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Flip, Flop and Friday – Options Expiration Spectacular!

Flip, flop & fly

I don't care if I die

Don't ever leave me

don't ever say goodbye

Things were going according to plan (even though the plan was horrifying) and everyone was happy but then Uncle Ben had to screw it up this morning when "The Bernank," speaking in Germany, indicated that the Fed would pull the plug on QE2 if they thought inflation would rise higher than "2 percent or a bit less.

WHA-WHA-WHAT?  Keep in mind that WE are the only country on the planet Earth that is still pretending inflation is under 2% and he's making this speech in China, where inflation is 4.4% so what do you think happened?  

Of course, if you can answer that, you are smarter than the Wall Street Journal (but then again, who isn't when it's being run by people like Roger Ailes, who just said of National Public Radio: "They are, of course, Nazis.  They have a kind of Nazi attitude. They are the left wing of Nazism.") who went with the headline: "Dollar Sinks Despite Chines Rate Rise" because they clearly do not understand the workings of International Monetary Policy, which I would find disturbing if the Wall Street Journal were a trusted source of financial information and not just a right-wing mouthpiece.  As our friend Jon Stewart so aptly pointed out last night, there's a pretty large disconnect between Conservatives and reality these days and it should be no surprise to any of us that this carries over to their trading positions.  

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
George Soros Plans to Overthrow America
Daily Show Full Episodes Political Humor Rally to Restore Sanity

Fortunately, PSW readers are well aware that any indication by The Bernank that the money spigot may one day run dry handily trumps a 0.50 increase in the reserve requirement of Chinese Banks.  Bloomberg get's it (liberal morons!) with the very succinct headline "Bernanke Steps Up Stimulus Defense, Turns Tables on China."  While Bernanke didn’t identify China in his speech, he took aim at “large, systemically important countries with persistent current-account surpluses.” Bernanke’s comments come a week after leaders of the Group of 20 developed and emerging nations meeting in South Korea failed to agree on a remedy for trade and investment distortions. At the summit, President Obama attacked China’s policy of undervaluing its currency. 

China has tied the yuan to the dollar to promote exports that helped produce the fastest gains in gross domestic product of any major economy. China, which surpassed Japan’s GDP to become world No. 2 in the second quarter, recorded 9.6 percent annual growth in the three months through September. It holds about $2.6 trillion in foreign reserves, the most in the world.

German Finance Minister Wolfgang Schaeuble said Nov. 5 he was “dumbfounded” at the Fed’s actions, which won’t aid growth and will instead contribute to imbalances by driving down the currency. U.S. monetary policy is creating “grave distortions” and causing “collateral effects” on faster-growing economies such as Brazil, Meirelles said in October.  China’s vice foreign minister, Cui Tiankai, said Nov. 5 “many countries are worried about the impact of the policy,” echoing concern across Asia over the risk of a flood of capital that causes asset bubbles. Economies from Taiwan to Indonesia and Brazil have taken steps to counter inflows of speculative money, and South Korea yesterday said it will back legislation restoring a tax on foreign investment in the nation’s bonds.  

None of this is particularly bullish for commodities, which is why we got right on top of this in Member Chat at 5:43, when my note to Members was: "Interesting, Dollar is being taken down while the Bernank speaks. It jumped to 78.55 but now smacked back down to 78.25 and that sent oil from $83 to $82 and back to $83, which makes them a good short play below the 83 line in the futures."  Oil just (8:30) bounced off the $81.50 line and we are not greedy at PSW, especially at $5 per penny, per contract on the oil futures!

Like the Army commercials, we can make more money before the markets open than most people make all day… 

So happy Friday to everyone!  We're off to an excellent start and Members should make sure they read the morning comments to get their bearings on what is already an exciting day.  We killed our long DIA calls and, of course. flipped a little short into yesterday's rally but just a couple of gamble to keep us from getting bored with our cash positions.  Yesterday's trade ideas were (and this is the last day of inside trading discussions, from now on, you'll need to buy the newsletter):  

  • IWM – I’d say that 72.17 should signal a breakdown and I’ll be surprised if they break 72.78 so maybe worth a speculative short there. The $73 puts have very little premium at .80 so figure .40 would be a good DD on those with a stop on a cross over 72.78.
  • CMG – Nice pin action at $230. You can sell the Nov $230 puts and calls for $4.70 if you are feeling brave (rolling the losing side to next month, if any).
  • PCLN – Another chance to go short on them. If you take 1/2 of a small position on the Dec $430 calls at $9.20 (selling them short) then the plan would be to roll those to 2x the $450s (now $4) if they break over $425.
  • DIA Dec $113 puts are $2.57 and you can sell the Nov $112 puts for .52 which protects you (delta 56) from a 100-point move up in the Dow while a move down won’t hurt because the Dec $108 puts are .85 so, at worst, you are in a $5 vertical that’s working for net $2.05. It’s a good way to set the (hopefully) naked Dec $113 puts up for weekend protection.
  • TTM – Well you can’t sell puts but you could buy 2x the Apr $28/33 bull call spread for $2.60 and that pays $5 at $33 (+92%) and the delta differential is .22 so a $5 drop in the stock will cost you 2x $1.10 or $2.20 which is as well protected as you would be with the short calls.
  • NABI – Good call, they are in that $5 sweet spot too. At $5.22, the June $5 puts and calls fetch $1.75 for a net $3.25/4.13, which is a nice 46% profit if they hold $5 so a nice way to initiate a position. 

That's how we do things intra-day, we shorted IWM, played CMG to peg $230 (and as long as they open there we can kill the trade with a nice profit without waiting all day), shorted PCLN again, did a spread but short on the DIA as we didn't think they'd drop too much today and played TTM and NABI long but hedged.  People have been asking if we do stock trades and the easy answer for that is if we are shorting PCLN or CMG with short calls or going long on TTM or NABI – THAT is a short and long call on the stocks.  Stocks are simply less fun to trade in this kind of market, options help us mitigate our risks as well as provide good leverage we can use while keeping ourselves mainly in nice, flexible cash while this crazy market tries to sort itself out.  

Of course we plan on being mainly cash and a little short into the weekend and (spoiler alert!) next week as well as we only have 3 real trading days and then Thanksgiving so probably low volume and no way do we go into a 4-day weekend with a lot of risk exposure.  We have not yet violated the Beta 3 pattern (see Stock World Weekly) and Ireland is still up in the air (but our long on AIB has already paid off nicely!) with Portugal already shaping up as the next target for the "bond vigilantes."  Ireland seems to have already lost their battle with Pimpco with this great quote from the opposition party's Michael Noonan

Cowen has squandered independence for a German bailout with a few shillings of sympathy from the British chancellor.  The government should be ashamed that Fianna Fail should be the ones to surrender sovereignty.

As I said in yesterday's post, unlike Americans, at least the Irish know when their government is screwing them.  Medicare cuts are already starting to take place and the deficit commission has Social Security on the operating table for a benefit-ectomy and the Republicans already voted down and 2M Americans will be cut off from benefits in just 40 days with the other 6M now on a ticking clock to possible bankruptcy – Merry Christmas Mr. Boehner, God bless us, everyone!  

The Department of What Little Labor is Left reported yesterday that fewer new businesses are getting off the ground in the US as start-ups of job-creating companies have failed to keep pace with closings, and even those concerns that do get launched are hiring less than in the past. The number of companies with at least one employee fell by 100,000, or 2%.  That was the second worst performance in 18 years, the worst being the 3.4% drop in the previous year.

 Research shows that new businesses are the most important source of jobs and a key driver of the innovation and productivity gains that raise long-term living standards. Without them there would be no net job growth at all, say economists John Haltiwanger of the University of Maryland and Ron Jarmin and Javier Miranda of the Census Bureau.  "Historically, it's the young, small businesses that take off that add lots of jobs," says Mr. Haltiwanger. "That process isn't working very well now."


Until we begin putting in job-promoting programs, we remain in a "Dead Parrot" economy and all the Fed's stimulus and Mervyn King's men will not put our economy together again.  

Oh well – try to have a nice weekend, 

- Phil

Top pic credit: Elaine Supkis at Culture of Life News 

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  1. NET $ +.15% lowest of the day so far, dx/y = (.14)%
    High was .89% at 7:00est
    F = 1193.00, overnight:  high = 1199.75, low = 1190.50

  2. Yeah, those poor NPR execs.  Ailes should know better.
    Better terms to describe the NPR dipsticks would have been:
    Intolerant morons.
    Pond scum.

  3. The Bernank was NOT suggesting that he would pull the plug on QE-2.
    Rather, like an alcoholic, he insists that he doesn’t have a drinking problem and can stop any time he wants to !

  4. Phil, now you get your news and political views from the Daily Show ? 
    Good group think there …
    Although the mocking of Beck was funny …

  5. China starts the tightening program….

  6. Oh Cap – this one is even better by Colbert…..first 12 min is a classic.

  7. PODD/rj – the selloff was because of several other companies getting delays with their products, most notably DXCM, who PODD works with.  It is a delay until most likely 2012.  Revenues are fine, but we don’t want to catch a falling knife, thus my entry suggestion…

  8. Amazing how Soros gets away with it.  Absolutely amazing. 

  9. While I didn’t read the speech itself, I kind of came away from the article on CNBC that the Bernank was doing the right thing with QE.  We have GOT to try and shake China off our tail.  To me, our dollar is over valued.  To me, there yuan is definately under valued.  Yes, we want to stave off deflation.  But I think this is really about flooding China with hot dollars and forcing their currency up.  I agree with the Bernank.  Their growth model is unsustainable.  We cannot continue to run such a huge trade imbalance with them.  We need to close that gap.  To make up for it, they need their consumers to step up and buy more.  How do they do that?  With more money in their pockets or with more buying power with the money they already have in their pockets.  It’s bitter medicine for all of us, but in the long run I think the US and China will be better off for it.  Now, if there is a way to debase the dollar without causing inflation in commodities I’m all for it.  But as far as I know.. there isn’t one.  Bueler?

  10. NET $ +.11%, dx/y = (.05)%

  11. MELA gets approval…  The FDA continues to amaze me.

  12. NET $ +.06%,  dx/y = (.02)%
    C =1194.91, F =1193.00
    10yr = (.02)%,  30yr = (.51)%
    oil = (.42)%,
    VIX +2.08%

  13. Phil
    Looks like you nailed AIB on those 1.50 Calls   They seem to be on a tear.   What would you recommend on these holding 20 contracts.  Do you think that it will pullback after Ireland is not fixed after they were fixed and so forth like Greece?
    That Jon Stewart clip is a ROFL piece.  I think I’ll watch it again.

  14. …..That was the panel, the FDA group is next and it was a 8-7 vote.

  15. Matt,
    Good points.

  16.  Wow. Seriously. We might as well just roll the dice instead of trying to predict what the FDA will do….

  17. any one have a link to the new commodity margin requirements announced

  18. market dropping dropping dropping
    PCLN CMG blissfully unaware, stay green

  19. NET $ +.28%

  20. Phil:
    On the Dec DIA puts: is this trade an in and out or good through the weekend? Should I complete the spread selling the dec 108′s? Thank you.

  21. Good morning!  

    Nothing to report as we seem to be positioned just about right but it’s options expiration day and anything can happen.  

    If I had to pick a day trade for fun, it would be the DIA Nov $111 puts at .13 as we could have quite a sell-off later today. 

    The CME is raising margin requirements on lots of commodities so DBA Dec $28 puts at .40 are a fun way to play a pullback there.  

    Other than that, same old levels we are bouncing between in our new zone and, until 3 of 5 are read, it’s just a bullish consolidation but, of course, we have a lot further to go down than up so certainly cash and a bit short into the weekend is the way to go..  

    • Breakout LevelsDow 11,500, S&P 1,220, Nasdaq 2,600, NYSE 7,750 and Russell 725
    • Up 10% (must hold)Dow 11,220S&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 

    Oil is already failing $82 and if you are going to take a long over the weekend, it should probably be some USO Dec calls, like the $35s, which are now $1.15 but hopefully less than $1 later.  That would make a nice upside hedge as today is probably the last day they need to dump  contracts before the rollover on Monday. 

    Be careful out there, 

    - Phil


  22. I do not understand what happened with my WYNN callers (instead 110 have appeared 102)

  23. NET $ +.64%,  dx/y (.14)%
    C =1190.66, F =1188.50

  24. WYNN/Phil:  They paid out an $8 special one time dividend yesterday so it took $8 off the stock price.

  25. The above was directed to roma, sorry. Force of habit.

  26. kinkistyle


  27.  Wow Phil, your play for CMG on the $230 line would have been a huge winner, but that was really a big gamble expecting to roll the losing side, but given the stock’s price today, the result will probably be the BEST possible scenario, closing both sides (call and put) on the winning side.. 

  28. FYI – The U.S. House of Representatives failed to pass a bill that would have extended unemployment benefits to millions of people. Even if an extension does end up being ultimately passed, there could be a delay in getting this through given the limited amount of working days left in November. As it stands, without an extension, nearly two million Americans are set to fall off the rolls in December (according to the Department of Labor), which would not be great for personal income (we estimate a $30 billion annualized impact in December alone).

