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Just Another Manic Monday – Value Investing

Up, up and away!  

As I mentioned in Friday’s morning’s post, we did a lot of bottom-fishing on Thursday as we began to develop Disaster fatigue with long plays on XLF at $11.50, shorting TLT at $123, shorting VXX at $49.50, TNA at $34.50, BRK.B at $65, AA at $10.20, VLO at $19, IMAX at $15.75, BA at $58.32, AGQ at $170, CHK at $27.50, DIS at $30.14 and ABX at $47.50.   They were hedged, of course and, for the most part, you still had a nice chance to make those entries on Friday – but not so much this morning as the futures are up about 1.5% already (7:30).  

Friday morning, in my Alert to Members, I reminded them that BCS looked like an excellent VALUE to me, no matter what the PRICE was ($8.75 after hitting $8.40 the day before) and this morning, that PRICE is up well over 10% in EU trading.  Did the VALUE of BCS change materially over the weekend?  Of course not, certainly not by the $4Bn their market cap gained – like the song, the VALUE remains the same – only the highly variable price of a share of BCS is undergoing ch-ch-changes…  

I pointed out similar hedged, long-term plays could be made on GS ($94), MS ($13), BAC ($6) and C ($24).  Of course we hedged them per our discussion in the morning post (TZA was our morning choice but we’re out over 650 on the RUT) but then we went long on EWG (Germany) again with the very aggressive Oct $16,18 bull call spread at $1.30, offset by the sale of the $17 puts for .90 for net .40 on the $2 spread.  10 of those in our virtual $25,000 Portfolio cost $400 and can return $2,000 in less than 30 days if EWG is over $18 and, guess what – they’re over $18 this morning!

Another bullish bet we placed was USO Nov $28/30 bull call spread at $1.30, selling the $27 puts for $1.10 for net .20 on the $2 spread with a 900% upside if USO simply doesn’t drop from where it is now.  That’s what’s nice about options – you don’t need the market to go up to make money good money.  On this trade idea, your worst-case scenario is owning USO at net $27.20, about 10% lower than it is now.  That would equal roughly $72 oil.  

Obviously, if you don’t WANT to be long on oil at $72, then you don’t sell short puts when it’s at $80 but, again, when you are a VALUE investor, this is exactly the kind of play we like to make – when the PRICE of something we want gets cheap.  You can’t be a Value Investor if you aren’t able to place a VALUE on the stocks you buy.  As I often say to my TA friends, these are not just random numbers on a chart – they are real companies that have very real returns on investment no matter who apocalyptic the rhetoric gets in the MSM or from the rest of the punditocracy.  

One example I often use with Members is buying jeans.  You have jeans – just like you have stocks.  Maybe some of your jeans are old and need to be replaced and maybe you just have some extra money and want a new pair but, after 40 years of buying jeans, you damned well know what a new pair is worth and what you are willing to pay for them.  So, usually, you have no urgency when you go to the store to buy them and, if they are not on sale but you expect one soon – usually you are willing to wait.  When there is a sale, you know if the price is good or not and you buy when you see a deal.  

Why is it you put more thought into a $50 pair of jeans than $50,000 worth of stocks?  If you know Levis fit you well do you care if the local paper ran an article saying Lee Jeans are better?  No, you KNOW what works for you and your wardrobe – just like you should know what works for you and your portfolio.  When the jeans are marked down 40% because it’s after Christmas, do you worry that they will get cheaper or that suddenly they must be no good or do you know that the current market environment is not likely to last so you snap them up because, again, you KNOW you want to own those jeans long-term.  

Stocks are no different.  A good stock is like a good pair of jeans and will give you VALUE, no matter what PRICE you pay for them but will give you a better VALUE when you manage to get them for less.  As we often discuss in Stock World Weekly, the PRICE of the markets, as well as commodities, are strongly influenced by moves in the Dollar and here’s our Multi-Chart of the S&P, adjusted to reflect various other PRICING instruments:  

Isn’t that interesting?  The only way the S&P seems to be performing poorly is against the Dollar which, unfortunately, is how we see it priced every day.  Against any other measure of VALUE, the S&P has had a pretty good month!  One "share" of the S&P bought 290 pounds of copper at the beginning of August or September, now you get 340 pounds – up 17%.  You could trade your S&P units for 26 ounces of silver on August 22nd – a month later it’s 36 ounces – up 38%.  If the gold and silver bugs are right and those metals aren’t a total joke – then the S&P had a fantastic month, right?  

We’re even getting 10% more oil and gold per unit than we did earlier in the month and food prices have pulled back a bit too and home prices have gone down too so pretty much everything you want to exchange your S&P shares for has gotten better for you against your stock – everything except the cash you have in US Dollars – and that’s why we have been Cashy and Cautious since the Dollar bottomed out in April – cash is also an investment and, when the S&P was at 1,350 and the Dow was at 12,800 – we decided the Dollar at 73 was a better VALUE than most stocks.  

Finally, 5 months later, the rest of the World is starting to agree with us but – surprise World – we’re done with that and starting to look to convert our piles of cash back to equities again.  Will it take 5 months for the World to catch up to us again or will the underlying value fundamentals continue to assert themselves through the end of the year?  That will depend on earnings results (which we do care about) and the level of investor panic over our various crisises – whether real or manufactured (which we care less about).  As I said on Friday – we welcome the crisis because, like the Chinese, we also see the opportunity hidden within.  

 We discussed the Global situation in this weekend’s Member Chat and I made the point that our last proper recession was in the 70s and during that decade we had War, Debt, High Unemployment, Rising Commodity Costs, Divided Government, Slowing Global Economy… Things were so bad, both the US and Europe turned to Conservatives for answers and we got Reagan, Thatcher etc.  There was Kent State, Charles Manson, Peruvian Earthquakes, Chinese Spy Satellites, the Cold War, the Pentagon Papers, Idi Amin, Israelis taken hostage at the Olympics, Wallace Shot, DDT, Philippines under marshall law, Nicaraguan Earthquakes, the October War in Israel, Patty Hearst kidnapped, lower speed limits (my pick for biggest catastrophe), Ethiopian Famine, India testing nukes, Tornado Summer, Lebanon Civil War, Saigon Falling, Ford assassination attempt, the Metric System, the Wreck of the Edmund Fitzgerald, Soweto Riots, Karen Ann Quinlan, Ebola, Son of Sam, New York’s blackout, Love Canal, Jonestown, Iran revolution, Three Mile Island, Greensboro Massacre, Nicaraguan Revolution and that Happy Days episode where Fonzie jumped the shark….  

Imagine if just a few of those things happened these days, with the hyperbolic media coverage we give everything. Ebola, especially comes to mind when you consider the way we freaked out over SARS and the Bird Flue – imagine graphic images coming at you 24/7 as each new case of Ebola was discovered…

As I said on Friday – it’s always something and all that crap happened to us in one decade (the decade of our Bicentennial too) and things really didn’t get better until about August of 1982, with the Dow at 800 after having been at 1,000 in 1966 so 16 years of nothing until then. Reagan had been elected Nov of 1980 and the hostages were released and oil prices came down but a lot of bad stuff was happening then too (Olympic Boycotts, John Lennon shot, Poland Revolution, Cuban exile, ABSCAM, Saddam vs. Iran, Grain embargo with Russia, Toxic Shock, Pope shot, Libyan War, Aids broke out, Reagan Assassination attempt #1… – all in just 1980 and 1981) but it’s all about attitude.

Reagan doubled our debt and had an irrational tax policy that his Vice President called "Voodoo Economics" that could never possibly balance the budget and he doubled the size of government while collecting less taxes and pushed us into the biggest military build-up in history, building nukes no less! All that and the markets began to rally because he made people feel confident and then the jobs came back but, mostly, it was inflation that made everyone rich – the same inflation that Ford and Carter had tried to tame was FLYING in 1980 and 1981 in the teens before it began to calm down.

One of our members pointed out that my commentary could be summed up very simply as "We didn’t start the fire, it was always burning since the Wold was turning…"

That’s where we are this fall – it’s a turning point.  One of those times in human history when we will need a great leader to step up and take charge and simply change the attitude of the people.  Unfortunately, Obama has been a huge disappointment on that front and none of the Republicans seeking to replace him seem right for the job either.  The relentless negativity of the Mainstream Media needs a counterbalance and we’re not going to get too carried away with our bargain-hunting until we do get technical confirmation but while we wait, there are plenty of very good bargains to be had – with stocks that will fit our portfolios like a good pair of jeans – ones we can hold onto for the long term.  

It’s going to be an interesting week with another look at Q2 GDP, the ever-lovely Case-Shiller Report, Durable Goods, Consumer Confidence, Personal Income and Spending and the Chicago PMI.  Also, the Government still may be shut down on Friday.   Short-term notes will be auctioned off this week – the first post-Twist set to be bid on and we have a TON of Fed speak beginning with 3 of our Governors today and 6 more as the week moves on so the bull will be flying – even if the markets are not!  

Tuesday Sep 27

 

Sarah Bloom Raskin Speaks
9:15 AM ET

James Bullard Speaks
9:30 AM ET

New Home Sales
[Star]
10:00 AM ET

Narayana Kocherlakota Speaks
3:00 PM ET
 

Redbook
[Bullet
8:55 AM ET

Dennis Lockhart Speaks
12:30 PM ET

 

Eric Rosengren Speaks
2:40 AM ET

Ben Bernanke Speaks
5:00 PM ET
 

Weekly Bill Settlement

GDP
[Report][Star]
8:30 AM ET

Jobless Claims
[Report][Star]
8:30 AM ET

Eric Rosengren Speaks
8:30 AM ET

Charles Plosser Speaks
8:30 AM ET

Farm Prices
[Bullet
3:00 PM ET

Money Supply
[Bullet
4:30 PM ET

 

Chicago PMI
[Report][djStar]
9:45 AM ET

James Bullard Speaks
11:00 AM ET
 

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  1. Oil Lines
    R3 – 81.72
    R2 – 81.28
    R1 – 80.47
    PP – 80.03
    S1 – 79.22
    S2 – 78.78
    S3 – 77.97
     
    Yesterday’s high and low -80.85 / 79.60
    Breakout lines – 82.87 / 76.32


  2. Some commodities are way oversold:
    http://www.bespokeinvest.com/thinkbig/2011/9/24/bespokes-commodity-snapshot.html
    And most of them are in the bottom of their channels.
     
    And gold bugs slept soundly while the yellow metal lost another $100 last night, dipping below $1550 at its lowest (some $20 below its 200 DMA)! It has recovered since then but it’s still below Friday’s close, not much of a safe haven! 


  3. The RUT tagged JRW’s target of 660 overnight.  Prescient.


  4. morning Phil: last week one of your hedge recommendations was Jan TZA 53\60 for $2. stop at $1. When something has such wide bid ask spreads, how do you know when you have hit $1? Seems one could easily exit too early or too late. Thanks


  5. PP


  6.  Attention PSW Vegas attendees,  I made a little site so we could keep all the questions and information in one easy to find place.  PSW VEGAS


  7. SPY 116 Calendar calls, selling for $2.08.



  8.  Wow, is it me or is ToS really showing some crazy bid/ask spreads today? It just told me my EWG spread was up $12k one minute, and down $2k the next. Oct SQQQ 22 Call is at a bid/ask of $.15/$3.70, while the 23 is at $3.20/$3.60?? 


  9. FAS Money Recap 
     
    Long Strangle –Jan 12 Puts (3.01 average now 3.55) and 15 Calls (2.75 average cost now 1.46). 
     
    Weekly – Full Cover October 13 Puts (1.98 average now 2.85)
    Monthly – Full Cover October 13 Puts (1.98 average now 2.85)  
     
    Two week recap later today!


  10. Lower to 2.05.  Still a nice profit for over the weekend.  Puts just went green.


  11.  TOS bid/asks are really screwed up ——


  12. Phil/Iflan – AAPL. There has to be a trade!


  13. Thanks for the BRK hint Phil.


  14.  Fidelity bid/asks screwed up also 


  15. Phil, that picture of Kennedy reminded me of a note I read this weekend about his tax cuts which are always used as an example by the GOP:

    “[I]n 1962, President Kennedy proposed a big tax cut for the rich in order to stimulate the economy and encourage investment. And the rates have been moderating ever since.” [Fox News, The O’Reilly Factor, 9/22/11] 

    But to put things in perspective:

    So, let’s set the record straight. When Kennedy cut taxes, he lowered the top marginal tax from 91% to 65%. Many congressional Republicans opposed his plan at the time, citing concerns that the treasury couldn’t afford such a tax break — the Republican Party used to be quite serious about fiscal responsibility, but it’s been a half-century — but Kennedy proceeded anyway because the higher rates, instituted during World War II, were no longer necessary.

    It’s all a question of timing I guess! And how attitudes have changed since then…


  16. And one more thing that Bill O’Reilly left from his comments:

    Keep in mind, unlike contemporary GOP policy, Kennedy’s plan distributed “peace dividends” broadly across the wage spectrum. As the Joint Committee on Internal Revenue Taxation explained at the time, the bottom 85% of the population received 59% of the benefits of JFK’s tax cut. The top 2.4% received 17.4% of the tax cut, and the top 0.4% received just 6% of it.

    Crucial I think! 


