Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

TGIF – Stop the Rally, We Want to get Off!

This rally is never going to end!

Just look at this chart – we're breaking every level.  THIS time is different – not only are we going to go on to 1,450, we're going to 1,500 and 1,550 and then 1,600 and then we're going to 1,700 and 1,800 and 1,900 and then we're going on to take on 2,000 – yeeeeeergh!  

Sorry, I was channeling my inner Dean…  Now that I've calmed down, I realize that this chart that got me so excited was actually the chart from March 5th and, as you can see from my end of February headlines like "Sell in March and Go Away," "This is the End – But For Who?" and "Fake-Out Thursday (March 8th) – Dollar Sacrificed on an Altar of Lies" – where I pointed out that rumors of more Fed easing (by John Hilsenrath of the WSJ, of course) had dumped the Dollar to 79 and that was accounting for the 1% gain in the S&P that day so – don't be fooled!  

The ECB had just dropped $712,800,000,000 in fresh stimulus on the 29th and I asked "Will Another $712Bn Buy Us Another Day at 13,000?"  Was I early?  Yes.  Did we miss the end of the rally?  Yes.  In fact, our $25,000 Portfolio at the time was so bearish, we were down almost $8,000 with huge bearish bets like 10 Short XRT March $55 calls, 10 short GLL March $17 puts, 10 April SCO 31/39 bull call spreads and 10 SCO short March $34 puts, 5 short FAS $88 calls, 5 March TZA $18 calls, 10 short SQQQ June $14 puts, 40 USO April $40 puts, 5 short FAS March $75 calls, 10 long FAS March $85 calls and 10 short FAS March $89 calls (a bearish spread), 10 TLT March $114/115 bull call spreads and 10 DIA March $129 puts.  

The only bullish play we had at the time in our virtual portfolio was DMND, where we had 4 hopeless June $29 calls which we lucked out on when they spike on rumors in mid-March.  Every other bullish position had been dumped and we were practically 100% bearish because the rally, at that point, seemed totally ridiculous.  Just a months later, the Portfolio turned around and was up $8,000 and by May 14th, we were UP $16,742 and the Big Chart, by the beginning of June, looked just as ugly to the Downside as it does angelic to the upside now.  

Just as the MSM had been whipped into a "you just can't lose" buying frenzy back in March (which we made fun of), by early June they were in a selling frenzy and I noted, June 4th: "Monday – "Markets in Turmoil" According to CNBC – Must be Time to Buy!"  We were so bullish in that post, we were even long on oil (at $82) and AAPL hit our buy-in point at $555 and we went short on TLT at $130.36, long on TQQQ at $41.96 and XLF at $13.50 – right in that morning's post.   

We did a lot of bottom fishing in June and, after a choppy start, things were good enough that we started 2 new $25,000 Portfolios for our Members on the 21st – catching that ongoing rally very nicely.  Last Friday, I published our $25KP positions and we were up about $14,000 at the time and very bearish.  Thankfully, ahead of Draghi – we took our own advice and added the aggressive bullish trades I suggested on Wednesday and the FAS spread I suggested that morning – the Oct $108/120 bull call spread for $2, selling XLF 2014 $14 puts for $1.55 for net .45 is now net $1.78, up 295% (which was our goal – 300%) in 2 days.  That's not a bad way to offset your bearish bets!  

We have been making bullish bets like that every Tuesday for the past month as the markets go up and up.  It's very easy to make this kind of money in a bull market – the trick is not to lose it all betting on things going the other way.  We modified that bet in the $25KP, and offset 10 of the FAS spreads with the short sale of 5 GS Oct $97.50 puts at $1.50 because they gave us a faster payoff (more aggressive) as we didn't really want to hold 2014 short puts in our short-term $25,000 Portfolio.  

The GS puts dropped to .70 already, so up 53% and, from a cash basis, it was $2,000 for the 10 spreads less $750 for the sale of the GS puts for $1,250 and now the spread is $4,000 and the puts are $400 for net $3,600 – up a quick 188% playing it that way.  We also grabbed 10 EDC Oct $97 calls at .80 and they short up to $1.30 yesterday (up 62.5%) but that's nothing as today the Hang Seng jumped 600 points (3%) and Shanghai is up 4% and India is up 2% – thank you Mario!  

The real question is – do we keep those trades open or take the money and run?  I'm inclined to take the money and run but our $25KPs are VERY bearish and it would be very painful for us if the rally continues next week and we don't have our longs (and just that FAS trade can hit $10,750 in total profits at FAS $120) so we'll probably kill EDC and the short GS puts but leave the FAS spread as a compromise, which will put us fairly short again going into the weekend.  

Why can't I just give up and love this rally?  Because it's BS, that's why.  It's the same BS for the same BS reasons as we were pumped up on back in March.  We have to protect the upside, mainly against the Fed doing something next week and FAS is ideal for that but, my prediction from early morning chat already came true when I said to Members (4:40 am):

Obama didn't talk about jobs.  Since he had today's ADP report, I have to think it's going to miss this morning.  That could lead to a sharp reversal of yesterday's move but, on the other hand, the bulls may (as usual) take the bad news as good news because it green-lights Uncle Ben for another money drop.  

What did move down sharply this morning, on a pathetic jobs report (just 96,000 in July and downward revisions to June and May of 41,000), was the Dollar, which fell from 81.20 to 80.40 (down 1%) and is now masking a massive sell-off in the Futures as oil stays flat against the weakness (even though no one is driving to work) and gold jumps back to $1,730 and silver $33.30 and copper $3.59 and gasoline $3.03.  Isn't that great, not only are there not jobs AND shorter work-weeks for those who do have them, but the commodity pushers want our citizens to pay record high prices for gasoline at the same time.  Ah Capitalism – it's amazing how thoroughly you can destroy the working class

So, unfortunately, we may still be a bit early on our shorts but we made our adjustments and we offset with good longs and it's QE3 or bust next week so let's all be VERY careful out there! 

Have a great weekend, 

- Phil

Tags: , , , , , , , , , , , ,

Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!

Comments (reverse order)

    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!

  1. Oil Lines

    R3 – 100
    R2 – 98.86
    R1 – 96.86
    PP – 95.70
    S1 – 93.70
    S2 – 92.54
    S3 – 90.54

  2. Good Morning!

  3. I love it!  Kernan and Santelli's shorts in a wad over the 8.1 employment rate…..
    7.9 baby…7.9…  :)

  4. Futures and oil already seem to be recovering a bit from the weak job report – of course, when we add stimulus on top of stimulus and then sprinkle some more, what should we stop rallying? 

  5. 8.1 "un"employment rate….

  6. Still looks like it will be tough sledding in Europe:


    This is Europe's fundamental problem. For years, capital has flowed out of the core (Germany etc.) and into the periphery (Greece, Spain, etc.), and this can't keep up forever. Basically, one of three things has to happen eventually:

    1. The fixed exchange rate area breaks up. In other words, Europe abandons the euro, the periphery countries readopt their old national currencies, and then promptly devalue them.
    2. The capital flow imbalances have to stop and turn around. This would require that Germany start running a trade deficit and the periphery countries start running trade surpluses.
    3. The capital flow imbalances have to be institutionalized permanently. This can happen either via permanent fiscal transfers from core to periphery (similar to the way the United States maintains permanent fiscal transfers from rich states to poorer states) or via central bank bailouts.

    Let's take these one by one. European leaders swear on their mothers' graves that #1 won't happen. They say the euro is "irreversible." There's no sign at all that #2 will happen either. Germany has shown no willingness to abandon its cherished trade surplus, no willingness to tolerate higher inflation, and no willingness to pursue any other course that falls under the general rubric of "internal devaluation." And option #3 is off the table too. Europe's rich countries have demonstrated no desire to permanently subsidize their poorer neighbors, and their voters would revolt if they tried — something that's pretty understandable given the vast sums that would probably be required. Likewise, on the central bank front, today's ECB action is a temporary measure. No one thinks they can (or should) keep it up forever.

    So we're in the same place we've always been. Either the eurozone breaks up or else capital flows between the core and the periphery have to be reversed. The former is supposedly off the table and the latter is politically impossible. So what gives first?

    My guess is: the eurozone. That seems to be what Wall Street increasingly believes, too. Unless I'm missing something, of course. Am I?

  7. /DX getting creampied……below 200d MA

  8. Good Morning!   First, to answer a question from cslanson2 re ISRG from a day or two ago.  Paraphrased:  ISRG bull call spread 2014   400/500 and sell  390 puts.   Is this a good trade?  Well, I don't care for it much.  The bull call spread costs you about 60 bucks and the put sale reduces that by another 32 dollars, so it looks good on first glance.  But…..margin is required for the put, which reduces your overall profit for money tied up to less that 20%.  Not to mention that the stock is downward trending during the past 4 months.  They make good stuff, but I wouldn't invest in their stock or options.  There are lots better places to put your money. 

  9. Dollar down another .4%…..since my last post.

  10. Gold seems to like the bad jobs number, so I think the rest of the market will love it shortly.  
    PCLN – I guess I don't need to worry about trying to salvage anything from my Sept. puts.  FU Nomura!  I'm starting to think it's best to avoid shorting the momos that the Institutions love/own.  They can do whatever the heck they want with them.

  11. /DX  WTF?  Uncle Ben doesn't have to do anything if markets keep reacting like this.  Hell, he doesn't even have to hint anymore.  Maybe he should start telling the truth on how we measure the economy and unemployment and say that it's actually much worse then they've been letting on.  That should take the markets to the moon!  Now pass me that crack pipe…
    I'll have to say though, it looks like the indicies are trying to defy the $

  12. The report's weak tenor was also underscored by revisions to June and July data to show 41,000 fewer jobs created than previously reported. The labor force participation rate, or the percentage of Americans who either have a job or are looking for one, fell to 63.5 percent — the lowest since September 1981.
    Jobs growth brakes in August, seen forcing Fed's hand

  13. QE3 Green Light - 96,000 is such a perfect number to green light QE3.  100,000 was the limit for horrible, and it is far enough below  expected to seem really really bad…which is really really good for the top 10% stock holders in America.  Green light Ben…to hell with the global poor, some of which will starve to death over your global inflationary policies.  How does the guy sleep at night…denial must be a powerful drug for thugs.  The suit doesn't fool me…or the duel mandate.  The little dutch boy with his fingers in the dyke has now created a situation in which one small crack can wipe the entire village…

  14. /DX watch that 80.40 line.

  15. "duel" mandate/Phil-it doesn't make sense to me, but will it ever change?  Opposing in many aspects…as action to create stability in one destabilizes the other.  Will Mitt remove it if elected?

  16. Great, went long /dx yesterday. Ugh…Getting murdered the past two days!

  17. And you wonder why investors are losing out or are not putting money in 'funds'…..

  18. SHJ..survey says:

  19. rogue / dual — Notice how we've had price stability (using their numbers, no fair including fuel and food) so now we focus on unemployment to give Ben some wiggle room.

  20. rogue/poor   If QE3 means Obama is re-elected, the worlds poor will be better off than without and romney as president….

  21. Thank goodness, I got out of all my shorts and went long after suffering my largest loss on a single trade on GLD puts.  Inspite of all the terrible economic conditions, highlighted here daily by Phil and my personal agreement with him, I realised that the central banks are gonna do whatever it takes to kick the can and that is going to bump up the market, no matter how ridiculous it sounds. I am glad I did that (even though it goes against all common sense) – picked up GLD and FAS earlier this week and they seem to be paying off very nicely.

