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Which Way Wednesday: Through the Roof or Smashed into a Thousand Pieces?

 

GRANDPA JOE: But this roof is made of glass. It’ll shatter into a thousand pieces. We’ll be cut to ribbons!

WILLY WONKA: Probably

Is today going to be the day?  After pressing against our breakout levels for a week, today do we should finally have the gas to get over the top or will our Must Hold levels keep acting like a solid barrier?  Oddly enough, I was asking the same question on August 30th, when I asked if we were "Breaking Higher or Dressing Windows?"   My comment from that morning works for today as well:  

No way to slow down.  That line from Tull’s "Locamotive Breath" keeps playing in my head as I look at these rumor-driven markets and contemplate that we MUST keep going higher – or we will fall.  On the whole, that’s not generally a winning long-term investing premise BUT – it does so happen to be the entire principal on which space travel is based so let’s not discount it entirely.   

Willy Wonka understood stock market physics, there had to be enough power to get through that overhead resistance or it was going to be a very painful test of the top (like the one we had in August).  Since our July dip, we’ve come back for another try at our Must Hold lines 4 times but the volume has been substantially lower than it was in July, leading us to believe it is only TradeBots, and not Oompa Loompas, who are buying this market. 

Can TradeBots alone give us enough "thrust" to break through this time?  Probably not.  We need to get real buyers off the sidelines and that’s not very likely to happen until we have real resolutions to the EU crisis along with some genuinely positive earnings news to countermand the doom and gloom prognostications we’ve been getting from "expert" forecasters.  

So far, this week, we’ve had 58 beats and 19 misses out of 88 reporting companies with 7 issuing positive guidance and 5 issuing negative guidance (the rest were in-line or no guidance) so nothing to complain about there.  Who missed?  SCHW, FHN, GCI, HAS, WFC, BMI, FRX, GS, JAKK, AAPL, FSII, LLTC, MRTN, SONC, CMA, MTB, PJC, TRV, and VCBI so far.  Overall, it’s a pretty mixed bag that doesn’t really signal any particular overall weakness – more likely just that there were winners and losers in Q3 and the fact that AAPL is ranked with the "losers" is a strong indication that we can’t judge a book by it’s cover.  

AAPL WEEKLYAs I said to Members last night – AAPL earnings were fantastic.  People simply didn’t buy IPhones last Q because they were waiting for the IPhone 5.  In fact, demand for new phones was so pent-up last week, that AAPL sold 4M $500 4S models in the first weekend.   Aside from that being double the sales pace of the original IPhone – it’s also $2Bn in 2 days!  That should get Q4 off to a good start, don’t you think?  As you can see from David Fry’s chart, AAPL has been in a very strong channel and our trade idea on that in yesterday’s Member Chat was:  

  • Buy AAPL Apr $410 calls for $49
  • Buy AAPL Apr $420 puts for $43
  • Sell AAPL Nov $420 puts for $19.50
  • Sell AAPL Nov $420 calls for $20

Obviously, with the Nov time-frame on the short position, we’ll have to wait and see how this plays out but, of course, $420 is our target when things calm down.  Our more aggressive trade idea from Tuesday was selling the Nov $380 puts for $6.30 to fund the purchase of 2 Oct $405/410 bull call spreads for $3.15 each for a free look (hopefully) at $10 worth of spreads.  I’m not sure we’ll get our $410 back by Friday and, if AAPL can’t hold $400, we need to cash the bull spreads and ride out the short puts.  

Other than that, we’ve stayed away from AAPL betting lately.  As I said at the Vegas Conference, I think AAPL is the best company in the World but I also felt $420 was a good top for now and didn’t expect them to justify a higher valuation this earnings.  I still think they are WORTH $500 a share – just not now.   Another target trade idea we had from the 10th was buying the AAPL 2014 $550 calls for $41.50 and selling the 2013 $500 calls for $30.10.  It will be interesting to see how that one holds up today but it’s a long-term trade that expected exactly what’s happening now.  

Other than using AAPL as a bullish offset, the only other working trade idea that I see from Member Chat in October was from my morning Alert to Members on the  4th and that was a great entry where we sold the $335 puts for $5.30 and we already picked up $15 on the weekly $380/395 bull call spread so that net .30 credit will finish up 5,100% if AAPL manages to hold $335 today and THAT is how I love to play earnings (selling far out of the money puts or calls for ridiculous premiums to cover sensible bets).  $10 put in play there paid for an entire Annual Premium Membership to Philstockworld – that’s not bad, is it?  Speaking of which – Premium Membership is about full and we will be closing to new Members at the end of this month, probably through the year’s end at least but there will be a wait list if you are interested.  

In non-Apple news:  Moody’s cut Spain’s Rating to A1 from Aa2 but that’s being overshadowed by a POSSIBLE EFSF deal which is now rumored to be 2 TRILLION EUROS – Muhahahahaha!   At the same time, the EU reached a deal as part of a short-selling law that will pave the way for an optional ban on naked credit-default swaps on sovereign debt.  Under the deal, traders may be prevented from buying CDS on government bonds unless they either own the sovereign debt or other assets whose price moves in tandem with it.

Our own Senate pretends to care today with a hearing on whether ETFs affect market volatility (spoiler alert – they do!).  Look for good quotables from the guy’s who wrote last years HI-larious Kauffman Foundation Report.  We had some surprisingly good housing numbers this morning with September Housing Starts up 15% to 658,000 – which is strange but we’ll take it.  Consumers better get out and buy those homes while they can because Real Earings DECLINED another 0.1%, down 1.9% for the year with average weekly earnings down 1.7% for the year so we’re just 50 years away from slavery at this pace.  

No surprise then, that the September CPI was "just" 0.3% with the core CPI down to 0.1% as (and I know this will be a shock to conservatives) IF YOU DON’T PAY PEOPLE THEY CAN’T BUY THINGS.  PPI was up 0.8% and CPI is up just 0.1% so that’s 0.7% of margin squeeze if I remember my calculus correctly.  That’s not particularly good for Corporations but none of that will matter if the EU is going to pass a stimulus program that’s 20% of their GDP so we’ll continue to ride the rumor wave as we skate along our critical resistance (Beige Book at 2pm should be interesting today) and I’ll let Jon Stewart have the final word as he sums up America’s top problem brilliantly (the same one I noted back in my August editorial) :  

 


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  1. Guardian reports on EU financial crisis in introspective fashion.
     
    I’m  quoting verbatim a reader’s  letter to the Guardian:
     
     

    "Over the last few weeks we have had a series of anonymous "EU officials" making statements to the UK press that have gone on the wires about 1 hour before the New York markets close.
    "On each occasion the effect has been to ramp the markets as brainless headline-scanning algorithms and brainless headline-scanning traders rush out to buy, buy buy. And on each occasion it has subsequently become clear that these "EU officials" were talking garbage."
    "You financial journalist chaps need to ask yourselves one question before printing this sort of unattributed rumour: Why exactly are you being given a story that if published at 7.30pm EST will cause the New York markets to go from -100 on the day to +200 in a matter of minutes? What is the agenda?"
    "Whoever is doing this will know that you can’t keep ramping the markets on late-afternoon rumours. Giving the markets its daily rush will require evolving techniques of spin and innuendo."
    Any market that moves so sharply on an unattributed comment is clearly hopelessly, disastrously dysfunctional."
     
    The Guardian comments today:
     
    "It’s fair to say that not everyone entirely supports our story yesterday that Germany and France are close to sealing a deal to raise the value of the EFSF to €2tn, which I mentioned here."
    "In the interests of balance, then, here is some comment to that effect."
    "UBS seems incredulous that anyone would leak a deal to The Guardian (God forbid):"
     

    Risk markets reacted positively to a story in the UK’s Guardian newspaper about possible EFSF leverage. Why the Euro area political elite would leak such a story to a UK newspaper, and why (if a UK paper) it would the Guardian is not clear. Markets have started to doubt the story…

     


  2. Phil/Real buyers
    "Can TradeBots alone give us enough "thrust" to break through this time?  Probably not.  We need to get real buyers off the sidelines…"
     
    The story running yesterday on SA linked to MarketWatch was that a lot of hedgies were complaining that it was impossible to buy any quantity of stock without moving the prices like crazy due to lack of availability of stock, so they were staying on the sidelines. I guess HFT is not providing that famed liquidity then. So is it a question of buy now while stocks last, or wait for the clearance sale?


  3. Oil Lines

    R3 – 93.11
    R2 – 91.07
    R1 – 89.63
    PP – 87.59
    S1 – 86.15
    S2 – 84.11
    S3 – 82.67

    Yesterday’s high and low – 89.03 / 85.55

    Breakout lines – 94.66 / 76.43 


  4. Does anyone know what is the best study in SSpro for measuring overbought/oversold.
     
    I’ve noticed a lot of the charts that are posted use the McClellan Oscillator but it doesn’t appear that Streetsmart offers it.


  5. Phil crazy to buy more USO puts before inventory with the dollar dropping so much?


  6. Phil:
    I have 2 different AAPL bear put spreads a 1:1 415/405 and a 1:2 415/360 spread.
    What is the best way to exit these – all at once or shd I let the 360put expire worthless?


  7. PP 4 today:


  8. Not that it matters.


  9. one of my sons is an la based musician..he is performing in athen tonight please check out his blog on his home page he is describing pipe bombing and a mass of riots in athens today..
    http://www.eskmo.com/


  10. Interesting chart pattern on the USD:


  11. he uploaded a video of parliament he is saying there are a couple hundred thousand protesters..what apathy we have here by comparison


  12. Sounds like a plan the "job creators" can get behind - http://motherjones.com/kevin-drum/2011/10/chart-day-cost-9-9-9

    The Tax Policy Center has done yet another analysis of Herman Cain’s 9-9-9 plan, and guess what? Unless you’re really rich, your taxes will go up! If you earn, say, $50,000 per year, you currently pay about 14.3% of your income in federal taxes. Under Cain’s plan, you’ll pay 23.8%. Whee!

    And if you make the big bucks? Well, millionaires currently pay about 32.9% of their income in federal taxes. Under Cain’s plan, they’ll pay 17.9%. Ka-ching!

    Might be hard to sell to the public at large though! 


  13. Will process all refunds this weekend


  14. Athens / Angel – It’s going to be a hot winter in Southern Europe… Nothing to do with climate change though! 


  15. A better chart on Cain’s plan:

    http://talkingpointsmemo.com/images/999aftertaxincome.jpg

    I am not sure I would want to try to sell that! 


  16. That Guardian story from yesterday might need some revising:

    http://ftalphaville.ft.com/blog/2011/10/19/705876/reflections-on-the-latest-eurozone-tape-bomb/

    No matter what, these guys are talking about some big money being pushed around and there will be consequences! 


