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Thirty-Five Trillion Yen Tuesday

Go go BOJ!!! 

Acting under pressure from the Government to DO SOMETHING, the Bank of Japan announce a 35,000,000,000,000 Yen ($418Bn) monetary easing program this morning, finally taking that last step and cutting rates to ZERO.  That’s right, the BOJ will literally give you money for nothing (no word yet on whether the chicks will also be free). Ironically enough, though, the logic of giving out free money now is the same as it was in the early 80′s – the BOJ is well aware that:

"We got to install microwave ovens
Custom kitchen deliveries
We got to move these refrigerators
We got to move these colour T.V.’s

Of course, even with an economy one quarter the size of the US ($4.1Tn), $418Bn doesn’t buy what it used to so the BOJ is coming up with ANOTHER 5 TRILLION YEN in a program to buy private and public assets – let the shopping spree begin!  You might think such incredibly reckless spending by the BOJ would devalue their currency somewhat BUT Noooooooooooo – the Yen ROSE back to 83.2 to the dollar (and we caught that move last night in Member Chat!) as currency traders realized that $500Bn of QE from the BOJ was only a drop in the bucket of the ocean of irresponsibility that is our own Federal Reserve.  

As I had said to Members last Wednesday (and we had lots of cool currency charts): "I am seeing A LOT of money lining up on the short side of the Dollar trade. I’m very concerned that BOJ will do something to squeeze the bears and THEN I think it’s a better entry."  Of course, currency manipulation was the theme of the week last week and you can get a quick review by downloading a FREE SAMPLE of our new Weekly Newsletter HERE.  

"The surprise invited some yen selling, but I don’t think the BOJ’s move will be enough to produce any sustained yen weakening," said Masanobu Ishikawa, general manager of spot foreign exchange trading at Tokyo Forex & Ueda Harlow.  Hirokata Kusaba, senior economist at Mizuho Research Institute echoed this view, saying "there will be no substantive effect from going from the already ultra-low 0.1% to this range.  The only effect on markets will be from the surprise of the announcement, but that will fade," he said. "There’s no doubt the BOJ tried its best today, but it’s hard to see how the measures as a whole will help the economy that much."

Japan’s currency largess gave the Nikkei a 1.5% boost this morning, rescuing them from a weak open, where they threatened to fail the 9,350 line that has been a point of contention all year.  The Hang Seng went nowhere but did recover from a 100-point drop and the Shanghai went up and up and up today, gaining 1.7% to finish at 2,655, exactly testing the declining 200 dma so tomorrow will be a very interesting test for the junior Chinese index.  The BSE just keeps getting rejected at that 20,500 line and fell 60 points today so a real "Which Way Wednesday?" in store for us tomorrow.  

Europe is the happy beneficiary of this recent Yentervention as the Euro jumped to $1.38 to the dollar for the first time since January, when oil was $83.95.  So strong Yen and strong Euro means too bad USA, who still have to buy oil with our weak-assed Dollars – not to mention gold ($1,332) and copper ($3.71) and even pokey old natural gas ($3.71) so we should have a nice rally day today with the energy and mining sector leading us back up as our currency debases another notch.  

Europe is up, led by the CAC, who we learned last night was a global laggard with the EWQ down 7% for the year.  They are making up 20% of that this morning (1.4%) but they have a bit of work ahead of them if they are going to catch up to Germany (EWG is down 1%) or the UK (EWU is up 1.5%) so we’ll be watching them to see if the bullish trend is real or whether this is just a quick stop on the way down, like the 2.5% pop the global markets got off the last Yentervention, on September 15th.  

We were already sick of the nonsense yesterday and I called for cash in our "Turning $10K to $50K in 6 Months" Virtual Portfolio (which is now the "Turning $26K to $50K in 3 Months" Virtual Portfolio!) along with any other unhedged longs and today is another good opportunity both to sell into the excitement and to get a little short with our "October’s Overbought Eight" list – maybe even another opportunity to short NFLX!  Of course we love our weeklies and I’ll be looking for the SPY $114 puts to come down to about .60 as a fun way to play a pullback for the rest of the week.  

We’ll get a nice look at how the market behaves on "good" news.  Obama said he would be “very interested” in finding ways to lower the corporate tax rate so U.S. companies operating overseas aren’t disadvantaged so MORE FREE MONEY for our Mutinational Masters and Bernanke said he refuses to be out-eased by Japan and he’s got a whole fleet of helicopters lined up to dump money on our Multinational Masters as well.  

If you like to keep track of the BS – the WSJ did a very nice job of highlighting the latest Fedspeak and makes a nice read.  ICSC Retail Sales were weak (down 0.8%) and Redbook Sales were not much better and the ADP report was weak so we are certainly not out of the woods just because our money is worthless.  We get the ISM report at 10 and Consumer Confidence at 5 but jobs will be the big driver of the week with earning from YUM tonight, COST, MON, STZ and MAR tomorrow with PEP, AA and MU on Thursday so today is a nice day for a pop before the reality of the data becomes overwhelming.

Who knows, maybe the data and earnings this week will surprise us to the upside but, for now, we’ll play the percentages as we feel we’re a lot closer to the top of our range than the bottom.


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  1. Good Morning!

  2. Good Morning!

  3. :)

  4. Good video on Rosenberg vs Keene.

  5. Phil / Shanghai:  LOL… Phil you’re really milking that Shanghai 1.7% rise from Sept 30th!  You referred to Shanghai rising on Friday and now Tuesday. Chinese markets are closed for 5 days (October 1st to October 7th) for National Day. The Hang Seng is still opened in HK, so that’s our best China indication while the markets are closed this week. Just thought I’d bail you out before you look for that 200dma test tomorrow!  :)

  6. Phil
    In your opinion, does another round of QE by the US (or other countries) help or hurt stocks (especially the short positions you recommended). I am finding it very difficult to gauge the intelligence of a market that seems perfectly comfortable latching on to any optimism available to move markets up. Do you play these ultra short events or do you lean towards the "bigger" picture? Thank you.

  7.  Shenanigans abound.  Currencies.  POMO.  Pre-market pump-a-thon.
    Will this be a FMD ?
    Or will it be a fade the gap day ?
    I have no idea (lean towards fade the gap right here) — stay tuned.

  8. Doubled – from your post yesterday, I could tell that you had some frustrations on some of the plays.  It is overwhelming, and very hard to keep track of.  One thing I found very useful in the past (and still do if it is a weekly play) is to keep a jotter down next to the computer for trades that are more short term (AKA NFLX) and write down the permalink numbers and day in which it was said.  That way if there are ??s on that specific play by myself or others, then one can go back and reread the answers/strategies.  I have a ton of bookmarks on these types of strategies, although I must admit, I do not play the more volatile ones as I do not have the margin, patience nor the time to manage them.

  9.  Pharmboy & others,
    I am another new PSW member, trying to ‘figure’ it all out.  You mentioned a couple of days ago you had some links to good educational articles.  If you could please email them, that would be great.  If anyone else has any strategy/education or things you feel a newbie needs to know, please let me know.

  10.  Cap, even if it is FMD, this is a artificial sugar high like stuffing 5 pixies sticks in your mouth at the same time.  I am waiting to buy some DIA 107 puts at the bell.

  11. Cap,
    Good question.  The bulls always have the power so it wouldn’t surprise me if they blow through the resistance…..on the other hand….it wouldn’t surprise me if we never see the premarket highs.

  12. Jomama,
    October Puts

  13.  Consumer loan delinquencies rise for 1st time in a while
    Moodys downgrades Ireland again
    HD lower on GS downgrade
    Talbots bad sales forecast
    Party On !

    This has been going on for all the Asian data, market still wants to melt up, well it will matter when it wants too

  15.  Soon the EURO will realize strong currency will dent their advance

  16. Dano – start here.  In the link, scroll up and find the other ones I have links to as well.  Strategy section as well has good resources as does the book, Options Tradinig, in the link at the top of the page.

  17. LOL!  That’s got to be one of the fastest gap closings ever!  Do folks want out of this market or what!!

  18. EA Sports is rockin’…..yeah!

  19. Phil – good time to add on to MOS puts? Results were below expectations, but seems a nice pop to short – Nov 52.5 puts are now 0.65

  20.  Good morning! 

    As I mentioned in the above post, the SPY WEEKLY $114 puts are .55 so better than we thought.  I like 10 of those for the $10K to $50K portfolio.

    Levels are the same and we are NOT bullish until we hold all 5 7.5% levels for 2 (TWO) full days! 

    • 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

    Despite what Tennyson said, it is not better for indexes to have made a level and lost it than never to have made a level at all so I am now using red to indicate failure for the Dow and S&P, who both did a proper test of their 7.5% lines now and really need to get back over. 

    As usual, the S&P is the most important index while the RUT is our most jittery so we watch both with great interest.  The dollar is down 1% so if stock asset prices are NOT up 1% to match, we have trouble.  

    One put I regretted missing yesterday was OIH and they are back at $113.50 ($115 is our short goal).  I like selling the Oct $114.10s for $2 and I like the Nov $117/113 bear put spread at $2.10 and those can be paired with the sale of the $114.10s to make a very cheap spread and the $114.10 calls can be rolled to the Nov $120 calls (now $2) if they give you trouble

    All we’re doing now is testing last week’s mid-range but if we break up, we could retest highs so don’t be in too much hurry to load up on short plays – we’ll have to watch Europe’s close carefully.  


  21. Pharm,
    Your opinion on the CLDX data?  Is that small of a sample size typical in these studies?

  22. Pharmboy
    i just got some good sounding write-ups on AZN & GSK and was wondering if you had any thoughts about either?

  23. Good morning,


    IWM  64.41, 64.93, 65.23, 65.52, 66.30, 66.67, 67.12, 67.45, 67.88 and 70.55

  24. Oct puts

  25. ISM looks like they gave us a pop to short against

  26. Datu – AZN is fine, but I like GSK better.


    CLDX/acl – small sample size is fine for the beginning (Phase i/ii), but they will need to increase it for the next round.  These companies are all the rage right now, and there are a few (ONTY, CLDX, NNVC and NWBO) that are leading the charge (DNDN is the other).

  27. AMZN up 3.50

  28. someone hit the buy button or what?

  29. Shanghai/Never – Damn, I thought they were open now.  Freakin’ stockcharts messed me up.  Well then that means China has a pretty muted reaction to Japan’s QE, which is very interesting and more bearish than I thought.  Thanks.. 

    QE/DClark – Well stocks are priced in dollars so a strong dollar lowers stock prices and a weak dollar raises them (same applies to home prices and commodities, of course).  Once you scratch off that top layer, it gets much more complicated as a strong dollar tends to be good for companies that sell a lot in the US, especially if they buy a lot overseas or do a lot of outsourcing.  A weak dollar can crush people like retail gas stations, refiners, retail clothing… who buy things overseas with a weak dollar and then have to sell them into a weak consumer market.  A weak dollar also puts upward pressure on labor costs (also a commodity) and it’s only the extremely high unemployment that is keeping wages in check.  As to the 2nd part, I am a big picture guy and usually get excited about things like today’s spike, which is probably nonsense on the way down.  Not to be a bummer but it’s kind of like with my Dad, who gets worse every day but once in a while nods or even smiles and that gets everyone’s hopes up but it doesn’t change what’s really happening.

    Fade/Cap – Well that remains to be seen.  "THEY" need a free money day because there is no way they have unloaded all the crap they bought in September and the put/call ratios indicate that the funds are not fully covered yet so too early for the big dump, I think.  Good party on list! 

    EU/Chyer – They are also pressuring China to save them by revaluing the Yuan.  I feel like screaming at everyone that China’s entire economy is just $4.5Tn, they can’t lift the whole World with that no matter what they do…

    Oil failing to hold $82 despite the good ISM number:

     Sep. ISM Non-Manufacturing Index: 53.2 vs. 52 expected and 51.5 prior (>50 denotes expansion). Prices index fell to 60.1 from 60.3. Employment rose to 50.2 from 48.2. New orders rose to 54.9 from 52.4. 

  30. Good idea for all selling the long BIDU 95 putter yesterday stock back to 100

  31. Good comment by Phil yesterday:

    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.

  32. Exec/
    They did a nice pump job in just before our open.
    Europe was slightly up all day and then rallied on no news (actually on bad local news)
    And ISM saved the party and gave them a reason for a move they have "so well anticipated".
    Anyway, if they wanted to scare the bears away, it is a done job now.
    Let s see how long it lasts, the rest of the week is heavy on possible inconfortable news. And we are just 50 points away from GS new end of year target for the SPX (1200-1250 down from 1450 2 months ago)
    My bet is we go down hard pretty soon.

  33. JR,
    How you playing this?

  34. POMO tomorrow too.  Might be green for two days or so.

  35.  Phil,
    Time to sell some puts on AXP?

  36. Lots of good charts were put up at the end of yesterday’s post (from my readings).

    At the open: Dow +0.56% to 10811. S&P +0.47% to 1142. Nasdaq +1.03% to 2369.
    Treasurys: 30-year flat. 10-yr +0.1%. 5-yr +0.05%.
    Commodities: Crude +0.98% to $82.27. Gold +1.19% to $1332.50.
    Currencies: Euro +0.82% vs. dollar. Yen +0.17%. Pound +0.28%.

    10:00 AM On the hour: Dow +0.95%. 10-yr +0.07%. Euro +0.86% vs. dollar. Crude +0.98% to $82.27. Gold +1.14% to $1331.80.

     ICSC Retail Store Sales: -0.8% W/W, vs. +0.4% last week. +2.4% Y/Y, vs. +3.6% last week. The decline in sales was partially due to inclement weather, and ICSC now expects monthly growth of 2.5-3%, down from previous guidance of 3%.

    Redbook Chain Store Sales: +2.7% Y/Y vs. +2.5% last week. The bad weather in some areas hurt sales though cooler weather in other areas boosted fall merchandise.

    Office buildings in 79 metro areas tracked by Reis lost 1.9M square feet of occupied space in Q3, pushing the national office vacancy rate to 17.5%, highest in 17 years. But the rate of increase appears to be slowing, and rents may be stabilizing. Average effective rents fell by just a penny, the smallest quarterly decline since 2008.

    The financial sector remains the "Achilles’ heel of the global recovery," according to a new IMF study, and prompt action is essential to alleviate regulatory uncertainty, which is acting as a drag on credit and economic growth. The report projects that writedowns from the credit crisis totaled $2.2T but nearly $4T of bank debt will need to be rolled over in the next 24 months.

    As new regulations push banks toward safer investments and lending practices, the middle class will suffer the most, Meredith Whitney tells CNBC. "A very large portion of the U.S. consumer base, which is really middle-class consumers… are being debanked from the system, so they’re delevering," she says. "That is going to put a lot of pressure on the U.S. economy."