  17. Pharm,  What’s the news on UTHR? 


  18. Stj – Come on!  You with all your "history," "context" and "facts."  We all know that last quote of yours is nonsense.  Why, because our gut tells us it is – end of story.  Republicans against tax cuts.  Really! Try that on some other gullible fools our there.  ;-)


  19.  PCLN???


  20. Huh, a drop right out of the open.  Where’s angel when you need the rumor/reason to explain why.  Let’s see what the New Home Sales are like.


  21. Damn it, this was not the market direction I planned for!


  22. Deals Alert
    from The Wall Street Journal

    Berkshire Hathaway’s board has authorized the conglomerate to buy back an indefinite amount of its stock, a move that if utilized would be the first such effort under Chief Executive Warren Buffett. A buyback might suggest Mr. Buffett hasn’t found deals at the return he had expected.

    Under the authorization, Berkshire can repurchase Class A and Class B shares at prices no higher than a 10% premium over the then-current book value of the shares. Berkshire plans to use cash on hand to fund repurchases, and repurchases will not be made if they would reduce Berkshire’s consolidated cash equivalent holdings below $20 billion.

     


  23. Dear Phil,
    The overnight price drops in the gold and silver futures were breathtaking.  At what prices would you get interested in gold and silver?
    Thank you.


  24. Good morning!

    Still all about the Dollar this morning and over 79 is still game on for our futures shorts from this morning at Nasdaq (/NQ) below the 2,200 line and the S&P (/ES) below 1,140 and Dow (/YM) below our 10,750 line – all with tight stops, of course.  At the moment, only the S&P is below the line with the Dollar at 79.005 but take note of how quickly we flew higher after catching a very small sell-off so these are very quick futures trades so you need to be confident in yourself and your trading platform (FU TOS!).  

    Not much to say since this morning’s notes.  Just the same back and forth BS that allows anyone to hear whatever they want to back up their feelings and, when things are uncertain – we watch the technicals and those are still very weak!  

    Our bullish premise was mainly that we expected the G20 to do SOMETHING over the weekend – they did not.  We got a nice pop anyway so we take our short-term bullish profits off the table (ALWAYS sell into the initial excitement) and get a little more bearish (10/15 or 15/20) until we get the Dollar under that 79 mark and we begin to see more green on the -5% lines.

    Short trade of the morning is DIA FRIDAY $105.75 puts at $1.15, 10 in the $25KP with a stop at $.95 so risking $200 to make quite a lot if things turn ugly.  

    Monday’s economic calendar:
    8:30 Chicago Fed National Activity Index
    9:15 Sarah Raskin: Monetary Policy and Job Creation (.pdf)
    9:30 Fed’s Bullard: ‘Policy after the crisis’
    10:00 New Home Sales
    10:30 Dallas Fed Manufacturing Outlook

    At the open: Dow +0.94% to 10873. S&P +0.94% to 1147. Nasdaq +0.56% to 2219.
    Treasurys: 30-year -0.35%. 10-yr -0.15%. 5-yr -0.04%.
    Commodities: Crude -0.37% to $79.56. Gold -1.17% to $1618.55.
    Currencies: Euro -0.17% vs. dollar. Yen -0.34%. Pound -0.41%.

    Market preview: Stocks look set to rally at the open, following European markets higher, on speculation of a possible ECB rate cut, which would be a major policy reversal. S&P futures +1.1%. Precious metals continue their slide, while crude oil climbs on a weaker dollar. Later: new home sales, plenty of Fedspeak.

    Chicago Fed National Activity Index: -0.43 in August vs. expectations of -0.37 and from +0.02 in July. 

    "Whenever you find the key to the market, they change the locks," said trading legend Gerald Loeb. Horse-racing bettor Robert Bacon called the same idea "The Principle of Ever Changing Cycles." After an overnight scare, markets look to be pulling back from Art Cashin’s "Thursday-Monday scenario" that called for a possible washout today.

    FOMC member Sarah Bloom Raskin suggests additional Fed actions may be warranted, even as previous steps have done less than hoped to assist the economy. Instead of concluding the Fed didn’t pursue the right course, argues Raskin, the ineffectiveness of current policy may mean a doubling-down is necessary.

    With time running out on Greece and fiscal policy unable to move fast enough, it’s up to the ECB to prevent a full-blown banking crisis by moving the risk onto its own balance sheet – even buying upall Greek government debt, says Carl Weinberg. Such a move could be done for €250B at current pricing. 

    Part of an hour-long TV appearance, Angela Merkel rejects a haircut on Greek bonds, saying such a move would cause a massive loss of investor confidence across the eurozone (as opposed to current policy?). A major haircut on Greek paper is a key leg of thelatest floated solution to the EU’s woes. 

    Der Spiegel reports Germany considering moving forward the launch of the permanent rescue facility (ESM) to 2012 from 2013. The action would nullify the need to provide Finland with collateral as the ESM would have capital paid in up-front to serve as security.

    Prospects for lower rates in Europe are raised as ECB member Nowotny says they "cannot be excluded" – central banker speak for "a rate cut is likely."

    The Socialists take control of the French Senate for the 1st time in the 53 year history of the 5th Republic. Coming just 7 months before the Presidential election, the results are a political blow for President Sarkozy, but legislatively, the Senate does not have the power of its U.S. counterpart. 

    Berkshire Hathaway (BRK.A) announces a share repurchase program, planning to reduce its cash holdings to no less than $20B. The company will pay no price higher than a 10% premium over the then current book-value of the shares. BRK.B +4%premarket. (PR)


  25. Ron / Gold and Silver – Not sure Phil has ever been long gold or silver.  Mining companies yes, but the shiny stuff I’m not sure.


  26. Phil,
    Do you think this is a good spot to sell PFE Puts? Jan $17.50′s are $1.40 and can be rolled to Jan13 $15.00′s ( $1.80) if desired.


  27. Phil
     
    thoughts on SDRL?


  28.  Phil or anyone, any suggestions on dealing with ToS on an issue related to their crazy spreads? I tried to close out my AGQ spread this morning but it wouldn’t fill, so I sold off the long leg for $3, which filled instantly, and but buying back the short leg didn’t fill at all, and when they fixed their quotes it’s now showing $3.50 to close it out. Their support said "the order filled as it should have so we can not do anything". I don’t think AGQ is going back to 175 in the next month but this is really annoying. 


  29.  WTF is tanking the Nasdaq???


  30. So we were OK about the G20/IMF doing nothing while the futures were being traded (at least part of the night), and then we get cranky when the markets open?  Very odd.


  31.  Kurt — AGQ on TOS is just stupid, numbers way off…I can’t rely on any of them, so I’m leaving it alone for now. 


  32.  This morning is very strange morning - http://finance.yahoo.com/echarts?s=^IXIC+Interactive#chart2:symbol=^ixic;range=1d;compare=^rut+xlf+^dji+^gspc;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=off;source=undefined
    Why are financials strong while the market turns ugly?


  33. Nasdaq / Jabo – Look no further than AAPL…. 


  34. JRW predicted the countertrend Gap Fill to the broken uptrend line at RUT 660, which got hit overnight.  Now its back to the overall downtrend to the 63-64 area support.


  35. Phil:
    I own 200 shares of GLW at 20.59 now 12.10. I liked it at $20, and love it at $12.  In addition to the stock, I sold 2 $15 2013 puts at $1.90. I want to make this a long term holding. Ok, it sucks that I am down, but I think it makes more sense to sell the stock and buy 5 of the the 2013 10/15 BCS to take some of the money off the table without giving up on the trade (which I should have done a while back but didn’t!). I can also sell another round (2) of the 2013 $12.5 puts to help pay for the trade. Does this make any sense-or do you have a better idea?


  36. Phil- Bespoke shows that commodities are oversold, but what do you think about selling calls in AGQ. It has dropped from +200 to less than 100 in a week. How about selling October calls in the 150- 160 range ? Like the 150 call at         $ 4.50 ?


  37.  Kurt — AGQ — it looks correct now.


  38. That AAPL move is based on that news from Bloomberg:
    http://www.bloomberg.com/news/2011-09-26/apple-cuts-ipad-supply-chain-orders-jpmorgan.html
    Not confirmed, but who needs confirmation on a juicy market moving rumor! 


  39. Berkshire buyback is major indication that $65 is way too cheap on BRK.B.  That’s over 10% of the company Buffett is willing to buy up to $77 per share and he’d rather do that than buy other very cheap deals out there – probably a reflection of the availability of financing.  Berkshire is heavily invested in housing, through building-type companies and also in Transportation so a pretty big bottom call by Buffett.  Could it be wishful thinking by a senile old man or an astute purchase using about 1/4 of their cash?    Buffett always says he needs to always have $20Bn of cash on hand but that’s about 10% of the Market Cap, not $20Bn really but figure that, even after he spends $20Bn on his own stock and drives the cap up to $200Bn again – that he still has $60Bn in cash on the side to buy things with.  

    I imagine Buffett thinks the Dollar tops out at 80 as well – I’d love to see a test so we can get comfortable with that range. 

    Oversold commodities/StJ – I’m not sure about that, they’ve been ridiculously priced for a long time and a dangerous mistake people make when bubbles burst is getting sucked in by technical indicators that don’t function well as indicators against long-lasting tops.  

    Speaking of indicators – more and more of our horses are leaving the stable on our Long-Put list!  BIDU collapsing very nicely and PCLN down to $495.  MA and V still pretty high – much higher than they should be if the Financials are falling apart!  

    TZA/Morx – Not an exact science, you need to look at last sales, not bid/ask.  Also, you need to use a bit of common sense:  Is the VIX up or down, is it a spike, was there news and is that news short-term or long?  You can’t just use PRICE to determine your actions – it’s a guideline.  Also, how much do you need the protection in the first place.  Remember, Rule #2 is "When in doubt, sell half" so if you don’t know the answers to these questions, then you are in doubt, right?   January is a LONG way away and the $53s last sold for $14.90 and the $60s last sold for $13.20 so that’s $1.70 and the bid spread is $13.40/11.75 ($1.65) and the ask spread is $15.70/13.25 ($2.45) so it does not seem, by any stretch of the imagination, that this spread is anywhere near $1.  You have to think these through logically, including the fact that TZA is at $53.90 and you paid net $2 for the $53 calls so is it reasonable to think you might do better than $2 in January?  If so – why would you even think about selling – especially taking a loss for no reason at all other than the PRICE of the trade MIGHT have changed?

    Vegas/Craig – Thanks!  

    DIA puts in $25KP $1.35 – up .20 so don’t let up .10 get away.  Not a trailing stop, just a stop at $1.25 if the Dollar is rejected at $79.25 again.  


  40.  esco – yeah, it looks correct to me too, but now I have to pay $.50-60 to finish closing out spread, when the spread is showing $.80 the other way. I realize now I shouldn’t have tried to close it out while the spreads were screwy, but I’m surprised ToS isn’t willing to help at all. Maybe I’ll just leave the calls sold naked, it’s not the trade I wanted but I really doubt we’re going back up to silver at $36 or $37 this month. 


  41. Phil, any comments about GLW.  I know they are a very cyclical business, but they seem very cheap.   A good time to accumulate some?


  42.  Kurt — and now it’s screwed up again, at least with my short calls.  But i wouldn’t close out the short side of a spread with AGQ…just too volatile and the spreads too wide.


  43. Good one StJ:  

    TOS/Kurt – F them at this point.  We need to find a better broker.  You have to just ignore all the bids and asks completely but that’s insane – you never know what your portfolio is worth and this is the biggest broker in the World!  Poor retailers must be getting stopped out of all sorts of things and don’t think this is because of something AMTD can’t fix – it’s a scam that forces transaction and maybe even makes them a fortune on the spreads since they can stop you out at $2 on those $22 calls but their buyer can sell them for $3.50 – that, sadly, is legal.  

    Don’t be greedy on those futures profits either!  Should have said that when I called the DIA puts…

    AAPL/Nicha – Now that they’ve cut deliveries it seems to be on IPad2s, indicating either they have supply issues or the IPad3 is coming by XMas.  It’s a coin flip betting on AAPL earnings not some obvious trade but their earnings are not until October and you can sell Friday $410 calls for $2.75 against a Jan $390/435 bull call spread for $19.50, selling the $320 puts for $10.70 for net $8.80 on the $45 spread less the $2.75 you pick up on the short calls ($6.05).  Aside from being able to roll the caller along, you have a profit of $38.95 at $435 so the stock would have to be AT LEAST (assuming no rolls) at $448.95 before the spread has upside troubles.  On the downside, the net entry is $326.05 but the Jan puts can be rolled to the 2013 $190 puts, which are currently $6.25 so figure the real commitment here is to buy 1x of AAPL at net $207 and, if you don’t REALLY want that – then why on Earth would you be making a bullish play on AAPL?

    You’re welcome Pentax!  

    Fidelity/Edro – Oh, maybe I spoke too soon, maybe there’s some system-wide issue?  

    Kennedy/StJ – Good point.  It’s like we were saying last night about Pathos – ignoring the real facts and using misleading arguments to get an emotional reaction because the logical reaction is unobtainable in rational discourse.

    PCLN/Jabob – We talked about that last week.  They went up on upgrades to US airlines (more business travel) while ignoring bad news on Asian travel, which is ridiculous because most of their growth comes from Asia, not the US.  

    Nas looking very weak with Dollar at 79.15, watch the RUT to fail 645 (640 on futures) to confirm a nasty downtrend.  

    NFLX still dying as deal with DWA was friggin’ expensive!  

    Breathtaking/Ron – I was interested in Silver at $30 but that’s not working too good.  Gold I have no real interest in until they test $1,500 and prove they can hold it – not very far away now!  