  22. 7.9 baby….7.9…  :)

  23. Pharmboy….When I talk to people I find they just can't figure out what to do with their money.   I had a realtor (friend of a friend) call me last night from California.   Said he'd placed 100k in some type of fund 4 years ago and it was still worth ……yep….100k.  He wondered whether I had any ideas.  Uhhhhhh, yeah……a couple.   We have known for years that these 'funds' are only profitable for the people who run them, and now the general public is slowly coming to realize same. 

  24. Good morning!  

    $25KP – We sell EDC into the initial excitement and buy back GS and we set a stop on the FAS spread at $3.50 (up $1,500). 

    I'll be surprised if we don't get selling here – we're only up because Dollar dropped 1%

    GLL will be a good add so remind me. 

  25. Phil— the one POS that is moving down fater than the $$ is VXX!
    FU VXX!!!

  26. Plz stop saying that Obama is creating big Govt…..the Govt Job #s are back to the good ol' days of Reagan…who was a republican that RAISED taxes…blasphemy!

  27. Large POMO Sell operation Today.

  28. Unemployment rate/1020 – So many people have dropped out of the workforce that it's becoming meaningless.  The shorter workweek is more of a concern than anything as losing .02 out of 40.07 (0.5%) for 135M people is like losing 675,000 jobs – not good!  

    Dollar 81,40, Euro $1.2758, Pound $1.5994 ($1.60 should be impossible today), Yen DOVE to 76.25 from 79 and /NKD is a great short at 8,850 with tight stops above – even though it's already off 75 points.  

  29. $25KP – 5 AGQ Sept $48 puts at .50 (both portfolios).  

  30. $25KPs – 10 GLL Oct $14 calls for $1.20.  

  31. This week FAS calls stopped out at $4.25 yesterday.

  32. JRCC on the move….

  33. PCLN going nuts!  Let's buy back the Sept $560 puts for .80 in both $25KPs – hopefully the madness will end.  We can use that $2.40 gained to roll the Oct $560 puts ($5.70) up to the Oct $575 puts ($8.40).  

  34. PCLN roll/ Phil – we were holding the October $545 puts, not the $560 puts? 

  35. XLB and XLE moving…..

  36. AMZN $25KP – In both portfolios, let's roll the AMZN Oct puts up to the $245 puts ($5.60) and, in the $25KPM, which has only 5, let's DD to 10.  

    V (both $25KPs) we can roll up to the $125 puts ($1.75) for .90.  

    EDCs fetching $1.75!  


  37. Might still be a tad too bearish in the face of all this free money!

  38. Oil in a steep dive

  39. DD on AMZN $220? 25KPM?
    None of the other orders you have recommended can I get fills on so far.

  40. This was not a MoMo trade, but yesterday afternoon I sold some AAPL this weekly 665 puts and 685 calls.  You could probably still sell some of the 685 calls, for about .40, if you have margin and want to bring in a few hundred.  I doubt AAPL reaches 685 today.   Nothing I see out there to move it.

  41. Phil making changes faster than I can post… I'll update the portfolios over the weekend!

    EDC and GS were gone at the open as instructed – better than a double for EDC and 60% for the GS put.

  42. phil,
    did we roll the fas weekly 97's ………
    i thought i saw a roll to 103………..
    or did we close them out for the loss………..tks

  43. CNBC – Paul Ryan – "You can't expect Central Bankers to bail us out all the time"


    GOP VP Candidate Ryan Tells CNBC: "You Can't Expect Central Bankers to Bail Us Out All the Time" (Story Developing)

  44. Phil, we still rolling PCLN all the way to 575 even though we're holding 545s and not 560s?

  45. never mind……….i see it in the fas port………….

  46. CRM – I am also rolling up to 135 Ps Oct for 1.50.  This is crazy, dumb…or maybe I am?

  47. The way you guys are plowing into these puts, if this market tanks next week you will all be rich!   

  48. FAS stopped out at $3.50 in 25KP.

  49. Being tested on the upside…. Sell more premium Peter?

  50. MrM – TIBX….thx for the recommendation.  Kept my shorts from eating me alive……

  51. Iflantheman / Puts :   In the mean time, my picture is promenently displayed on the Wikipedia entry for "Short Squeeze"

  52. Phil/MSM yelling QE3 guaranteed – So if it is a given…now what can the markets look forward to?  QE4???  I would like to be the first to announce QE4 – $1.2 Trillion.  Or perhaps we will get QE3 infinity, $50B/Month infinity?  What I want to see is the Fed buy risk assets…say FB to add to their GM holdings…bahahhahaaa

  53. Germany/StJ – I don't like that money flow argument.  It's the same trickle-down BS the rich use in this country.  Germany didn't build the EU.   They helped but, once it was built, they exploited the hell out of it and became fabulously wealthy but, unlike the top 1% in this country, Germans realize they NEED the rest of the EU to continue their own success.  If taking relatively small losses on loans (25% of $2Tn over 3 years is loan total, maybe they lose 25% of that – $125Bn in the end) keeps their $5Tn economy humming along – then so be it.  Think of it as a 5% rebate to their export customers.  

    LULU over $70 – Yoga wear for EVERYONE!  

    32M traded on the Dow at 9:55 and not going up from open.  

    LOL Rain – it's like watching a slow-motion train wreck.  

    Participation Rate/Rain – That's the most important measure of them all.  36.5% of the labor force isn't working – that is F'd up!!!

    One small crack/Rogue – This is really getting terrifying.  Paul Ryan was just on CNBC crowing over the low job creation – it's sick.  The man is a US Representative who chairs the Budget Committee – when was the last time you think this guy did any constructive work?  He and Romney have a "secret plan" to save us but only if we elect them in a few months – what BS!  Do they think if they fixed things now voters would think it was Obama's idea?  Even if they did, what would the moral thing to do be?  Sick people run our Government…  As to the mandate – it will never change because it makes no sense and is so vague the Fed can do whatever it wants and say "mandate" to cover their asses.  Why would Mitt remove it – the Banksters who run the Fed fund his campaign…  

    These politicians should have to wear jackets with patches from all their sponsors, like Nascar drivers.  That way, whenever they speak, you can be reminded of who's paying for it.  

    Dollar/Rain – It's gotta be the floor (today at least) as it's $1.5999 on the Pound and that's just ridiculous.    We are, however, below Jack's breakdown line for the Dollar so I guess technical selling can drive us down from here are people bail on the Dollar and then people see the Dollar diving and decide QE3 must be a lock so they buy more stock, etc. etc….

    AMZN up $10 since yesterday (4%) but AAPL only up about $9 (1.5%) – ridiculous.  

    AAPL Oct $685/695 bull call spread at $4.40 – 10 in both $25KPs give us $5,600 of upside protection.

  54. FAS port: Do we ever DD on the shorts? I am seeing $4.50 prem.

  55. AMZN is worth more than AZN and BMY combined.   %profit .7% for AMZN, 22% for the AZN/BMY combo…….okee dokee.

  56. Good adjustments Gandhjo! 

    LULU $73.67 – there's a Momo we dare not bet against.  

    Funds/Pharm – That goes back to the general financial illiteracy of the American people.  We don't teach it in school, we don't require the "financial advisers" to actually do what's right for the people who trust them – the system is set up (by the Banksters) simply to suck the wages up from the bottom.  They still tell people to go 40% in bonds – even though they have a negative return on inflation – what kind of advice is that?  "Take 40% of the money you need to retire on in 20 years and make sure it will be absolutely worthless" – this is advice?  

    80.38 – Pound $1.601, Euro $1.277 – so far, so wrong.  

    VIX down to 15 because this rally is never going to end. 

    And what Jabob said!  

    Government jobs/Pharm – Please do not confuse Conservatives with facts!  

    JRCC/1020 – We may have to give up on them.  We were bullish, selling puts, but the covers are too risky now.  

    AMZN/David – Only a DD on the 5 in the $25KPM to 10, NOT the 10 in the $25KPA – as we very likely have to roll back to Jan – we sure don't want to have 20 of them.  

    Changes/StJ – Sorry but working on theory that this is a blow-off spike and we need to take advantage while we can.  

    Strangle portfolio doing great considering the huge move up (the enemy of the strangler).  

    FAS Money/Mill – Yesterday we stopped out the short $97s after we added 2 short $103s.  You can call it a roll or a loss – the roll would have been a net loss anyway but the bottom line is we killed the $97s and opened the $103s.  

    PCLN $25KPs –  Oh, now I see what I did wrong!   I looked at the $560s and not the $545s in October.  So, the Oct $545 puts are $4 and we made $2.40 on the short puts so we can roll to the $565 puts, which are $6.90 for $2.90 so that is the proper target but, if you spent $2 more and already rolled to the $575 puts ($8.90) – no harm, no foul and not worth "fixing" as those are still a good deal.   

  57. You could reach some conclusions based on this chart:

    The most telling though is that the markets almost never lose in the first 1325 days of a president. Ideally, you sell puts on the indices on inauguration day and you are gold… And your president is Hoover, you roll to the 1932 LEAPS!

  58. Ryan/Constuctive work  Answer: McDonalds    

  59. Plowing/Iflan – Looking back on what we did in March reminded me that we are nowhere near in pain yet on those positions and, until Bernanke waves the QE wand, bearish hope springs eternal and, if he does wave the QE want, the FAS spread still makes $10K more.  

    FAS/$25KP, Real – What do you mean?  The $108s are $5 and the $120s are $1.20, that's $3.80 and those are worst-case numbers.  If you have a broker that stopped you out on that trade, they are robbing you!  Officially, now that we've made aggressive adjustments, I want to remove the stops on the FAS spread, we need the bullish offset.  

  60. AMZN – Everybody knows how crazy the valuation is, but at this point, I think it's even crazier to short the stock with a short term time line when all the big institutions that own the stock are looking at what it will be 5+ years from now.  GLD, GLL, PCLN, AMZN, VXX – I feel like all I've been doing is stepping in front of one bus after another.  There have to be ways to make money without losing a ton of it first.

  61. Russell index strong like bull

  62. Getting better entry prices on NTE again today Angel… Volume over the past 10 days has been in the order of 10x the averages. Can't just be PSW members! The news is spreading.

  63. LOL Real – Actually I do see the very quick .50 drop in the Oct $108s as someone forced FAS down for the 2 seconds it took to steal your money.  Good time to remind people – NEVER USE HARD STOPS – the bots see them (or your broker does and they are even bigger crooks) and they will give you the worst possible fill.  You need to learn to watch a trade and, when you see ACTUAL SALES getting to your stopping point, THEN you put in a limit order to stop out.  Also, it is, of course better to stop out the bottom of a bull call spread and leave the naked short calls until the downward momentum ceases but that's tricky day-trading stuff…

  64. $260 pin on AMZN.

    Dollar officially down 1% today.

  65. Phil—-I covered some of my long amzn puts by selling the Jan 180 puts at 3.25 now 2.25—would you buy them back and wait to cover again? thanks

  66. Phil, great pic of Kim Kardashian in her yoga outfit.

  67. FAS Spread/ Phil: So for those of us that were stopped out- do you have a re-load?

  68. The spread was down in the 3.40s earlier. I got out at 3.45 because every time I haven't taken the stop (which was 3.50) I've watched it continue falling. Are you saying we should re-enter for protection?

