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Thursday, March 30, 2023


Wrong-Way Wednesday – No QE3 For You!

Yesterday, we talked about the BS that is Fox News.  

Ironically, some of the "news" outlets that generally carry my articles (who's names shall be protected because they are wimps) decided it was too controversial for their readers so we know that's not a topic we're allowed to discuss in America, for fear of being black-listed.  Today we'll see if we can make it a two-fer in the Bracket of Evil, as I have a juicy resignation letter from Greg Smith of Goldman Sachs (thanks Rev Todd), who is no small player, but the head of the firm's US Equity Derivative Business in Europe, the Middle East and Africa.  Just a couple of excerpts:

I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it. To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.

What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym. 

I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail.

So we established yesterday that you can't trust the MSM and clearly you can't trust your Investment Banker and we KNOW we can't trust the Government (I don't even need to do a post on that, do I?) yet – based on the information THEY are giving you, the stock market is back near it's all-time highs and the VIX (fear index) is back near it's 10-year lows – as if you don't have a thing to worry about – just give them your money and all will be well… 

Are you really that dumb?  Clearly they think you are.  Despite being exposed by Matt Taibbi in Rolling Stone and despite Senator Carl Levin exposing internal GS Emails in which GS division heads called Timberwolf Securities a "shitty deal" at the same time as management made pushing the Timberwolf deal to clients the firm's "top priority."  GS declined from $170 a share at the time of this investigation (April 2010) to $85 a share last Fall but now they are rocketing back over $125 as – hey, it's been almost 2 years – all is forgotten and forgiven, right?  

This isn't about Goldman Sachs per se but about the overall investing climate in which the Corporations and the media they control, along with the puppet Government they fund through their lobbyists, have devised a massive wealth extraction machine that lurches this country from crisis to crisis (real and imagined) in order to justify first excess prices for goods and services, then excess fees for banking and insurance and then, when you begin to run out of money, exorbitant prices for food and energy (which you NEED to live) until you go broke and then they turn around and demand a bail-out to relieve them of whatever jacked up assets they are stuck with when the bubble they created finally bursts.  

WE JUST SAW THIS HAPPEN PEOPLE – yet here we are, getting right back on that horse as if we are none the wiser just 3 years almost to the day after the great bottom of 2009.  Markets don't crash because they were priced correctly – markets crash because the people who are buying the assets do not correctly identify the risk factors that may affect prices down the road.  That's what the Big Business/Government/MSM triumvirate is all about these days – getting the masses to once again believe all is well so the can get you to run back into the markets – AT THE SAME PRICES YOU OVERPAID FOR LAST TIME! 

Again, I have to ask, are you really that dumb?  Just yesterday the market began to sell off after the FOMC minutes (see my comments to Members here) failed to give an indication that additional Quantitative Easing would be coming and the market began to sell off and then, by "accident" JPM (every bit as bad as GS), revealed they had passed the stress test a day ahead of schedule by announcing buybacks and dividends that couldn't occur if they hadn't.  That started the rumor mill and a buying frenzy in Financials (up 3.5% in an hour) that took the market to new closing highs and then the Government backed up Big Business and fed the Media frenzy with an early release of the stress tests.  

This would be truly amazing – if it weren't the exact same spike move up, in the exact same percentage – also making new highs, as we had on January 25th – the day of the last Fed meeting, when they also failed to come through with QE3.  I think the real difference between investors and muppets is that the muppet knows it's being manipulated…

Anyway, we shall see how this all plays out today and into option expirations on Friday.  Less than two weeks ago, we had 10 long-term bullish trade ideas – one per day to add for each day the S&P was over 1,360 – just 50 points higher than the line at 1,310 we drew in January so not too much to ask for a "bull market."  We failed on the 6th and the 7th (back to 1,340) but have been up since and our 10 bullish trades still have a couple that can be played over 1,390 and we'll just keep pushing the line higher until the market does finally break.  Our 10 trade ideas were:  