    Woops, Dollar turning down already but a bounce off 79 here would not be good for the market as it could just be a set-up for a run to 80 (up 1.1%) and that can knock the markets down 2.5% given the current ratio of Dollar to Dow moves.  So failing to hold 79 on the Dollar here is CRITICAL for the bulls.  Euro is $1345, Pound $1.552, 76.42 Yen to the Dollar and EUR/CHF is 1.2165 – not what the Swiss want to see (stronger Franc).  


  44. Phil, with the dollar as high as it is, what do you think about buying calls on DIA for the week?  If the dollar gets knocked down to 77 which would still be high, should be a nice pop on the dow.


  45. bear action….random, choppy and trending lower…but its just bear action i am not saying bear market..i am wating for some rumores …brahahahaha


  46. Some thoughts on HP:
    http://www.churbuck.com/wordpress/2011/09/the-worst-board-in-history/
     
    It was funny, on Friday I was watching CNBC at lunch with my 20 year-old daughter who doesn’t know much about business and they had Meg Whitman on and she said that the most important thing for her was the next quarter! My kid looked at me and said "Is that short sighted or what?" That is so typical – HP just went through 2 CEO in 2 years, they get no guidance from a lousy board, they don’t know what business they are in and Meg worries about the next quarter? Gimme a break. If I were a shareholder I would be very worried. Priorities should be to look for a new CEO as Meg is probably over her head there, shuffle the board (is that a game) and come up a long term strategy for the company. But no… let’s make sure we lower expectations for the quarter and then beat them by a penny! This was once a very proud company!


  47. stockbern - UTHR: "Goldman Sachs reportedly downgraded United Therapeutics (UTHR:$37.99,00$-2.72,00-6.68%) to Neutral from Buy. The firm cited relative valuation and said they prefer Onyx Pharma (ONXX), which it upgraded to Buy."


  48.  Can we reload the DIA (Friday) $105.75 puts as the Dow nears the day’s high? Now priced at $1.05. Thx!


  49. AAPL…nicha….My play with this morning’s dip was to buy back some of the covers on the Oct 420/440.   They had dropped to 50% value.   I’ll probably sell them again later.   


  50. UTHR is being punished b’c GS downgraded them and upgraded ONXX.  You can be they took the other side of that trade.  UTHR makes, money, ONXX does not.


  51. @ Phil, do you still like CCJ longterm? Now down to $18, maybe a buy-write here? Thanks.


  52. Pharm - RXII - your thoughts on this please: "RXi Pharmaceuticals (RXII:$0.78,00$-0.21,00-21.21%) says it will separate its programs into two publicly traded companies: Galena Biopharma, which will focus on the development of targeted cancer therapies; and RXi Pharmaceuticals (RXII:$0.78,00$-0.21,00-21.21%) which will focus on the development of RNAi-based therapeutics."  We bought them because of RNAi as I recall, so I’m guessing that you would stick with RXII over Galena after the split?  Or own some of both?


  53. RXII//mrm – yes.  RNAi is not worth the hassle.  Stick with the vaccine part, RXII.


  54.  you see jpm chief economist talking depression and catastrophic consequences in europe…same type of talk gs was using before last meltdown.


  55.  from OPXS
     

    ! ATTENTION

    Quote Alert! The ISE exchange is experiencing technical difficulties with quotes. NBBO is not in effect, please check your orders and use market orders with care.


  56. PFE/RJ – Sure, I like them a lot but the point is to scale in.  If you are initiating ANY position in this market, you have to assume you will need to DD twice on the way back to 2009 lows.  For PFE, that was $10.48 so figure your net $13.20 entry averaging down to $11.85 x 2, at least, would be the allocation.  That’s the less conservative way to play it because you are assuming your roll will be makeable and you only face a 1x assignment but I think that’s fair for a large-cap like PFE.  As long as you would be EXCITED to own 2x of PFE at an average of $11.85 then selling 1x of the $17.50 puts puts for $1.40 is a no-brainer.  

    TOS/Kurt – Ignore them but I know that’s very difficult if you are tight on margin.  $175 is up 70% in AGQ and that would take a 25%(ish) rise in silver back to $36.25 but keep in mind you don’t need that, you just need a good move in that direction and you do have 30 days and then you can roll so I wouldn’t take the immediate loss and also, with TOS, I would stay away from any position that isn’t VERY liquid and trades with penny spreads as this is just ridiculous.  They have been no help at all and, at this point, I’m hoping someone sues them because complaining just doesn’t seem to work.  I think it would be a great class-action suite as any TOS user could demonstrate the difference in similar trades before and after they flipped systems – probably costing investors Billions as a direct result the Brokers actions (the change of platform under which original trades were made).  

    Dollar went under 79 and markets are loving it – let’s see if it sticks.

    DAX up 1.7%, FTSE flat, CAC up 0.8% – huge pullbacks in EU with 30 mins left.  .  

    Futures/JC – Was mostly a Dollar goose to the Futures in the 3am trade, nothing real about that.  On the whole, we’re back to drifting around Friday’s close – when we had no idea what the EU was going to do, like now.  

    TLT steady down but not helping TBT too much.  

    AAPL/Kinki – Good point, down 1.5% is a 0.16% drag on the Nas all by itself.  

    Financials/Yshen – Because they are ridiculously cheap.  Oh yes, I almost forgot that Berkshire is also a massive Financial play that Buffett is buying into.  

    GLW/DC – So effectively, you have 2x coming to you at net $16.85 and now they are $12 so it’s a question of how much you really want to commit to owning long-term.  2013 is miles away and you can lower your net by simply rolling the $15 puts ($4.40) to 2x the $10 puts at $1.60.  That will cost you $1.20 per long so your new net is $19.89/13.29 with 3x assigned.  If you don’t want to get to 3x or don’t want to increase your basis and you aren’t patient or confident enough to wait and see (especially wait for 2014 contracts to appear), then you need to focus on your "loss" which is an unrealized $   as the current net is just $6.34 because to change your positions now would mean paying $1.40 for the $15s ($4.30 in premium) and $4.40 for the $15 puts ($1.60 in premium) but I guess fear makes people do really stupid things so, if that’s what you want – then you’ll take the loss and you can focus on getting your lost $2,470 on 200 shares back rather than waiting and taking your assignment at $6,740 for 400 shares, which are now PRICED at $4,860 for an unrealized loss of $1,880 at $12.15.  Of course, if you always let yourself get panicked into tuning 27% paper losses into 37% real losses – that probably won’t lead to very good overall performance.  What do we do in a situation like this in the Income Portfolio?  Nothing…

    AGQ/Randers – Selling AGQ calls?  ROFL!  Not this low!  AGQ has been above $125 since last December except for a week in January and today and you want to call today a trend?  In January they bottomed out at $116.77 but were at $216 in March and $382 in April and you want to give them a month to get to $154.50, which is $30 LESS than they opened on Thursday, just 14 trading hours ago?  R   O  F  L….

    Dow came flying back and we can watch for a rejection at 10,900 for a possible reload on DIA puts.  This time we’re looking for the Dollar to bounce off 78.75 and hopefully we can pick up 10 DIA $106.75 puts for $1.15 (now $1.25) with a stop at .95 (sound familiar) for the $25KP.  By taking small gains we now have less risk on another trade in an even better position and, of course, we’re hoping to either get a nice run with a big profit or have the Dow keep going up and give us a small loss which proves we’re not nuts to hold onto our bullish positions.  


  57. Phil/Jeans
     
    In 1968 a pair of jeans cost more than today. I remember paying a week’s pay (about $30) for a pair of Wranglers flared jeans in Europe, because they had the cachet of being American jeans like they would wear at the Cartwright ranch on Bonanza or in Wagon Train. Russians would pay 5 times that amount on the black market.
     
    Now American jeans are made in the Dominican Republic or Thailand by computerized machines operated by sweatshop workers and sell for less than they cost 40 years ago. Once a luxury brand, they are now a commodity. Anyway, shorts or microfiber pants are more comfortable.


  58. Pharm, thanks but your reply confused me, you said that "RNAi is not worth the hassle.  Stick with the vaccine part, RXII" but the way I read the press release, RXII is the RNAi part ("the development of RNAi-based therapeutics") and Galena is the vaccine side ("targeted cancer therapies").  So wouldn’t we be buying Galena?
     


  59. ISE exchange/Careful
     
    My portfolio was all over the place this morning. For example, some almost-expired deep out of the money calls that should have been quite worthless were quoted at $10.50. Naturally I placed a market order to sell for a quick $10,500 profit, but of course the trade did not execute!


  60. Whoops, I was reading Thomson’s and mixed them up.  Galena, yes.  RXi, no.  Manic Monday it is!  (I wish it was Sunday, cause that’s my fun day……whoa ooo whoa….ok that did it didn’t it….listen here!)


  61. Nice… I’ve got an option with a $5.55 bid and a $0.05 ask!


  62. Wish I acted on that hunch to buy dia calls.  Mkt was up 30 at time.


  63. SPY phantom bar to 113.33….be careful.


  64. GLW/Leon – They make the glass that all these PDAs and Smart Phones are using.  I think they are a great long-term play.  Also, they make fiber cables, which are dead now but will be very undead when the economy recovers and the race to wire that last mile with fiber is back on.  The Telco margins are through the roof but Gorilla Glass also still has no real competitors so they are getting a premium for it as well.  Their main issue is their own suppliers can’t keep up with demand and that’s impacting their margins somewhat but that’s the kind of thing that works though the system.  The company is also sitting in $6Bn in cash and short-term investments against a $19Bn valuation (31%) after throwing off $2Bn in free cash flow last year (over 10% of cap) with just $2Bn in debt and $2Bn in liabilities.  So, the bottom line is – is this the kind of business you would like to own?  

    GLW was as low as $7.11 in 2008 but was $23.24 at the beginning of this year.  They were a stock I banged the table in back in 2008 and early ’09 and $12.05 at the moment is close enough to be exciting.   You do want to own the stock in case they distribute some of that cash pile as a dividend so a buy/write, selling the 2013 $10 calls for $3.50 and the 2013 $12.50 puts for $2.80 is net $5.75/9.13 which pays you 74% if called away at $10 and gives you a 24% discount if assigned 2x at net $9.13 in 2013.  

    As a 1x play, you can buy the 2013 $10/15 bull call spread for $2.15 and sell the $10 puts for $1.60 for net .55 on the $5 spread and your worst case is an assignment at net $10.55, which is a 12.5% discount on a 1x entry but with a very nice 500% return on margin (now that TOS seems to be working properly).  Even if you have to put aside 50% margin for the puts along with the .55 cash out of pocket, that’s still $4.25 back against $5.55 in 15 months (77%) if GLW goes up 25% to $15.  

    Here’s that test at 78.75 for the Dollar. 

    BA recovering nicely as planes are finally being delivered.  What a giveaway that was last week at $58!  

    BA still very playable for a 1x entry with 2x 2013 $65/82.50 bull call spreads at $5.15, selling 1x the 2013 $60 puts for $10.50 for a net .20 credit on and the worst case being owning 1x of BA at net $59.80 and making up to $35.20 (a Billion percent) on a 33% move up in the price of BA).  The nice thing about this trade is if the bull call spreads get to $8, for example, you can take one off the table and now your worst case is you own BA for net $51.80 and you still have another $17.20 you can make on the other spread but even at $60 in 2013, you would have taken a 16,100% gain on cash off the table.  TOS says it costs $10.50 in ordinary net margin to sell the 2013 $60 puts.  

    That, by the way, is why IRA accounts aren’t really that great if capital gains are 15% or even 20% since this would be a long-term capital gain and you can make this trade using about $21 of cash and margin vs needing $70.30 in an IRA account – how can the potential tax savings be worth using 3.5x the buying power to make the same trade?  Remember, it’s not about using the additional buying power to lever up your risk but to HEDGE your risk and to DIVERSIFY your holdings – it’s something worth discussing with a Financial Adviser for at least part of your account.  

    Dollar bouncing – bulls beware!  



  65. ck out VQT interesitng premise for these times


  66. Phil you are right- I meant to buy the calls- It is already up + 10 from todays lows. This one is probably too volatile for me..    Every now & then I like to take an extreme position like the NFLX out of money puts a month ago. But this is against the buying premium philosophy. My bad all around.. Market has me spooked..Need to start trading on more than fear & greed..


  67.  LOTS of talk from europe about big ideas, but i see little evidence they can pull them off so far.


  68. Phil/IRA
    "…you can make this trade using about $21 of cash and margin vs needing $70.30 in an IRA account – how can the potential tax savings be worth using 3.5x the buying power to make the same trade?"
     
    You are right, but if you receive a pension lump sum of, say, $500,000 and have the choice of either keeping it in the employers limited range of funds, or rolling it over into an IRA, then you have to choose whether to keep it in the IRA or pay all the tax to convert to tax-paid at once. Possibly this could be done over a period of a year to spread the tax bill. Withdraw 1/3 on December 31st, another third on January 2nd, then the rest the following New Year.  It probably makes more sense to take a chunk, say $50,000 on January 2nd, and put it in a margin account and only use that account for trades that benefit strongly from margin and tax treatments and then use funds from that account for living expenses for that year and hope to make enough to pay both income and capital gains taxes in that year. (Works even better if you have a NOL to offset taxes.)


