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Monday Market Movement – Time to Climb?

Are we ready to rally?

We certainly build enough bricks into our wall of worry over the past week as the markets gave up ALL of the QInfnity gains from 9/13 but, so far, as we expected – we're holding those 50 dmas – except on the APPLDaq, which has been shredded by the 10% decline in AAPL, which put a 2% additional drag on the index.  As you can see from our Big Chart – the Nasdaq is, in fact, 1.5% below it's 50 dma so it's ALL APPL's fault.

Other than the Nasdaq, we're looking at 2.5% corrections (after a 13% run) in the S&P, NYSE and not even that much in the Dow (and that's a 20% retrace for those of you playing at home) and a 5% drop on the more volatile Russell but that hasn't stopped the TA fan-boys from declaring the World about to end – mostly because of the textbook "head and shoulders" pattern that seems to be forming on our indices. 

I don't disagree with the Rorschach fans – we all see what we want to see and there's no denying that IF we fail the "neckline" – which is, effectively, the 50 dmas – THEN we do have serious problems with no real support until we drop at least another 2.5% to our Must Hold lines and, in the case of the Dow – it has yet to beat their Must Hold line at 13,600 – the line that's always kept us from getting too bullish.  

Click to ViewI, for one, was extremely encouraged by Friday's Consumer Sentiment Index and we'll see if today's Retail Sales Report gives us an upside surprise (+0.7% expected) to confirm that consumers are putting their money where their sentiment is.  Since we are living in the Appleconomy, we have to consider that the IPhone 5 went on sale in the last week of September and 5-7M IPhones at $500 each was probably $3Bn worth of ADDITIONAL spending that last week because I doubt the people lining up for IPhones were saying "I'm going to eat mac and cheese tonight so I can afford this."  

So, unlike "leading economists", I'll say we hit 1% or so in this report and it will be nice to have an upside surprise, for a change, that ISN'T due to high gasoline prices.  We also get the Empire Manufacturing Index at 8:30 this morning and that has deservedly low expectations of -2.8 and tomorrow we see CPI as well as Industrial Production and Capacity Utilization but, don't forget – consumers have to clear the shelves BEFORE the manufacturers get called upon to restock them so we're comparing leading to lagging indicators here. 

Industrial Production took a 1.1% dive in August and, while that's not great for Corporate America, it's great for American labor as it indicates that there are no more gains to be had from cutbacks and efficiency interests and it may be time to start hiring.  

Of course, the Non-Farm Payroll Report for September already suggests that's exactly what's happening but it was immediately called a fraud by the Conservative Media so what would normally have been a very market-positive event had almost the opposite effect in the recent turmoil. 

Notice on the chart that Capacity Utilization is rising steadily – that indicates more machines are turned on more often so, of course, someone needs to be hired to push that button.  This is, of course, one of those nasty "fact" things that Conservatives like to ignore – especially when it doesn't prove Obama is a Socialist so many of the people who draw their conclusions from reading the Generally Conservative Financial Media are unwilling to accept the possibility that our economy is actually improving in a fairly meaningful way.  

KBE WEEKLY JP Morgan crushed earnings on Friday and the Financial sector dropped 2% despite Dimon's bullish comments on housing.  WFC was in-line and also participated in the drop.  We mentioned the issue of charge-offs in Friday's post and that's keeping us cautious until we get past BAC and C's earnings but, on the whole, I'm still enthusiastic about the Financials in general (Dave Fry's chart left) – just as I was at the beginning of the year when we were shorting oil at $103 and long on XLF at $13.50.  I suggested that there was no need to play the markets this year as simply playing BAC to win should give a nice total return without all the fuss.  Our "One Trade" for 2012 was:  

BAC is still $5.75 and you can buy the stock and sell the Jan 2013 $5 puts and calls for $2.55 for a net entry of $3.20/4.10.   So putting $32,000 into 10,000 shares of BAC and selling 100 puts and calls can make a profit of $18,000 (56%) in 12 months if BAC holds $5 (13% down from here) through next January’s expiration. 

INDU DAILY  BAC is now $9.12 and the Jan $5 puts and calls are $4.13 for net $4.99 so just one penny under the full return already for a cash value on 10,000 of $49,990 off a $32,000 (56%) investment in 10 months.  We don't do a "One Trade" every year – that one was just too good to pass up and, on Friday, we were once again naked and long on our "FAS Money" Financials play as we cashed out our short callers on the dip down to $15.80 on XLF and I said to Members in the Morning Alert that I couldn't see selling anymore XLF calls until we hit goal at $16.50.  If we get past C and BAC without too much drama – I may still raise that target. 

In Friday's chat we also added aggressive longs on TNA (ultra-long Russell) over the weekend but we conservatively covered our AAPL calls as that stock faltered at our critical $633 line.  Generally, we've been more interested in bargain hunting so far and that remains true as long as those 50 dmas hold up but we'll have to see what news the morning data brings…

8:30 Update:  No surprises in the data release (for us, leading economists – on the other hand – are dazed and confused) as the NY Manufacturing Index (lagging) is at -6.2 (but better than -10.4 in September) while the Retail Sales Report came in at a very healthy 1.1% and especially the Ex-Transport, Ex-Gasoline number was up 0.9% vs 0.4% expected so, as we figured – stuff is selling again.  

C reported a big 88% drop in profits this morning but mainly as a result of a $4.7Bn write-down against it's stake in MS as well as the charge-offs we expected.  Even so, they made $468M for the quarter or .15 per $35 share but, excluding he one-time charges, revenue was actually up 26% on Investment Banking, up 63% on Fixed Income and up 76% on Equity Markets Revenue for $5.136Bn in profits – even better than JPM!  Needless to say, many savvy investors are peering past the headlines and taking C up 2.5% pre-market.  

We'll be watching earnings closely this week to see which companies are doing well but we're guessing the game plan will be to stick with the companies that do most of their business in the US, Canada and Mexico as North America seems to be the best area of the World economically at the moment.  Europe is still a total mess and, if they melt-down – it won't matter how good you feel about the US economy – we'll go down with them while my impression of China after reading up this weekend is they stand ready to support their economy at all costs – even going into debt for it.  

Gee, I guess they are getting to be a little more like us every day…

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  1. Phil- do you like any big shorts on oil this week as they need to roll the contracts?

  2. Good morning Everyone

  3. Good Morning from Philly

  4. Good Morning

  5. Good Morning!

  6. Good morning from sleepy Seattle….  

    Oil Lines

    R3 – 93.95
    R2 – 93.29
    R1 – 92.47
    PP – 91.81
    S1 – 91
    S2 – 90.33
    S3 – 89.51

  7. Are you in Philly all week Savi? I come back from Seattle on Wednesday to S. Jersey.

  8. Pharmboy,
    NPSP will have FDA Advisory Committee meeting about a new drug next Tuesday. The briefing document seems to be positive:

  9. Through S1 will it bounce off S2

  10. Good morning! 

    Wow, Oil just fell off a cliff at $92, all the way to $90.50 real fast.  Must be some rumor of Iran settlement. 

    Dollar up a bit at 79.80 again, holding back futures but doesn't explain oil's drop.  Gold steady at $1,745.

    Looks like a slightly up open but we have to hold those 50s or BIG TROUBLE:   Dow 13,318, S&P 1,428, Nas is gone so say 3,050 must hold and 50 is 3,090 to take back, NYSE is 8,179 and RUT is also below 827 and needs to hold 820.  

    AAPL back to $631 so thank goodness for our covers.

    Not much to do but see what happens…

  11. Neet – question is – how much is baked in?  Small market, other things that could be used…and lots of questions about safety…..I usually stay away from FDA dates unless I feel strongly about it.  Flip a coin.

  12. Oil shorts/Jrom – Usually they run up into Wednesday and then fall down.  I think last day is Monday next week for the current contract so they have a little time but whatever happened this morning messes us up if they don't recover as I'm leery of chasing them down to $90 for fear of a bounce.  

    Let's buy back 5 of the AAPL $635 calls at $8 in the $25KP.  Why?  Because I'm not sure and, when in doubt, we sell (or buy back) half. 

  13. AAPL/$25KP – We'll put a stop on the rest at $10, which should be about $637 and, once we stop out the 2nd 5, we need to cover with something else (higher strike, of course) as soon as momentum stops.  

  14. STJ do you live in S. Jersey? my brother lives in Philly—he is the head of the Heart Transplant unit at Jefferson Memorial and there having an investiture ceremony for him—that has nothing to do with the question you asked but thought I would stick that in  ;-0—-- leaving on Wednesday—

  15. HPQ 2015 options are out.  Looks like the 17 puts are trading for 5.75 right now.

  16. NFLX: Did someone post a play on this going into earnings? I thought it was an Oct BCS…

  17. At the open: Dow +0.18% to 13353. S&P +0.24% to 1432. Nasdaq +0.37% to 3055.

    Treasurys: 30-year -0.13%. 10-yr -0.04%. 5-yr -0.01%.

    Commodities: Crude -1.34% to $91.04. Gold -0.82% to $1745.35.

    Currencies: Euro +0.06% vs. dollar. Yen +0.38%. Pound +0.04%.

    4:55 AM EU shares are solidly higher mid-morning trading following positive export and inflation data out of China even though the latter's shares have fallen. Euro STOXX 50 +0.95%, London +0.3%, Paris+1%, Frankfurt +0.8%, Madrid +0.8%, Milan +0.8%. 