  29. NET $ +.48%,  dx/y = (.09)%

  30. NPR/Cap – No politics but all you terms are better than calling people Nazis, which polite society considers unacceptable.  Good take on Bernanke but even the thought that he MIGHT stop is not good for the markets since infinite QE is priced in already.  

    Colbert/Pharm – Also great! 

    Consume more/Matt – By the way, your commentary is much funnier if I imagine you speaking in the computer voice and looking like a cartoon bear.  We HAVE to figure out how to run chat like that all day!  Anyway, Chinese people make $2,000 a year and spend 40% of their money on food – what are you planning to sell them?  We don’t make things cheap enough to sell to Americans – there’s no way the Chinese can afford our crap.  That solution is a long, long way off and – as Keynes said, in that long run – we’re all dead….

    Wow, oil down to $81.30, pulled that sell trigger too early on the futures!  

    AIB/DD – Actually, as I said yesterday:  TAKE THE MONEY AND RUN.  I doubt the Irish bailout will go smoothly and they should pull back for another entry opportunity that is less speculative and longer-term.  

    FDA/Pharm, Hannah – That’s why I do treat all those decisions like craps rolls.  I find that you can read "expert" opinions until the hormone-producing cows come home but you will still do no better than 50-50 determining these decisions in advance.

    CME/Mike – I don’t see a list.  CNBC said they would put one up but I don’t see it.   

    PCLN, CMG/Cap – Just pin action.  I’m not expecting a big dip because of that but Monday could be crazy if they don’t get good news out of Europe.  

    DIA/DClark – If you want to speculate over the weekend, I’d take half off and go with the other half but, as a hedge, it’s game on for the weekend.  We don’t WANT to sell Dec $108s, that’s just the fallback if the short Nov puts end up in the money and HAVE to be rolled.  At the moment, they are .68 (down .16 from the .52 sale) and the 2x Dec $113 puts are at $2.85, which is up 2x .28 so net .40 is a nice gain and that makes for a cheap short play over the weekend (net $2.07) if you drop back to 1x the Dec $113 puts.  If, on the other hand, we get a strong sell-off later, then you can do a 1x roll-down and sell 1x of the Dec or do a 2x rolldown and keep the 2x Dec puts but we’ll have to see what happens.  

    WYNN/Roma- They did some kind of dividend payout today and all the options adjusted.  No big deal. 

    And what Kinki said!  

    CMG/Rav – You don’t wait to close those out unless the whole market is flatlining.  The $230 combo is now $2.40, down almost 50% but the pin looks good at the moment so you can be brave if you are feeling it but I like offering .50 to take out the caller and .50 to take out the putter early on.  

    That may be all for the sell-off folks.  Pin action is in the air and the dollar was rejected at 78.75 so watch that line as well as 1,190 on the S&P, which is what they are trying to hold onto for today’s close.  

  31. I agree with Matt -
    The Bernank is in an impossible position -
    Congress which should be making sure we don’t have massive unemployment is instead cutting-off benefits – so there is no hope of another stimulus package (First one was too small to do anything) –  I  don’t care how they achieve greater employment – be it a liberal or conservative idea – but they don’t seem to have any ideas at all
    Bernank knows Congress won’t act so he is doing what he can -
    I hate QE2 because it seems like a tax on savers – but the Bernank has no good choice 

  32.  DIA Nov $11 Puts at the $0.13 Bid price… but doesn’t look like it will fill

  33. Phil, If you have a premium account you get everything, including the newsletter right?  That was the way I read it, but I thought everyone on this chat would be premium members, so perhaps I was missing something.

  34. It seems to me that The Bernank’s threatening to pull the QE2 plug is just that, a threat or poker bluff …. in order to calm down his critics and to chill the market. No way do I believe he would actually stop the QE2 shuffle.

  35. Pharm, that is crazy that the people in control of the house are playing these games so close to the holidays!! On 1 hand I don’t want to people to suffer but on the other, I almost hope they continue with their reckless policy.I’m sure those 2 million people will make a difference in the election.

  36. These Are The 15 Housing Markets That Will Get Crushed The Hardest By 2012

  37. NET $ +.15%
    C =1190.44, F =1189.25
    oil (1.03),  gold (7.10)

  38. Phil,
    Im getting a little break today on the short SKX 23s, should i buy back and sell which expiration and strike to recoup the $1,000 loss still?

  39. Judging by the international reaction to our QE2.0 program, I realized that we are now an huge exporter nation. Except our biggest export is INFLATION.  All our printed money goes overseas now.  Its brilliant actually.
    Turn down the lights, China, because TheBernank is going to sex with you.

  40. haha Phil, I agree.  With the computer talking bear.. but my point in shaking them loose of the peg wasn’t so they could buy more from us but that they can buy more from themselves and not rely on exports to sustain their economy.  They have to become more self sustaining internally.  If their currency is worth more, they can buy more of their own plastic and not rely on us to keep their masses employed.  A rising yuan will make their stuff more expensive to us and gradually ween us off of their wares and force us to look internally for more goods.  It is possible we could manufacture again.  Not the really cheap stuff.  We can never compete with them there.  But the stuff on the margin.  We could possibly stem the tide of our jobs going over seas if it were cheaper to make them here.  That’s what the German’s and Japanese have found to be true.  Other countries, not China, could also make the same decision down the road once our dollar is lower.  Currency debasement is just like a tariff.  It helps internally.  The difference is a tariff helps in the short term whereas a cheaper dollar would help in the longer term.  I know it’s a bitter pill.. but we are plum out of the sweet ones.

  41. Good morning,


    IWM    70.58, 71.03, 71.57, 72.17, 72.51, 72.76, 73.49 and 73.91

  42. Hello Phil, I have a couple of strategic questions. First, you expect a market collapse the next week. On what? (Europe, China, municipal bond crisis, some very bad US economic news…). My second question is that you expressed an opinion in May that the fair value of Dow is 10700. More recently, you expressed opinions that the fair price is 10200. What is the basis behind these estimates, and why did they went down while corporate profits/outlook went up and bond yields went down?

  43.  anybody know what happened with SPWRA? so much down today

  44. Kink, an article I linked to yesterday spoke about how the world is kind of done playing nice on this currency issue.  Protectionism, in one form or another, is on the rise.  The largest volume trading firm, Knight, was saying the emerging nation growth story is over.  From here on out protectionism is on the rise and trade will suffer.  The Bernank is going to stick it to the world and there isn’t a whole lot they can do about it but piss, moan and raise their own barriers to diminish the affects of the Bernank’s pelvic thrust.  They could dump bonds but that would hurt them, too.  We’ll just print more.  I guess the only real alternative is dare I say…..   WAR.

  45. NET $ +.30%
    POMO train coming through

  46.  DIA Nov $111 Puts – Picked up for $0.09 !!!   Come on sell off…. 

  47. Phil:  Is today’s downgrade of SPWRA and the disappointing revenue forecast and the big drop in the stock something you’d take advantage of here (selling puts?) or would you wait till the market takes a hit?

  48. What jbur said and you would think" the boys" would remember that the inflation number is manipulated too.

  49. so far I can find nothing on the new CME margins for various commodities

  50. NET $ .15%, europe close in 30 min

  51. TSLA still trying to break out at $32.50, up 100% since IPO low.  

    The Bernank (we have to make this catch on!)/Samz – I agree that somebody has to do something but what Ben is doing is WRONG!  QE does not help people get jobs unless that job is as a managing director of Goldman Sachs.  You can’t possibly create enough jobs to justify the $1Tn destruction of US wealth for every 1% the dollar declines.  All you end up doing is creating such devastating poverty in the bottom 90% that the definition of job is reduced to the point where a greeter at WMT is considered fully employed for people who used to make $50K on an assembly line.  We are being financially bombed back to the stone age, pure and simple.  

    DIA/ITrade – I think it shot up pretty fast from where I priced it and we didn’t get enough of a bounce.  I hate to chase things like that, better off waiting a bit and seeing if we get a shift back up.

    ISRG making 52-week lows – What’s up with that?  

    Premium/Trad – That’s right you get access to everything on the site except the SUPER PREMIUM trades like xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx – xxxxxxxxxxxxxxxxxxxxxxxxxx – xxxxxxxxxxxxxxxxxxxxxxxxx.  Basic Members have limited and delayed access to this chat room and there will, in the near future be hour-delayed voyeur memberships available for people who can look but not participate.  No one but Premium Members can see the intra-day chat of other Premium Members.  

    Bluffing/JBur – You are probably right but The Ron Paul is coming in January and nobody knows what will happen when The Ron Paul gets The Bernank in the hot seat. 

    Housing/Mike   – Wow, they are predicting Armageddon for Florida!  Atlantic city falling from $153K today to $112K in 2 years?  That’s pretty damned pessimistic!

    SKX/Amatta – I would be much better able to answer that if I had any idea what you meant.  You have the what?  Nov $23 shorts.  That’s good.  We thought they’d run up into expiration and they are.  They are still $1.80 and you have to roll them to something like the Jan $21 puts, now $1.60 so I’d offer an even roll and just be happy if you get it, which you should as the last of the premium drains out.  

    LOL Kinki!  

    China/Matt – I get it and you are right but saying it, even if it’s a good idea, does not make it so.  China’s entire economy, about 80% is based on exports.  The entire concept of the Chinese economy does not function without exports and you can play all the games you want and you will not fix that this decade and, if you try to "fix" it artificially, you are more likely to just break what they do have.  Also, why would they change – it is the goal of every successful economy to be a net exporter – you are fooling yourself to think otherwise.  This planet is in deep, deep trouble as we approach full development and, as I’ve said before, Alexander wept because there were no Worlds left to conquer.  The history of the World is full of nations that stopped producing goods for external sale and it’s not pretty.  As you say, we could possibly this and possibly that but that’s up to us – you can’t put the ball in China’s court and say "Hey, we will continue not to invest in infrastructure or education or in building American industry but you have to promise to just buy whatever pathetic crap our current system can produce."  

    For one thing, as I pointed out a while ago, manufacturing is down to 12% of our GDP from 60% in the 50s.  It took 60 years to wreck our economy (although most of the damage was done from the 80s on but if I point that out it will seem political) and it would take probably at least 20 years and cost Trillions of dollars to build it back up.  THAT IS NOT GOING TO HAPPEN!  The voters just proved that – we do not have the stomach to rebuild America ourselves so we are putting our faith in the magical Big Business fairies, who promise they can fix everything as long as we leave them along and don’t shackle them down with taxes and regulations.   People who believe that crap deserve to be unemployed! 

    From China’s perspective.  The US is down from 60% of their exports to 30% over the past 20 years and they intend to make us 15% of their exports at the end of the decade.  It’s a big World out there from China’s perspective and while you are whining about how they should help us by buying our crap, they are in Africa helping to build infrastructure to facilitate the development of their next major market because people who make $2,000 a year CAN make money selling things to people who make $800 a year!  

    The only way it will be cheaper for us to make things over here is for our wages to move closer to China’s.  What’s more likely – that our $40,000 household income goes down closer to $20,000 or their $2,000 household income goes up to $20,000?  Of course we will meet somewhere in between.  They will go to $3,000 while we go to $30,000 and then they will go to $4,000 while we go to $25,000 and then they will go to $5,000 while we go to $20,000…  If that is your plan, then your plan is HORRIFYING!   

    Developing products people want, filling global market needs and encouraging LOCAL manufacturing is the only way to build the economy and we could easily do that by encouraging a clean energy industry for the future as the World will have an insatiable desire for energy as it grows.  If we wanted to, we could still buckle down and lead the world in Solar and electric vehicles and more efficient electronics but every friggin’ day we allow another industry opportunity to slip away while we pretend the free market will fix things.  

  52. Just thinking out loud, the last time when they raised silver margins, we fell, rallied back and then sold off late day, maybe a repeat today
    not sure, we have stock expirations today though

  53. Just a quick note of thanks to Phil and the rest of the gang for a great year+ of quality education and ideas!  I fall into the RevTodd group, in that I can’t get on the site every day and can no longer justify the cost of the education that just went up 25% for me.  I had hoped that the voyeur membership would be the answer but I learned from Greg that the price for that would not be discounted and would result in a 52% increase in my case.  I am happy for Phil because his site has taken off and warrants higher fees and I wish you all continued success and thanks again!

