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Federally Funded Friday


I feel like I’m driving in a gasoline truck at a 100 mph and towards an brick wall, says Brian Kelly. And Ben Bernanke just lit a match. I can’t help but worry that this ends badly.  - Fast Money's Brian Kelly

I also remain skeptical, adds Steve Cortes. The unanimous opinion sees to be the market can not go lower and I find it reminiscent of the rhetoric we heard right before the tech bubble burst.I want to know what the Fed sees that’s so dire that it’s required them to take drastic steps, muses Guy Adami. I guess it doesn’t matter because the market just wants to go higher. But the market action has the feeling to me of a blow-off top. I don’t know when it ends, but I suspect it ends extraordinarily badly.

[Pic (left), credit: Elaine Supkis Culture of Life News]

David Stockman sums things up very nicely, saying:

Today the Fed is scared to death that the boys and girls and robots on Wall Street are going to have a hissy fit. And therefore these programs, one after another, are simply designed to somehow pacify the stock market, and hoping to keep the stock indexes going up, and that somehow that will fool the people into thinking they are wealthier and they will spend money. 

The people aren't buying that. Main Street is not stupid enough to believe that engineered rallies as a result of QE2 stimulus are making them wealthier and so they should go out and buy another Coach bag. This is really crazy stuff that I can't say enough negative about…The Fed is telling a lot of lies to the market… it is telling all the politicians on Capitol Hill you can issue unlimited debt cause it doesn't cost anything.

We have $9 trillion of marketable debt. Upwards of 70% of that has maturities of 5 years or less down to 90 days. All of those maturities are 1% down to 10 basis points. So from the point of view of Congress, the cost of carrying the debt is essentially free. When you tell politicians they can issue $100 billion of debt a month for free, how do you expect them to do the right thing, and ask their constituents to sacrifice… I think the Fed is injecting high grade monetary heroin into the financial system of the world, and one of these days it is going to kill the patient."

Well, one thing we know about betting on a junkie that just got some heroin – they are going to get high!  That's the easy bet and we took that earlier in the week for a quick 200% on the FAS spread and we're done with that as XLF hit $15 yesterday and FAS went over $25, up over 10% in 24 hours from Wednesday's pick.  

I know that the trade was designed to make 1,334% but that was if we wait until January – after making 100% on day one and 100% on day too – forgive us if waiting 90 more days just to make 1,100% more seems a little tedious and we are still preferring to get back to cash early and often (per the above remarks!).  Of course there are many other great leveraged trades, that was just an example, as I do still try to play Robin Hood and throw out the occasional trade or two to the masses but we've already moved on to XLF and UYG spreads in Member Chat and we will be making other plays next week to keep us ahead of the inflation game.  

I said yesterday, I feel much less bad about taking advantage of our dysfunctional markets after the election – the little people obviously WANT to be screwed over, they want to the top 1% to own 70% of the nation's wealth while they go home to watch Fox news tell them what a great country this is.  As I wrote several years ago, it's the opposite of Robin Hood, it's the Dooh Nibor Economy but it's apparently the economy the American people are comfortable with so who am I to fight the will of the people?

We're gearing up to play the inflation game at PSW and it's a very exciting game to play (as you can see from that little FAS spread).  We can magnify relatively small moves in the market to create great trading opportunities almost daily and inflation is like putting a gigantic safety net under everything we do – it's just fantastic.  On behalf of the top 1%, I want to thank the bottom 99% for voting to "extend and pretend " rather than stopping the ongoing transfer of wealth that has now far eclipsed even the economic atrocities that led up to the Great Depression.  

The big joke of the day is, clearly all this emergency Quantitative Easing was not necessary.  We've been saying this for months but how else can the Fed tax the poor of this nation 10% of their total wealth in order for us to make 200% in 2 days trading on the banking sector?  151,000 jobs were added in today's Non-Farm Payroll Report  vs 60,000 predicted by the economists Bernanke used to justify his debasement of our currency.

I already pointed out yesterday that inflation is out of control and the CPI is a total joke, also used by Ben to justify his extraordinary actions.  "With all due respect, U.S. policy is clueless," Germany's finance minister said this morning. Pleading with the U.S. to take a global leadership role, Wolfgang Schaeuble believes there is no shortage of liquidity: "To say let's pump more into the market is not going to solve their problems."   

Clueless, reckless, dangerous, damning, doomed, fatally flawed… Whatever.  Our job as investors is simply to survive and thrive on the chaos.  In chat yesterday, we were discussing some simple hedges to make 200% a year if we have 20% inflation and trades like that are good as we don't need to over-commit our assets because we are still wary of currency-led shocks to the system as we expect the dollar to bounce off that 76 mark (and we still like UUP at $22 with the November $22 calls at just .18 at yesterday's close as NO ONE believes the dollar will bounce, so a good contrarian play).

Despite crude supplies at 14% over the 5-year average, oil hit our Fed-induced $87.50 upside target yesterday and that puts the USO November $36 puts in play at .35, also a play on a dollar recovery as well as a sell-off of crude into the contract rollover period in 2 weeks.

The markets have taken off like bottle rockets,” said Richard Soultanian, co-president of NUS Consulting Group, a Park Ridge, New Jersey-based energy procurement adviser. “The Fed action is going to create commodity inflation. A weak dollar is providing impetus to all the commodity trades.”

Aside from our own Federal Reserve screwing over the people by ramping up commodity prices, the oil industry is back in business (since we just voted out the possibility of more regulatory oversight) and the reason we had a draw in gasoline inventories the past two weeks had nothing to do with demand (still at 5-year lows) and everything to do with a 70% drop in gasoline imports for October.  Actual consumption last week was just 9.03Mb per day, the lowest level in 3 weeks as prices squeeze those poor bastards in the bottom 90% off the roads entirely…    

Things are certainly getting interesting.  China said the U.S. Federal Reserve needs to explain this week’s decision to purchase bonds to pump money into the world’s biggest economy or risk undermining the global recovery. “Many countries are worried about the impact of the policy on their economies,” Vice Foreign Minister Cui Tiankai said at a press briefing in Beijing today. “It would be appropriate for someone to step forward and give us an explanation, otherwise international confidence in the recovery and growth of the global economy might be hurt.”

Cui’s remarks echo concerns raised across Asia as countries brace themselves for stronger currencies and possible asset- price inflation. German Finance Minister Wolfgang Schaeuble yesterday said the U.S. was creating problems for the world and the subject would be raised during next week’s Group of 20 leaders’ summit in Seoul.

We should be testing that critical 1,220 mark on the S&P and the percentage play is to short them into the weekend but we'll have to play that by ear in Member Chat as we still have Pending Home Sales at 12:30 and Bernanke Speaks in Jacksonville at 2pm and at 3pm we get the Consumer Credit numbers, which begin to matter as holiday shopping season is upon us.  

Have a great weekend,

- Phil


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  1. Interesting video someone sent me today.  So do we really work for them or are they vulnerable to our demise???

  2. NET $ (1.86)% at the unemployment report, dxy=.47%
    Dollar up against the euro, Yen, Frank.  The Yuan floating higher is what is hurting.

  3. Oh no!  Payrolls are better then expected-  hope this doesn’t dimish the likelihood of QE3.  ROFL!

    I think this lays out a very plausible forward market scenario. So, if true, buckle up but don’t forget your helmet. 

  5. NET $ (1.58)5 after announcement so rising
    low of the day was (2.15)%, high (1.53)% for what that is worth

  6. Phil,
    A significant percentage of my portfolio is invested in gold (mostly GLD & various miners), which I got into when gold was below 900. Up till now I’ve "bought insurance" to protect my gains by buying puts from time to time (which have expired worthless, thankfully). You’ve won me over with your approach of avoiding buying premium if at all possible; how do you suggest that I hedge the profits from my gold investments?

  7. I  don`t know if charts are any help in this enviroment, so I posted popular stocks that did`nt do much yesterday.
    Job numbers will probably send those  soaring too. 
    I sold everything but TBT, NE and SYMC yesterday, including buy/writes. Will close them out on a run-up this morning.
    90% cash.
    Charts today:
    stocks that did`nt participate in yesterday`s run-up
    and the sector that got trashed..DV and APOL

  8. Phil:
      What would you do with the following trade on TZA (April $23/c/b/$6.05, April $32/c/s/$3.98, April $20/p/s/$3.90)? I thought about moving the spread down to the $19/$29 for $1.85 more. Does that make sense or should I just leave it since it is so far out? Also is the FAS trade (Jan$17/c/b, Jan $21.67/c/s, Jan $19/p/s)  longer term or are you getting out with a reasonable gain? Thank you!

  9. NET $ (1.68)%
    dollar tried to rise after the report, the relationships changing the most were the E/$ rising and the E/Y rising, so all of the action to keep the dollar lower was in the form of Euro buying
    $/Yuan had been (.34)% holding there for most of the  morning

  10. Hmmmmmm…..I didn’t run the math, but if this kid is right with his illustration, it demonstrates that we are in deep doodoo!!!!

    BTW…..isn’t there a law against destroying American Currency???"

  11. SQNM – someone asked late last night and they are not one of my favorites.  They just filed a mix shelf and we do not know what the price is (I did not look real hard either).  They are still tangled with the false data, and any info on that will send them back down.  I am staying away.


    TSRX has fallen quite a bit since my writeup.  We are ending the the time for biotechs as earnings, and data season are over.  This is a good time to get in with a 1/4 entry.  I will DD at $3.


    IMGN rocketed back up yesterday, so selling the $8 Dec straddle with the stock is a nice 15% if they hold $8.


    PCYC is moving up, the $6 Dec Cs are up nicely.  I will sell some $6 Dec Ps at EOD.


    CRIS, well, up ~40% from our initial entry at ~1.27 (actually, I was a 3X down).


    BPAX has shown a bit of life.  Buy in here, and get out at 1.45, otherwise, 1.75 or so.  Just a swing trade idea.

  12. exec – kind of a "what’s the use" feeling

  13. NET $ (2.02)% has been falling into the bell

  14. I think it is worth mentioning that the with the employment data, R&D spending is down, and Pharma is laying off in droves.  BIIB is closing it site in San Diego, ARNA is going to lay off a chunk (soon), MRK continues to purge, PFE as well.  Should be interesting to see how that employment data holds up.

  15. exec/china  Raises the hair on my neck. Yours?

  16. The unemployment number was baked like Domino’s pizza.  It’s great hot from the oven, but the next morning can be grim..

  17.  Pharm, I saw a big rotation out of the pharm sector yesterday.  They just shoved all of that $$$ into the energy sector.  Looks like a little profit taking today.

  18. Guys- I believe, for what it is worth BAC putters are golden, Faz is golden and the QQQQ Nov 12th, 2010 putters are a gift for protection or Downside play!

  19. I let my DXD go from yesterday….

  20. Jo, yeah, noticed that yesterday as well, esp. after the R&D spending was down big.  With the tax credit by the Feds for R&D, the spending was built in and now they are gonna scale back big time.  Biotechs are doing it as well.

  21. Morx,
    I’m not sure what to think of China.  There’s one school of thought that says they’ll never f**k with us because it will have a negative impact on them.  Presumably the ol theory that they are too disciplined to "cut off their noses to spite their faces".  I on the other hand, being cynical in nature think that they are 1. smarter than the people that run our government, 2. Sneaky, and 3. are just waiting for the right moment to pull something that will bring us down, knowing that they are in a position to survive in the aftermath.  How do they survive……simple…..they just let all their people suffer as much as it takes to survive.  Us on the other hand.  The instant things start to unravel, the people with panic, be lining up at the banks, gas stations, shopping malls and white house steps looking for somebody to help them out of the situation painlessly.

  22. Hey Phil,
    So in your "Dooh Nibor Economy, is helicopter Ben your sheriff of "Mahgnitton" (nottingham)? :) 
    As a member of the bottom 99% who doesn’t watch Fox I have an observation. For quite some time, I have seen examples of inflation growing every time I go to the grocery store and fill my cart. I see shrinking product sizes for the same prices. I guess these experts that say inflation doesn’t exist don’t shop the same stores as I do.
    Thanks for the clarity you try to impart to us on a daily basis. Most of the time the clarity shows increasing levels of insanity displayed by the powers that be.

  23. Good Morning! 

    Look at TBT fly for a change…   If China stops buying our TBills then Benanke’s going to have to come up with  a lot more than $110Bn a month for a lot longer than 8 months!

