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Monday Market Movement – Dollar Dive Masks Market Weakness

Another day another falling dollar.  

Good thing too or we’d be heading for the toilet this morning.  They did what they could to prop up the Nikkei in early trading, even triggering our 3am trade early by jamming the Yen down from 83.2 to the Dollar at the start of Sunday trading (5pm) all the way to 83.867 at 9:45 (the Nikkei opens at 9) after which it fell right off the cliff again and back to 83.2.  Traders did not like that one bit and the Nikkei fell 140 points after lunch but that was net down just 23 for the day as the market had gotten all excited about the totally fake downturn in the Yen in pre-market trading

How can Japanese traders be so dumb that they fall for the same trade day after day after day?  Don’t flatter yourself, we fall for the same nonsense every day ourselves – it’s just more obvious when viewed from the other end of the Earth.  It does amaze me, however, that I can point out our "3am Trade" for what is now 3 years in a row and it still works (shorting the USD/JPY on Forex into the early morning spikes), which shows you just how much money must be thrown at the other side of this farce.

Of course the Japanese are purely amateur-hour manipulators when compared to our Chinese Masters, who made a big deal about creating a $5Bn fund to help Greek shipping companies buy Chinese ships.   "We hope that by intensifying cooperation with you, we can be of some help in your endeavor to tide over difficulties at an early date," Mr. Wen said Sunday in a speech to the Greek parliament. "China will not reduce its euro-bond holdings and China supports a stable euro." (not the Dollar)

"These agreements and the announcement of China’s intent to continue to invest in Greek bonds are seen as a vote of confidence for our economy, which is going through a difficult time," said Greek Prime Minister George Papandreou. "As we say in both Greece and China, it is in the tough times that you know who your friends are." (not America) 

Mr. Wen also said China is encouraging its companies to invest in Greece, and predicted that trade between China and Greece likely will double in five years to $8 billion annually. Last year, China’s exports to Greece totaled €3.04 billion ($4.19 billion), compared with €93 million of Greek imports to the country, according to EU data.  "We hope the EU recognizes as soon as possible China’s full market-economy status, and will relax restriction on high-technology exports to China and oppose trade protectionism." (like America)

China will be making a lot of new friends in Europe as record bond refinancing needs outweigh even the most austere spending programs and more and more countries follow Greece – falling almost like dominoes at China’s feet.  

Euro-region governments have to repay 582 billion euros ($803 billion) of debt in 2011, up from 521 billion euros this year, according to estimates from ING Groep NV. Spain has to roll over almost 20 percent of its outstanding loans, government figures show. Portugal has 23 billion euros of debt coming due and Ireland has more than 10 billion euros, according to data compiled by Bloomberg

A 750 billion-euro backstop arranged by the European Union and the International Monetary Fund has failed to allay investor concern that some of the so-called euro-peripheral countries may buckle under the weight of their debt.  Klaus Regling, chief executive officer of the newly established European Financial Stability Facility, said last week he doesn’t expect his group’s 440 billion-euro rescue fund to ever be tapped.  “My central scenario of expectation is that we won’t have to make any loans available in the coming years,” Regling said during a Sept. 28 speech in Frankfurt. Terms for gaining access to the fund are “unattractive” as “the safety net isn’t supposed to be a safe haven, which is easy to reach,” he said.

Meanwhile, for those very few who still like to "Buy American," A second round of bond purchases by the Federal Reserve may have the unintended consequence of pushing borrowing costs HIGHER.  This is according to a growing number of U.S. government securities dealers, strategists and economists.  Based on what the Fed bought in 2009, yields are trading as if it has already acquired an additional $315 billion to $670 billion of securities, according to Deutsche Bank AG, one of the 18 primary dealers that trade with the central bank. Policy makers will announce plans buy $100 billion to $1 trillion in Treasuries before the year is out, a survey of 12 of the 18 dealers show. Three don’t expect the Fed to buy additional debt.  “A lot of quantitative easing is already priced into the market,” said Joseph Leary, an interest-rate strategist in New York at Citigroup Inc.

Based on what happened when the Fed began purchasing $1.725 trillion of government debt and mortgage securities in 2009, lower yields are not a foregone conclusion. Treasuries lost 3.72 percent last year as a drop in bond prices drove the yield on the 10-year note to 3.84 percent from 2.22 percent.  “Quantitative easing is priced into the picture,” said Sean Simko, who oversees $8 billion at SEI Investments Co. in Oaks, Pennsylvania. “When the market does turn, as we’ve seen in the past, it will turn sharply and very swiftly.”

As the Wall Streeet Journal observes: "Politicians think they can (1) fight markets, (2) inflict infinite pain on voters in democratic countries, and (3) whip the profligate into line. They can do none of these. Markets set borrowing rates, voters turn out politicians who push them too far, and plans to land with hobnailed boots on profligate debtor nations founder on two facts. First, no action was taken when Germany and France pierced the 3% ceiling on deficits, and sauce for the big geese should be sauce for the smaller gander. Second, fining countries that are broke might not be sensible, even if feasible."

So let’s consider the "D" word, or if default sounds harsh, call it restructuring. Frederico Sturzenegger and Jeromin Zettelmeyer, in their scholarly work on the subject of debt crises and defaults, note, "All lending booms so far have ended in busts in which some of the beneficiaries of the preceding debt inflows defaulted or rescheduled their debts." Their list of defaulters in the 19th and 20th centuries includes Turkey, Bulgaria, Italy, Japan, Mexico, Russia, China, Spain, Czechoslovakia, Portugal, and several Latin American countries—an incomplete list, but you get the idea. As Don Luskin points out, we are simply repeating the same exact behavior that the World went through in the early 1930s – so who is to say the results will be different?


The same wave of right-wing, third-party mania is sweeping the US and Europe with leaders calling for austerity in the midst of a Depression (or REALLY big Recession) and an end to "hand-outs" at precisely the time we need them the most.  Should the elections be handed over to the boot-strap brigade – we are well on the way to the next wave of economic collapse because only a fool would believe that REMOVING government stimulus (except for the wealthy, of course, who MUST keep their tax breaks) is going to revive this economy and create jobs.  We tried that once – it ended in disaster with 25% of America out of work

Charles Schwab came out strongly opposed to the Fed’s zero-interest policy this weekend, saying (as I have been): "The negative impact of current policy is clear. The near-zero interest rate experiment is weighing on consumer and investor confidence, and the Fed signals its lack of confidence with each "extended period" proclamation. It is providing banks with low-interest financing that can be used to create modest returns through a carry-trade in U.S. Treasurys but is adding nothing to the velocity of money, which is what actually generates economic growth…  The extreme monetary policy is also having no positive impact on the availability of consumer or business credit, job growth or consumer and business spending." 

Even the Wall Street Journal noticed the plight of the poor this weekend (rumor is Murdoch tripped over one this weekend and asked why there were people sleeping on his steps) and ran an article (on Friday, of course) about the now 41.2M Americans (up 58% since 2007) who are on Food Stamps and how it is affecting their shopping habits.  Will this finally be enough to make Uncle Rupert understand the connection between poverty and the economy?  Don’t hold your breath, even with 2,840 Millionaires now collecting unemployment

Nobel-winning Economist, Joe Stiglitz says that the banking sector has gone back to "business as usual" too quickly and that there are still risks of another financial crisis despite some improvements in regulation.  He also fears that governments around the world will attempt to cut their deficits too quickly and risk a double dip recession.  

"The worry is that there is a wave of austerity building throughout Europe and even hitting America’s shores," Mr Stiglitz said. "As so many countries cut back on spending prematurely, global aggregate demand will be lowered and growth will slow – even perhaps leading to a double-dip recession."  Mr Stiglitz warned that Spain, similarly to Greece, was now in the speculators’ sights.  Turning to the euro, Mr Stiglitz said that the different needs of countries with high trade surpluses, particularly Germany, and those running deficits such as Ireland, Portugal and Greece, meant that the single currency was under intense pressure and may not survive. He suggests that one way to save the euro would be for Germany to leave the eurozone, so allowing the currency to devalue and help struggling countries with exports. 

Paul Krugman, another Nobel winner who is vilified by the right, says recent events have amounted to a fairly clear test of Keynesian versus classical economics – "and Keynesian economics won, hands down."  Krugman continues: "Classical economics was all wrong in a liquidity trap. Government borrowing did not confront a fixed supply of funds: we were in a paradox of thrift world, where desired savings (at full employment) exceeded desired investment, and hence savings would expand to meet the demand, and interest rates need not rise. As for inflation, increases in the monetary base would have no effect in a liquidity trap; deflation, not inflation, was the risk."

So, how has it turned out? The 10-year bond rate is about 2.5 percent, lower than it was when Ferguson made that prediction in mid 2009. Inflation keeps falling. The attacks on Keynesianism now come down to “but unemployment has stayed high!” which proves nothing — especially because if you took a Keynesian view seriously, it suggested even given what we knew in early 2009 that the stimulus was much too small to restore full employment.   

We will be driven this week by early earnings reports, global news and the election cycle.  I don’t expect us to make it over 1,155 on the S&P, which is the 10% line and I do expect us to pull back 20% of the run up, back to retest the 5% Rule at 1,123.  Members should note we have a new October’s Overbought Eight list and we are fortunate to have avoided a gap down so we’ll have an opportunity to get back to cash on our Turning $10K to $50K by Jan 21st project, up 160% with 3 months left to go!  Cash is king as we continue to test our 7.5% lines.  Keep in mind that 5% is just 2.5% away and we fully expect that pullback but not with the dollar in the toilet - like it is today

Be patient and BE CAREFUL!  


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  1. Good morning all,  anybody else has problem to get in TD Ameritrade’s website?

  2. Yes but I just got it again

  3.  AAPL w/ upgrade to $430 !    
    Interesting to note that it is still down pre-market.

  4.  What! 430? Is that all? If NFLX was targeted at 180, and PCLN at 425, by my calculations, AAPL should be (conservatively) trading at $1450.

  5. Awww come on… llets not go overboard here.  I was personally thinking 800 was a more realistic estimate.

  6. $430 huh, well, someone wants out.


    Bonds/pstas – all I can say is we are becoming Japan, although we have little to no manufacturing.  Also, when PIMCO starts selling, then I would say bonds are gonna get dumped. 

  7. Looks like TOS is trying the software upgrade again.  No prophet charts

  8. As we head for market open, I am wondering if I am looking at the correct part of the web site to see any strategies for the day. I read plenty of histor of where we’ve been, but I’m new (as of Friday last week).  What should I expect on Monday morning regarding putting on any trades if any?  I sent a note via email because I thought my questions might be too mundane for the discussion board but I never heard back.  Can I call someone to discuss what to expect with the premium service or if I am looking in the right places on the web site?
    Yes, I did read the new members guide – I couldn’t find any history prior to September 7 so I couldn’t go back a full month. 