  54. Matt:  Just as an addendum to your point,I follow the Japanese round table news shows fairly closely, and I think I am seeing something of a drifting away from the U.S.-centric world.   Relations between China and Japan have been very rocky lately, with the whole fishing boat collision off of a Japanese territorial island and the rare-earth metals ban.  The Japanese are seeing an increasingly belligerent China with what looks like an intent to expand their territory and power base in Asia.  S.E. Asia is also experiencing increasing encroachment into their territorial waters.  There has been alot of anti-China/Japan demonstrations on both sides lately.
    However, it increasingly seems to the Japanese intelligentsia, that the U.S. is turning its back on Japan and moving towards a more China-centered Asia.  This pisses off the Japanese to no end.   There are rumblings of abolishing the 9th Article in the Constitution that forbids a standing military, because the belief is the U.S. is no longer completely capable of or perhaps willing to come to the defense of their closest Asian ally.  There is also a big push to try and become a more self-subsistent nation by finding alternatives to Chinese-exported rare-earth metals and turning towards more domestic manufacturing and agriculture.  There is a big backlash against the current government, which is being seen as wishy-washy, capitulating, China-sympathist.   This is causing a rise in something akin to a nationalist, hard-line, "Green-Tea Party" type movement. 
    The bottom line is: They can no longer depend on the U.S.  So its time to start depending on ourselves.  The walls are being built.

  55. Very interesting interactive map (income, health and education): 

  56.  Damn CMG..

  57. Here is all of the new margin rates, for any commodity traders, does not mean much to me


  58. Market collapse/Alik – I do not "expect" one but I do see a better than remote possibility on any of the things you mention (and I think I said so in the morning post).   We saw this week how a little issue in Ireland totally spooked the global markets – this is the same kind of fear and relief cycle we were having on 2008 as the bank crisis was on again and off again on a weekly basis.  A lot of people got trapped and burned in that crash so my attitude at the moment is "better safe than sorry."  As to your essay question on valuation – It’s based on earnings and outlook, of course.  We are NOT in an expanding economy.  Corporate input costs are rising and they are not able to pass those costs along to the consumer.  While 10,200 is the "fair" price for the Dow, that is based on the dollar at 85 so, at 78, 11,200 is about the right price and pretty much everything depends on which way the dollar moves.  

    SPWRA/Tcha – Downgrade by Wedbush of all things.  Too funny how easy it is to flush a stock these days.  Hopefully they test $12 next week and we can go long again.  

    SPWRA/John – Wait for the downgrade police next week.  If oil recovers, they will too but solar has big issues at the moment with all these countries trying to cut back (which is just what OPEC and the "Free Market" Energy Cartel wants, of course).  

    CME/Mike – Very strange, right but I’ve certainly heard it’s happening.  

    The Europe is all over the place – FTSE down 0.7%, DAX flat, CAC down 0.33% and that’s with a large and ongoing stick into the close that’s been going on since the top of the hour.  

    Dollar is hovering at 78.75 but looks like it will break up still and copper looks like it thinks so too, as does oil.  On the whole, it’s a big battle of bulls and bears today with 120M shares traded on the Dow as of 11:15, which is almost yesterday’s total.  As usual, no volume = up, volume = down and that is the very definition of a sucker’s rally.  

  59. thanks for that America Map stjeanluc looks cool, I will have to play without this weekend

  60. VIX collapsing was +4.96% earlier, only +.69% now

  61. JRW, You in anything?   72.05 line saying nothing right now

  62. Phil,
    What’s this newsletter you mentioned?

  63. NET $ +.64%, dx/y = (.15)%

  64. Mike5885 – You are welcome. I am sure Phil can use some of the numbers in his next political rant ;-)  

  65. Matt / China   Ran a big Asian group for 6 years and did lots of China sourcing.  Forget the currency manipulation Matt.  Even if they double the value of the Yuan we cannot compete with China, because of their low cost, but also because business in politically directed and nationalistic in China (the Japs operated this way for decades).  Leaving the US manufacturing future to our ‘multinational’ corps is like handing the keys to the henhouse to a bunch of foxes.  They are totally disinterested in the US and US employment.  Rising stock options are the only thing that matters.  And, after you cash in, Monte Carlo and Singapore look interesting.  This ‘free trade’, free mkt capitalism bs is going to finish America.
    We need structured fiscal initiatives, strategically thought out nationalistic objectives leading to matching fiscal policies which incentivise companies to rebuild America.  Phil has mentioned energy initiatives.  But, we urgently need aggressive MERCANTALISM forcing ‘stuff’ to be made here (with more automation) if we are going to reemploy 30 million Americans with good jobs.  We also have to get a grip on corporations which are selling America out via technology transfer agreements with China.  eg’s aerospace industry, semis, if they have benefited from billions in Defense dept spending they should not be allowed to produce in China nor source components from China.  And, lets end this offshore tax haven crap for corporations via punitive taxes.

  66. stockbern,

    I have a 1/2 position in TNA at $55.62; we have an ascending trend, now at IWM 72.24 to break through, but if they can get the dolaar below 78.50 that should not be a problem !!

  67. Thanks Mike!  This is much wider than silver, though.  It will be interesting to see what happens but I’m pretty confident with the DBA short play. 

    Thanks Sarah, sorry to see you go.  Unfortunately, I can only chat live with a limited amount of people and it’s a quality of life issue for me to have a smaller group who I can get into more detail with.  I found myself getting irritated and over an hour behind on questions and giving short answers when long ones were more appropriate and that simply ceases to be fun for me and I’ve always been an advocate of only working on things you enjoy.  I’m sure you know that you have the ability to give yourself whatever discount you wish through referrals as it’s our hope that people will subscribe to the newsletter (no chat) and offset the discount you earn.  That’s one way to save that extra $25.  

    9th Article/Kinki – They got that right!  What are the chances that we would run out and throw boats in front of China if they plant their flag on some Japanese island?  In fact, if China overran Tokyo tomorrow morning, what would or even could we do about it other than threaten to go nuclear?  China has a 2.5M person standing army plus another 2M in the PLA (ground forces).  This costs them about $100Bn a year to maintain.  We have 1.5M people in the army who cost us $1Tn a year to maintain.  Also, as you note with rare-earth – without their materials, we can’t even make new army toys!  We need to start outsourcing our military to India before it’s too late!  

    Maps/StJ – They are a little short on explaining the scales but interesting maps.  

    CMG/Rav – Yeah they suck but probably back to $230 at close although it is possible they go for $235.

    Newsletter/Trident – Click on the link from the post.  It’s just our new weekly newsletter and then there are the daily updates we all get now from the articles.  If you are not a subscriber, you can’t read most of that stuff for 48 hours and the Stock World Weekly is exclusive.  All memberships are downwardly inclusive so if you are Basic or Premium, you already have the Newsletters included in your subscription.  

    NYC/Mike – Wow, $600M gone from the local economy (and, of course, thousands of jobs).  That’s what we’ll be seeing nationwide I guess.  

    All very good points Tusca!  

  68. Net $ +.34%, dx/y = (.03)%
    C =1195.11, F =1193.50
    oil (.65), gold (1.80)
    VIX +.48%
    10yr = (1.00)%,  30yr = (.98)%

  69. mike5885,

    Thank you, BTW, for all your good input !!

  70. Me thinking that CMG 230 puts and PCLN 410 puts could be interesting gambles into the close ..

  71. I love these Bots. 
    You put a limit sell order in and they immediately drop the price 25 cents.  Then slowly but surely they inch their way back up toying around with you until they finally get frustrated and grab it.

  72. Careful, rising wedge forming on the 1 day, 1minute chart. (Usually ends badly)

  73. Good and disturbing article:  


    Now, because of the horrific hole that our politicians have dug for us, we are faced with some heartbreaking choices.  For example, right now the U.S. Congress is deciding whether or not to extend long-term unemployment benefits for the nation’s jobless.
    Extending those benefits through the end of February would add another $12.5 billion to the U.S. national debt.  But not doing it would cut off the only lifeline that many Americans have just in time for the holidays.
    The extension of jobless benefits that was passed last summer expires on December 1st.  If these long-term benefits are not renewed, approximately 2 million unemployed Americans will lose their checks.
    But what can the U.S. Congress do?  Just keep going into endless amounts of debt?  As I have written about previously, the United States is never going to see another balanced budget ever again under the current system.  The U.S. government is flat out broke.  Somehow our politicians desperately need to find a way for the federal budget to stop hemorrhaging red ink.


  74. JR
    Can you whip up a chart of that rising wedge?

  75. Hi Phil
    I am into cisco at $20.63. I was wondering if you think it will get back to that level with news of the stock buyback. Not familiar with the impact or timing of a buyback. Thanks.

  76.  Hi Phil
    RE: WYNN   You mentioned $112 looked good for short calls on Wynn.
    Wynn now almost $103 + the $8. div would = $111.
    what’s your thoughts  before EOD or monday at taking a shot at this trade?

  77. Phil, been patiently waiting to get into the JPM synthetic buy/write from a couple of days ago at suggested price. Just hoping for a small dip in JPM stock price. Not that paying .18 more than suggested is a big deal, but like you said before, those nickels add up.

  78. Tuscadog I agree with you
    Your talk about a level playing field in intentional trade, but there is a reason that American good are not for sale in china or Japan. There government has set up so many barriers to entrée into the market.
    You need to have a partner to sell in the country, Gm does not have a plant in china they have a partner who owns 51 % of the company.
    Anyone who has tried to ship a product into Japan knows it’s next to impossible.
    To me the answer is that we have the same rules in the US. We could take the Japanese customs system, word for  word and use that and the Chinese system for the owner ship of companies and use that as the basic of trade.
    If they are not happy with that then as they change the system we can change.

  79. exec

    Top line open to current, bottom line 71.57 at 9:54 to 71.98 at 11:16

  80. Phil, I can see you are getting worked up so I’m not going to belabor this.. except to say, your interpretation of my premise for forcing the yuan up is too tightly tied to trade directly between the US and China.  Yes, US companies would love to sell more to China.  But I agree with you, most companies have a long wait for the underpaid Chinese workers to afford their goods.  However, we are selling to them and that would only increase with debasement.  But a better intrepation would be to also see the effects of all the other countries out there who think US goods are too expensive right now.  A 10% pickup per country can really add up.  So, my point is that this debasement is not just about US / China trade but about US / world trade.  The Bernank said habitual exporters need to do less and habitual importers need to do less.  He hasn’t singled out China.  People are simply reading into what he is saying because they are the most egregious offenders of the habitual exporters.  A properly working currency exchange market could help balance the scale for both importers and exporters.
    But don’t get too worked up about it.  This is just ivory tower theory.  It only works when emotions aren’t involved and because we are humans that never happens.  The fact of the matter is there is a war a’comin.  Global trade is going down.

  81.  Hey all,

    We have a new Midterm Trade up for your perusal. We are looking at picking up shares of Verigy (VRGY) on a Midterm Trade level.

    Check it out here!

    Good Investing!

  82. Exec, never, ever give into their algos when you put a limit order in. Yes, they have it tuned down to the single order. They’ll hijack you if they can.

  83. We can play the bot game to … for example, put out some orders to short PCLN at 413.50 or CMG at 233. 
    May keep the bots from trying to run the price up by trading w/ themselves.
    If it gets too close for comfort, cancel the short before the price gets ups there.
    If enuf of us do that, we can beat em at their own game.

  84. why is my comment above "awaiting moderation" ?

  85. Out of TNA at $56.67; looking to go short.

  86. B’c it’s you, Cap!

  87. NET $ +.01, lowest I have seen today

  88. Cap

    You can go to jail for that in Norway 8-)

  89. Matt … Global Trade … check out the Baltic Dry Index lately ?   Something like 2150.
    that is pretty ugly.

  90. JR

    Is this drawn correctly?

  91. Yes, lets manipulate the market in "unfair" ways.  Only GS can do it fairly.
    Its a human flash order.

  92. Pharmboy – in the Colbert link the bit about the incoming conservatives on the energy committee is just downright scary.

  93. Bayer cuts 4100 jobs, Roche 4100 jobs.  MRK will, my company is.  ARNA will be.  It still is an ugly, ugly environment out there.

  94. Never mind JR.
    I just saw you were referring to 1 day 1 min.
    BTW….looks like you were right on the money.

  95.  PHIL
    DIA $111 NOV Put – Going for $0.05 now…
    What’s your take on the play going into the afternoon?
    Double Down (Initial entry was $0.09) To let it go as a gamble that lost (so far). 

  96. JRW, Are you short now or still ‘looking to go short"? Thx

  97. BDC – yeah, I watched that last night….and laughed so hard I cried.  I am not going to get things started on the global warming front this morning/afternoon.  It is too depressing around here as it is.


    FYI – I will not be here early next week at all…I am not even taking my computer with me to Vegas.  Should be back Wednesday.

  98. Phil, I’m at a "screw it" point with unemployment. If these people didn’t go to the polls earlier this month and keep Democrats in control they deserve it. At the very least this ensure Palin will win as many states as Dukakis did, maybe even Mondale ….
    In terms of the deficit: It’s over. The hole is in the boat and now it’s 2.5 miles to the bottom of the ocean for the US. Let’s just pick another country at random to start another $2B-per-week war and throw around slogans like "freedom isn’t free," to make ourselves feel better. At least the defense contractors get a piece of the dwindling pie.

