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Monday Market Mayhem – Bombs Fly, Markets Fly – Why Not?

America F*ck Yeah!  

From Ferguson to Fallujah, America has spent the weekend kicking ass and taking names with the National Guard rushing in to put down the 99% in Missouri while in Mosul, we're bombing the Middle East's 99% off the dams and picking off the stragglers with high-tech drones – F*ck Yeah!  

That, combined with what we can politely call a non-escalation of tensions in the Ukraine has sent the price of oil tumbling by 0.75 this morning, good for $750 per contract from our Friday short (and now we're long at $94 on /CLV4 for October) - F*ck Yeah!  Index futures were up slightly in Asia but gathered steam in Europe and markets there are coming out of lunch up over 1% – even as the cease-fire in Gaza is about to end.  

Meanwhile, over in Hong Kong, we got a powerful lesson in numbers as the 1.3Bn population of China is able to overwhelm that Island's 7M people (0.5% of China's population) at will and that will was exercised this weekend as China staged "Pro-Beijing" rallies that protested the "Occupy Central" rallies the bottom 99% of Hong Kong had been staging.   Can anti-democracy rallies be far behind?  

The anti-Occupy Central campaign's focus on the impact of civil disobedience has appealed to the pragmatism of many Hong Kong people. While many support democracy, they also just want to live their lives and go to work unimpeded.  "We can't be optimistic at all—the pro-Beijing camp will control the entire list of candidates," said Joseph Cheng, a political-science professor and convener of the Alliance for True Democracy, a coalition of democratic parties supporting Occupy Central.

In short, while China did promise to give Hong Kong the right to vote – they never said they wouldn't stuff the ballot boxes or put up candidates that were nothing more than two different flavors of the same puppets.  "If we are buying fruit, don't give us three rotten oranges to choose from," one of the activists said.  Oh wait, that might have been our own election coverage – it's so hard to keep these totalitarian regimes straight

Still it's VICTORY for the top 1% as the status quo is being enforced in all corners of the World and that is good for the markets, who love it when the people we put in power are able to use that power to throttle the competion – it's so much easier than when we have to run out and bribe a whole new set of people!  

When the top 1% and their Puppet Governments win, the markets are happy and this is also fantastic for our Stock of the Decade, TASR, who have been having a Hell of a week, popping $1 as the need for riot control gear grows in America and abroad every day.  In fact, just last Thursday we decided to sell 10 more of the 2016 $15 puts for $4.60 in our Income Portfolio (wheree we have a double position) and we re-picked our play in the Long-Term Portfolio in our Live Member Chat Room.  

That worked out very well as the stock gapped higher the next day.  Perhaps it was BECAUSE we made the call (since we are now so influential!) or perhaps it's just that other analysts are catching up to our take on TASR's growth potential given the escalation of civil unrest right here in our own country – something we have long considered inevitable as the wealth gap widens to levels not even matched in the Great Depression. 

FXI WEEKLYSpeaking of the Great Depression, our Chinese Masters may be great at oppressing the masses but, so far, they haven't been able to force them to buy houses – even with MASSIVE stiumulus measures that are being thrown at the tottering real estate market.  

Chinese Home Sales fell 28% in July as tight mortgage lending outweighed efforts by local governments to ease property curbs as prices and demand weakened.  Chinese cities began relaxing local property restrictions in June amid sluggish sales and as an oversupply in second- and third-tier cities drove prices lower. Thirty-six Chinese cities eased their policies as of the end of last week in an effort to re-inflate the bubble.  

According to Bloomberg, Home sales by area fell 9.4 percent in the January-to-July period from last year to 495.9 million square meters, the data showed. The value of property sales including office buildings and retail space declined by 8.2 percent to 3.63 trillion yuan from a year ago.  These figures, on their own could spell disaster but, AT THE SAME TIME, Chinese Banks' Loan-Loss Reserves have fallen to the the lowest levels in 3 years.  

We shorted India last week (EPI) and now FXI has got my mouth watering as a potentially good short.  I'd feel better about taking up a short on FXI at $45, not $42 but the Jan $42/38 bear put spread is just $1.80 on the $4 spread and that makes it very interesting as it pays 122% on a less than 10% decline in the Chinese markets – a nice way to hedge your bullish China bets!  

 


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  1. Phil

    SPY DAILYGood morning!  

    I like that 4,000 line on /NQ for shorting.  We're over it at the moment but, once it drops, it should be good upside resistance.  We're lined up with 1,150 on /TF, 16,700 on /YM and 1,960 on /ES so shorting the laggard in that group also applies.  

    Oil still just below the line at $94.47 and I still think they can bounce off this, but not too far.  Silver not too strong at $19.53 with gold at $1,298 so below $1,300 not too encouraging.  Dollar 81.50 is a good +/- line to watch there, as is copper $3.10.  

    Gasoline just sad at $2.67, nat gas $3.76.  

    Meanwhile, John Oliver needs to be on every day:

    SPX WEEKLY

    INDU WEEKLY

    RUT WEEKLY

    NDX WEEKLY

    XLE WEEKLY

    XRT WEEKLY

    XLF WEEKLY

    TLT WEEKLY

    UUP WEEKLY

    FXE WEEKLY

    FXY WEEKLY

    SLV WEEKLY

    GLD WEEKLY

    JJC WEEKLY

    USO WEEKLY

    DBC WEEKLY

    EWG WEEKLY

    EWJ WEEKLY

    EPI WEEKLY

    RSX WEEKLY

    FXI WEEKLY

    NYMO DAILY

    NYSI DAILY

    VIX WEEKLY?

  2. qcmike

    Major Earnings for the Upcoming Week

     

    Monday:

    A.M. – N/A

    P.M. – URBN

     

    Tuesday:

    A.M. – DKS, HD, MDT, TJX

    P.M. – LZB,YOKU

     

    Wednesday:

    A.M. – AEO, EV, HAIN, LOW, MSG, PETM, PLKI, SJM, SPLS, TGT

    P.M. – CACI, HPQ, LB

     

    Thursday:

    A.M. – BKE, DLTR, HRL, PLCE

    P.M. – ARO, BRCD, CRM, GME, GPS, INTU, MRVL, NWY, PERY, ROST, SMRT

     

    Friday:

    A.M. – FL, HIBB

    P.M. – N/A

     

    Economic Releases (8/18-8/22):

     

    Monday:

    9:00 am CT – NAHB Housing Market Index

     

    Tuesday:

    7:30 am CT – Building Permits

    7:30 am CT– Consumer Price Index (CPI)

    7:30 am CT – Housing Starts

     

    Wednesday:

    9:30 am CT – Oil Inventories

    1:00 pm CT – FOMC Meeting Minutes

     

    Thursday:

    7:30 am CT–  Weekly Jobless Claims

    8:45 am CT–  PMI Mfg. Index Flash

    9:00 am CT – Existing Home Sales

    9:30 am CT – Natural Gas Inventories

    9:00 am CT – Philly Mfg. Index

    9:30 am CT – Natural Gas Inventories

    All Day Event– Jackson Hole Symposium

     

    Friday:

    9:00 am CT – Fed Chair Yellen Speaks

    All Day Event– Jackson Hole Symposium

  3. stjeanluc

    Oil Lines (October contract)

    R3 – 97.21
    R2 – 96.30
    R1 – 95.74
    PP – 94.83
    S1 – 94.27
    S2 – 93.35
    S3 – 92.80

    Confusing this morning as TOS switched from the September contract to the October contract as the front month. We traded on the September contract on Friday and that contract trades at $96.40 today or $2 above the October contract! I am guessing if you shorted the September contract on Friday, you are up $0.50 today, not $2.50. On Friday, the October contract traded around $95 so no matter what contract you traded, the max profit is about $0.50.

  4. Phil

    Oops, my bad!  The chart of CL shows a huge gap down – that's super-unusual (as the poor spread-players have been complaining), it's generally a .50 move.  

  5. stjeanluc

    /CL / Phil – The issue was that the options expired on Friday before the contract rolled over. I guess TOS switches the front month when the options expire…

  6. stjeanluc

    September contracts expire on Wednesday this week actually.

  7. stjeanluc

    And I updated my lines to match the October contract.

  8. Phil

    $94.50 failed to hold on /CLV4 (Oct) – we could be getting that collapse.  Watch /CLU4, still $96.39, that's a huge gap (more than $2) and I'd bet it narrows over the next couple of days – but which way?  

    Options/StJ – The contract is still good (/CLU4) but not the options on the contract.  That's why I don't play Futures options – you need a calendar to keep things straight!  

    GTAT/Jbur – If true, it's contrary to all previous information on the subject.  Still, this should give them a really nice boost over $18 (our target) and, if true, we may never see $17.50 again.

  9. spank

    Phil, do you think it would be wise to make a small entry on a USO put if you think we're getting the collapse? or at least a solid downward move?  Thanks

  10. Phil

    USO/Spank – I feel "safer" in the XLE puts as oil can spike and we should have time to get out of those.  Meanwhile, if oil stays low, there should be a slow grind down in that index.  

    Submitted on 2014/08/14 at 1:42 pm

    Oil/StJ – Hopefully this answers people's questions who were asking why I didn't want to go long on USO, etc….  Oil is at a point where we may get a nice panic run down to $85ish.  It's too dangerous to bet on but will be interesting, nonetheless.

    XLE can be bet though, Sept $93 puts are just .95 so let's put 5 of those in the $25KP.  

    D'oh – There goes $94 – here's a video chart for oil:

  11. Phil

    Of course, comic book physics is about what I see holding up all the indexes at the moment…

  12. dclark41

    jbur

    I have built a nice position in GTAT for this run. It's a great stock to trade in and out of between $13 and $20. Of course, at some point, the channel will have to move up.  In addition to the better-known sapphire glass operation, their Merlin(TM) Metallization and Interconnect and Hyperion Technology is interesting for its use in the solar industry.

    https://finance.yahoo.com/news/photo-release-gt-advanced-technologies-142334004.html

  13. lunar

    phil, i still have some this week $97 QQQ puts--now $.27.  roll or swallow the loss?  if roll which strike would you suggest?  thx.

  14. sn0gr00ve

    New subscriber here.. could someone tell me where the contents of the 25K portfolio are listed. Thx.

  15. rustle123

    Momo's having another powerful day.  Still no big news on NFLX that I can see.  Waiting patiently before moving on writing a call on them.  With TSLA and NFLX never know if they really have an announcement about to come out or it's a hedge fund or big bank trying to squeeze out shorts.

  16. dclark41

    sn0gr:

    Look here:

    Phil
    August 14th, 2014 at 1:38 pm

  17. stjeanluc

    Chart for the week:

    http://qz.com/250431/the-15-most-important-charts-from-a-jittery-week-for-the-global-economy/

    Here is one from me:

    There was an editorial this morning in the Le Monde where they basically bashed Europe for imposing these austerity programs that have led to the current situation – no growth and the threat of deflation. And Germany bears a large responsibility as they have basically held back on wage inflation for the last 10 years or so, stifling any internal consumption growth. 

  18. News:

    Markets open up as Ukraine worries ease

    09:31 AM ET

    • Dow +0.59% to 16,758.50. S&P +0.57% to 1,966.20. Nasdaq +0.57% to 4,490.40.
    • Treasurys: 30-year -0.26%. 10-yr -0.17%. 5-yr -0.10%.
    • Commodities: Crude -1.35% to $94.02. Gold -0.61% to $1,298.10.
    • Currencies: Euro -0.13% vs. dollar. Yen +0.19%. Pound -0.23%.

  19. News:

    On the hour

    10:00 AM ET

    • Dow +0.79%.
    • 10-yr -0.21%.
    • Euro -0.26% vs. dollar.
    • Crude -1.47% to $93.92.
    • Gold -0.64% to $1,297.90.

  20. News:

    BHP eyes split from Billiton assets in mine spinoff plan

    09:57 AM ET · BHP

    • BHP Billiton (BHP -0.2%) may spin off assets estimated to be worth as much as $12B as soon as this week, as directors meet to consider a structure to focus the mining company on its four main products – iron ore, petroleum, copper and coal.
    • A de-merged company probably would be based mainly around former Billiton assets acquired in the 2001 purchase, with the intention of raising free cash flow, helping boost production growth and delivering stronger return on investment.
    • A spinoff that included nickel, manganese and aluminum operations which span Australia, South Africa and Colombia, a South African coal unit and the Cannington lead and silver mine may be worth as much as $12B, according to a valuation from CLSA Asia-Pacific Markets.

  21. News:

    Big Lots and Fred’s higher as dollar store consolidation sorts out

    09:53 AM ET · BIG

    • Big Lots (BIG +1.6%) and Fred’s (FRED +1.5%) are seeing some buying action after Dollar General ups the stakes for Family Dollar.
    • Retail analysts say the retailers will benefit in the short-term from the rising premium in the discounter space.

  22. News:

    AMC Entertainment deepens ties with IMAX

    09:46 AM ET · IMAX

    • IMAX (IMAX +0.8%) and AMC Entertainment (AMC +0.9%) sign a deal which covers 11 new IMAX theaters scheduled for installment in 2015.
    • New IMAX theaters in Chicago, New York City, and Phoenix are part of the development plan.
    • The new contract brings the total commitment by AMC to IMAX to 159 theaters.
    • Financial terms weren’t disclosed.

  23. News:

    H-P lands pre-earnings upgrade

    09:38 AM ET · HPQ

    • Citing the company’s ability to benefit from improving IT spending, Monness Crespi has upgraded H-P (HPQ +0.9%) to Buy ahead of the IT giant’s Wednesday FQ3 report.
    • Cisco reported strong July quarter enterprise/SMB order growth last week (carriers and emerging markets were a different story), and NetApp mentioned during its earnings CC it’s seeing stronger enterprise demand. Both companies added the U.S. was an area of strength.
    • IDC forecast 4.1% 2014 IT spending growth in May, with pent-up demand in developed markets offsetting emerging markets softness. H-P continues trading near a 52-week high of $36.21, and is up 28% YTD.