    Yes, there seem to be "a bit of a bond bubble" going on right now, says FDIC’s Bair. Her solutions: Delever the U.S. financial system, restore market discipline, and be aware of the effects of protracted low interest rates.

    Recent Fed comments, including from Bernanke, suggest the Fed could move ahead with more asset purchases as soon as next month if the economic outlook remains weak. Janet Yellen and Sarah Bloom Raskin, both sworn in by the Fed board yesterday, are likely to be Bernanke allies on additional purchases or QE.

    The world’s leading countries need to agree on a new currency pact to help rebalance the global economy, warns the Institute of International Finance. If not, countries will increasingly engage in "currency wars" and act unilaterally to keep their currencies artificially low.

    BOJ surprises markets by cutting its overnight call rate target to a range of 0-0.1% from 0.1%. Labeling its move "comprehensive monetary easing," BOJ pledges to keep its rate at “virtually zero” until deflation ends, and will set up a ¥5T ($60B) fund to buy gov’t bonds and other assets.

    In another rate surprise, the Reserve Bank of Australia keeps its key cash rate steady at 4.5% vs. a widely expected 25bps increase. Policymakers had been talking up a rate hike as necessary to head off inflationary pressures. AUD -0.7% vs. USD.

    Moody’s may cut Ireland’s credit rating, again, saying the country needs to take additional austerity measures given the heavy cost of cleaning up its banks, a weak economic recovery and rising borrowing costs. (see also)

    Ouch!  Jerome Kerviel, the former SocGen trader whose rogue trading created a multi-billion euro loss, has been given a five-year jail sentence (with two years suspended) after being found guilty of breach of trust. The court also ordered Kerviel to pay €4.9B in damages. Kerviel is expected to appeal.

    Germany’s Landesbank Baden-Wuerttemberg files suit against Goldman (GS) over a $37M loss incurred on a mostly subprime/"midprime" CDO. The complaint says Goldman represented the investment as "safe, secure, and nearly risk free" while Goldman execs were privately calling it "game over" and reducing their mortgage exposure.

    Boosting the DowChevron (CVX) says it will resume buying back its shares at a rate of $500M-$1B per quarter. “Initiating repurchases at this time is evidence of our ongoing capital discipline and strong cash flows,” CFO Pay Yarrington says. CVX +1.4% premarket. (PR)

    A good morning for Walgreen (WAG +2.7%) so far, as it posts a 0.4% gain in Sept. same-store sales vs. analysts’ expectations for a decline, and gets a rating upgrade from Jefferies. Total sales for the month were up 5.3%.

    Talbots (TLB) warns sales for the current quarter and the full year will be weaker than expected, and says it will close 75-100 stores over the next three years as it focuses on more upscale outlets to help grow revenue and improve its profit margin. Shares -10.7%. (PR)

    Celldex Therapeutics (CLDX) rallies the day after releasing favorable data from a Phase I/II study for its cancer treatment DDX-1401. Celldex is testing the therapy for the treatment of such cancers as melanoma. CLDX +12.2% premarket. (PR)

  37. Phil, if I need additional hedging, do you still like TZA Nov 21/25 bull call spread, possibly paired with selling some Nov puts?

  38.  Phil, what are your thoughts on MOS? They seem to be continuing upwards.

  39. Just picked up some AXP on the cheap. One of my all time faves, mostly b/c it’s made me so much over the years.

  40. Pharm / 9:31 post

    Great post; unfortunately, it’s based in reality and we are trading in a "brave new world". Welcome to the recovery, and always remember "truth doesn’t matter; perception of truth maters" !!

  41. Does the SPY weekly cover friday’s unemployment data?

  42. VIX is getting ready….

  43. Normal




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    Thanks for the excellent thought yes’d (below) re hedging MLPs. Reasonably good correlation betw ERY and MLPs esp on the way down  where it counts most. One more question re mgt of the spread – when/at what price point do you  roll Jan 34 puts to Apr 27s? How far against you do you let the mkt get before you roll/buy back puts?
    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.  
    Thanks again,

  44. Augusrot: MOS-mentum looks to be weakening.

  45. Phil Looking at the data, seems like order streaming from EU and US, dropping on Asian side. No wonder EEMs are getting worried

  46. exec,

    Went 1/2 long on the 10:00 buy program; we have resistance here (68.04) and if the obvious squeeze play fails, we could retest some of Phil’s levels !!

  47. Phil Good morning
    Is it time to sell some more 105 BIDU calls ?? thks

  48. In TNA (balance at $47.74); feels like a Monday !!

  49. Good links Pharm, thanks a lot!  

    MOS/Rn – They had good numbers, just not enough to match the expectations.  Those Nov $52.50 puts dropped like a rock from $1.10 to .70 so sentiment is the wrong way but I do like a roll up to the Nov $57.50 puts at $1.95 (+$1.25) which, if you were in at $1.10, puts you in the Nov $57.50s at net $2.35 and down .40, which is pretty realistic to get back and, of course, I like them as a new entry.

    BIDU/Yodi – Taking non-greedy profits is the hardest and most important thing trades need to learn to do!

    Volume on all this excitement is just 50M on the Dow at 10:30.  Most we’ve had in a while but not a lot in the grand scheme of things.  

    Europe still zooming along with the CAC up 2% and the Dax up 1.3% and the FTS up 1.1% with an hour to go.  If they want to impress Asia tomorrow, they need a big finish.  

    Oil back over $82, copper $3.75, Nat gas $3.73 but lumber is still $214, which is not far off the year’s lows.  

    AXP/JGW – Getting there!  If you REALLY want to own AXP, who have a forward p/e of 11 but may be forced to stop strong-arming retailers, then the short sale of the Apr $35 puts at $3.15 is a good way to enter (net $31.85).  You can get much more aggressive with the Apr $35/41 bull call spread at $3 for a total .15 credit on the $5 spread and worst case is you own them for net $35.15 (now $37.66).  

    TZA/Cwan – I like the spread as it’s 100% in the money with the RUT way up at 681.  I’d hold off on the put sale as the vertical has a nice 150% upside by itself and if it goes against you, then you should get a much better price to sell, like maybe selling the Jan $18 puts for $2 (now $1.30).  

    Meanwhile, up we go!

  50. Pharm
    Thanks for the info on GSK--do you have a site for other postings on your Pharm Phavorites or do they all appear on this board?
    do you still like GSK and selling the puts and calls here --on your post there was no strike price for the puts and calls so i assume you meant the $35′s is that correct? thanks again for all the info--its great

  51.  HA HA – POMO FMD !   (at least in the morning …)
    The joke market continues ….

  52. JR
    When the buy program kicked in my IWM screen went nuts.  Does the market typically continue to rise after one of those programs?

  53.  Time for the 10% levels?

  54. Exec,

    Well, it seems to be working so far !!

  55. MOS/Aug – See above.  Notice how yesterday we had a ton of bullish people coming on and Jim Rogers came in to say BUYBUYBUY commodities and JPM and GS upgraded people and analysts we never heard of raised targets on all kinds of stuff and Bernanke and the BOJ both said they would pump Trillions into the markets and Obama said he’ll give big business tax breaks that make it more attractive for them to book profits outside of America….  If all we can get out of that is a return to last week’s highs – then we are in BIG TROUBLE! 

    SPY/JMM – Yes it lasts until EOD Friday and the $114 puts are already down to .36 but can now be rolled up to the $115 puts for .27 (now .64) and that’s the way to go.

    MLPs/8800 – Generally you want to do a roll at the point where your puts are down to about 1/4 premium but you mostly need to keep your eye on your potential roll-to option and make sure the relationship stays even.  The real stop is, for example, .80 on the roll and not some specific price on your own puts.  As long as you can make that roll for about .80 or less then your math is that you own ERY at net $30, which is 25% down (assuming you don’t roll again).  As with all naked put selling, you MUST be comfortable with your worst case or don’t even get involved!  

    SKX flying today.  GMCR also deciding today is a good day to recover a bit. 

    Orders/Chyer – Well if mainland China is missing and coming back on Friday, that’s a great reason to keep the pumps on until then.  Those guys are big trend followers and will pull money out from the mattress to chase US performance – we may not put in a proper top until next week.  

    BIDU/Yodi – As I said earlier, don’t get too excited about shorting as we have some pretty good squeezing going on at the moment.  BIDU was $107 and let’s give anyone we want to short a chance to retest their highs.  If they don’t and the rally dies under them, then we can short with confidence anyway.  

    BIG TEST – S&P right on the 1,155 line I thought would hold up for the week.  

  56. I do have a trend line at IWM 68.34 !! So be careful here, we are up 2% !!

  57. JRW – no resistance lines between 67.88 and 70.55? Is that fill in the blank territory or what?

  58.  Phil/AXP:  From your post at 10:43, I think you meant to say sell the APR $35 puts, not APR $35 calls.

  59. Phil
    I took a peek at your Newsletter… It is a nice piece, but probably redundant to our "yackety-yack" activities here at PSW. How does the Newsletter interface with our activities, or does it have a different target? Are you going to sell advertising space in the newsletter?

  60. Like the remarks on downgrade of MSFT Ballmer THE UNTOUGHABLE shown on Bloomberg

  61. Phil, bought the 10/16 114 puts on SPY for .95  Presently .86  Any suggestions. (Seems like plenty of time to me to stay pat).

  62. Phil
    On the AXP Apr $35/41 bull call spread ,
    are you selling puts  ? what strike ?

  63. doubled
    I like your commentary, and benefit from any questions you pose, as many times the questions we all have from time to time are reminders of issues that we all sometimes overlook. Oh…. by the way, I think Oprah is very boring as well!

  64. Fully loaded now on rut puts
    waiting for the anti-stick this afternoon
    don’t think earnings guidance will match the level of hype

  65. They’re not going to give the shorts a chance to breath.

  66. For those of you following my ArthroCare position (ARTC)… this surgical products maker has just received FDA approval for a new device used to treat painful vertebral compression fractures. ( Shadowfax – please note )

  67. 2/3 out of TNA at $48.68; I think it’s going to consolidate.

  68. Hello all,
    Could someone please explain to me how do I “roll over” an existing put option position?
    Thanks a lot!

  69. respeja
    There are roll overs and roll overs it would be a good idea to give more details to what you are rolling

  70. 11:00 AM On the hour: Dow +1.24%. 10-yr +0.09%. Euro +1.1% vs. dollar. Crude +1.46% to $82.66. Gold +1.58% to $1337.60.

    POMO!!!  The Fed buys $5.19B in bonds, of $23.621B offered by dealers, in the latest of its ongoing rollover of proceeds from maturing securities.

    Is a 90 Day "Mortgage Meltdown" Foreclosure Moratorium Imminent as the RoboSigning Scandal Goes Mainstream?

    BofA(BAC) Foreclosures May Prompt Servicer-Rating Cut, Moody’s Says. Bank of America Corp., which delayed foreclosures last week to review affidavits it submitted to courts in 23 states, may have its top servicer-quality ratings cut, Moody’s Investors Service Inc. said. “Irregularities” in the bank’s process may delay home seizures, allow legal challenges to completed foreclosures and pose a “reputational risk,” Moody’s said in a statement today. The ratings company also cited “deterioration of the company’s collections, loss mitigation and timeline performance metrics.”

    Cities in Debt Turn to States, Adding Strain.

    Credit-Card Companies See Bright Future, Despite Financial Overhaul.

    MSCI China Index May Drop 15% in Fourth Quarter on Stimulus Exit, RBS Says. The MSCI China Index may fall 10 percent to 15 percent this quarter as the government focuses on structural reform instead of boosting the economy as growth moderates, Royal Bank of Scotland Group Plc said. “Beijing is increasingly aware of the side effects of its unprecedented stimulus measures, among which excess liquidity has to be one,” analysts led by Wendy Liu wrote in a report yesterday.

    Forget China, The New Buzz Will Be All About The Collapse of Brazil.

    Buffett’s China-Gushing Optimism Sells Like Sex: William Pesek. The marriage of Buffett’s suddenly unbridled optimism and China’s perceived invulnerability is a fascinating milestone. Just two years after pushing a “buy American” campaign, Buffett is leaning toward a “buy Chinese” one. In reality, the Buffett gush-fest is a reminder of the precariousness of the global economy. It’s one in which the biggest economies and the savviest investors may be relying too much, too soon, on a developing nation.

    Free time is as good as FREE MONEYEU Nations Win a Year’s Reprieve on State Aid. European governments will be allowed to provide soft loans and other concessionary support to their banking and industrial sectors for one more year because of the lingering effects of financial crisis, according Europe’s top competition regulator.

    Paul McCulley Discusses PIMCO’s Cyclical Outlook. Developed economies must spend an extended period undergoing balance sheet repair. Also, we are confident that monetary policy in the developed countries will remain extraordinarily accommodative for a very extended period. The bottom line for the U.S. is a growth trajectory so slow you’d nearly call it stalled, in the context of a huge output gap, implying further disinflation from an already too-low level for inflation. We are living in a world transforming to greater influence from the emerging countries, with retrenchment in the developed countries. And as strong as many of the emerging markets are, they are still tethered to the developed markets by strong global trade linkages.

    World’s Powers Must Head Off Threat of Currency War. The world’s major economic powers must do more to head off the prospect of a global currency war, a body representing the world’s financial institutions has warned

    iPad Adoption Rate Fastest Ever, Passing DVD Player. Apple’s(AAPL) iPad sold three million units in the first 80 days after its April release and its current sales rate is about 4.5 million units per quarter, according to Bernstein Research. This sales rate is blowing past the one million units the iPhone sold in its first quarter and the 350,000 units sold in the first year by the DVD player, the most quickly adopted non-phone electronic product.

    Harley-Davidson (HOG +7.1%) shares surge after positive comments from RBC Capital Markets. "Conversations with dealers indicate that Harley’s U.S. retail sales turned positive in the month of September following four months of declines in the mid-teens," analyst Edward Aaron writes, pushing his target on the stock up to $36 from $33.

    Amazon (AMZN) has begun to raise the price of some of its e-books above their paper versions, NYT reports. Amazon customers are bound to dislike the trend toward more expensive e-books, Doug McIntyre writes, but that’s the tradeoff for their low-cost Kindles.

  71. Cap
    The equity markets may be "delusional", but the currency markets are totally "crazy"  The Yen and the Euro are moving in directions that are completely opposite to what makes conventional sense. As far as the currencies are concerned, I will stay on the sidelines until an identifyable trend evolves.

  72. That may have been a mistake; TBT fling

  73.  AXP/Fortep – Absolutely, that should be sell the $35 puts (correcting)

  74. Kudos to whoever (cant remember) posted that zerohedge link yesterday stating that today would be an upday!

  75. JR/TBT
    I’ve noticed that IWM has been disconnected from TBT lately.  Purhaps the Bots are playing games.

  76. Yodi,
    Well, I have 15 weekly’s 114 puts at $.49.
    Phil said they could be “rolled up” to 115, but don’t know what that means… nor how to do it.
    Evidently I’m climbing the learning curve.
    Thanks for your help!

