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Monday Market Movement

National Ransom.

That's the title of the new Elvis Costello album and a fitting way to start the week as Elvis is an Irish bloke and it's the Emerald Isle that is kicking off the newest round of currency concerns with the Euro falling for the second day in a row as concerns mount about Ireland’s capacity to gain support for its budget and political uncertainty in Greece reduces the appeal of the region’s assets.

Europe’s currency weakened versus 11 of its 16 major counterparts before European Union Economic and Monetary Affairs Commissioner Olli Rehn arrives in Dublin today to look at Ireland’s budget plan. The euro also dropped as the extra yield that investors demand to hold Ireland’s debt rather than German bunds has more than doubled in the last three months. “The recent blow out in euro area peripheral country government bond spreads relative to bunds is starting to weigh on the euro,” said David Forrester, a currency economist at Barclays Capital in Singapore. 

Meanwhile, Bloomberg notes that "Hedge Funds Raise Bullish Bets on Oil to Four-Year High."  The funds and other large speculators increased wagers on rising crude prices by 8.6 percent in the seven days ended Nov. 2, according to the CFTC.  Net long positions climbed to a record for the CFTC data available. The Dollar Index, which tracks the U.S. currency against those of six major trading partners, slipped 0.9 percent last week and is down 13 percent since this year’s June 7 peak. “It’s all about the dollar being debased,” said Mike Armbruster, “You’re going to see managed money take its cue from the dollar. If the dollar continues to weaken, you’ll see them continue to go long oil.”  JPMorgan Chase & Co. and Bank of America Merrill Lynch last week forecast that oil may return to $100 a barrel for the first time since the 2008 financial crisis. “Whatever QE2 will or won’t do in the economy, it will cause the price of raw materials to rise,” said Jennifer Fan, virtual portfolio manager with Arrowhawk Commodity Strategies.

Oil did hit our magic $87.50 goal in overnight trading Sunday evening and is down $1 already so kudos to those who went with that trade.  People like Jennifer Fan and pretty much everyone at JPM have no clue what the impact of $87.50 oil is on their limo drivers and thus they can make idiotic predictions like that AND get paid for it.  There simply is not enough money in the World to support $100 oil.  We have, Globally, over 10% LESS people working than we did last time oil was at $100 and this time people can't leverage their home equity lines to pay for gas.  Also, $87.50 oil less 15% dollar devaluation = $74.38 and that works out to a 100% gain in oil off the '09 lows when priced in Euros or Yen so let's look for an eventual retest of $75, and that will come really fast if the dollar bounces.  

You would think high oil prices would turn things around for Dubai but they get paid in dollars and home prices there are falling fast – down 6% in Q3 alone!  “After a period of stable prices we are beginning to witness a shallow but lengthening slide in overall average prices,” said Ian Albert, regional director at Colliers. Prices had been hovering around the same values since the third quarter of 2009, he said in the report.  “We are witnessing a slow but protracted decline in asset values,” Albert wrote. “This reflects the reality on the ground as occupancy rates fall to 80 percent and the market is unable to absorb the additional supply without a growth in the population or a slowdown in the release of stock.”  

I am sorry.  Every week I go into the weekend resolving to get more bullish but then I make the foolish mistake of actually reading a newspaper or talking to actual people who work in the global economy and I JUST CAN'T DO IT!  Back on October 15th we charted the Beta 3 pattern that was being run by the bots and I said we are simply repeating the April run with a goal of taking us to 11,500 (as we came off a better base) in November with a failure right around Thanksgiving.  Look how well this pattern is holding up in month #4.  


The aberration is, of course, the Fed's QE3 announcement but, as I said to Members last week – getting to our target level early does not mean we are breaking through it, it just means the BS has been accelerating and no one piles it on quite like Uncle Ben and his nephew, Timmy.   Unfortunately, we have to be patient and we do have to keep ourself open to the possibility that the market can keep going higher.  Perhaps record numbers of Hedge Fund trades are not wrong this time, although they were in 2008 (when they set the old record), weren't they?

ObenjoReuters reports that it's beginning to look like Obama is heading to a G19 Meeting this weekend as the entire rest of the G20 has been unified by Geithner's betrayal (which I predicted would happen ahead of the last meeting as Timmy lied to and manipulated his fellow Ministers, Survivor-style).  Officials from Germany, Brazil, China and South Africa were among those expressing concern that the Fed's money printing could weaken the dollar, drive up commodity prices and send uncontrollable waves of investor cash into emerging markets.  If the G20 fails to defuse these global tensions, it may heighten investor concerns that policymakers are drifting further apart, leaving the world economy vulnerable to another bout of upheaval.  

Since intervening in the currency market on Sept. 15 in its first attempt in six years to weaken the yen—in which the government sold 2.125 trillion yen ($26.19 billion at current rates) for dollars and pushed the yen briefly to 86 yen—the yen has stubbornly soared back to near-15-year highs. On Monday afternoon it was trading at 81.25 against the dollar. Now, the country's most powerful politicians are urging Japan Inc. to capitalize on yen strength by going on spending sprees abroad.

MS"We must work to prevent (a sustained rise in the yen), but in the meantime, there are advantages of yen rises," Yoshihiko Noda, Japan's finance minister, said Monday during a parliamentary session. "Moves such as purchasing foreign assets as well as foreign companies should be actively pursued," as gains in the Japanese currency make them cheaper, he said.  The Nikkei rose 1.1% this morning but it was all pre-market pump based on the rhetoric out of the BOJ and Government.  The Hang Seng gained 0.35% with a 200-point stick save that prevented a down 100 day and the Shanghai was more enthusiastic with a 1% gain on the day.  The BSE dropped 0.7%

The EU is flat, waiting to see what we do and our open is looking flat as well as we wait for the week's data, including a new round of Fed auctions, starting with $32Bn worth of 3-year notes at about (ROFL) half a percent.  So today we ask to borrow $32Bn US Dollars that we will toss down the deficit hole today in exchange for promising to pay back $32.5Bn in November of 2013.  Had you taken this deal in 2007, you would be down about 25% today and able to buy roughly 1/2 as much gold now as you could then with your note (although a bigger house, of course).  

It is all madness as we count down to reality but meanwhile, we can still party like it's 1999.

The Fed's Bullard will give a speech at 12:30 on "Monetary Policy and Inflation Outcomes" timed ahead of the auction so expect propping language there.  Fisher speaks at 1:45 so it's bound to be a jawboning week as Treasury borrows another couple of hundred Billion for November.

Let's be careful out there!

Pic credit (lower two pictures): Thank you, William Banzai7 

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  1. Good morning Phil,
    Thanks for answering my question. Sorry to bother still one I need some inlightning. thks
    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. thks

  2. NET $ (.11)% at 7:45
    NET had started widening out last week, but soon as Giethner reiterated his $$$ does not need to weaken against the Euro and Yen BS last night, has been moving around the 0 area in a tight range
    dx/y is +.67% at 8:48

  3. Phil,
    I can’t get bullish either but as someone on the board put it.  Better to be rich than right and I’m getting real close to forcing myself to get bullish rather than sit here in cash and watch it erode away.
    Are you buying the breakout in FAS?
    Is your Omega 5 theory still valid?  I can’t overlay my chart and was wondering if this rally continues to mirror the February run up.

  4. Phil:
    I have held on to QID as a hedge. Could you help me turn this trade around or should I wait and do something down the road? April $13 (c/b/$3.20)/April $17 (c/s/$.94). Thank you and welcome back.

  5. Phil / QE2/3 etc.   I don’t see any outcome other than inflation ahead. EEC and Japan will retaliate with QE3 to maintain currency competitiveness. US is very competitive with them at today’s fx rates. Pressing China on fx is futile, as they still have 200mm plus unemployed ‘upcountry’ and since they earn 1/10th US wages, fx is irrelevant to US competitiveness. Our structural problem is globalization, not fx.  Any revaluation just pushes shoe factories etc into Vietnam, Indonesia etc., not to the US.  Selfish mercantalism is our only possible fix to unemployment (we are the only potentially self sufficient continental economy).
    Ben’s $600mm will achieve nothing re the US structural problems (and unemployment), so it will likely grow to $2T. Most will likely flow into emerging mkts. So, shouldn’t we be fully invested in mkts like FXI, IDX, ECH, Brazil etc, and gold via ABX rather than holding 65% in devaluing cash?

  6. Phil
    Good morning from a rainy Southern California!
    Each morning, I have been reading your commentary and telling myself you are right…… for the past 4 weeks.
    Yet the markets have continued to move up….reminds me of the disbelief in the summer of 2009, with the rise in the SPY from 680 tp 900.
    Q: what INSURANCE do you recommend now to protect against a 10% drop?And please keep it simple.
    Q: Any thoughts on AAPL…expected to sell 43M ipads in 2011 and 60m iPhones….how would you protect holdings here? And how would you position yourself not to miss out on a breakout over the next couple months?

  7. This is a must-read post by PragCap mainly because there is an EPIC debate in the comment section about whether QE2.0 is truly inflationary or not.  I think the heated debate is STILL going, but there was a consensus reached in that he current rally in commodities and equity is a speculative and psychological bubble.

  8. GM everyone.
    Phil, from what loony left website comes the claim of Bush having a 91 IQ ?
    That would make him mentally retarded.  Which would make John Kerry what exactly, as his grades were worse than Bush ?
    I know you think Bush was retarded, but c’mon dude …
    Let’s all chip in and buy Phil a copy of Bush’s new book (memoirs).

  9. BDS has no limits, it seems !  lol

  10. tuscadog – the shoe factories don’t need to move to vietnam.  the chinese are already moving factories from the expensive coastal areas where real estate and wages have increased to cheaper inland provinces.  this is a massive movement that is just underway now according to a panel I heard at an EM conference last month.  there are numerous inland provinces in china with population greater than vietnam. 

  11. Phil,
    Should we not sell some DIA Nov putter on the dip for the mattress?

  12. PCLN/Phil:  I have some Nov 390 callers that need to be dealt with.  Since earnings is today, what do you think the best course of action would be?  Perhaps selling putters to finance a roll upwards?  Your thoughts are much appreciated.

  13. Fed new msg to market?
    Warning to cool it ?  Concern about new bubbles ?

  14. Phil/Omega 5
    You read my mind!!!

  15. That Omega 5 is frightful

  16. GXDX/amatta – pure play based upon the support leves, volume and 5d MA.  I will write something up on them over the next week or so and go out further in time.  I have the Dec 17.5s for now.

  17. Phil/QE3 - I believe QE3 will be politically unacceptable due voter anger over food and energy inflation (and consumer product inflation)…along with the fact that Ron Paul is hellbent on "end the fed".  The USDA estimates that each 1% of food inflation equates to a $12 Billion expense on the U.S. consumer.  Question is, what is the U.S. consumer cost per each $1 increase in oil, both for gasoliine and heatinig oil?  Also, any idea on "product inflation" due to oil speculation?  Plastics are created from oil, delivery vehicles and plane fuel expenses will rise, etc…the product cycle is "fuel" of energy intensive processes which will spike with "$100 oil".

  18. Cap,
    Being a Ph.D. in Industrial Psychology, by training, I can tell you that IQ as measured by the Weschler Adult Inlelligence Scale (WAIS) would indicate an IQ score at 90-110 in the AVERAGE range.  Where 68% of the population resides.  As you know, this is NOT very impressive in real terms (ever take a look at the average person and think OMG – WTF!?)  Also the perspective from a normative group of Superior to Very Superior (where most PSW members reside) the average person does in fact appear ‘retarded’. 
    I would also like to say that BUSH was more than likely in the Superior range of intelligence.  He suffers from a personality disorder.  This is the environment at play -his was not a nurturing family situation.  (As the film highlights).
    Anyway that’s my .02 on what you’re saying above.

