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Try it Again Tuesday – What Will it Take to Move the Markets Higher?

If it's Tuesday, we must be at the week's highs.  

Obviously, we're still bearish and the news we've been discussing this morning in Member Chat certainly hasn't changed my opinion on that.  Back on August 7th (first Tuesday of last month), I said we were about $700Bn in stimulus short of what we need to support S&P 1,400 and we knew we would have to wait a month to see how much we got from Draghi and Bernanke but, so far, and with Ben already out of the way, we have zero.  

At $10Bn per S&P point that puts our fair value all the way down to 1,330 but keep in mind that the $500Bn we did get only lasts for 6 months so more like 1,310 at this point without a proper commitment by the ECB or Fed this week.  Even 1,310 would be up 50 from the June lows and it would represent a neat 2/3 retracement of the rally since then.  Our $25,000 Portfolio has, if anything, gotten more bearish as we dragged along the top but another thing we've done each Tuesday has been to take aggressive bullish positions to cover ourselves IN CASE someone actually does put up the cash needed to goose the markets over our breakout levels (see Friday's post for current positions in the virtual Portfolio and our levels).  

On Tuesday, August 14th, our trade ideas were as follows:  

  • 2 FAS Oct $105/115 bull call spread at $2, selling 1 BBY 2014 $18 puts for $3.25 for net .75, now $1.80 – up 140% (trade stopped at 150%) -
  • 2014 SHLD $32.50 puts sold for $7.50, now $6 – up 20% 
  • 6 EWJ Jan $9 calls at .53, selling 1 BBY 2014 $18 put at $3.25 for a net .07 credit, still net $2.60 credit – down 3,800% (trade stopped at up 1,000%)  
  • TNA Oct $55/61 bull call spread at $2.50, selling Oct $42 puts for $1.90 for net .60, now $1.80 – up 200% (stopped at 200%)

While we do go into these trades looking for about 300% (not the short put, of course), when we make a quick 100-150%, we take it off the table and move on to what we call "fresh horses."  It should be noted, however, that despite the now highly negative result on the EWJ trade, it now makes a terrific new entry as you can buy those 6 Jan $9s for .44 ($2.64) and sell the BBY 2014 $18 puts, which had dropped below $3, for $4 for a net credit of $1.36 and it could give you a tremendous early pay-off if BBY does get bought out.  The EWJs topped out at .63 the same day the short puts bottomed out at $2.90 for net .88 so keep those expectations realistic and you'll do fine on trades like this.  

The following Tuesday, the 21st, our new trade ideas were

  • 2 FAS Oct $107/117 bull call spreads at $2.05, selling 1 BBY 2014 $15 puts for $3.75 for net .35 is now net $1.30 – up 271% (stopped at up 334%)
  • AGQ Oct $38/45 bull call spread at $3.10, selling BTU 2014 $20 puts for $3.60 for net .50 credit, now .75 – up 50% (stopped up 236%)
  • 3 DIA Oct $135 calls at $4.05, selling 1 HPQ 2014 $20 put for $3.80 for net .25, now -$2.90 – down 1,260%

As I mentioned last Tuesday, when you live by the leverage, you die by the leverage but we took the money and ran on the first two trades, which more than paid for the losses on the third (even assuming you didn't stop out at some point more sensible than down 1,200%) and decided that, since that trade was so "off" that it would be the best one to use for our upside trade last week but we dropped to:

  • 2 DIA Oct $135 calls at $1.23, selling 1 HPQ 2014 $15 put for $2.30 for net .16, now -.80 – down 600%

Clearly the Dow is not being very kind to the bulls and clearly, if you are a QE believer, this is still a fun way to play the upside – especially if you REALLY want to own 100 shares of HPQ for net $14.20, which is a 16% discount off the current price.  So your worst case is owning HPQ for a 16% discount and your best case includes pocketing $1,000 at Dow 14,000 on some happy economic news between now and mid-October.  And, of course, if you make that $1,000, then your net cost on 100 shares of HPQ is down to $420!

You can see from the Big Chart why we were not too keen on adding more upside hedges in the past two weeks as that top is looking more and more solid every day and it's only been the fear (for the bears) of massive Central Bank intervention that kept us from being much more bearish in our main portfolios.  Even our Income Portfolio (Members Only), which is long-term bullish, was augmented with a TZA spread to provide us with an additional $35,000 in downside protection on a 10% drop in the Russell (back to 735).  

Yesterday, we were discussing strategies for setting up a hedge fund and we were forced to conclude that the best thing to do with cash is – STAY IN CASH!  This is certainly not a good week to deploy capital in any kind of quantity and, for small positions, the downside is much more attractive than the upside to this market at the moment.  Should there be an actual infusion of QE/Stimulus into the Global Economy, then we have plenty of time to BUYBUYBUY but, until then – we remain extremely skeptical.  

On the whole, we'll be watching and mostly waiting this week to see how it all plays out.  

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  1. Oil Lines

    R3 – 98.85
    R2 – 98.07
    R1 – 97.62
    PP – 96.84
    S1 – 96.39
    S2 – 95.61
    S3 – 95.16

  2. Good morning! 

    Dollar back over 81.30 and the RUT back to 812 (/TF) and the Dow failed 13,100 (/YM) and oil is back at $96.50 (/CL) and gold is just failing $1,695 (/YG) so exactly what we were looking at yesterday morning before all the BS manipulation – which is an excellent indicator of what total BS it was.  

    Let's watch that Dollar line very closely but, as I said this morning – I can't see the fundamental case for the Dollar breaking below the line on Jack's excellent chart (thanks Diamond):  

    So, technically, it does look like we're heading to a massive breakdown but the TA reflects the bets that are being made and, since Draghi's original comments, the betting has been one-way against the Dollar.  

    'The crowded long dollar trade is no more," writes Sober Look, as CFTC data shows currency speculators last week turned net short the greenback for the first time in nearly a year. The CFTC information can be handy when it gets to extremes. A year ago, specs were leaning heavily to the short side (amidst the U.S. credit downgrade) just as the dollar was set to take off on a 9-month, 13.5% run higher. 

    Keep in mind how devastating a rising Dollar is for commodities and equities – at least in the short-run.  

  3. Holy shmoly….MRX was bought…..Wow…whoa….yipee!

  4. Congrats on MRX folks!

  5. Oh yes, fantastic play on MRX Pharm, especially getting more bullish after earnings.  

  6. Thx Phil.  As I have been noting, <$10B is that sweet spot right now in Pharma/Biotech.  M&A with big boyz will be few and far between, but those in that range are fair game for cash rich companies. 

  7. 81.29 – about the only number that matters today. 

    Euro fell to $1.256 but bounced there, Pound $1.587, 78.37 Yen not making the Nikkei happy at 8,770 either.  

    Japan suspends ¥4.1T ($52.3B) in tax grants to municipalities due to Parliament not looking like it will pass a key debt-issuance bill by the end of the parliamentary session in four days. In response, the BOJ will inject a record of ¥1.9T/day into the banking system in order to keep short-term rates down ahead of an expected increase in loan requests because of the grant delay. – This is Japan's rapidly approaching fiscal cliff. 

    Gasoline fun to short below $3 (now) on /RB.  Refineries seem to be coming back on line and not likely we broke any summer demand records this weekend with gas at record highs. 

  8. Gotta be a bit concerned that AMZN and AAPL popped at the open and the Nas is still red.  Often they use the leaders to mask a broader exit.  

  9. MoMo trade:  Bought the AMZN September 7 250 puts back for 3.34  (sold Friday for 4.50).  Alternatively, you could just put a stop loss on these if you like, but I choose just to take the 20%+ this morning and leave the trade. 

  10. Notes:
    SQQQ – DD at $1.50
    SCO – DD at $2.50
    PCLN – Net is $5.00

  11. Same notes as above.

  12. Pharm: Hi- What are your thoughts on LLY?  I have Sept 41 P's. TIA

  13. VIX 18.50 – Very Interesting! 

    Oil and gasoline dropping nicely.  Dollar 81.345 – if the Dollar fails, it's good to get very tight with Futures stops.  RUT just bounced off 810, Dow off 13,050.  

    S&P Futures flirting with the 1,400 line at 1,403, which is 1,405 on the index. 

  14. LLY/newt – most likely, those are dead.  I have them as well in one account.  Just holding on.  IF we get a sell off, those should move and we can exit.

  15. Last week's AAPL and AMZN puts expired worthless. I closed this week AMZN short put.

  16. Pharmboy
    STEM jump up. Good deal?

  17. Pharm- thanks- i was stewing on rolling, letting them burn in a of hope of recovery…..

  18. GTHP – DD on my stock for 70c.

  19. STEM/neet – that is a shooting star forming and those are signs that it will backfill the gap. Then maybe jump in.  Not really interested.  They are a stem cell company, and while there are some interesting and very good science going on, it is too early for me to jump into that sector.  The spinal chord injury is a very early trial, so there are many things in play.  Wait and put on a watch list for a pull back.

  20. Transports dropping hard and fast (4,970), SOX no better at 393 – nothing to be bullish about until/unless they retake 5,000 and 400.  

    AIG making year highs of all things. 

    No changes to Portfolios yet – more of a watch and wait kind of day.  

    At the open: Dow -0.13% to 13074. S&P -0.11% to 1405. Nasdaq -0.07% to 3065.

    Treasurys: 30-year -0.38%. 10-yr -0.18%. 5-yr -0.08%.

    Commodities: Crude +0.07% to $96.54. Gold +0.31% to $1690.55.

    Currencies: Euro -0.17% vs. dollar. Yen +0.16%. Pound +0.1%.

    10:00 AM On the hour: Dow -0.16%. 10-yr -0.13%. Euro -0.02% vs. dollar. Crude -0.35% to $96.13. Gold +0.54% to $1694.35.

    Market Preview: Equity markets look like they're coming back from the long weekend still in the their summer slumber, with S&P Benchmark futures -1%. Now that Jackson Hole's a mere memory, the focus is on Mario Draghi at the ECB, who's ratcheting upexpectations of renewed bond buying. Medicis surges 38% on news it's being bought by Valeant, which is +12.7%. Later: ISM Manufacturing Index, Construction Spending 

    US Aug PMI Manufacturing rose to 51.5 vs 51.4 in July. Output 51.9 vs. 51.7 in July. New Orders 51.9 vs. 51.0 in July. Employment 52.4 vs. 52.7 in July. (PR)

    Aug ISM Manufacturing Index: 49.6 vs. 50.0 consensus and 49.8 prior. Prices index 54.0 vs. 39.5 prior. Employment 51.6 vs. 52.0. Inventories 53.0 vs. 49.0. New orders 47.1 vs. 48.0.

     July Construction Spending: -0.9%, vs. +0.4% expected, +0.4% prior.

    Canada's RBC PMI for August comes in at 53.04, essentially unchanged from July. RBC chief economist Craig Wright notes the contrast between the Canadian manufacturing sector and the rest of the world, and is particularly encouraged by new export orders rebounding from July's dip. 

    If September holds to form and shares turn lower, investors may want to buy the dip. Since the DJIA's 1896 creation, when stocks have been higher YTD through Labor Day, they've tacked on to those gains by year-end 70% of the time, writes Mark Hulbert.

    Capital flows out of Spain have reached 50% of GDP on a 3-month rolling basis, says Nomura, compared with Italy now at 15% and Indonesia peaking at 23% during the worst of the Asian crisis.

    More on Spain from Nomura: Heavy capital flight (previous) is in a "category of its own," say the bank's analysts, who also note foreign selling of Spanish securities rising to 19.4% of GDP in Q2. Daiwa chimes in, claiming last Friday's use of state funds to bolster Bankia could be the last straw pushing the country to seek a full bailout.

    Spanish jobless claims +0.8% M/M in August after four months of declines. Claims +12% to 4.63M Y/Y. The M/M increase is the first time claims rise less than 1% in August, which is significant because the month is among the worst for hiring. The data provides hope that surging unemployment is leveling off. 