  77.  respeja - that means sell the 114 weekly puts and in their place, buy the 115 weekly puts.

  78.  the purpose of the roll being that you pay 15 cents to gain $1 in position.

  79. Wow
    Where is this push coming from?
    smoking the shorts

  80. I don’t understand the excitement today.. all the economic indicators, while better than expected, are showing a slowdown of the economy. I am truly intrigued by the divergence between bonds/gold and stocks. Both going up at the same time does not make any sense, and naturally, one of the two WILL BE WRONG in the very near term. It’s hard to argue that stocks will be the ones taking the fall because there’s still a lot bearishness out there (plus companies holding lots of cash and playing it quite conservatively) and "growing" cautiously, so I believe stocks will find a strong support at one level not to far down from here (if they indeed fall). But the sudden realization of whoever is wrong (stocks vs bonds/gold) MUST BE VIOLENT, I have no doubt of that. But for this to unfold, we need an EXTREMELY STRONG catalyst in either one of the sides.. I wonder if super extreme good earnings from Q3 plus strong guidance would be that catalyst.. I seriously doubt it, but this wait and see game can kill anybody not prepared for it. Cash is king!

  81.  The shorts aren’t that hot today. Should I hold on to the SPY puts still now that S&P went past that 1155 line?

  82. respeja
    I like to now what stock you are rolling as buying a put for me is never a very good idea possible sell the higher put but give me the details thks

  83. Newsletter/Gel – Well, I always intended to do one but have been too busy.  Ilene and I found a guy we like to edit it and I hooked up with a couple of guys to market it so there you go.  Essentially, membership is full as I really don’t want to talk to more people than I am now so we are growing through non-chat devices like the newsletter and there will be a "Voyeur" Membership in the near future where people can look but not chat (non-Premium content).  The weekly newsletter will be $49/month but free to Members, of course as it’s pretty much what the wrap-up used to be.  Then there will be access to the daily PSW Reports with same-day access to non-Premium posts for $99 and the $149 Voyeur Membership in addition to Basic and Premiums but, as I said, they are full and a wait-list will be incorporated into the new design finally.  Not sure about advertising.  I don’t like it much and it really doesn’t pay enough to make it worth giving up the space but I’m letting the Newsletter team run the numbers and keeping an open mind.  

    MSFT/Yodi – Not stopping them from moving up today, though…

    SPY/Geo – I’d spend .30 to roll them up to the $115 puts if you can get it. 

    AXP/QC – Sorry, that was a mix-up, it was paired with the sale of the $35 puts, still $3.

    Rolling/Resp – That’s just shorthand for killing the existing position and opening a new one.  Rather than say "sell the SPY $114 puts for .33 and buy the SPY $115 puts for .57" we say "roll the SPY $114 puts to the $115 puts for .22."  Also, TOS and some other brokers actually have a "Roll" function that lets you set up the trade for the net price – which is amazingly useful if you trade these strategies often.  

    11:40 Dow volume is 81M with 90M at noon "normal" for a program trading day and it looks like we’re going for the gold.  The NYSE is crushing last weeks highs so no excuses for the other indexes with the RUT needing 685 and SPY already there at 1,158 so we’re looking for Nas 2,400, Dow 10,948 and RUT 685 to confirm.  

    DIA Nov $112 calls are $1.26 and are a good way to play the upside if you are too bearish with a stop at 10,900.  On the mattress play, a roll up to the Jan $110 puts from the Jan $108 puts (still naked) is .90 and worth doing.

    I am not enthusiastic about the longs but, it’s better than getting squeezed out of short positions if you are too bearish – that’s the only reason for them.  

  84. rwvjx5 / wow — IMO, This push is coming from getting over 10,9005 without triggering a sell program. If it bounces on 10,900 without triggering volume, I think we’ll drift higher until around 2pm when a 1.5% starts to look like nice pocket money for the day.

  85. TBT fling – they are reading this board…..


    Interesting take:  On the S&P earnings outlook for 2011 (from Rosie):
    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.

  86. SKX is taking off today, but I don’t find any news about them.  Is there a story there, or just a part of today’s upside fireworks?

  87. Phil, what’s your play on oil going into inventories tomorrow? Im thinking of either doing the Craigzooka play of buying a put and selling overnight or just straight shorting the futures. This is a joke and Im thinking SOME bearishness has to seep into the oil trade before inventory….

  88. Phil – I bought 20 QQQQ Nov $49 puts for 1.99, and sold 10 weekly $49 QQQQ puts against them for 0.84. This morning, at the gap up, I bought back the weeklys for 0.35 (expected a slow decline all over the day) (ie, effective price for $49 puts is now 1.74). The puts are now down to 1.27 – I have time on my hands. Would you recommend rolling them into the $50 puts for 0.42 more? That would put me in the $50 puts for an effective price of 2.16? Or should I just sit and wait with the naked puts?

  89. Pound up at $1.60 – MADNESS with Ireland on the verge of another downgrade.  They may be a different country but very entwined with the UK and the UK banks aren’t exactly sparkling and Darling is NOT wanting to give them more money as he has to write a letter to the Queen every time he screws up and allows inflation.  

    Euro got right to $1.385 and was rejected there and the Yen finally bounced away from the 83 line to the dollar, which is about the 78 line on the buck, which is super-significant.  

    Let’s call it on UUP at $22.50.  That’s ultra-long the Dollar and a huge contrarian play here but fun if it works so I like the stock straight up with a .10 stop as well as the Nov $23 calls at .20 and 25 of those for $500 is play number two with cash in the 10/50 Portfolio with a stop at .10.  

  90. And if I do keep the $49 QQQs, would you further recommend selling a cover?

  91. Out of TNA at $49.06 for 3% on the run; could have played that better !!

  92. So, I have this boat load of various shorts/hedges in position and all losing and getting squeezed. I start to mentally feel this tension and realize that this is much like the bottom in March 2009, when things were at their lows, and it was best time to buy… but it was painful to hit the buy button, which I did (and later wished I hit it more). So, what this tells me is that the best thing to do now is….  HOLD THE SHORTS, the fun part is coming. :)

  93. respeja
    I trust Phil made it clear now.  As I said before I am not a believer of buying option or buy them very seldom . SPY is up 2.00
    the option expires in 3 days.

  94.  I know why SKX is up so much.. along with DECK..Wolverine World Wide Inc (WWW.N) (which is another footwear seller) beat Q3 and raised FY profit view on strong order backlogs. So the whole industry of footwear is reflecting this today.. 

  95. ravalos,
    Ah, I hadn’t found that.  Thanks!

  96. skx is also getting some buzz off new iphone app, doesn’t hurt
    anything tied to aapl goes up lol
    look what it did for nflx
    rainman- good points /thanks

  97. Jbur / shorts

    Well, SOMETHING is going to happen pretty soon !!

  98. Yes Yodi and Jvest, it’s quite clear now.
    It’s just a gamble… the market is too overbought. A few naked puts shouldn’t be that bad… I hope!
    Thanks again.

  99.  JRW, that’s scary..

  100. JRW / Balloon — Wow! That thing looks like an accident waiting to happen. I would think a nice gust of wind would fold that thing in half!

  101. Phil / Business plan
    I respect your entrepreneurial skills… Your plan should work very well, I believe, as you are offering terrific value at a very affordable cost , which are the most important ingredients. The benefits you offer are unique, so competition is not an issue.

  102. JR,
    You best guess….up or down?

  103. Pharmboy:
    Thanks for posting those links earlier. What do you think of ENZN and AFFY as bullish plays?

  104. JRW: Thanks for cool chart and pic. Perspective always helpful. You’ve posted several charts from Kimble in the past few weeks. Is it a daily visit to their website for you?

  105. although going to cash yesterday is a little frustrating today, JRW’s chart makes me think it was not a  bad idea. Last time Phil made a go to cash call i didn’t respond very enthusiastically and paid for it rather dearly.

  106. exec / guess

    I try NOT to have an expectation, but I would say that people would rather have anything tangible than increasingly worthless dollars; and this does seem to be a well financed squeeze !!

    I’m currently in cash 8-)

  107. Phil, 
    I am stuck with the short BIDU 100′s… Are you still holding these?? is this an opportunity to DD? Should have unloaded yesterday) but I missed my order by 5 cents

  108. Observation — The Dow bots that I like to watch, seem to place their own support/resistance at about the 05-10 marks. I’ve observed in the past that it’s not the 100 pt resistance that triggers the sell, it’s a crossing of about 105-110 that triggers it. Today’s action is very revealing of that. Nice push up through that level with a gap and volume tells me the bot doing the push was expecting resitance. The bouncing at 10, tells me there are more bots that think we can keep it here (at least until play time is over at 2:00, then they break out the sticks and clubs

  109. Today is one of those days I am glad I scale into my shorts.

  110. JRW / S&P Chart
    The breakout will be coming, I think to the upside, driven by the fundamentals created by the anticipated iminent Fed easing ( very soon, I believe ). Also the euphoria in the business / investing community as it anticipates a change in government political domination, come November 2.  With a very good earnings season evolving soon, and the other positive catalysts, as mentioned,  I’m betting an upside breakout has better odds to the contrary.

  111. Phil / 11:21 — IMO that font on your news post at 11:21 sucks on IE. Difficult to read.
    Also, it looks like the system is eating my sunglasses smiley face when I past it in my posts, I’m guessing that became an admin feature? Is there a short hand like standard smiles (colon dash paren) and winks? Perhaps we need the "cool" font along with the "sarcasm" font.

  112. rain,
    What do you mean 05-10 marks?

  113. Nice headfake for FAS today.  Wish I’d quit while I was nicely ahead on that massive gap close!  Oh well.  The end is in sight.
    Phil, where do you get your put/call ratio info?  Bet they’re selling a boatload of calls today..
    Pharm, nice chart of VIX.
    JRW, nice pic of Wile E. Coyote!
    In light of of the BOJ announcement and in anticipation of QEII and earnings, my premise is now that we float up to earnings.. sell off hard and then the mood is set for QEII to be released.  Because at the moment, I think it would be a tough sell for Bernanke.   Not that he has to.. but his credibility is always at stake.

  114. Good S&P note Pharm! 

    SKX/Boobears – Just an oversold stock getting some notice in the buying spree. 

    Oil/Jrom – I think they are too high but the big sell-off usually comes into the Tuesday around the 20th, which is when contracts expire so right now, they can still play games and the shipping channel in Houston was shut down so day’s of imports are missing, which means a big supply draw so I’d wait on shorting until after and hope for a spike up to $85.  

    QQQQ/RN – Yes I’d roll but you’d better set a stop where you do another 1/2 sell to cover.  2,400 on the Nas would seem logical. 

    Fun/Jbur – I hope so!  Kind of like waiting out the early part of a firefight until the other side is out of ammo and THEN you can jump out with guns blazing (very demoralizing for the other side too!).  

    WWW/Rav – Thanks, good catch!

    Chart/JRW – Looks like the election can lead to explosive results one way or the other.  

    Plan/Gel – I am psyched.  I was sitting in Giants stadium and thinking to myself – this is 60,000 people and there are 200 stadiums just like this filled with people around the country and they are all paying $100+ for a single game and all I need is 0.5% of those people to pay $50 a month and it’s a nice little business…  The WSJ has 800,000 paying subscribers – I’ll be thrilled with 40,000….

    Cash/Morx – Well cash is useful in either direction and if we have a bearish set of bets, we can back those up with very aggressive upside plays if we break over and the bearish bets become the hedges.  It’s very hard to keep perspective in these crazy market swings but notice how similar this is to the Aug top action:

    BIDU/Amatta – Those were a take the money and run play already.  The Nov $95 puts were up 100% and the Nov $105s were down to $4 after hitting $9.50 last week – I don’t remember calling the $100 calls short though.  Either way, same logic but, if you are in the Oct $100 calls short, they are now $4.65 and can be rolled to 2x the Nov $120 calls (now $2.50) or, if you are stretched, then chip in $1 and roll them to the Nov $115 calls at $3.55 but only if you are, for some reason, so worried that you are willing to pay them a 100% premium to their intrinsic value just to get out 2 weeks early on a huge up day that may not in any way, shape or form be giving you a realistic indication of direction.  

    BIDU Friday $105 puts can be sold for $1.25 and that is a fun play if you have a lot of margin

  115. I also have the Oct DIA 105′s… was waiting for the pullback you expected to get out even or above water, now I’m down… hold these or roll them?? 
    Lastly SDS I am in the march 24/29 with the 27 puts sold for net 0.75 now (-.50) . You had mentioned to watch the line at 1150, which we have now breached… but what I am reading from your posts, this is a push up, what adjustment should I do here if any. 

  116. JR,
    Check out TBT….disconnected again.

  117. exec / 05-10 — Kind of like Phil’s precentage levels, humans like nice round numbers like 10,900, but the bots don’t start reacting until we get to 10,905 to 10,910 after the mental resistance was crossed, or sometimes will react before the crossing at 10,890-10,895. Today, there were bots selling into 10,895, look at the period from 10:45-11:20.
    Of course, now that I said that, the bots will go offline for reprogramming of tolerances.

  118.  Phil, 
    BIDU, no I am in the Nov 100′s short not Oct… thanks 

  119. Rain,
    Ah yes…..I’ve noticed that also.  Seems like they always pop about 16 points over a hard number and usually drop 6 below.

  120. QE2 is already here.   They are not going to do a massive stimulus anytime soon.  The current ‘buying’ shows that this is the status quo.  The business tax breaks are a joke, and does nothing for employment.  Who shot JR (‘s flag)? 


    Why is CVX buying back stock and not investing it in, um, jobs????

  121.  "Pimcos Rodosky: Has stopped buying treasurys since July" – hmm, that sounds ominous.

  122. Just a few things, markets repricing on dollar weakness, banks not likely to breakout, AAPL to the moon price targets yet 290 a serious barrier, all boats being lifted (downgraded stocks up today) everyone dancing in the streets calling for a huge move either way…stocks with largest short interest are the biggest movers

    11k should have been an easy move on this massive dollar weakness..10948 09/30 high should be an easier target, cant see things getting much more bullish…I would be dissapointed if they cant get the markets passed sep 30 level

    Longer term
    Strong Euro big negative for Europeans
    Yen refuses to weaken
    Commodity prices will effect growth going forward
    Bond market not buying market move

  123. How can one NOT short THIS ???


    Can’t do it;  in TZA at $24.64 (1/2)

  124. JRW: LOL

  125. JRW / TBT — divergence agrees with you.

  126. Phil / Entrepreneurial Activity
    One other ingredient that helps to boost the success probability, is to target a quickly growing base… option trading is still in its infancy, and your timing is perfect. You will need to revist your fee schedule soon however, as the dollar will soon be depreciating once we get the the coming inflation. You newsletter content, however, will hedge that problem for the subscribers.