    As I mentioned in the above post, FAS is too risky to stick with over the weekend but XLF is a mellower way to stick with the financials or even UYG but 200% in 2 days on FAS is ridiculous.  

    Yentervention failing already.  I didn’t get a chance to mention BOJ announced they will buy $68Bn of Nikkei securities and YAWN to that.  The worst thing is they talked it up like it was a big deal, which makes people think they don’t have a lot more ammo.

    Same old levels, of course, Dow is finally catching up and S&P popped us at the open so you can’t fight the technicals although I can’t even imagine the mindset of fund managers who don’t want to take some off the table at these levels:

    • Breakout Levels: Dow 11,500, S&P 1,220, Nasdaq 2,600, NYSE 7,750 and Russell 725
    • Up 10% (must hold)Dow 11,220,S&P 1,177, Nas 2,420, NYSE 7,500 and Russell 700
    • 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 

    Why has the Nasdaq gone from leader to laggard at the top?  That’s one we need to keep our eye on, of course.  We want to see all 5 breakouts hold for 2 closes to start layering the upside so cash is still king until we get a good feel for whether this is the beginning of another 10% run (to offset the weak dollar) or the blow-off top we’ve been expecting on the Beta 5 pattern (if someone can link to that chart in chat, I’d appreciate it). 

    At the open: Dow -0.11% to 11422. S&P -0.01% to 1221. Nasdaq -0.05% to 2576.
    Treasurys: 30-year -0.64%. 10-yr -0.07%. 5-yr -0.12%.
    Commodities: Crude +0.07% to $86.55. Gold -0.06% to $1382.30.
    Currencies: Euro -0.86% vs. dollar. Yen -0.57%. Pound -0.22%.

    Hot emerging markets get hotter, as the MSCI Emerging Markets Index heads for its biggest weekly advance in a year and Citigroup’s Geoffrey Dennis predicts another 30% on the upside. “The weak, but not recessionary, macro situation in developed countries is a ‘super-Goldilock… environment,” Dennis writes, echoing bullish sentiment from Mark Mobius, Barton Biggs and others.

    My dollar up premise: One of Europe’s biggest clearinghouses warns investors that they could be compelled to pony up substantially more money to trade in Ireland’s debt. Irish CDS rise for a ninth straight day, soaring 27 basis points to an all-time high; credit swaps on the other European peripheral nations also jump.

    The ECB turns down a request to disclose internal documents showing how Greece used derivatives to hide its government debt, citing "the substantial and acute risk of adding to [market] volatility and instability.”

    Few nations are optimistic about Geithner’s idea that the "currency war" can be ended if everybody just agrees to limit their current-account deficit or surplus targets to less than 4% of GDP. China’s vice foreign minister says the plan smacks of "a planned economy." 

    Oct. nonfarm payrolls: +151K vs. +60K expected, -95K in Sept. Unemployment 9.6% vs. 9.6% expected, 9.6% prior.

    So-called U-6 unemployment, which includes unemployed, involuntary part-timers, and those marginally attached to the labor force, edged down 10 bps to 17%. The broadest measure of joblessness had climbed from 16.5% in June to 17.1% in Sept. 

    All of the jump in payrolls came from the private sector, where the economy added 159K jobs. Government payrolls were off by 8K. Among the marginally attached, there were 1.2M million discouraged workers in October – up 411K from a year earlier. (Employment Situation)

    Top U.S. banks could face $31B in additional losses if they’re forced to buy back soured mortgages that they packaged and sold to investors, S&P said in a study yesterday. Bank of America (BAC) and JPMorgan (JPM) have the most exposure, followed by Wells Fargo (WFC), U.S. Bancorp (USB), and PNC Financial (PNC).

  24. guys- I made 2 posts on the optrade side you may wish to read- or you may not!

  25. Exec:
    You hit it the nail on the head with your number 3. It seems that all the people who use your term (that they are too disciplined to "cut off their nose…" ) to describe China forget that China is a government that places the government’s  priorities over those of its people and has not always been a rational player. The chance to take us down a peg or two is a real possibility in my opinion.

  26. Interesting – Dell is giving all 25k of their employees WP7 phones in exchange for their Blackberrys in an effort to promote their own service. They also say it’ll save them 25% on their phone costs by eliminating RIM’s Blackberry servers

  27. exec/1020/CHINA
    To rid yourself of that sick feeling from the video – just play that Toby Keith song "Well put a boot in your ass"  This way, you will be able to live in our FANTASY, a little big longer…….

  28. Rolled AAPL Nov1 310c to Nov 2 320c. Selling some CMG 195 putters to stop bleeding 

  29.  SQNM -
    They are issuing shares as part of the settlement of the law suit – 6 million – so a little less than 10% – dilutive but guess market likes that they are putting this behind them.
    For the stock the big hurdle is staying above $7 after options expiration –  has this trading pattern of running up into options expiration and then backing off. Ran to $7 last exp. then back to mid 6

  30. Phil
    Tried to close out FAS the call and putter cleared but Obama came on and the caller shot up 12%. You said too dangerous to hold over weekend which I take as may go down which is exactly what I need. Should I wait or accept reality of the move turned the winner into a looser?

  31. Volume must be extremely light. 
    The futures chart looks very gappy and choppy

  32. IF IF IF we get any good pullback, lots of stuff to fade.
    Some stocks just moving huge include:
    But then again, why should we get any selloff … the market only goes up, Ben said so.

  33. somebody buying SRS a minute ago. Maybe an excessive drop b/c of the jobs number.

  34. Hi Phil I still hold UNG in my ira account bot stock at 8.75 back in 2-10 forgot to ck it, what can I sell put and or call to try to break even at this point-- thx

  35. Phil / POMO   You mentioned Monday is another POMO – therefore hold off on any short positions until Monday afternoon?  I took your reply yesterday to mean yes buy some ABX as a good inflation hedge?

  36.  Exec
    Re: budget cut video. I checked the math. It seems right. To look at it in a different way, if the government spends $3.5T per year, that is approximately $10B per day (assuming 350 days in a year). So if the pres is going to cut $100M from the budget it means that just one day in a year they will spend $9.99B instead of $10B and all the other 349 days $10B.

  37. Market flat and look at XLF….WoW….

  38. WIth the aging population and assisted living going to be a big part of that, SUNH is looking interesting   The Jun 10 calls are flying and I am liking the straddle Jun 10s, with the stock.

  39. Insane action in FAS.  Insane.

  40. Phil
    The FAS caller is now down 29%. Wish I had done nothing but wow what to do?

  41. @Pharmboy
    They are splitting assets into two groups: operating and R.E.
    Does that affect your thinking?

  42. China/Exec – China does nothing but take from us.  They take jobs, they take money they take ideas – they are the capitalists and we are the colonials to them.  Once they have a better market elsewhere they will have no further use for us but we’ve been giving them our IP for a decade now, since Hong Kong opened and we began opening factories there so 100-years of American inventive advantage has been given away including how to build and run efficient factories.  At the same time, we stopped spending money on our own R&D and stopped doing Government research and stopped educating our children (the World Economic Forum ranked this country 48th out of 133 developed and developing nations in quality of math and science instruction).  One telling example of how far we’ve slipped is the new Chinese super-computer, which is not incrementally faster than ours but 50% faster!  They have blown us out of the race in what is probably the most critical.  Our idiotic policy of denying immigration has the backlash of forcing the best and the brightest of the World, who used to make a bee-line for the US, to seek opportunities elsewhere.  Boy am we smart!

    Buckle up/Pstas – It’s going to be a wild ride either way.

    Gold/Aryeh – That’s a good one and a big topic.  Please remind me on Sunday as I do intend to do a write-up on gold as an inflation hedge.  

    Do nothings/Ben – I think that, even in this craziness, people are starting to cash out the crazy momentum stocks.  As I’ve been saying, you are better off in blue-chips with real inflation as they are less prone to sudden sell-offs and if we can lever blue-chips to pay us 200%, why mess around with NFLX et al?

    TZA/DClark – You don’t have to adjust all at once, April $23s can roll down to the $19s for $1, that’s a no-brainer but, as you note, you have tons of time and there is no need to rush on the rest.  Keep in mind that the $20 puts are still almost all premium and they can be rolled along to the 2012 $15 puts ($4) which is yet another 8% up in the  RUT and you can offset that with an aggressive upside spread if you want to (if we hit our breakouts).

    Very good video on budget perspective, Exec.  All that does (Obama making a big deal out of cutting $100M) is make me realize they have no possible way of fixing this thing.  Also, if it were illegal to destroy American Currency, Ben and Tim would be getting the chair

    Biotechs/Pharm – How do you see those guys being affected by inflation?  

    Thanks Cain, I do try to get the word out there.  Ben does what the sheriff did, he goes to the poor villages and makes the poorer and then he brings the loot back to the castle where the top 1% live the high life while the rest struggle to survive.  The difference is, there is no Robin Hood to right the wrongs, no redistribution of wealth, nothing to stop the unfair taxation on the lower classes – in fact, the lower classes overwhelmingly just voted for the sheriff so what’s the point of fighting for people who love their oppressors?  Maybe the Sheriff just needed a better PR person…

  43.  xlf – breaking out above 15.50

  44.  Phil
    Are you still recommending the USO- Buy Nov 2010 Puts at .35 or less? Thanks

  45. NET $ (2.53)$ second lowest I have seen dx/y = +.67%
    dollar up against the Euro, Yen.  Lower against the Franc and Yuan.

  46. Phil/Education: You got that right.  It’s interesting that our community has a predominately European ancestry.  (Italian, German, Irish, English, etc.)  Yet, the highest achieving students are always Asian.  They come to our schools, excel, then go home.  How is it that we spend so much money on education yet we performance does not reflect the money spent?

  47. FAS/Shadow – You have a naked caller?  That’s a bit dangerous but if you get stuck next week we can look at turning it into a backspread and there’s nothing wrong with holding a long FAS position if things keep going higher so as long as you can visualize being in something like that for the longer-term, then it’s worth the risk to hang on.

    Volume/Mike – I think we are worse than yesterday.

    UNG/Gucci – Never sold calls?  Well you are down $3 on 1x so we need to make that back.  I’d go for 2x the 2013 $2.50/5 bull call spread at $1.75 and sell the $5 puts for $1 so net .75 with a $1.75 upside times two gets you even if they hold $5 and worst case is you doubled down net $5.75.  Margin on the put side is about $1.50 so even times 2 you tie up less than you have now although your IRA may require $10 on the puts.  Of course, you can just do the call spread in the IRA and do the puts in a Margin account.

    POMO/Tusca – We need to watch for another week to get the new rhythm of the market now that QE2 is a fact of life so caution at the moment but if the G20 are not going to do something to stop us this weekend and will wait for the meeting, then I don’t see this market going lower.  ABX is an obvious play as you are effectively buying gold but it’s gold with cash flow, not just some metal laying in a vault.   Their forward p/e is just 13.65 and if gold goes up, that goes down and ABX is sitting on 140M ounces of gold, which is $196Bn at today’s price so it’s not even worth mentioning their 6Bn pounds of copper ($24Bn) or $1Bn ounces of silver ($26Bn) and you get all that for a market cap of $49Bn vs, for example, owning GLD, which is valued at $48Bn and sort of kind of has contracts that should give them $48Bn worth of gold but they roll them every day and cost investors a fortune in fees and costs while ABX discovers more gold and gets more efficient at mining it and selling it PLUS, they are smart enough to hedge the downturns for you!

    So, I was going to save this for the weekend post but I do like ABX at $49.66 as a hedge and you can do so many things with them like entering by selling the Apr $45 puts for $2.30 and, since who doesn’t want to own ABX for net $45, you can spend that $2.30 on 1/2x the 2013 $50/65 bull call spread at $4.50 so you are in the $15 (or 1/2 so call it $7.50) spread for net $0 and your worst case is you get ABX for 10% off in April and we can talk about hedging that on the weekend.  If this trade works out you can sell more puts and layer up the spread until  you build up a substantial and free upside position in gold – THAT’S a nice way to hedge inflation!

  48. "the World Economic Forum ranked this country 48th out of 133 developed and developing nations in quality of math and science instruction

    That statement makes me sick every time I see it.
    We’re probably pretty high up in the ranks of being able to steam milk for coffee though!