  24. News:

    Goldman turns cautious on chip stocks, downgrades INVN/NXPI/MXIM

    09:24 AM ET · INVN

    • Following a strong 2014 rally fueled by healthy industry growth and hopes for more consolidation, Goldman has lowered its rating for the semi industry to Cautious from Neutral.
    • The firm thinks industry shipment growth will slow down, and sees risk to Q4 estimates. InvenSense (NYSE:INVN) has been cut to Neutral, NXP (NASDAQ:NXPI) to Sell, and Maxim (NASDAQ:MXIM) to Buy from Conviction Buy.
    • Benchmark aired cautious remarks about the sector last month, noting supply chain inventories have been rising and Taiwanese electronics growth (seen as a proxy for chip demand) has been slowing down.
    • Regarding InvenSense, analyst Mark Delaney notes shares have hit Goldman’s $25 target and have soundly outperformed the S&P 500 since being added to Goldman’s Americas Buy list near the end of 2011. He adds a key near-term catalyst (share gains at Apple) has played out.
    • INVN -2.4%. NXPI -3.3%.
    • Chip ETFs: SOXX, SMH, XSD, PSI, SOXL, USD, SOXS, SSG

  25. News:

    Stock futures rise, following strong European markets

    09:20 AM ET

    • Stock futures point to a solid open, tracking strong gains in Europe as fears of a sustained conflict between Russia and Ukraine begin to recede; S&P and Dow +0.6%, Nasdaq +0.5%.
    • Major European indexes trade higher across the board, with Germany’s DAX (+1.3%) in the lead, after foreign ministers from Ukraine, Russia, France and Germany met over the weekend to discuss a potential ceasefire; markets also gained ground across most of Asia.
    • Reports that Kurdish and Iraqi forces have made progress in recapturing the Mosul Dam is an additional geopolitical bullish factor for stock markets.
    • Apart from the geopolitical issues, it looks like another slow news day, as there are no earnings releases of note this morning and no key economic releases today.
    • Family Dollar stock +4.8% premarket after Dollar General (+11%) made a ~$9B bid for the company, topping an earlier offer from Dollar Tree (-1.5%).

  26. News:

    FDA clears Mayo Clinic Lab for stem cell production

    09:20 AM ET · BCLI

    • The Mayo Clinic Human Cellular Therapy Laboratory achieves regulatory clearance to produce BrainStorm Therapuetics’ (OTCQB:BCLI) NurOwn autologous mesenchymal stem cells secreting neurotrophic factors (MSC-NTF). The Mayo clinical team will begin enrolling patients in the Phase 2 clinical trial evaluating the safety and efficacy of NurOwn in patients with Amyotrophic Lateral Sclerosis (ALS) after completing some additional work with the company. It is the third and final site involved in the ALS trial.

  27. News:

    Capstone Turbine receives 9 MW factory protection plan contract

    08:53 AM ET · CPST

    • Capstone Turbine (NASDAQ:CPST) +2.6% premarket after announcing a Factory Protection Plan contract for nine C1000 power packages, increasing the total contract backlog for Capstone FPPs to more than $55M.
    • The deal is with energy supplier Horizon Power Systems, which has a fleet of 600-plus CPST microturbines in operation.
    • CPST says the $55M in-service backlog is in addition to the record $175M product backlog as of June 30.

  28. News:

    Apache +2% after claims of Australia’s biggest oil discovery in 30 years

    08:27 AM ET · APA

    • Apache (NYSE:APA) +2.2% premarket after announcing its first major discovery in the Canning Basin offshore western Australia may herald “a new oil province for Australia.”
    • The Phoenix South-1 well found oil in four locations and measurements from six samples indicate the reservoir may hold as many as 300M barrels of oil; one of the last big discoveries in Australia was in 1999 at the Enfield field, where a resource of 127M barrels was found.
    • One analyst say that from the results so far, the discovery could hold up to 60M barrels of oil that actually is recoverable; the well is still being drilled deeper, so it may end up being larger.

  29. News:

    CBS added to conviction list at Evercore Partners

    08:18 AM ET · CBS

    • Evercore Partners adds CBS (NYSE:CBS) to its conviction buy list based on its view the media company is set up to easily meet earnings estimates.
    • CBS +0.6% premarket

  30. rustle123

    IMAX is a tech company that really has been growing into their earnings.  Their earnings have gone up every year as they are expanding and they have been this price since 2009.

  31. sn0gr00ve

    >sn0gr:

    >Look here:

    >Phil
    >August 14th, 2014 at 1:38 pm

    Thanks for reply, that just looks like the Philstockworld home page, with dozens of links on it. 
    Sorry to be a little thick, but maybe there's a clear link  like something labelled "25K Portfolio" that I'm not seeing.

     

  32. News:

    Heinz recalls baby food in China

    07:54 AM ET

    • Heinz recalls baby food in China after regulators determined an unsafe amount of lead was in boxes which they tested.
    • The issue affected Heinz AD Calcium Hi-Protein Cereal.

  33. News:

    More on JinkoSolar’s Q2 results

    07:39 AM ET · JKS

    • Net income of RMB138.2M ($22.3M) vs. RMB49M in the second quarter of 2013.
    • Diluted earnings per ADS of RMB4.04 ($0.64) vs. RMB2.20 in the same quarter a year ago.
    • Total solar product shipments amounted to 659.5 MW consisting of 570.8 MW of solar modules, 54.1 MW of silicon wafers and 34.6 MW of solar cells. This represents an increase of 34.8% from 489.2 MW in the same period last year.
    • Cash, cash equivalents and restricted cash of RMB1.6B ($252.7M) as of June 30, 2014 vs. RMB1.7B as of March 31, 2014.
    • The company expects that total solar module shipments to be in the range of 800 MW to 850 MW for Q3, and estimates total solar module shipments to be in the range of 2.9 GW and 3.2 GW for FY 2014.
    • Q2 results
    • JKS -3.1% premarket

  34. News:

    SeaWorld Entertainment tapped by Credit Suisse for recovery

    07:35 AM ET

    • Credit Suisse initiates SeaWorld Entertainment with an Outperform rating.
    • The investment firm thinks the PR moves by the theme park operators will pay off and help boost traffic.
    • SEAS +2.1% premarket

  35. News:

    Strong 1H results from Sands China

    07:30 AM ET · LVS

    • Sands China (NYSE:LVS) reports revenue grew 25% to $5.08B in the first half of the year, led by a strong performance from the Venetian Macau resort.
    • Revenue for the Sands Cotai Central casino increased 62% to $152.7M on a large jump in revenue per room.
    • The company’s net profit rose 45.7% Y/Y to $1.37B during the period.

  36. News:

    Exporters likely to ship to Russia via countries not hit by ban

    07:20 AM ET · RSX

    • With Moscow’s new agricultural import restrictions, neighboring Russian countries are likely to see an increase of trade traffic through their borders.
    • Sanctions have been imposed on many Western nations as retaliatory measures, but other countries close to Russia, such as Turkey, Belarus and Kazakhstan are still available to trade with Moscow.
    • The newly created medium may form a “black market” where firms ship to Russia through countries not included in the sanctions, evading the ban on EU produce.
    • Vladimir Putin has already spoken to his Kazakh and Belarussian counterparts, seeking cooperation against Western foodstuffs, although EU leaders seem unlikely to deter traders who circumvent the embargo via third countries.
    • ETFs: RSX, TUR, RUSL, RSXJ, ERUS, RUSS, RBL, RUDR

  37. News:

    KKR to make first real estate investment in Australia

    06:36 AM ET · KKR

    • KKR (NYSE:KKR) and Australian property manager Abacus Property Group have agreed to buy 70% of the World Trade Center in Melbourne for A$120.4M ($112.1M).
    • The stakes in Towers 2, 3 and 4 of the World Trade Center will provide an initial yield of 9.3% a year, says Abacus.
    • The deal will be KKR’s first real estate investment in Australia, having previously focused on markets such as China, India and South Korea.

  38. News:

    Samsung to build phone factory in Indonesia

    04:34 AM ET · SSNLF

    • Samsung (OTC:SSNLF, OTC:SSNGY) is planning to set up a factory to produce mobile phones primarily for Indonesia, one of the world’s fastest growing markets for the devices.
    • Production capacity at the facility in West Java will be initially set at 100K units per month, but will eventually climb to 900K.
    • Seeing sales of its flagship Galaxy models weaken in more established markets, Samsung is turning to markets with low smartphone penetration rates and higher disposable incomes like Indonesia.

  39. News:

    Eurozone banks to borrow €250B from ECB

    03:47 AM ET · SAN

    • Eurozone banks are expected to borrow about €250B in cheap four-year money from the European Central Bank in September and December under the ECB’s “targeted long-term financing operations”.
    • The new loans would come on top of the more than €1T in cheap finance the ECB pumped into the financial system between late 2011 and 2012 to avert a financial crisis.
    • The new funds are expected to boost lending to the region’s credit-starved businesses.
    • Europe’s economic outlook has not been pretty. Last week, figures outlined a slowdown in Germany and France and Italy in recession.
    • Related stocks: SAN, DB, IRE, CS, ING, BBVA, BCS, RBS, HSBC, LYG
    • ETFs: EUFN

  40. dclark41

    sn0gr00ve

    Scroll down to Phil's post at: (1:38PM) on that day's (8/14) post and you will find what you are looking for.

  41. News:

    Russia may ban car imports if West imposes new sanctions

    02:47 AM ET · F

  42. News:

    Sonic Automotive to announce used-car dealership chain

    02:25 AM ET · SAH

    • Sonic Automotive (NYSE:SAH) will today announce its creation of EchoPark, a chain of preowned-vehicle stores that will challenge used-car retailers such as CarMax (NYSE:KMX) and Asbury Automotive (NYSE:ABG).
    • EchoPark is part of Sonic’s $350M investment to revamp its approach to selling cars, amid increasing U.S. demand for preowned vehicles.
    • As one of the country’s largest car-dealer’s, Sonic posted $8.8B of sales in 2013.

  43. News:

    Wal-Mart takes advantage of Disney-Amazon pricing skirmish

    Yesterday, 10:21 AM ET · DIS

    • Demand for Disney (NYSE:DIS) DVD titles is on the rise at Wal-Mart (NYSE:WMT) after the retail giant decided to aggressively step into a distribution void left when Amazon (NASDAQ:AMZN) blocked Disney DVD purchases on its website.
    • Pre-orders for Captain America: The Winter Soldier soared 90% after Wal-Mart offered a price cut on the Marvel film to $14.96 vs. the list price of $14.99 on Amazon where consumers can only sign up for an e-mail notification on availability.
    • Analysts note that although DVD sales are only a small piece of the e-commerce pie, any development that levels out the playing field is a boost to Wal-Mart’s online brand. Global e-commerce sales rose 24% at Wal-Mart in Q2, led by double-digit growth in the U.S. and China.
    • What to watch: DVD sales typically peak during the holiday shopping season giving Disney even more leverage in ongoing negotiations with Amazon over pricing.

  44. News:

    Mercedes-Benz found guilty of price manipulation in China

    02:04 AM ET · DDAIY

    • China’s anti-trust regulator has found Mercedes-Benz (OTCPK:DDAIY) guilty of manipulating prices for after-sales services, says Reuters quoting the Xinhua news agency.
    • The auto market and other industries have been under investigation in China, as the country increases its efforts to bring companies into compliance with its 2008 anti-monopoly law.
    • The legislation allows China’s National Development and Reform Commission, to impose fines of up to 10% of a company’s Chinese revenues for the previous year.

  45. millcreek

    phil….morning.

    im holding an old dba  pos…..10x jan5 26 calls…bgt @ 2.05……im thinking of trading out and replacing with a buy write of jjg which looks beaten down……like to get your thoughts and/or how you might structure ….tks

  46. News:

    New charges filed against FedEx over pharmacy shipment lawsuit

    Yesterday, 08:36 AM ET · FDX

    • The DOJ has filed additional charges against FedEx (NYSE:FDX) relating to its previous lawsuit which accused the shipping company of distributing controlled substances from illegal online pharmacies.
    • The new indictment charges FedEx with conspiracy to launder money, stating that the company collected payments on some prescriptions to return to the issuer.
    • “FedEx, of course, requires customers to pay for our services,” says SVP of Marketing & Communications Patrick Fitzgerald. FedEx’s “collect on delivery service,” which collects a payment to send back to a shipper, “is available to all of our millions of FedEx Express customers.”
    • The company plans to plead not guilty on the new charges.

  47. News:

    Schlumberger’s profits should gush – Barron’s

    Yesterday, 07:00 AM ET · SLB

    • Barron’s cover story is positive about oil-services giant Schlumberger (NYSE:SLB), whose recent acquisitions have catapulted SLB into a position of leadership in extracting liquids from shale basins, part of the booming business in hydraulic fracturing that’s reshaping the industry.
    • The acquisitions fix one of the company’s few week spots, and should put it further ahead of smaller rivals like Halliburton (NYSE:HAL) and Baker Hughes (NYSE:BHI).
    • CEO Paal Kibsgaard believes SLB can achieve a 10x increase in operational reliability, reduce inventory levels by 25%, boost asset utilization by 100%, raise productivity by 20%, and lower unit support costs by 10%. By 2017, he expects to boost EPS to $9-10 (from $5.70 this year).
    • Despite an 18% gain this year, shares looks cheap at about 9x estimated 2015 EV/Ebitda and eight times estimated 2016 EV/Ebitda vs. a historical multiple of 10 to 11.

