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Whipsaw Wednesday – Dollar Down, Market Up on Record Stimulus

Is it Wednesday already?

What a fun week we've been having.  I had told Members when we were looking forward in the weekend post:  "Wednesday is a biggie with Mortgage Applications, Challenger Job Cuts, ADP Jobs Report, Productivity and Unit Labor Costs, ISM, Construction Spending, Oil Inventories, Auto Sales AND the Fed Beige Book, which I think may show optimism building into the holidays (as they want to spin it that way) so, if we are going to get a push up, Wednesday should be the day."  Well, it's 7:15 and it looks like we're peaking out at 1% in the futures. Europe is up 1.5% at noon.  

Yesterday's very poor finish to November left us in no mood to go bullish into the close and we'll probably be shorting this open as I'm just not seeing any real news out of Europe to justify this rally so I have to think it's entirely a relief rally that's pushing the Euro higher ($1.31) along with the Pound $1.56 while the Dollar drops to 80.80 and that's down 0.6 from yesterday's close and we generally have a 1.5x negative correlation so there's your "rally" named in just one note.  We pulled our longs and went back to cash in the $10K-$50K Virtual Portfolio with another $300 gained on the day and that's on track (up $1,000 on day 2), but we still have $1,500 at risk on the bear side so we'll be a little nervous if the Dollar can't hold 80.50.  Overall, I'm still very pleased with my October call to get to cash and this morning Bloomberg decided to congratulate me, saying:

The dollar proved to be last month’s best investment, beating stocks, bonds and commodities, confounding officials around the world who said Federal Reserve policies would debase the U.S. currency. The U.S. Dollar Index, which tracks the currency against those of six major U.S. trading partners including the euro, yen and pound, rose 5.2 percent in November. The Thomson Reuters/Jefferies CRB Index of 19 commodities was little changed. The MSCI All Country World Index of stocks fell 2.2 percent after accounting for reinvested dividends. Bonds lost 1.1 percent including reinvested interest as measured by Bank of America Merrill Lynch’s Global Broad Market Index.

 

The Fed is certainly doing their best to push us higher and here's a great chart that shows you EXACTLY how that works.  QE2 inflationary pumping is our SOLE bullish premise on the markets at this level but so far, so lame as far as the market's reaction to an even bigger stimulus than we had in April and we're not even holding our highs – what happens when this round is over?  Well, probably there will be another one because investors are like children and the Fed is like an overly indulgent parent who can't stand to see us cry and they've already moved us from low-rate candy to quantitative liquor and now it's QE2 crack they are providing to give us a quick fix – I'm sure Uncle Ben is cooking up some speed-balls for QE3 because that's just good parenting, isn't it?  

If we don't wind up economically dead in an alley, it's going to be a wild ride – that's for sure!  We're watching several levels and today's bounce goals for our indexes are Dow 11,120, S&P 1,195, Nasdaq 2,525, NYSE 7,550 and Russell 735 – if we can hold those, then POMO fever may be more than just a passing phase and we can start taking a serious look at our breakout levels again and the Russell has never really lost the faith (which is why they are a key downside hedge for us) and hopefully we'll have the opportunity to take those QID calls we missed an opportunity on yesterday, when the Nasdaq gapped down at the open.  

Once we have some high-leverage downside protection, we'll be ready to look up again.  That's why we like to take bearish hedges as we test our upsides – they give us a solid floor we can play aggressive longs off.  We did add a few long trade ideas in Member Chat yesterday, of course, as we always do a little bottom-fishing on a good down-turn.  Today we'll be looking for an opportunity on QID, TZA and USO to go short (I mentioned shorting oil at $86 yesterday and they fell all the way to $83.70 into the NYMEX close, now back to $85.50 on the weak dollar) while, at the same time, probably looking at FAS again to go long.

The big pump in Europe today was caused by what is being considered softening language in Jean-Claude Trichet's testimony to the Euro Parliament, which suggests future bond purchase decisions were "on-going" as opposed to "off the table" as had been the previous case.  Trichet has that Greenspan quality where the market's move based on the slightest nuance in his statements.  Our Fed, on the other hand, has made it clear that they will gladly put this nation into 1,000 years of servitude to foreign debt-holders no matter what the economy actually looks like, which is why we can rally despite strong ADP Numbers (+93,000 jobs), that would logically suggest (along with other positive data) that the Fed should be easing up on the free money express.  

But everybody loves FREE MONEY and President Obama and the Republicans both hinted that we may get more of it in the form of extended tax cuts – just like the ones that doomed us less than a decade ago – isn't that special?  FREE MONEY allows us to ignore the 16.5% drop in Mortgage Applications last week despite the fact the 30-year note hovered around 4.5%.  And yes, that includes an adjustment that takes Thanksgiving into account!  Refinances were down 21.6% for the week, the lowest level since June when our market took a dive.  

That's pretty much in-line with the dreadful Case-Schiller numbers we saw yesterday and it does look like we're heading to a double-dip in housing but, hey – don't let that stop you from buying PCLN!  We were short PCLN but took that trade off the table on yesterday's dip as we are still very much in "take the money and run" mode on both long and short plays.  Challenger Job Cuts jumped to 48,711, the highest level in 8 months, indicating big corporations are not done downsizing.  Why should they be with Q3 Productivity up another 2.3% and Unit Labor Costs down 0.1%.  It's a perfect jobless recovery – well, jobless in America anyway, US corporations are still hiring tons of people in Asia!  Marcroeconomic Resilience put it very well yesterday, saying:

Although corporate profitability is not at an all-time high, it has recovered at an unusually rapid pace compared to the nonexistent recovery in employment and wages. The recovery in corporate profits has been driven by a rise in worker productivity and increased efficiency but the lag between an output recovery and an employment recovery seems to have increased dramatically. So far, this increased profitability has led not to increased business investment but to increased cash holdings by corporates. Big corporates with easy access to debt markets have even chosen to tap the debt markets simply for the purpose of increasing cash holdings.

Again, incumbent corporates are eager to squeeze efficiencies out of their current operations including downsizing the labour force but instead of channeling the savings from this increased efficiency into exploratory investment, they choose to increase holdings of liquid assets. In an environment where incumbents are under limited threat of being superceded by exploratory new entrants, holding cash is an extremely effective way to retain optionality (a strategy that is much less effective if the pace of exploratory innovation is high as an extended period of standing on the sidelines of exploratory activity can degrade the ability of the incumbent to rejoin the fray). Old jobs are being destroyed by the optimising activities of incumbents but the exploration required to create new jobs does not take place.

This discussion of profitability and unemployment echoes many of the common concerns of the far left. This is not a coincidence – one of the most damaging effects of Olsonian cronyism is its malformation of the economy from a positive-sum game into an increasingly zero-sum game. The dynamics of a predominantly crony capitalist economy are closer to a Marxian class struggle than they are to a competitive free-market economy.

This isn't new stuff people – that cartoon is 100 years old and we fought against the evils of corporate greed and won at some point but now they've changed tactics and moved onto taking over government and brainwashing the masses so the American people now confuse the good of the corporation with their own welfare when they are, almost by definition – diametrically opposed.  As I've said since November, when you people voted the same idiots back into office who destroyed the country in the first place – I wash my hands of it, you get the Government you deserve but it does still make me angry as I haven't completely lost my liberal nature as I try to pursue the path of true capitalism and just get mine while the getting's good – so forgive the occasional flash of conscience I may still show from time to time – I am trying my best not to give a damn about the bottom 99% – just like our leaders!  

Jobs are booming in Asia and Chinese workers there are getting raises as China's Manufacturing PMI increased to 55.2 in November.  That would be fantastic except the Input Price Index rand up to 73.5, another indication that China has a long way to go to get inflation under control but HBC considers it "manageable," which is code for "keep giving us money."  The Hang Seng gained 1.1% this morning but the Shanghai held flat while India put up an impressive 1.7% gain, trumping the Nikkei's 0.5%.  I mentioned Europe earlier and the Euro is up 1.15% against the dollar at the moment (9 am) but the dollar is holding that 80.50 line so far.  The CAC is up 1.3%, the Dax is up 2.2% on Trichet Fever and the FTSE is up 2% as Chancellor Osborne does a victory lap, congratulating the Brits for NOT being part of the Euro, saying: "I feel that our view has been vindicated by recent events – I'm very pleased the U.K.'s not part of the euro."

How's that for a ringing endorsement of global economic health?  Europe is simply ignoring the 9% drop in Carrefour, the World's 2nd largest retailer, who are plunging after reporting weak performance across Europe as well as costly write-downs in its Brazilian stores.  Carrefour has lost market share in France since September after competitors opened more stores, while price deflation “is evidently pressing margins.”  According to their CEO: An increasingly competitive environment in France, as well as economic weakness in Europe cited by the company suggest Carrefour may struggle to retain the benefit of its cost-cutting initiatives.  That is why the CAC is lagging the FTSE and DAX but this is not just a French problem.  

I think the entire XRT (Retail Index) is due to come under pressure as non-stop sales lead to margin squeezes.  I mentioned last week that we know the promotions are out of control when my 8 year-old daughter comes home from school and tells me how important Black Friday is.  All it will take is another small child (perhaps my 10 year-old because nobody listens when I say it) to point out the the Retail Emperor has no margins on clothing to knock this whole sector back to the low $40s.  The Jan $44 puts are just .95 and should be less than that if we have a silly pump open so that will be my Free Trade Idea of the week.  We'll see how it goes… 

Trichet has to do more than just talk to keep a lid on the crisis in Europe and we still have plenty of issues here at home that need to be addressed like Nevada getting their ratings outlook cut to negative by Moodys based on declining gaming revenues – the same ones that LVS and WYNN are making new highs in anticipation of.  

We are up based on the hope Trichet begins dropping Bernanke-sized wads of money from helicopters and we're up based on the hope that Obama, the Democrats and the Republicans will all sing Kumbaya and quickly pass another round of massive tax breaks (because the first one worked sooooo well) which we hope will boost the economy and we hope all that happens before any countries, states or banks go bust and, of course, we hope all the positive retail numbers we are hearing will extrapolate out to something in the vicinity of justifying our massive market rally.  

Hopefully yours, 

- Phil

 


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  1. Ugg.  Whipsawed again.  I must say that the thrashing I’m getting, my increasing inability to keep my emotions out of my trading and of course the charts suggest that we may be turning the corner to the upside for another run.  Makes absolute no sense except for the juice Phil is showing in the chart above (red line Fed stimulus).  I’m with you Phil.  I’ve got to go short by 9:45.  But if that doesn’t work out, it could be a free money day to the upside.


  2. NET $ +1.34%,  dx/y = (.43)%
    Futures:  1196.50, overnight:  high =1196.75, low =1176.25


  3. Good Morning Phil,
     
    Nice call on the cash Phil.  I don’t feel like such a dunce given the fact that I’ve been sitting almost 100% cash for the last month.
     
    I was curious about something.  Have you done, or do you know of any studies that have compared the pre-market futures to the actual performance of an index for the day. 
    For example:  If the S&P is down in pre-market 1%, how does that compare to how it finished the day.  It would be interesting to see if there are any patterns that could assist in trading.


  4. Matt,
     
    Don’t feel bad, I bought TZA near the close and like an idiot decided not to sell it in after market for a 1% gain.  Thus……I broke one of JR’s golden rules and will once again pay for it. 
    How does that go again?????   The trend is your friend……the trend is your friend……the tre


  5. so they do not like QE2 here, but want the ECB to be the main buyer if debt in Europe???? ok why not


  6.  So Trichet is considering ongoing bond purchases for Europe.   After all the vitriol thrown at Bernanke about QEII, it appears that Europe and specifically Germany will end up eating crow when they realize that the austerity strategy will not solve their problems.  In fact, as S&P considers downgrades due to the growth-inhibiting effects of the austerity moves, they are slowly realizing the inherent negative feedback loop of their strategy.   Funny how all the carping on Bernanke and the Fed has subsided as the dollar has actually strengthened and people realize that his moves are limiting the negative effects to the US of the slow-moving train wreck called the Euro.   


  7. I cannot remember such a ridiculous pump in FAS premarket.  There is 0 chance it won’t close some of it’s gap from yesterday.  Shoot, it could close 90% of it and still be up nicely from yesterday’s close.  The absurd pump and cheerleading about the friggin 73K jobs added at the malls for xmas lead me to believe this will be a fade day. 
     
    Exec, time to double down! 


  8. The dollar seems to be hanging in there? Maybe that will make NFLX go down ;-)


  9. What happens if every central bank in the world begins to ease?


  10. Seems like a feel disconnect between profits and economic reality for most people – have been betting on the later – perhaps a mistake – who knows when housing, debt, unemployment and defaults catch up to us.

    Guess we should be partying like it’s 1999???


  11. NET $ +1.30% at the bell


  12. Matt/DD,
     
    Ballsy move.  I’m tired of getting burned on the short side.  It’s so much easier to make money on the long side.


  13.  Sell that overpriced merchandise to the Mutual Fund 401k buyers today !


  14. Phil, 
    Any input on FSII? (I know you have said to stay away from "commodity" chip makers that compete with China… but this one has taken off unfortunately for me)…A few weeks ago I bought 3000 shares from one of David’s plays and they dove down from 3.15 to 2.50 in no-time, so I sold Jun 2.50 calls against them to protect further declines. In no time the shares went back to 3.21 and I sold expecting another pullback as they were in a range of 2.85-3.20… however they have surged now up to 3.50+ and I am in the hole with the naked sold calls…
    Thanks, 


  15. Phil, I am thinking of the DIA dec 109 puts at around .65 – .60 for a dow pullback later.. good idea?


  16. Wheee – what a ride!  

    S&P 1,200 already – can we hold it?  

