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Will We Hold It Wednesday – The Uncertainty Principle

SPY DAILYWhat a mess!

In quantum mechanics, the Heisenberg uncertainty principle states a fundamental limit on the accuracy with which certain pairs of physical properties of a particle, such as position and momentum, cannot be simultaneously known. In other words, the more precisely one property is measured, the less precisely the other can be controlled, determined, or known.

That’s what’s going on in the markets recently, as soon as we know the outcome of one thing, the outcome of other things in reaction to it becomes a new thing to worry about.  The EU passed the EFSF and all seemed well for 2 days but then the Greeks, now certain that further austerity measures would be asked of them, said perhaps (58% of those polled) they don’t want a bailout at that cost.  

Now the banks, who nicely "volunteered" to take 50% haircuts on their debt are faced once a gain with the REAL ISSUE, which is that an INvoluntary default by Greece (and the country rejecting the package and defaulting would seal that deal) would trigger $500Bn worth of Credit Default Swaps, the majority of which are insured by Gang of 12 Members in the TBTF Club like GS, MS, CS, DB, BAC, JPM, C

Guarantees provided by U.S. lenders on government, bank and corporate debt in those countries rose by $80.7 billion this year alone to $518 billion, according to the Bank for International Settlements. Almost all of those are credit-default swaps, said two people familiar with the numbers, accounting for two-thirds of the total related to the five nations, BIS data show.

MF Global Holdings Ltd. (MF), is/was a broker-dealer run by former Goldman Sachs co-Chairman Jon Corzine – so we can assume GS has a similar formula for offsetting their CDS exposure.  MF reported $1 billion of net exposure to Spain and $3 billion to Italy in its second- quarter financials, explaining in a footnote that the net was partly due to a short position on French bonds. Those hedges weren’t enough to protect MF Global, which filed for bankruptcy yesterday after losses in the portfolio wiped out its capital.  Keep in mind Lehman, Merrill and Bear Stearns assured us to the last moment that they were "just fine."

So more scary stuff for the banks who pretend to be insurance companies – only without all those silly reserves against losses that insurance companies would be required to have.

Oh wait, they do have reserves – it’s called your wallet.  As members of the TBTF Club, it is vital to your well-being that Goldman Sachs does not suffer losses from insuring $500Bn worth of debt with money they didn’t have.  That’s what we did with TARP1 (and it gets a one now because there will certainly be another if this hits the fan) and it will be the same dire emergency that will lead to TARP2.  

That, in a nutshell, is what we fear this week.  Will the IBanks let things go that far or will they just GIVE Greece $50Bn to pay off a year’s worth of debts so the whole thing can go away for 12 more months?  Either way, what’s another $500Bn between friends?  

Is it going to affect how many IPhones get bought in Q1?  Will people drive less or eat less or wear less clothes because GS goes under or will we dance on their graves and reinstate Glass-Steagall to make sure this doesn’t happen again (or at least until the next time Republicans take over and roll back all the sensible controls on banking and insurance).  

The banks stopped lending people (the bottom 99%) money two years ago.  They could all fold up tomorrow and as long as the Government prints some funny money to backstop the deposits, I doubt anyone in the bottom 99% would really care.  As members of the investing class, we tend to have an overinflated view of the value of the Financial Community in the overall economy.  While we view it as an engine of wealth creation – the majority of people in this country see nothing but bill collectors.  Sure the Banks  did loan them money once – but that was years ago in a relationship that has long since soured and become very one-sided – even abusive… 


Today we are getting a slight pop in the futures on hopes that the Fed will be kind to us this afternoon and that has worked out perfectly with our plan from yesterday’s post to get a bit more bullish on yesterday’s plunge but it’s a very cautious bullish as we wait to see if our levels can be re-taken before too much technical damage is done.

 Yields on Italian debt are back on the rise, with 10-year notes now fetching 6.25% as the Bank of Italy denies a report that it’s planning emergency intervention, possibly with the BOI buying short-term bonds from the banks in exchange for their commitment to buy the Government’s long-term debt.  

Man, Italy must be in BIG TROUBLE to resort to that kind of desperate, TWISTED strategy – imagine investors being so stupid as to let that sort of blatant manipulation by their Central Bank comfort them – they would have to be complete morons, right???

As Italian borrowing levels become unsustainable, Silvio Berlusconi calls an extraordinary cabinet meeting for this evening to discuss further economic measures. These would reportedly include unpopular taxes on bank accounts and real-estate.  Thank goodness we live in a country where unpopular taxes are never assessed because, as we know, we never have to do anything we don’t like and there will never be any consequences.  Come on, sing "I’m Proud to be an American" with me!

It’s all about the handouts today and the Fed Statement comes out at 12:30 with Bernanke speaking around 2pm and that’s what the bulls are hanging their hats on.  We’ll need a strong indication of QE3 at least being planned or we’re back to bearish – watching our levels closely, of course – none more so than the Dollar, which needs to stay below 77 to keep the pre-market magic going.  


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  1. I don’ think there is any way whatsoever TARP 2 would pass politically in the US in the current climate since neither the Tea Party nor the OWS side would have any truck with it. If GS and their partners in crime have screwed  up again by selling CDS’s on Greek debt, then they can file for bankruptcy and the winners in the CDS game can buy their assets.
    Perhaps we need a national referendum on whether to have TARP 3.

  2. Oil Lines

    R3 – 96.28
    R2 – 94.42
    R1 – 92.89
    PP – 91.03
    S1 – 89.50
    S2 – 87.64
    S3 – 86.11 

    Yesterday’s high and low – 92.56 / 89.17

    Breakout lines – 98.04 / 80.29

    Big volatility which of course generates more volatility moving forward since they basically program their bots to track the same lines we do and they play around them… This is IMHO a big factor in the moves that we are seeing.

  3. Phil
    USO is coming alive already. Should we short at the open or just before inventories?

  4. phil who let glass steagall go?..i htink it was larry bob and bubbah…that was a bad time uptick rule went as well..and then of course nafta has worked brilliantly for the don’t have to have leftie or rightie credentials to screw things just need to have a bagman somewhere in the mix..i still would vote for clinton to be dictator for life

  5. jmm – I believe they WOULD bail out the banks….as it is their friends that they are saving.  I maintain my ground that I am net short this market, but it may not matter….PP for today.

  6. Phil
    I paper traded AA for the last 2 weeks but now i think i would like to try it.  Can I enter it tomorrow with the new weeklies?  If so what would be the best way?

  7. EXEL – few comments on yesterday’s move, as I did not have a chance to then.  First, companies should not squabble with the FDA (EXEL did for their prostate cancer trial) – that is a no no in the regulatory world.  It makes the agency a bit testy.  Second, for a cancer drug to work, the endpoint is body bags, plain and simple.  EXEL tried to sneak in the back door and were caught, I happen to think that the FDA is right on this one.  BUT, we cannot overlook the data for cabozantinib working in other cancers.  The company also has clinical trials ongoing in other types.  Any one could cause the stock to go right back up. I am in 1/2 position,wit calls and puts sold against it, so the puts will be another 1/4 position added if they fail to move back up.  SO, be nimble, be quick, and let Jack jump over the candlestick……!!!!

  8. Tough sledding ahead in Europe:

    These PMI numbers don’t look encouraging. Certainly don’t call for more austerity measures! 

  9. Italy / Phil – Here is more for the fire…

    Jackals… Or as Jabo likes to call them, gonifs! 

  10. Apparently the odds of a hard landing in China are 30%…

    They cite 6 possible factors. 

  11. Another opinion.

  12. stjeanluc, I would call the a bunch of shlamazels!!

  13. AA Money Recap

    Long strangle:

    Jan 13 12.5 calls – $1.27 now $1.39
    Jan 13  7.5 puts – $1.04 now $0.86


    Weekly 10 calls – $1.48 now $0.73 (50%)
    November 11 puts – $0.85 now 0.69 (18%)

  14. well a hardlanding scenario will be hard to actually confirm as the chinese totally cook their books..wen (sic) they take the foot off the brakes equities will fly world wide..this is one way for them to help euroland ..because they certainly don’t have the cash to be bailing europe out…i doubt that we would tarp again….you would have austin howell the third at zuccotti park

  15. Isn’t it awesome how quickly they can fix things.  BuyBuyBuy!!!!

  16. Shlamazels / Jabo – That would be the people in the street getting hosed though…

  17. its not looking too robust so far this am…are we talking about lawyers here or protesters?..shlams and gons?

  18. Remeber the good ole Internet Boom days?  It was all about stocks and all about the USA.  I don’t think I knew anything about, or heard anything about the global economic picture.  Now everyday, that’s what moves our markets.  Debt here, Debt there, Debt EVERYWHERE!!!!!   

  19.  Pharmboy,
    How are you calculating your pivots? Are you using the same method as JRW?

  20. DDM – Thanks for these, Phil. As I move off-line for a few hours, based on feel for day gleaned here, rather than sell outright right now, I’m just going to move my stop up to around $2.40. Make sense?

  21. yes its all the new counterparty bs..brought to you via repeal of glass steagall..unreal..

  22. GNW/WCP -Sorry if you replied to similar inquiry yesterday from another member. I took enough GNW off the table to have my remaining position covered by house money. Assuming we still like this as a longer term WCP play, any reason not to pick up another 5? (I started with 20 – took 15 off at good profit and now have 5 at original cost.)

  23. Good morning!

    Looks like we’re opening at the pre-market highs and I’m not sure that’s good as we had quite the rejection at 4am.  

    Of course the Dollar bounced off the 77 line at 4am and, at the moment, we’re below it at 76.85 so all should be well as long as the Dollar stays down and that’s up to the Euro staying up and the BOJ leaving things alone so place your bets accordingly. 

    I think we can keep things up until 12:30 (EU close) and then it’s all up to the Fed Statement but it’s still take the money and run (there’s a reason Rule #1 is: ALWAYS sell into the initial excitement, isn’t there) on our short-term bullish bets like yesterday’s USO $34 calls in the WCP (was $1.20, now $2) the DDM calls (were $2.15, now $2.50) and, of course, if you read my post this morning, the FAS combo, with the Friday $12s at $1.65 (up 10%) and the short Nov $12 puts at .78, up .18, which may seem like a small gain but it’s $330 in a day on a $15K portfolio (2%) – that’s GOOD!

    Other than that, we watch and wait for the Fed with as much cash as possible but the announcement at 12:30 is only a prelude to what Bernanke says so be very careful.  

    Wednesday’s economic calendar:

    7:00 MBA Mortgage Applications

    7:30 Challenger Job-Cut Report

    8:15 ADP Jobs Report

    9:00 Treasury Quarterly Refunding

    10:30 EIA Petroleum Inventories

    12:30 PM FOMC Announcement 




    At the open: Dow +1.36% to 11817. S&P +1.62% to 1238. Nasdaq +1.11% to 2324.

    Treasurys: 30-year -0.93%. 10-yr -0.21%. 5-yr +0.814%.

    Commodities: Crude +1.47% to $93.55. Gold +1.28% to $1733.65.