  48. News:

    Target to keep stores open later

    Yesterday, 06:47 AM ET · TGT

    • Target (NYSE:TGT) plans to keep more than half of its U.S. stores open later starting this month, hoping to capture shoppers who put shopping off until after dark.
    • TGT’s 1,800 U.S. stores typically open at 8 a.m. and close at 10 p.m. on weekdays and Saturdays, and at 9 p.m. on Sundays.
    • The new extended hours start this month and will be in effect through the holidays, after which they will be evaluated.
    • According to a recent survey, only 0.3% of Americans shop after 10 p.m. on a typical night.
    • Rival Wal-Mart (NYSE:WMT) keeps 70% of its U.S. stores open 24 hours a day.

  49. News:

    Coke chooses caution, sees too much risk in swallowing all of Monster

    Sat, Aug 16 · KO

    • So why didn’t Coca-Cola (NYSE:KO) just go all the way and acquire all of Monster Beverage (NASDAQ:MNST) instead of stopping at an asset swap and a 16.7% stake?
    • More than anything, “it’s about protecting the [Coke] brand and the image” from a company that urges consumers to “unleash the beast” with drinks such as Assault and Khaos, said a person close to Coke.
    • Coke figures it deals with enough controversy from those who blame sugary sodas for obesity and diabetes; it wants to keep at arm’s length from the more serious public relations battles facing the energy drinks industry, including an FDA probe over deaths possibly linked to Monster.
    • On the financial side, the deal involves a reasonable $2.1B cash up front, while a full acquisition would have required at least $12B based on Thursday’s closing stock price – roughly equivalent to the amount of cash Coke had on hand at the end of July.
    • Despite the cautious approach, Coke could still own Monster some day; a standstill agreement limits KO to increasing its stake to 25% over four years, but MNST’s board can waive it at any time.

  50. stjeanluc

    Should we care about geopolitical events:

    http://www.bloombergview.com/articles/2014-08-18/war-does-nothing-for-your-investments

    The proper question to ask is, “Why should investors care about geopolitics?”

    That may seem counterintuitive, but if you delve into history, you will discover that markets have more or less found the normal turmoil of geopolitics to be irrelevant. The reasons for this are varied, but consider these factors:

    1) Most geopolitical events don't affect corporate revenue and earnings. Even trade restrictions tend to cause consumption to shift as opposed to going way (though there are, of course, some exceptions).

    2) Despite the big bold headlines, most of these events are relatively small from a global economic perspective. Take the Russian-Ukraine skirmishes. Ukraine’s annual gross domestic product is equal to about two days of U.S. GDP.

    3) Markets tend to anticipate large events; by the time news breaks, many key investors have already made adjustments to their holdings. “Buy the rumor, sell the news,” is another way of saying the news is already reflected in stock prices.

  51. Pharmboy

    Full 25K link.….

  52. craigsa620

    sn0- evereveryone asks this upon joining. Phil does not keep the portfolios posted anymore but does review them frequently .you can find them in last Thursday’s chat I think.

  53. Jbur

    GTAT/Dclark:

    Thanks for posting link.  Yes, well managed little company (for now) with tremendous upside opportunity.  Didn't think of it as a short term trading vehicle since all of my positions are Jan16, per Phil. But I can definitely see a lot of channel trading opportunities in the range you mentioned.

    Are you going to be making an appearance in LV this year? 

  54. dclark41

    Jbur:LV

    Haven't decided yet. Bought a cottage on a lake last month so a bit cash-strapped at the moment, but still considering the trip if I can swing it. I assume you are going?

  55. jeffdoc

    Phil,

    VIX down in the 12's again, do you see any play here again. Worked nicely last week when you called it. 

    Thanks.

  56. Jbur

    dclark:  Absolutely.  Been looking forward to the meeting since last November. Great to meet some really nice, smart people, great to learn from Phil in person,  and a good excuse for my wife and I to take a little sojourn. 

  57. dclark41

    Jbur/LV

    As long as I don't get too short this market, I will have the trip paid for by next month!  :) !

  58. Pharmboy

    ITMN is on a tear.  One can take 1/2 off now for a nice win (Jan15 35 P STO coupled with the Jan15 $45/50 BCS).  Let the rest run to see where it goes.  Up from our 25c (or better) entry….now net $2.

  59. angelcur

    i am starting to look for a short in the spu its crazy o/b

  60. pwright72

    Good morning Phil, re: GTAT, what do you think of a 1/2 call sale, I have 20 x Jan 16 10-17 BCS and short 10 puts, thinking about selling 10 x Sept 20 calls at $0.85, what do you think?  (Nice call on GTAT by the way)

    Thanks in advance

  61. sn0gr00ve

    Thanks for pointers to portfolio. Looking at a lot of the options, it looks like a lot of the movement has already occurred and maybe they are "holds" rather than "buys"? What if an option expires JAN 15 but a shows a lot of profit now? Is that a less, or more risky trade because it's already moved?

    Would it make sense to wait for and consider buying selling the newest recommendations by Phil in order to benefit most from option time decay?

  62. griffin

    Phil/ What are your thoughts on the SLW 2015 spread? Technically speaking, it's at the top of the channel. I'm just wondering if would be good idea to take some profit here? Thanks as always. 

  63. Burrben

    Phil –  Is there any way in TOS to tell the full symbol of /SI that you are trading?

    IB shows AUG and SEPT futures, and one of them is 1000x multiplier and one of them is a 5000x.  

    Which specifically are you looking at?

  64. Burrben

    GO GO GILD!

  65. Phil

    GTAT/DC – That's why I like them, not a one-trick pony.  AAPL is just a huge bonus for them.  

    QQQ/Lunar – Those are a disaster.  Totally the wrong way.  My attitude at the moment is we can hardly be more screwed waiting until tomorrow to see what happens – so that's my plan.  

    $25KP/Sn0 – The last update was Thursday in Member Chat.  I usually do an update at least every other week. 

    NFLX/Rustle – Wow, they just don't stop!  

    Thanks DC.

    Charts/StJ – Weak bouncing on Sentiment is not encouraging. 

    And what is negative investor sentiment in Germany signaling that should be encouraging?

    What happens when loans go negative?  Does that mean they are taking the money back? 

    IMAX/Rustle – We always like them when they go on sale.  Lately, $24ish has been the sale price but, if they are breaking $27.50 (200 dma), that may shape up to be a new floor.  

    DBA/Mill – You ride that all the way back down?  For shame!!!  I'm not sure why you'd want to narrow the bet to just grains, I'd simply buy more time as the Jan $26 calls on DBA are $1.10 and the 2016 $25/28 bull call spread is $1.40 so for .30 you can buy $1 of intrinsic value and net in for $2.35 with an upside at $3 or you can DD and average $1.88 on the $1.40 spread that's $1.20 in the money – not terrible.  

    Geopolitics/StJ – Very similar to the lectures we got in 2008, when all the great minds were telling us how banking and real estate meltdowns in China and Europe had nothing to do with the US.  If you are a long-term investor, it's not important but, if you hare trading on shorter time-frames, how can they tell you it doesn't matter?

    Thanks Pharm. Craigs. 

    VIX/Jeff – Notice I did NOT call a VIX play for months.  When the VIX was insanely low ($12) and the tensions were going up, THEN I made a call because THEN the odds were in our favor.  When there's another obvious play, I'll hopefully catch that but a watched VIX never boils and I've moved on for the moment – 9,000 other stocks to watch, you know…

    LAS VEGAS!!!  Please send Emails to Greg (admin@philstockworld.com) to let him know you are interested.  

    Seminar will be Nov 9th (Sun) and 10th (Mon) with live trading Monday during market hours (6-1pm in Vegas).  Saturday night is optional Dinner at Nobu ($125 last time) followed by a Poker Tournament and Sunday night's optional dinner is likely to be Rao's or Carmine's but, again, it all comes down to getting commitments early enough to book it.   Brunch on Sun and breakfast on Mon is included and check with your accountants as to how much of the trip is a tax-deductible educational expense!  

    Getting on Greg's list will prioritize you for discount seminar fees and also REALLY helps us plan this thing out so – much appreciated.  Last year, only 20 people took advantage of the early sign-in out of 50+ that came.  

    We could have kept costs lower if more people committed earlier – the reason it costs more when you sign up late is because it costs us more to add people!

  66. stjeanluc

    VXX below $28 again – that was quick!

  67. jeffdoc

    Thanks Phil, thought I'd ask. 

  68. ivan_s

    CBI/Phil – Do you like it here?

  69. hextra8

    GTAT/Phil

    Can you recommend a trade for today? Thank You.

  70. deano

    Phil – given the recent disaster in retail, and the decline of the underlying, do you think some SHLD puts are worth a play here? TIA!

  71. Phil

    Sojourn/Jbur – Good excuse for me to come out to Vegas the weekend before!  I love my Vegas week.

    $93.50 on oil (/CLV4).  /CLU4 is $96.  $2.50 spread is gigantic this close to expirations.   Here's the /CLV4 chart:

    Paying for it/DC – STP 29.2% ($129K) this morning, LTP 20.2% ($601K) so $731K means we're still playing this thing right, albeit very cautiously.  I'll try to come up with a specific trade that pays for it but CZR kind of scary this year and we're already in a WYNN trade – maybe something with LVS?

    SPU/Angel – The fruit juice?  

    GTAT/Pwright – If they are the go-to screen on the IPhone 6, then $20 is too low.  I wouldn't flip short.  

    Portfolios/Sn0 – If you look on Thursday, under each portfolio, I mention if a trade is still playable or not.  $25KP trades tend not to be as they have generally short time-frames so best to be PATIENT and look for new ones as they come in.  In the case of something like QQQ, which is down from our entry, it's best to ask (as Lunar did above) as, though the options are cheaper, the compressed time-frame no longer makes it desireable.

    SLW/Griffin – We have 10 SLW 2016 $18/27 bull call spreads in the STP along with short $18 puts and SLW is $25 and, last week, we decided they are well-targeted.  If you are just trading, then sure, take a profit but, if so, why did you not stop out between $27.50 and $25?  You need to KNOW what you want to do BEFORE the stock does it to you.  As the stock goes up, you need to always know what you will do in case it pulls back in small or large percentages.  If locking in profits was important to you, then you should have been out $1 ago.  

    /SI/Burr – It's /SIU4 at $19.67 at the moment (and this is a critical move so tight stops here).  I just trade whatever /SI TOS has current as I want to be as liquid as possible.  

    GILD/Burr – About time they had a real breakout:

    GILD/Abhish – Yesterday's trade idea still about the same price:

    On GILD, think they beat so I'd go with the 2016 $80/100 bull call spread at $9.50 (same as AAPL) and sell the $70 puts for $5 for net $4.50 on the $20 spread. 

    VIX/Jeff – Thanks for asking.  One of the things I'm trying to stress more is PATIENCE on trading.  Just because something works at a certain time, doesn't mean it will work again.  Other times, we get to go back to the well over and over again.  

    CBI/Ivan – I like CBI as a concept but they are going to take a hit and get downgrades as a lot of the rally from $50 to $80 last year was based on their participation in the Keystone Pipeline.  That's not happening this year and maybe not next either and the stock fell to $60, which is fair but not cheap.  As a long-term play, I definitely like them so selling 2016 $50 puts for $4.50 for a net $45.50 entry (23% off) on 1x is a very nice play – but I wouldn't be more aggressive than that.  

    GTAT/Hex – I HATE to chase!  It's not just that the stock is up $4 (28%) from our entry at $14 at the end of last month (when I was pounding the table on them), but that now you end up paying a much higher premium (or collecting less of a premium) for the options.  I was targeting $20 in 2016, they're at $18 now – it's just not an entry I would taken now as my target hasn't changed – just the delay of AAPL rollout now seems off the table.  If it goes back on the table and the stock dumps $4, THEN I'll like them again!  

    SHLD/Deano – Talk about playing with fire.  No way would I take a short bet against Fast Eddie.  

  72. Phil

    Bullish Meme:

  73. diamond

    I think the MM’s are switching from liquidity to lubricant …

  74. Phil

    $500Bn was committed in Europe this morning – that's our rally so far.  Fed has Jackson Hole this weekend, so people hoping for matching stimulus on our side.  If not, Dollar moves up and pressures things down again. 

    Joe on CNBC "The market is smarter than all these geopolitical concerns."  See – that's the new official MSM talking point!  

    • Crude rallied hard into the close on Friday, perhaps over worry of some geopolitical blow-up over the weekend, but – with no blow-up forthcoming – it's resumed its slide, off 1.4% to $96.04 per barrel - right around the lowest since late January.
    • "The world has changed," says energy market analyst Daniel Dicker, noting conflicts in Russia/Ukraine, Iraq, and Syria, along with destabilization in Libya and Egypt – had they happened a few years back – would have sent prices soaring. What's different today, he says, is the exit from trading by the large investment banks. "This has taken an enormous amount of speculative steam out of the oil trade."
    • USO -1.2%
    • ETFs: USOOILUCOSCOBNOUGADTODBOCRUDUSLUHNUWTIDWTIDNO,SZOOLOOLEMTWTI

    Silly Geopolitics – why should we worry about things on the other side of the World?  When in human history have things like that mattered?  

  75. diamond

    AAPL p-bar @ 11:50 A.M. down to Opening Range low = 97.98

  76. stjeanluc

    Geopolitics / Phil – As you said, these are blips for the long term investor (20 years and more) but maybe they shake the weak hands and that profits you know who….

  77. Phil

    Only 29M shares traded on SPY at 12:20.  Not terrible but not exciting.  

    AAPL $99 on news that 70-80 IPhone 6s will ship.  That seems high to me. 