  69. Hi Phil — I am sure someone ahd asked yuo this question before….why is RUT so lagging is it bc dollar too strong …TIA


  70.  European Central Bank Governing Council member Ewald Nowotny said it’s "dangerous" if Germany feels ignored because it’s outvoted in the ECB, and those feelings need to be respected. "It’s very dangerous if in Germany the feeling emerges that the country is passed over," Nowotny said. "To be precise, that such an important country is being outvoted at the ECB," he said. There is now a "protectionist tendency" in the euro area’s biggest economy, and its sensitivities need to be considered, he added.


  71. Anyone/SPY
     
    Does SPY end the week over or under $115?


  72. Phil:
    Could you comment on this rumored grand plan to save Euro? Will it actually work?
    http://seekingalpha.com/article/295803-europe-plan-in-works-is-a-game-changer?source=yahoo


  73. jmm1951
    My guess is lower unless something great happens. Why 1951? I was born that year.


  74.  Phil: Strangle on TBT gone awry
    I picked a crazy bad time to have started this in August, started out as a strangle, but now I’m short 1/2 X  9/30 20 calls, long Jan 25 c’s  but the Puts are way out of whack, suggestions to improve what is now long 20 Mar 23 puts short 20 October 29 p’s?
    TIA


  75. over, no under, Over, no Under….. ;)

     

    I c the gap getting filled ($116), jmm, but not sure if it will be this week.  The 5d MA is overhead resistance, and we bounced right off that earlier today.  If they want to push it up, that is fine.  SPY 117 calendars ($2.14 or better) is what I am going to see now.  IF they move it up, it will be very swift, and $116 will be an overshoot.  1/2 sale for those, as we can make it full if they move it up quickly to ‘sell’ into the excitement.


  76. rumor of amzn for nflx..nflx not responding price wise


  77. Busy all morning.  Just got a chance to log in.  Whoa!  Look at AAPL!
    Phil: I have a bullish play on AAPL: Bought 4 Oct 410 @ $20.50 and sold 3 Nov 425 @ $20.00.  Now down a lot.
    What do you suggest?  Thanks.


  78.  schaeuble says euro region has NO intention of increasing efsf – bloomy


  79. HPQ/StJ – Sure but that’s the problem with most companies.  EBAY kicked her out the door, California didn’t want her – I have no idea what HPQ sees in her but I also think HPQ is a solid company that is kind of hard to screw up and why they are being persecuted for doing exactly what IBM was applauded for (getting out of the low-margin and declining PC business) is beyond me.  

    DIA/Manimal – Good instincts but we always try to do better on our re-entries (see above adjusted trade).  Greed is good when it comes to getting better strikes for cheaper amounts…  It’s game on for those $106.75 puts, now $1.10 as we got our Dollar bounce right about where we expected and, if all we make is another dime, that’s still .20 on the day and we’ll take those all week long, right?  

    CCJ/Asaenz – Yes but REALLY LONG-TERM, not "long-term" as in if they drop back to $12 (2008 lows), you’re going to eat the loss.  As with the trade ideas above, the trick is to set yourself up to buy it much cheaper.  CCJ does not pay a dividend so there is no joy of ownership and we don’t have any reason to think they will pop in the next year or so, so all we want to do is get a cheap 1x entry and that means we look for a naked put to sell.  Since we don’t know who is going to ban nukes next, a conservative sale is in order and we can get $2.50 for selling the 2013 $15 puts for a net $12.50 entry.  That’s a good enough price where it wouldn’t be too greedy to do a 2x sale (out of 4x) since they can be rolled, of course and since $12.50 is 32% below the current price.    

    Rather than buy, for example, 500 shares for $9,150 and perhaps selling the 2013 $15 puts and calls for $8 for a net $10.30/12.65 net where you may end up owning 1,000 for $12,650 and your max profit (excluding rolls) is $2,350 in 15 months – the idea is you can just sell 10 of the puts for $2,500 now and you end up owning (if put to you and without rolling) 1,000 shares for $12,500 but your net cash and margin is less than 1/2 of what you need for the buy/write and it’s much easier to unwind the trade quickly if it goes sour.  More flexibility and less margin to make the same gain – that’s the way to look at these.  

    78.98.  

    JPM/Angel – Same kind of relentlessly negative talk all the IBanks have been using to keep the markets down this month.  

    Jeans/JMM – My friends used to go to Russia with 10 pairs of jeans and come back with none but their whole vacation was covered.  Cheaper manufacturing notwithstanding, me and Steve Jobs still like a good old pair of jeans for our winter wear.  

    Limit orders/JMM – I think you meant limit and yes, that’s always a good thing to do.  If TOS quotes me some idiotic price for a position I hold I’m happy to put it up for sale or offer to buy more at that price and, all of a sudden, the price adjusts to more normal levels – more evidence that they are entirely complicit in misleading their customers with incorrect pricing.  

    Classic Pharm! 

    Dollar rejected at 79 now – that’s good if it holds.  

    VQT/Angel – Interesting that it goes up regardless.  Maybe a good indicator.  

    AGQ/Randers – Oh BUYING calls.  That I’m all in favor of but better to do a bull call if you believe in them and let some other sucker pay those crazy premiums.  Put selling I find reasonable if you don’t mind rolling but also dangerous, comparatively.  You are right, best to just avoid ultras when markets are this volatile unless you are using them for a specific purpose.  ABX or FCX are INVESTMENTS you can make if you think metals are cheap by just selling some puts.  Best case is you make a quick 10% or a slow 20-30% and worst case is you own them for 20-30% less than this bargain price.  Sure you can try for a double on AGQ but why not pick trades that build your long-term portfolio as a fallback to making quick profits instead of swinging for the fences every time?  

    IRA/JMM – Yes, It doesn’t have to be all or nothing.  Let’s say you move $100K out of the IRA and leave $400K in. Now, what are you doing on a buy/write?  You are buying a stock and selling a call – perfect for the IRA, and you are offsetting with a short put – perfect for your margin account.  In fact, if the stock tanks and you are forced an assignment, you take the big loss against your short-term account while building a long-term position on the tax-efficient IRA side.  

    RUT/Gucci – No, the RUT should be happy about the strong Dollar.   It’s the fear (or reality) of lack of access to capital in the current and feared to come environment that is spooking people out of small caps.  

    Europe/Angel – As I said earlier, there is so much BS flying around that anyone will be able to find authoritative quotes to support whatever pre-existing market prejudices they may have.  

    Grand plan/Rick – I haven’t paid enough attention to it because there are so many "plans" floating around that I’m not too interested until one takes a clearer position but yes, there are dozens of ways to "save" the Euro – if you are going to work off the assumption that a $16Tn economy can be taken down by $1Tn in defaults in the first place (and that’s assuming Greece triggers dominos and they lose at least 50% of the total debt so fast that no stops can be put in place – a ridiculous assumption but one which I’m sure Angel has authoritative sources to back up).  You can "save" the Euro by handing Greece $11Bn and if they need saving again next year – another $20Bn would do the trick and then you can "save" Italy with $40Bn in 2012 and Spain with $25Bn…  Wake me up when we get to 1/2 of TARP….

    TBT/Lincoln – If you are short the 9/30 $20s, then you are right on the line so I wouldn’t go paying a crazy .55 of premium that expires on Friday for no good reason.  The Jan $25s are probably not so hot at .85 but they have plenty of time and, if anything, I’d roll down to the $20s for $1.40 and sell the Oct $21s for .75 and hopefully you can roll into a nice vertical (if you want to stay bullish).   Otherwise, just take the .85 and run (or set a stop from here) and let that lower the net basis on the spread and hopefully the puts expire worthless and, if not – then you only have one headache, not 2.  

    Speaking of TBT – they just broke over 20 and TLT looks weak at $119 which means money is pouring out of Bonds which means we may be setting up for another stick (it was a good indicator on Friday) although there is often a 1-day lag between bond dips and stock rips.  

    Still need to see Dollar fall below 79 and stay there – at the moment, it’s going the wrong way as bond sales put demand on the Dollar but it’s a good false signal if we get a rejection at 79.25 again.  


  80. see the euro fools believe that this sort of strategy will get them more imf (us) money..geithner and obama are so msoking pissed at those fops that that will never happen plus imagine o’s base if he started savign europe with our unemployment issues..good lord..largarde for sure has better legs than dsk…and hair..i am hoping she’s a little smarter than she seems


  81. German Finmin on German TV says no intention to increase EFSF


  82. Phil/Dollar,
     
    Something that I’m not totally clear about.  When the dollar goes up….equities go down in the USA.  What about the Europe and Asian markets.  Do they like to see a strong dollar or weak?
    I presume weak….but I’m confused with these sharp dollar moves right at the close of European markets.  Why do they like to raise the dollar near the close?


  83. Can someone explain the disconnect betweem SLV and AGQ today?  SLV down ~ 2% and AGQ (2x ETF) down ~6%? at least according to Scwab e-trade pro. Some kind of re-balancing?


  84.  Phil: Thanks for the comment.


  85. breathtaking gold/silver:   Thank you very much, Phil!


  86. Pharm, if you have time, could you comment more on your calendar strategy — specifically when you look at rolling a short option that is moving toward deep in the money.  The weekly short delta can quickly overwhelm the delta of the long side and i would think that you don’t want it to get too far ahead of the long side.  I am trying to get a feel for when this type of position is getting into trouble.  TIA.


  87. HPQ / Phil – They probably should get out of the PC market – at least the low end (I suspect that there is still money to be made on the server side), but my point was that they should actually flesh out their plan further than just say we are getting out of the PC business and pay huge premiums for acquisition. IBM did that very gracefully and once again, we use them as a yardstick… I detect a trend here! 
     
    And yes, being short-sighted is a common attribute to many businesses but when your main shareholders are HFT programs holding shares for a micro-second, it makes it hard to plan for 10 years! And it’s a real shame…


  88. SLV down 3%, ZSL up .6% WTF?


  89. Other than that that fake move last night, the dollar has been in a very tight 79.25 / 78.75 channel over the last 3 trading days! It’s a matter of fact, shorting at 79.25 would have been a pretty good move… except again for last night! 


  90. DIA/Phil – what about selling this week bear call spreads.. such as the DIA 111/112..  or can DIA fly up on us?


  91. Good morning, nothing new.

     

    IWM    63.04,  63.67,  64.25,  64.50,  64.74,  65.07,  65.31,  65.56,  65.93,  66.33,  66.56,  67.04,  67.47  and  68.10

    The SPY daily bar opened and closed below its BB bottom on Thursday; this argues for strong down momentum, therefore the first rebound is likely to fail. For all the past like patterns since 1993, I see no exceptions. Even if a huge rebound does start as early as today (and I do expect one), Thursday’s low will at least be revisited eventually.

    We are between trend support and resistance, now at IWM 63.50-64.00ish and 66.33

    But the current chart looks more like a kiss goodby than a rally setup:

    Just play the 3 minute chart, the lines are working quite well, and Good hunting !!


  92. Hi JR,
     
    Was does "BB" mean?


  93.  exec – Bollinger Band.


  94. Thanks Kurt


  95.  For all you NFLX players:
    http://www.marketwatch.com/story/netflix-in-deal-with-dreamworks-animation-2011-09-26?link=MW_home_latest_news
     
    I think I read here at PSW when Starz left the fold, why doesn’t NFLX just partner direct with Disney for content?  There you go.


  96. the Chicago fed national activity index fell to -.43 in august from an upwardly revised +0.02 in the prior month. its been negative 4 of the last five months..as economic recovery weakened…. of the 85 individual indicators 35 improved and 41 made positive contributions. the 3 month smoothed index edged down to -0.28 from -0.27 suggesting economic growth was still below historical trend BUT not indicating recession….the smoothed index is also consistent with subdued inflationary pressure over the next 12 months.


  97. Another reason JRW is in cash at the end of every trading day!
    http://www.bespokeinvest.com/thinkbig/2011/9/26/after-hours-trading-hurts-us-stocks.html
    I say this smells of manipulation, but they would call me paranoid! 


  98. exec / BB

    Bollinger Band


  99.  news???


  100. stjeanluc / Manipulation
     

    An update from European bond desks at the close.

    Apparently dealers were given a memo outlining a "solution" to the Euro debt crisis. It goes something like this (and their gonna use structured finance technology).
    1. EFSF will transform into an equity tranche that is 20% thick (i.e. first 20% loss will be absorbed by EFSF)
    2. ECB will assume risk over the remaining 80%.

    For this to work, you have to assume the following:
    1. Italy and Spain can support and fund losses on EFSF holdings;
    2. Increased risk and contingent liability that led to a downgrade of French sovereigns (and which now puts Germany at risk) will have no impact on EFSF rating and ability to fund; and
    3. Losses in the EU sovereign debt crisis ultimately will not exceed 20%.

    I think bond investors are seeing through this already as a weak policy response from EU leadership (that and the announced covered bond buy-back). Most investors have stayed away and most Sov spread tightening today were inter-dealer trades.


  101. And to further your thoughts JRW:
    http://ftalphaville.ft.com/blog/2011/09/26/685361/let-them-eat-efsf-equity-tranches/

    The point is — this doesn’t look the kind of credit protection that could fix the crisis, because this is a sovereign crisis that has broken a set of “risk-free” assets forever, not a squall in the ABS markets. It’s going to take a bit more than that…

     But this after hour weakness has been going on for a while!


  102. IDCC getting pummelled, I don’t see any news…


  103. JR/BB
     
    That’s amazing that you can’t find an exception since 1993.