  9. Ooops, couldn’t find history prior to September 27

  10. kares – yes, you are at the right part. Keep following the comments. Please don’t trade till you are fully comfortable with the methods on the board.

  11. Pharm- thanks for all the imp. links on Friday.

  12. Pharma;
    any opinion on svnt. no news, seems like blackout period

  13. Pharm- Pimco- I would love to know when they start selling. Do you have any spys up in Newport Beach?

  14. Good morning,


    IWM  64.41, 64.93, 65.23, 65.52, 66.30, 66.67, 67.14, 67.47, 67.90 and 70.55

    Let’s remember this is a Monday, and the beginning of the trading month, so a BS push over resistance would not surprise me !!

  15. I wish pstas. 


    SVNT = they have approval, so it is a waiting game.  They have always intended to be bought….but where are the buyers now?  I would be surprised if big pharma steps in, b’c these guys are a 1 trick pony.

  16. lflantheman
    Good morning, What is your input on the AAPL weeklies thks

  17. Good morning!

    AAPL/Cap – Whose upgrade?  

    Oil is flying to $82.25 on terror alerts out of Europe and attacks on Nato Fuel trucks in Pakistan – smells like Rent-A-Rebel to me…

    AAPL/Hanna – You’re right, proportionally they are getting no respect.  

    TOS/Wilsons – Maybe prophet is what ground them to a halt last time.  Performance seems fine today. 

    Welcome Kares!  We don’t force trades here.  If I have an idea ahead of the markets, it goes into a post or will show up in current chat (usually the last post I write) and I answer many questions during the day and, when I think something is generally a good idea for Members to consider – I will bold the entry (and I’m trying to remember to indent them as well).  Our Email was down this weekend but this is the right place to ask – AFTER you’ve read the New Member’s Guide and done your homework.  Otherwise we will make fun of you.  Actually, we will make fun of you either way because that’s how we roll but a little less so if you do your homework…  If you click on the tab tat says "Phil" you will see all my posts and, at the bottom is a button that says "Older Articles."  That is a secret language for "Articles that are older than the ones you see."  Try that!  8-) 

    Watch levels are still the same overall:

    • Up 7.5%: Dow 10,965, S&P 1,146, Nas 2,365, NYSE 7,280 and Russell 672
    • Up 5%: Dow 10,710, S&P 1,123, Nas 2,310, NYSE 7,140 and Russell 666 
    • Up 4%: Dow 10,608, S&P 1,112, Nas 2,288, NYSE 7,072 and Russell 660
    • Up 2.5% (MUST hold): Dow 10,455, S&P 1,100, Nas 2,255, NYSE 7,000 and Russell 650

    Just watching and waiting today.  QQQQ WEEKLY $48 calls are now $1.08 and make a great upside break IF you get nervous on a pop but very tight stops as a momentum trade.  I have no faith in the market sustaining anything

    From the post:

    Members should note we have a new October’s Overbought Eight list and we are fortunate to have avoided a gap down so we’ll have an opportunity to get back to cash on our Turning $10K to $50K by Jan 21st project, up 160% with 3 months left to go!  Cash is king as we continue to test our 7.5% lines.  Keep in mind that 5% is just 2.5% away and we fully expect that pullback but not with the dollar in the toilet - like it is today

  18. Phil
    I have a CAVM 20/25 Mar 11 spread
    With the 22.50 Mar 11 PUT
    Should I roll, close out, or wait it out?

  19. TOS users, regarding the software upgrade from this weekend (was there an e-mail that preceded the upgrade). I discovered that the ‘Setup’ button, which is in the upper right hand corner of the screen, includes new choices. Clicking on it brings up an option to ‘Save Workspace as…". If the feature works as I think it should, then saving the workspace saves your charts, left sidebar settings, custom option chain headers and etc. This software upgrade deleted all of mine.

  20. HHFIV – TOS charts of mine  are also lost… getting tired of recreating them…

  21. Phil:
    Any suggestions on USO Oct 8 $34 puts bought at .25 (now .10)? Not a big deal, knew it was a gamble.

  22. TOS users- I am trying to follow along with JRW’s lines on IWM, etc. Is there an easier way to enter the support/resistance lines on a chart short of entering each one manually each day?

  23. Loading up on some MSFT 23.87 – 23.92

  24.  Phil – AAPL – Ticonderoga (?)

  25. NFLX:
    Caris sees the creation of a Netflix app for Android phones and the popularity of Internet TVs this holiday season as untapped catalysts for Netflix.  The firm raised its target to $186 from $168 and maintains an Above Average rating on the stock.

  26. CAVM/QC – Well, you have $4 of $5 on the bull call spread and the $20 puts are down to .45 so this spread has only $1.45 left to give you and is tying up about $5 in margin and $4 in cash so it does make sense to re-position, even if you do want to stay bullish.  You are already back as far as you can get in time so not much to do other than decide if you have something better to do with the cash and margin than wait 6 months to see if you make $1.45 or not.

    At the open: Dow -0.07% to 10823. S&P -0.16% to 1144. Nasdaq -0.33% to 2363.
    Treasurys: 30-year +0.19%. 10-yr +0.2%. 5-yr +0.12%.
    Commodities: Crude +0.42% to $81.92. Gold -0.14% to $1316.00.
    Currencies: Euro -0.62% vs. dollar. Yen +0.01%. Pound +0.18%.

    On the hour: Dow +0.02%. 10-yr +0.21%. Euro -0.65% vs. dollar. Crude +0.36% to $81.87. Gold -0.11% to $1316.30.

     Aug. Factory Orders: -0.5% ($408.9B) vs. consensus of -0.4%. Factory orders had increased 0.5% (revised from +0.1%) in July. Ex-transport, +0.9%. Shipments -0.6% vs. +1.2% prior. Inventories +0.1%.

     Aug. Pending Home Sales: +4.3% to 82.3 vs. +1% expected, +4.5% prior (revised). Pending sales fell in the North but rose in all other regions. “Attractive affordability conditions from very low mortgage interest rates appear to be bringing buyers back to the market," NAR’s Lawrence Yun says.

    Predatory lending aimed at racially segregated neighborhoods led to mass foreclosures that triggered the housing crisis, a new study says. The study, which used data from the 100 largest U.S. metropolitan areas, says that living in predominantly minority areas were "powerful predictors of foreclosures" in the nation.

    The economy is highly unlikely to re-enter recession, suggesting stocks will keep moving higher, Goldman’s (GS) Abby Joseph Cohen tells CNBC. The deceleration caused by the end of inventory rebuilding and the fading of government stimulus will be offset by gains in equipment spending, industrial production and exports, she says.

    Reflecting on Charles Evans’ "liquidity trap" speech (and here), Mark Thoma wonders how much gas is still left in the monetary policy tank, given the heaps of cash firms are already sitting on. Why is everyone fixated on the Fed? he wonders, And why is everyone so quick to let Congress off the hook?

    With the goverment turning off the lights at the TARP horror flick, Gretchen Morgenson predicts its sequel: Clearinghouse Collapse.

    China’s non-manufacturing PMI rises a solid 1.6 points to 61.7, following up a pair of manufacturing PMIs that showed a strong revival in factory output after a mid-year lull. The service sector accounts for less than 45% of China’s GDP, much less than in more developed countries.

    "It’s for their own sake," not to placate the Americans, Nouriel Roubini says in urging the Chinese to allow the yuan to rise 5-10%/year. While exports will fall, "the real income of households is going to increase, and they’re going to consume more."

    Goldman tweaks its retailer ratings: Macy’s (M -1.7%) and J.C. Penney (JCP -1.8%) downgraded to Neutral from Buy because of limited upside and some possible near-term choppiness. Kohl’s (KSS) remains a Buy, with a new price target of $58. Price targets raised on Nordstrom (JWN), Saks (SKS) and Sears (SHLD).

    Microsoft’s (MSFT -1.8%) value simply can’t be unlocked if the status quo is maintained, says Goldman, downgrading the firm to Neutral from Buy and lowering its price target to $28 from $32. Among other concerns: "the newer threat of notebook cannibalization from tablets, where Windows does not yet have a presence."

  27. Adding to existing MSFT position (April 25 calls); but also selling a small amount of weekly 23 calls (delta 1) as a downside hedge

  28.  Tsunami alert near Japan

  29. USO/Dclark – Friday’s a little too close for comfort but you can spend .19 to roll them back to the regular Oct $35 puts (.51) net of selling the $34 puts for .25 and that puts you in the $1 bear put spread for .44.  Still risky of course but if you want to stick with it, that’s a good way to go. 

    Meanwhile, USO puts can be rolled up cheaply and that is a good idea if you have open ones!  At the moment, I like the Nov $33 puts at .55 as they have a .22 delta and that will jump to a .40 delta on a $2 move down, which would be roughly $76 oil so a good double on a  pullback to $75 and much better below that.

    Support/Resistance/Pastas – It’s a study on TOS if you have that under active trading.

    Ticonderoga/Cap – Well no wonder it had little effect…  

    NFLX/Kinki – We’re done with the puts so I’d live to see $180 as another short entry!

    MSFT/RN – GS downgrades usually hit a stock for 2 days.  

    Tsunami/Cap – Yes, the weight of the Yen is pushing the island lower into the water, I think…

  30. NFLX/Phil:  I can’t think of the last time I took an analyst price target seriously ;)

  31.  WYNN on a tear because Macau revenues are up 40% from last September but I read a NYTimes article this weekend about how Vegas is deader than dead.  It’s dangerous but I think WYNN may make a nice shorting opportunity as Zacks took them down last week for very good reasons.  They topped out at $95 two weeks ago and now back to $92 so I like selling the Nov $95s for $5 but they are now $4.25 so the plan would be to short 1x at $4.25 and 1x at $5.75 (if they keep going up) for a $5 average and then keep the next 2x reserved for a 2x roll to a higher, longer strike (the Jan $110s are $2.50).  

  32.  what in the world is happening to CCE, down 30% from Friday’s close? Did Pepsi finally win the taste challenge….

  33.  newbie—from Marketwatch "Coca-Cola Enterprises Inc. shares fell 30% after the globe’s biggest drink maker on Sunday said it completed its $3.4 billion buyout of its largest bottler.

  34. LULU had a fairly big blow-out spike up to $46 today.  The daily chart is look kind of toppy for what was a major momentum retailer in the Sep. rally.