    Market preview: U.S. stock futures follow EU shares nicely higher after encouraging trade and inflation data out of China and and better-than-expected retail sales in the U.S. The S&P benchmark is+0.6%. Sprint is +2.3% following confirmation that it's going Japanese, while Clearwire surges 15.95% even though it's not going to be part of the deal. Later : Business Inventories, Fed speak

    The Fed will not respond in a "hasty manner" to good news on growth, says FRBNY President Dudley, reiterating the central bank's intention to continue with QE and ZIRP even after the economy picks up. As for the puny yields at the long end of the Treasury curve, they're not a bubble, he says. Feel better?

    Oct. Empire State Survey: Manufacturing -6.2 vs. -3.0 expected, -10.41 prior. New Orders -8.97 vs. -14.03 prior.  Shipments -6.40 vs. 2.75 prior. Inventories -2.15 vs. 0.00 prior.

    September Retail Sales: +1.1% vs. +0.7% expected, +1.3% prior (revised from +0.9%). Ex-autos +1.1% vs. +0.5% expected, +0.1% prior.

    More on Retail Sales: Every category posted gains with the exception of department stores which lagged. The release of the iPhone 5 helped electronics and appliances show advance a healthy 4.5%. Auto sales grew at a 1.3% clip.

    Bain & Co. warns growth in the luxury market will slow to 5% this year with spending in China the biggest area of concern. Just last year, the sector was cruising along at a double-digit growth pace. The influence of Chinese consumers on the global luxury market continues to be dramatic with the nation now accounting for half of all luxury purchases in Asia and close to a third in Europe. On watch: RLCOH,KORSGUCG.PKWRCTIFLVMHF.PK. 

    To help former soldiers fill advanced manufacturing positions, major corporations, community colleges and veterans organizations are forming a coalition called "Get Skills to Work" that will train the vets and assist them in translating their existing skills. The companies include GE, Alcoa (AA), Boeing (BA) and Lockheed Martin (LMT). GE CEO Jeff Imelt says it's not just patriotism that spurs the firms: "veterans are a perfect fit."

    EU governments agree to more sanctions on Iran's banking, shipping and industrial sectors, including a ban on financial transactions. However, exceptions include humanitarian aid, food and medicine purchases, and provisions for legitimate trade. (See oil spill)

    Angela Merkel has softened her tone a bit with Greece, saying that while the country should keep to its agreements, the government is progressing with its reforms and should be given "another chance time and again." The eurozone is considering waysto cut Greece's debt burden, such as allowing the nation to use ESM money to buy back its deeply discounted bonds, Reuters reports.

    Spain could ask for a bailout in November, Reuters reports, adding that any request would be dealt with at the same time as a new debt program for Greece and a rescue of Cyprus. The report follows the ECB's Benoit Coeure saying on Friday that the bank could buy Spanish bonds even without the involvement of the ESM if Spain signs an MOU on the conditions for aid.

    Chinese CPI +1.9% in September Y/Y, in line and the slowest pace in two years, and vs 2% in August. September PPI -3.6% vs -3.5% in August and consensus of -3.4%. A government statistics official says the easing inflation will probably continue into Q4. "We haven't seen any signs of rapid recovery (in the economy), so there are few factors to substantially drive prices higher," says Pan Jiancheng.

    Chinese exports surprise on the upside in September, increasing 9.9% Y/Y to a record $186.4B vs. consensus of +5% and +2.7% in August. Imports +2.4% vs. -2.6% in August and forecasts of +2%. Trade surplus +3.6% M/M to $27.67B vs. expectations of $22.4B. However, Citigroup economist Ding Shuang cautions that weak economic conditions in the U.S. and EU raise uncertainties for Chinese trade. 

    China has the room to use fiscal and monetary policy to boost growth unlike countries with high debt and rock-bottom interest rates, PBOC Vice Governor Yi Gang tells the state-run Financial News. Yi Gang adds that the BRICS are considering increasing their co-operation by creating a mechanism to supply liquidity to their respective economies.

    The Chinese steel sector seems to be recovering, with prices for 63.5% iron ore fines to Qingdao hitting $117 a metric ton, up 29% from a multi-year low on Sept. 7. In mid-September, 29 vessels were chartered to transport iron ore to China, the largest weekly volume since late March. The trends come after the government OKs major infrastructure projects. Stocks that could benefit include BHP, [RIOVALECLF. (previous)

    Indian inflation rises to +7.81% Y/Y in September from 7.55% in August and vs. consensus of 7.75%, fueled by the government raising diesel prices by 14% to help get control of its increasing deficit. The wholesale price index +1.1% on month. The figures exacerbate the dilemma facing the RBI: how to rein in inflation against the background of slowing growth

    Five years after record fundraising for P-E firms, the shops still sit on much of that cash and are coming up against the time when they must "use-it-or-lose-it." As most would rather use it, Barron'sscreens for attractive targets – market cap of $1B-$10B, an Enterprise Value/EBITDA ratio below 10, and annual cash flow of at least 5% of stock market value. The winners: Guess (GES), Terex (TEX), Charles River Labs (CRL), and Big Lots (BIG). 

    "Enough about the 'fiscal cliff.' What about the dividend cliff?" Jason Zweig notes that on Jan. 1, the maximum dividend tax rate will go from 15% to either 18.8% or a heart-fluttering 43.4% – which means some companies expected to pay billions in dividends in the first few days of 2013 could save investors a bundle by moving a little sooner. Don't miss: He harks back to Ben Graham's drastic proposal that all surplus cash go to dividends unless an annual-meeting vote explicitly provides for reinvestment.

    Charles Schwab (SCHW): Q3 EPS of $0.19 beats by $0.02. Revenue of $1.2B (+1.2% Y/Y) in-line. (PR) 

    More on Charles Schwab (SCHWQ3: Net new account growth 14K, -22% Y/Y. Total accounts 6.1M, +7% Y/Y. Money market fee waivers $136M, down from $160M a year ago. Total income for the quarter $247M. How much more money would these guys be making in a "normal" interest rate environment? (PR)

    More on Gannett (GCI): Broadcasting revenue up 36% Y/Y, boosted by improved ad demand flowing out of the Olympics and the election season. Classified advertising revenue fell off 3.4%, led lower by a sharp slump in real estate ads. (PR)

    New Oriental Education (EDU) fires off a 14.5% premarket gain after Oppenheimer takes its rating on the name up to Outperform. Shares have now recovered more than half the ground lost since a SEC investigation and an attack from Muddy Waters drove them to single digits earlier in the year.

    Texas Instruments (TXN+2.3% following a report it's in talks to sell its OMAP app processor business to Amazon. Such a deal would be a blow to Nvidia (NVDA), which has been seen as a beneficiary of TI's decision to retreat from the app processor market, and was once (inaccurately) rumored to have scored a design win for the second-gen Kindle Fire. But a TI/Amazon deal could clear the way for Nvidia's Tegra processor to be designed into future Barnes & Noble Nooks.

    Some details about SoftBank/Sprint: 55% of existing Sprint (S +0.5%) shares will be purchased for $7.30/share for $12.1B. Another $8B will be spent to obtain Sprint shares (via new stock and a convertible bond) at $5.25 apiece. SoftBank will also get a warrant to buy 55M shares at $5.25. The deal is expected to close in mid-2013. Though Sprint isn't required to take any action regarding Clearwire (CLWR +20.3%), that $8B could facilitate a future deal, while allowing Sprint to pay down part of its $21B debt load. Dan Hesse will remain Sprint's CEO. 

    Amazon's (AMZN) Kindle DX may be heading for extinctionas the 10-inch offering gets discounted on the firm's website to less than $300 and looks to be only available from used dealers. Though the company could revisit the larger-size format again in the future, the DX is a bit too heavy to stay competitive in today's tablet environment.

    Apple's (AAPLiPad Mini event will also feature the introduction of a 13" MacBook Pro with a retina display, according to a "consistently reliable source" at a major U.S. retailer speaking to 9to5 Mac. The notebook will reportedly come in 2 models, and will be thinner and lighter than the 15" retina MacBook Pro released earlier this year (ed: this could be a sign solid-state drives will be used) . A recent Digitimes report claimed the 13" model's release has been delayed by display yield issues.

    Harvard's Alvin Roth and UCLA's Lloyd Shapley win the Nobel Prize for economics for their separate work on the "the theory of stable allocations and the practice of market design," which goes to the crux of a major economic problem: how to match agents as efficiently as possible – e.g., students with schools, and organ donors with transplant patients. (PR

  18. Good deal Savi! Congrats to the brother… I guess I'll know who to call when I have chest pain next time!

    Let me know next time you come around.

  19. WTF?  You can't take your eyes off this market for a second…  AAPL took a really fast dive down to $629 and now the $635s are testing $6 and it would be nice to take them off here for a $2.50 profit but only 5 left and no way to be sure there's a bottom.  

    Oil now down by $90 so we'll see if that holds but gold getting crushed at $1,737 and Dollar moving up to 79.84.  Silver $32.82, copper $3.67, Nat gas $3.47 and even gasoline down at $2.845 – something is up that's knocking down all commodities and it can't be just the Dollar. 

    NFLX/Newt – Not me – too crazy.  

    Dow volume just 16M coming into 10 so no conviction to that drop. 