  49. jasu1 – I assume by this remark that it is still a play. I am trying to play this one safe. Bought 2 at .35 will look at 2 more below .30 then consider more or exit at that time.
    "…also a play on a dollar recovery as well as a sell-off of crude into the contract rollover period in 2 weeks."

  50. Exec, it has much to do with a child’s upbringing and less with nationality, The child’s education is at the top of the list and sports somewhere near the bottom along with video game skills…not the case with most American families.

  51. Reminder Europe closes and hour late for 1 more day.  The time change is this weekend.

  52. Phil,
    Will each monday and thursday be a POMO day from now on? Is this public knowledge or something that’s supposed to be not known to the general public?
    Also have you been watching palladium prices at all? I’m pretty heavily into SWC calls as I want to ride this commodity inflation story for a while.

  53. Phil need some advice have 95% cash. 
    Think the market is misreading the election, ignoring Ron Paul overseeing the Fed.  People arn’t stupid, they know prices are going up, they know the US maco economic policy is rigged and Obam isn’t, or hasn’t, changed  the totally Wall Street centric economic policys of the last 18 years.  Why not vote in the Republicans?  I’m not a big fan of the Repubs at this point but how else do you send a message?
    Anyway what do you think of ERY and do you still believe we are in a range bound market.
    PS Sorry about the spelling, my computer broke, my tech guy is out of town and I can’t figure out how th get the spell check on my new one.
    what about buying ERY? 

  54.  morxlntway,
    Thanks . I saw it go as low as .31, and looking for confirmation that indeed the trade was to be taken. 

  55. jasu1 – this is one of those that he probably won’t tell you when to exit.

  56. CMG is now beyond ridiculous

  57.  I think CMG is getting out of control.. did anybody see that huge spike up on a super big order that pushed the stock all the way to almost $232? Gee mother of God.. I should shut down my trading desk at this point so I don’t have to look.. 

  58. Good morning,


    IWM 71.68, 72.86, 73.08 and 73.94


    Meetings again today, good hunting !!

  59. Many of the stocks that disappointed investors by missing or meeting expectations on Q3 have NOW filled the gap down after their earnings announcement and shooting even higher..  are we in the cusp of the next equities bubble?

  60. lori13
    If you ever figure out how to run spell check please post it more than you have spelling issues, most of us are the math type, I know I am.

  61. NET $ (2.09)%, dx/y +.59%
    oil +.27, gold +10.20

  62. Shadow, lori if you guys use need to download the google tool bar… there is a spell check option and it will appear as a tab, if it doesnt appear click on the wrench (open tools) menu and check off the box for spell check..

  63. Phil – pharma/biotech is shipping everything over seas.  They were the laggers for this, due to the patent issues, but with things getting better on that front, the scientist that were here, are starting things in China.  Talking with a friend, scientist/engineers are 3-5/1 here in the US.  As noted above, where is the innovation going.  China and India are gonna run us over.  AS for inflation, well, I think margins are going to get squeezed.  Genentech is offering rebates!  I still think small biotechs with good science are the way to invest in the future, but we need to weed through them carefully.

  64. Device sector is going crazy.  STK, STJ, even OMG, BSX…..

  65. Yodi, of all the high-flying stocks, why did we choose to short the craziest one? NFLX, PCLN, those guys are moving up at least "reasonably", but CMG? I promised myself not to bring this stock again on this board at least for a whle and simply wait, but nobody can’t ignore what is happening there! Where are the analysts? Why nobody is talking about this stock? It’s secretly going behind the curtains here amongst the investment community.. I don’t know what it will take to scare investors out of this stock but why oh why.. momentum trades are HUGELY piling up on this one.. even our Swing trader here at PSW missed this one I believe.

  66. On SQNM, I cannot get behind a company that has lied, cheated and been an overall wreck to the San Diego Biotech sector.  Maybe someday, but they are hard to swallow.  I like Genprobe better.

  67.  Phil, I don’t think CMG would slow down soon.. would u suggest I roll my 9x short Dec $200s to Jan 2012 $250s now and forget about this stock for a while? I’ll be taking the biggest loss ever but I can’t bail out at this point and I want to stop looking at it every day.. 

  68. rav; we could be looking at a blowoff top here on CMG …they ran a major squeeze program here.

  69. Thanks Kustomz!

  70.  Cap, I had the same thought on that huge spike up.. it’s at moments like these where I wish I could’ve worked in the finance field in some hedge fund company so that I know that sometimes they manipulate these things by (as you say) running programs to squeeze people out of positions before a fall.. that’d be EXTREMELY valuable insight information.. but since I’m in a completely unrelated field, I have no idea what these crooks do at times to take the money out of other people.. 

  71.  Thoughts on TBT -
    Finally getting money flowing out of Long Bond.
    Anyone have any insight on how this might play out with the Fed buying 10 and 5 year bonds?
    20 year rates should be able to rise – no?

  72. CMG I am sure Sr. Slim is puping up this stock. For the people who still do not know Slim is just the straw man of Salina Gortares!!!!!! Ex Mex President the one with the big rat ears

  73. Well thats interesting.  I didn’t know the market was allowed to go red.

  74. Phil / ABX Thanks, now into this.  What % cash should we now be at?  I”m about 50% now, net of a big hedge on SH (which has been painful lately).

  75. Hi Phil, I hope you enjoy your semi vacation in Florida, just about 300 miles from where I am sitting.
    Today Mattress DIA have been spending money on roling this sucker from Jan 108 to 110 112 and now 114. Bought back yesterday my last Nov 107 shorts. Would it not be time by this afternoon to put the toe in the water and sell some Nov shorts??

  76.  Ok – so money is coming out of bonds today but does not seem to be flowing to stocks – where is it going

  77.  sam, under the mattress?

  78. Math/Ms – That’s the point the guy is trying to make, even relatively sophisticated investors like us have to really think about what $100M is in the grand scheme of things.  We are just not naturally equipped to think in such large scales.  Essentially, Obama is promising to save 2/3 of what Meg Whitman spent of her own money in less than 1 year trying to get elected – woopie!

    FAS/Shadow – Holding is hard.

    USO/Jasu – Yes I like them as a $1 move up in oil should only cost a dime and then we can roll or DD on the play.  It’s a risky play on a dollar bounce but also we have the contract rollover to look forward to and hopefully that will lead to a little early selling as the end of the year becomes a tax issue for NYMEX traders. 

    Education/Exec – Better to question why the Asian kids do so well.   They do not tend to have working Moms, they are much more disciplined than US kids and they have very high parental expectations.  They have a strong sense of family across generations and tend to see themselves as part of a family chain, not the tree model Europeans tend to think of.  Parenting makes a huge difference in kid’s lives but we have so many parents living on the edge in this country that they just don’t have time to be good parents and that puts an entire generation of children at a huge disadvantage.  The combination of overworked teachers, underfunded schools and time-constrained parents is a recipe for disaster that’s already been in the oven for a decade and we’ve slipped 40 places in Global Ranking on Education.  Another 10 years of this and we won’t need to worry about it because there won’t be anyone left who understands what being ranked 90 out of 133 even means…

    Steaming milk/Rainman – We can’t even do that without controversy.

    POMO/Trident – There’s a schedule I posted the other day, I don’t think it’s every Mon/Thu but that would be nice of them!  I’m leery of all metals with the dollar testing 76 as they could bounce back to 80, especially if Ireland and the rest of the EU can’t get those swaps under control as that can panic people back into the dollar.  Keep in mind this is no in any way, shape or form demand driven – you are speculating in metals as a currency alternative – you may as well be honest with yourself and bet the Dollar down in Forex as this is just as dangerous.

    ERY/Lori – I think betting energy, which is a pure commodity, down is not a good idea with inflation.  The Nas has had the biggest run and has the farthest to fall so I still like the QIDs, even though they don’t like me.  Cash is good though – you don’t HAVE to bet.  You can take a week off and hang out at Barnes and Nobel and get some coffee and read all the magazines and international newspapers (something I love to do) and get a fresh perspective on where things are.  It’s not school, you don’t have to take notes or find something specific – it’s just good to read stuff you don’t usually read once in a while and then come back to the market with a new viewpoint.  It’s like when I go to a conference – I usually say as long as I get one good, new idea then it’s a worthwhile trip – it’s always good to talk to people from different places and see how they view the World.  

    CMG/Cap, Rav – I think they blew past ridiculous at $210.  We need a new term for $230.   Of course ISRG did this too and eventually collapsed under it’s own weight, even though they did nothing wrong and are still a great company (and they are getting attractive again off the $260 line, by the way). 

    Bubble/Rav – It’s not really an equity bubble as the equities are not up relative to the Euro or Yen.  It’s only a reflection of our currency and that’s a very misleading way to look at them, which is why the TA people are just nuts to take this stuff seriously.  

    Thanks Pharm.  Yes, I like device makers, I picked that sector ages ago as my favorite and IHI is moving up fast – should be good for a very easy 10% as they too make widgets that get sold for inflated prices.  

    CMG/Rav – When The Street endlessly pumps them and runs articles titled: "Enjoy Chipotle’s Rise and Never Mind the Critics " you just have to be patient as there are a whole lot of suckers out there paying a 44 p/e for a company that projects 20% growth next year so 5 years to grow into something even approaching a rational p/e (around 20) for the restaurant industry at this price.  As to rolling – sure, if it makes you feel better but selling some puts is key.  At this point, what do you have to lose by selling Jan $200 puts at $5?  Will you be that upset of your $200 caller is wiped out and you are left with a putter?  You can always stop them at $7.50 and that won’t cost you $2.50 without the callers giving up quite a bit.  

    Cash/Tusca – If you are well-hedged, that’s fine but don’t own any long you wouldn’t be HAPPY to double down on if the drop 20% and, since that would cost all your cash – 50% is a tad heavy as 35% means you could DD and still be 1/3 cash so make sure you REALLY love all of your positions and can’t possibly find 20-25% to cut back on. 

    Thanks Mike!

    Mattress roll/Yodi – Thanks for reminder.  Weekend stance should be NAKED DIA Jan $115 puts, now $4.  This is now great, reasonably-priced protection.  

    Money/Samz – It’s called staging.  Moving to the sidelines ahead of next week and ready to go with the flow (as I have been suggesting).  

    Nas rejected at 2,575, let’s watch that S&P 1,220 line, good spot to layer up the short momentum trades.  

    OK, things look normal enough.  I’m guessing we finish at 1,215-1,220 on the S&P but I’ll find that out tomorrow as I’m off to catch up with the family.  

    Have a great weekend everyone, 

    - Phil 

  79. Gel, I remember, that one yoursi dea was SIMO. What you think today?

  80. November 4th, 2010 at 2:59 pm | Permalink  
    Hi Phil: You asked me to remind you today. Thanks,
    Phil, with this new debasement of the the US$ what do you think of this play: buy GDX @ 59.83 , sell 2012 calls and puts for 17.90, 41.93/50.50. Is this a good play? I think the strategy would be to buy the shares and sell the calls now and when the adjustment comes sell the puts, am I correct? Thanks for your input

  81. @Phil
    Education/achievement in Asia
    Perhaps nature has a lot to do with it. Their gene pool is pretty much homogenous.  Asia is nearly monoclonal in its genetic makeup.
    Breeding goes a long way to passing thru intelligence and other traits and it has been established that the MOTHER passes the intelligrence gene thru to the sons and female breeding was curtailed in the Orient.
    They begin, then, with a leg up while mixed nationalities are beginning a step behind. 
    No, I’m not a eugeneticist.  There are other potentially disatrous problems that ‘single gene’ reproduction creates, but lack of native intelligence isn’t one of them.

  82. Phil,
    I agree that the rise in commodity prices is not demand driven and that it won’t last just like in 2008. However, if our currency is being debased as you say, then of course commodities priced in dollars should rise in price even if fundamental demand is unchanged. Palladium may be a special case since supply has been increased the last ten years or so by Russian stockpile reduction. Many think this stockpile is now depleted.

  83. Flip – Im going to debate your bell curveesque arguement. I believe it’s almost 100% a cultural problem. I think most people in India/China/Japan etc  place an emphasis on their children trying harder in school. Our culture places an emphasis on what? Being a sports star? Reality TV star? Singer? Our culture is fat and lazy. Parents spend ‘quality time’ with their kids by watching TV programs together. Forget tax policies, or republican/democrat platforms, if Americans could just KILL THEIR TVs/video games we might start scoring higher on these tests and have so many nations passing us in so many areas.