  99. NET $+.08%
    VIX negative now (1.44)%

  100. JR
    Does this look better?

  101. pharm – it isn;t even a "Global warming" discussion. These MORONS quote the bible and use it to influence policy. How are these guys any different than muslim terrorists????????? Seriously, someone answer my question dammit. They both do "God’s" work.

  102. Gambling: ADSK miss, CRM, huge hit. Win some lose some.

  103. BDC – no, it wasn’t, but the part about God not wanting another flood or that harnessing wind energy moving ‘hot air’ around was…..and it WAS too funny!

  104. Hello Phil,
    what do you think about CRM , are they realy so good. More than 20 percent in 2 days, on very good volume. EPS 2010 1.2 USD , with share price 134 . Strange a little bit.

  105. Puts/Cap – You would think people don’t want to go long into the weekend but they dumped 130M already so it’s a coin-flip at this point.  

    Bots/Exec – It is entertaining.  

    CSCO/Celest – Long-term, I think CSCO comes back.   Short-term, they were not wrong in their outlook.   Their municipal/government orders are toast for the foreseeable future.  The buyback will work over time, it’s the kind of company you just want to hold long-term and sell calls if you are going to stick them out.  

    WYNN/Ban – I don’t like the way the dividend messes up the charts so I’d give them a pass at the moment.  Hopefully they  rally back to $106 or so and then make a bit better short. 

    JPM/Jbur – You are right.  We had a small dip earlier but not quite enough.  They seem to be pinning $38.50 today.

    Rules/QC – Well that’s a great idea and I totally support it.  Now see how well that goes trying to get it past our puppet Congress.  As long as it is more profitable to pay Chinese people to make IPods and sell them here than to make IPods here and sell them to China – those rules will never change.  Why do you think Bush "Fast Tracked" NAFTA into the end of his term, Republican sponsors were terrified that a Democratic President wouldn’t sign it.  Clinton put in some clauses to protect workers in the end but they turned out to be nonsense and those rules laid the groundwork for us to export over 2/3 of our manufacturing over the next 25 years.  

    The Bernank/Matt – As I said, I do agree with the concept but I don’t see the road to execution.  We have about 12M people employed in manufacturing right now, a 10% increase might put 1.2M people back to work, whether its selling to China or Europe.  Our problems are way, way deeper than that and my main objection is that China is simply a distraction away from what really needs to be done (see comment above to QC) but it’s not going to happen so there is no sense in getting worked up about it.  The "free market" solution is America, as we know it, dies and the rest of the World moves on and you can jam the dollar up like Zimbabwe or Brazil and it isn’t going to fix your economy – Zimbabwe and Brazil proved that but hey, we have never been ones to learn from the mistakes of others so we may as well continue to make our own.  As was foretold decades ago for Nov 7th, 2010 – "There’s a storm coming."     

    See, now those DIA $111 puts are .05!  I knew they’d come back down.   8-(

    Great example of why we don’t chase momentum plays!  

  106. exec

    You have it; made sense to get out based on that. Doesn’t mean we can’t go higher, but one can’t go broke taking profits !! We should get direction from here shortly. (a break above 72.40 or below 72.15)

  107. Phil, a question on short calls with CRM as an example, but with broader applicability to trading strategy.  I want to short CRM, and was looking at shorting the Jan11 155 calls. However, I was wondering what your opinion was on selling a further out call, such as the Jan 2012 180 call instead?  You often sell OTM 2012 puts on the long side, so I was wondering to what extent selling OTM 2012 calls has a role in hedging long positions, taking advantage of Icarus type run ups like CRM is having right now.    

  108. exec, really neat how one can put together a chart like that and share it with others so quickly.  Friggin amazing internet-  Btw, that seafood linguine looked good!
    Phil, did you do a search in YouTube for ‘storm coming’ or did you remember that scene from Terminator and think there’d be a clip?  The latter would be scary..

  109. Phil, she says "Part 7, Nov 10," which is the date of the recording (the year, 1984, which is the year of the movie, is assumed). According to the movie’s story line, the nuclear holocaust occurs in 1997.

  110. Nat gas $4.13, finally acting like a commodity – price totally divorced from demand!  

    Moderation/Cap – I have no idea but fixed although the system is smart as collusion is not nice (and I am certain Members here would never do such a thing!).   

    LOL JRW!  You would have thought Norway would tell the IBanks to stuff it but apparently they bend over just as fast as the US lawmakers do for the Banksters.  

    Hey GM almost back to $34!

    BDI/Cap – You are out of step with the "new" economy.  It doesn’t matter if you actually produce, ship or sell anything, what matters is if Cramer likes your company or not.

    Very nice chart Exec – good thing I have a 30" monitor! 

    DIA/Itrade – It’s looking like a loser so 1/2 off is good and we live to play long-shots another day.  It does look a lot more like the fix is in now and we drift into expirations.  

    Screw it/BDC – Oh me too.  I said so right after the election but I still lapse back into caring sometimes – I’m sure it will pass….  

    CRM/Lith – Well it’s a very good product and the cutbacks in staff were good for them as more and more corporations tried them out and liked them.  I don’t think they can sustain the growth but I have no major reason to bet against them so they are just a stay away stock.  

    Oh, forgot to mention I have to go to Fla this weekend.  Dad’s still dying but, at $100K a month the hospital doesn’t want to let him go…   Really crazy stuff in this country on so many levels. 

  111. Anyone know if drcraig is still on the board ?

  112. Matt
    Not that Phil isn’t crafty, but I remember " There’s a storm coming" and "Dead cat bounce" as a kid in the nifty fifties.

  113. Phil / weekend.  I don’t know what "people" want to do, but most of the trading I am observing is "Fake Fake Fake Fake !"

  114.  Phil,
    Florida – DAD.
    I believe the hospital is happy they have a Full Census. But that is not synonymous with them not wanting to let him go…
    As a physician, our goal is to always achieve the patients desire (wishes). If you as your Dad’s son state that it’s time… then they will withdrawal any sustaining care and shift goals to comfort until the time comes. This change will often lead to a transfer to a less expensive facility. But you could even bring him "home" the cheapest plan, but most americans don’t want to live with "death" they would rather write a card and visit when they want. Most americans are happy to have medicare pay for the last 3 months of life which are the most expensive and drain the health care system. 

  115. BDI / New Economy.  We don’t need roads or ships in the new economy, we will just beam the goods on over.

  116. So I guess youre long now JRW?

  117. NET $ +.02
    S%P positive now

  118. I know I am not drcraig,  But I am currently in year 2 of Phd program so hopefully, in 3 more years, you will be albe to call me Dr. Craig as well :)

  119. that would be able not albe.  As you can see I am not becoming a Dr in spelling.

  120. Fake I tell ya.   PCLN hasn’t traded a single share in about 4 minutes.   Tells me no real participants.

  121. Phil, my $.02.. which used to be $.03 before QEII, but I’ve lost both parents in the last 5 years.  First my mom and then my dad 2 years later.  Mom died in the hospital.  She needed a special compression thingy on her leg to help with the ‘healing’ process.  She just wanted to go home and sit on her porch but we felt we couldn’t care for her well enough.  We were clinging to hope.  In hindsight, she was a goner (leukemia) and I feel awful we couldn’t be sensible enough and give the woman her dying wish.  Still bothers me.  Dad had cancer and we knew he was a goner.  He elected not to treat it.  He was in hospice the last 2 weeks of his life and it is truly a wonderful program.  Of course, it’s dependent on the people you get.. but I’ve never heard anyone speak poorly of it.  If I had it to do over again, I would have taken a month off and with the assistance of a nurse kept them at home where they are most comfortable surrounded by family.  Unfortunately, you only get one shot at death.

  122. CRM/Kururi – With a p/e of 76, they do make a tempting short but I think the Jan $155 calls are a very wimpy short.  Why not sell 1/2 as many Dec $140s ($4) for about 2x more money and those can be rolled to the 1/3x the 2012 $175s and, if you don’t think CRM isn’t worth $175 then why would you short them at all at $135?  If you are willing to bite the bullet and ride these out to 2012, you can afford to be more aggressive on the initial sale.  A small entry here like a scale in as long as you are willing to roll and DD at $150, is the way to go but, as I said above – this is a stay away stock to me.  

    Speaking of silly stocks, NFLX back to $171.70!  We missed the spike back to our sell point at $173 but they are paying $4 for the the Dec $185 calls so that’s a nice sale.  

    Terminator/Matt – No I was looking for Terminator final scene – my brain is full of useless stuff like that.   

    Nov 10/BDC – Oh, I thought she was using EU dating:  7 November, 2010.  Interestingly, the script (now that you made me look) omits her date words but it does say:  


    The boy takes her four dollars and she watches the
            snapshot develop.  It is a good photograph of her,
            the wind lightly ruffling her hair, expression thought-
            ful, slightly sad.
            We recognize it as the one Reese carried in 2029.
            She slips it into her short pocket.


    So if Reese had the photo in 2029 and John Conner sent him back, then John Conner was 44, that does seem about right.  The other way he’d have been 19 and that’s more like the unfortunately canceled Sarah Conner Chronicles.  

    DrCraig/JRW – Haven’t seen him in ages.  

    Fake/Cap – It is a truly amazing thing!  

    Sorry Itrade, I’m just a little bitter.  My family is going through hell for 3 months now and there’s really no end in site.  It’s not about the money, it’s about what my Dad (and my Mom) is suffering through as he goes up and down almost daily (the dialysis almost kills him every other day at this point).  2 of 6 siblings don’t want to move him to hospice although my Dad has made it very clear that’s his wish and Mom doesn’t want to do it if we don’t all agree (and even then I think she’ll feel guilty forever despite his wishes).  You are right about the last 3 months but, unfortunately, that’s an entire cultural/education problem that will take decades to undo.  Europeans and Asians are much more accepting of "the end" than Americans are and that allows them to make different and generally more sensible health care decisions.  

    No shares/Cap – If a stock trades on an index and nobody is around to buy it – does it make a sound?  

  123. Got some CMG 230 puts for a dime.  Complete gamble …

  124. Refineries for sale in Europe


  125. Capt. / long

    I have the break-out now at IWM 72.51 (also resistance), an ascending trend, failure at 72.33, also ascending; I think we close lower unless they can push the dollar below 78.50. I’m currently in cash.

  126. anyone catch any of those Unifies Quest 2011 discussions on CNBC, studying civil unrest due to economics

  127. Phil, iTrade:
    Human life is very precious. We do not have the power to give life nor should we take it.

  128. Thx for the heads up JRW. I always jump the gun and I shorted TF at when IWM was at 72.17 and you mentioned you were looking to go short. Im on a university computer so I can’t download the desktop platform for TOS and cant see all the moving averages and what not that you guys see. When Im at the University  I mainly just wait until I see you say youre going long (if I can read it within a minute or 2 of the post).  

  129. Cramer is not that almighty. Yesterday he ranted against SKX and look at SKX today.
    Speaking about Europe, I see the situation as simply a subsidy that rich exporters pay to poor importers to consume their goods. The subsidies are not called subsidies, and rich countries try to pay as little as possible, and to ensure that the subsidies are spent on “right" things. Neither side can afford the system to be broken (as it will mean an immediate economic collapse for both sides). So, despite all the posturing and threats of the “end of world" the system is fundamentally safe (at least for a foresseable future). Further, I regard QE2 as an attempt to institute a similar system, when the exporters subsidy the US consumption, and rich Americans subsidy the consumption by poorer Americans (both via inflation which will reduce the debts of insolvent homewners among other things). The latter is normally done through raising taxes and redistribution of wealth, but as it is impossible in US, QE2 (and 3 and 4) will, probably, work just as fine. And I would not beleive Ben Bernanke that he is seriously contemplating stopping QE 2. I do not think that he can do that without risking a total collapse and recession even if he really wanted.
    Speaking about China, I think that the priority of the Chinese leadership is turning China into the world superpower # 1 as fast as possible and by all means available. I do not think that they would be that deeply concerned by a 4.4% or even 10% inflation. Also, when I recently visited Beiging (in August) I was surprised how richer Chinese became in 1.5 years after my previous visit. For example, it became very difficult to flag a taxi at Beiging (an average price of a ride is 4-5$) – despite an enormous, incredible amounts of taxis and an excellent public transportation system – much better than in NYC, for example. So, my guess is that the wage inflation in China could very well be faster than the price inflation.

  130. Phil,  You are good at math.  How much will it cost Medicare  for all of us baby boomers to live  the last 2 months of our lives at $100,000 per month- twenty years from now, and how will we ever be able to afford it.   My Dad died in Sept and not only was the hosp. bill $100k a month but we also spent  $ 30k on private duty nurses.

  131. NET +.24%, dx/y = (.02)%
    C =1196.49, F =1195.25
    VIX (2.83)%
    10yr = (1.07)%,  30yr = (.65)%

  132.  Phil – Options and Dividends…I had bought WYNN Jan 11 90 puts and now I have Jan 11 82 puts. Is this normal on dividend date?? I’ve never noticed that behavior before. Not sure I would have bought the Jan 90s had I known.