  127.  We are not far anymore!
    Up 10%: Dow 11,220, S&P 1,177, Nas 2,420, 7,480 and Russell 709

  128. JRW, I followed you on TZA (which is the kiss of death, sorry), so let me know when you bail.

  129. Out of TZA for an $0.08 loss !!

  130. JR,
    I have no idea how you beat these Bots.  You guys jump in and they immediately attack.
    This is starting to look like one of those DOW up 280 point days.

  131. Phil
    BIDU I do not see a 105putter for the weekly Friday for 1.25 but inclined to sell the weekly 105 caller for 1.18 Where am I wrong? thanks

  132. Thanks for the "heads up" Mr. M

  133. Who wants to bet this is the last push for the rally?  No way FAS is taking out its 9/22 high

  134. Phil…. one last suggestion – in most successful launches, the base product is priced to be "the hook", ie to get the initial interest at a "bargain" offering. The upgrades and transitional product line extentions are the areas for maximun profit opportunity, as the base grows. Once an entrepreneur….. always an entrepreneur!

  135. Matt,
    Mmmmmmm… on!!! 
    But I hope your right.

  136.  Well matt, it’s crushing me like no tomorrow! Specially with those short calls on CMG..

  137. Matt,
    FAS is running up off the 100 DMA.  Why are you so confident it will fail?

  138.  If we end up this strong, I have no doubt there’ll be a bit of follow-through tomorrow.. so the pain for the shorts might continue..

  139. selling nov 180 calls at 9.30
    lets see how good Phils list is lol

  140. If it makes it to IWM 69.20 I may not be able to help myself  8-)

  141. Rav,
    I’d have to agree…..this is a serious take out the bear melt up.  There’s not even a hint of a let up.

  142. Bots/Rain – Interesting observation.  They are getting smarter and smarter and may watch each other these days and adapt their levels to conditions on the fly.  Could have good applications to pick up that pattern for day trading swings.  

    Shorts/Kinki – Well, now that Matt is here we know it’s time!  8-)

    Fundamentals/Gel – Fed easing is NOT fundamentals.  Non tax-break stimulus is fundamentals and anything else is doomed to failure but it will rope in enough sideline cash from conservatives (who have all the money anyway) who think that will work, to give us a nice blow-off top.  What’s the headline today?   "The BOJ does what they said they were going to do for a month – a month in which we rallied 10% in anticipation of the BOJ doing what they said they would do."  NONSENSE!  

    Fonts/Rain – Somehow, my switching to Chrome has screwed up a lot of things.  The fonts come out kind of random from the news and smileys work sometimes and not others.  I can’t figure it out but it’s only been a week so hopefully we’ll get it right eventually.   Meanwhile, everything runs 100% faster in Chrome so pretty much no way I go back to IE. 

    Puts and calls/Matt -$cpce  Now they are shooting up considerably over the 75 line. 

    DIA/Amatta – Those hit .68 yesterday, now .22 again but at least there are two weeks left.  That’s why we say "ALWAYS sell into the initial excitement" and not "…. or a day or two after."  At this point, the best use of funds is to spend .48 to roll up to the $108 puts (.70) and, if those don’t work out by Thursday, then it’s going to be another $1 to go to the Nov $106 puts – assuming you still want to stick with it.  If you don’t want to do the 2nd roll, then spending .50 on the first roll is extremely dangerous!  On SDS, it’s March so we give the indexes a day to prove themselves before bailing.   If we go higher, your roll gets cheaper and if we go lower, you are back on track.  

    TBT/Exec – That $32 line is poison for them.  

    BIDU/Amatta – Well that’s better but they are still $7 in premium and $2 of intrinsic so it really doesn’t even make sense to do anything as that would make you the sucker paying $7 in premium (7% of the stock price and 350% of the real value of the call).  It’s tempting to roll them to 2x the Oct $100s ($4.50) and burn them off quicker but, of course, still very dangerous to the upside.  If you get worried, you can always buy some Jan $105s to cover if they go over $10 (now $9.80) and use $10 as a stop and make your momentum money.  That’s better than giving the callers $9 out of fear, isn’t it?

    There is what seems to be an untrue rumor that John Boehner has said that the Bush tax cuts will be extended as if he’s worked something out.  That is total BS unless the people I talk to are out of the loop but it’s just one of many, many market-boosting rumors that are being thrown out today.  This all makes me VERY suspicious about what’s going on today:



    12:00 PM On the hour: Dow +1.49%. 10-yr +0.06%. Euro +1.07% vs. dollar. Crude +1.36% to $82.58. Gold +1.78% to $1340.20. 

    01:00 PM On the hour: Dow +1.61%. 10-yr +0.14%. Euro +1.05% vs. dollar. Crude +1.57% to $82.75. Gold +1.84% to $1341.00. 

    A sinking dollar (-1.1% against euro, -0.5% against pound, -0.4% against Swiss franc, -0.2% against yen) has metals riding high: Copper touched a 26-month high of $3.745 a pound, and tin climbed to a record. Gold +1.8% to $1,340.60. Meanwhile, North American aluminum shipments rose 7.9% M/M in August, and were 10.9% above last year’s total. 
    "MUCH MORE" FREE MONEY:  Amplifying comments last week, where he joined a dovish chorus at the Fed, Chicago Fed’s Charles Evans says "much more" accommodation than large-scale asset purchases is probably what’s called for. Near-zero rates are a "classic tell" for a liquidity trap, and price-level targeting could be required: letting inflation run over 2% to "catch up" from an extended low-inflation period. 
    The Coast Guard is hoping to reopen the Houston Ship Channel by evening, on the third day after its closure due to a barge collision. Three of four cut-off refineries (representing 4.9% of U.S. capacity) say they’re still running normally, but 11 inbound tankers are waiting to get through. Crude +1.5% to $82.65. 
    Buffett says BUYBUYBUY:  "I think there ought to be terrific downside… I think you should go broke," Warren Buffett (BRK.A) says of bailed-out bankers who get to walk away rich from their wrecked institutions. Speaking at a Fortuneconference, he added that in two or three years "unemployment will be far less and the economy will be humming," and stocks are a better investment than bonds

  143. Phil
    Does google tv announcement make this a good place to short nflx again?
    would seem like it? /Am I missing something?

  144. As soon as the sell and buy orders go 1 to 1 on the ES the market weakens, I noticed when the sell side is 1.2 or better they can jam up the markets…something to watch

  145. I do not think you will see tomorrow  the same market as today !!!!! Just for guys where the callers are pressing.

  146. Phil/Rumor
    Suspicious how?

  147. glad i got out of IRM yesterday. about even but better than today.

  148. exec, FAS has moved its recent daily max of 1.35.. the slope of the rise is too steep to sustain.. that being said, I totally agree with you and Ravolos that there will probably be a blow off top tomorrow before we head down.  And for today, we should close near the HOD.  I’m just looking to milk a little out of the teet on a pullback.
    Phil / link / thanks

  149.  yodi, not necessarily as big up move as today’s, but certainly follow-through.. no way it’ll be negative if we end up this strong.

  150. Matt / FWIW

  151. ravalos
    I see a lot of profit taking

  152. Phi;
    John Boehner was on O’riely last nite. I think he indicated that if the republicans prevail in Nov. election they will extend Bush tax cuts and also repeal the health care bill.

  153. I’m so confused by all of this. Everything is backwards. So, is a good jobs number on friday good or bad? Last week, bad data meant more QE, so bad data was good news. Today, apparently, good data is good news and QE is already a given. On friday, I expect the jobs report to be tepid, not terrible and not great, but i cant figure out what this means for the markets. Sigh.

  154. IMGN is moving (still) nicely up to fill that gap.


    AFFY – not compelling enough, but they are in PIII.  Should work, but don’t know enough about market advantage over AMGN.


    ENZN – another company using PEGylation.  SN38, why?  The regular drug is good enough.  Again, not sure of the market size for the technology.  I like IMGN better.  I will look deeper into both, but these are my first glances at the company websites and what they do.

  155. Hanna……I’m going back to my old reliable theory.  Nobody on this planet with the exception of Matt and the Republicans want the market to go down… least not yet.  So the market will always have a tendency to go up.  Fundamentals mean nothing anymore.  It’s clear from watching a 3 minute chart that "they" have the ability to make the market go where they choose for it to go…….I think Phil has got it exactly right.  Currently "they" have created the illusion that the market is unstoppable and will go to the moon.  They’ve got their loyal servants talking about DOW 13,000 …..meanwhile…..they’re loading up on cheap Puts so that when they pull the plug they come out on top again.

  156. Boehner’s statements are only exceeded by Sara Teaparty. Real people don’t listen anymore to their nonsense!

  157. Thanks for checking these two out Pharmboy.
    AFFY has over $5 cash/share ($6.30 today) was beaten down  after their anemia drug test results in Aug seemed dangerous to certain category of patients.
    ENZN is in Seth Klarman’s portfolio (i.e.: a deep value play w/long term prospects??)

  158.  Oxen Alert – New Longterm Rating

    Hey all,

    I have a new Longterm Rating for you in Johnson Controls. The company looks fair valued and is rated as a Hold. The stock’s price target is $35, and it is a Buy below $27. 

    Check out my thesis, valuation, etc. here!

    Good Investing!

  159. Let’s see, if I’m Goldman Sachs (50% of the market) and I’ve pushed the market up to its highs with no basis other than rumors of QE2, and I know I can push it right back down with light selling, then I would be accumulating puts too.

  160. LOL JRW – Gotta do it though, too crazy not to…

    Fees/Gel – I’ll put you on the new pricing right away, it will be indexed to gold so I know you can afford it!   8-)

    S&P 1,160, Dow 10,950 and Nas 2,400 all rejected on that run.  

    BIDU/Yodi – That’s fine, same end result. 

    End/Matt – Well SOX are not at the highs they posted last week so there is some internal weakness that we wouldn’t expect in a real rally.   Everyone else is pretty much double topping unless they break up here.   AAPL is up 3% and that’s 0.6% for the Nas, which is only up 2.2% so weaker than it looks and, of course, I HATE commodity rallies.  

    Hooks/Gel – I don’t really like that kind of marketing though so we’ll have to see.  Right now, my goal is to utilize affiliate marketing, where the affiliates get commissions and can offer their members discounts on the newsletter so it’s kind of a win-win thing.  It seems to me that there are at least 3M solidly potential customers (top 2%) and 15M in the top 10% so somewhere between 0.5 and 10% and I’ll be just fine.  I certainly don’t want it to get so big that it turns into some kind of business – I’m trying to be retired here!   8-)

    NFLX/RWV – Well that was my premise, that they are not offering a defensible product so they have no way to prove out their multiples over time so the GOOG thing is just one of many chinks in their armor.   I think they are flat today already because of it and they are a very dangerous stock which I would not chase.  If they go up to $170 again, I think they are a great short but $156 could go either way.  

    Rumors/Exec – When you get hit all in the same day with a ton of stuff that drives the markets higher (and the BOJ thing was something we knew would happen last Monday, so it’s logical that "THEY" key off that move) and some of it turns out to not even be true – then I have to start thinking there is some very desperate manipulation going on.  Even something like CVX’s announcement is "timed" by their IBankers to have maximum effect.  The only thing missing is bullish commentary from INTC – who pretty much say whatever Goldman tells them to to manipulate the markets when needed.  Maybe we get that after hours…

    IRM/Morx – Very disappointing guidance but still $1.20 a share, only .12 (10%) off expectations – no reason for them not to hold our $20 target long-term but those Oct $22.50 puts are dead for those who were too greedy to take .50 (up 66%) off the table.  

    GS/JRW – They look pretty disappointing in a strong market. 

    Boehner/42L – I heard that he said (or someone said he said) that they were going to extend them over the recess.  Mechanically, that’s not possible without Dem support and there is no way he has that but there are many people who very badly WANT to believe it will happen.   

    Good/Bad/Hannah – Actually that’s a point made in the newsletter.  Up is down, black is white and good is bad.  The Fed is split on QE2 and the worse the economy looks the more likely they swing that way but Krugman, Stiglitz and I all think that is a TERRIBLE misallocation of funds and will not, in the long or medium run, be good for the markets or the economy.  QE2 without stimulus is pointless.  Japan is doing both, not just QE.  Europe is happy because they have a strong Euro mentality (that’s why they formed the union in the first place) and they expect their austerity to be rewarded with currency strength.  


    See, the election is "in the bag":The head of the Republicans’ Senate campaign John Cornyn said no seat his party now controls is in danger in this year’s election, leaving the GOP to solely go on the offense in the last month of the campaign.
    Having worked on the front end of financial reform through legislative lobbying, Wall Street is now hacking at the enforcement end, lobbying regulators directly, Robert Reich says. Threats of shifting operations around the world just show that the Street will set up its casino wherever the rules are loosest.
    Facing a Chinese supply problem in rare earth minerals, Japan isturning to "urban mining" - plumbing a huge stockpile of used mobile phones and computers to recycle the valuable elements inside: "We’ve literally discovered gold in cellphones."


    People who find reality uncomfortable should avert their eyes:

  161. 42laurel
    Just my $.02… The Democrats will attempt ( in the lame duck period between the elections and the end of the year ) to repeal ( let expire ) the Bush tax cuts, and pass a new tax bill benefiting those with a gross income under $250,000. They will have the majority in the House, but may not be succeessful in the Senate.  After Jan 2, the Republicans will control the House until the 2012 elections… so Obama will not get any of his "re-distribution" bills passed. It will be a real "tug 0f war" and total gridlock. At least we will not see more of Pelosi’s "jam it through no matter what", even though no one likes the legislation activity.

  162. Ok, what the hell, let’s push it hgher and see if we can get more than  200pts on the DOW today! Just ordered up some short DIA thinking they won’t be able to break 10,950. Sort of feeling like a salmon today…

  163. Some actual good news:

    The ASA Staffing Index reached a 28-month high in Week 39 (September 20-24), and this marks the 23rd consecutive week with percentage gains in the ASA Staffing Index above 20% compared to the same week in 2009, and the 32nd straight week of double-digit percent increases vs. 2009. As a leading indicator of U.S. nonfarm employment, the ongoing improvements in the ASA Staffing Index this year suggest that we can expect future increases in nonfarm employment, along with reductions in the U.S. jobless rate.

