Archive for September, 2009

Pharmboy’s Review

Courtesy of Pharmboy

Good day to all! The corn is ready for harvest, and the fall season is upon our Pharm.  It is time for a quick review to see how we have done, and add a few more goodies to our Plots.

From our 15-Aug-09 list:

Novartis – Buying the $40 Jan10 C @ 6.40 ($1 premium), selling $45 Sept09 for 1.35 (also $1 premium).  The $40s Jan10 are now 9.10, and rolled 2X to the $50 Oct, now at $0.45 (small loss on the roll).  Net ~$2.1 up for the trade.

Bristol-Myers – Buy outright for the dividend, or buying the $20 Jan10 C @ 2.80 ($0.5 premium), selling $22.5 Sept09 C @ $0.55 and $22.5 P@ $0.7.  I think this company has room to run.  Bought outright and the stock closed on OPEX at 22.47…..can’t get better than that……Only stock on this position, but looking to sell the Nov09 24/22 P/C for 0.44/0.75.

SNY – Not as confident on the SNY story as of yet.  I would sell the $32.5 Sept09 P, being prepared to roll down to the $30 Dec09s.  These expired worthless….nice gain.

JNJ Buying the $55 Jan10 C @ 6.50 ($0.5 premium), selling $60s Sept09 C/P for 2.20.  $55 Jan10s currently $6.10, and the Sept P expired worthless.  Sept09 C rolled to the $60 Oct09 C for a 0.50 credit.  Puts not sold as of yet.

Genzyme – Buying the $50 Oct09C @ 4.2 ($1.5 premium), letting it run for the next few days, and then selling $55 Sept09 for 1.25 or better (all premium).  $50 Oct09 are currently $6.80 and the $55 Sept09s were rolled up to the $57.5s almost even.  These will need cashed out for a $2.5 gain, or to be adjusted to the 50 Apr10 C for 9.8.  To help offset the costs, I would sell the $55 Oct09 P for $1 or better.  For a net $1 out of pocket
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Fed Appeals Decision To Disclose Recipients Of Bailout Loans, Threatens With "Run By Depositors"

Courtesy of Tyler Durden

It has been about a month since the Fed last threatened with mass extinction events if it were forced to disclose whose crony interests it had been propping with taxpayer money, as it was ordered to do in the Bloomberg (Mark Pittman) v Federal Reserve case (08-cv-9595) on August 24. Today, the Chairman is out, guns blazing, and is appealing the decision.

From Bloomberg:

The Federal Reserve is appealing a judge’s order requiring the central bank to identify the financial institutions that benefited from its emergency loans, according to a lawyer representing Bloomberg LP.

The central bank refused to divulge details about the companies participating in its 10 remaining lending programs, saying that doing so might set off a run by depositors. The Fed had until today to seek a reversal of the Aug. 24 decision by Manhattan Chief U.S. District Judge Loretta Preska, who ruled the Fed must release the identities, as well as disclose loan amounts and the assets put up as collateral.

And as the second circuit already showed its true colors in the Chrysler fiasco some months ago, it is likely that this case will once again reach the Supreme Court, probably about a month from now. October will thus likely be a very critical month for the Chairman, who will be besieged on two front – the legislative and the judicial, as Congress will be pushing for passage of HR 1207 at about the same time that the Supreme Court does it best to pretend that it is the last bastion of non-corrupted, Wall Street uninfiltrated interests, yet, as is always the case, only to show its true colors at the end of the day, once again confirming just which firms run the United States of America.

Another Defense Of HFT, Promptly Refuted By New York Fed

Courtesy of Tyler Durden

An article today in Time magazine with the unassuming title “The Truth About High Frequency Trading” is the latest in the spin campaign defending High Frequency Trading. The story is well known- liquidity, and innocent market makers who only care about their spread without positional exposure or underlying bias.

Marketmaking explains why high-frequency trading accounts for over half of all U.S. stock volume: Every transaction begins with a trader offering to buy or sell. These days, more often than not, that trader is a high-frequency marketmaker.

Yes, high-frequency marketmakers profit from the bid-ask spread, and yes, other traders will benefit from being able to get in and out of the market more easily, but what about those who are not actively trading? Most of us aren’t concerned with having a tight bid-ask spread at every moment, since we are longer-term investors interested in holding a portfolio — not continually trading.

While some assumptions in the article are naively assumed to be facts, the key flaw is that market makers simply provide liquidity with no regard for the underlying direction of the stock they make a market in. And, as author Ari Officer explains, these very market makers are almost exclusively computers who have taken over ultra fast liquidity provisioning.