    Is this a "Wile E. Coyote moment" for the aussie, asks Macquarie's Brian Redican, pondering Fortescue's slashing of capital spending plans. The impact on the economy of a rapid decline in mining investment will be severe, he says, and take no comfort from still-large spending plans on the books – as cash flows evaporate, these too will be cut.

    Australia's Fortescue joins rivals BHP and RIO in announcing slashed capital spending plans amidst sliding demand and pricing for iron ore. The move comes just days after the company's CEO said all was well in the business and the company expected to triple production within a year. Shares fell 4.2% in Sydney.

    Beijing August home sales more than doubled Y/Y as developers raise prices, putting to question exactly what need is there for the government to remove property curbs. August is typically a slow month for real estate in China, so more will be known after the important "golden September and silver October" period.

    As trade deterioration continues, Beijing considers raisingexporter tax rebates to 17% from the current 13-15% range, according to sources. Certainly no bazooka, the move would be in line with Premier Wen's pledge of "fine tuning" to assist the slumping economy

    More on the Goldman (GSdowngrade: Giving Goldman kudos for its "best-in-class risk management," JPMorgan nevertheless sees shares as too rich for today's poor investment banking environment, and ranks the bank dead last (as a buy idea) among global IBs. Shares are richer this morning, +1.3%.

    Dahlman Rose cuts its outlook for metallurgical coal for Q4 and full-year 2013 to $180/mt FOB and $200/mt FOB, respectively. The cut in prices weighs on its estimates, resulting in downgrades (III,III) to the names most heavily exposed to met coal markets: BTU-1.8%ANR -1.8%WLT -1.9% premarket.

    Airline stocks open weak with a new report from an industry group highlighting that profit margins on major carriers fell to -1.5% for the first half of the year, compared to -0.4% a year ago. The problem in a nutshell is that expenses in the sector keep outrunning modest revenue gains. Decliners: LCC -3.2%UAL -1.8%DAL -1.7%LUV-1.5%.

    StemCells (STEMsurges 18% premarket after yesterday saying its HuCNS-SC treatment restored sensation in two out of three patients who were left paralyzed by severe spinal cord injuries. The developments, which came in a Phase I/II trial, represent "the first time that neural stem cells have been transplanted as a potential therapeutic agent for spinal cord injury." (PR)

    Subprime auto lending is back and better than ever, with low-credit borrowers receiving 25.4% of all new car auto loans, up from 22.3% a year ago, and higher than the 2007 peak of 25%. Among those leading the charge is Capital One (COF), nearly doubling its market share in new car loans to 4.4% in Q2.

    Chrysler (FIATY.PK) August U.S. sales: +14% to 148,000 vehicles, with the sales pace cooling from the level seen earlier this year. The automaker says volume increased 25% at the Chrysler brand, 34% at Fiat, 13% at Dodge, and 5% at Jeep. Over 25K Dodge Rams were sold, marking a 19% Y/Y increase.

    Ford (F) August U.S. sales: +13% to 197,249 vehicles, marking the automaker's best August sales haul on record. Passenger car sales were up 7% to 62,650, including a 35% gain in retail sales: Fusion +21.0% to 21,690, Focus +35.3% to 19,073. Utilities +27.8% to 63,225: Escape +36.8% to 28,188, Explorer +33.0% to 13,168. Trucks +6.1% to 71,374. (PR)

    Toyota's (TM) new RAV4 electric vehicle catches a positive review from The New York Times that raves about the electric drivetrain from Tesla Motors (TSLA) that turns the utility wagon with its 76 equivalent mpg into a "high-riding 4,032-pound electric beast." If the model helps turn public opinion around on the power of EV engines, the entire industry could get a lift and Tesla Motors could be set for a smooth ride.

    Barclays Capital's Anthony DiClemente takes his rating on News Corp. (NWSNWSA) up to Overweight, contending that the company's entertainment business alone is worth more than its market cap. After crunching the numbers, the analyst valuates the entertainment business at $24-$25 a share and the publishing business at around $4 a share, potentially giving investors a nice discount in front of a planned split of the company. 

    The Labor Day weekend didn't lift the movie industry out of its summer doldrums at the box office, but execs remain optimisticthat the industry is still in good shape. Though the Olympics and the Colorado theater shooting both impacted attendance, YTD box office totals are still running ahead of last year's totals and a number of movie franchises have blockbuster sequels lined up. Studios: TWX,DISLGFVIABSNEDWACMCSA. Operators: RGCCNKMCS,RLD. 

    Amazon (AMZNsigns an agreement with EPIX that will help it land thousands of new movie titles and TV episodes from major studios for its Prime Instant Video service. With the new deal in hand, Amazon has now doubled its available titles over the last year.

    Pricing pressure for the carriers:  RadioShack (RSH) and Leap Wireless (LEAP) unveil their long-rumored (III) prepaid mobile service. The service, which will rely on the RadioShack brand and initially feature two Huawei phones, offers 1,000 minutes for $35/month, and unlimited voice and 1GB of data for $50/month. MetroPCS (PCSrecently cut the price of its unlimited prepaid plan to $55/month. (PR) 

  21. Phil – what's your target on /RB.  Do you set trailing stops on /RB or just mental stops?  I seem to find my stops always get triggered in random spikes before crashing.

  22. Pharmboy
    What's good on GTHP? Thanks.

  23. /Oil's bouncing at S2

  24. Pharm, would you mind sharing your opinion on CERS?  I've held some shares for over a year and made a nice profit.  Thanks in advance.

  25. GTHP/neet – not sure what you mean.  GTHP has a non-invasive detection med. device for cervical cancer.  Instead of a pap smear, women can have this test.  Read about it here.

  26. Wheee on oil ($95.65) and gasoline ($2.979)!  

    STEM/Pharm, Neet – I think the news above is very big deal if true.   Too bad they have no options, would be a very fun long. 

    Gasoline/JJ – I don't really do targets.  $3 was too high so, at $420 per penny, per contract, I figured they were good for a rejection, along with oil at $97.50, of course.  They almost always try to flush the stops before taking out a futures position – we'll be doing a lot of Futures stuff in Vegas.  If you can't afford to lose and must use hard stops – then you really can't afford to play the futures and, of course, one like gasoline should be avoided like the plague!  Generally, if I want to short oil at $97.50, I'll start with 1x at $97.40, DD to 2x at $97.55 and then stop out at $97.60 with a .15 loss on 2x.  Then I'll either re-enter 2x short at $97.49 with a stop at $97.55 or at $97.90 I'll start the sequence again with 2x and go to 4x and maybe 8x before giving up (and if you were wrong by $1 and it's still going up on you – you'd better give up!).  That is, of course, very expensive as you can lose 8x .15 or .25 but, on the other hand, sometimes you make 8x x $1 (like now) or $2 and you feel very good about yourself.  

    By the way, keep in mind that the ONLY reason you DD is to get half out even – greed will always kill you in the futures.  Once you get back to even on 1/2, THEN you can set some stops to lock in profits on the rest. 

    Speaking of Futures – we have the Dollar at 81.28 so not the Dollar's fault we're dropping.  Oil bouncing off $95.50, Dow bouncing off 13,000, S&P can't get back over 1,400 but main index bouncing right there, Nas off 2,750, RUT failed 808 and should test 805 so beware the weak bounce at this point and Wheeeeeeeeeeeeee!  

  27. Pharm – posted this at 0500ish on the previous page.
    "Pharm – just looking at the MRX pick… THANK YOU! You and Phil are GOLDEN GODS! hahahaha. It has been an awful week for me in Afghanistan but this just turned it all around! WOOOOOOOOOOOOHOOOOOOOOOO! Give me your paypal, I got 100$ on your bar tab in Vegas since I wont be able to come in Nov…"

  28. jro….UR very welcome.  Good to know that a few of these are working for us.  Appriciated, and not necessary though.  You can email me at pharmboy123 gmail.

  29. Futures – Thanks for the strategy.  I tend to follow your entry strategy, but I always fall into the greedy bastard camp and mess up the exit – I try to set trailing stops to force myself out with a profit.  Will there be any sort of live meeting broadcast for those unable to make Vegas?

  30. NTE making new highs!  

    Very cool on MRX, Jrom – congrats.

    FB below $18!

    VIX almost 19.

    CLF falling off a cliff.  

    TASR not down as police prepare for rioters. 

    AOL new lows – how low can they go? 

    AAPL still green – God help us all if they decide to fail $666 and add to the downward momentum….

    SODA flzzles to new lows. 

    RCL cruises to new lows. 

    81.31, oil $95.25 – nat gas UP to $2.87 for some reason but gasoline falling hard and fast at $2.9775.  

    LAZ reclines to new lows.  

    Cord snaps on BG and they fall to new lows.  

  31. Pharm – sent you an email from my mil account. Let me know if you get it. Thx again!

  32. As a rough number – getting back above 0.55% losses on the indexes would be a weak bounce and -0.40% would be a strong one.  

    SOX down a whopping 1.75% so -1.4% is weak and -1.05% is strong and it's good to watch SOX and Transports (-1%, so -0.8% and -0.6%) since they aren't really manipulated the way the headline indexes are (although there is spillover manipulation from the mains, of course).  

    Dollar still very weak (81.345) so shouldn't expect too much of a sell-off but we're just laying around the point where we should be bouncing and that's a bad sign.  

    Europe is down about 1.25% and looking to close at the day's lows but the Euro is still pretty strong at $1.256 and the Pound is $1.588.   78.34 Yen is not making the Nikkei happy – down to 8,730.

    AAPL right at $666 but holding 

  33. MoMo trade:  Bought to open  LULU   5  Sept  22  65 calls for 4.50.   

  34. Phil: I sold BBY 2014 $13P for $1.61 for net of $11.39. Do u think it's a good move to buy them back at $2.15 and sell 2014 $15 p for $2.77 for new net of $10.77?

  35. RCL/Phil
    RCL is still not close to lows.  Low is 18.70.

  36. lflan
    what is the reasoning behind the LULU calls? Are you planning to hold it through earnings on 9/6? 

  37. LULU trades is a simple momentum play.  Probably out Thursday or before.   My source says earnings Sept 7 at 9 a.m. 

  38. Phil / V – Sept 120 puts down about 50% with 2 weeks to go.  roll?

  39. It seems the only one who stands up to Joe Kernen is their political correspondent, John Harwood.  A couple weeks ago, Joe said "Isn't hard for Romney to win if it's 99% vs 1%
    John said "then Obama would have 99% of the vote right now"

    Joe responded "well you have 8% unemployment"
    John responded "then he'd have 92%"
    And today Joe was talking about how we're not better off than 4 years ago and unemployment is higher than we Obama got into office.  John responded that when Obama got into office we were losing hundreds of thousands of jobs per month and we had 29 months straight of job growth.  Even though it's not as robust as he'd like, it's still much better.  Of course when confronted with facts, Joe Kernen didn't say much after.

  40. Germany finishes down 1%, France down 1.4%, London down 1.5%, Spain up 0.7% (about 1/2 of highs) and we should at least get our bounce here (assuming it was EU funds doing a lot of the selling). 

    Volume 37M on the Dow at 11:30 and they are righ at 13,000 so 20 DIA weekly $128 calls at $2.15 in the $25KPs have about .20 in premium and can give us a nice ride up with a stop at $1.90 – so risking $500 (of our gains) to cover a bounce.  

  41. Pharm/
    Could you take a look at ACAD for me?
    I am looking at selling 2.5 Puts and buying Mar 2013 and 2.5/5 Mar call spreads

  42. Oil testing S3 again

  43. AMZN / Phil – You really wonder how they can keep making these deals for content on the Prime Instant Video. I see that they now have a deal with Epix. They have to ve spending some money for these deals – at least as much as NFLX or even more to lock up exclusivity. For $79 you get free shipping and unlimited streaming of video. At least NFLX charges for the video streaming – with AMZN it's basically free once you go over the $79 of shipping… And the free books every month, etc… It's really a logical short if logic had any value in this market!