    Homebuilder confidence at highest since January

    • August NAHB Housing Market Index55 vs. consensus of 53; 53 prior.
    • "Builders are seeing a noticeable increase in the number of serious buyers entering the market,”says NAHB Chairman Kevin Kelly, after his firm's Housing Market Index rises to 55 this month. Challenges still remain, he adds, noting tight credit, and shortages of finished lots and labor.
    • The HMI's three sub-components all rose in August, with the current sales conditions and expectations for future sales gauges each ahead by two points to 58 and 65, respectively. The gauge of traffic for prospective buyers added three points to 42.
    • ITB +1.8%, XHB +1.6%

    Oil resumes decline as "speculative steam" exits via banks

    • Crude rallied hard into the close on Friday, perhaps over worry of some geopolitical blow-up over the weekend, but – with no blow-up forthcoming – it's resumed its slide, off 1.4% to $96.04 per barrel - right around the lowest since late January.
    • "The world has changed," says energy market analyst Daniel Dicker, noting conflicts in Russia/Ukraine, Iraq, and Syria, along with destabilization in Libya and Egypt – had they happened a few years back – would have sent prices soaring. What's different today, he says, is the exit from trading by the large investment banks. "This has taken an enormous amount of speculative steam out of the oil trade."
    • USO -1.2%
    • The Obama administration is closer than ever to imposing the first minimum standards for oil and gas activity in U.S. Arctic waters, as Royal Dutch Shell (RDS.ARDS.B) pursues permits that could allow it to resume drilling in the region next year.
    • There are no specific mandates currently governing Arctic oil development; federal agencies regulate drilling in the Arctic using the same basic rules that apply generally offshore.
    • Shell built a specialized, first-of-its-kind containment system for its Arctic operations two years ago, but the equipment did not reach the waters north of Alaska in time; if a requirement for similar equipment is written into new Arctic mandates, other oil companies such as ConocoPhillips (NYSE:COP) and Statoil (NYSE:STO) which hold oil and gas leases in the region might have to procure such a device before they could begin drilling.
    • "Investors beware," Andrew Bary warns in his weekend Barron's article discussing whether Richard Kinder's (KMI -1.1%) "brilliant financial move" to buy up its MLPs actually can create value.
    • KMI looks expensive, Bary concludes, with an enterprise value/EBITDA ratio similar to that of Facebook and significantly greater than Google.
    • The blue chips Kinder compares itself to – including GE and Coca-Cola – comfortably cover their dividends with after-tax earnings, and some are supplementing dividends with stock buybacks, while funding all or the bulk of their capital expenditures with internally generated funds; KMI expects to cover its dividend next year from cash flow, but it probably won't do so from after-tax earnings, Bary says.
    • KMP -1.3%, KMR -1.5%, EPB -1.3%.

    Airline stocks takes their cues from lower oil futures prices

    • Airline stocks start the week with an upward swing after crude-oil futures drop. Several analysts are out with a forecast for the lower oil prices sustaining for the short-term.
    • Advancers: Delta Air Lines (NYSE:DAL) +2.6%, American Airlines Group (NASDAQ:AAL)+3.3%, United Continental (NYSE:UAL) +3.5%, Southwest Airlines (NYSE:LUV) +2.3%, JetBlue (NASDAQ:JBLU) +2.0%.

    Drybulk shipping rates keep rising, extending last week's big gains

    • Drybulk shipping rates continue to move higher, adding to last week's run as iron ore shipments out of Brazil and Australia pick up.
    • On Friday, drybulk rates as measured by the Baltic Dry Index rose 7.7%, capping a 31% gain for the week driven by strength across the board but mainly in Capesize and Panamax rates.
    • After beginning its ascent on July 23, the BDI has jumped 40%, rising in every session except one.
    • Last week, Capesize rates surged 65% to $15,561/day, Panamax rates climbed 29% to $6,397/day, and Supramax rates added 9% to $9,170/day.
    • Related drybulk stocks include: DRYS +2%, PRGN +4.1%, DSX +1%, FREE +8.2%, EGLE-2%, NM +2.5%, NMM +0.7%, SBLK +1.1%, SB +1.7%, BALT +2.5%, SHIP -2.1%, DCIX +2.2%.

    U.S. box office on track for August record

    • The top 12 films in the U.S. took in $128.8M over the weekend to mark a 6% improvement over last year's corresponding haul.
    • U.S. box office sales for August are on track to set a record for the month.
    • The development gives some support to the argument that the weak box office in June and July was tied to a weak slate – not fundamental demand shifts.
    • Teenage Mutant Ninja Turtles (VIAVIAB) and Guardian of the Galaxy (NYSE:DIS) took in $28.4M and $24.7M, respectively, to dominate the weekend – while Expendables 3 (NYSE:LGF) limped in with a disappointing $16.3M opening.
    • Related stocks: RGCAMCCNKIMAXRLDSNECMCSATWXMCSRDICKECFOXA,DWA.

    GT Advanced +4.3% on iPhone screen production report

    • The Guardian reports production of iPhone 6 (NASDAQ:AAPL) displays featuring sapphire cover glass are expected to "go into large-scale production this month," courtesy of GT Advanced's (NASDAQ:GTAT) Mesa, AZ facility.
    • The paper adds both the 4.7" and 5.5" models will sport sapphire cover glass; reports have varied on whether both models will support it, or (due to production constraints) only the 5.5" model.
    • The WSJ has reported Apple plans to protect iWatch displays with sapphire, and is thinking of doing the same for "more expensive" iPhone 6 models, if supply isn't an issue.
    • Apple's iPhone 6 launch event is expected to take place on Sep. 9.
    • Prior coverage on GT Advanced/Apple
  78. deano

    Phil – on SHLD I meant selling the puts. Premiums are very high!

  79. Phil

    Unfortunately, StJ, as I learned in 2008, people may SAY they are long-term investors but then, when they hold perfectly good stocks that are down 50% or more during a crisis, they still cash out and head for the bomb shelters.  That's great for those of us selling bomb shelters, generators, water filters, toilet paper, etc (and survivalist stuff is cheap right now!) but it's also led me to drift towards more cautious strategies.

  80. Phil

    SHLD/Deano – Oh, that's different!  Make sure you are looking at the new puts, not the old ones.  The 2016 $25 puts can be sold for $5 for a net $20 entry off the $35 current price.  That's 42% off so I certainly like that one but, if they can't hold $30, I'd take the loss.  

  81. rustle123

    The iPhone figure doesn't sound high to me.  I've never spoke to so many people who can't wait to buy the new iPhone and some of them are people who bought the Samsung Galaxy and can't wait to switch back.  I can't wait to buy it.

  82. rustle123

    meant spoken not spoke for any English teachers on the board today.

  83. griffin

    Phil/ Sorry, I should have specified my position. I have a 2015 not 2016 SLW bull call 20/25. Must be older trade. Anyway, the issue that I ran into was that SLW shot up so quickly after trade was put on that the sold call price went way up and the spread didn't show much profit even though SLW was over  my target of 25. With time, though, it has gotten better. At present, I am risking 350 to make another 150 on each spread. I guess that answers the question!

  84. pfehlmann

    Phil / AAPL – you mentioned in the past that you believe AAPL will pull back to $85. Is this a good opportunity to sell some short term calls against my 71.43 Jan 2016 puts? I was thinking the Sep 100 call.

  85. angelcur

    sky people fruit juice LOL!

    (I KNOW YOU KNOW WHAT I MEANT)

  86. sn0gr00ve

    I got a 2011 macbook pro battery replaced a couple days ago only because I can't afford to give them $2000 for a newer mode, which I would gladly do if I had the money. Their store in Sacramento Arden mall had at least 25 people in it, many eager and engaged, maybe more than Sears (half joking). I asked the tech taking in repair if it was always this busy.  He seemed to not notice the crowd, shrugged — it seemed completely normal to him. Disclosure long owning stock with condors on Apple.

  87. jromeha

    Phil- you know I have a lot of respect for you, like you, and generally agree with you, but the, "bombing the 99%" comment about Iraq was inappropriate and way off base. ISIL is a terrorist organization that is too extreme for even Al Qaeda! These people are committing genocide against many groups in Iraq. Regardless of whether W's endeavor was a huge mistake (it was), helping the Kurds and Iraqis fight back against these animals is the right thing to do. 

  88. lunar

    phil, do you think the indexes keep moving up the rest of this week?  what does your chart reading say?

  89. pwright72

    Thanks Phil, makes sense re: GTAT

  90. diamond

    Dozens Of Flash-Crashes, Including AAPL, As BATS Breaks – Zero Hedge

  91. qcmike

    Phil

    Any trade on FAS  ? sell sept calls  ?

    Thanks

  92. angelcur

    OIL IS STARTING TO LOOK LIKE IT WANTS TO RALLY

  93. Phil

    IPhone/Rustle – No one has actually seen it?  What if it's unappealing in size?  Oh well, I'm not a giant phone person, who knows how many are and lord knows I don't question AAPL's ability to measure a market – just seems like a lot.  Very bad for Samsung if those numbers play out. 

    SLW/Griffin – Yes, if you stared with $200 and now $350 and you have to now risk $350 to make $150 more by the year's end and you aren't 75% or better positive you'll collect that $150, then it's kind of a waste of time because you KNOW you can make 10% in 6 months on the $350 and maybe 20%, which is $70 so now you have to feel that you are so sure about making $150 from $350 that you'd rather stick with that than have $350 of cash to make new trades with.  

    AAPL/Pfehl – Well, it's certainly not happening.  I do think $100 is a good top but I'd let all this IPhone 6 mania play out first.  If you only have the short puts and not the stock, then it's a whole, new, dangerous trade you are considering – I wouldn't want to be naked short AAPL.  

    Nice pop in oil and drop in the RUT saved my day!  /YM now my favorite short under 16,800 but it's only tight stops that are saving these plays – followed by re-entries at the next cross each time.  

    Fruit Juice/Angel – I thought you were branching out.  cheeky

    AAPL/Sn0 – Amazing near me (NY/NJ) – so many AAPL stores and almost always busy yet their customer service is fantastic – always a pleasure to go in there, even if I'm walking in with something that doesn't work.  

    ISIL/Jrom – Yes, they are evil bastards and that was an exaggeration (poetic license) but it's the same conditions of poverty and wealth disparity that breed this sort of behavior.  At one point, this country chose to address these conditions at their roots with the Peace Corp and through the UN, that's been one of our biggest policy mistakes of the last couple of decades – allowing things to drift into chaos.  Still, your point is well taken, that was an unfair comparison.

    Indexes/Lunar – My charts say today is Monday, so who cares what happens today?  On the whole, we're about half retraced from a 3% drop (from 0.5% to to -3% to -1% now) but the time it took to claw back up here doesn't make me think we have the kinetic energy required to punch through the prior highs on our next attempt.  We'll watch the Nas and see what happens – if it pops, then we can all pop but, so far, it's been driven by just a few stocks:

    You're welcome Pwright.  

    BATS/Diamond – Yet another thing to worry about.  That's a great flaw in people's plans who think they are going to be able to adjust on a market drop – if this market has a shocking fall, these electronic systems might flake out on us (not to mention broker platforms) and, without specialists, it will be very hard to put trades through during a major crash.  

    FAS/QC – We did a 1/2 sale in the STP on Thursday of the Sept $100 calls at $3.10, now $3.70.

    Oil/Angel – I think we were lucky to get .20 out of it.  

  94. News:

    A third of people have zero saved for retirement

    More than a third of people in the U.S. have nothing saved, a survey from Bankrate.com shows. But there’s no time like the present to start.

    Read more: http://www.cnbc.com/id/101926802

    Sent from the CNBC app. Available for iPhone
    and iPad

  95. News:

    The man who would remake India: A 90-day scorecard

    India elected Narendra Modi as its prime minister this year on a pro-business agenda that addresses taxes and inflation. Here’s what he’s done so far.

    Read more: http://www.cnbc.com/id/101927160

    Sent from the CNBC app. Available for iPhone
    and iPad

  96. News:

    Royally robbed: Heist on prince’s convoy nets $335K

    Armed robbers attacked a Saudi Arabian prince’s convoy in Paris, taking around $335,000 in cash and some sensitive documents.

    Read more: http://www.cnbc.com/id/101926519

    Sent from the CNBC app. Available for iPhone
    and iPad

  97. News:

    Take the wheel please, I’m done driving

    According to Bob Lutz, most vehicles will be nondescript people carriers that are self-driving.

    Read more: http://www.cnbc.com/id/101913796

    Sent from the CNBC app. Available for iPhone
    and iPad

  98. News:

    No slowing down for Disney as $90 crossed

    01:35 PM ET · DIS

    • Shares of Disney (DIS +0.9%) cross over the $90 level for the first time as investors continue to bet on the long-term potential of the company’s franchises.
    • A new line of thought on Disney is that the SEC Network property has been undervalued by some analysts.
    • The SEC Network is already off to a much stronger start than either the Big 10 Network or Pac-12 Networks, and is likely to improve on its +$1 per subscriber carriage fee rate with pay-TV operators as Disney pushes sports bundles.