  69. lol rustle

  70. Must be getting close to a top if you look back at what happened in the past:

  71. Burritos selling like hotcakes the past 2 days +10%.

  72. Phil, couldn't get a fill on pcln buying back puts. what do you suggest?

  73. Phil / Group
    Is the 10% rise in FCX yesterday and today due to the dollar diving?  Is there a longer-term reason?

  74. You can't know how close I came this morning to buying a boatload of AMZN this weekly 260 calls for .07…now   ..70.   Oh well………..I know one thing about AMZN.  Any money you spend shorting this sucker right now you can probably just kiss it bye bye.  Peopl are loving this stock and buyers are coming out of the woodwork. 

  75. wow, you go GLD! clocked 100% on GLD calls – reversed my loss from previous week. I am getting the hell out

  76. Phil / I have SPY Oct 134 puts at a basis of 1.48 now 0.57. What do you recommend?

  77. pete / FCX — Copper up 2.8% today too.  China stimulus.

  78. That AMZN straddle would have paid off today lflan…. Delayed big move! I am surprised we didn't get that yesterday given the dog and pony show. It was a good shot though.

  79. Phil / FAS spread, yeah I got stopped out too at 3.50

  80. Phil, the dollar is down 1.0% and wouldnt that normally drive the market up 2.0%ish?  This indicates to me, as you said earlier, that the drop in the dollar is masking significant selling.  Is there anyway to tell what they have been selling?  Or anyway to tell what they are propping the market up with?  If there was, i would think those would be good short call canidates or long put candidates….  TIA.

  81. AMZN's I Cloud Computing  very stable. I  now some big corps just switch their own I Cloud to AMZN.

  82. stjeanluc/AMZN straddle….yes, indeed.   But I cleaned AMZN's plow with yesterdays late day daytrade, so I'm still gemutlich!   (in a happy place).

  83. AMZN / Neet – It's a very often overlooked part of the AMZN business but I don't know how much money they pull from that. They have massive server farms and run apps, stream video and music for many customers (including Netflix I believe). They now have a new product called Glacier which is basically unlimited backup storage. You only pay when you retrieve the data but rates are incredibly low! Maybe another long bet!

  84. Phil : I sold JRCC Dec. $2.50 P for $.80 which is current price. Are you now saying to get out of this position?

  85. Phil
    Do you like CAT here? Interesting with all the infrastructure talk in CHINA.

  86. AMZN/lflan – oh don't say that..

  87. stjeanluc / portfolio: thank you for doing these. 

  88. mrm—-thx for Tbix

  89. Phil gll agq:  so is gold going up or silver going down. What's the thinking. I know gold will fly with qe but what's the deal with silver

  90. microflux / GLL AGQ — Both positions are bearish.  GLL is and ultra short ETF.

  91. Hi Phil FAS if got stop out at 3.5 do you rec to reopen the spread end of day for balance the bearish porfolio thx

  92. Sorry Real, forgot to mention – when you are trading something like FAS (a 3x ultra) the options can bounce around like crazy – it's the underlying you should be watching (XLF in this case).  If the price of your calls drops but XLF is flat or still going up – then you know it's BS.  

    Dollar 80.16!  It's a blood-bath…

    Gold $1,741, AMZN just tested $259 – which will get to $2,000 first?  

    LNKD $122!  

    QEfinity and beyond/Rogue – If the Fed eases next week, not only will I throw in the towel on short positions (of course) but I will also be looking to move very soon because this country is doomed.  We're like a banana republic, printing currency as fast as the presses will run and trying to maintain an air of prosperity at the palace while the people starve in the jungles.  So don't be surprised if you start having to pay your subscription in Aussie Dollars or CDN or something with a modicum of stability because it's time to blow this popsicle stand.  

    FAS Money/Newt – On the $102s?  No, too dangerous.  We added more longs in case we have to but we'll just be thrilled if those expire worthless (XLF $15.50).  

    Yen testing 78 to the Dollar (too strong) – I doubt the BOJ will let that stand but rumors are they are out of cash so maybe….

    AMZN/Pharm – "Worth" is perhaps not the appropriate word there…  

    Presidents/StJ – I guess whichever party wins, half the people in the country are enthusiastic enough to buy stocks.  

    AMZN/Ryko – Best thing to do is not trade momos if you don't like rolling into a position (which does entail losses).  Unless you know how to hit your entries to perfection, there's never a good time to enter.  All you can do is pick an unsustainable top and wait for others to realize it's unsustainable but it can take months.  We did it with PCLN and made 200% eventually but it started at a $3 put and we were in for $12 before it tripled for us.  Of course, $36 was 1,200% of $3 but those $3 puts were about $100 lower and we had far less shares so, on the whole, it could not have gone better as I'd rather make 200% of $12 on 10 puts than 500% of $3 on 5 puts, right?  Of course, starting with a $12,000 position is madness so we begin with a $1,500 position at the place we're willing to take a stand and roll up and DD as needed – keeping ourselves in the right place – UNTIL it is finally the right time.  That's the model to shorting Momos but, if you aren't ready, willing AND able to stick it out to the end – then don't start.  

    Russell/Rustle – Bull is right. 

    AMZN/Savi – I very much doubt $180 will ever be hit so, as long as you fully intend to ride them out to the end and ignore the fact that they may go up to $6 or $10 on a big drop, then you can leave them but, otherwise, 30% is a good gain short-term.  

    FAS/Newt, Real – Sure, I still like the same spread.  Not many trades have a 250% upside (from $3.80 to $12) where they need a $15 move up over the next 2 months on an ETF that's up $8 in the past two days.  Keep in mind this is a bet on QE3 and we HOPE we lose because it's just a hedge to our bearish positions but .65 on XLF has been $8 on FAS so it's not like we're looking for a huge move to win.  I wouldn't like it for a NEW spread but you made $1.50 in the first round so you are netting in (at $3.80) for $2.30, which is just .30 more than we started with (or better with the GS short put money).  So you have $1,500+ in the hand and you want to chase $6,000 in the bush?  Is it a good idea – if you need the protection, you really should have some sort of bullish cover because who know what will happen over the weekend.  And remember – "when in doubt, sell half" can apply to things you are buying too!  

    50 Dmas/StJ – Yeah 89% over does seem like a lot but Operation Twist got us to 100% last year in the Financials and the Dow so we can't be too complacent.  

    PCLN/Davidor – The Sept $560 puts are .80 right now with a bid of .75 and and ask of .80 – I suggest changing brokers if you can't fill that.  People have been filling at .70.  Also, I will say for the 1,000th time this month, 5% one way or the other is acceptable if you are having trouble filling but why, oh why would you pay one penny over to fill a short put when the stock moved $25 away from it in 2 days.  At a certain point you just say "screw you put holder, I'll just let you expire worthless in 14 days and save myself $80."

    FCX/Pete – They were a good deal at $35 and, if I wasn't worried about China collapsing, I would have added them to the Income Portfolio.  Also, FCX is 25% gold so that's a no-brainer of a move with copper up as well ($3.62 on China stimulus).  

    Good timing Gand. 

    SPY/Jyoti – October is a long way off but you are close to 10% out of position so I'd take the .90 loss and pick up the SDS Oct $13/14 bull call spreads for .50 as SDS was $14.60 yesterday and it went from $14.77 to $18.26 in April – June and it's at $13.77 now so it won't take much at all do double those positions but you must be willing to roll lower and buy back the caller if the S&P tests 1,450 next week or there's no point starting.  

    Dollar/Robert – Yes, it's usually a 2:1 counter-move.  We tested 80.15 and now 80.26 but very pathetic.  I imagine there are ways to study the trading patterns but not ways I have.  As usual, AMZN, PCLN and other Momos are used to goose the Nasdaq whenever AAPL is too hard to move but SOX are down 1% today so broader Nas selling going on.  CAT is single-handedly holding the Dow even – up $3.50 is about 30 Dow points.  Only 11 of 30 Dow components are green – another sign that the rally is BS.  

    AMZN/Neet – How many days will it take GOOG to trash them when they turn on their own cloud?  Did you know GOOG owns 80% of the dark fiber in the US?  

    JRCC/Dflan – No, that's a different trade.  I'm talking out our long $1.50 puts in the $25KPs that is the backstop for our selling of the front-month puts.  We already made 2 nice sales but now they long puts are getting too far out of position to be useful and I'm not comfortable selling $3 puts so we need to give up on that very nice income-producing trade.  In the Income Portfolio, however, we have a bullish spread with a $2.50 goal and bonus money at $3 and I'm very happy with that. 

    CAT/DC – I would like CAT if I didn't think we will wake up one morning with China in free-fall.  

  93. What a massive move in the euro and currency markets in general. 

  94. If there is no QE, do you think AAPL is now a good short candidate if we strip out the noise around Draghi?  Points to consider

    Humungous market cap (similar to MSFT at the peak when MSFT turned -  I think, but may be wrong)
    Missing expectations on results in last qtr and perhaps this one(?)
    Samsung S-III may have eroded the opportunity for iphone5
    hugely competitive tablet scene with Amazon, MSFT, GOOG now in the fray

    I think AAPL may have seen its best, I do agree on P/e it is still attractive if you look at the likes of AMZN, but if it has indeed peaked on earnings, wouldn't this be the point of reversal? 
    I know on this board shorting AAPL may seem a crime, but wouldn't mind a few attractive options to short with a 20% stop loss.

  95. Phil / Can the bots see trailing stops?

  96. Dow going down but FAS going up? What  gives?

  97. Interesting article in SA: "
    Apple May Lose The Smartphone War To Google

  98. Phil/Moving - I am concerned that things will get so bad here in the next 3-8 years, that the fed govt will attempt to tax net worth of individuals, or some crazy similar plan.  If I did not have kids that absolutely love our school system, I would be actively looking to move sooner than later.  Kids complicate the equation…

  99. Put steel teeth on this thing, drop it out of a low-flying drone, and an enemy squad would be blowing each other away trying to get it away from their shins!!

  100. At the open: Dow +0.03% to 13297. S&P +0.15% to 1434. Nasdaq -0.19% to 3130.

    Treasurys: 30-year +0.93%. 10-yr +0.57%. 5-yr +0.28%.

    Commodities: Crude -0.22% to $95.32. Gold +1.56% to $1729.75.

    Currencies: Euro +1.02% vs. dollar. Yen -0.75%. Pound -0.4%.

    Market preview: Stock futures hold slight gains, with the S&P +0.2%, following the weak jobs report, sparking QE speculation that's all over the map from "QE3 coming" to "bad but not bad enough for QE." Nonfarm payrolls rose by a lackluster 96K in August following a downwardly revised 141K (from 163K) increase in July. The euro +1.1% vs. the dollar to $1.2769; Treasurys turn higher.

    10:00 AM On the hour: Dow +0.03%. 10-yr +0.51%. Euro +0.98%vs. dollar. Crude -1.17% to $94.41. Gold +1.38% to $1726.65.

    11:00 AM On the hour: Dow -0.06%. 10-yr +0.5%. Euro +1.29% vs. dollar. Crude -0.32% to $95.22. Gold +1.99% to $1737.05. 

    11:43 AM European shares come off big early gains, but still tack on to yesterday's big ECB-inspired rally. Stoxx 50 +0.5%, Germany+0.7%, France +0.3%, Italy +2.2%, Spain +0.3%, U.K. +0.3%. The euro soars to levels not seen since spring, +1.2% to $1.2787. More interesting: The euro/Swiss franc cross.