  44. Phil/GLD – Phil, what's the hope with the GLD Sept weekly puts? I'm surprised we held these over the weekend with the expected premium decay. 

  45. AMZN/stjeanluc
    Amazon has hinted it is changing it's prime membership either making it more expensive soon or having a tier feature in it.

  46. AMZN / Rustle – That would make a lot of sense. Watch the stock take off when they raise the price by $10!

  47. MoMo  :  I just bought 5 more of the LULU    Sept 22 65 calls for 4.70.  We have now a total of 10 at ave. 4.60.

  48. AMZN/stjean
    Remember though, this is a company that doesn't care if they make a profit.  That's why the scare competitors so much.  And it doesn't seem to hurt their stock price as idiots think revenues and profits are the same thing just like people thought FB users and profits were also the same thing.  Didn't work out well for FB so far after the IPO.

  49. My point exactly Rustle….

  50. JBL — Anyone see news related to the 8.5% drop?

  51. Phil,
    With JRCC coming off quite hard – do you think we should sell another 2.50 put for Sept to continue paying for our long put?
    What is your thoughts on NFLX.  A little over done, possibly a good long?

  52. BBY/Dflam – I don't see where you get that new net.  You take a .54 loss and carry that forward to a $2.77 credit and that's selling the $15 puts for net $2.23 and that nets you into the stock at $12.77, up from $11.39.  But, would I do it?  No, not worth adding $2 to your trigger risk.  It's not so much your net as the fact that at $13.05, you trigger the $15 puts and pay back $1.95, which leaves you with .28 but, at $13.05, you win the whole $1.61 you sold the $13s for and you have another $1.66 to go before you fail to break even.  I'd rather sell another $13 put than move up.  If you want to spend a little money gambling – the 2014 $18/20 bull call spread is .80 and will make 125% if they get bought for $20 or more.  

    RCL/Rustle – That's strange.  ETrade says they made new 52-week lows.  So much for their signals!  

    Wow, not even a weak bounce so far.  


    V Terra – Not sure what ones those are but, in the $25KP, we went to Oct $120 puts a while ago.  Obviously you don't want to be in Sept, paying premium, so close to expiration.  

    Facts/Rustle – Joe's mortal enemy. 

    Prime/StJ – Yes, we celebrate today (for a few minutes anyway) AMZN finding yet another way to spend money without generating revenues.  Perhaps they will give all Prime Members a car, or at least free gasoline – then they should really go to the moon!

    GLD/$25KP, Ajay – Hope was the Dollar would do better and gold would fall back to $1,675.  The good news is that .50 will pay to roll them back to the Sept $159 puts, which we'll likely do tomorrow.  Those puts were $2 on Thursday so we don't have to be extremely lucky to get our .35 loss back.  

    Prime/Rustle – AMZN only has about 6 or 7M Prime Members (out of 121M registered customers).  So they could raise their fee $20 and pick up $140M but I doubt they'll go over $100 and if they lose customers, it would be very damaging to them since the myth that prime customers spend twice as much is what drives future valuation.  My theory is that the customers who spend the most end up using prime so they simply have the filter running the wrong way when analyzing them so attracting more prime customers quickly reaches the point of diminishing returns.  Also, it's not movies that people mainly use NFLX for, it's TV shows and the AMZN deal doesn't address that.  Of course all of this sucks for NFLX.   This should worry AMZN investors, not please them:  

    We are investing hundreds of millions of dollars to expand the Prime Instant Video library for our customers. We have now more than doubled this selection of movies and TV episodes to over 25,000 titles in just under a year, said Bill Carr, Vice President of Video and Music at Amazon.

    AMZN only dropped $600M to the bottom line last year.  

    JBL/Rain – Near as I can tell, their CEO made some very negative economic comments (we punish people for that now).  

    JRCC/$25KP, Ging – No change, we have short puts but, if we go below $2.50, we'll have to stop them out. 

    NFLX/Ging – I don't like them at all, never did.  I can't play them long – only like shorting them when they get too high (200 dma, now $85).  

  53. ACAD/lion – not one that I like.  The drug has already failed a phase 3 trial for Parkinson's psychosis.  Now the new trials may shed some light, but not worth the risk to me.  I like YMI better.  If you want to gamble, but a few hundred shares or a BCS and let it roll….it is a complete gamble to me.

  54. I think what you have to think about AMZN going forward is that the demise of the notebook purchases will hurt them.  Even if they sell as many tablets, Kindle and others, that's much less revenue.  The implosion of the big box stores is over, so they've captured that revenue already.  Additionally, a lot of technology purchases have longer cycles now.  The improvements in TVs, computers, phones, etc are fairly marginal now.  With SSD and GPUs now in notebooks, we've reached a cycle in computers that many envisioned 20 years ago.  The next thing on the horizon is not as clear.  That being said, AMZN buyers are crazy.  However, today AMZN is flirting with a -2% reversal.  But perhaps this is just to prepare for the Kindle launch, a frenzy which will last for 2 days before fear of the AAPL launch.  

  55. Thanks Pharm
    I am in your YMI trade already and sold Oct Puts.
    Are you still in Oct calls or buying Jan 13 calls as well?

  56. YMI – Still in everything.  Oct Calls just waiting for a pop, and continue to accumulate shares.

  57. Why is it that every time I enter a limit order at the ask, the ask immediately goes up after. Same thing with options. I bid 2.50 (the ask) and the next thing you know the ask is 2.55. Boatload of BS.

  58. CLDX…selling 1/3 of the calls Feb 13 $5.  Small gain, but we should take a bit off.

  59. MDVN gets approval for the prostate drug…..that is one helluva run.

  60. I meant the bid. The bid works it's way up until my order fills, then it goes right back down afterward.

  61. AMZN
    Another negative, I think, is that they have to start collecting sales tax in CA on Sept 15th.  For me, that ~8% hit really makes me rethink my Prime Membership.  I think I'll drop it, will shop AMZN less, and any buys will be on the +$25 super saver free shipping program.
    The sales tax issue might not be a big hit to them, but certainly not a positive event.

  62. Re: RCL, CCL
    North American onboard sales have recently dried up for both lines.  Not on the radar yet (pardon the pun).  For what it's worth.  This is directly from hotel managers onboard the vessels.  The booking numbers look fine, close to capacity.  But passengers are not purchasing alcohol (like they had been) which is a huge onboard revenue driver.  Same with shore excursions, onboard shop purchases, spa purchases.  Folks are grabbing the bargain cabin rates then drinking soda and water and not buying anything onboard.  I haven't heard from the European operations but I can't imagine anything better there.  Lots of North Amercians crusing in Europe as well…however…that is not substantiated.  Earnings for North America will most likley fall short as future NA earnings projections will be revised downward.  I am not a buyer at these levels. 

  63. AAPL
    Also, can anybody help me see the benefits (to Apple) to be buying back iphone 4S's for $285 and up?  Yes, that might get me into a iphone 5 ( instead of waiting till the 2013 model ) but 1 … are they concerned about iphone 5 sales without such a promotion ? and 2 …. that has got to come as a bottom line margin hit I would think.
    I'm trying to read if this is a positive AAPL thing or a negative.

  64. Careful in here.  TLT is falling, as is VIX.  $TRIN is holding, but there is some buying.

  65. Amalfi / why — Bots.

  66. Amalfi…..I've seen that time and time again.  They try to pull your bid upward.  Don't let them.  Just place your bid at whatever you want to pay then go do something else.   You would be surprised how often your bid (less than the posted bid) will go through a few minutes or a few hours later.  So if you aren't daytrading (needing it to go through right now), just lplace your bid and let it ride for awhile. 

  67. Bots — the other fun thing to do is figure out what the real spread is.  Bid a penny higher and you'll see the bots follow you. Eventually, they'll stop following you up and you've found the real bid.  You can do the same thing on the ask side as well and figure out what the real spread is.  If the real spread is too wide, move onto another instrument for day trading. Often it's easier to find smaller spreads to start. For example, I made a trade similar to Phil's DIA calls this morning but chose SSO $56 calls rather than the DIA because the spread was 0.02 rather than 0.08 with the price of the option within 0.10 of each other. The higher volitility of SSO makes for easier fills with the smaller spreads as well.

  68. If Mitt Romney wins I would be shocked enough to have a heart attack.  The GOP is doing almost everything in the last few weeks to alienate themselves from the vast majority of people in this country.  This is what Eric "the weasel" Cantor tweeted yesterday:

  69. ccsincsd – AAPL is not using cash, they are using credits towards future purchases. Smart!

  70. SQQQ – getting close to expiration on these.  Roll to Oct for $1.25?  I have been patient on this trade, but even the smallest move up on Q will destroy the rest of this premium ($2.10) quick

  71. All indexes heading up EXCEPT the Dow.  I wonder if that's because we bought the calls?  

    AAPL zooming up to $670 and that's all the Nas needs to catch fire.   RUT may go green already.  

    AMZN/Occom – Good point.  

    Limits/Amalfi – Once your order is filled, it goes to the next offer and, if that person is a nickel higher – there you are.  Might mean you are overpaying, you should never offer the ask, make them chase you.

    Still a weak bounce for Dow and S&P. 

    AMZN/CCS – Without the tax advantage, a lot of their stuff may fall below the line at which people would rather use them.  We'll see but one of many reason I like them short.  

    Cruises/Living – Yes, the cabin sales are practically loss leaders for the bar and the excursions.  If people are taking advantage of cruises as cheap vacations (and, at these prices, they are) and using discipline on board re. additional purchases – that's a very bad trend for the cruise lines.  

    AAPL/CCs – That's really strange.  Of course, they are only giving you a credit towards another purchase and it's possible this is a defensive move because S, T and VZ are already offering in-store credits and there's no obligation there to buy another IPhone (in fact, I imagine they'd rather you didn't).  Of course, the cash price for a used 4S is about $250 anyway and AAPL probably has a good way to repackage them and sell them refurbished to foreign markets or maybe they can tweek a 4S and turn it into a 5 (although that would suck if a 5 is the same size as the 4s).  

    VIX back to 18.50, TLT $126.90 – -all must be well.  

    RUT 811.87 – 812 is green. 

    S&P can't get back over 1,400 in Futures but index is there.  Same with Dow 13,000 with the Futures about 10 points behind the index.  

    Oil can't take $95.50 back so far.  

    Gasoline ($1.2977) and copper ($3.47) not recovering yet.  Other than the RUT, not a very impressive bounce so far. 

    Let's take $2.20 off the table on half of our DIA calls in the $25KP and ride the last 10 out with a stop at $2

  72. MoMo trade:     Bought……OPEN Sept 22  42.50  calls   15 of them  at 1.85

  73. You may not get that price on OPEN..   They are moving quickly upward. 

  74. Great point on finding spreads Rain.  

    Great article Rustle:  


    The irony in Cantor’s tweets, like the irony in many of the words spoken by Republican leaders, is that Cantor has never built a thing. He, like Romney, was born of privilege. His father’s business was real estate. The only job, outside of the government, that Cantor has held was working for his father.

    For Cantor to imply that workers don’t work hard and take risks is hypocritical at best from the man who released last year’s congressional schedule, which included just 109 working days. There was a time, when unions were strong and when loyalty was a two-way street. Labor worked hard, as they always did, only then, they didn’t live in fear that their jobs could be outsourced to near slaves. They didn’t live in fear that their pensions would disappear or that their health insurance would be too expensive to afford. Wages didn’t shrink as management’s compensation grew.

    There is a class war, and Cantor and the Republicans have most of the weapons. The only weapon the middle class has ever had are unions and they are all but gone. No one begrudges the true job creators, most of whom are middle class themselves, but we do resent the idea that it is only the super successful that work hard and take risks.

    This is what the Reps just don't get.  MOST people work for someone else.  Their donors don't but never before has a party so blatantly treated the majority of their constituents with such little respect.  It's gotten to the point where the abusive attitude may even penetrate the many washed layers of the middle-class Conservative's brain – this is not their party, they are not the elite, they are being asked to vote but are promised nothing (economically).  