  19. hi Phil — IBM-- Have bull call spread jan 90/100 call spread back in 3/10with sell of put jan 100, I have been slowly take the spread off the table except one contract of spread left.  I bot back all the putters and forgot talke the last contract off the table.  I got assigned over the weekend….not sure why — spread not expired till jan…. I was net gain , now showed net loss, so iahve right now 70 shares short (I have 30 stocks was bot long ago) – give net -70 short stck at 100,  I still have jan 90call one position, should this cover this short stck — but why it went neg.  What should I do now, thx ahead for the advise

  20. doubled / IQ measurement – wrong time of day for this so I’ll be quick – I think the 95 may come from people playing with the lower bound of the 95% confidence interval – which if I remember correctly is +15 for IQ, but not certain about that.

  21. Psychmetric measurement is all about reducing variance (which is what you are talking about).  So a test score that provides a 95% confidence level of measurement is not worth much.

  22. If CMG doesnt start falling soon I think I might just walk in to their stores not purchase anything  and start taking napkins, lemons, and whatever else they put out….I’ll increase their overhead costs one store at a time! This STUPID mutha of a stock will not fall!

  23. Hi Phil forgot to give prive, jan 90call was bot in 3/10 for 37.94, I am currently have short 70 ( was assigned at 100) IBM stock and one contract of jan 90 call, now net neg at  $1406

  24. doubled / variance – oh, man, so tempted to get into an abstruse statistical debate here…….I’ll mostly restrain myself and say that in my field (biostatistics & epidemiology) we reduce variance mostly by increasing sample size, with the primary aim being a solid point estimate, which is what we really care about. Different philosophy from yours, I guess.

  25. Could someone tell me what I.Q. stands for?      

  26. Phil,
    You asked me to remind you about the question I asked you on Friday about hedging one’s profits from gold investments — so, I’m reminding you!

  27. NET $ (.05)%

  28. yodi – which Nov are you looking at? They seem risky with the pull back possibility. What about Dec?

  29. Phil- Re POMO, isnt today a POMO day? also, how does POMO affect equity markets? I thought it was only for debt securities?

  30. Good morning!

    My overriding mood coming back from vacation is what nonsense this all is.  The global economy is as fake as a Disney ride – it looks good as long as you are willing to believe in it and resist the temptation to look for the wires that are holding things up.  Still, people line up for hours to ride the rides and they keep coming back for more.  There’s a Harry Potter ride at Universal and people literally wait 4-5 hours to get on it after spending $75 for a day at the park and the ride is less than 4 minutes long so half the day at the park shot on one ride (although it was cool but I got in early and waited 30 mins).   

    Anyway, we are not children and we shouldn’t be willing to suspend our disbelief where investing is concerned so I still prefer cash to chasing a dream that we all know we’re going to wake up from at some point.  Things are not true just because a bunch of people dress up in costumes and tell you they are true.  Even if they construct an entire WORLD with massive amounts of money and even if they call in the best script people and designers and even if it all looks really, really cool – keep in mind that it’s just a very well-coordinated fantasy and you can’t live there – the illusion can only be maintained for a certain amount of time before reality reasserts itself (sorry).  

    So, the question is, how long can they maintain our levels and how high can they fly this thing?  Looking at the Beta 3 chart above (Omega 5 was last year’s pattern) it’s obvious they are trying to push us higher but our ranges are governed by stock market physics and not the wishes of the FOMC board.   So please, Please, PLEASE keep in mind that this is all, FUNDAMENTALLY, BS and it is not at all safe to go long on this market at the moment.  It’s not safe to go short either with the Fed pumping in $110Bn a month but we are a very long way from having a stable base to build off as well.  


    • 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 


    It’s another good week to watch and wait.  I still like our various Q plays as the Nas is clearly overbought and my bullish plays would still be financials and slower moving commodities like CHK, VLO, etc but I expect a pullback in energy so it’s really just a defensive long at best.  Cash is still king – waiting is the hardest thing an investor has to do but that’s the difference between an investor and a gambler. 

     "Adventure, excitement. A Jedi craves not these things…" 

  31. Doubled/IQ
    You “stole” my words, exactly… But you are absolutely correct!
    70-90 is ‘sub normal’, though I forget the psychiatric classification for under 70 IQ

  32. Sample size is good.  The measurement tool is just as important.  I am not disagreeing with you at all.  I’m not even sure what IQ is and I have studied it extensively.  Besides you know that statistics can be manipulated to say whatever we want.
    MSM pumps out crap everyday.  Different from scientific research. 

  33. NET $  =0 first time today see if ti goes positive with the dx/y

  34. Lflan
    Welcome back…
    Did you go off on vacation to a differeent planet?
    What is IQ…HA ha….

  35. Maya,
    "Dull Normal"   Below that it is not politically correct to use the older medial terminology which is rank ordered:
    1. Moron
    2. Idiot
    3. Imbecile
    And thus has been totally abandoned for obvious reasons.

  36. Pharm / diabetes     What are your favourite plays on this growing epidemic?  Also, since many can’t walk anymore will AMED be a buy (the hospitals are full and too expensive).  HHC and hospice should grow exonentially.  Medicare billing rates are the wild card.

  37. Lflan,
    IQ is intelligence quotient, which used to be how they derived the number (division of "mental age" by chronological age). Now, it is not actually a quotient anymore but a composite score of various factors that have been found to load onto "G" (the construct of general intelligence).
    Also, Intelligence score alone is not sufficient for diagnosing mental retardation (70 or below); it has to be accompanied by deficits in at least 2 adaptive functioning areas (life skills, hygiene, employment, finances, social relations, etc).

  38. Tusca – diabetes is a tough one – hospitals have been empty – just look at conference calls from aet and hum. new therapies need to be devoid of cardiac risks which is next to impossible since diabetics have small vessel disease by definition – i think the only play is insulin pumps or supplies like needles/glucometers since the pool of diabetics being covered should be greater in 2014.

  39. Maya1….Hi!    Yes, and having lots of fun! 
    Trading AAPL:   Holding   Jan 11   300s, fully covered with Nov (monthly) 320s.   (I held Nov 310s as covers but converted them to 320s this a.m. because of higher time value on the latter.  Back to the plus side following earnings long play when AAPL went south instead. 
    Bought SOLF last week   It is RIPPING upward today prior to tomorrow’s earnings.  Up 4%.

  40. moron, idiot & imbecile are still used. i read them on the PSW site regularly. (don’t forget the smiiley faces, morx) :) :-} etc

  41. lflantheman
    November 8th, 2010 at 9:51 am   Could someone tell me what I.Q. stands for?   
    IQ = intelligence quotient… at least it used to before we started awarding more college degrees to American kids in sports club management than in electrical engineering (2009).

  42. Tus – Jo gave you the specifics, and I like the device companies and MRK for diabetes.  Januvia will continue to capture market share for Type II, and generics will eat up the rest.  AMLN, NOVO, LLY will be players for TypeII, but not the market.  There are a ton of things in the pipeline for reducing blood sugar, but none are panning out.  ARNA just lost JNJ in their collaboration…..PODD is a favorite, and could be a takeover target for JNJ, MDT, or even LLY.

  43. Pharm/ re vrtx
    Know anything about VRTX and their upcoming fda application for their Hepatitis C drug?
    Talked to a person they are looking to hire and they feel drug is going to get approved
    any insight on VRTX?

  44. Phil- You are smarter than you think ( no I take that back because I suspect what you think) but you give all a chance to win and prosper and my hat is off to you and your site! You are correct in your staement " this is all nonsense" as we will duly pay the piper for irrational exuberance’ or however it is spelled. everyone who wishes to make money should have some mattress plays so they can prosper form the coming disaster in the market. I do not know when- please read that one word- but I do know how it will eventually end as it always does when greed becomes the overriding emotion as opposed to fear! We never learn from our past mistakes- jthoma

  45. Welcome back Phil:
    Sounds like you had a great time at Disney with family. My wife’s medical issues are preventing from paying 100% attention to the market. I still need to adjust the QID Nov 13/15 bull call (.96) with Jan 13 P sold (.78). Would you still roll to Jan 12/14 for a net debit at this time, adjust the putter latter? Or is there a better way to do this? Thanks much.

  46. Good Morning Phil… I have been looking at BA as a 2012 Leap candidate. Do you have any suggestions or sentiments? Thanks!

  47. iflan / AAPL
    I have been following you on this stock and doing very well.  I am considering a March spread at the moment, and would appreciate your thoughts ( speculation ) as to a price number on their valuation in this time frame.

  48. HepC is a very active area for many companies.  VRTX has the best in class for now, but their stock is SOOO high.  The application means nothing at this point, and they will have 10-12 mo to wait.  We can start looking at them 4-6 mo b’f their FDA panel review date.

  49. IQ… is always an issue. Some of the most "gifted" people I have known do some of the "dumbist" things you could ever imaguine. I believe a "street smart" quotient is many times overlooked, when considering importance.

  50. DCTH strangleDec 9C and 8P, buying the stock.  Nice 15% if called away, and if P to you, sell calls against it.  They are gonna be great.  I also like the 5/15 Jan12 bull call spread, selling Ps against it to reduce the costs.

  51. gel1/AAPL…..4 months away.   Well, a lot can happen in 4 months.  Purely speculating, I think March brings AAPL to somewhere between 335 and 355, barring any unforseen events, such as we’ve alluded to earlier. 

  52. OK, i’m kinda struggling here. I look at my ticker, and i’m apparently totally disconnected from the market. I have most of my money in cash at this point. I sold off stocks too early, even stocks i liked. WYNN is now at 115 on $2.5 max earnings next year, AMZN at similar multiples. I held LVS until $20 and then sold it (now, $50). I sold FCX at $65. The list goes on.

    What am i doing wrong, if anything? Should i have held these stocks, with covered calls? Should i re-enter stocks now, or simply hold the cash, even if it ends up being a couple months? Should i just buy some safe dividend stocks to protect cash….?

  53. Ron Paul CNBC interview
    Krugman is the exactly the opposite of a free market economist. I would think by now he would have been totally discredited and it’s tragic – i pray every night that his views will just disappear because what he wants to do is more of the bad stuff…He is leading the intellectual charge for the total destruction of the dollar. I don’t see how he has any credibility whatsoever.

  54.  Phil—could use your advice again on the SDS jan11 27/34 bull call spread at net $2.76. Paired with that are the sale of jan11 $27 and jan11 $30 puts. Ratio is 2 calls to 1 put with the puts spread evenly between the two strikes. Currently down huge on this thing. Thanks and welcome back.

  55. Pharmboy
    I own the Jan 5/15 2012 spread. What p would you sell against it. Thank you.

  56. PCLN Nov Short Strangle at 340/450 at 9.70 in premium, with stock at 387…with earnings out tonight.   Premium is about evenly split, so there must be large bets expecting 10%+ moves both ways!   I’ll take the premium, thank-you.