  164. HI  Phil  — I have not got a chance to see the market till after lunch central time today, mu gosh — is this a breakout for real today, I did not know any catalyst today beside dollar down — like whip saw — I still have October short strangle short call left , the putter I closedout on the run last week already-- should I roll up all to november at htis point , my position are
    OCT RUT short call 700 — very closed noe, and SPX  1185 short call from already roll up 2x last week already — thx for your help

  165.  Phil/AMZN:  I’m equal short the Oct 140 calls and long the Oct 160′s. Break even is $146 so down about 9% from today’s price action.  If I DD today I can up the break even to $151 so only down 5.5% from here. What do you think? I had thought about upping the long position and going further out, and then rolling up the short but don’t have that much faith in AMZN. Thanks!

  166. Liked the newsletter. It’s a good summary of the week’s events, Very nice for those not able to follow the blog. Lots of success.

  167. Another tidbit of reality:  For August, the ATA’s (American Trucking Association) Truck Tonnage Index fell 2.7% seasonally adjusted, which was, dare we say, the sharpest decline since March 2009 (the same month that the government decided to effectively bail out the entire insolvent banking industry) and down now in three of the past four months.

    Chief Economist at the ATA, had this to say after the trucking data were released:
    “We fully anticipate sluggish economic growth for the remainder of this year and the latest tonnage numbers are reflecting that slowdown."

  168. Oh, now we are in for it (link): GS Inc., hitherto one of the biggest Treasury-bond bulls on Wall Street, now says the rally has seen its peak and the best trade going forward is to buy stocks, not bonds.

  169. Does anyone know why the ticker RIFIN (Russell 1000 Financial Services Index) no longer works on TOS? RIFIN is the underlying index that FAZ and FAS both track. Was the ticker changed? I couldn’t find a thing on the internet.

  170. gel1
    The Nov. elections are any ones guess. If the republicans win the house and senate then it has been said that oBAMA will veto any repeal of his health care bill,  but the repubs. have said they will not fund the health care bill, thus killing it.

  171. HHFIV / Russell -- .R1RGSFS

  172. Taxes/Gel – LOL, the Republicans are such idiots.  If they don’t pass the extension the Dems want now then the cuts will expire and then, for 2 years, Obama and the Dems will be able to scream that the Republicans are blocking all efforts to give people tax cuts (because the Dems will never allow them to apply to the top 2%) while people’s actual wallets are being hit and, by 2014, it will be a simple message of – Don’t vote Republican or you’ll have 4 more years of higher taxes.  Not only that, but the new budgets will come in figured out sans tax cuts and any attempt to reintroduce them will become a nightmare that will blow up the new budget.  It’s a lose, lose for them just as the expiration was meant to be a loser for the Dems, in case they got into power when Bush wrote the cuts to expire as a 2010 election issue.  Well, they got what they wanted but I don’t think it’s going to work out the way they thought…. 

    Volume has died.  Now just 120M on the Dow at 2:15, about 10M in the last hour and they’ve barely got it up.  SOX 350 is holding, Nas 2,400, Dow 10,950, NYSE 7,450, SPX 1,160 and RUT 690 – all very good if we hold them as 695 is 10% on the RUT but not so good if we give up ANY of the 7.5% lines at this point (and the Dow still hasn’t made theirs)

    Puts/Gucci – I think if you have any intention of sticking with them then you really should roll up.  This is either a great opportunity to press your bet or you’ll be capitulating tomorrow anyway.  Of course, we are most likely to end this rally with a blow-off top so maybe wait for that before getting too committed.  

    AMZN/Fortep – Ouch!  So I guess you collected $6 and risked $14?  That’s why I hate negative risk/reward trades, you have to win 3 in order to offset one loss!  I see that spread is now $16.50 so you are down 150% and finally spurred on to action with 2 weeks left…   Doubling down when they are in the money with 10 days left is probably not the answer.   I’d spend the money on 2 April $185s at $9 and roll the caller to 2x the Nov $160s ($10.25) as you have a huge theta advantage and you have 5 months to roll the callers up so if you can do a $5 roll each month even (and the Jan $170s are $9.50), you are good to $185.  

    Thanks Arbo – I’m shooting for the crowd who just wants to know what’s going on in the markets in an hour on a Sunday morning as opposed to the people who have time to actually view the site daily as I figure there’s lots of them. 

    GS/Pharm – they said that yesterday and that’s a huge trigger for today’s move.  The truck thing is very disturbing.  

  173.  Phil:  UUP play
    Is there a fundamental basis for this play?  Or just "what goes down must go up"?

  174. Phil, I HOPE youre right but I’m going to have to disagree with you. If the tax cuts expire I think Obama will be blamed

  175.  Phil – got in the SPY 114 weekly puts for 0.40 earlier… then rolled them to the 115 puts for 0.22 – so total cost = 0.62.  What would you do at this point?  Hang in until the end of the day in anticipation of a late day selloff?  Or get out now?  First time taking one of these weekly plays…

  176. gel1 Phil
    When pressed over and over on Meet The Press Boehner said if the only tax break option was for $250,000 and less he would vote for that but added he wanted tax breaks for all. Did he lie under presure to help lower income taxes? As usual he gave prepared lines but if he didn’t agree to that he was sounding like he only cared for the rich. It was fun watching him twitching when trapped!

  177. Phil/Republicans,
    I know I should stay off the politics but I just can’t help myself. 
    They’re all idiots…..both the Republicans and the Democrats.  When are they going to start worrying about what’s best for the country rather than keeping their phony baloney jobs.
    I can hardly stand turning on the TV and listening to all their BS during the run up to the election.
    As far as I’m concerned, you can send them all to DC for a big party then smart bomb the entire place and start over.

  178. I’m on the same page as Jromeha.  The prevailing meme is that Dems not extending the tax cuts is actually Dems wanting to "raise taxes".  With the mainstream media and national sentiment currently stacked against Obama and the Dems, I think the GOteaP can pull off a successful swiftboating of this issue.

  179. Of course there’s always this:


  180. HEY!  Where’s the stick save??  How we gonna get to the moon, Alice?

  181. tomorrow is the last POMO for a while.  Next batch to be announced on Oct 13.  We can have a week to 10 days without free rocket fuel.

  182. Careful Matt…’re gunna piss off the Bots and they will run it up to the moon.

  183. Rally into the close?  Just for sh**s & giggles?

  184. Well, they took out the 9/22 high for FAS.  Good job boys!  I mean bots!

  185. Hey thank goodness we don’t have to worry about that terrorist attack in Europe everyone was worried about yesterday, right?  I think one day of worrying is plenty…  8-)

    UUP/Red – That’s a TA play, if this level breaks then the dollar is doomed, this should be their last stand before another 5% dip and they are down very sharply (7.5% in 2 months and 12.5% since May) so a 2.5% bounce back to over 80 is very possible and the BOJ has allocated money but you don’t know what they will spend it on and they could screw over the dollar bears tomorrow with a massive squeeze.  The only way to make UUP plays is contrarian, when they get cheap and that one has a nice, potential upside and a manageable loss.

    Cuts/Jrom – Oh he will at first but come April the Dems will have tried to pass Middle Class tax relief a few times and, since everyone earning less than $2M a year in this country seems to think they are middle class, by the time the Republicans filibuster the 10th Democratic tax relief bill because it doesn’t include breaks for the top 2%, there will be no question in Nov 2014 voters minds whose fault it is.  Blocking the extension now is a gigantic mistake by the Republicans as they are backing themselves into a huge corner once the Republican tax cuts hit the Republican planned expiration.  Unless they win the House and the Senate and get to introduce legislation and force Obama to veto it – they are going to be in a position were they are standing in the way of tax relief.

    SPY/SrF – Well those suck now but need to hang on through tomorrow I think.  The $115 puts are .42 with a .30 delta so if the Dow gaps up 100 tomorrow they should be .10 to .15 and a DD there would drop the basis to .38 and a retrace back to where we are now would get us out even.  That’s a very possible scenario and, of course, any solid move down tomorrow also would be nice.  Also, the roll to the Oct $115 puts is .55 and the $115 puts can be sold for .42 so .13 to buy another week at worst.  

    Boehner/Shadow – Did you read this totally great Krugman article on Fox, the Koch’s and the Republicans

    Nobody who was paying attention has ever doubted that Fox is, in reality, a part of the Republican political machine; but the network — with its Orwellian slogan, “fair and balanced” — has always denied the obvious. Officially, it still does. But by hiring those G.O.P. candidates, while at the same time making million-dollar contributions to the Republican Governors Association and the rabidly anti-Obama United States Chamber of Commerce, Rupert Murdoch’s News Corporation, which owns Fox, is signaling that it no longer feels the need to make any effort to keep up appearances.

    As the Republican political analyst David Frum put it, “Republicans originally thought that Fox worked for us, and now we are discovering we work for Fox” — literally, in the case of all those non-Mitt-Romney presidential hopefuls. It was days later, by the way, that Mr. Frum was fired by the American Enterprise Institute. Conservatives criticize Fox at their peril.
    Phony baloney jobs/Exec – Harumph!  
    SUN making 52-week highs and VLO still down in the dumps. 

  186. This is painful

  187. Uncle!

  188.  DIA $112 calls are $1.40 so mission accomplished there as a momentum trade (10%).  If taking them off leaves you too bearish, then leave them on to protect through tomorrow but 10% in a day is a nice offset to bearish losses and you can use the cash to roll short positions up if we gap up tomorrow

  189. Phil,

    BIDU im not sure i follow. what do you mean by using 10 as the line to play momentum? You meanit’d it goes up from it buy the cover and if it stays below it do nothing? I was asking if dd not giving into the caller. I guess my question is if you think this has legs to continue rallying tommorrow or break down towards the 5% lines and taking BIDU down with it? If so I would at least enter another 1/2 position if not doubling down.

    Sorry but just want to be clear and not mess it up more.

  190. LOL -  "I have a bag of potatos in my refrigerator that probably had as good of a day as the S&P 500" – CNBC guest on dollar decline pushing the markets. 

    02:00 PM On the hour: Dow +1.76%. 10-yr +0.17%. Euro +1.25% vs. dollar. Crude +1.83% to $82.96. Gold +1.85% to $1341.20.

    Seeking to take advantage of investor demand for higher-yielding, emerging-market debt amid record-low interest rates in Europe and the U.S., Mexico is selling $500M of 100-year bonds. Plus, "the fact that Mexico has the capability to place a 100-year bond… sends a very positive signal to the market."

    Always looking out for the little guy:  A new power that shareholders were to be given in the coming year – allowing them to propose board members to public companies – will be delayed because of a lawsuit from the U.S. Chamber of Commerce.

  191. Phil,
    I have a UNG posttion as following,
    Jan, 2011 bull call spread (Bought $6 call and sold $7 call), sold Jan 2011,  $6 put for 100 contracts each.  It’s down a lot.  You wrote that UNG might go to 5 this winter.  What adjust should I do about it?  Thanks.

  192.  aclend, I hear you!

  193. Phil / Idiots
    No argument from me…. I agree with exec – they are all idiots, with only their own interests only at heart ( for the most part )

  194. Phil/Phony Baloney
    Now that was funny…….if it wasn’t so close to true……it’d be even funnier.

  195. Is Mexico selling a 100-yr bond sorta like my pizza guy quitting his $7.25/hr gig to become a mortgage broker?  One of those things that makes me go….hrmmmmm….

  196. Here comes the final push to close on the HOD !!

  197. CRIS is starting to lift off the ground. 

  198. JRW / HOD — Doubtful, CNBC just mentioned 11k, down we go!

  199. Phil / Potatos — That’s a good one! Brings new meaning to a lunchtime hedge!

  200. 42Laurel
    You have it right.  Obama is essentially frozen in a time capsule until 2012, at which time Hillary will get the nod, as the "O" will not be able to move his program forward for his base electorate. He would have been better to work with his oposition, instead of pissing them off…. but no – he is not a skilled politician – now back to community organizing, I guess.

  201.  BIDU/Amatta – I’m saying at $10 you execute a buy of the calls to cover as momentum and not saying anything about giving up.   They could keep going up but this is about what they are worth, not what they are priced at for a day or two.  This is a MASSIVE market push and, although we are only up about 60 points from Friday’s close, it can still bring in a lot of money as follow through so you can’t "plan" on a quick reversal.  If you want to stay with a position, you need to have a clear plan for what you are going to do if it keeps going up.  I don’t think BIDU is worth $100 at November expiration but that doesn’t mean they won’t be PRICED at $100, even though that’s a pre-split $1,000 and up 10x since Jan ’09 with a p/e of 100.  People are just idiots, you can’t stop them from BUYBUYBUYing.    As I said, you can roll to 2x the Oct $100 callers for better than even and you can buy 1x the Jan $105s if they head higher but, otherwise, you put them into $4 of total premium that expires in 7 sessions at the top of a huge run.  If they keep going up, the Nov $115s are $3.70 and you can roll 2x the Oct $100s to 2x the Nov $115s and you’ll have 1x the Jan $105s that will be $10 in the money before you owe the callers their money back.  

    UNG/Bob – I assume that was an even trade and your net assignment is $6 so, unless you REALLY don’t want to own 1,000 UNGs at $6 ($6,000) – don’t worry about it.  They MIGHT go to $5 and you MIGHT roll to the 2012 $5 puts (now .63) or you MIGHT take the assignment and do a buy/write with those puts and $6 calls for about $2 for net $4/5 – is that so bad for a long-term investment in natural gas?

    Mexico/Hoss – Hey, they have the best performing global economy now! 

    Push/JRW – More like the dump, that BS move up came too early. 

  202. Just went long on the USD/MXN for a short term reversal play – target is 12.5651

  203.  Have I said how much I hate this idiotic, fake market ?

  204.  Bought some Oct TZA 25 calls …

  205. Made enuf today on my gold positions to buy a car from JRW… can’t tell if he is selling though.

  206. Where’s my sombrero….

  207. Still awaiting the Hurricanes that have been forcasted for the Gulf of Mexico… The weather service is still concerned about the possibility in the Gulf – not the Atlantic

  208. Pharm- any view on VRX (Valeant Pharma)? Txs in advance

  209. UHHH-OHHHH.. just saw a hangman’s noose in the 3 minute over stochastic under eclesiastic chart!  Whatever could they be thinking?????????????    Bwa-ha-haaaaaaaaaaaaaa!

  210. Does the increase in oil content in the Gulf, especially on the surface, effect the evaporation rate?   And does said evaporation rate provide the fuel for a hurricane?  Could that be why we aren’t seeing so many gulf storms?
    I have no idea, just wondering…..

  211. lol, hang in there Cap!

  212. Took the opportunity today to close out my RDY positions… that one moves too slowly for me… will jump on one of Pharm’s picks.

  213. Phil / FAZ   Does this foreclosure fraud / freeze make FAZ  a buy here?    ps is the UK and SKX looing great here also.  One of the analysts read my 11 page report and has set a $51 price target on SKX.  I’ll write an update tomorrow, been buying more.

  214. Valeant has a gout drug as well making it through the pipe.  Better than SVNT’s FYI.  Still needs a bit more time.  Nothing else though in the short term.

