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Friday – QE Fever Turns To QE Forever!

DBC WEEKLY$85Bn a month!

Oh boy was I wrong when I said Ben Bernanke wasn't crazy enough to ease into a bull market.  Yesterday, he exercised the full power of the Federal Reserve to confiscate your wealth and hand it over to the bankers.  That's right, by engaging in what many consider reckless money-printing practices and announcing there is no end in sight, Bernanke caused the Dollar to fall below 79, down from 84 (6%) before all this QE talk began.  

That's like taking all $100Tn worth of US Assets – everything you worked for your entire life – and just devaluing them by 6%.  Many of our Conservative friends decry the 1% tax on wealth imposed by the French – but at least they are honest about it.  At least they debate it and vote on it.  Not Bern Bernanke – the Federal Reserve Chairman simply decrees that you will contribute 6% of your dollar-denominated assets towards more bank bail-out and there's no cut-off if you are below the top 2% – this is a confiscation from every man, woman and child in America.  

How far down will Dr. Bernanke take your Dollars?  That's the beauty of it – there's no limit!  He warned Corporate America yesterday that he will continue to give them FREE MONEY as long as they keep refusing to hire more workers.  The less American workers they hire – the more money he will give them.  Sure, they can hire and spend overseas (most are) because that won't affect US unemployment rates but, if they start hiring Americans – THAT's when he will begin to take away the punch bowl. 

See how this scam works?  

It is hard to see how another round of QE would help the economy. Long-term interest rates are already at historic lows. With rates this low, even if QE put effective downward pressure on rates — a dubious proposition — the economy would be unlikely to benefit. If a 3.5% mortgage rate is of little consequence, there is no reason to believe that a 3.4% or even 3.3% rate would suddenly produce results.

Nor would quantitative easing result in a burst of money creation, as per traditional monetary policy, because the Fed now pays a quarter-point interest on excess bank reserves. With little growth in the demand for private credit, banks have chosen to leave their additional reserves on deposit with the Fed, earning this paltry but completely safe return.

The real problem with QE — beyond increased near-term uncertainty — is that the Fed must at some point unload all these bonds it has bought. The Fed will buy bonds in soft markets and sell them when interest rates are already rising, pushing interest rates up further, faster. The problem, in short, is that the Fed will have failed to prop up the economy when it was weak only to risk killing the recovery once it really takes off.

We discussed this and some other concerns I still have in Member Chat this morning.  Meanwhile, we have to play the hand we're dealt and, for the moment, we've been dealt two aces and we MUST play our hand.  Keep in mind we have to make 6% just to keep up with the devaluation of the Dollar the Fed is causing.  For those of us who have real estate assets, metals and other commodities and, of course, stocks as the majority of our wealth – All is well as The Bernanke is working for us (top 1%'ers).  I happen to be in Las Vegas this week, helping rich people get richer with Real Estate and then it's on to LA, where we look at ways to allocate some long-term investments in this market. 

Also in Member Chat this morning (and sent out as an Alert to Members) we updated our uber-bullish Twice in a Lifetime List and we'll be taking a look at our long-term Bullish Income Portfolio this weekend.  With virtual allocations of $500,000 in the Income Portfolio and $100,000 in the TWIL, our short-term $25,000 Portfolio was tasked with the job of protecting the rest.  Thus we went aggressively bearish, but that was because we genuinely believed the Fed would disappoint the markets this week.  Being wrong there cost us dearly as our virtual portfolio dropped from being up 60% just two weeks ago to now just up 20% since we began it in early June.

As you can see, we've made a lot of adjustments since last week but we haven't gone fully bullish yet, as we'd still like to see where we are next week before taking our losses on what's left of the short side.  Not reflected here, of course, are our general bullish hedges like last Tuesday's 2 DIA Oct $135 calls at $1.23, selling 1 HPQ 2014 $15 put for $2.30 for net .16, now $2.05 for a quick 1,181% gain on cash – a very nice way to offset some losses on a few bearish plays.   We have been picking aggressive offsets like this every Tuesday morning since the beginning of August and all 12 of them have exceeded their 300% return goals already.

Making money in a bull market is easy – especially with the low VIX giving us such cheap entries on long option contracts.  Making 1,181% in 10 days is an excellent way to stay ahead of inflation (for now) and you don't need to make a major commitment to aggressive plays like this to keep a more conservative portfolio humming along.  The FAS spread in our $25KP is one of those plays and already halfway to it's 500% upside.  

So it pays to be patient and it pays to be cashy and cautious ahead of these events.  Sure we may have missed some of the rally but now we can invest with a lot more confidence as we shift to a more bullish stance next week.

Have a great weekend, 

- Phil

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  1. Good Morning!   What a fun day yesterday, eh?   I hope you were all positioned well into the event.  From here forward there will be no excuse.  We have QE!   Get bullish!  Get long!  In what?  Try AAPL for starts.  Yesterday at close I bought some Sept  675/700 bull call spreads for my personal accounts.  These are not a part of the virtual MoMo portfolio.  I didn't even have time to post the trade idea, as I was rushing off for an appointment.  Doesn't matter.  Phil has an AAPL spread idea or two already on the boards, and you know what to do anyway.  What to do is to go long AAPL with some bull call spreads.  Phil, why isn't AAPL on your once in a lifetime list?  It should be at the top of such a list, don't you think?  Anyway, let's see how high the market gets today.   

  2. Oil Lines

    R3 – 103 (WTF?)
    R2 – 101.17
    R1 – 100.15
    PP – 98.33
    S1 – 97.31
    S2 – 95.49
    S3 – 94.47

  3. AAPL / lflan – The next earning release will be on 10/23 but will most likely not include much from the iPhone 5 release. So it's possible that we will have a repeat of the last earning report. But we should have some sales numbers for the iPhone 5 so guidance will be the key it seems.

  4. stjeanluc/AAPL…..Yes.   My take is that the iPhone 5 will fly and AAPL's price with it.  I think the safest play on AAPL is some long term (several months out) bull call spreads.  For the more nimble, they can be played closer to the vest (a closer month).  For the most nimble they can be played as straight-up calls, with profit-taking as indicated. 

  5. Phil – Nice Twice in a Lifetime post this morning.

  6. YMI/gerryf – it means buy the stock, say 200 shares, and sell one call against the position. That is a 1/2 cover. One can also then sell same number of puts to ‘juice’ the play and that will be a full position in the stock….or 1/2 position in the stock, depending upon ones tolerance to risk.

    Marc Faber: If I Were Bernanke, I Would Resign
    A Mayfair economy is one which benefits the wealthier and better off in society. Faber said this latest round of QE would not help the “man on the street”.



    European Stocks Could Correct Up to 20%: Marc Faber
    Marc Faber: Buy These to Prepare for Coming Collapse 

    “QE helps rich people whose asset prices go up and whose net worth then increases but it doesn’t flow to the man on the street who is faced with higher costs of living with price rises. You just have a small economy that is booming but the majority of the economy is damaged by QE,” he said.
    iPhone 5 Will Be More Help Than QE: Former Fed Gov
    Thursday's decision to launch open-ended QEwas a move akin to what the Fed would have done "during the deepest, darkest days of the financial crisis and the panic" in what is, rather, "a suboptimal recovery, a lousy recovery," Warsh said.
    The decision was unique in that it tied Fed policy directly to lowering the 8.1 percent unemployment rate. But Warsh doubted the policy will help.
    "If we continue the policies we've been going down, then it would be taking risks we need not take as a country," he said. "If you look at the markets now, where asset prices continue to melt up, where asset prices are driven less by fundamentals and particular companies and more by speeches and policies that come out of Washington, you're taking these risks. Risks are highest in the economy when measures of risk are the lowest."

  8. lflantheman 

    Do you have a long term AAPL spread in mind 
    ( several month out)


  9. Phil/QE Forever – With no more QE psychological "It's coming 'soon'" factor for the markets to look forward to, would the markets not be at risk of bad news actually being bad, and good news being even better than previous?  And if this doesn't work, then the fed will need to start buying hard assets and stocks…as if $85 billion/month can not move the economy forward, what good would $500 billion/month do?  Seems like the market is set up for even greater possible volatility, especially with nobody hedged (VIX going to 10 soon?)…and the false assumption that Bernanke's "Put" will actually work, because now the Put isn't just a legend, it is going into Phase 1 Testing…

  10. Thanks Pharm

  11. F'in a….here we go:

    The consumer price index jumped 0.6% last month to mark the biggest advance since June 2009, the Labor Department reported.

    The bulk of the increase stemmed from a 9.0% gain in the gasoline index, which also rose by the fastest amount in more than three years. As a result, energy prices surged 5.6%, marking the first increase in five months

    The cost of food rose at a much slower 0.2% pace on the month.

  12. Good Morning!

  13. Clashes in Egypt over film, protests spread
    Just wait until the world figures out that USA Bernanke is to blame for their families staving with soon to be $10/bu corn and $20/bu soybeans!  I'm not sure how going from 200bu/acre x $2/bu= $400/acre to 200bu/acre x $10/bu – $2000/acre in a few short years is really going to help anyone when it is all said and done, when the world is going to go to hell in a handbasket once global inflation destroys the hope of the masses by starving them to death.  Are your corn flakes 5 times more tasty, as mine are not…and at some point neither is greed…

  14. That cost of food may not rise very much, but getting the food to the destination is going to catapult things tremendously.  Faber is correct….and I have one longer term chartist that I follow who says this:

    Economic Armageddon is coming in 2013, maybe before, maybe late this year. Before then, we could see stock and commodity markets rise further. There is an upside price target around 14,500 in the Industrials from an inverse Head & Shoulders pattern that is confirmed. The upper boundary of this Jaws of Death pattern is also in that same 14,500 neighborhood.

  15. Bad morning to you down on the coast 1020….I have opened up my turrets to take out whomever starts to invade from the coast in my hilltop home!

  16. What does marc faber know about the "man on the street"?…..

  17. Pharmboy/fkn A – LOL, got that right!  Just reading that even Americans use something like 6.7% of income on groceries and another 4.5% on eating out, so it isn't like the 50% plus of poor countries, but food costs us about 11% of income if people continue to eat out, which I believe they always will not matter what as great tasting (fatty) foods make people less stressed over their finances, and feel perhaps a little wealthier artificially when being "served".  I never buy the "but the restaurants are busy so the economy must be good" theory, as people will spend their last dime on comfort factors that happen to also be necessary.

  18. Pharm – I'll be sure to let you know when "they" are on the way……
    …..besides I still have my "getaway" nestled up against Camp Pendleton with an ocean-ready vessel and a large urban-assault (rv) at the ready….
    Let me know if you need a ride…. ;)

  19. Pharm: can you help with the GLD Sept/Dec 173?  Sell the Sept and buy Dec then when do I sell Sept Q?

  20. rogue / restaurant economy — Not to mention the trend of not cooking at home.  Here's a pretty good (but sad) anecdote for that.

  21. Oil touched $100 already today…woo hoooo.  Americans are feeling the markets wealth effect already as they full up their vehicles this morning with a C-Note, on their way to the unemployment and food stamp offices!  Forget the trickle down piss analogy, this if full force projectile vomit on the masses economy!

  22. Subtle reminder – Do not use VXX for hedging anymore

  23. The MoMo portfolio is in cash now.

  24. GLD – Buy the Dec 173, sell the Sept 173.  1 for 1.  Net debit is $4.68.  We will then roll the Septs to the Q next week with the delta crush.  Then roll those to Oct.  Not sure what strikes we will roll these to, but we need to watch this one carefully, but i think gold is going to go for it….ATH.