  84. correction – and NOT have so many nations pass us in so many areas.

  85. flip – did you say it’s because they breed with their leg up and we step behind? Not sure i understand why that matters.

  86. lori, your welcome ;-)

    Anyone playing GE… higher oil, commodity prices making wind power look very cheap. Just waiting for the talking heads to say they like it here and wait for the bounce..

  87. hahahah morx, not sure if your trying to be funny but, you made laugh…hard

  88.  kustomz – i kind of was thinking the same thing.  Plus, there is a rotation going into the crap that hasn’t gone totally crazy – industrials and financials are next.  

  89. pahurik / SIMO
    I am still in the play, and will keep it until next year. They supply componentry to the iPad as well as some other manufacturers that are coming on line with a similar product. I believe they report in early Feb, and hopefully will show good earnings. This is a downstream play on the success  of the iPad, which will be a Xmas success, I believe.

  90. Kust – coal is off to the races today.  MEE is way up, I had to flip to the call side.  TCK, PCX, ACI and BTU all up.

  91. CMG – sold off a 220 call. Rav is fighting the good fight but sometimes you just gotta run with it (though I was way too scared to hold a call past this point). I’m also rolling up 2 Nov-195 puts to 1 @ 220.
    SLV – anyone think this is getting ridiculous?
    UUP – Dec 23 calls are a STEAL. Sellers are arguing the dollar can’t come back 4% in six weeks? 
    I have a Stanford 10 year bond that pays 4.75% simple interest. A $1k face is quoted at $1,129. Do I need to tell you how ridiculous this is. You are paying $1,129 NOW to get $1,000 in 2019. Along with the $380 in remaining interest. Pathetic.

  92.  pharm – coal is probably up on india’s coal ipo.  But, then again why not?  

  93.  Oxen Alert – Position Update

    Back from my meeting with 5/3, and it went well. I learned about the company, commercial banking, etc. The company is an up and comer!

    CLD – Great earnings from the company paid off for our last 1/4 of our position. We were able to exit the first 3/4 at 3% and 4% gain. Exiting at the open like all other overnighters, we were able to sell the last 1/4 at 18.60, which was a solid gain of 0.90 or 5.2%.

    SOLF – We are still in our last 1/4 of the position, and it continues to be a gem. We got in originally at 9.91, and the stock is now trading at 11.00. Our last position is up 11%, and it should continue higher!

    GMCR – We are still in this one as we have not gotten 2% on the downside or 3% on the high side. 

    Good Investing!

  94. jo, Financials were a great play on the QE2 news, and may work for a short period GS BLK 2 of my fav…I like the insurers.. MET PRU etc..but i do believe we will see a minor pullback in the markets…just a bit of profit taking as I see no need to rush now that Bernanke has committed.  If nothing stinky comes out of Europe i would look for companies that focus much of their business there, great way to play currency strength/weakness.


  95. Phil, what do you think about BID as a possible inflation hedge?

  96. Kustomz, oil is not used to make electricity. U.S. production is currently ~50% coal, 20% natural gas — my guess would be to go with gas to replace rising coal prices.

  97. Asians / Flip – sorry mate, Asians might all look alike, but even in East Asia, ie Japan, Korea, and China, the ethnic mix is no more homogeneous than Europe.  It’s all about Confucianism with the schooling. Education is a value for the family and the group, so it’s supported even by people who don’t have kids. And Phil, your remark about Asians thinking of family as a chain rather than a tree is spot on – never thought of it like that myself and I live in the Asian culture. Thanks.

  98. Also, what do you think about HRB as an alternative to XLF? Or buying HRB will be chasing at this point?

  99. I would like to comment more about my previous question about BID. Art prices are now VERY rapidly growing, and will continue growing at least until there will be no perceived threat of inflation anywhere on the horizon. Besides inflation another factor influencing art prices is a rapid growth of the number of rich people in the world, especially in Asia, that frequently tend to collect art as a hobby even without regard to its value as an inflation hedge. The growth of art prices influences BID profits not only directly but also through much lower number of unsold lots (from usual 30% to less than 10% in the last auctions).

  100.  with POMO Monday (and buying out to the 2020 maturity), it’ll probably be a market up day with a pullback on TBT. I’m not betting it, but if I did, this would be my play.

  101. Phil, Your ABX play Gold is up by 11.00 ABX up .12 Where is there the relation ship between the two. ???

  102. Etrade level 2 is down, anyone else having issues with ETPro quotes?

  103. bio, yes you are correct..sorry if i seemed ignorant to the fact in my post..guess I watch too much CNBC  ;-)

  104. From Rosen-BEAR:
    Today’s editorial on page 12 of the FT really hit the nail on the head (Bernanke Pushes On Very Long String). What was very insightful as well was the article on page B1 of today’s NYT titled Fearing Fate of Japan, Not Greece. Indeed, all one has to do is go back to March 19, 2001 to see what happened when the Bank of Japan embarked on its monetary policy experiment of asset buying and radical expansion of its balance sheet — boosting reserves at the commercial banks six-fold over a four-year span. The San Francisco Fed published a report on the impact back in 2006 and concluded that while the plan was successful in terms of ratifying “measurable declines in longer-term interest rates” and “greater risk-tolerance in the Japanese financial system,” the bottom line is that “quantitative easing may have had the undesired impact of delaying structural reforms.”
    In other words, quantitative easings are no antidote for structural economic problems, even if they manage to give investors a short-term sugar high.
    Let’s learn from the Japanese lesson with its QE experiment. The day the Bank of Japan launched the program on March 19, 2001, the Nikkei surged 7.5%, from 12,190 to 13,103. It went on to make a fresh high on May 7, at 14,529 (just under two months after the announcement) — rallying another 11%. Fully three-quarters of the post-QE rally to the May highs occurred in the first four days. And that is all she wrote.
    Three months later, as it became painfully obvious that the real economy was not responding well to the shock therapy, the Nikkei index slid 16% to just over 12,000. Moreover, the day before 9/11 it had already tumbled all the way down to 10,500 (down 27% from the nearby post-announcement high and 14% lower than the day of the announcement itself!).

    Forewarned is forearmed
    This dovetails with the earlier scenario cited:

  105. Etrade back up, with a 8 minute gap in quotes and volumes…weird…

  106. I saw an estimate that the notional value of derivatives outstanding worldwide was 1.4 Quadrillion
    (is that close?  anyone have any data?)
    Big Ben could take the current easing and increase it by 1400% and still only be affecting about 1% of the 1.4 Quadrillion derivative hole, and that is if we ignore real estate, social security, medicare, bankrupt states, etc.  Else the number is even bigger and his affect is even less

  107. Phil, 
    Any plays on TBT?, seems to be getting away… I last sold for a huge loss at 30.19 (bought at 45). Also not sure if entering the FAS or any of the other financial plays at this point? 

  108. @jromeha & Snow
    Perhaps, but every single really smart and significantly accomplished person I know started out with a brain that he/she was given at birth.   The notion that ‘culture’ can somehow overcome a ‘small cauldron’  is ridiculous. 
    We can debate it if you like, but this is likely not the time an hour before the close. 
    But there is nothing you can tell me that my own experience documents: Without native smarts all the education, studying, tutoring in the world will do no more than marginally improve our kids’ results in national test standing.  Firstly,  it must be determined if a kid has ‘it’ to take on complex material and from a conversation I had last night with my very good compadre whose son tested, sadly, with a 92 IQ,  the boy is not being considered as good college material.  This apparently goes on whether we like it or not—that students are rated for intellectual achievement from nursery school or kindergarten on.

  109.  biodiesel, you had a LONG CMG Nov $220  Call?? Wow!! I salute you!

  110. I’m Asian and I am no more intelligent than your average American kid.  What got me where I am was the constant haranguing by my mother to study, practice the violin, go to after-school programs.   I can’t tell you how many days I wanted to run-away or wished that I was born into a normal American family that let their kids play baseball after school.
    Take my word for it:  its the work ethic.

  111.  Board members, if I’m able to beat CMG, please please call me "Gladiator! I salute you!!"

  112.  kinki, and now you really value and appreciate those moments right? For some reason it happens to all of us :)

  113. goldman
    I am level 4 and the only thing I experienced was IWM seemed to stop tradeing for 10 minutes everything else ran smoothly.

  114. rav:  I do appreciate it and I don’t.  Can happiness truly be calculated in status or wealth?  Or can paradigm-changing inventiveness, creativity, and ingenuity, "Out-of-the-box thinking"  — the likes of which created the Internet — can that be bred through just hard-core studying?

  115.  kinkistyle – ditto…same background and upbringing.  Trying to instill that same thing with my kids mixed in with some balance (sports/hobbie)

  116.   anybody know what is happening with MEE?

  117. Time for the 1500 stick?

  118. HELLO MEE….go go go .

  119. exec – thanks for that penny video on deficits, great visual

  120.  Obesity (regarding last CNBC segment) is a pretty interesting topic – the cost to our society is huge – we can’t legislate or tax our way out of it.  I’m not even convinced that education will help – people are willing to drive 80 mph and text, so how are you gonna get them to stop eating fries and to take the stairs instead of the elevator?  I’m not too hopeful on this topic as we just make bigger beds and longer instruments at our hospitals.

  121.  MEE: from WSJ – takeover rumor from Alpha resources. buyout price unknown.

  122. NYC folks … last call for drinks today …. I can do it but we should have at least 3 … Eph ? Brooklyn ?  anyone else.
    5  pm midtown west location….

  123. MEE Report that Alpha Natural will buy the company

  124. Pharm, check out that bounce on ALTH!

  125. Max pain on CMG is what, 230?

  126. Cap – I work in CT and live in NYC – flatiron.  prob can’t make it tonight.  another time!

  127. If QE2 fails then QE to infinity and beyond!

  128. jomama
    I wil be shouted down by the masses but I believe all subsidies, tax breaks, etc reguarding children need to be eliminated. Part of the problem is who is having babies and it is not the intellectuals or well to do. It’s the parents or in America lack of, young single undereducated mothers and worthless dads. Then cut all wars, including drug, and cut military and criminal spending. It is 70% of bubget. SS and unemployment comp. will only stop consumer spending with very small net saving negated by economic contraction again.

  129. flips talking about creating a nation of Einsteins through selective reproduction, I think the other guys are merely focused on the problems that plague the US child’s ability to excel in education and not just sports. Flip wait until the Internet grabs a hold of developing nations, the erosion we see in today’s society here in the US will spread like a disease. When society has no shame it has lost its innocence and stupidity is rewarded. The kids today simply have no shame, i see it on FB with my own family members, acting and saying foolish things to be accepted by people who approve of such foolish behavior.

    Have we reached the pinnacle of human evolution? I fear the answer and hope for the future but all I see are the worst in people’s nature being nurtured. Smart people reprogrammed to be stupid…I like that one.

  130. Yeah, on what news mrm?  Bizzar.  Might have to buy a little and C where it runs.

  131. Phil / 65% cash.  Wow, that’s a brave call, but you’re usuallly right.  Another Euro blow up courtesy Greece, Ireland etc might be the cataliyst for the dollar bounce.  I think I’ll hold off buying more ABX until the next correction.
    Just ending a Caribean cruise.  Never seen as many 300 pound pears with diabetes stuffing their faces while in wheelchairs.  America is finished.  Need to consider healthcare stocks.  Pharm, AMED is ramping up healthcare clinics to add to HHC.  Is it a buy at these prices.  Which diabetes stocks to buy?

  132. kustomz- well said!

  133. Tuscadog – Your description of your cruise mates reminded me of the spaceship people in the movie Wall-E.

  134. terrapin – another time it is !  we’ll figure something out.

  135. Jo… I may be shouted down, but I believe a society, in order to be successful, must have a qualification testing quotient that includes the level of inteligence, that must be met in order to vote and procreate.

  136.  Cap 
    I can be at Penn station at 5pm (live on Long Island)
    what do you mean "west location", what street?

  137. Cap,
    Ok. another time 

  138. Kustomz – i see  the same thing in the schools & neighborhoods where i tutor & "mentor". It is sad. The schools have no ability to change anything regardless of the amount of money allotted to them.
    But did we ever evolve to anything higher? Higher than what? We have, especially recently,  thrown off constraints of religion and cultural morals and are now stripped down with no protection from our basic natures.
    I sound like my mother

  139. Fun watching the bots attempt a stick save…when the dollar is approaching the intraday highs.

  140. gel1
    We will be shouted down, I also think ,"When in America, speek english!" Take spanish out of schools!