    SQQQ/Cdel – Tomorrow we will be cutting Septembers loose in the $25KP – either taking losses or rolling.  

    RUT green!  Back to TNA next time we want to play a bounce!  

  75. Wow, those TZA weekly $15s at $1.55 are tempting.  Just .05 premium on the 3x mover to play a rejection at RUT 813.  At 815 I'll likely call it but it's a poor man's Futures play on each line with tight stops…  

  76. MoMo trade:  I've sold the 15 OPEN  Sept 22 42.50 calls ,   15 of them,   for  2.10 each.    Just a quick +13.5%.  

  77. I think it's pathological lying now:


    From Paul Ryan, on the stump in North Carolina yesterday:

    In 1980 under Jimmy Carter, 330,000 businesses filed for bankruptcy. Last year, under President Obama’s failed leadership, 1.4 million businesses filed for bankruptcy.

    It turns out this isn't true. In 1980 there were 43,000 business bankruptcies. Last year there were 47,000.

    I mean, lying about your marathon time is already weird enough!

  78. Cheap cruises. They have gone past the failed point. At first they hired people to sell them at high commisions, they got pink slips last summer, I was told at that time they were setting every money trap they could when your stuck on a boat.
    The buck goes up with the RUT, We are at the top of the range again for those thinking of shorting and a sell signal.

  79. Apple event confirmed for September 12:

    The invite, image above, offers a subtle hint as to what the event will unveil. The text reads “It’s almost here,” with a large Calendar-style 12 beneath. There’s no direct mention of the iPhone, but the shadow of the 12 is a looming 5 — a pretty clear indicator of the focus of the event.

    Better have a bigger screen in the new iPhone….

  80. 11:00 AM On the hour: Dow -0.78%. 10-yr -0.1%. Euro -0.25% vs. dollar. Crude -1.18% to $95.33. Gold +0.42% to $1692.35.

    11:37 AM There's a wide divergence in Europe today as the core gets battered while the periphery does okay following the leak of Draghi's ECB bond purchase plans. Stoxx 50 -0.9%, Germany -1.1%, France -1.5%, Italy -0.2%, Spain +0.8%, U.K. -1.5%. The euro gives up big early gains, now -0.2% to $1.2565.

    12:00 PM On the hour: Dow -0.76%. 10-yr -0.14%. Euro -0.20% vs. dollar. Crude -1.29% to $95.23. Gold +0.41% to $1692.15.

    1:00 PM On the hour: Dow -0.61%. 10-yr -0.25%. Euro -0.24% vs. dollar. Crude -1% to $95.51. Gold +0.55% to $1694.55. 

    2:00 PM On the hour: Dow -0.61%. 10-yr +0.27%. Euro -0.18% vs. dollar. Crude -0.9% to $94.64. Gold -0.3% to $1655.75.

    The JPMorgan August Global PMI falls to 48.1, down from 48.4 in July and the lowest print in more than 3 years. Leading the decline were Order Backlogs falling at their fastest pace since spring 2009. Rising oil prices contributed to a big jump in the Input Price index, now just barely showing contraction at 49.2. 

    Perhaps an ugly bellwether for the global economy, Asia's aggregate exports turned lower Y/Y in July for the first time since the financial crisis, says Nomura's Rob Subbaraman. Yes, Europe has fallen off a cliff, but the data leave little doubt the slowdown is becoming more synchronized. August numbers from Korea suggest the trend grew in strength last month. - How does the market ignore this stuff??? 

    A look at the ISM sub-indexes over the past few months, shows a striking, broad-based deterioration in activity. In April, 82-83% of industries reported increasing New Orders and Production, now just 22%. 62% reported growth in New Export Orders, now just 22%. (this morning's report)

    Is the U.S. better off than four years ago? When it comes to energy, Duke Energy (DUK) CEO Jim Rogers says yes: "Are we better off in terms of efficiency? We see per-home usage of electricity declining… We [have had] two license[s] for nuclear plants issued. We have abundant supply of natural gas at low prices… [In] the various ways to generate electricity, we’re better off today."

    The bear case for stocks may make sense, but how do you square it with BAML's survey showing overwhelming bearishness (the highest since 1985) amongst professional managers? Such extremes in negative sentiment have been great buying opportunities in the past. (h/t tradefast)

    More on ECB bond buys: Draghi told EU lawmakersmonetary policy – as it's currently being carried out – is mostly ineffective as rate cuts are not being transmitted where needed. To not do something further would be an abdication of the bank's responsibility for price stability. "Frankly, all this also has to do very much with the continuing existence of the euro."

    Brazil's August PMI rises to 49.3 from 48.7 previously, led by New Export Orders remaining in contraction for the 16th consecutive month. Separately, the government was forced to cut its 2012 export forecast after a sharp fall in trade for August. Two key products: iron ore and sugar this year have seen export volume declines combining with big price drops – a tough 1-2 punch. EWZ-1.6%.

    Central Falls, RI is expected to win approval for its emergence from bankruptcy, with the burden falling on taxpayers and retired municipal employees. Unlike some California cities – who may have discovered they can stiff bondholders and live to tell the tale – the goal for Central Falls has been to preserve credit market access, and creditors will not lose a dime.

    Buyers of Banco Santander's (SAN) upcoming IPO of its Mexican unit will still have to keep a close eye on the bank's home country of Spain. "Who knows when they might sell the next 10%," says a fund manager, referring to capital needs back home forcing Santander to pressure its Mexican unit stock price by unloading more shares.

    Long corn? If you bought the December crop 7 weeks ago you're even, notes an analyst. This despite falling crop ratings, the USDA cutting its harvest numbers, and numerous private tours confirming the poor state of the crop. Always take caution with a bull market that's stopped reacting to bullish news.

    Gold gets jarred above the $1,700/oz. level for the first timesince March as the weak ISM print naturally raises the odds of further pump-priming by the Fed. Silver posts an even sharper move, rising to $32.25, its highest price since April. 

    Does the divergence of copper (JJC) and the homebuilders (XHB) offer an investment opportunity? Reports of declining economic growth in China, Europe and the U.S. have taken copper lower, likely a bearish indicator for homebuilders, Tim Seymour writes; their shares have soared, but the slowest part of the year is looming for the international real estate sector, particularly homebuilders.

    Halliburton (HAL -3.7%) shares sink after CFO Mark McCollum warns a drop in activity in its North American home market means Q3 revenue will decline, and lower pricing will knock as much as three percentage points off Q3 profit margins. Analyst consensus had expected a ~2% rise in Q/Q revenues. Also: SLB -2.1%BHI-3.5%CJES -3.9%.

    Solar stocks are off sharply in early trading (TAN -3.7%). Concerns about Europe and China could be weighing, or it could just be that the Street continues to grow more pessimistic following last week's earnings reports (III). YGE -9.5%SPWR -7.8%LDK -7.6%.FSLR -6.4%JASO -10%.

    In an indication of just how broad demand for cars in the U.S. has become, even luxury sport car sales are on the rise. The U.S. importer of Porsche cars says U.S. sales soared 39% in August and now stand up 9% YTD compared to last year.

    Chrysler's (FIATY.PKstrong demand in the U.S. also reached across the border to Canada where August sales were the highest since 2000. Fuel-efficient vehicles paced the gains, and the automaker says it expects the momentum to continue with Dodge Darts just now arriving at dealerships.

    Ford (F +1.1%) trades higher after sales of light vehicles shoot up 12.6% in August, compared to the estimate of analysts calling for a 9.8% gain. The automaker saw broad gains in its lineup of cars, utilities, and trucks – helping to justify its plan to increase Q4 production by 7% Y/Y to 725K.

    General Motors (GM) August U.S. sales: +10% to 240,520, easily beating the consensus estimate of analysts. Advertising during the Olympics and a money-back guarantee programs helped stoke up sales during the period. Key brand Chevrolet saw passenger car sales soar 25%, while Cadillac and Buick also posted double-digit gains. (PR) 

    Honda (HMC) August U.S. sales: +59.5% to 131,121 vehicles, 12.1% higher than last month's mark. Honda division +57.9; led by Accord and Civic posting gains of 89% and 106%, respectively. Acura division sales rose 72.8% to 15,646, lifted in part by a record high 2,926 RDX units. (PR)

    Hyundai (HYMLF.PK) August U.S. sales: +4.0% to 61,099 vehicles. Sonata sales declined 5% Y/Y to 19,624, offset by a 19% increase in Elantra sales to 17,989.

    Nissan (NSANY.OB) August U.S. sales: +7.6% Y/Y to 98,515 vehicles. Total car sales rose 8.1% to 63,012, while truck sales saw a 6.8% increase to 35,503. Nissan division +5.9% to 87,360. Infiniti division +23.6% to 11,155, marking its best August in seven years. (PR)

    Toyota (TM) August U.S. sales: +40.2% to 188,520 vehicles, falling in the mid-range of the estimates from analysts. The comparable Y/Y gain is still influenced by the production slowdown last year following the natural disasters in Japan. Full sales totals by model will be issued by the automaker later today. (PR)

    More on Toyota's August Sales (previous): Toyota division sales rose 42% to 164,823, led by demand for Camry models. Lexus division up 28.9% to 24,237, with sales of passenger cars outpacing luxury utility vehicles and light trucks. The two divisions combined to sell 28,960 hybrids, up 110% from a year ago. (PR) 

    Volkswagen (VLKAY.PK) August U.S. sales: +62.5% to 41,011 vehicles, marking the automaker's best August sales mark since 1973.

    More on Toyota's August Sales (previous): Toyota division sales rose 42% to 164,823, led by demand for Camry models. Lexus division up 28.9% to 24,237, with sales of passenger cars outpacing luxury utility vehicles and light trucks. The two divisions combined to sell 28,960 hybrids, up 110% from a year ago. (PR)

    Shares of Supervalu (SVU -5.5%) slump with the grocery operator's labor turmoils now starting to take center stage. A plan tosell off the company in pieces may look great on paper, but the 42% of Supervalu's workers who are in the middle of a collective bargaining process for new contracts muddy the water a bit.

    Green Mountain Coffee Roasters (GMCR -1.7%) could take a hit with word that Supervalu's Java Delight Uncup can be used with the Keurig system, according to Hedgeye's Howard Penney. Much of the debate on GMCR (outside of accounting) focuses on the potential of its consumables business, with forecasts ranging far and wide on the competition advantage the company holds in the space. - Wait until a generic wins a hotel contract, GMCR will drop like a rock attached to a bigger rock.  There's a reason blade makers change the blades every year or so…  

  81. That's quite the RUT outperformance. I wonder if they can get the Dow green? Going to be interesting to watch.

  82. New Best Buy (BBY +0.5%) CEO Hubert Joly says he willtake to the floors of stores in Minnesota to help combat criticism that he doesn't understand the finer details of retail. The turnaround specialist may be rolling up his sleeves in a mostly symbolic move, but after the retailer misfired with its focus for the last two holiday seasons a bit of face-to-face with consumers roaming Best Buy stores won't hurt.

    Evercore's Patrick Wang makes a bearish call on PC chip stocks: AMD (AMD -1.9%) and Nvidia (NVDA -3.9%) have been downgraded to Underweight, and estimates have been cut for Intel (INTC -1.7%). Wang expects AMD to continue underperforming due to high CPU inventories, margin pressure, and tough competition from Intel and ARM-based solutions. As for Nvidia, he thinks Tegra sales could disappoint, partly due to the iPad Mini's arrival and slowing smartphone design wins. (Intel estimate cuts: III)

    Orbitz Worldwide (OWW -9.1%) falls hard on heavy volume as the ramifications from an antitrust lawsuit filed by AMR starts to weigh more heavily on investors who are already antsy about increased competition in the space from the likes of Google and other major players. Shares of OWW now trade at their low for the year.