  • SKX Oct $10/14 bull call spread at $2.20, selling $12 puts for $1.55 for net .65, now .90 – up 38%
  • SU 2014 $25/37 bull call spread at $6, selling XOM 2014 $65 puts for $5 for net $1, now net .70 – up 30% – still playable
  • USO June $40/46 bull call spread at $2, selling SCO Oct $26 puts for $3 for net $1 credit, now .24 credit – up 76%. I like this one because you are long and short oil at the same time.
  • AA 2014 $10 puts sold for $2, still $2 – even – still playable
  • X Jan $25/2014 $20 buy write at $17.04/18.52, now $17.84 – up 5% – still playable
  • PEG Sept $30 buy/write at $27.07/28.53, now $27.20 – up 1% – still playable
  • HOV 2014 $2 puts sold for .90, now .85 – up 5%
  • BAC 2014 $3/7 bull call spread at $2.75, selling $10 puts for $3.30 for net .55 credit, now 0 credit – up 100%. 100% seems like a lot but it's just .20 out of $5.10 (927%) of potential gains so still very playable.
  • HCBK Jan $7 buy/write at $5.14/6.07, now $5.55 – up 8%
  • FTR 2014 $5 buy/write at $2.43/3.71, now $2.37 – down 3% – still playable.

Not too bad, right?  You didn't miss much if you held back as they are well-hedged positions where we really only care if they are "on track" or not.  This Friday will be trading day 10 and I promise to have 10 new trade ideas for the next two weeks if we're still in this technical (certainly not fundamental) rally.  Meanwhile, please be careful out there – this rally seems as fake as any I've ever seen and, while I don't mind playing along – I think it's prudent to always have one hand on the exit and to make sure we're one of the first ones out the door when this party begins to wind down.  

Be careful out there.


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IWM stuck on JRWs R line…..JR – can you use a vacuum and suck the market down a bit.  1365 would be good by Friday for me.  Thx.

I couldn't daytrade AAPL today but if I could have I might  have killed it.  It was a perfect setup.   As low as 575 and as high as 595.  Unfortunately , I will not be able to daytrade it tomorrow either.  So I'll sit with cash and my puny 620 short calls  and watch for another day.  

I love that your "correction" target on apple will bring it back to where it was on monday!  HA!  All I know is i wish i'd been trading with you longer, so whatever you say!!!

Lflan – you've gotta daytrade tomorrow.  Got nervous today and missed out on all the action.  Oh dear!!! What am i going to do without you guys??  Wouldn't even probably know how to tie my shoelace without you guys. 

SharePost: none of the team listed here is in that complaint, which is against different entities. Elsewhere I found an article that suggested SharePost already settled with the SEC in unrelated activity.

When huge blocks sell below bid after hours it is usually not good for the next open. It happened!

AAPL/lflan – do you think they are going to crack $600 tomorrow? 

Rotten to the core. Supermarket chain sells cheap apples, ferments controversy.

iPad 3's were on sale today for about $80 at Tesco, 5% of which was snapped up by Warren Buffett after they announced poor Christmas sales figures. No wonder. After this publicity stunt Tesco claimed it was a mistake and that they would not be delivering the iPads to online purchasers who had bought the device, some of them possibly using older versions of the iPad for the transaction.
Company information: iPads are made by the Apple Corporation, which is currently involved in a number of patent disputes with Samsung and other corporations, made a half billion dollar payment last year to Nokia Corp for use of patents. Apple Corporation  has vigorously pursued infringements of its own patents. Apple Corporation copied its name from British company Apple Corps, founded by a group of musicians from Liverpool. Apple Corps settled various lawsuits with Apple Corporation in 2007.

The dashboard below is 90% red… most over .5%…. and yet the market is flat.  Is that AAPL?  This seems like a scam where money managers can beat the benchmark by holding just 1 stock.

Levels / Peedle – As you can see from the charts above, the broader indices (RUT and NYSE) are actually down today. The DOW is a joke and NASDAQ might as well just be AAPL now!

Phil, any ideas to roll weekly TLT 114 put?  TIA.