  133. Tusca/China
    TOTALLY AGREE !!! Sad thing is WE as a population to "right the ship" will not happen until too late…. The responsive answers to our dilemnas are plain to see but our form of government with the "ME" generation will not allow it to happen.  Factoid…. 9 of the top 14 wealthiest counties in America are the surrounding DC area…. WTF is that….???     

  134. Ah, I see…nevermind already been discussed above.  

  135.  Cap, I was also tempted to buy a CMG Nov $230 put for a dime for a pure gamble..but CMG is stubborn in the $31.62 line as a support.. 

  136. nicha,
    Why is that argument always so one-sided? We do things to prevent natural death all the time (various cancers due to lifestyle choices, heart disease and stroke due to same reasons). One’s personal choices and free will is really the ultimate expression of life (zoe: spiritual life as opposed to bios: biological life). So, are we not in some way killing the person when we do not respect their right to die when and how they wish? I say, "Yes we are."

  137. matt1966
    i was touched by what you said and just wanted to add that you also only get one shot at life

  138.  Phill:  Not relevant to your situation, but as a non-religious person I don’t understand why all those who believe in a "heaven" cling so to the last months of life with total disregard to the extraordinary financial and emotional costs.   You’re right that the cultural shift we need in this country is generations away but I hope someone with influence starts emphasizing rational care vs rationing care.  Hope this is not considered political and that your family gets some resolution soon.

  139. No shares / Phil – Cap’s not here right now.  We are his robo auto responder.  We are VGer

  140. NET $ (.14)%

  141. I don’t know if anyone here has ever had a Near Death Experience (maybe Shadowfax?), but as someone who has very low blood pressure,  I believe death itself is probably an incredibly peaceful and pleasurable experience. Because thats what I feel, occasionally, when I stand up too quickly and all the blood rushes out of my head. 
    First there is a "dilation of time" as a second feels like hours and I get a rush of what I can only describe of "extreme relief" as all worries, cares and stress just melt away.  It is the very essence of "peace".  Of course, I snap out of it a second later as the blood catches up to my brain, but it has helped me get over the fear of death because I feel like I have caught glimpses of what it may feel like.  Certainly, its a natural part of life and in many cases may be a  huge relief to people who are suffering from pain and agony on a daily basis.   It certainly helps me to keep perspective, thats for sure.  Just my 2 cents.

  142. Phil, what are your thoughts on a pair trade DBA short and DBB long for December?  If you like can you suggest one?

  143. aceland- what you say amounts to suicide in my belief. I wouldn’t want to help some one do that. I am well aware of the financial repercussions of this attitude and I am willing to go bankrupt for that as my mom’s will states that she should be kept alive at all costs until brain dead. My father on the other hand has willed that his plug be pulled off if the financial hardship is too much. I have told my father that I would not make that decision for him so he has given that authority to my bro.

  144. redlog – Im not too religious either but seriously!!? Regardless of believing in heaven or not I think most SANE people would like to continue LIVING. As Tim Robbins says in one of  my favorite movies of alltime (Shawshank Redemption) "Hope is a good thing, maybe the best of things…" I think most dying people cling to the hope that maybe they can beat it.

  145. Everything is flat, all the indexes, TBT, the dollar, except the VIX is down and the Russell is up………………….

    Just the result of tens of thousands of independent investors making informed decisions, Cap was right all along 8-)

  146. What a surprise, I got short TF and IWM shoots up. Are you long now JRW since its broken through 72.5?

  147. Matt,
    Talk about wild internet gadgets…….check this out. 
    We had a lot of gasoline being stolen from our yard when the price got way up there a couple of years ago, so we had a bunch of cameras installed around our office and shop.  We also have an automatic gate at our facility so whenever that gate is opened while our office alarm is armed, we automatically receive an email that goes into a independent file, which time stamps it…..we also receive a text message.  Well yesterday we installed an upgraded video recorder for the camera system, so now when I receive a text, not only can we bring up and manipulate every camera on a remote computer, but every camera can be seen on my I-phone.
    So if I ever find myself cocktailing on Phil’s private Island and security page goes off, we can simply whip out the I-phone and see who’s messing with our stuff!!!
    Speaking of Seafood Pasta…….I might just go for that this weekend.

  148. kinkistyle
     I have had numerous conversations with my mom about the experience. She went out in the emergency waiting room, I was on the operating table. We both recoverd to life support and a total sense of peace. 30 minites later we both were in undiscribable pain and both don’t want a repeat. They had me connected to a morphine pump and after 2 shots I refused that because it made me feel worse. I said over and over I should have died but now don’t want to die or be resusitated. Mom agrees.

  149. Capt. / long

    TNA at $57.22, but only a partial; I must let go of my reservations as today is a clear repeat of 11/10 !! Our only hope for a short is for the dollar to bounce at 78.50 !!

  150.  Kinkistyle:  peace  I too have low bp and "pass out" easily. You’re right about just feeling relaxed, just last week I passed out during a medical procedure and although I was aware of  the commotion around me, getting oxygen and such, I felt no anxiety and was comfortable. However I was  ill later when I came to and saw that CMG was up another 5 points:(

  151. Nicha     I can see lots of problems with your parents wills.    First , I hope you will never have to observe you Mom going through a terrible amount of suffering so that the Hospital can everything possible, whether needed or not) to keep her alive.  My doctor calls it ‘Full Hospital Mode"   Second, since you are not necessarily paying the Hospital any money, "financlal  burden" will not necessarily come into play when it comes to making your Dad’s end of life decisions.  Sorry, but I’ve just been through all of this

  152. Thanks for the info JRW, I need to learn to stop jumping the gun!

  153. Cap, Pharm - HK has been in a perfect downward channel on the one year chart and it just broke out.  Interesting, I might have to get back in after several months away.  Thoughts?

  154. CROX making year highs – there’s no business like Shoe Business!  

    C/Mike – They cut too many employees to get all that stuff done… 

    .02/Matt – It’s a systemic problem.  Children are kept away from dealing with it when their grandparents die so they are not prepared for dealing with things when their parents are dying etc and you don’t even learn philosophy or (heaven forbid!) ethics in college anymore, let alone high school so 99% of the people in this country have no idea what to do when the situation is upon them.   The reason they teach logic and philosophy in schools in other countries is so that, by the time children grow up to be decision makers, they already have a background in discussion and debate and have spent decades thinking about the big issues as opposed to making decision based on the latest talking point.  We are a society that has been trained to be susceptible to suggestion from birth and thinking for ourselves is generally frowned upon – I’m sure the Greeks and Athenians never imagined a democracy where about 20% of an uneducated public selects the leaders.  

    Good luck Cap!

    Refineries/Mike – Demand has fallen?  Well that must mean oil should be higher, right?  As to Unifies Quest – I don’t even know what that is…

    SKX/Alik – I didn’t mean literally Cramer, just any Gang of 12 analyst or CNBC guru or whatever.  It is scary that the average investor now turns on a TV and makes a buying or selling decision based on whatever information they got between commercial breaks.  On China, they had huge wage increases this year and the people are getting much richer so kudos to them but they are just an expansion-stage economy converting farmers into factory labor and that is good for phenominal growth all around.  As I said earlier, they will move up and up in wages as we slide down and down.  All it takes is for 140M American wage earners to make $10,000 less (25%) and 700M Chinese workers can double their salaries – it’s a simple formula.  Throw in a little bit of global GDP growth and maybe they can grow a little more and we can shrink a little less but that’s the path we’re on.   All QE2 does is mask what’s really happening but of course they have to do it because deflation leads to wage CUTS and wage cuts lead to revolution.  American workers may be extremely docile and stupid but take a dollar out of their paycheck and they will notice!

    Medicare/Stock – We’re already spending it.  4M people die every year and about half of them die in hospital and half of them receive what many countries would consider extra-ordinary measures.  At just $100,000 each that would come to $100Bn a year spent just on the last month or two of 1M people’s lives but it’s probably way higher than that as our total health care bill is about $2Tn and I’d be surprised if end of life is less than 10% of it.  

    For the record, when I’m dying, my plan is to say goodbye to my family and book a flight to Singapore or some place like that and spend my last days in a private clinic with a view of the ocean.  I do not want people huddled around me for weeks looking worried and such – I’d rather ride off into the sunset and, as far as the family is concerned, it would be like when you give an old dog to a shelter for years they can be thinking "maybe he’s still alive."   8-)

    WYNN/Ajay – It’s not normal at all but they did a special dividend and the options were adjusted accordingly.  

    Foreclosures/Mike – I’m sorry but I think it’s not all that big a deal that the banks lost track of the mortgages.  Yes, they should be made to have the paperwork and yes if they try to BS the documents there should be penalties but there is a FACT that a person has an obligation to pay a mortgage and that obligation can be sold, transferred or chopped up by others but it doesn’t void the obligation.  The media is making way too much of this one and I’m no friend of the banks but this is more of a distraction than anything else.  

    Thanks Red, good thoughts. 

    Shares/VGer – Yep, that’s about what I see when I look at this trading, a sea of Bots and the occasional human getting trampled.  153M on the Dow at 2:15, that’s 33M in 3 hours.  Look at ISRG parking at $250 – that is a thing of Bot-driven beauty!

    Death/Kinki – Well I hope so (and I know a hash bar in Amsterdam where you can get that feeling any time you want!) but I figure you have eternity to deal with that, I would just hate to miss what happens next on this plane of existence as it’s so much damned fun!  I have had that whole time dilation and peace thing kick in a few times when skiing/almost dying as well as a car accident.  Interestingly, my friends who are serious athletes tend to get that same effect on a regular basis.  I first discovered this when I was in high school and my friend who was a great hitter (way better than Walt Weiss, who was on the same team) was trying to help me with my batting and he’s telling me how to look for the way the seams are rotating off the tip of the pitcher’s finger as he releases the ball and all I could do was turn to him and say "what seams?"  Pro athletes operate at a whole different level of awareness and that actually explains a lot of their other behavior…

    DBB/Mr. M – They should move more or less in tandem, it’s a real bet against yourself.  Maybe VLO long as they should go up with commodities and no tragedy to own them if they don’t.  

    Surprise/Jrom – You have to be careful on a very slow day like this.  With this kind of volume, THEY literally may be out to get literally YOU as you are the only guy making a trade.  

    Good system Exec.  

    Oh no, it’s Cramer!  

    Oil finishing at $82 so, other than a brief dip, it was the right bottom call this morning.   

  155. Mr M

    Welcome back; HK is the perfect play for this market !!



  156. A lot of energy stocks are doing well, HK is lagging, largely b/c it is so heavy in Nat Gas.
    Mocha, you could sell some puts.   Or put in GTC buy orders at support or prices you like.
    I have been holding and writing covered calls along along.

  157. Negative here, 1st time today
    NET $ (.05)%,  dx/y = (.05)%

  158. Mr Mocha, Last I asked you about HK it was around $16.80, you said no, but I couldn’t wait.  I sold some Nov17p which will expire today. 

  159. Death and Dying:  Having been on the "white coat" side of things for 3 decades and running an ICU for over 10 years I feel that I can speak with some authority on things.  Phil’s family sounds very typical of the contradictory dynamics which emerge with critically ill and dying patients.  It’s rare for a family, especially a large family to have unanimity on health care decisions.  The emotions that typically emerge are guilt and anger.
      It’s amazingly helpful when patients have taken the time to complete a "living will" and I encourage all to do; it so helpful to assuage the guilt in minimizing treatments and heroics when the end is inevitable.  Most people don’t want "everything done" and I have found that the truly religious are much more accepting of death than the nominally religious.
    It will all become moot as we will be left with no alternative but to limit health care expenses in the near future; our current Medicare Czar favors a British approach to limiting expenditures based on years of "useful" life remaining.  Its probably a good solution, but will have to be rebranded to fit into our American mentality.   Just my 2 cents.

  160. see waht happens could just be this 2:30-2:40 area
    C =1197.47, F =1196.00
    oil (.34)

  161. I’m very sorry to hear about your father Phil. I went through exactly the same thing this past May when my Dad took a turn for the worse in his battle with colon cancer and passed away in May. In the last month, the cancer had spread to the bones of his spine and he lost his ability to walk. He died in the hospital while begging us to take him home and begging the doctors to leave him alone.
    I have to tell you though, although he was sick for a long time and had gone through a number of major surgeries, as well as chemo, the medical care system did work for us. Medicare paid for the majority of the bills and although there was ‘overflow" that had to be covered by us out of pocket, it was never an issue of bankruptcy or a major burden. The family came together and split the cost of the medical bills and funeral expenses between everyone. As it should be.
    My point is that since the majority of a person’s healthcare expenses are incurred in the last 2 years of their lives and currently in the US that coverage is provided for most Americans through Medicare, I ask – what is wrong with having a single-payer system that covers everyone and takes the profit motive out of healthcare? For the majority of us, that is the system we will rely on for our care when we face those final moments anyway. Where is the flaw in that?