  57. jrohema – CMG   — LOL.   Yeah, me too !  
    doubled; so what is the personality disorder ?  (other than any pol that wants to be prez – megalomania)
    gel — iq – so true

  58. AMZN buying diapers and soap …. give ‘em a 100 P/E !

  59. GS/Yodi – Those plays are very hard to win if you don’t have conviction for your targets.  If you get new information that makes you rethink the target, then either you have a new target to center on or you take the loss and find something you aren’t sure about but don’t just keep piling on risk – as you can see, that leads to bigger problems.  Yours isn’t so bad though, just roll the callers out and up and be patient.  GS is not worth more than $180 and probably $150ish so just roll up $5 per month (or two) until you win, there’s no need to add downside risk other than perhaps just enough to pay for your caller roll like the sale of the Jan $150 puts for $2.  

    Dollar/Mike – Notice we got pushed down to 77 again but jumped again into the close.  Not sure what caused it but someone is pushing the dollar up pretty persistently.  

    Better to be rich/Exec – Yes, but until we really break over, this is as likely to be a top as anything else.  Invest when you are sure, not when you just don’t want to miss out.  If the dollar breaks 76, then we’re sure stocks will go up until it recovers.  That’s easy enough to wait for isn’t it?  If copper breaks $4 or oil breaks $77.50 or gold $1,400, then we have good signs that money is continuing to pour in and we can makes some bullish bets to cover the moves up but if you know that one bad article in the WSJ can tank this market – they why roll those dice on trades you don’t believe in? 

    QID/DClark – I’d spend .80 to roll down to the $11 calls on your long calls and then you are in the $6 spread for net $3.34 that’s $1.20 in the money so not too badly off with a .77 delta on your calls.  

    Inflation/Tusca – I’m sure that’s what the BOJ has been saying for the past 20 years as well.  If the velocity of money remains at zero (and it’s not, it’s declining per consumer credit contracting) then anything less than infinity put into the cash still yields net zero.  When the velocity of money does pick up, there will be hell to pay but there doesn’t seem to be much danger of that at the moment as no government policies are planned to improve the lot of the actual people in a country where consumer spending is 70% of GDP.  I am in favor of investing in things to keep up with inflation but not on betting on ways to get ahead.  The flexibility of cash is too valuable now.  Yes, I like ABX and I like several other things to hedge with and, as I pointed out last week, you can take simple plays that pay 200% if the stocks move up 20% so how much do you NEED to risk?  There are no sure things, we’re heading into the holidays – just be careful is all I’m saying. 

    Drop insurance/Maya – Well, make sure you REALLY need it but I still like the QIDs (and they are kind enough to bounce back up now after a good drop off Friday’s open.  You can sell the Apr $13 puts for $2 and buy 2x the Jan $11/14 bull call spread for $1.  So let’s say you short 10 for $2,000 and you buy 20 bull call spreads at $2,000.  If QID goes back to $14 (where it was in early October) you cash out $6,000 less whatever you have to buy back the puts for (if you decide to).  If QID drops you can stop out of the bull call spread at .50 and recover $1,000 and then you lose only $1,000 times whatever amount of dollars lower than 12 QID ends up (but of course you can roll) so let’s say you are risking $2K to make up to $6K – that’s a good risk/reward, isn’t it?  This makes a huge amount of sense if you are actually protecting Nasdaq longs and even if QID is put to you at $8 in 2012, it’s still going to make nice protection against your broad portfolio.  

    AAPL/Maya – I would protect AAPL by taking the money and running.  Then re-bet and take that money and run.  I would rather miss 1/3 of each move up by being cautious than risk losing half if something happens to Jobs.  I’ve said before that I like selling what you are willing to buy post-disaster like the AAPL 2013 $190 puts for $14.50 and then you can use that to buy a 2012 $300/370 bull call spread for $29.50 and that’s net $15 on the $70 spread and your worst case is that AAPL gets put to you at net $205.  If you don’t REALLY WANT to own AAPL at $205, EVEN IF something TERRIBLE happens to the company, then it’s a stupid play to be in but, if you do REALLY WANT to grab them up in a crisis – then it’s a cheap way to make $70 if your $400 fantasies are real and a smart way to skip the first $100 of possible drop if you are wrong.  

    PragCap/Kinki – That does look good, I’ll have to get to that later.  

    Bush/Cap – I don’t know, I remember seeing it somewhere.  I’m sure you can’t wait to rush out and buy a book from a guy who says he doesn’t read them but don’t go dragging everyone else into it!   Oh here it is Cap, it says it right here on YouTube – 81 IQ!  8-)

    DIA/Yodi – It’s a POMO day, this isn’t much of a dip yet.  Back at 10,200 I’d say yes. 

    PCLN/Kinki – Waiting is fulfillment. 

    Message/Cap – We need to see some action backing it up.

    Consumer cost/Goldman – Well we use 20Mb of oil per day so that’s $20M per day per $1 increase but gas is $3 a gallon and there’s 42 gallons in a barrel so the end cost to consumers is $126 per barrel so we figure a 50% refining mark-up so each $1 per gallon costs consumers $30M per day.  Then we have to look at how other commodities are affected and it all comes out to about $50M per day per $1 (I did the math extensively once) or $18.250Bn per year per $1 out of consumer’s pockets.  Don’t forget the GBush stimulus was "only" $160Bn so a $10 rise in oil is like the reverse of that entire stimulus over the course of a year.  That’s why I say people who don’t think that rising commodity prices will impact the economy are basically idiots…

  60. Phil/AAPL
    Just to be sure..the 2013 puts but the 2012 bull call spread?
    Why not 2013 for puts AND the spread?

  61. Trading PCLN:
    Facts:    Looking at the last 12 reporting quarters PCLN has been…
    Up the next session 10 of 12
    Up the next week    9 of 12
    Up the next month 11 of 12.
    Expedia, a competitor, just reported better than expected.
    Markets generally bullish right now.
    My recommendation:   Go long.

  62. Phil— what are the simple plays if the market moves up 20%?

  63. iflan / AAPL
    I do agree with you… With some inflationary pressure now in our future, and Apple definitely working as the "lead dog" in the sector pack, I feel very safe with a spread targeting your numbers. I also believe the 1st quarter of 2011 will be very good for the equity markets, and I am structuring the plays now.

  64. Cap – I am not a clinical psychologist any longer although I still maintain the requirements for a license to practice.  Having said that, my vote would be Addictive Personality Disorder.
    Aclend – Good job – quite professorial and correct.

  65. hanna
    Just my input, FWIW, I think it is a good time to be long the market. The $600 bil of QE2 will be fully spent, and this will have an effect on the markets ( commodities and sentiment in particular ). Also, I believe the recent elections will have more effect ( in a very positive way ) than most realize. The markets will be thrilled with the prospects of an extension of the current tax cuts, as well as a roll-back of some of the caustic provisions in the recently passed Health Care Bill. Both of these events have a strong possibility of passage, and will be a major catalyst in driving the markets upward. January and February are the best months, historically, for the markets and I think we may see a rotation starting out of bonds and into equities. I have followed Ken Fisher for many years, and has an incredible record for accuracy. His reasoning is based upon the theory that markets become very bullish post mid term election periods when there is a reversal of power.  Looks like a lot of stars that have lined up, so I think the probability of a bullish market is likely. Oops – almost forgot Santa Claus…. he sometime helps in this regard.

  66. doubled
    Given your clinical expertise and educational background…. is there any hope for me ?

  67. gel- ROFL

  68. It is a good day to go long on BA…. Sold the 2012 70 puts for a nice discount on the entry

  69. Hi Phil — comment for Fortep-- was he in QID Nov 13/15 call spread with Nov 13 put like Jbur comment, I have the same so you still rec roll down the same month ( nov) that wuold make $ dollar spread I do not get the $6 doller spread, cannot find Fortep comment to know what spread was in Nov, thx

  70. Gel1 BA looking good closed for 10.30

  71.  Anybody have input on WYYN, LVS. To see if it makes sense to short them via some calls here for Nov expiration? 

  72.  Phil, 
    You had a short play on MOS, is it still a good one at this point, or the inflation expectations will keep pushing it up?

  73. Hey all,

    We are looking at a new Play of the Week in China Sunergy (CSUN). The stock looks poised for at least 3-5% growth this week.

    Check it out here!

    Good Investing!

  74. Good review on Bush Book in Times:

    Certainly it’s the most casual of presidential memoirs: how many works in the genre start as a sort of evangelical, 12-step confession (“Could I continue to grow closer to the Almighty or was alcohol becoming my god?”), include some off-color jokes and conclude with an aside about dog poop?

    Shortly after moving to Dallas, he writes, he took his dog Barney for an early morning walk: “Barney spotted our neighbor’s lawn, where he promptly took care of his business. There I was, the former president of the United States, with a plastic bag on my hand, picking up that which I had been dodging for the past eight years.”

    Sorry DD but I have a hard time buying that a person with an IQ above 110 would want his Presidential legacy book to include discussions of doody!  In fact, now I’m kind of worried about Laura for letting that go through…

    IBM/Gucci – There’s no loss there, you were forced to short IBM at $147 on Friday and now it’s $145.50 so you gained $1.50 so far.  Just buy them back now and sell the puts again for more money than they were on Friday or just be happy with the gain.  I don’t think it "went negative" as I don’t think your system is comparing apples to apples now.  On the bull call – you ignore the net.  Eventually the premiums both wash out and you have net $10 on the spread.  That’s the end game, it doesn’t matter if it says $8 or $12 now, the fact is the spread is worth $10 if it expires in the money.    

    CMG/Jrom – LOL.  That’s a good plan actually.  If we could get 100M people to short CMG and then boycott CMG, we could all retire in style!

    IQ/Snow – But if you are measuring intelligence then your sample size is always 1 and your SD is going to remain 15 for each case.  Increasing the sample size may clue you into average but the inexactness of the test itself is never going to give you a better answer on an individual’s score.  That’s my issue with the poor kid that Flips is so quick to write off, aside from the 15-point swing in the test, IQ does not remain constant over time and there are dozens of factors that can increase observed scores over time in a NURTURING environment.  

    IQ/Iflan – Intelligence quotient

    Gold/Aryeh – Yes, I have a not on that one.  Hopefully I’ll get to tonight. 

    POMO/SNS – It’s just free money being handed out to the primary dealers (GS et al) and they decide what they want to do with it.  If you are given $1Bn for free for 72 hours and you know you can jam oil from $86 (today’s low) to $87.50 and you can lever that play 10:1 for a $175M profit at $87.50 and then you give your principal back to the Fed until Thursday, when you do it again.  

    Idiot/DD – I thought Idiots ranked at the bottom?  

    LOL Morx!

    WSJwisdom.jpgDumb money/Goldman – Good chart but it doesn’t seem to indicate that we are topping on the bullish side yet but man those bears headed for the hills.  

    Diabetes/Pharm – That’s a good sector for sure!

    When/Jthom – Ah, that’s the eternal question.  

    QID/Jbur – I’d roll the call you own but I wouldn’t cover unless the Nas broke 2,600 at this point. 

    BA/Gel – They are a bit high for my taste here but I do like them long-term.  You can go artificial with the 2013 $60/85 bull call spread at $10.50 and sell the $60 puts for $9.50 for net $1 on the $25 spread and worst case is you own them for net $61.   Margin should be about $14 so a really nice ROI for a spread that’s $10 in the money to start.  

    What to do/Hanna – You are doing the right thing, when you see a compelling opportunity, you can buy it.  Like the BA above, there are plenty of nice little trades to make that can give you big returns.  If you play the market ALL the time bullishly, the only thing you guarantee is that you will get burned one day. Having an itchy sell trigger-finger is not a negative thing because, if you make 10% a year and get back to cash, you can retire very wealthy, even with inflation.  Do you wish you were still in WYNN at $90? Then sell the March $95 puts for $5.  That would cost you $5 in net margin to make $5 (100%) in less than 6 months while you keep the rest of the $115 in cash – is that a terrible plan?  Find a few things you REALLY want to own and take small scale positions at prices you don’t mind them crashing to.  