    We’ll be looking for that but the breakout line is 1,220 so let’s not get too excited about this, OK…

    Our watch levels were: Dow 11,120, S&P 1,185, Nas 2,500NYSE 7,550 and Russell 715 - once again the NYSE is our stick in the mud so we’ll watch that line as our on-off swtich but I like the short plays this morning:

    The QID $11/12 bull call spread is .66 and we can sell the Jan $12 puts for .60 so net .06 on the $1 spread that’s $1.30 in the money.  

    I also like the $11 calls at $1.30 with 5 in the 1050P and a stop if the Nas breaks 2,550 so pretty tight stop but I doubt we’re over 2% today for more than a few minutes.  SOX are up 2.75% at 400 so that’s good to watch too – if they head higher than that and the Nas pops – then it’s a bad trade and we have to give up.  

    DIA $110 puts are a good deal at .90.  Same thing at 12,000 – just testing our highs and, as always, looking for a quick 20%.  10 of these in the 1050P but I may be willing to DD on a move up so we’ll have to play this by ear.  

    XRT Jan $44 puts came in at .80 so game on for those too, 5 in the 1050P and we’re now very bearish there!  

    Our other levels are still in play at:

    • 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 2,420NYSE 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 

  17. lol!  Look at the dollar.  Flat as a pancake after a big overnight drop.  You’d think that Trichet’s comments on the possibility for QE in Europe, which is supposedly behind their rise in equities today, would continue to strengthen the dollar.  But no…. not in bizzaro land where big money controls the equity market and even bigger money controls the FX market.  PIMPCO getting into equities really scares me.  Just think what they could do in bonds and FX to help their equity book.  Makes me head hurt thinking about it.


  18. SPX- anyone else having problem with TOS on SPX? My screen says it’s as 1260 bid?


  19. Phil Do you still feel that NFLx is a blowoff topper? You recommended I wait a bit before rolling the Dec 190 C. How long is ‘a bit’?


  20. Whipsawed Matt – Just let me know when you are capitulating so I can step up my shorts!  As you can see, I’m already joining you as I saw nothing but bearish opportunities in the open.  Even our MoMo buddies are failing to follow through so far – but the day is young..

    That’s a big net Mike!  

    Lots of 10am data so look sharp and, of course, the BBook at 2pm.  

    Wednesday’s economic calendar:
    Auto sales
    10:00 ISM Manufacturing Index
    10:00 Construction Spending
    10:30 EIA Petroleum Inventories
    2:00 PM Fed’s Beige Book
    2:10 PM Fed’s Yellen: Fiscal Responsibility and Global Rebalancing
    5:00 PM Fed’s Fisher: Economic update


  21. Phil –
    What about a short on fix on the assumption china is going to tighten more


  22. pstas – yes on SPX.  Problems abound.


  23. Looks like the pigs (CMG NFLX) are starting to lose traction!  Go Down! Down! 


  24. Markets are up and NFLX is down. I call dibbs on the theory that NFLX is tracking the Dollar index ;-)  


  25. Studies/Exec – I don’t know of any but I’d like to read it if you find one.  In general, we seem to be successful as contrarians into big pre-market moves in either direction.  From an options perspective – we are selling into the excitement and that gives us a natural buffer we can work with, especially when we can play a 2% move on the odds that it’s more likely we pull back to 1% than break over 2.5% in a single day.  

    ECB/Mike – Well if Europe prints money and we print money then we stay even and we get to realize Ben’s vision of global hyperinflation that wipes out all debts.  

    ISM 56.6 vs 57 expected so a tiny disappointment there but it doesn’t take much to burst a 2% bubble!  


  26.  FMD on the open … will it hold up …. barring any major news, I will go out on a limb and say we close green.
    Whether we close above these levels is another matter entirely.


  27.  NFLX red … a lot more to go down.
    CMG just turned red …. ditto


  28. 10:00 spike in the dollar to push us over.  What a bunch of crap.


  29. Construction spending is surprisingly strong, up 0.7%, which is even with last month but they expected a 0.5% drop for October.  That may keep commodities higher and will soften the ISM reaction.  

    Now it’s oil inventories at 10:30 and a tempting short there but I’m hoping for a big pump job and we can short into that.  No, I still can’t find anything to go long on…

    DECK testing $80 in case you missed getting in short yesterday.  


  30. Phil:  I am looking to enter COL (Rockwell Collins) on a nice big volume bounce after a big drop.  Looks like good momentum to the upside. Defensive stock, Pays a dividend, inline earnings and increasing global unrest.  Good for a mid to long-term hold?


  31. FAZ just broke down 12 and turned back up.  Total stop buster.  They are some real mo fos!


  32. Oh yeah, tripled down in FAZ at 12.  Hope this doesn’t turn into a white knuckler!


  33. Phil/Futures
     
    I looked all over the web and the best I could find was this report.  I don’t understand the "handles" terminology that he is using.
     
    I thought maybe JR had some info on this.  I think I might start keeping a log.  Perhaps log the premarket S&P at 9:00am and how it closes for the day to see if there is any kind of pattern.


  34. NET $ +.86%,  dx/y = (.35)%, lowest I have seen on the NET today
    C =1200.01, F =1199.50


  35. Dollar climbing… TZA climbing….WTF????


  36. FAS/Matt – I know and XLF is only up 1.4%, lagging the broader market.  

    1999/Samz – Yes but the question is:  Is it March of 1999 (with 30% to gain) or December 1999 (with 60% to drop)?  

    FSII/Amatta – Not scaling in and lack of conviction get you every time, don’t they?  Things drop 20%, you should EXPECT things you buy to drop 20% and know exactly what you are going to do AFTER they drop 20% BEFORE you buy a single share or contract.  If you don’t have a plan you look forward to executing on a 20% drop – DON’T BUY THE STOCK – especially silly little small cap just-over-a-penny stocks like FSII.  It’s a $140M company and was a $110M company at $2.50, which means your 3,000 shares at made you a .0001% owner of the company.  I don’t know what you sold the June $2.50s for or why you have done nothing while the stock gained 44% since mid-October but you have to stop doing this!  The stock did not surge to $3.50, it was $2.80 3 weeks ago and went up to $2.90, then $3.20, then $3.40 and now $3.60, blowing past multiple logical stops or at least rolls.  June $2.50s are $1.55 and that’s net $4.05 for the stock and you paid $3.15 so LEAVE IT ALONE and take your small profit and next time scale in and set stops and have a plan BEFORE the stock drops 20% and then rebounds 44%, which is, in the end, only up 20% overall and this is likely the top of the range.  

    DIA/Novice – They are not much different from the $110 puts I picked before but I like to spend closer to $1 so the commissions don’t outweigh the profits on a 20% gain.  

    Mattress Plays – Don’t forget to roll up to the March $114 puts, now $5.60 and a .40 roll from the $113 puts


  37. Pimpco/Matt – I can’t believe that the government doesn’t draw the line on a fund and say – Gee, $1Tn is a bit much…  Well, then again, sadly I can believe it and we all know why and that’s why this country is doomed.

    1,260/Pstas – Well if they are bidding, I’m selling!   I’m not seeing it. 

    Oops, oil up 1.1Mb, gasoline up 600,000 barrels and distillates down 200,000 barrels so a bust for oil – there’s no other way they can play this one (one would think).  Nice, slow move means the Jan $35 USO puts can still be had for .97 – 5 in the 1050P should be good


  38. COL/Phil:  Looking at selling Apr 50 Puts for $1.50 and buying the Apr 55/60 Bull call spread for $2.60  for a net cost basis of $1.10 with a potential return of 31.53%
     
    Maybe to take advantage of the dividend, a straight out buy-write selling the Apr. 55 puts and calls for $10.25 for a net cost basis of $46.03 and a put-to basis of around $50.90 and a profit potential of 22%


  39. Good Morning!


  40. Good morning,

     

    IWM    71.62, 72.02, 72.28, 72.74, 73.47, 73.91, 74.57 and 75.28


  41. NFLX/DD – I think the whole market is topping off here and all it takes is for one reputable analyst to question their model and down they go so I would just keep my eye on the roll to the Jan $210s at $13, selling the $180 puts for $6 to split the current $18 Dec $190s and, as long as that spread doesn’t go negative (currently $1 credit), you have no pressure to roll ahead of expiration, where you still have a good chance of expiring the caller worthless. 

    FXI/Samz – Who knows what China is going to do?  If you want to risk China short, I’d rather sell FXP Jan $26 puts for .85 and buy the Jan $28/31 bull call spread for $1.15 so net .30 on the $3 spread that’s $1.25 in the money

    Woops, here comes the pesky Dollar – back over 81!   Euro $1.307 so watch that $1.30 line and the Pound already plunged to $1.555 (down 1% from the open).  As I said, Trichet needs to do more than just talk to hold things together over there.  Heading into the EUs last hour and they are still up about 2%.


  42. Hi JR,
     
    That’s a big gap between 73.91 and 75.28…..what is this support we are at now?


  43. Phil, 
    Sorry I guess my post wasn’t very clear, I was watching the shares, and after climbed back from 2.60 I sold the shares back at 3.21 a week or so ago, as I said expecting a pullback to buy back the Calls… So you are saying leave the calls alone or cover buy buying shares at current price?


  44. NET $ +.74%, dx/y = (.26)%
    C =1201.26, F =1201.00
    VIX (11.94)%
    10yr = +4.65%,  30yr = +2.295%


  45. COL/Kinki – I think we need to hear from the Deficit Commission first before making military plays.  I think you are probably right and a lot of fear is already built in from the drop from $62 but I would have liked selling puts at $54 a week ago as an entry a lot more than trying to get in at $57, which is still up 100% from March ’09 (so outpacing the markets).  Options contracts aren’t bad to sell, if you  sell July $55 calls for $6 and the $50 puts for $2.60 you drop the net to $48.40/49.80 so just watch that combo as they move back to test the 50 dma at $58.50 – if you get over that, then maybe do it with the $55 puts if you feel brave but, if rejected, you should get better prices with the lower strikes.  

    Super AAPL pump time for the Nasdaq!  FSLR getting bought too so you know it’s robots as EU countries are cutting back on solar funding significantly.  

    Report/Exec – I don’t know what he means with handles but .62 is the strongest correlation – not too impressive.

    WYNN up 5% after the state of Nevada is downgraded on poor gaming revenues.  Maybe they are just not paying their taxes…  


  46. Phil: Thanks for the advice!


  47. Matt,
     
    It’s starting to get the FMD look.


  48. exec

    I have nothing on IWM 74.12; but there should be resistance at 74.57


  49. FSII/Amatta – Now I’m totally confused.  What is your position and basis?  

    Here comes DECK $80!  

    At the open: Dow +0.6% to 11118. S&P +0.79% to 1190. Nasdaq +1.55% to 2537.
    Treasurys: 30-year -1.52%. 10-yr -1.01%. 5-yr -0.63%.
    Commodities: Crude +1.8% to $85.62. Gold +0.35% to $1390.90.
    Currencies: Euro +0.99% vs. dollar. Yen -0.82%. Pound +0.18%.

    10:00 AM On the hour: Dow +1.84%. 10-yr -1.07%. Euro +0.92% vs. dollar. Crude +1.95% to $85.75. Gold +0.04% to $1386.70.

    11:00 AM On the hour: Dow +1.76%. 10-yr -0.79%. Euro +0.6% vs. dollar. Crude +1.72% to $85.56. Gold -0.07% to $1385.10.

    EIA Petroleum Inventories: Crude +1.1M vs. consensus of -1.1M. Gasoline +0.5M vs. consensus of flat. Distillates -0.2M vs. consensus of -1.1M. Futures +1.7% to $85.5.

    The plan released by the co-chairmen of the deficit reduction commission would dramatically reduce income tax rates while imposing spending caps and ending many popular tax credits, including the home mortgage interest deduction. (.pdf).
     
    They have got to be freaking kidding?  That’s what they came up with???

    Janet Yellen, in her first speech as Fed vice chair, defends the Treasury-buying program, says the economy continues to need support, and warns against premature tightening. She calls for a fiscal program combining additional short-term stimulus to help the economy recover with a longer-term plan to bring the deficit under control.

    Is QE needed in Europe? A third sovereign rescue may be necessary as soon as early 2011 with the larger European economies next in line. Large scale bond purchases by the ECB might be the only way to truly stop the contagion.

    Some of the largest U.S. money market funds hold billions of dollars in securities issued by major Spanish and Italian banks, highlighting the potential risk of further deterioration in Europe. The banks remain highly rated by the major rating firms, and the funds apparently are in good shape for now, holding short-term maturities that reduce the risk of default.

    In an attempt to reduce the deficit to 6% of GDP in 2011, Spain’s Socialist government is privatizing parts of the lottery and airports, as well as cutting unemployment benefits. The EU commission "applauded" the move, but some might question the wisdom of selling assets to cover operating expenses.

    Veteran strategist Byron Wien thinks "things are picking up" in the economy, but not through the Fed’s efforts. "I don’t think monetary policy is making that much difference," he says. "Interest rates have been rising since the quantitative easing process was announced. You know anybody who’s not borrowing because interest rates are too high?" 

    The autumn of 2010 is in some ways a replay of last spring: sovereign debt spikes, coinciding with efforts by China to raise interest rates and tighten credit, and a drop in European and Chinese stock markets. "But this is a slower-moving and broader wave than the first one," James Hamilton warns. "And tsunamis pack much more power than a simple crashing breaker." 


  50.  Phil, on DECK, I have 6x short Mar $70 calls sold @ $3.67 covered with 6x long Jun $75 bought @ 3.95.. I was bullish on DECK but I wanted to sell some short calls to pay off the premium but now they are hitting $80.. I had thought of rolling my long ones from $75 down to $65 back when DECK hit $58 a few weeks ago but you discouraged me from doing that (basically paying premium and expecting the stock to appreciate from $58 back to $65, which now looking back seems not too crazy). What would you suggest me to do? I don’t want to close the long positions and wait for a pullback to close the short because I don’t want to end up in a situation similar to CMG.. CMG has my margin quite tied up so I can’t do much in other stocks.. any advice as to how I can take advantage of this crazy move up on DECK? thx


  51. Phil, on the /es futures a handle refers to 1 point.  So, a move from 1200 to 1199 is 1 handle.


  52.  Amazing moves in PCLN over the last 2 days.   Down and up over 15 points.   Glad I didn’t play the weeklies on that one this week!  I have enough nail-biting on whether my NFLX  DECWK1 210/185 strangle is going to succeed!