Volume / Phil – For the level charts I pick up the volume numbers from Google Finance (they update automatically) and for the Dow I have 130 M share today just like yesterday. I had 100 M on Monday. There are just too many different numbers out there, but I use the same source for all the charts to be consistent (and for the fact that it saves me work!).

Dow Transports down fairly hard today -1.41%.  It still hasn't made that higher high that the other indices have.  The Dow Theory bearish signal is still intact.

A pretty staggering chart….


That parabolic move of the last 3 months or so cannot be sustained….

stj…..You must be correct.  This type of movement cannot be sustained.  If it can, and if it is, then I will have to miss the move, because I can't justify further long plays without some kind of a correction.  

AAPL / lflan – But there are still some hit-and-run play to be had on a daily basis!

Did y'all see Doug Kass's interesting chart comparison of GOOG 2004-2007 and AAPL 2009-2012?
But then again, all parabolic moves look kind of similar…

stj…having said that, it does not mean I won't play AAPL.  There are many ways to make money on this stock, as well as others.  It does not have to go continually up for us to profit.   That's one of the things I try to teach people on this site.  I don't really care which way a stock moves, or even if it moves at all.  If you set up trades correctly you can make $.   Or, for a twist on the old political saying:   "It's the methodology, stupid!"

Article above:   Yes, noted.   I listen to Doug Kass….I think he is an astute individual.

lolobear…I don't know whether AAPL cracks 600 tomorrow.  I just hope they don't crack 620 (that's where I shorted it on the weeklies)   🙂     Say, did you buy those 575 weeklies you were talking about a day or two ago?   I hope so, although I wouldn't have suggested it at the time.

stj…..Yes, there is huge money to be made in AAPL when it is moving like this, just by day trading.  Unfortunately I have another job that keeps me tied up some.  Hopefully some members have gained enough expertise in daytrading AAPL that they can take advantage.  

Do you have an opinion on GLW? 
Cool video on the future of crystal displays: http://www.20min.ch/ro/videotv/?channel_id=138&video_id=237224

Google article very interesting.  All those tracking functions on the net creep me out.  I looked at a particular kind of exercise equipment one day.  The next few days, the ad kept popping up.  I'm a little slow, but I finally figured out what was happening.  I'm so allergic to Facebook that, while I have an account and 8 friends, I have a false name, 100% false personal data, zero pictures of humans and very few pics at all, and it is sterilized in every way I can imagine short of wiping out the account completely.  Which may not actually be possible. Google should have tried the opposite:  a service for people who would like to be guaranteed privacy and zero tracking.  I would pay for it – if it could be trusted.  
 Will there ever be a "FB backlash?"  It doesn't seem so.  But worms do turn, at some point, and I wouldn't assume that the human desire to be ever more "interconnected" is limitless.  There is no evidence of this to date.

Will there ever be a "FB backlash?"  It doesn't seem so.
I don't know. I got pissed off with it and deleted my account, or at least as close as you can go to deleting it. However, if you sign back in your account is reactivated. I don't like how some third party Web sites insist on you signing in with a Facebook ID. F*** them, I say. But them I am a person who doesn't see why you should pay a cable TV company to deliver advertising to your home. As far as I am concerned the TV companies should pay the cable companies to distribute their signal to consumers and the consumers should just pay a small amount for the installation and the decoding box. Instead of which they play all kinds of games. A cable TV company called me last year with a special offer for cable TV, Internet, and phone line combined and I was quite interested. I asked how much it would cost for a package that included certain TV stations that I wanted, and the sales guy said he didn't know. I said "Well find out and call me back." He said it was impossible to do that. I never heard back from him. How can they run a business this way?

What a day. This collection of guitar riffs from 60s and 70s helps.

sounds like the playlist in my car!!