    Paul/Goldman – It’s interesting that he sees all forms of stimulus as bad whereas Krugman and I think bottom up stimulus is good.   I can’t wait for Ron Paul to chair a meeting with Bernanke!

    SDS/Fortep – Let’s call the Jan puts $4 and that means you will have to roll them to 2012 $24 puts (now $4.20).  If you can live with that, then don’t worry right now.  What you should be doing is covering up moves in the S&P, like if they pop 1,125 with something like SPY Nov $122s, which have a .56 delta at $1.67 and, if you make .25 or .50 – take it off the table and then pick another spot and do it again.  .25 here and .25 there can make a world of difference over the next few months.  

    PCLN – Selling the Nov $430 calls for $8 is a fun way to say they don’t jump 10% this evening.

    AMZN/Cap – Why stop there?

    AAPL/Maya – Because you can do it twice if you start in 2012.

    Up market/Jabob – I will put more up but there was an IBM last week and the BA above and the XLF, UYG and FAS plays (FAS is back on as we dipped on XLF today). 


  75. On the diabetes front, missed the BMS/AZN combo pill that has recently won approval.  Here is the info.  Gonna have to watch how this plays out on the new scripts filled vs income.  Could be a drawback for MRK.


    PCYC moving up….not too late for GXDX entry.

    And FRX coming into a nice chart for our shorts

  76. I jumped on another momentum play today… buying VECO ( Vecco Instruments ). The company is a leading supplier of process equipment technology for the manufacture of light-emiting diode ( LED ) lighting. This type of lighting is growing very quickly and the upside is very big… we may soon see street lighting in LED.  SHADOWFAX – what do you think ?

  77. This one is pretty funny

  78. Phil
    what (if any) is the significance of the "Beta 3′, "Omega 5" chart patterns--i just know the TA basics --it seems like those names have some meaning but i have no clue what you are talking about?

  79. At 27.50 per t.oz. I would say Silver is officially in a hyperbolic bubble.

  80. Ooops…..

  81. Phil – what do you think of VLO as a stock long term hold?

  82. Phil / BA
    Thanks…. One of these days they will start delivering the Dreamliner, and it will be a nice payday. They keep selling more, and I’m sure the Australians are now viewing the Dreamliner brochure. BA received a very nice order over the weekend from UAE, and the orders keep piling up.

  83.  Phil / AAPL – We chatted about this about 10 days ago when AAPL had pulled back a bit, but I wanted to revisit. Through a series of adjustments I now have 2x AAPL naked April 320 short calls. WIth AAPL flirting around its resistance of 320, lots of time remaining, and all the talk of AAPL 350/400/500…I’m wondering how to adjust these. I am tempted to close out half the position at a loss to cut my exposure which has gotten to an uncomfortable level. What do you recommend? Thanks!

  84.  Phil/SDS—regarding your advice earlier, I’m not certain whether you mean selling or buying the calls to cover an up move in SPY? Here’s your quote:
    "What you should be doing is covering up moves in the S&P, like if they pop 1,125 with something like SPY Nov $122s, which have a .56 delta at $1.67 and, if you make .25 or .50 – take it off the table and then pick another spot and do it again."

  85. It took $45B on the Friday stick save to move IWM to 73.75…a mere $92B could get us up to 1231 (S2) on SP500.  Seeing that BAC had a perfect trading record this last quarter (made $50M a day), and that GS actually lost money…who do we call now, as Lloyd isn’t the top dog anymore!

  86. gel1
    LEDs are complicated. In high power they are not cheap, they need transformers and power supplies to convert AC to DC, transformers especially small ones require expensive rare earth metals, these need cooling altough the LEDs run without heat. Because they last forever your street light idea sounds good, the fixture could be a heat sink, they are not on when the sun makes everything hot. A few expensive cars use them now, color temperature is perfect and 12 volts DC means no conversion but still heat in the engine conpartment. Now the power supply is behind the light it could be moved behind the grill for cooling. Indoor lighting without a breakthrough will continue to have color problems, too cool or blue, unnatural. Backlighting TVs and computer monitors is the best new thing I have seen because they are faster  to control the brightness than the LCDs to control the color.

  87. Phil,
    You’re right about idiots. They are at the bottom..  I am still sticking with personality disorder on Bush.  That is nothing more than an obsessive fixation typical of the anal phase of development.  So I guess his emotional IQ (Goleman) is around the Moron level.  I really don’t think he is an Idiot but given the variance of measurement – it is difficult to pin it.

  88. Hi-ho Silver..

  89. hanna
    I forgot one other signal that I observe that indicates the market is headed higher…. many corporations are in a frenzy to spend the cash they have on their balance sheets ( some estimate it to be in the 2 Tril range ). Instead of investing in new plants, employees or capital improvements, they are buying back their own stock ( many of the majors have already acnnounced their intentions in this regard ). To me…. this bodes well for the markets, as the management teams who are making this decision  must feel the markets are headed higher …… if they thought otherwise…. they surely would not be buying stock at today’s prices…… Just a thought!

  90. Hi Phil, I am new in investing and am confused about your remark that GS is not worth 180 and maybe even 150$. May I know what do you think is wrong with GS? It looks like it has both current and projected P/E below 10, P/B 1.32, cash – debts=250 Bln (which is several times its market capitalization). Where is the problem? A threat of criminal prosecutions? Bad loans?
    Also, are you now bullish about TBT (as an inflation protection), or you would rather recommend ABX? Thanks.

  91. @Phil
    I’m not ‘writing anyone off’.  I’m relating to you what his father and his mother and his academic counselors are saying regarding his ability to absorb complicated college level complexity and quantitative information. 
    His talents apparently lie elsewhere.  He is a first rate tennis player. But he cannot get a tennis scholarship on the grades he has attained thus far and he is a senior.
    Why are you arguing that his IQ, which is in low average end, is not a factor when it clearly is, especially when considered amongst the other data these people (who love and care for him) have looked at and believe it a waste of his time to go on to college? 
    Average performance from average Intelligence.  But certainly not a write off.

  92. doulbed
    I totally agree that Bush ha s a personality disorder, he also suffers from chemical dependency and as people who quit smoking are the most negative about smoking, his responce is put those that can’t control their dependency problem in jail.

  93.  Phil, 
    I asked you on Friday about any potential plays on TBT now that it is on the way back up… You responded:
    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.  
    Not sure if you meant TBT… 
    Also, as I mentioned on my post I actually held the shares that were put to me at 37 and then capitulated when they got to 30… You mentioned at that point that it was a position way out of proportion for my $200K in longs. 
    I am just concerned that there will be a lot of inflation and I am sitting on 75% cash right now…
    Thanks for clarification. 

  94. I would be surprised if PCLN jumped more than 5% unless they announce a split and psychologically it could go into the high 40′s by Nov expiration (assuming a 10 for 1). With prices already in the stratosphere there is no rational basis of course, just eye-balling stock charts and predicting momentum.
    I hold a 420 call, worth 10 or so and even with Phil’s recommendation to be short the 430, find it hard to sell this thing pre-earnings.

  95. Phil,  Sorry the position was 1,000 shares @ 37… 

  96. Flip:
    On Friday I posted this to you but got no answer.

    November 5th, 2010 at 5:49 pm | Permalink  
    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.

    Are you for real on this, or just funning with us?

  97. Shadow- I agree!  And most of the people who are executed in this country are psychotic.  Now that is one hell of a treatment program.

  98. Phil, what does your gut tell you about oil going into close? Im usually pretty good with /QM & /CL but today Im confused as to the direction going into close.

  99. Bio -  Looking at the relative strength comparisions between PCLN, Expedia and Orbitz shows quite a bit of divergence (I use google finance to look at the comps).   If fact, Orbitz is down 10% during the period and PCLN is up nearly 14%.  As Iflan indicated earlier, they are likely to exceed expectations, but the ramp may already be in the stock and option prices, especially if its peers are trading flat to down on a relative strength basis over the last month.

  100. Shadowfax
    Thanks much for your input…. I was drawn to VECO by their "blow-out" numbers in the 3rd quarter – Revenue more than tripled, and earnings went from breakeven to  $91.1 million. There was some anticipated profit taking, but  the stock is starting to come back in a clssic "cup and handle" chart pattern…. which sometimes preceeds a "major" breakout. China is driving a lot of their sales, and the Chinese government is targeting the LED industry for big expansion. This company also is a big player in the flat panel TV business, and is the world’s leading supplier to hard disk drive manufacturersof thin film magnetic heads ( controls 40% )… increases the amount of stored data.

  101. Dont even know why I was DEBATING, I felt it would go 30 cents either way from 86.5 but I really dont know what planet I was on thinking it could POSSIBELY fall further!

  102. OK – I sold off that PCLN Nov-420c at 9.60. It was up 50%, have to take it and run — too much risk!
    Look at gold go! Zoellick you moron…

  103.  talk about selling too early, I had relatively big position in PAL from <3 and sold it at 4.50-ish and now zooming higher ….

  104. gel1
    Considering your last post flat panels and data storage, they sound good, tech is flying high and the only competitive tech comes from China. I personally wonder if this is tech bubble 2?

  105. QID/Gucci –  Now I’m totally confused but if you are in the NOV $13/15 spread then that calls are just .10 and there’s not much to roll anyway, is there?  I’ts pretty much a new play to go to the Jan $11s ($1.43) and I would not cover them until/unless the Nas breaks over 2,600.  As to the puts, the NOV $13 puts are $1 and can be rolled to Jan $12 puts for .20 or less and that’s the way to go there but, as usual, no hurry with 2 weeks to expiration. 

    WYNN, LVS/Amatta – Very dangerous shorts as you are playing right into that sweet spot of infinite Chinese demand.  

    MOS/Amatta – Short plays in general are dangerous until we see inflation break down and shorting commodities are the most dangerous.  We were looking at shorts on valuation but now you have to give all those stocks another 10% at least to the upside to account for QE2.   I guess this would be a good time to mention my preference to cash over endless playing in an uncertain market. 

    What’s in a name?/Datuu – Those are just silly names we make up to make the patterns sound official.  Funny how that works psychologically, isn’t it?  The pattern is real, it’s not uncommon to see chart patterns repeating due to the 70%+ bot trading but it’s not like they all have actual names…

    VLO/BDC – I like them as a fundamental play and as an inflation hedge since they benefit from that too.  We generally like to get net $16.50 entries but that hasn’t happened lately and they were in the $50s when oil ran up so plenty of room to run over time.  You can buy the 2012 $12.50s for $7.25 and sell the $17.50 puts and calls for $5.85 for a net $1.40 on the $5 spread and worst case is you own them for net $18.90 (b/e is $15.70 above the calls) with about net $4.50 cash and margin to make $3.60 (80%) in 14 months.  That should keep you ahead of inflation!  

    Dreamliner/Gel – At least the new delivery date gives GE time to redesign the flaws in their own engines! 