    Maybe the clearest sign the world has changed this week, the pressure on the SNB-imposed euro/Swiss franc floor of CHF 1.20 has lifted. Put in place a year ago as a flood of euros sought safe-haven in Switzerland, the floor has been under attack since, forcing the SNB to hoover up euros by the tens of billions. Now it's those short euros under attack as the cross lifts all the way to CHF 1.2146.

    Something to look forward to at next week's FOMC policy meeting will be the Fed's first economic and interest-rate forecasts for 2015. Likely to be completely wrong, the numbers should nevertheless offer a window into whether the central bank is likely to extend its ZIRP promise past the end of 2014.

    When severely beaten-down markets get the slightest bit of good news, watch out. Shanghai soars nearly 4%, first getting a pop from yesterday's big rally in the West, and then a jolt from Beijing's roll-out of major road building plans. Chatter grows about further action – possibly a reserve ratio cut – over the weekendFXI +2.1% premarket.

    August Nonfarm Payrolls: +96K vs. consensus +125K, prior +141K (revised from 163K). Unemployment rate 8.1% vs. consensus 8.3%, 8.3% previous. 

    More on Nonfarm Payrolls: June's job gains are revised down as well, putting the 2-month negative revision to -41K. Labor force participation rate falls to 63.5% from 63.7% in July (there's your headline UE decline), and from 64.1% a year ago. Average workweek is unchanged at 34.4 hours. July's average workweek is revised down to 34.4 hours.

    More on NFP: The broader U-6 unemployment rate falls to 14.7% from 15% last month and 16.1% a year ago. 2.6M are counted as "marginally attached" to the labor force, unchanged from a year ago. As has been the trend for several months, government employment is a net negative, falling 7K in August after -21K in July.

    The weak NFP print increases the likelihood the Fed will launch fresh stimulus at its policy meeting next week, writes Jon Hilsenrath. Bernanke made clear (again) his concerns over the labor market in his Jackson Hole speech, leaving the suggestion he's itching to take actionToday's report, combined with ISM in contraction territory, may give him the opening. 

    Byron Wien's informal survey of billionaires summering in the Hamptons finds them more upbeat about markets and the economy than the last couple of years. The majority believes the S&P will hit 1500 before year's end, with some calling for 1600 in a year. "I will be curious to see whether these lunches prove to be a contrary indicator." Now off for a quick 9 at The National.

    Investors yank $3.7 billion out of stocks (CNN Money)

    Canada adds 34.3K jobs in August against expectations for a rise of 10K. The unemployment rate is unchanged at 7.3% Labor force participation rate climbs (see U.S.) to 66.6% from 66.5%. Now that's a positive report. The loonie soars to a one-year high, now buying $1.0220. FXC +0.4% premarket.

    German industrial output +1.3% M/M in July vs. -0.4% (revised) in June and forecasts of +0.2%. Falls -1.4% Y/Y. The surprising M/M growth adds to better-than-expected trade figures, and suggests that Germany is remaining resilient in the face of the eurozone debt crisis.

    High yield spreads continue to tighten – the Barclays index is at 572 bps, near its low for the year – even as the default rate on junk bonds has quietly turned higher, notes Rom Badilla. At 2.13% (based on dollar amounts), the default rate remains well below the historical average, but spreads and defaults do tend to move together.

    "Market reaction can quickly reverse," writes Buttonwood (click the link if solely for the classic headline), picking apart the ECB's OMT piece by piece. Even assuming Spain and Italy submit to a bailout (and the sharp austerity it brings), does the Continent need another Greece on its hands? How long until that backfires? 

    Are Chinese Banks Hiding “The Mother of All Debt Bombs”? (The Diplomat)

    Metal and mining firms are among today's top gainers on China's plans to spend $156B on infrastructure and Glencore's raised buyout offer for Xstrata. Coal is enjoying a big day, with Alpha Natural (ANR +14%) the S&P's biggest advancer. Other coal (KOL +5.2%) names: CLF +11%BTU +9.6%. Steel (SLX +5%) names: X +7.1%,AKS +9.1%. Also: FCX +6.9%JOY +6.8%.

    The steel industry remains burdened with chronic structural overcapacity that will take at least seven years to eliminate, Credit Suisse says, but demand looks to be at the low end of the cycle, suggesting an upturn in the steel market is likely by 2013 or 2014. In such an environment, the firm favors MTRSNUEPKXTX.

    China's feed demand needs to be met by imports no matter what the price," says FCStone's Nathan Broders. With the drought no longer driving corn prices, it's now about demand, and China's appetite is going nowhere. Rabobank's Daron Hoffman believes the USDA's estimate of China's corn crop is too optimistic, and therefore its view on Chinese imports too light.

    Shares of Chipotle (CMG +4.2%) run higher with call options showing a healthy boost in volume. Traders say the momentum name is back in favor after seeing 33% lopped off its price from the April high.

    More on Kroger (KR): Cites higher tonnage and total household growth as top-line drivers. FIFO gross margin fell 43 bps to 20.63%. Sees FY12 EPS of $2.35-$2.42 with identical store sales growth in the 3.0%-3.5% range. Shares +1.8% premarket. (PR)

    Lazard Capital starts coverage on Green Mountain Coffee Roasters (GMCR) with a Buy rating. With a lush price target of $39, the firm is calling for plenty of upside potential for the beat-up coffee industry name on the strength of fundamentals factors, not just a momentum play.

    It's full speed ahead for Green Mountain Coffee Roasters (GMCR +11.3%) as a pair of analyst notes fire up a healthy round of momentum trading. Roth Capital notes the firm's looming patent expirations are already baked into GMCR's share price, while Lazard Capital initiates shares at Buy with its own positive take. As expected, the GMCR doubters are out in full force over the burgeoning rally.

    An earning beat and a hike in guidance from Lululemon (LULU) isn't enough to overshadow a sharp increase in its inventory total as investors sell off shares. With same-store sales still growing at a double-digit pace, Kid Dynamite wants to know why building up inventory doesn't make sense for the retailer into Q4. LULU -1.5%premarket.

  101. SINT JOHN:  NTE closed at 6.54 on Aug 14, so increased 75% in 16 trading seSsions
      trading aVg of 2.2M shares per day in last 8 trading sessions

  102. HFT

  103. Great expectations:
      Priceline (PCLN +2.3%) rallies on an upgrade to Buy from Nomura's Brian Nowak. Nowak is cutting his European sales estimates for Priceline on account of its soft Q3 guidance, which waspartly blamed on Europe, but also notes 65% of hotel room bookings are expected to be non-European going forward (up from 42% before), and predicts growing U.S. and Asia-Pac sales will yield 2012 and 2013 EPS slightly above Street estimates.

    Southwest Airlines (LUVreports air traffic for August with the carrier improving its load factor on flat revenue passenger miles. Key metric, passenger revenue per ASM, is estimated to have improved by 2%-3% during the month. Shares of LUV +1.6%premarket.

    Nomura tips off that U.S. hotel chains are seeing increasing traffic, with the luxury and upscale segments both showing solid gains in revenue per available room (RevPAR) in August. The firm forecasts the momentum will sustain during H2 for the industry. On watch: MAR,HHOTHST.

    Execs with Smith & Wesson (SWHC) say the demand for guns isn't going away despite the direction the national election goes. Though the Q/Q pace of sales was quite dramatic with modern sporting rifles up 144% and handguns 26.4% higher, the trend for long-term growth also remains intact. SWHC +20.5% premarket. (transcript)

    Intel (INTC-2.3% premarket after issuing downside guidance for Q3, lowering projected revenues ~7% to $12.9B-$13.5B from $13.8B-$14.8B due to "weaker than expected demand in a challenging macroeconomic environment." INTC sees customers reducing supply chain inventory, softness in the enterprise PC market segment, and slowing emerging market demand.

    Intel's (INTC -2.8%warning is hurting other chip stocks with strong PC exposure: AMD -3.4%NVDA -4.5%MU -4.6%. H-P (HPQ-1.4%), Microsoft (MSFT -1.3%), Seagate (STX -1.6%), and Western Digital (WDC -1.4%) are off moderately, though Dell (DELL +0.9%) is higher after declaring its first dividend. Analysts had been slashing estimates (IIIIII) for Intel ahead of the warning thanks to a torrent of negative PC data – that seems to be limiting the damage.

    Apple Seeks to Create Pandora Rival (WSJ)

    Pandora (P) now -16.9% in response to the WSJ's report (I,II) on Apple's (AAPL) Internet radio ambitions. Pandora has thus far been successful in weathering challenges from Clear Channel,Spotify, and others, in part because of the time invested by its users in building custom stations. But a service that comes pre-installed on iOS devices, features tight iTunes integration, and is backed by Apple's brand and marketing machine would present a different kind of competition. 

    Nokia (NOK) and AT&T (T) plan to begin selling the just-announced Lumia 920 and 820 on Nov. 2, sources tell TechRadar andThe Verge. That's a few days after Microsoft's official launch date for Windows Phone 8. Yesterday, Verizon Wireless confirmed to the WSJit will sell Nokia WP8 devices, but declined to provide specifics. Nokia, which sold off sharply following its phone announcements, hasn't provided any details about pricing or launch partners. 

    Amazon Challenges Apple With Updated Line of Kindles (Bloomberg)

    "We don't want to lose a lot of money" on Kindle hardware sales, Jeff Bezos insists, even though Amazon's (AMZN) pricing for its latest tablets and e-readers suggests more losses could be arriving. But in spite of aggressive pricing and new content-oriented features,most observers don't see anything for Apple to be too worried about, given the iPad's app lead and the fact an iPad Mini is on the way. Google's Nexus 7, which just got undercut by the non-HD 7" Fire, could be in a tougher spot. (more) 

    Apple (AAPL +0.6%), Google (GOOG +1.3%), and Amazon (AMZN +2.8%) have two things in common: 1) They're at each others' throats. 2) They're making new highs today, rising even as PC-centric names fall on Intel's warning. Amazon's gains come as the Street mostly gives a thumbs-up to its Kindle refresh, citing its potential to boost Amazon's content ecosystem. Henry Blodget is taking a moment to gloat about his infamous 1998 $400 target (now a split-adjusted $67). (more on AMZN)

    Owners Lose Possessions After Home Near Twentynine Palms Is Mistakenly Foreclosed (CBS LA)

    A Slippery Slope: Dissing Facts and Science (Working Wider)

  104. Phil / JRCC: we ca still sell the 2.50 each month for .40 a nice 800 a month. What's wrong with that ? Are you thinking JRCC with break down with the rest of the coal produces and we lose our gain ? Or are you saying the price is too hi and the put sells are too small to be worth it ? Thanks 

  105. What a   day for oil 96.60 down to 94 ish back to 96.60 no volitility there

  106. Phil- Thank you.

  107. Dell holding up after INTC warning, could it be a bottom? Should we care?

  108. Silver and gold/Micro – Bearish on both as I don't think the Dollar fails 80 but, at 80.25 today – I could be wrong…

    FAS/Gucci – I know I wouldn't be able to sleep well without bullish covers over the weekend and into the Fed – maybe we'll pop another 5% next week or, if China does something, maybe a 2% gap up Monday.  