  141. SPEAK! sorry

  142. GXDX finally getting  a ‘lil love.  Someone bought/sold 2000 17.5 Dec Cs.  I think we should join the party….

  143. Gel1 I agree with you 100% but you will have 50% of the Nations, ( DOE DOES) against you

  144.  Tusca – went on one cruise – i’ve never seen so much food consumed by so few.  

  145. MEE – "Wall Street Journal reports that the company is weighing a takeover offer from rival Alpha Natural Resources"

  146. I can not believe it but it looks that this market is still turning positive, Crazy

  147. the unemployment report from today bears some further inspection IMO.  Notably:
    Broader household employment fell 330,000.  With 254,000 dropping out of the labor force, which acts to hold unemployment rate steady.  This also dropped the civilian labor force participation down to 64.5%, indicating people don’t think jobs are available.
    The scariest part of the report was the US LOST another 124,000 Full Time jobs, thus in the last 5 months 1.1 Million full time jobs have been lost.  The economy is substituting part-time and less than full-time jobs for full time jobs.  The level of full time employment in October was the same as December 1999.  How does this generate income growth?
    IMHOThings seem to be getting a little worse if you look under the sheets….but that’s ok, we’re going to Dow 12,000 by Christmas!!!
    Took the ABX play this afternoon selling 2X the April puts for $2.47 and buying the Jan13 50/65 spread for $4.50 for net entry of ($0.44).  Look forward to seeing your notes on this over the weekend. 
    Have a good weekend all!

  148. Nice pump into the weekend to keep people fat and happy :-)

  149. Looks like they are winning…amazing what ulimited free money can do to the markets EOD.  Just think about it, taxpayers dollars used to increase taxpayer 401ks…..brilliant!

  150. hoss18 / 12k — I think your right.

  151. yodi…. I know I am in a minority…. but it is the minority that pays all the bills, and  are the ones that exhibit ‘responsibility". Disease, pestulance and incarceration is the levelling field I know of people who have smoked, and over-consumed drink and food  to the point they died from it. Nature keeps everything in balance, I guess. Survival of the fittest eventually prevails, as it does in in the jungle.

  152. The Stick Lives!!!   Everyone have a great weekend! :)

  153. Inflation is in our future…. sold puts  ( ITM ) on DBA today, for a nice income play.

  154. Gel – Is it possible to be responsible and be a liberal?  ;)

  155. shadowfax… Yes, I agree regarding taking Spanish out of the schools… we should be teaching Mandarin, as it will be needed in the future, as China will soon be the largest economy, and maybe even the reserve currency…. get prepared for the future.

  156. Gel/Shadow – I actually agree with you. I think there should be some sort of a license and testing in order to have kids. I think anyone discussing this who hasnt seen the movie "Idiocracy" with luke Wilson should rent it this weekend (or put it in your nflx que.) Funny movie and sadly, it brings up a lot of good points.  You all have a good weekend. CMG – closing at 230.56, what a surprise…….

  157. Gel/China – China is led by a group of engineers, who are very calculated and won’t sit by idle while the fed attempts to break the relationship between the Yuan and dollar.  As the media states China will never risk the consequences, as an engineer myself, I can tell you that engineers are taught to take "calculated risks" to solve very difficult problems that don’t have perfect solutions ("x" percentage of designs will fail, "y" percentage of humans could harmed/killed, "z" costs via recalls and/or lawsuits).  China PhD engineers and scientists versus career American politicians with "political science degrees"….there simply are not enough "Ron Pauls" in Congress to stop the inevitable from happening.  As China horded gold and copper at a 50% discount of today’s prices…the USA threw trillions into oblivion.

  158. 1020…. oh yes, liberalism and responsibility can be intertwined successfully, however "behavior" is the issue that needs to be addressed, both in the family culture and our schools of learning. It is, unfortunately, absent for the most part.  We are "wimps" in our attempt to change direction when needed.  Nobody wants to sacrifice anything for a better future, and it seems we, as a society, have accepted failure as a "way of life". We can not even convince a fat kid to lay off the potatoes, so how can you acomplish much more in the effort to educate them. We have lost the resolve to suceed, and it starts at the ground level.

  159. BOeing delaying 787 possibly until Aug 2012…….ouch…no wonder we had a visit by mr. stick, gotta put lipstick on that pig. Down 2% AH would have smacked Dow close…….I’ll get back in down around $55.

  160. Kink, 
    I never would have guessed you to be Asian by the name.  I naturally assumed you were a trader by day and a male stripper or peeper by night…
    I’m sure your correct about the work ethic, which incidently most American’s no longer have….including the teacher that teach our uneducated kids.

  161. gel – We agree on much more than we disagree, especially when you discuss family culture and accountability – We could not agree more!  I have not had the same success as you, but I can assure you, we share many of the same values. I enjoyed your comments about testing for adults who want to start a family and yes, to vote. I’ve said the same thing and that’s not with tongue-in-cheek….
    Too bad most couples do not take a compatibility test to get married, like my wife and I did in ’83 (we’re catholic and were so compatible, the people giving the test thought we cheated!) and that’s where you start. We knew bringing children into the world would be our greatest responsibility. We even took child development classes while dating! The kids just turned 11 and they are awesome young people! Our work is far from over and they will be in Jr. high next year so we are taking their "game" to the next level.
    I only wish others would take their kids future more seriously.
    You’re a good man gel, your family is fortunate to have you!
    Have a great weekend!  :)

  162. exec:  Its actually refers to the Kinki region (Haha, "Kinki Region") in Japan where I have family and went to school.   I am actually a chef by day and stripper by night. ;)

  163.  Gel..Yodi..Jromeha 1020..Shadowfax
    This has to be the most revolting discussion I`ve ever seen on this board.
    I cannot  fathom how ridiculous you guys are!
    To imagine that a tn IQ  test in any way tests a persons decency or common sense is just beyond imagination.
    There is not a religion or concept of God on this planet that would condone limiting the right of procreation to someone who passes an intelligence test!
    The only regimes that engage in that kind of behavior are godless and as someone who believes in the dignity of man who was created in god`s image I find you guys pathetic and lost.
    As far as this survival of the fittest  nonsense, any one of you dropped in a jungle without your money or the law to protect you would`nt last ten minutes. Why do you think social structures was created? So we don`tt live by rules of the jungle. 
    I am embarrassed that this kind of nonsense is tolerated on this board.
    By participating I feel I vindicate your right to spout this garbage.
    So that`s it for me. 

  164. Flip, interesting 1:00 post. Where did you get the fact that intelligence is passed on from mother to son? Never heard this before. Thanks.

  165.  kinkistyly -my wife is from Yokohama. I love going over there! Japanese kids stare at me like I have six heads. It’s pretty funny. And on the train, even when it’s busy — I always seem to have lots of room ….
    Wow this board is getting wicked fun to read. So much tension! I love it.
    Yes I did have a CMG call, imagine that!! somebody let me make money for a change. Sold it at 12.50, not a bad 2 day gain (from 5.10). Now I want it down down down into expiry. I’m going to Qdoba for my burritos!!!

  166. I have to say,

    "Their gene pool is pretty much homogenous.  Asia is nearly monoclonal in its genetic makeup." is hilarious.

    Even if this statement wasn’t obviously factually absurd, any argument that rests on painting billions of Others as all homogenous and monolithic should trigger every adult’s Bullshit Detector.

    Weren’t y’all just bemoaning American provincialism and lack of education? LOL

  167. bdc: Yes, its great.  My plan was to move back sometime next year and have the wife’s folks help out with the new baby, because my mom is gone. But with the USD/JPY at all time lows, I might need to postpone it indefinitely.  Ben Bernanke truly is the bane of my existence right now. I want to karate chop his beard off, hehe :)

  168. ben1be – Come on Ben! Sorry to be so bold as to reveal a bit of my darkside, but it’s just that – you have one as well.
    What do you say about the compatibility test given to myself and my wife? Maybe we looked a little weird, you know, we had little hearts in our eyes when we gazed at each other, lol…..
    I wish for a lot of "way out" things, like Peace and Harmony – That alone will have some calling me a liberal! 
    You know yourself that there are couples you know or read about that "the marriage was doomed to fail" or "what are these people thinking" when they support a candidate you can’t stand. The dark side exists in all of us.
    Sorry I made the choice to share a little of mine, for a smile  :)

  169. …..And Ben, thanks for including me with a nice group of people….  :)

  170. ben1be: Bah! I think its all a bunch of reactionary hyperbole.  People always shoot their mouths off about "IQ" and "qualification" standards until they themselves or someone they care about fails the suddenly stricter "standards". 

    I know everyone understands this deep down inside — because, ironically, everyone here is too smart to actually believe these things.  My dad always says crap like this, and I just shake my head.  He’s a good guy, just being barbaric.

  171.  Please note the BDI is slipping downward. This is not a good sign. Even if the shipment of dry goods is down, this index is measured in dollars and should be floating upwards from currency easing like any other commodity.
    If I have time this weekend I’ll price the BDI in terms of gold, that would be interesting.
    Also, insider selling to buying ratio rose to  2,300 to 1. My hedge fund friend said they are fairly bearish.

  172. i just want to see y’all’s photo with your heads shaved and your white robes on.

  173. ben… I qualified my statement  with the condition…. "if a society wants to achieve success", and I stand by that.  Is Yemen a successful society ? It is not so in the confines of my definition. It is lawless, and a disgrace to the standards of a society that exists in the 21st Century. It is an abject failure to those that reside there and to the world in general. Intelligence is a component of their problem, as they are not intelligent enough to solve their own problems. A society can be successful, and deteriorate quickly to a condition of despair, solely because of poor government and a breakdown in family values. This has occurred often in the past, as one who has studied history, in particular the many empires that failed… case in point the Greek Empire and the Roman Empire to name just a couple. Inteligence, or lack thereof, had much to do with this transition. I, as one who has extensively studied English history, can chronicle the many reasons for the breakdown of the Enlish Empire, and I am sure the causes are not without the full consideration of laziness, stupidity and a desire to live a lifestyle that is void of effort.  Eventually the mases prevail and the fulcrum is adjusted to their level, and that may be a society in decline.

  174. gel – I could not have said it better…. ;)

  175. Bush 2: "I have an update on the war on poverty. The poor lost"
    haha. That was great.

  176. Pharm, 
    Thanks for the heads up on GXDX. What is their story, You have a play in mind? 

  177. gel1,
    You must have hit on a sore spot, you just forgot all the people who vote and make a cross on the paper,  who can not even read.

  178. Rosenberg market update:
    The equity markets are running on fumes right now; extremely overbought and sentiment near extreme levels. The only correlation that counts is the U.S. dollar. Nothing now says that the equity market can’t go higher still, as it did during the “don’t-fight-the-Fed” days in the fall of 2007 — but what a dangerous market that proved to be. What is fascinating is that the last time the S&P 500 was at current levels, back at the prior recovery high in April, the consensus outlook for 2011 S&P 500 operating EPS was $100/share; today it is barely above $95. And, back at the previous market high, the outlook was for 3% real GDP growth in 2011, now it is 2.4%.

    The market was hitting those highs last April when there were still visions of a V-shaped recovery and the Fed was so confident over a sustained reflationary cycle that it was discussing exit strategies. Now the economy is skating on pretty thin ice and the Fed is now re-opening the liquidity floodgates. As Gary Shilling is fond of saying, all the Fed creates are reserves; it is up to the banking system to churn that into a reflationary pro-growth credit creation cycle

  179.  Let’s have some fun … discuss amongst yourselves:

  180. Benanke Countdown - Read that gasoline hit $3.69/gallon in LA, hitting $3/gallon in small towns across Illinois.  How is it so high in LA when CA prices are much lower according to the DOE averages? (  Do people who live in LA have gold flakes in their gasoline and vodka?  Knowing that the natiional price is $2.81 today…we should hit $3/gallon on a national level with oil at $95.  This should occur about the time that Bernanke is getting dragged into his first real subcommitte meeting with Ron Paul.  Noticed that  AAA is already blaming Ben Bernanke in the papers (see below).  BennyBoy is going to be a household name soon, as very few price increases piss off the American public more than the price of gasoline.  I really don’t think we will have QE3 or QE4 as the public will be outraged at the grocery store AND gas station…and Ron Paul will ride the wave of public anger to remove this fool from office.  Sure 90% of taxpayers may not understand the meaning of QE…but most can read the spinning wheels on the fuel pumps… 
    You can blame Ben Bernanke, according to AAA, because he’s the head of the Federal Reserve. That body’s decision to buy $600 billion in bonds is supposed to keep interest rates low and stimulate the economy, but it also has weakened the dollar.