  53. Can anybody tell me where I find the fibonacci article on the site? 
    Thanks


  54. As Santayana said – "Those who forget the chart patterns of the last 10 days are condemned to repeat them!"


  55. Meanwhile, I strongly encourage you to play with the Yahoo multi-chart in various time-frames so you can see why I like the short RUT play:

    TZA Jan $17 puts can be sold for $1.25 and that pays for the $17/20 bull call spread at net $1.15 for a .10 credit on the $3 spread and you can risk owning $1,700 worth of TZA at net $16.90 (now $18.65) and about $9.50 in net margin to make up to $310 if the RUT pulls back about 3%.  It’s a very good hedge and the RUT needs 775 to hurt you and, of course, the puts are rollable..  


  56. NET $ +.33%, dx/y  = (.13)% lowest of the day on the NET
    C =1200.78, F =1200.25
    10yr = +4.25%,  30yr = +2.15%
    VIX (10.88)%
    oil +13.9


  57. QE 2 for Europe?


  58. JR,
     
    How are you positioned?


  59.  Phil,
    Sharing my experience. I tried the TZA options play a couple of days ago. The problem is when TZA is going up, VIX is also going up. That gooses up the TZA puts sold so they don’t loose value as quickly as you would expect. Folks just need to keep an eye on that. If you don’t need to, don’t sell the puts right now since VIX is low right now. Buy calls though.


  60. This market is just whacked.  Not a friggin healthy thing about it.


  61. Pharm,
    Thanks for the good comments on Mankind in yesterday’s post!


  62. @Phil
    Carlos Augusto Alves Santana also said:
    O Yay Com oh vah.


  63.  POMO? Popped Stops? we are starting to ride up.


  64. exec

    I have no current day-trading position, but it looks like they are going to take us up.The Russell has clearly broken above the descending trendline; this could make a bad 2010 even worse for any bears left. It seems just about the only stock down today is NFLX (of all things……..).

    1201-rut


  65. Morning! Wow! So much for Delta-7, onto the Woemega-3 pattern.  
     
    Ok, just choked on my lunch with the massive 11:50 stick (dollar club).


  66. Phil:
    Thank you for posting the model-decoding and Barry’s random thoughts (way too) earlier this AM.
    Nice reads!


  67. DECK/Rav – You are just not going to leave these MoMo stocks along, are you? At least you have the Junes so you’re keeping up.  I don’t know what the plan was as you sold calls with a virtually identical delta to you so you have an incredibly narrow window for success in the first place.  At this point, I would suggest taking your $13.50 and running on the June calls and rolling the Dec $80 calls (now $3.10) and the short March $70 puts for $4.60 since you like them and shouldn’t mind owning them for net $62.40 and you can roll those down to June $65 puts anyway.  If the stock goes up, you have until $87.80 before you get into trouble and you can always buy the June $85s (now $9) to cover.  

    Handles/Craig – Thanks. 

    Oh damn, everything going up again as the dollar is THROWN down hard off 81.20, all the way back to 80.80 in one giant spike and que the breathless CNBC pom-pom girls to tell us how the market is breaking higher.  

    Not selling the puts here, holding on for now and going with 20 FAS WEEKLY $21 calls in the 1050P to cover at $1.48 with a stop at $1.30 and looking for $1.80 ish


  68. Stupid OIL!!!!! Didndt give me my entry yesterday and wasnt going to enter it up 1.50 today…..


  69.  Phil – did you sell the Qid calls?


  70. Someone destroys the dollar in 10 minutes sending the stock market up.  This is exactly what I’m talking about.   I mean WTF?  This really is becoming an impossible market to trade. 


  71. PCLN $410 weekly calls can be sold for $4 – risky but fun in 2 days! 

    Fibonacci/Amata – Not sure where that would be but I talked about it in the 1050P article this weekend (under Portfolio Tab now).  

    FAS – On a protective play like that, which is already up .08, you set a very tight trailing stop, like .10 so it’s now a free trade and you expand that stop by .05 per .10 we gain until you’re at 20% of the total (.30) and then leave it alone as a hedge you can’t lose on


  72.  If spain can go up 4.4%, surely we can too!


  73. Was there anything that triggered that stick or was it just JRW getting bullish?


  74. Matt,
     
    Question is……who is the someone that tanked the dollar…..and how did he do it?


  75.  Fibonacci/ well I meant the learning post I remember I read upon joining, where it explains the line retracements, etc…


  76. Here is what I picked up re the 11:50am push up
    From Reuters: "US official says US would be ready to back larger European financial stability fund via increased IMF commitments."


  77. NET $ +.19%,  dx/y = (.21)%
    C =1206.05, F =1205.75


  78. Big USD dump: US FED gives green light to back up IMF on rescue of Europe. Now the US Taxpayers are stuck with bailing out Europe as well!
    What say you Phil and how do we play this going forward?


  79. JRW
    Nice call. Where did the 74.57 line come from.

    No position seems a lot better than short tna – ugh


  80. QID/Sr. F – Per above, I favor covering with the FAS at the moment and seeing how that goes as this still seems very artificial so no point in taking losses with so long left and the previous patterns very much in our favor.  

    Impossible/Matt – Yep, that was just blatant, ridiculous manipulation.  The Dollar fell all the way to 80.54, that would be a huge move over a whole trading day and it took 5 mins – like a dollar flash-crash that was designed to pop the levels, which is just what it did.  I just can’t believe CMG isn’t at $300! 

    So, where are we on 1050P?  

    • 5 CMG $230 puts at $1.35, now $1.50 – fine
    • 5 NFLX Jan $155 puts at $2, now $1.72 – fine
    • 5 QID $11 calls at $1.30, now $1.15 – worried
    • 10 DIA $110 puts at .90, now .80 – DD at .70 if possible
    • 5 XRT Jan $44 puts at .80, now .82 – fine
    • 5 USO Jan $35 puts at .97, now .85 – DD at .73 if possible.  

    20 FAS Weekly $21 calls at $1.48 – stopped out even already so we’re looking for another long, probably 20 DIA $112 calls for about $1.85 if the Dow gets over 11,250 so let’s keey an eye on that but hopefully that was just a flush.  


  81. Phil, 
    Is it a DD on the DIA’s? now at .78?


  82. I took a S&P 1200, DEC 31 put here at 22.30
     
    looking for a quick flip at the 26.70-27.00 area


  83. Phil,
     
    Who has the power to manipulate the dollar that drastically?


  84. PLX – gaining traction now, and I have been watching for a while and the FDA date is Feb 25.  TEVA CEO owns a bunch of shares and PFE signed an agreement in first part of Nov.  If you think GENZ is going to be taken over, then PLX has them beat for Gaucher’s disease.  I like the May 7.5/12.5 bull call spread for 1.75, selling the Jan and Feb 7.5 Ps to reduce costs.   Now, manufacturing is the big question, but should be fine.  Below is an excerpt on their process.  Ease in with a 1/4 entry.  No more than 3% of a portfolio for newbies.

     

    From SAlpha:  PLX use a plant cell-based manufacturing process in order to produce UPLYSO. They were slowed down earlier this year when the FDA wanted more CMC data regarding their manufacturing process. The request focused primarily on validation of the manufacturing process at an upgraded manufacturing facility. This process is seen to be vastly less expensive than Genzyme’s, which in turn would allow them to offer UPLYSO at significant discount to Cerezyme, which runs about $200,000/year. Genzyme had sales of $1.2B in 2008. Recently, they have had supply and manufacturing problems that have hindered sales. PLX just recently posted study results from a small 9-month study showing that patients can safely be switched to taliglucerase alfa from imiglucerase (Cerezyme).


  85.  Fed and IMF:   and down the rabbit hole we gooooooooooo.


  86. kallenjr / IMF — Pheeww!, I thought my brokerage was effin with me. I bought DIA puts about 30 seconds before the stick :-o


  87. Speaking of EU debt, MS holds a ton of Portugal’s debt, and if they fail, they will be thrashed.  They also hold a ton of Italy and Spain.  The the CDSs widening, they are a $19 stock (from a bond trader FWIW).


  88. Phil/DECK, I’m not sure I follow your suggestion..
    You said I should take the money of my 6x long Jun $75s ($13.5) and run.. that would leave my 6x short Mar $70s naked.. what should I do with those then? 
    Well, I don’t know why I let the argument of buying premium when the stock hit $58 to roll the long $75 down to $65 and convert the whole thing into a vertical bull call spread from actually executing the move, since I started bullish on DECK back when it was priced at $45.. anyway, now my play is no good so I want to make an adjustment.. at this price, I wouldn’t buy Deck anymore so what should I do with the short Mar $70 calls? They were sold for $3.67 (now $13.95).. can u please clarify that for me? thx
    DECK/Rav – You are just not going to leave these MoMo stocks along, are you? At least you have the Junes so you’re keeping up.  I don’t know what the plan was as you sold calls with a virtually identical delta to you so you have an incredibly narrow window for success in the first place.  At this point, I would suggest taking your $13.50 and running on the June calls and rolling the Dec $80 calls (now $3.10) and the short March $70 puts for $4.60 since you like them and shouldn’t mind owning them for net $62.40 and you can roll those down to June $65 puts anyway.  If the stock goes up, you have until $87.80 before you get into trouble and you can always buy the June $85s (now $9) to cover.


  89. Trigger/Rain – It was an epic dollar dump on FOREX.  Irrational, insane and unsupportable are words that spring to mind…

    IMF/Kallen – Thanks, that helps explain where that came from.  Of course we have nothing better to do than borrow another couple of hundred Billion so we can bail out Europe – that makes perfect sense…

    Bailout/DJank – CASH!!!  This is just rumor-driven nonsense – you can’t take it seriously and, in the bigger picture, we have all this "great" news and we’re still down 200 points from the beginning of November so this is sure not a "rally" we want to be chasing.  

    DIA/Amatta – Why would you double down to cover a .10 loss?  It’s barely over 10%.  The idea of a DD is to take a 20% loss and turn it to 10% or a 40% loss and turn it into 20% (assuming you are still enthusiastic that you can recover).  So, with a $2,500 budget per posiition we can buy 5 DIA $110 puts for .90 and 5 more for .70 ($800) and roll those to Jan and DD again and we’re down maybe 20%, which is about 50 Dow points in a higher strike and a longer month for still less than a full position.  Meanwhile, if at any point between here and there we make our 20%, that’s going to be about $200, which is 10% of a full allocation and we’re very happy.  

    Power/Exec – Anyone who can get a good rumor going so GE, Murdoch, Redstone, Goldman, JPM, UBS, CS, BAC, DB, MS, 1,000s of politicians all over the World, any Central Banker or Fed Governor, Matt Drudge…  Sadly, the list is so large that you can only sit and pray they are all very honest people who would never consider using their power to influence the markets.  ROFL!  Just kidding – we’re doomed, of course…


  90. samz / IWM 74.57

    A trend line from August 25th.


  91. Maybe this NET neutrality news will help bring Netflix back to earth


  92. Oh no, FCC endorses usage-based pricing for the Net.  Bye-bye NFLX, thanks for playing our game! 8-)


  93. JRW – wow – hars to believe how precise you can be with that trend line. Thanks


  94. nflx dump


  95. mike / net neutral — I’d think that would be another reason to pump NFLX.


  96. This move by the FED, Trichet and the IMF is all about saving the global banksters collective asssses. Keep the Ponzi game going until there are no more suckers left.


  97.  Wow look at the pigs going down in this market… NFLX down $5!!!!


  98. Arrghh !… I feel like a "rag doll" being whipped to death… made a fortune on my longs. and lost an equal amount on my currency plays…. I wish I could have seen this coming !


  99. oh, didn’t know the FCC was for it, seems rediculous to me.


  100. My guy Todd Gorden is on CNBC…. He must have been suprised as I, as he gave no warning


  101.  Phil, 
    On the USO play, buying the puts, right?


  102. IMF / FED / Ponzi — Matt mentioned that this morning. What if everyone eases? Well, debts get erased and us bottom 99%’ers have to pick up our guns and shoot the top 1% in order to survive. One for the good of 99 8-)… Ok, who on this list is in the 1%?


  103.  Unfortunately I am busy w/ other stuff today, but I do want to note that the high flying pigs are generally not green today, which is a good sign that these are gonna come down.


  104. Does anyone have a list of all that FED lending to foreign banks during the crisis?  They showed it on CNBC but I can not find a list.
    Wanted it to peruse and enjoy


  105. Well FCC ruling on net neutrality should have done that…You’d think it would have plunged the shares 10% at least (as thats how much they ran up after they announced their new download only program…


  106. Phil:
    a) Do you happen to know the approx. time of that "EPIC dollar dump"?
    b) Care to explain what you mean by:"It’s now a free trade"? How would they be a free trade? against current positions?
    FAS – On a protective play like that, which is already up .08, you set a very tight trailing stop, like .10 so it’s now a free trade and you expand that stop by .05 per .10 we gain until you’re at 20% of the total (.30) and then leave it alone as a hedge you can’t lose on.
    Cheers!


  107. NET $ +1.84, dx/y = (.61)%


  108. The Fed is pulling out all the stops to get the markets as high as possible hoping they can knock the legs out from under Ron Paul and the coming inquisition.