  25. FLAN: Any adjustments for the BCS from this AM?

  26. DJI vol 33M

  27. Pharm- Sweet, Thank you.

  28. TLT….yikes!  

  29. Pharm, do you miind explaining how your gld play works.  When you say delta crush I'm a little lost.  TIA

  30. Next retail sales report should look better with gas going to highs.

  31. Phil- Should we keep in SCO, roll to 36s possibly ?

  32. Wow, U. of Michigan confidence 79.2 (74 expected)….

  33. That giant sucking sound is the Bernanke stealing your money! 
    FU Bernanke 
    He just put a gun to every investors head – buy hard assets or see your money get devalued. 
    Exactly how market is reacting – scramble for anything but dollars.

  34. The money leaving this country is probably booking flight on PCLN…..

  35. Pharm?  are you taking LIFE $, covering or just keep on truckin'?

  36. GLD/jr – Calendar plays are made on stocks that are either sideways our 'trends' in direction.  Gold is now in an up trend, but reaching resistance 172 area.  So, my premise is that it continues up, but pauses here and may even in fact, retrace a bit to the down side.  Thus, using a 4 month calendar, we can capture the premium on the short end, and rent the options on the long side.  This is similar to buying the stock and selling weekly, monthly options against the stock. I don't want to hold this for longer than a few months, as I am not confident that GLD is a long term investment, but we want to capture that trend, gain on the long as well as sell the front premium to make $$ there.  If it goes up up up, we will have to roll the shorts, and if it goes down too far, we may have to change direction. 

    LLY was one that I thought was going to go that way, and it has gone against me.  CELG on the other hand has worked beautifully.  These are similar to trend plays, but with less inherent risk, but can be tricky if they move too far in one direction.

  37. Pharmboy
    GLD 9/2011/h $185.85, 2/2012/h $174, 9/2012/L $166.

  38. Good morning! 

    Please make sure you go over my concerns (especially the chart of QE2) and our TWIL List with new trade ideas from the end of yesterday's chat.

    As expected, Asia and Europe gapped up at the open and we're getting follow-through despite a lot of disappointing data (does it even matter anymore?).   

    Aug Industrial Production: -1.2% vs. -0.1% expected, +0.5% prior (revised). Capacity utilization 78.2% vs. 79.2% expected.

    The 1.2% dive in industrial production is the biggest decline since the depths of the financial crisis, though 0.3% of the fall is being attributed to Hurricane Isaac. S&P futures add a bit to gains, now +0.3% - maybe in hope the Fed will double QE to $80B/month?

    August Retail Sales: +0.9% vs. +0.8% expected, +0.6% prior (revised from+0.8%). Ex-autos +0.8% vs. +0.8% expected, +0.8% prior. - Don't be fooled, ex-gasoline it's only up 0.1% and inflation was 0.6% so people are buying less stuff for more money!

    More on Retail Sales: As expected the auto industry outpaced other sectors, with the motor vehicle parts category jumping 1.3% M/M and 10.7% Y/Y. A laggard in retail sales once again is electronics and appliance stores, losing 1.4% M/M and 2.3% Y/Y despite sweeping turnaround plans. On watch: RSHBBYCONN.

    Tacking on $2 since the Fed's QE announcement, WTI crude is back in triple digits and hopes from 10 weeks ago of gasoline below $3 gallon give way to worries of the price popping through $4. What Fed stimulus gives on one hand, it takes away with another (good luck getting them to admit it!). USO +1.6% premarket.

    Aug Consumer Price Index: +0.6% in-line with consensus, 0.0% prior. Core CPI +0.1% vs. +0.2% expected, +0.1% prior.

    Eurozone inflation +2.6% Y/Y in August, as in previous estimate, vs. +2.4% in May-July. Prices were boosted by fuel and transport costs. Inflation +0.4% M/M vs. -0.5% in July. Core inflation +1.5% Y/Y. (PR)

    Dollar Danger:  One currency the dollar is on the rise against is the yen as the QE3 announcement forces Japan to trot out finmin Azumi to threaten intervention. "I will not rule out any measures and I will take decisive steps when it is deemed necessary." That line could have been lifted straight from Bernanke's press conference. Do both own a copy of Central Planning-speak for Dummies?

    This, on the other hand, is so good it doesn't make any sense:

    Sep Reuters/UofM Consumer Sentiment79.2 vs. 73.5 expected and 74.3 prior.

    More on Consumer Sentiment: Importantly, according to the report authors, the large gain was evenly split between the first and second halves of the month, suggesting continued gains into September. Panic hits the bond pits thanks to a combination of a Fed adding stimulus to an economy maybe not needing it. The long bond yield +13 bps to 3.06%. TLT -2.6%.

    I guess it's Obama by a landslide…

    We have plenty of bullish plays from the morning Alert and that should tide us over until next week.  AAPL hit our $695 goal, now we'll see if they can hold it.  GOOG used to be 10x AAPL ($850 to $85) just 4 years ago, not they are both around $700!

     At the open: Dow +0.26% to 13575. S&P +0.25% to 1464. Nasdaq +0.35% to 3167.
    Treasurys: 30-year -1.16%. 10-yr -0.5%. 5-yr -0.1%.
    Commodities: Crude +1.18% to $99.47. Gold +0.14% to $1772.05.
    Currencies: Euro +0.89% vs. dollar. Yen +0.87%. Pound -0.4%.

    10:00 AM On the hour: Dow +0.43%. 10-yr -0.67%. Euro +1.17%vs. dollar. Crude +1.31% to $99.6. Gold +0.24% to $1773.75.

    Market preview: Are all-time highs next for stocks? Equities look to open higher in a post-Fed glow, as S&P futures+0.3% but off earlier gains following the release of retail sales andconsumer inflation data. European and Asian markets rallied overnight, gold skied to a six-month high, and the euro rose to a four-month high vs. the dollar. Still ahead: consumer sentiment, business inventories.

    "Ben Bernanke is a modest man. Yesterday's move was an immodest move," says former Fed Governor Warsh, appearing on CNBC and describing what he heard yesterday as "QE forever."

    Treasurys continue to get punished by the Fed, the 10-year note yield up 11 basis points to 1.83%. So much for Operation Twist – of which the stated goal is to lower long-term rates. Those who believe in the omniscience of the Fed will point to rising long-term rates as proving the QE announcement is already working. The FOMC should have done this months ago!

    The dollar continues a big move lower following the Fed's open-ended QE announcement and Bernanke's anything it takes as long as it takes press conference. The euro +1% to $1.3116, the aussie +0.5% to $1.06 – neither of those handles have been seen for months. The loonie +0.4% to $1.0367, a 2012 high.

    S&P futures +0.25%, giving up some premarket gains following the retail sales and CPI reports. Higher prices at the pump (absent wage growth) just suck consumer dollars from spending elsewhere. Backing out gasoline and autos, retail sales rose just 0.1%. (full report, .pdf)

    July Business Inventories: +0.8% to $1,592.0B vs. +0.5% expected and +0.1% prior. Sales +0.9% to $1,240.6B. Inventory/sales ratio was 1.28. 

    The good times should stay rolling for the mortgage REIT industry, says Barron's, as QE3 will continue to make the business of borrowing short to lend long a good one. Two perhaps less-followed mREITs mentioned are AG Mortgage (MITT) and MFA Financial (MFA). ETFs: MORTREMAGNC +0.5%NLY +0.4% premarket.

    "(QE3) will create the potential for renewed influx of capital into Hong Kong … We have to stand ready for it," says the state's central bank chief Norman Chan. The bank last night immediately moved to tighten mortgage lending standards and fiscal authorities claim to be at-the-ready will more property curbs.  The Hang Seng+2.8%.

    China's weakening economy hasn't prompted the huge layoffs that occurred in previous slowdowns. Explanations include: the economy is not doing too badly; the service sector is able to take up the slack; the larger size of the economy enables it to better withstand the slowdown; and companies recognized that they cut jobs too quickly in the global crisis, when 20M factory workers were fired. 

    Gold bugs hoping to wake up to $1,800/oz. will be disappointed as the metal fails to follow through thus far on its big Fed-induced rally. At $1,772, gold is about unchanged on the session and remains right at its 2012 high.

    Coal names continue to climb higher in premarket trading, adding to yesterday's big gainsJRCC +5.1%ACI +4.2%ANR+4%YZC +3%WLT +2.9%BTU +1.4%.

    Japan's government says it will phase out nuclear power by the 2030s, marking a major policy shift and the first formal decision to retreat from atomic energy since the Fukushima disaster 18 months ago. Japan aims to triple the share of renewable power to 30% of its energy mix, but it is sure to remain a top importer of oil, coal and gas for the foreseeable future.

    Ford (F) says it’s cutting consumption of rare earths used in its hybrid and electric cars by 500K lbs./year and will save hundreds of dollars per car in the process. But shares of rare-earth leader Molycorp (MCP +5.6%) shoot higher anyway, adding to gains a day after China announced a 40% cut in the number of permits to mine rare earths. REE +5.7%AVL +4.5%.

    Microsoft (MSFT) is handing out free Surface tablets, Windows Phone 8 devices, and Windows 8 PCs to its 90K+ employees in an effort to stoke interest in its latest products. Separately, Microsoft confirms the Windows RT version of Office 2013 will be provided for free, and will arrive at some point between November and January. But the company also cautions it will lack some of the advanced features found on the Windows 8 Pro version of Office won't be included.

    Apple (AAPL) may have sold out of its initial stock of iPhone 5s just an hour after the company began accepting pre-orders for the smartphone on its Web site today. The order page initially said delivery would be on the device's launch date of next Friday, but then it said that the handset would be available to ship in two weeks.

  39. stjeanluc – My money has no passport….  Buy Real Estate….

  40. Morning All – there goes another US embassy.

  41. LIFE/morx…..well, the trend is your friend.  $50 is OH resistance…but when in doubt, sell 1/2, no?

  42. Actually German embassy in Sudan being attacked – WTF?

    But Sudan has criticized Germany for allowing a protest last month by right-wing activists carrying a caricatures of the Prophet Mohammad and for Chancellor Angela Merkel giving an award in 2010 to a Danish cartoonist who depicted the Prophet in 2005, triggering demonstrations across the Islamic world.

  43. Pharm, thanks for the explanation.  I was pretty sure I understood but wanted to make sure. 

  44. Pharm/food prices, your getting much less than you used to. Next time you go out to eat, take a look at your portions. My damn shower loofah is half the size it was a month ago.

    Bernanke is insane, I was all for QE last August, things in Europe must be deteriorating quickly or _______, you fill in the blank, shouldn't be too hard.

    @Samz, Bernanke just put the gun to his own head.

  45. What is more worrisome is:

    Tensions between the Asian giants have flared anew after the Japanese government bought the islands from their private Japanese owners this week. The uninhabited islands, claimed by both countries as well as Taiwan, have become a rallying point for nationalists on both sides.

    Here is a map of China's territorial claims:

    Seems a tad aggressive…

  46. AAPL/Lflan – Because it was $85 at the lows, not $685 but, once we crack $700, it will be time for some upside playing for $800 for sure. 

    Thanks Rain.  

    Oh and thanks so much for the portfolio updates last night StJ!

    Faber/Rogue – Why would Bernanke resign?  The job of the Fed Chairman is to enrich the member banks (top 1%, of course), not to help the American people.  That's why you get all that hemming and hawing from Bernanke when he's asked how this program will actually help the man on the street – not at all if it isn't Wall Street.  That's why the Fed is so brilliant – even people who should know better think they are there to help the American people when nothing can be further from the truth.

    Forever/Rogue — Those are all 2013 problems, for now, it's more than enough to get us through the year and, with an average hold time on stocks of 23 seconds – I think that's plenty.  Sure down the road it just puts us into an unwinnable situation but – that's down the road.  Once we get past next week I'll be getting very confident going long. 

    Inflation/Pharm – Ain't no stopping now…

    Food/Rogue – Good point, this will spin out of control quickly – same as 2008.