Ironically, Exhibit A refuting Ari’s argument comes not from a place like Zero Hedge, but from a much more “objective” and traditional venue: the New York Fed itself:

Exhibit A

A staff report paper released a week prior to the Time article titled “Are market makers uninformed and passive? Signing trades in the absence of quotes” comes to a conclusion which debunks Mr. Officer’s Utopic conclusions about naive and uninterested market makers. And we quote:

When we look at the cross-section of market makers and relate the extent to which their initiated trades are inventory increasing to their profits from trading, we find a significant and positive relation. Our results provide evidence against the market maker being just an uninformed liquidity supplier. On the contrary, he seems to actively speculate on private information signals.

Not only that but the following:

We therefore conclude that for locals and duals on announcements days there indeed is

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Equities Back To Tracking The Zombie Dollar Tick For Tick

Courtesy of Tyler Durden

A day after several failed attempts at killing the dollar did not work, what is a Fed chairman to do but try, try again. The market now tracking the JPY-EUR carry trade tick for tick.

Mad Hedge Fund Trader’s Global Market Comments

Here’s MadHedge’s diary entry from yesterday – everything you want from technology, to cars, to baseball. But I’m not quite sure if MadHedge is shorting BofA or Cubs supporters. – Ilene

Mad Hedge Fund Trader’s Global Market Comments

September 29, 2009

Courtesy of the Mad Hedge Fund Trader

Featured Trades: (RADA), (BAC), (SCHW), (V), (CVX)
1) When a retired Israeli Air Force general calls me up in the middle of the night and tells me there’s a company I should look into, I sit up and take notice. Privately owned Spider Technologies Security Ltd (click here for their website) has achieved a quantum leap forward in seismic based detection technology. It has pioneered a set of algorithms, code named “Tarantula,” that can analyze ground vibrations to create virtual fences along national borders, or around military bases and high value targets, like energy infrastructure. A portable version can be used by a squad of soldiers on the move to detect approaching enemies at night, on or under the ground, in all weather, and can tell the difference between a car, a man, or a mouse. Now this is where the story get’s interesting.  Spidertech has just inked a joint marketing and production deal with NASDAQ listed RADA Electronic Industries (RADA), an established supplier of hardware and software for unmanned aerial vehicles  (click here for their website at This gives Spidertech access to Rada’s rolodex of a who’s who in the international arms bazaar, and catapult the technology into the global limelight. Experts in the field tell me the potential market is in the billions. Of course the big fish is the US military, and the technology is already being field tested by the US Navy for Homeland Security. If you want to check out the details of this fascinating technology, go to the international arms publication Defense News by clicking here at  . In the meantime, check out RADA’s stock, which has drifted up from 60 cents to $3 since March. A few key orders and it could be off to the races. Israel has long blended advanced American technologies with its own to create better and cheaper weapons, which are then sold to emerging markets. The difficulty has always been to find a tradable instrument…
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BusinessWeek Cover: “Why The Market Will Keep Going Up”

BusinessWeek Cover: "Why The Market Will Keep Going Up"

bwcoverup2.gifCourtesy of Vincent Fernando at Clusterstock




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More Pain For Humiliated SEC After Disclosure It Ignored Moody's Whistleblower Warnings

Courtesy of Tyler Durden

As if the SEC could be humiliated any more, another piece of disclosure now highlights that Mary Schapiro’s useless organization was unresponsive to whistleblower overtures by former Moody’s employees attempting to warn the regulator “about Moody’s weak compliance department and ratings process.”

From Reuters:

A congressional panel will expand its examination of credit rating agencies to look at why U.S. securities regulators ignored warnings from former Moody’s Corp executives about the company’s weak compliance department and ratings process.

“We want to look at the fact that the Securities and Exchange Commission did not respond” to concerns from Moody’s former head of compliance, Rep. Edolphus Towns, chairman of the House Oversight and Government Reform Committee, told CNBC television on Wednesday.

Towns’ panel held a hearing on Wednesday to probe allegations from two Moody’s whistleblowers that company managers favored revenues over ratings quality.

And here is how the SEC’s worthelessness from the Madoff affair has ported over into comparable situations, with the regulator apparently having learned absolutely nothing from the its humiliating episode yet.

Scott McCleskey, a former Moody’s senior vice president of compliance, sent the SEC a letter in March 2009 alleging that he was routinely ignored when he warned that the firm was not properly monitoring municipal bond ratings.