  20. For those who got 1/2 out of TNA even in the $25KP, now is a good time to DD again at .45. but only if you have 20, not 40! 

  21. Gotta go with my gut and buy back the rest of the AAPL $635 calls at $7 in the $25KP. 

  22. Interesting:

    Remember when Texas Instruments revealed it was planning to dump its mobile processor business in favor of embedded systems? Israeli business sheet Calcalist is reporting that Amazon is in "advanced negotiations" to snap up that part of TI's OMAP division, which currently supplies processors for theKindle Fire and the Nook HD. The paper suggests the company is emulating Apple's purchases of chip designers in order to lower the price of future hardware — which it currently sells at cost.

  23. I'll be offline most of the day attending a conference so no update during the day. Back tonight!

  24. Good Morning!  
    Hi Newt…That was my NFLX trade>   Bought Oct 65/70 spread for 2.14 and sold for 2.37.   Presently no trade and no plans for same. 

  25. Thanks Flan.

  26. Phil/AAPL
    The roll to Dec 660's is 7.28, and the 655's 9.10, and the 650's11.10?

  27. Oil failing $90 – any news?

    Levels failing but volume still low:  

    Dow 13,318, S&P 1,428, Nas is gone so say 3,050 must hold and 50 is 3,090 to take back, NYSE is 8,179 and RUT is also below 827 and needs to hold 820.  

    Pretty much all right on their lines except NYSE, which is up 50 at 8,230.  

    Have a good conference StJ.  

    AMZN below $240.  If we weren't already high risk with AAPL, I'd sell the puts we own and leave the short puts naked for hopeful bounce.  

    Dollar 79.85, Euro $1.294, Yen 78.72.  Gold $1,732, silver $32.66, copper $3.66, nat gas $3.496 should bottom here, Gasoline $2.84 also probably should stay over $2.85 so let's say this is a good place to call a bottom

  28. AAPL rolls/DC – But now we don't have the money to roll.  The idea was AFTER we sell, then we roll to put ourselves in better position to caller but, because we were still worried, we didn't want to spend the money on Friday to roll and it's a good thing as we took advantage to buy back callers for a small profit instead.  Well, it's a good thing if AAPL bounces back and we can cover again at better prices, anyway…

  29. Phil/AAPL
    But you would agree that we should roll the longs before earnings?

  30. Actually, the Gloom Patrol was out in force this morning:  

    Fischer Says World Is 'Awfully Close' to RecessionFischer’s take on global growth added to concern raised at annual meetings of the International Monetary Fund, with the IMF cutting its forecasts on Oct. 9 and warning of more weakness unless the U.S. and Europe address threats to their economies. As the euro crisis drags on, fiscal tightening and muted demand in wealthy nations hurts emerging countries from China to Brazil. “We’re awfully close” to a global recession, said Fischer, 69, who served as the IMF’s No. 2 official from 1994 to 2001 and was thesis adviser to Fed Chairman Ben S. Bernanke at the Massachusetts Institute of Technology. “It’s pretty slow right now. Europe is technically in a recession, the U.S. is predicting less than 2 percent growth for the next few months.”

     SUMMERS: The World Is Stuck In A Vicious Cycle.

    Global Economy Distress 3.0 Looms as Emerging Markets Falter (Bloomberg)

    Global Economy Distress 3.0 Looms as Emerging Markets FalterThe global economy is facing its third major brake on expansion in five years as emerging markets slow from China to Brazil, provoking debate about how much policy makers should respond. Three years after industrializing nations led the world out of the U.S. mortgage meltdown-induced recession, the reliability of the power source is waning as Europe’s debt crisis persists. The International Monetary Fund sees them growing an average 5.8 percent in the half-decade through 2016, almost two percentage points less than the five years before the 2009 slump. Finance chiefs at the IMF and World Bank annual meetings left Tokyo this weekend at odds over how to address the issue, with South Korea’s central bank chief urging Asia to add stimulus as Russia and Brazil called on rich nations to fix their own challenges.

    Morgan Stanley(MS) Found Two Red Flags In This Week's Trade Report, And Now Its Forecast For Next Quarter Is Not Pretty.

    China Will Grow Old Before Growing Rich, And It Will Bring Down The Rest Of Asia.

    EU Girds for Summit as Nobel’s Glow Fades on Crisis ResponseEuropean leaders, basking in praise for their rediscovered crisis-fighting skills and the award of a Nobel Peace Prize, meet this week as Greece seeks to justify renewed aid and Spain holds out on tapping a bailout. The European Union’s leaders convene for an Oct. 18-19 summit in Brussels after a weekend in which international finance chiefs expressed some optimism that a firewall is in place to contain the euro’s turmoil and urged further action to quell the main threat to global growth. With German Finance Minister Wolfgang Schaeuble yesterday ruling out a Greek exit, the 17-nation euro area faces the challenge of harnessing positive sentiment by resolving differences on aid for Greece and Spain before investors pounce again. Also contentious is how to knit euro nations more closely together amid spats over the timing and depth of a banking union. “The summit will highlight how much remains to be done,” said Alex White, an economist at JPMorgan Chase & Co. in London. “Our concern is that the removal of acute financial market stimuli may reduce the political incentive to deliver.” 

    German Finance Minister Wolfgang Schaeuble says "it's impossible for Germany to pay everybody's bills" in the euro region and "every member state has to fight the problems" it faces. "We would be destroyed" if Germany were to overstretch its resources, Schaeuble said in Singapore.  

    German Saving Banks Chief Rejects Core Reasons for Banking Union. Georg Fahrenschon, president of the German DSGV savings banks group, said he doesn't want to give Europe the "keys to the safe" for deport protection funds, according to a speech he gave at the IMF conference in Tokyo. The money that German savings banks hold ready to protect the deposits of clients shouldn't be used to insure big banks and investment banks, he said.

    Greece May Be Forced to Leave Euro Area Within 6 Months. Sweden's Finance Minister Anders Borg told reporters on a conference call. A Greek debt write-down is not a good way forward, he said. Spain needs to recapitalize its banks, Borg said. 

  31. AAPL/$25KP, DC – I want to roll them but gotta get the timing right.  At the moment, volume picking up nicely on this dip to $625 and we're holding that line so hopefully the buyers that take us to $635 are coming back.  What we need is to sell $8 worth of calls like Friday that expire worthless or get in and out of $8 worth of small profits ($1 down today) so we can string together enough money to pay for at least half a roll.  What we do not want to do, is take any more money out of our pocket for AAPL on spec!  

  32. Oil (/CL) good play for a bounce off $90 (bullish, of course) and USO Oct $31.50s at $2.02 have just .13 in premium so also a nice way to play with tight stops if $90 fails to hold. 

  33. USO $32s are $1.53, those are good too. 

  34. Phil:
    Thanks for the explanation. Just trying to plan my next move on a half position of yours.

  35. AAPL Mini news. (not sure how reliable)
    Here is the proposed breakdown of the models and pricing:

    8GB WiFi Black/White, $250
    8GB Cellular Black/White $350
    16GB WiFi Black/White $350
    16GB Cellular WiFi Black/White $450
    32GB WiFi Black/White $450
    32GB Cellular Black/White$550
    64GB WiFi Black/White $550
    64GB Cellular Black/White $650

  36. What kind of stop would you put on the USO $32?

  37. AAPL near the 100dMA for the fourth time since May. The three previous times it bounced up from those levels.

  38. dclark41 – Oooh … I want a 64GB WiFi Black iPad mini! :-)

  39. diamond
    I made need a maxi! :)

  40. diamond:
    That was supposed to say: I may need a maxi!

  41. AAPL
    Will they be called mini-pads for short? And hasn't that name already been used for something else?

  42. NLY/Phil
    I have 600 shares of NLY and was waiting for a drop to sell long term puts with a view to accumulating for the dividend.
    Now a good time. Or wait and see if it drops further? Then again, is the dividend still good for the future?

  43. Hi Phil: I like WFC long term amd sold 5 WFC ,Jan. $33 P at $.73 with the intention to buy 1/2 of my new position in the stock at net $ 32.27. The option is now at $1.33 and the stock is $33.79. I realize the option price is all time premium, but would it be a good idea to roll to April $32 P at $1.72 for a net entry price of $30.28?

  44. Electronic sales jumped 4.5% from a month earlier, due to the debut of Apple Inc.'s AAPL +0.05% highly anticipated iPhone 5. It was the biggest monthly increase for this segment since October 2011, which was the month the iPhone 4S was released.

  45. Phil--do you have an opinion about VALE?

  46. Good call on the bounce Phil – I still believe oil has MUCH further to fall so Im hanging tough with my short.

  47. Rare off day.  Traded TNA, quick $500 and out.  Without the tutelage fro PSW, this would never of happened!

  48. Phil,
    For a long term portfolio build/ income portfolio,
    INTC @ 21.85 with a sales of 2015 22Call & 15Put for a net 17.7 with a 4+% yield….your recommendation appreciated.

  49. Minis/DC – That's a pretty big range but I guess they do that with IPods too.  

    USO/Davidor – If Oil fails $90 I'd say premise is blown – this is playing for a .25-.50 gain, not for a home run.

    NLY/Zip – Those things are really out of favor at the moment.  Will make a nice buy when they bottom.  For selling puts, you can sell 2015 $13 puts for $2.30 and that's net $10.70, about 33% off so no reason not to as long as you REALLY want to own them.