    14,500/Pharm – Well, here we are.  And KFT out, UNH in today is interesting.

    SCO (and all $25KP)/Villa – We are pretty much in neutral now and I like that into the weekend,  Next week we will adjust or kill more positions. 




  47. but Phil says to scale in, only buying a quarter. how can i sell half when i only bought a quarter?

  48. For a bunch of guys who are probably making money today you sure are a humorless bunch!!
    Here, kustomz, try to smile:
    To quantify the impact of weight gain or weight loss on health care costs.
    Employees completing at least two health risk assessments during 2002 to 2008 were classified as adding, losing, or staying at high/low risk for each of the nine health risks including overweight and obesity. Models for each risk were used to compare cost trends by controlling for employee characteristics.
    Employees who developed high risk for obesity (n = 405) experienced 9.9% points higher annual cost increases (95% confidence interval: 3.0%-16.8%) than those who remained at lower risk (n = 8015). Employees who moved from high to lower risk for obesity (n = 384), experienced annual cost increases that were 2.3% points lower (95% confidence interval: -7.4% to 2.8%) than those who remained high risk (n = 1699).

  49. VIX green.

  50. 1020…and farmland….u can take me there in your RTV

  51. Portions/Kustomz – Hidden inflation is very nasty,

    Selling half/Morx – Then it's an eighth.  I remember when stocks traded in eighths….

    VIX/Rain – That's odd.  I wonder if we finally found a bottom.

    XLF rejected at $16.50.  AAPL at $695 so far. 

    Dollar bounced off 78.7 and back at 79.

  52. stjean/China    Can we call it "Thrilla in Manila – part deux"?
    Seriously, You have a problem with Japan, you'll have a problem with US……

  53. Sweet Ride Pharm!   :)

  54. newt..sounds like you might have entered that AAPL 675/700 Sept spread after I posted this a.m.   I got in that spread yesterday for 14.86/3.60 or  11.26.  It's now at  21.92/6.35 or 15.57, so up almost 40%, but another  9.43 it could go.  However…..700 could well be a sticking point for AAPL, and after some thought over the weekend, it could even pull back in the short term.   So the safe thing to do is take your one day profit of another 40% on AAPL by closing the spread, then we go on from there.  In fact, I just closed mine. 

  55. These high oil prices don't seem to be helping RIG…. What's the deal there?

  56. Capitulation alert – I just closed all my short positions.

  57. Just like taking candy from a baby newt….

  58. FLAN: YEA!  I entered the 680/710 at $13.7-  shutting it down now.

  59. phil,
    tks for the fas reset…….
    i have an old income gdx bcs jan 14  40-55.
    would like to monetize the 40 and was thinking of rolling the 40 to mar 53…then see where we are.
    i dont want to pay the extra 10$ in prem on the 55…..
    any suggestions…………tks

  60. DJI vol 53M

  61. Zmoney, I like this idea, your forced to fight a much larger opponent for all your meals. Not sure it will bring health care costs down but, you'll only get what you deserve.

  62. Phil, you like doing some option plays on shorting oil into close? They have 7 days to roll TONS of contracts right? Figure monday or tuesday things MAY calm down a bit? Maybe the President decides to release some more of the strategic reserve?

  63. In 8 trading sessions the Euro has gained a full dime against the dollar - 

  64. Hi Phil
    Couple of questions?
    Considering that QE3 has been done, what do you think of getting into long FCX trade. If yes, could please recommend one?
    Also, I would really appreciate your opinion on USD with respect to AUD in the short and long term. Do you think that USD will be considerably weaker as compared to AUD. I have some money in AUD and need to decide whether to convert to USD now or wait in the hope that USD goes lower against AUD.
    Thanks for your help,

  65. Virtual short strangle portfolio updates – For SPX, I'm looking to flip some SPX Sep 1485 callers to Sep putters.  Some of the SPX 1500 callers can be flipped now as it's lower value.  But as soon as I typed this email, the market is retracing, so let's wait for better pricing.  The escape route to October is still wide open.

  66. An update on the OEXA200R indicator:

    Still climbing.

  67. lflan
    what's your thought about pcln ?, it seems it's going to close the gap….

  68. Chinese territory/Stjean: That map you put up is that is just the southern territory China is claiming at the moment.    It also claims the waters by Japan and Korea to the Northeast,  and it claims Taiwan as a rebel province of China.
    Basically any piece of land or sea that China had some sort of territorial claim (perceived or true) at some point in China's thousands of years of history, basically rightfully belongs to China, according to China. 

  69. TZA BCS Jan13 15/22 in for 1.69-- is it a good idea to adjust this now?  If so what / how should I look at it?

  70. Peter – Looking at SPX I see that the Sept 1500 calls are around $1.20 but the Sept Quarterlies are over 3.50 (average). I guess another option (no pun intended)…. You could buy another 25 points and go to 1525 for 8 days with these prices. But OI is much lower so spreads might be bigger.

  71. Euro – sorry that was 8 weeks – not 8 days for the dime move – forgot I had a weekly chart up

  72. Claims / China – In this case France also claims Spain (an 1809 claim, Germany 1804-1812, Northern Italy 1798-1814, and many others). German could claim all of Western Europe and 1/2 of Russia. Etc…. Just ridiculous. 

  73. stjeanluc, yeah, agreed!  There are several possibilities when we look outside September.  The shorts were totally squeezed this morning, so the market is retracing to fill some air pockets.

  74. stjean: Unfortunately, China and the Chinese govt. in particular doesn't give a **** what you think and it never will.

  75. Phil:
    Could you suggest an S&P 500 hedge for about 5-10k in long positions (mostly Jan'13 BCS, and short puts dated Jan'14).  Is SDS my only option?

  76. St Jean – Or Greece/Italy/Mongolia could claim most of the world?

  77. stjean/claims   Exactly.  I hear the British have claimed a few things as well…..

  78. Stj:  "Vive le Quebec livre!"  [DeGaulle]

  79. Burritos not participating today.

  80. kinki/****  It don't matter…..As long as we spend half our GDP on "offense"……

  81. Claims / Jrom – I put a limit at 1000 year old claims… 

  82. …..let's ask romney what he thinks….lol…..

  83. China/Kinkistyle – you speak truth, kinki – China is afraid that when N. Korea collapses, a reunified Korea could include full former Korean territories, which do not stop anywhere near the present Apnok/Yalu River border:

  84. Waiting for the VIX to get so low that they need to do a reverse split on it.

  85. i just got a call from a headhunter offering me a job as US ambassador to Tunisia…odd

  86. Reverse Split / Rustle – Waiting for the VXX reverse-split so we can short it!

  87. Did you contribute to the Romney campaign Angel   :-)

  88. marc faber// dreadful track record…dreadful sounding voice…dreadful little pony tail..why he is quoted so widely is a mystery to me as is jimmy rogers
     multiple college campuses here being evacuated on bomb threats

  89. Romney apologizes to Muslims?

    “I think the whole film is a terrible idea,” he said. “I think him making it, promoting it showing it is disrespectful to people of other faiths. I don’t think that should happen. I think people should have the common courtesy and judgment —- the good judgment — not to be — not to offend other peoples’ faiths. It’s a very bad thing, I think, this guy’s doing.”

  90. War on China/1020:  You know, I think St. Ben of Bernanke might be our greatest warrior in our war with China. His inflationary policies are very damaging to China's economy.
    Part of the reason why I think China is rattling the sabre so hard recently is because $100 oil is forcing them to look for cheaper local sources of oil and simultaneously they are trying to quell internal civil unrest by focusing their attention on "supposed" foreign threats to their sovereignty.  
    Its a movie we've all seen before.

  91. Angel:  Tripoli to Tunis is an overnight on a fast boat.  Not to say you aren't eminently qualified, but the usual ambassadorial suspects must be a little gun shy this week.

  92. why is DOW lagging so much?

  93. Gun shy / Zero – No pun intended I am sure….

  94. I don't know about these guys:

    HP bet big on the smartphone world when it purchased Palm, but the company fell flat on its face and webOS failed to take off. The reasons for the failure are numerous, but the new CEO Meg Whitman is smart enough to realize it can't simply abandon the market entirely. In an interview with Fox Business, she said that HP "ultimately has to offer a smartphone." Though she was willing to acknowledge that the company is "working on this," she would not divulge too many details about its mobile plans. Whether or not webOS may rise from the ashes as a largely community-powered platform remains to be seen, but we wouldn't be shocked to see HP pivot towards its longtime partner Microsoft, and release a Windows Phone 8 device. Perhaps the best glimmer of hope for the former Palm system was Meg's focus on developing markets. She rightly points out that, in some parts of the world, the first and only "computer" a person may own is a smartphone — and reaching that audience is essential to Hewlett-Packard's success. Going back to the webOS well (with its open source support) would allow the company to save a few dollars on the cost of a new handset. Check out the video after the break for the full quotes in context.

    They has a great system with webOS, then they dump it and now they want to come back to the table in face of the competition in that market. They can't dump another $1 Bn I think….

  95. RIG/StJ – I was looking at them last night.  They are still held back by potential liabilities on a couple of spills.  Unlike BP, their cash-flow is not so tremendous that it makes any fine a joke.  Also, limited upside to new wells as we've had a multi-year build-out and most big oil cos are cutting back on capital spending (ie rigs) to improve their bottom line while demand is low.

    GDX/Mill – I'd cash the $40s for $14.25 and buy the 2014 $55/70 bull call spread for $4.60 so you get about $10 off the tale and your Jan caller is well-covered.  If you can't leave the "naked" Jan $55 caller, then you can just roll to the 2014 $57s for $7.20 and you are still getting half off the table plus whatever is left when the caller expires (and if GDX goes over $57, you can just roll the short $55s to another vertical – currently the 2014 $70s are the same $3.40.

    Volume/Rain – Thanks, so busier than yesterday already,

    Oil/Jrom – I like it but something may blow up over the weekend with all these embassy attacks and Iran rhetoric.  DUG next week $19 calls are just .30 with DUG at $18.88 and down .67 today so a fantastic play on oil collapsing next week but – keep in mind – very risky.

    Dime/Samz – That's about 8% of our buying power gone in two weeks – Kudos to Bernanke, that has to be a record.

    FCX/Gandhjo – I think the China overhang of copper inventories makes FCX too dangerous.  If they were lower maybe but they already moved from $32 (where we like them) to $43 so it's a bit too chasey here.  I think AUD or CAD are good places to keep money.  They are net exporters and have small populations (so not too much safety net stress) and not too much debt.  

    TZA/Newt – I want to wait until next week to make those decisions.  A lot can happen between now and Jan and not much of it will likely occur between now and next Friday so no reason to rush a decision.  

    SDS/DC – Not only but probably best.  Assuming you would be most harmed by the long puts, you can pick up the SDS 2014 $14/22 bull call spread for $1 and that kicks in with a 5% drop in the S&P and pays you 8:1 in a real crash.  Generally you want to hedge about half your expected loss so with $10K and a 20% drop figure you lose $2K and can more than offset it with 3 spreads at $300.  On the way down, you can always add more or stop out some longs to balance out.

    KFC torched/1020 – Now THAT is an act of war!

    Tunisia/Angel – Don't forget to write (and duck).

    Romney/StJ  - On now HE'S apologizing after saying Obama should never apologize for our first amendment freedoms – what a convictionless tool he is!  

    China/Kinki – And now we have a new guy coming in….

    Dow/Pat – Wow, some people are never satisfied – it's up almost 1,000 for August.   Also, the safety stocks in the Dow are slowing it down now as people want more aggressive exposures. 

  96. Phil/Dow,
    "the safety stocks in the Dow are slowing it down now as people want more aggressive exposures." – Thanks for the clarification.