  35. Good morning Phil,
    NFLX/Kinki – We’re done with the puts so I’d live to see $180 as another short entry!
    180 calls which month are you looking at Nov at 5.80 ? thks

  36. TOS – the lost charts.  When you log on to the application, there’s a "configure" button in the lower left before you enter your logon ID and password.  After you click that, you get a window with some tabs…one of them is "backup and restore".  That gives you a list of builds you can go back to and rebuild your charts/settings/etc.  Pick the 2nd to latest upgrade version.  I got hosed on the last upgrade and sent them a missile of an email.  Tech services sent me through this process. Worked fine for me.

  37. LVS/Phil:  Taking a huge run up on the Macau news as well.  Except this even has "Las Vegas" in its name!

  38. Phil,
    What counsel would you offer to hedge MLP positions (mainly transmission cos with limited exposure to oil, which however do seem to vary with cmdy pr nonetheless)? Only inverse vehicle (MLPS) is all of 3 days old. Most liquid etf is AMJ which is optionable (1 yr etf pr range: 24 -34, presently @high).
    Thanks in advance,

  39. CCE/Newbie – They closed the sale of North American bottling operations to KO for some cash (about $3.5Bn) and the assumption of debt  I’m not sure what I think of the value of the new, gutted company but I sure like KO!  

    And what Fortep said!  

    LULU/Kinki – The problem with shorting them is they are small ($3.5Bn) and very faddish on the West Coast so they tend to pop if some movie star mentions them or wears them – that makes them kind of hard to ride out.  They have really good growth for the next 12 months but slowing after that so long-term, a good short play but I think there are better (worse) stocks to pick on.  

    NFLX/Yodi – I’m not looking at anything yet.  I mean I’d actually like to see them run up to $180 where I would be thrilled to short them again.  I don’t think that will happen but I’m certainly not interested in shorting them at $156 so hopefully they head up first.  Be patient, they have weekly calls so we can catch a good spike whenever it comes to go short.  


    10:00 AM On the hour: Dow +0.02%. 10-yr +0.21%. Euro -0.65% vs. dollar. Crude +0.36% to $81.87. Gold -0.11% to $1316.30. 

    11:00 AM On the hour: Dow -0.31%. 10-yr +0.31%. Euro -0.79% vs. dollar. Crude +0.05% to $81.62. Gold -0.19% to $1315.30.
    Analysts are cutting their forecasts for S&P 500 earnings for the first time in more than a year, Bloomberg finds. Retooling has helped U.S. companies wrest big earnings from lower revenue, but as one analyst says, “you can only cut costs so much before you start cutting into bone." 
    Keynes wouldn’t be cheered by China benefiting most from his ideas, Nancy Folbre writes. "No country has taken better advantage of free trade than China, with its controlled currency and strong industrial policies," she says. "China’s state capitalist regime has borrowed Keynesian theory from the West and garnered huge profits from it.”

  40. I may have missed it but were there any suggestions on the DIA OCT 105 P’s  purchased at .72?   Roll them to Nov or wait and see what happens this week? 

  41. Buying QQQQ Nov $49 puts and half covered with weekly 49 puts; out at 20%

  42.  LVS/Kinki – Very manipulated stock so I’d rather short WYNN.  On the whole, LVS is just as good a short.

    AMJ/8800 – I don’t know that much about them.  It’s an interesting investment as transmission does tend to survive most shocks but, as you note, is not immune to price fluctuations so I’d say Something like March $31s as a base position, selling Nov $33s for $1.10 (and the Nov $32 puts for $1.10 if you want to be more aggressive) and buying out calls on dips and reselling them pops but, other than that, it’s just not worth the bother (and even that probably isn’t as there’s little premium at any strike).

    DIA/Sun – At this point, if you didn’t DD or roll then getting out even should be your goal.  They are .57 so not too bad adn we should do better by the day’s end (hopefully we at least test 10,700) but it’s not worth the risk with just 10 days left.  

    QQQQ/Rn – Good strategy.  

  43. Sep was a huge leverage up month (bag holders)…not sure if this is just a test but if smart money has taken the other side of the bullish run in sep then I would think the dollar can make it past 78.70 without much resistance. Very curious the dollar having nothing to do with this move..maybe just Europe dumping

  44. JR/.67 Line
    I think you’re a covert  BOT.

  45. IWM hit that 66.67 line on the nose and is holding it at the moment, that’s a key level to watch, right about 667 on the RUT and, of course, failing 666 would not be good as the RUT has been our downside leader for quite a while and that’s their 5% line.  

    Of course I say not good but I think most of us are bearish – I just have trouble flipping my language as I do prefer to see the market going up, even when I’m betting it won’t. 

    Oil is hanging on but failed to hold $82.  Copper is $3.67, gold $1,317 so we’re not too weak and now the QQQQ WEEKLY $48s are .75 now (we’ve been watching since $1.08 at the open) so I like them enough to pick them now with a stop if the RUT fails to hold 667.  I’m thinking AAPL may take off so this is a side bet on that.

  46. Phil,
    Sorry but relatively new to the vocab so would like a little more help: what is the base AMJ position Mar 31s (long/sht, P/C)  ?. Also, selling Nov 33 calls? (and Nov 32 puts?).
    Mainly interested in protecting the long positions (as opposed to collecting prem) I have so was thinking in terms of a bear spread – although it would involve buying premium (puts) as in buying Nov/Dec 33 puts and selling a lower put strike. Maybe offsetting debit with selling a higher call strike.
    Thanks again,
    AMJ/8800 – I don’t know that much about them.  It’s an interesting investment as transmission does tend to survive most shocks but, as you note, is not immune to price fluctuations so I’d say Something like March $31s as a base position, selling Nov $33s for $1.10 (and the Nov $32 puts for $1.10 if you want to be more aggressive) and buying out calls on dips and reselling them pops but, other than that, it’s just not worth the bother (and even that probably isn’t as there’s little premium at any strike).

  47. exec / bot

    Well Dave, I’m afraid I……………………………………………..

  48. Europe/Kustomz – Good thought, very possible. 

    AMJ/8800 – I am certainly not advocating the position but the March $31 calls (owning them) would be the base and you sell the Nov calls and the March puts to offset the purchase but I don’t like this trade at all if you aren’t going to day-trade the covers and, if you are asking me this question – chances are you shouldn’t be daytrading the covers!  Ideally, if you are bullish at $33.94, you buy the March $31/Nov $33 bull call spread for $2 and sell the March $32 puts for $1.10 so net .90 on the trade and you have a $2 position advantage on the caller plus time to roll and worst case is the stock is put to you at net $33.  

    Woops, forget the Qs, XLF can’t hold $14.50 and that’s a bad sign all by itself

  49. JR,
    This is where I always mess up.  Did you flip to TNA?  I did at .67….never know how long to hold.

  50. Selling half of BIDU Nov 95 puts for 100% profit and letting rest run.

  51. And similar trade with XLF too (buy Nov 15 puts for 0.94, half cover with weekly $15 put for 0.65)
    Phil – while covering with weeklies, I always fear that someone might go for an early exercise on the options I sold, thus resulting in me also losing the time premium on the underlying longs. Recognizing that this is possible, is there some statistic on how many early exercises are there? I guess the only solution is to sell OTM weeklies?

  52. exec

    No, sold 1/2 TZA, still have the other 1/2; thinking of buying the first 1/2 back if they can’t take back 66.67 as the VIX is up and TBT still dropping

  53. Don’t know if you have time, but finished Eric Weiner’s SHADOW MARKET  this weekend, very enlightening read, but alot of what he says we’re already there on.  Only thing that bothered me about it is the premise of the actions of oil rich nations, China, and other Soverign Wealth funds are somehow "in the shadows".
    Maybe we’re just over-educated here at PSW, but it struck me throughout the book that all of this is happening right in front of our faces.  It’s not some super secret behind closed doors kind of thing.  The world is really not some wonderful Oz-like wonderland where everyone is taken care of and your pet never dies.  We(the US especially, but many in the West) have driven ourselves over a cliff, and we are not doing anything constructive about it.  The only thing we seem to be doing well is failing to pull the ripcord on our basejumping parachute.
    Man the ground is coming up fast…..Great book if you have the time.
    Sorry, probably should have been an after-hours post, but I’ve got the 2 yr old today and wanted to get my thought in before pre-school’s done. 
    Be safe y’all…..Hoss

  54. Good morning Phil/all!
    Has anyone encountered this?
    I sold some AAPL Oct 1 weeklies…. I thought expired on Sat.
    My Fidelity account still lists them today.
    As a result, I could not sell the stock itself, because of the calls and the limitations of options agreement.
    I was told that the weeklies from last week are not removed until Tuesday or Wednesday!,
    THEN, I can sell my position according to their rep.
    Anyone else experience this?
    Should I move my accounts? to where?

  55. Phil,
    Enjoyed your BNN interview. How would one play a possible real estate downturn by Nov (before QE2)? thinking a SRS (widow maker!) ($21.24) Nov $23/$26 bull call spread for $.48? or XHB ($15.51) Nov $16/$14 bear put spread for $.75? Any others?

  56. We are down 1 1/4% on average and on a line they must defend so I expect a push here. Let’s just see if it works !! Out of TZA at $26.96

  57. Hey all,
    I have a new Play of the Week available for you now in Alcoa Inc. (AA). We will need this one to come down some in price still before an entry, but it definitely could have a nice week on a bit more downwards movement.
    Good Investing!

  58. Phil,
    Sorry for the confusion and rather than take up more mkt hrs time an AH response would be okay. I have long positions in MLPs and am interested in hedging them against an oil price induced drop. The most likely vehicle is AMJ which is a long MLP etf. So wanted to get your thghts on the type of spread to hedge those long stock positions I have ,perhaps using bear put sprd using AMJ, buying higher strike and selling lwr, with possible sale of higher call strike.

    Thanks again,
    Mainly interested in protecting the long positions (as opposed to collecting prem) I have so was thinking in terms of a bear spread -although it would involve buying premium (puts) as in buying Nov/Dec 33 puts and selling a lower put strike. Maybe offsetting debit with selling a higher call strike.

    Thanks again,
    AMJ/8800 – I am certainly not advocating the position but the March $31 calls (owning them) would be the base and you sell the Nov calls and the March puts to offset the purchase but I don’t like this trade at all if you aren’t going to day-trade the covers and, if you are asking me this question – chances are you shouldn’t be daytrading the covers!  Ideally, if you are bullish at $33.94, you buy the March $31/Nov $33 bull call spread for $2 and sell the March $32 puts for $1.10 so net .90 on the trade and you have a $2 position advantage on the caller plus time to roll and worst case is the stock is put to you at net $33. 