    Currencies: Euro +0.81% vs. dollar. Yen -0.39%. Pound -0.42%.

    Market preview: S&P futures +0.6% and gaining strength from comforting jobs data (III). However, with the FOMC not expected to announce any new stimulus and Grecian-Roman woes causing angst, stocks could turn lower, as in Europe. Following earnings, Comcast +2.3% despite missing forecasts, Time Warner+3.4%, AOL +3.7%. Bank shares look set to rebound: BAC +3.9%, C +2.9%.

    "He had better find himself a German grandmother fast," says Morgan’s currency chief of incoming ECB president Draghi. His first acts need to be cutting rates and launching massive purchases of Italian debt, but this would only confirm German’s worst fears about an Italian leading the central bank.

    Treasury says it will gradually increase gross issuance of TIPS in 2012, calling the inflation bonds an "important part" of its overall debt management strategy. The move has the potential to drive yields further into negative territory on shorter terms. Current TIPS yields: 5-year -1.03%, 10-year -0.04%, 20-year 0.48%, 30-year 0.77%.

    sentiment survey of CEOs shows confidence in the U.S. declined to a reading of 57.7 – marking the lowest level since Q2 of 2010. 25% of the execs polled see the economy deteriorating, more than double from a prior survey. "Most CEOs are confident in strength of their own organizations but are deeply concerned that other factors out of their control may hamper their companies’ performance," sums up one investment adviser neatly.

    OpenTable (OPEN) is down 12% following yesterday’s soft Q3 report, which included a Q/Q drop in reservation revenue. BofA isdowngrading shares to Neutral, noting concerns about slowing seated diner growth, the shuttering of the company’s Spotlight daily deals product, and management’s commentary about soft restaurant industry trends.

  24. Someone is spending:  MasterCard (MA): Q3 EPS of $5.63 beats by $0.82. Revenue of $1.81B (+27.3% Y/Y) beats by $100M. (PR)

    More on MasterCard’s Q3 report: Gross dollar volume of transactions grew 18.1% Y/Y, up from Q2′s 16.4%. 13.6% growth in U.S. dollar volume, 20.4% growth in international volume. Processed transactions rose 20.5%, up from Q2′s 17.4%. Free cash flow was $991M, up 72% Y/Y. MA +6.7% premarket. V +2.7%AXP +2%. (PR

    Taking another peek into the experiment of what happens when you tell the banks to take a flyer instead of bailing them out – Iceland hikes its benchmark rate 25 basis points to 4.75. It’s the 2nd bump this year as the economy continues to cruise along, despite the slowdowns around it.

  25. Took very small profits on bullish plays yesterday and glad.  Very cashy right now.  Will breathe a little and just wait.

  26. The McClellan Oscillator is NUTERAL at minus 33 the prior day it was Plus 98. Put / Call volume ratio was 1.35.
    The S& P 500 is up 9 points at this writing.
    We were hyper overbought, extended and needed back-and-fill. Are we oversold enough for a decent bounce to stick? Probably not, but there is loads of technical support below that could withstand more funky Euro headlines…
    As I said, “I think we retrench, find support and await the Santa Claus rally.”
    Declining tops resistance in the S&P 500 (SPX) is at 1224
    Short term price resistance in the (SPX) is at 1229 / 1231 then at1279,then at 1287, then at last Thursday’s top-tick at (SPX) 1292.
    The 200-day moving average resistance is at 1273.
    S&P 500 (SPX) short term support is at 1215.
    Last Thursday’s low tick of the cycle was at 1197and 1192.
    The 50- moving average support is at (SPX) 1190.
    The August 8th lows were 1101. The “clean-out” lows were put in on 10/4/2011 at (SPX) 1074.
    The (SPX) closed at 1218 off 35 points from Friday

  27. Above is from Dr. John Faessel, forgot to credit.

  28. The ADP job report was not bad and that makes you wonder where the market would be if it was not for the European mess! We could get good news all week including another good job number on Friday and still be down for the week! 

  29.  TARP2/JMM – It’s not up to the people,  They have an emergency meeting and ram it through Congress before the markets collapse – no Congressman (except Ron Paul) wants to see a total collapse of the equity markets.  

    Shorting USO/Celeste – I prefer after inventories if they get a nice pop — gives the best chance for success. 


    As the push for new legislation heats up, lobbyists quip that raising the issue of financial modernization really signals the start of a fresh round of political fund-raising. Indeed, in the 1997-98 election cycle, the finance, insurance, and real estate industries (known as the FIRE sector), spends more than $200 million on lobbying and makes more than $150 million in political donations. Campaign contributions are targeted to members of Congressional banking committees and other committees with direct jurisdiction over financial services legislation.

    After 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic.

    On Oct. 21, with the House-Senate conference committee deadlocked after marathon negotiations, the main sticking point is partisan bickering over the bill’s effect on the Community Reinvestment Act, which sets rules for lending to poor communities. Sandy Weill calls President Clinton in the evening to try to break the deadlock after Senator Phil Gramm, chairman of the Banking Committee, warned Citigroup lobbyist Roger Levy that Weill has to get White House moving on the bill or he would shut down the House-Senate conference. Serious negotiations resume, and a deal is announced at 2:45 a.m. on Oct. 22. Whether Weill made any difference in precipitating a deal is unclear.

    On Oct. 22, Weill and John Reed issue a statement congratulating Congress and President Clinton, including 19 administration officials and lawmakers by name. The House and Senate approve a final version of the bill on Nov. 4, and Clinton signs it into law later that month.

    Just days after the administration (including the Treasury Department) agrees to support the repeal, Treasury Secretary Robert Rubin, the former co-chairman of a major Wall Street investment bank, Goldman Sachs, raises eyebrows by accepting a top job at Citigroup as Weill’s chief lieutenant. The previous year, Weill had called Secretary Rubin to give him advance notice of the upcoming merger announcement. When Weill told Rubin he had some important news, the secretary reportedly quipped, "You’re buying the government?"

    That’s from PBS, who should get their facts better because Clinton did not repeal Glass-Steagall (both Democrats), he signed the Graham-Leach-Bliley (all Republicans) Act, which repealed some of the provisions of Glass-Steagall, specifically allowing one bank to act as an investment bank, a commercial bank as well as an insurance company.  In 1999, when the Reps gained control of both houses of Congress, they amended and passed a revised G-L-B Act by a veto-proof majority which completely trashed Glass-Steagall and Clinton did not make the futile gesture of vetoing it as it was attached to a necessary spending bill that would have shut down the Government over the holidays.

    AA/Willie – You can go with the same longs and sell the Nov $11 puts and calls to get started. 

    Jackals/StJ – They certainly smell blood!   30% in China not bad. 

    Opinion/Exec – But it’s ALL a con game isn’t it?   Fiat currency is all about faith, you either accept it or you don’t.  

    DDM/NF – Sure, a stop is fine, risk a little to hopefully make more if you feel it’s the right way to go.  No matter how much you learn trading, sometimes you have to trust your gut.   On GNW, we still have the trade on as it was as it’s on target. 

    Good move Rustle – makes the markets much more fun, doesn’t it?

    Time for those oil inventories. 

  30. ruslte/ attribution fear not everyhting is derivative

  31.  italy 10-y yld was up slightly on day…6.21%

  32.  Oil inventories not enough to sustain $93 and the Dollar back over 77 so down we go. 

     EIA Petroleum Inventories: Crude +14.7M barrels vs. consensus of +200K. Gasoline 9.1M vs. consensus of -1.25M. Distillates -4.7M vs. consensus of -1.5M. Crude futures lower, +1.1%to $93.82.

    USO Nov $35 puts at .90 – buying 10 in the WCP.

  33.  We won’t know until 1pm why such crazy numbers, likely a bump in imports.  

  34. Phil / USO – Is it a buy  Nov $35 put? Sorry, could not help it. It’s a slow day :)

  35. i hope no one is expecting the fed to say there are prospects of qe3 ed hyman is scrambling to revise his second half gdp to 2.5% from one and change…

  36. Philj,
    I bought 25 JPM 34 dec calls yesterday to off set a jan 36 position I opened on monday afternoon that I am selling weeklys against.  The position is up 750 but the weeklys are  around .50 for this friday.  Is it dumb and greedy to sell the weeklys for a 1.00 over the 750?

  37. From Barry – That’s a pretty amazing statistic and probably worth playing in the long run: 

    Why are equity returns so strong on FOMC announcement days? The answer is not clear: factors such as risk, volatility, and liquidity cannot explain the market’s reaction. Similar patterns do not emerge around other scheduled macroeconomic announcements or across other asset classes such as fixed income and currencies. Regardless of the source, however, these findings suggest that equity investors should be circling FOMC announcement dates in their calendars.

    A recent paper entitled “The Pre-FOMC Announcement Drift,” David Lucca and Emanuel Moench of the Federal Reserve Bank of New York find that U.S. stock prices rise significantly in the 24 hours prior to FOMC announcements but do not rise or fall significantly after FOMC decisions are released to the public. In fact, the authors find that 80% of the equity premium of the S&P 500 index over treasuries from 1994 to 2011 was earned solely on FOMC announcement days, meaning that all other trading days combined accounted for only 20% of the equity premium during this period. The authors also found similar patterns in numerous international equity markets such as France, Germany, Spain, and the United Kingdom.

  38.  Where do I find the current open trades for the WCP?

  39. Gaming the Greek scenario:

    Needless to say, many possible outcomes and not that many good ones! 

  40. Don’t get me started on day 3 in a hotel lobby Oscar!

    10:00 AM On the hour: Dow +1.24%. 10-yr -0.1%. Euro +0.77% vs. dollar. Crude +1.1% to $93.2. Gold +1.62% to $1739.55. 

    11:00 AM On the hour: Dow +1.77%. 10-yr -0.11%. Euro +0.8% vs. dollar. Crude +1.12% to $93.22. Gold +1.92% to $1744.65.

    Smartphone users can’t get enough Angry Birds: Rovio says downloads of its hit game have passed 500M, and that users play 300M minutes daily. By contrast, sales of the top-selling console game – Activision’s (ATVI) Call of Duty: Black Ops – onlyamount to 10M. Rovio is mulling a 2012 IPO, likely at a $1B+ valuation. - There’s the cause of the Recession right there!  300M minutes a day is 5M hours or about 650,000 jobs destroyed by Angry Birds!

     Good quote, very German - "A drowning person who throws the life preserver back can’t be saved," writes Germany’s Handelsblatt. Greece leaving the euro wouldn’t be the worst thing as it would allow leaders to focus on Portugal and Ireland – 2 countries seemingly determined to take their medicine for the good of the continent.

    Angry Greeks:  "The referendum will be a clear mandate and a clear message in and outside Greece on our European course and participation in the euro," George Papandreou tells a cabinet meeting, where he won support for the vote. Next up is the wrath of Merkozy today and then a confidence vote on Friday.