    Debt-laden Telefonica (TEF +4.9%) and Telecom Italia (TI+4.2%) are rallying on hopes the ECB will start buying short-term Spanish and Italian government bonds. Telefonica's gains come as the carrier launches Amérigo, a €300M ($378M) VC that will initially focus on Spain, Columbia, Chile, and Brazil, but could eventually expand to other regions.

    Nokia (NOK +3.6%) rallies as more details leak for its high-end Lumia 920 Windows Phone (previous), set to be announced tomorrow. The 920 will reportedly feature wireless charging supportand a Qualcomm (QCOMSnapdragon processor. It'll officially be labeled as a PureView phone, but will only have an 8MP sensor (the Symbian-based 808 has a 41MP sensor). The details come as Digitimes reports LCD panel shipments for Nokia and Motorola Mobility phones have been declining in seasonally strong Q3.

    Vodafone (VOD -2.1%) slips after receiving a downgrade to Market Perform from Bernstein. SA's Qineqt offered a cautious take on the mobile carrier over the weekend, arguing heavy European exposure, call termination rate cuts, and a relatively steep valuation will limit upside. 

    Apple (AAPL +0.8%) roundup: 1) A U.S. appeals courtupholds a decision to toss a $625.5M 2011 jury verdict against Apple related to a patent suit from private Mirror Worlds. 2) Piper's Gene Munster thinks iPhone 5 sales, expected to begin on Sep. 21, could reach 10M just by the end of September. 3) Needham's Charlie Wolf believes U.S. education-market PC sales fell 14% Y/Y in Q2, while iPad sales to the market totaled nearly 1M. He considers this proofthe latter is cannibalizing the former. (iPhone event) 

    Apple (AAPL) has sent out invitations for a Sep. 12 event at the Yerba Buena Center in San Francisco. The event, which starts at 1PM ET, is widely expected to feature the release of a new iPhone, with many expecting the device to go on sale 9 days later. Recent reports suggest the iPad Mini won't be announced until October. The teaser image for the Sep. 12 event suggests the next iPhone will be called the iPhone 5.

    Three lunchtime reads:

    1) Employment data could ramp up the odds for quantitative easing

    2) The twilight of the public corporation

    3) Loan rates point to eurozone fractures

  83. The buck and the RUT keep going up. All the day trading signals are worthless lately. BOTS picking up any pattern no matter how small, easy when all the other trades are BOTS.

  84. RUT almost up 1%!?!?!!?!?

  85. Rut has to hold over 820 at close or it don't mean a thing!

  86. The new pair trade.  Long /TF short /YM

  87. Wow….

    AVEO…buying back Sept calls (sm. loss).  Selling more Oct 10 Ps.

  88. RIG Sept/Oct $50 calendar for 85c.

  89. Over 820, what a F#CKING joke.

  90. Holy stick o mole' !

  91. Wow, shackles coming off the Dow and the S&P and RUT blasted past 815.  I wonder if we had gone long on the RUT and left the Dow alone if it would have been reversed?   That's why it's good to watch something like TZA for a while before playing it – you want to get a feel for what it's doing.  The $15s dropped to $1.31 and still have no premium.  The RUT is hitting yesterday's Futures high of 816 so very tempting here but the S&P is at 1,402 with the /ES at 1,400.75 so I'd want to see that fail first.  NYSE at 7,986 – we'll see how they handle 8,000 and, of course Dow 13,050.  

    $25KP – Now we can set stops on DIA calls at $2.25 (now $2.40) to make sure we don't take a loss.  Obviously we'd like to make .25 ($250) or better.  If the Dow goes even they should fetch $2.90 so let's say taking $2.75 off the table is our goal (around 13,100).  

    Pathological/StJ – He can't possibly believe those numbers, can he?  I don't think there's a 10-year period in which you can get those numbers.  Even under the Bush catastrophe, the record probably wasn't 60,000.  

    Cruises/Shadow – We do the Disney cruise and it's very, very nice.  There is nothing on the ship you can even spend money on except liquor, which they sure don't push.  We love it, I'm going again in April with the kids.  When they are a bit older we may do other lines but at their ages (tweens) I can't imagine anything being as good as those ships for them.

    817 on the RUT – WOW!  

    Did anyone hear of any kind of catalyst for this?  

    Volume on this rally has been about 5M on the Dow (now 55M for the day) – that's the really amazing thing here, we had huge (relatively) volume in the morning on the way down and then "THEY" get to reset the market levels higher with a few tricks and a few trades over a 30 min pump.  They don't even need a reason anymore and this will never be questioned or investigated – it's just Tuesday.  

    VIX back at 18 – all is well!  

    RUT 822!   TNA $56 calls went from $1.20 at 1pm to $3 now.  At 2 they were just $1.60.  

    At this point, this is just silly – how can you take this market seriously? 

    May as well go bullish on oil (/CL) over the $95.50 line.  I mean, why not?  

  92. WTF is this BS? did Benny just dump 500bn on it?

  93. Are we still doubling down on PCLN at $3 in the $25KP?

  94. RUT up 1.25%.  Silly Europe, what were they thinking?  

    Gotta play the TZA Sept (not weekly) $15s at $1.24 – 10 in the $25KPs and I have to chicken out of the DIAs here at $2.85 because it's just silly!  

  95. Ryan Numbers
    Did he goof?  Or trying to spin it?  The numbers are accurate, it is just that they are the total of personal and business.  Either way, stupid mistake, or stupid spin.

  96. SQQQ DD still in effect @ 1.50? Got the impression we may be rolling earlier.

  97. Time for some TZA?

  98. I filled on 11 of 12 for the SQQQ DD.

  99. that impertinent stick was downright rude.

  100. Stop on TZA? 

  101. SGEN flying…..

  102. Phil
    Have no knowledge of Disney cruises but know someone who lost the selling job. He only did cruises for adults. the money traps were only breakfast provided free, no free drinks even water, and gambeling. There were more expensive packages but that was the under $2,000 packages.

  103. The DIA long calls was a good trade Phil.   I scalped a bunch of 'em for +25%.   

  104. Triple thx. to phil / rain / lflan. Learning more and more everyday!!

  105. Absolutely no excuses on those SQQQ calls this time (DD at $1.50)!  

    PCLN/$25KP, Real – As they are Sept puts, we should save our cash for an Oct roll and possible DD.  At the moment, I'm thinking e can sell the Sept $570 puts for $4.20 and roll our $565 puts ($3.40) to the Oct $550 puts at $8.20 for about .70 net.  The Oct $550 puts have a .20 delta and the Sept $570 puts have a .18 delta so we should stay out of trouble without having to take any more out of pocket (not much).  We'll see how it looks tomorrow but that's the roll I'm looking at.  

    Personal bankruptcies/CCS – Is that what they are saying now, that he meant personal?  Personal bankruptcies are always around 1.4M (1% of households) how would that even be a point someone was trying to make?  My point is that SAYING business bankruptcies are 20x what's real is a pretty strong indication that this guy doesn't even understand the words coming out of his own mouth.  If you were reading a teleprompter and it said 9,000 public companies went bankrupt last year would you read it?  No because you know there are only 9,000 total public companies.  If the man doesn't even understand the basics of the American business environment – he's just another Sarah Palin in a more expensive suit.  

    SQQQ/$25KP, Rebel – That one I still want to DD as it can snap back fast and we can get out even (or ahead if the TZAs work too).  By Friday we'll be done with those in Sept but this crazy run-up to the top of the SQQQ range (again) will allow us to get out even at about $2 and the top of the range is $2.25 so a good chance to hit it (they were $2.20 this morning).  I am also encouraged by AAPL hitting $675 again at the same time as they are saying there will be no IPad mini on the 12th.  

    Good call Rain.  

    TZA/$25KP, Cdel – No stop on the Septs.  I'm looking for a reality check in the morning. 

    Cruises/Shadow – I'm sure plenty of them are rip-offs.  Same as any package trips – it's caveat emptor at its finest.  

  106. You know what's funny is everytime they do this I act surprised and get pissed!!! lol.   Great call on the DIA calls Phil, definitely wished I got them!

  107. Ryan / ccs – At this point, they just make stuff up, see what sticks and hope that no one will check and actually the MSM doesn't so good plan!

  108. WCRX – selling Jan 2013 13 P for 75c or better.

  109. MoMo trade:   Now I've dumped the LULU Sept 22 65 calls  for 4.90.    I'm not proud.  I'll take a few hundred here and there all day.   We are back to AAPL bull call spreads only in the MoMo.

  110. SQQQ – so you are DD at $1.50 now?  What is the basis for thinking we get a sell off this week when the pattern is buy into potential positive ECB news, then sell on disappointment.  Seems to me that spending $1.5 ($1.20 right now)  to get more time and (temporarily) less decay, then DD if necessary would be the play.  Can you explain why the DD now is better, when you will likely roll anyway?  It can wait until AH…

  111. The SS administration has put out a bid for 174,000 hollow-point bullets, which has caused a bit of a stir, as they claim they are for "target practice."  Hollow-points are more expensive than solid rounds, and no one uses them for target practice – they don't behave any differently from a ballistic standpoint.  Cyberspace is buzzing with notions of SS runnning out of money and needing the rounds to mow down grannies at demonstrations.
     It's getting weird these days, that's for sure, although even weirder in Spain, where their SS administration is already dipping into reserves to cover payments, the First Secretary of the Spanish Socialist Party is denying that he's purging the Party of Catalan nationalists, while saying at the same time that, "sooner or later, there will have to be a Catalan referendum", and the monthly unemployment figures have risen again in the last month after declining for the last three.  Strange Days.

  112. Doesn't APPL usually sell off a bit on event days? Sell the news?

  113. Lflan / nice work today.  thanks

  114. I think Bernanke is giving stimulus only to institutions that hold stocks in the Russell Index.  That thing is moving like a bat out of hell over the last 6 weeks.

  115. So RUT finishing at days highs…Nice…

  116. Are we really rallying on a Bill Gross tweet "Gross: Draghi appears willing to write 2-3 year “checks” to peripherals. Very reflationary. Buy gold, TIPS, real assets."?  How is this anything new?

  117. Zero
    I hand load and hollow points are now cheaper because of the cost of copper, now all they do is expose the lead. Long ago they lined the hollow with tin making a very nasty ripping through now it is all about less copper. The full copper semi wad cutters for match rounds are double the cost now.
     Why does SS need any ammo?

  118. jromeha / high — Not over yet.  I think if the other indcies don't clear their highs, there might be a clubbing into the close.

  119. How many times can we rally on the same news, guess indefinitely is the answer. 

  120. Thanks 2can/Amalfi…….
    I'm thinking AAPL may surprise us soon with a stock split.   That should be good for another pop! 

  121. SGEN Mar 30/35 BCS.  Selling the mar $22.5 for 1.80 for a 35c credit.

  122. HOV!

  123. I am seeing some very large blocks trying to keep the RUT up. Premium for puts spiked.

  124. News / Rustle – Like the market, I have decided to ignore all the bad news. That leaves only good news – makes me feel good about everything. What can go wrong with that plan?

  125. The RUT will not drop!!! Dow drops 20, RUT drops 1!

  126. I dedicate this to today's market…..

  127. stjeanluc….I bought a bit of TZA today for downside protection.  That should assure that we get a pop tomorrow.  

  128. That's just unreal:


    The trio use a novel technique to calculate levels of tax evasion in Greece. The authors look at a dataset from a large Greek bank, which contains information on individual borrowers’ credit applications between 2003 and 2010. Taken at face value, the data for self-employed borrowers make no sense. On average, self-employed Greeks spend 82% of their monthly reported income—ie, the amount they declare to the tax office—on servicing debt payments. Some professions, like lawyers and doctors, appear to spend more than 100% of their income on debt servicing.

    That cannot be right: a rough rule of thumb is that a third of income should go on debt payments. Banks would not lend at these steepling debt-to-income ratios. Weirder still, the delinquency rates on loans do not seem to vary in line with these ratios: self-employed Greek doctors are both the most indebted profession and the one with the lowest delinquency probabilities.