  59. I have seen some crazy moves in MA, but today’s is in the top 10 of crazy moves

    ES was 1144 this AM now 1129, this market is on the verge of blowing a fuse

  60. Kustomz,

  61. Hang on

  62. exec/s&p mini

  63. Volume very low at 68M on the Dow at 12:15 (90M is "normal") so we can’t take anything seriously.  

    Houston ship channel is closed due to "power outage" – more Rent-A-Rebel shenanigans!  That’s keeping oil over $80 but the sector isn’t waiting and XLE is down 1.66% and OIH is off 2.5%.

    This is a tough spot as holding these 5% lines (Dow 10,710, Nas 2,310, Rut 666 – the S&P and NYSE are well over) is actually kind of bullish but, of course, blowing any of them is a little more bearish and blowing 3 of 5 is VERY BEARISH. 

    BIDU/Kinki – Very nice and good job not being greedy – ALL SHOULD TAKE NOTE!

    XLF/RN – When they are near $14 I just like selling puts.  The Nov $14 puts can be sold for .42 and .50 is a great price to get as that’s net $13.50, which is a very comfortable entry.  I think if you want to play them down, FAZ is way more fun at $13.35 and you can buy a Jan $10/15 bull call spread for $2 and sell the $11 puts for $1.15 (net .85 on the $5 spread that’s $3.35 in the money) and, if you want to be more aggressive, you can sell the weekly $14s for .15, which is .60 a month if things go well and, if not, you have a $3.15 profit before you owe the caller a penny.  

    "The world is really not some wonderful Oz-like wonderland"/Hoss – Hey – how about saying "spoiler alert" before ruining things for us?!?   8-)

    Weeklies/Maya – And they expired out of the money?  That makes no sense.  

    Real estate/Reza – Thanks.  I prefer the IYR shorts as they have relatively good spreads to play like the Jan $56/50 bear put spread for $2.90 and you can sell the $55 calls for $2 to drop it to .90 on the $6 trade that’s $3 in the money.  TOS margin account says net $5 to sell the calls so not too bad there and, of course, rollable.  

    Out/JRW – I’m thinking this is just a weak support bounce – we’ll see in a little while.  

    MLPs/8800 – How about ERY, the 3x energy bear?  You can buy the Jan $35/42 bull call spread for $3 and sell the $34 puts for $2.20, which is net .80 on the $7 spread that’s 100% in the money so ANY move down in the energy sector gives you a huge profit and you can roll the $34 puts to the Apr $27 puts so covered to about a 33% drop or more than 10% up in energy.  If you short 10 puts, the margin is about net $9 per share and then you spend $3 for the spread so $12,000 set aside to get $7,000 in upside protection and worst case is it’s put to you at net $34.90, which is 20% down from here.  Keep in mind you only want to hedge against about 1/2 your expected loss but this is the kind of hedge you can win – even if your positions do pretty well.  

    Fuse/Kustomz – Other than the dollar, I don’t even know what’s holding it up.

  64. reza99
    Regarding your comments concerning QE-2, I believe with all of my convictions, the Fed is looking for an excuse to launch their easing. When it comes, it will be huge. If Friday employment figures are dismal, then you can expect it right away, but no matter what….. it is coming !!! . Look for the dollar to tank and gold to soar.

  65.  Anyone know how to see weekly options on Etrade? Thanks!

  66. don’t believe etrade offers weekly options yet
    long rut calls for the afternoon bounce
    its monday right?
    got to be some mutual fund money coming in

  67.  Oh. I hate Etrade. 

    Interesting that they cant get much of a bid going yet with this drop….you’d think the people would be drooling to buy stocks at these low low prices….

  68. Maya--same happened with my acct--only I did not try to sell AAPL stock  at that time--did not realize they stopped you from selling the stock even though the call expired--will check with rep also

  69. Phil/Weak Support    
    The BOTs are trying hard to keep it up.  Don’t they normally succeed on light volume?

  70. 11:00 AM On the hour: Dow -0.31%. 10-yr +0.31%. Euro -0.79% vs. dollar. Crude +0.05% to $81.62. Gold -0.19% to $1315.30.

    12:00 PM On the hour: Dow -0.65%. 10-yr +0.26%. Euro -0.74% vs. dollar. Crude +0.43% to $81.93. Gold -0.09% to $1316.60. 

    Nasdaq legs down, now -1.2%, with Microsoft (MSFT) nowdown 2.1% after its downgrade by Goldman Sachs. Techs are among the worst performers so far today: down in sympathy, Apple (AAPL -1.2%), Intel (INTC -2.2%), Baidu (BIDU -2.5%).

    Visa (V -0.3%), MasterCard (MA -1.3%) and American Express (AXP -2.2%all decline, sued by the Justice Department in an antitrust probe, as Attorney General Eric Holder preps a 2 p.m. announcement on the cases. Visa and MasterCard are expected to settle, while Amex has said it would fight chargesUpdated 12:53 p.m.: "No intention" of settling, Amex says. 

    Despite its earlier cuts to Portugal’s rating, S&P sees anextremely low chance the country will default, saying fiscal consolidation shows a willingness to fix the budget. S&P expects Portugal’s GDP to shrink by 1.8% in 2011. 

    Yankee borrowers - foreign issuers that sell dollar-denominated debt in the U.S. to take advantage of interest rates – have the biggest share of the corporate bond market in a decade: 43% of sales this year. U.S. bond mutual funds took in $46.3B more in the first nine months this year than the same period last year.

    Ford Motor (F +4.1%) isn’t just a cost-cutting success story, says a bullish Morgan Stanley, initiating coverage of the carmaker at Overweight. MS says Ford’s earnings will be nearly 40% above consensus, due to success in developed markets instead of emerging markets. 

    Coca-Cola (KO) has wrapped its $12.3B buyout of the North American ops of bottler Coca-Cola Enterprises (CCE -31.1%, reflecting a$10/share cash dividend as part of the deal) – and reiterates plans for $1.5B in share buybacks. There’s no time to celebrate, with a lot of work ahead, says CEO Muhtar Kent: "This is not a victory lap." (previously)

  71. Maya, Savitri
    Fidelity – make sure you call the Active Trader hotline, they are the only folks at Fidelity that can deal with this problem.
    They should fix it for you

  72. gel1:
    Thanks for sharing your convictions on the QE2 and the subsequent dollar(down)/gold price moves. It is possible it may take a while longer for the housing downturn to be reflected in the RE indices if QE2 is announced.

  73.  Volume/Exec – Yes but it’s been a very choppy week of no volume and they haven’t done much with that.  It seems to me that the Bots are now releasing what they bought back into the wilds of the retail bag-holders.  As you can see the VIX shot up 7.5% today so I still think the Big Boys are accumulating their puts just before they pull the rug out completely.  Have I mentioned I like cash lately?  

    Cool chart from Barry’s site:


  74. Phil – Agree, but I cannot sell naked puts. I could make it a bull put spread (by maybe buying the $11 or $12 put), but that doesn’t seem worth the margin (with commissions, etc.). Till then, I found this to be the best way to play a not so bullish alternate (it might go up, but I would rather expect it to go down by Nov)

  75. Pharmboy, just sold the last of my VNDA (happy I got 80% out at 15, and you told me last Spring it was getting boring – you were right!).  Planning to put half of the winnings into NNVC, just checking to see if you still like them long term…

  76. Here’s what turned the markets back up (of course):

    Brian Sack - New York Fed’s POMO man - says expanding the central bank’s balance sheet will help stimulate a "relatively tepid" recovery not only by lowering longer-term borrowing costs but adding to household wealth, by supporting asset prices. 

  77. edro00--Tx

  78. Anyone have Phil’s link to the Robert Precher article from two weeks ago?

  79. Borrowing costs for who?  30% of the public cannot get a loan b’c their FICO scores suck!  The other 30% are underwater.  So that makes sense, ’cause my house is going to lose 50% more of its value – unless of course I line my attic with gold (or treasuries). 

  80. MRM – yes I like them and CRIS.

  81. Phil, sometimes I struggle a bit when it comes to deciding what to do with a winning position. Sometimes you advocate the non-greedy mentality by retiring big winners instead of attempting to exploit the full profit, and other times you advocate not to pay premium back when we are close to expiration week.
    I have short 4x Oct $170s in NFLX at an avg premium of $5.5.. the options are $15 out of the money with 9 trading days left. The options are now $1.58 (71% profit) so I’m unsure whether to take the profits or leave it there until expiration as I believe I have a big chance of them expiring worthless… other times you suggest taking half off the table and leave the rest with a tight stop. So, I’m trying to refine my judgment on these situations, what is your recommendation now?

  82. ARNA up 7%. Not sure why.

  83. Somethings going on, traded MET this morning it looked very strong and here it is at the LOD and heading lower, maybe im just reading too much into this move or maybe someones getting out on the sneak…tom is POMO day as well


  84. kustomz / Thanks

  85. hanna5 – etrade doesn’t have weekly options yet.  but TOS and optionsexpress have them.

  86. Phil, one of your points is finally catching on.

  87. Phil,
    I am still holding the Nov 165 NFLX  selling the naked calls.  I don’t mind owning the stock and can do that BUT they did spike up to 170 so I sold a bunch more.  I did sell half of the ones that I bought at the higher premium but the earlier ones are just at breakeven. 
    Are you recommending that we get out of NFLX now?  You are saying that you want it to run up but I would certainly not want that to happen especially since you put your foot down on them at 165.  I am a bit uncertain about the direction you’re going with NFLX at the moment.  Like ravalos, I am having trouble managing with your running commentary.

  88. Phil, how about USO $38 puts (weeklies) here, at $2.35.

  89.  XLF/RN – That is limiting but the bull call spread alone has 150% upside so just keep tight stops maybe?   I just lean towards hedges where there’s a least a chance of a double win. 

    It’s all about Jobs this week.  Consumer Credit is also on Thursday and Friday is NFP, which is a big deal and, of course, AA kicks of earnings season on Thursday.  

    Precher/JRW – What, the interview or the Elliot Wave posts?    You can see his stuff here (no T in the name… except for at the end of Robert, of course).  

    ADBE making new lows!  AXP looking crappy – much worse than V and MA for some reason. 