    Despite reports that up to $700M of customer money may have gone missing, MF Global (MF) has told a judge that it has accounted for all its clients’ cash. Most of the bankrupt firm’s U.S. assets are held at its brokerage unit, which is not part of the main bankruptcy case, while foreign funds are mostly with regulated entities. - See, total BS but it’s so much fun hearing everyone pontificate on someone’s guilt without a trail, or evidence.  After all, that’s what America is all about – these days – in the Conservative media

    Discount clothier Syms (SYMSfiles for bankruptcy after receiving no "viable bids" in an attempt to sell the company. Syms, which operates 46 stores under Filene’s Basement and its namesake brand in the U.S., says it plans to liquidate the business during the holiday season. SYMS -43.3% premarket.

    Shares of Sotheby’s (BID) move 4.9% lower as its Q3 earnings release approaches and the high-end fall auction seasonlaunches tonight in NYC with art by masters such as Picasso, Degas, and Magritte for sale. Will wealthy investors bid up prices as they use art as a safe haven or will financial turmoil keep sales slow?

    Another BS MoMo bites the dust: OpenTable (OPEN) is down 12% following yesterday’s soft Q3 report, which included a Q/Q drop in reservation revenue. BofA isdowngrading shares to Neutral, noting concerns about slowing seated diner growth, the shuttering of the company’s Spotlight daily deals product, and management’s commentary about soft restaurant industry trends.

    From last year’s Septermber’s Dozen List:  True Religion Apparel (TRLG +10.8%) shares gap higher after the high-end denim retailer’s Q3 report beats profit and revenue expectations, and the company says it entered into a new distribution agreement to expand its business in China. Same-store sales open at least a year rose 10.2%. Caris says shares are a buy at current levels; Brean Murray raises its price target.

    WYNN spikes higher at the open as the company declares a $5/share cash dividend. Shares +4.7%. (PR)

    With investors contemplating Apple’s (AAPL) cash mountain, Tim Cook is apparently open to paying dividends or buying back shares, although neither of these options is likely to happen soon, the WSJ reports. In a feature about how Cook is not Steve Jobs, the paper also cites the opinion of Jobs and others that Cook is "not a product guy."

  41. My home line is apparently back up so I want to get back ahead of the Fed.

    Should be back before 11:45.

  42.  Phil, 
    Portfolio is been slimmed down to only a few positions trying to unwind some more. 
    Struggling deciding what to do with RIMM and TBT.  RIMM (short Jan 40 Puts) was hoping for a little push up to 24 last couple weeks to bail, but they have continued drifting. Would hate to pull the plug at the lows of the year on them after all the waiting for all these months.  at these levels if you think they have a little bounce in them. 
    TBT have the 2013 34 puts but they still hold about $1.00 in premium (which I cant understand being so deep in the money)… In any case, if there is going to be inflation as seems inevitable you think these will come back big?

  43.  Anybody have the link to disaster hedge education?  Thanks

  44. Pharmboy, thoughts on the DEPO earnings?

  45. Anybody’s take on LinkdIn earnings (LNKD)? 

  46. l4real / Pivots

    Standard "pivots" are called Floor Pivots and are available on any platform; there are also Woodie’s, Camarilla, and DeMark’s.  The levels I post are confluence levels based on multiple factors; all is explained here !!

    Good hunting !!

  47. Results Floor Pivot Points Woodie’s Pivot Points Camarilla Pivot Points DeMark’s Pivot Points
    4th Resistance      
    3rd Resistance    
    2nd Resistance  
    1st Resistance
    Pivot Point    
    1st Support
    2nd Support  
    3rd Support    
    4th Support    

  48. DEPO/mrm – next Q will be the tall tail sign for DEPO.  I think uptake and off-label (shhh) will be the key.  I do believe that once a day will trump any 2-4X/day product, including Xenoport.

  49. Guys, I need somebody to find a flaw in my reasoning here: I wasn’t around when you played the FAS/FAZ pair, but Phil has indicated it got scary when one side flew higher, much more in points than the other side dropped. I do not propose to short the underlying, rather I intend to sell calls. If one side soars, I will be assigned a short position on that underlying, while the other side expires. So, what if I turn around and sell a ITM put against my short, inviting a long (and cancelling) assignment and collecting a fat premium? This appears to work.
    After the first month, I propose to sell calls against both sides, and trusting the put will clear away my original assignment. Of course, it matters how far the one side runs, but on the surface it looks promising.

  50. Pivots…..I use standard ("floor).  And what JRW said.

  51. AA Money – Something to keep in mind: 

    The ex-dividend date for Alcoa Inc (NYSE:AA) is tomorrow, November 2, 2011. Owners of shares as of market close today will be eligible for a dividend of 3 cents per share. At a price of $10.18 as of 9:30 a.m. ET, the dividend yield is 1%.

  52. Phil,
      Do you still have faith in RIMM? I have sold JAN 12 $24 Puts (D/D and rolled in two steps from $50). I was thinking of , in effect, exchanging them for JAN 14 ISRG puts, or somethng else.

  53. BTW, Good morning, (Aloha), same levels as yesterday:


    IWM    70.64,  70.98 ,  71.33,  71.87,  72.56,  72.96,  73.51 and  74.02

  54. Phil – still holding the DIA nov 119 puts which I’ve been using as my main downward hedge. Do you think it is it a mistake to hold through the fed statement as I’m more worried about another drop?

  55.  Thanks JRW! That’s good information!

  56. This surprised me, but probably shouldn’t have: From the FT, today:
    From WORLD 11:25am
    Germany sees first jobless rise in 18 months
    PMI also falls as Europe’s largest economy hits weak patch

    Merkel switches to back minimum wage
    German business confidence tumbles

  57.  This surprised me, but probably shouldn’t have:  From the Financial Times:
    From WORLD 11:25am
    Germany sees first jobless rise in 18 months
    PMI also falls as Europe’s largest economy hits weak patch

    Merkel switches to back minimum wage
    German business confidence tumbles

  58. iPad2, only JRW could afford.

  59. I guess no "gap fill" today !!

  60.  From the Financial Times today:  I was surprised by it.
    From WORLD 11:25am
    Germany sees first jobless rise in 18 months
    PMI also falls as Europe’s largest economy hits weak patch

    Merkel switches to back minimum wage
    German business confidence tumbles

  61. OK, I’m back!

    USO holding that $93 line for now, Dollar 77.01, gold $1,740, indexes with a slightly better than weak bounce off the drop.  

    JPM/Joel – It would be nice if I knew the actual strikes and what you paid.  Ahead of the Fed and Bernanke, we could go either way today but, with a weekly position, if you don’t take your money and it moves against you – then what?  No time to recover and time is not on your side at all…

    Barry/StJ – Not clear?  How about FREE MONEY!  There, now it’s clear….

    WCP/KSone – There’s a post for it that you can find using the "Phil" tab on top pretty quickly.  I don’t think I tagged it into Portfolios yet but that’s where it belongs.  After I write a post, about once a week I collect the comments and reprint them under the post but, in between, you just need to go to each day’s comments and hit CTRL-F and put in "WPC" and you’ll see all the times we discussed the trades.  

    RIMM/Amatta – I think they may come back a bit but no way back to $40.  TBT we got away from ages ago.  Shorting TLT much better and I’m sure we had that discussion not too long ago and I have not changed my mind since.  

    Disaster hedge/Willsons – Try to Google " Hedging for Disaster" that should bring up articles.  

    Speaking of disaster hedges:  EDZ is a fun hedge at $18.62 and the Jan $19/23 bull call spread is .85 and can be offset by the sale of CHL Jan $45 puts at $1.05 for a .20 credit on the $4 spread.  

    LNKD/Lolo – No one expects them to make money so I don’t think it makes much difference and I’m sure they set a target that would be easy to beat.  Certainly not something I’d want to play in either direction. 

    Pairs/Barf – Look at SKF in 2008 – $442 (adjusted) on 11/3 and $1,200 on the 21st.  Do you think that may be a problem?  Yes, it’s a black swan but, if you keep betting these ultras – it WILL happen.  Just like if you said it was a "sure thing" to bet against 0 or 00 coming up in roulette – while statistically not likely, after 100 spins you’ll see pretty much everything.  It’s funny when you think about it because, even in Taleb’s "Black Swan" book – there’s a picture of a black swan on the cover  - the most expensive mistakes investors and gamblers make is misunderstanding statistics.  Just like 0 and 00, which pretty much nobody bets on, the house edge in the markets is those margin-blowing black swan events that happen with surprising regularity that force you to fold and walk away with your money on the table.  

    RIMM/Kevin – As I just said to Amatta above, I have $25 faith in RIMM but not $40.  The Jan $24 puts are "just" $6.30 with RIMM at $18.85, I’d sell 1/2 the AAPL Jan $360 puts for $12 or 1x the BA Jan $67.50 puts ($5.75).  

    Aloha kakahiaka JRW.  

    DIA/GBor – If you are worried, then that’s what the hedge is for.  You’re not supposed to "win" your hedges – they are supposed to protect you in a catastrophe.  

    IPad/Nicha – Did they really need to grind up the dinosaur?  Seems like overkill to me… 

    Last Fed statement (9/21):

    Release Date: September 21, 2011

    For immediate release

    Information received since the Federal Open Market Committee met in August indicates that economic growth remains slow. Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has been increasing at only a modest pace in recent months despite some recovery in sales of motor vehicles as supply-chain disruptions eased. Investment in nonresidential structures is still weak, and the housing sector remains depressed. However, business investment in equipment and software continues to expand. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect some pickup in the pace of recovery over coming quarters but anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

    To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to extend the average maturity of its holdings of securities. The Committee intends to purchase, by the end of June 2012, $400 billion of Treasury securities with remaining maturities of 6 years to 30 years and to sell an equal amount of Treasury securities with remaining maturities of 3 years or less. This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

    To help support conditions in mortgage markets, the Committee will now reinvest principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. In addition, the Committee will maintain its existing policy of rolling over maturing Treasury securities at auction.

    The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.

    The Committee discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action were Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who did not support additional policy accommodation at this time.

  62. Can’t seem to post a link – testing.

  63. Floor pivot points
    P = Pivot
    H = High
    L = Low
    C= Close
    Pivot(P) =(H + L + C)/3
    Resistance level 1 (R1) =(2*P) – L
    Support level 1 (S1) =(2*P) – H
    Resistance level 2 (R2) =(P – S1) + R1
    Support level 2 (S2) = P – (R1 – S1)
    Resistance Level 3 (R3) =(P – S1) + R2
    Support Level 3 (S3) = P – (R2 – S1)

  64.  From WORLD 11:25am
    Germany sees first jobless rise in 18 months
    PMI also falls as Europe’s largest economy hits weak patch

    Merkel switches to back minimum wage
    German business confidence tumbles

  65.  QE3 – EU version?
    Jeremy Batstone-Carr, chief economist at Charles Stanley, comments: “On Europe we believe that the only way out, once the authorities realise that plans announced at the recent Summit are unworkable in practice (and hugely unpopular), is for the European Central Bank to open the spigots and print euros – ultimately buying much if not all peripheral regional sovereign debt. Whilst we are far from fans of quantitative easing, we see this as really the only workable solution going forward. Therefore, we expect much chat and little action from G-20.