    AAPL/Ajay – Don’t stay in a position you don’t believe in.  Apr is a long way and anything can happen but if you are worried now at $320 then you will be inconsolable at $360, won’t you?  Logically, if you sell the Jan $300 puts for $9, which have a .30 delta to the Apr $320s with a .54 delta, you will do better on the way down and the Theta will take care of the rest while you cut the upside gains of the calls to net .24 delta.  That $9 pays for a roll of the $27.40 Apr $320 calls to the $18.40 2012 $410 calls and they can be rolled even to the 2013 $480 calls (now $21) even if you don’t sell any additional puts (out of your opportunity to sell $10 every 3 months).  If that is outside your comfort zone – then why the hell are you shorting AAPL?

    SDS/Fortep – You buy calls as a momentum play to make money when the index is moving against your position.  You do it at very strict stop lines looking for very short-term gains like our futures momentum trades.  Every day you should have a line you don’t expect the S&P to cross and, if it does, you hit a cover with a delta of about .50 or better and you look to make .25 every once in a while and get out.   It’s very simple once you get used to it.  

    GS/Goldman – They took a lot of risks last Q yet no one seems bothered by it. 

    Meanwhile, Gold $1,400!!!

    Boding well/Gel – I now rename you Mr. July 2008 because you are essentially listing every reason we were going to the moon in the middle of 2008.  Not a care in the world, the Government was the friend of business (go McCain!), tax cuts forever, don’t worry about commodities and, of course, if corporations are buying their own stock then it MUST be too cheap!  Total and complete flashback, thanks for the memories.  8-)

    GS/Alik – Investing in GS is investing in a gambler.  Even the best of them takes a loss once in a while.  That is why, historically, they tend to have p/e’s well below 10.  They have good years and bad years and you are looking at them in a good year while Warren Buffett wisely waited for a bad year to buy the stock.  As to  TBT, I have never not liked them but I did get sick of picking them because they went down and everyone freaked out so I hate to make plays now when the last thing we did (those of us who didn’t bail) was take advantage of the drop to $30 and roll out to 2012.  Don’t play a volatile ultra like TBT if your buying premise is I like them.   If YOU don’t like them and YOU don’t believe in the position enough to stick with it and scale and and roll if necessary until the (in our opinion) inevitable time that people realize that putting money in TBills is IDIOTIC (now that we’ve confirmed there is nothing dumber than that) then you will end up getting forced out on a dip precisely at the time that you should be making a bigger commitment.  Fundamental plays are all about scaling in and committing to what you believe in – TBT is a pure fundamental play that is based on long-term market forces.

    Average/Flips – I’m sorry, I’m just a bleeding heart liberal who believes in giving every person every possible chance to succeed.  A person who can play tennis has good hand-eye coordination and has obvious strategic thinking as well as spatial awareness.  At 17 or 18 to decide not to send him to college at all (I’m not saying force him into Harvard) and denying him a chance to try and find a path for himself because he probably won’t do well seems a little cruel to me.  I guess you wouldn’t mind if some test when you were 17 branded you unfit to continue with your education?  Regardless of your own intelligence, any cut-off is arbitrary – I’m sure some college rejected you for whatever reason – it’s all a matter of degree…  If you convinced me that my daughter was too average to benefit from college then I’d send her to a cool party school in a good location that gives her at least a year abroad so at least she could have fun and see the World (don’t tell her I said this or she’ll never do her homework again!) because there are more things to get out of life than straight academics and even if she lacks the capacity to learn from books, she doesn’t lack the capacity to gain experiences that will help round her as a person.  Not going to college at all is a permanent disadvantage – no doctor is going to make that decision for my children! 

    TBT/Amatta – Yes, I meant TBT.  ABX is better than TBT at the moment for an inflation hedge as the Fed is not directly spending $600Bn to keep ABX down (quite the opposite).  With 75% cash, that’s a bit much and you should have some longs but TBT is not a long, it’s a play on inflation but it’s inflation measured in bonds which are distorted by BS Government statistics and Fed intervention in Bond auctions, that’s why it didn’t work as fast as we thought.  

    LOL DD!  Just taking shock treatment to the next level I guess…

    Oil/Jrom – They are going for $87.50 again ahead of inventories. 

  106. biodieselchris
    Those rare earths, what is happening in California? The Wyoming thing has location, location, location problems!

  107. shadowfax … Tech Bubble 2 – maybe in the making!  We definitely need to watch the P/E’s for the signal

  108. Phil… happy to oblige… BUT, remember this is a different time, and we do not have a real estate bubble ready to explode, and the economy is not overheated…. AND we are in recovery mode, in addition not entering a recession ( disclaimer – I hope ), and Chris Dodd is history.

  109. Phil:
    What do you mean when you say the FAS trade is back on. Could you suggest a new trade on FAS at these levels. Bought and sold the the Jan 17/21.67 spread last week. Thank you.

  110. Phil… Are you taking the opposite position, and shorting the market over this period of time?

  111. gel; let me temper some of your enthusiasm a bit.
    Corp buybacks … not necessarily so bullish.  They, like the Fed, are using your cash to try to enrich themselves.
    What you don’t see is MANAGEMENT buying company stock.  The sale to buy ratio is something like 4000 / 1.
    There is NO INSIDER BUYING of stocks, period.
    2nd point … I can recall many companies foolishly buying back their stock in the last bubble, just a scant couple of years ago.   Moodys (MCO) for example, was buying back their stock like crazy in the mid-60′s, and borrowed $1 Billion + on their credit line to do so.   Not too smart, check out the stock price and their balance sheet.
    MBI was a big buyer of their stock.
    If anything, stock buybacks mean they don’t know what to do w/ the cash.

  112. for a POMO day i’ve got to say i’m not very impressed, with the dow down 47 and nasd up 1.

  113. At the open: Dow -0.38% to 11401. S&P -0.21% to 1223. Nasdaq -0.31% to 2571.
    Treasurys: 30-year +0.12%. 10-yr +0.06%. 5-yr -0.06%.
    Commodities: Crude -0.32% to $86.57. Gold -0.47% to $1391.10.
    Currencies: Euro -0.71% vs. dollar. Yen +0.15%. Pound -0.39%.

    10:00 AM On the hour: Dow -0.68%. 10-yr +0.1%. Euro -0.93% vs. dollar. Crude -0.83% to $86.13. Gold -0.74% to $1387.40.

    11:00 AM On the hour: Dow -0.62%. 10-yr +0.12%. Euro -0.97% vs. dollar. Crude -0.85% to $86.11. Gold -0.38% to $1392.40.

    12:00 PM On the hour: Dow -0.37%. 10-yr +0.02%. Euro -0.77% vs. dollar. Crude -0.14% to $86.73. Gold +0.16% to $1400.00.

    01:00 PM On the hour: Dow -0.36%. 10-yr +0.01%. Euro -0.64% vs. dollar. Crude +0.14% to $86.97. Gold +0.53% to $1405.10.

    02:00 PM On the hour: Dow -0.37%. 10-yr -0.05%. Euro -0.69% vs. dollar. Crude -0.32% to $86.57. Gold +0.59% to $1406.00. 


    The Treasury sells $32B in three-year notes at 0.575% (.pdf). Bid-to-cover ratio of 3.26, vs. a recent 3.17; indirect bidders take 35%, vs. a recent 38.1%. Direct bidders take 13.9%, vs. a recent 13.4%. 

    Geithner tries to take a conciliatory stance after a meeting of the Asia-Pacific Economic Cooperation group, telling reporters "we will never use our currency as a tool to gain competitive advantage" and reiterating his support for a "strong dollar." Tensions may cool slightly, but QE2 isn’t winning the U.S. any fans

    "We’re not in the business of trying to create inflation," Bernanke says at a Fed conference today, dismissing the idea the Fed may raise inflation too high in order to aid growth. "Our purpose is to provide additional stimulus to help the economy recover" but "our credibility must be maintained… [and] it’s critical for us to maintain inflation at an appropriate level.” 

    The gap between companies raising earnings forecasts vs. those cutting them is the largest Bloomberg has seen since 1999. Nearly 200 companies raised estimates above analysts’ projections; 130 firms cut them. “That companies themselves are expecting better profits is very positive," an analyst says. "As we see rising earnings, we’ll see improving stock prices.”

    The Conference Board’s Employment Trends Index picks up to 98.1, from a revised September figure of 97.3 and up 10.1% from a year ago. Of its eight indicators, six improved – including new jobless claims, temp workers and involuntary part-timers – but in a common refrain, activity should remain "sluggish" in 2011. 

    Yesterday’s four bank closures bring this year’s total failures to 143, pushing the 2010 tally past last year’s 140 and marking the most failures in a year since the S&L crisis. The four closures (I, II, III, IV) will cost the FDIC’s insurance fund around $254M.

    "Given what ails us, additional monetary policy measures are poor substitutes for more powerful pro-growth policies," writes the Fed’s Kevin Warsh in a WSJ op-ed, arguing that what many economists call the ‘new normal’ is really just the ‘new malaise.’

    St. Louis Fed President James Bullard: Discusses "QE2 in Five Easy Pieces," including: We’re in a disinflationary trend, the U.S. has to worry about repeating Japan’s mistake there, and "maximum impact" from QE2 will be felt as soon as six months from now.

    Bernanke is getting the Obama treatment and repeating the Obama response, Paul Krugman writes. In an effort to mute intense criticism over QE2, Bernanke scaled back his plans "in such a way as to guarantee that they’ll fail," just as Obama softened his stimulus plan last year. 

    The U.S. continues to get flak for its QE2 move: Germany says the Fed’s decisions are "undermining the credibility of U.S. financial policy" and "artificially lower[ing] the value of the dollar," while China says the U.S. "is not recognizing the responsibility it should take as a reserve currency issuer." 

    With the QE2 announcement behind us, investors are shifting their focus back to the eurozone’s debt problems. Irish pension issues and Greek elections are adding "new elements of uncertainty," and the euro is -1% vs. the dollar. 

    ECB President Trichet tries to calm the dispute over foreign-exchange policies, refuting claims that major powers are deliberately weakening their currencies. The world’s central banks "share a common purpose" in keeping inflation expectations anchored, he says, despite the differing challenges they face in their respective countries.

    World Bank chief Robert Zoellick wants to bring back the gold standard, sort of. In an FT op-ed, Zoellick argues readopting a modified global gold standard could provide "an international reference point of market expectations about inflation, deflation and future currency values." 

    The IMF moves forward with a G-20 plan to make China the third-strongest member of the fund, behind the U.S. and Japan. The ‘historical’ move must now be approved by an 85% majority of the 187 members’ votes. 

    After a bit of resistance, gold’s holding a new intraday record over $1,405/ounce. Bubblicious? Morgan Stanley is pointing to fundamental expectation changes, particularly long-term inflation

    The pile-up into precious metals is leaving one behind: platinum, having its worst year (in relative terms) since 2006. Production has outstripped demand for the past few years, but "nothing goes straight up all the time," Jim Rogers says. (ETF: PPLT)

    UBS upgrades Intel (INTC) to Buy from Neutral, with a price target of $25, as the firm believes the computer “component inventory cycle has bottomed.” Shares +1.4% to $21.53.

    Berkshire Hathaway (BRK.A) is ready for another major acquisition, at least if its rapidly growing cash pile is any indication. Cash holdings jumped 23% to $34.5B in Q3, the highest level in more than two years. When Berkshire’s cash reached $30.6B in 2009, it announced a $26.5B takeover of Burlington Northern six weeks later. 

    Inflation has to be more of a "when" than an "if" – so a 10-step guide to surviving it advises getting rid of cash and Treasurys, buying crude and staying away from domestic techs.

    Emerging markets made a pretty crowded trade even before QE2 helped make the area a racing bandwagon. So how to jump in? Embrace the risk, Brett Arends says, by paring bets but putting them into the riskiest assets, using call options.