    AAPL/Checho – We just went long on AAPL to add a hedge to the $25KP.  I think AAPL is a great deal here – it's only their shear size ($650Bn) that keeps them from flying like the Momos.  Trading 13M shares a day, you need almost $9Bn worth of AAPL buyers PER DAY to sustain their price.  There was an article above indicating $3.7Bn taken out of the market in one week was a big deal, this is 3x that much every day – very hard to sustain and, of course, if you need a 10% imbalance in ($900M) to get the stock to go up 1%, then getting a 5% move up in AAPL ($30) requires $4.5Bn of inflows – that would be more than the whole market take in an incredible week and that's just AAPL.  That's why these spike moves up are so hard to sustain – they immediately create a gaping hole that can only be filled by massive inflows of capital.  So, very hard for AAPL to move up and they will drop with the market but there are way more overvalued stocks to short than AAPL.  

    Bots/Amalfi – It depends on your broker and if they protect you or not but the Bots get around it anyway by flashing in single orders to flush the stops before making moves.  Another trick to find stops is to enter unfillable block orders (must fill all at exact price) and you can get a quick sense of where the real volume is by watching the trade move through the system.  It's my understanding that the Bots now profile individual trades so, if you are trading a thin stock, it may literally be just you and a Bot trading against each other.  

    Taxing net worth/Rogue – It's actually not a bad plan.  The biggest problem with the super-rich is they tie up Trillions of Dollars in assets that do nothing for the economy (and they take depreciation on them to further reduce their taxes) AAPL is sitting on $100Bn in cash – not doing anyone any good sitting there and it's enough money to pay 2M people $50,000 salaries so, even if you just put a 1% tax on assets and even if the government is only 50% effective in creating jobs and even if you pretend there is no multiplier effect on money put in motion – you're still putting 25,000 people back to work off the tax on a single company that only has 60,000 employees in the first place.  So if Bill Gates want to have a $100M home, let him pay 1% a year on it – if it was a $100M NYC Co-Op (and yes, they have those), he'd be paying $500,000 a month in maintenance fees anyway and no one complains the Co-Op board is confiscating their wealth (well they do but not within ear-shot of the board!).   The Fed creates money but if $85M of that money is used to buy a paining at Sothebey's, rather than being put in a bank and creating $850M worth of working capital – it's dead money sitting on someone's wall – they should be penalized for that!  

    Teeth/ZZ – I imagine they'll more likely be sporting some very nasty machine guns in the final version.  

    JRCC/Micro – Nothing wrong with it but I'd rather catch it on a downturn than at $2.80.  Yes, I think coal and steel will break down again because we've had 100 stories of how bad things are worldwide and they can't all be offset by $180Bn of spending in China (and details not at all clear). 

    You're welcome Newt!  

    INTC/Kustomz – INTC is just as wrong as FDX – obviously these companies don't know what they are talking about in their forecasts – stick with Cramer – he'll set you right.  

  109. I thought Romney said he was not going to watch Obama's address yesterday—-I guess he couldn't stay away like most Americans  ;-)

  110. Savi – I did not watch one minute of the convention.  I was glued to the US Open tennis.  

  111. Forget Cramer, I just got off the horn with Miss Cleo! CALL ME NOW!!!

    Wow on PPHM! Pharm any knowledge on this one?

  112. stjeanluc, Phil & all/update on the 500k virtual short strangle portfolios,
    Just checking in and I'm floored (or bored) by the chart for /ES.  Such a narrow range of just 3-4 points.  We are not likely getting fills on rolling our OTM options today, but will see.  First, thanks to stjeanluc again as you are not only tracking, but also reminding us to do updates.  How cool is that?  We need you to stay in the 40s forever. 
    We have 25 RUT short calls and 11 RUT long calls, plus 10 SPX naked short calls.  That means we have a lot of margin available!  Before we panic, I'd like to quote Phil that the US market is $30Tn (or $20Tn?) and it takes $1Tn to move it up 3%.  Did people put in a net $600Bn yesterday to get it up 2%?  Well, looks like there is some air pocket somewhere.  The lowest RUT short call is at 870, which is roughly 3.5% up, i.e. needing another $1Tn infusion to get to our mark.  Is it likely?
    On the other hand, the Day Traders are buying on dips (until it doesn't work any more), which could be next week or longer.  Since we are roughly 2 weeks from September expiration, we need to make a decision whether to move the short calls or not.  Given the macro condition, we can stand pat, or we can move the 870 callers to 880 callers (making them putting in another net $300Bn into the market before we act again).  We can always move them to October, but we don't want to waste September yet.  So the RUT adjustments are:

    - Buy back 5 RUT Sep 870 callers at $1.1 debit and sell 13 RUT 880 callers at $0.45 credit (resulting in a small credit overall)
    - Buy back the other 3 RUT 870 callers at $1.1 debit and sell 8 RUT 880 callers at $0.45 credit
    - Buy back 2 RUT 870 callers at $1.1 debit and sell 7 RUT Sep 760 putters at $0.5 credit.  Basically, we flip some callers to putters to decrease the holding of callers.  Why not, right?  We are the QE crowd too, hihihi.
    More on the SPX spreads later.

  113. terra—well, as an immigrant one does not take too many things for granted--whatever anyone says this is an amazing country and we  need to keep it that way and the  best chance of doing that is with Obama
    sorry no more politics until AH

  114. VXX Rolls
    The roll to OCT 10s is 0.47, 0.26 to the Oct 11s – are we interested?

  115. Peter D—I missed all the plays for Sept—-would you get in on the adjustments or wait?

  116. Phil / JRCC: so if we expect a break down would it not make sense to hold on to the long puts because they would go up. I'm bugging you because I'm trying to learn the thinking pricess. 
    Coujd it be that we are just done with it and we just want move on to other things in a portfolio of 25k ?

  117. Very good analysis Peter although it seems that just the possibility of stimulus is enough to move the market just as much as the real stuff so we seem to get double the bang for our "money". Good game from Draghi and Bernanke – you talk about the stimulus, markets move up 5%, then you actually go through with it and markets move another 5%. And since they basically work as a tag team in alternate month, bingo… Rinse and repeat. 

  118. Savi, terra/immigrant – yes, I agree! This is an amazing country!

  119. SPX adjustment/short strangle portfolios,
    With the same comments as RUT, buy back 5 SPX Sep 1475 at $1.1 debit and sell 8 SPX Sep 1485 at $0.7 credit (for a small overall credit).  The 5 SPX 1500 callers remain unchanged.

  120. Savi,
    Good question on whether one would start a new spread or not.  Since the RUT Sep 880 caller is only $0.45 credit, it's $450 for 10 contracts, which is a small amount, but they do add up to $5-6k a year, versus none if we don't have the trade.  Adding the putters, you can get another $500 for the next two weeks.  It's up to you whether you want to pocket that $1,000 in two weeks or not. I would, but some of us would take more risk, such as placing a more bearish bet by selling the RUT 860 callers for $2.6 ($2,600 credit for 10 contracts) for example.  Too many possibilities and the final decision is yours.  Good luck and thanks for all the good comments on this board!

  121. Good thing I'm only 50% German or I'd be pissed too…=)
    'The ECB Is Doing Governments' Dirty Work'

  122. Romney/Savi – Oh, did he do the opposite of what he said he was going to do 24 hours later with no shame whatsoever?  What a surprise….

    Markets/Peter – About $40Tn US, $20Tn rest of world.  Great job on the strangles.  

    VXX/Edro – I'm not giving those bastards more money!  

    JRCC/Micro – It's not a bet though.  I just have to evaluate next week but if VIX is this low it may be just time to move on to another spread.  That one was fun because I was comfortable that they could hold $2.50, $3 I'm not so sure but if we can sell $2.50 puts for .40 anyway – that may be worthwhile but if they announce QE, then it goes to $4 and no way I want to sell $3.50 puts…  I'm sure we'll find another small one we are more comfortable with. 

    Good study Edro.  

    Great country/Savi, Nicha – Yeah, yeah – now show us your papers!  8-)  

    Bond costs/Rogue – Sure good for the PIIGS but Germany will pay more.  If you'll borrow money at 2.5% but your kid, who you personally guarantee, will borrow money at 5.5% – who am I going lend to?  So they may drive rates down for the kids by backing their debt but, if Germany wants to borrow – they'd damn well better come up with more than 2.5%.  That's why they had a failed bond auction this week – there's no point in lending Germany or France or any strong EU country money under Draghi's plan.  

  123. My problem with this AMZN trade is there is no catalyst within the Oct options period i.e. you will need to roll at least once more to capture the potential earnings drop…according to my calculations you will be in it for roughly $12 including rolls and DDs…a lot to ask even if the overall market pulls back.  "Hoping" for a crash seems like a pipe dream given all the central bank support right now.  Personally I prefer to wait until the day before earnings to make my play…

  124. FYI…playing the $255 AMZN weekly calls for $2.75 to hit the $260 pin.  AMZN trading $257.88 right now…(mental) stop at $2.50

  125. 80M on the Dow at 2pm (strong volume day, relatively)

    Dollar 80.22, oil $96.08, gold $1,741, silver $33.70, copper $3.645, nat gas $2.68 and gasoline $3.024.  

    Euro $2.793, Pound $1.6013, 78.2 Yen to the buck and EUR/CHF at 1.2090 (was 1.2009 for most of the year so a big deal). 

  126. Thanks Peter

  127. Barfinger / Strangle plays  
    Please everybody should watch the Ritholtz video linked above. I've long suspected this guy was exceptional, now I am convinced.                                                                   I couldn't find the link.  Can you give more info about where to find it?  I'd like to know more about how your system works. 

  128. Phil / that's an excellent point about how Draghi's plan screws up the bond market for Germany and the other strong Euro countries.  It's a backhand way to make them finance the bailouts.

  129. The most powerful men in the world are no longer the elected leaders of the past.  The Central Bankers are Gods among men who will remain omnipotent until impotent…
    Die Welt writes:
    "The dangers of this policy are enormous. At the moment, it's not inflation that is the big problem. Rather, it is the redistribution of wealth from the north to the south in a completely non-transparent way and without political legitimacy. (The money is flowing) from the savers to those who benefit from this irresponsible monetary policy. This is undemocratic and antisocial."
    The business daily Handelsblatt writes:
    "The crisis has given the ECB Governing Council such an increase in power that no national government and no other European institution can hold a candle to them anymore. The Governing Council can at any time, with a majority vote, decide the fate of at least half a dozen governments, supporting them or bringing them down — and that number is increasing."

  130. Phil—you may not see my papers sir , where do you think you are Arizona  ;-)

  131. Phil—I am still in the /NKD short—-what do you think hold or get out with small loss?  thanks

  132. Voting – "Who Really Controls the World?"  funny how so much of this doesn't sound so funny anymore..

  133. WCP / Phil,
    Any thoughts on doing one this year…..? when you may care to start….?
    With the way the market has kept going up and up and up, I need help!

  134. What's up with TLT?  Opened at $126.14, now failing $124….

  135. Phil,
    Back to the Bernanke article. Yes, the velocity of money being nonexistant means that all of the e-dollars the Fed has created have no transmission mechanism to the real economy EXCEPT through the expectation of future inflation. The point that I thought was so interesting, is that if long term inflation expectations WERE truly higher, then QE would have the OPPOSITE effect on long term interest rates. They would be UP not down. The fact that Bernanke brags on how his actions have lowered long term interest rates is ironic in that lower bond market rate expectations are in all likelyhood proof that QE doesn't work.