Phil Interesting
From Seeking Alpha (watch video):
The sleeper story today is China, says Art Cashin. The Shanghai Stock Market was clobbered overnight on comments by Premier Wen, raising questions about the need for reform to avoid slipping back into the "Cultural Revolution." The issue gets its legs from the fact that the leader of the communist party right now is going around the country touting a revival of Mao, and at present, no market in the world has yet priced in a potential power struggle in China. (video)

 A discussion of "Europe" — what it is and isn't — the heterogeneity of the the countries, and cultures, now united in currency union.  Quite good.  http://www.youtube.com/watch?v=gNIC4OH20_A&elq=9aeea9662d2e41589017f3761d838b1f

Phil/Dancing Banana  Phil, sometimes you just need to lighten up and NOT act your age!  🙂

I'd like to think that none of the wealthy PSW folks were part of THIS study….
Unfortunately, while IQ's may be high, many of the wealthy score a low Emotional Intellengence…..

Anyone check out the Feds twitter page? Its funny but not surprising that 99.9% of the tweets are negative. They've exposed themselves a bit too much and its just a matter of time before more jump on the end the fed bandwagon.

@federalreserve/kustomz:  Oh god, some of the tweets are hilarious.  Best waste of time I've done in a while. 
Heres a good one by ZeroHedge:
"Thanks to the @FederalReserve arrival, the value of all tweets will collapse by 98% in a few years"

The link to the real-time Twitter feed: https://twitter.com/#!/search/realtime/%40federalreserve

Fed Tweets/Kinki- Thanks for the link…lots of laughs trawling through the Tweets against the Feds!


Worth a browse…

@fedres… How many shills are there to incite the others to say things that may get them in hot water.

I've been wondering who will buy treasuries now that the markets are in bull mode, just a matter of time till Bernank losses control of yields …

And not only that, but since it is suddenly fashionable to sell US Treasurys, just who will step in to buy (not China) considering there is about $6 trillion in net new issuance over the next 4 years? Because if US GDP was at least rising faster than US debt one just may have made the case that there will be retained cash by various entities who can buy up US paper domestically. Alas, that is no longer feasible, and the only option is, you guessed it, for the buyer of last resort to step in – the @FederalReserve

Phil – It appears that Chinese Premier Wen Jiabao already fixed his Communist party problem …
China's Bo Xilai Is Out, Replaced By Zhang Dejang

Phil – question:  I have 5 March 17 FAS $82/86 bull call spreads, up about 25% at the moment.  Do I understand correctly that upon expiration this Friday the brokerage will just plop 5 x the $400 spread = $2000 into my account (that is, exercise the long and short calls) or do they actually sell the long and buy back the short and give me the difference?  Is there anything I should be doing in this case? 

Ah, yes, the rogue trader defense, but this kind of thing seems to be rather common and annoys consumers, many of whom are first excited, and then disappointed, and then accuse companies of false advertising. With $7 airline flights now a regular feature, consumers will convince themselves of anything.
It might be a sign that companies employ undereducated computer clerks under a lot of time pressure to crank out hundreds of online ads and that no one in the company has time to look at them.
An employee error caused incorrect prices to appear, wrote Tony Hsieh, Zappos.com CEO, in a blog post. “We have a pricing engine that runs and sets prices according to the rules it is given by business owners,” wrote Hsieh. “Unfortunately, the way to input new rules into the current version of our pricing engine requires near-programmer skills to manipulate, and a few symbols were missed in the coding of a new rule, which resulted in items that were sold exclusively on 6pm.com to have a maximum price of $49.95.”
Interestingly the Zappos error was one that capped everything on the site at $49.99, so not a typo, but some kind of programing error. Even more interesting that the Tesco error also involved the number 49.99.
Probably just coincidental that the CEO of Tesco's UK operations was fir…, um, resigned the same day. Last year Tesco was also involved in a less egregious online pricing error on a smaller scale over a Nintendo game player, but refused to honor its advertised price.

Good Morning
Phil—I have to roll my Appl march short 550—bought at $ 5 now  $40 and only going higher—I have margin but how does one decide on the strike etc–the parameters?–

Phil/GIVING AWAY their attention
Absolutely. I would like to strike a deal with Aeropostale that I will wear a T-shirt with the name of their company free of charge if they supply me with the T-shirts. I will also make deals with major league sports teams that I will wear baseball caps with their insignia on game days for a small consideration to help them promote their business.

Phil – No bananas for me. I'll stick with unicorns…. 🙂

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