    Child labor/Msf – What are the hours?  My kids need jobs…  8) 

    WFC/Dflam – I'm not a big fan of rolling until 2/3 of the premium is chewed up – it's kind of a waste because YOU are the sucker paying the $1.33 premium now and isn't that exactly the opposite of what we're supposed to do.  Even if they go to $2.25 and they are $1.75 in the money, then they'd be like the Oct $35.50s which can be rolled to the Jan $34s ($1.80) which is better than the $1 roll you're looking at now.  Why?  Because you're not paying premium like an idiot, you'd be selling it.  

    AAPL/DC – Told you so! 

    VALE/Jabob – I think they are a nice long-term hold but there's not likely to be any growth here with China and the EMs on pause.  Unless you are looking to accumulate and want to get a 1/4 position established by selling the 2014 $18 puts for $3.15, which nets you out $1 below the spike lows – then you're probably better off waiting for them to break back over $20 and prove they can hold the $50 dma.  Maybe by then there will be 2015 puts to sell or maybe they go much lower and you'll be glad you waited.  At $20, the 2014 $18 puts have a .43 delta so you can still sell the puts for $2.25ish and figure the 2015s will fetch $4 so there's not much to lose by waiting.  

    Oil/Jrom – Usual pattern is up into inventories, then down.  

    TNA/Jfaw – Very nice.  

  50. Child labor/Phil – I thought Jackie worked here?

  51. OK, if this is AAPL's snap-back wee k I'm covered with a 650 weekly call.
    So for a few days here I'm bullish on AAPL!

  52. This is why Romney has as many votes as he does, people are just stupid:

  53. INTC/Jasu – I worry about the disruption in their normal sales channel as people move to Pad computing.  AAPL, AMZN, Samsung et al are making their own chips so a bad trend for INTC.  The problem is, state of the art chips, where INTC is designed to make money, are more powerful than home or office users need anymore so now INTC's main channel of sales is server farms, where all the computing power/needs have moved to.  That's great for now but they are very vulnerable to a design beat by AMD or IBM or Samsung – who knows what comes next?  Bottom line is INTC is not the sure thing it used to be so I'd be careful of making a big commitment and always sensitive to news along those lines. 

    Jackie/Snow – I offered her a job but she doesn't enjoy it.  8(  That's why I want to outsource her – let her know what a real job is like…

    AAPL/BDC – The just can't get it in gear.  Someone is very persistently bailing and our buyer is very patient before they jump in to save.  

    Clueless/Rustle – Typical – what a total fool that woman is.   We really should divide this country at this point, why do we try to get along with those people?

  54. HPQ/Phil:  Now that the 2015 options are out for HPQ, I'm thinking of rolling of the 20 2014 $23 options now at $9.60 in the Income Portfolio out to maybe 33 of the 2015 $17 options at $5.75.   Good idea?

  55. 10:00 AM On the hour: Dow +0.1%. 10-yr -0.01%. Euro -0.05% vs. dollar. Crude -1.59% to $90.81. Gold -1.29% to $1737.05.

    11:00 AM On the hour: Dow +0.1%. 10-yr +0.02%. Euro -0.14% vs. dollar. Crude -1.88% to $90.55. Gold -1.41% to $1734.85.

    11:45 AM Europe starts off the week with gains after having lost about 5% in the month since the Fed launched its latest QE effort. Stoxx 50+0.6%, Germany +0.4%, France +1%, Italy +0.4%, Spain +0.4%, U.K.+0.2%, The euro flat at $1.2948

    12:00 PM On the hour: Dow +0.46%. 10-yr -0.04%. Euro -0.02% vs. dollar. Crude -1.14% to $91.22. Gold -1.41% to $1734.95.

    Aug Business Inventories: +0.6% to $1,601.7B vs. +0.5% expected and +0.8% prior. Sales +0.5% to $1,246.6B. Inventory/sales ratio was 1.28. 

    Breakdown of September Retail Sales: With sales coming in at a healthy 4.8% Q/Q and 5.4% Y/Y clip, analysts raise the possibility the read-through for holiday sales could be positive. Inflated prices helped grocers and gasoline stations, while department stores showed sluggishness in the face of tough Internet competition. Electronics and auto sales were outperformers for the month.

    Surprise Jack Welch Missed Shows Better U.S. Growth (Bloomberg)

    The Sad Story of Jack Welch in Retirement (

    Bill Miller's back and housing bulls may take comfort or caution. The man who beat the S&P forever until one year he didn't and then lost most of his investors' money is up 29% this year and beating 99% of his peers by concentrating his fund's assets in homebuilders and others who would benefit from a housing rebound.

    Mutual fund casinos still skimming billions (MarketWatch)

    Germany looks to be getting its housing craze after having sat out the property boom last decade. Jones Lang LaSalle says Berlin prices are up 20% in a year, fueled not just by low interest rates, but by foreign buyers looking for the next London at cheaper prices than the real thing. "We are just at the beginning," says a bank analyst.

    Citigroup (C +5%) continues to climb following its earnings beat. Of interest on the conference call is CFO John Gerspach's caution on housing: "We are all seeing some elements of what I would call stabilization … But there are still some rather significant challenges to be faced.” It doesn't quite match Jamie Dimon'sunguarded optimism from last week.

    Liquidation in mortgage REITs picks up where it left off on Friday, with nearly the entire sector lit up bright red. Leading today's decline is CYS Investments (CYS -4.6%) after being cut to hold at Wunderlich. No details are available, but presumably the analysts there read the papers: interest margins are declining and mortgage refinance activity (prepays) is on the rise. 

    "There was this mythology that you could get 90 computers, some Harvard PhDs, and you would turn on your machines and make money." High-frequency trading is falling in on itself, with industry profits expected at just $1.25B this year, off 35% from last year and vs. $4.9B in 2009. Informal data suggests firms are cutting staff and HFT now accounts for 51% of trading, down from 61% three years ago.

    A big shift in oil will bring price relief (Quartz)

    The battle over Tesla Motors (TSLA -0.5%) hums right along with analysis seemingly strong on both sides of the argument. Deutsche Bank highlights the pie-in-the-sky worries on the name by calling out 78% of its estimate for TSLA's net present value uses cash flows from 2020 and beyond, while Jefferies notes even modest forecasts for growth in the EV market point to steady revenue for Tesla in the future. Shares have settled into a narrow trading range over the last few weeks with visibility on Tesla's production numbers for 2013 still cloudy.

    I do this:  A strengthening trend of consumers to divide up their food shopping amongst various stores is hurting grocery stores, according to research from Kantar Retail. While specialty players Whole Foods Market (WFM +0.8%) and Trader Joe's grab market share in many high-margin categories, dollar store chains and Wal-Mare continue to broaden their reach. Feeling the pressure: SVUKRSWY.

    Film producer Angus Finney is the latest industry insider topredict the death of movie theaters with his vision that it's only months- not years - before people make watching movies on their tablets and mobile devices their top preference. Is the clock ticking for operators such as CNKRGCCKEC or theater systems player IMAX.

    Best Buy's (BBY -1%) pledge to match the prices of online rivals is limited to a case-by-case basis with some sales associates empowered to hash out price breaks with customers on the spot. The matching prices will only apply to 20 online sellers, headed up by behemoth Amazon as well as pure Internet plays and

    ChipMOS (IMOS -7.8%) plunges after reporting Q3 revenue of $175.5M (+6.4% Y/Y), and stating it expects Q4 revenue to be flat to -5% Q/Q. The chip packaging/testing services firm's Q4 revenue consensus stands at $179.4M. Soft DRAM packaging sales are said to be offsetting strong LCD driver and flash memory testing sales. The report could have negative implications for DRAM makers such as Micron (MU -0.1%). (PR)

    Pandora (P -2.7%) falls as details arrive about the long-rumored Xbox Music (MSFT) a day ahead of its launch. The service bears a strong resemblance to Spotify: an ad-supported version that works on PCs and tablets will be free (it'll be Windows 8's default music service), while an ad-free version that supports the Xbox and smartphones will go for $10/month. However, iOS and Android apps won't arrive until next year. Pandora's Internet radio share thus farhasn't been hurt badly by growing competition. (more)

    AT&T (T -1.1%) and Verizon (VZ -1.1%) edge lower after Sprint (S +0.2%) and SoftBank (SFTBF.PK) make their deal official – shares had already fallen a bit on Thursday following initial reports about the deal.  In the PR announcing the acquisition, SoftBank CEO Masayoshi Son bragged about his company's success in taking Japanese mobile share by "by introducing differentiated products to an incumbent-led market." SoftBank fell 4.9% in Tokyo today, adding to Friday's big losses. (more)

    Some details about SoftBank/Sprint: 55% of existing Sprint (S +0.5%) shares will be purchased at $7.30/share for $12.1B. Another $8B will be spent to obtain Sprint shares (via new stock and a convertible bond) at $5.25 apiece. SoftBank will also get a warrant to buy 55M shares at $5.25. The deal is expected to close in mid-2013. Though Sprint isn't required to take any action regarding Clearwire (CLWR +20.3%), that $8B could facilitate a future deal, while allowing Sprint to pay down part of its $21B debt load. Dan Hesse will remain Sprint's CEO.