    Everybody and their grandma dumped their garbage onto the Fed, going to be some interesting reading.

    http://www.federalreserve.gov/newsevents/reform_transaction.htm


  109. reza99 / dump — dump started at 11:49 (as he scrapes lunch from his monitor to see the chart below)…


  110. Hate trading on beige book days. Ramped up here in tight little range.


  111. I had enough.  I think I’d rather stick my forehead under a slow dripping faucet than watch this market for another minute.


  112.  Byron Wien: "You know anybody who’s not borrowing because interest rates are too high?"
     
     Hilarious. So simple and true!
     
    Tax changes: It’s sad what they came up with. I took personal income taxes as part of a CPA prep this quarter so I know it in a fair amount of detail. Lowing rates is not what you want to do with whatever-gazillion in debts we are facing. And pinching mortgage interest during a fragile housing recovery?
     
    Here’s the simplest way to get started: Create one income number (no more "capital gains," hobby tax," AMT nonsense). Wages, interest income, dividends, $20 found on the street — all the same. Keep the current exemption and dependents structure (this works well since they required SSN’s for each dependent/exemption). For the most part keep the schedule A but eliminate the either/or "standard deduction." Instead, keep both, but the standard deduction simply becomes a 0% tax rate. This should be expanded out to $40,000 for MFJ / $20,000 single. Keep the rest of the brackets where they are and add a 38-40% bracket for $1M or $2M+ (currently the 35% bracket kicks in around $370k and never goes higher — basically the government is saying if you make $400k and if you make $400 MILLION you’re the same to them). In fact the brackets should graduate much differently than they do now. With the advent of computer software that virtually everyone uses to do taxes, the rates could be much more linear.
     
    Given that 80% of the money made in the stock market is made by people in this highest bracket, the "one income number" would essentially move people off the ridiculous 15% max long-terms capital gains rate into the highest bracket and would ensure both that, (A) the lower bracket extensions/exemptions are paid for and (B) the gov’t increases revenue.  This is the simplest change in all of the tax code that would generate the most revenue — this is why Warren Buffets pays less in tax than his secretary!
     
    Also, for housing – KEEP THE MORTGAGE DEDUCTION (morons! — who pays these people to sit around and come up with these bad ideas??). Well, on the principal residence anyways, forget the second house. Now’s a good time to wipe out the capital gains exemption for selling a house, and since no one is going to be selling a house for a gain for the next 10 years anyways — no one will notice! At the very least keep the deduction for one house and cap it at $50,000 in interest. "Death tax"???? Stupidest conservative argument of all stupid conservative arguments. The estate tax has a FOUR MILLION DOLLAR DEDUCTIBLE (And Bush wanted to eliminate it completely, how many people would this have actually effected, maybe 1,000? How do poor people get behind this idiocy?).  So obviously, LOWER the estate tax deductible and RAISE THE RATES to 50%. This is the most obvious of all the taxation answers.
     
    For all those tea partiers who don’t understand taxation that will never effect them (that is, their ancestors will never be worth more than $4M), YOU DON’T PAY TAX ON MONEY GIVEN TO YOU FOR FREE, because free money is not considered taxable, which is why the estate pays the taxes for you. Since you are getting free money, in my opinion, you should just STFU and as Warren Buffet says: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.” If you are actually OVER the $4M deductible, you are in the top 1%, so do-like-Warren-do and be responsible (and STFU!). 
     
    Corporate tax: next quarter.
     
    In order to pull this off I say take a look at some hard HARD cuts at the same time and never EVER elect some moron to go blow $2B a week rebuilding some retarded nation in the desert. 


  113. The Fed is co-locating their servers at the ECB and buying more bandwidth!! 


  114. Amazes me that NFLX is seeing buying here at the 200 level. Amazes me that people think one company can use 30%+ of internet bandwidth at peak hours for free. Amazes me that people think this company can double its US membership and get everyone online streaming. And, exactly how does that work with our current internet infrastructure? They would consume easily 50%+ of internet traffic at peak hours…..Do investors think no other companies are gonna fight this? Just food for thought….


  115. Phil, DIA, sorry yes I thought the entry price was .99… so was figuring 20% for a DD…


  116. The "PIIGS" (rest of world) – portugal italy ireland greece spain
     
    The "Pigs" (on PSW) – NFLX CMG PCLN 
     
    :)


  117. WNC – have this in my IRA and noticed it’s going ballistic so I bought some JAN 10 calls, will cover with the 12.5s when it looks toppy…


  118.  TBT — good dog!


  119. hanna5 / bandwidth — I don’t have the answers to your questions but is the pipe ever FULL at peak times? NFLX has a connection to the internet at a certain bandwidth that they pay for. Why should they get dinged for filling it? That’s like telling me that I can only use 2.5Mbps of my 5Mbps DSL connection, isn’t it? If the backbone can’t handle the traffic, then I would tend to think that the entire internet slows, INCLUDING NFLX. Am I wrong? Seems like evolution to me. If the backbone can’t handle it, maybe streaming across the air via dish is the better way go… If the backbone can’t take it, then NFLX’s business model is in trouble even if they pay for extra bandwidth. If they can buy bandwidth, then can they buy it all?


  120. Re dollar dump time --Thanks rainman!


  121. mike5885/halts   A Good Move…..


  122. Phil / Fed games    They must be very scared about a slide into Depression if they are now going to also print to backstop the Europe, via the IMF.  No real permanent jobs being created.  China will have to tighten dramatically to halt the inflation nightmare,  Europe is enforcing austerity (read neg GNP) and our GOP is gunning for austerity here (as long as it doesn’t include defense and taxes).  Logic says short this nightmare in motion.  But, can we really afford to fight the Fed and the new Euro Fed who seem to have decided to print as much as is needed to goose markets and keep consumer sentiment positive.  They seem determined to make inflation a reality, via trillions in new money.  I’m beginning to think ABX may still be attractive to play this madness?
    Shorts could go bankrupt before this ponzi scheme unravels.  This money printing and manipulation might go on well linto 2011 Phil?


  123. NFLX – only down to 198 and then back hard. People just love this thing no matter what.


  124.  NFLX $200 weekly call a good sale at $4 IMO.   (would have been a better sale at $11)


  125. biodieselchris
     
    With over 50,000 pages in the tax code, and a lot of it ambiguous to the point the CPA’s do not have a clear understanding of the intent, I believe it is time for a flat tax has come. Unemployment will be solved only through the removal of risk (tax policy) for those that are predisposed to creating a business creation or expansion model…. simple solution – yes, but it will work. All of the unemployed CPA’s can enter the workforce in a more productive capacity.


  126. DECK/Rav – I’m saying I would ditch both legs of the trade and switch to the naked short puts and calls and only cover the calls again if you have to because $80 is ridiculous.  

    Ponzi/Djank – They got me on that one.  Who even thought it was possible that the US would agree to bail out Europe.  I wonder if that means Europe will bail out California.  Then maybe California can bail out Florida, who can bail out New York, who can bail out Los Angeles, who can bail out NYC and then NYC can give tax breaks to Wall Street guys who create new instruments to make it possible for the US to borrow another $60Tn and we can all go round again!  

    Rag Doll – for Gel. 

    1 hour to Beige Book.  Auto sales are good though and that will play into the book:

    USO/Danos – Yes, buying puts!

    1%/Rain – You only have to earn $1.5M per year to make top 1%, top 0.1 is $7M and top 0.01 is $30M – that’s how fast it goes up from 3M to the last 30,000 people and then there are 3,000 people who make more than $200M a year each, which is more than 333 suckers in the top 1% who think they are "one of them" and their failure to pay 10% more tax (and, in fact, as Buffet often points out, they only pay 17%, not even 35%) costs those 333 suckers $60,000 each (5% of their salaries) to balance it out.  

    Fortunately, however, those 333 wannabes can usually manage to shift the burden down to 3,000 other suckers in the top 10%, who have to fork over 10% of their income to cover the people who don’t pay at the top.  Imagine how much it sucks not to even be in the top 10% when that burden trickles down to you!  

    And, of course, as always, we completely ignore the "corporate citizens" who paid less than 2.5% of their income in taxes in 2009, pushing that burden onto the human citizens who are unfortunate enough to share a country with them.  

    Fed list/Mike – Here.  

    TM just announced bad numbers, which we knew as my brother told us sales were sucking in November- easy short at $79.50 with the $80 puts at $1.60


  127. Phil / DECK  Caution re your short.  My teen neices in both the US and UK tell me that all the cool kids need multiple pairs of UGGS.  They are selling at very high prices with no discounts and starting to sell out in some stores.  It’s a momentum brand.  Overvalued? yes.  But it dangerous to short a highly successful growing company.  And, boots as a category are running at 40% up y/y this season.


  128. US Is NOT Discussing Larger IMF Contributions To European Rescue Funds http://is.gd/i3x5v


  129.  Phil/DECK, I got your suggestion now. Yes, I agree. I will sell my 6x long Jun $75s, buy back the 6x short Mar $70s, sell short 3x Dec $80s and sell short 3x Mar $70 puts (only 3x so that I don’t end up with an oversized position again!). This will give me $6.90 in credit for the short contracts.


  130. NET $ +1.85%, dx/y = (.64)%, very weird things all over the place
    C = 1204.47, F =1204.00
    10yr = +5.115,  30yr = +2.34%
    VIX (11.38)%
    oil +2.29, gold +2.30


  131. Phil/Bailout Mania
    Be careful- the powers that be might just take your bailout "merry go round" idea and run with it! Then there would never be a day of reckoning.
    BTW Goldman has just gone BS bullish on the US economy- talk about a day where they pile everything into the Goldilocks sink. They must need to dump alot of their pumped up high fliers.


  132. Tyler Durden's picture

     

     

    According to the WSJ the US is not discussing a larger IMF contribution to the European Rescue Fund. EURUSD plunging now. The theater continues. And since the market went up on the news, why would anyone expect it should go back down when the news is refuted. The market is now a total and complete travesty.


  133. Phil JRW / The Russell   Is this a good moment to short?


  134. NET $ +1.68%,  dx/y = (.55)%


  135. Tusca -
    Rut – why not wait until you get a confirmed down trend. Being short right now is like sticking your head in a vice.


  136. jromeha -- Oil


  137. rainman--!!!! hahahah that is what Im doing now!!!!!!!!!!!! I MEANT to go long overnight but somehow Ive managed to keep entering short positions today and losing my ASS!!! Right now I am short at 86.56 HOPING we get even a small selloff to 86.4 before the fed but who knows…..


  138. tuska / short

    If "they" can pull the dollar back from its 200 DMA we could see 760 or better so wait for Mr Market to show you the way !!


  139. Phil do you see the Fed’s beige book pushing us towards 3% on the day or maybe bringing us down just a bit? Oil is killing me today and I literally have made sounds like the dude in Rainman’s video.


  140. Another view of th dollar


  141. NFLX/Amatta – Yes but people are much stupider than you think and they won’t actually dump NFLX until some analyst explains to them that downloading a 2.5Gig movie is more bandwidth than the average subscriber uses in a month at a cost of $30 so, technically, NFLX should be paying $30 for each movie it delivers via the Web.  Now somewhere between $30 and Free is where they will settle but even .10 per move is $1 per 10 movies downloaded against their $7.99 monthly service charge so you are looking at a solid 10% hit to their bottom line even in the kindest of estimates.  

    Dollar/Reza – Sure, it was 11:50 when it started in earnest and was about 0.6 in 5 mins. We were already moving down before that a bit but that was the big shove.  FAS, it’s free because it was an insurance trade against going higher and once you can stop it out even, it’s a free trade with only potential upside and no loss.  The idea was to take the bullish play so we wouldn’t have to kill the short side and once it goes green, it’s free protection (as long as you set your stops).  

    Thanks Kustomz! 

    Faucet/Exec – Sensible trading plan!  

    Good points BDC, too bad the Deficit Commission thinks you are totally wrong and will do pretty much the opposite.  Have I mentioned that we are doomed lately?

    Doubling Down/Amatta – You really never want to DD on less than 20%, tempting though it may be.  If you go in with a 1/4 allocation and DD at 80%, you are in for 90% average and used 45% of your allocation.  If you wait to DD at another 20% lower, that’s now 40% off the original entry and costs you just 30% of your allocation so you are in for an average of 70% with the stock at 60% of your entry price and you still have 25% of your allocation available to roll or adjust and down 14% of 75% is down just 10% of a full position so you can drop all the way to 50% of the original price before you are down 20% of a full allocation and, if something has moved 50% against you – it is probably time to admit you were wrong…

    Bandwidth/Rain – That’s like saying that if there’s an all you can eat buffet and one super-human, super-fat alien can pay the same $20 as everyone else but eats 50% of the food that that’s OK.  It may be the letter of the agreement but it’s certainly not the intention as the model held by the restaurant assumes a person will eat a "normal" amount of food.  What if there are two companies like NFLX who use up the entire allocation of bandwidth vs the 1Bn people who pay $30 a month now?  Is that at all fair?  There’s no way to address that because, clearly, NFLX can’t possibly pay $15Bn a month for bandwidth yet that’s what their plan calls for.  I could have a business plan that says I will suck all the oxygen out of the air and then bottle it and sell it to people who need to breathe.  Would there be anything wrong with that?  The air is free, I’m just using a little more of it than other people…

    FRE/Mike – What a heartwarming Christmas tale that is!   8-)

    Euro-Fed/Tusca – You said it, it’s MADNESS!  Obviously gold is good if this is true as we are simply debasing the hell out of our currencies and poor China is pegged to us and can’t print Yuan fast enough to keep up so what happens to them?  The price of commodities flies up in Yuan and their people don’t have the cash floating around to buy them so we are exporting our riots and starvation and social unrest along with our jobs.  This can all go on for quite a while until then but I’m still not believing that both the EU and the IMF bucked overnight.  