  181. Re: Zerohedge articles in general…. There’s some good stuff in there but its just way too much the apocalypse is upon us everyone’s about to die… been that way for years now. If you actually traded on what they say there, you’d be living in RevTodd’s homeless shelter with Yipcarl and all the other permabears.

  182. gel – U so crazy! If history is your game, Guns, Germs and Steel and Collapse, by  by Jared Diamond.  Good reads.

  183. Pharm… yep… me crazy! – Have known it for some time!  I know of Jared ( California academic ) and all of his stuff is thought provoking and intellectually accurate. If one believe in the concept that history is capable of repeating itself, then his theories are a warning for us all, as if I remember correctly, he basicially theorizes the demise of a society is self-inflicted. (arn’t we practicing this right here in California…. sure looks that way to me! )

  184.  I gotta go with ben1be on this one.  you guys would be funny if not so pathetic.  Are you proposing mass sterilizations (like
    Hitler),  or forced abortions (like China) ?  Who gets to appoint your dream "death panels" ? Obama ?
    Cap hopes for "a cure" for the liberal gene, even though curiosity & inovation springs from it. Would we be richer or poorer without DaVinci, or Einstein, etc. ?
    On the flip side, we wouldn’t have people like GW or Sarah Palin running around, & there’d probably be less warring, & stupid military spending going on.

  185. I noticed that when Phil is away, the skew on this board tends to drift to political views or personal values.  Perhaps the financial thing is just a cover to play out our personal perspective/ views of the world/reality(we perceive0.. 
    Hope one thing is held in common by this diverse and interesting membership – that we all stay healthy and keep ahead of whatever is planned for 99% of the population by the .01 that Phil rants on daily..

  186. Ben – first of all, you are so immature it’s ridiculous. You write your points and then write, "that’s it for me", not giving us a chance to respond. THat’s how adolescents argue, state their point and don’t listen to anyone else. Now onto the arguements… I qualified my writing with stating that I agreed there should be some sort of a license or test to have kids  - what is ‘revolting’ about that!?  We have to pass tests for driving, to become an electrician, etc, WHY NOT HAVE A TEST FOR THE BIGGEST RESPONSIBILITY ANYONE WILL EVER HAVE!!!? I also think there should be an age limit (18 or 21) and drug testing during pregnancy. And if you’re a crackhead or 16 then you shouldnt be having a kid!!!   As far as religion- I do most  hate religions, ain’t gonna lie – I believe they have prevented humanity from progressing  and I believe they are full of hypocrites… As far as the jungle comment, Im pretty sure Ive had more survival training than you so Ill just shake my head and laugh at that comment.
    Kinki – not shooting off my mouth, I wholeheartedly believe what I said
    Morxlntway – great comment. Shows how limited your ability to debate is when you have to resort to a low blow like that. My old friends from the college multicultural club that I was vice-president of would get a kick out of hearing that some moron called me a KKK member.

  187. Members….I just reviewed my paper trading account in TOS and find that it has gone from 100K in January to 416K today.  Comissions paid are only $455 for the 10 months, as I’ve traded this account sparingly and infrequently.  Obviously I want to figure out retrospectively how I did this, but I can’t determine how to find this information on the paper trade format.   Anyone know how to look at the last 10 months trades on TOS paper trade?   If I can figure this out I’m sure we will ALL be interested in the findings.  And I’m willing to share the info with everyone, if I can find it.  It’s a bit astonishing. 

  188. lflantheman
    I am very surprised over your findings, as I am under the understanding that trading on the paper trading acc is for free. Please keep us informed.

  189. Good morning Phil,
    Question on sinthetic buy writes. I am holding various plays Jan 11 to Jan 12 where the long caller has already a delta of over .90 – .95 and the short caller running between .80 and .85. Does it make much sence to hold this play still, as the short caller is gaining just about as much as the long caller, or do you drop the short caller to a lower delta? Thank for your view

  190. lflan- AAPL- as the resident expert- what are your thoughts here? I am holding Jan 310′s which I (unfortunately) bought gambling on the last earnings- a poor choice in retrospect – but this recent run has almost brought me back even. Debating with myself on weather to hold on for now or exit and re-enter later?
    Also, sold a 1/2 cover on the 310 weeklies- again , unfortunately a day too early.

  191. test

  192. Phil- i want to make sure I’m on the "right" track with my "investments". I noticed this week with the market moving up that a number of members were pointing out that their sold calls on their buy/writes were working against them in a big way. To me that makes sense since when the market moves up the calls go negative and the puts are positive. The question is would you adjust for this since every time I buy a call back because it goes against me the only thing I seem to do is add to the cost per share of the position. So if I just leave the trade alone I seem to be better off in the long run.
    An example- I took advantage of your INTC trade some ago. Bought 2,000 shares @ 18.90 and sold the 17.50 Ps and Cs for a combined total of 5.55 or a total premium of 11,100. If left alone to expire in Jan 12 the trade yields 31% plus the 3% dividend. The calls are underwater by 3,200 but the Ps are 2,500 positive. If i buy back the calls just because they are negative I have to spend another 1.50 which adds to my cost per share. But, if I leave the trade alone and it gets called away I make 31%. What’s wrong with 31% ?  My preference is to leave it alone so what am I missing that other members know who seem to want to make adjustments along the way ? Thanks

  193. DKGuy
    Regarding your question to Phil about short calls that are going in the wrong direction, as the underlying stock price escalates – Phil is far more qualified to give you the best answer, but I will share my experiences. I do a lot of Buy/Writes, and when I see the short side ( calls ) getting to the point it is worrisome ( ie getting called away ) I roll up and out to a strike that I believe is safe and also realistic in terms of eventually expiring worthless through decay and price. This problem is good, as it means the composite trade is going in the right direction. Another consideration I make is to make an assessment of where the underlying stock is trading within the channel, and select a strike that is just outside, hoping the short call will die a OTM death. Repositioning through prudent rolling will usually solve the problem, unless a profound event like a buyout rumor takes place, then buying back the call might be the best solution, in order to mitigate further risk.

  194. Gel – thanks I appreciate the advice and input.

  195. TOS/lflantheman
    My balance when paper trading on TOS has been all over the place without apparent logic or consistency. But I didn’t take the time to look into it, as I was more focused on learning how the system works and experimenting with various trade ideas (probably should consider P/L at some point, eh?). Might try talking with one of the service people for an explanation. The quickest way I’ve found is to use the chat but calling also works as they get to you pretty quick and the ones I’ve talked with have been really good.

  196. jromeha: think about what you are saying.  What are you going to do to some teenage kid who gets pregnant because of some stupid prom night mistake?    Make them take a test and take their baby away (the alternative is too barbaric to contemplate) if they fail?

  197. A BULLISH contrarian signal for a change:
    "’In the current economy, reality shows like “Downsized” on WE TV and “The Fairy Jobmother” on Lifetime are trying to redress the balance by focusing on people who have lost their jobs, not just their minds and their manners. It’s a natural progression. Sitcoms like “Outsourced” and “Raising Hope” have already adjusted to the bad economy by moving to the land of foreclosures, low wages and high unemployment.’

    Typically, by the time Hollywood has caught on to an economic condition, commissioned the scripts, greenlit the production, filmed the actors and gotten the finished product on television, you are already closer to the end of something than the beginning.  Look at all those asinine shows about flipping houses and "rock star real estate" people from 2007.  Or the investment bankers-as-superheroes show Bull that aired on TNT over the summer of 2000, just in time for the post-tech bubble meltdown.

    TV is similar to the magazine cover indicator but it’s more delayed.  The Depression shows are here.  And this is great news."

  198. Kinki – Like the contrarian article – hope the trend continues and we are at bottom! As to the other stuff, the pill/shot/etc and condom use should be promoted even more in schools than they already are. For those kids who still get pregnant not sure…. But to answer the question, I dont think I would be against those kids getting their babies taken away and given up for adoption (if the parents of these kids didn’t want to take over custody of thebabyI’d rather see kids raised in a good home than in an environment where the biological parents don’t have the mental/social/fiscal maturity to raise their offspring. Ugh….Time to get back to my thesis work :(

  199. jromeha:  Normally I would also be hopeful of a full-fledged market-recover rally complete with consolidation/pullbacks/et al.   But now with the Fed blowing asset bubbles when its completely unnecessary, its hard to be a bull, and its somewhat dismaying.

  200. DKGuy
    Following gel1 opinion I wish to share still my thoughts on the matter. As you see above my question to Phil on buy writes. Basically I agree with gel in respect of rolling. Your Idea of leaving the play alone re INTC is OK in principal. In a rising market Stock and short caller increases in value. However the stock has always a delta of 1.00 as the short caller mostly starts at about .50. As the stock goes up the delta of the stock does not increase but the callers delta will increase to a point where it will be aproaching 1.00. On top of this now the caller is well ITM. Now I need to take a decission do I like the stock with the div payments, I weigh the amount of increase of the stock against the cost ofthe  roll of the caller to a position explained by gel1. Normally the roll is less costly than the increased value of the stock, so I lose a bit on the caller but have more value in the stock. Only in synthetic buy write the long caller will in the end of experation lose any and all premium and here is the question when to close the play and taking profit without greed. In some plays I set the short putter some what higher than the short caller so the caller get called away and the putter still possible ITM will replace your stock again. I find stocks with good div payments get just called away shortly before last day of registration, even if you have a play six or twelf month away. So you have to be always on the look out no one will steal you div. I trust this will help.

  201. DKGuy
    Here I give you a typical example of buy write
    Bought KO for 52.34 now 62.21 just about up 10.00$
    sold Jan 12 55c for 4.15 now 8.67 with 1.48 premium left so this one will not be called away but against me by 4.52 against the 10$ increase in stock.
    I sold as well the Jan 12 52.5 putter for 7.65 now 2.12 credit 5.53
    So here you just sit back and smell the roses as you can see the caller now with a delta of .76 has still away to go to 1.00. Once the caller will lose its premium I will look at rolling as I do not want to lose the stock.
    Once the putter loses most of its value I even will sell a higher putter, to increase return and possible get even assigned for more KO if you set your stakes high enough

  202. Yodi and Gel – thanks to you both for your input. I think I am beginning to understand some of what you both are saying in regards to the roll process. In doing more work on the above INTC example what I have found is that I roll both the calls and the puts to the Jan12 $20.00 strike that allows me to capture some of the gains on the stock and while the rolling process instead of costing me ~ 1.50 to roll ony the calls, if I roll the puts as well will only costs me .30. So by rolling in this way if the stock gets called away in Jan 12 with these new option strikes they allow me to turn a 31% return into 42% if I have done my math correctly. I guess on the down side I give up some protection but that is most likely relative to the original position anyway.
    Does this sound about right ? Thanks again for all your help.