Eric Kolchinsky, a recently suspended managing director at Moody’s, will tell Congress that analysts are “bullied” by managers who override their decisions to generate revenue.

Kolchinsky tried to tell the SEC about his concerns but his calls were not returned,” according to a memo prepared by Republican members of the committee and obtained by Reuters.

Judging by the SEC’s extremely time consuming attempt to cover up for Ken Lewis all throughout the year, we are confident that all parties involved fully understand and sympathize with Mary Schapiro on this one.

And yet the question of whether the SEC, or Moody’s for that matter, is needed in any formal capacity going forward remains unanswered:

An SEC spokesman has said the agency has established an examination program for credit rating agencies that includes reviews of disclosures, policies, and procedures regarding municipal securities ratings.

“We are focusing carefully on the tips

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Latest DTCC CDS Update (Week Of September 30)

Courtesy of Tyler Durden

A week after the roll into new indices (HY13 and IG13) there was quite notable action in CDS land. Net notional change across all sectors was substantially negative to the tune of $282 billion, which however consisted primarily of matured transactions accounting for $330 billion of this number, implying the adjusted number was around positive $50 billion and a notable derisking. There likely has been a corresponding netting out on the New Transaction side over the past month as accounts were rolling existing positions.

Total gross outstanding have been relatively flat over the past month at $26.7 trillion, with $15.3 trillion in Single Names, $8.5 trillion in Indices and $2.8 trillion in Tranches, a material unwind from the beginning of the month when there was about $3.4 trillion in this category. This likely means a major index fund was unwinding tranches over the past month, likely leading to reverberations across all asset classes.

In single name action, the leader in the derisking category was Danone with $933 million in net change leaving last week (on $14.7 billion gross notional). Another notable name was Goldman Sachs at #4, with $175 million in net long CDS positions purchased. Some other notable deriskers were British American Tobacco, Ford Motor, Eastman Kodak, Safeway, FDC, Time Warner, VNU and Autozone.

In the rerisking category, the dominant names were as expected, financials, with DB, BNP GECC and AIG comprising the top 4. How long this optimism for financials will persist, especially if there is a major drop in equities, is as always the main question.

Endgame Near For CIT

Endgame Near For CIT

Courtesy of Yael Bizouati at Clusterstock


And don’t miss this, courtesy of Tyler Durden at ZH

Jim Cramer’s Recommendation On CIT From Yesterday: "Primed For Upside. I Would Buy"

Jim CramerOne can only hope that at some point irresponsible, speculative and highly destructive stock calls like this would see some regulatory intervention.

Citi and CIT Are Primed for Upside, by Jim Cramer, 9/29/2009, 1:54 PM EDT

Citigroup’s on the move, so is CIT . I think that Citigroup will be the biggest beneficiary of the new plan to buy toxic assets, because it is basically running its SIV as discontinued operations and it could benefit from the new program. CIT is about the possible IndyMac link-up courtesy of John Paulson, a real smart guy who was negative about mortgages before it paid to be negative. Dan Freed on CIT CIT Surges on Report of IndyMac Deal I put both of these up there as examples of companies that won’t die, and because they won’t die, they live. I know that seems a little circular in reasoning, but because Citigroup never suffered a run like Wachovia and Washington Mutual did, it made it and as our flagship site mentioned, it is safe. If it is safe, it can go higher. Because no one forced CIT into bankruptcy, it can live to play again, and when I read in the New York Post that Paulson owns CIT debt, I realized that he’s powerful enough to save this company, particularly because he is one of the investors in IndyMac and knows his way around the bottom of the debt barrel. These two stocks represent lottery tickets that are no longer rip-ups because they have made it out of the "critical care" stage and are recovering. I would buy them both.


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Chicago PMI Subscribers Drive Market Down After "Flash Look" At Bad Number

Courtesy of Tyler Durden

The market tanked after the Chicago PMI index took a big bath on the second derivative double somersault. After hitting a better than expected 50 in August, the September number was 46.1, much weaker than the expected “expansionary” 52. the PMI is a useful advance indicator on the overall ISM, which is out tomorrow, and has been responsible for much of the presumed economic pick up in the past 6 months. As John Bougearel pointed out yesterday, ISM fans may be set for a major disappointment.

As a reminder the Chicago PMI is:

An index released monthly on the last business day of the month to which it refers that indicates how vibrant regional manufacturing activity is. An index value of 50 or higher indicates increasing busi-ness activity; below that indicates decreasing activity. The index breaks out readings for production, new orders, order backlog, inventories, prices paid, employment, and supplier deliveries. The PMI is a timely look at the strength of manufacturing industry in the Chicago Federal Reserve regions, which comprise Illinois, Iowa, Indiana, Michigan, and Wisconsin. The new orders and orders backlog indices are useful in predicting future production activity.