    The explanation, confirmed by bankers in statements to the authors, is that Greek banks have adapted their credit models to adjust borrowers’ reported incomes up to a best guess of their actual incomes. Lenders assume that self-employed borrowers in certain occupations are under-reporting, in other words, and plug this assumption into their decision-making processes. Tax evasion is less an under-the-radar activity, more a social norm.

    Of course, in the US we have tax lawyers to do that legally especially hedge fund managers. But the Greek system seems much simpler!

  129. Isn't a rotation into small caps generally seen as a bullish sign for the stock market?  I am inclined to think that whatever Draghi says will be spun positive anyway.  I am 97% in cash, waiting for SOMETHING REAL to move this market one way or the other…just one man's opinion

  130. Shadow – Thanks for the hollow point explanation.
    Many in this country have developed a nasty habit of thinking our government can't do a damn thing right. I had a feeling the hollow points might have been cheaper to buy – Thanks Again to Shadow for confirming my suspicions…..

  131. Some people will only work for cash!

  132. 1020
    Your welcome, anything to counter the hype.

  133. You're welcome Amalfi! 

    Every time/Jrom – That's the point of practicing.  After a while you can smell the con.  

    64M at 3:15 now that selling has resumed – interesting how that works.  

    HOV snuck over $3 today!  WFR making a run on $3 as well. 

    SQQQ/Cdel – I don't know what you are looking at but the Sept $38s are $1.60 at the moment and the idea is that we have already tried multiple time to get $1.50 and it's been a tough fill so that means it's likely still a good target.  You think QE is in the bag – I'm playing for ECB disappointment and a massive sell-off. 

    Strange days/ZZ – This news of Government agencies stocking up on hollow points keeps spreading.  Something strange is going on although all the articles seem to come from right wing-nut publications so maybe it's just one of those Karl Rove specials:

    AAPL/Amalfi – I don't see how the long-awaited IPhone 5 should cause such excitement.  Without a new IPad, we're not talking about a lot of additional revenues.  

    RUT made a big move trying to shake off the shorts – seems encouraging to me.  

    Gross/JJ – Yes, now one man can tweet the markets up $1Tn – isn't that fun?  Of course, that's why my reaction is to short it – on that volume, there was no possible way the move up could be sustained.  That's why I was digging for a catalyst and,  not finding one, decided to kill the bullish Dow calls and DD on SQQQ and add the TZA.  On the whole, I don't mind being wrong when logic and math don't work out but I feel like a real fool when I get burned because I join the herd and become a bag-holder.  

    Why does SS need ammo/Shadow – Imagine what will happen when they stop sending out checks….  Very good point on hollows being cheaper!  

    RUT/Jrom – The Dow is 16x bigger than the RUT so not really disproportionate.  

    That's an oldie Vill.  

    Greece/StJ – So they don't have any level of computerization to verify incomes?  Very strange.  With that kind of multiplier, their per capita gdp must be about double to $47,500 – putting them near  the top of the World (ours is only $48K).  So very impressive if the study is true but, obviously, it's more likely the study findings are flawed…

    Draghi/Cdel – Draghi promised to save everyone 10% ago.  You think that his actions will be good for what, another 5%, 10%?  At $600Bn per 1% gain in the markets, we've already priced in $6Tn worth of benefits from Draghi – seems like a lot to live up to from my point of view.   Cash is very wise in any case.  

  134. Phil, you talk about there's only so much money to keep these valuations but if bots are buying and selling and ending flat at the end of day, don't they have the ability to keep moving the markets higher and higher as long as volume is light?

  135. Shadowfax
    I have been having a problem with my internet explorer.  when it is open all day it gets slower and slower as the day goes on.  sometimes i have to reboot to get the speed back.  it can even get to the point of freezing the whole computer. 
    any opinions?

  136. Greece / Phil – This covers only self-employed borrowers which would be probably less than 10% of the population. Employees (public and private) are stuck with the income that their employers declare. It makes a lot more sense then…

  137. Them's some big volume candles on IWM today!

  138. StJean/ Greece
    Finally an academic study to corroborate all the anecdotal stories I have witnessed.
    Upper Greek class cheats their poorer fellow countrymen big time.
    Hopefully, with a bit of German engineering in their Tax Office, they will start collecting taxes and suddenly Greece will be prosper once again.
    Angela is doing an incredible job at disciplining the Peripheral Euro governments and administrations.
    Average Greeks have been robbed blind for more than a decade by their bourgeoisie and it had to stop but they needed some European help for that.
    As an aside, I was traveling through a little village in Piedmont a week ago and they had a big billboard sign on the plaza reading in both German and Italian "Thank you Ms Merkel!"
    People wont be duped anymore. Hopefully….

  139. williex / ie — I'd remove any extensions you might have and see if it clears up.

  140. 73M with 5 mins to go on the Dow. 

    Bots/Rustle – Sure but it's like my car lot model.  At some point, cars/stocks actually have to be sold and then, as soon as you find out there's no buyers, prices plunge at an alarming rate.   If the market was $60Tn and now it's $66Tn on $200Bn worth of shares being traded over and over up to $220Bn then you'll reflect a $66Tn valuation on the whole market but, if you didn't create an additional $6Tn worth of money to buy stocks along the way, then as soon as any volume of selling comes in you have an air pocket all the way back to $60Tn and there simply isn't any money to fill it with – certainly not from the silly $220Bn the bots have to play with.   That's why bubbles end in collapse – in the end, they grow at a rate that is simply unsustainable and that initial pop comes as soon as there's some real price discovery.  When they pop – you never know, but the higher we go, the harder we fall in the end.  

    IE/Willie – Try Chrome, you'll never switch back.  

  141. Phil
    Those practicing are not world champ marksmen. Hitting a target at 50 feet is the goal +- 1 foot is very good for most.

  142. Greece / StJ – By looking at the professions in the article, i would say at least 20-30% of working population.  There are very very few consolidated firms in all these occupations. People tend to open individual offices, especially to be able to pull through all the tax evasion scams.

  143. rain
    already tried removing the extensions.  Thanks
    will try chrome

  144. Well that was a joke.  Good day to all!

  145. Down volume about 10x the up volume into the close.   Dow looks like 100M after the bell.  

    Will be an interesting overnight.  

    Yet another guy on CNBC saying how negative the sentiment is.  Where is this negative sentiment if we are going up every day for 2 straight months?  What on earth does a bull market look like if that's the case?  

    Self-employed/StJ – Ah, that's possible then.  Not too different from the "deductions" our own top 10% take when they can. 

    Tomorrow we get Euro-Zone PMI Service reports and Retail Sales over there and Thursday is Euro-Zone GDP and the BOE and ECB announcements along with our ADP, ISM services and a 7-year note auction.  

  146. williex
    Tried crome faster with same problem you have, links add cookies, some cookies are plane and leagal spyware. When I day trade I never ever check the links on my trading computer. Swab has a spy program. I dumped them. I use a laptop for everything else and never check email during the day. Today not trading I checked 2 links and it killed my speed. Hope you have 2 computers and clear cookies every day. It seems silly but the difference is real.
    Links from members to pay sites are the worst if you don't pay.


  148. Taxes / Lionel & Phil – As I said, here in the USA we do it legally with tax lawyers – the upper class is cheating the rest of the country as wel. With his battery of lawyers and accountant, Romney manages to pay 13% on his income. If the average upper middle class taxpayers pays around 25% in taxes, he effectively has a 2x income multiplier. Legally! Although apparently in question now….

  149. What wHAT IS THwHAT IS THE aRE WE C

  150. What is the plan with the GLD we purchased last wHAT IS THwHAT IS THE aRE WE C

  151. Greece / Dpas – Does this study make sense from your point of view on the ground though?

  152. OIL
    We shut down refineries, had a holiday, so there has to be a draw right? This it the last chance to spin shit and call it shinnolla.

  153. HOV to report earnings before market 9/6. I am hoping
    for a pleasant surprise.

  154. StJEan/
    All agreed.
    You could also add that American middle class is also subsidizing US corporations by letting them operate in an effective tax free environment.
    Things have to change and we should be supporting any politicians willing to tackle the issue. Courage is the new gold!

  155. Shadowfax
    I do clear cookies regularly every few days.after the market. 
    thanks for your thoughts

  156. Greece/StJ – Yes totally. As mentioned in the article, mostly occupations around services are the bigget tax evaders.  And top 3 has to be doctors, engineers and lawyers.  You may seem a bit confused regarding the engineers, but in GR there is no industry. They are occupied with trivial jobs especially around building permits and handlng various paperwork for small construction projects.  Regarding education, its all about the teachers  that provide private lessons after hours to make up for a failed education system.  The norm is that no one (or ver very few) of all the above professionwill give you an official receipt unless you really ask. No receipt no taxable income, black economy.  Thats how GR is still surviving after all the salary and pension cuts. 

  157. Makers of Diovan HCT said they will give me free pills until Dec 31. The generics refuse to help. Rediculus, have to return to the high priced stuff and need new presriptions, refuse to fill my refils. Doc office already complained, not the doc.

  158. `williex — might also try clearing the cache.

  159. Tax Free / Lionel – Indeed, the biggest scandal is the corporate tax. The GOP keeps complaining that it's the highest in the world at 35% but on average firms pay less than 15% – when they pay anything at all…

  160. Thanks for the explanation Dpas… A sorry state of affairs altogether!

  161. SQQQ/Draghi – I was looking at a $1.20 roll of the 38s to Oct 38s for similar upside without the extreme premium decay if Draghi says anything at all that is spinable (see Bernanke effect of last week)…or nothing for that matter. 

    Some guy on CNBC just said that the market is actually pricing in the bad news, not the good news potential…funny enough he said that bad news, once public, gets factored in immediately, then forgotten.  If this is so how does the same "good news" we keep hearing over and over again KEEP getting factored in over and over again.  Furthermore, the bad news is even good now because of QE possibilities. 
    My point was not that I see a significant ECB move happening Thu; rather, it seems like no matter what they say or hint at, the spin factor will at least limit the sell off.  Said another way, solid financial logic has gone out the window

  162. willi
    I clear them every day, takes ony a few seconds before shut down. I have had a few lock ups and cleared the cookies, ran clean disc during the day, and presto fixed everything still running. I used that most times for PSW but I have not had a problem with refreshes in months. Excellent Phil!

  163. Indeed! and very difficult if not impossible to change. Anyway..have a good afternoon

  164. PM Carpenter comes through again on Paul Ryan:


    Which leads to the closely related question: Since when did Paul Ryan become an intellectual?

    Any grown man who sees Ayn Rand's brooding, adolescent objectivism as evidence of a towering intellect and excavating philosophy is also a man of remarkably limited cognitive abilities. Mr. Ryan is, incontrovertibly, a liar--and a world-class liar at that. Yet allowances must be made, for he's also little more than a hack, a parrot, an immature, unoriginal "thinker" of extraordinary credulity.

    And what's even more disturbing and most astounding is that among the "conservative intelligentsia," he sits at the very top.

    The best quote on Atlas Shrugged is still from John Rodgers:

    There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.

  165. SVU is releasing its own brand of single-serve coffee cups that work in Keurig machines called "UnCups"
    SUPERVALU Launches Java Delight Single Serve Coffee UnCup

  166. Stock buybacks are not always a good thing:

    In practice, however, as we can see with Dell, it doesn’t always work that way. The company ends up overpaying for its shares when the stock is high, thereby essentially taking money which belongs to all shareholders, and distributing it only to those who are exiting. As a result, the most loyal and faithful shareholders can end up with less than they started with, even when the company has been solidly profitable all along.

  167. And Amazon might be helping Netflix:

    Think about it this way: up until now, when Netflix has signed exclusive deals for TV shows and movies, the enormous sums involved can be broken down into two parts: one part for the right to show the material, and another part for exclusivity. If Netflix gives up on exclusivity, that means that it’s paying less for the material, and that all the money it’s spending appears on the screens of subscribers, rather than showing up also in the absence of that material on the screens of non-subscribers. If Netflix is convinced that its value proposition for subscribers is a good one — and I think that it is — then it shouldn’t need to pay untold millions of dollars to keep non-subscribers from watching certain shows.