  136. DJI/Phil – any idea why this is not keeping up with every other index? all others green today, dow not.

  137. FAS/Phil – cover, roll, or just hold on to the Sept 103s?

  138. Real companies warn, ie  INTC, MCD FDX while the momo's once again get pumped up, while it is painful today I can't believe LULU is once again getting teed up for a smackdown with a pe over 50 as all signs point to a recession.  And to think, six weeks ago I was worried there were not going to be anymore obviously overbought stocks.  OPEN is another dubious pe >50

  139. PPHM/kust – 104M in stock, now $4, and in Phase 2 trials for a bunch of different things.  Drug is interesting, but it is SO early, that I have a hard time paying that for their drug.  They have about 18M in cash and are burning about $5-7M/yr…and that is on small(er) studies.  So, they will need to raise more cash unless they license it out, which is a possibility.  I will put them on my radar list.


    The drug is a monoclonal antibody that attaches to cells that are infected by viruses.  The cells express a protein that is not normally exposed (viruses may use the protein for signaling – I have to read up on it?).  It is a novel mechanism, and the protein is also expressed in some cancers….so it should be a relatively good one.  I need to see who else is working in the space.

  140. AMZN/Cdel – Good plan.  Hopefully you don't miss anything.  

    Backhand/2Can – It's forehand to Germany, they know the cost, which is why they object but, in the end, they have no choice because they need those customers to be able to buy their stuff.  

    I like the point made in the 2nd paragraph Rogue – ECB made way too powerful through this system.  

    Arizona/Savi – Hey, it's the interweb, we enforce whatever local laws we feel like!  

    /NKD/Savi – Oh I'd give up.  The premise was we sell off and they follow, that's not happening and holding over weekend is nuts.  

    Control/Scott – As noted by Rothschild, it's been this way for hundreds of years, the only difference is, for a brief period of time (since the Depression) we had a few regulations in place to control the Banksters.  They, of course, spent the last 7 decades doing everything they could to unwind those regs – including the creation of a political party that is nothing more than a puppet show to advance the goals of the top 1% (who have abortions whenever they want to and can afford their own doctors, will be able to fund their own retirement and pay for their kids' college, etc.) so bit by bit they pulled out all the threads of SabOx and changed a law here and a reg here and, where they couldn't change the regulations – they defunded the regulators – allowing them to get away with murder.  Same as it ever was, as the song goes

    White Christmas Portfolo/Sank – If Bernanke does QE, then it will be a great time for an uber-bullish portfolio but that is also what the $25KPs will become.  

    TLT/Esco – Crazy day on the bond side.  We have the same problem as Germany, now there are AAA-backed PIIGS borrowing money at 5.5% – why on earth would you lend it to the US at 2.4%? 

    QE/Sparky – The problem is the banks are sitting on the money, which gives the Fed a very false measure of what QE is doing to the economy.  Everyone thought QE 1 and 2 and Twist would be inflationary but the black hole in the banks' balance sheets was so massive that the money fell in with barely a ripple felt in the broader economy.  I used to use an example of trying to fill a pool that's leaking at a rate of $2Bn a day with a $1.5Bn hose – you'll never fill it!  So you get a bigger hose and you keep filling but you never know when you have caught up until the levels (inflation) begins to rise and, if you are not careful, you overfill the pool and money starts pouring out the top so you'd better be able to shut off the hose and then, if all that money in the pool is stirred up – you'll have a flood on your hands that no one can control.  

    DJI/Scott – I think it overran reality yesterday, that's all.   Also, in case you missed it – the Global economy SUCKS!  Perhaps people buying Global Industrial corps still take old-fashioned things like that into account?  

    FAS/Scott – We're set up for a 2x roll if we have too so we'll just see what sticks next week.  

    Overbought/Lincoln – A lot of them are getting there.   Earnings might be very ugly next month.  

    92M on Dow at 3:15. 

  141. I am glad I was not around this morning….how aggravating to be trading in a 30c range on SPY.  Worse than watching paint dry…and my accounts dry up with it.


    Underinvested, Underperforming Pros Drive Rally

    By Barry Ritholtz – September 7th, 2012, 7:30AM

    Whenever we see a major market move,t here are always a series of post hoc analyses, explanations and rationales.

    They are never convincing to me. Why? Because the narratives tend to try to tell a story that gives us comfort, rather than determine what actually happened and why.

    Consider yesterdays 244 point pop. The talking heads claimed it was either:

    -Draghi finally doing something to save the Euro;

    -The Fed’s open ended response to economic weakness;

    -The market getting comfortable with the prospects of an Obama win;

    -Markets had over-compensated for an earnings decline;

    -Prospects of a huge China stimulus

    -ADP data suggests that perhaps the economy is okay.

    To each of the data points, I say bullocks!

    There simply is nothing new in any one of those items that wasn’t a) well known and/or b) expected or c) easily deduced by simply looking at history.

    What did cause the rally? I don’t know, and mostly, I don’t care. That is really the worng question for investors to be asking themselves. After the fact explanations are worthless, and Day -to-day action is primarily noise. (If you want to look at charts, try using weekly data instead. More signal, less noise).

    However, since you have already read this far, and are mostly unsatisfied with my explanation why all the other explanations are wrong, let me point you to one very interesting factor: Underperformance.

    In yesterday morning’s reads, I included the chart below from the WSJ. (PM reads had a different chart from the same article). The piece, titled More Gains, Even More Pain:  Summer Rally Puts the Hurt on Defensive Hedge- and Mutual-Fund Managers showed just how far behind — and therefor under-invested in equities — these pros must be.

    Stock oriented hedge funds are charging 2% + 20% of the profits for their YTD returns of under 3%. Mutual funds that focus on large cap stocks are up YTD less than 7%. Oh, and those of you who index are up YTD 13%.

    If you want an explanation as to what is driving stock prices, that is as good as any . . .

  143.  Phil / Taxing net worth:  Spain does it – a 2% annual tax.  Unless the money is invested in a company that provides X numbers of jobs and invests, or engages in, what the U.S. would call an active trade or business.  Unfortunately, my Spanish friend that took that route five years ago ended up losing far more than they would have paying the tax — office overhead, employee salaries plus benefits, transportation, investing in other trades or businesses, interest costs, the whole "real company" ball of wax.
     The more difficult question is whether Spain would be better off five years from now for having had those policies [more salaries and costs paid for companies forced to invest in businesses that lost their capital] or letting the wealthy preserve their wealth [even if that meant putting it in U.S. utility stocks] for later repatriation.  It certainly added up to a very substantial net worth loss on the part of wealthy Spaniards, money that is no longer available for what otherwise would have quite likely been repatriated to Spain at some point.  I don't find the answer obvious.

  144. AAPL BCS- I am looking at the Feb13 635/685 for $25.  Any thoughts????

  145. scottmi – fwiw, I covered 'em and bought some weekly 100 puts instead.  Better risk/reward for me right now.
    If you want to see why Dow is lagging, etc, in TOS go to Marketwatch tab.  Heatmap is self-explanatory when you look at it, or go to Watch tab and pull up whatever index you want there.  Looks like the safety plays are holding dow down.  Sell your Kraft, and get some CMG!  Hate to say it, but looks like we go up from here, until we don't.

  146. Stick, just for a little exclamation point on the week by the powers that be?!

  147. AMZN/Phil – I do have a longer term short position just in case…I certainly won't capture as much upside though.  Good luck with that

  148. Hello All – With the Euro not at about 1.28, does anyone have any clue as to the impact this will have on their exports?  I can't imagine Draghi is happy with the upward movement in the Euro.  TIA

  149. cdel – what time does the stick program start?

  150. AMZN – from earlier post, closed 10 Weekly 255 C @ $1.75 for $2.30

  151. Phil,
    For inflation to be on the horizon, one must believe that the velocity of money will increase in an environment where 80% of global economies are in contraction. Assuming that this does happen at that point there will be a stampede to the exits in the bond market, which is currently operating on the greater fool, or pyramid mentality, at least for anyone in bonds who believes in future inflation. Interest rates will skyrocket overnight, and/or the Fed will have to completely corner the market, (see the charts on Fed bond purchases posted on PSW today from ZH) causing  liquidity to dry up in the worlds larget market. How can this senerio be good for stocks? Either bond investors today believe that there will be no increase in the velocity of money, and therefore no inflation, or they think they are quick enough to get out ahead of it. The assumption is that when the bond market implodes, the cash will flow into stocks. But imagine the reality of 8% to 10% inflation on companies earnings, not to mention the psychological impact on all markets when bond panic hits the headlines and the biggest pig on the planet is having its first "Greek" moment. You often speak of holding stocks for inflation protection, and I am interested in what you think will actually happen ie, how do we get to 8 or 10% inflation without all markets having a panic attack?

  152. rkyroma – 15 min before close usually…but closed my day trades early because I'm not feelin' it…just seemed appropriate given the week we have had
    i.e. (!)

  153. – Best Buy-Out Looms!
    I wonder why this came out today. Its not something we did not know. 

  154. StJ/portfolios – I guess I missed it but what happened to the short FAS $103 C in the FAS money portfolio?  Also, what is the capital basis for the MoMo portfolio?

  155. newt /AAPL/ 3:16 post.  Reasonable trade.

  156. FLAN- Thanks.

  157. FLAN- I sent you an email.

  158. AAPL 3:16 huh.  I guess it is almost like a religion…

  159. cdel 360/AMZN…Nice trade on AMZN today.  

  160. FAS Money / cdel – We are still short the 103 calls. Obviously, we'll need some correction or we'll be rolling and DD.

    As far as the MoMo portfolio is concerned, what figure do you need exactly?

  161. stjeanluc….Is that query to me regarding the MoMo? 

  162. Spain/ZZ – It's very complex but clearly it's NOT productive for all that money that WAS running a business and employing Spanish people to have instead been invested in a US bank where all those people would not have worked at all.  Would it have been better for your friend?  Well it depends where he would have invested the money during a collapse but when you read about US Corporation holding $2Tn in cash on their books (and rumors of another $1.5Tn overseas) while they tell millions of people they can't afford to hire them – then you know that's not doing anyone any good UNTIL the economy collapses and then the big businesses get to swoop in like vultures and buy up small businesses and then cut back the staff and close locations anyway….  

    AAPL/Newt – I like it, just keep a god stop on it so your risk/reward stays realistic.  

    Euro/Ink – It won't have an impact until it lasts more than a few days.  

    Inflation/Sparky – Over time it lifts profits.  There are dislocations along the way but IBM wasn't making $10Bn in quarter in the 60s, even though they dominated the market.  Even MSFT, when it was essentially the only software company on the planet in the 90s, didn't put up those kind of numbers.  Why?   Well, as they said to Dr. Evil when he wants to get $1M ransom and his guy has to explain to him that their evil corporation makes $10Bn a year in 2003  - there just wasn't that much money in the entire World when Dr. Evil was frozen.  Later he goes back to 1969 and asks for $100Bn and they laugh at him about that.  Now it's a Trillion here and a Trillion there like it doesn't even matter – THAT's INFLATION.  

    BBY/Nicha – So strange how the stock acts as if this buy-out will never happen.  

    FAS/Cdel – Those are still open.  

    110M on the Dow and the bell hasn't even rung yet. 

  163. Mini-stick

  164. Funds – with the ridiculous spike yesterday and hang today, i wonder how many redemptions were put in to funds which will register for monday?  

  165. selling after the bell below bid

  166. Phil- Thanks.  Can you help me with the FAS $103  and why we didn't DD for more prem.?

  167. StJ/MoMo – 41K in profit…I was wondering what the account started at…also, is it virtual, or using real money?  Either way seems impressive depending on the capital basis

  168. Looks like 140M in the end, flat all day essentially – they did get everything but the SOX green at the end. 

    VIX 14.43, knocking 7.5% off on one flat day.  

    Have a good weekend everyone, next week is Bernanke!  

    FAS/Newt – Too dangerous.  Look how fast we went from $97 to $103 – we can go to $109 or higher on the Fed – sometimes it's better to be cautious and this is certainly one of those times. 

    I'll be around this weekend, trying to figure out what is going on in Europe….

  169. Remember when Soros bought $2B worth of european bonds from MFG below par?  I am sure he is a very happy man now after Draghi's unlimited bond buying program. 

  170. Pharm/ TIBX - NP, I owe you plenty, some of your picks lately have been fun and rewarding.  I hoped you grabbed the CMG play I posted awhile back, that one was a barn-burner this week.
    I was traveling this week, I should have warned you guys, seems like the days I'm not trading are always the best days for Crazy Plays, what a week!

  171. Phil 
    Was the BBY spread closed  ?

  172. James Quinn – Subprime Auto Nation


  174. Iflan – impressive!  What do you think about CMG and LULU after today?



  177. cdel/  CMG and LULU…I think both go up from here.  That's the short answer.  I actually looked at both today and considered a long on each.   But I want to see what Monday brings to see where this market is going in general before committing money in the MoMo to any new trades. 

  178. Pharmboy called the AMZN  560 pin nicely at just before 11 a.m. 

  179. typo….AMZN 260 pin. 

  180. I think I was thinking of AMZN's price this time next year when I typed 560.    :)

  181. IFLAN: LULU
    I would be curious as to your thinking on LULU going up from here.  Do you see something fundamental or is it because it trades as a momentum stock and what goes up must go up?   Was this not a short squeeze today?  TIA

  182. newt….I did not recieve an email from you.

  183. LULU & CMG / lflan – Talk about parabolic moves on these two…. LULU topped at around $80 last time and they are within $3.00. Is there more to come? They had some pretty good earnings today but they are not cheap. Although as we know, it doesn't matter with these MoMos. As for CMG, strong move today based on no news that I can tell… But retracing 50% of their losses over the last 6 months could take them back to $360 again. Looking back further, $330 is also a decent line and we are not far. 

  184. Lincoln/LULU…..It's a MOMO.   Extremely high volume today.  So if the markets follow through next week, I think LULU goes up as well.  Look at the volume, the 5 day, and the 6 month chart on this stock.   Unless we get an overall market correction, LULU has further to go over the short term.   

  185. LULU….Having said that, you didn't see me trade the stock today, which means I'm not highly confident in an upward move.  What I would like to see is LULU go to 85 or 90.  Then we might short it.

  186. I'm calling it a day.  I'll see you guys on Monday.  Have a great weekend.  

  187. PPHM/Thank you Pharm!

  188. How in the hell are we going to pay for iPhones?  How….Tell me?! Only 58.3% of the population is working….holy shmoly, that is back to 1980 levels…..

  189. ROFL! — LULU over $70 – Yoga wear for EVERYONE! What a visual!

  190. After High Note for Euro Plan, Discord Emerges
    “A Black Day for the Euro,” “Over the Red Line” and “Pandora’s Box Opened Forever” were some of the German headlines, with the normally sympathetic Süddeutsche Zeitung headlining an editorial: “The E.C.B. Rewards Mismanagement.” Even the German Bundesbank, officially part of the European Central Bank, put out a statement commenting acidly that the plan was “financing governments by printing bank notes.”
    At the same time, the two intended beneficiaries of the Draghi plan — Spain and Italy — expressed reluctance to ask the bank for help, even if both might eventually have little choice but to seek aid. The governments in Madrid and Rome apparently fear the political impact at home of bowing to whatever demands for harsh economic policy changes might come with the aid.
    They seem afraid that the medicine might prove worse than the disease, because Mr. Draghi made it clear that there would be no bottomless well of money made available without a program of greater spending discipline.
    “Those who did everything to have the E.C.B. help now say they don’t want it,” said Ferruccio de Bortoli, editor in chief of the newspaper Corriere della Sera, in a Twitter message. “Speculation will play on this contradiction.”

  191. Phil/QE3 -  the fed has to consider the unintended economic consequences to other countries with QE3…because what hurts the global economy hurts the USA too (high oil prices is not going to help CHina from a hard landing!).  MSM is screaming 80% chance of easing next week…the fed would very narrow minded to make his decision to ease on one 96k print single data point.  When Iran gets bombed, what will he do then when oil spikes to $130 if QE3 has moved oil to say $110 late in the year.  ALso there is a mountain of research on the limited amounts of short dated securities he can buy, the monopoly he will have on MBS if that is the only asset purchased, etc, etc, etc.  Premature QE3 is very dangerous to say the least…our country is in deep, deep, shit if for some reason our Fed believes forces QE3 next week.  Perhaps he knows something we don't???
    Hiring Slows in U.S., Putting Pressure on Obama and Fed
    Some, like Nigel Gault of IHS Global Insight, predicted a third round of so-calledquantitative easing, with the Fed buying $500 billion to $600 billion worth of assets, mostly mortgage-backed securities, to try to lower rates.
    Others, like Steve Blitz, chief economist at ITG Investment Research, predicted that the Fed would limit itself to extending the ultralow benchmark rate. He estimated a 60 percent chance that the Fed would extend the rate but only a 10 percent chance of another round of asset purchases.
    “I don’t think the economy is quite as weak as the 96,000 figure suggests,” he said. “The Fed doesn’t react to one data point.”
    One problem for the Fed is that more easing tends to lower the value of the dollar against foreign currencies, he said. Besides driving up the price of commodities like oil, it does little to help China or Europe avert a further slowdown.

  192. Phil/Side topic - I am extremely long "CO2", moderately short "ICE"!  But hey look at the bright side…at least global warming won't exist for the next 4 years if Mitt wins in November…=)
    Arctic ice melt 'like adding 20 years of CO2 emissions'
    White ice reflects more sunlight than open water, acting like a parasol.
    Melting of white Arctic ice, currently at its lowest level in recent history, is causing more absorption.
    Prof Wadhams calculates this absorption of the sun's rays is having an effect "the equivalent of about 20 years of additional CO2 being added by man".
    The sea ice extent at 26 August (white) is markedly different from the 1979-2000 average (orange line)
    The Cambridge University expert says that the Arctic ice cap is "heading for oblivion".
    In 1980, the Arctic ice in summer made up some 2% of the Earth's surface. But since then the ice has roughly halved in area.

  193. Long "ICE"…short "CO2"…woops!  Perhaps Curiosity will digs up some alien tech on Mars to scrub CO2 on Earth…

  194. (Reuters) – Inc trumpeted cutting-edge wireless technology as a key selling point for the fanciest of the new Kindle devices introduced by CEO Jeff Bezos on Thursday. There's just one problem: the devices have not yet been approved for sale by the Federal Communications Commission.


  196. Phil – Have you read this yet?
    Twenty Big Trends That Will Dominate America's Future

  197. Angel – Just found it funny and thought others would as well. Hopefully they tank soon.

  198. Phil – Looking to add some agricultural exposure as an upside hedge – they have run up recently, but what would you think of a MON spread, buying the 2014 70/80 bcs, and selling the 70 puts for 1.2 on the $10 spread that's 100% in the money? Open to better ideas in the space if you have one. Thanks!

  199. Good post Diamond

  200. Lots of good charts Diamond!


    Final Thoughts on the Fed

    Before this week I was not expecting an aggressive action by the Fed, but my own opinion changes with the data.
    The mistake made by most is a collection of dangerous ideas — OK for politics, but risky for trading and investing.  In the absence of a better term, I'm going to call it the Fed Skeptic Syndrome.
    The Fed Skeptic has the following collection of beliefs:

    QE has no positive economic effect.  It has not helped employment and has boosted stocks only because the Fed bond buys act like direct purchases of stocks and commodities — in addition to pushing conservative savers into tech stocks and soybeans.  Fed action has artificially kept stock prices and the economy higher, but is ineffective.  You can see this because things are worse than they were a few years ago. It is all a sugar high, and it will end badly either through deflation, or hyperinflation, or both.  These forecasts are certified by an array of "chief investment strategists" whose credentials do not include economic education but do include frequent media appearances.  The most popular are "self-taught in Austrian economics."

    The FOMC has the opposite viewpoint:

    QE has lowered interest rates by a few bps and generated a gain of about 2 million jobs over what otherwise would have happened.  There was no direct effect on commodity prices.  Misguided speculators drove these prices higher.  Stock price increases reflected the improved economic prospects from the program, and also created a virtuous cycle of confidence and wealth effects.  The proponents are all credentialed mainstream economists of both political parties.

    As a voter, feel free to take whatever perspective you want.
    As an investor, it is wise to understand those who actually have power, and predict what they will do.  Most of those who are missing the rally do not have sufficient respect for the determination and power of government officials.

  202. Good morning!  

    No exciting news so far this weekend.  Just accelerating inflation in China (no surprise) despite sluggish demand (no surprise).

    Soros/Ink – That's one smart trader.

    BBY/QC – Yes we got a good spike and got out but I still like the concept of it. 

    Sub-prime car loans/Scott – Another hidden stimulus that may not end well.  

    Senators/Angel – There were, as of 2010, 16 Senators who were not worth $1M (max estimate) including Jersey's own Bob Menendez.  Deborah Stabenow from Michigan may actually be $50K in debt, which makes here perfect to represent her state, acually.  On the other end of the scale, John Kerry is worth $231M and the rest of the top 7 are Democrats – who'd have thunk?  Maybe that's why Reps are so pissed – the top 3 Dems (Kerry, Warner and Kohl) are worth about $600M – pretty much the combined net worth of the Senate Republicans.  

    AMZN/Lflan – Certainly nothing like logic will stand in their way.

    QE/Rogue – No point in speculating when we're getting facts next week.  It's ridiculous to ease the money supply when stocks and commodities are at near-record prices and unemployment is 8.2% (no matter how much you want to scream about the BS figure) and housing is "recovering".  If these are conditions for QE, then only in a massively strong economy will it ever not be time for more QE, which then sends long-term inflationary signals through the roof and will pressure wages etc. as everyone tries to stay ahead of the inevitable.  There's also the danger that the Fed has gone too far already and faces a lagging effect and if they ease this month, they may have to tighten a few months from now and that would make them look like idiots (more so) and further erode confidence in the Central Bank of the United States – something we certainly can't afford.  Total madness to ease now.  Doesn't mean it won't happen – just stupid if it does.  

    Super Options/Pstas – Now THAT's an inflation hedge!  

    Trends/Diamond – I love that kind of stuff.  This infrastructure spending plan is completely irrational.  In 2009 it was estimated we have $2Tn in CRITICAL repairs to make.  So all Government planning is a joke when you pretend you'll get by spending $5Bn a year for the rest of the Decade.  

    4. A Weakening Infrastructure

    And, of course, the total insanity that the GOP wants to protect at all costs:

    9. A New Healthcare Mandate

    Fortunately, we're going to almost double our killing capacity under Romney (and this doesn't even count wars and benefits!):

    19. Military Spending Under Pressure

    So the government currently takes in $2.2Tn and we're $1Tn in the hole.  Romney's plan is to collect less money and spend $400Bn more on the military.  Like Clinton said – Arithmetic!  