    Three lunchtime reads:
    1) Andy Xie: To hell through QE – on to the next crisis
    2) Stocks to own while Fed moves to spur economy
    3) Economic crisis management: What’s next?

  114. shadow … you "agree that Bush has a personality disorder" … shocking !  lol

  115. Phil / DBA   Do you like this ag ETF?

  116. @@Jbur
    Not funning at all.
    This is a good start,
    there are others as well.  I’ll post it when I get the one I discovered  this interesting twist about 6 years ago.

  117. Cap
    As always, you make very good points in support of your position. Actually, the companies that have already announced thieir plans have committed to approx. $275 Bil in buybacks. More that 5 times as much as last year ( Birinyi Assoc. ) The economy is still "iffy", so the execs are opting for a better deployment for investment purposes. Cash on the balance sheet pays nothing today, but a rising stock price could be a positive return, if you think the market is headed up. Just a few of the companies that are doing this – PPG, CY, EBAY, WTW, EMC, KO, WAG, FDO, CVX, MSFT, HPQ, PEP, and on and on. I think action like this by the board of directors and management indicates they believe their shares are undervalued by a large margin, as they otherwise could re-invest for more sales and profits…. Just a thought.

  118. Gel – Id just like to focus in your " this is a different time" statement….Sounds a lot like " This time is different!" :)

  119. Very thoughtful comments; much more "real" than the crap peddled by Bernanke.
      There are some green shoots beginning to emerge in a landscape still pocked-marked by brown spots. General economic conditions are improving slightly and are expected to continue doing so. The risk of a double dip in economic activity has lessened, as has the risk of deflation. Financial speculation and excess, however, is beginning to raise its hoary head.

    Read more:

  120. I was invited to the White House five times by Bush… he was either a moron or he enjoyed my contributions…. maybe both!

  121. Cap
    I think Bush used religion as a crutch. I think his problem caused misgudgement. He was the worst presidental speaker ever, BUT NOT STUPID!

  122. Phil,
    I sold 25 contracts Nov 135 calls on IBM for 7.20. I dont want to double down.Can you suggest a sensible strategy to salvage this trade.

  123. They didn’t let SP 1221.73 fail…else 1217.62 S2 was next.  Predictable yet disturbing…kind of like politicians!

  124. gel - I’ll paint my house white and invite you if you give enough contributions (prefer gold at the moment)!!!

  125.  Is it possible – could this market actually close lower??

  126. Gold – silver – platinum 6-month
    If this trend continues, Pt is the best play (ETF: PPLT). I think Rhodium is even better but hard to invest in.

  127. Real estate bubble/Gel – Not true.  Now the bubble is in China and we have our own 15% to still drop in the US if the dollar comes back and/or interest rates rise.  

    By the way, the following people beside the Fed are trying to raise money this week:  

    • Florida, $200 million of general obligation bonds. Competitive.
    • Richland County, S.C., School District, $60 million of general obligation bonds. Competitive.
    • University of Alabama, $100.4 million of revenue bonds. Competitive.
    • Virginia, $391.0 million of revenue bonds. Competitive.
    • Colorado Regional Transportation District, $400 million of sales tax revenue bonds.Goldman Sachs.
    • Delaware County Authority, Pa., $70 million of debt securities. Bank of America.
    • Gainsville, Fla., $162.4 million of utility system revenue bonds. Goldman Sachs.
    • Georgia Municipal Gas Authority, $69.8 million of revenue bonds. Wells Fargo.
    • Iowa Finance Authority, $293.1 million of state revolving fund revenue bonds. Piper Jaffray.
    • Los Angeles Municipal Improvement Corporation, $50.1 million of lease revenue bonds. De La Rosa.
    • Los Angeles Municipal Improvement Corporation, $68.2 million of lease revenue bonds. Siebert Brandford Shank.
    • Los Angeles, $800 million of taxable lease revenue bonds. Bank of America.
    • Los Angeles Department of Airports, $875.8 million of airport senior revenue bonds. J. P. Morgan Securities.
    • Massachusetts Development Finance Agency, $740 million of Harvard University revenue bonds. Morgan Stanley.
    • Maui, Hawaii, $74.1 million of general obligation bonds. Piper Jaffray.
    • Michigan State Housing Development Authority, $89.1 million of single-family homeownership revenue bonds. Barclays Capital.
    • Nassau County, N.Y., $70 million of debt securities. Bank of America.
    • North Dakota Housing Finance Agency, $81 million of housing finance program bonds. Morgan Stanley.
    • San Antonio, $110 million of water system revenue bonds. Siebert Brandford Shank.
    • Santa Clara Valley Transportation Authority, Calif., $650 million of sales tax revenue bonds. Barclays Capital.
    • Seattle Port Passenger Facility, $149.3 million of revenue refinancing bonds. Goldman Sachs.
    • Southwestern Illinois Development Authority, $93.4 million of local government program revenue bonds. Morgan Keegan.
    • Spring Branch, Tex., Independent School District, $142.7 million of school refinancing bonds. RBC Capital Markets.
    • Tarrant County, Tex., Cultural Education Facilities Finance Corporation, $150 million of health resources system revenue bonds. Morgan Stanley.
    • Tohopekaligia, Fla., Water Authority, $99.7 million of utility system revenue refinancing bonds. FirstSouthwest.
    • Tucson Unified School District, $61 million of general obligation refinancing bonds. Piper Jaffray.
    • University of California, $760 million of medical center pooled revenue bonds. Barclays Capital.
    • University of Delaware, $131.7 million of revenue bonds. Morgan Stanley.
    • Wisconsin Health and Educational Facilities Authority, $58.9 million of healthcare revenue bonds. Piper Jaffray.
    • Wise County, Va., Industrial Development Authority, $105 million of solid waste and sewage disposal revenue bonds. KeyBanc Capital Markets.

    FAS/DClark – At the moment that would be selling Jan $21.67 puts for $1.50 and buying the Jan $23.33/27 bull call spread for $1.90 which is net .40 on the $3.67 spread that’s $2.67 in the money so a winner as long as XLF holds $14.50.  If you are already in the $17/21.67 spread then just be happy with that as we caught that at a perfect time!

    Shorting/Gel – Nope, CASH!  I am just looking for opportunities as they come along, long or short but 20% and out is my game at the moment in either direction.  VIX is 18.43 so why should we worry, right?  When this thing breaks down, it will probably be good for a prolonged drop that we can jump on IF we are in cash and ready for it.  In between, it could go up or down 2% any day (or both).  

    Buybacks/Cap – How about XOM – bought a ton of their own stock in the $80s.  Ridiculous way to spend $50Bn while China was running around locking up global reserves.  

    ABX new high at $51!  Who was complaining they didn’t see the correlation on Friday?  How’s 4% today?  Much better than gold AND better than GDX!

    DBA/Tusca – I did like them about 50% ago.  Not so much at $30.

    MSFT/Gel – Ballmer just sold about 50M shares.  Guess he needed $1Bn of what the company is buying.  Good scam. 

    Fisher/Cap – I totally agree.  We need bottom up stimulus but we didn’t vote for a Congress that will give it to us, did we?  Interesting points from Fisher:

    Margin debt remains shy of 2007 highs but is fast approaching levels that prevailed before the NASDAQ implosion in 2001; in fact, margin-account debit balances as a percentage of the market capitalization of the S&P 500 now exceed the precrash level of 1987 and 2001.

    Junk yields are at their lowest levels since October 2007. And the leveraged buyout market is back to paying 2006 levels of EBITDA (earnings before interest, taxes, depreciation and amortization) of 6 to 8.5 times, with the recent announcement of Carlyle Group’s reported 11 times EBITDA purchase of Syniverse Holdings echoing the peak of the precrash craze.

    I realize that two other central banks were engaging in quantitative easing—the Bank of Japan and, most notably, our friends at the Bank of England. But the Bank of England is offsetting an announced fiscal policy tightening that out-Thatchers Thatcher. This is not the case here. Here we suffer from fiscal incontinence and regulatory misfeasance. 

    I expressed concern about the purported benefits of a weaker dollar in the exchange markets. Much of what we export is in the form of high-value-added goods and services and in commodities like cotton and soybeans that we produce with enormous efficiency. A not insignificant portion of what we import, in addition to oil that feeds into gasoline prices, is used to clothe and support lower-income earners, the very people suffering from unemployment or job insecurity whom we are endeavoring to help. When faced with a further squeeze on their margins that comes with higher import prices, the Wal-Marts, Dollar Generals, Costcos and other stores where the most impacted people buy necessities will likely react by driving productivity even harder, which, translated, means selling more while employing fewer workers.

    We are already seeing the beginnings of speculative activity in stocks, bonds, buyouts and commodity markets. The rich and the quick are certainly able to exploit these circumstances to get richer. I have no problem with market operators making money; I did so myself in my previous life as a funds manager (before I took the vow of financial chastity and joined the Fed!). But I take no comfort, and see considerable risk, in conducting monetary policy that has the consequence of transferring income from the poor and the worker and the saver to the rich. Senior citizens and others who saved and played by the rules are earning nothing on their savings, while big debtors and too-big-to-fail oligopoly banks benefit from their subsidy.

    The Fed, as I see it, has taken a leap of faith that our political leaders will forge a sensible budgetary and regulatory path that incentivizes businesses to put to work the money the Fed is printing to invest in creating jobs for American workers while averting what the Stanford historian David Kennedy described in yesterday’s New York Timesas “a looming fiscal apocalypse.” We need for the Congress to move quickly, beginning in its lame-duck session. As Winston Churchill said, “We need action this day!”

    Otherwise, the effect of quantitative easing will, in my view, simply result in financial speculation, further investment in more welcoming quarters abroad and, ultimately, in “super ordinary” inflation. The FOMC is taking a calculated risk. If the Congress and the Executive fail to deliver, I believe the FOMC will have to consider changing course.

    Bush/Gel – Too…. many… jokes coming to mind….  

    IBM/Oncmed – Just wait it out.  You can roll the $135 calls to the Apr $140s and if you sell the Apr $130 puts ($2.65) you could even go to the $145s but, since we think the market is toppy, you can just roll them along to Jan for now and pick up $1.50.   Do that 10 times and you are all set to pay back the $11 anyway.  

  128. Markets getting rammed up on a strong dollar, just like Friday.  If someone finds a new correlation…by all means, do tell! 

  129. all the fed needs to do is simply SUGGEST it might scale back it’s latest QE2 by even one red cent and the whole bonds ponzi scheme will totally fall apart. TBT will blast through 50 on it’s way to 60-75 in 6-9 weeks.
    That’s the dream I have…. Now someone name a street after me…..

  130. Phil / Ballmer
    Not a good example… this guy is never right !

  131. Re: my VECO play today… Anticipating a possible breakout, I added to my stock play by adding a ratio short strangle which gives me a 36% discount on the stock purchase. Sold the April 50 calls on a 2-1 basis with a short sale of the 47 puts. Phil… this 36% play beats all the 20 percenters -  ( if the stock goes up – of course )

  132. Strong dollar/Goldman – Wow our expectations have gone down!  The dollar is at 77.165, flat for the day and about half a point over Friday but down from 77.3 mid-day.  Things have been all over the place today and TBT is off 0.5 off the highs back at $35 again.  They are quoting Zoellick like nuts and that’s really what’s driving commodities today despite the dollar holding up.  This is such a silly conversation as gold would have to be $50,000 an ounce to cover all the currency in the World.  That would be cool for rappers, of course but I would predict a rise in crime as gangs roam the streets with bolt cutters to take rings off arthritic fingers…

    SLW making new highs, ABX ramblin’ on.  NAK closing on $10, HMY at $12.50.  Those are my favorite golds…

    CCJ made new highs too!  