  99. News:

    Carney: Legal victory of little use to GSE owners

    01:23 PM ET · FNMA

    • Assume, says John Carney, Bill Ackman and other investment managers win their legal battle against the government over Fannie Mae (OTCQB:FNMA -1%) and Freddie Mac (OTCQB:FMCC -0.8%). At that point, we go back to the bailout agreements under which both would still be obligated to pay a 10% dividend. Also, both would need to pay a commitment fee of, say, one-half to one percent, an amount they would struggle to be able to afford.
    • The result is the two would have an even tougher time building a capital buffer, meaning a time frame of years before their earnings power could accrue to holders of either the preferred or common stock.
    • Previously: Carney: Fannie and Freddie investors should surrender

  100. News:

    Hong Kong growth slows as tourism from Mainland slows

    12:55 PM ET · EWH

    • Hong Kong street demonstrations against Beijing have become a regular occurrence, and there’s evidence it’s hurting the economy, with the Hong Kong government reporting this weekend reporting a quarterly decline in GDP and cutting its full-year forecast to 2-3% growth from 3-4%.
    • Teams from Detusche, Capital Economics, and BAML have also slashed estimates, with BAML noting slowing services exports and declining growth in visitors from the Mainland.
    • The business of Hong Kong is business though, and this weekend, tens of thousands of people took to the street to protest, not Beijing, but threats against the financial district by Occupy Central should 2017 elections not meet what it deems to be international standards.
    • EWH +0.3%

  101. News:

    Kandi +5.8% after announcing Shanghai EV deliveries

    12:44 PM ET · KNDI

    • Kandi (NASDAQ:KNDI) has delivered 208 EVs for the launch of a Shanghai car-sharing program. The cars were sent to rental stations within Shanghai’s Jinshan district for immediate use.
    • Kandi previously announced plans to offer EVs for car-sharing programs in Shanghai, Beijins, and Chengdu, to go with its existing efforts in Huangzhou. The company owns an indirect 9.5% stake in ZZY, the operator of the Shanghai program.

  102. ivan_s

    CBI/Phil – 55/65 BCS + short 50 put. What do you think? Thanks!

  103. rustle123

    iPhone pics/Phil

    http://www.tmz.com/2014/08/15/apple-iphone-6-pics-photos-leak-leaked/

    I'm excited to get the bigger 5.5" screen with 128gb of memory.

  104. News:

    Vehicle stocks from snowmobiles to motorcycles show strength

    12:41 PM ET · WGO

    • Shares of Winnebago (WGO +5.8%) trade higher on what’s been a broad rally in vehicle manufacturer stocks off of a mix of positive economic news for the industry.
    • Navistar (NAV +4.7%), Arctic Cat (ACAT +4.4%), Polaris (PII +2.1%), and Spartan Motors (SPAR +2.4%) are also showing gains.
    • Of the major automobile manufacturers, General Motors (GM +1.7%) is showing the most strength.
    • Shares of Harley-Davidson (HOG +1.2%) aren’t stuck in neutral either.

  105. News:

    Higher margins should bring share gains for GE, Credit Suisse says

    12:23 PM ET · GE

    • General Electric (GE +1.4%) hits $26 after Credit Suisse reinstates coverage with an Outperform rating and $30 price target, which looks for GE’s industrial margin expansion to accelerate in 2015.
    • The firm thinks the current GE share price implies a mid-teens 2016 P/E multiple for the industrial businesses, which looks cheap given the high share of profits accruing from aftermarket (80%-90%); by that time, “services/AM businesses should/will be valued more highly than cyclical assets” after GE’s segment profits barely declined during the last downturn.

  106. Winston

    Winston port at ATH.

    Top 5 mega winners: AAPL, PCLN, GS, CAT, BA

    Second tier outperformers: ABX, TSLA, VLO, MON, SLB

    Bottom 5 inglorious suckers: CLF, RIG, BTU, TITN, HOV (s**t everyone a Phil fave @*!!!??), having said that all repairable through rolls and various adjustments. 

    Credit to Phil for much sane advice on all the rest of the positions over time.

    News still ignored. 

    Discussions, recommendations etc. related to futures ignored – the devil's work.

    Debates related to oil tuned out.

    American political diatribes simply go over my head (but what can we expect from a country that made that choice all those years ago.

    The geopolitical analysis and insights leaves me perplexed.

    But goodness me, Phil can certainly pick winning trades!!!!!!!!!!!!!!!!!!!

  107. Phil

    The CEO of Starwood just made a really good point on Bloomberg. He said that 30% of his profits come from just 2% of his guests.  That's a great example of the power of the top 1%.  These hotels exist pretty much to serve them, your business is incidental if you are not in the $3,000/night suites.  That's the way things are going Worlwide – even the top 10-2% is getting squeezed out by the top 1-0.00001%.

  108. mrmocha

    TSLA – unattractive candle today, could it be the double top we (at least Jabo and I) dream about?

  109. stjeanluc

    Bomb shelters / Phil – The problem is that when the market tops off, most people are 100% invested and stay that way on the way down so when we bottom they have no buying power to add to their positions. No matter what you think of TA, there are strong signs that a market is about to take a bad turn like moving averages for example. Back in 2011 (can't believe it's been that long) I wrote a post about some strategies:

    http://www.philstockworld.com/2011/10/06/timing-the-market-2/

    They will keep you out of the biggest drops. So when you get one of these big signals, lighten up and take some profits on your biggest winners! Then you have buying power when you get a buy signal. And then again, the buy signals don't have to be perfect since you setup trades that will double or better in between these crashes…

  110. stjeanluc

    And where we stand with the method I talk about in the post:

  111. rperi

    Phil I would love your current thoughts on WU.  I have been playing them as a buy-write strategy to the tune of 30% or so for the last year and a half, but they are approaching $18 again and I am skeptical to get back in.  Can I trust the 50 dma at arounf $17 or should I be wary of another drop to the 200 dma of $16.50?

    Thanks!

  112. edro00

    /CL spreads – last 2 days of trading, tomorrow and Wednesday settle as stated below.  If I read this correctly, the front month will drop a lot.  Olease comment if you have had experience with this.

    Thanks

    from CME:

     Settlement on Last Two Trading Days of the Front Month
    On the day before the front month contract expires, the front and second months are settled according to the following procedure:
    Tier 1: On the day before the front month contract expires, the front and second months settle to the VWAP of the outright CME Globex trades executed between 14:28:00 and 14:30:00 ET, rounded to the nearest tradable tick. The next five months will settle based on the same procedures mentioned above.
    Tier 2: On the day of expiration, the front (expiring) month will settle based on the VWAP of the outright CME Globex trades executed between 14:00:00 and 14:30:00 ET, and the second month will settle based on the VWAP of the outright CME Globex trades executed between 14:28:00 and 14:30:00 ET. The next five months will settle based on the same procedures mentioned above.
    Tier 3: In the absence of outright or spread trades during this period, the settlement price will be the best bid or best ask in the expiring contract at 14:30:00 ET, whichever is closer to the last trade price. If there is not a bid/ask pair in the expiring contract at that time, the settlement price will be the best bid or ask implied by the bid/ask in the spread between the front (expiring) and second month contracts at 14:30:00 ET, whichever is closer to the last outright trade price in the front (expiring) contract.

  113. Phil

    CBI/Ivan – Well, that would be a lot more risky than the trade I do like (just selling puts).  It's fine if you are gung-ho bullish on them but I wouldn't be surprised to see them 10% lower if the markets correct in between – just make sure you are mentally prepared for that. 

    6/Rustle – Wow, based on that picture… er… nothing..

    Congrats Winston, very nice.  Now the question is whether you are prepared to lighten up on AAPL, PCLN, GS, CAT and BA and put more into CLF, RIG, BTU, TITN and HOV?  This is one of the reasons we diversify, so we can rotate into our underperformers and out of our outperformers over time.  Actually TITN has been a disappointment and no reason to think it till be great long-term but the other 4 I certainly like over the next 24 months – as long as the economy doesn't collapse, of course.  

    TSLA/MrM – Did we finally find a point at which people realize how silly it is?  

    Submitted on 2014/08/07 at 11:14 am

    TSLA/Rustle – Good spot ($255) to go short.  Prior high was $265 so figure a rejection there means selling Sept $260s for $11.75 is kind of a fun play – but VERY DANGEROUS

    Submitted on 2014/08/13 at 3:52 pm

    TSLA/Diamond – Looks like a double top to me because the forward p/e (if you buy that BS) is pushing 80 here, and that's for end of 2015.  Last time they tested $265, they plunged $80 (30%).  If they are getting stronger, the bottom of this channel should be 15% down at $225 but that would break the trend line the chart people are watching but it also happens to be the 50 dma at the moment.  

    Submitted on 2014/08/14 at 3:37 pm

    • TSLA – Our underperformer.  As it's just 2 contracts and as I feel strongly about it, how about we sell our 2016 $220 calls for $72 ($14,400) and roll the -$14,000(ish) of both the short 2016 $300s and the short Sept $200s to 7 short Jan $275 calls at $21 ($14,700).  If TOS goes over $265, we can cover with 10 long 2016 $300/360 bull call spreads at $16 ($16,000) but I'd feel better with the naked short calls.  

    That is a good post, StJ – people should take heed.   Winston!!! 

    WU/Rperi – I loved his earlier work but, after Red Cliff, he made Reign of Assassins and the Crossing – neither of which were at the top of his game.  Hopefully his next film will find more commercial success.  If by chance, you are talking about the much less popular Western Union, I have to admit I have no idea how or why those guys still make money!   The gist of it seems to be money transfers in 2nd and 3rd World countries and, like check-cashing – it's a fantastic business if you don't mind preying on the poor.  Last earnings showed profits falling but no one seemed to care and they bounced right back, mostly on news of a push into Africa.  So, on the whole, I think they are fairly priced at $17.50 and, if I were going to play them, I'd sell the 2016 $15 puts for $1.15 and buy the $17 calls for $1.95 and only sell the $20 calls (now 0.85) if they fail to hold $17.50, otherwise, just see if they can pop over $18 on this run and make new highs ($19 is next resistance).  

    Oil/Edro – You can never count on it but, until they get the front-month contracts down to 25,000 (25Mb) or less, there's usually persistent downward pressure.  My theory is more so this month because the inventories are so full that they have nowhere to put the oil and we're making more and more every day:

    Chart: U.S. crude oil production by crude type

  114. Phil

    In the $25KP, I want to buy 5 of the TQQQ Sept $86/80 bear put spreads at $2.30 ($1,150) and we're going to leave the QQQ puts through tomorrow and hope for the best.  The upside on the TQQQ is $3,000, so, if right, that will get back our lost QQQ money.  In the STP, I'd like to get 20 of these for $4,600, which pay $12,000 if the Nas heads down not very much.  

  115. dforster2

    Phil,
    For a smaller port like say 12k, is the TQQQ hedge still a good idea? I did buy the QQQ last week but about half what you did in the 25kp.

  116. Phil

    TQQQ/Dforst – Well, keep in the mind that, in a small portfolio, it's more of a bet than a hedge – so treat it accordingly.  All we're doing is pressing the bet we made in the $25KP, it's like a roll but to another position with the same intent.  

  117. Winston

    Phil/Lighten up; Therein lies the rub. Short answer: 'No friggin' way!'

    I do try and digest the key lessons. I've got dollops of cash. Access to significant buying power. On my top 5 I am short for 2014, mega long for 2015 (and the way that spreads work you know only too well that profits are backend loaded). If markets pause or go down 20% it's a good outcome (pause and it's Xmas 10x over)  – confident that 2015 positions can be rolled down financed by the short 2014 positions. So far I avoided putting on the various flavours of index hedges (2X & 3X included) which for anyone who actually tried this stuff this year in an advancing market would have got creamed month after month – and a hedging strategy on indices would have demanded that one consistently placed these trades month after month.

    You made a gutsy call earlier this year on cashing out the virtual portfolios. You were wise enough to realise that was an early call and got back in later on. My personal experiences in managing a real money portfolio are that the dimensions of decision making on cashing out in an up market take on much more significance. For a virtual portfolio, call it wrong and a couple of mea culpas and everything's back to normal. Get it right and you're a virtual hero. For the owners of real money portfolios, big screw ups and it's a "Honey, there's something I need to tell you about our retirement plans….?"

    However, what is priceless on PSW is the diverse points of view – I know when I get ahead of myself my exuberance needs reining in, and when I get too cautious I need to stick my head above the parapets.

    StJ is a superstar – you should disclose his value to PSW in your next submission to the SEC!!! 

  118. stjeanluc

    Timing / Phil – Thanks. And looking at how the system works, you would have lightened up back in September 2011 when my article was written and gotten back in in January 2012. And since then we are are up 50% so we didn't miss these 100 or so points at the end of 2011! 

    In the meantime, no reason not to cash in winners at any time, but no reason to panic out of long term positions either until we get a strong bearish signal. And I would be cautious adding now as clearly a 50% move in 3 years calls for a pause!

    And thanks Winston!

  119. stjeanluc

    And BTW, I go back to the quote I posted last week and I paraphrase:

    If you have decades of market experience, you can rely on your instincts to time the market, otherwise, try to stick to some methodology!

  120. scottmi

    Cashing winners – Puplava had a good discussion of the costs after taxes of selling then buying rather than holding through in last weekend's podcast…

    http://www.financialsense.com/financial-sense-newshour/big-picture/2014/16/08/on-the-record

  121. stjeanluc

    And here was the follow up article to that timing the market article where I backtested the method with various instruments:

    http://www.philstockworld.com/2011/11/19/timing-the-market-%E2%80%93-backtesting-the-mehods-part-1/

    I actually have more data available on TOS now and the 3x ETF have been around longer so maybe time to update the results. Need more time….

  122. Phil

    I'm not advocating a full cash-out.  We did that in the Income Portfolio as an experiment and it didn't work as well as intended.  With the LTP, we had way too many winners to leave on the table and the STP wasn't doing as well as we'd hoped so we rebalanced with great success.  Nothing wrong with that.  I am saying that, if you have outperformers, you do need to consider what a reversion to the norm would mean to your portfolio.  If you are comfortably balanced, like our current LTP/STP then no problem.

    Good point, StJ.  

    So we have Dow 16,828, S&P 1,967, Nas 4,505, NYSE 10,879 and RUT 1,154 and the July highs were 17,151, 1,991, 4,485, 11,105 and 1,213.  RUT's 50 dma is 1,160, NYSE is 10,900 and Dow is 1,6850, so those are our key lines for the rest of the week.  