    Struggles/Rav – Well, that’s because it does depend on the stock and the strike and the market.  Right now, we risk a big sell-off.  Aside from an overbought market we have another terror overhang in Europe so I leaned towards cashing out winners – even relatively small ones, if there is ANY risk to the downside.  Since we feel our risk is on a sell-off and since we don’t see the value in NFLX, I’d put a $2.25 stop on those calls (20% trailing stop) so you at least make 50%.  Now, think this through.  If you are going to stop at 50% and you are up 75% now, that means you might make 100% or you might make 50% or you can DEFINITELY make 75% by taking 1/2 off now and then possibly make either 87.5% total or 62.5%.  So, if you think there is ANY chance at all that you will be stopped out at 50%, it is silly not to sell half now, right?  If you think the odds are 50/50 that you get stopped out at 50%, then it probably makes more sense to take 75% now.  If you don’t REALLY, REALLY not mind rolling NFLX callers to the Jan $200s (now $5.50) and patiently waiting with your convictions AND you have no need to release the margin, nor will it bother you to tie it up through Jan – then you can ride it out.  

    Wealth Distribution/Craig – Thanks!  I love seeing things I think are important start to get into the conversation – very rewarding

    This is kind of sick, the bottom 40% don’t even register on the chart!  It’s interesting that Bush voters think they have the least (at the top) but even more interesting that they consider an ideal distribution kind of in line with everyone else.  As I keep saying – it’s only a misinformed public that allows this crap to persist.  The wealthy control the media and cut those education budgets so we have this massive separation of reality..

  90.  Augrusot / ARNA – This may have something to do with it….

  91. Phil/Volume:
    That’s what I like about you…….just like that dude in Terminator……you’ve mutated and learned to think like a BOT.

  92.  Maya – I did experience that w/ Fidelity and the weeklies.   It is an unacceptable system glitch.
    They should be able to manually fix it for you and not make you wait until Tues or Wed.
    You should demand it.
    You are probably not speaking to the correct folks; try the Active Trading folks.

  93. Phil, Savi
    Yes the calls expired out of the money on Friday!
    The rep told me this morning that they don’t settle till wed.
    Naturally, I did not like that, and told them so…
    Well, guess what, the calls have mysteriously now been converted to ‘expired’ 30 minutes after the conversation.
    I have asked for an explanation…waiting.

  94. Made so much selling PCLN calls (out at 72%) that I thought I’d play with a little bit of the winnings, bought a few NFLX 160/165 weekly spreads for $1 in case they decide to start gaming that stock again after the jobs number…

  95. Cap, yes they said they can override it.
    However, that cost me thousands of dollars this morning in the retirement account, although I was able to get the sale price for Aapl in the other account…
    By the time I called the desk, the stock was down $3.

  96. OC / Phil – what do you think about the timing of a short position (bear put spread) on OC? I thought I’d wait to see how they responded to a little pull back before I entered.

  97. Europe just closed above its mid range line.
    We had a disconnect in the US with the markets shooting past June and August highs whereas Europe did remain within its range.
    If we follow Europe move down we are going back to 1100 on SPX

  98. Cap, Maya - I also consider Fidelity a dangerous place to trade in an IRA.  When I buy a call spread, I can’t roll the bought calls down; I have to first buy the lower strikes and then call the Options Support line to have them re-bind the existing sold calls to the new bought calls at the lower strike, then I can sell the higher strikes and effectively I have done a roll.  But it’s a giant pain!  According to them: ‘if we let you  roll your long calls down, for one millisecond while the trade is executing your short calls would be naked, we don’t allow that in an IRA’.  Pure piffle, OXPS lets me do it just fine and I’ve moved almost everything from Fidelity to there.  Also, you can’t trade 2x and 3x ETFs with them without major pain, if you enter a spread order for SQQQ, for example, that costs $500, it will show the impact on buying power as -$11,000 or such, so you’re locked out of any other trades until the spread executes.  I’ve called them monthly about these bugs for a year, they could care less.

  99. colored comments? / anyone – how come my comments on this list now appear with a gray backgound, am i getting seniority or what?

  100. Tenger/
    This comment is gray

  101. Tenger/
    This one is not :)

  102. tenger: no, you’re every other guy. gray and white are the default, easier to read if they alternate.

  103.  Mocha -
    Fidelity; others.  They all have their limitations unfortunately.  Its a pain in the ass and often defies common sense.

  104.  NFLX/DD – Well we rolled up to higher puts and they are gone now but you have to expect wild volatility in a momentum stock.  I forget the entry on those but they went all the way to $20 last week and are now at $9.70 so that’s a 50% drop right there!  They could go back to $20 or they could go to $5 but they probably won’t go much lower than that between now and late Oct.  I’d certainly use stops if they head back up and you can always sell higher calls later, now that we know they have that kind of run in them (we didn’t know that when they hit $165 but we’re smarter now so we make better decisions).  I want it to run up because I thought everyone took the money and ran but just guard your profits and have a plan for what you’ll do if they gap up $10 on some silly upgrade (will you roll up to 2x the $185s, will you roll to 1x the Jan $180s, will you buy the Jan $180s to cover?).  As long as you are comfortable with your "outs", then you can hang on to the trade.  This is always true, in options and in poker!  

    USO/Jordan – Looks to me like they’re going for $82.50 and then inventory is a wild-card tomorrow so I’d go for more length and less delta risk.  

    Mutation/Exec – Well it is the time-tested way of surviving on this planet…

    Weeklies/Maya – I think it’s just their own policy and most people trading options probably don’t think twice about it so they get to hold their money for free.  Good job not being one of the sheeple but you should consider a more option-friendly brokerage.   

    FSLR coming down nicely.

    Nicely done Mr. M!

    OC/Tenger – I like those guys, they are certainly not someone I would short at this price.   Let me know if you do well and I’ll start a buy when you exit! 

    Color/Tenger – White comments actually alternated white and light gray, just to be easier on the eyes.  Did you change monitors or browsers – maybe you just didn’t see them before?

    And what Jordan said! 

  105. gel1
    NGG --doing well today, thanks for that idea the other day—i agree with what you say about QE2 and gold--do you have any
    particular gold stocks you like at the moment--i am in au and gdx--

  106. mrmocha
    I am looking at your NFLX weekly play vertical 160/165. even with PM margin to receive aprox 94.00/ per contract you paying 1630.00 in margin yes in one week all goes well you make 5.7 % on that margin. Do I have this right??? I feel this is more like roulet.

  107. Phil: regarding AXP, V, and MA… Apparently V and Ma agreed to settle the antitrust suit, and AXP said no way, and  they are going to fight it. That’s why they are down so much more.

  108.  1:00 PM On the hour: Dow -0.85%. 10-yr +0.31%. Euro -0.75% vs. dollar. Crude +0.02% to $81.60. Gold -0.16% to $1315.70.

    2:00 PM On the hour: Dow -0.87%. 10-yr +0.32%. Euro -0.77% vs. dollar. Crude +0.42% to $81.92. Gold -0.08% to $1316.80.
    John Hussman sees the current market as a "Ponzi game" where valuations are unsustainable and "speculators increasingly rely on finding a greater fool." At a Shiller P/E of 21 and at historical peak-to-peak S&P earnings growth of 6%, a simple reversion to the historical (non-bubble) norm of 14 shows that "stocks are not cheap here."
    When orders-to-inventory data have been at the levels they are now, the economy has slipped into recession 75% of the time, David Rosenberg notes. The ratio tends to lead headline ISM by around three months, he says. 
    Hedge funds, HFT firms and individual investors cut stock trading activity in Q3, sending volumes down 25% from Q2, raising questions about the conviction behind September’s rally. It also casts a pall over the coming earnings season for banks, brokerage firms and exchanges, which make their living from churn in the markets.
    October may bring more of a trick than a treat to investors, Bank of America’s (BAC) Mary Ann Bartels believes, citing weakening short-term price momentum indicators in the face of continuing low volume. "We remain defensive, expecting a correction that could be up to 10%-12%.” 

     What’s scary is that this stuff passes for news – we’ve been talking about these issues all month! 

  109. mrmocha
    Sorry the  total credit is 285.00 and not 94.00 so the percentage is 17.4% well still do not like the margin

  110. mrmocha 
    sorry my first calculation is correct ignore the second message

  111. Phil/Stick    
    Any chance for a stick in this environment?  Do you think the Controller of the Bots might bring it up so they can accumulate their puts cheaper?

  112. Phil
    Glad to see a few seeing the wage issue. What I can’t understand is why don’t the wealthy understand that the only way to make money by velocity increases requires the workers to get more money and spend it supporting the next leg up etc and eventually the top makes more? Deflation effects all including the top eventually. Give the money to the top and eventually the system breaks down because there is no base to support it, like houses built on stumps the foundation rots away and the house falls down. You may be on the roof but you have no house!

  113. Lack of volume is no news – yes, but I found it peculiar being on the front page of the WSJ. Murdock must have a reason to point out the lack of volume…

  114. let’s see if my instinct is right (got it in writing here): close near days lows (or still deep in the red), gap down tomorrow, try and make up for the rest of the day before a fall later in the week or next.

  115.  AXP/Jordan – Ah, thanks.  Well, AXP is right, it’s nonsense when there are 3 major players negotiating.  Will be nice if they get cheap off this as the cost of complying now vs dragging it out in a 3-year court battle is a no brainer. 

    Stick/Exec – I think "THEY" are pretty much done buying.  They propped up the market and hit their goal and now they’d like to keep it up for a while so they can fill their funds with inflows (people chasing performance) and then, once they have cash, they want to tank the markets until everyone is screaming SELLSELLSELL and THEN they’ll start buying again.

    Base/Shadow – Yes except we’re not in a closed loop system.  The real rich in this country have moved on and are invested in China and India and other emerging markets.  America is stale and the American workers are nothing more than expensive, worn-out parts of a machine they used to use before they learned better.  Now America and the American people are nothing more than a drag on multi-national investors and corporations – not good for anything other than whatever money they can still squeeze you for.  

    Tomorrow/RN – Well it usually is a "Testy Tuesday" so a good day for the 5% rule to test out.  

  116. Phil, you’re getting your Jburs and your Jordans all mixed up…. but it’s ok b/c my AXP Oct 41 callers are happiness :)

  117. Testy Tuesday/Phil – I first thought tomorrow would be Tumultuous, but then realized those are Thursdays :)

  118. JRW/
    What is your R/S number for 666?

  119. Yeah I wouldn’t know AXP even if it hit me.

  120. lionel / 66.67

  121.  Jordan/Jbur – Hey, if I only mess up one out of 100 I’m happy!

    Good note from Barry:  

    The out of control foreclosure machinery has officially been brought into the shop for repairs.

    The real estate financing industry appears to have brought the same technical expertise that allowed automated underwriting of mortgages to an automated foreclosure process: Structurally flawed, rife with errors, guaranteed to fail — and in need if an immediate overhaul.