  215. hoss / Gulf storms
    I believe they originate in the waters far to the South of where the oil is concentrated.

  216. hoss, that’s some good thinking but hurricanes are well formed by the time they hit the oil slick that is now more like the Gulf of Arabia then the Gulf of Sudan… errrr, or sumpim like that!

  217. Wouldn’t a 190 pt sell off be great right now?

  218. hoss / Gulf storms
    I believe they originate in the waters far to the South of where the oil is concentrated.

  219. Gel-you are the ICE man.any trade you like here.

  220. Pharm, where’s that Dudley(?) hedge fund from Kansas when you need them?  Surely, they could drop another $4.1B bomb fer us?

  221. AAPL now responsible for 1/2 of Nasdaq’s gains for the day.   A lot of sneaky selling going on while they do the dog an pony show for all the suckers

    Nicely done Gel!

    Evaporation/Hoss – That’s interesting.  I suppose it makes the water more reflective which keeps it cooler which could actually reduce hurricanes.  Interesting that that hasn’t come up (that I’ve seen). 

    Enough/Cap – Don’t sweat it.  

    LADIES annnnnd GENTLEMEN – I present to you, a rarely seen wonder of the modern World – something so amazing that few traders dare even whisper it’s name but – an I promise you this – it is something that, once you have it, you will never want to be without.  Presenting – THE 5-Year Chart!!!!

    Now, can everyone PLEASE GET A GRIP?!? 

  222.  Get ready …. MAJOR selloff coming ….this week or next but it is coming.

  223. Thanks Pharm!

  224. New HTF cable to connect UK to NY….yeah!

  225.  50-60 points in 2-3 days I would say.
    (i know, I;m sounding like Matt … but I mean it ! … my indicators say so.)

  226. gel: congratulations on the winning trades! way to work those bubbles ;)

  227. Wheee.. finally got a lil milk from the bot’s teet!

  228. Cap - careful, I went into the TZA 23 calls earlier today, down 10% already!

  229. Cap, ouch!  If you hadn’t noticed.. I’m not that Matt anymore.  In fact, I’m a lot funnier!  8-)

  230.  As to the 5 year chart, boy do I feel young again!

  231. fortep / 5 yr — And I still feel agnostic!

  232. I need some expert advise.  Won’t be near the computer tomorrow.  Sitting on TZA……cover in AH or hold.

  233. Cap – you see a 50-60 point sell off coming soon? You mean 500-600, right? What indicators are these?
    Phil – I don’t know, I still don’t get the buy buy buy feeling; which means that this rally still has legs to climb? :P

  234. lol…….I think he means 50-60 points…….big move down……:)

  235. Gel1 – yes, I understand they originate elsewhere, but as they move, warm Gulf waters evaporate more quickly, giving them extra power.  That’s why storms coming from the Caribbean can come into the Gulf Cat 1 or 2 and hit landfall Cat 3 or 4.  Growing up in Texas, I remember the Gulf being very warm, and forecasters always talking about how that fueled hurricanes.
    I wondered how the oil in the water might effect the evaporation, because if it did slow it down or change it, then incoming storms might not ramp to Cat 3/4 or could even dissipate as the moisture they desperately need is not present.
    Dunno…hadn’t seen anything about it, but seems like it might explain the lack of storms…..<shrug>
    Non-sequitor….Gel what are your thoughts on NEM or ABX as gold miners?

  236. drum…. speaking of ICE… the stock is doing very nicely, BUT, it should be better given the market action of late. Remember their overhead is fixed, so an increase in volume will have a big effect on their earnings. Look for a big jump in earnings this quarter… will play some long calls just prior going into their report!

  237.  FAZ/Tusca – Meredith Whitney sure thinks so, she was on the other day.  I don’t want to mess around with the finacials until we hear from some of them on earnings.  SKX is a kick-ass pick – I was in the Times Square store on the weekend and they were not just hopping but a very well-trained staff that was impressive.  

    Wow, we finished at 216M on the Dow so a ton of activity right at the end and it was pretty much all downhill – what does that tell you?  

    YUM not very exciting with both US and International only up 1% – where’s my amazing growth story? 

    TZA/Exec – Dow 10,944 (miss by 6), S&P 1,160 on the nose, Nas 2,399 (miss by 1), NYSE 7,234 (miss by 16) and RUT 689 (miss by 6) – That means they all still have to pop resistance tomorrow and we saw a lot of selling pressure at those levels so I don’t think we pop over tomorrow, which means risk/reward favors keeping the TZAs.  

  238. hoss, I like ‘em both, and have both. My favorite is AU.  ABX is the largest, and getts a lot of attention because of this, but they are not the "lowest cost" producer.  GG ( Goldcorp) is good as they have one of the least costly operations.( Also-very good management)


  240. hoss…. if they burn off that oil - will that warm the water more? – not suggesting that, just speculating.

  241.  Matt … just joking at your expense.
    The indicators are based on excessive bullishness which usually marks a sharp reversal.
    But who knows ?
    Mocha, I hear ya; I bought them late today and sold some 35′s to reduce the cost a bit.  So I have a 25/35 spread for $1.
    If we get a good selloff, that will pay off nicely.  And if we don’t… $1 at risk.

  242. Gulf Oil — I don’t think there is enough on the surface to change the weather patterns. I think if there was enough to do that, then it would still be in the news on a daily/weekly basis.

  243.  Bernanke Tells the Truth: The United States is on the Brink of Financial Disaster

    Yesterday, Federal Reserve Chairman Ben Bernanke delivered a speech before the the Annual Meeting of the Rhode Island Public Expenditure Council in Providence, Rhode Island. In the speech, he warned about the current state of the government finances. His conclusion, the situation is dire and "unsustainable".

    It is remarkable that mainstream media has given this speech no coverage. I repeat, the central banker of the United States says in his own words:

    Let me return to the issue of longer-term fiscal sustainability. As I have discussed, projections by the CBO and others show future budget deficits and debts rising indefinitely, and at increasing rates. To be sure, projections are to some degree only hypothetical exercises. Almost by definition, unsustainable trajectories of deficits and debts will never actually transpire, because creditors would never be willing to lend to a country in which the fiscal debt relative to the national income is rising without limit. Herbert Stein, a wise economist, once said, "If something cannot go on forever, it will stop.  One way or the other, fiscal adjustments sufficient to stabilize the federal budget will certainly occur at some point. The only real question is whether these adjustments will take place through a careful and deliberative process that weighs priorities and gives people plenty of time to adjust to changes in government programs or tax policies, or whether the needed fiscal adjustments will be a rapid and painful response to a looming or actual fiscal crisis.

    This is as close as you are ever going to see a central banker admit that his country’s financial situation is so dire that it could breakup at any time.

    Here’s more from Bernanke’s remarkable speech:

    The recent deep recession and the subsequent slow recovery have created severe budgetary pressures not only for many households and businesses, but for governments as well. Indeed, in the United States, governments at all levels are grappling not only with the near-term effects of economic weakness, but also with the longer-run pressures that will be generated by the need to provide health care and retirement security to an aging population. There is no way around it--meeting these challenges will require policymakers and the public to make some very difficult decisions and to accept some sacrifices. But history makes clear that countries that continually spend beyond their means suffer slower growth in incomes and living standards and are prone to greater economic and financial instability.

    Now, get this, he warns that it is not only the Federal government that has financial problems, but also states and local governments:

    Although state and local governments face significant fiscal challenges, my primary focus today will be the federal budget situation and its economic implications.

    Does Bernanke see the tsunami hitting or what?

    Then, he put things in historical perspective:

    The budgetary position of the federal government has deteriorated substantially during the past two fiscal years, with the budget deficit averaging 9-1/2 percent of national income during that time. For comparison, the deficit averaged 2 percent of national income for the fiscal years 2005 to 2007, prior to the onset of the recession and financial crisis. The recent deterioration was largely the result of a sharp decline in tax revenues brought about by the recession and the subsequent slow recovery, as well as by increases in federal spending needed to alleviate the recession and stabilize the financial system. As a result of these deficits, the accumulated federal debt measured relative to national income has increased to a level not seen since the aftermath of World War II.

    Then, he explains the deterioration and the problems it will create for the entire economy:

    For now, the budget deficit has stabilized and, so long as the economy and financial markets continue to recover, it should narrow relative to national income over the next few years. Economic conditions provide little scope for reducing deficits significantly further over the next year or two; indeed, premature fiscal tightening could put the recovery at risk. Over the medium- and long-term, however, the story is quite different. If current policy settings are maintained, and under reasonable assumptions about economic growth, the federal budget will be on an unsustainable path in coming years, with the ratio of federal debt held by the public to national income rising at an increasing pace.2 Moreover, as the national debt grows, so will the associated interest payments, which in turn will lead to further increases in projected deficits. Expectations of large and increasing deficits in the future could inhibit current household and business spending--for example, by reducing confidence in the longer-term prospects for the economy or by increasing uncertainty about future tax burdens and government spending--and thus restrain the recovery. Concerns about the government’s long-run fiscal position may also constrain the flexibility of fiscal policy to respond to current economic conditions.

    Then, he tells us how powerful the negative trends are and how the aging population and Obamacare are going to make things worse:

    Our fiscal challenges are especially daunting because they are mostly the product of powerful underlying trends, not short-term or temporary factors. Two of the most important driving forces are the aging of the U.S. population, the pace of which will intensify over the next couple of decades as the baby-boom generation retires, and rapidly rising health-care costs. As the health-care needs of the aging population increase, federal health-care programs are on track to be by far the biggest single source of fiscal imbalances over the longer term. Indeed, the Congressional Budget Office (CBO) projects that the ratio of federal spending for health-care programs (principally Medicare and Medicaid) to national income will double over the next 25 years, and continue to rise significantly further after that…he aging of the U.S. population will also strain Social Security, as the number of workers paying taxes into the system rises more slowly than the number of people receiving benefits. This year, there are about five individuals between the ages of 20 and 64 for each person aged 65 and older. By 2030, when most of the baby boomers will have retired, this ratio is projected to decline to around 3, and it may subsequently fall yet further as life expectancies continue to increase. Overall, the projected fiscal pressures associated with Social Security are considerably smaller than the pressures associated with federal health programs, but they still present a significant challenge to policymakers.

    Then he goes back to warn that the financial mess also exists at the state and local level:

    The same underlying trends affecting federal finances will also put substantial pressures on state and local budgets, as organizations like yours have helped to highlight. In Rhode Island, as in other states, the retirement of state employees, together with continuing increases in health-care costs, will cause public pension and retiree health-care obligations to become increasingly difficult to meet. Estimates of unfunded pension liabilities for the states as whole span a wide range, but some researchers put the figure as high as $2 trillion at the end of 2009.  Estimates of states’ liabilities for retiree health benefits are even more uncertain because of the difficulty of projecting medical costs decades into the future. However, one recent estimate suggests that state governments have a collective liability of almost $600 billion for retiree health benefits. These health benefits have usually been handled on a pay-as-you-go basis and therefore could impose a substantial fiscal burden in coming years as large numbers of state workers retire.

    Bernanke then breaks the news that the problem is global:

    It may be scant comfort, but the United States is not alone in facing fiscal challenges. The global recession has dealt a blow to the fiscal positions of most other advanced economies, and, as in the United States, their expenditures for public health care and pensions are expected to rise substantially in the coming decades as their populations age. Indeed, the population of the United States overall is younger than those of a number of European countries as well as Japan.

    Bernanke then re-emphasises, the damage this will do to the overall economy:

    Failing to address our unsustainable fiscal situation exposes our country to serious economic costs and risks. In the short run, as I have noted, concerns and uncertainty about exploding future deficits could make households, businesses, and investors more cautious about spending, capital investment, and hiring. In the longer term, a rising level of government debt relative to national income is likely to put upward pressure on interest rates and thus inhibit capital formation, productivity, and economic growth. Larger government deficits increase our reliance on foreign lenders, all else being equal, implying that the share of U.S. national income devoted to paying interest to foreign investors will increase over time. Income paid to foreign investors is not available for domestic consumption or investment. And an increasingly large cost of servicing a growing national debt means that the adjustments, when they come, could be sharp and disruptive. For example, large tax increases that might be imposed to cover the rising interest on the debt would slow potential growth by reducing incentives to work, save, hire, and invest.

    He then states that we do not know how much time is left before all hell breaks loose:

    It would be difficult to identify a specific threshold at which federal debt begins to pose more substantial costs and risks to the nation’s economy. Perhaps no bright line exists; the costs and risks may grow more or less continuously as the federal debt rises. What we do know, however, is that the threat to our economy is real and growing, which should be sufficient reason for fiscal policymakers to put in place a credible plan for bringing deficits down to sustainable levels over the medium term.

    From there,Bernanke goes into a bit of wishful thinking by identifying ways Congress can rein in spending and make the tax system more efficient. Good luck with all of that.

  244. Here’s a perspective on HFT perils and the flash crash:
    It’s a bit hard to buy the explanation: one firm’s algo-based HFT going haywire . . .
    Thanks to disaster hedges, not too worrying . . .

  245. Storm news!
    What creates storms is temperatures over 85 degrees that creates a thermal lift. The warmer air is less dense so it can carry more mosture up with it. This also creates thunderstorms and tornados. Most storms start off the Africa coast where the water is even warmer and follow the warm waters that move  eastward entering the south Gulf of Mexico. These warm water flows out south of Florida and create the gulf stream off the east coast. Water temp is lower this year especially off the east coast which is why that coast is spared this year. As storms move north over colder water they disapate. In 1938 the worst storm to hit New England, the waters off Long Island, NY were in the 80s and haven’t been that warm ever since. Early 1900s had many sever storms because the ocean was unusually warm. From what I have read the remaining oil is at the bottom where it will effect sea life for 100 years.

  246. Wow..Bernanke sure has a way of making me feel all warm and fuzzy!  After reading that, I’m shocked, SHOCKED, we’re only up 193 on the Dow today.  What’s wrong with you people?  Up is the new black!  Long is so in!  Quick someone ramp the Dow 12,000 hats so we can pass them out!  What ARE you waiting for BUYBUYBUY!!!
    Gel – burning, I dunno.
    Shadowfax – thanks! interesting…love learning stuff like that…
    and just to ice the cake in case you didn’t understand me clearly earlier…..BUYBUYBUY!!!  :P

  247. At the close: Dow +1.77% to 10945. S&P +2.04% to 1161. Nasdaq +2.4% to 2400.
    Treasurys: 30-year -0.19%. 10-yr +0.12%. 5-yr +0.10%.
    Commodities: Crude +1.45% to $82.68. Gold +1.84% to $1341.80.
    Currencies: Euro +1.1% vs. dollar. Yen +0.19%. Pound +0.38%.