  17. FAS Money Recap (13 or bust edition)

    Long Strangle –Jan 12 Calls (2.71 now 3.20) and April 11 Puts (3.30 now 2.63).

    Weekly – Full Cover October 13 Puts (1.98 average now 0.45 – 77%)
    Monthly –  Full Cover October 13 Puts (1.98 average now 0.45 – 77%)

     


  18.  Pharm:
    Is that chart suggesting dollar bullish?
    Thanks


  19. Joe, yes.


  20. Either trough that dotted and solid line, or down she goes.  Goes with PSW 5% lines as well.


  21.  That might cause a talent drain in Wall Street:

    http://www.farnamstreetblog.com/2011/10/video-nassim-taleb-on-wall-street-protest-banking/

    Taleb posted this on his facebook wall, which is relevant to the video above:
    Hammurabi’s code, ~3800 years ago, removed the agency problem as a condition for transaction: “If a builder builds a house and the house collapses and causes the death of the owner – the builder shall be put to death. If it causes the death of the son of the owner , a son of that builder shall be put to death.”Everything in past 100 years has been to shield managers from liabilities. Think of Fukushima.


  22. If anyone has GMCR, you should look at Einhorn’s powerpoint presentation.  The guy is known for exposing shady practices in companies (even though Phil called this one first), and his case is very solid against GMCR.
     
    http://msnbcmedia.msn.com/i/CNBC/Sections/News_And_Analysis/_News/__EDIT%20Englewood%20Cliffs/VIC%202011%20Presentation%20-%20GMCR.PDF


  23. Phil, Is that or a similar Apple trade still playable? I like the "Ka-ching!" aspect of it if it stays at the put strike at expiration.
     
    STJ,  Good research on Herman Cains tax plan. Those are important details people should be aware of.


  24. Phil:
    Nice call on oil topping out at about $90. Now if we can get the rest of your premise to follow through. Well done!


  25. Good morning!

    AAPL $403, not too shabby!

    We already did shorts on the Dow and RUT in the Futures this morning, hopefully we’ll have a reason to stop out.   (USO is a go though): 

    USO Nov $32 puts at .85 are a DD in the $25KP for 20 at an average of .925 ($1.10 originally).  We may get more of a run into inventories but then I expect a nice sell-off.  Obviously, I like them as a new play too. 

    Another fun play is the AAPL $395/400 bull call spread for $3, which pays $2 more if AAPL holds $405 through Friday.  10 in the $25KP with a stop at $2.50 risks $500 to make $2,000 – simple enough?  

    F is also a buy now.  It’s a little chasey at $11.80 but we can offset that by selling the 2013 $10 puts and calls for $4.50 for net $7.30/8.65 so 2,000 of those in the Income Portfolio is a nice start.  

    In general, it would be bad if we fail to hold 700 on the RUT or 1,220 on the S&P so let’s watch those lines and we’d like to see the Nas over 2,650 but no real danger until we threaten those green spots on the Big Chart and, so far, only the RUT seems like it is even likely to make a test today.  So, if the RUT holds 700 – we are still bullish! 

    Dollar is over 77 at the moment and the fact that we’re not down is a good thing but let’s keep an eye out as we really don’t want the Dollar over 77.20 or it will become too much of a drag.  I’m still worried about Yentervention, which could happen any time.   

    Oh, big rumor but I can’t prove it (but I trust the guy I heard it from) that GS tanked their earnings on purpose and used CDS write-offs that were completely arbitrary to offset what would have been a very good Q.  

    Super busy day with the Beige Book at 2pm but so far, so good on a heavy earnings day

    Wednesday’s economic calendar:
    7:00 MBA Mortgage Applications
    8:30 Consumer Price Index
    8:30 Real Earnings
    8:30 Housing Starts
    9:00 Fed’s Lockhart: ‘Achieving Latin America’s Growth Potential’
    10:30 EIA Petroleum Inventories
    2:00 PM Fed’s Beige Book
    4:30 PM Fed’s Lockhart: ‘Leadership and Career’

    Notable earnings after Wednesday’s close: AMLNAXP,CAKECBSTCRUSCVACYSEBAYETFCEWEWBC

    FNF,KMPLHOLRCXNENFXPLCMRJFRVBDSLMSYKUMPQ,WDCWYNNXLNX

    At the open: Dow -0.16% to 11558. S&P -0.21% to 1223. Nasdaq -0.62% to 2350.
    Treasurys: 30-year -0.18%. 10-yr -0.05%. 5-yr -0.02%.
    Commodities: Crude -0.05% to $88.48. Gold +0.25% to $1656.85.
    Currencies: Euro +0.49% vs. dollar. Yen -0.06%. Pound -0.75%.

     Market preview: Stock futures pare losses after better-than-expected housing starts and in-line inflation data. S&P futures -0.1%, but a drop of more than 5% in Apple keeps pressure on the Nasdaq. Abbott Labs +7% after announcing a split-up. European bourses rise on revived hopes for a bold EU plan. The dollar and Treasurys are lower. Still ahead: Fed Beige Book.

    September Consumer Price Index: +0.3% vs. in-line with expectation, +0.4% prior. Core CPI +0.1% vs. +0.2% expected, +0.2% prior. 

    September Real Earnings: -0.1% for real average hourly earnings M/M, -1.9% Y/Y. Real avg. weekly earnings -0.2% M/M, -1.7% Y/Y. Avg. workweek +0.3%. - Why all the protesting?  We’re already paying them less for doing more…  

    September Housing Starts: +15% to 658K vs. 590K expected and 572K (revised) last month. Permits -5% to 594K vs. 610K expected and 625K (revised) last month.

    Uh oh:  European shares and the euro give up some more gains as Reuters reports French President Sarkozy, on the way to Berlin for more bazooka talks, has told lawmakers in his party that negotiations are stuck over relations between the EFSF and the ECB. The only thing sillier than selling on this chatter was buying on the chatter that proceeded it.

    European shares give up some of their strong gains after a German FM spokesman says no decision has reached about expanding the €440B EFSF, contradicting yesterday’s report that the deal has been set. Denial of the denial coming soon. Fun and games. Stoxx 50 +1%.

    With risk back on, investors would rather buy stocks than German paper. The country sees weak demand at its 10 year Bund auction, moving just €4.1B when it hoped to sell €5B. The bid/cover ratio came in at a tiny 1.1. The 10 year is 9 bps higher at 2.1%.

    Seeing that the EFSF may be expanded to help recap French banks, Ireland looks to get some candy as well. The government is seeking to have the EFSF take over its stakes in AIBand Irish Life & Permanent, reducing the nation’s debt load by more than €20B. EU sources react coolly, saying Ireland has been "dealt with."

    September job growth in Brazil beats expectations, coming in at 209,078 vs. a forecast of 168,625 (Brazilian economists and statisticians clearly have a sense of humor). The fast number isn’t dampening expectations for another 50 bp cut in rates at tonight’s central bank meeting. EWZ -25% YTD.

    Foreign cars are selling in the U.S. at the biggest price premium to domestic autos in 12 years, allowing Ford (F) and GM to pick up market share. The weak dollar discourages automakers such as Toyota (TM) and Honda (HMC) from importing lower-priced cars, which have slimmer profit margins. Ford and GM also have closed a quality gap to their Japanese rivals, researchers say.

    Popular (BPOP): Q3 EPS of $0.03 misses by $0.03. Shares -0.55% premarket.

    Freeport-McMoRan Copper & Gold(FCX): Q3 EPS of $1.10 beats by $0.03. Revenue of $5.2B (+0.8% Y/Y). Shares +1%premarket. (PR)

    Intuitive Surgical (ISRG) is up 7.6% premarket after a strong Q3 report (I

  26. Phil

    Intuitive Surgical (ISRG) is up 7.6% premarket after a strong Q3 report (III) featuring 27% Y/Y shipment growth for its costly da Vinci surgical robots. Though maintaining a Neutral, Goldman thinks "current momentum in the stock is unlikely to reverse," given strong demand for da Vinci systems in the face of weak hospital capex. 

    SuperValu (SVU): FQ2 EPS of $0.28 beats by $0.07. Revenue of $8.4B (-2.7% Y/Y) beats by $40M. Sees FY12 EPS of $1.20-1.30 and revenue of $36.5B. Shares +4% premarket. (PR)

    I lLOVE this!  David Einhorn’s slide presentation (pdf) regarding his short of Green Mountain Coffee (GMCR). He comes about as close to alleging accounting fraud as his lawyers will let him: "The research shows that GMCR (and its distributor) are potentially engaged in a variety ofshenanigans that appear to mislead auditors and to inflate financial results." - I want to point out that our own Sam Antar called this a year ago! 

    Here come the hackers: Groups of programmers mobilize - indoors, not outdoors – in order to offer their collective assistance to the Occupy Wall Street movement. An online design library of protest signs and icons are just the first step. Next step?

    Though analysts are defending Apple (AAPL), shares remain down 5% premarket. One point of concern may be Apple’s 9% Y/Y decline in revenue per retail store, in spite of strong Mac and iPad sales. This is likely raising questions about whether North American iPhone demand was affected by Android’s (GOOGboom, in addition to iPhone 5 anticipation. (more) (transcript


  27. Wow, Athens looking like a war zone.  

    Still happy with our SQQQ play (offset by short AAPL puts) from yesterday.   

    Another quick hedge is TZA Oct $37/40 bull call spread at $1 and it pays 3:1 so you don’t NEED an offset but some good offsets include: 

    • X Nov $20 puts can be sold for .95
    • GS Nov $90 puts can be sold for $1.40
    • FAS Nov $11 puts can be sold for .92
    • AAPL Nov $360 puts can be sold for $3.20 
    • NFLX Nov $70 puts can be sold for $1.25 - Actually, I’m just kidding about NFLX – they totally suck and I would be horrified to end up owning them for net $68.75!  

  28. BCS – Best Exits: I’m doing more BCS trades now that I’m back. Just did the AAPL 395/400 and have the TNA 38/40. Basic question since I’ve not done them much in five years: what are best exits paths on a winner? Loser? Thx.


  29. Phil/F
     
    I own Ford and was thinking about selling some calls.  I don’t really care if I lose the stock just want to maximize profits. 
     
    Any recommendations would be appreciated.


  30. Guardian/JMM – So far, I haven’t seen anything indicating it is clearly NOT true.  As I said yesterday, I think they floated a trial balloon and, when you do that, you do use a paper that is less likely to be taken seriously.  

    HFT/JMM – I read a study that proved (as far as I’m concerned) that HFT not only provides no liquidity but it sucks it out as well especially in a sell-off.