    As we have seen, homeowners without mortgages have lost their home to foreclosure. That this legal impossibility actually occurred  reveals the foreclosure process, especially in Florida (but other states as well)as little more than a legal conveyor belt, bereft of oversight, manned by parasitic law firms and over whlemed bankers.

    It is Lucy on the chocolate factory line, only with Homes being repossessed instead of bon bons slipping by unwrapped.

    This more than merely “flawed paperwork” — the entire process is problematic. It has reached such depths that numerous banks have voluntarily stopped foreclosures while they review their internal processes, and the methods used by local law firms they hire. Called Foreclosure mills, many of these firms employ illegal methods to their legal practices. They use robo-signers instead of reviewing documents reviewed by lawyers; they hire process servers with histories of fraud and criminality. In the pursuit of foreclosure profits, they have tried to turn the practice of law into a clerical act of foreclosure, repossession, and resale — consequences be damned.

    Also worth reading:  How Flawed Was The Paperwork?

  122. datuu / Gold
    I must admit, I am a  "buggy-eyed" gold bug, and have most of my gold assets in GLD. I however have probably 20 other holdings, so I am diversified in both the bulion gold as well as the miners. The miners this year are lagging the spot gold price in appreciation ( not unusual ), so we will see some catch up as the miners dispose of their inventory. I also am in AU and GDX, and I consider the AU the best miner play at the moment. Peter Schiff believes gold will reach $5,000 / oz on this run up over the next few years. I am more conservative, and would consider $3,000 more realistic. Remember, we are looking at "humungous" inflation in the US after the economy starts to crank. The Fed will be behind the curve on this one, and it could develop into HYPERinflation, as the dollars have been printed…. they are just not circulating yet, and the velocity is not evident so far.  It is tough living as a "bug", as so many think you are nuts, but I believe my projections are correct, and my bet is on the line.

  123. Interesting, ever since the morning when the Nasdaq tanked and the other indices had a more moderate decline, the Nasdaq has been held in one place, while the other indices have caught up to the downside.

  124. Yodi, I bought the NFLX debit spread – long 160 calls, short 165 calls. No margin, just $1 debit to make $5 if they goose it back to 165 by Friday.  Just a fun craps roll on the long side to balance the shorts I have.

  125. JRW/
    Sorry I meant 66.67. But what is your R/S number for that support?
    You explained to us in a previous post that you calculate how many times we bounced off that line within a specific time frame that I dont remember. Ohh Mr Stick is back

  126. Phil – Forgot the $85 stop out of the VNO puts from Friday.  VNO is UP today (are you kidding me? UBS seems to have upgraded some REITs saying that strip centers will outperform malls, so naturally even the mall reits are up.)  I’m more inclined to DD…

  127. Speaking of VNO, I’m wondering about a ratio backspread instead of buying puts, but not quite sure how to appropriately construct one.  Sell 2 Nov 90′s for 2.00 and buy a Jan 90 for 4.00?  (5/3 ratio is a little rich for my blood, or at least for my account.)

  128.  Bug/Gel – Well it will be great if it pans out but consider whether GLD can deliver what they promise you if it all hits the fan.  

    Catch-up/Jordan – That happens when you hit key resistance zones, Nas is waiting for the others to cross the line.  So far, no takers.  

    VNO/Rdn – As we’re holding the 5% rule today, I’d wait to see if they can retake $87.50 tomorrow before doubling down (and you might want to roll up first).  

    Stick is back/Lionel – I like the Elton version.  

  129. I hate the last hour stick save..

  130. Phil
    Remember those multinational corps. need the American consumer or that house will fall, no buyers no profit, no profit loose investment. Eventually everyone looses.

  131. Interesting…..IWM not budging

  132.  Last hour stick save. And, AMZN still acting like its 1999. Yawn.

  133. exec
    IWM not budging yet I have IWM puts. Big sell3:33!

  134. mrmocha
    Thanks NFLX that is different but going up 9.00 until Friday a lot of optimism for me. good luck

  135. (e)Book writers – B&N just launched PubIt! – a service which lets you publish your own e-book and keep some reasonable percentage of the profits. Some of you  guys that have written books may want to consider(?)

  136. lionel / 66.67 is a 12

  137.  Hey that’s funny, Coke CEO is pushing Vitamin water on CNBC – that was my top criticism when they asked me, that they didn’t brand themselves enough with that stuff…

      Americans/Shadow – Not for long.  US consumers spent "just" $4Tn last year.  That’s only 10% of the global GDP.  Figure 75% of that is necessities and our swing consumption is just $1Tn, or less than $1,000 per person in China and about $350 per Asian so a tiny little raise for Asia and American consumers become completely redundant.  The reality is they are gaining faster than we are dropping so we’re a non-entity in multi-national corporate planning.  Because it’s also obvious that the marginal consumption from us won’t amount to much more than $500Bn a year – there’s really no point in even attempting to develop or maintain this market.  

    Uh-oh – Jim Rogers left China to go on CNBC – he must need something!  

    Publit/Kwan – That’s cool. 

  138. Phil, I have the ADBE position with the Jan 24/28 bull call and 26 short puts. Looking at the chart a 5 year chart shows some support at 25, but little support downward from there. In this market environ do you have any concerns? Just wanted to hear your thoughts. Thanks

  139. Thanks JRW.
    Would you mind after hour reexplaining how you come with this number?
    So next time I wont bother you.
    By the way, They are really fighting hard to keep us away from retesting 666.
    It may not be as strong support as it seems (2 weeks ago when we broke down 666 we went all the way down to the SMA 200 which at the time was at 64.75.
    Rn you may be right on a gap down tomorrow.

  140. Phil, I enjoyed your appearance in BNN on Friday, but I have a question: do they allow to say "suckers" in the air? :D

  141. Phil
    OK we lost and we keep the people that don’t want to pay taxes here by extending tax cuts to the rich. WHY? Sounds like a loose loose!

  142. thanks gel--
    i definitely don’t think your nuts but i still (as i asked you last week) question the end game for gold? i see it going up primarily do to currency debasement but if we don’t go to the gold standard (which you said you don’t believe will happen and i don’t either) then how is the gold going to be used--we’ll have all this gold and we are going to trade it for bread? studies i have read show that gold is a good crisis hedge but hasn’t actually done all that well during inflation--it seems to me i’d rather have a commodity that everybody will need to use like oil--
    i also am concerned about what phil said about gld and do they really have the gold they are supposed to have--hey have you ever read read john doody’s gold stock analyst--he has way out performed gold, and gold mutual funds for years--
    thanks again--

  143. 03:00 PM On the hour: Dow -0.95%. 10-yr +0.31%. Euro -0.68% vs. dollar. Crude +0.03% to $81.60. Gold -0.1% to $1316.50. 

    Finally catching on to what I’ve been saying:  Goldman Sachs (GS), long one of the biggest Treasury bond bulls, now says the rally has seen its peak and the best trade going forward is to buy stocks, not bonds. Francesco Garzarelli, Goldman top interest rate strategist, says the 10-year note’s yield has seen its bottom in the 2.45%-2.5% range, breaking ranks with other bulls.
    Here’s one of many ways NFLX is screwed:  Google (GOOG -1%) lines up partners to help deliver its Google TV service. It will be built into the new TV you buy – Sony (SNE -0.4%) has developed compatible TVs – or you could buy a separate set-top box via Logitech (LOGI -2%) and Intel (INTC -2.6%) to add to your existing TV. It looks good but pricey, Dan Frommer writes. 
    American Express (AXP -7.1%accelerates its slide as battle positions harden in the standoff with the Justice Department. AG Eric Holder cites AXP as having "the most restrictive merchant rules and the highest fees in the card business," preventing merchants from offering rebates and discounts for using Visa (V +0.2%) and MasterCard (MA -1%), effectively holding consumers “hostage." 
    Petrobras (PBR +0.2%), after raising nearly $70M in a share sale last month in the world’s largest offering, may need to raise an additional $60B to fund its plans to double production by 2020, Nomura Holdings says. 

  144. This is another BIG bad one for NFLX:
    Wedge Partners said not all content providers are willing to work with Netflix and they expect this trend to continue.

  145. Well, it looks like they’re going to push a little into the close, but I’m done for the day with the one TZA trade this morning; 5% on the day, good enough to start the week !!

  146.  TLT/TBT/Phil
    "Finally catching on to what I’ve been saying: ….. buy stocks, not bonds"  
    Is this a signal of a TLT/TBT trade opportunity ?  

  147. Phil,
    TASR taking a beating. I don’t know if it is the lawsuit announced last week or not. To risky or good time to sell some puts?

  148. Staying uncovered on the mattress hedge tonight?

  149. Phil,
    Is there a link to your interview? Thanks – always like to see the master in action.

  150. datuu / Gold
    I believe the debasement of thedollar is the prime mover in the gold pricing ( gold is priced in dollars ). We are entering a long protracted downward move in the dollar value  (DXC). The recent moves downward in the dollar had an interesting collelation in the move upward in gold. The ratio is interesting and shows a leverage for gold. The US dollar moved down 7.13% whereas the gold price moved up 10.6%. So factoring this ratio ( should it hold ) be can anticipate a ratio move in gold upward of approximately 3 : 2 to the drop un the USD. – NICE ODDS on a dollar denominated investment.

  151. reza/ravalos — thanks for reminding me about Phil’s BNN interview. I like how they accused him of not liking any tech stocks, and then he responded by saying, "Call me crazy but when a stock goes up 40% in a month…."

  152. oops – lots of spelling errors…. time for new batteries in the keyboard.

  153. oops – lots of spelling errors…. time for new batteries in the keyboard.

  154.  ADBE/Jbur – Not if you REALLY want to own 1x for net $26.  If they head lower than yes, I think concern is warranted but you can always buy Nov $26 calls (now $1.37) as a momentum play below $25 and then use the profits (if any) to put towards a roll to a better position.  Also, since they don’t seem to be racing back, you could consider selling Nov $26 calls for $1 as you are $2 in the money at $26 and you don’t have to give his dollar back until $27, where your’e $3 in the money. 

    Suckers/Rav – I thought the funny thing was they did censor my nod and wink with the OK sign when I said "Jim Cramer would never do that to people", which totally changed the whole thing to make it seem like that’s actually what I meant.  Perhaps Canadians simply don’t get sarcasm…  Next time I bring a boom box to have my own "Canadian Idiot" background music!  

    Losers/Shadow – We’re nothing but a fully exploited colony, out of resources with natives that are too fat and lazy to put in productive work so the carpetbaggers have rolled up their tents and moved on to greener pastures (now that they’ve removed the last of the wealth).  As long as we have something left to squeeze they aren’t going to walk away but don’t you dare ask them to contribute.  Think about it, what do the rich want from America?  Open up the last of our oil reserves, let them pollute, let them employ Americans for "competitive (ie. slave) labor rates" and, oh, let them live tax-free or they’ll leave.  It’s hardly a hidden agenda when its one of the major political party’s platforms, is it?  