  104. For anyone that did not read about the tastytrade.com offer last week on Phil’s site …
     
    Participating brokers: OptionsHouse; TD Ameritrade; TradeKing; thinkorswim; optionsXpress; tradeMONSTER; TradingBlock
     
    Annual tastytrade subscription: $45.00 
    Max voucher purchased: $350.00
    Total Expense: $395.00
     
    Total return = $700.00 cash rebate on trades and a free book!
     
    **Bonus FREE book  (just for today): Tim Knight’s new book 


  105.  FYI… I was with TOS and had the options fee of $1.25/contract and the stock fee of $5/trade (however with the transition to TD Ameritrade the stock trade had a $0.15/share sliding schedule). Talking to TD Ameritrade they have recently lowered their commission on options to $0.75/contract, while the stock fee is the same $9.99/trade.
    Thought this might be of use to those on this form that are paying the higher $1.25/contract TOS fee. 


  106.  Does anyone have a lower commission rate at TD Ameritrade?


  107. Also known as the “TRIN,” the Arms index is a measure of the ratio of advancing and declining stocks relative to the ratio of advancing and declining volume. This ratio is inversely-related to the direction of stock markets, as very high readings are seen as signs of capitulation.

    Monthly, weekly and daily TRIN readings have reached levels that are historically associated with “oversold” readings for stocks.

    A subsequent rally can take the broad market back toward the 200-day simple moving averages. The 200-day MA for the S&P 500 comes in around 1282, which implies a 12% rally from current levels and relates exactly to point 13 on my chart !!

    Before it can reach that level, S&P 500 will have to contend with the resistance at the 50-day moving average, around 1210. Above that, the 50% retracement of the decline from the July 7 closing high of 1353 to the Aug. 8 closing low comes in at 1236.


  108.  Appl – This could be the reason for some of the weakness in Apple.  Amazon expected to unveil tablet to compete with iPad on Sept. 28. They are talking about a price as low as $250.
     "Even though Amazon taking on Apple is a bit like David taking on Goliath (compare the market cap, profits, and cash position of the two companies), Amazon’s willingness to sell hardware at a loss combined with the strength of its brand, content, cloud infrastructure, and commerce assets makes it the only credible iPad competitor in the market," Forrester analyst Sarah Rotman Epps wrote in a recent blog post. "If Amazon launches a tablet at a sub-$300 price point--assuming it has enough supply to meet demand--we see Amazon selling 3-5 million tablets in Q4 alone."

    http://www.fiercewireless.com/story/amazon-expected-unveil-tablet-compete-ipad-sept-28/2011-09-26?utm_medium=nl&utm_source=internal


  109. Phil/IRA/Splitting the trade
     
    Yes, that is brilliant. You are worth your weight in  (commodity of your choice).


  110. SPY Calendars/robert – I have started something on the calendars.  I will put it up when I am done….promise!


  111. TOS/iTrade: That 0.75/contract commission is good news!  Is there a per-ticket fee?  How do we sign up for that commission rate?


  112. itrade/ TOS commisions – is the reducton automatic or do I need to call them?


  113. Thanks Pharm!


  114. IDCC/mrm – back to where it was b’f the rumors of takeover. 


  115.  Great points STJ on after hours trading!


  116. TOS & TD Ameritrade Class Action Lawsuit
    Kurt, Phil and others who are having issues with the TOS to TD bid/ask fill issue.
    Please take a moment to provide real examples, explicit detail, or other issue that will bring to light the issue. I’ll file a Class Action Lawsuit for all those affected.


  117. Very choppy market today.  Reminds me of Thursday (?) last week when were waiting for Bernanke’s statement.  Maybe the market expecting something to come out of Europe? 


  118. AAPL/Cwan – That was an earnings play.  Do you still want to be bullish on earnings?  The Oct 410s are $12.10 and the Nov $425s are $13 so down about $1,100 on the whole thing at the moment.  Simple solution is selling a Nov $430 call for $11.20 and there’s $1,120 back but I think you entered this trade with the wrong idea so you sure won’t like it if your 4 Oct calls expire worthless and then you are naked short on 4 November calls but that’s what this trade was about into earnings if AAPL disappointed.   Since you don’t want to ride out the trade, i guess I would buy back the Nov calls for $13 (-$3,900) and sell 4 Oct $405s for $14 ($5,600), cash the 4 $410s for $11.80 ($4,720) and buy 3 Dec $415 calls for $21.30 ($6,390) and that’s a net $30 credit to move to a more bearish spread if you’ve lost faith in AAPL.  

    Schaeuble/Angel, Kustomz – Didn’t he get kicked out of the leadership over some major scandal involving illegal lobbying donations?  Not sure if I’d make him my go-to guy for the latest rumor.  Although he is the Finance Minister, I think he is somewhat Merkel’s "loyal opposition".  

    Dollar/Exec – If the Dollar goes up, it goes up everywhere.  What happens in the EU is they see their stocks, priced in Euros, go up as the Euro goes down but then they (TradeBots) seek to match the decline in US equities (a percentage measured in local dollars) by trading EU stocks down but then they go down further than they should but it kind of evens out the other way.   On the commodity front, if the Dollar goes up then the price of commodities priced in Euros goes up too – to them, the Dollar is just another alternate commodity to be held.  What really complicates things is many US multinationals do trade in Euros on their Bourses – that’s why the people who think it doesn’t matter because things are priced locally are on drugs – and almost always Americans because this is the only country on the planet that doesn’t almost automatically think in terms of multiple currency conversions when pricing things.  It’s a very US-centric attitude that greatly harms US investors who are unable to see the very obvious bigger picture (dollar swings moving the market) no matter how consistent they are to track.  

    AGQ/Gmarts – That’s no a disconnect, it’s a 3x ultra.  That’s what it’s supposed to do. 

    You’re welcome Rick!  And Ron…

    Shame/StJ – I agree.  To a large extent it is the stock market that is the ruination of the US Business Model.  Nothing matters but making money.  Imagine if Edison had worked under those conditions – would he have patented over 1,000 inventions, many of which changed the world?  And how fast would a modern board fire him after this quote:  

    After struggling to develop a viable electric light-bulb for months and months, Thomas Edison was interviewed by a young reporter who boldly asked Mr. Edison if he felt like a failure and if he thought he should just give up by now. Perplexed, Edison replied, "Young man, why would I feel like a failure? And why would I ever give up? I now know definitively over 9,000 ways that an electric light bulb will not work. Success is almost in my grasp." And shortly after that, and over 10,000 attempts, Edison invented the light bulb.

    That would just never happen in modern America.  They would scapegoat him for a bad quarter and he would never be able to work again in the industry.  If he had VC partners, they would probably have sued him…

    DIA/Scott – No clear direction at the moment (obviously) and spreads like that are time and price targeted so you’d better be pretty damned sure – a lot more sure than we are.  If anything, I still think we finish the week up because, despite Angels rumors of the moment and despite JRW’s chart, I think Greece is "fixed" this week. 

    NFLX/Rev – Why would DIS give NFLX content?  They are already partnered with AAPL and would make NFLX pay through the nose for anything they want.  In general, a network is going to want at least .25 per 1/2 hour view and NFLX can’t possibly afford that for popular programs.  That’s why everything is delayed, if you watched NFLX like a network, they would bust from the number of views (although the deals aren’t structured that way since it doesn’t happen).   DIS/ABC knows their content WILL be viewed so if one person, like Comcast, will pay them $5 a month (10 hours of viewing) why should they take $1 from NFLX?  

    I think all TV will eventually be PPV.  Rather than having cable or satellite (or NFLX), you can just Google what you want to watch and pay .25 or less and watch a show.  The average family watches 153 hours of TV per month so that’s $75 a month if they paid .25 for each half-hour to get any show or movies they wanted any time.  Of course, old shows and movies could cost less and the viewers could choose to watch commercial-filled episodes for discounts but if you take a show like Survivor, with 10M viewers for 1/2 hour and that show could generate $5M per episode at .25 per 1/2 hour – that’s probably more than they make selling 12 minutes of adds, even assuming they were near the top of the heap at $250,000 per minute

    For most shows, it would generate a lot more revenue – especially for those shows that could sell a lot of archived episodes.  That’s the future, you’ll sit down whenever you want and decide to watch the first 3 episodes of 24 from season 2 without commercials and it will cost $1 as a special package and your browser will keep track of what series you’ve been watching and which episodes you’ve seen and haven’t.  Either AAPL or GOOG will make this work and probably as soon as 85% of the homes have fiber because obviously (with YouTube and Apple TV), the custom delivery of shows on demand is a non-issue.   This will probably destroy the networks over time because the actual production companies will be able to bypass them.  

    Chicago Fed/Angel – About what we’d expect.  

    Testing 79.25 again – hopefully this will do it and we can pop into a nice finish as the Dollar pulls back.   Look for TBT to go higher (as the bond selling stops and the dollar weakens, which makes the bonds decline in value even faster).  

    IPad Killer/Stu – Yawn….

    Thanks JMM – I choose Uranium at these prices (see URA).  

    URA options not that thinly traded actually and the April $7 puts can be sold for $1.  Even if you have 50% margin that’s net $2.50 in margin and $1 in your pocket for a 40% profit in 207 days if URA doesn’t fall another 25%.  


  119. Phil and JRW -

    Any ideas of where we go tomorrow…for some reason I can’t get a good read…mixed signals?


  120. Class action/ITrade – I’ll be very happy to act as a consultant on that one!  Ideally we want to find examples of people who were forced to sell or felt forced to sell over misreported margin issues, people who owned stocks or options prior to the rollover who had to liquidate wide spreads that were unfavorable or who could not get fills (which we can compare to other fills from other brokers at the same time).  Pretty much anyone who feels they were getting screwed by TOS, now is a great time to vent.  Perhaps, ITrade, you should set up a private mail drop as it could get messy if everyone puts it in chat.  

    Waiting/JC – It seems like we’re always waiting for someone to save us.   

    Tomorrow/David – Well I called a stick into the close and if we don’t get that, as long as nothing blows up, we should have an up day tomorrow as a lot of money came out of bonds – enough to dunk TLT 2.5% today and over 5% since Friday am, when everyone though I was wrong for calling a top at $123 because this time it was going to be different.  


  121. IDCC/mrm – back to where it was b’f the rumors of takeover
    it’s a buy for me under 50


  122. Phil, those DIA puts down to .90,  time to stop out?  Esp if you are expecting a stick into close…


  123. yes shneuble is treuble…another asshat…how many of these can you have under the leaky roof of one currency?


  124. NLY ex div date 9/28 ready to sell some puts again after that date !!!


  125. Phil, AGQ is a 2x ETF not three times like some of the others. Further digging suggests disconnect has to do with resets for AGQ and ZSL being based on LBMA fix, rather than the NY movements underlying the SLV. This appears to be a decay mechanism implementing itself over the weekend.


  126. Anybody know where i could get a good, basic explanation of call / put options?  My brother is curious about what we do and i wanted something to educate him with.  Thanks in advance.


  127. Phil…actually my mistake, I see the DIA 106.75′s are  down from 1.10 to .99, I"m holding on a bit longer, but I take it your stop would be at the same level as the previous (.20 down), correct?


  128. Weidmann: Pre-emptively cutting interest rates reduces pressure on politicians to act
    I smell a rate cut coming..soon


  129.  TOS Commissions -- simply call them and request the lowest commission fee. They’ll likely put you on the "standard" TD Ameritrade rate of $0.75/contraction and $9.99/ stock trade. 
      
     Class Action Lawsuit Bid/Ask Price Fluctuation and poor Execution  -- When you have time, please share in detail as many examples of this problem as you have. We will build a case!
     
     New Broker? I too am getting fed up with TD Ameritrade (I loved TOS) and amber ready to change brokers… anyone else have a good alternative like or better than the old TOS?


  130. They are really having a tough time with SPY 115.


  131. @Yodi
    I’m right behind you….so to speak.  Just don’t know how many.


  132. investopedia dot com – robert.  Good site with lots of info.


  133. Phil/Dollar,
     
    Thanks for the explanation.  Any idea why the RUT is so weak today?


  134. fin min in russia reigned …snazzputin gettign ready for soldier of fortune pages again


  135. ITrade / TOS Rates – Their web sites says they will charge a ticket fee of $9.95 and then per contract of $.75.  Are you saying if you call them you can get them to wave the ticket fee?


  136. flipspiceland
    NLY they possible will drop .60


  137. trade e minis instead of options if its really that tough ..ib is great


  138. XOM is green (1%), CVX is flat.  Something is gonna give.  Buying CVX 92.5 calls.  Out if they move down 10% no matter what.


  139. Phil,
    I am out of the TLT 122 calls- I will take a 40% gain for 4 days anytime, even if there may be more there. Thanks


  140. Robert/Options made easy
     
    This is where I learned, and I think it is very good. Video lesson too!
     
    http://www.optionsplaybook.com/options-introduction/options-basics/


  141. Nice Angel. His candor did leave those BBC journalists "gobsmacked," as the Brits like to say.


  142. gmarts/ZSL — I think you are right about ZSL…I trade it a lot and I was hoping for a much bigger pop this morning.  Right now SLV is down 2.37% and the ZSL is up only 1%.  I can’t explain it; it usually works well.  I closed out my position for now.


  143.  PBR looking both cheap and spry, in light of Phil’s oil bullishness.


  144. Oxen Group went long on SBUX this afternoon after the stock broke both the 20-day and 50-day today and looks poised to retest 41.50.