And in case you were wondering why the market started tanking 3 minutes before the official release, it is because Chicago PMI subscribers get a 3 minute advance look on the number ahead of the general media. In other news, Flash Orders, Actionable IOIs and advance looks improve liquidity (and front running).


Zero Hedge

Explosion Hits Russia's Largest Virus Lab Which Houses Plague, Smallpox, Ebola And Other Deadly Viruses

Courtesy of ZeroHedge View original post here.

A sudden explosion at a Siberian virus research center on Monday reportedly left the facility engulfed in flames, according to several Russian news outlets. 

Firefighters and other emergency personnel were dispatched to the "Vector Institute" located several miles from Novosibirsk - an emergency which was upgraded "from an ordinary emergency to a major incident," a...

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Phil's Favorites

The future of work will still include plenty of jobs


The future of work will still include plenty of jobs

Even though the future is unknown, Canada’s employment rate has risen steadily from 53 per cent in 1946 to more than 61 per cent today. (Shutterstock)

Courtesy of Wayne Simpson, University of Manitoba

There is now widespread anxiety over the future of work, often accompanied by calls for a basic income to protect those displaced by automation and other technological changes.

As a labour economis...

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Lee's Free Thinking

Is The Drone Strike a Black Swan?

Courtesy of Lee Adler

Pundits are calling yesterday’s drone strke a “black swan.” Can a drone strike on a Saudi oil facility, be a “black swan.”

According to Investopedia:

A black swan is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences. Black swan events are characterized by their extreme rarity, their severe impact, and the practice of explaining widespread failure to predict them as simple folly in hindsight.

I seriously doubt that no one expected or could have predicted a drone strike on a Saudi oil facility.

Call Me A B...

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Insider Scoop

New Relic Cuts 2020 Sales Guidance, Announces Changes In Management

Courtesy of Benzinga

New Relic (NYSE: NEWR) has reaffirmed its second-quarter guidance and cut its sales guidance for fiscal year 2020 from $600 million-$607 million to $586 million-$593 million.

The company’s chief technology officer, Jim Gochee, and chief revenue officer, Erica Schultz, have resigned. New Relic also named board member Michael Christenson as its chief operating officer. Christenson joins from his ... more from Insider

The Technical Traders

Metals are following downside sell off prediction before the next rally

Courtesy of Technical Traders

It is absolutely amazing how the precious metals markets have followed our October 2018 predictions almost like clockwork.  Our call for an April 21~24 momentum base below $1300 followed by an extensive rally to levels above $1550 has been playing out almost like we scripted these future price moves.

Now that the $1550 level has been reached, we are expecting a rotation to levels that may reach just below the $1490~1500 level before attempting to set up another momentum base/bottom formation.  And just like clockwork, Gold has followed our predictions and price is falling as we expected. Just look at our October 2018 chart where we forecasted the price of gold...

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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 


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Kimble Charting Solutions

Bond Yields Due For Rally After Declining More Than 1987 Stock Crash

Courtesy of Chris Kimble

U.S. Treasury Bond Yields – 2, 5, 10, 30 Year Durations

The past year has seen treasury bond yields decline sharply, yet in an orderly fashion.

This has spurred recession concerns for much of 2019. Needless to say, it’s a confusing time for investors.

In today’s chart of the day, we look at a longer-term view of the 2, 5, 10, and 30-year treasury bond yields.

Short to long term bond yields are all testing 7 to 10-year support levels as momentum is at the lowest levels in a decade.

A yield rally is likely due across the board after a recent decline that was bigger than the stock crash in 1987!

If yields fail to ral...

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Digital Currencies

China Crypto Miners Wiped Out By Flood; Bitcoin Hash Rate Hits ATHs

Courtesy of ZeroHedge View original post here.

Last week, a devastating rainstorm in China's Sichuan province triggered mudslides, forcing local hydropower plants and cryptocurrency miners to halt operations, reported CoinDesk.

Torrential rains flooded some parts of Sichuan's mountainous Aba prefecture last Monday, with mudslides seen across 17 counties in the area, according to local government posts on Weibo. 

One of the worst-hit areas was Wenchuan county, ...

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The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.


The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:


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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...

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Free eBook - "My Top Strategies for 2017"



Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:


·       How 2017 Will Affect Oil, the US Dollar and the European Union


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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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