    That finish was not so bad.  If we fall our 2.5% by falling 1.4% and 0.7% and 0.35% then we will land on the 5% lines like a feather and be ready to bounce.

    TBT/Newbie – You would think so but the only thing worse than SRS is TBT (with honorable mention going to UNG).  

    TASR/RJ – There’s a whole big thing going on, hard to say what’s real in that suit as the Guy did work for TASR and did file a patent but is it TASR work product or not?  The problem is that McNulty seems to be backed by  BAE and that means they can afford a long, costly suit and those are never fun.  

    Mattress/Deano – With all the terrorism talk in Europe, you gotta have some serious hedges but make sure you aren’t over-protecting the portfolio if you’ve been getting more bearish.

    Thanks Jvest.  TV interviews are strange.  They shove you in a little booth and stick a thing in your ear and then ask you about 10 topics in 8 minutes.  That’s why I hardly ever go but I was feeling bad as I promised them I’d do Sept but missed it when I had to go to Florida.   At least I’m the lead on their 5pm show…

  155.  Batteries/Gel – Yeah, that’s the ticket – batteries!  If I had batteries I’d be spelling like a champ…  8-)


    04:00 PM At the close: Dow -0.72% to 10751. S&P -0.8% to 1137. Nasdaq -1.11% to 2345.
    Treasurys: 30-year +0.37%. 10-yr +0.29%. 5-yr +0.15%.
    Commodities: Crude +0.05% to $81.62. Gold -0.14% to $1316.00.
    Currencies: Euro -0.77% vs. dollar. Yen -0.11%. Pound +0.05%.


    Market recap: Stocks slumped and the dollar rallied ahead of jobless numbers and the start of earnings season. The Dow was weighed down by American Express after the Justice Department filed a civil antitrust complaint against it, and Microsoft’s downgrade hurt techs. Two-year Treasury yields touched a record low 2.46%. NYSE decliners led advancers nearly three to one.

  156. Phil/Jvest: Yeah, it was entertaining to see Phil’s ideas on blue chips, techs and that day’s earlier play w/a 600% return (DIA puts).

  157. Does anyone keep tabs on the after hours trading.  I’ve been watching it lately and it seems to me that it’s more manipulated that regular trading…..(if that’s possible)….it seems to me that they move the stock to create an illusion….like today for example….TNA is rising, then the next day the market does the opposite of what the after hour move suggests.  Has anyone noticed this phenomenon or am I imagining it?

  158. AH trades/exec: I am very weary of AH/PO trades; RIMM’s recent price actions on the night of earnings announcement (+4) and the next day’s ($48.39 @open to  close @ $46.72) are case in point.

  159. Yeah Phil, that’s bullsh!t! Looked on the link and right where you get to the part where you talk about cramer they put up a chart of NFLX! It DID sound like you meant that Cramer "Would never do that"!

  160. Phil, Since MOS had a big fat miss.  Do you expect MOS to be the first to fall on your list of 8 shorts?  In this environment, it seems highly unlikely that this stock will get bought up.  Also, it looks like added downward pressure will be added in the sector with MON reporting in 2 days.

  161. Just watched the TV appearance, fun to watch but i had to agree with the lady, Green Mtn Coffee is not quality coffee.

  162. Just noticed that YRCW dropped 22% today.  They have a reverse split.  But why the drop?  Just because of the reverse split??

  163. Ok, so our personal income was up last month 0.5%.  Here is why…

  164. Another Flash Crash…..

  165. Ilene & Phil…nice!

  166. It will be interesting to see if this pans out:

    "As circulated by a very prominent prime broker, the following names (and several others) might show up on buy-in lists tomorrow:  NOK and KLAC, but most notably SPY and IWM. As a reminder these kinds of broad index ETF buy-ins occurred in March and April 2009 when the market surged higher day after day without a care in the world. Couple this with tomorrow being a POMO day, focusing on the belly-heavy portion of the curve (9/30/2016 – 8/15/2020), and we have a feeling red is not in the cards for stocks."

  167. test post to see if my name is back (fingers crossed)…

    "In David Tepper like fashion, Jim Rogers says commodities are in a win win situation (of course, Tepper said stocks were a win win just a week ago).  He says commodities are the obvious beneficiary of the current environment no matter what.  If the economy weakens the Fed will print, devalue the dollar and bid up commodities.  If the economy recovers commodities will also be bid up.  This is exactly what David Tepper expects, however, he sees equities being the beneficiary."
    Does Mr. Rogers need to unload some commodities longs, I suspect?

  169. I like the newsletter. Is this going to replace the weekly wrap up?

  170. Anyone know what time the Aussie interest rate decision is? I googled it and got conflicting reports of 2230 (Eastern) and 2330….

  171. jromeha
    The RBA has put the rates ON HOLD… look for further weakness in AUD/USD – there you have it!

  172. Thanks Pharmboy and Kwan!

  173. jromeha
    The BOJ has announced a new policy of QE up to 2.5 trillion Yen to be implimented in the future…. not a lot of excitement, but tempering the Yen strength somewhat. I am long the USD against the JPY, but watching closely.

  174. After hours/Exec – Well that’s just low-volume BS.  Stocks and indexes can be pushed around all over the place when no one is trading them – happens all the time.  

    BS/Jrom – Well, that’s show biz.  That’s why I like having my own "network" at PSW.  Even when I allowed Forbes to have my content, they immediately chopped out the parts they didn’t like – the MSM is a farce and it’s very sad that most people are not aware of that.  

    MOS/Ash – They were simply the Ag stock (as I thought the whole sector was overbought) most likely to fail.  Expectations were just crazy high for them so even these pretty good earnings are a disappointment.  I’m hoping they get down to the low $50s.  

    GMCR/Morx – If quality mattered, MCD would be a bad stock.  

    YRCW/Cwan – I expected the sell-off as the reverse split essentially gave some big boys room to make an exit.  We’ll see where they hold up in the end but we were hoping for at least $4 so they are holding up well considering. 

    Good chart Pharm!

    Newsletter: Nice job Ilene (and Elliot, our new newsletter editor!).  After a month of set-up and practice, this is our first actual full week we’ve gotten together so I thought we’d put it up for commentary.  It will be a work in progress for some time, of course but also the first of several newsletters we expect to put out with this one being the flagship/general newsletter.  Once we have that running smoothly (end of year), we can then look to put out some specific newsletters like ones that follow strategies or sectors.

    POMO day/Jordan – It sure seems so from the late action today.  It’s really difficult to play the market when, aside from world events and TA and watching the general market trends, you have to constantly worry about the government and the IBanks just screwing around with the market at will.   I think I pointed out two weeks ago that we gained 400 of 250 points for the week on two pre-market spikes that topped out just after the open – the rest of the week (90% of the trading time) was a 150-point loss but no one seems to care.  

    Welcome back Kwan!  Yes, the newsletter will replace the weekly wrap-up.  I got bored writing them and they took away from my reading time.  A little review is a very good thing but too much and you take away from the present.  Plus, now we can actually market it as a product!  

    Jim Rogers likes commodities?!?  Wow, I AM SHOCKED!   8-)

    I think I heard Rogers say "food demand will explode" which I find interesting with a fairly stable global population that has less money and a higher percentage of old people (who eat less) and less children (who eat more).  Is he suggesting that we’re all planning on getting much fatter?  

    Aussie/Jrom – On hold at 4.5%.   Still, better off putting your money in an Aussie savings bank at 6%,  which is backed by their government than in a 10-year T-Bill backed by ours at 2.5%!  

    Still, Aussies on hold give the dollar a chance to get off the mats.  I was checking on on the daily Yen dip, which now seems to come at 11:30-12:30 and we hit 83.96 this morning and already down 0.3, on the way to the usual 0.5.  The Nikkei is also boring and predictable, following the Yen and I’m thinking that playing those futures might be fun.  The currency bottomed out at 12:35 and was clearly moving down by 12:55 and the Nikk was still at 9,550 and then fell to 9,475 – that’s big bucks in the futures.

    Meanwhile, the Nikkei is up 155 for the day, even after the pullback so it looks like the ball will be ours to drop in the morning…

  175. USD is starting to move better now against the JPY… adjusting my stop loss above the entry level to lock in profit, and call it a day.

  176. Viva la Mexico!  


  178. Tuesday’s economic calendar:
    7:45 ICSC Retail Store Sales
    8:55 Redbook Chain Store Sales
    10:00 ISM Non-Manufacturing Index
    5:00 PM ABC Consumer Confidence Index

    Notable earnings after Tuesday’s close: YUM
    Rally fuel (More FREE MONEY!): Obama says he would be “very interested” in finding ways to lower the corporate tax rate so U.S. companies operating overseas aren’t disadvantaged. His remarks came during an announcement that McDonald’s (MCD), Gap (GPS) and other businesses will pair up with community colleges as part of a plan to boost job skills.
    Pump it up!  The huge rally in gold will continue, with $2,000/oz. well within sight over the next decade, Jim Rogers tells CNBC. But "get yourself a tractor," he adds, because food demand will explode and agriculture has been under-invested. 
    Some major macroeconomic signs point to a "probable" stock market crash, Keith McCullough writes, but it’s important to keep an eye on how October surprises play out around the globe. Historically, it’s the month for it (IIIIII). 
    The American public, already skeptical of free trade, is becoming increasingly hostile to it, according to a new WSJ poll. The ire has clouded prospects for approval of pending free trade pacts and prompted concern among U.S. businesses reliant on the rest of the world for growth. 
    Mosaic (MOS): FQ1 EPS of $0.67 misses by $0.05. Revenue of $2.2B (+50.2%) vs. $2B. Shares -1.75% AH. (PR)

  179. Cool, I found the rest of the week’s calander (lots of cool stuff coming from Newsletter research)! 

    Wednesday, Oct. 6

    7:00 MBA Mortgage Applications
    7:30 Challenger Job-Cut Report
    8:15 ADP Jobs Report
    10:30 EIA Petroleum Inventories

    • Notable premarket earnings: COST, MON, STZ

    • Notable postmarket earnings: MAR

    Thursday, Oct. 7

    Monthly retail same-store sales
    6:00 Monster Employment Index
    8:30 Initial Jobless Claims
    10:30 EIA Natural Gas Inventory
    1:30 PM Fed’s Fisher: ‘Current Economic Conditions’
    3:00 PM Consumer Credit
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet

    • Notable premarket earnings: PEP

    • Notable postmarket earnings: AA, MU

    Friday, Oct. 8

    8:30 Nonfarm payrolls
    10:00 Wholesale Trade
    2:25 PM Fed’s Tarullo: ‘Next Steps in International Financial Regulation’



  182. Good Job on the newsletter!!

  183. gmorning exec-  long time no see.  what a weird day yesterday afternoon, huh?  I like Phil’s premise of them holding it up while they aquire their put positions.