  162. On daily chart, HK double bottomed at 14.60 in Aug and Sept. 
    Mad new recent highs last week at 19.50 area. 
    Above all relevant trendlines.
    200 MA at 18.54, broke above today.
    No resistance above 19.50 until 22.15.

  163. so what did they do, tell everyone at CNBC to be a positive pump and spin doctor or lose your jobs?

  164. Here is a Gasparino article I saw




    /* Style Definitions */
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    mso-padding-alt:0in 5.4pt 0in 5.4pt;
    font-family:”Times New Roman”;

    GM IPO Continues Trend of Rewarding Those Who Failed

  165. sorry, that did work  :)

  166. Good Morning all -
    I think it is time to enter a long term position in EUO ( ultra short Euro )… this old friend is about to become more attractive, as the Euro once again gets beat up in the playground.
    As the financial crisis in Greece created a stir in the financial markets earlier in the year on the Euro. the dollar rallied nicely against it. The IMF bailout  temporarily gave the Euro a reprieve, and the currency traders have since focussed on the effects of US deficits and QE-2, putting the Dollar on the defensive.
    I think we will see a reversal in this balance and the Euro is destined for the penalty box, once again.. The Fed, with the efforts recently taken, is showing the markets inflation is in the cards, and the bond market is selling off bonds and in effect driving long term rates higher…. so the Dollar is becoming more attractive to the international currency traders.
    Back to the Euro… fears are surfacing that Ireland may default on their debt – this would be larger than the problem in Greece, as so many of the banks in Europe hold the debt. If Ireland needs a bailout…. then so will Spain, and then Portugal. ( Italy is in the wings ) This is a game of dominos at the best, IMO Good strategy is to get out of Euro dominated bank accounts ( JRW – a warning, my friend ). I see the Euro falling 15% or more against the Dollar over the next 6-12 months. This could be a double move in the leveraged etf, and further leveraged using options. We made some nice profit on the EUO last time our palms were "Greesed" with Eurozone  financial problems. I’m looking for a repeat. The etf is down today…. and I am selling some puts naked ( fully dressed however )

  167. Thanks, JRW, but it seems less menacing without the mag!

  168. Phil:
    Do recommend buying USO calls still? Never quite got below 1.00.

  169. Back positive for now, NET $ +.10%

  170. Phil, what’s the basic DBB play as you see it

  171. stockbern, nice move on HK.  If you draw lines on the tops and bottoms of the HK one year chart, I have tried to go long at the bottoms and 16.80 was near the top so I was waiting to get back below $15 and never got it.  This breakout does look interesting, as Cap notes.

  172. humvee, agree.  My folks had living wills.. as well as trusts.
    exec, you mean you can’t control the cameras with your iPhone, too?  8-)
    Interesting… the dollar and FAS are dropping.  hmmm… must be opex day.

  173. Just a thought, keep in the back of your mind all of those margin hikes in the commodities start tonight.  Might be a bigger deal if not for the Free money and options expiration
    But, we do have the holidays coming and the long slow volume weeks, so the margin hikes may make the cost of carry unpalatable for some
    so we may see selling either today or Monday (I am usually wrong, so does that mean rally?)

  174. Mr M / my apologies


  175. Maybe I am crazy, I just bet a nickel on a stick with the NOV DIA 112′s with an hour to go..

  176. Much better, thanks!

  177. Bot a few DIA 112 puts earlier for fun, expecting some selling at the end, sure not happening yet…

  178. randers, looks like between us we created a DIA straddle!

  179. Phil: Sorry to hear about your dad; wishing your family peace, harmony and togetherness.
    Any weeklies you’d recommend for the short week?

  180. Cap
    you mentioned that you have been selling calls on HK --can you please tell me what you are currently selling--i am in an underwater position on HK--but every time i consider selling the calls it doesn’t seem like enough premium to make it worthwhile (i think i need to adjust my expectations when it comes to call writing)--any advice greatly appreciated--

  181. Mr Mocha,   RRC did the same thing today, but its all based on natural gas…. Which I don’t trust to stay up at $4.16

  182. allan292
    Don’t say that too often, you will spook everyone. You understand that insurance is a pool of money, some only pay to help the unfortunate. The problem is most want to collect some day and insurance companies think the idea is huge profits and never take care of the unfortunate, a cost. I remember when Blue Cross was a not for profit and medical costs were reasonable.

  183. Phil/DAD
    Sorry about your dad.  Both my parents passed away the past 18 months, a year apart.  Because family lived close by and legal, investment and insurance planning was established 17 years ago, when it was discussed in a lucid manner my sister (one of 10)  a nurse/pharmacist was given the responsibility to make life ending decisions.  They lived a very good life but the last 3 to 5 years were very difficult mentally (dementia) and physically. My sister could have placed both of them in the hospital and let the system take over…. but, the decision for both at the very end was to place them in hospice at home and both passed comfortably with family. My 3 sister’s cared for them at nite with paid help in the day time. My sister’s live’s (all with jobs) were totally not their own for the past 4 years… a real sacrifice.  But, they wouldn’t have it any other way. In my opinion, death is a part of life and all should educate themselves….I will leave it at that…. Best wishes as this time passes.    

  184. futures have not budged

  185. LOL Red – The Lord giveth and the Lloyd taketh away!

    I agree Humvee but the British system would likely be sued out of existence here unless they give the people in charge Hank Paulson-like protections against prosecution.  

    KO STILL making new highs.  I picked them and I’m still shocked by this run…

    In addition to the usual list of potential causes of market weakness – bad economy, QE2, sovereign debt, China – here’s another: Stocks aren’t cheap. "This misconception is based on the year-ahead forecasts of S&P 500 operating earnings, [which is] a contrivance… [Based on GAAP] the S&P 500 is now at 18.2x the average and far closer to the top of the [normal] range than the bottom." 

    With today’s record-low interest rates, governments should be borrowing more – not stop spending, Yale professor Robert Shiller writes. Rock-bottom rates offer governments a significant arbitrage opportunity: "Borrow massively at these low real interest rates, and invest the proceeds in positive-returning projects, such as infrastructure or education."

    Paul Krugman believes the Chinese and German governments, and the Republican Party act purely in their self-interest in trying to "bully" the Fed into calling off QE2. "China and Germany want America to stay uncompetitive," he writes, while "Republicans want the economy to stay weak as long as there’s a Democrat in the White House." 

    The ECRI’s Weekly Leading Index edges to a 23-week high of 124.3, from 124.2. Annualized growth legs up again, to -4.5% from last week’s -5.5%.

    It’s not just the U.S. where price indexes aren’t reflecting real inflation, Marc Faber says – China’s inflation is really more like 10% per annum. Talking to Bloomberg TV, he says "China and the U.S. are on a collision course, both economically and politically." 

    Global investor William Browder predicts developed countries will experience “debasement inflation” from printing too much money, prompting their currencies to collapse. He’s looking to the U.S. residential real estate market, which is 50% percent off of its peak and will become an inflation hedge as the U.S. and others start printing money, he says.

    Gold prices are roughly 50x silver prices – a historically high ratio, but below levels at the start of the recession. Abigail Doolittle thinks the silver bull market may have only just begun, but gold prices also may be starting to drop. 

    In a speech this morning, IMF director Dominique Strauss-Kahn was highly critical of the eurozone banking sector, and warned the crisis is far from done. "The wheels of cooperation move too slowly," he said, "in part because policymakers are not paying enough attention to the pan-European dimension."

    Many European countries have long felt that Ireland’s 12.5% corporate tax rate gives it an unfair advantage, and now they see a chance to eliminate that tax niche in exchange for aid. But while other Irish taxes may have to rise to rein in the huge deficit, raising the corporate tax rate could damage not only Ireland but its partners too.

    Greece is losing hope of getting additional time to pay back a $150B loan after EU officials yesterday demanded it take additional steps to bring its deficit back in line with targets. The tough stance, and recent criticism from Austria and Germany over Greece’s fiscal efforts, have dashed its hopes for more benevolent terms.

    Investors are bailing out of high-yield and muni bond funds (down $723M and a record $3.1B this week, respectively) on "renewed concerns in the sovereign space," Merrill Lynch strategists report. Investment-grade and emerging-market bond funds, by contrast, saw inflows. 

    Irish bonds reverse course and slip, as Allied Irish Banks (AIB -0.8%) says its deposit base shrank 17% this year – about €13B ($17.8B). The spread between Irish and German bonds widened three basis points to 544 bp, but it’s 19 points narrower for the week.

    Bond vigilantes are picking off weak countries one by one, leaving Portugal – like Ireland, a small economy with a relatively illiquid debt market – next in line. Portugal’s fiscal picture is seen as less dire than Ireland’s but lagging its euro zone peers in taking additional budget measures. 

    Meet Lin Mun Poo, the guy who hacked the Fed

    Meredith Whitney takes on Moody’s (MCO), S&P (MHP) and Fitch with plans to set up her own credit-rating agency, which will rely on the industry’s status quo business model of debt issuers paying for credit ratings. Whitney plans to rate global structured products and corporate bonds.

    A fascinating visual re-creation of the torturous financial path of one man’s mortgage; even after everything learned lately about toxic assets, "it’s still amazing how ridiculously complex the system is." 


    Sources claim Apple (AAPL) risks a ‘war‘ with Vodafone (VOD) and other European carriers over a proposed new iPhone SIM card. This SIM chip would allow customers to immediately access Apple’s website and services – but also to switch carriers or demand shorter-term agreements. Operators may cut their Apple phone subsidies to block the SIM.

    Speaking of Chinese wages: Chinese electronics manufacturer Foxconn (FXCNY.PK), a key producer of iPhones (AAPL) and iPads, faces worker protests over pay and relocation plans. The company has promised to improve working conditions and raised wages.

    Google (GOOG) posted 2,000 new job listings on its website – a six-fold jump from March 2009. The fresh talent will support expanding efforts around Android software, online advertising, and web business apps. Google’s workforce already numbers 23K, up 18% from the start of 2010 because of acquisitions.

    Testing out their new super computer, I think:  A faulty signal from China Telecom (CHA) last April re-routed 15% of all web traffic through China for 18 minutes, says a congressional advisory board. China Telecom denies the hijacking, but the situation will increase rising competitive tensions between the U.S. and China.

    Harrah’s Entertainment cancels its planned IPO , providing no details other than that the cancellation is "due to market conditions." Harrah’s was supposed to price at $15-17/share last night. 

    Mela Sciences (MELA) +111% after an FDA panel narrowly backed its experimental skin cancer detection device late Thursday. Some panelists said MELA’s MelaFind device could help save lives, while others expressed doubts that it could help doctors detect cancers. Earlier this week, FDA staffers said MelaFind was not studied adequately, could be a health risk, and urged a new clinical study.

    A buy-write strategy involves buying the stock and selling a call option, attractive for investors who believe a stock is a longer-term buy but likely to be range-bound near term. Goldman Sachs sees Bank of America (BAC), General Electric (GE), Oracle (ORCL) as three of 50 "buy" recommendations using this strategy.

    Three lunchtime reads:
    1) What happens if Chinese growth slows?
    2) Formerly fringe Fed bashers now mainstream
    3) What’s really behind Bernanke’s easing?

  186. gel1
    question for you on the EUO--when you used it last time did you have any problems with the etf de-correlating from the euro?--it is my understanding that starts pretty much immediately because of the leverage and gets worse on a daily basis

  187. NET $ +.28%
    here comes the hour of power

  188.  humvee4me:  love your perspective  based on your real experience.  Maybe medicare or insurers could come up with an attractive alternative (pay-off) to patients heading into  a prolonged period fruitless treatment.  In agreement to forego Full Hospital Mode you can have palliative care plus a contribution to the retirement account(s) of a family members.  Sort of a medical savings account for services not taken.  Bet if some family members were going to get a little something they wouldn’t think of it as "rationing".

  189. Flaw/Allan – Hey, I can’t find one and the rest of the World doesn’t see one and is working fine with it but here it’s considered "Commie Talk."   You guys can have fun with that as weekend discussion after I’m out of here!  

    HK/Cap – Worth a gamble as a play on oil going up but I’m still not feeling the upside.  

    CNBC/Mike – Bad news = Bad ratings, they don’t like to be negative for too long.  As to rewarding failure – if we didn’t do that, what kind of affirmation would US corporations ever get?  

    Euro/Gel – I agree, I think they need to have something together by Thanksgiving weekend in the very least or people will lose patience.  

    USO/DClark – Only as an upside flyer over the weekend, perhaps if you are generally short and want a hedge.  Cash is much nicer if you are in that.  

    DBB/B1 – I didn’t say anything about DBB.  I like shorting DBA, which is noted above.  

    LOL Randers & Mr. M – That’s what makes a market. Two guys taking the opposite bet at about the same time…

    Weeklies/Reza – Thanks.  None on the weeklies right now.  I couldn’t tell you what will happen Monday at this point.  Keep in mind we are open on Friday for 1/2 day so those weeklies will have movement through then.  

    Thanks Acobra, nice thoughts.  