  203. Yodi – how can you tell how much premium is left in an option ?

  204. yodi – I think I got it. One of the platforms I use is Fedility and looked up the greeks and found how I can display the delta on the option chains. So now I can see what you were meaning in your above note.
    So my 17.50 Jan 12 calls have a delta of .74 so as you say I still have a way to go while the Jan12 20.00 calls have a delta of .60

  205. Steve Ballmer realizes that he is in charge of Microsoft …
    Microsoft’s Ballmer Sells 12 Percent Of His Stake In Company 

  206. DKGuy
    The premium has to be calculated for each play and it is not a fixed number.
    Below is the example the 55 caller plus the present call value 8.67 give you 63.67 minus todays stock price 62.21 is actually 1.46 and not 1.48. This is your premium left in this play. This is what you have to do with all plays.
    The INTC roll looks OK to me but always keep in mind " only sell putters if you like the stock" Intel could go down and the 3% div are not that high to cry about. Always good to look at the deltas.
    Bought KO for 52.34 now 62.21 just about up 10.00$
    sold Jan 12 55c for 4.15 now 8.67 with 1.48 premium left so this one will not be called away but against me by 4.52 against the 10$ increase in stock

  207. yodi…You are correct.  It is only paper trading.  But they give you a realistic representation of the process by telling you how much these trades would have cost had you done them in reality.   I just can’t find where they summarize the actual trades, and I’m not compulsive enough to have recorded them elsewhere.
    pakdog…I will call TOS rep on Monday and try to track the information I’ve alluded to. 
    pstas….I’m holding the Jan 300′s and fully covered with Nov 310s.    I too played the earnings announcement long, with the Jan 300s uncovered, and pulled back about 20%.  I’ve regained all of that by selling weeklies and am about even since the earnings trade.  I plan to close out my present trade on Nov expiration date, about 2 weeks from now, and either move to the Apr calls, or stay in "AAPL cash" and wait for a pullback, depending where AAPL is in 2 weeks.   I don’t think you are in bad shape with the Jan 310s for the next 2 weeks, but I would be inclined to do a full cover with the Nov (monthly) 320s which will probably go Monday for about 4.00, which is all premium. 

  208. Yodi – thanks so much for all your help.

  209. ekor; what’s w/ the dumbazz comments  attributed to me ?
    and I did not know that DaVinci and Einstein were liberal Democrats. 
    great info !

  210. DKGuy
    I agree with yodi… he really has a grip on the situation. I forgot to add one other tool I use when rolling calls – I more often than not make my adjustments by doubling down and sometimes go 3X, as I look at both sides of my short positions that wrap the underlying in a B/W as profit centers. I try, as an objective, to make money on all three components. If the short call is disappointing me and compromising my goal, I then double or triple the size of the position, and position for eventual profit. This strategy is risky if a radical upward move in the stock materializes, but – as they say profit is the reward for risk-taking. Ravalos is in a battle right now with his short call position in CMG….. he is tenacious, and will eventually win, I expect..

  211. Hi Phil,
    I need your inside on this poker play April 10 I set up a short GS strangle 155p to 210 call I bought the call back still to early but made a resonable amount on the play. The putter ran up against me like crazy but I did not budge. I sold the putter in April for 8.91 which is now down to 2.69, all premium. But like a fool when GS was still in the 140s I thought of countering a bit by selling still the 155 Nov caller for 2.75 now 16.22 and just about all intrinsic value. Never thinking these sharks would come up that fast. Stk trading at 171.07 today. As I do not want to double this situation I was thinking of rolling the 155c Nov to 175c Dec and supporting the bleeding with selling the same anount of 170 Apr putters at 8.73 hoping they do not get arrested by the Gov. again. On the other hand pay the piper and let the putter run out or simply roll the putter up. As I think next month I will be in the same position with the caller. Thanks

  212. Cap
    I have an invitation for you… please join me, Meg Whitman, Carly Fiorina and that guy that opposed Barney up there in MA, in a joint therapy session, in hopes of resolving our emotional disappointment, in trying to figure out why our beliefs are not shared by all.

  213. gel1
    ravalos is not alone in this game. I closed the CMG long callers (mistake) thinking they would not go any higher.
    Stopping the bleeding by selling 195 putters. As they must come down one day. Here we talking about a gamble not to be compared with buy/writes. The worse thing can happen your stock goes down and you land up with the putter, that is if you add putters to the game. Doubling to me is like poker even if it is very nicely explained by Phil as slicing in.
    However using stocks of the dow as listed by Phil the other day as potencial players you are to an extend saver.
    I am more concered about the general market. My portfolio is going up in good pace, but in the back of my mind is always the question, when do they draw the carpet underneath us again? People have no money, houses have no value, printing money like flighers, without any backing, where will it all end, does any one thinks resonable. Why do you think the gold goes up to 1400. Sorry the gold does not go up it is the dollar losing it’s value.  

  214. yodi… Right – gold, priced is dollars is not going up that much, but is a hedge against depreciating dollars – UNLESS you are leveraged, which I am, and the profits are nice, even though they are denominated in dillars.
    With the US hyperventilating over the prospects of inflation ( that is Ben’s objective ), I believe the coming inflation will inflate the price of equities on a 1 – 1 basis, along with commodities, housing and wages ( eventually ). That is the nature of inflation. It is also good for economic growth, as it encourages spending…. and that is the principal driving economic growth.The market bias should be upward going forward… as well as commodities and gold. Oil will follow as well, because of increased demand and dollar devaluation. I like the opportunity to sell puts, given this scenario. I am cautious when it comes to selling calls in this environment…. better to buy them

  215. Iflan- AAPL- great idea- thanks.

  216. gel1,
    Gold what positions do you hold. I hold ABX but they did not even move on the up turn of Gold.
    My other gold holdings are real gold.

  217.  gel – if that is the case (regarding inflation, etc).  Then a no-brainer should be to sell USO 40 2013 puts  @ 8.1  and buy 32 USO Calls 2012 for about 8.5.  The fix is in & oil should really take off under the above scenerio?

  218. Making a case for a BIDU short
    1) general market pullback
    2) GOOG announces coming back in on softening China policy / works with gov’t (All they have to do is flip a switch)
    3) China’s equity bubble pops
    1) If china currency floats or they play other currency games, BIDU could go way up
    Compared to a lot of other puts, if you have a general market bearish stance right now, this one could be better because you get Point 1 and the other two as freebies.
    2 year chart

  219. yodi… my gold positions ( stock and long options ) are ABX, AU, GG, GLD, NEM, SGOL, GDX, GDXJ as well as bullion. I like GG and AU the best, and heard the other day that ABX could be a takeover target ( rumor, I guess ). AI am also very heavy in silver with etf’s and stock.

  220. Thanks gel1

  221. Jo / USO
    Those "no brainer " plays are best for me.  I do like the play you have suggested, as the long calls are already nicely in the money, and the short puts have lots of time to get into the money. Oil is priced in dollars and the supply is tightening, additionally the dollar is depreciating – so it looks plenty safe in my opinion. I would probably have picked the 45 2013 puts and sell 3 puts for every 2 calls purchased. Time is on your side on this one. Thanks for sharing!

  222. I consider myself a fiscal conservative, and social moderate.  My friends think I’m to the right of just about everyone, but even I must call y’all to the carpet on this one….WTF are y’all talking about???  Qualified or unqualified, the statements in regards to testing for parenting appropriateness you are making are horrifying.  How far is it from what you said to Henry Ford and the Eugenecists?  Not far, they wanted people to submit to testing prior to having children too.  And that’s just how far from Hitler and the Third Reich desiring to create a "Master Race" by pre-selecting only the very best gene pools to breed the "Hitler Youth".  Only, they found themselves in position to murder over 2 million people in a vain attempt to make their dream come true…and those were grown people they murdered.
    It’s my darkest thought because I NEVER wanted to be associated with anything like that, and here we are, not even 60 years later discussing the same thing?  Frankly, I cannot believe the world has returned to this place, but disturbingly, it probably has.  As Edmund Burke is so often misquoted, "All that is necessary for evil to prevail is for good people to stand by and do nothing."
    My conscience requires I say something.  Think about what you are asking for…who would decide what the test is?  Who would decide the questions?  Who would determine the requirements to pass or fail?  What would innocent people who suddenly found themselves afoul of such a law do to prevent capture or whatever measure the state prescribed?  It would be a level of governmental control and power that give pause to the most die-hard of progressive liberals.
    And I speak from a certain level of experience, as I have seen how the government is involved in merely the process of adoption, and I can tell you it’s a DISASTER.  Because of my battle with Non-Hodgkin’s Lymphoma, my wife and I are unable to have children, so we elected to pursue adoption.  We had to go through government mandated courses on parenting, responsibility, counseling, and the social implications of our decision.  We had to take 16 hours of classes about becoming parents, most of which were nothing more than what you would learn if you paid 10 minutes attention to your parents growing up, assuming you had run of the mill, average parents.  Then, once cleared to adopt, and we were matched with a baby, we had to go through over a year of continued follow ups from the state of Illinois to insure we were good parents.  Knowing what we know of the our daughters biological parents, I can GUARANTEE you she’s is better off.
    So, no y’all.  The solution does not lie in the direction of attempting to force moral decisions upon the populace through governmental action.  The solution, IMO, lies in providing the best possible circumstances for anyone who becomes, by accident or choice,  the opportunity to be the parent a child requires.  Sadly, our current system does not allow this because of the concentration of wealth at the top of our society, and because we are no longer a reward society.
    America was built on the dream that a free person, left to their own desire, of pure heart and mind could succeed.  That no longer exists.  We have sold our soul to financial engineering, and once again have found ourselves worshipping at the alter of a false prophet.  We need to rid ourselves of that evil, and reclaim the right to achieve on merit, so that children like my daughter, who’s parents neither even passed the GED(not for lack of trying), have given unto us a child who is being tested by Northwestern University as a gifted person when she’s not even three years old. 
    IMO, the greatest shame in the creation of our current crisis is how much we have let down the generation that gave us this opportunity.  The forces marshelled to vanquish the evil that was Nazi Germany are sadly now too removed to stand up and call bullshit on topics like this.  Or merely recall the darkness of the age they lived in, so that we might through the wisdom of our elders avoid a similar fate.  I don’t know if it is because you don’t realize what you’re are saying or it’s because you truly believe it, but either way, you need to seriously think twice about the path you suggest, for it does not yield the fruit you so desire.

  223. Obama to cave on tax reduction extention for the rich in order to keep the markets higher (see article below)…which reconfirms my theory that when you peel back a few exterior layers, Democrats and Republicans are the same fiscally insane party.  Ask yourself if you are a democrat…how can I vote for a party that has been screaming that the rich won’t get the tax break extentions for the last two years…then caves at the last second?  And if you are a Republican, how can you say you are for reducing the deficit by adding $700B debt over the next 10 years.  Both parties are full of liers and manipulators of mankind…and yet somehow, folks are still proud to pick one side of the coin…which is disturbing in its own right…
    A big factor for Obama, according to a former member of the Clinton administration who consults with White House economic officials, is mounting concern about the economy.
    “They’re really worried about the economy,” said the former Clinton official. “I think they’re hearing from [Federal Reserve Chairman Ben] Bernanke that it is a problem, and they are much more inclined to say they don’t want risk a fight that really unsettles the markets.”

    On Thursday when the stock market surged and reached a level not seen since before the worst of the 2008 financial crisis, the lobbyist said that “Obama is not going to want to be blamed for killing off the recovery in the stock market.”

  224. Hoss – you just proved my point – " Knowing what we know of the our daughters biological parents, I can GUARANTEE you she’s is better off. " THAT IS WHAT IM SAYING!!! I never said forced abortions to create some master race (you and others have put those words in our mouths). I was simply stating what I truly believe which is there should be a test to ensure that the parents are socially/mentally/fiscally mature enough to become parents, if they cannot pass it then their baby is given up for adoption to parents such as you and your wife. Thank you for agreeing with us :)

  225. GXDX/amatta – I have the Dec 17.5 Cs. For now, I am using Opts method to see how the stock behaves.  5d MA on the daily chart will serve as the stop out (~17.30).  As long as the stock stays above on the close, I will hold on to it, selling 1/3s along the way.  Small position for now, and may add to it.  Just want to see where we open on Monday.


    Hoss, very well said.  After my pseudobulbar affect upon reading some of the comments this weekend, it scares the bejeezers out of me for the future of our country, especially our children.  We are becoming more divisive as a nation, and I can only hope we come to some sense of peace and harmony.