    Dow is off 1.9%, S&P -1.2%, Nas +0.5%, NYSE -2% and RUT -4.8% and the Dollar was 80 in early July, now 81.60 so 2% there accounts for the entire dip in the main indexes.  That means we're still in a very strong market!

  123. Burrben

    Phil, why did you chose to go with a bear put spread on TQQQ rather than a bull call spread on SQQQ?

    They should be exactly the same trade since SQQQ is the inverse of TQQQ right?  What did you see that made you chose this path?

  124. JPH1121

    Burrben / S versus T

    I think I'm personally going to 100% stick with puts on TQQQ versus calls on SQQQ.  With the calls, you have decay working against you as the contracts are rolled and fees are assessed.  With puts, they are working for you.  

  125. Phil

    I didn't like the relative premiums we'd pay for SQQQ and TQQQ, since it's really popped lately, should have a slightly easier time giving us a 100% play than SQQQ.  Also, we already have an SQQQ in the STP so I thought it would be interesting to test the two against each other.  

    And what JPH said re. longer-term plays as the decay becomes a factor in your favor.  

    Oil finishing at $93.84 and I still like it long over $93.75.  /YM 16,799 and I still prefer the short there and /SI $19.67 on the button after testing $19.75, so mission accomplished on that one.  There's no need to stick with the Dow short if they pop over as /NKD is 15,430 and would make a nice short at 15,500 so that would be the fresh horse if the overnights are strong.  

    We'll do a Webinar tomorrow (1pm, EST) and look at some of those Futures trades. 

  126. stjeanluc

    Hedges / Winston – I agree with you, I am not big on hedges on the face of such a strong market. Especially if you have positions like short puts made to withstand a 10-20% downturn. Looking at the chart I posted earlier, once we got the bearish signal in 2007, it took some 15 months to get to the bottom! Many opportunities to lighten up then or buy hedges, whichever is your preferred method. All this talks of black swan make for good press, but we didn't lose 50% in one day in the face of the worse crisis in 100 years! Yes, there could be a catastrophic nuclear attack on NYC and other places. But we might have other worries than the value of our hedges then!

  127. stjeanluc

    Commodities – Not trading well:

    http://yahoofinancecontributors.tumblr.com/post/95105849486/kimblecharting-commodities-time-to-catch-a

    kimblecharting:Commodities-Time To Catch A Falling Knife?Commodities ETF DBC has been a little soft over the past seven weeks, losing around 7% in price (-2% YTD), while the S&P 500 has been flat (lower chart).The top chart is the TR Continuous Index, which finds itself testing dual support, one of them being a 14-year rising support line.  This index has been soft for the past four years, while the stock market has continued to rally. In the big picture, what happens here could be very important for commodities overall direction in the months to come. Some believe in the idea of buying low and selling higher. Is now the time to “Catch A Falling Commodities Index???” 

    Commodities ETF DBC has been a little soft over the past seven weeks, losing around 7% in price (-2% YTD), while the S&P 500 has been flat (lower chart).

    The top chart is the TR Continuous Index, which finds itself testing dual support, one of them being a 14-year rising support line.  

    This index has been soft for the past four years, while the stock market has continued to rally. In the big picture, what happens here could be very important for commodities overall direction in the months to come. 

    My own charts of the various commodities indices (not just DBC) are just as bad!

  128. Burrben

    Phil –  Great call on /SI.  I took the leap and bought it this morn.  Thank you!

     

    Do you like WAG?  I know you hate SA, but I like this author.  

    http://seekingalpha.com/article/2398355-walgreen-a-high-dividend-growth-champion-to-consider?isDirectRoadblock=false&uprof=11

    I was thinking about selling the Jan16 57.5's for 5.30 if you like the company.

  129. Burrben

    PS:  On /SI I tried a new kind of "stop" with IB.  I used their alerting system to set a price parameter on the upper and lower side.  Then if that price parameter was triggered, it sent a order to sell or buy /SI with a 0.01 offset to mid.  

    I know you guys hate "stop" and hidden orders, but I think this might be a "automated" way to build in some protection/profit taking into futures that move slowly.  Since this alert isn't anywhere in the market…I can hope.  Although /SI went way quicker than I thought.

    https://www.interactivebrokers.com/en/software/tws/usersguidebook/realtimeactivitymonitoring/assign_order_action_to_alerts.htm

    Just my 2c.

  130. stjeanluc

    Pretty serious moves – NASDAQ making new highs and S&P punching through its 50 DMA like butter. The other 3 indices knocking against that same 50 DMA. Big tests in the coming days. Most of the economic numbers come in Wednesday and Thursday so that could be the trigger to momentum either way.

    We'll see if that VIX indicator signals another big bull run – so far, these big VIX spikes have been buying opportunities or probably more like put premium sellling opportunities:

  131. deano

    Fed buys scheduled for this week should keep the fuel on the fire, Thursday is the biggest day, so perhaps a strong up day, combined with some dovish comments and we're talking about record highs once again.

    Mon, Aug 18, 2014

    Tue, Aug 19, 2014

    Outright Treasury Coupon Purchases

    02/15/2036 – 08/15/2044

    $0.95 – $1.15 billion

    Tue, Aug 19, 2014

    Wed, Aug 20, 2014

    Outright Treasury Coupon Purchases

    11/15/2024 – 02/15/2031

    $0.25 – $0.35 billion

    Thu, Aug 21, 2014

    Fri, Aug 22, 2014

    Outright Treasury Coupon Purchases

    11/15/2021 – 08/15/2024

    $2.05 – $2.50 billion

  132. Winston

    StJ/Hedges: I am with you on that one. I much prefer a direct hedge on the underlying – as you say, implicit in the buy/write financed by a put. It was Phil's idea (one of his best) to short Jan 2015 calls to cover Jan 2016 buy/writes. The caveat highlighted by Phil that this can withstand everything but a strong upward move during 2014. Even though that came to pass, with layering on additional spreads and judicious front month put and call selling even the most difficult position (AMGN) can be managed.

    I'll post some of top winning positions during trading Tuesday, to highlight how closing out 'winners' is not as obvious as it would seem. Deep ITM spreads for Jan 2016 are still loaded with premium on the short leg, as are the short Jan 2016 puts. The big profits are made (is that greed talking?), as Phil rightly points out, by holding to expiration. But that requires patience to hold, and foresight to adjust when the position goes against you. But I'll throw up an example which I think exemplifies the situation. The following is a TSLA trade outlined by Phil at the end of December 2013. I placed the trade on 12/27/13 when TSLA was $151. The trade was buy Jan16 160/240 @$20, financed by the sale of the Jan 16 $120 put @$30. I think Phil's combo was slightly different, but I managed to place for a $10 credit (pretty interesting I thought at the time – but in all honesty I thought at least if the position expires worthless I get $10 for my trouble). Phil thought a realistic price for TSLA was $180 in Jan 16.

    Fast forward to today, TSLA is @$260, the $80 spread is deep ITM and can be closed for $50 – so halfway there in terms of max profit, and the $120 put can be sold for $4. 

    I am now getting dangerously close to answering my own question – damn you Phil!, Winston why the hell wouldn't you close it out 17 months ahead of time with that kind of profit.

    But my brain thinks in another way, or should I say the devil in my shoulder whispers into my ear – "don't settle for that – hold on and think how much more you can make!". Another voice says "if you close out now, where are you going to find that premium to sell without taking on a lot more risk?"

    Phil's right, being right is what he does best (and where would we be without that quality) – but how does one balance closing out winners and seeking fresh horses when the horse you are already riding, is giving you a double handful and pulling away from the rest of the field, with a doping investigation on some of the other horses in the field a more than likely outcome. I jest, but something to ponder.

     

  133. News:

    From Bloomberg, Aug 19, 2014, 3:22:11 AM


    Aug. 18 (Bloomberg) — Binay Chandgothia, a Hong Kong-based portfolio manager at Principal Global Investors, talks about the outlook for China’s economy and stock market.
    He speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    European and Asian shares rose with
    U.S. equity-index futures (SPA) as global geopolitical concerns eased
    amid a rally in technology stocks. Australian bonds followed
    Treasuries lower as the New Zealand dollar weakened, while crude
    oil advanced with metals.

    To read the entire article, go to http://bloom.bg/1tgmPxr

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8

  134. News:

    From Bloomberg, Aug 19, 2014, 4:38:36 AM

    Aug. 18 (Bloomberg) — Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce, talks about Bank of England policy, and the U.K. and U.S. economies.
    He speaks with Anna Edwards on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)

    U.K. inflation cooled more than economists forecast in July, giving the Bank of England room to keep its key interest rate at a record-low.

    To read the entire article, go to http://bloom.bg/YsY6vh

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8

  135. News:

    From Bloomberg, Aug 18, 2014, 6:22:01 PM

    Palestinians flee their destroyed neighbourhood in the northern Gaza Strip city of Beit Hanun, on August 18, 2014. Photographer: Thomas Coex/AFP/Getty Images

    Israel and Palestinian militants agreed to extend their five-day truce for 24 hours in another attempt to reach a long-term accord aimed at halting the violence that has devastated Gaza, negotiators said.

    To read the entire article, go to http://bloom.bg/YqSbqz

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8

  136. News:

    From Bloomberg, Aug 19, 2014, 12:00:01 AM


    Aug. 18 (Bloomberg) — U.S. President Barack Obama speaks about his decision to send Attorney General Eric Holder to Ferguson, Missouri, to meet with federal and local authorities where the shooting of an unarmed black teenager by police has sparked days of protests and violence.
    Obama, speaking at the White House, also discusses U.S. airstrikes in Iraq. against Islamic State militants. (Source: Bloomberg)

    President Barack Obama said the U.S. will continue “limited” airstrikes against Islamic State militants, which have stopped their advance on the city of Erbil and helped Iraqi and Kurdish forces recapture a key dam at Mosul.

    To read the entire article, go to http://bloom.bg/1qloP3r

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8

  137. News:

    From Bloomberg, Aug 18, 2014, 7:01:00 PM

    Workers operate on the assembly line that makes photovoltaic cells, the main energy generating component of a solar panel, at the Suntech Power Holdings Co. factory in Wuxi, China. Photographer: Qilai Shen/Bloomberg

    The solar industry is facing a looming shortage of photovoltaic panels, reversing a two-year slump triggered by a global glut.

    To read the entire article, go to http://bloom.bg/1tgpkQf

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8

  138. News:

    From Bloomberg, Aug 19, 2014, 12:01:00 AM

    Microsoft Corp. (MSFT)’s Azure cloud-computing service, a critical part of Chief Executive Officer
    Satya Nadella’s plan to remake the software company, experienced
    a major global outage yesterday that lasted for around five
    hours.

    To read the entire article, go to http://bloom.bg/1tg4mBd

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  139. News:

    From Bloomberg, Aug 19, 2014, 4:23:27 AM

    Commonwealth Bank of Australia is
    losing faith in the ability of the local dollar to extend its
    world-beating gains this year.

    To read the entire article, go to http://bloom.bg/1oMulk1

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  140. News:

    From Bloomberg, Aug 19, 2014, 12:01:03 AM


    Meager improvements since 2009 have barely kept up with a similarly tepid pace of inflation, raising the real value of compensation per hour by only 0.5 percent. Photographer: Ty Wright/Bloomberg

    Call it the no-raises recovery: Five years of economic expansion have done almost nothing to boost paychecks for typical American workers while the rich have gotten richer.

    To read the entire article, go to http://bloom.bg/1kQrOob

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  141. News:

    From Bloomberg, Aug 19, 2014, 3:57:07 AM


    Aug. 18 (Bloomberg) — U.S. President Barack Obama speaks about his decision to send Attorney General Eric Holder to Ferguson, Missouri, to meet with federal and local authorities where the shooting of an unarmed black teenager by police has sparked days of protests and violence.
    Obama, speaking at the White House, also discusses U.S. airstrikes in Iraq. against Islamic State militants. (Source: Bloomberg)

    Police fired stun grenades and tear
    gas at protesters in a St. Louis suburb rocked by violence after
    police shot and killed an unarmed black teen 10 days ago.

    To read the entire article, go to http://bloom.bg/1sQxp0n

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  142. News:

    From Bloomberg, Aug 19, 2014, 1:34:11 AM


    Titanic replica press conference. Australian billionaire Clive Palmer during a press conference outlining his plans to build a replica of the Titanic, at The Ritz hotel in central London. Picture date: Saturday March 2, 2013. Photo credit should read: Yui Mok/PA Wire URN:15944927

    Australian mining magnate Clive Palmer, whose political party effectively holds the balance of power in the Senate, accused China of trying to take over the nation’s resources — earning a rebuke from Prime Minister Tony Abbott’s government.

    To read the entire article, go to http://bloom.bg/1tiwClJ

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  143. News:

    From Bloomberg, Aug 19, 2014, 3:48:10 AM

    The Crown Melbourne casino and entertainment complex, operated by Crown Ltd., right, stands on the southern bank of the Yarra River in Melbourne, Australia. Photographer: Carla Gottgens/Bloomberg

    Australians once rioted against Chinese migrants attracted by a 19th-century gold rush. Sydney’s sole casino now depends on the city’s Asian ties for high-rollers who provide almost a third of its sales.

    To read the entire article, go to http://bloom.bg/1sQDqu4

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  144. News:

    From Bloomberg, Aug 19, 2014, 3:06:47 AM

    Signage outside a government hospital in Freetown, Sierra Leone, on Aug. 13, 2014. Photographer: Carl de Souza/AFP via Getty Images

    The worst-ever Ebola outbreak is straining the finances of affected governments, with Sierra Leone using Treasury Bills to fund the fight against the virus as mining companies halt operations to protect workers.

    To read the entire article, go to http://bloom.bg/1tfZRXd

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  145. News:

    From Bloomberg, Aug 18, 2014, 8:02:29 PM

    Airlines should maintain services to
    Ebola-hit regions that need connections with the outside world,
    the International Air Transport Association said after more
    carriers put flights on hold.