    VAT/Gel – I say a 25% VAT on EVERYTHING that isn’t groceries or home heating/electricity – that’s $4Tn a year for the Government to play with and make them balance a $3Tn budget and pay $1Tn of debt off per year until we’re done.  The dollar would rocket back over 100 and everyone’s buying power would go up 20%, offsetting almost the whole tax and we eliminate all other taxes so the government can cut the IRS for starters.  Perhaps 1M tax accountants would have to look for work but the economy should be in much better shape and I’m sure they can find something to do….

    DECK/Tusca – Not to worry, they are flying up already in anticipation of Cramer.  

    BBook is out – Bullish on Manufacturing, better consumer spending, soft durable goods, high expectations for the holidays, housing still sucks, CRE still sucks, Farmers happy with high prices.  All in all it’s a good-looking report but you would think that would be a reason to scale back QE and bad for the market.  


  142. Travesty/JRW – That’s a good word for it!  

    RUT/Tusca – I think so but I’m pretty happy with the shorts we have.  

    BBook/Jrom – I think it can’t possibly deliver the message the bulls are expecting.  

    Dollar/JRW – Well we are right where we expect a 20% retrace of the move up.  We didn’t get much consolidation to 40% so an 8% pullback is what we look for, not getting that is bullish.  


  143. F$CK OIL! I should be yelling at myself though since Im bullish midterm for oil and somehow tried to short all day. Im an idiot.Now that Ive said that and Ive done about 15 minutes of acting like Rainman’s video Im going to go meditate and calm myself down. I wont be trading the rest of the week.  As JRW says, Good Hunting!


  144. NET $ +1.03, dx/y =(.36)%
    C =1206.27, F =1204.75


  145. For my 2 cents The RUT is up the least, S&P second, NAS third, and DOW the most. That is largest market up the least and smallest the most. Dow 109.5 mil so my thoughts are thinly up and the usual sell off close or gap down open.


  146. Jromeha

    Are you a contrarian by nature?

    I find this really gets in the way of my trading.

    My reaction is to always want to do the opposite.


  147. @phil

    "…1M tax accountants would have to look for work but the economy should be in much better shape and I’m sure they can find something to do…"
    Sarbanes-Oxley was what they found to do. It’s made million dollar annual compensation for the partners in Big 4 firms routine.
    You don’t seriously think that tax accountants are going let that happen, do you? Give up the IRS code, their license to print money?
    Do chickens have lips?


  148.  Phil,  
     You anticipate holding NFLX in the 1050P overnight?


  149. Phil/VAT  A little short term pain for better long term health. I would go full monty though and create a flat tax while easing the VAT…..


  150.  Any other news on the Vegas trip… definitely interested in going when the details get set.


  151. Phil / Rag Doll….. Ha! – Now that is a rag doll you can believe in !


  152. 1020
     
    The flat tax and a VAT would work well. While we are at it, since most of the CPA’s are better utilized for better purposes, why not have tort reform, and do the same with most of the attorneys. Now… we are talking efficiency and fairness !


  153.  Phil/DECK, I’m a bit scared on leaving naked short  Dec $80 calls.. after what I am experiencing with CMG, I have to be more careful with this because even though $80 for this stock is madness, nothing at this point would stop it from more madness and letting it reach $90, or $100.. I mean, CMG is our best example. But I HAVE to do something with my play long Jun $75 / short Mar $70 at this point, before it goes away from me. Is your suggestion the only possibility I have? Can I maybe wait at least until it finds a ceiling? today’s volume is twice the average, confirming this uptrend.


  154. Phil,
    Re: VAT
    You are effectively advocating the Fair Tax. Neil Boortz co-authored a book of the same name with Congressman John Linder, who has sponsored a bill to accomplish same repeatedly in Congress, with a growing list of co-sponsors. The book expands on the basic concept and makes for interesting reading.
    The hard part would be to get the government to adhere to your sensible budget/debt reduction plan and not raise the tax to some astronomical level, or fail to abolish the existing tax code and substitute the Fair Tax in its place.


  155. Gel – Agreed!  :)


  156. JRW that UUP chart looks a lot like July/Aug 2008. Which makes me nervous — remember what happened in Sept – Nov!


  157. Gel – After that, we can fix healthcare!  :)


  158. CRAMER BELIEVES IN THE BERNANK!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


  159. Phil are you becoming more of a believer in this rally? Do you think the ECB going to make or break it?


  160. NET $ +1.48, dx/y = (.56)%
    I have to run all


  161. Shadow – LOL!  You tell him there is no Santa….o.k.?…..


  162. I have an expedia deal for $150 if I book be Dec. 31 so where are we on the Vegas thing? Should we have a separate website so we can thread comments on this endeavor?


  163. Eye opening statement in this video from Tobias Levkovich (Citi) regarding the holdings of the haves/have nots/have yachts
    and the stock market correlations to buying habits: [2:10-3:20]
    http://www.bloomberg.com/video/64771596/


  164. Vegas/BDC --
    Still working on it, but, there are so many choices, if everyone wants to go, we can find something, anytime. 
    Phil suggested perhaps Presidents’ Day weekend in February, as an alternative.
    I am talking to Caesars today….there might be a problem with meeting space, but I’m looking into it.
    After hours, can everyone vote "IN" or "OUT"? 


  165. PharmboyVIAP appears to be basing at .07 and it appears that their VCs just exercised warrants at .071, perhaps that floors the stock here.  I’ve been nibbling on the way down, should I continue to nibble, are you still a believer?


  166. Beige Book Highlights:


    Reports from the twelve Federal Reserve Districts indicate that the economy continued to improve, on balance, during the reporting period from early/mid-October to mid-November. Economic activity in the Boston, Cleveland, Atlanta, Dallas, and San Francisco Districts increased at a slight to modest pace, while a somewhat stronger pace of economic activity was seen in New York, Richmond, Chicago, Minneapolis, and Kansas City. Philadelphia and St. Louis reported business conditions as mixed.

    Manufacturing activity continued to expand in almost all Districts, with relatively strong growth seen in metal fabrication and the automotive industries. Reports also showed steady to increasing activity for professional and nonfinancial services. Two Districts noted a decline in demand from government agencies due to budgetary shortfalls. Reports on consumer spending tended to be positive. Nonetheless, several Districts noted that households remain price sensitive and focused on buying necessities. Expectations for the holiday shopping season were generally positive, with several Districts expecting higher sales when compared to year-ago levels. Sales of new cars and light trucks were largely higher than in our last report. Tourism improved in all reporting Districts.

    So forward-looking expectations with couching language on consumer spending.  Keep in mind this report is anecdotal and you have to pay attention to what is real reporting of activity and what is HOPE and what is SPIN!  

    Housing markets remain depressed, with several Districts reporting further weakening during the past six weeks. Conditions in commercial real estate were mixed, and activity stayed at low levels. Agricultural conditions were generally favorable, with several Districts reporting yields nearing historic highs. Agricultural sales to off-shore buyers increased. Overall activity in the energy sector continued to expand.

    Is depressed really a word you associate with Market Rally?  

    Lending activity remained stable across most Districts. Credit quality has been steady to improving for most of the Districts that commented on it. Prices for final goods and services were fairly stable, despite rising input costs, especially for agricultural commodities, metals, and fuel. Hiring activity showed some improvement across most Districts. Wage pressures were contained.

    Manufacturing
    Manufacturing activity continued to expand in most Districts. New York was the only District where manufacturing activity was reported to have weakened, while Dallas reported that manufacturing was mixed. Metal fabrication increased in Chicago, Kansas City, Dallas, and San Francisco. Contacts in automotive industries reported gains in Boston, Cleveland, Richmond, Atlanta, and Chicago. The Boston, Kansas City, and San Francisco Districts reported increased sales for high-technology manufacturers, though Dallas noted that growth in orders and production in high-technology industries had slowed from earlier in the year. Steel producers and service centers in the Cleveland District reported that volume was either flat or improving, while Chicago noted some temporary softening in steel demand. Refiners in the Dallas and San Francisco Districts noted reduced production levels. The Philadelphia and Dallas Districts indicated little improvement in demand for manufacturers with ties to residential housing and construction. The Philadelphia, Cleveland, and Kansas City Districts reported that capital spending or spending plans had increased. On net, manufacturers in the St. Louis District reported they planned to expand operations. Contacts in Boston, New York, and Richmond commented on increasing input costs. Several Districts noted an optimistic outlook from manufacturers. Boston and Richmond described manufacturers as upbeat; New York and Chicago reported contacts as more optimistic; and Philadelphia and Minneapolis manufacturers expect increases in activity in the near term. However, several contacts in Dallas expressed concern about a decline in demand from government agencies, as budget shortfalls continue.

    Always keep in mind there are 12 districts so when they say 4 reported good stuff – we don’t care unless it’s more than 6.  Pretty obvious actually.  

    Nonfinancial Services
    Activity was steady to increasing for professional and nonfinancial services across most Districts. The exception was the St. Louis District, which reported a decline in service sector activity. Boston, Philadelphia, Minneapolis, and San Francisco noted growth in information technology services. Accounting demand remained stable in the Dallas District, bolstered by consulting and merger and acquisition work. The healthcare sector was said to be expanding in reports from Philadelphia and St. Louis, though Richmond noted no change in demand. Firms that provide services to governments in the Philadelphia District indicated that their clients were using less of their services because of the tight budget environment. Demand for transportation services increased in several Districts. Freight companies in Cleveland noted that volumes increased slightly during the past six weeks, and contacts in Atlanta said freight volumes had improved from a year ago, with both Districts recognizing gains in chemical shipments. Regional rail contacts in Dallas noted strong increases in volume. Contacts in Dallas said that intermodal transportation firms experienced increased cargo volumes, buoyed by demand from international clients, as well as a rise in international container trade volumes. Kansas City reported that the transportation sector stabilized but noted a shortage of qualified drivers.

    Consumer Spending and Tourism
    Retail spending showed improvement across most Districts, with the exception of Boston, Cleveland, Richmond and St. Louis, where results were mixed. A return to more seasonably cool weather was credited for boosting sales in the New York and Dallas Districts. Grocers reported rising sales in Cleveland and Richmond, while sales dropped off in San Francisco. Purchases of apparel improved in the Philadelphia, Chicago, and Dallas Districts. Expectations for the holiday shopping season were positive across Districts; however, in Richmond, retailers expected holiday shopping to be restrained. Reports from the Philadelphia, Cleveland, Atlanta, and Chicago Districts indicated that consumers remained value conscious and tended to focus on buying necessities. Purchases of big ticket items were soft in Richmond, St. Louis, and Kansas City.

    Sales of new automobiles and light trucks rose in nine Districts during the reporting period, with several Districts indicating that vehicle inventories are now at appropriate levels. Dealers expect new vehicle sales to continue rising through year-end in the Philadelphia, St. Louis, and Kansas City Districts.

    This is pretty good stuff!

    Tourism was characterized as stronger or improved in the Boston, New York, Richmond, Atlanta, Minneapolis, Kansas City, and San Francisco Districts, while business travel to destinations in the New York, Atlanta, and San Francisco Districts increased. Occupancy rates at hotels in Manhattan and Atlanta’s major markets were higher than a year ago. The Richmond and Atlanta Districts noted a pickup in international visitors. In Boston, increased tourism was attributed to generous travel incentives and perceived value, while Richmond noted that discretionary retail spending by tourists was lower.

    Real Estate and Construction
    Residential real estate and construction activity remained at a low level in all Districts. The Philadelphia, Atlanta, St. Louis, and Minneapolis Districts reported some further weakening in home sales. Boston, New York, and Richmond characterized the market as soft; while Cleveland, Kansas City, Dallas, and San Francisco described the market as sluggish. The Chicago District reported that high inventories of unsold homes continued to be a drag on new residential construction and home prices. Residential house prices were mixed. Price declines were observed in New York, Philadelphia, Atlanta, and Kansas City; prices were flat to up in Minneapolis, and prices edged up in Boston. The Dallas District reported that home prices increased on a year-over-year basis. The rental market continued to offer incentives to tenants in New York, while strong demand for rental units was reported in Richmond and Dallas. Outlooks for 2011 were mixed.

    This may be my new favorite Fed spin ever!  4 districts say "further weakening," 3 districts say home sales are "soft," and Chicago says it’s a "drag."  That’s 8 of 12 with very negative comments and the other 4 say they are only declining.  No wonder the Fed is scared to death – if housing drops another 10% then we have another 200 banks that will probably turn insolvent.   Not only that but Case-Shiller just told us that EVERY district sucks so the ones who say anything less than sucked are just hopeless optimists…

    Conditions in the commercial real estate industry were mixed during the reporting period. Several Districts reported flat demand and high vacancy rates, which translated into limited nonresidential construction activity. The New York, Atlanta, and Kansas City Districts noted some weakening in nonresidential activity, while the Boston and Dallas Districts indicated some modest improvement in commercial real estate. Reports from Cleveland and Chicago noted that most new projects fell generally into the infrastructure category. Contacts in Boston, Richmond, Kansas City, and Dallas expressed some optimism about the near-term outlook in their Districts, but contacts in several other Districts expressed a more cautious outlook.

    Banking and Finance
    Banking conditions remained stable across most Districts. Lending activity was reported as steady or unchanged in New York, Philadelphia, St. Louis, Kansas City, Dallas, and San Francisco, while a slight improvement was noted in Cleveland, Richmond and Chicago. The Atlanta District reported constrained credit conditions and weak loan demand. Contacts in Chicago and Dallas said that increased competition for high-quality borrowers resulted in more aggressive loan pricing. Demand for commercial and industrial loans was generally stable, though several Districts noted improvements in specific loan categories. The Cleveland and Chicago Districts reported increased lending for mergers and acquisitions, and access to credit by small businesses in Atlanta improved slightly. Consumer lending has remained stable at weak levels in most Districts. The San Francisco District reported that loan demand declined slightly as a result of households’ desire to deleverage, while Chicago saw a small pickup in consumer lending. Several Districts reported increases in lending related to residential real estate, and, in particular, to refinancing activity. Reports on changes in credit standards were mixed. Bankers in New York reported a tightening in credit standards across all loan categories, Kansas City contacts indicated no change in lending standards, and Atlanta reported an easing in standards for small firms. Contacts in the Cleveland, Richmond, and Chicago Districts reported improved credit quality, but San Francisco bankers noted ongoing struggles with credit quality. The Cleveland and Richmond Districts both reported declines in delinquencies.

    This is actually disturbing because it’s not the availability of money that is holding things back which means QE2 is wasteful AND dangerous as it’s clearly misallocated.  The problem is there is not bottom-up driven demand, pure and simple and we’re not going to get any with a jobless and homeless recovery.  By the way, extended unemployment benefits begin terminating tomorrow and will be all gone for 2M people as of Monday.  Merry Christmas!

    Agriculture and Natural Resources
    Mainly favorable weather conditions helped facilitate early harvesting and the planting of winter crops. The Chicago, Minneapolis, and Dallas Districts reported large to record-setting yields for certain crops. Agricultural prices continued to climb, boosting farm incomes. Reports from several Districts indicated that higher grain prices were raising feed costs for livestock producers. Nonetheless, contacts in Chicago noted that even with higher feed costs, margins for livestock producers remain positive. Strong global demand and tight supplies pushed cotton prices to near historic highs for growers in Atlanta and Dallas. San Francisco noted that reductions in overseas yields, combined with the lower value of the U.S. dollar, are helping boost domestic farm sales.

    Activity in the energy sector was expanding. The number of active drilling rigs increased in the Atlanta, Kansas City, and Dallas Districts. Although producers are interested in returning to the Gulf of Mexico, drilling remains well below pre-oil spill levels as permit issuance lags. Producers in Kansas City expressed concern about future production due to labor and equipment shortages. Cleveland reported an increase in production from Marcellus shale. In the Minneapolis District, wind energy continued to expand, but at a slower pace than a year ago, while mining activity increased.

    So plenty of supply of food and energy but they are jacking up the prices anyway.  It’s very encouraging to know that higher feed costs are already being passed down to the consumers (as long as you are one of "us" and not one of "them," of course).  

    Labor and Prices
    Hiring activity showed some improvement across most Districts, although employers are waiting for clearer signals of expanding business prospects before adding significantly to payrolls. A preference for part-time and temporary workers was reported in the Atlanta and Chicago Districts. Seasonal hiring in retail trade is expected to be higher this year in Chicago and San Francisco than in the previous two years. Employers in the Boston, Richmond, and Minneapolis Districts reported having difficulty finding skilled workers. Employment agencies in the New York, Richmond, and Chicago Districts reported a moderate increase in new job openings, while staffing firms in Dallas said that hiring activity is strong. Boston staffing contacts noted that labor demand has strengthened, particularly in the information technology, medical, manufacturing, and legal sectors. Wage pressures remain subdued across Districts. Contacts in Richmond and Kansas City noted that they expect little change in wage pressures during the upcoming months. However, employers in San Francisco reported significant increases in employee benefit costs.

    Prices of final goods and services were fairly stable across Districts despite rising input costs, especially for agricultural commodities, metals, and fuel. Companies in the Atlanta, Chicago, Kansas City, and San Francisco Districts reported a limited ability to pass through higher input costs to customers given the relative softness in demand. However, some manufacturers in the Boston, Cleveland, Atlanta Districts have announced plans to raise their product prices in the near future. Retailers in Philadelphia and San Francisco noted price increases on selected products imported from Asian countries. Reports from the Chicago and Dallas Districts indicated that that record-high inventories and forecasts for a warmer-than-normal winter are putting downward pressure on natural gas prices.

    Maybe jobs ARE coming back!  Too bad upside down mortgages prevent people from going where the jobs are – another great reason to rent and not own.  This is definitely not going to be Nat Gas’ year it seems…

    Overall, not a bad report and we’re up nicely but just 117M volume on the Dow at 2:45.  Still, the market is looking very much like a runaway train and if we get another day of this we break the pattern as well as our break-out levels but the ECB meets tomorrow and if Trichet doesn’t put up, the market will shut up so I am in favor of holding our 1050P shorts overnight unless we do get an opportunity to get them off the table with profits into the close. 


  167. Dollar/Phil: I understand you’re referring to the dollar below. IF we get an 8% dollar pullback that would be bullish for oil among other commodities. Does this explain why we picked the USO Jan Ps instead of say Dec Ps?
    "Dollar/JRW – Well we are right where we expect a 20% retrace of the move up.  We didn’t get much consolidation to 40% so an 8% pullback is what we look for, not getting that is bullish."
    Thanks!


  168.  I have been about 80% in cash, and now with the trades I made today I’m close to 90%. ( I must be experiencing a "scare syndrome" ), but I think we will see some nice opportunities looking forward. Just think…. the market could have dropped 250 points today, instead of the inverse. "Cash is King" , I believe at the moment.. Most all of my gold positions have been liquidated… hmmm – I feel like a whore with no make-up.


  169. It’s amusing watching CME get rejected right at 300.00
     
    I like this one long term though.


  170. What’s scary is the depressed demand from government agencies bc that is not coming back any time soon.


  171.  oops – it busted through LOL


  172.  QE2 disaster – watch what happens to interest rates next year. It’ll be the big story.


  173. Hi Phil : I have 12 TZA Dec $18/$20 bull call spread with sale of 12 Dec. $18 puts for net $.21 which is now net $.19. Hold it for bounce down or roll to Jan. $17/20 spread with sale of Jan $17 puts? Thank you.


  174. BDC- I am with you on CME. Should have dd a couple of days ago though.


  175. Gel I was surprised at the time when you were selling your gold holdings especially as you were such a believer in gold. Your SLW is doing well I did the play as well


  176. saw this and had to post it
    http://www.ft.com/cms/s/0/ea1e1478-fd77-11df-a049-00144feab49a.html?

     
    all right have to run, very late


  177.  Phil, 
    FSII-- 
    Bought 3000 shares at average of 3.00, sold at 3.21…and sold 20 JUN 2.50 Calls for .75… 
    Sorry for the confusion.


  178. CNBC — they were trying to cut off the oil bear! Funny…


  179. Phil, 
    CHS. We discussed this position a few days ago… I am short 2000 shares at an average of 11.45. You recommended selling Dec 11 Puts.. @.30 but I never got filled. Now they are obviously not worth it at .10. With the Beige Book and the looks of this market do you think retail stocks will hold up, to perhaps sell Dec 12 Puts to average up the short? 
    Thanks


  180. rainman
    Very interesting, anything over $60 oil is pure inflation, but that and food don’t count!


  181. gel1
     
    With your sells today, are you still in any currency trades? EUO?


  182.  Just got back in …. see that CMG is drifting up on the usual manipulation; now even for the day.
     
    NFLX getting just a little bit of a beat down … much more is needed.
     
    Most energy and commodities flying.
     
    Joke of a market, really.
     
    Aren’t these huge days supposed to be evidence of a bear market rally ? 
    Fed POMO and related govt interventions and maniupulation has F-ed up any normalcy in trading the markets.


  183.  Someone just flashed a 10,000 share buy order for CMG at 258.43.  Must spend 2.58 M on CMG now !
    Usually that means they want to close this a bit higher, could be short cover.  Could ve ;phoney bid.
     
    Looks like they want to hit that bid … let’s see. 


  184.  They are selling the overpriced CMG burrito paper to him at 258.43.  5,500 left to fill.


  185.  Somebody didn’t read the Beige Book, or why I love the headline wrtiers explanations of market moves.
    "NYMEX-Natural gas ends up 2 pct on cold forecast. (Reuters)"


  186.  gone


  187. Phil, 
    UNG, I sold my Jan 6 Calls, waiting for an entry to roll to the 2012 6 Calls, but you warned after the precipitous fall to wait out… it seems its bounced but not sure if this is an entry point to reestablish (I still have the Jan sold puts and the Jan sold calls) 
    Thanks


  188. Bandwith / Phil – Pay per usage would hurt many more people than Netflix and would cripple the business models of countless businesses. Look at the backup business, most of them charge $5/month for 20 GB of space. If you backup pictures, mails and others on a regular basis (and you should), your bandwith usage is over 2 GB per month. Not to talk about games – a lot of games are now downloaded (for example Steam) and each game can be 5-10 GB! If you stream music at 5 MB per song… In addition, you have Amazon, Google, Hulu and Apple getting into the movie distribution business. This cannot be stopped and I doubt that people would pay more than what they pay now for these services. The pipes are getting bigger and soon a Netflix movie will not put a dent on the available bandwith. I have Fios at home and office and my installer told me that starting in 2011 I will be able to go to 100Mbit for what I pay now for 25 Mbit.  At that speed, you can download a movie in about 3 minutes! But you have the cable and comm companies scared that people will drop their cable service and start using only Netflix and Hulu so they have to look to either block them or make them pay tolls!


  189. VIAP/mrm – no, got out of them at 11.  I do like the pathway as it is the same as a GSK clinical candidate for asthma/COPD, and Zileuton, which is on the market. 


  190. Have you guys seen this one?
    http://www.xtranormal.com/watch/7889419/


  191. Oil/Jrom – We were hoping for $87.50 to take the futures shorts so I wouldn’t be too disturbed by the move up.  They have 3 full weeks before rollover on the contracts so nothing they do now is real anyway.  I’m disappointed, we didn’t get our DD on the USO puts (so far).  

    IRS/Flips – Sadly no, I don’t think it will happen even though it obviously should.  What kind of insanity is it to have a 500,000-page tax code and take up about 1/3 of Congress’ time discussing it every year?  Why do businesses have to have tax departments and why do people who earn $40,000 a year have to pay an accountant $1,000  to try to save $2,000 off their $12,000 tax bill?  It’s clearly stupid but it goes on and on and on….  

    NFLX/ITrade – Oh yeah, those are the least likely I’d give up.  Now we can just sit back and relax on those and wait for the downgrade police.  

    I cannot believe Bob Pissani just said "Goldilocks" in regards to the economy and the markets!  It is clearly fall 2008 all over again…  

    VAT/1020 – Well that would be redundant as we’re charging 25% of GDP and the government currently collects $2.2Tn and I’m jacking it up to $4Tn, which shows you how much the top 5% (including corporations) DON’T pay under the current BS 35% system.  The net effect is you would pay no income, no SS tax but the stuff you buy would be 25% more expensive (assuming it was fully passed through, which it wouldn’t be).  That would mean a guy who made $50K and got taxed $15K + $6K of SS who took home and presumably spent $29,000 would now take home $50,000 and have to spend $36,000, which still leaves him $14,000 ahead – that’s how much money the top 5% are stealing from the working classes every year under the current tax structure!  

    DECK/Rav – You should be scared.  That’s why we have, between the short puts and calls, almost a 10% buffer and, as I said, if they cross $80 you just buy the stock or more long calls and turn it into a natural or artificial buy/write.  Again, you choose to play ultra-volatile stocks then this is how to play them but, if you don’t feel comfortable with riding it out – DON’T PLAY THEM!   There are 9,000 stocks to trade and about 900 of them are idiotic stocks that get yanked around like this – you only seem to play that 10%.

    Fair Tax/Kevin – That’s the problem with it.  They need to market is as a Screwpoor Tax and it would get overwhelming support.  Nobody in the top 1% wants to be involved in anything with the word "fair" in it.  

    Believer/Jabob – You can’t fight the tape.  We have been making light bets against it from a cash position to avoid boredom while waiting for a retest of the early November highs but I am as dubious now as I was then and I am having to argue with as many people who want to flip bullish now as I did them so I will just keep cutting and pasting "CASH" and "HOLD" from my little memory tray as many times as it takes until I’m ready to accept the new levels (will take quite a bit of convincing) or until everyone stops asking like they did in the last 10 days of November, when we sank back to early October lows (a relentless drive down that ended over 48 hours ago so I can, of course, understand why everyone seems to have forgotten and lost their minds again).  But for you, I will sing this song!  

    Vegas – I think someone (seems to be Esco only working on it) needs to take official charge of this pronto.  Don’t look at me – I’m just showing up if invited!  

    Good video Reza!   Yes to the dollar, we can’t be that sure what will happen in 3 weeks but the trend seems to be our friend. 

    Poor Gel

    Government demand/Samz – One of the many cutbacks that are just around the corner.  

    TZA/Dflam – The key to that kind of play is whether or not you mind having TZA put to you as long-term protection against more bullish positions.  As it stands now, your net .19 would be .55 if the premium expires at $18.50 (here).  If TZA goes lower, you can roll the $18 puts (now .83 and 100% premium) to the Jan $16 puts (now .80) and you’d be in those for net .21 and you could then spend $1 more for the $16/18 bull call spread if you wanted to keep some upside on it.  Since that’s your future, if you are worried, you can spend .90 now to roll the $18 calls down to the Jan $18s and roll down if you need another short call sale but you’re no worse off than you are now and you lower the theta slightly rather than letting your current .90 of premium get eaten away.  If it’s a hedge, then hopefully the RUT going higher is well offsetting these small losses (if any).  

    FT/Mike – I still haven’t subscribed again!

    FSII/Amatta – OK so you have NAKED $2.50 callers that you sold for about $1 (as you made money on the stock) and now they are $1.55 but .20 of that is premium.  That goes back to the same thing then, sell the $5 puts for $2 if you like the stock and you are well covered and, worst case, you own the stock again for net $2.  

    CNBC/Rain – Now THAT’S manipulation!  


  192. Re--LVS  --I would love to be included if it is MLK weekend
    Tx


  193. Look at IWM
    some people are looking for a gap down ttomorrow
    which agrees with what I’m looking ffor gap down and then another bounce


  194. Phil, small victory.  I did buy the QQQQ calls at $0.64  yesterday when you called them, and sold them today at $.96 in the morning pop. Up about $300, but now I’m too bearish with the CMG, NFLX, DIA & QID plays left.


  195.  CHS/Amatta – No, I don’t believe in retail – that was my pick of the week this morning!    You never know with teen retail of course as any of them could be popular this year but you are short 2,000 at $11.45 and down $1 but you can sell Jan $12.50 puts for $1 and that raises your entry to $12.45 if you are worried and/or you can buy the May $9/12 bull call spread for $2 which makes $1 UNLESS CHS falls .50 and doesn’t lose any money until you are .45 in the money.  So you can buy the bull spread and sell the puts and that’s $2 of upside buffer right there.  

    Nice to see NFLX couldn’t hold $200 at the close.  

    CMG/Cap – Yep, they got their close – same as yesterday, must be a lot of someone’s money riding on keeping that one afloat.  

    Nat gas/Amatta – Remind me on tomorrow’s inventory and we’ll check out the trends. 

    Bandwidth/StJean – Yes, you will have 100Mbs capability because VZ spent $30Bn building it and now NFLX comes up with a model to use it for free and compete with VZs video services.  Clearly that is wrong and clearly they should pay as should any bandwidth hog.  I can’t even believe there is debate about this but I guess that’s why I thought NFLX was such an obvious short and why there are so many people who think free bandwidth is some kind of God-given right.  Overall, this will be an excellent reason to buy more T and VZ! 

    BAC video/Ac – Damn, those guys are great!  ROFL with the NFLX discussion!  

    Too bearish/RDN – We’ll know on Friday if we were too bearish, not today…


  196. ARO Q3 report, forecast and below expectations. Nov. SSS down 1.0%


  197. Phil,
     
    I’ve been listening to "experts" on CNBC who have suddenly switched from doom and gloom to full fledged market cheerleaders and several of them have indicated that the reason for the rally today is because they are expecting an announcement tomorrow that Europe will effectively be mimicking our QE policy.
     
    So if that is the case, shouldn’t it be weakening their currency, and thus stregthening ours, which would cause our markets to decline rather than advance?  This just doesn’t make sense.


  198. "I’m glad I listened to Jim Crammer and didn’t buy when the Dow was at 6000."  …classic


  199. 4:12 PM Eastern Standard Time, 12/01/2010 (MidnightTrader) — Aeropostale (ARO) reports Q3 EPS of $0.63, including $0.04 per share in items. The Street view was $0.66 per share, ex items. Sales were $602.8 mln, vs. expectations of $605 mln.
    The company announced its earnings guidance for the fourth quarter of fiscal 2010. The company expects earnings in the range of $0.94 to $0.96 per diluted share for the fourth quarter. The Street is at $1.03 per share.
    Price: 24.98, Change: -1.82, Percent Change: -6.8
    eropostale, Inc. (ARO) announces that, effective immediately, Thomas P. Johnson, Co-Chief Executive Officer, has been named Chief Executive Officer. Johnson will also continue to serve as a member of the company’s Board of Directors.
    Mindy C. Meads will be departing from the company to pursue other interests, ending her tenure as an officer and a director of the company.
    I wonder if this is ARO specific? Or, says something about the rest of the retailers?
    I’m leaning towards company specific since the a co-CEO is gone.


  200. Phil:
    At what price would you like BRK.B (trades options) stock or options, if any?
    If not, why not?
    Cheers!


  201. Could be very good for the other teen retailers with a little bit higher price point. ARO did really well last year as their product is a lower price point.


  202. Phil/redundant  I would not want both. VAT could be Now that we need it,  To be replaced by a flat tax which is needed for the future….


  203. I just learned something today and not sure if everyone else was aware of it.  I had an order in to sell half of my DIA Dec 110P position @ a limit price of $.84.  It did not fill at the close but to my surprise did fill about 10 minutes later at my normal commission rates.  I called TDA and found that the broad based index options are open until 4:15.  Glad it filled but it was a surprise.


  204. VZ/Phil – Bandwith is not free, we pay for Internet services every month! And that is the original premise of these cable companies. What might work is to cap overall monthly bandwith – for example, you get 50Gb per month and after that, it’s $.10 per GB. But they need to adjust based on whatever speed plan you choose. VZ might have invest $30Bn on Fios, but they need only 9 millions customers like me with a $275 bill to get $30bn a year in revenues. I am sure there is enough there to make up for the original investment. What worries me is that VZ, Comcast and others will start deciding who pays what and favor their own offerings (much like mutual fund companies pushing their own and we see how that works) which may or may not match what I need. And since there is no or little competition on the market, we are screwed. I am lucky, I can choose between VZ and Comcast in my neighborhood, but if it’s like choosing between Stalin and Mao, it’s not helping much! 


  205. Does not make sense/Exec – I believe that the Central Bankers are using the "Chewbacca Defense" to keep the market confused enough to ignore your very obvious logic.  Also (and again this is logic so be sure to ignore it as it would never apply to actual market conditions) you would think that with both the EU AND the US both adding over 10% to their money supply that the Yen or perhaps, dare I say, the British Pound would go higher but the Pound does whatever the Euro does even though the UK is not part of the EU so you can never really assume that the FOREX markets will ever do anything other than move opposite the Dollar in general synchronization.  

    Interesting, 2 of the Fast Money people are saying "Get out now!"  

    Listening to Cramer/AC – I’m upset they didn’t say "You should have listened to the Phil Davis" – I always get dissed on that call!  Interestingly, BAC at $3.14 was one of my calls that day

    BRK.B/Reza – We were in at $65 ages ago and got out in the low $80s so I’m not too thrilled at $79.  If the markets go down, they go down with them and then I’ll be very interested again but they are nowhere near as much fun with a low VIX.  Something like the 2012 $70s for $16, selling the March $80s for $4.30 and the 2013 $65 puts at $5.80 is net $5.90 on the $10 spread with rolling ability and if you REALLY don’t mind owning Berkshire at net $70.80 then it’s a good way to enter and, if they head south, you can roll the calls down to the 2013 $65s for hopefully $6 (the price of rolling the 2012 $80s to the 2013 $75s) and that’s a nice long-term base to keep selling calls from for the next 18 months.  

    Late fill/Button – Yes, that can be very useful sometimes.  Nice that you got your price – isn’t cash relaxing!

    Choice/StJ – Well, I agree it needs to be fair but clearly any "fair" way of charging for bandwidth will cost NFLX a fortune.  They have 12M subscribers and we can assume each one uses more bandwidth than a non video-loading VZ client so it would only be fair to charge NFLX $30 per subscriber per month but even $10 is over $1Bn per year against their $200M income so even $1 per month for using 1/3 of all internet bandwidth for 12M subscribers would break them.  This is a business model based on theft of services from other people – that’s ultimately the problem.  You can rip off the public all day long in this country and they’ll pin a medal on you but rip of a corporation and you are in court very quickly!  


  206. Made an observation about gap ups like today. Recent past shows market may not go higher (neither lower) soon. It will hang in the air for 3-4 days during which the gap is closed. A good time to sell calls.
    Here are DIA dates with gap ups like today (all above 50 SMA):
    11/18, 11/4, 9/24, 8/2, 7/13, etc.
    Gap ups under the 50SMA are usually trend changers.


  207. Phil, I am glad to hear that there will be a new guy coming on board this month to outline strategies with Iron Condors for monthly income plays. In my own experience, these are hard to manage and adjust properly and you can have a nice run at 8-10%/month and get wiped in one month. So it will be nice to have someone with experience.  But I would like to know if someone could outline other monthly "income" strategies that could be applied by those of us who cannot day trade (for whatever reason). I know Peter has his Index strangles but what about outlining some individual stock strangles and how to adjust them over a couple of months. I have been paper trading some, but I am not sure I am making the right choices. I have also read some of Jeff Augen books who has some interesting ideas with strangles and ratio. I have been doing some artificials, selling puts and such for long term portfolios, but it would be nice to have other options (no pun intended). Thanks.


  208. Vegas --
    I am very willing to do whatever it takes to get this off the ground, and make all the necessary arrangements.  There are plenty of hotels and all sorts of price ranges.
    However, out of 30 or so Members on the "Vegas List," there have been very few "YES" commitments, and very little feedback (and thanks to those few who have commented with their ideas). 
    So, given the passing time and the need to make travel plans, what we need to do is find a way to get this from a "great idea" to a "firm plan."


  209. This comes under………"It’s how you trade, not what you trade."          
    With this crazy up/down/up/down market I’ve learned another way to make my trades profitable.  I call it the ‘immediate sell order’.    As I cannot be at the computer all day, all my orders have stop loss orders attached.  These are attached at the time of purchase, so as to minimize my losses on losers.  But another technique I’ve taken to using is that of placing an ‘immediate sell order’ on the options at the time of purchase.  Example:  Buy RIMM $60 Dec Calls for $3.00.  Place immediately a sell order GTC Sell RIMM $60 Dec Calls for $4.50.    This allows you to take advantage of quick runups in stocks by automatically taking options profits while you are away.  This example on RIMM is from this week, but I’ve had this occur several times.  Give it a try on a few of your options trades on these up/down volatile stocks.  You’ll be occasionally pleasantly surprised to see that you made a 50% profit on the option, and that they have now retreated back down, and that you are out of the trade with cash in the account, all while you were away.  Oh, and don’t forget those stop loss orders, to let the computer kick your losers out, so you don’t have to.   :)


  210. iflan- good ideas re: the OCO orders. I have used trailing stops with some success when I cannot be at the screen- just another choice to consider.
    Curious about what your current positions on AAPL are and how you may be seeing it going forward. I closed out my Jan 300′s today and have some naked weeklies which I may well close out on Thursday.


  211. yodi
     
    I closed out most of my gold positions, as I contemplated a pullback, assuming the playing field remained level. It now appears I would have been prudent to "stay put", but I do not have a crystal ball. I will be phasing in  to some gold positions over the next few weeks, as I believe the handwriting is on the wall – "inflation is in our future". I’m pleased with the SLW play… I like their business strategy ( silver is attractive looking forward, as well ). The theory I follow is the assumption most of the governments that are over-leveraged with debt, will address their problem with money printing – austerity programs are not working because the risk to their economies is a pill they do not want to swallow.


  212. Phil  just an FYI the link you posted to the Bernank Bears in your after the close email was the QE2 one.
    I finally got it load when I went back the first Aceland post.


  213. djanki1
     
    I am trading currencies through etf’s and the FX market. At the moment I am short the Yen through YCS ( ultra ) and FXY. I am also long FXS ( Swedish Krona ) – good fundamentals long term, and not part of the Euro problems. At present I am not playing EUO… but may take a position tomorrow. My FX plays right now are – short EUR / CHF, and long USD / HUF. I see the Euro headed toward 1.20, and will play it later in the week.


  214. Gel, I think Krona 9 level is maximum, If we have big problems in Euro countries, Sweden export on the fire. Last Lehmann crisis krona fall 28%.


  215. pstas/AAPL………Still holding Jan 300s and selling 1/2 weeklies.   General plan is to continue same.   I think positive holiday AAPL sales will drive the price higher over the coming weeks, and I expect January quarterly report to generate a bounce.   I want to stay long AAPL into the holiday season and as we approach earnings. 


  216. Left work late today and was listening to Cramer on my way home this evening (Sirius satellite radio carries CNBC). He recommends selling half your NFLX position and now rates it a hold.


  217. escohen- firm IN for Vegas over MLK.


  218. Phil:
    I can’t tell you how happy I am to hear the events on NFLX today. Although I know that anything can happen and stories can change and deals can be made, I feel a lot more confident that my 195 Dec short calls will expire worthless. That alone is worth the price of admission to your site. I learned an awful lot this week and last about how to work a short trade properly. Specifically, about when to execute rolls and all of the things you need to think about before you dip your toe especially on volatile stocks like CMG or NFLX.
    Many times, in the past, my thinking was shallow. In other words, I read a few stories, investigated the fundamentals, reviewed charts,  and then convinced myself that I was right and jumped in. Ouch! Sometimes I was right, and sometimes I was wrong, but I never had a plan other than ….REACT! You have taught me first and foremost to think and think hard before I do one of these trades and to realize that it may not work as planned. Secondly, to have a plan for A) scaling in B) setting stops if you want a quick in and out and,C) what to do if the trade goes against while you wait for your conviction to ring true.
    I have a long way to go. Afterall, I still own short calls on NFLX and CMG! But, my positions are much more manageable than they were in the past and I have a plan in place for both.
    I am not a great day trader. Never have been. But I still try. To be honest with you, I can’t wait for the air of uncertainty to clear so we can do some buy writes and be very comfortable waiting for our 20% returns.
    Thank you and all of the great board members for their great reads, advice, and patience with those of us that are struggling to keep pace. I will gladly sign up for another quarter in December.


  219.  escohen5 : Vegas
     
    I’m a probable but can’t commit til 2wks prior.  So my question is do we need  set minimum number.  Or rather than committing to a block of rooms and a conference/poker room could we maybe just leave it flexible. That way you don’t get stuck messing with it, we’re all big boys/girls and can figure out how to get together.  When x number have committed with flights and we book our own best rates at our favorite hotel we then see about getting a place we can all meet.  I have no idea if that weekend is big in Vegas but I know there is plenty of meeting space for small groups that we could probably book the day before.  Or we could all throw in to cover a suite for a night or two that could accomodate a suitable get together, maybe there’s a high roller who gets a suite comped who could host cocktails?.  Maybe make the 31st the drop dead date.  If enough people are in I’m sure Phil can lead us in some early Jan day trades to finance the trip.  The "Vegas Portfolio".     What number do you think would make it worthwhile? 10-20-30?
     


  220.  pahurik / Swedish krona
     
    I believe the Euro is cooked… all of the countries that have violated the terms of debt ratios, that were dictated by the Eurozone agreement, are in a quagmire of problems. Sweden, alternatively, is well managed and their economy is doing very well – result is a strong economy, and a strong currency. As long as the dynamics remain the same, I plan to keep my long position…. as it really,is about comparisons.


  221. Phil,
    I still have a thorn in my side from that time. I was a brand new member of only about one month and somehow I missed out even on following you into that buying opportunity of a lifetime. I was clueless about value and just wanted to be a "trader." I was driven by emotion like most others and totally bonked! However, what I have now learned in two years will benefit me for the rest of my life. Many thanks, again.


  222. Esco

    Thanks for your help w. Vegas, I was the keeper of the list and had intended to contact 3 sites to see if I could get us a great package, but work has me under water with no end in site. My suggestion from here would be to get a set of std. Parameters, maybe 25-35 rooms, conference room, and a suite for cocktails for 2-3 nites, tell three hotels what we want, and get their price/ room. Once we have that the attendees can discuss & vote, and we confirm.

    I can carve time to contact a hotel or two, but not really a Vegas guy myself so need suggestions on sites. Comments?


  223. Redlog/vegas --
    Thanks for the feedback.
    You are correct, it does not have to be highly organized.  We could all stay where we wanted (or where we each have standing deals, comps, points, or whatever), and not commit until the last minute.
    On the other hand, I like the idea of making it an "event" in the sense that we all go to the same place.  It just makes meeting easier, and we wanted to take advantage of whatever "group" rates may be there.  
    Also, and this is very loosely gathered from Phil’s posts, that while he is not interested in a "seminar" format, he has nevertheless suggested that there be a room with AV capabilities, internet, and some sort of food involved. 
    So yeah, we could "wing it," but I’d rather not.


  224. Gel – for what it’s worth Nenner agrees with you *but* says that there will be a bounce in the Euro for the next week or so. I know he uses sunspots and sh!t but I have found him to be fairly accurate with short-term direction calls when it comes to currencies and futures.
    VEGAS – Phil/ESCHO - A couple of things, even with "group rates" we may be able to find better deals individually. We definitely need to set the date (MLK was the one most people agreed on) I think it might be easier if we set something up where Escho negotiates the rate for the hotel conference room where we will be playing poker, talking stocks, etc. Once he gets this rate he sends the invoice to Phil.  The cost is  divided among the 30+ people who have made the commitment. Those 30+ people send an email to Phil/Greg authorizing Phil to charge 1/30th of the amount on our credit cards and Phil uses this money to pay for the conference room. What do you think Phil?


  225. Hey Deano/Escho – just read your comments after I posted mine. I am down with making it an "event" but since my bestfriend lives in Vegas I will be staying at his place. I really think it might be easier if we could just get everyone to chip in for the conference room (and maybe cocktail room) as soon as we find out the cost and hash out everything else later. Providing Phil is OK with sending us some invoices for 1/30th of the community cost…. I think once we get this commitment, we could work on itinerary stuff…. THe seminar room could just be for one night, the other days/nights we could just reserve a room bar/restaurant to meet at and list it on the itinerary….


  226. Bandwidth / NFLX – Telecom/cable providers increasingly recognize the video bandwidth challenge in both wireline internet and wireless. Usage is growing much faster than their costs to provide bandwidth are coming down and telecom providers will need to pass these costs on to consumers. There is a move to more data/bandwidth pricing plans to deal with YouTube and Netflix growth.  In Canada all wireline ISPs charge for excess internet usage, usually in the range of $1.00 – $2.00 per GB over your plan cap, or you can move up to a new bandwidth tier for $10 – $15 per month to get capacity for 20GB – 45GB depending upon operator and plan.  I expect Netflix Canada will not get huge traction because of these costs especially when the major telcos and cable companies can provide bundled content over satellite and cable without usage charges  (or over their own internet connection and then charge their customers for the usage!).  I don’t expect the FCC would permit discrimination against Netflix on Internet bandwidth usage, but nor do I think discrimination is the problem.  The cost to deliver more bandwidth is the issue.   
    From a wireless perspective, RIMM’s recent bounce is largely tied to its new QNX platform which will provide a bandwidth efficiency advantage relative to other smartphone/tablet platforms.  


  227. es – I am IN for Vegas over MLK weekend.  I am not around Presidents weekend.


  228. For the ‘event’

     

    Friday arrive, and a cocktail hour at a restaraunt TBD.

    Saturday say 10-11: Intro of people attending and what they want to get out of PSW

    11-12: Talk/Seminar whatever by Phil

    12-1: Lunch

    1-2: I am happy to give a background into biotechs and other investments (hell, I can give a seminar that will put you all to sleep besides the Docs and scientists

    2-3 wrapup and other info

    3-XX Texas Hold’em buyin for XX $$

    Sunday

    Breakfast and hour gathering Open for discussion

    Free after that.


  229. jromeha
     
    The Euro could as you say, show strength for about a week, and then reality will set in again, and it is then ‘elevator down", in my humble opinion. No astrology or witch- craft involved… just fundamentals and TA


  230. FWIW: Related to "…maybe jobs are coming back." I am a mental health/chemical dependency counselor by training and there have been a relative dearth of job opportunities over the past year in the greater Orlando area but my recent perusal of Careerbuilder showed significantly more openings around town. These facilities are private for-profit (few) and non-profit (most) corporations that are funded through self-pay, insurance, and contracts with the state.


  231. escohen
     
    Damn… I wish I could join you guys ( and gals )… it will be a "blast " for sure. A few years ago I entertained a small group of business associates from Saudia Arabia, and we met in Las Vegas for the weekend. I hosted the occasion and we stayed at the Mandalay Bay ( might be the best choice in Vegas ). Because of the reservations I had in the restaurant off the Lobby ( a steak house, that might be the best in Vegas ) the hotel gave me an upgrade to a suite that was beyond belief – it was two bedrooms, three bathrooms a huge bar, gigantic living room and dining room etc. It was on the top floor and overlooked the whole city. Unbelievable, Check this out for sure and ask for the upgrade as you will have a large number of folks for dinner. Phil could stay in one of the bedrooms, and Cap in the other…. maybe work out the political deadlock we have in Washington. The suite will accomodate 30 people for a party, and the view will never be forgotten.


  232. Gel – are you still keeping 208 as a hard stop for the USD/HUF trade?


  233. Selling calls/Praizada – Yes, that is very logical but the super hero guy says:  "Buy the F’ing Dips" and you can’t really argue with a super hero, can you?  

    Condors/StJ – Well we need something that people can play in this chop aside from day trading and scurrying back to cash all the time!  As to more passive monthly income strategies, I don’t know what people have against good, old fashioned buy/writes.  BAC is $11.29 and people have no idea what it’s going to do so you can sell the 2013 $10 puts and calls for $5.65 and that’s net $5.64/7.82 and you make 77% if called away at $10, which is about 3% a month.  So if you have $100,000 and you put $5,640 into 1,000 shares with the hedge, you’ll get back $10,000 if all goes well, which would be a 4.35% gain on your ENTIRE $100,000 with just 5% of the cash used and a commitment to add $10K more for a total potential commitment of $15,640.  4 trades like that commit about 60% of your portfolio (worst case) and pay you 20% over 2 years on the whole portfolio while keeping you in plenty of cash as you are only cash committing about 25% of your portfolio to make 20%.  

    As you note, the condor strategy provides excellent returns WHEN THEY WORK but the occasional black swan (which seem to come up twice a year, actually) can wipe out a year’s worth of gains.  That makes perfect sense though as why do you think you can make 10% a month if the underlying risk isn’t huge.  So, for a condor strategy like that, you can’t play with more than about 5% of your portfolio.  Of course, getting 10% a month on 5% of your portfolio is huge and you can roll 1/2 your profits back in and get to 7.5%, 10%, 15%, 22%…  as years go by while pocketing the rest but starting out with a large amount before you make any profits doesn’t just risk that month’s bet on a 9/11-type event but puts the rest of your portfolio at risk as well.  Yes, BAC may go bankrupt but if you diversify, then all 4 (or 8 or 10) of your positions are not likely to and, even in a severe downturn, at least you own the stock long-term and have cash on the side.

    You need to be realistic about any investing strategy.  At the moment (5am) it’s looking like we’ll be gapping higher in the morning and that will likely wipe out our week’s gains in the 1050P – that’s what happens when you pursue and aggressive strategy and it’s not the kind of thing you EVER do with retirement money.  Because we are lightly committed, we will be able to DD and/or roll our small entries into the pop (I’m assuming the dollar holds 80.50 again) but these directional strategies can become a nightmare if you don’t manage your cash.   That’s the case with condors, where your risk is often 10:1 to your reward – selling both sides means you cut the risk down to 5:1 and that’s why I say you take 1/2 of your yearly victories off the table so next year you can risk a little more but you need 5 wins under your belt on cash you keep on the sideline for emergencies just to be safe enough to even consider raising the bet.

    ANY strategy in which your goal is to make more than 20% in a year (1.5% per month) is GAMBLING!  Please keep that in mind.  If it was not gambling, then everyone in the World would be a Trillionaire by now because $10,000 compounded annually at 20% for 65 years is $1,402,106,469.15!  How many people do you know who did that?  That’s why our goal is to make 20% and get back to precious cash – 20% is as much as you should ever expect to make in a year, making it in a single trade over a short period of time should always be protected.  

    "The man who begins to speculate in stocks with the intention of making a fortune usually goes broke, whereas the man who trades with a view of getting good interest on his money sometimes gets rich " – Charles Dow, 1901


  234. Vegas/Esco – See, I keep getting dragged into this.  We don’t have a way to take money like that – we work with a 3rd-party CC company for security reasons and that security means we can’t just take money for random stuff.  Hotels can arrange to make a block of rooms available and everyone just calls and pays and you arrange a certain rate for a conference room and equipment to be included in those room fees so if, say 20 people pay $250 for 3 nights then you get the conference room, the equipment and maybe some food for 20 people.  

    I’m not against a seminar, I’m happy to talk all day long – I just don’t want people to think I have any idea what I will say or that I have ever done an options seminar before.  This will be the first time and I figure we’ll look at some charts and talk about them and look at some fundamentals and talk about them and look at some option chains and discuss them.  

    I’d hate to go all the way to Vegas and not meet people so I would hope we have a dinner together on Friday (for those who get there on time) and then a seminar day on Saturday with dinner and a poker tournament and maybe another seminar Sunday or at least a brunch thing because that was the point of doing it on the holiday weekend, right?  It would be interesting to hear from a lot of people as most of us are professionals in some field or another and it would be very interesting to hear what everyone knows and what they consider good trade ideas and why.

    I doubt you’ll get very far with commitments until you pick a weekend, pick a hotel and set a price and we can make a post that says – here’s the deal, call this number and let us know when you’ve registered (the hotel will send you Emails if you want too) and then set a date that we MUST have 20 people by to confirm, otherwise all money gets returned (room cancellations) and that’s that.  

    If you try to run this by committee, it will be 2012 before we get this done.  Just make a choice, commit to it and then we’ll see if there’s enough real interest.  

    One last thing – you should ask hotels whether they have packages that include airfare as some do and that may work out well for some people.  


  235. Immediate sell/Iflan –  Good plan but 50%?  That’s pretty ambitious!  I’d be curious to see how it goes with a more reasonable goal set.  Pstas is right, trailing stops are very good to use – TOS let’s you set trailing stops based on last sale, which I find reasonable to use as bid/ask/mark can go crazy but if no one actually sells or buys it doesn’t trigger you.  

    Gold/Gel – That depends.  Gold was $1,387 in early October and is $1,390 now while the dollar was 76 and is now 81 so the dollar has vastly outperformed gold for the last 2 months EXCEPT in relation to gold but if you find something that has gotten cheaper to the dollar (like XLF, HMY, BA, ISRG, VZ, T, JPM…) to invest in, rather than mindlessly running back to gold, you can leverage your advantage although I still prefer the cash as the dollar is merely pulling back after an 8% run which means i’t pulling off the support line (8%) of a 10% run and that’s normal, especially as there was a pullback off the 4% run to 79.46 (up 4) back to 77.97 (up 2.50) and now we’re up another 4 so a pullback to 80.50 is exactly what we expect for the next consolidation prior to the next leg.  Holding 80.50 and consolidating a bit here is exactly what the dollar needs to get over the 200 dma at 82 as it was not at all realistic to think it was going to plow through with no resistance.  

    I’d say anything other than a break below 80.50 today will be very bullish for the dollar.  UUP came down nicely to $23.30 so maybe fun to sell a put today.  The March $23 puts are .50 and those pay for the premium on the March $23 calls (.80) so that’s a fun pair trade, similar to one we ran last month that did very well. 

    Link/Doro – Yeah, the EMail lost the video but it’s on the main page the way I intended, that link was meant to go back to the original and I was thinking it would be obvious with the big video box below – I didn’t realize it wouldn’t show up in Email or in Flash-less IPads (AAPL just pretends that ADBE images don’t exist).  

    Thanks Cramer! 

    NFLX/DClark – That’s great, I’m very happy to hear it! 

    Euro//Gel – If the Euro is cooked then what are we?  They are way less in debt as a group than we are.  Our health care costs are the elephant in the room no one is dealing with – that will only serve to push us closer and closer to the edge of the cliff every single year we fail to address it.   

    Thorn/AC – That was a very crazy time.  I think there may be another opportunity in our future, with a nice downside first and then maybe a recovery so just be patient and hopefully you’ll be ready, willing AND able to put your cash into play when the time is right.  Good to know about Orlando too!  

    Mandaly/Gel – Yeah, that was one of my top choices from last week.  I’ve had very nice experiences there too.  


  236.  Phil / UUP
    Did you mean March 23P @ 0.5 / March 23C @ 0.8? Other than 80.5, what other levels to you see on the $?


  237. UUP/Yshen – Yes, that was March, thanks!