  168. Felix is on a rampage – why hyperinflation is not something to worry about:

    Some staggering example:

    At their highest, the numbers start to beggar the imagination: in mid-November 2008, for instance, inflation in Zimbabwe reached a monthly rate of 79,600,000,000%. That’s 79 billion percent per month. At that rate, prices pretty much double every day. And Zimbabwe doesn’t even manage to grab the top spot: in July 1946, Hungary saw hyperinflation of 41,900,000,000,000,000%. That’s 42 quadrillion percent in one month, with prices doubling every 15 hours.

    And conclusion:

    All of which is to say that hyperinflation, in and of itself, really isn’t anything to worry about. It’s pretty much impossible to predict — and if your country has hyperinflation, it almost certainly has even bigger other problems. In fact, I’d hesitate to categorize hyperinflation as a narrowly economic phenomenon at all, as opposed to simply being a symptom of much bigger failures at the geopolitical level. Those failures are exacerbated by hyperinflation, of course: there’s very much a vicious cycle in these episodes. But you only ever find hyperinflation under extreme conditions, and, with a single exception (Peru), I’m not even sure I can find any genuine democracies on this list.

  169. Man, you guys have really convinced me. Paul Ryan is a liar. .
    Then again, it may depend on the meaning of "is".

  170. Since English is not my first language Pstas, maybe you can give me another word for someone who tells lies (even picked up by Fox after his speech!).

  171. Denlundy:  That's some serious dyslexia you've got there.

  172. No dyslexia,  my fingers  just suffering uncontrollable stroke like  symptoms  when I saw the option price on 160's  down to 12 cents.

  173. Cut 'em off.  They are leaches.

  174. Phil:  Yeah, that "hollowpoint" story does have a synthetic vibe to it.
    Shadow / hollowpoint:  So those bullets are just softpoint – flat lead nose — or do they have a concave tip, to be called a hollowpoint?  I thought you could only control expansion by lining the cavity with  a non-lead material [copper/tin, as you say]?
     Separately, I'm not sure I buy that story about hollowpoints being more "humane" by not causing a through-and through, because they do a tremendous amount of non-lethal damage [read: unnecessary] if they don't hit a vital area, and the "save the bystanders" argument doesn't hold up very well — all of the rounds fired by the NY Police in the Empire State Building shooting were hollowpoints:

  175. Stjeanluc/liar  I believe the word you're looking for is charlatan….. Oui?   :)

  176. 1020/  Great word Monsieur!

  177. An equity strategist for Goldman Sachs [GS  106.41    0.69  (+0.65%)   ] is predicting a September selloff that happens so rapidly he is telling clients to protect themselves before Sept. 14.

  178. zeroxzero/hollow points – small caliber hollow points are prohibited in international and non-international conflicts (at least on paper) .  In the U.S., hollow points are allowed for personal defense, hunting, and police duty.  In such cases it makes sense versus regular bullets, for a couple of reasons.  Expanding bullets (hollow points) are like small grenades going off inside soft tissue once they strike a harder medium such as bone, and thus will slow down and stop a perpetrator, animal, or a criminal much quicker and with fewer strikes.  In a close range scenario, hollow points can cause less collateral damage to bystanders as they tend to not leave the body once they fragment (smaller pieces do not have the momentum to escape due to both the loss of mass and increased coefficient of drag).
    QE3 – I still believe Draghi disappoints and Bernanke pulls the trigger next week.  Why…because even if Draghi pulls the trigger on short duration bonds (which will not happen before the German Court blessing), everyone already knows that is not going to work so the effect will fade within days in the equity markets.  Ben on the other hand, who I believe is actually intelligent, either knows something the rest of us do not (date in which Israel is going to bomb Iraq, impending bank collapse, fiscal cliff stalemate consequences, etc)…or he is simply evil and enjoys fattening his buddies wallets at the expense of global food riots and worse.  I have to think he has the insider scoop on the global economic picture more than any other human due to his power status (more important than the US Pres at this phase of history, IMHO)…thus I take a glass half full stance that he is trying to save the world, and is smart enough to not destroy it in the process.  Personally myself, I would jawbone the markets until after the new elections, and then let the markets tank hard, which would force Congress to enact some fiscal policies that hopefully create jobs.  Perhaps Ben is just getting the markets higher to allow them a less destructive 20% fall in December.  I believe it is a given the markets will start to implode in December anyway, as the capital gains taxes and dividend taxes increase substantially (Obama wins), or the fed gets real audit threats and handcuffed by Romney…and Japan, China, Europe, and the rest of the world can not hide the dirty laundry any longer.  I hope Ben runs the SP500 up to 1500-1545 territory by December and waste all the central banker bullets…which would set up an epic pullback that would have zero bid and thus an unbelievable profit potential if positioned wisely!

  179. FedEx lowers guidance.  Again, here we go!  Up up up and away!

  180. Pharmboy/Up Up up and away! – Yes but Goldman just said today to pull out and buy the Sept 14 SP500 1375 puts.  Can you imagine, a "crash" to 1375!!!  Hope can't float reality much longer…release the kraken!
    Question for you Pharmboy—is Matt (red) or JRW (yellow) still around?  I miss the "colors"…=)

  181. Shadow:  I've always leaned toward confusion and incompetence over conspiracy as the principal engine of causality in human affairs.  In the case of Bernanke, I, too, believe he is perfectly intelligent, and understands that monetary policy is not magic, cannot directly create jobs, stimulate consumption [if banks raise credit standards above certain levels], directly lower debt levels or change the partisan deadlock which has crippled the development of effective public policy.
    Rates are at historically low levels, and monetary policy is by and large a one-trick pony.  Bernanke therefore has no choice but resort to psychology — essentially reprising the FDR ploy that "the only thing we have to fear is fear itself", and trying manfully to stave off the prospect of a downward-spiralling fear cycle where every [depreciating] dollar is sfuffed under a mattress by continuing to imply that he has "non-traditional" methods that can still be deployed.
    Does he?  Only if by that he means "stuff that has never been tried before, but what the Hell."  His principal gambit for the moment is to sustain "hope" by implying that he has [nonexistent] levers that can still be pulled.  My father once had occasion to end up sitting in the Oval Office with Nixon and Kissinger during a particular political crisis, believing that, after seeing a bewildering series of seeming missteps and contradictory policies, he was finally going to get to the bottom of whatever clever plan had been devised by our senior political leaders.  With a combination of bemusement and horror, he realized that there was none when, after being briefed, Nixon turned to Kissinger and exclaimed "Now what the hell do we do?"  I'd be surprised if this isn't scene isn't being repeated in Federal Reserve meetings these days. 

  182. Charlatan / 1020 – That works….

  183. There was POMO today – is that what pulled us up?

  184. Hi all,
    During the 3-day weekend, reviewed a couple of Schwab commentaries (interesting for 3-6 months outlook):
    1. Back to work – After the summer, it's time for the market to get back to "work" (volume).  European equities raised to neutral from "sell".   Cautiously  optimistic view of the stock market:
    2. Strategy – if Earnings / Margins are peaking, what about Stocks – A somewhat more bullish case for market out-performance in next year:

  185. Phil – What exactly does it mean if the ECB does start buying bonds with the markets at these levels or even QE3?  What is the catalyst for higher stock prices.  Oil is at peak levels, gas is at all time high, food costs are out of control and their are NO JOBS being created.   Can someone break down the how up-side works here. Short Euro long Dow?  This is seriously backwards. 

  186. All this talk about cruises. Regarding shore excursions, the cruise line gets 50% and of course whoever handles the excursion begs for tips. I've been on 11 cruises and I quickly learned to book my own shore excursions in advance (it's called the Internet, it's not hard) or just hop off the ship (it's not called a boat – the captain hates it when you call it that) and find something. I love grabbing a taxi (cheap, usually) for a few hours and we do our own thing. Practically the same price as the ship priced shore excursion – less if I have all 3 kids with me. I have many stories. Regarding Disney, I started cruising with my kids in 2000 when my youngest son was 10 (I have three sons, spaced 1 1/2 years apart). When we went on our first cruise I actually asked them all if they wanted to go on a Disney ship and they said NO. So we went on Carnival, they loved it, and the rest is history. After a few years of Carnival we went on a Royal Caribbean ship and my kids all like it better although I still have a very soft spot in my heart for Carnival. I'm almost 57 but I don't feel it at all and I'm just not ready for the upscale, more sedate ships  (Princess and Celebrity). And I'm definitely not ready for the "geriatric" Holland America ships. Nuff said.

  187. The daily closing of the India/Pakistan border, and, no, this is not a Monty Python skit.  Grim economic times, but it's glad to see that the sub-continent is maintaining a modicum of propriety in international relations.

  188. zero
    That is a good bit of how I feel about Bernanke. The country is in a series of mistakes. give without take in world trade, and allowing the sale of intellectual rites undermines everything. Lets just free up the banks and that means no free money. They will all find out soon how much of high pay they  have earned.
    Hollow points are hollowed out which actually makes them larger,  they have some silces in the copper to control expansion but flat points do the same thing. Sierra bullets and some others say the hollow allows a smoother slice through the air, The full jacketed match semi wad cutters slice the paper target better, real accuracy requires a point and a boattail rear end. The most accurate use a very controled slower burning power to increase the push after the rifeling starts the twist ,also extends the barrel life. There are a few supper special killer bullets that I have never seen a photo of, unobtainum. A small amount of mercury in the hollow  sealed over is unbelievable, they explode, and anyone can do that, then untraceable fragments. Based on hunting it is where the bulet hits that makes the difference not the bullet. Not going through is to protect what is behind.

  189. Ships boats and such. The bigger they get the more staying on land makes sense. Boats that have a feel for the water are where the fun comes. Sailboats are fun if the wind keeps blowing. Want exctitement try fishing for big fish and there is something special about eating what you catch. Nothing comes close to killing and cleaning a fish as soon as it is landed, cooked on board if you can, you can't buy that at any price. In Montana I had a special lake that when the ice melted we would hike in with a single burner stove, fry pan, butter, and salt. Cooking those brookies and cut throut trout  out of 32.5 degree water ASAP. The rest of the year through them back, not worth eating.

  190. ECB/QE3/Joel
    1) No new stimulus from either Mario or Ben.
    2) It turns out that somehow Mario has gotten his plan to buy 3-yr bonds approved (there's a constitutional question here) but then nothing from Ben.
    3) Mario has nothing, but then Ben launches the "flexible" QE3.
    4) Both Mario and Ben come thru.
    For planning purposes, I'm regarding each outcome as equally likely.  For some interesting ideas about case 2) see Zero's post at 10:52 pm on 9/3/12.

  191. What happened an hour or so ago? All markets simultaneously jump about 1% because!? Probably the same reason we did yesterday….Which was?

  192. Good morning!  

    The Futures WERE back near yesterday's lows around 4 but, of course, all "fixed" now.  

    We're back to news is so bad, it's good mode today:

    Wednesday's economic calendar:

    7:00 MBA Mortgage Applications

    7:45 ICSC Retail Store Sales

    8:30 Productivity and Costs

    8:55 Redbook Chain Store Sales

    9:45 ISM New York Business Index

    3:26 AM Asian shares are lower following weak U.S. manufacturing data and ahead of yet another key central bank meeting tomorrow – the ECB – that might not be as exciting as the hype. "Markets are getting tired of signals for easing. They just want to know whether they are going to get it or not," says analyst Stan Shamu of possible ECB bondbuying. Japan -1.1%, Hong Kong -1.3%, China -0.5%, India-0.7%.