  97. TZA / Phil, Pharm, stj
    I'd appreciate thoughts on getting into TZA at this stage for the longer term – 3 to 6 months, and selling calls on it. Is this an instrument like VXX that has significant time decay that would just make this an unviable position, or is there a chance that this could pay off?

  98. Phil
    FAS OCT108/120 should i cover  ?
    do you think there is more up side ?

  99. You have to be bullish now…

    This is the same guy who with Kudlow was selling stocks when Clinton got in, bought in when Bush was elected and probably sold in Jan 2009. The perfect contrarian indicator so far. That these guys are still on TV is a mystery to me!

  100. seriously lets turn the filmaker over to the MB it will discourage further cinematic antics while promoting the wonderful fog bomb of idealogical censorship that runs so rampant in the world press today.

  101. TZA / sank – All these 3x ETF have decay built in so long term positions have to be weight in against that factor. On the other hand, a quick correction will be reflected 3x so it's possible to do well. But I am leery of getting in for the long term…

  102. DJI vol 73M, looks like we'll get a volume day but the churn doesn't make it all that much more interesting.  All the gains game in the first hour.
    Fix finally falling back into alignment.

  103. That's VIX not FIX, although the VIX is FIXED.

  104. Romney's Convictions / Phil – He does have convictions but they are subject to quantum mechanics….

  105. oh boy, TLT behaving like it supposed to. Somebody is going to be making some money now! 8)

  106. sank/ TZA -
    Do not buy TZA for a long term position. You may get lucky but it will be luck. 

  107. Toyota has finally outdone itself, behold, The Prius Solution
    All in on TM!

  108. stj, samz,
    Thanks for the feedback.

  109. Pat - been wondering that myself. Maybe the index isn't broad enough. T, VZ, MRK and PFE are all off nearly 2 points

  110. Phil – my brother-in-law director is out of town for PSW-LV2.0 weekend. Sorry! But I still think a video of some sort covering the Sunday topics would be cool.

  111. Dear Phil,
    These Income Portfolio-type questions relate to owning stocks that pay dividends (by buying shares and writing covered calls, and perhaps shorting puts on the companies as well) as we used to have some of in the Income Portfolio from a couple of iterations ago.
    1) How do you feel presently about some of the dividend-paying stocks which used to be owned in the Income Portfolio (for example, NLY and FTR)?
    2) If you are especially keen on financials after yesterday how do you feel about some of the bank stock preferreds or commercial REITs (for example, NRF or OLP) for yield?
    3) Do you still prefer RIG over SDRL?
    4) They have run up a lot but what do you think about the energy infrastructure MLPs for yield (for example, KMP, EPD, MWE) (on which short calls and short puts can also be written)?
    Thank you.
    Best wishes,

  112. phil,
    …i think there was error……..
    i tried to extrapolate but not there yet so i have to come back to you………….
    i dont own the jan 40 but the jan 14 40-55 bcs and want to monetize the jan 14 40 (16.65) vs the prem in the 55,,,,,,,,,,,,

  113. Phil,
    I know that you are not a fan of GLD as an investment and prefer ABX to the metal, but what about selling puts on GLD to take advantage of the QE fueled inflationary move in gold? Jan,2013 150s (1.07) or 155 (1.73).

  114. Proof positive that QEForever isn't doing anything to help the population at large and the market knows it:  V (personal spending) and NUE (steel) are both in the red today.  So people aren't going to be spending and nothing is going to be built as a result of the Fed actions.  Solid work Fed governors…solid work.

  115. chuckered….it only makes those with money buy hard assets (real estate, etc) with debt.  They are the only ones that have the ability and credit to be able to finance those 'income' earners that will be the inflation hedge.  It continues to be a transfer tax up the income scale.

  116. Pharm – Agree 100%.  If you listen to Ben's press conference when asked about how his policies are unfair to savers, he pretty much says tough luck and if anything, they can buy stocks.  I can't see how history will be kind to him. 

  117. Tunisia/Angel  - US embassy over these now on fire.  Whoever is offering you position is not doing you any favors.

    HPQ/StJ – AAPL has everyone playing defense not.

    TZA/Sank – The decay is not insurmountable.  With TZA at $13.50, you can pick  up the Jan $10/14 bull call spread for $1.50 and, if TZA goes lower, you can sell the $10 puts (now .25) for $1 (price of the $12 puts) and either keep the cheap protection or roll to improve.  

    FAS/QC – I think we're just in the first stage of the financials moving up.  $16.50 was my target for about half this much QE.  At $12, the calls are at full value and the next move is to pick up something like the Jan $124/137 bull call spread at $4 and THEN we have a buffer that allos us to stop out the Oct $108s as its cheaper than buying back the Oct $120s (now $5.30) and has the possibility of a nice double win.

    Luskin/StJ – I think if we round up Kudlow and all of his regular guests and stick them in a Tunisian embassy – we'd all be better off.

    Hey, does anyone remember when Americans were rioting to block the building of a Mosque in Manhattan – imagine how that crowd of morons looked to – well, pretty much everyone else in the World…  Just considering who is without sin before casting stones. 

    Fix, VIX/Rain – Yep, same thing.

    LOL StJ – or, possibly, LOL.

    TLT/BDC – Man, we missed that short this time.  Almost time to go long.  As to the video thing.  I don't care if someone does it but I sure as hell am not going to start worrying about some production.

    Dividend payers/Opes – I think NLY may be in good shape along with AGNC going forward, those are going to be worth taking a closer look at.  FTR has gotten away and I would not chase it at this point.  I'll show you next week why we can do better making our own dividends rather than tying the money up in preferreds – there's a risk/reward factor in that you have a lot of trouble using options to cover big dividend payers.  RIG we discussed earlier, I don't like them or the space right now other than a general play on OIH.  The infrastucture plays are worth a look but similar issues with dividend payers and coverage but also will be worth a closer look. 

    2014/Mill – Oh, I though this Jan.  That's the problem with these spreads, they really don't pay off so early in the cycle.  You have $16.50 with $13.50 of intrinsic value but, if you roll up, you shift to mainly premium you'll be burning off.  You can pull your $16.50 and buy a $57/63 bull call spread for $2 to cover and then you get $14.50 off the table but you'll have to add more if GDX keeps going higher.  I think its a bit premature to call a top and maybe if you wait a month, the 2015s will come out and then you'll have some more interesting options.  

    GLD/8800 – I'd wait for a dollar-bouncing event or a general crash that gives you a better pay-off than that.  Even with PM, that's a lot of margin just to hopefully collect $1.73 if GLD doesn't drop 10% in 4 months. 

  118. Nothing/Chuck – That's what I was saying early this morning.  This is not a game changer – just a market attitude changer but Oct earnings could be a very cold slap of reality for the markets.

    And what Pharm and Ink said.

    The trick now is to see how the markets handle an adverse event.  Then we'll get more of a feel for how far up Bernanke has moved the support line.  

  119. smala/  PCLN…… I wouldn't play it right now.  Let this one get as high as it can get, then we'll short it right before next earnings report.  Everyone will have forgotten what they need to know about the last report by then and we can cash in on it again.   

  120. FWIW—I have been playing long  /cl and/ or /rb (if oil has been strong during the day) just before the close and it has been working (until it does not)

  121. Ron/Phil,

    I still have my animal health plan if you want to throw in 1M for a 10% ownership.  The drug works for atopic derm in dogs, and also will work for seasonal allergies, asthma, and maybe COPD in animals.

    Funds would be used for drug product, Tox studies and a few POC studies.

    Otherwise, i like the pet cemetery idea!


  122. DJI vol 87.6M

  123. Pharm — maybe you should use the pet cemetery as a hedge for the tox study :)

  124. Phil / Can you explain the TBT / TLT thing? Based on QE3, should we be long one and short the other? Thx.

  125. The Fed's Raskin just said that most unemployment has been cyclical.  These guys are truly insane!!

  126. Actually, maybe Raskin is right.  They need to blow another bubble so we can have another boom/bust cycle. 

  127. Iflan – you on the board?

  128. yes nicha, studying the MoMos.

  129. What do you think of next week 680/685 BCS for $3 – $3.25?

  130. On September 13, 2012, at 12:25:27, the December 2012 eMini contract experienced an evaporation of liquidity at such an alarming rate that it produced one of the most disturbing charts on market stability we have ever seen. Basically, about 80% of the orders resting in the book vanished in a second. To be sure, liquidity before major news events always dries up beginning 1 to 2 minutes before the scheduled time, but always, at, a, gradual, rate. This event tells us that either one firm controls 80% of this contract, or that algorithms have become dangerously susceptible to herd behavior and can be triggered to stampede in a heartbeat.

    See for visuals.

  131. Inkarri: Touche.   That's why cycles have been all about in the 21st century.

  132. nicha/AAPL I presume/  I'm thinking in terms of maybe a calendar spread.  AAPL may have some trouble at 700.  How can we design a calendar to take advantage of this? 

  133. Volcano cutting loose in Guatemala, biggest eruption in decades.

  134. Iflan – Oct or Jan?

  135. Iflan – Oct 700 @ 18.10, selling next week 695 @ 7.60…delta neutral.

  136. Thinking aloud…..Perhaps buying October calls, selling September calls.  Do we need a pullback first?  Or maybe it never comes. 

  137. Phil, or others who know:
    I'm new to the board and have a question.     
    In the past there was a guy that went by JRW who daytraded and posted his trades on the board.  Is he on a temporary 'vacation' or has he permanently left the board?  – if permanent, do you know why?  And does he post his trades anywhere else on the web now?   

  138. Iflan – think about what AAPL reports next week on how many phone they sold over the weekend! Maybe that pull back doesn't come…

  139. One thing you have to do is…when you've made a good chunk of change on something, don't get to feeling you can just keep doing it over the short term.  But AAPL isn't really up that much.  5 days ago it was  680, now only 690, so it hasn't really taken off.  It might blow right by 700.  That's why if you do a calendar it should be a fractional calendar, maybe buy 2 Octobers for every sold September call.

  140. FLan- AAPL calendar spread= i have been thinking of buying OCt calls and selling weeklies. Just not sure how to pick the strikes.

  141. I think the iPhones will blow off the shelves.

  142. Stay tuned…..

  143. FLAN: Can we layer in pick a few strikes and keep the number of contracts balanced? $685, $690, $695, $700 one spread of each

  144. Is it me or is this a poor follow through rally?  maybe we go back and test S&P 1440 as support before moving higher…

  145.  Virtual MoMo trade :   BTO  6 Oct 700 calls for 18.30.   Scaling into this trade

  146. newt….you could but then it gets too complex.  Needs to be kept simple. 

  147. FLAN- Got it.

  148. I had a couple of residual hopeless out of the money Sept.22 Euro 120 puts, no bids  for a week or two.  All of a sudden they're up 50% --someone wants 'em, and no one is selling.  I wonder why.

  149. newt…Common trading error is making things too complex.  Make things simple.  Trade just a few stocks.  Just one or two strikes.  Then you can lie in bed in the dark at night and review all your positions in your head in one minute. 

  150. Iflan/AAPL – so the plan is to sell weekly 700 calls against the long Oct 700 until it breaks through?  Then what…cover that week's caller and let the Oct run, or, exercise to cover…I am new to calendar spreads…can wait until AH…

  151. Apple sold out of iPhone for the launch week, only way to get them now is waiting in a line that morning… otherwise pre-orders a for a week after the launch. Might put the international launch on delay…

  152. AVEO – buying OCT 12.5/15 BCS and selling the 10 Ps for 15c credit…..craps roll, but they are back on the march up for their approval in November.

  153. Scaling in important.  Also helps to keep number of options divisible by 2 and 3.  This lets you scale in and out in 1/2 s and 1/3s and to cover the same fractions.  Good reasons for this but better for a weekend digression. 