  145. ‘ things ah a tad wooly out theah jc!"


  146. at least he admitted he’s been wating for three years for his dream trade…missed a little opportunity i ‘d say …say  what pip pip..


  147. 2:00 PM On the hour: Dow +1.08%. 10-yr -0.29%. Euro -0.33% vs. dollar. Crude +0.87% to $80.55. Gold -2.36% to $1599.05.

    3:00 PM On the hour: Dow +1.64%. 10-yr -0.3%. Euro -0.26% vs. dollar. Crude +0.92% to $80.58. Gold -2.11% to $1603.15.

    Sept. Texas Fed Manufacturing Outlook: Business Activity Index -14.4 vs. -11.4 prior. Mfg. Production Index 5.9 vs. 1.1 prior. New orders 3.6 vs. 4.8. Capacity utilization -1.3 vs. -2.8. Shipments 9.4 vs. 6.7. Employment 13.4 vs. 5.4.

    Aug. New Home Sales: -2.3% to 295K in-line with expectation, 302K (revised) prior. Months’ supply unchanged at 6.6. Median price $209,100. 

    CNBC reports "top European officials" are preparing a detailed plan that would lever up existing EFSF money eight to one to buy up European sovereign debt and then issue bonds. Stocks move higher: Dow +170, S&P +13, Nasdaq still down fractionally. 

    Another 10 days of rumors to go!  The ECB will be discussing a number of measures to ease monetary conditions at its Oct. 6 meeting, according to a source. Among them are restarts of its covered bond purchase program and 12-month loans to banks. Earlier, ECB member Nowotny tipped a possible rate cut

    Barclays flips its stance from last week, now expecting £75B in QE to be announced at the BoE’s November meeting as part of a £150B facility. The bank says "most MPC members appear to have become alarmed at the deterioration in the growth outlook," according to September’s meeting minutes.

    An interesting thought on The Twist: Is the move a recognition that QE2 – aimed at Wall Street by pumping asset prices and sinking the dollar – was a failure? Operation Twist, it appears, is targeted at helping the average citizen by lowering mortgage rates and increasing purchasing power with a stronger dollar.

    Is the rally in Treasurys over after 10-year yields sky to astratospheric 1.9%? Perhaps, if Europe can deliver a plan to resolve its debt crisis. What’s currently priced into the financial markets is a disorderly default, TD Securities’ Millan Mulraine says, so with any actual news of bulking up the EFSF by a potential 2T, "you can kiss the bond rally good-bye."

    The U.S. economy will remain "bleak" for several more years, Paul Tudor Jones says, with "a decent probability" of a European-style sovereign credit crisis: "We saw the same thing happen in the ‘30s and ‘40s, and it took the country a long time before the economy really began to recover from the credit boom of the 1920s."

    Like Marc Faber, UBS doesn’t think gold’s selloff is over yet,believing "concerns about liquidity, European bank funding, and margin calls amid a strong dollar" offset any flight-to-safety benefit. However, the firm does think a bottom could soon be reached, thanks to growing demand for physical stocks of the metal as investor fear runs rampant.

    After an overnight collapse that saw its price fall about 13% (on top of last week’s near 30% dive), silver returns back to unchanged. Gold and copper see similar price action, but not as wild as silver’s. With this sort of volatility, another margin hike on top of Friday’s is not out of the question.

    This is a big deal – this guy was good!  Disagreements with President Medvedev over economic policies has reportedly led Russian finmin Kudrin to resign. Kudrin has presided since 2000 – using revenues from the oil boom to pay off nearly all of the country’s foreign debt and create SWFs.    A fund manager weighs in on the Kudrin resignation: "(He) single-handedly turned Russia from a banana republic in terms of debt levels into one of the best credits in the world. Losing him would be a huge loss to Russia, its debt and equity markets."

    Traders behave more recklessly and are more manipulative than psychopaths, a new Swiss study says. “Naturally one can’t characterize the traders as deranged,” a prison official tells Der Spiegel. “But for example, they behaved more egotistically and were more willing to take risks than a group of psychopaths who took the same test.”

    Banks are set to earn more, according to a survey by Bankrate.com that finds lenders stepping up fees on checking accounts, ATM charges and account overdrafts. Add in to the mix that banks only pay 1.5% or less for deposits and are only selectively lending, begs the question: Is a boom in profits in line for banks that stick to a simple model? 

    Told you so!  Select casino stocks (BJK -1.9%) see a wave of momentum selling on high volume, as concerns in the sector focus on high debt, consumers’ discretionary spending, and sustained revenue growth in Macau. Decliners: WYNN -5.3%MPEL -6.7%CNTY -6.4%LVS -4.7%.

    Warren Buffett’s negative stance on buybacks comes from his distaste of managers buying high to offset the dilutive effect of stock options. However (he wrote in 1984), "(If) shares are selling far below intrinsic value … no alternative action can benefit shareholdersas surely as repurchases." Bottom line, says Cullen Roche: Buffett believes BRK.A is cheap, and the rest of the market not so.

    Though some business IT names are reporting weak European demand, Oracle (ORCL) isn’t one of them: its sales from the region rose 14% Y/Y in FQ1, with co-President Mark Hurd addingthe strength was broad-based. Hurd also echoes Larry Ellison’s statement about Oracle having little interest in selling low-end serversfeaturing INTC or AMD chips. – Hey this Mark Hurd guy is good.  Maybe HPQ should try to get him….

    Speaking of CCJ:  It’s not all over for nuclear power after the Fukushima disaster cast a pall over the industry – highlighted by Germany’sdecision to close all nuclear power stations by 2022. The Labour Department in the U.K. is leading a resurgence of support for nuclear options. "My very strong view remains that the nuclear industry now is most definitely a sunrise and not a sunset industry," says Shadow Minister Jack Dromey.

    Yay!  Shares of Safeway (SWY) clock a 5.6% gain after Longbow Research backs off its Sell rating and moves to a Neutral call on valuation. Perhaps lifted by Safeway’s reversal, mid-sized grocery chains The Fresh Market (TFM +5.1%) and Arden Group (ARDNA +3.7%) are also getting a second look from investors.

    Deutsche Bank’s Chris Whitmore reiterates his belief Apple (AAPL -2.3%) will release a low-cost "iPhone 4S" to go with the iPhone 5 (previously). He adds that he expects the iPhone 5 to have a unibody aluminum case, and the iPhone 4S will sell for $300-$350 without contract, well below the iPhone 4′s current, $600+ price. 

    Apple (AAPL -0.8%) begins to bounce back as analystsrush to its defense after JPMorgan said Asian suppliers were seeingcuts in iPad orders. Piper Jaffray’s Gene Munster suggests the report might be considering only part of the total supplier puzzle; Susquehanna agrees that all is well. Even JPMorgan itself reportedly is trying to&nb


  148. Apple (AAPL -0.8%) begins to bounce back as analystsrush to its defense after JPMorgan said Asian suppliers were seeingcuts in iPad orders. Piper Jaffray’s Gene Munster suggests the report might be considering only part of the total supplier puzzle; Susquehanna agrees that all is well. Even JPMorgan itself reportedly is trying to play down the note’s significance.

    Three lunchtime reads:
    1) If it looks like a bear, and moves like a bear…
    2) China’s squeeze on property market nearing ‘tipping point’
    3) Can Europe be spared cascading collapse? 

     

     


  149. notice NO euro rally on this supposed fix to the situation…by adding more debt to their debt.


  150. marc faber…really? come on he and jum rogers dont deserve any air time..sorry..why not peter eliades..or mason sexton..they suck as well


  151. rogue traders/psychos… they keep these psycopaths in the back office until they need to book a massive loss then they VOILA! bring out a rogue trader


  152. from a friend of mine
    no reason, really, to expect any sort of weakness in the final 45 minutes.  Traders are enthusiastic about Europe doing their own version of Quantitative Easing. 
     
    The VIX is lower right now,and it appears it will close back inside its upper Bollinger Band.  So, I will be looking for low-risk buy side trades to recommend.
     
    However… and this is a BIG however… in this environment, it is quite likely that today’s big rally willbe followed by a large gap down tomorrow.  That’s not a prediction – just an observation.  So, I’m not too keen on buying anything today in anticipation of a VIX buy signal, and holding it into tomorrow morning.
     
    I’d rather wait and buy tomorrow.
     
    If we get a large gap down then we’ll buy at a better price.  On the other hand, if stocks gap higher then it will serve to confirm the buy signal.  Yes, it’ll cost more to buy then.  But, it’ll be a higher probability trade.
     
    Having said all of that, my gut tellsme to be extremely careful here.  I favor the upside over the next three months.  But, the next three days have me worried.


  153. does he sound like a psycho?


  154. DIA/$25KP, Jerconn – Of course, the stop was at .95 and I said I expected a rally into the close.  Also the Dollar failed to hold 79 – all on our list of reasons to stop out.  

    How many/Angel – By my count it would be at least 289 and up to 535.  

    AGQ/Gmarts – 2x, really?  You’re right, the way it moves, I always assumed it was 3x!  

    Calls and puts/Robert – He can read the Ebook or our Education Section – lots of links there.  

    RUT/Exec – Money is tight for small businesses.  

    TLT/Randers – Congrats.  5% down is always a good place to get out as a strong likelihood of a 1% retrace there anyway.  

    Trader/Angel – He underestimates how fast fear can turn back to greed.  This guy is founder of LeadingTrader.com, and, of course, he’s talking his book but he has a some good stuff.  

    PBR/ZZ – I’m not very bullish, at $72 I’m bullish but at $82.50 I’m wishy-washy.  At $87.50, I’m bearish again.  

    Careful/Angel – That is good advice.  Barely psychotic at all.  8)  


  155. That dollar channel has really been working although it looks to be tightening which could lead to a breakout up or down – can’t tell yet! 


  156. Even lower volume than Friday…..this ain’t for real…well it is, but not long lived….


  157. yah i am with you lets go with at least 289 tho


  158. I’m still beating the TBT drum. Even though Pharm probably disagrees, this is one hell of a two-year chart to not get giddy about.
     
    This time we might finally be in the parade…


  159. PHil, do you expect a "selloff" tomorrow or more of the same?  Nothing’s fixed, and we’re just going up, up, up…


  160. MT kind of a joke at $16.  Forward p/e of 5 (current 7).  They have a $24Bn market cap at this price but made $10.4Bn in 2008 and $114M in 2009 on 1/2 the business ($61M) and last year made $3Bn on $78Bn.   They bottomed out in 2008 at $14.37 and that price was so silly that they only hit $15.57 in 2009 and only briefly below $17.50 on both occasions.  2013 $15 puts can be sold for $4.20 or you can capture the 4.2% dividend by buying the stock for $16 and selling the 2013 $15 puts and calls for $8.50 for net $7.50/11.25, which is 100% if called away and a 29% discount if put to you at $11.25 so let’s do 500 in the Income Portfolio and sell 5 of the puts too!  


  161. Well, they filled the gap faster than I anticipated.  Rolling the SPY 110 Q (weeklies), up to 112s to keep the delta close to even. 


  162. Tomorrow/Jercon – As above, no.  Nothing is fixed but nothing is more broken, is it?  We have nothing but rumors in search of a crisis and the crisis never comes, leading to seller fatigue.  Meanwhile, as I noted earlier, we are now in day 2 of money coming out of Bonds and moving to the sidelines – likely looking for ANY reason to BUYBUYBUY.  

    Well, that was a super-fun first day of the week!  


  163. 1157 in /ES expected. Its all downhill from here….http://www.youtube.com/watch?v=7edeOEuXdMU


  164.  Oh, dude, that was so much fun.  Over 7% on JPM, Phil?  You’re the man, brother!!


  165. Phil:
    Remember from Sept 15: "Central banks co-ordinated actions to address dollar liquidity in Europe." 
    http://www.guardian.co.uk/business/2011/sep/15/world-banks-flood-markets-with-dollars
    Is this coordinated action in addition to individual US FED actions such as the most recent announcement? Is it safe to say that some of this money can find its way to US banking interest as well?
    Thanks for the slap down on GLW. That is why I asked. Did you say it was 10,000 hours to get great at this stuff? :)
    I increased my holdings in GLW and will continue to do so until I am at full position. I am building positions in HCBK, CSCO, GLW, JPM, HOV,  WFR, AA,. Half way there with GLW, CSCO, HOV, HCBK. Any worries with my list? Scaling in does take time! Thanks as always.


  166.  breadth lackluster too…leaders were year’s worst performers…could gain more traction on perceived solution from europe, but if their solution is to leverage debt to fix debt crisis in attempt to kick can down road again…it will only intensify crisis down the road…that said i think we should be about ready for a more inclusive scalding move to the upside…


  167. So for the SPY calendars:

    This morning we closed out the call side on the Oct 116/Sept 116 Q calendars for 2.08 (if you stayed in…you did much better than I, and I would get out for 2.30).

    Oct 110 P bought (3.54), sold the Sept 110 Q (-1.40).  Bought back the Sept 110s for 39c, and sold the Sept 112s for 69c. 


  168. Vegas update
    rainman--received your deposit—-19 confirmed
    craigzooka—jnb22—celeste —did not receive your deposit as yet


  169.  Phil/NFLX –  So if I read you right, there is going to be big money made somewhere as TV content will no longer really be solely on TV and GOOG, AAPL and even AMZN are probably going to grab the pie from NFLX and all content providers will make their deals accordingly.  Is this a good opportunity for a pair trade, NFLX short and the others long?