  184. "Bernanke said he was convinced that the Fed’s massive purchases from March of 2009 until early 2010 had lowered effective interest rates at a time the central bank’s benchmark lending rates were anchored near zero, where they remain. "
    There’s your biggest counter trend rally in the market since the depression.  It’s all phony.  What threw me off on this bitch was that while they announced that they would buy these assets in December of 2008 they didn’t actually start doing it until March.  I was looking for a turn around much closer to the announcement.  But it didn’t happen.  And then Jim Cramer goes on the Today show and tells everyone to get out of the market.  So, I figured it simply wasn’t going to be enough to stem the tide.  But in hindsight, ‘they’ took the market down until the Fed actually started deploying the money into the market.  Then it responded.  While they trumpeted the news they would start buying assets from the highest mountain..  I don’t remember ever hearing they say exactly when they would start buying.  Turns out it was March 2009.  Which was when Obama said he thought the market was ‘a good investment’.  Why didn’t he just say we’re deploying $ into the stock market and we’re going to start in March?  Would that have been so wrong?  Instead, they kept that info for all the insiders to profit from and tried to create this fantasy that the market had bottomed.  Meanwhile, folks like myself fought the insanity of not being able to connect the dots.. or in my case not believing our government would actually do something as corrupt as that and lost a lot of $ in the market.  I was willing to drink the koolaid.. but it should have happened closer to their announcement in December.  By waiting till March, they were simply allowing those in the know to profit from those not in the know.  Unless you believed Obama was, on top of all his other skills, a good market timer. 

  185. Hi Phil,
    I’d like to throw my .02 on your newsletter.  I think the format is great, friendlier and easier to follow. 
    I know that the real objective is to have a marketable newsletter that actually says meaningful things.  Most of what is available is pure junk.
    You are one of the most intelligent investment minds i have ever come across.  Now having said that there are also some other ‘genius’ types on your board as well.  Having said that, I would assume that you have a very high drop out rate on your subscription (premium) service.  That is because the board postings is like reading a space shuttle manual to most people.  They don’t get it. 
    I still find it very hard to follow your trail on managing the trades and I try very hard to do that.  I am speaking about the NFLK 165.  Nov Call play.  I have scanned over your posts and I know that I saw that you liked the 170 weekly puts.  However, I didn’t see. Hey all you people that sold the 165 calls on NFLK now is the time to roll these to the 170 weeklies.  Please don’t take it as a criticism but if you want better retention, then hire a guy to piece it together a bit at intervals.  Your mind is too valuable to do administrative stuff.  You work VERY VERY HARD and you are VERY Good at what you do!
    I am just speaking from the perspective of someone that is really studying, wants to get it and am glad I am here. It is still a bit intimidating for me.  But I like your style and you always answer!  This is really great.  Just thought this you should at least consider some wrap up on your posts during the day by someone other than you who is tracking this stuff.  But will that give/ diminish the power of the trade ideas here?  One has got to be a sophisticated person to follow the dialogue and most will give up?  They won’t see the forest for the trees.  Perhaps this is a good thing.  If everyone joined then your advice would be useless so to speak.
    Anyway thank you for providing a way for me to feel more confident than ever before about being able to  manage my financial assets.  I am tired on the bullshit investment brokers and the dumb head Susie Ormond types that act arrogantly and preach to the choir,  I am also sick of Oprah as well.  BS BS BS.
    Hope you find something in here useful.

  186. Operating Overseas/Phil: When I hear something like, the first thing that comes to my mind is:  "Oh wow! Thats going to make moving my business overseas so much easier!"

  187. matt1966:  Welcome back! Its much more fun to be bearish with the occasional pink comment box.
    The second time around, it looks like the situation is different.  Everyone just KNOWS Bernanke is going to print. Tepper announced the "No-Lose" trade on TV.  Jim Rogers is saying "FREE LUNCH IN COMMODITIES THANKS TO FED".  Yeah, Ben is a big spender, we get it.
    The markets are now completely priced for QE2.0 perfection that you have to wonder if it will A.) even happen and B.) have the punch that QE1.0 had or what everyone expects it to have…

  188. Good morning!

    Timing is, indeed, everything Matt.

    Follow-through/DD – Well I do count on you to follow the overall strategy.  I realized a long time ago it was ridiculous to follow through on every trade idea I put up, there are about 200 a month so I follow through on the sample portfolios and, if anyone went with one of my other 200 trade ideas a month, then I am very happy to answer any adjustment question they may have.  When you are 20% behind on a position, you either get out or adjust or make an affirmative decision to stand pat.  It says this in the strategy section, doesn’t it?  When you get another 20% behind, wash, rinse and repeat but I think you will find about 100 NFLX related comments and adjustments between the time we first decided to short them and when they got ridiculously high last Thursday.  For sure it was the single most talked-about stock last week so I am sorry if you did not feel any of that commentary applied to you at the time but there’s also the assumption that you scale into a position and, as I said, the move up to $21 was a gift for people scaling in as you could have gone 2x to a $10 put or just sold more at $21 or done what I said in response to your question last Monday where you said:

    NFLX  I sold the 165 NOV Calls last week on your "I can’t take it anymore" post.  Are these still good?  Also, it seems from your earlier post you’re saying that the Mad Money Mouthpiece is pumping NFLX so that in part the OCT shorts get margin calls forcing some of them out so GS can buy them after they finish with the pump? 
    Therefore, on a play like this should we expect the stock to drop around Oct expiration (assuming market as a whole is held constant for example purposes only) and perhaps get out then with a profit instead of waiting for NOV when they try to do it again?  In principal, is my logic correct?

    And I responded:

    NFLX/DD – Sure.  We liked the $165s because that’s as high as we thought they’d go and here they are at $165.  The Nov calls are $15.25 and that’s $14.65 of premium – not much to be done there.   If you are worried, sell the $155 puts for $10.30 but if that doesn’t seem very smart – then it’s a good thing you are still short!   Right now it’s tempting to do a 2x roll to the Oct $165 calls ($8.50) but the escape route remains the Jan $180 calls, now $14 and if that worries you – then you should get the hell out of the short $165s while you can.  Keep this in mind next time though – these are not good trades for you if you don’t have the conviction to stick with it – it’s not worth the stress.  The logic of the trade is NFLX is simply not worth $165 so if it goes to $185 or $205 or $225, we can just roll it along and wait for sanity to resume.  There are not many stocks you can point to where that strategy doesn’t work – EVENTUALLY.  Remember, you only have to be right (about a pullback) once, they (your callers) have to be right every single time.  

    Or last Friday, when you said:

    Is there a ratio on disaster hedges to long positions?  I am really heavy on these right now.  I’d like a metric on how many I should keep.  Having said that I have a large short position on NFLX so I want to protect my position on these into the Nov expiration.  Sold a bunch of calls just before the end of the day yesterday when they were at 170.

    And I responded:

    Disaster Hedges/DD – In general, you should be looking to offset 1/2 your expected losses from a 10% drop at most.  In theory, we should be able to add more shorts on the way down to 20% and, if not, then your cash itself becomes a hedge as you can DD and get a 10% discount on the stocks you currently own (and that, combined with the hedge, leaves you down just 5% on a 20% drop).  The less cash you have, the more you need to hedge but try not to overhedge.  Frankly, if you are lookiing to protect short NFLX $170s from yesterday, I’d say cashing them out for $8.40 gives you great protection as you’re up about 33% in one day and you can’t possibly make more than 66% more in another month and a half so, even if you win, you have only diminishing returns over time to look forward to.  Why spend money to protect that.  If you go to cash, I’m fairly confident we’ll find something to trade on Monday and, of course, Rule #2 is:  "When in doubt, sell half."

    I’m sorry if my responses are too vague and that you have a hard time following my trail.  I guess what you are saying is that I should do is take that kind of time to talk about adjustments of hundreds of trades at random, whether anyone is actually in them or not, rather than specifically helping people with the exact position they are in?  The specific advice I will give you is DO NOT play volatile stocks if you need step by step instructions on how to deal with them and DO NOT follow random daily trades if you do not know how to scale in and stop out.  I usually put up one virtual portfolio a month, which we do follow through on and, if you need your hand held to that extent, please stick with the hand-holding positions.  

    Overseas/Kinki – Well of course they want it to be easier to operate overseas.  That’s code for exporting more jobs but not being penalized for bringing the profits home – kind of how we got into this mess in the first place. 

  189. Matt:  Barry had this great graph that shows that "smart money" investors are massively short the Nasdaq futures, and they seem to have had a decent track record timing the tops:

  190. Morx,
    I don’t follow the real estate market ETF’s.  Have you seen this type of imbalance in options before?  Does this suggest that the real estate market may improve?

  191. Apolgies if I sounded too needy. Really wanted to provide feedback on retention. No hand holding needed Thanks again Phil. You are a cool guy!

  192. 2. A muddle-through economy will generate $95 of earnings next year
    Indeed, this is the bottom-up S&P 500 operating EPS estimate that is currently driving equity valuations — if you don’t believe it, then go to page 26 of Barron’s (Facing Up to the Real Third Quarter). That would be a 14% gain on top of this year’s anticipated 36% bounce. But here’s the problem, the economy is no longer accelerating, it is decelerating. And to show how a sub-2% real GDP growth can wreak havoc with corporate earnings when margins are close to peaks rather than troughs, the national accounts data show vividly that on a sequential seasonally-adjusted basis, pre-tax corporate earnings (without IVA and CCA) barely rose at all in Q2 (+0.9% QoQ). So continued double-digit YoY growth (the consensus is +24% for Q3) is masking the slowdown evident on a quarter-by-quarter basis.  Here’s the rub: to get that $95 operating EPS for 2011, we either need to see at least 7% nominal GDP growth, which last happened in 1989 when inflation was 5%, not close to zero, or margins manage to reach new all-time highs. We won’t entirely rule this out, but will give it 1-in-25 odds of occurring. All we can say is that the base case is for low single-digit nominal growth and some margin compression so frankly we could be looking at something closer to a $75 earnings stream next year. Moreover, when one slaps on a 10x multiple on that — consistent with the economic uncertainty commensurate with a post-bubble deleveraging cycle — then getting to 750 at some point in the S&P 500 is not at all out of the question.