    Market recap: Stocks staged a broad-based rally on heavy volume, as investors were emboldened that global central banks will follow Japan’s lead in stimulating economic growth. The dollar fell to a six-month low vs. the euro and lost ground vs. the yen; dollar weakness sent gold to another high at $1,340.60/oz. and oil past $82/barrel. NYSE advancers beat decliners by more than four to one.

    A "flood of liquidity" from the Fed and the ECB is bringing "chaos" to global foreign exchange markets, Joseph Stiglitz says: "The irony is that the Fed is creating all this liquidity with the hope that it will revive the American economy. It’s doing nothing for the American economy… It’s a very strange policy they are pursuing."

    Gary Shilling says the growing housing surplus may depress prices another 20%, bringing the total decline from the 2006 peak past 40%. He says this would merely return prices back to the flat trend from 1890, pointing out that prices may fall below trend on the way down, just as they overshot on the way up, as is often the case in cycles.

     Insiders can’t get out of the market fast enough, Zero Hedge says, citing sales of $414M last week vs. purchases of just $177,000 – a ratio of 2,341 to one. His take: "This Fed-induced rally is nothing short of a godsend for each and every corporate executive." 

    While the SEC-CFTC report emphasizes the role a single trade played in igniting the flash crash, more focus is needed on the brittleness of the electronic markets and measures to prevent any one trade from having so profound an impact. But while a look at the technology and the practices of HFT is needed, volatility can’t be legislated away.

    YUM! Brands (YUM): FQ3 EPS of $0.73 beats by $0.01. Revenue of $2.9B (+3%) in-line. (PR)

  248. Phil / Ben — That’s all gloom and doom from months ago. Old news in a new market!

  249. Hoss…. BUY, BUY, BUY….. ok, …. WHAT?, WHAT?, WHAT?

  250. geli,
    i am in AU so very happy to hear that its your favorite--why? and are you still adding to your position at this point?

  251. Sounds like Bernanke has got a firm handle on the problems we face.  What he fails to make a case for is how more QE is going to help.  In fact, it could easily make things worse.  There isn’t a credit shortage.   Take away the banks’ ability to gamble with money in casino like markets and you will see lending improve.  The dangers of more QE to the population as a whole outway the potential benefits to investors.  What he needs to state is where exactly he thinks the problem is with our stalled economy and how will QE help that.  I am far from convinced.  It’s almost like he is throwing all of his common sense to the wind and diving head first into a pile of $.  As I said now a long time ago… there is no escaping the pain! 

  252. Bernanke speech/Phil: Thanks for sharing the speech; interesting read . . .
    I wonder, what does he think about the FED’s monetary responsibility and policy going forward?

  253. Pharm/Gel,
    Thanks for the suggestions and comments.  I found them helpful and appreciate the time you took to explain it to me.  I really am here to learn from you guys as much as I am here to make a gain.  I think that I may have pushed Phil a bit as he wasn’t really pleased with my post.  But I don’t take it personally because I am not that thin-skinned. Besides, he is such a great guy anyway.  So, thanks to you Phil as well.  I wish you  great success with your plan on expanding your business subscription model.  I own an Internet business that has a subscription pricing model and it really is nice when those renewals come in!

  254. The pain is coming Matt, you and I know it and slowly more people are accepting it. What has changed in 3 months? Nothing but the market is up, what goes up must go down. I am net short now and waiting for the sky to fall!

  255.  great post & charts from D.Short : .

  256. The most recent commitment of traders report (courtesy of Sentiment Trader) shows a massive short accumulation in the Nasdaq 100.  If you look at past occurrences their market timing has been fairly good.  The current net short position is almost twice as large as any occurrence in the last 5 years.  Is the dumb money on the wrong side of the trade or are the institutions about to become fuel for the next leg up?

  257. respeja
     Long term markets go up but current shorts are short term overdue for some correction and base building is needed, 10,500 would be nice.

  258. RE:
    Ben’s speech in Rhode Island: It’s testament to the ignorance of his audience, if in fact they were so, that all he did was iterate what has been known and written and talked about for two years or more.
    There isn’t one thing he was revealing that hasn’t been done to death in so many venues I’ve lost count.
    This speech wasn’t worth a minute of our time.

  259. Phil et al, scary speech but more lipstick can be put on the pig.  Where does one go, I don’t know.  Everything on FinViz up but USD, Cocoa, Bacon and Feeder Cattle.  If USD bounces all will reverse.  Fed is pushing on a string but the mkts are into it.  Will stop but timing is everything.

  260. flipspiceland
    Why are Rhode Islanders ignorant? Why not attack the speaker? It was his show, he talked, they listened. Where do the smart people live? Is it because that state is mostly democratic? Did you know they have had many republican governers and a US senator named Chaffee for generations?

  261. flipspiceland, when a central banker or Fed chairman seems to take notice or even becomes a proponent of something that has been known earlier, this something takes on a special meaning. So not at all irrelevant that Bernenke is mentioning publicly known facts. The fact that he is mentioning them is important.  And yes, you can make your own investment decisions on that, including to choose to ignore it.

  262. Jordan
    You said it better than me and mostly I failed to make your point. The last time the market went up Greenspan said we are financing the GWB tax cuts with borrowed money. Ben saying this is new and reason for hope. Thanks!

  263. Shadowfax… You say Chaffee was a Republican…. hmmm – he always voted with the Democrats, so he was really a Democrat.  In today’s world, you are what you think, and how you vote…. not the color of your tie or blouse.

  264.  gel1                                                                                                                                                                                                                     A republican he is backed by the national republican party and ellected in a democratic state, facts are facts. The fact that someone said the ignorance of Rhode Islanders instead of attacking the republican speaker shows how ignorant the republican party has become. I am embarassed that I voted for them as many times as I did and this only proves my and Phil’s opinion of who is ignorant and makes stupid statements without facts like Boehner!

  265. Chafee — a RINO if there ever was one.  An elitist putz.

  266. shadowfax
    In today’s political world labels are nothing more than that…. just labels. It comes down to "How did they vote?" Chaffee voted consistently with the Democrats – That is a FACT, and like you say facts are facts.Just because you and Phil say Republicans are idiots – that does not make the statement a fact….. only an opinio, my friend. 

  267. Hey, why am I getting dragged into this?  Not all Republicans are idiots.  There’s….  uh…. well, there’s…   8-)

  268. No, Cap, I would classify the guy as an elitist "schmuck", that was riding on his daddy’s coatails and notoriety. Now THAT is an embarasement to the political process, and the State of Rhode Island.

  269. This is a cool study on productivity (surprising to see Netherlands do so well, must be the hash):  



  271. But they promised …..

    3M Co. confirmed it would eventually stop offering its health-insurance plan to retirees, citing the federal health overhaul as a factor.
    "…health care reform has made it more difficult for employers like 3M to provide a plan that will remain competitive,” the memo said.

  272. Hmmm … was Carter not a Republican idiot…. no I guess not – just an idiot

  273. Hey Phil,
    They actually have one of the lowest rates of drug experimentation and substance use disorders of all the developed nations…kinda reminds me of something Jesus said about the law not being intended or able to bring spiritual freedom.  Hmmm…  8-)

  274. In confusing times, profits do not predict a recovery


    Dr. Ben.  What a jokester he is. Makes me .

  275. Phil,
    I was invited by TD Ameritrade to a meet the president and founder event (marketing) dinner for TD Apex account holders in Boston next week.  They stated that the event is for ‘Self Directed’ traders who have a Premium (Apex) account with them.  Would it be OK to mention that I use PSW to get my trade ideas and learning from member’s posts and your recommendations?  Not sure if this would be OK with you so I’d thought I’d ask first.
    Otherwise, I’ll just mingle and have a free dinner on them.
    BTW The ‘Pivot Point’ strategy looks totally awesome!  Perhaps I’ll be able to comprehend it in another year or so. (The learning potential here is beyond words.)  Wish I had the time but I have to run a business let alone not be away from the screen for lunch. 

  276. So basically Bernanke says we are screwed. I can’t believe the politicians are so blinded by short term greed that they are hell bent on destroying the long term stability of the country! No wonder some of you folks are looking to get out of this sinking ship…

  277.  gel,   a shmuck riding his daddys coattails, now who does that remind me of,  oh yeah, your hero GW.

  278. Watch out for the great unwashed ….
    Politico, via Bob Costa, on Rahm Emanuel’s first day in candidate mode:

    On Day One of Rahm Emanuel’s weekend transformation from power-behind-the-throne at the White House to glad-handing big-city pol, there were awkward handshakes, unplanned stops that surprised even his handlers and two sets of protesters, including one that blocked his car. 
    And if you were looking for symbolism, there was the moment when Emanuel finished shaking hands with commuters at a Chicago Transit Authority station and shoppers at a supermarket and climbed back into his black Dodge Caravan, in which he could be seen vigorously washing his hands — in clear view of television cameras and reporters.

    Full thing here.

  279. Doubled, do u live in Boston?

  280.  nicha,  John Adams said it :
    There is nothing which I dread so much as a division of the republic into two great parties, each arranged under its leader, and concerting measures in opposition to each other. This, in my humble apprehension, is to be dreaded as the greatest political evil under our Constitution.   J. Adams
    Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide. It is in vain to say that democracy is less vain, less proud, less selfish, less ambitious, or less avaricious than aristocracy or monarchy. It is not true, in fact, and nowhere appears in history. Those passions are the same in all men, under all forms of simple government, and when unchecked, produce the same effects of fraud, violence, and cruelty.   J. Adams

  281. Oh no, say it ain’t so!
    Just when we thought Fidel would lead us to the promised land of hope and change!

  282. ekor/gel/GW  OUCH!!!  :)

  283. Hahahaha Cap, REALLY!? If I was shaking hands with tons of random people I’d be washing my hands to!

  284.  Interesting : Equinix (EQIX) "now sees revenue of $328 million to $335 million for the September period, compared to its prior range of $335 million to $338 million. Wall Street’s current consensus estimate is for revenue of $336.8 million for the period" . On this news, the stock is down from 105 to 78 in AH (Thats $26). Wait! Lets review : They cut their revenue by about 2%, and they drop ’bout 30%. May give us a little window into what people are expecting from these stocks in terms of earnings/rev beats and guidance. Any bad news is gonna turn into terrible news for these stocks. 

  285. Cap/hands  Another slow news day mmmm?  Cap, talk to your kids about why we wash our hands and cover our mouth’s when we sneeze……. 

  286. 1020 – I think he’s just mad b/c SOME Americans are starting to wise up and the Dems are gaining in the pols….

  287. jrohema ….. and if I were shaking hands w/ Rahm, it would be me washing my hands after checking to see if I still had my wallet.
    1020 … methinks its the two of you who need to do some wizing up … get those blinders off guys !

  288. What ?  Paul Allen isn’t going to give his money to the government (voluntarily, anyway) ?
    Dammit, Obama is just gonna have to take it, b/c Allen has more than enough.

    Of course, I applaud Allen for giving his money for philanthropic purposes.
    But how come all these guys (Buffett, Allen, Bloomberg, Gates, etc.) aren’t cutting voluntary " just let DC spend it" checks to the government, like 1020 and jrohema undoubtedly do ?

  289. Anybody watching this copper BS!? This is ridiculous!

  290. Did any of the mainstream media reported on the Bernanke speech? A blind man can see the storm clouds that Ben describes building, why can’t our leaders……or perhaps the do but don’t have the political will or resolve to do what needs to be done. Let’s face it, they’re doing the opposite of what has to happen…..hiring more government employees, propping up unions, subsidizing failing companies and state governments, perpetuating hopelessly bankrupt government programs, and spending money we don’t have is not going to fix the problem. It’s inevitable that the day will come that they be forced to deal with these issues. Unfortunately that is the day that as one scholar put it, what government givith, government cannot takith away……..and like Greece and Spain…is the day we see riots in our streets. I’m not sure this problem is fixable any longer.

  291. ekor….TOUCHE !!!

  292. Cap – You report, I decide. Why bother?  GOOD NITE NOW!!!  :)

  293. jromeha / copper
    It is the weakening dollar….or fear of it.

  294. Copper is up 12 cents from 1 AM Tuesday…. 12 cents in 24 hours!

  295. I would not get close enough to shake Rahm’s hand, for fear someone would think I knew him.

  296. Gel, I understand – I just think the move is a little excessive…. We are at levels where we were only at for 6 months in 08 before all this mess.

  297. jromeha / Copper
    This metal is quite often the subject of speculation, and usually it is the most vulnerable…. also the "canary in the coal mine" for things to come relative to other commodity pricing. Additionally, there are so many countries that have weakened their currency recently… now Japan is going everything to accomplish this end… so this will have a big effect on commodities, including gold, IMHO. The anticipation of QE-2 is placing pressure on the pricing as well.

  298. Yeah…I’ve read that about copper as well…Guess Im just pissed b/c my I’ve lost a decent chunk of change shorting both Gold (hit my stop of 1330) and copper lately…. Im glad you (and my parents with their massive stash of silver coins) have done well with your gold bets! Just make sure you got an ounce (or a 1/4 of an ounce at this rate) to pay me off when Obama dominates Romney! lol

  299. jromeha… Ha… at this point, I have no concerns of Obama dominating anybody…. he needs to first get out of reverse, before he backs over somebody.

  300. Good morning!

    The futures are strange in their total lack of activity since yesterday.  

    The Shanghai is up 1.7% AGAIN (kidding, still closed) but the Nikkei is up 1.8% and the Hang Seng is up 1% but it was 100% gap open to 23,000 followed by a 130-point drop into lunch so far.  

    No 3am trade this morning and that’s what’s strange about the Nikk, as the Yen is still 83.15 and was below 83 yesterday.  Shows how ga-ga people get about QE, even when there’s no change to the actual situation…

    Miners/Gel – Don’t forget my little HMY – although they’ve totally gotten away now.  NAK also doing well, outperforming gold by a mile this Q.  That’s why I like the miners better than gold – at least they make money.  

    NAK is done now since they are a bit too speculative at $8.66 (up 30%) although you can protect them with a conservative buy/write of the May $7.50 puts and calls for $2.80, which is like selling at $10.30 if you came in at $6.50 and not so bad, even as a new entry as it’s net $5.86/6.68 so almost as good as if you had caught it when we did.  

    Flash crash/Reza – I don’t know why we are supposed to feel "better" that, supposedly, one company’s errant program caused the Flash Crash.  That just makes me wonder how many other ticking time bombs are out there, any one of which can take down the market – not to mention the idea that a single cyber-terrorist could exploit the same system and crash the market at will.  

    Storms/Shadow – I suppose you are right, storms far too big to be effected.  I remember during the crisis I did the math and calculated that the worst-case scenario for the oil spill still didn’t get them to one part oil per million of the Gulf’s total volume (which is one of the reasons we decided to risk being long on BP).  