    To read the entire article, go to http://bloom.bg/1qj4lbB

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  146. News:

    From Bloomberg, Aug 19, 2014, 4:05:29 AM


    German Foreign Minister Frank-Walter Steinmeier yesterday called the discussions, which also included France’s Laurent Fabius, “a difficult conversation.” Photographer: Sean Gallup/Getty Images

    The Red Cross is making progress on details of a safe-passage plan for a Russian aid convoy intended for southeast Ukraine, after four-way talks on a halt to the fighting reached an impasse in Berlin.

    To read the entire article, go to http://bloom.bg/1qiX4bO

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  147. News:

    Watch this video at http://bloom.bg/1sPYktl

    Price Wars: Why Taco Bell Is Introducing a $1 Menu

    Aug. 18: Technomic’s Darren Tristano Taco Bell’s new Dollar Cravings menu.

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  148. News:

    Watch this video at http://bloom.bg/1sPYktl

    Price Wars: Why Taco Bell Is Introducing a $1 Menu

    Aug. 18: Technomic’s Darren Tristano Taco Bell’s new Dollar Cravings menu.

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  149. News:

    Watch this video at http://bloom.bg/1Atowe3

    Super-Fast Robot Arm Can Catch Whatever You Throw At It

    Aug. 18 (Bloomberg) — The list of things robots can’t do is getting shorter. An ultra-fast robotic arm, developed by researchers at École Polytechnique Fédérale de Lausanne in Switzerland, can catch flying objects with complex shapes and trajectories, out of midair in less than five hundredths of a second.

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  150. News:

    From Bloomberg, Aug 19, 2014, 3:44:49 AM


    Andrew Mackenzie, Chief Executive Officer of BHP Billiton Ltd. Photographer: Jeremy Piper/Bloomberg

    BHP Billiton Ltd (BHP) announced a long-awaited split of the world’s largest mining company, separating
    off aluminum to coal assets from Australia to South Africa in
    potentially the industry’s biggest spinoff.

    To read the entire article, go to http://bloom.bg/YsHXGq

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  151. News:

    From Bloomberg, Aug 19, 2014, 4:45:18 AM

    Bank of China Ltd. reported its
    slowest profit growth since the first quarter of 2013 after the
    lender set aside more money to cover costs tied to bad loans.

    To read the entire article, go to http://bloom.bg/1thv4t4

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  152. News:

    From Bloomberg, Aug 19, 2014, 4:35:12 AM

    Sweden’s central bank is ready to
    lower its main interest rate again, after delivering a surprise
    half-point cut last month, should the inflation outlook
    deteriorate further, Governor Stefan Ingves said.

    To read the entire article, go to http://bloom.bg/1pHaPVj

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  153. News:

    From Bloomberg, Aug 19, 2014, 3:23:07 AM

    Pacific Investment Management Co. (PCARX)
    has been snapping up some of the higher-rated junk bonds dumped
    by speculative-grade debt managers amid the recent exodus from
    funds.

    To read the entire article, go to http://bloom.bg/1tiRRDS

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  154. News:

    From Bloomberg, Aug 18, 2014, 7:01:00 PM

    At 11:15 a.m. on July 29, Irish
    property developer Michael O’Flynn realized that Blackstone
    Group LP (BX)
    was trying to gain control of his real estate empire,
    which includes the country’s tallest residential tower.

    To read the entire article, go to http://bloom.bg/1tgmmev

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  155. News:

    From Bloomberg, Aug 19, 2014, 3:29:48 AM

    Aug. 19 (Bloomberg) — MGM Resorts International has scouted the world’s biggest fish market as a potential site for the casino resort it wants to build in Japan, according to two people familiar with the company’s plans. John Dawson has more on “First Up.” (Source: Bloomberg)

    MGM Resorts International (MGM) has
    scouted the world’s biggest fish market as a potential site for
    the casino resort it wants to build in Japan, according to two
    people familiar with the company’s plans.

    To read the entire article, go to http://bloom.bg/1qjTlKX

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  156. News:

    From Bloomberg, Aug 14, 2014, 10:27:16 PM


    A residence stands on a street known as “Mansion Street” in the eastern suburb of Bellevue Hill in Sydney, Australia. Photographer: Jack Atley/Bloomberg

    Billionaire Lang Walker, founder of one of Australia’s largest closely held developers, said that home prices in Sydney and Melbourne have climbed too much, and he is turning his focus to his investment in Malaysia.

    To read the entire article, go to http://bloom.bg/1pvxEv7

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  157. News:

    Watch this video at http://bloom.bg/1sP7gyV

    Bank Rules Should Be `Balanced, Nuanced’: Keating

    Aug. 18: Frank Keating, president and chief executive officer of the American Bankers Association, talks about banking regulation and consumer lending standards.

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  158. News:

    Watch this video at http://bloom.bg/1Arv9O2

    What Will Janet Yellen Say at Jackson Hole?

    Aug. 18: Michael McKee previews the Fed’s meeting in Jackson Hole, Wyoming.

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  159. News:

    Watch this video at http://bloom.bg/1sPrqZQ

    Are Investors Shrugging Off Global Crises?

    Aug. 18: S&P Capital IQ Global Markets Intelligence Vice President Robert Keiser discusses the markets and how global crises are affecting investor confidence.

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  160. News:

    Watch this video at http://bloom.bg/1sRlgZa

    Euro Seen Weakening to $1.25 Over Year, Barth Says

    Aug. 19 (Bloomberg) — Marvin Barth, head of European foreign-exchange strategy at Barclays, discusses the annual central bankers conference in Jackson Hole, Wyoming, and his currency recommendations.
    He speaks with Mark Barton and Manus Cranny on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

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  161. News:

    From Bloomberg, Aug 19, 2014, 3:56:51 AM


    Aug. 19 (Bloomberg) — Marvin Barth, head of European foreign-exchange strategy at Barclays, discusses the annual central bankers conference in Jackson Hole, Wyoming, and his currency recommendations.
    He speaks with Mark Barton and Manus Cranny on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    The Swiss National Bank is seen
    maintaining its cap on the franc for at least another two years
    as the economic revival in the neighboring euro area struggles
    to gain tractions.

    To read the entire article, go to http://bloom.bg/1tiwGSt

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  162. News:

    From Bloomberg, Aug 18, 2014, 7:00:00 PM

    One hundred gram gold bars sit on a one kilogram gold bar, center, in this arranged photograph at Gold Investments Ltd. bullion dealers in London, U.K.. Photographer: Chris Ratcliffe/Bloomberg

    Gold producers opening new mines are hurting efforts to revive industry returns following the biggest price slump last year in more than three decades, according to Randgold Resources Ltd. Chief Executive Officer Mark Bristow.

    To read the entire article, go to http://bloom.bg/1tgwZhp

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  163. News:

    From Bloomberg, Aug 18, 2014, 6:28:09 PM

    It’s easier to get a tee time when everyone else is in jail.                    

    Today the Securities and Exchange Commission and the U.S. Attorney for Massachusetts brought insider trading charges against two men who allegedly shared inside information when they played together on the same co-ed softball team. No, of course I’m kidding, come on, they were golf buddies. They’re always golf buddies!

    To read the entire article, go to http://bv.ms/1pBvjPa

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  164. News:

    From Bloomberg, Aug 18, 2014, 1:24:18 PM

    Sit back, relax and hope the cabin air isn’t harming your health.

    Can airplane cabin air kill? The question has nagged at airplane manufacturers, crew and passengers ever since the jet age shut us into pressurized metal tubes. As far back as 1955, aviation engineers worried about contaminated air in plane cabins, and in 2009, Boeing settled a lawsuit brought by an American Airlines flight attendant who claimed that toxic air leaking into a 2007 flight had caused her health to fail. In the wake of that suit, Boeing insisted that “cabin air is safe to breathe.” And until recently, airlines and planemakers could legitimately claim that there wasn’t enough scientific evidence to support the accusations.

    To read the entire article, go to http://bv.ms/Xvl30X

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  165. News:

    Tuesday’s economic calendar

    12:00 AM ET

  166. News:

    PetroChina re-evaluates LNG production

    03:13 AM ET · PTR

    • PetroChina (NYSE:PTR) is re-evaluating its multi-billion-dollar push for LNG production, due to the rising cost of the gas and China’s slower growth rate that has reduced demand.
    • An anti-corruption probe of PetroChina’s top executives also adds to the uncertainty of the company’s business strategy.
    • PetroChina shut two loss-making gas liquefaction plants in the past month, with neither plant having a clear restart date.

  167. News:

    TV Broadcasters file lawsuit against FCC airwave auction

    02:50 AM ET · CMCSA

    • The National Association of Broadcasters has filed a lawsuit against the FCC’s plans to auction off airwaves stating that the plan will incur expense and harm coverage of TV stations.
    • The auction is set to take place next year, and will allow TV stations to take bids and sell their airwaves to meet the surging demand of mobile broadband.
    • The new lawsuit challenges the regulations stating that it doesn’t fully protect broadcasters that don’t participate in the auction.
    • Broadcasters say that they should not be forced into having their coverage area reduced or to pay out of pocket for the expense of moving their broadcast signal to a new frequency.
    • Relevant tickers: CMCSA, TWC, ALLT, LVLT, CCOI, FTR, WIN, CTL, CHTR, CVC, DISH

  168. News:

    Google roundup: YouTube music, kids, AdWords, e-commerce

    01:07 AM ET · GOOG

    • Android Police reports YouTube’s (NASDAQ:GOOG) anticipated subscription music service will be called YouTube Music Key, come bundled with Google’s All Access music service (to be renamed Google Play Music Key), and cost $10/month.
    • As previously reported, the service provides access to both YouTube music videos to go with audio-only listening. A screenshot suggests 20M+ songs will be included. No word on the launch date, or on how many holdout indie labels (previous) have signed up.
    • The WSJ and The Information report Google plans to officially offer accounts to kids under 13 for the first time. Parents would reportedly have the ability to set up accounts and establish controls,and a kids-friendly version of YouTube would also be offered. Privacy laws place strict limits on marketing to kids.
    • Google has updated its mainstay AdWords search ad platform to allow advertisers to track when an ad leads to a phone call. The feature is of particular value for mobile and local advertising, where marketers are often looking to enable a phone call rather than an online order/sign-up.
    • The WSJ takes a look at how Google’s efforts to offer vertical search results in fields such as travel (previous), online retail, and local are upsetting advertisers who fear their bookings platforms are being marginalized. On former online travel exec: “All the value add is going to Google and everyone else becomes a commodity,”
    • A Google VP insists his company is simply trying to “get you the information you need as fast as possible.” Moreover, like other Google moves that have unsettled advertisers, the backlash hasn’t yet done much to affect ad spend, especially since many marketers feel Google’s dominant search share leaves them with no choice but to stay the course.

  169. News:

    Sprint launches new Family plans, aims for high-ARPU users

    Yesterday, 07:19 PM ET · S

    • After recently promising big price cuts, Sprint (NYSE:S) has launched Family Share Packs, a pricing scheme that bears a strong resemblance to AT&T and Verizon’s subsidy-free shared data plans. Unlike regular Framily plans, there’s no drop in per-line charges upon adding new members.
    • Sprint argues its pricing sharply undercuts rivals. For example, a family sharing 20GB between four lines would pay $160/month, less than the $210/month charged by AT&T and Verizon for similar plans, and the $180/month charged by T-Mobile (NYSE:TMUS) for a plan featuring 5GB/line for four lines.
    • However, Sprint fails to undercut T-Mobile among families requiring less data. With Sprint charging an extra $10/month per line to those buying a bucket smaller than 20GB, an 8GB bucket costs $170/month to a family of four, and a 4GB bucket $140/month. By contrast, a $140/month T-Mobile plan provides 12GB (3GB/line) to a family of four.
    • At the same time, Sprint is following T-Mobile’s lead in offering aggressive short-term promotions: Until the end of September, the carrier is waiving $15/month access line charges through 2015 for families buying plans with 20GB or larger buckets, and is also throwing in an extra 2GB/line.

  170. News:

    WSJ: Electrolux gains momentum in bid for GE appliances unit

    Yesterday, 06:36 PM ET · GE

    • Around the time GE was closing a deal to buy Alstom’s power business in France, the company was already discussing the possibility of selling its U.S. appliance business to Electrolux (OTC:ELUXF, OTCPK:ELUXY), and WSJ says the length of the courtship indicates the talks may be further along than thought.
    • GE’s Appliance and Lighting unit reported $381M in profit in 2013 on sales of $8.3B, making it the third-smallest of GE’s seven industrial business lines by revenue, but that also makes it a prime target for sale as GE tries to pare low-margin businesses and focus its efforts on such heavy industrial products as jet engines, power turbines and oil industry equipment.
    • LG Electronics and Samsung also are said to be in the mix of possible buyers, and Quirky Inc. reportedly has teamed up with Blackstone to work on a possible bid.

  171. News:

    After Hour Gainers / Losers

    Yesterday, 05:35 PM ET · SKH

  172. News:

    Rackspace +2.6% AH; activist reportedly ups stake (updated)

    Yesterday, 04:56 PM ET · RAX

    • The WSJ reports activist Blue Harbour Group has grown its stake in Rackspace (NYSE:RAX) to ~6.5% from the 2.5% it had at the end of Q2. The paper adds Blue Harbour has “communicated” with the Web hosting/IaaS provider, which says it’s still evaluating strategic options.
    • The report comes 4 days after Dan Loeb’s Third Point LLC disclosed it had a 7.25M-share position (good for a 5% stake) at the end of Q2.
    • Update: Blue Harbour has filed a new 13D disclosing a 6.4% stake.

  173. Phil

    Good morning!