    Overbought/Exec – Dave likes these two:  

    NYMO

     

      NYSI


  31. USO/DoctorH – Crazy is a valid investing strategy but it’s hard to be consistent without a lot of practice.  As noted above, I do like the Nov $32 puts at .85 or less but keep in mind it’s a fundamental trade on where oil will be over the next 30 days – what happens today I have no idea…

    AAPL/Etrad – They look like they’re planning to pin $400 but we do have 2 more days.  If the market collapses (Athens burning, no EU agreement) then you could get in trouble on the short $405 puts but the $360 puts seem far enough away that you can take the other $415 puts off the table at $15 and just put a stop on the other set at $7.  

    Tips/Pharm – Interesting stats.  Most interesting is that ARO is actually in control of the S&P – I hadn’t realized that before.  ;)  

    Very cool Angel!

    Oil taking off on big drawdown on inventories.  Let’s see if they can make and hold $90 but I doubt it.    Oil down 4.7Mb, Gasoline down 3.3Mb and Distillates down 4.3Mb – that’s the best draw they’ve had in ages.

    EIA Petroleum Inventories: Crude -4.7M vs. consensus of +1.3M. Gasoline -3.3M vs. consensus of -1.6M. Distillates -4.3Mvs. consensus of -1.5M. Futures turn positive, +0.88% to $89.31.

     


  32. Hard to sell/StJ – Don’t be silly, Paul Ryan LOVES it and the Kochs are backing Cain so the Tea Party loves it too.  He got a lot of flack at the debate last night though (Mishy went straight for the fences saying a 9% tax would, of course, lead to a 90% tax): 


  33. Cain / Phil – Going for the jugular with the Paul Ryan endorsement? I would love to see the average Tea Party member’s face when they see their first tax bill of a Cain administration. They might then start the real Tea party!


  34. Phil / GS — Funny, I looked at their eps and that was my immediate reaction — they tanked it to get off the radar.


  35. Debate clip/Phil
     
    Love how Rick Perry constantly refers to Herman Cain as brother.  Maybe not the brightest move especially when you come from TX.  I was waiting for him to actually call him his homey.


  36. @Stjeanluc
     
    Thanks for posting the 9-9-9 analysis earlier.  Sent that to a few people already.


  37. Good 9-9-9 chart StJ:  

    AAPL/L4 – I guess you saw the new one from the first post.  

    Oil/DC – We’ll see how many contracts they are able to roll over into the morning excitement.  

    Bull call spreads/NF – You are essentially stuck in them until just before expiration.  If you want to be daring, once you have the full amount of the spread in the call you own, you can look into cashing out and leaving the naked short call or you can roll out to a longer cover in a diagonal or ratio spread.  Very little can be done with a loser other than to salvage your call’s remaining value and risk the short call again.  Verticals are TIME TARGETED – trying to get out early adds a lot of risk.

    F/Exec – Why not sell the 2013 $10s for $3.10?  That’s someone buying it from you for $13.10 now and you have about 25% of free downside protection between here and there.  

    Perry/Rustle – I don’t know who his handler is but he needs to be replaced asap.


  38.  Good thoughts on OWS from Lemony Snicket:
     
    http://occupywriters.com/by-lemony-snicket
     
    My favorites: 

    11. Historically, a story about people inside impressive buildings ignoring or even taunting people standing outside shouting at them turns out to be a story with an unhappy ending.
    13. 99 percent is a very large percentage. For instance, easily 99 percent of people want a roof over their heads, food on their tables, and the occasional slice of cake for dessert. Surely an arrangement can be made with that niggling 1 percent who disagree.


  39. as long as the S&P 500 holds above 1220 there’s no motivation to short this market….  1220 was important resistance….  now support..10 day EMA has moved up to 1190…. the spread is still fairly wide…it’s not as extreme as it was friday


  40. CLOWN CARS/ the GOP tried to buy some clown cars… but O’s administration bought them all up…and has more on order…MERKOZY also buying lots of them……Reuters is reporting that China’s plan to save Wenzhou revolves around making it the Clown Car manufacturing capital of the world.!


  41. Phil/F
     
    I was contemplating what you suggested, however, I talked to a friend of mine a few minutes ago who owns a Ford dealership, and he told me that this has been his best year in ten years and that they can’t get cars fast enough.  I’m assuming that will be reflected in Ford’s earnings report so I’m debating whether to wait until earning to sell the calls.
     
    I haven’t really tracked options during earning season, do they usually peak on good news or does the smart money run it up prior to earnings then dump it on the news?


  42. lots of call buying in the homebuilders today


  43. Look who is going to get shafted if BAC goes bad:

    http://www.nakedcapitalism.com/2011/10/bank-of-america-deathwatch-moves-risky-derivatives-from-holding-company-to-taxpayer-backstopped-depositors.html

    You the taxpayer!

    This changes the picture completely. This move reflects either criminal incompetence or abject corruption by the Fed. Even though I’ve expressed my doubts as to whether Dodd Frank resolutions will work, dumping derivatives into depositaries pretty much guarantees a Dodd Frank resolution will fail. Remember the effect of the 2005 bankruptcy law revisions: derivatives counterparties are first in line, they get to grab assets first and leave everyone else to scramble for crumbs. So this move amounts to a direct transfer from derivatives counterparties of Merrill to the taxpayer, via the FDIC, which would have to make depositors whole after derivatives counterparties grabbed collateral. It’s well nigh impossible to have an orderly wind down in this scenario. You have a derivatives counterparty land grab and an abrupt insolvency. Lehman failed over a weekend after JP Morgan grabbed collateral. 


  44. Leverage / Kustomz – The French and German banks look a bit exposed! 


  45. Ford / Exec – In addition, the UAW just approved a new contract so less uncertainty moving forward. 


  46. exec – Where is your friend’s dealership?


  47. NFLX - I’m not a candle expert, but today’s candle looks a bit ominous to me for those of us short NFLX.  Thoughts?


  48. Phil/BAC: What do u think of BAC at $6.74 and sell 2013 $5 p& c for $4.85 for net $1.89/$3.45? Thanks.


  49. Caesar,
     
    Ford Dealership


  50. exec – Thanks.


  51.  Phil
    Up nicely on the AMZN back spread – thanks – holding with a stop here? If so, what would you suggest?


  52. Phil – Market seems choppier than normal.  I’m wondering if people are wound up, waiting for the next rumor out of Europe?  It seems that we’ve grown accustomed to them, so perhaps no commitment until the rumor appears?


  53. JC
     
    Yes I am so accostomed to them I have been sitting on my hands for the last 2 weeks


  54.  Phil  INTC Selling into excitement
    Long term position for the dividend and selling calls – bought in Aug 2010 for 19.75 sold Mar 2011 21 Cs 1.59 expired worthless. Then sold Jan 12 $21 Cs for 1.10. Can buy back now for 3.70. Thinking of rolling but the Jan 2013 $22.50 Cs are 3.70 so I don’t pick up any premium. I can sell the Jan 13 $20s for 5.30. Other companies in PC sector have been weak but INTC says emerging markets are good. So I am concerned about pullback. Range has been $18-24 since 09 so they are at the top. 
     
    Thanks


  55. jc, Mr. Market may be looking to lighten up a bit today

    Reuters reports that Germany has not changed its view that the ECB should not leverage the EFSF, citing a senior government source.

    /HG down nearly 3%..
     


  56. Phil:  I would like to buy a Premium membership for a friend, before the rolls close.  I have his name and email address, he’s in Europe, not that it matters.  What should I do?  I don’t remember how I paid for my membership, although, since I haven’t seen a checkbook in years, I imagine it was a credit card. ????


  57. zero/membership – you are not talking about me, are you? :)  gee…thanks!


  58. nicha/ akkkkwwwarrrd


  59. Phil/APPL,
    I have Nov 450/465 BCS along with Nov 350 and 340 sold puts much lower that are doing good. Any advice on the BCS?
    Thanks


  60.  Nicha:  Are you gay, too?  :)  [Is that politically incorrect?  Awaiting moderation.]


  61. SCO still looking good.  Horrible inventories and oil still down.  Shows you how rigged the run up was.


  62. S&P basically flat, but VIX up by more than 1.5.


  63. I like this one Kurt:  

    There may not be a reason to share your cake. It is, after all, yours. You probably baked it yourself, in an oven of your own construction with ingredients you harvested yourself. It may be possible to keep your entire cake while explaining to any nearby hungry people just how reasonable you are.

    Leverage/Kustomz  - Kind of scary on that left side.  Makes the right side seem reasonable:  

    F/Exec – Well gosh, if you own a stock at $11.80 and you can sell a $10 call for $3.10 to drop your basis to $8.70 with a 15% profit in 15 months if called away at $10 (10% below the current price) and you don’t think that IS what the SMART money does – I can’t help you!  If that seems like too much of a sure thing to you, then logically you can sell the $10 puts and pick up another $1.44 for another 20% on your now net $7.26 and if getting called away at $10 for a 37% gain in 15 months is still too tame for you, you can risk owning more F at net $10.56 by selling a few more $10 puts and buying the $10/15 bull call spread for net $2 and than you have another $4.44 of upside over $10.56 to look forward to.  

    Builders/Angel – Good housing number.  HOV jetting back to $1.40.  Good time for Bill to call me back on real estate project. 

    BAC/StJ – But what would it cost us if the Bank failed.  Don’t forget the FDIC only has about $50Bn to cover BAC’s $2Tn in deposits.

    BAC/Dflam – I like it as they are too big to fail but, as the guy said yesterday – I don’t have the stomach for it so I prefer XLF. 

    AMZN/Deano – In the $25KP?  The idea is to let the callers expire worthless.  The longs are still in good shape at $8 so net $1,400ish at the moment can be well over $2K on Friday and AMZN doesn’t even have earnings until after expiration – that was the reason we liked the trade in the first place.  

    Choppy/JC – Sure, I said that above.  Retailers are sidelined after 2 months of being whipsawed up and down 10% 5 times.  

    INTC/TX – You don’t pick up any premium but you pick up $1.50 in position if you are called away.  How about sell the stock (1x) for $24.30 and buy the 3x 2014 $20 calls for $5.65 and sell 2x 2014 $25 calls for $3.20 and roll the Jan $21 caller ($3.70) to the 2013 $22.50 calls ($3.70) so you spend a net of $10.55 and put $13.75 in your pocket and you have the 3 long 2014 $20s covered with 1 2013 $22.50 and 2 2014 $25s so you’re looking at another $12.50 at least if INTC is at $25 or more (depending on how you roll out the 2013 $22.50s.  If INTC drops, you can buy out the callers and/or sell some puts and roll down to a lower strike to get really aggressive.  

    Germany/Kustomz – That’s like going to either Republicans or Democrats for quotes and citing them as "senior government" sources – you can get any quote you need to make you point – often from the same person!  

    Membership/ZZ – I guess you just sign up for him the normal way and use your CC.   You’d have to check with Greg – maybe, if it’s a CC problem, you can sign up as you and authorize a transfer.  