    MON/Deano – I am worried about MON's sales of Round Up as it's losing it's effectiveness and they haven't reformulated yet.  DBA is a good thing to invest in, using a similar type of spread.  

    Good alternate POV Pstas.  

    I have to run to the Jets game.  Later all. 

  203. New Report: Health Care Waste $750 Billion per Year

    The report made a comparison between banking and healthcare:  If banking had a system equivalent to healthcare an ATM transaction would take days.  And comparing to retail sales, healthcare is like shopping in a store with different prices for the same item depending on what isle you shopped in.

    But perhaps the most astounding finding of this study was the documentation of $750 billion in healthcare expenses each year that do nothing to improve health.  In other words, nearly 1/3 of healthcare expense is wasted money.
    I don't post this to start another gov't vs. private sector health care debate. If you think cost reduction is best accomplished top – down  via more government control, fine, Have at it. If you think it is best to bring the consumer into the equation, as I do, go for it. Either way, cost is the issue and an awful lot can be done either way. Just get on with it.

  204. Wow, someone is optimistic:


    I lost count of the stories saying that we were back to the 2008 highs. Danger! The idea seems to be that we all remember what happened then, so watch out!  We also have triple tops and the like.  (Whatever happened to the Death Cross and the Hindenberg Omen?)

    So I did some checking.

    May of 2008. Forward earnings on the S&P 500 then were 93.77, the ten-year yield was 3.9% and the odds of a recession — according to the best method — were nearly 100%

    Now. Forward earnings are 108, the ten-year yield is 1.59% and the recession odds for the next year are below 10%.

    People talk about headlines and sling around phrases like Draghi put, printing money, etc., instead of analyzing data. The world is a much better place for investing than it was in 2008.

    Maybe, but without danger?

  205. And we might need to stay bullish…

    I count that 4 out of 5 indicators were moving obviously and deliberately in the correct direction.  Yields were a mixed bag, but you may not have chosen yields as your wildcard so I will omit it.  Anywhere on earth 4 out of 5 ain’t bad.  Certainly good enough to keep me bullish.

  206. Why QE isn't working and why QE3 probably wouldn't work either.  Same story, different day: lots of money in the system, but you can't have any of it — unless you don't need it.  And people who don't need it don't want to borrow it because the people who do need it can't buy much.   Hence QE is largely string-pushing and monetary velocity low.

  207. Stj/Debt chart. I don't know about anyone else, but I'd rather be in the USA than a lot of those low debt places like Africa, the old Soviet republics or Central America.

  208. Debt / Jet – True but what is scary is the total debt load – almost $49 Tn…. What another trillion of stimulus in the scheme of things. How much of that debt will ever be repaid?

  209. Yes, it is a huge number. I'd love to see  a pie chart of whom that debt is owed to! I don't hold any and you probably don't either. If it is all held by China and Goldman Sachs, then  good luck to them. As Phil says, it will all be inflated away over the next decades and the idiots who "invested" in it will get what they deserve. Or could they somehow be the smart money and be closer to the beginning of the pyramid scheme than the suckers at the end!?

  210. From JPMorgan, Sept 5. 2012:  Excerpt is a bit lengthy, but it's the weekend so I've taken the liberty.  [Emphasis JPM's]
    “What are the costs and risks of ECB ‘debt monetization’? There aren’t many precedents for what the ECB indicates they may do. Of course, one thing we are watching is inflation in Germany. While wage gains are starting to pick up and home prices are rising modestly for the first time in a long while, economy-wide German price increases are still well below 2%.”
    “Another risk relates to losses at the ECB. Central banks can recognize losses over long periods of time, and do not have to disclose how or when. They can even earn ‘seigniorage,’ which refers to the difference between the yield on bonds they buy or lend against, and their cost of money (zero).”
    “Eventually, however, the ECB might have to engineer a massive “Paris Club” debt renegotiation, which is how governments forgive and restructure debt owed by developing countries. A Paris Club outcome seems more likely than the ECB having an actual exit strategy for its purchases and loans. After all, let’s remember why the ECB is printing like crazy: southern Europe is seeing the largest outflow of capital that the modern world may have ever seen. Without the ECB, there would probably already have been more sovereign and/or bank defaults in Europe.”
     “Many economists believe the cost of keeping the Eurozone together is much smaller than the cost of a break-up, an epiphany that seems to have occurred in Germany as well. Even so, the cost is likely to increase this fall; let’s see if Germany will pay it…. However; while the easy money from shorting Europe vs. the US has already been made, and while EU equity valuations are low, we continue to have most of our equity exposure elsewhere. Europe is conducting one of the most unorthodox experiments of the last 100 years (a competitiveness adjustment mostly through wage and price declines instead of currency devaluation), and they are making it up as they go.”
    “The average maturity of Spanish and Italian government bonds has fallen sharply, suggesting that the ECB will face continued days of reckoning over the next couple of years. The ECB’s balance sheet will grow, but what no one knows is when or how it will deal with the indigestion of radically relaxed collateral terms, and trillions in loans and bonds that the private sector won’t want to own unless there is a miraculous rebound in growth and employment. [There has been] steady erosion of non-commodity exports in Europe since the year 2000 (other than from Germany), yet another indication of the choke hold that the Euro has put on countries in its periphery.”
    “While the challenges the world faces are substantial, the “death of equities” stuff is a little overboard. This kind of commentary has a checkered history: Business Week and Time covers in 1979 and 1980 talked about the death of equities and asked whether or not capitalism is working, and were followed by two decades of substantial equity returns. Similarly, the timing of bearish articles like “Dow 5,000”  (September 2002) and “Dow 5,000 Redux” (December 2008) also preceded substantial equity gains. The death of equities discussion made more sense in the mid 1970’s and early 1980’s, when companies weren’t making much money, and most of it got inflated away. That’s quite different today; as shown, the free cash flow to asset ratio of US large cap growth stocks is at the highest level in decades. We can debate the multiples they deserve, but the US corporate sector is generating substantial profits in both real and nominal terms.”  
     I would comment that one of the reasons for theses rosy FCF to asset ratios is the recession-induced concentration of most industries into oligopoly. 

  211. Pharm- Do you know anything about Sunshine heart (SHS) and its c-pulse system ? Jensen on SA mentioned them as having Euro approval for their device. Thanks for any insight.

  212. Not a ton of data next week, but Wednesday sure looks interesting with the EU coming up with their banking plan and the German high court ruling on the ESM. And then Thursday, it's the Fed's turn with Bernanke's press conference the cherry on top!

    Martin Feldstein: Romney's Plan Can Raise Tax Revenue

  214. why is Ben talking on Thursday and not Wednesday (like always)?? I don't remember this happening ever before?

  215. Good morning!

    Futures looking pretty flat with Dollar flat (80..26),  Euro flat ($1.2787), Pound flat ($1.5996) and the Yen flat (75.29) – commodities are flat too so very dull with no major news over the weekend.  

    It's all about the German court decision Wednesday, the Greeks wrangling over austerity (didn't pass budget today) and our Fed Thursday. We do have notes to peddle this week on Weds and Thurs so maybe some panic ahead of the Fed to move bonds?

    Not much data for us until PPI Thursday and then Friday has a lot (see chart). 

    Health care/Pstas – Perhaps YOU would negotiate the best health care for yourself and your family but that's EXACTLY the "different price in every isle" you are complaining about.  The prices need to be regulated and homogenized by experts, not by Joe the Plumber as does the care rationing (for lack of a better word) to cut down on the waste.  Our system is currently set up to over-do everything both because the doctors are deathly afraid of being sued and because they like to make more money so the risk/reward structure of the system is set up to encourage waste – no wonder it's 33% of the cost.  Any attempt to cut waste will, of course, lead to cases where people will die because they didn't get a certain test or procedure that may have saved their lives but wasn't statistically prudent.  We're not going to be able to properly reform health care until we reform people's attitudes about health care, unfortunately.  For my own Dad, who spend most of his last year in the hospital in full-time dialysis – it was costing $77,000 a month to keep him alive.  Was his last year of life worth $924,000?  

    He sure didn't think so, he wanted to die a good 6 months before he did and I think he was conscious maybe 6 days of his final 4 months.  It wasn't a monetary decision but even in our own family, there were differing opinions on whether or not to keep my dad alive and it wasn't until my final brother was ready to let go that the hospital was finally willing to acquiesce to my Dad's stated wishes and stop saving him.  

    This is how our nation spends 1/3 of it's health care costs as well – on those final months of life and we're not going to have proper health-care reform until we begin having proper health education in the schools that addresses the philosophy of quality of life, etc. that people are simply not prepared to deal with until it personally confronts them.  

    Optimism/StJ – It's a valid point but he's cherry picking May 2008, which was right before we fell of a cliff.  Go back to the peak in May 2007 and the projections were more like that 108 going forward and no one thought there would be a recession and the 10-year may have been 4% but it was going lower, which is much more exciting for the economy that 1.6% with nowhere to go but up.  

    4 of 5/StJ – Yes but when one of them is housing permits using this chart, I have to question the author's own brain or perhaps just his objectives in slanting the article with this completely misleading view: 

    So what is he showing an uptrend of?  "Normal" is around 2M a year, and this guy is saying that moving from 650,000 to 800,000 (23%) over 3 years (7% a year) after a 3-year 75% drop is one of his big signs of recovery?  Even worse, building is not selling – Ideally, you need to sell homes to sustain a recovery and that clearly isn't happening.  

    12. The Housing Market Recovers

    Global debt/StJ – We went from $32Bn in 2008 to $48Bn this year (50%) – that's not a trend we are going to be able to sustain. 

    Low debt places/Jet – And I'd rather go to a party at some guy's house where he's spending $50K he doesn't have to impress his guests than the guy who's keeping it under $1,000 because he wants to be sure people have a house to party in next year as well.  As a member of the top 1% – I get invited to plenty of parties so I'll just go to the best ones each year – I don't really care what happens after I leave and, if that venue or organization doesn't exist next year – I probably won't even notice because my box will be stuffed with invitations from other people and organizations that fill the gaps.  This is one of our problems as society, we celebrate consumerism and borrowing from the futures to have fun now and we do NOTHING to invest in the future of our country.  You can keep kicking the can down the road but one day, maybe, you get to the end of the road and there's nothing left but you and a giant can.  

    Pyramid scheme/Jet – Good point, you never quite know where you are in these things until it starts falling apart.

    ECB/ZZ – I think the main problem is the ECB monetizes $2Tn worth of Spanish and Italian debt over the next 3 years by buying 3-year notes.  So, 3 years from now, the ECB needs to roll over or collect $700Bn of their notes and the Spanish and Italian governments still need to borrow, even assuming big cutbacks stay in place, $400Bn that year.  So now, SOMEHOW, 50% more bonds need to be sold than last year.  Will the ECB then buy $1.1Tn?  It's a slippery slope indeed.  Same with our Fed, in theory, they aren't supposed to just keep $3.5Tn on their balance sheets but, if they start selling, we're all doomed.  

    Feldstein/DC – Don't get me started! 

    Bernanke/Jabob – He speaks after the Fed meeting, this meeting is 2 days.  Usually they are Tues/Wed but this one is Wed/Thurs. 

  216. good morning.  is anyone having TOS/TDAmeritrade issues this morning?

  217. I can't get to the ToS browser based trading.  Says it can't resolve the DNS.

  218. TOS – I can log into the TDAmeritrade hopepage, but I can't access TOS.

  219. TOS Platform working for me.