  170. I will book 16 for Nabu on Saturday at 7.  Need to call today.


  171. Pharm--I am in for dinner and poker--although I have no clue how to play
    Thanks for handling the dinner reservations


  172. Ilene or Phil,
     
    I tried downloading the PSW newsletter for Feb 27 and I got the March 27 newsletter instead.  Can you check to see if the link is broken and if the actual Feb 27 newsletter is available?


  173.  Phil: tbt spread follow up and vegas poker
    1) earlier I wrote about a spread long 20 Mar 23 P’s short Oct 29 P’s since the point originally was to be neutral and the call side is fixable what if anything would you suggest I do with the puts? I was thinking double down to 40 Jan 21′s/ short Nov 25′s margin would be about $4,000 more with improved chance of getting rid of the putters.  Is this a logical way to look at this situation?
    2) Vegas Poker:  I’m embarrassed to admit to being a terrible poker player and worry that if that is the case you may say "what the hell are you doing trying to trade options?"  Is it possible to get proficient at one without being good at the other?  


  174.  Today’s Rally – I loved today, especially with Berkshire as may biggest holding.  But I’m wondering how much of this is both a "dead cat" bounce from last week and Friday is the end of the quarter.  I’m trying to be patient with my short-term longs for the week, but may cut them back significantly before the weekend.  For those of you that read "All About Trends" (up at the top of your menu here at PSW) David has some interesting charts about what a real capitulation would like on the charts if Greece defaults or the EU fumbles their debt problems.  I don’t think we have hit bottom yet, so I’m staying in quite a bit of cash still.  I did not sell my short positions into the last rally and don’t want to make the same mistake twice.  I did manage to sell my short-term shorts on Thursday, so at least I’m starting to get the game.


  175.  Oops.  Make that, I did not sell my longs into the last rally and lost my gains.  I’m trying to get better at selling into the excitement with my shorter-term positions (which is usually two to four weeks for my time frame.)


  176. Pharm,
    I am in for dinner and poker also. Thanks


  177. Let me know if you book the Nobu place. My wife and I already booked Yellowtail (Bellagio sushi place) for the same date and time (and I’d like to do a few group activities). So I would definitely cancel that if you do book it.
     
    Definitely up for poker wherever/whenever that is.
     
     
    BDC


  178.  Pharm:  Dinner for sure….poker???
    What is the arrangement for poker game?  draw poker amongst friends?  dealer for hold em?  stakes?
    TIA



  179. That quite a history lesson from me:
    http://londonbanker.blogspot.com/2011/09/testimony-of-marriner-eccles-to.html
    A lot of his testimony does apply to today’s problems. It seems unreal that we keep on repeating the same mistakes at that level.  Politicians don’t seem to learn or would rather not learn as they profit from these "mistakes". The problem is not government as the majority of public workers go about their jobs probably as efficiently as private sector employees. The problem is the politicians who set the rules and policies! As an example, Belgium has not had an elected government for the last 18 months and yet things get done  - well, for Belgium as they face an entirely different set of problems. Maybe that’s the solution!
     
    And here is an excerpt from the testimony for Phil:

    It is utterly impossible, as this country has demonstrated again and again, for the rich to save as much as they have been trying to save, and save anything that is worth saving. They can save idle factories and useless railroad coaches; they can save empty office buildings and closed banks; they can save paper evidences of foreign loans; but as a class they can not save anything that is worth saving, above and beyond the amount that is made profitable by the increase of consumer buying. It is for the interests of the well to do – to protect them from the results of their own folly – that we should take from them a sufficient amount of their surplus to enable consumers to consume and business to operate at a profit. This is not “soaking the rich”; it is saving the rich. Incidentally, it is the only way to assure them the serenity and security which they do not have at the present moment.

    And this guy was a big business leader! Not some commie!
     
    And this – remember from 1933:

    I repeat there is plenty of money today to bring about a restoration of prices, but the chief trouble is that it is in the wrong place; it is concentrated in the larger financial centers of the country, the creditor sections, leaving a great portion of the back country, or the debtor sections, drained dry and making it appear that there is a great shortage of money and that it is, therefore, necessary for the Government to print more. 

    The debt structure, in spite of the great amount of liquidation during the past three years, is rapidly becoming unsupportable, with the result that foreclosures, receiverships and bankruptcies are increasing in every field; delinquent taxes are mounting and forcing the closing of schools, thus breaking down our educational system, and moratoriums of all kinds are being resorted to – all this resulting in a steady and gradual breaking down of our entire credit structure, which can only bring additional distress, fear, rebellion, and chaos.

    Sounds familiar!


  180. BDC – Poker is Texas hold ‘em. 

     

    Dinner, I am waiting to hear back, so if you are in (with your better 1/2), then plan on it.  I think almost everyone is in except a few for dinner/poker.  If there are 19 booked, then I am making it for 17, barring a disaster……We shall see.


  181. BRK/B- this is a no-brainer if there ever was one. I already have a half boat load of A and B shares but last week I began scaling in to Jan 13 $60 leaps with the intent to buy more if the stock went lower. Also sold some Jan 13 $60 puts. Today’s announcement was a very pleasant surprise. 
    I will likely add to this position this week even though it is up. Certainly will add if it declines.
    Frankly, the prospect of buying one of the best companies in the world at a fraction over book value is a "real deal" not to be missed- especially considering the man himself has put an effective floor under the price. It is not without risk, however. There is the Buffet health watch to consider plus the stock can and likely will sell off in a major market decline once the short term memory of this buy back announcement fades.
    If there is one place to put one’s long term money and be able to sleep soundly at night it is BRK.


  182. pstas/BRK.B – this stock offers no dividend and in my experience always lags the market. I agree it is one of the best companies but I think it is too big to move a lot barring today’s increase. Short time I usually lose money on this. Long term might be another story.


  183.  Pharm, I am also in for Dinner and Poker, I just sent off my deposit to Savi.


  184. Calendar write up.  I hope it makes sense….


  185. IRA strategy/Iron Condors
    Given the limitations of margin in an IRA, an iron condor may be a good thing, because you get two spreads, a put spread and a call spread for the price of one, in terms of cash set aside to cover the spread. (Reason being that both sides cannot fail simultaneously.)
     
    Of course the potential problem with condors is that the wheels may come off on one side and leave you like Jack and Jill (In an attempt to scale the summit, Jill fell down and Jack came tumbling after.). In an attempt to find a Jill-safe strategy, and after a fair bit of playing around, I came up with this.
     
    On both put and call sides, sell  10 options and buy 12 (or in proportion to this) using options fairly far out, with the intention to close the position at least 60 days before expiration. This way if the stock price hits one of the outer strikes before the date chosen, the losses are kept to about 1/3 of the potential losses on expiry, though if the stock really plunges or is subject to takeover talk, you have something similar to a ratio backspread and could make a killing.
     
    It seemed to me that this might be useful for a disaster hedge with SPY, so I scratched out a few numbers using the SPY January 2012 $110/105 put spread and the $130/135 call spread and what I came out with was that at the 60 day from expiration point the maximum loss was $222 on the put side and $1117 on the call side for a credit of about $1100 to put on the trade.
    Of course the devil is always in the details. If the S&P totally tanked before the 60 days, you might make a nice profit. The chances of S&P going into orbit on the up side must be a lot more remote and would be offset by other portfolio gains. The other downside is that the condor is unlikely to be in plus territory 60 days out as most of the gains come at the end. Although not as profitable as selling puts as a way of buying stocks, it has a lot more build in safety in the case of a crash. And of course you can always roll.
     


  186. Phil,  I’d appreciate it if you can you take a moment to give more perspective on TBT.  I am hoping that some sort of resolution in Europe will reverse the "rush to safety" and drive it back up.  Of course, the Euro may ultimately fall apart, and political gridlock and a worsening economy in the US can drive the market and rates lower and make the safety of treasuries more attractive.
    TBT has dropped more than I ever thought possible.   Over the next year how low do you think it can go, worst case?  If we get a bounce back up near term, what do you think we can hope for?  I have been rolling my short TBT puts for a long time, the 2x rolls I’ve had to do have left me with a far larger position than I wanted and are using up a lot of margin.  They are also creating a substantial opportunity cost in terms of other trades I no longer have the margin to support.  I have January 2012 short puts staggered down from a 35 strike to a 27 strike.  There is relatively little time premium left and I can roll to lower January 2013 strikes, which will help reduce the margin requirement.  I’m considering doing so on a bounce, or simply cutting the position back, taking my (huge) loses and moving on to other positions that can gain traction faster.  TBT has been a nightmare, but if it were a new trade it is at a level that looks very tempting.  I’d hate to cut and run at the bottom.  Your thoughts?
    By the way, rolling to 2013 means another year of decay.  How significant a factor is this?
    (My TBT Jan 2012 short puts:  35 ($2.68 cost); 34 ($3.10); 33 ($2.89); 31 ($2.29); 30 ($2.42); 29 ($3.95); 28 ($3.27); 27 ($2.17.  For 2013, I am short the 34s ($6.05).)


  187. Hi, Pharmboy,
    That write-up on calendars looks great!  I just posted a question on that page.  I think it would be nice if we all post Q/A on the same page.  Thanks!


  188.  So the poker game is also at the Hard Rock?



  189. Vegas update
    20 confirmed
    craigz --received notice of payment


  190.  Phil:  You referred today to a "PBR", on which you were "wishy washy at $82.50. ???  PBR [Petrobras] has been trading in the $20s, I caught a nice spike with a fistful of options today.  To which company did you refer – in case I see it get to $72!!


  191.  Savi / poker novices,
    If you have an iOS device, check out my free app on the App Store, "Dogs Playing Poker". It has a nifty tutorial that will teach you the basics of the game in a fun way.
    Link to App


  192. Thanks Nkhan


  193. worth watching – not the reaction of the interviewers as well:
    http://www.nakedcapitalism.com/2011/09/trader-on-bbc-sounds-alarm-about-market-crash.html


  194.  Savi,
    In regards to Vegas, what is the deposit for?
     
    Thanks


  195. TOS is a friggin’ joke!!! Another 2-3 weeks before the accts will be combined and we can use our stocks & equities margin to trade futures. They’ve been saying 2-3 weeks every week for the past 5!!!!!


  196. Thanks Jordon – the wrong SWW was uploaded on the site, sorry about that. Here’s the Feb. 27 stock world weekly: http://www.stockworldweekly.com/wp-content/uploads/2011/09/Newsletter22m.pdf


  197. So far, so good with the futures holding up. 

    Nikkei up 1.77%, Hang Seng up 2.4%, Shanghai up 0.3%, BSE up 1.6%.  

    Dollar behaving itself at 78.70. 

    JPM/ZZ – Nice, congrats.  

    Coordinated action/DC – Yes, this is MORE.  Making sure Dollars are available is just a liquidity issue but that doesn’t help the PIIGS deal with their debt, just stops their banks from imploding.  Eventually it’s all just more and more water filling the bathtub while everyone tells us inflation will never spill out but one fat guy jumps in and shouts "Eureka" and suddenly the floor is soaking with it.  As to 10,000 hours – it’s all about getting the real experiences over time – every time you see something like that play out that reinforces lessons you’ve learned, it builds those valuable little pathways in the neurons of your brain and the next time it plays out, you are trained to react.  Stack enough of those lessons together and suddenly you’re an expert.  That’s the advantage of this semi-Socratic format, where many people share their experiences with various trades and we all get to experience a lot more trade ideas and outcomes than we would be able to process on our own leading to what they call "institutional memory" gains for all.  

    Holdings/DC – All sound good to me.  HOV is most scary of the group but I like them.  

    Down the road/Angel – Hopefully so as it would be a good ride down we can be prepared for.  

    Now looking at no deal on Oct 3rd (seen as unrealistic) but maybe Oct 13th meeting but that’s very last minute as they must pay bills in Oct with money they don’t have.  

    TV Content/Rev – Best bet is GOOG or AAPL and shorting CVS, NWS but not so much DIS or TWC – who produce a lot of content.  As usual, it’s the middle man who gets killed.  TV networks will go the way of record companies – still there but with crushed margins as artists gain pricing power with many paths to distribution and their key advantage will remain their ability to pool promotions for unknown entities but not so much for established names.  This is long-term, of course.  ITunes came out in Jan 2001 (but the store was rolled out wide over the next 2 years) and Warner Music, for example, didn’t collapse until 2007 so it’s a slow process and we’ll have plenty of warning – not something you want to try to get ahead of…  Of course –  some would argue the industry was dying anyway and ITunes actually saved them.  

    Don’t forget, ITunes was just one of 100 ways to "rip" MP3s at the time so illegal downloading was really killing the industry (kind of like TIVO hurts ad revenues in TV) and what Jobs did buy buying SoundJam and turning it into ITunes (he didn’t invent it) was to come up with a way to commercialize the process in a way that people didn’t mind paying.  That’s what Jobs does well – he gets the fact that most people don’t want to rip their own files or use bit-torrent to watch movies even though the systems may be technically superior and offer the users greater control at lower prices.  What consumers really want (and this is what Jobs totally gets) it to think of a song, press a button and hear the song in 3 seconds or less.  TV is the same – we just haven’t been trained to think it’s possible yet.

    Nabu/Pharm – I don’t know if the food’s any good at Nabu but NObu is excellent!  8)  

    Poker/Savi – Try to have better cards than the other guys and, if not, try to pretend you do.  There, you’re all set! 