    AAPL/Jomp – That was pretty aggressive and you can pull the $450s (now $2.35) and leave the $465s (now $1.15) naked.  There’s no particularly good way to cover it as this is (and I may have mentioned this before) the downside of verticals – they are very tightly targeted to a strike AND a time – that’s why they are cheap – they are less likely to pay off.  

    Oil/Rustle – Could be people who need to roll contracts selling into the people who reacted well to the inventories.  If they burn a lot of front-month contracts, though – then they may set up for a more bullish manipulative run as they’ll have breathing room.  

    Europe closed up about half a point so we can’t blame them.  

    Dollar at 77.20 – we CAN blame that.  


  64. Phil., 
    JAG dissapointment on production… whats your take on them going forward?


  65. Pharm/HGSI,
    Great call the other day selling Jan 10 puts for 1.00 or more. I sold at 1.10 when the stock was about 12.30 but went up to 13+ and puts went up, should have sold another round but ow at 14+ and starting to pay off.


  66. zero what do you mean when you say ‘too’…


  67. angel, good eye :-)


  68.  

    The Oxen Group went long on Eaton this morning at 42.68. We like them a lot into earnings, and we think they should move to 44.00 pre-earnings and 46 post-earnings. Nice results from PH show some good things happening to industrial electrical equipment. The company is boosting EPS from 0.80 to 1.08 as well as increasing revenue 17%.


  69.  Phil
    INTC – If I do BCS suggested, I collect 13.75 now, (24.30 less the 10.55 spread cost) but I have to  include the 19.75 initial outlay. So net outlay is 6 on the 20-25 & 22.50 BCS that pays 12.50. So a double if INTC holds 25 thru 2014. Meaning I am bullish on INTC to 2014. Is this the right thinking?
    Thanks


  70. Angel:  When men refer to their "friend", it usually elicits a smile.  But you just can’t joke about sexual preferences these days.  Let’s hope my wife and three children don’t read this, they may ask me the same question.


  71. zero – no!!! Definetly not. Not that there is anything wrong with that. lol


  72. Anybody know of a way for me to invest some money for my daughter (education, etc) that will not be taxed until withdrawn.


  73.  Nicha:  Just click on the "question mark" symbol above; it produces the phrase "About FCK editor."  :)


  74.  Sorry, I’m just bored stiff…..


  75. @nicha
     
    529b plan


  76. The fact that Cramer was on this morning talking about how Apple was not a buy and you should be very concerned about the numbers makes me think it can see 430 in a couple weeks.



  77. in my world you joke about everything because laughter is the rarest commodity…i have 8 children one is gay..and when i met the very first boyfriend i said as they walked toward me arm in arm ‘aww you two fags look so cute!!" and you know what they laughed hard and long..too much seriousness..so anyway i am in charleston and this am at my club three ladies one form texas one form fla and one from northcarolina were going on about the debate..they were all republican and SOUTHERN…one of them said no state in the south would EVAH vote for romeny as he is a mormon..ALL three of them were for HOIMAN..how about that..two black men running for president of the us..that would be very cool..


  78. Earlier this week the Washington Post and the Pew Research Center conducted a poll asking people for the one word that pops to mind to describe the GOP line-ups.  

    Let’s just say the result is less than confidence-inspiring.
    Here’s what polls like these are good for:  Seeing what aspect of a candidates persona has managed to permeate the national psyche.
    Here’s why this is bad news for Rick Perry:  The third most popular word to jump to the public’s mind when Rick Perry is mentioned is "idiot."
    Yikes. 
    One imagines this is mostly the result of his poor debate performances; being a good debater may not mean you’d make a good president, but being a bad one (especially in a year where they are drawing record viewer levels) is clearly a problem.  For the record: ‘Texas’ and ‘No’ were the first two respectively.


  79. The U.S. capital has swapped top spots with Silicon Valley, according to recent Census Bureau figures, with the typical household in the Washington metro area earning $84,523 last year. The national median income for 2010 was $50,046.


  80. A bit less spikey today but, I still see the spikes 10:30 11:30 12:30 playing for 1:30 spike


  81. The Commodity Futures Trading Commission (CFTC) voted 3 to 2 today to limit trading in oil, wheat, gold and other commodities after a boom in raw-materials speculation, record- high prices and years of debate and delay.
    The rule limits the number of contracts a single firm can hold and it limits traders to 25 percent of deliverable supply in the month nearest to delivery. The spot-month limits apply separately to physically settled and cash-settled contracts. Deliverable supply will be determined by the CFTC in conjunction with the exchanges.
    The rule has been among the most controversial provisions of the Dodd-Frank Financial Reform Act which gave the CFTC the authority to limit trading in over-the-counter commodity swaps as well as exchange-traded futures.     Chairman Gary Gensler stated that the limitation would prevent excessive speculation that may burden interstate commerce.


  82. Good morning, nothing new:

     

    IWM    68.69,  69.14,  69.32,  69.76,  69.96,  70.14,  70.64,  70.98,  71.33,  71.87,  and  72.09

    We may rally if we can break the HOD, if not the ascending trend line now at 70.30 is key and I will short there.

    I apologize for the sporadic posts. My bandwidth is limited and I need the charts so other links suffer, but I have ordered a new Sailor 500 to be installed when I get back; that should do it !!

    BTW, how about yesterday’s bottom call with 8 minutes to spare !!  (9:56)  Good hunting  !!

     


  83. rustle – thanks but 529b plans let you invest in mutual funds only. I hate that.
     
    rainman – thanks but Coverdell ESA has a limit of $2000 per year.
     
     
    I should have been more clear. I may have $25k coming from a land deal that I want to sock away and manage on my own using ideas from the income portfolio. 


  84.  Now that we’re talking about sex and race, I’ll throw in religion.  I have a house in Utah, and know lots of Mormons, although the house is in a canyon where federal troops were once quartered to ensure Utah didn’t secede from the Union, so it’s relatively secular.  I don’t get it — they are efficient, friendly and hard-working, and much less racist than many rural places in the U.S., since religion trumps race for them.  When Utah had an influx of poor [read: Mexican] immigrants in the ’90s, many smirked that the Mormon influence would be diluted.  Wrong — they extended a warm welcome, brought them food and assistance — the LDS church runs its own farms and distributes food to poor families – and their membership increased.
     
    .  The U.S. is, as a whole, one of the least racist countries in the world, and Utah is one of the better examples of that.   I was born Catholic, received confirmation from an Archbishop at the Vatican in Rome, so I am not a member of the tribe, just an objective observer.


  85. @nicha
     
    Offshore account in Cayman Islands


  86. hard to get behind a rally the financials don’t want to participate in, especially since we’re going up on rumors of Euro bailout which would boost financials.


  87. gs negative divergence form market


  88. Ill get out at 41.90 hopeful just a flush.. always expect the unexpected. $ is spoiling the fun..


  89. Phil,
    F/exec another question. I have F shares from $9.16 to $12.50,  and am fine with holding them. Would you discuss the pro/con of selling the $10 call for $3.10 vs the $12.50 call for $1.88 against the $12.50 shares?  It looks like the higher strike has less chance of being called away and would result in a higher return for the $12.50 shares.  


  90.  Rustle123:  GMCR
    Thanks for that very thorough link.  I would guess that presentation could make for some very pointed questioning on their conference call.  Think I’ll maintain short position thru earnings.


  91. All short now !!


  92. JR,
     
    That ascending trend line that you mentioned.  What duration chart?


  93. GMCR/frustrating – dang thing goes down and down, and i just can’t get my puts to pay! just trying to get out even now. yet again this momo jerks me around for no joy. what is it with momo’s that they aways end up costing me?!


  94. Nicha:
    Which state do you live in? In WA state they have a state guaranteed prepaid tuition purchase plan ( http://www.get.wa.gov/ ) where u can purchase tuition today and have it apply whenever u want. I bought about 25k worth of units in March. With the recent tuition increase they are already worth over 40% more!  Its very difficult to get that kind of returns from a passive strategy in the stock market. With this kind of returns, even if I don’t need to use the money for tuition, I can pay the penalty and taxes and still be ahead of the market. The best thing about this type of plan is, your final savings goal is very clear. You need 100 units for 1 year worth of tution. With other 529 plan, you have no idea how much money u need to save by the time ur child is ready for college, because u don’t really know what the tuition will be 10 years from now.

    I am sure other states also might have prepaid tuition plan options. Check it out.


  95. Phil you are bullish on F but what about GM? The stock seems to have signifcantly more upside than ford and be better positioned. GM’s got a PE that’s 30 % lower, a market cap close to 10 billion less, and sitting on a mountain of cash with almost no debt. GM has a lot more new product coming out as well, and their UAW contract gives them lower labor costs. They do have a big potential problem with pension liabilities, but they’ve got the cash to cover it, and with any luck that gap will shrink as equity markets and interest rates recover. Public opinion seems to favor F over GM bc of the bailout business, but that certainly doesn’t seem to have slown down GM’s car sales.
    So GM or F?


  96. Doctor,
     
    FWIW….the public opinion issue is pretty significant.  My friend the dealer told me they have GM employees buying Ford products because of the bailout.  Go figure.
     
    We no longer buy any GM products and there’s a lot of people I know who won’t either. 


  97. exec,

    1 minute bottoms of the 13th, yesterday’s tops; goes back to 9/22 !!


  98. VIX/JC – Good call, something strange going on.

    JAG/Amatta – Man they got killed for that miss didn’t they?  They were 20% shy of revenue estimates but some of it was pricing and some was luck as they have to mine 463,000 tons of rock to get 40,660 ounces of gold and sometimes the yields are better than others (of course downtrending yields are a bad sign too!).   Guidance was reduced and it’s not expected they’ll produce at a better rate than they did this quarter BUT, that’s still a net cost of $850 an ounce for 40,000 ounces so figure they clear $600 an ounce and that’s $24M per Q of operating profit (not net) or $100M a year against a $400M market cap so I like them long-term but they are going to be a rocky hold.

    Dollar 77.27 but the markets not tanking yet.  Be careful though.  

    INTC/Tx – Yes, that’s right, you are simply taking most off the table and leaving on some for possible additional gains.  Of course, that’s based on me thinking you would agree that INTC is in a range and, if they happen to sell off for some reason, then you would be happy to take the opportunity to adjust the position far more aggressive again.  As it stands now, of course, it’s a bit bearish with the $22.50 caller but, as I noted, you won’t be crying if you end up getting "stuck" paying them off either.  

    Education/Nicha – Yes there are 529 (I think) accounts specifically for that purpose.   You have to check with bank or accountant.  Good cartoons: 

    Wall Street Photo: Selected By The Observation Deck / AL

    Cramer/Rustle – I was thinking the same thing.  That guy just oozes sleaze these days – he’s like a cartoon snake oil salesman – you can’t trust a single word that comes out of his mouth.  

    8 and 1 is gay/Angel – Well that’s just about the right percentage isn’t it?  I’m wondering if there are any black guys in the club or if the Members are only willing to vote for them as a theoretical President?  As to Perry, I didn’t think synonyms counted…  

    CTFC/Kustomz – About time but now we’ll have to see if the rules have any teeth or if the big guys can get around it by just hiring more traders or creating more LLCs to trade through.  

    Good call JRW! 

    $25K/Nicha – Perhaps you can have the money go to the kid at a reduced tax rate (although you may lose your own deduction).   Both you and your wife can give $13,000 a year tax free to each kid and that money does not count against your $5M lifetime exemption – that is my understanding anyway but I am a terrible accountant so check with yours.  Actually, it may be possible to "gift" the land to your kid and let them collect the cash – all stuff you need an accountant to sort through but timing is everything as I THINK that you and your wife can gift the land without taking a gain on it but the value of the gift would be $12,500 from each of you and then there would be no gains charged to the kid for the sale of the land they got as a gift – that’s a little convoluted but that’s my interpretation of it.  

    Mormans/ZZ – Who has a problem with Mormons?  I hear a lot of people defending them but I’ve never heard people saying bad things about them in the first place – they seem like a very nice group overall.  

    Oops, Dollar 77.35 and NOW The markets are reacting.  


  99. Obviously, 11,500 is a good line to short Dow Futures (/YM) with a tight stop there.   

    DIA $115 puts are just $1 so 20 of them in the $25KP with a stop at .85.  


  100. Nas dropping hard and fast – oil $87.67 and we may get a huge sell-off into NYMEX close.  

    Quick take on the Beige Book is that it’s worse than the last one – I’ll go over it next but this may be a n over-reaction and I wouldn’t go too crazy but let’s watch that RUT 700 line as a "good or bad" indicator.  


  101. Rupert!  1:59 PM The WSJ is reporting that EU lawyers may be blocking thefloated rescue fund expansion, rejecting the notion that the EFSF can be used to guarantee sovereign bondholders against losses. Stocks and the euro show little reaction so far 


  102. There seems to be something very strange with the vix today.   I am not sure what that means…. anyone have any opinions.  I shorted the SPX at 1230 at 1230 and we are 15 points down and the position is loosing $15….


  103. Doesnt the rising vix mean someone is buying a lot of puts?


  104.  GMCR WTF?  anyone


  105. Intel breaking out of a long trading range:

    http://www.bespokeinvest.com/thinkbig/2011/10/19/intel-intc-breaks-out-of-multi-year-trading-range.html

    That is a very unappreciated stock IMHO! 


  106. GMCR / Lincoln – Einhorn got the big stick out… Nothing like talks of fraud to hurt a stock price. 


  107. Amazing that some stocks trading today are lower than after the 1987 crash:

    http://www.bespokeinvest.com/thinkbig/2011/10/19/the-87-crash-wasnt-a-good-entry-point-for-some-stocks.html

    They look oversold on my 25-year period RSI chart!


  108.  Thanks for the oil trade Phil, just took profits! You da man…


  109.  That puts the 9-9-9 plan in perpective:

    http://www.washingtonpost.com/blogs/ezra-klein/post/the-9-9-9-plan-in-one-very-long-graph/2011/08/25/gIQAgq8WxL_blog.html

    Make sure to turn your 80" inch screen vertical!


  110.  You’re going to need a vertical screen to track this selloff.


  111. Got part of my SCO calls at 100% fin a day, now just hoping it stays over 53 by Friday for my 50/53 bull call spread net 1.20.


  112. etradingsignals – thank you. Will look into that. Did you read this article about Illinois reneging on their prepaid tuition.


  113. Beige Book:  

    Prepared at the Federal Reserve Bank of Chicago and based on information collected on or before October 7, 2011. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.


    Reports from the twelve Federal Reserve Districts indicate that overall economic activity continued to expand in September, although many Districts described the pace of growth as "modest" or "slight" and contacts generally noted weaker or less certain outlooks for business conditions. The reports suggest that consumer spending was up slightly in most Districts, with auto sales and tourism leading the way in several of them. Business spending increased somewhat, particularly for construction and mining equipment and auto dealer inventories, but many Districts noted restraint in hiring and capital spending plans. By sector, manufacturing and transportation activity was reported to have increased on balance. A few Districts also reported slight improvements in construction and real estate activity; nonetheless, overall conditions for both residential and commercial real estate remained weak. Districts reporting on nonfinancial services cited mixed results with activity varying widely by industry. Loan demand by and large moved lower, with the exception of an increase in mortgage refinancing in many Districts. Crop conditions at harvest were generally less favorable than a year ago. In contrast, energy and mining activity continued to strengthen in several Districts, with the exception of some storm-related slowdowns in the Gulf of Mexico. Cost pressures eased in the majority of Districts, though there was some further pass-through of earlier increases to downstream prices. Wage pressures remained subdued outside of a few exceptions in which firms noted having difficulty finding appropriately skilled workers.

    Note they are attempting to put a good spin on things but it pretty much sucks.  Obviously, from the PPI, cost pressures have turned red since this report and wage pressure being low are good for companies but very bad for America.  

    Consumer Spending and Tourism
    Consumer spending was up slightly in September. The majority of Districts reported increases in auto sales, with the largest improvements in San Francisco and New York. Several Districts noted a greater availability of new vehicles as the supply disruptions that had plagued auto dealerships in the aftermath of the Japanese disaster subsided. Contacts in the Cleveland, New York, Philadelphia, and Dallas Districts indicated that demand for used cars remained high and that some models were still scarce. A large number of Districts reported that non-auto retail sales were flat to down in September; but a few, such as Philadelphia, Richmond, and Dallas noted an increase in customer traffic late in the month and into early October. Back-to-school sales were described as being fairly strong in New York and satisfactory in Richmond. In addition, Boston, Chicago, Kansas City, and Dallas cited some strength in the sales of big-ticket or luxury items, while Minneapolis and Chicago noted that more consumers were trading down to value products at grocery stores.

    Tourism was generally higher in those Districts reporting on the sector. Contacts in New York noted that, despite the negative impact of Hurricane Irene, Broadway and hotel revenues continued to rise. Richmond reported substantial damage from Hurricane Irene to some tourist destinations that were subsequently forced to close for repairs, but tourism remained vibrant in other areas. Boston, Atlanta, and Minneapolis also cited increases in tourism, with hospitality contacts in Atlanta expecting a robust holiday season. Tourism results were mixed across various destinations in the San Francisco district.

    Consumer not dead yet but not ready to go out dancing either.  

    Business Spending
    Business spending increased somewhat from the previous report. However, contacts in a number of Districts reported that a weaker and more uncertain economic outlook had increased caution and was weighing on future spending plans. Philadelphia, Richmond, and Chicago indicated that many retailers were reluctant to build inventories ahead of the holiday season, pointing to recent declines in consumer confidence. Auto dealers were an exception, as they continued to replenish inventories that ran low in the aftermath of the production disruptions caused by the Japanese disaster. Capital spending continued as planned in most Districts. Respondents in Cleveland, Atlanta, and Chicago noted increased purchases of equipment in the manufacturing, mining, and transportation industries. Boston and Minneapolis indicated that some manufacturers planned to expand capacity either through mergers and acquisitions or the building of additional facilities. Atlanta cited a pick-up in corporate expansion and relocation interest, and Chicago noted an increase in mergers and acquisitions activity among middle-market firms.

    Lame! 

    Nonfinancial Services
    Reports regarding nonfinancial services were mixed in September. Richmond noted slower overall activity, and St. Louis cited reduced demand for telecommunications, media, and education services. Demand for accounting and legal services was reported to have been unchanged in both Dallas and San Francisco. On the positive side, contacts in St. Louis reported that demand for business support services increased, and Boston reported strong business conditions for economic consulting firms involved with litigation work and advertising firms helping to market financial services. In addition, San Francisco noted continued growth in demand for technology services, Minneapolis noted an increase in activity in software and engineering, and Philadelphia cited some growth in logistics. Staffing at nonfinancial service-sector firms was reported to have been up slightly in Richmond, but growth slowed in Chicago and Philadelphia reported flat activity.

    See, they are trying to cherry-pick but this is not good at all.  

    Manufacturing and Transportation
    Contacts indicated that manufacturing and transportation activity increased since the last report in most Districts. A large number of Districts reported higher production of autos and other transportation-related equipment. Cleveland, Atlanta, and Chicago noted increases in auto production, and Boston, Richmond, Chicago, and St. Louis all cited robust activity for auto suppliers. Dallas reported healthy demand for nondefense transportation goods. Boston, Richmond, Kansas City, and San Francisco indicated continued growth in commercial aviation and aerospace manufacturing. Steel production rose in Cleveland and Chicago, and in a number of Districts metal manufacturers’ new orders also rose. Other areas of manufacturing were more mixed. The Dallas report noted a decline in refining activity. However, both Dallas and Atlanta continued to note robust oil and gas drilling activity, and this activity was said to be propelling demand for related equipment from suppliers in Chicago. Manufacturing of construction materials or equipment was reported to have increased some in Philadelphia, Chicago, and Dallas but remained weak in most other Districts. Growth in high-tech manufacturing continued to be robust in Boston, but moderated in Dallas and San Francisco. Respondents reported that food production was up in Chicago, Minneapolis, and San Francisco, steady in Dallas, and lower in Boston. Manufacturers of consumer products reported a softening in orders in Richmond, Chicago, and Dallas, while new orders for apparel increased in San Francisco. Freight traffic increased in Cleveland and Atlanta, driven in large part by shipments of commodities, and Richmond also noted that port activity for commodities continued to be robust. However, Richmond also indicated that imports and exports, in particular of consumer goods, were both somewhat soft during what is typically the peak season for trade.

    Commodities doing well but not so much consumer goods – not a well-balanced economy at all.  Still, it’s our brightest spot so far (and you don’t have to be a genius to predict how the next section is going to look!).    

    Real Estate and Construction
    All twelve Districts reported that real estate and construction activity was little changed on balance from the prior report. Residential construction remained at low levels, particularly for single-family homes. That said, Philadelphia, Cleveland, and Minneapolis noted small increases in single-family construction, and construction of multifamily dwellings continued to increase at a moderate pace in Boston, Philadelphia, Cleveland, Kansas City, Dallas, and San Francisco. Home sales remained weak overall, and home prices were reported to be either flat or declining across all of the Districts. In contrast, rental demand continued to rise in a number of Districts. Commercial real estate conditions remained weak overall, although commercial construction increased at a slow pace in most Districts. Boston, Philadelphia, St. Louis and Cleveland cited some gains in demand for construction of education, healthcare, and institutional-related buildings, and New York reported an increase in hotel development. Furthermore, Philadelphia, Cleveland, and Chicago noted an increase in demand for manufacturing and distribution facilities. Vacancy rates remained elevated, but Boston, Atlanta, Chicago, Minneapolis and Dallas reported an increase in leasing activity and Philadelphia and San Francisco indicated rising investor interest in well-leased office space.

    Banking and Finance
    Financial activity was reported to have weakened some since the last report. Dallas noted that the improvement in financial conditions had stalled, and Chicago indicated a further tightening of credit conditions, particularly for financial firms. In addition, New York reported noticeably weaker activity in the securities industry. Loan volumes were either flat or down slightly in most Districts. Consumer loan demand moved lower according to respondents in Cleveland, Chicago, and Kansas City, and it held steady in New York and San Francisco. However, New York, Philadelphia, Cleveland, Richmond, Chicago, and Kansas City all noted an increase in mortgage refinancing activity given lower mortgage rates and Cleveland also noted continued strength in auto lending and increased demand for business loans. Meanwhile, business loan demand was described as down somewhat in Philadelphia, Chicago, St. Louis, and Kansas City and was little changed in most other Districts. Loan standards were described as still tight for many classes of borrowers. That said, several Districts indicated that strong competition among banks for high quality borrowers was leading to lower rates and fees for these customers.

    We already know this – Banks will only lend to people who have money.  Other people (the bottom 99%) have gotten the message and aren’t even applying anymore so the banks have to chase the top 1% and give them great deals to borrow while they foreclose on the bottom 99%, who can’t even refinance what they have.  This is simply a confiscation and transfer of property from the bottom to the top facilitated by the Banks – just as Jefferson’s quote predicts.  

    Agriculture and Natural Resources
    Contacts generally reported that crop conditions at harvest were less favorable than a year ago, although results varied by and within Districts. Lower yields than a year ago were reported for major crops in the Chicago, Minneapolis, and Dallas Districts and in most of the Kansas City District. Even so, yields were large enough to alleviate worries about shortages. Corn, soybean, and wheat prices moved down, while some contacts noted higher prices for cotton. Drought conditions persisted in the Atlanta, Kansas City, and Dallas Districts, and pastures were in worse shape than a year ago in many areas. Although there were declines in feed costs, poultry and livestock producers remained pressured by drought and the cost increases of the past year. Hog, poultry, and dairy prices decreased, while cattle prices increased. Still, agricultural prices tended to be higher than a year ago, boosting farm incomes outside of drought-stricken areas. Chicago and Kansas City reported higher agricultural land values.

    Activity in energy-producing sectors strengthened in the Cleveland, Minneapolis, Kansas City, Dallas, and San Francisco Districts. Atlanta reported a decrease in off-shore operations in the Gulf of Mexico due to Tropical Storm Lee. Cleveland and Atlanta also anticipated increased capital investments in oil and gas production, since new technology has lowered costs and boosted output. Contacts in Minneapolis reported plans for expanded wind generation of electricity. Mining activity in the Minneapolis, Kansas City, and San Francisco Districts was strong.

    Money still going into commodities and away from consumer goods and assets.  It’s not good when the "robust" portion of the economy is consumables – there is nothing of value when they are gone but dry land and a hole in the ground.

    Employment, Wages, and Prices
    Respondents indicated that labor market conditions were little changed, on balance, in September. Several Districts cited only limited and selective demand for new hires. Cleveland, Richmond, Atlanta, Chicago, and Kansas City all noted that firms in some sectors that were hiring more broadly (such as manufacturing, transportation, and energy) were also experiencing difficulties in finding appropriately skilled or qualified labor. Respondents in the Boston, Richmond, Atlanta, and Chicago Districts indicated that hiring was being restrained by elevated uncertainty or lower expectations for their future growth. New York reported that deteriorating business conditions in the finance industry had led to a pull back in hiring with some layoffs anticipated in the months ahead. Richmond and Chicago reported reduced seasonal hiring in retail trade given apprehension about the strength of holiday sales, while New York indicated that seasonal hiring was likely to increase.

    Most Districts reported that wage pressures remained subdued. Exceptions were generally for workers with specialized skills or in areas where firms were having difficulty finding workers. For instance, Atlanta and San Francisco cited wage gains for workers with specialized skills, such as in information technology, Minneapolis reported wage increases in the energy industry, and Cleveland noted higher wages for truck drivers. In addition, contacts in Minneapolis and Cleveland noted increases in non-wage costs such as healthcare. Most other cost pressures moderated in September. Although Kansas City and San Francisco reported increases in raw material costs, most Districts reported a general decline in commodity prices, including prices of oil and industrial metals. Many Districts indicated that there continued to be some further pass-through of past increases to wholesale prices. Though retail contacts noted a hesitation to increase prices with demand still weak, many Districts reported increased pass-through of costs in the retail sector, particularly for food and cotton-based goods.

    Well inflation is on the march and it may be the only thing that can save us.   Overall, this is a crap report showing deteriorating conditions since the last one (September 7th).

    Hard to say how much of this was anticipated but, as I keep saying, earnings trumps all so I don’t think we can call the end of the World based on poor data and poor outlooks that came during a time when everyone was super-gloomy about the markets.  

    We made a quick 20% on those DIA puts so don’t blow it – we take it and run and the same goes for the SQQQs etc.  This reaction was an over-reaction and we can always use our additional cash to buy more hedges but we got the drop we were looking for on this data so DON’T BE GREEDY!  

     


  114. Oil touched $86 so of course half back out at $1.15 on the USO puts in the $25KP and a stop at $1 on the rest.  We might do better but why risk a nice gain after almost taking a loss?  


  115. robert/VIX: VIX is based on implied volatility of both puts and calls roughly 1.5 months out within a certain % OTM.


  116. JRW – Where’s your preference when on the water?


  117. Caymans/Rustle – Hey, maybe our next PSW Conference should be there!  

    Financials/Rustle – Good point.

    GMCR still falling.  

    F/Sparky – Look at that BBook – why not take the $3 and reduce your basis to $9 or less across the board and enjoy the free protection.  You can always roll the caller to higher 2015, 2016 etc. calls while you collect dividends.  If you are so gung-ho bullish, sell puts but don’t take risks you don’t have to.  The logic of selling $10 calls and puts is you collect $4.50 and yes, you do expect to get called away but at net $14.50 – that’s better than net $14.38, isn’t it?  The $12.50 puts protect you down to $10.62 while selling the $10 puts and calls for $4.50 protects you down to (using $11.80 as a basis) to $8.65.  So that’s a 0.12 better upside if called away (but from a much lower basis) and a whopping 20% better downside protection selling the $10 puts and calls vs just the $12.50 calls.  That’s kind of a no-brainer.  You can, of course combine the $12.50 calls with the $10 short puts but my objection there is you raise your put-to price by 10% and that’s fine if you are early in a scale but not so much if you are already heavy with the stock.  

    GMCR/Scott – Momos are playing with fire at the best of times but once they turn bad – they can go very, very bad.  

    GM/Doc – I can’t get my head around GM yet.  We did very well on them when they were up and I did the math and determined that they were losing $20,000 for every car they made and there was no way that was getting better.  I have not looked at them since the inevitable (to us) BK but we did go long at the very bottom but have long since lost interest.  My issue is it’s the same management team that lost money selling cars a few years ago so why would I trust them now?  So I have not been motivated to really look them over and I’d like to see a solid year of earnings before I believe in them.  F on the other hand is a good company as is TM.  

    Damn – 77.45 on the Dollar – I thought it would stop by now.  Over 77.50 and it’s time to flip to DIA $114 puts at $1 (now .95) with the same .85 stop on 20 in the $25KP in case we have an anti-stick finish but volume is still light and this could just be a shake-off ahead of the real EU fix so I do not WANT to cover more.  


  118. I took .80 and ran on SQQQ, thank you very much.  Do you still have confidence in the short AAPL puts or am I being greedy since the whole trade is already a nice winner?  


  119. VIX/Robert – As noted earlier, it was up on a flat day and that was a warning sign.  Those SPX options can be strange during a panic – you have to be careful with them as the bid/asks go nuts.  

    GMCR/Lincoln – Emperor had no clothes and Einhorn pointed it out.  

    Shares of Green Mountain Coffee Roasters (GMCR -11.5%) are off more than 20% since David Einhorn lasered in on the company’s shortcomings, but catch a small lifeline when KeyBanc’s Akshay Jagdale comments on his own Buy rating and $120 price target. He says issues raised in Einhorn’s bearish case (.pdf) aren’t new, and maintains the company is well-positioned to take advantage of licensing deals with SBUX and DNKN.

    You’re welcome DrC! 

    999/StJ – LOL, that graph is great!  


  120. Content – So NFLX announces content deals – and bumps up or steadies.  AMZN announces PBS deal and gets killed.  What up? 


  121. AMZN – I’m short AMZN P 230 and NFLX 105 P this week in any case.  AMZN sub-230 pre-earnings?  Come on.


  122. GMCR – I’ve been costing down (various short P repair combos) on the GMCR Jan 13 40 Ps I’ve had since January 2011 -  pre-fake run-up.  They’ve kept up appearances for a long long time.   No clothes indeed.


  123. Phil…
    After the close… I’m curious about your take on a flat tax. Whether sales or income or combination of both.
     
     Theoretically I think it is a great idea. Remove all loopholes to ensure everyone is paying taxes!
     
     Cain’s 9-9-9 is getting so much bad press, but I feel like it is more the argument of the rich will pay less… while infact they will actually pay less than what they should be paying only if the didn’t find the loophole.
     
    Thanks for sharing your thoughts.


  124. So much crap coming out of Euroland over the wires, making my head spin


  125. USO/Phil – Did u just deliver me 40% on yesterday’s USO Nov Ps?  Thank ya – off the table.


  126.  Phil: missed opportunities
    I remember back in early summer suggesting to Cap we should create a short etf with a basket of all you favorite MOMO’s (NFLX,OPEN,GMCR) would have been best performing for sure ;)  Any thoughts on LNKD?  I know CMG we’re hoping for abig bounce on their earnings before getting back into them.


  127. They are just figuring this out now????????  WOW thought they would actually have a real plan by now…….
     
    from seeking alpha
     
    3:30 PM EU officials are fast at work on another plan after lawyers warn using the EFSF to guarantee against bond losses violates the law. Being debated now is the use of the fund to provide collateral to back up sovereign paper. Countries would borrow from the EFSF and then set those funds aside as security against their open market borrowing. You can’t make this stuff up. Comment! [Global & FX]
     


  128. F U SPY!


  129. Out of USO puts – Thanks Phil but I’m sure you can do better than 45% in 1 day.


  130. russ, looks like Finland will need to vote again on the EFSF issue as well due to incorrect wording in the law


  131. Anyone got TOS script to plot JRW’s pivot points on a chart?
    Thanks.


  132. How does Herman Cain have any votes?  This guy is a moron and as out of touch and wrong as you could be.
     
    http://www.5min.com/Video/Cain-Blames-Unemployed-Crowd-Cheers-517183045


  133. I’m waiting for the Republicans to start touting the Rent is Too Damn High guy.  He might have more of a clue than Herman Cain.


  134. Phil, how did you know to call the bottom on that drop?  I follow your calls but I can’t see how you do it and you do it all the time.  What am I missing?  


  135. AAPL/Dennis – I don’t see AAPL failing to hold $360.  It seems ridiculous just to say it.  Keep in mind though, the cost of the margin on the short Nov $360 puts but, if that doesn’t bother you and especially if you REALLY want to own AAPL at net $360 (or less), then why spend $700 not to own them at that price?  You have $1,600 in your pocket from the puts so whatever you get back is a bonus and just don’t let it go negative if you’d rather not own the stock.  

    Deals/NF – Depends on terms, I guess. AMZN earnings not until later are they?  

    Flat tax/Itrade – I would rather have a VAT than a flat tax because corporations can still avoid a flat tax (although less so if you carve out exemptions).  Our entire deficit is due to the fact that Corporations, who have $15Tn in revenues, paid $192Bn in taxes last year.  That is MESSED UP!  A 20% VAT would raise $3Tn in taxes (we currently collect 2.2Tn including $1Tn of FICA) and balance the budget and if we kept FICA (but removed the $106K cap) and capped spending, we could pay off our national debt in about 20 years with a total effective tax rate of 26.25% for people and Corporations and no IRS forms and not accounting fees, etc – if you buy things, you pay the VAT and if you get paid or pay someone, you pay the FICA – end of story! 

    USO/NF – You are very welcome.  Congrats to all the USO faithful!  

    LNKD/Lincoln – Another BS stock but we shorted them at $100 and got a ride to $75 and I haven’t been very interested since.  I’d love to see them pop back up and use that $100 line but you have to be careful with first-year earnings on these silly stocks as they can make the numbers look very nice (see GMCR) to pull more suckers in.  

    Law/Russell – Those guys write the law, it’s just another technicality.  What this is is a rumor that countermands another rumor and maybe the first rumor was floated by the same guy with the perfect hole to torpedo once they were done with their longs and had flipped short again.  It’s all just BS but what a ride!  

    USO/Jomp – I know, just being conservative in this crazy market.  

    Cain/Rustle – Look at the choices!  I’ll bet I could put myself up and jump to the top of the ranks – it’s pathetic…  Just give any random person a few Million Dollars to meet the filing requirements and they’ll jump to the middle of the pack.  

    Missing/Chaser – It’s kind of like counting cards.  I have price targets on the indexes and key stocks and commodities and every time I read a bit of news or observe some market action I sort of give things a +1 or -1 or whatever weighting so, when a "big" thing hits the wire that’s + or – 5 and moves the market, I can kind of eyeball how much of an affect it’s likely to have.  Also, we have our support lines on the 5% Rule so 1,200 on the S&P seemed kind of obvious, as did 11,400 on the Dow and $86 was our target for oil.  So lots of stuff going on in my head is the answer but I do try to convey as much of it as I can to you guys…

    For tomorrow – Europe finished up 0.5% and now we’re down 1.5% so they have a lot of catching up to do so neutral to bearish into the close is prudent.  

    It’s been a while since we tapped EDZ but they are great crash protection and the Nov $22/26 bull call spread is $1.30 and that can be offset with the same short puts as we looked at for the TZA’s at 10:08 (but I bet you get more for the offsets now).  


  136. oburlacu / pivot points - I’ve never seen JRW be specific about which pivot points he uses (Shadow Trader, Camarilla, Woodies, etc.).  And for the most part he uses his own confluence / support & resistance lines.  It is called a "Pivot Point Strategy" but it might be better thought of as a "confluence line strategy."  If reading this, JRW can set me straight if I’m off.

     

    As to how he comes up with those lines, he usually just says he uses a crystal ball (in other words, he’s not saying). 


  137. AMZN – Right – earnings on 25th.  Up after hours – oh well.  I’m okay at 230 I think – frankly, I’d own them for a while there anyway if need be.


  138. 1020

    I still like Vancouver Island and the San Juans, but Europe has a lot to offer as well  !!


  139. AAPL/Phil – When appropriate, perhaps holla what u might be thinking on today’s AAPL 395/400 BCS.   Seems they make it back to 405 by Friday, but…


  140. JRW – Vancouver Island and the San Juans.  Of all the places we’ve been with the kids, including most of Europe, Alaska and the entire Puget Sound are clear favorites…..
     
    :)


  141. wynn pounded after-hours


  142. Lots a poundings going on AH …EBAY XLNX CAKE …AXP with decent #s and it sells off
     
    NEW YORK (Dow Jones)--The price/earnings ratio of the Standard & Poor’s 500 Index at the close of trading Wednesday was 58.53.
    On Tuesday, the ratio ended at 59.28.
    The price/earnings ratio for the S&P 500 measures the index’s closing level divided by the index’s total earnings for the most recent year.
    In 2010, the most recently reported year, S&P 500 companies reported earnings of $20.67 a share.


  143. I look out to Vancouver island from my home office — I could spends years just travelling this province and being amazed.  That being said, anyone ever been to Crater lake in South Central Oregon?


  144. AAPL/NF – I think they flatline to $400 and maybe $405 and I originally picked the $400/405 but then thought the $395/400 was safer.  AAPL held up well in the drop but won’t be immune to a major sell-off, of course.

    WYNN/Angel – Another winner on the Long Put List.

    Price-earnings/Kustomz – What?  Where does that number come from?  I’m telling you, these days I see Dow Jones and I think Rupert and I think manipulation.  How would the p/e of the S&P 500 gone from 20 to 50 in one quarter?  Are we having another 2008 catastrophe (only with much worse numbers than we had then) or is that report completely false and misleading to such an extent that it can only be on purpose?     

    S&P 500 PE Ratio Chart

    We were talking about weighting the news and that is an important thing – when I hear news I don’t just accept it – it has to conform to facts I am sure of and it has to be from a reliable source.  A source can have an agenda (most do) and still be reliable but you know it’s reliable bullish or bearish, liberal or conservative.  All that has to be taken into account when you process market information and when I see something like what Kustomz just posted – if I see that that "news" is what moved the market lower – then that would make me BULLISH as I know it’s complete nonsense but I also know that there are a Billion suckers out there who take things like that at face value – again, the benefit of raising a society that is full of people who are incapable of doing any critical thinking – or math…



  145. Even the FT is noticing that afternoon have been surprisingly heavy in market moving news:

    http://ftalphaville.ft.com/blog/2011/10/19/706651/gilt-stuffed-and-shrinking-euro-banks-capital-hole/

    It’s afternoon in New York, which means at least one of the following is about to happen:

    1. The abrupt appearance of odd confectionery in the FT bureau.

    2. A downgrade of a European sovereign.

    3. Our colleagues in London or Brussels or Paris or Berlin file a market-moving story.

    You could almost think that they try to manipulate the markets but it’s that would be crazy! 


  146. At the close: Dow -0.61% to 11506. S&P -1.24% to 1210. Nasdaq -1.89% to 2320.
    Treasurys: 30-year +0.14%. 10-yr +0.17%. 5-yr 0%.
    Commodities: Crude -2.51% to $86.31. Gold -0.55% to $1643.75.
    Currencies: Euro 0.% vs. dollar. Yen -0.04%. Pound -0.35%.

    Market recap: Stocks slid late after Sarkozy said eurozone debt talks were stuck, adding to a gloomy assessment of the U.S. economy from the Fed. Tech stocks fell sharply on Apple’s surprise earnings disappointment. But the weaker economy doesn’t appear to be slowing corporate profits, which have mostly surpassed expectations so far. NYSE losers led gainers three to one. 

    Your regularly scheduled 3 o’clock hour news item from Europe: EU officials indicate just €70-€90B will be necessary to recapitalize the banks, far less than the €200B estimated by the IMF and even higher estimates by private analysts. Key to the analysis will be gains booked on holdings of assets like U.K. Gilts, currently trading 11% above par value, but carried at cost.

    EU officials are fast at work on another plan after lawyers warn using the EFSF to guarantee against bond losses violates the law. Being debated now is the use of the fund to provide collateral to back up sovereign paper. Countries would borrow from the EFSF and then set those funds aside as security against their open market borrowing. You can’t make this stuff up. 

    Banking troubles are spilling over into the commodity trade as French lenders are among the gorillas in so-called trade finance – the credit lines that support Swiss-based commodity traders. With the French forced to pull in their horns, big shops like Glencore should be fine, but small-medium sized firms are already feeling the pinch. 

    Turkey vows vengeance after fighters from the Kurdistan Workers Party (PKK) kill 24 Turkish soldiers along the border with Iraq. Political pressure could leave PM Erdogan with no choice but to respond by sending ground forces into Iraq to go after the PKK. TUR -6.6%

    Wells Fargo ramps up its coverage on the steel sector today, initiating the following companies: Nucor (NUE -2%) with an outperform, and AK Steel (AKS -4.8%), Steel Dynamics (STLD -2.8%) and U.S. Steel (X -5.9%) at market perform.

    Einhorn’s slide show:  Green Mountain Coffee (GMCR -11.8%) dives yet again, after David Einhorn publishes the slides from his bearish presentation. The SEC’s rule 201 has gone into effect, as bulls seeing a hit product and sky-high growth continue arguing with bears seeing a steep valuation and potential accounting issues.

    Expectations are high for Amazon’s (AMZN) Kindle Fire, with many predicting the Android (GOOG) tablet will be a top-selling gadget this holiday season. Rodman & Renshaw forecasts 5M Q4 shipments, while UBS is optimistic about the Fire’s ability to createAmazon Prime subscribers, who tend to make far more purchases than other Amazon users. (previously- Well, that’s lovely but don’t you think AMZN LOSES money with each Kindle Fire sold at that price? 