  66. New Fed Statement – Nothing concrete for the Bulls:  

    Release Date: November 2, 2011

    For immediate release

    Information received since the Federal Open Market Committee met in September indicates that economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year. Nonetheless, recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has increased at a somewhat faster pace in recent months. Business investment in equipment and software has continued to expand, but investment in nonresidential structures is still weak, and the housing sector remains depressed. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect a moderate pace of economic growth over coming quarters and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets. The Committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the Committee’s dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.

    To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

    The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.

    The Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools to promote a stronger economic recovery in a context of price stability.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen. Voting against the action was Charles L. Evans, who supported additional policy accommodation at this time.

    Bernanke officially at 2:15 – given this statement (nothing), what Bernanke says is most important.  I think I highlighter the only change in the whole statement!  

  67. RIMM / Phil – What they have going right now is their service! On the handset side, they are being killed by Apple and now Samsung and HTC. In the latest market share analysis, they were down below 10% coming from  24% a year ago. They are supposed to have new handsets out next year with the new OS (which is really good apparently) but that might be their last chance now for a comeback (looks at NOK with the Windows phone). Not saying they go BK (they still get revenues with the service), but not much room on the upside either. But maybe they get bought since they have put that option on the table before!  

  68. Phil,

    This has a copyright so feel free to pull it if that is a problem !!

    And you wonder why anyone cares about Greece besides the Greeks ?

  69.  Phil
    WFT Weatherford Intl Oil Services – Rebounding like SLB and the drillers.
    Can do B/W  $15.38 selling Jan 2013 !2.50 C & Ps for 7.10. Net 8.28 for a 50% call away if it holds 12.50. Put too is 10.38 which is near their 2009 low of $10. They don’t pay a dividend, but spreads on verticals are WIDE. Do you like them vs SLB?

  70.  Is that enough for our Santa Claus rally?
    Or do we need to wait until the presser?

  71. JRW,
    VIX and other statistical info from Cobra
    Do you know what source he is using to pull all that data from?

  72. USO – What is the target for the USO puts?

  73. JRW, you trading today?

  74. will we finally get that missing mr. stick today???
    Phil--do you think we get a positive or negative surprise from Big Ben at 215? Maybe a little whisper to his cronies to save us from dropping a dime this week?

  75. QE3…ha!

  76. pharm??

  77. phil,
    We just were rejected at the neckline of the H&S from July, and no helicopter Ben.  Should we be leaning bearish now?

  78.  CNBC talking about criminal charges for Corzine for tapping into client accounts.  Considering the source, pure blather, but that "accounting problem" mentioned yesterday better turn out to be true.

  79. Phil,
    VIX is up today even with significant gains on the market.  Still a lot of fear??

  80. Sorry my bad, VIX is down as expected

  81. Jabo?

  82. why did you say qe3 ha?

  83. vic55 / Stats

    He uses BackScanner;here is a free tool !!


    gmarts / Trading

    Just one TNA play from 10:00 to 11:00, all cash now, waiting !!

  84. Free Money / Phil – That’s really your gift Phil… Explaining complicated situation with short sentences we can all understand  :-) 

  85. Well that Fed statement was not enough to keep the Dollar down (no QE 3 so stronger Dollar) and up we go back over 77 and down everything else goes! 

    Chart/JRW – No issue as Gordon writes for us.  That chart’s been right on the money since this mess began. 

    WFT/Tx – I like SLB better but they are OK.  A little cheaper because they are working off some issues that should be behind them and SLB’s dividend sucks anyway (1.4%) so a reasonable trade-off.  

    Santa Clause/Peedle – No way, now it’s all up to Ben’s spin because this is not enough to do anything.  

    USO target/Ross – I’d sell at the bottom.  

    Ben/Jabob – We got NOTHING from that statement so it can’t be more negative at 2:15 than that.  

    Bearish/Peedle – If Ben says as little as that statement, we’re bearish.  

    Fear/Button – Actually, 35 on the VIX is pretty high considering so a bit more fear than is being reflected by the actual movement.  

    Gift/StJ – You mean like this:  

    Dollar rejected at 77.40 so far.  RUT holding 720, NYSE 7,400, S&P 1,230, oil $92 – all good to watch now.  

  86. Phil,
    TLT trade?

  87. Trend line and EMA resistance coming up at IWM 72.29 !!

  88. is there a put you might suggest that we could key in, like DIA 116s??? So we can be ready if we start dropping rapidly?

  89. The Groupon road show is going well, I don’t think I’ve ever read so many articles warning you not get involved with an IPO.  Washington Post just had one telling people to avoid Groupon.  Seems there’s a different one every day.

  90.  Phil,
    Re TLT trade, I took TLT trade from yesterday’s comment: You can still sell the Nov $119 calls for $2.12 and buy the Friday $120/117 bear put spread for $1.75 for a net .37 credit on the $3 spread.

  91. Jabo – this market is counting on Free Money…which ain’t gonna happen until JR’s chart comes to fruition.  By then, it may be too late.  QE1 held the banks up, QE2 was to lower the unemployment rate (did it?), and QE3 is nothing more than a song and dance.

  92. Zeroxzero/Corzine crimes?
    Apparently the source is Jake Zamansky a leading "clean-up Wall Street" lawyer and activist.

  93. Layoffs, layoff, and more layoffs…..SNY announces more, AMGN announced some, MRK is announcing more, NVS, etc.  This is only big pharma….Banks….The new normal, yes.

  94. All in TNA now !! (1/3 off IWM 71.87 and 2/3 on the break through resistance)

  95. TLT/Kallen – Where were you yesterday when it was higher?  That trade was selling the $119 calls for $2.12 (now $1.80) and buying the Friday $120/117 bear put spread for $1.75 (now $1.90) for a net .37 credit on the $3 spread.  Now it’s net .10, up .47 but not worth chasing.  Just have to wait for the next run over $120 and look for similar (maybe the same combo will go back to a credit).  

    Momentum put/Morx – Whenever you need a momentum put, you just want to find whatever DIA put has a .50 delta, in this case it’s the $118 puts at $3.  What’s nice about those is a $2 move in the Dow down raises them to $4 with a .62 delta so your gains expand as the Dow move lower but a $1 move against you (where you would obviously have stopped out) is $2.60ish so .40 risk to $1 reward is always a good way to enter a trade but the Dollar is heading down now so it’s just a trade to keep ready in case the Dow fails to hold 11,800 here, using that line as a tight stop.  If you want to spend less, the put $2 lower than the put with the .50 delta is the way to go – in this case it’s the $116 puts at $2.23 with a .40 delta.  

    Groupon/Rustle – This is one of those cases where "everyone" is probably right.  

    TLT/Kallen – Well if you got the fill, I still like the target for the week.  

    TNA/JRW – Very brave.  Dollar may bounce off 77.20 and form a tight range into Bernanke. 

  96. Phil /FYI


    A new U.S. citizen holds an American flag during a naturalization ceremony beneath the Statue of Liberty, October 28,  2011.  REUTERS/Mike Segar

    A new U.S. citizen holds an American flag during a naturalization ceremony beneath the Statue of Liberty, October 28, 2011.

    Credit: Reuters/Mike Segar

    COPENHAGEN | Wed Nov 2, 2011 8:01am EDT

    COPENHAGEN (Reuters) – The United States remains the fourth best country in the world to live in, but adjustment for inequality drops it into 23rd place, according to an annual U.N. ranking of nations’ development released on Wednesday.

  97. Quick profit,  and OUT !!

  98. If Bernanke says the word "Congress" (as in Congress will need to act), we will drop at least 100 points.  

  99. ROFL Phil.  "CON-digress…."

  100. Phil / Congress – Good point, but I can’t imagine he’d be that direct (of course I could be wrong).  I would think he’d say something about the need for "monetary policy to be reinforced by expansionary fiscal policy."  Or something like that.

  101. JRW / flag — I guess that guy is under distress after becoming a citizen?

  102. JRW/Country Rankings – Norway – really? Have you read the crime fiction coming out of the Nordic region? Those are some damaged white people. Lol.

  103. Whoa –  Fed shaves over a point off growth forecasts!  From 2.7% to 1.65%!  DIA puts looking Good!  

  104. Thanks JRW

  105. Phil--why do you think the market isn’t reacting to the negative news???

  106. Could lay foundation for QE3 though…

    Citizen/JRW – Appropriately, the little flag they make you buy is made in China…

    Nordic crime/NF – Yeah, they write some dark stuff.  It’s like their specialty… 

    DECK is still one of my favorite puts. 

    Reaction/Jabob – News is so bad we GOTS to get us some QE3.  

  107. Pharm – Maybe later I’ll share my personal experience w same, but I’d imagine the new and substantial finding that annual chest x-rays don’t improve survival rates for lung cancer (along with what will be misinterpreted as an endorsement of CT scans as better) will impact the “CT Market” in a number of ways. I know you’re a pharm-side guy, but any sense of what that market looks like? Is it fragmented at every level? Or are there player segments?

  108.  N**fx – No one took to "death metal" like those folk, drove from Oslo to Stavanger once, misty forests and heavy death, like a horror movie~

  109. Phil--hilarious!

  110. Nords – Not a crime thriller per se, but one of my favorite little-seen Swede movies of all time: The Celebration – Avail at, um, NFLX. (BTW, even tho the US version looks to be pretty good, the original release of “Girl With the Dragon Tatoo” is worth seeing first – free on NFLX!)

  111. zero/death metal – oh my god – yes! So true. Saw a great documentary that covered death and goth metal in a bunch of countries. The Nords were the blackest of black.

  112.  Careful with TZA. dollar selling off.

  113. Wow, an inflation target (2%)!  

    3-3.9% growth in 2014?  Whuck?  What happens, do aliens from that diamond planet start shopping here?  

    Dollar right on that 77.20 line and markets look like they WANT to go up – all he needs is a few kind words.  

  114. FED OFFICIALS SEE 2011 GDP 1.6%-1.7% VS 2.7%-2.9%
    FED OFFICIALS SEE 2012 GDP 2.5%-2.9% VS 3.3%-3.7%
    FED OFFICIALS SEE LONGER-RUN GDP 2.4%-2.7% VS 2.5%-2.8%
    FED OFFICIALS SEE 2011 UNEMPLOYMENT 9.0%-9.1% VS 8.6%-8.9%
    FED OFFICIALS SEE 2012 JOBLESS ESTIMATE 8.5%-8.7% VS 7.8%-8.2%
    FED OFFICIALS SEE 2013 JOBLESS ESTIMATE 7.8%-8.2% VS 7.0%-7.5%


    So the best investment ?

  115. Market/NF – if you are referring to diagnostics, the industry is bracing for tags that they will be able to infuse to find the cancers.  Think of it as a nano particle or something that lights up when the cancer is ‘found’.  Scans are cool, this is way cooler.  Other methods will be SQNM type tests, but I like Genprobe better than SQNM.