    Someday You’ll Understand – Jackopierce

    "Hope things get better
    For the earth and the trees
    Save the air from our toxins
    And the water from a freeze
    But don’t sit back, everything won’t be just fine
    Save from becoming deadly, our sweet sunshine

    But someday you’ll understand
    That it’s not just our land
    Pass it on to our children’s hands
    Someday you’ll understand

    The air we breathe and the water that we drink
    Does the burning Bush ever stop to think
    About the future, about the past
    He’ll be dead in 20 years but will our infants last

    But someday you’ll understand
    That it’s not just our land
    Pass it on to our children’s hands
    Someday you’ll understand

    Go to the mountains and lie on the grass
    Fall asleep in the sunshine
    Let the sweet time pass
    Then maybe you’ll understand
    What we’re trying to save
    We wanna leave our kids a beautiful world
    Not dig their graves

    But someday you’ll understand
    That it’s not just our land
    Pass it on to our children’s hands
    Someday you’ll understand

    Hope things get better
    For the earth and the trees
    Save the air from our toxins
    And the water from a freeze
    But don’t sit back, everything won’t be just fine
    Save from becoming deadly, our sweet sunshine

    But someday you’ll understand
    That it’s not just our land
    Pass it on to our children’s hands
    Someday you’ll understand

    Green trees and white sand
    Pass them on to our children’s hands
    Someday you’ll understand

  226.  All
    IMO a profound statement from hoss18 worth contemplating on:
    "We have sold our soul to financial engineering, and once again have found ourselves worshipping at the alter of a false prophet."

  227. I think some of our members are on the wrong site. The pope is in Spain at present, giving his blessings and costing the Spanish Gov. a lot of CCCCash to protect him.

  228.  Gel – LOL;  its everyone else that needs therapy, isn’t it ?
    Chris – BIDU – I like it.  Talk about a stock that needs some beatdown.
    Speaking of beatdown, AMZN buying soap and diapers to justify its high tech crazy ass P/E.

  229. Hey guys! I’m finally home!

    I need a vacation from my vacation at this point. Will try to catch up a bit after dinner.

  230.  Where’s Phil ?
    Did he get lost in Orlando after going to an Alan Grayson victory rally ?

  231.  Ah, he’s baaack.  How’s that for timing.
    Just teasing Phil; welcome back !

  232. Hope we get back to trying to make money tomorrow.

  233. Phil
    The PSW website did not change the time!

  234. Phil
    Welcome back !   Lots of "hot talk" while you were away… hope the membership is still intact on Monday !

  235. JO
    I believe F is on the way to $19 +.  Following the same strategy we discussed on USO, I placed an order buying the Jan 2011 12.5 calls @ 3.90, and sold an equal number of 1012  17.5 short puts @ 3.20. On 30 contracts of each, my net debit came to $2152.

    "In essence this is an uncontrolled increase in money supply, equal to indirect exchange rate manipulation," Shi Jianxun of Shanghai’s Tongji University wrote in the guest commentary.
    "Given the present international financial situation, countries should join together to restrain America’s irresponsible behavior of issuing excessive amounts of money," Shi wrote.

  237. Phil/Gel "Hot Talk" – Time to give gel a "Hot Talk" tab at PSW.  Next week I propose we discuss the philosophical issues concerning the consumption of dog meat by southern Chinese citizens (specifically is it ok to eat "mean dogs" such as Pit Bulls…but should we avoid eating "smart pooches" such as poodles???), how we can go "long puppy" during the global food inflation crisis in 2012, and ultimately determine if dog meat is a "healthy choice" (I’m skeptical!!!… as there are more grams of fat than protein per serving, according to  Week after next, we can discuss the 98% similarity rate between human and chimpanzee dna…and how it relates to the financial crisis…

  238. Goldman – hahaha! Unfortunately, I think that research question has already been posed and answered on "Manswers"

  239. goldman… LOL…. No thanks –  the "Hot" talk will get a "Cool" reception.  Pit Bulls? well maybe, but no Poodles (particularily black ones) as Chinese astrology reserves them as symbols of good luck…. we need to stick with monkey brains !

  240. good Morning Phil, nice to see you back.
    I had two questions for you on Saturday, if you have a change today. see below thanks.
    1.      yodi
    November 6th, 2010 at 11:30 am | Permalink  
    Good morning Phil,
    Question on synthetic buy writes. I am holding various plays Jan 11 to Jan 12 where the long caller has already a delta of over .90 – .95 and the short caller running between .80 and .85. Does it make much sense to hold this play still, as the short caller is gaining just about as much as the long caller, or do you drop the short caller to a lower delta? Thank for your view
    1.      yodi
    November 6th, 2010 at 5:17 pm | Permalink  
    Hi Phil,
    I need your inside on this poker play April 10 I set up a short GS strangle 155p to 210 call I bought the call back still to early but made a reasonable amount on the play. The putter ran up against me like crazy but I did not budge. I sold the putter in April for 8.91 which is now down to 2.69, all premium. But like a fool when GS was still in the 140s I thought of countering a bit by selling still the 155 Nov caller for 2.75 now 16.22 and just about all intrinsic value. Never thinking these sharks would come up that fast. Stk trading at 171.07 today. As I do not want to double this situation I was thinking of rolling the 155c Nov to 175c Dec and supporting the bleeding with selling the same amount of 170 Apr putters at 8.73 hoping they do not get arrested by the Gov. again. On the other hand pay the piper and let the putter run out or simply roll the putter up. As I think next month I will be in the same position with the caller. Thanks

  241. Good morning!

     GDX/Arbolito – See the ABX trade, which I like better.  You are giving yourself a 20% discount on GDX, which is good but, to me, there are good miners and bad ones so why invest in a basket when there are a few that are totally superior?

    Intelligence gene/Flips – Having worked with many inner-city educational projects over the years (my Father designed the national computer system for Head Start in the 70s) I have come to strongly feel that nurture trumps all.  Perhaps you can be genetically predisposed to a higher IQ range but health and education can push any kid to the higher end of their potential.  Look at Jewish people, who marry based on a religious affiliation, not a genetic one – they have a culture that expects academic excellence and they get it despite the fact that Russians marry Poles and Germans and English or Australians and, of course, the African’s in the Middle East.  It’s a pretty genetically diverse group but the religion enforces nurture and gets results. 

    And what Jrom said!

    Commodities/Trident – The problem is you are debasing the currency of the World’s 2 biggest consumers (because China is still tied to the dollar) and if the demand tails off there, then speculators will be stuck with a massive stockpile of unwanted commodities.  The dollar is now 15% lower than when the copper was at $1.30 in the crash so let’s call it 20% and then let’s double that for you and say that the floor should be + 40% – that’s $1.82.  Oil was $40 so $56, gold was $800 so $1,120 (which is my $1,150 fair price target), etc….  That’s a very generous interpretation of the floor in commodities if demand falls AFTER accounting for the dollar at 76.  How low can the dollar go?  Can China and the US really afford $100 oil?  This is the problem with commodity bulls – they don’t stop to think about where all this money is going to come from to pay for the commodity.  

    Quantitative Easing does a fine job of putting money in the hands of idiot speculators who pump it into commodities and raise the prices but in bypassing the consumer they miss the very critical step of impacting demand and, in fact, negatively impact demand by driving prices up faster than the amount of capital that is available to the consumers.  For consumption-driven commodities – that is, eventually, death.  Unfortunately, it’s not a direct feedback loop and it can take quite some time for reality to come back to commodity prices because it only takes a single wealthy fool with $1Bn to hold onto 32M tanks of gas worth of oil (at $86) so the demand picture is warped in incredible ways.  

    UUP/BDC – Good call on Dec $23 calls, very cheap considering the possibility of a $1 move in UUP.  Those bonds are nuts. 

    BID/Alik – I like the company, they were an old crash pick of ours but up 5x since then is a bit much for me.  Your logic on them is great but I think some may be built in at this point with them up 100% since June.  I think they are a great buy on the dip play with the 200 dma at $32 and the 50 dma at $36, you just have to hope for a slip to get in. 

    ABX/Yodi – It doesn’t move 1:1 with gold of course but that’s your protection if gold drops.  ABX sells gold, if gold goes higher, they make more money – that’s the relationship, it’s a fundamental one, not a technical one. 

    BOJ/Pstas – Amazing how we seem to learn nothing from history.

    1.4 Quadrillion/Mike – That sounds a bit high but what’s the difference once you are over $100Tn, which would be a 30% tax on the entire global population for 10 years?  It’s not a payable or serviceable amount of money – it’s simply out of control and can’t be fixed so it’s ignored like global warming, which hopefully will get us first…

    TBR/Amatta – If you are out, I don’t think getting back in is a good idea.  The time to DD and roll to 2012 has passed and those entries are way up already with a goal of $40 by next year.  If they come back down and hold $32.50, then maybe a good time to sell puts for a cheap entry but don’t chase something you didn’t have the stomach to hold onto already.  As I keep saying – if you don’t REALLY want to own the underlying security at the put-to price, then NEVER initiate a trade where that’s the end game.  

    IQ/Flips – Wow, that’s a terrible attitude!  A kid with a 92 IQ has a lot of hard work ahead of him but that doesn’t mean you hand him a mop and walk away.  Bush had a 91 IQ and look at him (actually, we all would have been better off if someone had just handed him a mop 40 years ago).  Schonemann has a good paper on the subject.  

    LOL Tusca!  Very funny take on cruises – you are right, health care is the future unless they are cloning Jack LaLanne real soon.  

    English/Shadow – Actually that’s one of our problems.  The US is one of the only countries where children aren’t expected to be fluently bi-lingual primary school.  Learning another language does a lot to stretch your mind yet we have this sort of revulsion to the idea that puts our children at a disadvantage in the global marketplace.  

    Here’s a good scene for those who haven’t seen Wall-E.  

  242. @Phil
    You use Bush as an example. 
    You made my case right there.
    It’s not an atitude.  The kid’s academic counselors have been advising parents with low iq (and subseqent results from testing for college caliber achievement) that his entry into college is going to be a waste of $120,000.  All schools seem to have a department that assists parents in assessing the likelihood of success (better than a c average) in challenging classes.  That is likely the reason that so many questionable majors have arisen in curricula design over the last umpteen years.
    In addition, if a child has a low IQ AND reading disabilties, there are other far better avenues for his native talents that he can pursue.
    You raise an interesting point about the Jewish achievment levels (followed or closely linked to Asian achievement levels).  Who can argue with the fact that geithner, orszag, bernanke, summers, greenspan, rubin, friedman,  fuld, frank,gensler, blankfein, shapiro, yellin, fink, cohn,kagan,lippman and so many others have risen to such heights far and away, per capita, exceeding the closest next nationality?
    Native intelligence is absolutely essential for achievement.  None of the above would have any problem testing in the top 1%.  Yes, hard work can help, but as we all know the students who made it to valedictory levels were not simply hard workers.
    I’m afraid that this falls into the category of nothing you can point to will change my mind that your native intelligence level is way above average, and for that you can thank your mom.  Not to say you didn’t also and continue to work very hard, which only enhances your success.

  243. BA/Hoss – Remind me if they do go down, it’s not like Airbus is in better shape on deliveries.  I’ve been thinking about that since I was at the airport.  Even Orlando has only a couple of bays for the A380 so it’s going to be virtually impossible to knock BA out of US airports, who have no money to re-fit terminals.  Also, A380s have those Rolls-Royce engines (GE is a good pickup on that news too) that may have a fatal design flaw and that can cause massive delays as plane and engine design are entwined.  

    BDI/BDC – Good catch.  That’s what I’ve been saying, demand is going down while prices go up.  This cannot end well. 

    Fumes/Goldman – And, as we know, it’s the fumes that are most explosive.

    LOL Kururi!

    Buy-writes/Yodi – Well the artificial buy/writes pay you X above a certain point.  The real question is what percentage of your possible gain have you collected and is it worth waiting however long for the rest.  Keeping in mind it’s a "bird in the hand" kind of thing if you are not worried about a full retrace below your strike.  Short answer – it depends…

    Hussman/Chuck – That guy is on a roll!

    INTC/DK – As above to Yodi, it always depends.  You are exactly right, there is no loss here, you agreed to sell INTC for a 31% profit at $17.50 and INTC is now $21.50 so you may have regrets that you weren’t more aggressive but you damn sure are on track to a 31% profit.  Since you get a dividend while you wait, there is little incentive to do anything with the trade unless you have a better use for the profits you’ve already got.  I assume those were the 2012 $17.50 puts and calls ant they are now $5.80, which means you have $2.05 of premium left to collect between now and 2012.  If your net entry was around $13 then $2 is 15% over the year – not bad for doing nothing!  You can roll the shorts to any 2013 combo you want and that can be the $22.50 calls ($2.65) and $17.50 puts ($2.30) which would cost you .90 to give yourself $5 more upside over the next year (35% of $13.90) and that’s what we do with mature buy/writes long-term – just roll them along and pick up 20% here and 30% there, year after year….

    Oops, time to work – Please re-ask anything I didn’t get to in new post!