    We're up just a bit in the Futures and Europe gapped up at the open and Asia was up but really all following our momentum, not sure that we actually have enough energy to keep going – just have to wait and see.

    Dollar popped to 81.76 but not pushing anything down yet.  

    /NKD topped out at 15,480 and back to 15,440 and I still like the Dow short, now 16,831 with /ES 1,970, /NQ 4,020 (rejected at 4,025) and /TF 1,155 so still shorting the laggard in the group since we have decent lines to key off.  

    Oil $94.27 and oil oil (/CLU4) $96.88, still a huge gap.

    You're welcome Burr.  Those stops are a good way to go, good way of hiding your intent while still keeping a cap on things. 

    WAG/Burr - I don't like SA but there are still plenty of good authors there.  My direct experience with WAG indicates they are a poorly run company with a lot of work to do.  I don't know what high dividend means when WAG pays just 1.7% though.  Sans inversion, they are simply reverting to the correct price for an unexciting stock, which is really under $50 (p/e low teens), not $60 so your sale of $57.50s for $5.30 only gets them to about the right price and I wouldn't be surprised to see them there over time ($52.20).  In short, not interesting enough for me.   

    CMG/Burr – Kind of a cult…

    Big Chart – Lower volume on the rally but what else is new?  In case no one has noticed – we are still 3 of 5 red on the Must Hold lines – that's not a reason to get more bullish!  If the rally is real (ie, going up another 20% in another year), then those lines need to go green!  If not, we need to stick to careful stock picking strategies. 

    POMO/Dean – It's not very much at all, they used to do $5Bn+ on a good day.  

    Hedges/Winston – To me, the hedges are the reason I don't mind taking the aggressive long positions, so they are necessary.  With a spread like TSLA, it really comes down to how sure you are that TSLA will hold $240 for 16 more months.  If you are 100% sure, then you have $40 coming to you and it's worth risking $40 but the less sure you are, the less appealing the risk is since we KNOW we can make 20% on $40 in dozens of ways.  

    If you feel there is any possible way TSLA can drop to $200 and endanger your $40 (including the fact that a drop like that may make you panic and take less than $40 to get out), then we're into very dangerous territory because I sure don't feel that way about IRBT or TASR or WMT or DBA or SLW or CCJ or EBAY or HOV or JDSU or KBH or PFE or RIG or PNW or TEX or ARO or WEN or WFM (our Buy List!).  

    Since I can make trades on all of those that will make 50-100% over the same period and I'd feel a lot safer in those than TSLA – that would be how I base my decision.  Remember, when in doubt…

  174. Winston

    Phil, thanks. You make very valid points – much appreciated.

  175. cj50

    THE RISE OF THE MACHINES

     

    ‘There will come a time when only 200 people in the whole world will need to work.’

    Phil Davis, Investment Guru

     

    During my teenage years I would spend hours almost every day reading books, novels and comics.  One of my favourite genres was what is defined in the English dictionary as ‘fanciful fiction based on postulated scientific discoveries’ commonly known as Science Fiction (Sci-Fi).    These visionary authors wrote stories of fiction in an environment they would ‘foresee’ as coming about sometime in the future extrapolating on scientific discoveries and their implementation within greater Society.   Sci-Fi stories were concocted from the early 1900’s and amongst their early scientific visions were personal communicators for the entire planetary population, mechanised farms including crop production completely run by machines, mechanised factories run by armies of robots, robot-machine miners, robot run health and wellness facilities, worldwide production and distribution facilities run by robots, weather control,  infinite supplies of energy and medical advances that would bring about eternal youth. 

     

    The scientific discoveries that such novels spoke about held my adolescent imagination in thrall and the sciences and scientific literature became my favourite readings.  I would, even at that time, keep a watchful eye on how every new technical development or scientific discovery was leading the world closer to what these visionary science fiction authors had foreseen.  The authors talked of medical innovations.  From a young age I was cursed with uncomfortable thick eyeglasses.  I longed for the day when the medical innovation predicted by my favourite authors got rid of my glasses but did not think it would be in my lifetime.  One day, I noticed an article of how, for those with defective vision, Russian surgeons were slicing the eye cornea to alter their shape to give better vision. It was going horribly wrong in many cases but in the Soviet Union of the time, all was legal in the advancement of Science.  I felt the first flickers of hope that my day was coming.  Then some Western surgeons were using hot lasers.  Again, a significantly less than one hundred per cent success rate.  Finally cold lasers were developed and used successfully.  My day had come and a few years later I paid out a lot of money, every penny worth it, to a Canadian eye surgeon for LASIK.  My heavy eye glasses with their quarter inch thick lenses have been an emotionally satisfying relic ever since.  For a couple of years after, I would bring out my old now useless contact lenses and play tiddlywinks with them out of spite.

     

    However, I never thought I would live long enough to see the sci-fi authors more innovative concepts in every day common global usage.  But here we are in the relative youth of my life with ubiquitous personal communicators (as foreseen in Star Trek), nano-robots, drones, laser and non-invasive surgery, metallic  external skeletons, 3-D printing, mass global communications on the Internet, holographic entertainment amongst many other technological wonders also about to come into every day common use and well within my current lifespan.  I have little doubt that a day will dawn when there will be no task that a computerised machine cannot do.  That day when almost no one will need to work is not too far away and perhaps within some of our lifetimes.  Everything will be planned, produced and serviced by robot machines at the beck and call of humans.  Armies and the police forces will be machines and robots.  All that humans would be left to do is eat, drink and basically idle their time away however they choose.  It was a theme that kept coming up time and again.  Arthur C. Clarke, an accomplished writer, explored and developed this concept the most as far as I could tell.

     

    The huge problem is that as machines replace humans at a rate that is accelerating, none of the science fiction authors explored in detail the societal income and economics changes that are desperately needed to go hand in hand with scientific developments and lifestyle evolutions that must take place.    The sci-fi authors merely envisaged that the necessary economic and financial changes required would magically manifest perfectly and there will be no problems over this.  No science fiction writer-author described the economic and financial workings of their well organised machine controlled global and/or galactic environment.   The reason is simply because they were not Economics experts.

     

    Over the last 100 years scientific and technological advancement have been better rewarded by direct financial gains.  An individual or corporation that invents or develops an advance that trumps current technology can look forward to being quickly rewarded financially and in many cases very well.   Think Ford Model T vs. horse and buggy, MS Office vs. typewriters, internet banking vs. checkbooks and bank tellers and so on.  Thus personal goals and scientific/technological advancement trajectories are almost perfectly aligned in the same direction.  For this reason every new discovery or scientific advancement is closely studied and tenaciously adhered to in a fierce race to build on to the next scientific advance and yet another invention, service and lucrative commercial patent.  This is what makes the absolute replacement of human employees by technological activity inevitable.  

     

    However Economic/ Financial Theory advancement, if it can be called such, does not correlate much with direct financial reward and certainly not quickly.  Economic and Financial Theories are often abstract, only rarely applied immediately, sometimes fiercely debated and challenged by a plethora of opposing theories and vested interests.  Some theories and concepts accepted after many years of debate and further study may then be taught in school/college text books at which time the author may collect royalty revenues normally many years after their initial submissions.  Sadly there is no aggressive study and adherence to one economic law or rule to race on to build another from it.  It is normally a slow, laid back process.  It has become an increasingly common observation that politicians, corporations or wealthy individuals, once aware that a certain economic rule may infringe on their interests, employ all means available including character assassination and media campaigns to advance contradictory theories and rules, valid or not, in a bid to tear down the offending rule or theory.

     

    It is for the reasons stated in the last two paragraphs; the initially stealthy and now accelerating progress of science and technology in the developed nations that a well thought out workable economic and financial strategy that should have been in place to keep pace and deal with this is actually lagging tens of decades behind the current state of scientific and technological advances.  Economic rules and theories were applied for the common good of mankind for a large part of the 20th century but evidence shows that this process appears to have reversed after the mid 1970’s helped in large part by the rise of vested commercial interests.

     

    This malicious effect of economic advances lagging scientific advances is already upon much of the world.  Global employment levels in percentage terms are at an all time low and there is little to indicate that there will be any significant meaningful reductions in unemployment.  If anything the signs are pointing to higher unemployment levels worldwide and the wealth gap between the diminishing numbers of the rich and increasing numbers of the poor relentlessly widening.

     

    Consider the introductory scenario that only 200 people on the planet will need to work.  If so, will all wealth accumulate only to them?   The point is that automation funnels wealth to the owner of the machine and away from workers if they exist at all in the new equation.  Thus when we reach a stage where very few need to be employed, how will the many billion people who have been replaced by machines acquire money to live on?   Many are currently smug that they will never be replaced by software or a machine and point to the Industrial Revolution as the economic model for precedence.  That is, that they will train themselves in another line of work and that so called human ingenuity will prevail.  Let us take a leap of faith and fast forward to the future time when machines and software have the ability to do everything.  In such a scenario there will be no other line of work to re-train up to because if there is, the machines will learn at virtually the speed of light to do it.

     

    Some will say, for example, they own apartments for rental income and these will continue to pay income.  This would be true if their tenants have an income to pay their rent with but not otherwise.  The wealthy of such an economic environment will not rent their residence or office; they will own vast swathes of land and large buildings if not entire cities.

     

    Many look upon the jobless as worthless, good-for-nothing lazy individuals who ‘have only themselves to blame’.   But as the numbers of jobless individuals’ increase they will, as is the nature of humans, form organised gangs and cults. Driven by this attitude against them and with nothing to lose most will organise and operate on the wrong side of social equity.  The French Revolution is a great example of when this occurred.  Historical records say that the few elite rich were forcefully and violently pulled out of their homes and unceremoniously decapitated before cheering crowds.  However this did not immediately result in a better society in France.  The country struggled with mass lawlessness and violence for a very long time before peace was restored and the rule of law and this time a much more equitable rule of law was established.  It seems that this is a scar that still sits on the French national psyche.  They currently have one of the most advanced socialist systems in the world as do the Scandinavian nations and the Canadians amongst some others.  It is the societies of these countries that will cope best with the inevitable rise of the machines.  This is because they are the ones that will most likely re-distribute the wealth derived from automated organization and production systems to the citizens so that they will have enough to live on.  These nations will find a way to ensure their citizens are provided a decent level of guaranteed income, employed or not, to consume what the machines produce.  They will ultimately develop a self sustaining, self perpetuating economic machine in harmony with technology.

     

    Nations that do not have a socialised outlook will allow their entrepreneurs to monopolise production, buying up all competitors and land so that the poor are increasingly forced to live in slums or worse.  The rich business elite will buy up all politicians and easily fully control the media to attempt to mislead public opinion to their financial advantage.  However, as less of the population earn living wages, the low tax rates they will have ensured the politicians have put in place will result in decreasing tax collection volumes.  This will lead to lower social and infrastructure maintenance and ultimately a failed, violent, miserable state.   The machines will be used to oppress rather than liberate the masses.

     

    It is instructive that science fiction authors somehow intuitively grasped onto this future dichotomy and constructed stories based on both, that is, States where the machines controlled by a few oppress the citizenry and States where machines help create a utopia. 

     

    It is becoming more urgent and imperative that economists and financial researchers focus their efforts to develop methods that equitably re-distribute the wealth created by greater automation.

     

    In conclusion it must be reiterated that the inevitable progress of science research and technology will elevate the few nations who place a high priority on social welfare and equity to far greater heights of mass prosperity and well being for its citizens.  The same progress of science and technology will accelerate the demise and final failure of the other nations to extreme levels of poverty, violence and misery as the number of unemployed inevitably and relentlessly grow at the rate of millions and no social welfare funding and distribution systems are in place to ensure the masses maintain a decent level of income to live on. 

  176. cj50

    Hi Phil,

    As it is after hours I thought I' let you have the final draft of what I posted on my Linked In.  I assumed your silence was a yes to go ahead.  I hope I was not wrong.  Your further input was very helpful and depressing as I see I will have to go back for english language lessons in grammar and punctuation if I wish to write in future.  All the best and thanks once again.

  177. advill

    CJ50 / robotic future:

     

    We are colliding into a world where 9billion people will have as their only option  searching for work, at the same time  technology is eliminating jobs in a faster way that it creates them.

     

    If you think , that there will be  a "few nations"  and the rest…think it again, all the borders are porous, here in Europe I see people trying to get in Europe and they are the happiest in the wold having the freedom  of getting a market cart and search into the trash containers, my other experience is the TX border, where you  find  the "homeland security"  been passing over by an army of children crossing the border…are you going to do, shoot them?.

    So, we have a HUGE problem if we continue in the same trend, we need a new Adam Smith to solve the paradox.

  178. Phil

    All good with me, CJ, nice article.  Get "The Elements of Style" by Strunk and White – best book I ever owned!  

    Huge problem/Advill – Amen to that.  We already have a functioning economy where just 150M out of 310M have jobs and we produce more food, goods and services than we need by a large margin.  What would the other 160M people even do if we did put them to work.  Just 100 years ago, 90% of the people worked (including old people and children) so we've knocked out about half the workers in 100 years and it's reasonable to assume we can knock out another half in the next 100.  

    That's just 75M people needing to work in 2200 – what happens to the other 75M?  They won't be needed so there simply won't be jobs for them – it's not about being lazy, it's about being unnecessary.  Another 100 years and we'll need 30M people to provide for 300M – will 90% of the people get no pay?  Clearly that's ridiculous and, to me, it's just as ridiculous that we don't take action NOW to begin changing our social structure and reward systems because we are already disenfranchising tens of millions of people.  

    Labeling them as "lazy" may make the Fox crowd feel good about themselves but ignoring the problem is like ignoring a missing lug nut on a tire – it begins to weaken the other and then another pops off and your car is "suddenly" undrivable – or maybe you wreck the whole thing in a spectacular crash. 

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