    An 8GB Wi-Fi-only version of the iPad Mini (AAPL) willcost just $249, according to an inventory screenshot leak – that would make the device, expected to sport a 7.85" display, $50 more expensive than the 7" 8GB Nexus 7 and 16GB Kindle Fire HD. But a 16Gb Wi-Fi version will go for $349, as will an 8GB 3G/4G version. The most costly model listed (a 64GB 3G/4G unit) will reportedly sell for $649. Apple is expected to unveil the Mini at an Oct. 23 event. (retina MacBook Pro)

    The Patent, Used as a Sword (NYT)

    Who Closed the American Mind? (The American Conservativesee also The Problem of Conservative ‘Intellectuals’ (The Nation)

    Repealing Deductions Pays for 4% Tax Cuts, Study Says (Bloomberg)

    Rule #1. Surround yourself with people who are smarter than you and move out of their way (Explore)

  56. Divide the country / Phil,  my sentiment exactly.  I've been a supporter of Texas seceding for the last 20 years.

  57. AAPL:  Concerning the blog post about the leaked AAPL Mini prices,  the original German post had the prices in Euros not US Dollars which would make it more like $320 — although I am not sure if that is an error in the original post or not.

  58. kinki/AAPL mini – I think they subtracted VAT from it to get to $250. Although, vat wudnt be so much!

  59. Phil / I'm back to even on TNA after a DD this morning. I'm holding Oct. 20 61's. Do you recommend a stop at this point or do you think we can go higher? Thx.

  60. I spent the weekend checking out high speed rail – always believed in it as a solution for the US but it would've taken a Dem Exec/House/Senate to muster up the will to make it happen (which is all but gone now). 
    * Make all lines run along current freeways
    * Concurrently expand all freeways to 3 (or maybe four) lanes where trucks ONLY can be in lanes 1 and 2
    * Expand nerve-center infrastructure (fiber optic cable, new gas and oil distribution lines, etc) while building the dedicated HSR routes so it becomes a nerve center for the country for the next 50-100 years
    *Labor: Think what this does for unemployment! Screw the "job creators," this creates 3M jobs in one day!!! Offer illegals citizenship if they've been in the country at least 5 years and work on this project full time at least 3 more (just to make sure conservatives go apeshit). 
    What this does for re-applying the new-energy distribution grid across the country to accept intermittent green power (wind, solar, etc) is phenomenal, and alone worth the cost, but you can read about all of that in the link or google/wiki it. This could be the "manhatten project" or "new deal" of the 21st century. If we put our mind and resources to it we could be done in 3 years. Now THAT is how you stimulate the economy. I've been on both the shinkansen and the TGV and what a way to get 600 miles or less. It blows flying and driving away.
    17,000 miles of line plus 125 fixed stops at $25M per mile and $350 per fixed installation = $500B. That's less than the bank bailouts and we actually GET SOMETHING for the money we spent. Wow, what a concept.

  61. clueless woman/Phil
    The best is when she didn't think Obama was an American citizen and Chris Matthew asks "Do you think he's (Obama) an American?"  She answers no and then and then says just because he's born here doesn't mean he thinks like us.

  62. INTC is such a great company to own in retirement. You can sit back and collect 4.2% yield all day long, and that's enough to keep the price down so go ahead and sell calls to earn another 4-7%. 

  63. HPQ/Income Portfolio, Kinki – Yes because there's no real premium left in the 2014s and the $17 puts are 1/2 premium.  Let's consider the net, the short $23s were sold for $5.75 (assuming Income Portfolio entry point) for a net $17.25 on 20 short puts.  They are now $9.60 so down $3.85 so there's really no need to move to more than 20 of the 2015 short $15s at $4.40 since that's now a net .55 credit with a net entry of $14.45 so, without spending any money, we drop the basis about $3 (20%) and now our commitment is to buy 2,000 shares at net $14.45 vs 2,000 shares at net $17.25 and we got paid $1,100 and the net margin is $6,000 so not a great return but now we still have room for a roll and DD should they get close to $10 and, if they go up, well we currently have an $8,000 loss on paper and, in my book, not losing $8,000 is almost as good as winning it so why be greedy?  

    That's a great earnings sheet Diamond, thanks!  

    Division/2Can – Yeah, I watch that Revolution show on TV and I'm thinking "not so bad…"  

    AAPL/Kinki – I prefer to patiently ignore the rumors anyway. 

    TNA/$25KP, Amalfi – Of course we get 1/2 back out even!!!!   That leaves us with 20 at a lower basis.  As it is, the Oct $61s are back to .65 so better late than never if you have more than 20 in the $25KP.  

  64. Pharmboy – QCOR strong.  Any thoughts?

  65. TZA/Phil: In the Income Portfolio we have the Jan 15/22 Bull Call.  My cost was $1.59/ spread. Cheap! I was trying to analyze rolling the Jan 22's down to the 20… this alone will reduce the cost of the spread almost 40-45%, but will obviously affect the possible total payoff. How would you compare this to just covering will some put sales? Your thoughts? TIA

  66. HPQ/Phil:  Makes sense.  You are right, we should be happy just to salvage the trade and lower our entry on an assignment.  Thanks for the piece of education.

  67. Phil
    Problem with the anti communist woman is that she gets on the news.  all the media outlets love to put the clueless on skipping the well thought and spoken individual.  so all we get are msm sound bites showing how stupid the otherside is. 
    Look at OWS and the only people who make the news are the fringe lunatics.  All it does is make for emotional news. 

  68. Phil
    I saw half of an episode last week of revolution and couldn't stand the whining of the female lead.  Typical kid.  no experience running around telling everyone what to do after 15 minutes I was hoping they would kill her charcter off.  Since I had no daughters I guess my threshold for whining is limited.

  69. Hi Phil – Do you still like FTR as a long term hold?

  70. HPQ/Phil
    With the HPQ play you just described I'm in 5 short HPQ Jan 14 23 puts and 5 short HPQ Jan 14 20 puts.
    So working on the logic of the previous note to Kinki, I should roll out to 20 HPQ Jan 14 14 puts. Right?

  71. This was the skydive that took place yesterday where Felix Baumgartner jumped frmo 24 miles up and fell as fast as 833 mph breaking the sound barrier without a plane.  Incredible.  His balls will be on display at the Smithsonian one day.

  72. High-Speed rail/BDC – I'm all for that.  Why do we have to fly to Florida from NY?  It's only 1,200 miles maybe 4 hours by TGV.  Pass through Philly, Wilmington, Baltimore, DC, Richmond, Savannah, Jacksonville, Orlando, Palm Beach, Fort Lauderdale and Miami by pretty much just building along 1-95 – that would be a real game-changer for how people move around this country.  They could run that all the way up to Boston and another line from NY to Pittsburgh, Cleveland, Toledo (close enough to Detroit), Chicago, St Louis, KC (where a line can run down to Texas), Denver, Alberquerque, Flagstaff, Vegas to LA and then you can have a west coast train and that's all it takes to wire up most of the country.  

    Oil seems done going up – watch the indexes!  

    INTC/BDC – For a retirement stock, I always try to imagine giving it to my Grandchildren in 20 or 30 years and this year, for the first time ever, I'm not positive INTC will exist in 30 years.  They will most likely adapt and survive but it's now possible they may not.

    TZA/Jbur – You're right, it's a very good idea.  Can always roll the $15s later with the money you collect but, for now, it's a great way to save some cash. 

    You're welcome Kinki.  

    News/Willie – True but nothing you can do about that although I don't think that woman was very a-typical – they weren't looking for her – she was screaming Obama was a Communist and Matthews headed over to ask her why, which was a question she wasn't prepared to answer because she's exactly what they call themselves – dittoheads.  My daughter asked my why all these crazy things happen to people in the movies all the time when usually nothing crazy happens and I said to her – it's not worth making a movie about an ordinary day – they make the movies about the days that were exciting or interesting.  Catching these people is the same thing – no one wants to see the 90% normal people (well maybe 40% for the Tea Party) at a rally – we want to hear from the fringe.  

    Whining/Willie – Yes, maybe I do have immunity.  I put a "No Whining" sticker on the kids' bathroom mirrors years ago – they're still there.  Doesn't help much but I have often dragged them in to point it out and say – how can you not remember this, it's right there every morning!   

  73.  Rustle / Communism – It's a subtle distinction, you can't blame her. The difference between Communist and Socialism is that Socialists only confiscate the resources that are profitable!

  74. Clinton max tax rate = 39.6% and Cons call him the anti-Christ communist hitler of all nations
    Bush = 35% max tax rate and he's the Jesus Christ the Savior himself of all things Capitalism.
    People need to get a grip and exist a little more in the gray area, where reality sits, and they obviously do not.

  75. Oh, and Obama KEPT the 35% tax rate 3 years into his first term. So in reality Obama = Bush, so this idiotic moron of a "woman" is calling Bush a communist now? We should call her a traitor.
    It makes me so mad I want to scream. I gotta go work I'm so pissed at how stupid most Americans are.

  76. FTR/Ink – I wouldn't dump them but they're not the bargain they were at $5.  Perfectly good company, not much growth prospects but a good hold on their market and a great dividend (8.3%) because they don't really have anything else to do with their money so they are just basically and old-fashioned utility stock.   With the 2015s out, you can buy the stock at $4.83 and sell the 2015 $5 puts and calls for $3 for net $1.85/3.43 and that makes the .40 dividend 21.6% while you wait to get called away with a 170% profit so, come to think about it – I do still like them a lot!  