  154. btw—on the oil futures I meant into the NYMEX close

  155. Flan- thanks.

  156. MoMo trade:   BTO 12 more AAPL Oct 700s for 18.80

  157. JRW just sort of evaporated from the board one day. Not really sure where he went. 

  158. Seems that the stocks with a higher earnings 'yield' are being sold…but those with 'growth' are being bought….T, VZ, drugs stocks, utilities, etc.

  159. JRW…I wish I knew where he went.   He was quite a good trader, and expert really on TNA/TZA. 

  160. BD5555 – JRW has left the site, and he has no 'website'.  Shadow has a pretty good handle on the lines of JRWs, so you could ask him for those. The write up is also good on how JRW did his thing.

  161. Lflan I still can't figure out how you know when to pull the trigger when you do on GMCR, AAPL, etc. you explained GMCR the other day(last Fri maybe) but what's your equivalent "checklist" for putting trades into the Momo port? Anything empirical that you can describe would be great, but I imagine it's not a system per se like JRW had. 
    Weekend discussion obviously..

  162. KLAC – Dec 55 C for 1.60.  More upside from them….

  163. Good call Savi. 

    $1M/Pharm – We're not there yet, unfortunately, just establishing a track record first.  

    TLT/Amalfi – TBT is a terrible ETF, we have learned, it's better to just short TLT when it's near $130 and then we go long around $115 but, with QE, it's hard to say what the new range is.

    Raskin/Ink – This is one hell of a cycle then….

    Algos/Rain – In this low-volume market, it's a recipe for disaster…

    JRW/BD555 – Last I heard he was ill and taking some time off.  

    Follow-through/Cdel – I think I'm not the only one who would rather wait and see what happens next week.  There was a 4% pullback after QE2 was announced as the pre run-up was a bit overdone with no pullback – just like this rally.

    Performance on action/Ink – Thanks:

    Euro puts/ZZ – I think the BOJ is serious about Yenervention next week.   

  164. DJI vol 96M

  165. BD555
    JRW last reported from France and was coming home. He has contacted Phil and is sick, every day that goes by seems to show he is very sick. I hope he returns because he knew much more than day trades. I have also fallen to bad health and currently suspended day trading because I can't stay in front of the screen all day. I would be willing to point out where he would have made trades and the signals he watched, the confuence lines, and hopfully by next month get back to it myself.
    The system worked very well for me and was what I did best.
    What system do you trade on and what real time access do you have?

  166. Virtual MoMo port:   STO 18 next weekly AAPL 700s for 5.75

  167. We will buy back at least 6 of these covers before EOD.

  168. AAPL will either go up or down from here before EOD….up if significant people feel they might be left behind, down if significant profit-taking.   We will take some profits on this calender either way. 

  169. Thanks Phil

  170. Virtual Short Strangle portfolio updates:
    - The SPX Sep 1500 callers has come down to $1.05 (could be lower if VIX hasn't gone up), so buy back 5 Sep 1500 callers at $1.05 and sell 8 Sep 1380 putters at $50 each, netting a small credit.
    - We'll wait until next week to deal with the Sep 1485 callers.  If the market goes down, this caller would quickly go below $1 early next week.  As we can roll them to either Sep Quarterlys or October, we can afford to wait for more decay over the weekend (rate of decay is faster for Sep when the callers are OTM).
    - For RUT, buy back 5 RUT Sep 880 callers for $1.95, sell 7 RUT Oct 770 puts (yes puts) for $1.45, netting a small credit.  This is a bullish bet of course.  We'll deal with the rest next Monday or Tuesday.

  171. AAPL 700 weekly not filling- chase?

  172. newt….no. 

  173. K

  174. Egan just downgraded the US to -AA from AA.  What do those guys know anyway…

  175. Virtual MoMo….BTC  6 of the weekly covers on AAPL for 5.00

  176. AH Question for Anyone:
    Am interested in anyone's input on their favorite (or least favorite) security (anti-virus) software.  I need to be able to trade in realtime, and follow PSW.  Am also confused about what's a virus, malware, rootkit, etc.  I want to be protected from malicious software, but not be the sucker who pays too much for TOO much protection.  Am also aware that there are some free products (AVG, for eg.) which might be just fine.  Looking for the best value without overkill.  I do not game, nor do I download from any site that looks suspicious to me.  Many thanks…

  177. 96M/Rain – Thanks, sounds like it really petered out from this morning.

    Seems like selling pressure mounting into close.

  178. laddoo
    Norton 360 Premier seems to work for me

  179. SDS Sept 13 Cs….36c.

  180. AVG…I use it Laddo…it is free and works fine..

  181. Virtual MoMo   BTC  4 more of the weekly covers on AAPL for 4.50

  182. Well, the market drops as soon as we threaten to be bullish in the portfolio!  For the virtual short strangle portfolios, you'd be getting better pricing now with the adjustments posted at 3:16PM.  Since I only adjusted a portion of the portfolios, I'm fine with the more expensive price for those spreads as that's a compromise we make regularly, in case the market goes up with a stick at the end of the day.

  183. laddoo  — Microsoft Security Essentials (free). The only time I've noticed it is when it blocks malicious website content or the occasional note that a scan hasn't been done in awhile.

  184. Phil/SPG
    My first question on the board, but has been enjoying learning along the way.
    My scan gives me SPG is a buy.  What is your opinion on this stock?  My bet is 155/160 credit Oct put vertical for $1.  Now it is 162+, with hope QE3 will help this type of real estate companies.

  185. Hey Phil, what are your thoughts on LQMT.
    I know it was mentioned as a super speculative possibly fun play, maybe a few months ago now. Any new thoughts on it? Apparently did a capital raise through private placement of $12.0 million in notes in july, they paid there first installment on 8/31 stock got hit, came back, but now back beneath that days low. 5 million-ish shares as there first installment to the 5 holders of the notes and looks like they could do that up to almost 37 million conversion shares. Would you even bother looking at it anymore as a long term maybe little lotto type play?
    They are in contract with apple for what looks like at least two more years but I doubt they got the best end of that negotiation. I'm sure you know all this and more. Should have probably just left it at the first sentence lol.  

  186. Laddoo – last I reasearched, Norton was the best.  I think the 360 includes backup services that I never used.  Package without it is a few bucks cheaper, and google for discount/rebate deals.
    Is Mr. Stick going to show up today?

  187. Virtual MoMo port:   BTC the remaining  8  AAPL weekly 700 covers for 4.75 each. 

  188. Laddoo/Antivirus,
    I agree with rainman on Microsoft Essentials, I use it for real-time protection.  To be on the safer side, I also have Malwarebyte and Superantispyware – both are free and I run scans every weekend.  Sounds like overkill, but nothing compared to the damage a virus or worm can cause!

  189. Laddo… I am with Pharm.  AVG Free is my antivirus software.  Works well.

  190. Since I'm bothering people
    Pharm what do you think about GALE. I have $1 oct calls that I'm in for free after a few ins and outs and sold puts. I'm sorta just looking to see if it gets some lift as a free play now. I have some idea on the technicals and it seems to be getting a little mention on a few websites so maybe it can sit over $2.00 and get some more momentum. Sorry if you've mentioned it again recently and I missed it. Thanks!!

  191. 11:49 AM Europe closes sharply higher as markets there catch up to yesterday's post-Fed U.S. rally. Stoxx 50 +2%, Germany +1.4%, France +2.3%, Italy +2.3%, Spain +2.7%, U.K. +1.7%. The euro continues to surge, +1.2% to $1.3145.

    1:00 PM On the hour: Dow +0.37%. 10-yr -0.74%. Euro +1.01% vs. dollar. Crude +0.49% to $98.79. Gold +0.2% to $1773.05.

    2:00 PM On the hour: Dow +0.31%. 10-yr -0.78%. Euro +0.93% vs. dollar. Crude +0.65% to $98.95. Gold +0.1% to $1771.35. 

    3:00 PM On the hour: Dow +0.35%. 10-yr -0.78%. Euro +0.96% vs. dollar. Crude +0.75% to $99.05. Gold -0.01% to $1769.35

    Egan-Jones downgrades its U.S. debt rating to AA- from AA. "Some market observers contend that a country issuing debt in its own currency can never default sine it can simply print," but Reinhart and Rogoff show 70 out of 320 defaults since 1800 have been on local currency public debt

    Stocks remain positive but well off early highs as ugly industrial production data reveal just how bad the U.S. economy remains – so bad that John Ryding of RDQ Economics thinks the results swayed the Fed’s decision to push all-out stimulus. Although the unwinding of "special factors" should help data in September, RDQ expects little improvement in underlying production trends 

    Maybe signalling the risk appetite needed for further gains (or a sign of froth), microcaps join small caps in leading the equity rally over the past month. Up 8.9%, the Russell Microcap Index (IWC) has outperformed the S&P 500 by 540 basis points, and taken the lead YTD by 290 basis points.

    Explain again why the Fed needs to support the MBS market? The spread between an index of MBS and Treasurys hits 91 basis points, the narrowest gap since at least 1984, according to Bloomberg. "A typical fundamental-value framework" is useless, says a portfolio manager. In today's monetary policy environment, one wonders what other assets the same could be said about.

    As Treasurys plummet (TLT -2.4%), inflation-protected bonds (TIP +0.5%) move in the opposite direction. Michael Gayed tracks the ratio of TIP to the 7-10 year Treasury ETF (IEF) as a way to gauge inflation expectations, and it's spiked higher of late, suggesting far higher inflation fears. 

    The ECRI Weekly Leading Index rises to 124.9 for the week ended Sept 7 from 124.1 previously (revised from 123.7). The annual growth rate rises to 2.1% from 1.4%. It's the highest level since August 2011 and one wonders if Lakshman Achuthan is pulling his recession call.

    More on Retail Sales: Discount stores continued to show a disturbing trend in August with the sub-sector showing negative Y/Y growth as it decelerated even further since the beginning of the year, according to data dug out by (RetailGeeks). Some analysts are pointing to the dual threat of an over-saturated market and mobile shopping as pesky threats to DGFDODLTR, and FIVE.

    Anti-Western protests continue to spread. Protesters have scaled the walls of the U.S. Embassy in Tunisia and replaced the American flag with a black flag. The Embassy is reportedly on fire. Earlier, the German and British Embassies in Sudan were rushed. The University of Texas orders its buildings be evacuated after a bomb threat from a caller claiming to be with Al-Qaeda.

    Something's up in the Spanish bond market, where yields are shooting higher, the 2-year +24 bps to 3.19%, the 10-year +18 bps to 5.81%. ECB bond purchases won't begin until Spain submits to a bailout, and Spain won't submit to a bailout as long as bond yields remain contained, ergo, another peripheral bond panic almost certainly lies ahead.

    The life insurance industry has its outlook cut to negative by Moody's thanks to the expectation (certainly reinforced in the last 24 hours) "that interest rates will remain in the low single digits for the next few years … continu(ing) to erode insurers' earnings and revenues." The Fed has one word for the insurers: Leverage.

    NYSE Euronext (NYX) will pay a $5M (not a typo) penalty to the SEC to settle charges technology issues at the exchange gave high-frequency traders stock-price data seconds ahead of the general public. Those who remember the 2010 "flash crash" recall waiting several seconds for updated price quotes. No worry – the HFT boys had the info in milliseconds.

    Caterpillar (CAT +2.9%) shares climb as CFO Mike DeWalt sees an improved selling season upcoming in China. CAT's long-term mining business is "favorable," DeWalt says, although miners are remaining cautious; construction is still "fairly depressed" with housing starts still poor despite some improvement. 

    Coal shares are on a roll - JRCC +11.4%ANR +7.2%,ACI +6.9%WLT +4.9%BTU +3.8% - but Paul Ausick reminds of the sector's long-running ailments: ANR is saddled with debt and its met coal business amounts to only 20%-25% of its shipments; JRCC’s met coal business is weak, and thermal coal prices aren’t rising very fast; ACI’s assets in Appalachia have been a drag.