    3:47 AM EU shares open mixed as hopes of ECB bond buying are tempered by the poor U.S. manufacturing data yesterday. "On the one hand, credible solutions to the debt crisis in Europe are emerging, but on the other hand the macro newsflow in the United States is turning ugly," says Global Equities' David Thebault. Euro Stoxx 50 flat, London -0.1%, Paris -0.1%, Frankfurt +0.2%, Madrid +0.3%, Milan-0.3%

    6:00 AM Overseas: Japan -1.09%;. Hong Kong -1.47%. China-0.29%. India -0.78%. London -0.04%. Paris +0.05%. Frankfurt+0.51%.

    6:35 AM U.S. stock futures point lower after sluggish global economic reports and a warning on profits from FedEx. S&P -0.2%, Dow -0.2%.

    MBA Mortgage Applications: -2.5% vs. -4.3% last week. Thirty-year fixed mortgage rate with conforming loan balances ($417,500 or less) decreased to 3.78% from 3.80%

    Goldman strategist Stuart Kaiser is predicting a September selloff that happens so rapidly he is telling clients to protect themselves before Sept. 14. Kaiser doesn't think the Fed will embark on a third round of QE so soon or that Germany will support bold steps by the ECB to resolve Europe's debt crisis, which will prompt investors to dump stocks en masse.  

    "Market judgements that are based more upon belief than fact are subject to change without notice," writes Gen Re (Berkshire subsidiary) CIO John Gilbert, wondering how long France will continue to be treated like Germany (low bond yields) despite fundamentals closer to Italy and Spain. An outstanding essay on the "frenzy for safety."

    Bernanke: "We Can't Really Prove It, But We Did The Right Thing Anyway".

    Headline in Bloomberg:  First Black President Can't Help Blacks Stem Wealth Drop

    As Soon As The National Debt Passed $16 Trillion, Republicans Dropped This Brutal Ad On Obama. (video)

    National Debt Hits $16 Trillion; GOP CriticalThe Treasury Department said Tuesday that the national debt has topped $16 trillion, the result of chronic government deficits that have poured more than $50,000 worth of red ink onto federal ledgers for every man, woman and child in the United States. The news was greeted with a round of press releases from Barack Obama’s GOP rivals, who used the grim-but-expected news to criticize the president for the government’s fiscal performance over his 3 1/2 years in office. Obama has presided over four straight years of trillion dollar-plus deficits. "We can no longer push off the tough decisions until tomorrow," said No. 2 House Republican Eric Cantor, R-Va. "It’s time to address the serious fiscal challenges we face and stop spending money we don’t have."

    Financials Hide Analysts' "Earnings Recession" Expectations.

    A month before the close of Q3, most corporate management teams are more bearish than analysts on earnings – except for consumer staples (XLP). Companies in the sector are the only ones in the S&P 500 to issue more positive guidance than warnings, writes Gregg Harrison, yet analysts may not be giving them credit for such.

    Many company insiders have recently accelerated their selling.

    Risk Increases of Prolonged World Slowdown, BOJ’s Miyao SaysThe odds of an extended world economic slowdown have increased and the Bank of Japan (8301) needs to remain ready to take decisive action if necessary. - See how that spins into a positive?

    Euro May Decline to Two-Year Low on Channel: Technical Analysis.

    What Happens Once Mario Draghi Unleashes The European Creosote Bank. (graphs)


    Euro Zone in Deepening Slide

    Euro-zone business activity slid at an accelerated pace in August, the latest indication the crisis-hit region is likely to enter a recession and that Germany, its biggest economy, is sputtering.


    Eurozone composite PMI 46.3 in August vs. flash reading of 46.6 and 46.5 in July. Services 47.2 vs. 47.5 and 47.9. "Sharp declines in new orders at manufacturers and service providers, plus further job losses, mean that there is little prospect of a sustained improvement in economic conditions over the near-term," Markit says. (PR)

    Final German composite PMI 47 in August (same as flash reading) vs. 47.5 in July; services 48.3 (same as flash) vs. 50.3 in July. "New business volumes across the service sector…fell at the sharpest pace since the summer of 2009," says Markit. "Employment was the only relatively bright area of the survey." (PR)

    Final French composite PMI 48 in August vs. flash reading of 48.9 and 47.9 in July; services 49.2 vs. 50.2 and 50. "Worryingly, jobs were cut at the steepest rate since March 2010 as firms engaged in cost-cutting amid a continued divergence between rising input prices and falling output charges." (PR)

    Fears Rising, Spaniards Pull Out Their Cash and Get Out of Spain. “The macro situation in Spain is getting worse and worse,” Mr. Vildosola, 38, said last week just hours before boarding a plane to London with his wife and two small children. “There is just too much risk. Spain is going to be next after Greece, and I just don’t want to end up holding devalued pesetas.”

    Volume of eurozone retail sales -0.2% M/M in July, in line. Falls 1.7% on year vs. consensus of -1.5%. The biggest fall was unsurprisingly in Spain, where sales fell 7.3% Y/Y. (PR)

    Knowing (hoping) the ECB is set to start bond purchases, Spain plays a game of chicken, finmin de Guindos saying the country isn't so sure it will submit to a full-blown bailout if the terms are too harsh. Germany thought it had a deal – forcing Spain and Italy into Greek-like austerity in exchange for allowing the ECB to move forward with sovereign debt buys. 

    Asian Stocks Fall 5th Day as U.S. Manufacturing ContractsAsian stocks fell, with the regional benchmark index headed for the longest losing streak in eight weeks, as economic reports from the U.S. to China and Australia stoked concern global growth is slowing. 

    Shanghai Stock Index Falls to Lowest Since 2009China’s stock indexes fell, dragging the Shanghai Composite Index to the lowest level since February 2009, on concern the economic slowdown is deepening. 

    How bad is China’s cash crunch? (

    China's 2012 industrial output growth may slow to about 10%, from 13.9% in 2011 and 15.7% in 2010, citing a joint report by the Ministry of Industry and Information Technology and the Chinese Academy of Social Sciences. The manufacturing industry is facing weakening demand and production overcapacity, according to the report.

    Australian Q2 GDP +0.6 Q/Q vs. +1.4% in Q1 and consensus of +0.7%. Rises 3.7% Y/Y – the fastest pace since 2007 – vs. +4.4% in Q1. The slowdown was attributed to weaker housing and rising imports. The data comes after the RBA held interest rates at 3.5% yesterday but tilted dovish in its statement. The Aussie -0.4% vs. the U.S. dollar.


    After 21 Years of Growth, Australia’s Outlook Dims



    FedEx Warns of Slowdown

    FedEx cut the outlook for its fiscal first-quarter earnings below already reduced expectations, citing weakness in the global economy.


    UPS slumps in after hours trading on the back of Fedex's (FDXlower guidanceUPS -2%FDX -4% AH.

    With Blackstone (BX) closing a new $13.3B property fund, investors fear that the size of the vehicle will mean lower returns, as has generally been the case as the firm's funds have got bigger. Blackstone's Jonathan Gray brushes off the concerns, citing "an enormous amount of distressed real estate" and few large firms that can take advantage. "We think this is a terrific environment…to generate attractive returns."

    August auto sales wrapup: Small fuel-efficient models led automakers to record a solid month and keep on a 14.5M annual sales pace. Ford (F) backed its recent plan to increase production with broad gains, while GM rode fleet buyers to double-digit growth. Though numbers from Japanese firms (TMHMCNSANY.OB) are still out of whack due to last year's earthquake, consumers looking for fuel-efficient models and emboldened with better financing terms came back into the market in force for imports. Chrysler (FIATY.PK) didn't miss out on the fun, with the Dodge Dart roaring to a good debut.

    AutoNation (ANreports new retail sales rose 28% in August to 23,213, led by a 42% increase in unit sales in its Imports segment. (Related: August auto sales wrapup)

    So much for unlimited Chinese demand growth:   A Chinese City Moves to Limit New Cars. It is as startling as if Detroit or Los Angeles restricted car ownership. The municipal government of Guangzhou, a sprawling metropolis that is one of China’s biggest auto manufacturing centers, introduced license plate auctions and lotteries last week that will roughly halve the number of new cars on the streets. The crackdown by China’s third-largest city is the most restrictive in a series of moves by big Chinese cities that are putting quality-of-life issues ahead of short-term economic growth, something the central government has struggled to do on a national scale.

    Ocean Power Technologies (OPTT +10.6%) rises after inking a new R&D agreement with the U.S. Department of Homeland Security Science & Technology Directorate to perform a new round of in-ocean tests on its Autonomous PowerBuoy, in an effort demonstrate its value for ocean surveillance and maritime security.

    The DOJ yesterday sharpened its rhetoric against BP (BP) and Transocean (RIG) over the Deepwater Horizon oil spill, accusing the companies of "gross negligence" in deciphering a key pressure test. Such a finding in an upcoming trial, which is set for January, could almost quadruple the civil damages BP has to pay to $21B. Shares-3.7% in London.

    Canada is the new Africa in China’s quest for oil (Vancouver Observer)

    NASA Helps Hatch Robots for Drilling Oil Without Humans: Energy (Bloomberg)

    Evidence is mounting that Monsanto's (MON) genetically modified corn is losing its effectiveness to bugs, the EPA says, with studies finding that rootworms on two Illinois farms had become resistant to insecticide that the corn produces. Corn accounted for $4.81B of Monsanto's sales last year, or 41% of the total.

    The principal grains producers' association in Brazil's top soybean-growing state warns farmers not to plant a new variety of transgenic soy it says Monsanto (MON) is distributing. The soy hasn't been approved in China, where most of Brazil's exports of the oilseed are shipped; the group claims seeds could contaminate shipments of approved varieties, putting exports to China at risk of being refused.

    Some smartphone sales data: 1)&nb

  193. Some smartphone sales data: 1) Kantar Comtech estimates the iPhone's (AAPL) smartphone share fell 500 bps Y/Y to 14.6% in the EU5 nations for the 12 weeks ending Aug. 5, but rose 840 bps to 35.2% in the U.S. Android's EU5 share is pegged at 67.1%, and its U.S. share at 55.9%. 2) comScore believes the iPhone now accounts for over 1/3 of U.S. smartphones in use. 3) Canaccord's checksindicate Samsung's Galaxy S III outsold the iPhone 4S at Verizon and Sprint (but not AT&T) in August, ahead of the iPhone 5 launch. (previous)

    Video and pictures leak of the first BlackBerry 10 smartphone. Called the L-Series (the phone was previouslycodenamed London), the device is shown sporting an icon-based interface similar to iOS and Android. Research In Motion (RIMM) is expected to launch its delayed BB10 hardware early next year, after a flurry of Windows Phone 8 devices arrive on the scene this fall.

    BAD TECH: Amazon’s Fuzzy Math: Stop Encouraging Them (Xconomy)

    The FBI yesterday denied a claim by a group called AntiSec that it stole unique ID numbers for Apple (AAPL) devices, including iPhones and iPads, by hacking into the laptop of an FBI agent. AntiSec provided a link to a database of over 1M numbers and said it obtained the numbers and personal information of 12M devices; the FBI said it never possessed such data.

    Most Influential 50 in 2012 Shows Turmoil: Bloomberg MarketsThe ability to move markets or shape ideas and policies. The clout to affect the price of a security or the structure of a deal. These are the attributes that define the people who hold sway in the world of finance — those who make up the second annual 50 Most Influential list in the October issue of Bloomberg Markets magazine.

    High-Frequency Traders Flat-Out Buying Data Ahead of You (WSJ)

  194. 20120830001-sc

  195. 20120830002-sc

  196. ECB/Joel – It's like the Fed's operation twist – it simply kicks the can down the road while the PIIGs rack up another Trillion in debt.  Look at us – we did a Trillion and a half this year at an average of about 2% so it costs us just $20Bn a year to spend another Tn.  You can keep kicking that can down the road for a long time and of course it all ends badly but we have that kind of joy that terminal cancer patients get when they find out they might have another 6 months – sure they are going to die anyway but now it's down the road a bit and maybe they'll go on a cruise or something…  That's what this is, we're partying like it's 1999 – even though we know 2000 (and 9/11) is coming…