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Tempting Tuesday – S&P 1,200 or Bust (again)

Here we go again!  

If this game feels familiar to you it’s because this is the 6th time in 8 weeks that we’ve made a run at S&P 1,200 with only 3 of those attempts being successful and none of those lasting more than a couple of days before busting again.  That being the case, you will have to forgive me for being a little cynical just 2 days after I went bullish and called a bottom.  It’s not that I’m flip-flopping – we’re simply playing the range and if the trip from the bottom to the top of the range is just 2 days – then flip-flop we must!  

Of course we’re going to give the S&P a chance to prove us wrong but we’ll also be bargain-shopping on the bear side into any weakness so we’ll be setting some aggressive targets for today – 2.5% moves up at least to Dow 11,300, S&P 1,200, Nas 2,575, NYSE 7,100 and Russell 685 to keep us believing in the rally fairy.  The Russell finished at 666 exactly, which was my target for the day from Monday’s Member Chat and also the mark of Lloyd, a great indication that the TradeBots are on the march and in control.  The Dow and the Nasdaq made it our -5% levels on the Big Chart and the S&P should confirm that line this morning but we need to see the NYSE and Russell join the party at our targets or we’re just repeating the same old range.  

openingimageIt’s still the squeaky Greece wheeling around the Global markets with each twist and turn in this fiasco sending investors flying in and out of various assets.  The WSJ saves me writing time this morning with their "Euro Zone Primer: Where Things Stand" and David Fry does an excellent job summing the situation up even further, saying:  

IMF head Christine Legarde held a news conference which was frankly useless but typical as these things go. Her most significant answer came from a question posed by a Greek reporter: “What will the IMF do with these demands should there be great social unrest in Greece?

Her response: “Implementation, Implementation, Implementation.” (This statement meant previous agreements must be taken seriously.)  The WSJ was kind enough to post a description of just what’s going on as to the calendar and conditions in simple terms.  The three primary Greek agreements include slashing pensions (“implementation” = riots); cutting public sector jobs (“implementation” = bloodshed) and raising taxes on the poor (“implementation” = all out war).  Further, whatever actions are to take place will be strung out over the next few months as in “buying time”.  The odd thing is so-called “Troika” is going to give Greece its October payment even with the likelihood they may not get any more money in November.

How ridiculous does that sound?  What kind of rinky-dink Government runs their economy this way?  Oh yes, OURS!  Much like the Trioka – the US Senate had to perform their own stop-gap funding measure to keep the lights on in our own country as they almost unanimously approved (79-12) a bill last night to fund the US Government through November 18th and that’s 3 days longer than Greece has so – in your face Papandreou – USA, USA, USA!!!  That right, with the ridiculous Government that we have, we will celebrate whatever small victories we may get.  

BUDGET.SUBBefore you think that there was some kind of compromise in our Capital though, you should know that the major sticking point was that the Republican’ts wanted to strip funding from FEMA because, as everyone knows, disaster relief should be handled by the private sector.

Surprisingly the Democrats actually found this to be an issue they could finally put their foot down on - and we’ve been at an impasse over whether or not helping people who have had their homes destroyed by natural disasters was or was not something Governments should do.  As I said, no compromise was reached – it was FEMA themselves who ended the debate by saying "F U, you petty sons of bitches – we have enough money to last the year without you."  That may not be an exact quote but you get the gist of it.   

Now before we get too excited, the Senate was only able to approve a stop-gap measure to keep us funded through October 4th BECAUSE the HOUSE recessed without voting to fund the Government.  That’s right, those bastards actually went on vacation and left a Government shut-down up in the air for a Budget that ends on Friday.  The drama recommences on the 4th as the House has one day to approve the Senate extension for the next 5 weeks and then we start this nonsense all over again.  

"If it weren’t for House GOP efforts (of going on vacation without voting for a budget), the American taxpayers would have been on the hook for even more reckless borrowing by Washington Democrats," Michael Steel said in a written statement on behalf of House Speaker John Boehner.  In the Senate, Republicans were pleased that the compromise included EVEN LESS disaster-aid funding than the bill passed by the House.

This has been an especially expensive year for FEMA, with a record number of federal disaster declarations, including severe flooding along the Mississippi and Missouri rivers, deadly tornadoes, wildfires in Texas, and floods along the Eastern Seaboard this month in the wake of Hurricane Irene and Tropical Storm Lee.  Late last week, the emergency agency feared it could run out of money as early as Tuesday. But spokeswoman Rachel Racusen said Monday afternoon that FEMA’s disaster-relief fund still had $114 million left.  Let’s just all pray that nothing bad happens anywhere in America for the rest of the year and everything should be fine

Idiots?  Morons?  Psychopaths?  We report – you decide.

How much crap will the American people take before they WAKE UP?  Bloomberg reports that Household Net Worth fell by $149Bn in Q2, a 1% annualized drop to $58.5Tn led by a loss of $947Bn in real estate assets over the past year.  The erosion in wealth, which remains below pre-recession levels, and a stagnant job market may prompt Americans to keep trimming debt and rebuild savings, limiting the spending that accounts for 70 percent of the economy.   

“Households’ ability to spend is being constrained,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. “Consumers are just tired to death of seeing the value of their homes fall.” The decline in wealth “provides the argument for long-term stagnation in consumer spending.”

Fortunately (for us) the $149Bn of net worth that was lost by the bottom 99% was almost entirely transferred to the top 1% as Financial Assets improved by $139Bn.  House Speaker John Boehner pledged to spend as much money as it takes to find out what happened to that other $10Bn and make certain it goes to the "job creators," who shipped 350,000 US jobs overseas in Q2.  Meanwhile, as Boehner digs around in the wallets of the bottom 99%, looking for loose change, consumer continued to borrow to stay afloat – racking up a 3.4% increase in Consumer Credit.  We’ll see how confident those consumers are in today’s 10 am report on the subject.  

Meanwhile, our Corporate Masters had a record $2,050,000,000,000 of cash on their balance sheets, up $90Bn in 3 months – which represents $90,000,000,000 removed from circulation in our economy which translates into the 3-month payroll for 7.2M people at $50,000 a year.  This pace of Corporate Profit expansion has now kept up for 10 straight quarters as Government Bail-Outs go straight into the vaults, completely bypassing any possible benefit to US workers.  

The really good news is that those Corporations are making record campaign contributions to the Republican Party – to make sure no one rocks the boat in either of the upcoming elections so we can look forward to 4 more years of wealth extraction.  

While 96% of the President’s donations are in amounts of $250 or less, only 6% of Mitt Romney’s contributions fall into the category of "small donations."  That is allowing the GOP to crow about how "loved" Romney is because, of course, their only measure of love is money.  

That’s a good thing as Romney got his ass handed to him by McCain in the vote department, collaring just 34% of the Republican vote in the last cycle compared to 42% for McCain.  Fortunately for Romney, we don’t have John McCain to kick around anymore and Rick Perry managed to scare even his GOP supporters away in the last debate so it looks like it will be Romney Care vs. Obama Care in 2012

CNN reports that a record 15.4M suburban residents in the US are now living below the poverty line – an 11.5% increase (1.7M US Citizens) over last year.  Since 2000, the number of suburban poor has skyrocketed by 53%, battered by the two recessions that wiped out many manufacturing jobs early on, and low-wage construction and retail positions more recently.  The suburban poor are catching up in numbers to the 18M rural poor and have pulled way ahead of the 12.7M city folk who live below the poverty line in the wealthiest country on Earth.  "We think of poverty as a really urban or ultra-rural phenomenon, but it’s not," said Elizabeth Kneebone, senior research associate at Brookings. "It’s increasingly a suburban issue."  

15.4% of US households (1 in 6) are now living below the poverty line of $22,314 for a family of 4.  They still pay about $3,000 worth of FICA taxes on that $22,314 but they are included in the Republican count of the 45% of households who pay no taxes.  Another 15% of non tax-payers are Sub Chapter S Corporate households that declare losses for the year.  Most of them have garages that are bigger than the homes of the 15.4% of the genuine poor.  The rest of the non-tax payers are mainly retired people, also with no taxable income and, of course, cheats – which is why the Reps dropped that talking point as it turns out those cheats are very big contributors and don’t want the attention drawn to them in the debates.     

The genuine poor make up 46.1M of the 49.9M uninsured in this country, but in the words of Ebeneezer Scrooge

If they are going to die, then they had better do it quickly and decrease the surplus population. Good night, gentlemen.

 


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  1. Pharm  / Vegas
    I’m in for dinner and for poker.
      


  2. Hopes for a beefed up European bailout fund, oversold conditions rally metals and equities.  From Bloomberg News.
    European banks’ access to longer-term funding was dramatically squeezed this quarter.  Dealogic data shows that only $34B of senior unsecured debt was issued by the region’s financial institutions.  This will be the lowest amount in more than a decade.  From the Wall Street Journal.
    U.S. equity short interest increased 5.5% on the NYSE and 4.25% on NASDAQ in the two week period ended September 15th fro the August 31st data.  These are the highest levels since 2009, and could provide some fuel to any rally.  From the Wall Street Journal.

    Schaeuble..

    Solidarity cannot replace a government’s resolve to reform its economy
    Immediate fiscal consolidation needed in Greece, Portugal, Italy and Spain
    Governments must just not commit, but deliver; now is time for bold steps
    Strengthening euro may need treaty changes and may take time


  3. Looks like the Buffet rally may continue. Considering that this guy is right up there next to God, guns, mom, and apple pie, it is hard to underestimate the effect of his call of a market bottom (sort of). Though I personally never watch TV, I have no doubt that Cramer etc. are all over this and jumping up and down and waving their arms, spittle flying everywhere.
     
    Heard on NPR this morning that the Greeks are not taking their medicine well. Call in Julie Andrews with a spoonful of sugar.
     
    NPR said that Greece is the leading country for importing German-made Porsche SUVs and was given an award by Porsche.  I’m guessing they don’t accept payment in drachmas.
     
    http://www.npr.org/2011/09/27/140834491/greek-parliament-weighs-property-tax-amid-protests


  4. PP for today.

    All I can say is remember JRW’s graph from yesterday.  Well, we are almost there…..


  5.  Berkshire – I agree with pstas from yesterday.  This is a great time to buy Berkshire, at least as a solid cornerstone to my portfolio.  I don’t expect it to shoot to the moon like NFLX or GMCR, but with all the volatility going on, Buffett has basically bought a put at $72.50 for anyone owning his stock .  He has said they will buy back shares up to 1.1 times book value, so any time the shares fall below this level a big buyer is stepping in.  It is no surprise that the stock closed at $72.09 yesterday, which is close to where Buffet will still buy.  I’m holding 2013 $70 puts I bought a few months ago, and those are looking like free money right now.  (I almost feel like an IBank, only with a lot less money!)  My plan is to hold about 10-15% of my portfolio in BRK and write covered calls for the next couple of years.  Even if Berkshire doesn’t move off the $72.50 line, I should be able to make at least 20-30% annually off the covered calls.  That is the kind of cornerstone I want for my portfolio.  I don’t need BRK to do anything spectacular, just be boring and consistent and let me sell calls.


  6. Phil
    "What kind of rinky-dink Government runs their economy this way?  Oh yes, OURS! "

     
     
    Laugh!!!…………..What a great line.
     
    Sad but true.


  7. Well, now the calendar strategy will be put to the test….For the call side (117s), do nothing for now.  We are going to wait for a pull back which should be fine for those.  For the puts, we will roll the short puts up closer to ITM, and use that money to roll our long puts up as well, so the delta is close to 0.3.  The EU is up 3-4.5%, so that means we will be moving to that area today.  May buy some other calendars to soften the blow since this is a rocket that is running out of gas.


  8. Oil Lines
    R3 – 88.8
    R2 – 85.52
    R1 – 83.67
    PP – 80.39
    S1 – 78.54
    S2 – 75.26
    S3 – 73.41
    Yesterday’s high and low – 82.24 / 77.11
    Breakout lines – 90.54 / 63.67
    Plenty of volatility following yesterday’s move! 


  9. Ok, lets see if PSW can beat TOS to the punch with support. at 6:15 I asked in TOS chat:
     
    Is there a setting that keeps the current candle visible on a one minute chart? Sometimes I find charts drawing off the right side of the visible graph and I have to pan to the current candle, and then it fills in the space to the right and starts drawing off the screen again.
     
    They have a 10 minute head start.


  10.  jmm – Thanks for the NPR link. If 92% of the population says the austerity measures are unfairly implemented, I wonder who the 8% are?   Tax evasion is a way of life in Greece.  My wife spent her high school years there while her father worked in the Near East office for HPQ.  There is plenty of money to begin closing the deficit if the government can find a way (or the will) to close the loopholes in the upper brackets.  The EU underestimates the anger of the Greek middle and working class.  While Greece may have had too many entitlements and poor budget discipline, that is not the full story.  The average Greek knows that they have been living in a kleptocracy, and they stayed quiet as long as they got the crumbs through state jobs and benefits.  But now it is all falling a part, and they are paying a huge price while the real beneficiaries (criminals really) have parked their money overseas.  EU officials can be as high minded as they want about European unity, but as Tip O’Neil observed, "All politics is local."  As the NPR notes, even the police, tax collectors and utility companies are unwilling to be the stooges to enforce austerity for bond holders.  I think it is going to be a rough ride until the default is all worked through.  Cash is king until this gets worked out.


  11. BRB.B
    Finally a nice smooth trade!  Phils recommendation on the short jan13 50 put, and long jan13 70/82.5 BC Spread was right on! Let’s up it runs right up to 80!


  12. rain
    go to style,settings scale & axis and check/select expansion 10 should do it.


  13. FAS Money Recap 
     
    Long Strangle –Jan 12 Puts (3.01 average now 2.80) and 15 Calls (2.75 average cost now 1.93). 
     
    Weekly – Full Cover October 13 Puts (1.98 average now 1.70)
    Monthly – Full Cover October 13 Puts (1.98 average now 1.70) 
    Looks like we are back on track. We should think of making sure we don’t get caught again in the next downdraft!


  14. Roll Oct 110s to 116 for ~ 1.45.  Hoping for a pull back to sell the 116 Sept Qs.


  15. From Dr. John Faessel:
     
    Price resistance in the in the S&P 500 (SPX) is at 1183 then at 1220 – then at 1230. The 50- moving average resistance is at (SPX) 1210. The 200-day moving average resistance is at 1281.
     
    Price support in the S&P 500 (SPX) is at 1138 / 1132 / 1129 then at 1114. The August 8th lows support is at 1101. The (SPX) closed on Monday at 1162.05


  16. buy back short puts, 110s or 112s..


  17. Pharm/Vegas
     
    I’m in for all events.


  18. Phil or Anyone – I’m trying to figure out the relationship between indexes and the ETFs that follow them.  Basically my question is whether selling or buying pressure on the ETFs (IWM as an example), would affect the value of the index (RUT in this case), or is IWM simply a reflection of the value of the RUT’s underlying 2000 securities.  If the latter is true, then if IWM got out of sync with the RUT (higher or lower), would traders arbitrage it back to the value of the RUT? 
     
    Thanks in advance and let me know if I need to clarify the question.


  19. For the short puts, we are targeting the 116s for $1 or better, which pays for a majority of our roll up. Use JRW’s rules to sell them, as I may be off line when it hits.


  20. davew / TOS — Thanks!


  21. FWIW, the 117 Calendar spread is up by $170 on my virtual score card, so any pull back here, these should be bought back….that MEANS both long and shorts.


  22. The ToS charts have been screwy for me lately. 


  23. Hi Phil,
    I am in the TZA OCT 55-59 Bull call spread at $1.15.  Can you help me adjust this please?
    Thanks,
    Dan


  24. TOS — 35 minutes to answer, PSW 7 minutes. :)


  25. Vegas update
    21 attendees
    jnb22—received deposit
    thanks


  26. Phil/leveraged ETF’s
     
    There’s been a lot of talk about how you shouldn’t hold leveraged ETF’s for more than a day or so due to the decay that is inherent in leveraged ETF’s.  Particularly the triples.  So if I’m to understand this concept, if you thought the market was going to drop, and you purchased TZA to capitalize on that move, but instead of dropping, the market stayed stagnant, not moving up or down for a month or two, then the TZA position would be worth less than you purchased due to decay.
     
    I was thinking about that last night and was wondering if the decay actually works in your advantage when shorting the triples.  It would stand to reason that if you shorted TNA for example with the expectation that the market was going to go down, but the market stayed stagnant, then the decay should make the short more valuable. 
     
    Has anyone every explored this concept?


  27. revtodd/BRK.B
    RE: I’m holding 2013 $70 puts I bought a few months ago, and those are looking like free money right now.
     
    Bought or sold?


  28. I have changed my VIY-indicator chart to display the date of the prediction. I think this avoids further misunderstanding. (you can add the 6-7 weeks forecast period in your head)
    http://www.pentaxon.com/psw/viyindicator.html

    …and I am very curious on the next few weeks as the indicator is turning from red to dark red. A comparable situation can be found in November 08. Things didn’t turn a lot worse then, but at least there came no market surge for several months. We’ll see… if the indicator is wrong this time and the market continues to climb for the next two months – then the rules of the game have changed I will have to abandon this indicator – but until then I will trust it and be very cautious during the next weeks.
     


  29. Again from John Faessel:
     
    After European major stock markets and our Dow and NYSE blew out their consolidation lows we’ve gotten a nice bounce back into the base the lows of which were established on August 8th. A technical perspective that’s always a good thing to break consolidation lows and then reverse back as "it" flushes out the last seller. In the case of this consolidation, (that to me is of some historic proportions) yesterday’s "pop" (and today’s early futures postings) have come off the lowest low "oversoldness” in McClellan Oscillator history at a minus 438, months of very high put / call volume ratios, super deep interday TICK registrations and consensus investor and consumer sentiment that registered "end-of-the-world" catastrophe proportions. This all sets the stage for a least a decent bounce to the upper reaches of the now seven-week consolidation, as best seen in the S&P 500 (SPX) 1230.


  30. PHIL,
    Your thoughts on the oil arb play, long USO/sht BNO (from Fidelity) reflecting strg $ and rel strength of US vs Europe, expecting the spread to decrease.
    Thanks


  31. amzn tablet is a dumbed down rimm playbook going after nook from what i have read


  32. i see geithner taking credit for fixing europe…right! just like he "fixed" the U.S….we’ll see just how well he "fixed" the U.S. over the next couple of years…it seems to me he has however ‘fixed’ wall street…


  33. Good morning! 

    OK, very simple today – 1,200 or bust on the S&P.  Europe is up 4.5% now (2:30 pm for the UK) on the DAX and CAC and 3.25% on the FTSE and all at day’s highs at our open so we are already lagging by a long-shot, up just 2% at the open.  

    As I said in the above post, our targets are Dow 11,300, S&P 1,200, Nas 2,575, NYSE 7,100 and Russell 685 to keep us believing in the rally fairy but we’re not going to wait all day to do the right thing as we look to add some coverage if the Dow can’t make 11,300 by 10:30 and then we’ll raise our expectations higher.  

    The Dollar is making this all happen, down to 78.12 at the moment is down 1.25% from yesterday’s close and we’ve been getting 2:1 dollar to market moves so that’s pretty much the entire story of the morning – all the rest is noise.  

    We need to watch the 78 line on the Dollar, which should be bouncy back to 78.25 (weak bounce) or 78.50 (strong bounce) and a rejection at 78.25 will be bullish for our big move to 1,200 while a move over 78.50 is – DOOM!  

    This morning is day 2 of Cramer screaming at retail investors not to buy the rally – which does make me more bullish as the only reason that crook is telling the sheeple not to buy is because his hedge fund buddies (and we discussed the huge bearish sentiment in funds last week) are getting squeezed and need all the help they can get keeping a lid on things.  

    As usual, it’s a good time to go back to our Short Put List and hunt for fresh horses – we had huge winners off the last round and this is about where we want to start adding some less-volatile protection if we can.  

    TLT is all the way down to $117 so congrats to all the faithful shorts on that one!  TBT is $20.77 but it’s almost certain we get a bounce around here as we’re down 5.6% from $124 in less than 3 days.  That’s 7 points down so a 20% retrace is going to be 1.5 points up, back to $118.50 for a weak bounce and $120 for a strong bounce.  

    We took 1,173 (the -5% line) on the S&P so holding that is key for the day in the very least but not a good sign if that’s all we can manage.  I do think we make it – Cramer’s sheep can only sell so much before being overwhelmed by the BuyBots unless the EU suddenly fades into the close.  If the EU finishes at the day’s highs, then their BuyBots will flip to our markets to satisfy their hunger after 11:30.  

    The RUT is still behind and the IWM FRIDAY $68/69 bull call spread is .50 so I like 20 of those in the $25KP or, for the non-margin challenged, you can sell 10 RUT FRIDAY $645 put for $2.55 and buy 40 of the bull call spreads for a net .55 credit bet that the RUT won’t reverse and drop 37 points (over 5%) by Friday (rollable, of course).  

    Other bullish offsets include short VLO Oct $19 puts for .79, GS FRIDAY $100 puts can be sold for $1, GS Oct $85 puts can be sold for $1.05.  JPM Oct $31 puts can be sold for $1.05 too.  GE Jan $15 puts can be sold for $1.05, VNO Oct $75 puts can be sold for $2. 

    A bear spread, using the same offsets, would be a DXD $18/20 bull call spread at .70.  With DXD currently at $19.16, this is well worth using as a cover if the Dow fails to take out 11,300 or if it fails it thereafter.  30 of these for $2,100 has a $3,900 upside and, if you stop out at .35 with a 50% loss ($1,050) all you need is to sell 10 $1.05 bullish offsets to make this free insurance!  

    Tuesday’s economic calendar:
    7:45 ICSC Retail Store Sales
    8:30 Chicago Fed Midwest Manufacturing Index
    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.
    12:30 PM Fed’s Lockhart: US Economy 

    Notable earnings after Tuesday’s close: ACNJBLPAYX

    At the open: Dow +1.99% to 11264. S&P +2.04% to 1187. Nasdaq +1.66% to 2271.
    Treasurys: 30-year -1.24%. 10-yr -0.49%. 5-yr -0.24%.
    Commodities: Crude +3.46% to $83.02. Gold +4.23% to $1660.15.
    Currencies: Euro +0.7% vs. dollar. Yen +0.11%. Pound -0.67%.

    Market preview: Rising optimism on Europe’s debt crisis fueled overnight gains in Asia and Europe, and pushes U.S. stock futures to big gains; S&P benchmark +1.7%Home prices rose for the fourth straight month, but no one thinks the housing market has hit bottom. Treasury prices resume yesterday’s slideStill ahead: consumer confidence, Richmond Fed. 

    10:00 AM On the hour: Dow +2.32%. 10-yr -0.49%. Euro +0.82%vs. dollar. Crude +3.97% to $83.42. Gold +4.56% to $1665.35.

    I’m not dead yet:  Redbook Chain Store Sales: +4.2% Y/Y vs. +4.1% last week. The sales with discounters was boosted by demand for basic household supplies, while that of department stores continue to decline.

    I’m getting better:  July S&P Case-Shiller Home Price Index: +0.9% M/Mvs. +1.1% in July. -4.1% Y/Y vs. -4.5% expected, -4.5% prior.

    I feel happy!  Sep. Richmond Fed Mfg. Survey: +4, to -6 (above 0 = growth). Shipments +15 to -2, new orders -6 to -17, jobs +6 to 7.

    Happy!  August Chicago Fed Midwest Manufacturing Index:+0.6, at a seasonally adjusted level of 85.0 (2007 = 100). Regional output +7.6% Y/Y, national output +4.2%. 

    Small guys continue to suffer:  ICSC Retail Store Sales: -0.2% W/W, vs. -1.2% last week.+2.7% Y/Y, vs. +3.4% last week. The slowness in weekly sales is due to the renewed and intensified consumer concern over the economy.

    Sept. Consumer Confidence: 45.4 vs. 46.6 expected, 45.2 in August (revised). Expectations 54 vs. 52.4. Present situation 32.5 vs. 34.3. "Consumer expectations, which had plummeted in August, posted a marginal gain. However, consumers expressed greater concern about their expected earnings, a sign that does not bode well for spending," the Conference Board says. 

    We saw this coming a mile away:  Treasury bonds are falling (yields rising) for the 3rd consecutive day as investors rush back into risk assets. The 30 year yield is back up to 3.10%, meaning it has given back the entirety of its eye-popping rally from the 36 hours following the Fed’s Operation Twist announcement. TLT -1.5% premarket.

    European shares – rallying because of a rumored expansion of the EFSF into a €TARP – roll right through a statement by an official from the German Finance Ministry that finmin Schauble told the Cabinet the EFSF will not be expanded (reported by Reuters). Stoxx 50 +3.8%.

    Why the UK is lagging:  The CBI reports its U.K. September retail sales index falling to -15 from -14 in August. It’s the weakest reading since May 2010, but inline with expectations. The future outlook is even worse, with expected orders dropping to -19, the lowest level since September 2009.

    Helping the rally:  Japanese finmin Jun Azumi: "If there is a scheme that’s based on a firm process, involves a reasonable amount of money and could provide the world and markets with a sense of security regarding a Greek bailout, I would not rule out the possibility of Japansharing some of the burden."

    Not stopping the rally: The ECB scaled back sovereign bond purchases to €4B last week from €10B the week before – the lowest since resuming the controversial program seven weeks ago. One economist called the dramatic change a "reality check" that demonstrates just how reluctant the ECB is to intervene.

    But causing this problem: Italy sells €14.5B of shot term debt of varying maturities. Even with sharply higher yields than last month’s auction, the sale didn’t attract a ton of interest – the bid/cover on the longest-dated paper was just 1.57 vs. 1.94 last month.

    Calling for vigilance over the use of China’s "21st-century treasure trove of new materials," its Ministry of Land and Resourcesorders even tighter controls on rare-earth sales. While such moves usually alarm global manufacturers, previous calls for prudence have proven difficult to enforce.

    Molycorp (MCPpops 6.4% premarket, encouraged by news China is tightening controls on rare earth exports. The shares could use a lift after falling by 35% over the past few sessions on word the prices of rare earth minerals are falling.

    J.P. Morgan’s Mark Moskowitz distances himself from a report issued yesterday from a Hong Kong-based company analyst, which claimed Apple (AAPL) is dramatically cutting iPad orders. Moskowitz, a long-time Apple bull, says all is well with the firm. Bruce Forester, however, believes Moskowitz’s retort may have been spawned by complaints from Apple or large shareholders.


  34. Chaps/BRK.B,
    My $.02 is they are sold puts if it looks like free $.


  35. I don’t think it’s a wise idea to put 42 executives on the maiden voyage of any craft! I hope they’re hedged!



  36. .even if europe fools the market one last time…its hard to imagine that stopping the global economic deterioration that is underway….but if things just stabilized for a bit…then i guess the valuation argument comes into play.


  37. jomptien/BRK.B
     
    right.


  38. one way to think about this market is that it TRENDS on the fundies…but Trades on the technicals


  39. Exec - I don’t short leveraged ETFs, way too scary, but when the market is in a trend I buy ITM puts to take advantage of the decay on the opposite ETF.  For example, when silver’s on a run I’ve made good coin playing ZSL down, you get the drop plus the decay.  Same with TZA when the market is going up.


  40. Geithner/credit for Europe:
     
    His plan is to leverage the EFSF. That would mean the Germans would be lashing themselves to the PIIGS and doubling/tripling/quadrupaling/… down. In other words, probably risking everything, based on the size of the EFSF, the German % of the EFSF, and the size of the German economy.
     
    Geithner would probably do it. I don’t think the Germans will. The Germans are going to get hosed no matter what. I think they’ll end up taking their hit by supporting their own banks in the final analysis.


  41. they will be out of the euro…meanwhile nice bounces everywhere i will be shorting the euro around 137…and still looking for 20-25 dollars on silver….1200 looking likely in the spu..lets remmeber its tape painting week


  42. mrmocha / leveraged etfs – I’m not following you.  How does decay help you on options you own?  Don’t you mean sell?


  43. Consolidation/Kustomz – Imagine the US Government demanding drastic austerity measures be "immediately" taken in NY, NJ, CA, etc.  Or I guess Greece is more like the Rhode Island or Alaska of Europe (our most indebted states by percentage), where they have little say in the matter but that doesn’t mean they’ll like it.  

    Berkshire/Rev – Keep in mind that the book value can drop if earnings underperform – that Buffett is a sly one with the contracts!  I love Berkshire but don’t get too carried away with them, they do not outperform the S&P in a crash – they are simply a better index than the S&P as Buffett cherry-picks a diversified mix of companies for you to invest in.  The best performance of Berkshire is coming out of a crash, when they get to scoop up bargains and make favorable deals with their sideline cash.  

    BRK.B/Burr – I only wish I had been more short-term aggressive but the Jan trade seemed so nice and safe I didn’t want to be more aggressive – now I regret it as it seems so obvious. 

    TLT not getting a bounce, TBT threatening $21!  

    FAS back over $12.50!  StJ – you tell me how we can make sure we don’t get caught…  I think at $15 this time we should at least sell 1/2 the calls but I would be so pissed if we get burned on the upside after all this nonsense.  

    VIX down to 36.23

    ETFs/JC – Sure it does.  When you buy IWM, IWM turns around and buys a basket of stocks that mirrors the RUT.  IWM is not all that big, just $14Bn in holdings with 90% of their assets invested in the basket.  You can see what they are doing in Yahoo and more detail is available elsewhere.  On any given day, $1.4Bn worth of shares of IWM are traded (10%) with about 10% of that being JRW. 8-)   Anyway, if you figure that 90% of the $1.4Bn balances out between buyers and sellers, it’s just a $140M imbalance one way or the other that typically moves the index up or down.  It’s not IWM that goes "out of synch" with the Russell, IWM has a set basket, they adjust it if they get out of balance to the RUT but, on a day to day basis, money flows to IWM and the Russell gives you an exact number at the day’s end which represents the weighted composition of all 2,000 components.  It’s not like they are all controlled by the same guy and must line up.  Yes, in general, traders will bet they get back in line with arb plays.  The DIA is more fun to play that way as, even now, the Dow Futures (/YM) are 11,206, the Dow itself is 11,285 and the DIA is 112.54 -usually, on expiration day, they all get pretty much to the same place.  

    Past 10:30 without breaking 10,300 and the Dollar over 78.20 so over 78.25 is a good reason to tap the DXD hedge or grab the DIA FRIDAY $111 puts, now .98 so let’s watch that VERY CAREFULLY although it could just be a bit of profit taking into the EU close with the DAX up 12% since Friday morning.  A pullback to 10% is very much expected here and EWG naked calls can come off the table for now until they prove they can break $20.  

    In the $25KP, our EWG $16/18 bull call spread is $1.60 out of $2 but the short $17 puts are still .40 for net $1.20 out of $2 possible so, although we’re up 200%, there’s another 200% we can capture and we’re feeling pretty good about holding $18 for the month at the moment.  We’re not risking 300% to make 200%, we’re risking 100% (stopping at net .80) to make 200%.  


  44.  Pentaxon – Thanks for sharing that chart – it’s a real eye opener.  I actually prefer the "dumbed down" version, but either way, I would love to keep seeing updates.


  45. Phil - nice job sneaking in the M. Python references (here’s a hint for those who didn’t get it).  "I think I’ll go for a walk…"


  46. jcaesar / ETFs - While it’s tempting to sell premium on leveraged ETFs, I wouldn’t do it after 2008, when you could sell a call on SRS at 30 and suddenly it rocketed to over 200, that’s quite a squeeze.  Regarding decay, imagine of you buy a put on ZSL that is ITM and has very little premium.  ZSL then drops 3x compared to silver’s rise, but with the decay over time you actually get a 4x drop, which gooses your put a little more.


  47. Pentaxon:
    Great charts.  If possible could you also post the "old version"  TIA


  48. Phil / ETFs – Interesting – thanks!  I think I used to know that but for some reason forgot.  I hate it when that happens!


  49. Can someone please repost the link to the Put List Phil discussed above?  I can not find my bookmark for that.
    Thanks!


  50. TZA/Dan – You can pull the $55 calls at $3.40 and leave the naked $59 calls ($2.75) or just take the small loss on the insurance and move on.  If you want to stay covered, I’d still cash the $3.40 and pick up a longer-term bull call spread like the Nov $44/52 bull call spread at $2, which puts $1.40 back in your pocket and you can’t owe the short Oct $59 callers a penny unless you are up $6 on the bull spread and the Oct $59 calls can be rolled to the Nov $80 calls (now $3) and, if you are that bearish on the RUT, then why adjust your $55/59 spread in the first place?  

    Note:  The above adjustment is why, for PM players and people who have lots of extra margin to play with (which you damned well should if you are at 65% cash), I love the ultra verticals.  This trade went against Dan by over 20% already but, in the straight short call adjustment, he can pull a 200% profit off the table if his short caller expires worthless – not a bad ROI on insurance for being totally wrong on direction!  

    Tech support/Rain – We should set up one of those web answer sites where we get paid to answer questions by outsiders.  

    Vegas/Savi – That’s great and thanks so much for taking your time to organize this for all of us! 

    Triples/Exec – First of all, BUYING premium in any ultra ETF is like burning money in the fireplace.  That’s why we almost always do verticals with offsets – all the premium is sold that way and the whole thing is to your advantage.  Yes, shorting ultras is the best way to go but you need to do it at the top of a cycle because, from the bottom – they can destroy you very quickly (see AGQ this morning, up 30% from yesterday).  

    VIY/Pentax – Thanks.  Very interesting now:  


  51. mrmocha – Oh, you mean decay of the leveraged ETF itself over time and its effect on the option value, right?  It was thinking you were referring to theta decay of the option which benefits the option seller.


  52. FAS Money / Phil – Don’t know about $15 on FAS… We have topped off at $16 at the end of August and it looks like we are in a down channel right now with resistance around $13. Of course, with these 3x ETF, you never know – we could rally the entire week and be up 20%! We could always sell 1/2 cover on the call side looking at rolling up to a full cover if needed. It might not be a bad idea to put stops on the puts we sold as we are now showing almost a 37% profits. I would not go too tight as we got burned last time, but I would not want to find myself where we were last Friday!


  53. Phil / BCS
     
    Fyi, the BCS OCT11 10 Call is now 1.10 x 1.30.  Bought it at 0.85 for a nice 47% return if filled at 1.25.
     
    Thanks!


  54. AP)  WASHINGTON — A new survey says more than half of cities have cut staff, canceled projects or raised fees this year to cope with shrinking property- and income-tax revenue.

    The National League of Cities says cities are struggling to make ends meet. High unemployment, weak housing markets and slow spending have reduced the tax money they collect. Rising health care and pension costs for city workers are also draining budgets.

    Two-thirds of city finance officers said they had delayed or canceled public works projects. Two in five reported raising fees for city services. One in five had cut spending on public safety.

    The annual survey found the impact of the recession on cities was delayed because it took time for lower home values to affect property tax bills.


  55.  Taking volatility to new levels in Germany:
    http://www.bespokeinvest.com/thinkbig/2011/9/27/you-think-its-volatile-in-the-us-look-at-germany.html
    Roller coaster anyone!


  56. BNO/8800 – I don’t like it because we had bad timing last month shorting BNO and we had to give up and THEN they finally fell.  As we got to watching them closely, I did not like the action as BNO seems, if possible, even more manipulated than USO – probably because it’s controlled by ICE, which has no regulatory oversight vs. WTIC, which is controlled by the NYMEX and has a total joke of regulatory oversight.  I find USO pretty easy to predict so, to me, an arb play is a waste when all we have to do is be patient and follow our monthly inventory/expiration patterns as they develop.  

    Geithner/Angel – And what will you say if it’s straight up from here?  That Timmy was a genius?  I don’t think you can judge anything based solely on how things LOOK over time.  These are the kind of things we hope are dissected later in books but the only people who pass judgement this quickly (even in a year or two) are media blowhards who think they know everything but can’t be trusted to point to "up" without flubbing it – especially if it violates the conclusion they reached before the question was even asked.  

    42 Executives/Rain – Good show of confidence.  A lot of them would rather be dead anyway if this plane crashes.  

    Ranges/StJ – thanks:  

     

    Subscribe to Bespoke Premium to receive more in-depth research from Bespoke.


  57. your welcome Phil—I am looking forward to meeting everyone and learning some poker and of course futures


  58. 11,300 having a tough time for the Dow.  S&P 1,190, Nas 2,575, NYSE 7,150 and RUT 670 are our other lines at this level.  

    Europe looks like they’re closing at highs with DAX and CAC over 5% up and FTSE up 3.6% so woe unto us if we can’t pop over these 2.5% lines and move on to better things.  


  59. Phil / 2.5% – If we don’t make 2.5%, we’ll either catch up overnight, or bring Europe down tomorrow.  I guess the latter option is your "woe" situation.


  60.  Phil – does it make sense to buy back some sold calls on my hedges into this pop? I’m thinking of partially uncovering some, like my Oct SDS 20/22 spread, or Oct SQQQ 22/25 spread? Or is there a better adjustment to make assuming we are nearer to the top of the range now? 


  61. Python/Mr. M – Always like to throw in a little culture when I can.  

    Forgetting/JC – I do that with phone numbers. 

    Short put list/Danosu – Here it is as of the 11th (PRICES NOT ADJUSTED!):

    • AXP (was $12, now $48) Jan $35 puts are $1 – now $1.30 (up 30%). 
    • BIDU we already did (was $11, now $139) Jan $61 puts are $1 – still $1 (even) 
    • CAT (was $24, now $86) Jan $62.50 puts are $2.30 – now $2.85 (up 24%) 
    • CMG (was $40, now $307) Dec $200 puts are $3 – still $3 (even) 
    • DECK (was $15, now $86) March $50 puts are $2.30 – now $2.05 (down 11%)
    • FCX (who I like LONG, was $9, now $45) Jan $37.50 puts are $2.40 – now $4 (up 66%) 
    • GOOG (was $250, now $522) Jan $300 puts are $2 – still $2 (even) 
    • IBM (was $70, now $167) Jan $110 puts are $1.05 – now $1.50 (up 42%)
    • ISRG (was $80, now $372) Jan $200 puts are $2 – still $2 (even) 
    • KO  (was $40, now $70) Jan $60 puts are $1.12 – now $1.40 (up 25%) 
    • MA (was $120, now $322) Jan $160 puts are $2 – now $1.75 (down 13%)
    • MMM (was $42, now $77) Jan $55 puts are .85 – now $1.15 (up 35%)
    • NFLX (was new, now $211) Jan $120 puts are $3.95 – now $4.65 (up 17%)
    • PCLN (was $150, then $30, now $525) Jan $300 puts are $5 – now $5.90 (up 18%) 
    • QQQ (was $26, now $53) Jan $45 puts are $1.45 – now $1.65 (up 14%) 
    • V (was $42, now $85) Jan $65 puts are $2 – now $2.10 (up 5%) 
    • WYNN (was $20, now $147) Jan $95 puts are $2.75 – now $3 (up 9%)

    The idea is to look for ones that are CHEAPER than they were when picked and watch them for a turn back down to grab the puts on momentum.  Obviously, almost all of these were huge winners Thursday and Friday but now, 5% later, some are making for attractive entries again.  That’s why you MUST take profits off the table and why we have a big and diverse list to pick from.  I used red and green for stocks that are currently up or down from original strike – I don’t have time to look up all the options again.   The Green ones are, of course, cheaper to play.   Also keep in mind these are DISASTER INSURANCE for a break below the 10% line – these are not inherently weak companies – we picked them because they are SLOW to drop so, WHEN the market stops dropping, we always have time to go to this list and grab a couple of cheap ones before they build up downside steam.  

    Meanwhile, 11,300 is holding up so no need to be bearish at all so far as we’re getting a bit of the buying we expected at 11:30 but now we’ll need to see 3 of 5 of those 11,300 ish levels hold up to stay bullish.  


  62. Germany’s Roesler

    EFSF leveraging is “off the table”

    These guys cant make up their minds..
     


  63. Vegas update
    22 attendees
    celeste--received deposit--thanks


  64. Consolidation here, looks like a new move up to the 120s is in store.  This is EOQ week, and as noted last week, ‘they’ need to paint a pretty picture.  July was a good EOQ week as well, then what happened?

     

    RIMM calendar: Sell October $25 Calls, buy Novemeber $25 calls for 60c debit.  OH resistance at 26ish, but rumors are swirling now for Icahn to take stake.


  65. Wow, Vegas is like this market….keeps going up with attendees…..


  66. OXPS - anyone else having trouble logging in? I can’t login on any accounts ("invalid password") and the live help won’t even pop up.  They’re hurting technically.  And this one day after the big TOS rant on this site — Phil needs to start a reliable brokerage!


  67. FAS Money/StJ – As long as we see steady daily improvement in XLF, there’s no reason to cover.  We still have earnings coming up and if things are as bad as XLF is picturing, it should be obvious from the first few reports.  If not, $15 is still cheap.  

    BCS/Burr – You are very welcome!  

    Germany/StJ – Fun! 

    2.5%/JC – We have it now on the RUT and NYSE.  Those were our laggers and that’s a good sign, now we need the Dow, Nas and S&P to show us the money and all will be well. 

    Dollar cooperating by laying around at 78.12.  Gold having trouble holding $1,650.  Oil $83.68.  

    Buying back/Kurt – It depends how bearish you want to be.  I think setting stops on 1/2 is a good idea ("When in doubt, sell half" applies to buying back what you sold too).  Just make sure you have a plan for what to do if things go the other way on you.  If you sold a lot, taking out 25% now, setting a stop at 25% 3 more times is a great way to scale out of a short caller or putter if you think the move against you was overdone.  As I said above, with Europe closing up 5% at highs – anything less than a 2.5% up day for us indicates something is very rotten in the state of Denmark, or Deutschland , as the case may be.  

    OXPS/MrM – That’s why I loved TOS so much – I had escaped from OXPS.  


  68. Phil,

    Really want to short WGO today, but concerned it gets moved on just another big pop tomorrow. Its right at the 50-day MA, and it has not been broken since March. One more day like this, though, may pop it over it…any thoughts?


  69. Brokerage / MrM – We are going to get desperate soon with these brokerage firms. I checked out IB yesterday and compared to TOS, the software sucks! But they do have nice rates… I guess you could use the TOS software to check trades and make them on IB. But they got to do something, it’s horrible (and slow). TradeKing will supposedly have new software soon but we can’t preview it yet. They also have some very good rates on options trading. But no futures… I checked also OptionxXpress and OptionHouse, but once again, not overwhelmed by the software experience! Good fees at OptionHouse, but once again, no futures… Looks like TOS for now, for better or for worse! 


  70.  Phil, Pharm or Savi,

    In regards to Vegas, what is the deposit for? I still may attend.
     
    Thanks


  71. Good morning,

    On Friday I said "The SPY daily bar opened and closed below its BB bottom; 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), yesterday’s low will at least be revisited eventually." We are between trend support and resistance, now at IWM 63.50ish and 66.33.

    Well, they gapped us over 66.33 AND the support trend line from the August lows (now at 67.53)

    If you follow on SPX, resistance is at every 10 points from 1190 to 1230;1282 is the final target,imho

    IWM   66.33,  66.56,  67.04,  67.47,  68.10,  68.69,  69.15,  69.53,  69.95,  70.14,  70.64,  70.98,  71.33,  71.87,  and  72.09

    Good hunting !!


  72. CMG chart looks like it’s thinking about pulling a NFLX, so am looking at a DEC put spread.


  73. OXPS fixed their login problem but you still can’t trade, the Positions tab shows "We’re sorry, but that request cannot be completed."  Jeepers OXPS, I’m a software architect, I’ll trade you a code review for free lifetime commissions!


  74. 14real--deposit for food and equipment at Cafe Moda


  75. Decline in Richmond activity eases.
    Texas manufacturing conditions worsen.
    Existing home prices linger along bottom.
    Consumer confidence remains in the doldrums.
    Weekly chain-store sales soften


  76. Watch the Euro.. weak hands under 1.36


  77. aapl block sales


  78. While regional economic activity was mixed, home prices stabilized, and consumer confidence was little changed
    ndr


  79. stjeanluc/TradeKing
     
    Yes, they say they are rolling out the new software and eventually all customers will have it. It looks and sounds good from what they are saying, and the rates are good. Customer service is VERY helpful and broker assisted trades cost the same as online trades. Here’s a link to the screenshot and promo:
     
    https://investor.tradeking.com/labs/live


  80. WGO/David – I don’t like them but they don’t seem overpriced to me.  Actually they may do well because people are buying more mobile homes as homes these days.  If they were smart, they would start marketing them as homes in the first place or at least create a new company that rebrands their mobile product.  

    CMG/Mr. M – It’s all about their new Chop House idea.  If that puts up good numbers and they announce a roll-out plan, they can get a nice kick (which would be a good short) but if they have any kind of disappointment in their pilot (DC), they could drop 10% very fast.  Also, last Q was not a good one for food or labor costs for them (immigration issues) so they do make a fun short with the caveat that you have to be prepared for good spin from Chop House.  

    Earnings are on the 20th, the day before expirations so I like the volatility crush of selling 5 $340 calls for $9 ($4,500) and buying 3 Dec $350s for $15 ($4,500) for a free spread.  No matter what CMG does, $4,500 of premium will be gone from the callers on Oct 21st, then the Nov whatevers can be sold, hopefully for another $4,500 in premium or perhaps we can just pull the trade so let’s do one set in the $25KP and see how it goes. 

    Trade/Mr. M – Clearly they won’t do that as they don’t seem to spend that much on software development.  8)  

    Dollar behaving well and staying under 78.25 but does look like it would like to go higher.  We need it to go lower to really get something going.  


  81.  IB as a broker – as stjeanluc 
    says, the software is terrible with IB, but the execution is very good, the rates are low, and the platform is stable and accessible.  I was able to get quotes and make trades during "freak out" times.  I do track most of my trades on the paper trading function of TOS, which makes for double entries, but I have been willing to do the work for the very low trade costs.  Just my two cents after using IB for about 2 years.


  82.  
    TRENDS TO TAKE NOTE OF
     

    No asset class is up over 10% in the last one year.

    International stocks are down about 13% over the last one year, and they are down around 20% this year alone.

    The US is up 1.4% over the last one year, but is down 9.5% year-to-date.

    Latin America and Emerging Europe are down over 27% this year.

    It feels good in Jamaica right now, as their stock market is up over 23% this year.

    Energy was down over 11% last week, and Basic Materials were down around 12%.  This places Energy down about 13% for the year, with Basic Materials down around 20% in 2011.

     


  83. BBC trader rogue or rogue trader says GS rules the world
     
    His name is Alessio Rastani and he has a Web site where he elaborates on his opinions. He is certainly getting plenty of attention now:
    http://www.leadingtrader.com/


  84. There’s an old saying on Wall Street… "Sell on Rosh Hashanah, buy on Yom Kippur."
     
    This is similar to the "sell in May and go away" saying that highlights the seasonal weakness during that time period.
     
    Tomorrow is Rosh Hashanah.  Friday, October 7 is Yom Kippur. 
     


  85.  cnbc just a segment with people talking about the cdo squared eurozone is proposing and i think its dawning on people what a ridiculous disaster it would eventually be.


  86. Phil, Rain/ Dreamliner
    The plane has probably done numerous such trips (maybe not necessarily to Japan, but would not surprise me if it had already been there more than once), in more complex and challenging conditions before already and the public is only now being told.
    Certification delays are one thing, but those guys are no dummies…
    Quite possibly safer than any other plane as its been more scrutinized.
    Just my $0.02


  87. Brokers- OptionsXpress was acquired by Schwab. They may be experiencing changes soon..


  88. cdo squared/SIVs: ah, shades of ’08


  89. Phil/AAPL
    Any idea why they are lagging? all because of some truth to yesterday’s report?


  90. 12:00 PM On the hour: Dow +2.38%. 10-yr -0.44%. Euro +0.53%vs. dollar. Crude +4.53% to $83.88. Gold +3.86% to $1654.25.

    1:00 PM On the hour: Dow +2.48%. 10-yr -0.48%. Euro +0.51% vs. dollar. Crude +4.39% to $83.77. Gold +4.02% to $1656.65.

    Bidders weigh some competing trends – Operation Twist and the Fed’s low-rates pledge – as the Treasury sells $35B in two-year notes at 0.249% (.pdf). Bid-to-cover ratio of 3.76, vs. a recent average of 3.28; indirect bidders take 36.8%, vs. a recent 28.2%. Direct bidders take 12.2%, vs. a recent 17.1%.

    European shares close at the highs of the session even as denials mount over yesterday’s reported €TARP. While the leak seems unlikely to be true, the greater story is that EU officials have seen enough disintegration in financial markets, and are at least talking bazooka. Stoxx 50 +5%, Germany +5%, France +5.4%.

    The man who launched a massive worldwide rally in stocks with his report of a €TARP yesterday, CNBC’s Steve Liesman takes to the air to say nothing has been resolved or even officially proposed. "If the market is going up on my rumor, it is ahead of itself… Europe is either in for €2T, or the euro is done."

    Schaeuble strikes again:  At a speech in Berlin, German finmin Schaeuble throws more cold water on the latest rumors, saying increasing the EFSF is a silly idea and would cause some EU states to lose their AAA rating. As for the eager-to-add-2-cents Tim Geithner: "It’s always (far) easier to give advice to others than to decide for yourself."

    At least someone is reading PSW:   Mark Hulbert says it’s time to stop blaming Greece for every ill that has hit investments. It doesn’t add up – last week’s stock losses knocked $865B off combined market cap, while Greece’s total sovereign debt totals $393B, little of it owed to U.S. banks – and it’s "intellectual laziness." On most days, he says, we don’t really know why the market does quite what it does. 

    "China is now ‘The World’s Most Crowded Short’ and is on the verge of a massive short squeeze," SocGen says. Short volume stands at 9% of total, a "2.2x 13-year standard deviation event" likely fueled by hedge funds who’ve been restricted from shorting most of Europe. "Do you think the PBOC would maintain tightness if its financial system was imploding?" it asks. ETFs: FXIGXCBGJ

    Copper futures bounce 5%, on the turnaround in attitude over Europe: "A few days ago, we were really worried that… officials [were] not willing to do anything" to prop up the economy, a top commodity strategist says. "Now there’s optimism that they are willing to do something." Copper was also due for a bounce after falling 22% this month through Monday. FCX +5.1%.

    The Bank of Spain will inject several billion euros and take over 3 more of the country’s troubled savings banks this week, and is expected to receive offers to sell another (CAM). The central bank is offering a sweet deal for CAM – covering 80% of losses up to €2.8B. Among the interested buyers: Banco Santander {STD} and BBVA.

    Dougherty is reiterating a Buy and $40 PT on Tesla Motors (TSLA +2.9%) after meeting with management, claiming it’s now more confident about Tesla’s yield for its Model X crossover, and believing its Model S sedan will be a major catalyst for shares. Dougherty also sees Tesla’s revenue rising from $532M in FY12 to $3.3B in FY15.

    When in doubt – CHINA!  Caterpillar (CAT +3.6%) stays on script and remains positive about the prospects it sees in China. "We are optimistic about where our business is going in China over the next five years," notes a company exec. China is more than just a little important to CAT, as it accounts for over 50% of the world’s demand for construction equipment.

    A new study suggests that the impact of trading with China could be worse for the U.S. economy than previously thought. The traditional view that trade is ultimately good for the economy isn’t the problem; it’s the speed at which China has surged as an exporter, overwhelming the normal process of adaptation. Also: states losing the most jobs to China.

    Or IPhone!  Apple (AAPL) announces it will be hosting an iPhone-related event on October 4. The event is widely expected to feature the introduction of the iPhone 5, and perhaps also a less costly iPhone for prepaid markets.

    Three lunchtime reads:
    1) Why you should be a growth investor – and a value investor
    2) Unrelenting downturn is redrawing America’s economic map
    3) Hussman: Downturn not over by a long shot


  91. CMG’s ShopHOUSE is a mile from where I work.  I am gonna head out there and try it.  Be back in about an hour to report.


  92. Greek tax vote passes


  93. Maya / BA — Agreed but it only takes one of those 20,000 SAM’s to take it down. I don’t know how many executives they have but I know in my past life at a big corp, when we were moving time critical IP, we sent it along with multiple people on multiple routes to be safe.


  94. WELL ONE GOOD THING THAT CAME OUT OF THAT REPORT WAS THAT IT WOULD COST 500 MILLION TO INSTALL THOSE LASER DEVICES NOT 6 BILLION …LITTLE MATH ERROR BY BRIAN ROSS


  95. Rainman/BA
    I would love to flying that baby on this trip!


  96. Phil & everyone else-  How do you feel about shorting GMCR at $109-110 (by selling premium of course)?  Thanks in advance.


  97. Apparently, the new Windows Phone OS is pretty good:
    http://www.engadget.com/2011/09/27/windows-phone-7-5-mango-review
    That might help Nokia! 


  98. GSucks/SellPremium – awesome handle. You show show up everyday just to remind us to sell premium!


  99. IB / Rev – Thanks for the input. That was my idea as well, but I really hate to have to keep 2 software just to track my trades! On the bright side of IB, I can automate it from my charting software… 


  100. Swiss doing a great job of nosing themselves back to $1.22 so we have to assume they are keeping Euro up at $1.36 and that’s keeping the Dollar down at 78.22.  BOJ, has only 76.58 Yen to the Dollar so they want the Dollar UP, which explains the silly zone the Dollar is trapped in as both banks trade against each other.  As $1.22 is goal for EUR/CHF, the Swill will likely stop soon and that will drop the Euro and pop the Dollar and that’s not good for our close so be careful.  

    Missiles/Angel – Well that sucks.  I’m amazed they haven’t used them to down planes yet.  Sadly, as I noted in the original post on she Long Put List (above), both PCLN and WYNN are good terrorism shorts as they are so travel dependent.  

    Dreamliner/Maya – Oh I have not doubt it’s safe.  I’m long BA for the rest of the decade but I still prefer not to fly new plane designs until they’ve had a year of use as you never know.    It’s a shame though as the new jets are gorgeous but you know that within 6 months the airlines will rip out all the comfortable seats and jam in another 20 or 30% more chairs to torture people with and it will become just as annoying as every other plane. 

    AAPL/Maya – They had a really good pop and now there is uncertainty ahead of earnings.  It’s good if they don’t fly as they are less likely to disappoint on the event.  Anyway, up 10% for the month while the markets are down doesn’t really fit my description of "lagging."  

    Good man Craig – thanks for getting out there for us.  

    Warnigs/Angel – It was SUPPOSED to be risky.  The idea was to fund risky ventures that has a chance of creating green jobs for companies that were having trouble getting bank loans.  Overall, the program was a huge success – the fact that a big deal is being made of the fact that they didn’t bat 1,000 is juvenile at best.  42 projects were funded with $40Bn and 66,000 jobs were created (and yes, that’s $600,000 per job but if those jobs last 10 years, it’s $60,000 per jobs and that doesn’t count the supply chain or re-spending through the economy or tax revenues generated or people off unemployment).  It also doesn’t count the 3 million homes that will be powered with renewable energy or the 19 Million metric tons of carbon dioxide that will not be put into the atmosphere each year (as good at taking 3.5M cars off the road).  

    A normal country would celebrate the success and look to create more programs like this one but this nation has an opposition party and their Ditto-head followers that feed only off negativity and would rather burn any chance of actually doing something to improve this country than allow the Administration to proceed with much-needed programs so they stage witch hunts and manipulate their followers into spreading this BS so that nothing is done in this country that doesn’t benefit the established business interests.  


  101. Money coming out of bonds again.  Setting up for another wave of buying.  

    GMCR/Sell – Not with the market going up.  They are a Momo favorite and those things can really take off if we break up regardless of merit.  


  102. its typical of our political class not to involve any measure of resposnsible dd to get soemthing done that was my point…why is larry s so mad he’s the leak on most this stuff


  103. Can someone hip check the $? Seems to be stuck…


  104. Phil Your CMG play 12.54 Just got in the Oct 340c is 10.20 but the dec 350c is 17.60 am I reading something wrong ?


  105. Nobu – we are on for 20.  They have a vegitarian menu for those that do not want meat, and it is prepared/served independent of any other meats.


  106. Vegas Wifi    
     
    I really hope that Cafe Moda has some amazing Wifi.  With 22 people using trading software, that will test even the best wireless routers.  


  107. Fisher the hawk basically took an axe to the $ today.


  108.  Well, I hate to be the bearer of bad news but CMG’s ShopHouse if really good and cheap. 
     
    They are set up just like a chipotle. 
    1.  Choose Bowl or Bahn Mi sandwhich. (I chose a bowl so I will recount that)
    2.  Add white rice, fried rice, or noodles.
    3.  Add chicken, beef, tofu, or meatballs.
    4.  Add Broccoli or Sauteed Green Beans
    5. Add mild curry, spicy curry, or Tamarind Vinagrette
    6. Cant remember the choices but I went with Papaya Slaw.
     
    Then they shoo you out the door.  It took me about 10 minutes to get through the line and there were 50ish people in front of me.  Also, its damn good.  Which is damn bad for my CMG short!!  Any other questions and I will be happy to answer them.


  109. Phil:
    Is this a good time to exit our VIX trade in 25kp?
    Thanks


  110. Vegas / WiFi — More than one access point might be in order.


  111. lv—will wifi be a problem for 22—-
    Phil/attendees--should we close enrollment now?


  112. Thanks for the $ bump BTW :)


  113. Savi/Pharm – I’m going to try to make the Sunday festivities. 


  114. Phil/AAPL/ ‘lagging’
    I meant its lagging today!
    Hedge funds manipulation?
    The iphone 5 apparently has voice technolgy, used for texting and search and rumor has it that it may be a game changer as far as utility, ie may replace mouse?
    So, are "they" trying to keep the stock ‘down’ for a few days?
    Nah, I am too cynical……


  115. sellpremium—did you send in a deposit?


  116. Maya / voice — Android has had voice for quite some time. It won’t replace the mouse (touch screen) but it replaces the soft keyboard often and makes for hands free operation while driving.


  117. Charting software    do you guys have a recomendation for a charting package that won’t force me to learn a programing language      Currently using the OptionsHouse charts which only alow 10 streaming at one time    can’t keep up with open positions w/o opening and closing     recepie for a misshap


  118. Savi – Have not.  Where should I send it?


  119. For what it’s worth, which should be practically nothing since none of you know me, I’ve seen lots of SPY option trades suggesting that tomorrow will be a down day and the target pin strike on Friday is 116.  This is consistent with the information about the Swiss currency trades.


  120. I’m out of TNA on the failure of 69.15; I suspect we will not fall below 68.10 !!


  121. CMG/Yodi – Well the prices do change you know….  I see $16.80 as the last sale on the Dec $350s with a bid/ask of $16.20/16.90 so spending an extra dollar would not make much sense.  That would be $5,040 for 3 and if you sold 5 of the Oct $340s for $10.20 ($5,100) then it nets out better than even so who cares what the prices are if the net hits your target?

    Nobu/Pharm – Cool!  Actually some of their veggie/mushroom dishes are my favorites but the cooked fish and sushi are totally amazing.  

    Wifi/Burr – I don’t think the idea is for 22 people to be on at once, that’s why we’re doing projectors.

    ShopHouse/Craig – Well that’s the end of that then, there are bigger fish to fry than CMG so we should move on because if their one store has good numbers, people will extrapolate some insane stuff for them going forward.  THEN we can look again but too dangerous if the new stuff is good (and we assume making money).   

    Dollar testing 78 line, briefly at 77.93 so we are trying to rally.  

    1:16 PM Treasurys hold onto today’s losses after a two-year note auction comes in just ahead of last month’s record low yield: the 30-year yield +0.11 to 3.10%; 10-year +0.09 to 1.99%; five-year +0.05 to 0.95%; two-year +0.01 to 0.239%.

    2:00 PM On the hour: Dow +2.84%. 10-yr -0.56%. Euro +0.75% vs. dollar. Crude +4.69% to $84. Gold +3.49% to $1648.35.

    Financial stocks (XLF +2.6%pick up where they left offyesterday, up ~8% since hitting multiyear lows on Thursday, encouraged by hopes that European officials will provide capital to institutions exposed to a Greek default. Also likely helping is a rotation by fund managers into the sector after ranking among the biggest underperformers in Q3. MS +4.8%C +4%JPM +2.4%.

    Atlanta Fed President Dennis Lockhart expects Operation Twist will have only a “modest” positive impact and won’t result in "large gains" because the normal channels though which Fed interest rate cuts affect the economy are blocked. He sees "a period of greater risk and uncertainty," and signals it’s possible the Fed could take additional action.

     "Jujitsu on the yield curve" and "Likely to prove ineffective" is how Dallas Fed chief Fisher describes Operation Twist in an explanation of his dissent last week. He relates his business contacts giving him an "earful" before the meeting, saying the move would scare consumers and hurt banks and pension funds. - Notice it’s Dallas that gave us the poor Fed report this week as well

    As expected, Greece’s Parliament passes a law allowing new property taxes. The tax will be assessed on citizens’ electricity bills, thus making them subject to losing utility service if left unpaid. However, workers at the state electric company have said they would not enforce such action.

    Spain’s budget deficit widens to 2.8% through August, but remains 12% lower than it was at this time last year. This is expected to deteriorate in Q4, but the government still expects to stay within its full year target of a deficit/GDP ratio of 6%. - Much better than our 12%! 

    The U.S. is lowering the size of mortgage loan it will guarantee, which will result in higher costs and bigger down payments for many home buyers. Real estate pros are bracing for a hard hit as buyers learn they may no longer be able to afford the higher-priced homes they had been considering. "This is just going to kill us," says the president of the California Assn. of Realtors.

    Yay!  IBM and Intel (INTC +2.6%) plan to invest $4.4B over 5 years to create a nanotech R&D hub in New York, according to NY Governor Cuomo – whose state will add $400M to the kitty in support. The project will focus on creating chips of a length of one nanometer – one twenty-five millionth of an inch – to power systems from supercomputers to smartphones.

    Shipping stocks soar after global demand for dry-bulk shipping picks up and pushes vessel rates higher. Cantor Fitzgerald’s shipping analyst chips in, saying a good tape and a strong Baltic Cape Index are supporting the rally. Gainers: EXM +12.4%DRYS+4.2%GNK +6.8%PRGN +8%.

    Southern Company (SO +0.1%) closes in on becoming the first company in 30+ years to build a nuclear power plant in the U.S, as the NRC holds final hearings in Washington. That the stakes are high for the company (and the industry) is not lost on the company’s CEO: "This is the first, best shot for the nuclear renaissance in America."

    Cisco’s (CSCO) security hardware chief doesn’t see the IT world’s "bring your own device" trend letting up, as employee satisfaction and convenience trump the concerns of IT administrators. In practice, this trend is proving a boon for Apple (AAPL), asemployees opt to use Macs, iPhones, and iPads over "approved"MSFT and [[RIMM] solutions.

    Apple (AAPL +0.8%) continues underperforming following its expected iPhone announcement, perhaps due to ongoing fears aboutiPad shipment cuts. However, Piper and UBS are once more issuing bullish notes, believing the iPhone 5 will see strong pent-up demand. Piper expects Verizon (VZ) customers to be especially eager to buy the device.

    Cool, now our teenagers can hunt for terrorists:   File under not quite on the front lines: Engineers and researchers at Boeing (BA +2.2%) and MIT team up to build an iPhone app that allows users to fly a drone aircraft from 3K miles away (video), serving as a possible precursor for military uses. Is app-writing now a Defense Dept. outlay?


  122. Also, I have a trend line here (69.00); so we could Stick into the close from here, but if we fail here, 68.50-70 should hold with 68.10 a MUST HOLD for Lloyd today !!


  123. sellpremium—send to my pay pal acct—-savi_ted@hotmail.com — amt $150 non-refundable


  124. Craig / Shophouse – Yeah I read a review (I think on the Washington Post).  They said the lines there have been getting longer and longer every day since it opened.  Not the case for all restaurants.  They certainly got a good buzz going in their favor.


  125. sampuran / charting – Are you wanting to program or not?  Or are you just looking to make charts?  TOS is good for charts in my opinion, but my only experience before them was with Etrade a couple of years ago.  When I made the move to TOS, it was like going from the minor to the major leagues.


  126. VXX/$25KP, Etrad – I think the VIX should continue trending lower.  While a bit disappointing so far, we are on track with an hour to the close and we would be thrilled with our progress if Europe hadn’t done so well today.  The $52 short calls are still .20 with VXX at $45 and the $51/48 bear spread is $2.40 so net $2.20 out of $3 from a net .30 entry means we’re up 633% with 900% max so we have 270% more to gain in 3 days – it’s not something we need to throw away unless we get nervous and an up 2.5% day is not a reason to be nervous.   This is a very cool trade for the $25KP that can net $1,500 off a $30 cash investment from last Thursday!  Keep in mind we’re playing aggressive with a very small pecentage of the portfolio at risk on this trade – if you have serious money on it – of course take the money and run with 2/3 of max gained already or, when in doubt – sell half!  

    WiFi/Savi – I didn’t expect to see 22 people on-line at once.  LV has to let us know what he thinks they have.  

    I5/Maya – I already use Dragon a lot and that kicks ass and if they have integrated it better into the text and mail functions then that’s my main wish for a better IPhone taken care of (2nd would be a better video camera).  AAPL is always massively manipulated into earnings – that’s why I keep telling people that the vertical trades into earnings are all or nothing.  You have to be a true believer or stay away.  

    Charting/Sampur – TOS lets you display 2 tabs (that I know of) with 12 charts on each tab, maybe more but I usually just have 9.  You can sign up for paper trading and get 90% of their functionality.   Frankly, if you have more positions than you can keep track of, the real solution is to have less positions, not more charts!  

    SPY/Myshort – We’ve been getting these reports 3 days in a row and it may (again) be people covering first ahead of buys.  Still, I am disappointed we didn’t make 1,200 and the Dollar is holding 78 so, without Mr. Stick showing up in the next 60 mins – we will have to get back to neutral as well.  


  127.  Phil
    I am thinking about a bear put spread on the NDX
    Buy Oct 2600 Put
    Sell Oct 2400 Put 
    for a net $180 debit on the $200 spread witha higher theta decay on the lower strike.
    Its an alternative to selling naked 2400 Calls.
    The idea is that this is a play on the NDX not breaking to new highs. Its only briefly gone over 2400 in the past couple of years.
    TIA for your thoughts.


  128. Phil,
    Are you watching TLT to monitor movt of funds into/out of bonds (below)?
    Thanks
     
    September 27th, 2011 at 1:59 pm 

    Money coming out of bonds again.  Setting up for another wave of buying. 


  129. Game on for the DIA puts but now we can pick up the $112 puts for $1.10 – 10 in the $25KP with a stop at .90 in case we dive into the close.  


  130. EDZ got nicely crushed on the China move today and those are always fun to play, let’s plan on weekend protection with 10 of the Oct $28/34 bull call spread at $1.10, selling FCX Oct $31 puts for .91 in the $25KP.  


  131. Phil/Rainman
    Thanks for the respective clarifications.
    I wonder why they are making a big deal of the features on "Seeking Alpha", then….especially if Android already has these features.
    Oh well…will follow your advice and remain a true believer, until proven otherwise or until stock dropsdown to below my tolerance level.


  132. Merideth Whitney takes down G


  133. Are we blaming the drop on the dollar, animal spirits or something else?


  134. ^^^^^
    GS and MS earning


  135. market gakin


  136. Say what angel?  What’s a "market gakin?


  137. whatever happens here real objective is to use any capitulatory decline as an opportunity to "back up the truck" for a year end rally.


  138. Buying TNA here (68.28) for the stick off the ascending support trend line of the August lows !!


  139. So much for THAT !!


  140. xlf giving way too  much back here


  141. Must be NEWS 2/3 short now !! (on the failure of 68.10)


  142. this market trades like a friggin thai farmer’s market!


  143. Oh Ben ??


  144. NDX/Oncmed – Obviously it’s very unlikely you will get burned on that so you get a $2,000 credit and risk an $18,000 loss on a major strange event that whips the Nas up 15% in 23 days.  The only problem is we just has a 20% move in less than 3 weeks so you can’t even call it a black swan.  Can you make this trade 10 times without getting burned once?   Not in the past few years you couldn’t have so you are taking a massive risk regardless of how "safe" you think it is.  That being said, if you can afford the risk and plan to do something like that hundreds of times rather than just dozens or until it bites you once or twice in the ass – then statistically it makes perfect sense.  

    Funds/8800 – I have some bond buddies who text me when there’s big action.  They usually know what they are talking about.  For my own observations, I watch TLT and the Dollar to confirm.  

    Drop/JC – Totally the Dollar – it shot up over 78.25 and we know that stings.  Also Whitney was no help – same BS as usual when they want to halt a rally.  Next we hear from Roubin, Gross and El-Erian.  

    XLF very sad, will have to get bearish again if this continues tomorrow.  


  145. bac blocker sales


  146.  JRW III,
    How much do you let the trade go against you before you exit? 
     
    Thanks


  147. Phil / XLF Very Sad – Boy you sure sound different about a market tumble compared to that guy they had on the BBC.  I’d love to see you two being interviewed together!  LOL


  148. SPY calendars….WHEEEEEEEEE……time to take the money and run on the 117s…….(if you did not earlier)!


  149. XLF / Phil – Not good indeed as we are giving back all the FAS Money gains from this morning!  


  150.  Phil, 
    I only enter this trade when the NDX starts approaching 2400. So this is an opportunistic entry based  on current levels, historic resistance at 2400, and  the fact that we have had a 20% move in the past 3 weeks. Perfect storm type of stuff
    I dont intend to repeat this unless the stars align again. 
    TIA


  151. l4real / Losses
     

    NOT a lot !!  8-)

    (July 8th, 2010) JRW: No stops, and don’t own the position, if you’re going negative, and all your indicators would be putting you in the opposite ETF, you’re wrong, so dump it.


  152. 67.47 or better !!


  153. RUG PULLER ALERT


  154. El-Erian, as expected.  

    And wheeeeeeeeeeeeeeee!  

    3:00 PM On the hour: Dow +2.57%. 10-yr -0.58%. Euro +0.78% vs. dollar. Crude +5.36% to $84.54. Gold +3.51% to $1648.65.

    CNBC reports Meredith Whitney slashing her Q3 EPS estimate for Goldman Sachs (GS) to $0.31 from $3.39 and consensus of $1.13. She lowers her FY12 estimate to $7.85 from $15.30 and against consensus of $15.09. Just last week Barclays said it expects Goldman to report a loss in Q3. 

    More Whitney: She cuts her Q3 estimate for Morgan Stanley (MS) to $0.28 from $0.53 and consensus $0.37. She brings down FY12 to $2.14 from $2.50 and against consensus of $2.48. Again, Barclays remains the lowball, seeing a Q3 of just $0.12. - Keep in mind Whitney has been wrong 66% of the time since she started her group!  

    The FT reports 7 Eu states are demanding private creditors take a bigger haircut on their Greek holdings than was agreed to on July 21, as the last 2 months have made clear the country’s funding needs go well beyond the €172B forecast this summer. 

    China may allow local governments to issue their own bondsas the country takes steps to model its municipal finances after the U.S. Unable to do this previously, local authorities have relied on land sales and setting up so-called LGFVs to raise money – both of which may have landed municipalities in deep debt trouble.

    Macau casino operator Melco Crown Entertainment (MPEL) is up 8.4%. Shares could be getting a boost from a Deutsche Bank report claiming Macau’s gaming industry is posting a strong September. Other casino operators with Macau exposure are also performing well: LVS +4.4%WYNN +4%MGM +3.2%.

    Maybe we’ll get another chance to short them:  LinkedIn (LNKD +0.7%), fresh off a PR coup after President Obama dropped by a visit, adds another feather to its cap with itsselection to Morgan Stanley’s top 25 growth stock list. Shares still need to climb 16% to recapture their day-one close following the company’s IPO.


  155. Hell  Phil you got the nose for DIA  today great



  156. Tumbles/JC – Oh and I just ruined it by saying "Wheeee".  While we can enjoy the move if we call it right, that doesn’t mean we’re going to dance a jig as the global markets collapse – that’s that sociopathic behavior they say traders exhibit! 

    FAS/StJ – I’m not changing my stance because Meredith Whitney told me to.  

    Good discipline Oncmed!  

    DIA/Yodi – Didn’t hold our premise, so we switch on a negative signal from the Dollar – that’s all it is…


  157. el erian in sanskrit it means he who has ravished the light and truth… (lux et veritas)


  158. "El-Erian!!!"  "Whitney!!!   "Khan!!!"
     
    They all go together.


  159. Did I mention that according to the VIY indicator the top (this small spike on the right side) should be somewhere between Sept 23rd and 30th. ;-) Maybe today? We’ll see. Thrilling.


  160. angel, don’t think his name is Sanskrit…El Erian sounds more middle eastern, no?


  161. Regarding TradeKing: 
    I was using TradeKing about two years ago.  At the time, they had a horrible margin requirement.  For Reg-T accounts, they required minimum $20,000 margin for short puts or short calls, regardless of how many contracts or strike you sold.  That was why I switch out of TradeKing.
    Have they changed their policy?  Do they now have Portfolio Margin?


  162. Went short on ES at 1187.75 with a stop at 1190.25 (uff…)


  163. Man JRW, the market ain’t going your way!
     
    Send the bill to Meredith and Mohammed, El-Erian, that is.


  164. A little late in the day for me; taking profit here (IWM 67.28) !!


  165. jcaesar,

    Made a quick $1.60 on the drop !!


  166. Korea – a bit on the economy in South Korea, for those interested:
    http://www.icontact-archive.com/fK9KaP_Er1AZBFr1vEt6rIi-1qPq695G?w=2


  167. They are really trying to keep this thing up. 


  168. FAS Money – Jan $15 calls (now $1.60) can be rolled to the $12 calls ($2.70) for $1.10 and Jan $12 puts ($3) can be rolled to April  $11 puts ($3.25) for .25 so those are the adjustments on this sell-off.  

    Oops, if too late – remind me tomorrow and we can look again.  


  169. DIA $112 puts in $25KP out at $1.65, of course (I hope I don’t have to say those things with a 50% gain in an hour!).  


  170. JRW – Well if you caught that big drop, you did well indeed.


  171. Ravished/Angel – Really?  That’s funny.  

    That was an interesting day.  On the whole, we gave up half our gains but all of the day gains and our only gains were the pre-market pump.  

    Dollar finished right at 78.25 and that’s where it was at the open and now the markets are back to where they were at the open – this is not complicated folks…  


  172. jcaesar / Drop

    I only caught 1/2; I bought TZA when IWM failed 68.10, but that was almost as much as riding TNA most of the day !!


  173. Regarding Vegas,  internet service has been upgraded to 50mb at Cafe Moda, so 20 people shouldn’t be a problem.  I’ve been told the wireless router will handle up to 50 sessions, but I will look into that.  Otherwise we will use ethernet cables.


  174. Great, thanks LV!  

    At the close: Dow +1.32% to 11190. S&P +1.03% to 1175. Nasdaq +0.87% to 2254.
    Treasurys: 30-year -1.17%. 10-yr -0.41%. 5-yr +0.436%.
    Commodities: Crude +4.13% to $83.55. Gold +3.58% to $1649.75.
    Currencies: Euro +0.44% vs. dollar. Yen +0.56%. Pound -0.42%.

    Market recap: In a jumpy market pulled by the latest game-changer headline, stocks finished up but gave back half of earlier gains following reports of a split in the eurozone over terms of the next Greece bailout. Treasury prices continued their slide, sending 10-year yields back to 2%. It was risk-on in commodities, as goldand oil rose sharply. NYSE gainers led losers three to one.

    Hewlett-Packard (HPQ +4.4%) takes an unfamiliar spot at the top of Dow after getting some love from Bernstein’s Toni Sacconaghi, who says H-P is the first tech stock with a $5B-plus market cap trading at less than 5.5x earnings in the last 20 years. H-P is poised to increase EPS by 6% this year, he reminds, and remains dominant in x86 servers, printers and personal computers.

    Paychex (PAYX): FQ1 EPS of $0.41 beats by $0.03. Revenue of $563M (+9% Y/Y) beats by $9M. Shares +0.3% AH. (PR)

    Accenture (ACN): FQ4 EPS of $0.91 beats by $0.02. Revenue of $7.2B (+23% Y/Y) beats by $0.7B. Shares +1.9% AH. (PR)

    Jabil Circuit (JBL): FQ4 EPS of $0.62 beats by $0.07. Revenue of $4.28B (+10% Y/Y) beats by $90M. Shares +3.9% AH. (PR)


  175.  Phil,
     
    Excellent call with the IWM BCS as the market gapped up and the DXD BCS for when the dow began failing and broke below 11,300!
    I’m learning to master JRW’S system, but I see the value in using the long and short bull call spreads to work the longer timeframes greater than one minute and to salvage the losing trade by converting it into insurance or outright ownership of the underlying when puts are sold against them. 
    You have incredible knowledge of option strategies and the markets with a knack for knowing when and how to apply it!
    Keep em coming dude!


  176. Ford doesn’t even want to think about busting through the 20 DMA. 
     
    Very weak


  177. OK, now that it is after hours, NOBU is going to be a set menu for that many people, unless we do two reservations of 10 under different names…..


  178. My take on the market, and I may be very wrong, but I see them moving this up again to suck in retail and then yanking the market out.  They need retail to sell to, and I still see JRW’s chart as the one to guide us, so IF you are long OR Short, just be prepared to cover one way our another.  Otherwise, go long on puts to protect yourself and hold on to the handle bars, cause it is going to be a wild ride, wild west show, and the holes that are left are going to make this swiss cheese dam fail……


  179. Check out the performance of our green plays from the Long Put List (11:37):  BIDU flat, CAT down, CMG down, DECK down, GOOG down, IBM flat (INTC deal was good news), ISRG flat, MA flat, QQQ down and V down – so it’s like shooting fish in a barrel simply rotating to the underperformers in the group.  


  180. Nobu/Pharm – Set menu not a good idea – too much weird food for most people’s taste plus the prices can get out of control.  


  181. FAS Money / Phil – Too late indeed. Tomorrow is another day with another set of variables! 


  182.  Phil,
     
    I LOVE that CMG diagonal trade.  Seems a very safe way to sell premium.  How different is that risk wise to a covered call?


  183. Apple might be getting into too many patent wars…
    http://9to5mac.com/2011/09/26/formosa-plastics-group-the-beast-apple-should-have-never-awoken/
    Not sure how that’s going to end! 


  184.  is there a link to the Vegas info. So far I have the Nobu on the radar but then there is some discussion today around Sunday events and I can’t seem to figure that out….
     
    I could keep track of the email/phone of the contact list and run point on fielding calls/emails if there is not already such an activity
     
    BDC


  185. Nobu – That’s what I figured, so we need 2 tables of 10……I will book one, someone else must book the other…….OPEN has a booking feature on their website!  (FWIW more than 12 and it gets kicked to the group that I dealt with….)


  186. BDC – shoot me an email….I have most of the people captured….I think.  pharmboy123 at gmail


  187. OK, one table booked….I think craigz booked the other, that should take care of dinner.  I am going to send an email to Savi, who should have the contact info, I hope, on the names that these are booked under.  I also have an itinerary set up, but not finalized, as I need lv’s info for us to meet on Sunday.  As for poker, I have 15 or so, and I am setting that up at Cesaers.


  188. When we calculate EMA/SMA and others for graphs – what do we use as input? MIDPOINT trades? Or do we weigh it somehow?


  189.  I got a second table booked.  However, we could only get a second table together for 8 of us.


  190.  By the way, the most current info is updated as soon as I get it HERE.  There is a message function at the bottom of the page so you can ask questions.  I will answer the questions as soon as possible.  I feel we need to move the discussion off the main thread of PSW or next week it will degenerate into PSW Vegas instead of paying attention to the markets.  Also, I dont mind taking the Vegas question answering workload off of Phil since I need to him to make me a couple grand next week to pay for the trip ;)


  191. Nice site by Craigzooka……all should sign in there and give the final head count for dinner AND poker.  Thx.



  192. craigz—thanks for helping out and great idea with the site


  193. Deos anybody know the link to JRW III system?


  194. rrahbar,

    Here !!


  195.  Observation and question:  Q1 and Q2 earnings were aided by a falling US$, we lost something like 10% of the USD purchasing power in the first half of the year.  Q3 may have a bit of a surprise in store, as August/September saw the USD race back up to the high 70s.  Does that create an equal headwind to the previous tailwind, and is the market pricing that in?  Also, the dollar ramp was in the second half of the quarter, so may not significantly impact full Q earnings, but things do not bode so well for Q4, as continued dollar strength for an entire quarter would certainly put a damper on earnings, right?
     
    Not saying we go down, just that we may get some negative surprises if this is the case.  And from here, with the dollar in the 78-79 range, do we look to break up through 80 if Europe falls apart.


  196. JRW III, 
    Thanks,  keep up the good work.


  197.  From FT – the apparent cause of the days end reversal:
    Split opens over Greek bail-out terms

    A split has opened in the eurozone over the terms of Greece’s second €109bn bail-out with as many as seven of the bloc’s 17 members arguing for private creditors to swallow a bigger writedown on their Greek bond holdings, according to senior European officials.

    The divisions have emerged amid mounting concerns that Athens’ funding needs are much bigger than estimated just two months ago. They threaten to unpick apainfully negotiated deal reached with private sector bond holders in July.

    While hardliners in Germany and the Netherlands are leading the calls for more losses to be imposed on the private sector, France and the European Central Bank are fiercely resisting any such move. They fear re-opening the bond deal could spark renewed selling of shares in European banks, which have significant holdings of Greek and other peripheral eurozone debt.

     
     


  198. sbux: interesting how these two arcticles seem to be saying the opposite about the same activity …
    http://www.bloomberg.com/news/2011-09-27/starbucks-sevenfold-gain-over-s-p-500-fuels-put-buying-options.html
    http://finance.yahoo.com/news/What-behind-put-selling-optmonster-909954539.html?x=0&.v=1
    what I don’t get is how can PCLN and SBUX be at the similar MarketCap (depends on the day).   I don’t even know what a shattner is, but sbuck$ follows me everywhere.


  199. Phil -I missed a fun day! Was busy trying to save a $200M DOD program (that they probably should cut lol). I was curious what you think of the carbon fiber manufactures now that BA is finally going to deliver some of its dreamliners? I was looking at ZOLT, CYT, and HXL? Thoughts?


  200. thatway sbuck$ may follow you everywhere but captain kirk has been where no man has gone before and when he returned was smart enough to take pcln stock as comp


  201. there is no reason for the euro taxpayers to shoulder the load of these defaults…these banks are the only investors on earth who undertake (perfect word) negligible DD on these credits because they assume THEY hold a carte blanche to win and reality be damned… despite this idiotic premise and the hell they unleased on the world in 08…up until today there has been little voice given to the outrage smoldering beneath the surface in most of europe and our country…getting 27 governing bodies to agree by passage to wittingly and in full view of the world  make a mockery of the notion that governments protect their citizens from all forms of threats and evil..will NEVER happen…there is a better chance of nancy pelosi going down on dick morris…bank on it..how the fuck did we really believe that europe would go down the same worm hole we have?.., if they leverage that thing a few years from now it will go down as maybe the single biggest mistake in global financial history…



  202. CIM – i know Phil has pointed out the concerns of investing in a company that features an imaginary creature as it’s name..  doing a little investigating and very interesting to see the large share purchases made in August by officers and directors. Also interesting to see the CFO is a Denahan.. i am assuming the daughter of Ms. Wellington Denahan-Norris.. the Chief Investment Officer and COO of Annaly Capital and one of the 25 highest paid women according to CNN. Looking over other connections, a number of family ties, and quite Irish.  All the sturctures under Annaly look like quite a way to employ and distribute wealth to the sons and daughters, cousins, etc…  Now, should this be a sign of support, or a red flag!?


  203. NLY/Phil – you say you love it here are these prices (and a HECK of a dividend!). With CIM be a creature of Annaly..why so sceptical of that vehicle?


  204. Savi/Vegas – Looks like I can make it Vegas. Can I still get in on this trip? If so, I’ll send you a deposit ASAP. 
    Thanks!


  205. CIM – pages 15/16 of the CIM Annual report are quite interesting:   
    Risks Associated With Our Management and Relationship With Our Manager
    We are dependent on our Manager and its key personnel for our success.
    …Our management agreement with our Manager only extends until December 31, 2011. If the management agreement is terminated and no suitable replacement is found to manage us, we may not be able to execute our business plan….
    There are conflicts of interest in our relationship with our Manager and Annaly, which could result in decisions that are not in the best interests of our stockholders.
    it goes on… Very interesting.  in short, the individual managers have been buying CIM stock, and Annaly itself can (may) start selling out starting Oct 24, 2011..then more in April and May 2012.  This gig may dry up quick..but still on right now. 


  206. USD – weekly chart shows how it hit resistance at 200MA. Support maybe at 50MA (around 76.50)


  207. Good morning! 

    Dollar back down to 78 and all is well in the futures, heading back to yesterday’s highs.  

    They can yank the market around like that every afternoon if they want to, as long as we can make a quick 50% into the close, right?  What did we do?  We put the brakes on the slide by adding 10 DIA puts at $1.15 so $1,150 in our $25KP was a 5% allocation (of the original amount, as we’re up around $80K now) and we made a quick .50, which is $500 but that’s not chicken feed – it’s 2% of the ENTIRE original balance of the portfolio in one hour!  If we do that on 100 drops, we make 200% ($50,000) so who cares if we take a few dings.

    What’s key is that we DIDN’T panic out of our bullish positions.  What we were mostly doing was allocating about 10% of our open position exposure to a very bearish position and that very quickly flipped us from being $7,000/3,000 bullish to $7,000/4,150 (examples, not exact) bullish.  Also, that last bullish play was unhedged and, if we consider it a double weighting, it’s more like flipping from 7/3 to 7/5 and that’s how easy it is to put the brakes on a drop.  

    Now what would have happened if the market went the other way?  We were 7K/3K bullish and we spent $1,150 and perhaps we would have stopped out back over 11,300 with a $150 loss.  Would that have hurt us?  Not at all!  We might have lost a percentage of our gains but they key is, again, that rather than stop out of our positions on a dip we did not believe in (and incur spread costs and commissions) we rode out the dip with our longer-term investing premise intact.  

    The $25KP is very aggressive and, at the moment, it’s aggressively bullish but even an aggressively bullish portfolio can be steered very quickly to a more neutral stance if you follow the rules and maintain a balance of bullish and bearish positions at all times – that’s what makes what seems to be a quick, little adjustment so effective.  I’ll be updating that portfolio this evening and we’re almost at our $100,000 goal so we’ll be getting back to all cash and making a fresh start again with a $10/100KP, where our goal for next year will be to turn our virtual $100,000 into $500,000 or, for those looking for smaller trades, to turn $10,000 to $50,000.  

    It’s been a wild 2 years since we started the $10,000 Portfolio last year and we hit our goals with room to spare and, of course, we will continue to maintain our much more conservative (and very boring) Income Portfolio, which was so dull and balanced that we didn’t even have anything to update this month as there was nothing to change – despite the 20% drop (we did make some adjustments during Member Chat, as usual).  

    So that’s my plan for next year, even though it’s not even Q4 yet so plenty of time for suggestions if you have any.  

    Back to our morning business:  Asia was down about half a point except Japan, who were flat.  Europe opened way down but now the DAX and CAC are up 1% and the FTSE is flat going into their lunch hour (6:30 EST).

    We need that Dollar to stay under 78 to have a good day.  Oil is way up at $84.34 so right on target for our bullish plays there and gold is still lame at $1,657 – which tells you a lot as they are not bouncing with oil at all.   Silver hit $33 last night but pulled sharply back to $31.50 (5%), copper is $3.40 still, nat gas is $3.87 and gasoline is $2.63.  

    TLT is way down at $117 so my bond guys have been super-helpful this week giving us a heads up on the money flows – that’s down another $2 since we noted the movement yesterday afternoon!  Congrats to the players on that one too…  

    Nothing jumps out at me as a trade this morning.  That pullback yesterday was nonsense and we were right to ignore it so we’re just back to now EXPECTING to break all of our 2.5% marks (Dow 11,300, S&P 1,200, Nas 2,575, NYSE 7,100 and Russell 685 to keep us believing in that rally fairy).  Unlike yesterday, when we expected the 2% pullback off that run, today we need to go through and hold it to stay bullish.  1,200 on the S&P and 2,600 for the Nas (the Must Hold line) are the main goals for our day with RUT 700 and NYSE 7,100 are also a must (the -10% lines).  


  208. Thanks L4!   Keep in mind that my system is all about taking a balanced group of trades and cashing out the winners and working out the losers while JRW’s system is VERY directional and short-term.  The two can be used together the same way I favor having the bulk of our assets in well-hedged positions like our Income Portfolio and using a small portion for short-term gambling like our $25KP.  Over the course of a year, we expect the $500K Income Portfolio to make 10-20% so even getting wiped out of the $25KP only dings us slightly but making $75K on the $25KP still adds 15% more to the overall portfolio so we risk losing 5% to make 15% and 15% is A LOT when you add it to a long-term strategy and reinvest it SENSIBLY over time.

    It’s a rough market and we still could move violently in either direction – everyone needs to keep that in mind as we’re back to Cashy and Cautious for the moment (20/15 or 15/10 bullish until we fail our goals).  

    CMG/Peedle – That’s a ratio backspread and dangerous if you don’t manage it properly on a move up.  The real danger is if the stock pops on you fast (earnings) and the front-month outgains your longs and you can’t get a good roll, then you are stuck in a work-out mode but it’s usually not so horrible as you buy more longs (it’s good to have level stops that trigger either adding longs or stopping out short calls), which is why I like to have a time buffer of at least 2 months to roll.  Do not be fooled into thinking it’s "safe" we’ve had some spectacular failures playing that in the $25KP but mostly we recovered them and, overall, the series has been very successful as it’s a good strategy that sells more premium than it buys and, as we know, the house usually wins.

    AAPL/StJ – I don’t know why it doesn’t occur to people that AAPL may be fairly positive they are going to win these patents.  Do you really think other people invented IPhone/IPad interface before them?  Maybe some chip nonsense but I very much doubt AAPL used anything they didn’t have a US Patent on or bought from someone else who had a patent – they are patent crazy and Sewell has been with the Company for 2 years after leaving INTC as General Counsel – AAPL brought him in for this fight – I think he’s being paid $30M a year so let’s assume he’s good.  This is just Apple-bashing crap that we always get before earnings – just a new flavor this year.

    Dollar/Hoss – For multinationals it means that 50% of the money they take in is coming in at an average 5% discount.  Of course a lot of their overseas costs come down 5% as well so we may see lower revenues but good earnings numbers anyway.  US investors and analysts hardly ever price in currency conversions.  Americans are very provincial and, interestingly, Wall Street people more so than most.  They are at work from Monday at 4am until Friday at 4pm in New York and then they take a "vacation" in the Hamptons, about 100 miles away.  Investment guys almost never leave the country – there’s no time!  As to the Dollar breaking over 80 – the US is in worse shape than Greece by all measures EXCEPT the one where we get to print our own money and pretend we can pay our debts.  How does that make the Dollar more valuable than the Euro?  If they let Greece die or ultimately bail out the PIIGS for less than $3Tn, then the Dollar will LOSE value to the Euro because we are printing $1.5Tn EVERY YEAR just to pay our own bills.

    Oops, 7:30 – gotta go to work!  Feel free to reask stuff in the new post.