  116. He’s selling the current policy as SUPER-Accomodative.  

  117.  His voice sounds really unsure.  Might be my bloomberg radio feed.  Anybody else hear that?

  118. Oslo Drive – Drive north out of Monroe, Louisiana in the deep night some time – then call me regarding the need for an underwear change about an hour into it. Same as you describe. True True Blood-ish.

  119. Oops, that was it already?  That cannot be taken bullishly.  If they don’t have a question tee’d up for him to hint on, stick a fork in this rally ’cause it’s done.  

  120. seems like no market reaction, blah.

  121. Pharm/diagnostics – Thanks. I was also thinking/asking who benefits – from an investor viewpoint – in the likely spiking growth of “elective” CT scans over the next ten years. (Even though one torso CT has the equivalent radiation exposure of 1500 chest x-rays – and has a 90% false positive rate as related to lung irregularities.)


  123. But he didn’t say Congress!

  124. He didn’t really say anything

  125.  Does he read PSW?

  126. GE makes CT scanners….if they get rid of their finance unit, I would consider buying them….but not worth the risk when they own a ton of real estate in the EU (I think it is still on their books?).

  127. Usually the initial way the market runs after Bernanke is the opposite of how we finish.  Wonder if DIA puts should be bought?  Phil, you’re take.

  128. meant your take

  129. Why it must be 2:30   8-)

    Resistance at 72.56, 200 SMA at 72.62 !!

  130. Phil/DIA, Out of puts over 11,800 or wait and see? thanks

  131. JR/.223
    I agree…..and well stocked.

  132. Spooky/NF – Try the Jersey Pine Barrons (where they filmed Blair Witch

    Did I miss some nuance here?  I didn’t hear whatever dropped the Dollar below 77.20…

    That’s my take Rustle, I don’t see why we’re going up at the moment.  JRW may be right, it’s 2:30!  

  133.  DIA puts/Jomp – I wouldn’t get out on a spike but now we are playing to lose a bit by hanging on but I DO NOT HEAR ANYTHING BULLISH YET.  

  134.  Those are not .223 cartridges; I think they’re .50s, unless the photo was taken through a microscope.

  135. Wow, Ben loves to say how well he’s controlled inflation.  What a tool.  People are getting killed and downgrading their lifestyles because he doesn’t count food and fuel as inflation (nor is there much weight given to college costs or medical expenses).  I guess for the people who buy lots of computers and cars and homes – inflation is totally under control!  

  136. V and MA selling off so he’s not making consumers happy.  

    Now he’s naming tools they COULD use and indicates he MAY use them at some point "if we are below our objectives" – HOW THE F*CK IS 8% UNEMPLOYMENT NOT BELOW THEIR OBJECTIVE???

  137. Market might be going up on meeting tomorrow for Greece.

  138.  Pharm – GE exposure to Euro

    That’s $127 billion in direct exposure to Europe. Assume a 20% haircut on these assets (based on bond prices), and you’re looking at $25 billion in losses. That’s a conservative estimate based on today’s prices… but we expect the situation will get worse.


    Due to $100 billion-plus of assets sales (including some of its best money-making properties, like NBC), GE now holds $44 billion in net tangible equity capital, which is enough to weather the storm in Europe – for now. However, I believe GE will continue to sell its trophy assets to cover these losses, which will greatly minimize the earnings power of the surviving company. And… if the crisis in Europe continues to get worse, there’s no doubt GE’s solvency is at risk.

  139. ZXZ, Looks like 50′s to me too

  140. why not take bank overnight rates to 0%, make them lend to make money

  141. "We are prepared to do more, we have the tools to do more" – that should be enough for the bulls.  

  142.  Euro still rising, taking small TZA position.

  143. IWM weekly $73 puts can be sold for $1.35 with a stop at $1.50. 

    IWM Nove $72/73 bull call spread is .60 and can be a 2:1 spread or nice 66% gain potential on it’s own. 

    DIA puts dead, of course.  Oil puts still good pending review of why the build.  

  144. phil--you turned more bullish cause of that comment?

  145. FAS Nov $12 puts can be sold for .75, Nov $12/14 bull call spread is $1.15 for net .40 on $2 spread.  

  146. All in TNA again !! (1/3 off 71.87 line, 1/3 on the 72.30 break, and 1/3 on the 72.56 break)

  147. Phil / Going up ?

    Well, of course, it’s so that we can go DOWN tomorrow !!  8-)

  148. not looking very bullish.

  149. though I could be wrong

  150. mr stick???

  151. OK, coffee break’s over… BACK TO GREECE!

  152. 2:00 PM On the hour: Dow +0.93%. 10-yr -0.02%. Euro +0.32% vs. dollar. Crude -0.12% to $92.08. Gold +1.25% to $1733.15. 

    3:00 PM On the hour: Dow +1.48%. 10-yr +0.01%. Euro +0.46% vs. dollar. Crude +0.54% to $92.69. Gold +1.28% to $1733.65.

    Europe closes solidly higher following yesterday’s mini-crash. Stoxx 50 +1.4%, Germany +2.3%, Italy +2%, France +1.4%, Spain +0.5%, U.K. +1.3%. Banking shares, however, were unable to make much headway following 2 days of big losses. Financial ETF:EUFN flat.

    The Fed lowers its growth outlook for 2011 to 1.6%-1.7%, 2.5%-2.9% in 2012, 3%-3.5% in 2013, and 3%-3.9% in 2014. It sees unemployment at 9%-9.1% this year, 8.5%-8.7% in 2012, 7.8%-8.2% in 2013, 6.8%-7.7% in 2014. Personal consumption expenditure inflation is forecast at 2.7%-2.9% this year, 1.4%-2% next year, 1.5%-2% in 2013, 1.5%-2% in 2014. 

    What has the Fed actually accomplished with its lower rates? Bernanke says the view behind the question is "understandable," while noting constraints; the Fed can push mortgage rates lower, but there are other problems in the housing market. "Monetary policy may be somewhat less powerful" than it was in the past, but he says it is affecting economic growth.

    Goldman’s little market cheerleader:  The S&P 500 is 33% cheaper than usual for periods of similar inflation, making some energy and financial stocks "attractive," according to Abby Joseph Cohen. Her forecast assumes the U.S. economy avoids recession, but "that’s not a high bar. We’re not saying rapid economic growth or rapid profit growth, but avoid recession and have just modest economic and profit growth." 

    Something for G-20 leaders to chew over as they gather in Cannes tomorrow: The best equity performer over the last 12 months is the U.S., returning 8.12%. The worst is China at -15.73%. Over the last 5 years, emerging markets take the flag – Indonesia, Brazil, and China taking the top spots with annualized returns in/near the teens, while the West was flat to negative.

    Honing in on our new company’s action:  How things have turned around from earlier this year. Oaktree Capital is raising at least $4-$6B to take advantage of a growing selection of distressed assets, just months after returning cash to investors because of a dearth of opportunities. "After making an effort to avoid having too much capital, we are now concerned we have too little," says Chairman Howard Marks.

    Former FDIC chief Sheila Bair blames European banks and their regulators for the European financial crisis. The Basel committee needs to quickly adopt standardized measures of risk set by regulators, not banks, she says; instead, "European regulators have turned risk assessment into an insider’s game where the bankers are calling the shots."

    In a letter to the G-20, the IIF says EU banks will "shrink risk assets," i.e. cut lending, rather than try to raise capital privately (with share prices so low) or accept state injections. The group also calls for more ECB sovereign bond purchases as well as lower policy rates. Euro headed south again. (pdf

    Andy Xie minces no words: "It is not in China’s interest to participate in any EU bailout scheme." Among his reasons are public attitudes towards China in the EU (think Chuck Shumer). Xie isn’t so sure they would improve just because the country funneled cash into the EFSF. More likely, he says, is the "spark(ing) of more fears towards China."

    Attempting to clear up the "nonsensical chatter" of the past few days, the ISDA says CDS do not pose the risk to the system that they did in 2008. The key is transparency – a 3 year old system catalogs 98% of all CDS transactions, making it difficult for anotherAIG to be lying about out there. - Then what happened to MF Global? 

    President Obama urges (live audio) Congress to pass the infrastructure portion of his jobs act – including working on 215 of the nation’s structurally deficient bridges. If Congress clears the path, will infrastructure-related ETFs GIIIGF, and PXR get a boost? 

    MasterCard (MA +5.8%) crushed Q3 estimates, as gross dollar volume of transactions made with its cards increased 18.1% and total transactions rose 20.5%. The concern for the U.S. economyis that the surge in credit card use will lead to a similar uptick in delinquencies and defaults. Credit card use is far outstripping debit card use, possibly indicating that consumers didn’t have the cash.

    Michael Verd’s study of Google Trends data finds a notable decline in searches for Netflix (NFLX). Given the historical correlation between searches and Netflix subscriptions, Verd suspects the company’s recent subscriber losses are likely to get worse. 

    InvestorPlace’s Jeff Reeves makes the bear case for Chipotle (CMG -0.4%), calling it a "favorite to flop." For starters, he cites runaway food inflation squeezing margins and a "nosebleed" P/E ratio of 39, before lining up the historic record of restaurants that grow too fast. "The fact is you can only build so many stores so quickly to prop up growth. Eventually the market becomes saturated or the rate of expansion is no longer large enough to materially impact earnings and sales growth." 

    U.S. smartphone sales growth clearly slowed down in Q3, and it looks like U.K. sales were also weak: Canalys estimates U.K. smartphone shipments fell 7% Q/Q, as weak consumer spending pressured demand. Interestingly, the firm believes Research In Motion (RIMM) was the U.K.’s top smartphone vendor with ~22% share, and that Nokia’s (NOK) share collapsed to ~3%. (yesterday

    Three lunchtime reads:

    1) The end of the uptrend

    2) Worry builds for deficit-panel deal

    3) Two Italians’ high-stakes poker determines global economy’s fate

  153. Bullish/Jabob – Of course.  The most powerful Central Banker on Earth just said, very clearly, that he is prepared to do more, that he has the tools to do more – what more do you want?  That’s the money shot baby!  

  154. CERS breaking out under heavy volume

  155.  So just to be clear Phil,  I can peel off some hedges looking for the Santa Claus rally?  Or we’re gunna rally back up to resistance and then all bets are off?

  156. Phil
    I’d like to get into some semi spreads and two AAPL suppliers are prob.a good start.
    What to you think about
    1.  SWKS  Feb $16/$19 bull call spread for debit $1.6 and selling the Feb $16.p @ $1.50 for net .10 on $3.00 spread.
    Swks now @ $19.00 and would love to own SWKS at $14.5
    2. TQNT  Jan $4/$6 bcs for $1.00 debit and selling the Jan. $5. p @ $.60 for net $.40 on $2.00 spread.
    TQNT now @ $5.24 and would love to own @ $4.40
    - Tis the season for semi’s
    - Expect Cramer to bring on SWKS CEO whom he loves (had on 3x in the past) and this is perfect timing to follow a possible uptrend and TQNT is new supplier with very good track record with GaAs semiconductors and carries no debt.

  157.  Phil: I love bullish, as it comports with my sunny nature.  But the Euro at 1.3750 looms as a real threat, no cierto?

  158. CERS / button - funny that you would post about it when it was at 2.87, which is exactly where I bought it back in May so I was watching this move.  As my daughter would say - "how random!"

  159. Can’t go too crazy on the bull side because Europe is still dangerous but Merkozy is in a meeting right now slapping Papandreou around and they’ll issue a statement tomorrow so maybe all "fixed" again as we get some good jobs numbers (ADP and Challenger were BTE) and Lockhart speaks at 8:30 and he’s a bit doveish so no particular speed bumps between now and tomorrow morning.  

    Hedges/Peedle – MODERATION.  I’m just leaning a bit more bullish (60/40) than I was this morning.  It takes more than a day to convince me everything is back to go-go form.  Still, that very clear statement from Bernanke is not even getting a lot of play – I bet they are saving it for headlines into the weekend.  

    AAPL Suppliers/Ban – Apple suppliers tend to not do as well as you think.  AAPL kills them on pricing so I’d rather be in trades I can get out of when the Cramerican’s come in, rather than getting trapped in a vertical through earnings.  I wouldn’t play either one but, if you are going to, then maybe sell the SWKS Jan $16 puts for $1.30 and buy the $20s for $2.25 and just be happy to make a buck on the net if they get a pop.  If not, you can pull the $20s at $1.25 and then you can just hope they hold $16 and you’re out with a small profit.  TQNT is a joke the way it moves, very dangerous.  If you love them at $4.40 you can sell 2013 $7.50 puts for $3.20 and relax or pair that with the Jan spread and you can still make $2, even if the Jans miss.  

    Euro/ZZ – Still the big problem but we have to have faith in Merkozy to hog-tie that runaway Greek PM in record time this evening.  

  160. Only in bizzaro world would the markets rally off a cut in GDP forecasts from the Fed…

  161. JRW, I played TNA with you today and so we were both "sticktorious"!

  162.  For Immediate Release: November 2, 2011

    Washington, D.C.- Dean Baker, a co-director with the Center for Economic and Policy Research, released the following statement on the announcement of the Wall Street Trading and Speculators Tax by Senator Harkin (D-IA) and Representative DeFazio (D-OR):

    “As more and more Americans voice concerns about the reckless actions of the financial sector that pushed the banking sector to the brink of collapse, Senator Tom Harkin and Representative Peter DeFazio have introduced a proposal that would impose a small tax on financial transactions. This tax would raise tens of billions of dollars a year while reining in dangerous speculative trading.

    “The Harkin-DeFazio proposal calls for the implementation of a modest 0.03 percent financial transactions tax (FTT) on the trading of stocks, futures, bonds, and credit default swaps. This would have a minimal effect on individual 401(k) or mutual funds, however, it would impose substantial costs on those who are engaged in short-term trading strategies that can lead to disruptions in markets, such as last spring’s flash crash. This tax would have no effect on ATM withdrawals, short term revolving loans, or other everyday financial transactions.

    “The FTT enjoys a wide range of support internationally. The European Commission is currently considering a financial speculation tax largely at the urging of the conservative leaders of France and Germany. In the United Kingdom, there is already a similar tax in place that raises 0.2 to 0.3 percent of GDP (the equivalent of $30 to $40 billion a year in an economy as large as the United States) based on taxing stocks alone.

    “As a policy-tool, this tax would raise additional revenue in the United States. At the same time, the legislation would be an effective disincentive against some of the speculative trading. As a result it would reduce the amount of resources wasted in the financial sector and allow it to serve its economic purpose more efficiently.”

  163.  Phil, re the running with the money from before fed, now that we have the fed on board, do we hold for a longer upside, or sell into the close? Thanks!

  164. CERS / MRM,
    Yeah I have been adding as the stock dropped most of the year.  This move actually made this position profitable for me.  Hope we continue the move UP!

  165.  Bloomberg radio all bullish guests

  166. Button, what’s your buying premise on CERS, it’s been half a year and I’ve forgotten mine?  I often DD on bios but forgot to on this one…

  167. kustomz / bizzaro — And what world do you live in? 8)

  168. Not much strength as we retest the day’s highs. 

    Close/Tarpoon – I’m not a day trader.  If there’s profits, sure – take them but I don’t like going in and out of things like that.  I just added some bullish trades (for 2 weeks from now) as that statement has a good chance of bringing us back up but they are not super-aggressive bullish and we laid out a nice EDZ hedge against them already.  It’s all about balance.  The markets will continue to go up and down and, if you are balanced, you cash some out when it’s up and some when it’s down and then you get more balanced again.  At the moment, Bernanke tipped the scales to make us want to lean a little more bullish but nothing really changed – it’s just words but Bernanke’s words can now be spun very bullish so I thought it was a good idea to add some more bullish trades but the World is no less screwed up now than it was at 2:29, is it?  

  169. CERS intercept blood system is picking up in revenue over the pond.  Still awaiting the US approval…..Things that work take time to come around.  DD is a hart thing to do, esp. when the losses are mounting.  Even from this price, they could double if the FDA gives them the nod.

  170. I do believe it’s going to be another 10% day !!  8-)



    Congratulations !!

  171. Bail on another break of IWM 72.96, imho !!

  172. CERS / mrm,
    The Intercept system to inactivate pathogens in donated blood is a very interesting product.  Currently it is used in Europe, Russia and Mid East.  Not yet in USA.  I think that could be a strong move if the FDA approves.  They also have a partnership with Baxter and could be easily bought as it is only a $150 M company.

  173. JRW, I didn’t hit the 10% mark but $1.60 times 600 shares is still a fun day for me!

  174. Button, Pharm - thanks!

  175. well if you look at the clothing it looks like mao is standing there…please stop talking about qe3..if it happens its not going to be form these levels..first china takes foot of brakes..then euro prints in conjunciton with us..then food prices soar oil goes to 120..the chinese revolt and we rally like hell for three months and go into a world wide recession yeah!

  176. All out; too late in the day. 9%, not bad !!

  177. Nice calls JRW!  

    Good plan Angel.  

    This close is sucking, wake up Mr. Stick! 

  178. Dow volume 107M with 8 minutes to go – super low, especially for a Fed day.  

    Absence of sellers good for the bulls though.  

  179. Not carrying too much momentum into tomorrow… Merkel and Sarkozy currently in a teleconference with Papandreou. I am sure it’s going well and they are already making plans for the Euro Christmas party. Never too early to plan! 

  180. baby stick ;-)

  181. Voume / Phil – Really light, not even 1/2 of the 2 sell-offs of this week! 

  182. Phil,
    Thanks for waking up the stick in the last 5 minutes!

  183. FAS
    Come on FAS trade, I need to make back the money I just spent today on a ring for the GF!
    Didn’t get great fills, $1.17 on the spread and $0.65 on the puts for a debit of .52 instead of the .40.  Those puts dropped like a rock as soon as I put in the order at 3.55.

  184. I think Lloyd did that on purpose to let me know I could have been at 10% !!

  185. Well, we would have been very happy with a 1.5% up day off a Fed announcement if it hadn’t come pre-market so, in perspective – a good day for the bulls.  

    FAS/Burr – When you don’t get a good fill, you should lower your profit stops, not try for more money.  

  186. After Hours – When I rejoined a few weeks ago, my most regular and simple bullish income play was short puts (weekly or front month) – I’m bullheaded and simple. Nothing wrong with simple. After being schooled by Phil post-AZMN earnings (a lot like being on the “hot seat” in rehab) I’ve taken to heart a number of things. With respect to AMZN, while it’s not worth being super-bullish, it’s certainly not worth betting short – or even bearish neutral. So, I quietly went back to my simple 195/205 AMZN Nov w bull put spread. In fact, as it looked locked in, I dumped 2/3 of the long puts while they had some value. All good.

    One thing I’d never really done – and that now I’ve come to appreciate a bunch is the bull call spread with a same-stock or related short put. Way cool. Situation specific, but still cool.

    General question – and I know a net credit versus a net debit play: is there a “general” feeling here when even just modestly bullish about a “stock” – not an index (I just follow Phil on those for now as I learn) – about short outs for cash versus bull call spreads w/ a short p leg or without? Too much apple versus orange? Both are easy to understand for me now. So … Just curious.

  187. For those keeping track of these, DIA made an almost perfect bullish harami cross today.  

  188. Short “puts” – not “outs”

  189. Phil / FAS
    I think I know what you mean, but to say it in other words; My expected profit for the trade will be lower that yours since our net entry price is different.  So if you are going for a double let’s say, to 0.80 with a 100% profit, I will still be looking for a 0.80 exit, with a lower % profit.  
    Apologizes if I mis-understood though..

  190. Right on our lines again on 4 of 5 indexes.  

    General/NF – I look at each play and think about what’s likely to happen between now and expiration.  The advantage of a bull call spread is you suffer very little damage if your premise is blown early compared to a naked something.  So, I tend to take the bull spread if I’m either very sure of the target or not at all sure.  If I’m pretty sure, I’m more likely to want to be flexible and just go for the naked put or call, that can easily be stopped out.  But there’s no general anything, it’s all about the specific stock or index over the specific time-frame.  The trick is to learn all the various strategies so you have a lot of tools in your box and then you can choose the right tool for each job – that’s key.

    At the close: Dow +1.54% to 11838. S&P +1.7% to 1239. Nasdaq +0.95% to 2320.

    Treasurys: 30-year -0.19%. 10-yr +0.07%. 5-yr +0.234%.

    Commodities: Crude +0.22% to $92.39. Gold +1.52% to $1737.75.

    Currencies: Euro +0.23% vs. dollar. Yen -0.39%. Pound +0.08%.

    Market recap: Stocks pushed higher after Bernanke reiterated Fed readiness to do more if growth stalls, while the FOMCkept rates unchanged and appeared to show little movement toward further easing. Meanwhile, the Greek referendum is still on, which could delay the next bailout tranche. Treasurys and the dollar pared losses. NYSE advancers led decliners four to one.

    "The market has become one big fat ETF, deal with it," writes Josh Brown, noting the average CBOE Implied Correlation Index has hit a stratospheric 78.21 recently. "It’s a binary market – risk-off or risk-on depending on which side of the bed any given finance minister in Brussels wakes up on that morning."

    Wrapping things up, Bernanke says "the outlook remains unsatisfactory over the next few years," and doing more "remains on the table." Earlier, accepting that low interest rates "have costs for a lot of people," he maintains "a greater good here, which is the health and recovery of the U.S. economy. After all, savers are not going to get very good returns in [a recession]."

    Ben Bernanke’s response (video) to a question on low interest rates isn’t likely to give a warm fuzzy to savers stuck with sub-1% rates. He argues savers would miss out on improved stock market returns without an ultra-low interest rate policy in place to hold off a recession. The pickle: The answer doesn’t quite cover the millions of retirees who rely on CDs, Treasurys, and savings accounts to cover their cost of living. 