    AK Steel (AKS -4.8%) is missing out on the QE-fueled rally in materials shares after warning of a larger than expected Q3 loss as it contends with lower average per-ton selling prices. AKS cited lower spot market prices for carbon steel products because of declining global economic conditions. Other steel names are posting strong gains: X +2.9%MT +6.9%STLD +4.6%

    Solar stocks aren't getting left out of today's Bernanke-fueled move into risk assets (TAN +2.4%) – First Solar (FSLR+8.3%) is leading the way. Yesterday, the Chinese governmentannounced solar investments will reach CNY250B ($39.5B) during its 2011-2015 5-year plan. The announcement was well-received by local manufacturers, but U.S. and E.U. regulators might be worried about the details.

    Oops!  Halliburton (HAL +3.1%) is searching for a seven-inch tube containing radioactive material that went missing in West Texas earlier this week. The tube is used in the measuring and evaluating of conditions within oil and gas wells; HAL warns the public not to touch or handle it. Shares are rising along with other energy and materials stocks in the post-Fed glow.

    When Elon Musk tweets, people listen. Or at least Tesla Motors (TSLA +2.8%) investors trying to figure out exactly how electric vehicles can ever go mainstream with their limited driving range limited might. In his latest, Musk writes that an event scheduled for Sept. 24 will unveil the "Supercharger" which will feel like "alien spaceships landed at highway rest stops." Perhaps, but maybe a little more grounded is the plan in the Czech Republic where EV stations are popping up at McDonald's conveniently located at highway exits.

    Recent Internet IPOs are staging a big rally. FB +4.6%.ZNGA +5%GRPN +7.4%LNKD +3.8%YELP +5.4%. A positive Raymond James report on Facebook's ad efforts could be helping, but it looks like short-covering is a major factor.

    "We have to ultimately offer a smartphone," H-P's (HPQ) Meg Whitman insists. Apparently the webOS fiasco and otherfailed smartphone efforts aren't enough to deter the company, which recently created a new Mobility division led by Nokia's former MeeGo OS chief. Whitman adds H-P has no interest in using BlackBerry 10 (RIMM) – are me-too Android and/or Windows Phone devices on the way? 

    Google Glass (GOOG) may be an unfinished product, but you can count David Pogue among its admirers. "If there’s anything at all as different and bold" as the iPhone and iPad on the way, "surely it’s Google Glass," says Pogue: He calls the display glasses "an absolutely astonishing feat of miniaturization and integration." and praises their touchpad controls and head-tracking ability. Google has said it doesn't plan to use Glass to push ads, and is looking to profit from hardware sales. (also)

    FCC docs turned up two more 4G spectrum bands - the 800 MHz. and 1900 MHz. bands – in the North American GSM version of the iPhone 5 (previous) in addition to the ones officially named by Apple. Their inclusion suggests spectrum-hungry AT&T (T) plans to launch 4G LTE services in those bands on top of the bands it has already promised to support. That, in turn, could be a sign Ma Bell is looking to ramp its 4G capex and/or acquire companies owning spectrum in those bands – could PCS or LEAP be targets?

     More on Stifel's downgrades of AT&T (T -1.9%) and Verizon (VZ -2.4%): While expecting the carriers will continue to "dominate the U.S. telecom sector," analyst Christopher King expects margins to get hit by iPhone 5 sales, which should carryhigher subsidies than sales of rival devices. King also suggests AT&T and Verizon "could be used as a near-term source of funds … as the QE3/risk-on trade becomes more prevalent." (VZ CFO comments)

    Apple (AAPL +1

  192. laddoo
    As rainman linked  security esentials is good and better than 99% of the pay ones. I will add that they all slow you responce time. As a day trader, BOT, and tick watcher even that slows to much for me. I use an old fav of free that is off until you scan. Spybot Search and Destroy, only download it through safer network many others cause unwanted problems. I fix computers and although it is hard to learn all it's features it is the only one that I have ever seen find and fix a real virus.

  193. Apple (
    AAPL +1.7%) and its suppliers are outperforming after the iPhone 5's initial stock apparently sold out less than an hour after pre-orders began. CRUS +7.1%SWKS +2.6%OVTI+1.9%TQNT +4.3%BRCM +1.7%. Thus far at least, the situation bears a resemblance to the 4S launch, with criticism about an "incremental" upgrade and other issues failing to prevent huge sales from occurring. And the iPhone 5 is definitely a bigger upgrade than the 4S.

    Three lunchtime reads:

    1) There's no longer a Bernanke put

    2) Pettis: China headed for 3-4% growth

    3) Energy: Will we see a big sell-off in the coming weeks?

  194. Laddo… I use norton 360 and have been really happy. I also use free Malwarebytes as well and def second wappler and recommend that

  195. iPhone 5 / Phil – GLW is also up 1.7% today… They should also benefit but they always seem to be the forgotten ones!

  196. Drops/Peter – That's why I moved to more like 50/50 until we see what sticks. 

    Welcome Range Trader!   I generally like SPG but haven't looked at them in a while.  Please remind me over the weekend and I'll be happy to look into them (along with some others we're thinking about).

    LQMT/Lmeirner – They will keep diluting until they pay off debts or announce a big deal so very annoying to treat as a hold but a fun stock to trade.  We'll see how low this round takes them but I like them in the teens. 

    OK – gotta run to a poker tournament – have a great weekend everyone.  I'll be in LA on Monday.

  197. Shooting star setup on SPY…although it is green….short term bearish.

  198. what is a good charting service to use?

  199. Pharm – I really hope you do something on TA at PSW meetup!

  200. GALE – they are good for a starter position.  Technology is one that I have been watching and we have invested in in the past.  Start small and be nimble.

  201. Thanks Phil!

  202. stjeanluc…..It looks complex on todays' trades but really not.  Bought (and keeping)  6   October AAPL 700 calls for 18.30 and 12 for 18.80…..Then sold to open 18 next weekly AAPL 700s for 5.75 and bought back all 18 for average 4.75.  
    So the 18 longs October 700 remain in the MoMo portfolio.   Thanks.  !!

  203. Thanks Pharm!

  204. Pharm — SDS Sept 13 Cs….36c… I jumped in at .34 for a fun…let's see what happens into OPEX next week.  This was a weak follow through so, why not.

  205. Norton has huge issues!
    It and a few other like mc fee fail to find and fix. People who think it is good have never been infected. Viruses are not much of a problem anyway, it is the spyware, malware and profile helpers that cause problems and because they are legal those pay programs do nothing but make you feel safe. Malwarebites has caused to many problems and like spybot only more beware of who you download through. Then there is the you really blew it Regi anything, right from microsoft. Many of these can't be deleted with out a format and reboot from disc loosing everything, sometimes you can rid them finding all remnants on all your discs before shutting off your system, and then you must be verry careful to only backup from before the problem occured. Take care and regularly remove old restore points when things work perfect. Quick detection and restore to a clean point will serve you better than about everything
    The only real fix for a serious infection is reboot from the original disc. I have never tossed a computer for these things or ever found one that could not be fixed. None of them really work. My best advice is get a trading computer and only trade on it. Do all mail, searches, links, and I mean everything on another computer, I use an old XP that has nothing saved to test all that is not known to be safe, like you use it, so I can just reboot, download the updates, and not care. 

  206. As with any security your never 100% safe and the speed at which things that can do harm are created or modified is always faster then the reactionary services used to protect you from them. Using a separate computer and being careful what you use it for is always a good idea.    

  207. AMZN is so annoying. I  lost like $1500 on them over the last 2 weeks. I hate that stock.

  208. shadow – AVGfree seems to work well for me on Windows. 

  209. New highs are on the way up…


    Remember right after Labor Day when we were waiting for Net New Highs to stop declining? Wow that feels like a century ago. Just a couple of days after we were complaining that the internals weren’t confirming the new highs in price, boom – net new highs start to breakout. Right on cue.

    At the time, we were worried that the divergence we were seeing was way too similar to what we saw in the Spring, just before the market corrected sharply. But, “no sir, not this time”, said Mr. Market. Take a look at the breakout in new highs just after our post that has certainly continued throughout this week.

  210. Laddoo/Antivirus – I also use and recommend AVG Free Edition.  One word of caution though, AVG Free, like many other "free" software products, will offer to install any number of add-ons from browser search bars, to who knows what else… you really don't want these clogging up your computer.  When you install, read each screen carefully and uncheck the add-ons.

    I also am a fan of (i have no commercial or other interest) which is a curated collection of free and commercial software, and is a handy place to download software.

  211. Shadow:  How's Kaspersky?  Seems to work fine, no issues this year that I've had it.  Purchased through BBY.

  212. Best advice when using computers is to make a user account that is not administrator and use that account. That's how I stopped my friends to come with computers full of malware and viruses every 3-4 months to me.
    Unless you install something you DON"T NEED administrator rights. If you use your computer with the default user (who is administrator btw) anything you get from internet will have administrator rights and do anything they want on your computer.

  213. FYI   Phil—if you like Thai food I hear that this small place called " Archi Thai Kitchen" in Vegas on W. Flamingo Rd is really good—It is supposedly not at all fancy , to say the least ,but supposed to have the best chicken satay --I am thinking of going there when I am there in Nov

  214. What a week!  I don't know about you guys, but I'm exhausted; Thank goodness for my new BFF's: TLT and TZA puts.   Despite being positioned for a pullback all week I think I've emerged unscathed.  I'm just hoping that CNBC runs a special about the uber-bullish market on Sunday night – then we could short at will.  It seems like everyone is convinced we're going up forever, even on the bearish blogs.

  215. ONVO – I walked through their labs this week….very interesting.  Small starter position.

  216. It's now Saturday, so I can, without giving too much offense, turn to American politics.  
    I will argue that, partisanship aside, this Presidential campaign is uniting commentators on both sides as arguably being the one of the most vapid and least informed on record — one of the most shatteringly trivialized exercises in ersatz leadership anyone under the age of 90 has witnessed in our country.  
     It is just a sham.  Romney's handlers are mostly concerned with ensuring that he says nothing of substance that might alienate these mythologized "swing" voters and lose an election that would otherwise go his way based on America's Dissatisfaction Index.  Obama's handlers are mostly focused on Obama continuing his 4 year record of saying nothing of substance publically on any topic whatsoever.  Neither one of them could manage a successful bake sale, much less the United States of America in deep recession and structural crisis.  They have neither a clear conceptual grasp of the economic and political complexities the country faces, nor the slightest trace of talent for defining a coherent set of responses from among the limited alternatives available. 
    The result is that both the Executive and Legislative branches of the U.S. Government have transferred leadership by default to a Ben Bernanke, mild-mannered academic who is Chairman of the Board of Governors of the Federal Reserve system, a Federal Agency overseeing the hybridized public/private Federal Reserve Banking system, which both is, and isn't, a federal instrumentality depending which of a complex of Supreme Court decisions is addressed. While one might legitimately debate what the Fed should properly be doing given our present straits,  most would agree that running the country for all practical purposes was never intended to be its principal role. 
     This is not a partisan issue.  Effective leadership never is.  So we can all wail about deadlocked Congressional processes,  polarized electorates, overdeveloped SuperPac muscle and undue corporate influence, but in the end this is all noise to conceal the tragedy that afflicts the country — that our democratic system has failed to produce adequate leadership at a critical moment in our national history.   
    Leadership comes down to putting a picture in people's minds and a boot in their ass.  Unfortunately, extraordinary leaders are rare, more born than made, and we don't have one right now.   So the entire country is consigned to watching the navel-gazing of a well-meaning professional bureaucrat as he reads and interprets economic tea leaves on national television, which is tantamount to having Napoleon or Wellington sitting on the top of a hill with a telescope,  five miles  removed from the  lines at Waterloo, counting casualties and cannon discharge rates and deciding whether sending in horse carriages laden with particular allocations of sandbags, raincoats, or field rations might turn the tide of  battle.    
    In consequence I fear we are facing a long war of attrition, which is inevitably the result of having dullards running a war.  It recalls the phrase used to described the British trench war effort in WW I with its appalling losses: "Lions led by Donkeys".  God bless America.