    Arrrrrrrrgh!  AAPL is so frustrating!  

    HPQ/Zip – Change it to 10 2015 $15 puts and you're good.  You can even do a few less if you want but 10 is more than you owe on the 10 you have.  

    Sky dive/Rustle – So is there a sonic boom when you do that?  That would seem to be bad for you outside of a plane although I guess if he's moving faster than the sound, then it's behind him before he can hear it.  

    AAPL/$25KP – Still looking at possibilities and, since we can sell the Nov $635s for $22 and roll to the Dec $620s at $37 for about $2.50, I'm not worried yet – just frustrated.  The Oct $635s are $5 so opportunity lost there but clearly it's a nice up day and AAPL is dragging down the Nas on no negative news.  Just seems dead wrong to cover at this level.  

    Apple Inc. (NASDAQ:AAPL): According to Pacific Crest, concerns regarding the iPhone 5 may be overdone, and the firm still expects that the company will sell 51 million iPhones during its December quarter. The firm keeps its Outperform rating and a $760 target on the stock.

    Apple, Facebook Data Center Spending To Cool In 2013

    New iPhones snapped up in Gaza despite high prices, poverty

    The iPad Mini Will be Another Boring Win for Apple

  77. zero
    if you think that is the difference between communist and socialist then you need to take a look at eastern europe.  the soviets plundered much of eastern europe leaving a lot of ugliness

  78. THanks Phil!

  79. skydive/Phil
    He said he felt nothing different than a regular fall or heard anything.  He did say the pressure was intense and he was spinning out of control for a bit there.

  80. Thought this was a funny message ZH sent out today when Apple dropped – "Apple goes Baumgartner at 100 DMA". 

  81. Is USO something you would hold overnight?

  82. HPQ/Phil
    Can't see how I can get a credit on that roll of the Jan 14 23s and 20s to Jan 15 15s.
    Net entry on the 23s was 5.67 and the 20s 4.97. The rolls would require a net debit of about $7 as far as I can see.
    Am I missing something?

  83. QCOR – fairly priced…maybe a little more.  So, sell puts at a lower strike….the Nov 10s are 10c…..

  84. PGNX…having a nice day….

  85. Gas is ridiculous here in So. Cal.  If this is any indication of forward looking retail…it is gonna hurt.

  86. Phil
    looking over the FTR trade and I don't see 3.00 on the $5 short puts and calls

  87. PHIL like your discussion on high speed trains to be installed. Well we do have it here in Europe. Leaving next Monday from Aachen to Frankfurt +- 250Km with ICE( Intercity express) two hour ride. Back in the jungle the same night at local time 6.15 PM.
    We had in deed a wonderful vacation and at the same time followed the stock market and kept up with my portfolios.

  88. williex
    FTR I can see more like 2.20 Possible Phil has his super computer switched on!!

  89. You're welcome Ink. 

    Communism/Willie – I think this is the simplest explanation:

    Note the value of the "job creator" – note how we all suffer when he is removed…

    Yes, SOMEONE has to buy the machine and invent the business but what if we collectively elected the best and brightest among us to do this and what if we gave them a percentage of the income to further invest and to make sure society's needs were being properly met – wouldn't that accomplish the same thing?  Isn't that what Government is supposed to be?  

    USO/Davidor – No way, those $31.50s are $3.05, that's up 50% in a day – why would you even think about risking it?  

    HPQ/Zip – See above discussion on HPQ.  You lost $4 and you sell puts for more than you lost – that's a net credit.  When you get behind, your goal should be to get even, not to essentially double down so you can make what you wanted to make originally, it's not the stock's fault your plan didn't work out.

    FTR/Willie – Not much trading so far but the $5 calls are now .20/.80 and, at $4.84, if you take .20 then you deserve what you get.  They were more like .60/2 before but some bozo put in a low offer that you'd have to be insane to accept.  The puts are $1.40/2.05, also lower than they should be since the 2014 puts are $1.25 at last sale so don't tell me another year is only .75.  You have to put in offers, maybe $1 for the calls and $2 for the puts and then you have to be patient.  

    Glad you are having a good trip Yodi – safe journeys. 

    Dow volume at 2:18 is 52M, about normal heading for 70M at 3pm.  

    Hopefully AAPL takes a better shot at the $630s this time. 

  90. Is any one trading AAPL up .50 down .50 what happened to the 10$ moves. They surely treading softly!

  91. How the hell did oil have that recover!!!?!? WHat a crock of shit. Phil, can you post the link for the amount of contracts they have to roll? Thanks.

  92. yodi
    ask for a $10 move and sometimes you get the $10 move

  93. Thanks Phil Going back with mixed feelings as Europe has a lot to offer in respect to Mexico.

  94. HPQ – Got it.  Paper loss.  Great Roll.  The plan is to recover the paper loss by Jan 15.  Educational for sure.  Thanks Phil.

  95. Does anyone here follow Bombardier?  I just read that they are attempting to build a plane in hopes of competing with Boeing and Airbus.

  96. HRB/Phil: I have naked stock at about $12.60 after closing short straddles at a profit several months ago. I am thinking about selling the Jan15 17 straddles for $6.20 to reduce net further, of course. But being the greedy bastard that I am, I can't help but think that with an increase in the VIX ( no guarantee but a good bet) I will be able to sell them for more in the future. Another thought would be selling 1/2 the number of straddles, and selling more with an increase in the VIX. Am I over complicating this?

  97. AAPL and INTC – Phil – Intel seems to have a short window of opportunity to get things right given the fast evolution of devices. For this WiGig technology they are one of the top 6 but are perceived at being at a disadvantage to Qualcomm and Marvell in this article. I also think this is where Phil you are right about Apple.
    Apple probably have one of the best shots at controlling the home environment here by further integrating their cloud service and devices with something like WiGig in Apple TV.  Google with their Motorola patents set top box assets and Google imbedded in TV's  but I don't see them referenced in this WiGig article.  Microsoft has the XBox but they likely need to evolve from there or they will blow that as well.   By investing in GOOG, AAPL, QCOM over time it seems like it will be hard to lose.  
    By the way QCOM has come off a lot, looks oversold and I think selling puts here seems like a good opportunity.  Less risk in some respects than AAPL since they are an arms dealer to many.  

  98. Willex: Just trying to be funny.  I'm also trying to figure out why oil looks so perky, and I think "short oil" may be looking unwise, with the Euro fading.  "Fading" is one thing, but "dropppig off a freaking cliff" would be another, and this is not impossible.  Here's a [rather lengthy, sorry] comment from FT's Longroom, and it is slightly unnerving – today the Spanish Minister of Justice threatened Arturo Mas, President of the CiU, the Catalan Party seeking Catalan independence, with criminal action.
    "The Spanish economy is imploding, government revenues are falling despite higher taxes, and the bank run continues. Spain is running out of runway, and something will have to happen.   Europe has told Spain that, if she applies for assistance from the Eurogroup and agrees to the Troika’s terms, the ESM will lend directly, and the ECB will buy Spanish bonds in the secondary market.  This would appear to be the obvious next step.

    "However, Spain has not yet applied for assistance, and has given three reasons for not applying. First, she says she doesn’t need the money, which is a blatant but understandable lie. Second, she says that she won’t apply until the Troika’s terms are known, and the ECB is more explicit about the size of its intervention in the bond market. Rajoy doesn’t want Spain to be living on an IV drip like Ireland and Portugal, and who can blame him? Thirdly, Spain will not apply for aid unless she can be assured of receiving it. That’s the really scary part."

    According to Reuters:
    “Germany has sent Spain strong signals that it should hold off because German Chancellor Angela Merkel is wary of presenting a fresh aid request to her parliament, euro zone sources say. Spanish officials see more risks to moving ahead quickly without assured German backing, than in delaying a request.”

    "There you have it: Even if Rajoy were satisfied about the terms of the deal he needs, he can’t apply because Merkel won’t put it before the Bundestag. Given all the happy talk in Brussels and Frankfurt about how Europe is moving forward to resolve the Spanish crisis, there is only one problem: the Bundestag. Nothing can be done for Spain or anyone else unless the Bundestag approves. Not all Eurozone parliaments, just one: Germany’s. The entire fate of Europe hangs upon the political calculus of one country’s legislature. …[T]his is Europe’s latest problem: “The Germany that can say no”.  It is telling that Merkel and Schauble are telling Spain to wait. Presumably they hope that the Bundestag will be more accommodating when Spain is teetering on the edge of default. It used to be that one thought that Rajoy was negotiating with Europe over Spain’s bailout. It is now clear that he is negotiating with the Bundestag, which is much less charitable. At this inopportune juncture, democracy [Catalunya] decides to rear its ugly head."

  99. Apple TV
    This is the third try at this since early 2,000s. Last 2 times it was lower definition, pay for free stuff, and it isn't new. Will it be different this time?

  100. zero
    well then i am laughing wih you  LOL.  I just get annoyed when the msm puts the morons out there because like most I have to get my emotions under control to keep from turning into an angry voter.  lifes too short to be pissed all the time.