    Nice, another 100,000 jobs cut:  A group of U.S. Senators push a proposal to save $8B from the U.S. Postal Service’s budget by cutting Saturday service, closing more post offices, and buying out 100K workers. The situation remains dire for the USPS as it faces a possible default on a $5.5B payment that is due on Nov. 18 for its retiree health fund. Sen. Joe Lieberman supports the deal, saying "without taking controversial steps like these, the Postal Service just isn’t going to make it." - Really Joe?  How about just rais the price of stamps by 5 cents instead of one?  That would only make them 1/35th the price of FedEx.  Or how about not forcing the post office to offer bulk rates to junk mailers?  Let FedEx go to every house, every day with a pound of magazines and brochures no one wants… 

    You can fool some of the people ALL of the time:  Bloomberg’s Emily Chang reports Groupon (GRPNhas stopped taking orders for its shares due to high demand, prompting the witty rejoinder from Josh Brown asking, "if a company comes public with less than 5% of its shares in the float, is it even a public company?" The IPO will sell a 4.7% stake in the company.

    Go Rupert!  News Corp. (NWS): FQ1 EPS of $0.32 beats by $0.03. Revenue of $7.96B (+7% Y/Y) beats by $300M. After hours: NWS+1.7%NWSA +1.8%. (PR

  191. FAS/Burr – Yes but we’re actually looking to make 20% so .40, which means you should be looking for .25 before getting very cautious.  If you look to make 100%, you will be disappointed A LOT and you will let A LOT of 20% gains slip away.  

    What a surprise, Blodget likes Groupon:  More on Groupon selling out of shares: It all makes sense to Henry Blodget: "If I were running a big fund, I’d have placed a huge order for Groupon, too. And then I’d flip immediately." 

  192. Post office / Phil – How about forcing FedEx and UPS to pre-fund their employees health plans like the post office has to because of Congress.

    Most particularly, Donahoe cited a federal regulation instituted in 2007 that "…required the Postal Service to pre-fund retiree health benefits (RHB) in amounts of approximately $5.5 billion per year." There is no other entity in the federal bureaucracy that must abide by similar rules. 

    Just manipulate the game to make sure that it matches your expectation… 

  193.  Phil,
    Is there even the tiny chance that the FED wouldn’t act in the event that the economy blows up?  And if there is no chance of that eventuality, why does the market act surprised when BB says he stands ready to throw a line?

  194. FED-
    I just don’t see the doom and gloom. I remain mildly bullish for the near term.

  195.  Phil or anyone,
    If you compare the 2 stocks YINN and YANG (3x china etf’s) you’ll see that if you had shorted both in almost any time frame you’d be a big winner.  I’ve seen a few posts about a kind of arbitrage trade on 3x etf’s, but are there any tested strategies to take advantage of these funds?

  196. BRK/B- well, I was wrong about my call for a bounce at the 200 MA. Despite that, I added to my 13-Jan position on the dip (off the rising 20 MA.). Also maintained front month calls and will add on a break over the 200. Still looking for mid-80′s or better.

  197. financial transactions tax
    If they introduce this, playing on futures would be too risky,
    1 CL contract would have $30 fee for sale.
    so no fast get in – get out if you are wrong.

  198. Phil/Post Office
    Agree with what you say. It is a pity that the nature of the public media in the US doesn’t allow for more discussion of issues like this, because I am sure that people who actually use the postal service could come up with thousands of cost savings ideas. It is years since I’ve watched TV so I don’t really follow what is on, but can you imagine something like Fox TV getting a bunch of people in the studio to discuss where the US Post Office should be headed? Or Oprah, or whomever is playing the part of Oprah now. I am more and more convinced that a large part of the problem with national politicians is simply that they are too isolated from every day life and really just don’t know what they are talking about, even if they do mean well.
    The Post Office could do a lot more with selling packaging materials, selling prestamped envelopes with eternal stamps, marketing stamps for collectors, promoting use of prepaid US postal money orders for buying Internet merchandise, printing up address labels for homeowners,  and a bunch of other things. I used to rent a PO box, but gave it up, because I didn’t check it very often and it was always jammed full of garbage and junk mail, with just a few letters for me. I asked them to stop putting crap in my box, because I was paying for the box and saving them the cost of delivery, so should not have to put up with this, but they said they couldn’t stop it, even if it was a grocery store flyer addressed to The Holder, Box # xyz.

  199. lol730- what is the source of that info?

  200. 3X China / Peedlew – True that they eventually both went down, but YANG went from 12 to 32 in 2 months (August to September) and you better be ready to accept these types of moves either rolling for time or strikes by DD. It will test your willpower I am sure. You could be right in the long term and be gutted in the short term (look at the TBT trade for example).  

  201. Transation tax / Lol – That would surely put an end to HFT! 

  202. And QCOM easily beat – these guys are just printing money with all the smart phones being sold! And they don’t have much competition either. Up another 10% now! They are forecasting at least $3.42/share next year and even at $57 (AH quote) that would still be a P/E of 16. And they are expected to grow earning about 15% a year in the next 5 years. On the other hand, Price/sales at around 6 is really high! But they pay an OK dividend. Interesting… 

  203. Transation tax
    it will also put end to all our strategies which include covering and rolling twice a week.
    There is simple solution to put end to problems with HFT – just make them keep quotes valid for 1 sec. That’s it. No need for tax.

  204. pstas
    Transation tax -Phil mentioned this earlier today

  205. finance tax – iam about as leftwing as you get but listening to our elected officials talk about the financial system is so annoying and frankly scary.

    F*’ them – why dont they get rid of carried interest and other inane tax breaks -

    i would gladly pay some transaction fee -

    1) i could file as a trader even if i had w2 income – but IRS does not allow this. i had w2 income last year, but managed to trade 20 million in stocks and options – hmm – wonder which i was doing full time – trading or my part time job?

    2) as a non-trader – i could deduct my margin interest

    the list could go on but my blood pressure is going uo.

  206. pharmboy-
    how do i get a good file of your protest sign?

    i want t-shirts and lots of swag

  207. Why even bother trying to pick winners:

    More than 400 stocks in the S&P 500 moved in the same direction in three of the last four days. Investors first snapped up shares when Europe’s leaders agree to expand the region’s bailout fund and then fled equities when Greece said it would hold a referendum on the plan.[....]

    The market has become One Big Fat F***ing ETF.

  208. Transaction Tax- I think that would be $3 not $30 on a $10,000 transaction.
    Representative Peter DeFazio and Senator Tom Harkin proposed a 0.03 percent tax on stock, bond and derivative trades.

  209. CL contract is x1000.
    With oil at 93 = 93,000
    $10,000 is margin, not face value.

  210. Quote of the day from Bernanke’s conference:

    We are trying to do our best to support economic growth and job creation. It would be helpful if we could get assistance from some other parts of the government to work with us to help create more jobs.

    And here is a list of his previous quote and a prediction on the next one:


    With an assist from Steve Benen -

  211. Something must have transpired from talks in Europe – dollar is over 77.50 again and futures are back to the lows of the day….

  212. LOL//an oil contract with 100 price would  have a 3 cent fee..don’t worry it will never get thru the house…i know this will dissppoint those of you who wish to be paying higher fees and taxes..but lets get behind one reality and that is if they wanted to slow or penalize hft they could do it in a much more efficient manner…

  213. its price if its value futures traders will leave in droves

  214. News Alert
    from The Wall Street Journal

    Europe’s leaders, making plain that they’ve reached the end of their patience with Greece, demanded that the beleaguered nation declare whether it wanted to remain in the euro currency union—or risk going it alone in a dramatic secession.

    "Does Greece want to remain part of the euro zone or not," German Chancellor Angela Merkel said. "That is the question the Greek people must now answer."

    The extraordinary rupture with the rest of Europe—whose leaders have insisted for months that an exit from the currency union is simply inconceivable—follows Greek Prime Minister George Papandreou’s stunning decision Monday to call a referendum on his country’s bailout.

    Mr. Papandreou said the referendum could be held Dec. 4 or 5 at the earliest, French President Nicolas Sarkozy and Ms. Merkel said. Greek Parliament must vote on whether the referendum is held.


  215. The more I think about it, the more I like the idea of Phil’s "21st Century Berkshire" business.  Those businesses are exactly the reason why the stock markets  types of businesses that the stock market was actually created for — ownership of businesses as opposed to high-stakes gambling that many participant engage in now.  And it is exactly the type of business that will be necessary to turn this economy around.
    I sincerely hope that this idea comes to fruition because Warren doesn’t have much time left here, but we can carry on his work. 

  216.  I hope they (Greece) tells them (banksters) to F@$K $ff. There is no point in getting their money just so they can give it back as payback. This situation sets a precedence for the rest of the troubled countries… do what your told or we cut you off. There is no dignity in compliance.

  217. Damn, Square may have solved the mobile payment problem. The solution? Tell the cashier your name, and they verify you are who you say you are on their iPad app by verifying your face matches you. But your face doesn’t even show up on their list until you’re within 100 feet of the store, and only then if you’ve turned on auto-payments for that store. All without ever having to take your phone out of your pocket/purse.
    Label me impressed.

  218. dmoroz – I could not agree more….

    Anyone have a lighter?   :)

  219.  7 out of 10 Greeks support the Euro. I doubt they change their minds and go back to the Drachma. JMHO. My thinking is Germany and France will promise to open some factories in Greece. P man is playing hardball, cant blame the guy.

  220. Pharmboy – What is your opinion of Amarin (AMRN)?

  221. sam – karl denninger’s sign, not mine.


    Diamond – would you buy fish oil for $3/pill, or buy Costco’s for 10c?  Get my drift.

  222.  angel – the transaction tax is on notional. So a CL future is 1000 barrels at $100 per barrel is $100,000*.0003= $30.00

  223. how absurd it won’t get thru the house anyway…thank you for the clarification!..imagine i trade sometime 50 spus large at 150k each…its just absurd

  224. A little background on the Prime Minister of Greece:
    George Papandreou was born in Saint Paul, Minnesota, United States, where his father, Andreas Papandreou, held a university post. His mother is American-born Margaret Papandreou, née Chant. He was educated at schools in Toronto (King City Secondary School), at Amherst College in Massachusetts, Stockholm University, the London School of Economics and Harvard University. He has a Bachelor of Arts degree in sociology from Amherst and a Μaster’s degree in sociology from the LSE. He was a researcher in immigration issues at Stockholm University in 1972–73. He was also a Fellow of the Foreign Relations Center of Harvard University in 1992–93.
    In 2002 he was awarded an Honorary Doctorate of Laws by Amherst College and in 2006 he was named Distinguished Professor in the Center for Hellenic Studies by Georgia State College of Arts and Science.
    Papandreou’s father studied and worked as professor of Economics from 1939 to 1959. His paternal grandfather, the elder George Papandreou, was three times Prime Minister of Greece.