    American Express (AXP): Q3 EPS of $1.03 beats by $0.07. Revenue of $7.6B (+9% Y/Y) in-line. Closely watched loss provisions: $249M, vs. year-ago $373M. Shares +0.9% AH. (PR)

    Buffalo Wild Wings (BWLD): Q3 EPS of $0.61 beats by $0.02. Revenue of $197.8M (+31% Y/Y) beats by $6M. Shares +5%AH. (PR

    Cheesecake Factory (CAKE): Q3 EPS of $0.36 misses by $0.02. Revenue of $430.4M (+29% Y/Y) misses by $5M. (PR)

    eBay (EBAY): Q3 EPS of $0.48 inline. Revenue of $2.97B (+32% Y/Y) beats by $60MEBAY -4.1% AH. (PR)

    More on eBay’s (EBAYQ3 results:  $526M in free cash flow, below net income of $628.2M. Marketplaces revenue +14% Y/Y to $1.35B, Payments revenue +29% to $1.03B. PayPal accounts +14% Y/Y to 103M. Company expects Q4 revenue of $3.2B-$3.35B and EPS of $0.55-$0.58, compared with consensus of $3.3B and $0.58.  EBAY -4.9% AH. (PR)

    E*TRADE Financial (ETFC): Q3 EPS of $0.16 misses by $0.02. Revenue of $507M (+21% Y/Y) misses by $14M. Shares+3.7% AH. (PR)

    Kinder Morgan Partners (KMP): Q3 EPS of $0.44 misses by $0.03. Revenue of $2.19B (+6.6% Y/Y) misses by $120M. Shares+0.9% AH. (PR)

    Western Digital (WDC): FQ1 EPS of $1.01 beats by $0.05. Revenue of $2.69B (+12% Y/Y) beats by $210M. Shares +2.3% AH. 

    Wynn Resorts (WYNN): Q3 EPS of $1.05 misses by $0.11. Revenue of $1.30B (+29% Y/Y) misses by $140M. Shares -4.3% AH. 

    Our next great shorting opportunity.  Kwan – where is our App?  $12Bn!!!!  Groupon is considering an an offering valuing the company at $12B, according to two sources. The float is expected to be less than 10% of that valuation. It’s a far cry from earlier this year when a valuation as high as $30B had been discussed, but above Google’s late 2010 offer of $6B. 

    Jaguar Mining (JAG -18%) gets hit today after lowering its FY11 gold production outlook to 155,000-163,000 ounces at an average cash cost ranging from $835-$845 an ounce. The company attributes the reduction to continuing mill issues at its Paciência mine. 


  147. Phil / 3. Our colleagues in London or Brussels or Paris or Berlin file a market-moving story.


  148. Hey phil.

    The craziness continues.

    Today was another fail that leaves us in that 110 – 122 trading range.

    BUT after 160 pts straight up, we have only given back 20-25 points.

    I still think we stay rangebound and i hate this rumor bot nonsense.

    Killed it today.

    Hope all is well.


  149. mocha – why are you shorting NFLX AFTER it has dropped 200 points ?

    I need to find you a good energy long to replace HK – LOL.

    Seriously NFLX Can easily go to 150 or 200 or could get bought.

    Why short here ?


  150. Phil maybe cause Prez Obama said buying stocks is potentially a good deal, next time i’ll put a WTF in the heading..


  151. Greeks fight back.
     
    Greek resentment of the Germans was clearly demonstrated in Europe as Olympiakos of Piraeus took time off from striking to  unexpectedly defeated German champs Borussia Dortmund 3-1 in tonight’s  European Champions League soccer game.


  152. anyone know if the i pad or other pads will work with tos or do you still need a lap top?


  153. williex/ipad/TOS, yes TOS has app for iPad, type "thinkorswim mobile" in the iPad App store, you will see it, just download and trade.  It’s not as good as it on PC/MAC but it works.  Good luck.
     


  154. Canuck – Visiting Crater lake should be on everyone’s bucket list.
     
    I can scratch it off mine…. :)


  155. Best performing stocks on their earning release day so far:

    http://www.bespokeinvest.com/thinkbig/2011/10/19/best-performing-stocks-on-earnings-report-days-this-season.html

    Of course, there could be other factors such as release on a rally day!  


  156. /HG continues its slide gold weaker.

    Slovenia cut to AA- from AA
     

    Cut to AA- from AA on deteriorating finances
    Earlier today a govt institute said the deficit
    Debt to GDP has doubled since 2008 to 43%
    Outlook stable

     
     

    The survey of 900 Australian businesses fell to -4 in Q3 from +5 in Q2 with sales, employment and profitability all turning lower.
    However, the NAB said conditions gained momentum near the end of the quarter.

    Shirakawa

    Global economic growth slowing
    Emerging economies to maintain trend
    Japan stable, likely to resume moderate recovery
    Carefully watching Europe
    Must watch forex and other markets


  157. who is this guy charles payne..? is he a financial commentator?


  158.  Today’s overall market action is bearish


  159.  the S&P 500 rolls over again at the upper end of its 2-month range, despite falling Eurozone debt angst, some positive US economic data and falling food/energy prices. On the positive side, Utility, Medical and Education shares are higher on the day. Gold is down -1.22%, oil is falling -2.52% and the UBS-Bloomberg Ag Spot Index is down -1.4%. The Germany sovereign cds is down -5.65% to 87.5 bps, the US sovereign cds is down -7.5% to 43.92 bps and the UK sovereign cds is down -4.67% to 84.0 bps. On the negative side, Alt Energy, Oil Tankers, Oil Service, Steel, Internet, Computer, Disk Drive, Networking, Bank and I-Banking shares are especially weak, falling more than -3.0% on the day. Cyclical and small-cap shares are substantially underperforming. Lumber is down -3.2% and Copper is plunging -4.3%. Rice is still close to its multi-year high, rising +30.2% in about 14 weeks. The Libor-OIS Spread is still at 33.0 bps, which is the highest since July 2010. As well, the TED, 2-Year Euro Swap and 2-Year swap spreads are still very close to their recent highs, which is also noteworthy considering the recent strong equity advance. The Western Europe Sovereign CDS Index, the European Financial Sector CDS Index and the Asia-Pacific Sovereign CDS Index are still near their records and trending higher. Despite gains in most of the rest of Asia, the Shanghai Composite fell -.25% overnight and is still near its recent lows, -15.3% ytd. Ukraine shares made another new multi-year low today and are down -48.5% ytd. 


  160. MS earnings beat….what a crock.  They would have earned 3c….no, if you really dig, they actually lost $1.6B. 


  161. By Dave Fry:
     
    "One of the more interesting stories today was embedded in Morgan Stanley’s earnings report. The street expected the company to earn $.30 but the company beat with $1.15 based on an accounting adjustment. How did that work? The company has debt, and plenty of it, but they adopted the unique DVA (Debt Value Adjustment) ploy. It goes like this. The company’s debt has become worth much less in the open market. If they bought the debt back in the open market they would gain $3.4 billion in profits--as CEO James Gorman stated: "It’s a bizarre accounting anomaly". I’ll say! Without this adjustment the company earned $.03. This is the kind of stuff going around these days that doesn’t pass the sniff test. I wonder if you could perform this trickery as a small business person trying to borrow some money from a bank like Morgan Stanley. Not a chance in hell would be the answer."


  162. Williex:  Don’t use TOS, but have an iPad, essential if you travel much.  I’ve paired it with an Apple bluetooth-driven keyboard, which makes it far more useful, even if you don’t touch type; if you do, it’s just night and day.


  163.  


  164.  Didn’t post:  Here’s the link, FWIW:  http://www.seasonalcharts.com/Indices.html


  165. I feel better now…
     
    World wealth to grow 50 percent in 5 years – C.Suisse
    http://uk.news.yahoo.com/world-wealth-grow-50-percent-5-years-c-073843276.html

     
    EU Could Bar Ratings Firms From Issuing Reports On Members In Crisis
    http://www.efxnews.com/story/6040/eu-could-bar-ratings-firms-issuing-reports-members-crisis
     


  166.  dangerous, keep $$ out of BAC!


  167. biodieselchris – OK! ;-)


  168. Good morning!   

    Not much action in the Futures.   

    China was down about 2%, Japan down 1%, India down 1.4%.  Europe is down about a point so far. 

    Dollar right on the 77.5 line – way too strong.   Oil $85.68, gold $1,622, silver $30.80, copper $3.14, gasoline is  way down at $2.65, which shows what absolute BS those inventories are and Nat gas is $3.57 so very lame all around on the strong Dollar. 

    Our futures are actually flat so could be worse but we’ll see if we can stay so brave when real trading starts.  

    Vancouver/Canuck – Now that’s a view I would love to have! 

    Dollar designs/StJ – What a great idea!  I wonder if that’s legal?  Turning cash into political messages for the masses is an excellent concept.

    Good pic, JRW.  

    Hey Cap!  Hope you had a good summer.  Things are fine here, we’re keeping your seat warm.

    IPad/Willie – I use their App and it’s good but nothing like what you have on a PC. 

    And what Bob and JMM said. 

    Best Performers/StJ – Yes, interesting but hard to tell what mitigating factors were.  Maybe list like that based on outperformance to their sector that day.  

    Slovenia/Kustomz – Oh no, not Slovenia!!!  

    Payne/Angel – He was on Cavuto and Bulls and Bears and now they gave him a show of his own.  I think he has some kind of stock research service but the bottom line is he’s one of the faithful at Fox.

    Bearish/Angel – Not with the Dollar up 1% – we held up well considering. Energy and commodities were a huge drag but we expect them to fall as we rotate back to real companies on earnings and the resolution of the EU crisis.  That then causes a slowdown in tanker traffic and rail traffic and flashes all the wrong signals for the data junkies.  Bottom line is (see Big Chart above) that we are consolidating at our breakout lines and every day we’re here is a lot more likely we’re forming a good base to move higher from than we’re turning lower.  

    Yentervention is still my biggest fear but a resolution to the EU issues that boost the Euro and tanks the Dollar should be a constant concern for the bears.  

    MS/Pharm – It’s amazing what crap they can pull in those reports.  Here’s something interesting: 

    John McDermott’s review of Q3 reports from top U.S. banks finds Citigroup’s net exposure to PIIGS economies fell 47% Q/Q, to $7.5B. However, Bank of America (BAC) and JPMorgan (JPM) still have $14.6B and $15.1B in exposure, respectively. Morgan Stanley (MS) and Goldman Sachs’ (GS) exposure grew Q/Q, but each remains at modest levels. 


  169. MS/Diamond – Thanks. 

    Seasonals/ZZ – Well they do all seem to go up at the end of the year. 

    Woops, Dollar just fell off a cliff – all the way back to 77 – erasing yesterday’s gains – that was pretty wild!  

    RUT (/TF) is at the 700 line and and can be played bullish above it with very tight stops and the same for the Dow (/YM) over the 11,500 line but only if the Dollar gets below 77 (and it should at least bounce there first).  


  170. World Growth/Kustomz – Well I suppose if the Governments are going to start banning bad news – maybe!  

    NFLX/Diamond – What a ride!  


  171. Pharm,
    Had another look at your chart on the USD and have to consider - are the catalyst to repeat the 2008 pattern falling in place with Euro Zone not delievering (market expectations are high!) and combined with Yentervention? …..hmmm quite possible in the next two weeks!