    Newsletter/Jordan – I’ll have Ilene take a look. 

    TBT/Lincoln – I’m sorry, I missed the puts.  We don’t like TBT anymore as it decays too much.  Quite a while ago we decided if TBT failed $24 it was doomed but TLT shorts work out fine if you are patient for the pops.  I’d just look at how much you are out on those short puts and look for a way to turn that into premium decay trades on short TLT calls.  At the moment, it’s a little chasey at $119 but I certainly believe $120 is not long-term sustainable so something like the Jan $123/120 bear put spread at $2, selling the $102 puts for $1.55 is net .45 on the $3 spread and we figure Operation Twist should put a floor on TLT as well so it’s an interesting way to play.  It is also possible to play this more aggressively by selling the $105 puts for $2.15 and selling the $126 calls for $3.05 and that way you have a net credit of $3.20 on the Jan $123/120 bear put spread and your breakeven on each end is $101.80 and $129.20 with a full win anywhere between $105 and $120, which seems to be the realistic range we’re seeing. 

    Poker/Lincoln – Trading options is not poker but the lessons of poker are good lessons for options trading but you’d have to know how to play poker for it to make sense.  The simplest way to put it is "You have to know when to hold ‘em, know when to fold ‘em, know when to walk away and know when to run and you never count your money, when you’re sittin’ at the table – there’ll be time enough for countin’, when the dealing’s done."  If you can just keep that straight – you’ll do very well!  

    Cash is king Rev, we just need to keep an eye on the Big Chart to see if we’re in a series of weakening bounces (which becomes consolidation on the break-down line) or forming a better bottom.   Obviously, today’s little move was nice but not impressive unless we string together a few of them.  A good rule of thumb is putting 20% of those paper gains into downside protection on the way up – just little things like what we did with DIA puts today in the $25KP – we won $100 and then lost $200 so our cost of insurance to protect a 277-point gain on the Dow was $100.  The value of that was we were not inclined to cash out our bullish positions as we jerked around during the day because we had some nice downside protection.  Spending $100 to help hold onto $8,000 worth of upside plays is a good idea…

    Eccles/StJ – I love that!  Even better is this line, where he sums it up nicely:  

    Our problem, then, becomes one purely of distribution. This can only be brought about by providing purchasing power sufficiently adequate to enable the people to obtain the consumption goods which we, as a nation, are able to produce. The economic system can serve no other purpose and expect to survive.

    Read this and know that just one person, with vision and principles, can make a difference to the world in a time of crisis, establishing the basis for decades of prosperity and growth.

    Buffett/Pstas – My feeling on that is that Berkshire is no Apple.  Buffett put it together but each individual company is run by strong people and the holding company does little to interfere with the running of the individual businesses.  While I’m sure Buffett gives valuable advice and gets deals done – it’s not like the company will miss more than a step or two without him.  However, at that point it would very much depend on who takes over and how they decide to utilize Berkshire’s vast holdings.  I’m not sure how many younger men would have Buffett’s patience as it’s hard not to want to make your own mark when you are handed the wheel of a $200Bn powerhouse.  Just ask El-Erian, who drove the Harvard Fund off a cliff after Jack Mayer spent 15 years building it up at a 15.9% annualized rate (same as Buffett).  El-Erian came in and added 23% by taking risks and then he took the money and ran and left a total mess on July of 2008 for Jane Mendillo and the Fund dropped about 22% over the next year ($8Bn) – giving back all of El-Erian’s gains in the typical IBank model where they make paper gains, take bonuses and run before it all blows up in someone else’s face.  

    Interesting JMM – I’d like to know how it works over time. 

    TBT/John – Sorry but my take is it’s a broken ETF that is constantly ground down because the artificial nature of support of the underlying instrument means it generally takes losses more often than gains.  At some point TLT will fall hard as rates kick up but in 2 days TLT is down 5% and TBT did not gain 10% so – broken.   TBT did, however, drop 15% when TLT gained 7% so – broken.  We’re not talking long-term decay here, this is what’s happening in 48-hour moves.   If you want the worst case, look at SRS – another ETF we played too long before we realized it was a hopeless cause.  That’s why we gave up on TBT when they failed $24 – it’s pretty much a death spiral from here unless TLT miraculously fails hard and fast.  As I noted above, I prefer shorting TLT to long TBT at this point.  What you might want to do is just take the loss and then set up a plan to try to make 1/3 at a time back with TLT shorts, rather than pressing TBT longs and looking for a huge win that is very unlikely to come with the Fed interfering in the long-term market.  

    PBR/ZZ – It’s oil I’m wishy-washy on at $82.50 with a $72.50 to $87.50 "normal" range.  

    App/Nkhan – Cool.  Hey, check out Monopoly and the way they do their dice (I have the IPad app, not IPhone) – I’m thinking that can be adapted to a beautiful craps game.  The big problem with craps games is they don’t give you a good feel for the game but the Monopoly dice are perfect and then the next problem to solve is being able to take various chips from your stack and use your finger to put the bets on the felt – that shouldn’t be too hard, right?  

    Thanks Ilene, that was fast!  


  198. At the close: Dow +2.59% to 11051. S&P +2.4% to 1164. Nasdaq +1.15% to 2232.
    Treasurys: 30-year -0.94%. 10-yr -0.31%. 5-yr +0.126%.
    Commodities: Crude +1.75% to $81.25. Gold -1.13% to $1619.25.
    Currencies: Euro +0.13% vs. dollar. Yen -0.17%. Pound -0.59%.

    Market recap: Stocks continue to jolt from headline to headline, the latest thanks to reports of an advanced-stage ESFS bailout plan for Europe. Financials led, reflecting the more favorable tone on the eurozone crisis; techs lagged after a report Apple is planning iPad production cuts. Gold falls to $1,620, and Treasury prices tumbled. NYSE gainers led losers nearly two to one.

    Bank stocks were among the day’s big winners, fueled by Berkshire Hathaway’s (BRK.A +8.1%buyback and cautious eurozone optimism. JPM +7%MS +6.5%C +7%USB +5%BAC+4.6%GS +4.2%STI +8%.

    Did Berkshire (BRK.A +8.1%) just talk its way out of astock buyback? Shares finished at $108,449, just shy of 110% of book value, the upper limit Warren Buffett said he’d pay in buying back shares.

    8:10 PM Japanese stocks jump in early trading on the back of a strong performance in the U.S. and Europe overnight. The Nikkei Average advanced +1.4% to 8,489.19, as technology and auto export shares lead gainers: Fujitsu (FJTSY.PK +3.5%), Subaru-maker Fuji Heavy Industries (FUJHY.PK +2.6%), Nissan Motor (NSANY.PK+2.6%).

    Belgium has the right idea!  The Senate approves, in a 79-12 vote, stop-gap measures to fund the government for an additional six weeks and avert a shutdown. It also approves, on a voice vote, a one-week extension to give the House time to consider the funding bill.

    How come only the Nobel prize-winners get it?  The U.S. economy is struggling with two problems on two very different time frames, observes Nobel economist Peter Diamond. The first, unemployment, is "an immediate problem that requires an immediate response," Diamond says. We need "big-time fiscal stimulus," to boost aggregate demand. Operation Twist is encouraging, but not enough. The second challenge, government debt, is a long-term issue requiring fiscal restraint, but contradicts what’s necessary now.

    Europe’s stronger economies must give way to expansionary fiscal and monetary policies if they really intend to fix the crisis, says Paul Krugman. Private sector demand has plunged in the debtor countries, and austerity progams are killing public-sector spending as well. Export-led growth is the only way out. But, as the creditor nations economies contract under the weight of their own fiscal austerity measures, just where are these countries supposed to export to?

    See, it’s not just me who’s bored with it:  "Simple math tells you Greece’s default is pretty much a certain thing," writes Sprach Analyst. Bored and sickened by the cycle of deadlines, rumors, denials of rumors, rinse, repeat, the writer asks for someone to wake him when it’s over, but leave him out of the loop of details until then.

    "Tensions are running high in Germany," reports Ambrose Evans-Pritchard. The head of the constitutional court warns politicians, "There is little leeway left for giving up core powers to the EU. The sovereignty of the German state is inviolate." A few days ahead of a vote on an expanded EFSF, a spokesman for the SPD complains of a "multi-trillion dollar program being cooked up in D.C. and Brussels while the wool is being pulled over (our) eyes."

    The reported €TARP plan sounds a bit like the original U.S. TARP – raise a lot of money to purchase distressed paper (in the U.S. case, MBS, for the EU, sovereign debt) sitting on bank books. Like the U.S plan, a major issue will be how to avoid banks taking capital-destroying marks when selling the bonds.

    Ireland announces (in a tweet, of course) that Twitter will follow the lead of Facebook, Google (GOOG) and other tech firms in establishing a headquarters there. Why the Emerald Isle? A 12.5% corporate tax rate is attractive, but even more exciting for cash-rich tech firms are the loose financial transfer laws - making it easy for companies to shift profits through their subsidiaries in Ireland to tax havens.

    It’s been a bad decade for male college graduates, Mike Mandel writes, suffering a 9.7% drop in real pay from 2000-2010 and providing "corroborating evidence that the labor market seems to have moved against male-dominated industries and occupations, affecting the college educated as well as workers with only high school diplomas."

    More FREE MONEY!  Nissan (NSANY.PK) stays on point – 2 execs adding to last week’s comments by CEO Ghosn for Japan to do something aboutthe strong yen. "We’re praying for the Japanese government to do something in terms of QE," says one. Another says he believes PM Noda is soon to take a page form the SNB

    Moody’s cuts the outlook for the oil and gas sector to stable, saying it expects the global economy to weaken, leading to slower growth in oil consumption. Also, Libyan production will also return, easing tightness in supply over coming quarters. 

    Fitch downgrades gold, saying recent price increases left its value "detached from fundamental supply and demand considerations." The agency pins the current decline on an overbought situation combining with CME margin hikes and the volatility created by ETFs.

    Jim Rogers insists he’s still a bull on most all hard assets, but if he could buy one sector right now it would be agriculture, because that’s where he thinks demand will come first. Commodities are all about "scarcity in a growing world," he says, and in the agricultural sector "we have shortages in everything… and inventories are very low." (Video).

    Bernstein’s Brad Hintz maintains Overweight ratings on Goldman Sachs (GS) and Morgan Stanley (MS), but remains cautious, noting i-banking activity is at its lowest point since 2009. He also thinks book values provide limited support, given investor experiences with a financial crisis in which "everything became illiquid and price/book became meaningless."

    Singapore’s SWF stands as the biggest loser in the UBStrading scandal, facing a $7.4B hit if shares don’t recover. The fund also faces a $500M loss on its stake in Citigroup (C +4.4%). A finance prof in Singapore masters the obvious: "The SWF’s investments in international financial firms have not panned out as well as they hoped."

    Peter Kafka’s sources claim Amazon (AMZN) has inked deals with magazine publishers Hearst, Conde Nast, and Meredith to sell digital copies of their titles on its forthcoming tablet, but Time Warner (TWX) remains a holdout. Print publishers have long sought a credible alternative to the iPad, having squabbled with Apple (AAPL) over multiple subjects.

    MG Siegler, who earlier provided the first hard details about Amazon’s (AMZN) tablet, claims the device will be called the Kindle Fire, look similar to Research In Motion’s (RIMM) PlayBook, and feature a dual-core TI (TXN) OMAP CPU. Siegler’s latest claims make it further look as if the tablet will be aimed at the Nook Color (BKS) more than the iPad (AAPL).  - As soon as one of these bursts into flames, we can short the hell out of AMZN!  You don’t name a product "fire" if there is even a 1,000,000:1 possibility that it can actually catch fire… 

    Tuesday’s economic calendar:
    7:45 

  199. Phil

    Tuesday’s economic calendar:
    7:45 ICSC Retail Store Sales
    8:55 Redbook Chain Store Sales
    9:00 S&P Case-Shiller Home Price Index
    10:00 Consumer Confidence
    10:00 State Street Investor Confidence Index
    10:00 Richmond Fed Mfg. 

    Notable earnings before Tuesday’s open: WAG 

    Notable earnings after Tuesday’s close: ACNJBLPAYX

     


  200. Good morning! 

    Things moving along quite nicely now with Europe up over 2.5% and our futures  up over 1% already and the best part is the Dollar is still 78.80.   

    Oil at $82.13 (+2.5%), gold $1,666 (+4.5%), silver flew up to $32.64 (+9%, which is why I liked silver longs better than gold), copper is back to $3.40, nat gas is $3.83 and gasoline is $2.56.

    2,250 should be a tough spot in the Nasdaq futures and bullish if we get over that.  That should match up to Russell 670 and S&P 1,170 and Dow 11,100 – those are roughly the 1.25% lines and we expect that as we finished up 2.5% yesterday so this is follow-through on a slowing bounce if that’s all it is.    To be really bullish, we NEED to see those levels broken and, preferably, get over the 2.5% lines again today and hold at least a 2% rally.    

    If not, we’ll be getting a bit more bearish again. 


  201. Phil / app

    Thanks. I have been looking to create a good craps game for a while. I actually have a couple of well known celebs on board for branding. Alas. . . too many projects, not enough time.

    Have you ever considered an official PSW app? That would go right on my home screen! If that is something you are interested in, I would be glad to talk to you about the app store from an insider perspective. My email is nadir@candywriter.com


  202. Thank you Ilene!