  133. In the annals of failed experiments:

    Ireland has boomed in recent years, and it now boasts the fourth highest gross domestic product per capita in the world. In the mid-1980s, Ireland was a backwater with an average income level 30 percent below that of the European Union. Today, Irish incomes are 40 percent above the EU average.
    Was this dramatic change the luck of the Irish? Not at all. It resulted from a series of hard-headed decisions that shifted Ireland from big government stagnation to free market growth. After years of high inflation, double-digit unemployment rates, and soaring government debt that topped 100 percent of GDP, Irish policymakers began to cut spending in the late 1980s in a desperate bid to recover financial stability.
    Irish government spending fell from more than 50 percent of GDP in the 1980s to 34 percent by 2005. For Europe that is a triumph of restraint, given that the average size of government across 25 EU countries today is 47 percent of GDP. And Ireland has steadily reduced its tax rates. The top individual income tax rate was cut from 65 percent in 1985 to 42 percent today. The capital gains tax rate was cut from 40 to 20 percent in 1999.

    However, the key to Ireland’s success has been its excellent tax climate for business. In 1980, Ireland established a corporate tax rate for manufacturing of just 10 percent. That low rate was subsequently extended to high-technology, financial services, and other industries. More recently, Ireland established a flat 12.5 percent tax rate on all corporations — one of the lowest rates in the world, and just one-third of the U.S. rate. 
    Last week, the Irish government conceded that it had previously miscalculated the scale of its debt challenge. It announced that the task would require an additional 15 billion euros in savings over four years, bringing the total sum of tax increases and spending cuts to about 30 percent of Ireland’s total economic output.
    Looks like many countries will be joining the Irish on the road to austerity. But holy crap, tax increases and spending cuts amounting to 30% of GDP. Imagine that in the US!

  134. Looks to me the dollar is headed down… does that mean gold is going up?

  135. Phil / Congress can’t give stimulus.
    All they can give is pork, with borrowed money that they don’t have.
    The stimulus has to come from the economy; the private sector, not the Fed, not the gov’t.
    Gel / Whitehouse … did you go.
    Shadow / Bush …. terrible speaker, I agree.  No phd, but no dummy and good politician.  good man; good heart; real person (more real than most pols at that level).  Maybe b/c he’s not a lawyer !

  136. Yep, everything today is just as good as it was in ’07!  


    Nope, nothing bad can possibly happen

  137. Even after shaking off that 420 call I couldn’t stay away.
     I got in 12 shares of PCLN long at 387. Premium be damned!  Still hold the 330 put. Either way, I hope it’s a gigantic frickin’ move!!

  138. Phil,
    You mention the dollar, copper and oil all the time.  Do you know were this information can be tracked in real time?  I remember trying to look up copper a while back and Schwab, (once again) didn’t offer the exchange on StreetSmart Pro.  (Maybe they should rename their platform StreetStupid Amateur because they’re always a day late and a dollar short!!!)

  139. every freaking day w/ this end of day BS !

  140. SPY - I am really torn here, we’re midpoint between Lloyd’s original prediction of 1250 for EOY and his revised prediction at 1200.  So do I bet that he wants to be right the second time and we trend down, or that he wants to be right the first time and we trend up?  Given that Obama would prefer up, I like the SPY 123/125 Q4 call spread, that’s a double from here to New Year’s….

  141. chris… I do not think the Fed will scale back, but to the contrary will most likely expand further their committment for easing.

  142. IQ / Phil – your point "But if you are measuring intelligence then your sample size is always 1 and your SD is going to remain 15 for each case.  Increasing the sample size may clue you into average but the inexactness of the test itself is never going to give you a better answer on an individual’s score.  That’s my issue with the poor kid that Flips is so quick to write off, aside from the 15-point swing in the test, IQ does not remain constant over time" misses a bit about how characteristics of things like IQ are set up…..long story short, it all started with a bunch of army draftees and a Gaussian curve…..but your point about IQ not remaining constant is spot on! You still see people labeling youngsters at age 6 or 12 and believing that defines the kid for the rest of his/her life.

  143. Don’t know if there are any day traders besides myself here…if so, TNA following a perfect ascending channel the last 47 minutes…making 7-10 cents each way.
    PHIL/Dollar- I’m glass half full on the dollar…Ben needs it up too, you know…

  144. Cap – Good heart!!!?? ROFL!!!!!!!!! Must be his ‘compassionate conservative’ side….lol. He’s lived the life of a spoiled brat and the earth is much worse for him having been on it. Im not a religious person but IF I believed in hell then I would be certain that there is a special place reserved for him.  He is ‘real’ though, Ill give you that.

  145. Meant last 1hr 47 minutes…channel started at 14:00…

  146. DCTH/dclark – Dec8 P to sell against the spread.

  147. Now DCTH is moving….

  148. gel1/silver
    What’s your take on the appreciation of metals…. ie, SLV,SLW,PAAS,SSRI and SWC… how far do you expect silver to run and do you expect a short term pull back any time soon…. I was in back in October, but mssed the recent move..Comments ?!?!?! Thanks….

  149. Exec – just switch to THinkorswim – they have everything. Very convenient.

  150. Wow…EOD selling pressure…how odd!  Channel looking weak at lower limit…nothing a 3 minute mini-stock can’t solve…

  151. Gotta love the 3-minute mini stick…likely to stretch back AHs…

  152. Cap
    I have been in the White House a few times, but I did not attend the functions Bush invited me to. All but one were black tie, photo-op BS dinners…. not my style, but the invits were impressive. I lived in DC part time for about six years, so the flight to DC to attend a dinner with so many "posers" was just not my thril.  I donated a lot of money to the Administration, mostly because I had a total disgust in the Democrat leaders, including Gore and Kerry. I was a big contributor to John Thune, in his overthrow of Daschle ( I still feel very good about that one ) The guy even wrote me a personal letter, as I have never done anything in SD except fly over. I can just say this… a little money spent in political contributions can get you invitations you would not believe.No, I never sent a dime to Obama – and I still feel good about that one too.

  153. Bush is the guy chasing butterflies with a rubber mallet through the grassy field.

  154. See TNA "stretch back" from 60.55 last paint to 60.40 instantly in AHs…easy to make 10-15 cents on that play also, although I’m not sure JRW would approve…as you can get trapped holding the triples.  Fun if your bored…

  155. Arg! Getting killed on PCLN!

  156. Wow, selling into the close – imagine that!

    Boy, I feel out of shape.  One of the miners from Chile got out of a cave after 2 months and ran the NYC Marathon this weekend….

    30%/STJ – I think I used that number this weekend, that’s where we are effectively but this country doesn’t have the will to do it. 

    Morgan Kelly, Ireland’s "Dr. Doom," warns that even more grief awaits the Irish when their long recession finally causes a wave of mortgage defaults. Ireland is "no longer a sovereign nation in any meaningful sense of that term," Kelly laments. "From here on, for better or worse, we can only rely on the kindness of strangers." 

    Dollar/Gel – Normally yes but gold already got a super-pump and might need a dollar drop just to maintain. 

    Doug Kass, skeptical about the prospects of QE2 success, thinks the market has topped. "To me, there’s an artificiality of the program," Kass tells CNBC. "We had ‘Cash for Clunkers.’ Now we have ‘Cash for Stock Market Gains.’"

    Private sector/Cap – In what way does buying their own stock and doing M&A stimulate the economy?  You may as well say the stimulus has to come from the Easter Bunny for all the good that would do.  Your entire premise is everything the Government does must fail and everything Big Business does must succeed but we’ve had a full decade now showing you what total BS that is – do you not even see, just a little bit, how wrong that thinking is?  

    NY Fed’s latest report on household debt and credit maintains the continued downward trend of the previous seven quarters, though at a slightly slower pace. Since its peak in Q3 2008, nearly $1T has been shaved from outstanding consumer debts. The findings suggest that consumers have been actively reducing their debts, not just by defaulting. (.pdf

    PCLN with big pop at the bell!

    At the close: Dow -0.33% to 11406. S&P -0.22% to 1223. Nasdaq +0.04% to 2580.
    Treasurys: 30-year 0%. 10-yr 0%. 5-yr -0.12%.
    Commodities: Crude +0.08% to $86.92. Gold +0.82% to $1409.10.
    Currencies: Euro -0.77% vs. dollar. Yen +0.2%. Pound -0.4%.

  157. Nice job Bio! I tried to get my order in for a few shares as well but the market closed before I hit the send button :( . What a crock! Oh wells…

  158. PLCN  jumping up to 415.00 boy o boy dangerous games

  159. acobra / Silver
    I am in all of thiose positions, and I believe Silver will follow gold in the same historical pattern. Most traders feel the same way. A look at the charts indicates silver is lagging, but that usually is the case. I do not profess to be an expert, but I am bullish for fundamental reasons, going forward. A definitive dilution of the dollar and quantitative easing in many countries throughout the world down the road will keep silver moving up. I am in these positions LONG TERM, as I do not see a reversal on the horizon as far as the fundamentals are concerned. I do not even pay attention to the charts anymore.

  160. PCLN … with the run its had, you would think all of this and more is priced in (and that is what I think).
    Its games …. we’ll see if / when they pull the rug on the momo monkeys.

  161. Gel good for you.  Getting rid of Daschle was a good thing for sure.
    I am not one to give money to politicians and like you I have no need for hanging with posers who want to get close to power and/or leech off it.

  162. gel1: In Colorado, LEDs are commonly used in street  lights. I don’t know how much it costs to retrofit a conventional street light with LEDs. Many years ago, LEDs also made their way into headlamps – brighter and longer lasting. Having run at night in some ultras – the LEDs are great.

  163. Dollar, etc/Exec – Sure, it’s /HG, /DX and /QM on TOS’s futures, even on the Paper Trading account you can see them (which is very nice of them). 

    SPY/Mr.M – You’d have to pay me more than 100% to bet that SPY will finish higher than this!

    IQ/Snow – While I think testing is useful, I don’t think it ever tells the whole story.  What’s really nuts in this society is that, even when we do test kids, we don’t take the kids that test out on top and track them into top-level schools and colleges – leaving it up to the fate of the free markets to see what kind of education they get.  Imagine how many great minds are wasted in our survival of the financially fittest society…  

    Day Traders/Goldman – I don’t think too many people have that long of a time-frame these days…  8-)

    Dollar/Goldman – Ben has decided that inflation will set us free but he tragically doesn’t differentiate between top down and bottom up inflation and that is going to doom us.

    Donations/Gel – Yes, what worries me about our system is not that politicians can be bought but HOW CHEAPLY they can be bought for – that is disturbing!

    Bush/Kustomz – No, sadly Bush was actually this guy.  Scarborough did a funny compilation and had analysts debate whether or not Bush is actually an idiot.   It’s funny to see Bush look down to read every other line when he speaks and think of Cap’s constant teleprompter criticism of Obama.  Reading is a skill, you know… (PCLN): Q3 EPS of $5.33 beats by $0.36. Revenue of $1B (+37.1%) vs. $974m. Shares +6.4% AH. PR)

  164. Private Sector / Phil … you seem to be mixing and matching concepts.  I said nothing about buying back stock and doing M&A as being stimulative.  I don’t think it is.  M&A, while good for investment bankers, lawyers and private equity, is bad for jobs.
    All I said, or meant, was growth in the private sector is stimulative to the economy and gov’t borrowing for allegedly "shovel ready" pork projects and other spending for the sake of spending is not (and to the extent it provides any boost at all, it is temporary).

  165.  Thanks, Phil! I bought back half of the AAPL contracts and then followed the rest of your plan for the other half.

  166. clusterstock clusterstock 


    Fed Governor Warsh Slams QE: "The Federal Reserve Is Not A Repair Shop" by @thestalwart

  167. I was so tempted to sell Nov $450s, but after the psychological shock of CMG on this Q3 I could not do it. Anyway I can’t afford at this point to increase my margin or risk another out of control position since I’m already dealing with an oversized CMG play. This is a big opportunity cost for me but it has served well to teach me a few lessons..  very valuable.
    Kinki, I read your comment a bit late but I had a couple of suggestions for your short Nov $390s, but it was too late. Part of the learning process with CMG, but I’m not sure if your whole intention was to fall to this point where you would be short during earnings announcement.

  168. Cap / Politics
    I have an underlying disgust for politicians in general. I see them as oportunists and parasites, and do not believe they as a group are qualified for the task that is required. These pompous bastards are revolting for the most part. There are a few I like, and Thune was one of them, and I was disgusted with Daschle. I guess you could say, there are many I contribute against, so my interest in influencing an election, is for defensive reasons, and not a raw-raw overwhelming love for any.

  169. Phil / Donations
    It is not the amount of the donation that freaks me out… but who it is from has my concern.

  170. NYC marathon – and Jared ran 5:13 — ouch!

  171. CMG really is on a rip… The only way to stop this one is to sabotage the Beano factory, and sentiment for all those burritos would fall.

  172. I don’t have much for these "celebrity" runners, even the Chilean miner. I trained for 3 months and ran 2:34. It isn’t an achievement to "finish a marathon." The achievement is challenging yourself, how fast can you go, how far can you push yourself?
    When you look at life this way, everything gets brighter. Food tastes better, relationships are more rewarding.
    Investing is the same way. Is it an achievement to "finish"? It’s about challenging yourself, producing change within (as with running, it’s a chemical change, with investing a mental one). I hate to sound like an "After school special," but that’s my two cents on it.

  173. Gel / Politicians … well said, my thoughts exactly.
    Gel / Insider selling:
    CMG / I gotta tell my boys at Burrito box to go public … its insanity !
    PCLN / kinski … if you are short the 390′s, no need to fret …. very salvageable and rollable; let’s discuss tomorrow.

  174. BiodieselC you ran a 2:34 in the NYC marathon?

  175. chris / kudo’s to you on your marathon running;  IMO it IS an achievement to finish (at least if you are running, not walking), whatever your time.  Its a gruel man.
    And not for me … I hate running.   I run around the bases and up and down the court; that’s it …. I do like to bike …

  176. HHFIV
    I believe LED industry is in for substantial growth. These light use less power and last much longer than conventional lights. The Chinese are really behind the expansion of this technology, as they are promoting this lighting for street lights as I mentioned, but also factories and businesses. VECO not only has a nice story, but also has domination and good numbers. Early Feb the company reports again, and I think they will make believers of those who might doubt.

  177. I can’t believe anybody would buy even one share of GM… unless it is some sort of crazy arbitrage scheme.

  178. Brett Favre yesterday … 446 yards passing … a CAREER HIGH … at 41 …. on a broken ankle … A M A Z I N G
    (despite all is baggage / flaws).

  179. chris… I agree. Achievement is essential to happiness, and it is proportional to the effort invested.

  180. Republicans control redistricting and will make any chance of retaking the house difficult in the next several election cycles. Hope the Dems had fun while it lasted! The one hot-button issue (everyone has at least one, right?) I wish they had passed is HR 2267 / 2268 (sponsored by my very own Jim McDermott, lover of true freedom). This bill is, at its most fundamental roots, about personal responsibility and true libertarian freedoms, and would give the added benefit of making the US compliant with international finance law (WTO kinda thing).  This is all but dead now that "personal responsibility" hypocrite republicans will surely block its passage to pander to their freedom-hating "Christian" base.
    Hey "Tea-Party" – this is one (rare) instance where you can break from your largely thinly-veiled pro-republican stance on social issues, and I’ll actually be watching.
    Redistricting link 

  181. PCLN/Cap:  Thanks, I appreciate that.  Its a small position, but a move of that magnitude going against me is heart-wrenching.

  182. kustomz 
    career worst …..

  183. gel – so you would recommend a position in CREE. Despite the recent run on every other stock, their’s looks pretty good actually

  184. chris / CREE
    I am not in this one. I like the fundamentals and the chart looks attractive, BUT I do not like the P/E. It is 3 times the P/E of VECO, and Veeco is more diversified. Maybe both are well positioned, but I prefer one over the other.

  185. Ravalos, et al on shorting…
    I feel you your pain, I am fighting short calls on AMZN, NFLX, and PCLN… what has helped (a bit) is selling delta neutral front month puts in order to mitigate the losses and help finance the rolls. For example, I was way down on a PCLN Jan. 400 short call, which is down a lot more now that is has popped circa 410 after earnings. However, today prior to earnings I sold a Nov 380 put as protection, which likely now will expire worthless. Next, I plan to roll out my Jan short call (probably Jan 450), and sell against it a Jan short (probably Jan 350) put to make a new delta neutral position, wait it out and adjust as needed.      

  186. kukuri, can you explain how you decide on what is a "delta neutral" position ?

  187. Oh and yes I agree with all the Republicans here, we need to return to that golden age of governance, as demonstrated in this video.

  188.  Here is the GOP solution to the deficit…
    Aside from "cutting waste," DeMint’s one big idea for saving money is to repeal the Affordable Care Act. And what does he attack the Affordable Care act for? Cutting Medicare! So he’s essentially conceding that his "deficit-reducing" plan involves increasing the deficit.

  189. Cap, I think there are others here who could explain better than me, but basically it’s having two short positions whose deltas equal 0 or close to it. For example, the pre-earnings delta of PCLN Jan 450 call was +.26, so I would look for something like the Jan 350 put at -.27 delta to establish delta neutrality. Be warned though delta can shift dramatically each day, so you have to re-balance at times. All bets are off if PCLN takes a violent sustained swing up or down, that would be worst case. But, at the current AH price of 410, that gives me a price band of 350-450 where both sides will expire worthless and I can salvage a small profit from a very painful short call gone amuck. I don’t like to play short strangle on crazy stocks, but it’s better than trying to fight the short battle on stocks like PCLN when the full weight of QE2 is coming into play. I see this as the non-panicky way to hang in there on the short side to a degree, with a plan to salvage a small profit from a big loss if PCLN can settle with this $100 =strike range. Even if PCLN settles at say $470, I will capture my short put profit and roll out the short call into say for example the April $520.   

  190. Bio- where are you from? You call mcdermott “one of your own” I’m from Washington state and went to UW for my undergrad…. I’m a liberal guy but will always hate him. Going to Iraq before our invasion was one of the most disgusting things I’ve ever seen a politician do (even if his position of being against the war, stating that Iraq didn’t have WMDs, etc was correct).

  191. see jrohema, we can agree on stuff…. McDermott is a reprehensible dirtbag; you gave one good example of why, but there are others.

  192. PCLN/Kinki – The trick tomorrow will be to take advantage of the pop and roll up into a higher call.  Your caller will lose most of their premium, maybe $25 but the Jan calls will gain a huge amount.  Likely you can roll to the Jan $430s even, which is better than you could have done today.  If you can’t roll up to at least the $420s, just wait as things will calm down after the pop.  Remind me in the morning and we’ll see where it is.  Due to acquisitions in Asia, PCLN’s International Operations contributed $531M which was up 80% but up 67.6% without the favorable dollar exchange.  Looking forward, they predict $200-210M next Q ($3 per share).  

  193. Kink -PCLN  feel your pain I sold  NOV 360′s and 370′s will be looking to roll around end of week

  194. Gimme a break: he went on the premise that no WMD would be found and that W would lead us into war no matter what.
    Since he was right on both accounts, by default, de facto, common sense, or whatever you want to call it, HE WAS RIGHT. HE WAS SO GODDAMN RIGHT it makes me peeved I even have to point it out. Certainly, all of the pretexts for this "War" were proven false to the point that its disgusting and sad we don’t even discuss it anymore. And so, in hindsight, if he was WRONG you could call him a dirtbag, but since he wasn’t you better damn well check the colors of your star and stripes because I’m not sure we’re even playing for the same team anymore.
    And still to this day NOT ONE PLAUSIBLE EXCUSE, from the perspective of causality or national defense for any aspect of the entire "Iraq War" has ever been made known to me from anyone on the right.

  195. biodiesel – nice – less than nine minute miles! i am taining for pf chang mini marathon in phoenix.

  196. Bio- so where are you from:)? I already said he was correct, but the manner he went about it was wrong. He is not some stupid celebrity with a high school education who believes his fame now gives him the expertise to tell us how to vote and/or feel about issues, HE IS A US Congressman!!! Let me tell ya something buddy, this war will cost me a year away from my 2 y/o daughter starting next September… There are 10s of thousands in the army that have spent 4+ years in the AOR away from their families since these wars started…No one likes it. But we like BS political stunts like the one Mcdermott pulled even less…

  197. Just viewed Inside Job, save your money and catch it on DVD…nothing we all don’t already know that’s been covered 1000x. Sad there were only 7 other people in the audience, but after the movie there was a little pow wow…very interesting stories to say the least. French couple called most Americans stupid, that was my cue to leave….sadly I haven’t an opposing view on the matter.

    Banks rob people with the Governments permission, go broke, then rob people again, most people go broke while banks reap billions more..they point the fingers, we all know the culprits, some squirm, some deny the facts and the ones on the other side of wrong were giddy and filled with delight they were right. End of story.

  198. Kustomz:  I see rottentomatoes gave it a 96%
    We probably just follow financial stuff more than most, who aren’t aware of many of the facts.  I would say it’s ironic for the French couple to call us stupid considering their recent behavior  "we’re upset we have to work longer, let’s strike and burn stuff".

  199. hum, you have to respect their resolve to get what they want, whether or not one agrees with their methods. Maybe French Idol isn’t all that important. If this Film went main stream it would def cause some to pause and think, but I suspect that would pass quickly. Your right, we are a bit desensitized since its all we think and talk about every single day ;-)


  200. In France the folks are rioting about not working any longer than they have to…… however in contrast the folks in China are concerned about not working enough.

  201. Probably the wrong place, but I was awake and watching
    the NET $ (1.09)%, while the dx/y = +.33%
    The Euro is down hard, so the dollar should be up, but is being held in check by the Yuan and the Swiss Franc
    The $-Yuan is (.49)% a very large move for a pegged relationship, one of the biggest I have seen in a single day, so Yuan really floating higher

  202. NET $ (1.06)%
    the $-Yuan is (.60)% now, so the Yuan and Franc are determined to keep the $ lower, as the Euro falls, very strange

  203. " in contrast the folks in China are concerned about not working enough"
    That must be the reason the Chinese worker is committing suicide at such an alarmingly high rate, the lack of working hours.

  204. "That must be the reason the Chinese worker is committing suicide at such an alarmingly high rate, the lack of working hours."
    That’s NOT funny… the % of Chinese worker commited suicide is not high,