  225. Pharmboy – Yes, thanks!

  226. Good morning! 

    Wow, first time in a week I’ve had cable/web access when I woke up.  Too bad today is the day I leave for my trip but I guess I’ll enjoy it while it lasts.  

    Thinks went straight to hell again starting at 5 with this comment:  

     The dissents are the biggest news from today’s Fed statement after lone dissenter Charles Evans said the Fed was not easing enough, while dissenters have been hawkish after past meetings. "That’s a huge change," Dennis Gartman says. "If you thought QE3 was on the table, it’s not – and tightening is not on the table until 2013… Accommodation is not on the way."

    Also, we have a BOE and ECB policy meetings this morning and the Dollar is back to 77.50 (up 1%) in anticipation of rate cuts by both banks.  

    In addition to the normal noise about Greece, check out the relentless stream of bear news right after the market closed:  

    4:31 PM Transocean (RIG): Q3 EPS of $0.03 misses by $0.76. Revenue of $2.24B (-4% Y/Y) misses by $120M. Shares -4.5% AH. (PR)

    4:44 PM Hartford Financial (HIG): Q3 EPS of $0.05 misses by $0.25. Revenue of $4.52B (-31.5% Y/Y) misses by $1.44B. Shares -2.8% AH. (PR)

    5:33 PM MEMC Electronic Materials (WFR): Q3 EPS of $0.03misses by $0.09. Revenue of $516M (+3% Y/Y) misses by $269M. Shares -9.6% AH. (PR)

    5:35 PM Muni bonds face a "real threat" of losing the tax-exempt status of their interest income from the congressional supercommittee on the U.S. deficit, John Kraft says. “Tax exemption is not a tax preference for the rich but an opportunity for states to carry out their capital projects in the most cost-effective way."

    5:50 PM Citigroup’s Tom Fitzpatrick believes the rally hatched a month ago will break down soon: "While we respect the October monthly close on the S&P 500, we did not close above the 12 month moving average… We believe the bear market rally is behind us and anticipate a move towards the 1,000-1,015 target over the weeks and months ahead." 

    7:50 PM European leaders say that Greece will receive no more bailout aid from Europe until it agrees to meet its commitments to the euro zone. Speaking after talks concluded between senior EU leaders and Greek Prime Minister George Papandreou, French President Nicolas Sarkozy told a news conference: "Our Greek friends must decide whether they want to continue the journey with us."

    9:46 PM Maritime operations at the Port of Oakland – the nation’s 5th busiest – have been effectively shut down as thousands of protesters block the gates. The activity is part of a general strike aimed at closing down the city for the day. Numerous cases of vandalism have been reported at bank branches, ATMs, even a Whole Foods, and "It’s not even dark yet," sighs City Council President Larry Reid. Live stream here

    9:58 PM The Greek referendum on continuing within the eurozonelooks to be set for December 4. Earlier, Sarkozy and Merkel said Greece will be cut off from any further aid until after the vote. Merkel made clear that stabilizing the eurozone is goal number one, rescuing Greece the lower priority.

    10:05 PM Stock index futures are off sharply following thebrinkmanship in the eurozone. S&P 500 -1.2%. German DAX -1.3%. In Asian trade, Hong Kong -2.5%, Japan closed. The euro -0.5% at $1.3672.

    10:28 PM More tales from the rumored slowdown in China, where steel production is diving, and taking the price of iron ore down with it. "We cannot sell anything," says a steel trader, frustrated he is still receiving product signed for under long-term contracts. The mining giants - BHPRIO, and VALE - are selling for 5X-9X earnings. Cheap, or value traps?

    Now, reality check.  We knew all about Greece and Merkozy in the afternoon and we rallied.  No on mentioned Bernanke’s bullish remarks in the Q&A session – even the NYTimes spun his statement as bearish.  Also, the vast bulk of the Futures sell-off came between 5pm and 10:30 and had little to do with "brinkmanship in the Eurozone."  

    All we have is a 1% move up in the Dollar (77.60 now) causing a 1% drop in the markets given an extra push by the bear pundits.  This is just the old 3am trade (dollar strongest at 3am into Japan close) and we like to play bullish off these lows only today it’s a 4am trade because they changed the clocks but the EU Futures are down 2.5% so we’ll have to wait until they open to see if there’s a trade. 

    Fortunately, oil is down to $91.25 and EDZ (our hedge from yesterday) is, of course, doing very well.  Unfortunately, our new aggressive Financial plays will not do well if we don’t recover by the open.  Again, this is why balance is the key to trading – happy about some things, sad about others is a lot better than being all sad…

    Thursday’s economic calendar:

    Chain Store Sales

    8:30 Initial Jobless Claims

    8:30 Productivity and Costs

    10:00 ISM Non-Manufacturing Index

    10:00 Factory Orders

    10:30 EIA Natural Gas Inventory

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet

    3:05 AM China won’t decide about investing in the eurozone’s EFSF rescue fund until the situation with Greece has been resolved, says deputy finmin Zhu Guangyao. "The fund has not established details of its investment options so we still can’t talk about the issue," says Zhu.

  227. Notable earnings before Thursday’s openAGUANFANRAPAARIABEAMCNQCVSDNRDTVDUKEGOEL,FIG





  228. Courtesy of BetaBeat and Barry:



  229. And now, for some good news

    Bernanke Says More Stimulus ‘on the Table’ as Risks to U.S. Economy Remain


    Dividend Swaps Signal No Recession for U.S. as European Debt Crisis Boils 


    Service Companies in U.S. Probably Expanded at Fastest Pace in Five Months 


    GS Permabull Abby Joseph Cohen: S&P 500 at 33% Discount on Future Profits (Bloomberg)

    China’s Stocks Rise as Signs of Economic Slowdown Spur Easing Speculation 


    China Corn Output Rises 6.7% to Record, Tops Forecast, Farmer Survey Shows 


    ‘Zombie’ Properties Come Back to Life (WSJ) see also Consumer Bankruptcies Decline (Real Time Eonomics)

    China Pushes Electric Car Market with Hefty Subsidies and More (GreenBiz)

    Removing ‘Deadbeat’ Cells in Mice Blunts Physical Decline From Aging 


    Rich Class fighting 99%, winning big-time (Market Watch)

    Ferrari sees ‘one of best years’ despite downturn (AFP)

    BMW Q3 Profit Gains on 5-Series, X3 Demand


    Consumer ’Scared to Death’ But Still Spending (Bloomberg)

    Organ Gangs Force Poor to Sell Kidneys for Desperate Israelis 


    A Nation of Vidiots (Project-Syndicate)

    Fatty Foods Addictive Like Cocaine in Growing Body of Scientific Research 


    Cain Aides Say Fundraising Grows After Sex Harassment Report 


    ‘Once you get beyond a million dollars, it’s still the same hamburger’: Bill Gates says being a billionaire is overrated (Daily Mail

    Millionaires Support Warren Buffett’s Tax on the Rich (WSJ)

    Elizabeth Warren’s winning formula (Washington Post)

    Who’s behind the ‘information attacks’ on climate scientists? (Southern Studies)

    Judges Are for Sale — and Special Interests Are Buying (Time) see also A Campaign to ‘Intimidate America’s State Judges’ (New Politics Report)

  230. See, so there is some good news (and some weird news!) out there!  

    The RUT futures are holding 715 so I like a long there (/TF) with tight stops below. 

    Nas Futures are holding 2,275 and I like a bullish play (/NQ) with tight stops on that line.  

    Oil is at $91.37 and that may be the low but it’s gasoline we like to get bullish on into the weekend and gasoline (/RB) is down to $2.5999 so let’s go bullish there over $2.60 with tight stops.  

    EU opens in 10 minutes and their futures are down 2.5% and I could be wrong but I think we’re being manipulated lower into the ECB meeting and the Merkozy statement on Greece. 

  231. Good Morning Phil.
    Is it wise to sell Dec $5 puts on WFR? I have 10 of the same strike for Jan 13 that might get more expensive by 10-15% at the open.
    I am 75% cash, so I did not do any of the hedge trades.. Now I am thinking to take like 3-4% of the total value of portfolio and do one, which actually might turn to one of those "insurance policies" that pay you back with a profit… Does this make sense?
    I apologize in advance if we are supposed to ask questions after the market opens.
    Have a nice vacation.

  232. Wow, nice moves already.  

    Of course we want to set reasonable stops like RUT 720 (2.5 trail), Nas 2,280 (20 trail) and gasoline hasn’t moved yet so still an entry opportunity on /RB ($2.593).  

    I just updated the WCP – if you didn’t get the Alert, it’s in the comments under the main post (now under Portfolios Tab).

    Question/Oscarz – I’m busy in the mornings sometimes and don’t have a chance to get to questions but nothing wrong with asking and, if I haven’t answered you by 9:30 on a market day, you need to re-ask the question in the new post because I rarely go back once I make a new post.  

    On WFR, I like them long-term.  It was a rough Q for solar but nothing wrong with their overall business model but don’t expect any quick pops.  As long as you REALLY want to own WFR for net $4.20 then sure, it’s good to sell the Dec $5 puts for .80 (estimate) but you can sell more 2013 $5 puts for about $1.40 for a net $3.40 entry so why mess around selling Dec?  

    Woo-hoo – We’re taking off now.  I don’t know why and I don’t care – just ridiculous rumors and manipulation which we were right to ignore – NOW we’ll see what holds up but first – BREAKFAST!  

  233. Wow, you snooze you lose in this market!  

    Dow up about 300 points since we flipped bullish but stopped out now at RUT 733 (up 13), Nas 2,330 (up 55) and $2.62 on gasoline but I think gasoline can do better as long as we hold $2.615.  

    Dollar back to that 77 line but holding it so an obvious place to cash back out and see what’s going to happen next.  

  234. 107.25% for Greek 2-year notes!  Who needs ultra-ETFs when you have bonds like this?  

  235. Thanks Phil.

  236. Have a nice trip Phil!

  237.  Note the jump in the US dollar after market yesterday, and then the dump at 3:30 am:

  238. You did it again!  Thanks for the futures trades, if this Christmas isn’t white I can afford to have them truck the snow in now.  You are an amazing guy, Phil, I don’t know how you do it but please don’t stop.  

  239. After going through the New Member’s Guide, and reviewing many of the posts and tabs above over the previous week, I (a Premium Member Newbe) am having a lot of difficulty figuring out how to get started trading from the info I have seen.  There are lots of news articles and opinions from other investors, but I really need more of a
    "Buy Dec 15 call option if it hits X for company XX, and sell it if you see the following".
    Can I find clear direction somewhere on this site that I am missing?  Really like the philosophy, but need clear direction.
    Please Help!
    Much Thanks,

  240. PS…I really need a white Christmas.  :-(

  241. I am a new member and would find it very useful if an email could be made when a new trade recommendation is made or via Yahoo instant messenger or other instant messaging service.
    I value the information posted on the site but find I am missing great recommendations because they are in between posts and I have to refresh the browser to update them.
    Your help would be greatly appreciated.
    Thank you.