    Bernanke/Hoss – It is amazing isn’t it?  If he had said that at the end of August, it would have been the front page of every paper and the top of the news but now the MSM controllers have flipped the bull switch and a speech like that doesn’t even get mentioned.  

    Bernanke/Matt – I find it interesting that in 1988 he was writing papers describing the futility of the Fed’s current policy (see "Credit, Money and Aggregate Demand" yet here he is doing pretty much exactly what he said Central Banks should not do:


    Keynes’ explanation for the liquidity trap is, of course, well known. We think of high substitutability as more likely to arise from financial innovation, which create new money substitutes. However, even with a liquidity trap, monetary policy still matters because it influences the CC (commodity/credit) curve.
    We therefore reach a conclusion similar to that reached in discussing indicators: If money-demand shocks are more important than credit-demand shocks, then a policy of targeting credit is probably better than a policy of targeting money.
    Fed/Reza – I think Bernanke knows they are on the road to Hell but he doesn’t have the spine to take a stand.  Probably he hates having Volker looking over his shoulder too.  Greenspan was just a crook who was given the keys to the vault but Volker was a real Fed Chairman and clearly thinks Bernanke is a screw-up.  
    Europe opened and they are buying some dollars.  Oil $83, copper $3.78, gold $1,348 so we’ll see how that play out today.
    Sentiment/Resp – Oh that’s just me….  8-)
    LOL, must be a slow day if you guys are arguing about Rhode Island!  
    Good point Jordan! 
    Labels/Gel – Yeah you Republicans are tough with your rules.  Now they walked away from O’Donnell and stopped funding Delaware.  I suppose victory isn’t going to be as total as they claim…  
    Speaking of Republican All-Stars, great article by Bob Herbert in the Times:
    I’ve always thought of Mr. Boehner as one of the especially sleazy figures in a capital seething with sleaze. I remember writing about that day back in the mid-’90s when this slick, chain-smoking, quintessential influence-peddler decided to play Santa Claus by handing out checks from tobacco lobbyists to fellow Congressional sleazes right on the floor of the House.
    It was incredible, even to some Republicans. The House was in session, and here was a congressman actually distributing money on the floor. Other, more serious, representatives were engaged in debates that day on such matters as financing for foreign operations and a proposed amendment to the Constitution to outlaw desecration of the flag. Mr. Boehner was busy desecrating the House itself by doing the bidding of big tobacco.
    Meanwhile, rumor is Boehner may be involved in some kind of affair (already being played down as "no big deal" by the right, which it shouldn’t be other than the sheer hypocrisy of the Conservatives) so we’ll see how that plays out.  KOS takes him to task on his lack of actual facts regarding TARP and spending cuts.  

    Imagine your home catches fire but the local fire department won’t respond, then watches it burn. That’s exactly what happened to a local family tonight.

    A local neighborhood is furious after firefighters watched as an Obion County, Tennessee, home burned to the ground.  The homeowner, Gene Cranick, said he offered to pay whatever it would take for firefighters to put out the flames, but was told it was too late. They wouldn’t do anything to stop his house from burning.

    Each year, Obion County residents must pay $75 if they want fire protection from the city of South Fulton. But the Cranicks did not pay.  The mayor said if homeowners don’t pay, they’re out of luck.

    As our infrastructure crumbles — while Wall Street just had its best September since 1939

    Video of house burning down with firemen watching because they didn’t pay $75 protection fee. 
    Yeah, let’s privatize everything!  

  301. Chafee/Gel, Shadow – He was never a real Republican.  He inherited his father’s seat mid-term in ’99 and got elected in 2000 as people didn’t have time to get to know him and he had name recognition.  He lost the seat to a Democrat in ’06 and is now running for Governor as an Independent.  

    Elitist Putz/Cap – You are right, his family is a long line of Elitist Republican Putzs.  His great-grandfather Henry Lippitt was a Republican Governor Elitist Putz and his Uncle Charles Lippitt was Governor and Senator and Republican Elitist VP candidate on the Putz ticket and his other Elitist Putz Uncle was Henry Lippett II, who was a Republican Putz Senator and, of course, his Dad spent 23 years as a Republican Putz Senator with his Elitist Harvard Law Degree and Yale education (and, of course, he served his mandatory family term as Governor too!).   

    Daily Mirror (UK) - How can 59,054,087 people be so dumb?Idiots/Gel – Democratic Underground made a list of the Top 10 Conservative Idiots at one point and then got so many suggestions for people they left off that it became a running joke.  There are now 382 "Top 10" lists of Conservative Idiots with this week’s top 10 including Meg Whitman (housekeeper), Carl Paladino (sends racist joke Emails to friends), Paul LePage (screaming obscenities at reporters, saying Obama should "go to hell"), Linda McMahon (my husband is rich so you have to elect me) and Sharon Angle (say no more!).  

    You and Cap can have fun defending them – there’s a new list every week….

    Here’s a fun clip of Barney Frank getting pissed at a Conservative Idiot questioner.  

    "elitist "schmuck", that was riding on his daddy’s coatails and notoriety."/Gel – Now who does that remind me of?  Wait, let me think…  Don’t help me, I’ll get it – it’s right on the tip of my tongue….

  302.  These health care plans being eliminated by companies such as MacDonald`s, which is causing a furor on the right over the new health care bill, are actually "mini-med" plans with annual caps of $2000.00 or $10,000.00 in benefits. That`s not the deductible, that`s the total benefit they offered.
    If you paid $730 into your plan, you got $2000 in benefits. Now that`s a deal!  Macdonald`s probably took a kick-back on every plan sold.
    Gotta love the health care industry.
    Do you sleep, or are you one of those liberal commie zombies we`re being warned about?

  303. Phil / Currency – I don’t have enough exposure to gold or other dollar-hedging plays.  I know gold has had a great run and you think HMY and other miners in addition to food stocks are fully priced and/or at top of current uptrend.  What do you suggest?  Ease into Canadian and Australian stock market ETFs, in addition to maybe HK and Singapore?  Wait for pullback?  What do you think dollar devaluation will be from now until year end in percentage terms?  Thanks. 

  304. Health care/Cap – Yeah, it’s amazing how Janet Adamy manages to "dig up" these stories by omitting the actual facts, isn’t it.  What 3M actually said was:  "3M will stop offering a group health-insurance plan to younger retirees. The company says the federal health care overhaul has given retirees more options and made it harder for companies to compete."  Instead, the company will direct retirees to Medicare-backed insurance programs, and will provide reimbursement for that coverage. It’ll also reimburse retirees who are too young for Medicare.  In other words, the new health care program is good enough that MMM can’t do better through their own negotiations….  In its memo, the company said the new health-reform act would create new opportunities for people in their 50s and 60s to find affordable insurance.  The new policy is likely to save 3M money because it reduces the risk to the manufacturer for rising medical costs, according to a University of Minnesota professor interviewed Monday by Minnesota Public Radio.

    Of course, Cap – Never let the facts get in the way of a good story, right?  This is the whole point of National Health Care – businesses save money by not having to maintain private plans and the Government picks up the buying power of a National system to do things more efficiently (eventually) and negotiate cheaper rates for the beneficiaries.  No one in this story is losing health care, getting less health care or spending more on health care yet you try to spin it like it’s some kind of example of the system failing???  

    Carter/Gel – Now what is "idiot" referring to?  If you don’t like his policies he’s an idiot or is it his masters in Mathematics at Georgia Tech or his Fulbright Award or his promotion to command nuclear subs (I assume you would say the Nobel Prize is political so I won’t even bother mentioning that)?  With no family background he was elected State Senator, Governor and President consecutively.  Perhaps it’s just that you watch too much Fox news.  Did you know Carter’s term gave America the single biggest 4-year boost of GDP on record?  Of course not, because it doesn’t fit in with the world-view you’ve had drummed into your head…

    Even more amazingly, Carter did that without declaring war on anyone (always good for a nice GDP boost, as the Republicans are very well aware).

    Netherlands/Ac – Oh sure, I spent many vacations there and that’s why I’m for legalization here.  Such a totally nice country and notice how they work about 20% less than we do yet produce more and have a similar per capita GDP – seems like a nicely balanced lifestyle to me!  It’s interesting because the Swiss and the Norwegians are a bit like the Dutch and they also have great ratios but, of course, Switzerland has the banking and Norway has the oil.  The Netherlands don’t have any resources (they even import the pot!) but they seem to have worked things out quite nicely…

    Oops, down goes the dollar and up go the futures!  

  305. Conservative idiots- well , that strategy is a looking like a sure winner.
    Hope and change you can believe in , I guess.

  306. Carter- Yeah, I remember fondly how the idiot voters swept him back into office for a glorious second term by land slide proportions. Ah, those were the days.
    Perhaps the idiot voters will do the same for President Obama?

  307. Profits/Pharm – Well, I’ve been saying that all year.  Big Business can do great by grinding the life out of the bottom 90%.  Once they trash this country, they just leave and find the next suckers to exploit and squeeze.  It looks like they currently have their sites set on China, who are only now recovering from the time the British came to enslave them (by getting them hooked on opium no less) in the 1800′s.  Actually, maybe this could solve our own trade problems, I think we are probably the world’s top producers of crack and crystal meth…  


    Low Chinese demand for European goods, and high European demand for Chinese goods, including teasilk, and porcelain, forced European merchants to purchase these goods with silver, the only commodity the Chinese would accept. In modern economic terms the Chinese were demanding hard currency or specie (gold or silver coinage) as the medium of exchange for the international trade in their goods. From the mid-17th century around 28 million kilograms of silver was received by China, principally from European powers, in exchange for Chinese goods.[11] Britain’s problem was further complicated by the fact that it had been using the gold standard from the mid 18th Century and therefore had to purchase silver from other European countries, incurring an additional transaction cost.[12]
    In the 18th century, despite ardent protest from the Qing government, British traders began importing opium from India. Because of its strong mass appeal and addictive nature, opium was an effective solution to the trade problem. An instant consumer market for the drug was secured by the addiction of thousands of Chinese, and the flow of silver was reversed


    AMTD/DD – Sure you can mention us.  I’m already one of their featured writers on the TOS side.   Say high to Scott Sheridan for me if he’s there, he’s our guy at TOS and one of the founders. 

    Congress/Diamond – That’s a great article!

    Sinking/Nicha – I think the long-term picture is really scary.  The only hope I have for this country is hyperinflation, like we had in the 70s, either that or default outright on our debts but, either way, they are neither payable or sustainable as they are now. 

    GMTA Ekor. Good Adams quote.  To bad we never listened to our Founding Fathers – they knew a lot of good stuff – probably because they spent more time reading books and less time watching TV….

    I think TV is a great killer of intellect.  One reason people are so jumpy and lack perspective is because the time-frames of TV are generally short-term and that leads to expectations of instant gratifications while books give you a longer-term perspective.  For example, think of Mozart and you probably think of scenes from Amadeus.  Think of Nixon or Reagan and you think in terms of clips but think of Lincoln and we generally read biographies of him in school and you have a richer image of his life from the rail splitting, to the Lincoln-Douglass debates to the War as a whole entity.  Maybe it’s just the way my brain works but I feel I get so much more out of a book than from TV or Film…

    Hand washing/Cap – Really?  I mean, REALLY?  See, we are having some nice, friendly political chat and then you have to bring it down to the lowest level once again…

    Cuba/Pstas – So what, you expect liberals to jump in and defend Cuba’s economy or be bothered by that article just because you can’t tell the difference between Democratic principles and Communism?  That would be like me printing an article on the housing crisis or the national debt or the millions of civilians killed in the war or the 42M people on food stamps or the 10M homes in foreclosure or the 25M people who are unemployed or the 37% loss of household wealth or the failure of our educational system or our Trillions of Dollars of unfunded government liabilities and expecting you to defend the totally disastrous Bush legacy…  

    EQIX/Hanna – I think I said that to Canada on Friday, stocks are priced to perfection.  They are priced for a good domestic and international economy, they are priced for job growth, they are priced for consumer spending, they are priced for no oil shocks and no terrorism and, of course, they are priced for earnings to expand at 20% a year (p/e’s over 20).  Anything short of that means people have been overpaying and that’s why I’ve been pointing out for a couple of weeks now how the indexes are full of stocks that are just too stretched in value to assume the index can keep going up.  

    Giving money away/Cap – Yes, that’s the solution.  If I am in a store and 99 people are looting it, then me paying double for the TV I buy will fix everything and I should just leave the looters alone, right?  Only criminals attempt to make deflections like that, effectively calling people who think tax policies should be fair "goody two-shoes" and telling them to go fix it themselves.   It’s pathetically juvenile but I guess you work with the tools you have, right?   

    Copper/Jrom – We thought they’d top out at $3.75 so this should be it.  Good line for a futures short.   

    MSM/Exec – No, it’s still "all bull, no bear" this week – the switch hasn’t been thrown yet.

    Money & Values/Diamond – Those are great. 

    Sleep/Ben – Did that last week, I think…  Actually, I’m usually good with 4-5hrs and once or twice a week I’ll go 8 to catch up.  I have my teams spread out in different time zones so there’s always someone awake who I can work with.  

    Gold/Terra – I’m not into gold or emerging markets right now but the above NAK buy/write isn’t bad.  It’s a great long-term hold and has a 27% upside if they just hold $7.50 for 15 months.  I really and truly believe you would be chasing a top to buy in now and I’m sorry if I’m wrong about that but right now I just don’t see us keeping going – at least unless earnings are SPECTACULAR. 

    LOL Ben!

    Strategy/Pstas – Yep, it looks like you’ve got things locked up!  

  308.  Poll/Pstas – Yes, I remember that you guys were crowing 2 years ago when McCain had a 10-point lead among "likely voters" – how did that work out for you?  

  309. Jimmy Carter:   Greatest President Ever !!!!   ROFL
    Hand Washing:   Oh boy …. funny news story must have hit a nerve.  As we now, libs can’t stomach any criticism of their heroes whatsoever.  Phil, right after you go on and on about important lists like the Conservative Idiot list and call out candidates like Paladino and make sure to mention affairs (Boehner and Paladino) and Meg Whitman’s maid, you then whine about a news story about Rahmbo ?   A little thin-skinned at 4 am, no ?
    This just in, Lincoln Chafee and Arlen Specter and John Kerry to form the "Elitist Putz" party, as an alternative to the Tea Party movement.  Their motto is "we know what’s good for you even if it isn’t good for us".

  310. Polls,
    I trust the polls about as much as I trust a politician to make a decision that benefits the country more than himself or his special interests.
    I have no idea who these "likely voters" are that they always poll.  I’ve been voting all my life and have never have been polled, nor do I know anyone that’s ever been contacted.

  311. "….the MSM controllers have flipped the bull switch and a speech like that doesn’t even get mentioned."
    For once the MSM did something right.  His speech, revealing nothing new,  wasn’t worth one nanosecond of their time
    Or ours.