  101. AApl
    so 640 as a target?   Takes care of Max pain

  102. Shadow – Whether it is Apple with Apple TV/Airplay or someone else, we will all be synching our devices with someone's solution.  My bet is Apple or Google.  Miracast certification for peer to peer wi-fi is a big step in that regard.  Of course Apple is not known for opensource so they will likely evolve their Airplay solution to compete with Miracast.  Apple is a member of the wi-fi alliance, as is Samsung, Intel, Motorola, Qualcomm, TI, Cisco, Huawei, Dell …

  103. AAPL some one must have noticed my complain

  104. AAPL/Yodi – It got stuck but hopefully a bullish consolidation. 

    Oil/Jrom – I told you so.  Why you weren't thrilled to take $90 is beyond my understanding.  You can't play oil if you can't learn to be satisfied with a gain like that:


    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Nov'12 91.63 92.20 89.79 91.81 15:05
    Oct 15
    -0.01 241696 91.86 150511 Call Put
    Dec'12 91.99 92.62 90.27 92.29 15:05
    Oct 15
    0.04 130613 92.28 299769 Call Put
    Jan'13 92.53 93.08 90.80 92.82 15:05
    Oct 15
    0.07 59086 92.76 149014 Call Put
    Feb'13 93.05 93.55 91.33 93.29 15:05
    Oct 15
    0.07 21241 93.24 65256 Call Put

    Still 600,000 in the front 3 months so they're going to have problems.  Had to churn 241,000 contracts just to get down to 150,000 open at end of session today – that does not bode well but oil can go up and down $2-4 a day into expirations like this.  

    Europe/Yodi – I know I prefer Europe.  

    Your welcome Jfaw.  Can't win them all and you shouldn't try to. 

    Bombardier/Ink – Good luck to them.  Look at all the delays those guys had.  You can compete against old haulers like the Chinese are doing but to go head to head with those guys on state of the art is a very bad plan.

    HRB/Jbur – No, when in doubt, sell half is a very useful rule – just have a line in the sand at which you will give up waiting for a better sale and realistic expectations of what constitutes a better sale.  With that big dip from last week, their internal vol is actually still pretty high and you're getting a decent price for the puts.  I'd sell the 2015 $15 puts and calls for $6 as I prefer a conservative play for long-term holds.  That drops you down to net $6.60 and you should be thrilled to have to DD and you can just go to sleep for 2 years and collect your $1.60 in dividends so you get about 1/2 off the table now and another 25% over time and you either still own the stock dirt cheap or you're called away with a 150% gain – isn't that nice and relaxing?  

    QCOM/Stu – I like them and BRCM and, don't forget CSCO.  Was hoping for more of a sell-off.  

    Spain/ZZ – The ESM doesn't actually have any money.  Just about $35Bn has been put in place so far – it's all a joke until Germany really puts up some cash.  

    AAPL TV/Shadow – HDTV was a big step forward.  Now we have the resolution to make it work.  Also, advances in Wifi are critical.  My Tivo does cool stuff but it takes 30 seconds per screen to move around so it's not worth it.  

    AAPL/Willie – Let us pray. 

    There was a big volume bar (15mins) on AAPLs move from $630 to $633 – kind of keeps me disinclined to cover…

  105. after 5 years of telling people to buy china all the way down…jim rogers now loves russia, not china…hahahaha…russia will impode as oil implodes next few years.

  106. why does anyone bother with some of these claghorns

  107. Pharm / SGEN
    I have a Dec25-30 Bull CS and I sold the Dec 25 put short.  The Bull CS is now 1.42, and I paid 1.56 for it.  Would you continue to hold, or close it out.  It seems to be having a hard time getting over 26 and the decay might start setting in soon.  

  108. Phil / ESM-Bundestag: True.  And it probably doesn't help that Italy is not exactly pulling for the Spanish package; "Italy's share of a potential 100 billion euro ($130 billion) aid package for Spain would represent the equivalent of 1.5 percent of Italy's gross domestic product, Italian Finance Minister Vittorio Grilli told La Repubblica, Reuters reported Oct. 15. Italy's public debt has increased 4 percent because of EU aid given to Greece, Ireland and Portugal, Grilli said" [from Reuters]

  109. CSCO/Phil – Used to like them but I see them a bit like INTC now.  The move to software defined networks may be an issue for their margins.  They may have got lucky with the blocking of Huawei sales in the US, but Huawei will be a formidable competitor in the rest of the world.  CSCO has good cash flow and cash position so they can go back to their old growth model and buy their way to success though.  

  110. I recall reading that Spain also has to pony up about $8B in the next week or two to fund the ESM.

  111. Pharm/ any trade idea on VRTX to recoup the loss?

  112. Phil:
    Nice calls on AAPL. But sure is/(hopefully was!) a hard way to make a living! :)

  113. Phil/AAPL
    Is there any significance to the 100 day moving average compared to the 200? AAPL seemed to bounce off that and now all the technicals are starting to look better – like it's preparing for a run up before earnings.

  114. Fascinating article /  Excerpt:  "The perfectly efficient market is by nature random. When the market has too much influence over the economic reality it was designed to mimic, the flow of information becomes increasingly less efficient with powerful consequences. Information becomes trapped in a self-reflexive cycle whereby the market is a mirror unto itself. Lack of randomness ironically leads to chaos. I believe this is what George Soros refers to as “reflexivity”."

  115. Apple TV
    They didn't offer HD TV until now limited. Netflix and cable also have a not real HDTV, compare over the air. I give the WIFI to them but that isn't new, I have had it in my house for years. The video freaks will reject it just like the others. If they could team up with sattelite that would do it. Direct TV is with Verizon now, DISH may die, and cable has a huge bandwith problem.
    Don't forget you have to get it to the hub. How many people get all excited about watching the super bowl on an ipad or phone. It is all about the big screen and surround sound. Free TV is the only full high definition. It doesn't matter on a 7" screen and earbuds.

  116. Buying after the bell, that is different.

  117. Rogers/Angel – No longer a person to be taken seriously.  

    TASR back over $6. 

    Italy/ZZ – Isn't that ridiculous?  After Spain, they'll be next in line for a bailout. 

    CSCO/Stu – I think different than INTC because you can't touch their routers and the more phones and stuff get smart, the more need for CSCO products.  Huawai is a legitimate security threat and Australia, Canada, UK and others (probably Japan will) are also stopping them from becoming China's ears on their Internets.  Even if they weren't owned by the Chinese Government, the fact is that Chinese hacker attacks used exploits in their system to steal data on several occasions so that just makes them bad tech – if nothing else.  

    Spain/Ink – Don't worry, they can borrow it from the ESM.  

    AAPL/DC – Yes, way too much stress.  Hopefully tomorrow they gap up to $695 and we can just close it.  ;) 

    100 dma/DC – All ma's have some value and, if you run enough of them, you'll find one that fits your premise.  That's why I almost never alter my chart views.  You can play with charts and convince yourself of anything because each time-frame tells a different story – the trick is to pick a time-frame YOU are comfortable working with and stick with it.  Generally, I look at 10mins or 15mins – preferring 10 mins if the charts have it for intra-day and then I'll pull back to 1hr to confirm and, other than that, it's day's and weeks and 90% of the time I use StockCharts Gallery Veiw for consistency.  That way, a pattern has to really form for me to start watching it but if you flip from 5 to 15 to 30 to 45 to 60 when looking at something – you can convince yourself of anything and that's not the point of using charts, is it?

    Good day for the markets and the $7 AAPL gained off the bottom is our only hedge at the moment….

    Good article ZZ, thanks.  That's why I subscribe to those guys.  

    CNBC says if Obama wins, we are DOOMED!!!  

    HD/Shadow – That's what I said, they had to/still have to wait for HD.  

  118. Shadow – I agree, the 7" screen doesn't do it but the WiGig and all of the plug and play devices and USB hubs will get that content from your tablet or computer to your screen.  Have you seen the smartstick?
    To me its a transiitonal piece of hardware, but it is a nice portable tool for now to take for example your Netflix content with you to your cottage/chalet/office etc.  

  119. Phil:  Speaking of Soros — one of smartest guys out there by a country mile — here's some of his comments this afternoon:  Excerpt: "Germany should either step up to fix it or step out of the currency union altogether", fund manager George Soros said on Monday…"The crisis 'is having tremendous impact in the state of affairs, it is pushing the EU into a lasting depression, and it is entirely self-created,' said Soros…'There is a real danger of the euro destroying the European Union….Germany could leave the euro, and the problem would disappear in thin air,' as the value of the euro declines and yields on the bonds of debtor countries adjust.”   

  120. HRB/ Phil: Thanks for the assist Phil. Was able to bring net down to $6.65 on the sale. Decided to sell the full position since the internal Vol was pretty good and I just want to move onto other things.
    I can't tell you how much I enjoy the LONGER trades. I really suck at the shorter term stuff (APPL losses confirm that!). I believe that what Buffett says is true, know your circle of competence and stick with it.

  121. Phil:
    You posted a site a couple of days ago where they would pay you $170 for your old I-phone. Do you remember what that site was called? THX

  122. Angel, I had to google the Claghorn reference, could you keep these references to this century. That's a joke son!

  123. Fascinating article about Clinton/Obama by John Heilemann (Game change author)

  124. Phil:  Here's a Chuck Schumer WSJ article about tax reform, suggesting he favors policies not dissimilar to the one's [I think] you have recommended, but with an ulterior purpose.  I dunno, could be… .