    That’s a great idea Red – offer $25K NOT to go through with extended care.  No, still would be kind of a rich vs. poor thing but it would make for some great hospital drama….

  190. @ allan292  and other would-be socialists and assorted other lefties: 
    memo: I didn’t start this ‘conversation’

  191. Matt,
    You can only view the cameras real time on the Iphone.  There are 12 cameras and you can toggle between them or zoom in or out using an app for the Iphone.  In my home or any other remote computer location, in addition to all of the features above, you can also search and review recorded data.  That’s a great feature since you can check the time stamp on the email or text, then navigate right to the spot and review the recording in the comfort of your home.
    It’s also nice tool for keeping the guys on there toes.  I’ve never mess with our employees, but the manager of our sister company will occasionally call the shop from home and ask the guy at the shop who’s loading or unloading his truck, why he’s taking this or that off the truck because he’s going to need it…….talk about head games!!

  192. Looks like more of a pin to where we started than a stick ! 

  193. NET $ +.19%
    I have to run, have a great weekend all

  194. @Phil

    At the bottom of your last post but one, there are three "Lunchtime reads".  Does one have to be a subscriber to the WSJ to open those reads?
    If you have it, can you post the "What’s The Bernank really after"?

  195. Gave up on the DIA puts, it’s all about you now Randers

  196. Phil,
     I can only say that as difficult as the situation is for you and your family, it must be immensely gratifying and comforting to your Dad in his hour of need to have your support. May you receive in kind when your hour arrives. 
    I looked over the Strategy Section again looking for one of those neat little rules of thumb (where did that expression come from – some old carpenter deal? Should we have a rule of middle finger for those situations where you’re f***ed?) that would apply to making decisions whether to let a buy/write, or sequence of buy/writes,  come to an end or continue, but I didn’t see anything related.
     I’m in Arch Coal, and after two rounds of buy/write I have a basis of 15.75 with outstanding JAN 2011 $22.50 calls sold and $19 puts sold. This would seem ripe for another round when the time comes with the price currently over $30, assuming the pump monkeys don’t stop pumping.
     Assuming you still like the stock when the time comes, what do you consider, or is it pretty much just numbers crunching?

  197. Phil : In July,I bought BMY at $27.35 and sold Mar. $27 calls for $1.56 for net $25.79 (now $25.94) in my IRA account. Since the call is down more than 50 % should I roll out to June $ 27 calls?  thank you

  198. flip
    Have you ever been in an accident caused by the other party? When the very profitable insurance spends $9,000 to cut your payment to $10,000 on a car that cost $20,000 to replace are you going to say the lawyers and big business needs more money or I got screwed? How about injuries that cause you to code blue and refuse to pay? Is that thinking like a socialist or lefty? The richest people are the most unhappy and like whores want more money. Think all others are pond scum and deserve nothing. What happened to equal oppertunity for all? 1.8 trillion deficit, 1 T military, cut SS, unemployment insur., food stamps everything else, still 1 T deficit, no taxes collected, no economy, starvation, civil war. The pentagon is planing on turning the military on civilians to portect the rich, that is socialistic dictatorship and why we spent all the money to control Iraq, Be careful what you wish for, you may get it and not like it!

  199. Just crushing the dolar; we’ll be at 75 by Christmas !!

  200. Phil,
    Sorry about your Dad.  I’m dealing with a similar situation.  Watching your parents grow old really sucks.

  201. Conversation/Flips:   Oh is that like Richard Posner going as far to write "A Failure of Capitalism"?

    Dollar getting jammed down hard into the close, failing the 78.50 line.  This is so convenient now, you only have to manipulate the dollar and the rest is done for you!

    Reads/Flips – Oh sorry, I guess if the article is from the WSJ (they are not all from) then maybe subscription.  How do you not have a Journal subscription?  No I can’t post something that circumvents the copyright of someone else but maybe you can get in through Andy’s blog

    Gotta run guys – have a great weekend,

    - Phil

  202. Pharm,
    Anything coming up for SPPI?

  203. Out of TNA with a quarter, another1% day. Have a good weekend all !!

  204. ACI/Kevin – Thanks but the essay answer will have to wait for next week.  I can tell you, however, that rule of thumb I believe was an approximate measurement in the old days of "about an inch" and I think the "rule" was it was fair to use your thumb as an inch for transaction purposes.  

    BMY/Dflam – Yes, if you want to stick with them but I’d check Pharm’s overall opinion of them.  As you know, I prefer to just roll the calls down first if you think it’s a good bottom. 

    Sucks/Exec – Yes it does.  Still, this is my Step-Father.  My Father died just over 10 years ago and I have to tell you how much I appreciated having my other Dad around as a friend to me and a grandfather for my children.  I could put up with a lot of sucking in exchange for the chance to have him around.  

  205.  @flip - Yes, socialized medicine is bad bad bad.
    Oh, wait a second…isn’t Medicare socialized medicine? Isn’t it already accounting for the vast majority of healthcare payments in the US as a percentage of total healthcare spending? Interesting. I have an idea, let’s get rid of it and rely on the private insurers for all coverage! I’m sure the insurance companies will give me great rates for a private policy once I’m retired and past 60. 

  206. allan292
    At 49 private insurance refused coverage because of per existing conditions, no rates at any price. Cut medicare and the doctors have to trade stocks to make ends meet, have you noticed how many doctors are members? Flip’s system is a winner.

  207. @Shadow  I love the Jon Stewart clip when Spitzer asked the ex-MD Senator on how much he made a year even after all of the Medicare spending cuts made in the past 2 decades. The Senator’s reaction was priceless…he came pretty close to bringing up the whole hooker thing with my man Elliot. 

  208. allan292
    Did you know my senator Brasso WY  was a doctor, now he is one of the worst senators in the nation making a lot more money. Wonder if he was agreat super caring doctor ready to help all including those with no insurance or money? I missed that clip.

  209. Shadow, I have noticed there are a lot of Drs on this board! However, I thnk they are trading b/c they like it, not b/c they need money.
    On another note Phil, the Gov’t is thinking of freezing military pay for 3 years which would save around 9 billion (if I am remembering correctly). I think it is a good idea fiscally. Although we sacrifice much, we also have job security and the military is having NO recruitment problems in today’s economy. Not sure I would recommend O do it and give the conservatives a chance to campaign next election on "Obama cutting support for military".  Anyways, ya’ll have a good weekend.

  210. exec, how do you resist micro managing?!  That’s a pretty nifty set up you’ve got.  So has it helped stop the pilfering?  Hope so- enjoy that pasta this weekend!  Out.

  211. Matt,
    I hate micro managing, in fact, my style of managing is to let people make decisions.  I learned a long time ago that if you’re going to direct each and every move a person is allowed to make, then they will be content to stand around doing nothing productive and wait for you to tell them then next place to stick their shovel in the ground.  I’ve also learned that if you tell someone how to perform a task, when things don’t go as planned, they will blame it on your idea.  On the other hand, if you let them know that it is their responsibility to figure out the best way to get a task done, they will kill themselves to make sure it gets down on time and correctly.
    As far as the servailance system……the salesman told me that the theaft would drop off by 90% the instant the word spread that we were monitoring the site.  He was right. 

  212. You know what’s amazing ?  It’s 1 week until "Black Friday" and we have heard virtually nothing about it … usually the media is hyping the hell out of Black Friday (& cyber monday) by now.
    Maybe they know its not gonna be good, so the less said the better ?

  213. Good Evening…. have been away most of the day, and as usual, the board has contributions of diverse advice and experiences… end of life issues and the following consequences of death… just my $.02, as I believe most who experience this ( don’t we all ) are looking at the "dark side" as most all who attend funerals are dressed in black, and wearing dark  sunglasses.and projecting a "morbid" attitude.  The feelings of sadness notwithstanding, I believe a funeral should be a celebration, and not an environment for encouraging the weaping and remourse.  I have been to many funerals, out of respect for the family of the deceased , and they frankly "suck" as an experience. The last funeral I attended a couple of months ago was the perfect example of how a funeral should be planned.  It was my father-in-law who passed away, and the funeral was held in a Catholic Church. My father-in law was a renowned musician, and the service was really a concert performed by his musician buddies— unbelievable!!!. The priest was also was an Irish buddy of the deceased who entertained us all ( jokes and humerous anectotal stories ). The church was a background, but the service was entertainment, as the deceased was an "entertainer" his whole life through his music. After the funeral, the family and his entourage of many friends went to his home and had a party that he would have been proud of – We even opened up his massive wine cellar, catered food, and let it be the best function he ever hosted from afar. He, I’m sure would have approved…. just a thought, as we all will go through this at some time in our life. Just a thought – It should be "the quality of life, and not the quantity of life"

  214. I’ll leave it to you to answer whether Socialized medicine is bad, bad, bad because the Bamster just tried to re-design it and has made it more socialist.  How’s that working so far?
    Even our local liberal newspaper has told him not to reduce his reimbursements for doctors under the new program.
    Socialism is failing. Here as well as everywhwere else.
    @PHIL —Capitalism….Anyone know of a capitalist country?  I sure as hell don’t.  This country has been an oligopooly run by Oligarchs in banking for 40 years or more.  Capitalism may be failing too if only we could find somewhere to test that theory. 

  215. Ah come on Phil, speaking of out of touch, did you just see the election results …the Dems just got their friggin ass handed to them. Look, I am a liberterian , how can you still be blaming everything on Republicans, the Dems have had control of congress for 4 years. Also, you need to be an equal opportunity critic, there is plenty of jucy stuff going around to have a field day on both sides. Finally, you seem like a really smart guy, next you will tell me that you trust the business page of the USA today more than the Wall Street Journa and Jon Stewart, a comedian, is your news and opinion source???..he seems a little too serious and needs to get laid more!!!.l…Oh, and how is extending unemployment benefits going to help the nation start job growth???…finally, I just got laid off from a sales position at BIIB, they just cut their entire Oncology division . Over 650 people got the Ax. think they are going to put them selves up for sale…Finally love your rants and writings . i appreciate all that you do….

  216. My brother is a researcher in pediatric oncology. He faces some real challenges but tries to work with families and the system. There will be a PBS documentary out on his work soon. I will try to let you all know when it airs.
    In retrospect,Turns out that selling the Nov DIA puts would have been the 90% earner today to the peg. Like Phil the master constantly states. Thanks for the learning opportunities.

  217. Gel:  You and I agree on most topics, but I have to disagree somewhat with your views on funerals.  I believe that funerals are put on solely for the closest of the departed; they are not meant to be entertaining or be uplifting to the attendees unless that’s what the family wants (which they obviously did in the last funeral you attended and so eloquently described). 
    The desires of the family will usually be dictated by their cultural ideals; being half hispanic I can assure you that if no tears or waling occurs at a funeral then attendees would wonder what was wrong with the remaining ones.   I know its very PC  to have funerals be a "celebration of life"; personally I attend to support the family nothing more or less. 
    It certainly should be more about quality and not quantity of life that matters!

  218. We need to expose more of these fraudulent, junk China companies for what they are.  Just like during the bubble, the exposing of these companies as being valued on hot air and "hope", came part and parcel with the bursting of the Bubble.  Its about time this one popped too:
    After RINO, Is Muddy Waters About To Sacrifice Orient Paper (NYSE: ONP) On The Altar Of Chinese Stock Fraud?

  219. humvee… Yes, the occasion is really intended to give the immediate family a chance to bring some closure to their loss, and to pay their last respects to the deceased. The family, primarily, is the intended beneficiary, but also those outside the family that were very close. This funeral I described was in very good taste, and lasted about 1-1/2hours. The music, both  instrumental and vocal, was some of the most moving beautiful sounds I have ever heard. The eulogies were equally as beautiful, as so many ( unexpected) got up and spoke about the many memorable events they shared with the deceased. The ceremony was "upbeat"and everybody who attended really enjoyed the experience. It was the first funeral I have been to where "Ava Maria " was not part of the musical presentation.

  220. datuu / EUO
    I do not understand your question – "de-correlating with the Euro because of the leverage" Do you mean the etf and Euro rise or fall at a ratio that is not 2:1, as one would expect. I know Phil played this one as well, and he might have an insight to your question. I entered my first position today, selling the naked May puts. Since this etf is priced in US Dollars, I believe the move up in the value is directly related to the weakness of the Euro vs the Dollar, and not a basket of currencies. If I am correct that the Euro could fall 15%, then I believe that would be a move of 30% in the EUO upward.

  221. coffee at starbucks up to $4.29 today (from 4.18, +2.6%).
    Because it’s food, this doesn’t count as inflation of course.

  222. SPPI – don;t see any new news on them.  Conference is coming up in December but don’t know what it may contain.
    BMY – like them a lot.  I would just leave the hedge on or roll them down per Phil’s advice.  They are approaching the 200d MA, so if they touch, maybe selling the $25 Mar10 P would be a good one as well (if you can in the IRA). 

  223.  I’m still plotting my next moves while sitting mostly in cash.  I have been reading a lot to make up for some knowledge deficits about options trading and currencies.  I’m staying focused on long-term trading that fits my lifestyle, doing discount writes in my margin account and moving more to married puts in my IRA account.  I posted some thoughts today on my website.  (click on the user id).  As I noted earlier I’m pulling back for awhile at the end of the month and I appreciate the well-wishes many of you sent last week.  I still plan to write my weekly thoughts about IRA trading and hope many of you will keep in touch through the website.  Be careful out there!  And remember I’m still the only free newsletter writer who will give you a free bed if your trading sucks because of my bad advice. 

  224. Gel
    Well said re funerals.  Funerals have certainly been cultural and societal defined beliefs which of course changed radically over the ages.  Given your contemporary view of the funeral as a ‘celebration of life’ mirrors the most recent shift at least in the Roman Catholic church but was for many years was and I think remains the main theme of the Irish culture’s ‘passing on’ ceremony.  (Think they have it right).  Having been born and educated in Boston, many of my friends are of Irish Catholic descent.  I really could not tell much of difference from a wedding, funeral or any other event in Southie.  Fact is no one view is completely correct nor will one view of the experience be held by all.  Like your father-in-law and yourself, I say let’s make it a good one.

  225.  Gel, Doubled and Funerals,
    I’ve done a ton of funerals and I think I do them well, since no one I have buried has complained yet. :-)  I have always treated funerals as a celebration of a life lived, but sometimes I have to look hard.  I have unfortunately had to do funerals where life was cut too short, or even worse, many people were glad to see them go.  Sometimes a funeral is a time to make some peace.  If I sense the family had a broken relationship with the deceased, I tend to say something about unresolved emotions and give space for people to let go of things as needed.  Sometimes a true celebration of life acknowledges the rough spots, the struggles and the importance of loving people anyway.  My rule of thumb is that if people did not laugh at least twice and cry at least once, then I did not do a good job.  My two cents from the other side of the pulpit.

  226. DD… Yes, Irish funerals are definitely not morbid affairs…. how about some of the wakes, where the deceased is in attendance, and receives so many wonderful toasts and the recitation of memories of past experiences. All of this is good for the soul, and helps to heal the wounds of sorrow. I’ll bet the "Southies" still salute the deceased in the true traditional Irish fashion, and send them off with sincere blessings of affection. One must remember, the "departed" is probably watching the whole event from above…. so be careful what you say !

  227. Revtodd… I like your attitude for funeral events….they should be respectful. and supportive of the family, however not morbid.  If the deceased is deserving of kind words, then the immediate family should be reminded of this, as they are the ones who are grieving the most. ( maybe the creditors feel even worse ). In my recent experience, I was the son in law, and happened to be one who was a friend – shared a mutual respect for each other, as we both loved investments, and also had similar political interests ( you betcha, Phil – he was a liberterian ) and enjpoyed good wine together. ( I inherited a part of his wine collection ). He was an extraordinary musician, and his funeral was dominated by music -executedby some of his close musician buddies… an experience that will live with me forever. He  ( the deceased ), by had two funerals – one in California, which I attended, and the other in Chicago which was for other family members and friends ( and  burial in the family plot ) In his will he insisted certain family members attend the last ceremony, as he wanted to make sure the body which was flown to Chicago was in the coffin, and that the coffin be opened for the occasion to make damn sure the funeral home in California was not playing games…. now that is what I call a hedge.

  228. Phil,
    That was a good notification yesterday regarding the 20 minute moving average.  Good video’s.

  229. I meant to say 20 DMA.

  230. Good article!

  231.  biodiesel – SBUX is increasing their prices – the interesting part of the last conference call was that they priced in a increase for coffee prices but not enough in my opinion based on the following comment by the CEO – "higher coffee prices are unsustainable"   Part of the starbux model is predicated on what i saw the other day, "two young ladies, who seemed like servers at a local restaurant (ahead of me in line) spend 13$ on two drinks and then drove away in a broken down car. At what point, does this become "unaffordable luxury"  Clearly, half of their customers are making unwise decisions and spending 6 to 7$ on crappachinnos.

  232. Jomama:  amazing marketing SBUX has performed, to encourage lower income workers sample their only taste of the American dream and then drive away in their reality based vehicle.  Its sad to see people squander their few dollars so that they can feel part of the main stream. 

  233. Jomama, but its probably better than going to the local mini mart to buy cigarettes, 4loco, and lottery tickets  :)

  234.  Does anyone here have an opinion on H&R block?  They are currently $12.50 with a dividend yield of 4.7%  I can sell the JAN 2012 PUT/CALL for $5.50 which makes the yield over 8%.

  235. @jomama
    RE: SBUX customers
    I received a ‘free’  SBUX card good for $5.00.  Maybe the people in the broken down car did too.  Unless you saw actual cash being exchanged, might not that have been a possibility?
    Just sayin’…

  236. gel1 and all
    Being of Irish and other desent as a catholic I believe the church has adapted to modern deaths. If all would accept this view of celibration in whatever view we would be a big step towards acceptense of the facts of life and death. I will ad that all organized religion is in suspect as they are run by imperfect humanso I rarely go to church to avoid the human interpretation.

  237. BEWARE!
    When dealing with a religious SOB get it in writing as he has no problem blanking you over with god on his side!

  238. So now the Irish bailout for what, $130B or so….from the IMF, ECU, etc.   But really, isn’t this the next step in the cascade of failing european sovereigns with much more carnage to come?   I can’t escape the conclusion that the Euro is dying a slow death which in the final capitulation phase to come when Spain or Italy fail, will drive the dollar up as the global reserve currency!  
    I think I’m the only voice right now who thinks that Bernanke is actually doing the right thing in getting ahead of the deflation curve, which is the only way to effectively deal with it (Japan learned from being behind the curve in QE, and at least the Fed seems to have learned too).   I don’t know whether to call it ‘musical chairs’ or ‘pin the tail on the donkey’, but clearly there is a contest and where there will be real losers in the sovereign solvency game.   But I think Bernanke pre-calculated the demise of the Euro and where the tide of currency will flow to:  Chimerica, as it is called.  As Europe is forced first to deal with their debt collapse, the weakening of the Euro is their version of QE monetary debasement and may well lead to dissolution of the Euro in the end.  Currency players are not unaware of this. 
    With China forced to cool its economy and speculative excesses by the Fed jamming their currrency, I think it was a stroke of genius and finally an offensive move against what has been an intransigent, self-interested China who in the end appears not willing to play by WTO and other global trade rules.  If they want to keep the peg, then this is what they can expect:  imported inflation, asset bubbles, unstable economy and civic unrest due to rising food prices and other basics needs.  
    I think the fears of the collapse of the dollar are way overblown, especially when considering purchase-parity-power trends down the road (euro down/yuan up), and the geoeconomic instability that is present.   Yes, gold will continue to be strong, but I strongly suggest that the dollar will continue to be in demand as the global reserve currency, as the world continues to deflate the debt/asset bubble via monetization.  If Bernanke did not get ahead of the deflation curve with QE, then we would, in my opinion, face a strengthening dollar as a safe haven, even while our economy struggles and China manipulates its currency…not a good thing for America or the world.
    My prediction is that the dollar remains relatively stable at 75-80 over the next year (QE notwithstanding), while the euro loses value and the yuan is forced by the market to appreciate — all good things for America and, more importantly, the responsible path for the custodian of the global reserve currency.

  239. lvmoda
    I happen to agree with your thesis. I do believe the Euro will face some serious headwinds going forward. Ireland is the second domino to fall, right behind Greece ( their problems are very serious, however Ireland happens to be a domino with more mass.  Spain, Portugal and Italy are lined up to follow as well, given the debt levels and cultural/financial imperfections they share.
    Much of my reasong comes from the belief the "cultural" parameters in The Eurozone embrace the "entitlement" concept of governmental functions – expansion of pension benefits, and union domination in the workplace. The diminshment of the work ethic and creative desire will keep the economies of the members at a non competitive level, compared to other advancing nations. Simply put…. they can’t work their way out of their mess.
    Recognizing the need for a better GDP/debt ratio, in order to keep their bonds attractive so they can finance the massive debt, many of the more indebted nations are implimenting "austerity" programs, which are not working. These programs are slowing growth, and reducing GDP…. thus making  the bonds they issue less attractive to buyers and forcing the rates up in order to make them marketable. This additional interest expense is a "double wammy" that makes things even worse financially… and increases the chance for the domino to tip over.
    Exacerbating this whole ugly scenario – most of the debt is swirling around in the Eurozone, so all members are at risk of the potential default. The German government is the only hope for this nasty scenario – however Angela Merkel is making sure the German taxpayers will no longer be on the hook for the debts of other nations and their mistakes. Merkel has suggested the bondholders "eat" the risk… the ECB is against the idea as the rates will skyrocket and the debt will increase.The German elections are in March, so this will get interesting.
    Bottom line is…. the Euro is approaching the bathroom, and the toilet bowl is calling. This will pump up the Dollar, and I am looking at some investments to take advantage of this scenario. On Friday I took a long position in EUO ( ultra short Euro ), and I will play the Forex market, targeting the Exotic currencies that trade in concert with the Euro. Some of these move "faster" directionally than the Euro – The Hungarian forint is one of my favorites, as they have a nice "mess" of their own, and should enter the tank at a faster rate than the Euro. The others that follow the Euro directionally are Polish Zioty, Turkish Lira and Czech Koruna. I have my eye on a few others, and will watch the charts.Many of these currencies move much faster as they are smaller and less liquid. Stops need to be observed for this reason, among others.These opportunities will develop over a period of time, as the news evolves.

  240. Flipspice – she paid with her purchase with a $20 bill – i had plenty of time to observe since the two girls had a very elegant long order. but your point is well taken.

  241. Dollar:  It’s become too confusing for this simpleton.  Earlier this year, if a european country showed any weakness the euro would tank, gold, us bonds and the dollar would rise.   The Irish problem came forward this weekend and the dollar and us bond are both down, and gold is up; i really don’t get it.  It seems very unpredictable and subject to manipulation.

  242. Good morning!

    Looks like I didn’t miss too much and Ireland has finally decided to accept help but there is no actual solution ready so probably into December before people stop worrying completely.  

    Did we only rally because last week was expiration week or did we prove a test at 1,177?  

    gpc 11-22-1

    That depends on whether the dollar made a weak bounce (2.5 points) off it’s 12-point drop or if it’s just consolidating for a move back over 79.  I think that 78-80 range will define our direction this week and a break up or down will probably indicate which way the year goes.  Notice last time we bounced off low support, at the end of last year, that we had a little pullback in the dollar and then ZOOM!  ZOOM would not be good for US equities or commodities!  

    gpc 11-22-4 

    Of course, bulls shouldn’t be too worried as the long-term trend may be their friend with the dollar down 35% since Greenspan first cranked up the presses in 2002.  

    Where was the Dow in 2002?  10,500.   So where should we be, all else being equal?  14,175!

    Where was the S&P in 2002?  1,100.  So where should we be, all else being equal?  1,485!

    That is where we topped out in 2007, when the dollar bottomed out at 72.  So, the good news is – we were never rich.  It was all a commodity driven (and stock certificates are a commodity too) illusion and so, when I tell you it’s all about the Dollar – it is not just ALL about the Dollar but it always has been ALL about the dollar so, if you like equities and commodities, you’d better be damn well hoping that Europe gets their house in order and that Japan is not successful in weakening the Yen and that China helps us our by de-pegging the Yuan and that Ben keeps printing money because – if that dollar bounces – down we go!  

    The potential for a full repeat of the Beta 3 pattern (see this week’s Stock World Weekly) is so worrying that I cannot, in good conscience, recommend anything but cash and some shorts but that was last week’s "spoiler alert" so let’s not be all shocked by my lack of faith. 

    If you are a new reader – I swear to you that I may be a cynic but I am NOT a pessimist – this is just a crappy market to invest in and I call them as I see them.  Did you know that newsletter revenues go down significantly when the outlook is pessimistic.  People don’t want to hear bad news so the pressure is on most to give you the sunshine and lollipops point of view as much as possible.

    Yes there are bearish newsletters but they are always bearish and have a niche audience.  I’m talking about the neutral ones, not to mention the vast majority of funds are bullish funds and that can’t change so they NEED you to be bullish on something and put your money into the market so they can charge you fees.  You won’t hear very many hedge fund managers saying "I think you should be in cash" because they are not "Cash Fund Managers" and they don’t get paid for doing nothing.  

    So beware the charlatans, they have the floor and they will tell you ANYTHING to get your money off the sidelines.  We have a short week, we’re heading into the holidays and these are very uncertain waters so why not just relax and have a happy Thanksgiving with the family as there will be tons of opportunities to invest in December and, of course, next year so we’re not going to miss anything by skipping this low-volume BS and having a nice, relaxing week. 

    Will I still make picks?  Sure I will, I love making picks!  But let’s just keep things in context and have some fun rather than trying to come up with an investing premise in an uninvestable market.

    All the best, 

    - Phil