  217. zero – you could have saved yourself a little typing…."extraordinary leaders are rare, more born than made, and we don't have one right now" 
    'Nuff said.

  218. zeroxzero
    Well said but for myself I place most of the blame square on the shoulders of the electorate. When I chat with most of the people that I run into, on the subject of politics and economics I'm reminded of the movie "Dumb & Dumber".  We no longer teach civics in our schools and most of the press is as dumb as their readers/viewers.  Anyone who could be qualified to run but has a "turd in the closet" because they've learned from past mistakes has a almost no chance of being elected because of the media "grinder". 
    With respect to the two current candidates for the job of President, I think it's not so much that they don't possess leadership skills, it's more that they choose not to use/display them to avoid playing the role of Don Quixote. I fear leadership with details and the truth is akin to like they used to say in old England, "casting pearls before swine". 
    Appreciate your regular comments.

  219. Zero
    I still argue that the lack of leadership is the end result of the flawed two-party system we are currently stuck with.  They are so polarized now that any candidate is forced to carry forth the party-line for fear of being excorsized by one of the cowardly cheiftans that hide behind the puppet in front. This pushes the silly issues forward for the silly electorate to feel like they are really getting something when they really are getting nothing! How many people do you know where abortion is a big factor in their lives, or who question day to day how they will pay for contraception, or who are dying for another tax cut……(one could go on and on).
    It just seems to me that these two parties are a front for the real leaders behind the scenes who have all the incentive in the world to keep things the same because it benefits them greatly. They have a plan, but its fashioned for them; you aren't invited! In the mean time, we the people get to advance our skills at identifying who's right or who's left, who's liberal/conservative, who's fascist/socialist, blah, blah, blah.  Just random thoughts from one of the disgruntled sheeple.

  220. FT has an article by John Authers today, which has a chart of the S&P in gold since the 2007 market peak. I could not find the graphic in the website or I would have linked it, but we've essentially gone nowhere when the market is valued in gold since the crisis. If someone knows how to do that with stockcharts – I'd appreciate the help. But would encourage you to see the chart (article is OK too – link below).

  221. Rdn4
    I too, was leaning short before the FED but added longs(aapl,fas) late in the game and then (qcom/Iflan's) afterwards and recovered all of my losses. I don't think we are at the endgame yet. And I will be mostly balanced while leaning long. What the Bernanke did was extraordinary.  Who knows it might even work! In the meantime, it might be best to stick with the old adage and not fight the FED.

  222. Newt,
    Try TC 2000 charting service, trouble is they don't do options, nor futures,  but have other great features, including fundamentals, volatility, and predeveloped screeners.  Use to have a free service.  Good to see your comments on occassion, and being so active w/ PSW.  We are having fabulous weather in the pacific northwest.
    Best Regards,

  223. Informed…Yes they are.  People were asked to look at the new IPhone5.  Too funny!

  224. Going forward the Fed will be a buyer of more than half of all new agency MBS issued. At this point one might as well make the GSEs part of the Fed or give the central bank a mortgage origination capability (Sober Look).

  225. Sober Look:

    Job creation, which is what Ben Bernanke focused on at Jackson Hole, can supposedly be improved via the mechanisms above. However financial stress conditions, corporate and retail interest rates, and bank lending are all in decent shape already, while risk asset valuations are not anywhere near "distressed levels". "Improving" these further may prove far more difficult than in 2010 as the Fed tries to squeeze the last few basis points out of rates (and push VIX down to 13?). As discussed earlier, it will certainly not generate a great deal more in payrolls. The "unintended consequences" however may pose further risks to the economy (discussed here).

    Even if QE was justified in 2010 (some would argue it wasn't), additional monetary expansion certainly can not be justified in the current environment.

  226. Pharm- Thanks for post- my thoughts exactly in that QE3 will have no real effectiveness until people have jobs , feel secure financially , and are willing to take on risk again. A classic cart before the horse. Even if the fed were to lower origination standards (subprime again as there is no risk for the banks anymore !!) there are still not enough people in the position to take on a mortgage again- the last bubble stripped people of their nest eggs and hard earned down payments . So with the middle class, I see a waste land for properties that the aforementioned would purchase leaving a bifurcated real estate market for the uber-wealthy and the struggling lower class. So multi family and apartment REITs may turn out to be excellent investments for the next few years and this latest QE will probably just suspend the market correction until after the new year.

  227. Well, due to inflation in food prices, we have resorted to this…..

  228. This is what happened to my puts….

  229. Pharm – Love the cat fail video.  Have you or anyone else been having any luck with calendars  and diagonals lately?  I haven't, since the back month volatility is so much higher than the front months/weeks.  In fact,  TOS's Spread Hacker keeps suggesting that the high probability trades are buying the front month and selling the back month.  I'll let the board know if I try any of these because that'll be for sure when the VIX explodes.

  230. Zero makes a very good case, as usual.  But I am more attuned to the views of cslanson – it is the brain-dead American electorate who is to blame.  How do you campaign among people who never read newspapers and are not concerned with substance.

  231. Pharm-Villa / Bernanke:  "When all you have is a hammer, every problem looks like a nail." 

  232. hopeflly this could knock down oil a bit! Im pretty short right now and with the barrels they have to roll and this… I think this should be a good week!

  233. rdn – I have been doing 3 to 4 mo calendars (in TOS it is called a 1 X 4 mo wide) to capture both the front and back ended premium.  On stocks such as LUFK, CELG, KLAC, and others.  I do about a .3 delta on both, which let's the stock rise, but allows for those fronts to decay.  A few have moved through the strike, but they are easy to roll up and out further.  RIG is another that has been good to do it with, although it tends to move rapidly one way or another.

  234. This, from ZH, is what's been on my mind since the Fed announcement:
    In Bernanke’s rush to increase employment and raise asset prices and lower mortgage rates, if not to help the President with his re-election; we would assert that the Fed did not go far enough in its thinking and that they may get stung by what they have not considered. The issue here is gas at the pump.
    If the effect of QE raises gas prices even more from here, the benefits for the banking/stock market economy could be outweiged by the drag on the real economy – pulling us into a gas price driven recession. I have no idea how to quantify this, but I think its a big issue from here.  Of course, Obama could release the SPR - 

    •  "Do you know what the loss would be on a 30-year Treasury if it went back … just to the yield in force in 2011?" asks Jeff Gundlach, incredulous anybody would buy one (answer: 37%). If you need safety and yield, he says, buy Campbell Soup (CPB) instead. Listen to why the hot-shots at his firm would rather day-trade Facebook than divine the Treasury market. 

  235. Hi team,
    Just joined — is there a place to see all the different porfolio's in one place. Also are there are any new positions that were initiated from the last couple of days. I am following Phil's latest twice in a life time list. Wanted to know if all the porfolio positions are under the tab portfolio.
    Also member chat is like a room or is it more a post and reply option.

  236. Think "chicken or egg"……
    ….An informed electorate or extraordinary leader….
    My suggestion: Don't hold your breath….
    Have A Great Day Everyone!      :(

  237. Checking in, checking the news.  Quick take: Romney has already lost the election over aging boomers'  fears for health care.  Have a good one….

  238. Talk about a brain washed electorate, I give you the Values Voter Summit:

    And these people are actually in Congress or other positions of power. And Romney and Ryan are pandering to these people. Scary….

  239. Leaders / Zero – I agree in the most part with cslanson. Whatever hints of leadership our current candidates possess (and they clearly both do possess some as they would not be where they are without it) is turned into a liability by the opposition and its media. And looking over the last 60 years or so, what president would you consider a great leader? The last one I can remember (in your definition of a leader – putting a boot in people's ass) is probably FDR. The "good" president that people remember today (irrespectful of  their political opinion) like Kennedy, Reagan or Clinton were not great leaders in your definition. I mean, Reagan in the last 4 years would have had trouble managing a bake sale and he was selling happy times are here again in the face of runaway deficits. Clinton could not manage his own private life…. They are mostly remembered because they were great communicators. They were able to communicate policies designed by others with some passion either because they believed them or through great acting (you decide). The "bad" ones (Carter, both Bushes) were lousy communicators and benefited (in case of W.) or failed victims (HW and Carter) of outside crisis. But were the good ones putting a boot in the people's ass? When Mondale ran again Reagan and had the audacity to say that we would have to raise taxes (and who was right then?) it was used against him! Imagine FDR running against Romney today – how would his leadership abilities be portrayed? Putting people to work on infrastructure projects – a Communist takeover of America for sure… (I can already imagine the Fox news headlines) How about Kennedy running today with his "background"? 

    Obama is leading in the polls today not because of a perceived leadership advantage (although Romney doesn't help himself by showing no conviction in anything), but because he (and other Democrats) are better communicators. And we leave in a world of communication. Well, they also benefit from a demographic shift, but that's another story!

  240. ST JEAN: The Polls..I wouldn't take any of them very seriously right now..both sides are using them as a method of influence public opinion  rather than reflect it….some polls are riven with method faults…is the gathered data from registered or likely voters.. is the poll sample balanced with a 1 to 1 sampling dems to repubs? the demographic modeling rigorous… i think its a dead heat..which is not good for the president as indies usually break for the challenger at the last minute….democrats running state campaigns are almost unconcerned saying the debates will decide all and pres will kill romney..fewer bake sales… fund raisers sparse in ct..i think this level of complacency is a recipe for disaster..although its a plus for the prez that not one board member has taken my bet on the!

  241. Polls / Angel – What is the history of polls in presidential elections? Have polls taken in mid-September always been wrong? I don't track that data so I can't really have an opinion. But people like Nate Silver make a living out of that and they seem to give a slight advantage to Obama right now. We'll see…

  242. Barry has some insights from a GOP insider:


    Just got back from vacation, with Congress on an extended recess, and getting ready to go out again for elections. After that, nothing gets done in lame duck. Bet on Congress doing something to avoid the fiscal cliff, but not until doing everything possible to screw it up.

    Romney looks like he’s toast. Which means four more years of more or less the same crap we’ve seen. Great for big banks–Michael Lewis has a piece out where he talks about how no one realizes just how good Obama (and he really means Geithner) were to Wall Street. Did you ever read that Lawrence Baxter piece I sent you? You should. Terrible title, but goes into detail on Obama doubling down on even bigger banks. Betting Big: Value, Caution and Accountability in an Era of Large Banks and Complex Finance,” 31 Rev. Banking & Fin. L. XXX (Oct. 2012))

    Republicans are up in arms about QE whatever. The big complaint seems to be that it may actually make things better. Funny part is imagining what Romney would want if he were president; surely he wouldn’t want the Fed choking off his recovery by tightening up. (Bit that no one picked up on: Hubbard talking about how great a job Bernanke had done and was doing, only to have Romney turn around a week later and say no way would he reappoint Bernanke as Fed chairman. Either the campaign is clueless and disorganized, or Romney really will say anything to be president.)

    Some articles today talked about how Wall Street was starting to have second thoughts about a candidate who wants to turn off the spigot; a couple of weeks ago, the FT has a column on how Wall Street should be careful about wanting a Republican victory, because that means that the “break up the bank” types like Hoenig will have even more influence. Hard to figure out what’s what: Big GOP talking point is “Dodd-Frank did not end TBTF,” but then being absolutely schizophrenic on the issue of whether big banks are a good thing and whether the American economy needs big banks. Marx was wrong: capitalism will not collapse under the weight of its internal contradictions; The GOP, on the other hand . . .

    The new Congress is going to have quite a shuffle of Chairman. You should pay attention to Jeb Hensarling, a Phil Gramm protege. He is likely to be running the House Financial Services committee, which ibviosuly impacts what you do. Hensarling’s really, really smart, charismatic, organized, and has a coherent view of the world.

    Like Gramm, it’s a world view that turns out to be wrong–but at least it’s consistent . . .

  243. Phil
    Back in Feb I did a Jan 13 $12.50 buy/write on NYB with stock at $12.70. I bought back the Puts and took the profit prior to the latest Fed decision (just in case). The $12.50 callers now $1.65 have squeezed out the entire premium with the stock now at $14.12. There is only one more dividend of $0.25 in November that I could capture, but there is a good chance I would get called first. I am inclined to just cash out the trade since there doesn’t seem to be any more profit to squeeze out and unlike most people, I still think stocks can go down. The Jan 14 $13 calls are $1.50, so a roll would cost me $0.15 to only gain $0.50 in position. Do you see another way to play this that I am missing?

  244. ST JEAN POLLSTER OR POLLTEGEISTS (SIC) Mark Blumenthal, publisher of, wrote that Silver's methodology, in which he awards bonus points to pollsters based on their membership in the National Council on Public Polls and their endorsement of the American Association for Public Opinion Research Transparency Initiative, "appear[s] to significantly and dramatically alter rankings prominently promoted as "pollster ratings," ratings that are already having an impact on the reputations and livelihoods of individual pollsters. That's a problem." Blumenthal noted, "My bottom line: These sort of pollster ratings and rankings are interesting, but they are of very limited utility in sorting out "good" pollsters from "bad." 

  245. Like I said, we'll see Angel… BTW, I mentioned that before, but in the last French election undecided moved more toward the incumbent Sarkozy at the end. He was expected to lose by 6 points and lost by 3 only. Sometimes the devil you know…

    As for myself, I can't wait for this election season to be over….

  246. Phil / A Favor Request
    On my birthday, Sept 7th, got some awful news that my mom was in the hospital.  She passed away last Wednesday (yes, the day before QE) and I've been running around ever since.  This is the 1st time I've gotten to do anything at all close to trading.  I obviously haven't been reading the blog, or following trades, and I know I probably lost out on some easy $$.  Anyway, my request is just a few trade ideas for Mon morn that I could put on and capture some $$.  I'm in "follow the leader" mode right now.  Thanks for understanding.  This week I should be able to trade again.

  247. Burrben,
    sorry to hear the news . wish you and the family the best.

  248. Stj / Leadership:  FDR, yes.  But, again using my definition, he was not the last one.  That distinction I would venture belongs to Lyndon Johnson, a man with tremendous vision and a Large Boot.  He crashed and burned on Vietnam, but the country was, and is, much better off for his Presidency: 

    The Civil Rights Act of 1964[9] forbade job discrimination and the segregation of public accommodations. The Voting Rights Act of 1965 assured minority registration and voting. TheImmigration and Nationality Services Act of 1965 abolished the national-origin quotas in immigration law."
    "The Civil Rights Act of 1968 banned housing discrimination and extended constitutional protections to Native Americans on reservations. Johnson, who, as a teacher had observed extreme poverty in Texas among Mexican-Americans, launched an "unconditional war on poverty" in the first months of his presidency with the goal of eliminating hunger and deprivation from American life. The centerpiece of the War on Poverty was the Economic Opportunity Act of 1964, which created an Office of Economic Opportunity (OEO) to oversee a variety of community-based antipoverty programs."
    "The War on Poverty began with a $1 billion appropriation in 1964 and spent another $2 billion in the following two years. It spawned dozens of programs, among them the Job Corps, whose purpose was to help disadvantaged youth develop marketable skills; the Neighborhood Youth Corps, established to give poor urban youths work experience and to encourage them to stay in school; Volunteers in Service to America(VISTA), a domestic version of the Peace Corps, which placed concerned citizens with community-based agencies to work towards empowerment of the poor; the Model Cities Program for urban redevelopment;Upward Bound, which assisted poor high school students entering college; legal services for the poor; the Food Stamp Act of 1964 (which expanded the federal food stamp program);[13] the Community Action Program, which initiated local Community Action Agencies charged with helping the poor become self-sufficient; and Project Head Start, which offered preschool education for poor children. In addition, funding was provided for the establishment of community health centers to expand access to health care,[14] 
    Major amendments were made to Social Security in 1965 and 1967 which significantly increased benefits, expanded coverage, and established new programs to combat poverty and raise living standards.   Federal funds were provided for special education schemes in slum areas, including help in paying for books and transport, while financial aid was also provided for slum clearances and rebuilding city areas. In addition, the Appalachian Regional Development Act of 1965 created jobs in one of the most impoverished regions of the country. The Economic Opportunity Act of 1964 provided various schemes in which young people from poor homes could receive job training and higher education."
    "The most important educational component of the Great Society was the Elementary and Secondary Education Act of 1965, designed by Commissioner of Education Francis Keppel. It was signed into law on April 11, 1965, less than three months after it was introduced. It ended a long-standing political taboo by providing significant federal aid to public education, initially allotting more than $1 billion to help schools purchase materials and start special education programs to schools with a high concentration of low-income children. The Act established Head Start, which had originally been started by the Office of Economic Opportunity as an eight-week summer program, as a permanent program.
    The Higher Education Facilities Act of 1963, which was signed into law by Johnson a month after becoming president,[17] authorized several times more college aid within a five-year period than had been appropriated under the Land Grant College in a century, and provided better college libraries, ten to twenty new graduate centers, several new technical institutes, classrooms for several hundred thousand students, and twenty-five to thirty new community colleges a year.[18] This major piece of legislaton was followed by the Higher Education Act of 1965, which increased federal money given to universities, created scholarships and low-interest loans for students, and established a national Teacher Corps to provide teachers to poverty-stricken areas of the United States. "
    "The Social Security Act of 1965 authorized Medicare and provided federal funding for many of the medical costs of older Americans.[20] The legislation overcame the bitter resistance, particularly from the American Medical Association, to the idea of publicly funded health care or "socialized medicine" by making its benefits available to everyone over sixty-five, regardless of need, and by linking payments to the existing private insurance system.  n 1966 welfare recipients of all ages received medical care through the Medicaid program. Medicaid was created on July 30, 1965 under Title XIX of the Social Security Act of 1965. Each state administers its own Medicaid program while the federal Centers for Medicare and Medicaid Services (CMS) monitors the state-run programs and establishes requirements for service delivery, quality, funding, and eligibility standards."
    "In September 1965, Johnson signed the National Foundation on the Arts and Humanities Act into law, creating both the National Endowment for the Arts and National Endowment for the Humanities as separate, independent agencies.  The Public Broadcasting Act of 1967 chartered the Corporation for Public Broadcasting as a private, non-profit corporation."
    "The Urban Mass Transportation Act of 1964 provided $375 million for large-scale urban public or private rail projects in the form of matching funds to cities and states and created the Urban Mass Transit Administration (now the Federal Transit Administration). The National Traffic and Motor Vehicle Safety Act of 1966 and the Highway Safety Act of 1966 were enacted, largely as a result of Ralph Nader's book Unsafe at Any Speed."
    "In 1964, Johnson named Assistant Secretary of Labor Esther Peterson to be the first presidential assistant for consumer affairs.  The Cigarette Labeling Act of 1965 required packages to carry warning labels. The Motor Vehicle Safety Act of 1966 set standards through creation of the National Highway Traffic Safety Administration. The Fair Packaging and Labeling Act requires products identify manufacturer, address, clearly mark quantity and servings.  The Wholesome Meat Act of 1967 required inspection of meat which must meet federal standards. The Truth-in-Lending Act of 1968 required lenders and credit providers to disclose the full cost of finance charges in both dollars and annual percentage rates, on installment loan and sales. The Wholesome Poultry Products Act of 1968 required inspection of poultry which must meet federal standards. The Land Sales Disclosure Act of 1968 provided safeguards against fraudulent practices in the sale of land. The Radiation Safety Act of 1968 provided standards and recalls for defective electronic products."
    "At the behest of Secretary of the Interior Stewart Udall, the Johnson Adminstration included several new environmental laws to protect air and water. Environmental legislation enacted included:
    §  Clear Air, Water Quality and Clean Water Restoration Acts and Amendments
    §  Wilderness Act of 1964
    §  Endangered Species Preservation Act of 1966
    §  National Trails System Act of 1968
    §  Wild and Scenic Rivers Act of 1968
    §  Land and Water Conservation Act of 1965
    §  Solid Waste Disposal Act of 1965
    §  Motor Vehicle Air Pollution Control Act of 1965
    §  National Historic Preservation Act of 1966
    §  Aircraft Noise Abatement Act of 1968
    §  National Environmental Policy Act of 1969"
    "Amendments made to the 1931 Davis-Bacon Act in 1964 extended the prevailing wage provisions to cover fringe benefits,[26] while several increases were made to the federal minimum wage.[27] In addition, a comprehensive minimum rate hike was signed into law that extended the coverage of the Fair Labor Standards Act to about 9.1 million additional workers."
    And that, gentlemen, is what  leadership looks like..

  249. LBJ / Zero – I would not disagree with that and I was thinking of him when I wrote my post. But he is still a pretty controversial figure among many as FDR is widely admired. I have no doubt that history will be kind to LBJ… 

    Of course, much of his legacy would be in danger if Romney were to be elected I think!

  250. Economic Calendar for next week. We have the BoJ rate decision (might get a yentervention as well) and then on Thursday a deluge of PMI information which will paint a picture of the word economy. Plenty of Fed speakers next week as well.

  251. Phil….WHR…what the FU.Up 27% In 60 days. SLD 10 sept 75c and 10 77.50c for at 10.80. I still believe in the postion,but waited way to long to do something. Got any of those DD thoughts on a possible DD out?  or did I just fall in love with my hand?…Keep up the good work

  252. Burr – sorry for your loss. My sympathies!

  253. Burr:  Very sorry for your loss, it's a heartbreak.   I lost my mom 8 weeks ago; she followed my dad by 18 months, after 62 years together.  I hope your parents had a good run. too.

  254. Per ZH:
    Here is a summary of where the world stands:

    Unable to reach a compromise over the weekend, South Africa is now in an all out labor strike, with the police again firing rubber bullets at miners with lethal escalation guaranteed
    Back from vacation, the once again penniless citizens of SpainGreece, and Portugal have resumed protesting austerity
    US embassies attacked, in many cases with numerous casualties, in EgyptLibyaTunisia, Morocco, Sudan, LebanonIndia, Balgadesh, Indonesia, and others.
    Japan "appropriating" China-contested islands provoking a firestorm of retaliation including demands for "war with Japan"
    The Japanese ambassador to China dying mysteriously
    Netanyahu telling Meet the Press Iran will have a nuke in six-seven months and must be stopped beforehand
    Warships from more than 25 countries, including the United States, Britain, France, Saudi Arabia and the UAE, launching a military exercise in the Straits of Hormuz
    A third US aircraft – the CVN-74 Stennis – carrier is en route to Iran with an ETA of about 10 days
    And finally, a potential catalyst to light this whole mess on fire, Iran's Revolutionary Guardannouncing that its troops are now on the ground in Syria.

  255. Good morning!

    I'm way behind (4:45 already) so please re-ask anything pressing in new post. 

    It's not the business days that mess me up – it's the family ones, especially this side of my family (show biz) who like to have 4 hour dinners and THEN more people come over…  

    Very sorry to hear about your Mom, Burr – especially that she missed QE3 – I'm not sure I'd want to chase trades just yet, we still need confirmation that it wasn't already baked in but, if not, then after this week we should be good for a rally though the end of the year.