  125. Angel – RE: Senator Claghorn
    "… The most famous parody, which ironically has outlasted its source in public memory, is the Warner Brothers' Looney Tunes classic animation character, Foghorn Leghorn …"
    "… Ironically, however, Delmar recalled that after Warner Bros. copyrighted Foghorn Leghorn, he had to ask their permission to play the character elsewhere …"

  126. stj—thanks--will let you know when I am here next—it would be fun to get together

  127. Looks like I missed a fun day…

  128. That would be cool Savi – looking forward to it..

  129. Isn't called job creation?


    Except Mitt Romney was not a businessman; he was a master financial speculator who bought, sold, flipped, and stripped businesses. He did not build enterprises the old-fashioned way—out of inspiration, perspiration, and a long slog in the free market fostering a new product, service, or process of production. Instead, he spent his 15 years raising debt in prodigious amounts on Wall Street so that Bain could purchase the pots and pans and castoffs of corporate America, leverage them to the hilt, gussy them up as reborn “roll-ups,” and then deliver them back to Wall Street for resale—the faster the better.


    That is the modus operandi of the leveraged-buyout business, and in an honest free-market economy, there wouldn’t be much scope for it because it creates little of economic value. But we have a rigged system—a regime of crony capitalism—where the tax code heavily favors debt and capital gains, and the central bank purposefully enables rampant speculation by propping up the price of financial assets and battering down the cost of leveraged finance.


    So the vast outpouring of LBOs in recent decades has been the consequence of bad policy, not the product of capitalist enterprise. I know this from 17 years of experience doing leveraged buyouts at one of the pioneering private-equity houses, Blackstone, and then my own firm. I know the pitfalls of private equity. The whole business was about maximizing debt, extracting cash, cutting head counts, skimping on capital spending, outsourcing production, and dressing up the deal for the earliest, highest-profit exit possible. Occasionally, we did invest in genuine growth companies, but without cheap debt and deep tax subsidies, most deals would not make economic sense.

  130. Soros/ZZ – The problem with Soros is, he may be totally right but it's hard to get people to listen to him as everyone thinks he has an agenda.  That is, of course, not unfair as this guy has knocked countries on their asses in the past.  

    HRB/Jbur – You're welcome.  Now isn't that relaxing?  

    IPhone/DC – I don't know which one I was looking at but here's a few.

    LOL Rpme!   Here's the original

    Schumer/ZZ – Check out how slanted that article is with little snide comments and such.  This is why I hate the Journal these days.  Schumer gets it and that makes him public enemy #1 to these guys.  

    Big Chart – We don't like to see the S&P stopped dead at 1,440 and the Nas is below the 2.5% line (3,075) and the RUT is stuck under the 50 dma (828) – all not acceptable if we're to get more bullish.

    Stockman/StJ – He does a good job of explaining the scam but too complex for most people to differentiate what Romney did as job destruction and never job creation.  

  131. It's just a guess, but perhaps a psychologically consistent one, that the deal signed between the UK and Scotland today giving the latter the right to referendum on Scottish independence in 2014 will give the Catalan push for independence increased vigor.   It is very hard-working and financially-sophisticated region which produces 20% of the GDP of Spain's 17 autonomous communities, Catalunya is one-third the land area of Portugal and one-quarter the land area of Greece, although it's GDP is 1/3 greater than Portugal's and slightly greater than Greece, approxmating that of Denmark, and is the mostly populous Spanish community, approximating the population of Austria at 8.4 million..
     Their GDP might not change much if Catalonia were to join the Eurozone, and would probably improve if it opted out of the Euro and simply remained a member of the EU.  In short, Catalan autonomy within Europe is economicaly feasible.  Politics are altogether something else.   My comments are pure speculation, since Spain's chief prosecutor is threatening the head of the Catalan nationalist party with criminal action at this point, but I wouldn't discount Catalonia's stand-alone economic potential within Europe. 

  132. Phil: The Schumer article is indeed very slanted.  They paint him as wanting to increase taxes on rich individuals, reduce taxes on big corporations, and ignore the high personal income tax rates paid by small business and Sub S corporations.  That has to be a distortion of his views.  A particular sleight of hand is stating that the richest 1% pay "38.7%  of all income taxes", without pointing out what the effective rate is that they actually pay on this income.
    It also ignores the fact that ALL income of wage earners is taxed above a certain threshold, but increases in net worth, which tend to accrue to the minority of the population with significant capital, is not taxed at all until "realized" i.e., until the asset is sold, which effectively converts an income tax into a consumption tax.  I would guess that the rich consume quite a small percentage of their net worth annually, allowing most of their asset values to compound in a way that earned income cannot.  This is not entirely unfair, since they probably took risks to earn it, and it can always fall in value [giving them a loss carryforward if the loss is realized], but it's intellectually dishonest to oversimplify it as the WSJ article does.

  133. Nobu Dinner ALERT!!!!
    To all dinner participants
    I am sorry but I have to change the deadline for the dinner payment
    Could you please send me the $148 ASAP as Nobu wants to me to  confirm the reservations in 72 hours —your payment is your confirmation
    Thank you

  134. Nobu – Parm, send payment to savi, right?

  135. Question for the experts. Wish to follow the presidential debate today. Sitting in Europe and need to receive same via internet. What is the best way to go. TIA

  136. Good morning!

    Dollar down to 79.61 so you know the Futures are up, but only a little so far.  Euro at the magic $1.30 line and Pound just under $1.61 with 78.83 Yen to the Dollar keeping the Nikkei happy enough to make it back to 8,700.    

    Oil $91.72, gold $1,740, silver $32.84 (nice buy for /SI at $32.85 line), copper $3.70, nat gas $3.50 and gasoline $2.8575.  

    Tuesday's economic calendar:
    7:45 ICSC Retail Store Sales
    8:30 Consumer Price Index
    8:55 Redbook Chain Store Sales
    9:00 Treasury International Capital
    9:15 Industrial Production
    10:00 NAHB Housing Market Index
    12:00 PM Sarah Raskin:'Financial Regulation'

    Notable earnings before Tuesday’s open: DPZFRXGS,GWWIRWDJNJKOMATOMCPNCSTTUNH

    Notable earnings after Tuesday’s close: APOLCREE,CSXFTNTFULTIBMINTCISRGLLTCURI

    2:58 AM Asian shares are mixed, supported by overnight gains in the U.S., where Citigroup's earnings and retail sales beat forecasts. However, there's caution ahead of China's GDP data on Thursday. Japan +1.4%, Hong Kong flat, China -0.3%, India +0.3%.

    3:45 AM EU shares open strongly and add to gains from yesterday on a report that Spain has crystallized the form its bailout request would take. EU Stoxx 50 +0.9%, London +0.5%, Paris +0.5%, Frankfurt+0.7%, Madrid +1.1%, Milan +0.7%.

    Spain is considering asking for a credit line from the ESM for its bailout so that the country would only take loans when needed, a government official tells reporters. With bond yields below danger territory, Spain is in no rush to ask for assistance; the hope is that just the existence of the line will be enough to send borrowing costs plummeting and the stock market surging. 

    EU new-car registrations for September highlight the the sector's troubles in the region, slumping 10.8% to 1.1M, the fastest drop in a year. VW -13.8%, Ford (F) -15%, Opel (GM) -16%, Renault -33% but BMW +11%. In Jan-Sep, sales -7.6% to 9.15M. (PR)

    Eurozone August exports +3.7% M/M vs. -2.2% in July. Imports +2.1%. Trade surplus falls to €6.6B from €14.7B and vs. consensus of €10B. In August 2011, the deficit was €5.7B. (PR)

    Eurozone September CPI +2.6% Y/Y, down from a flash estimate of +2.7% but unchanged from August and still well above the ECB's goal of just below +2%. Inflation is being boosted by rising energy prices and tax hikes that are part of austerity programs. (PR)

    U.K. September CPI falls to 2.2% Y/Y from 2.5% in August and hits its lowest level since November 2009. The decline brings inflation closer to the BOE's 2% target, although new gas and electricity price hikes will probably cause inflation to climb higher again. (PR)

  137. Good Morning
    please send dinner payment to me via pay pal —
    Thank you

  138. Catalonia/ZZ – Someone needs to do some math for those guys.   They certainly owe more than their fair share of debt and, if they break away from Spain, they aren't going to be able to stick Spain with it – not without a fight.  If Catalonia separates, they take their banks with them – as well as the 3M homes that are upside down on their mortgages (50% decline in housing prices since 2007).  Their GDP is $315Bn but, even if just 1M homes need to be written down by 20% and let's say that's just $40Bn – you're talking about taking a 10% hit to GDP just to stop their banks from busting – not a good way to start a new Government.  They they'll need to establish all sorts of Government services and set up safety net programs quickly and in such a way that their riot-prone people don't burn down the new Government offices (oh yes, need army guys too!) and they'll need a whole big Government to write a constitution and establish relations with other nations – especially that hostile Spain to the North…  

    It's one thing to talk about independence but quite another to actually do it.  

    Schumer/ZZ – He's being vilified by the right because he is likely to be the lead negotiator of any budget deal so the sooner they paint him as a psychopath, the better.  Intellectual dishonesty is pretty much all they've got – have you seen that Romney/Ryan tax plan?  No?  Well, no one else has either – That's how Romney can go from talking about $5Tn in tax cuts to the wealthy to denying they exist overnight – it's easy when you don't write anything down…


    I know I'm a little behind but this was a good AAPL sketch on SNL:

  139. Classic Steve Jobs: