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Tuesday – Testing 1,440 – Again


That's getting to be a serious line – especially on Tuesdays and Wednesdays.  Last Tuesday it was a floor, as the IMF made calls for a Global Recession, the Tuesday before that, we started and finished there and it was Wednesday's post (Oct 3rd) which I titled "Will We Hold It Wednesday – S&P 1,440 Edition – Again" because that had also been the title of the previous Wednesday's post and the previous day we had done a brilliant study of the Dow components where we determined that 13,600 was not likely to be broken until we got earnings to support it.  NOW it's earnings season

As you can see from Dave Fry's intraday chart of the SPY, it was indeed time to rally yesterday but we did have a nice little dip at the open, which allowed us to buy back our AAPL short callers in Member Chat.  At 10:43, we also went bullish on Oil off the $90 line, playing the Futures (/CL) as well as USO $32 calls for $1.53 and $31.50 calls for $2.02.  Oil topped out at $92 for a nice $2,000 per contract gain in the Futures while we took $2.05 and ran on the USO $32s for a 35% gain and $3.05 on the $31.50s for a 50% gain on the day.  Now we're more likely to wait for tomorrow's inventory report (10:30) and we'll be looking for an opportunity to go short – hopefully back around $93.  

XLF WEEKLY Knowing your trading ranges allows you to take full advantage of these little dips – probably one of the highest-percentage ways to make money day-trading.  Another nice little intra-day trade, which I mentioned in the morning post, was our TNA $61 calls, which fell to .45 at 10:03 so we grabbed 20 of those for our $25KP for $450 and they finished the day at .75 – up 66% for the day for a quick, virtual $300 gain on the day but we got 1/2 out at .70 as part of a larger position we had been scaling into.  

Other than that, we added a long-term play on FTR and discussed adjusting HPQ in our Income Portfolio but, generally, we're already bullish so there wasn't much to do but watch and wait.  There was nothing about the close to make us change our mind so we stayed very bullish into the close as the progress yesterday was as good as we could have hoped for with our bullish premise.  

Hopefully the Russell will continue it's bullish trajectory (828 at the close) as we need about 5 more points to put our TNA calls in the money and, of course, XLF is doing nicely for us (also discussed in yesterday's post) and should be even better today as both STT and GS had nice beats.  Even C popped 5% yesterday so the only bank we're still worried about is BAC and then we can go off to the races towards our $16.50 target.  

Speaking of C – CEO Vikram Pandit mysteriously resigned this morning and that's knocking back half of yesterday's gains in pre-market trading.  It's too early to say what this means – perhaps yesterday's earnings were simply "mission accomplished" after Pandit came in to save the bank from disaster 5 years ago but the suddenness of the resignation and the fact that COO John Havens is also stepping down and that Pandit is "immediately" off the board as well – raises enough questions to let the rumor mill run wild for a while.  

imageEurope is in a super mood this morning, led by a 2% gain in Spain with the bourses there up about 1% so far.  Spain seems on track to work out terms of a bailout and, even more importantly, Greek bonds are making new highs as investors are beginning to accept the concept that Greece is, finally, "fixed."  

"There has been a sea change in market sentiment since June when policy makers acknowledged the need for fiscal unity," said Richard McGuire, senior fixed-income strategist at Rabobank International, adding that investors "are now trading from a euro-makeup bias rather than a euro-breakup stance."

The yield on the bond maturing in 2023—the closest Greece has to a 10-year benchmark-fell by roughly two-thirds of a percentage point to 17.2%, according to Tradeweb. The fall means yields are now at their lowest level since the restructuring, falling past the 17.6% reached in late March. Still, with volumes light and yields in unsustainably high territory, analysts said Greece faces a long hard slog before it wins the trust of long-term investors.

All this good news out of Europe has popped the Euro to $1.3045 this morning and that's knocked the Dollar down to 79.40, down 0.5% from yesterday and our futures are up 0.5% so surprise, surprise – we're not going to take this morning's "rally" too seriously but we just want to hold our lines and we'll be able to stay bullish overall.  We certainly won't be alone – short interest on the NYSE has dropped to a 5-month low but is still, as you can see from the chart on the right – very historically high.  

As Zero Hedge puts it:

Since the Fed desperately needs inexperienced, "weak-hand" shorts to reenter stocks to facilitate its "transmission mechanisms" (all of which can be summarized in two words: "stock ramps"), and since the only time shorts re-enter the market, even against their and everyone else's better judgment, is just after major market tumbles, expect the Fed to prepare for some more stock market acrobatics whose sole purpose is to get a fresh batch of shorts in, just so the squeeze trap can be replayed over and over, as it has been for the past 4 years.

They certainly need to do SOMETHING to get money flowing back into the market.  This chart of the money flows out of stocks and into bonds during the 4 years (so far) of QE show just how weak the underlying bid on the stock market really is.  The Fed was right to step in with QInfinity last month because, if we have another market shock – we'll start to see actual outflows from equities – and that can cascade into BIG TROUBLE very quickly.

But, for today, we're still hopeful.  China's Golden Week Retail Sales were up 15%, less than last year's 17.5% but much better than expected.  Germany's ZEW Index rose to -11.5 from -15 and -18.2 in previous reports.  ZEW is more of a forward-looking survey so things are not quite so dire as they are being painted by the press.

This morning we had in-line earnings by KO (which we expected as they are over 50% International) with beats by DPZ, FRX, GS, IRWD, JNJ, MAT, OMC, PMC, STT and UNH, who also raised guidance.  GWW and WWW missed but only by a bit and PKG, one of yesterday's misses, also guided up but will still open down on the headline penny miss.  Our Industrial Production is up 0.4% and that's double expectations so good for Corporate America and Capacity Utilization was up 0.3% to 78.3.  The 40-year average is 80.3 so we're that far from  getting back to "normal" from that perspective and that of course would be about 5.6% unemployment as well.

We need to find some AAPL buyers to get this market over the hump and, of course, we need not to fall back to 1,440 on the S&P – if we do, we'll have to add some short plays – like the TZA spreads we already have (see last week's post). 

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  1. 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.  
    PS Good morning all.  Hope you caught that silver play.  I just have no idea how long to hold…

  2. 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

  3. Our favorite Koch brothers at it again.

  4. yodi – Live Video – C-SPAN

  5. Good morning!

  6. All:  From Savi regarding Dinner Nobu for PSW Does Vegas

    Money is due ASAP b'c Nobu is being a PITA.  Get $$ via paypal out right away!



  7. down oil down

  8. diamond
    Great thanks what time do they start.

  9. yodi – From C-SPAN link:
    7pm (ET)
    9pm (ET)
    10:30pm (ET)

  10. Oil Lines

    R3 – 95.05
    R2 – 93.63
    R1 – 92.64
    PP – 91.22
    S1 – 90.23
    S2 – 88.81
    S3 – 87.82

    Yesterday's high and low – 92.2 / 89.79

  11. lflan:
    Your thoughts on AAPL earnings and I am curious how you will play them with your January position. TIA.

  12. Good Morning!

  13. QCOR

  14. Phil
    big drop in AONE. any news? do you see a trade in AONE? Thx 

  15. A123 Systems (AONE) officially files  for bankruptcy protection. The electric car battery maker warned last night  it might file for bankruptcy after defaulting on a loan payment. It remains to be seen how the filing affects A123's financing deal with China's Wanxiang Group. Shares -50% to $0.12.

  16. PHIL,
    Currently, have Dec BCS, GLD173/174, with gold in a down trend what would you recommend?
    I am new to PSW, and enjoy the fellowship of the members, their willingness to share knowledge
    and advise.  Look forward to the future with your shared expertise.  Thank you in advance. 

  17. The big mover in earnings tonight is ISRG. They usually move by 13% on earnings release. These guys never miss but yet last time, they lost 15% in 3 days. However, the Oct straddle prices only a 7% move so it seems to me like it is mispriced. It's one occasion where buying the premium might work…

    Any ideas Phil?

  18. Biggest Borrowers from Uncle Ben…

  19. diamond
    Thanks on debate info

  20. Pharm – just a quick thanks regarding all your insights recently! 

  21. Phil/AAPL:
    Is that AM drop something you think we can take advantage of daily selling calls at the the EOD and buying them back early in the AM. It has been doing this since Friday.

  22. Pharm/ Re VRTX what would be your play now that they seem to hold $53-$55?

  23. XOP – someone moved 10K of Dec 50s for $1…..

  24. GLD – I would hold the BCS in Dec.  Plenty of time.  In actuallity, I would buy back the 174s, and sell weeklies against the position… this weeks 170s……3/4 cover.

    VRTX – give them another day, we may roll down from the 62.5s.  I want to see the candles play out.

  25. Good morning! 

    AAPL continues to be frustrating, down $6 from pre-markets but everything else is strong so no reason to cover yet. 

    XLF flying at $16.15 as C recovers.  Silver coming along nicely at $33 but don't be greedy as I'm not sure the Dollar will stay below 78.50 (now 78.42). 

    Kochs/RJ – Not to defend them but if you work for the Koch's and you don't know they want you to vote Republican, you're kind of thick…

    AONE/Crussell – Yes, they filed for BK, down 50%.  No trade, who knows how they'll dilute?

    GLD/Rob – I think that's a fine target but you've still got $2.82 in your Dec $173s, which is 180% of your max payout on a spread and you can roll them out to March $182 at $3 for .20 and then you bought a lot of time and, if GLD goes back over $170, then you can roll the Dec $174 callers (now $2.45) to Jan $177s even (now $2.50) and, even if you have to roll up $3 per month, you'll still end up in a better vertical but, any time the front-months expire worthless, whatever the long puts hold onto over .50 will be profit.  

    ISRG/StJ – Looking at UNH's numbers and XLV in general, I would think ISRG is doing well.  The stock is low in the channel, right at the 200 dma,  I think the way I would play them for earnings is to set up an April $510/485 bear put spread for $10 and sell the Oct $500 puts for $11 so a net $1 credit on the combo and ISRG would have to be below $475 before you're down more than the $25 you make on the spread and, of course, the short puts are rollable and we like the company.  Let's do 2 of these in the $25KPA to see how it goes.  

    AAPL/DC – It is starting to get reliable in the mornings.  More to the point, I just think there's a very big seller at $636 who has yet to be exhausted.  Without news, it's going to be hard to squeeze past him until he simply runs out of shares to sell.  On the whole, you're talking about $5 moves on a $630 stock – if it were a $63 stock that moved up and down .50 every day would you be looking for ways to play it or would you simply be patient and wait to hit $65 if that's what you expect?

  26. 79.51 on the Dollar – it was fun while it lasted.  Now we'll be more impressed by a continued move up…

  27. At the open: Dow +0.51% to 13493. S&P +0.52% to 1448. Nasdaq +0.31% to 3074.

    Treasurys: 30-year -0.4%. 10-yr -0.17%. 5-yr -0.06%.

    Commodities: Crude -0.38% to $91.97. Gold +0.38% to $1744.25.

    Currencies: Euro +0.78% vs. dollar. Yen +0.2%. Pound -0.3%.

    Market preview: Stocks are set for a second day of gainsthis week as Spain says it may ask for a credit line rather than an actual loan and heavy hitters such as Goldman Sachs (+0.3%) follow Citigroup in besting Wall St's finest in their earnings reports. Citigroup (-1.7%), of course, is grabbing the attention following the resignationof CEO Vikram Pandit, who presided over an 89% loss in shares. S&P benchmark futures +0.5%Later: NAHB Housing Market Index, Fed's Sarah Bloom Raskin (12:00) 

    10:00 AM On the hour: Dow +0.74%. 10-yr -0.26%. Euro +0.87%vs. dollar. Crude +0.14% to $92.45. Gold +0.49% to $1746.05.

    11:00 AM On the hour: Dow +0.87%. 10-yr -0.26%. Euro +0.58%vs. dollar. Crude +0.03% to $92.34. Gold +0.49% to $1746.15.

    Sept. Industrial Production: +0.4% vs. +0.2% expected, -1.4% prior (revised). Capacity utilization 78.3%, in-line with consensus. 

    Sep Consumer Price Index: +0.6% +0.5% expected, +0.6% prior. Core CPI +0.1% vs. +0.2% expected, +0.1% prior.

    NAHB Housing Market Index: 41 in-line with expectations, 40 previous

    Redbook Chain Store Sales: +1.8% Y/Y vs. +1.6% last week.

    ICSC Retail Store Sales: flat% W/W, vs. +0.2% last week.+2.7% Y/Y, vs. +2.8% last week. The falling temperatures are keeping up traffic as shoppers hunt for seasonal goods. The report sees steady sales rates through October.

    Expect the Bank of Canada to drop any hint of hawkish guidance from its policy statement next week, says Derek Holt following Governor Carney's speech yesterday. It's "fairly clear that (Carney) is priming markets for a forecast re-write and a more neutral to dovish bias." The loonie remains near its highest levels of the past 18 months, buying $1.0140.

    Germany is open to a precautionary credit line for Spain,reports Bloomberg. Spain is supposedly interested in a bailout "line of credit" in which the ESM would approve but not disburse any funds until Spain draws on them – more "bazooka in pocket" stuff. The euro adds 35 pips to already solid gains, +0.8% to $1.3049. 

    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)

    Russia threatens to crack down even further on cigarette selling, with comments out from Prime Minister Dmitry Medvedev accusing Philip Morris (PM) and British American Tobacco (BTI) of intentionally hooking women and children on the product. An anti-tobacco bill in the nation hits Parliament later this month. 

    Retail sales during China's Golden Week grew 15% during the holiday period, lower than last year's 17.5% pace but ahead of many forecasts. The crucial shopping period saw a healthy uptick in tourism which could bode well for gaming companies with Macau operations such as Las Vegas Sands (LVS), Melco Crown (MPEL), Wynn Resorts (WYNN), and MGM Resorts (MGM).

    "Rates go down you get killed, rates go up you get killed," says hedge fund manager Brad Golding, summing up the situation for mortgage REITs. The days of double-digit yields are over – at least at Annaly (NLY), where new co-CEO Wellington Denahan-Norris calls it "fantasy" to think the company can just jack up leverage to replicate the returns of the past. 

    Vikram Pandit clashed with the board at Citigroup (C) over "strategy and performance," updates the WSJ. David Faber doesn't mince words and says Pandit's "firing" happened in the past 12-24 hours. C now +1.5%Updated: Details on the clash. (more)

    PNC Financial dives 4.3% following this morning's headline beat on earnings. The bank reported total loan growth of 1% Q/Q, with net interest margin declining 26 basis points to 3.82%. Mortgage banking is a bright spot, contributing $36M to the bottom line after accounting for a $213M loss in Q2. Loan loss reserve release adds $28M to profits. (PR)

    More on Goldman Sachs (GS): Investment banking revenues of $1.16B were up 49% from last year's horrid Q3, but down 3% from last quarter. Revenues in Fixed Income, Currency and Commodities (FICC) rose 1% Q/Q. The compensation and benefits:revenues ratio remains at last year's pace of 44%. Shares -1.2% premarket after an initial pop as the "beat" isn't due to strength in the company's core operations. (PR)

    Regulators and lawmakers have focused on investigating high-frequency trading in stocks, but natural gas traders tell WSJthey’re being pushed out by the emergence of HFT seeking profits from the gaps between prices offered to buy and sell gas futures contracts. One veteran trader says staying out of the market costs him broker fees and missed opportunities, but jumping into the fray is too risky.

    Plugging back in: General Motors (GM +0.6%) says production on the first luxury plug-in hybrid, the Cadillac ELR, will begin in late 2013 with a short turnaround before it hits the market. The automaker also says production of its Volt, Ampera (Opel) and Holden Volt (GM Australia) models picked back up after a plant was idled for four weeks.

    Education stocks are on watch after Bridgepoint Educationreveals it's under investigation by the DOJ. The sector could take a hit with an increasing focus on the practice of companies of tying compensation to recruiting levels. Lawmakers (and taxpayers) are less than thrilled with the prevailing quantity over quality sentiment in the sector. BPI -13.5% premarket.

    UnitedHealth (UNHQ3: net profit +28% to $1.6B. Revenue growth fueled by increase of 2.15M consumers served over the past year, including 670,000 new consumers in Q3. Consolidated medical care ratio -170 bps to 79%. Ups 2012 EPS outlook to $5.20-$5.25 vs. consensus of $5.10, and cash flows from operations to $7B. (PR)

    More on Coca-Cola (KO): Global volume up 4% Y/Y, with solid but unspectacular gains across every major geographic region. Worldwide still beverage grew 10% with packaged water, juice drinks, and sports drinks contributing. Currency headwinds affected profits negatively by 7% during the period. On a YTD basis, cash from operations is up 15%. Shares -0.4% premarket. (PR)

    Quick takeaways from Coca-Cola's Q3 report : 1) The Street already chopped close to a nickel off of consensus estimates from just three months ago, taking the shine off the earnings "beat" a bit. 2) The read-through from strong growth in select emerging markets helps make the case Coca-Cola is still a growth story. 3) Energy drinks will remain a focus of the company as marketing efforts continue to help boost results.

    Tidbits from Coca-Cola's (KO -1.2%) earnings call: Global growth is the major focus of the Q&A portion of the company's earnings call as execs call macro factors too tough to overcome in Europe for the time being. In China, the company sees volume staying weak for the next six months although its business model stays viable. A bounce back in Japan is forecast with an improved pricing atmosphere setting up. Investments in Latin America are starting to ramp up in front of the 2014 World Cup slated for Brazil as it sees big potential down the road across the continent. (webcastearnings,breakdown)

    Shares of PepsiCo (PEPgain 1% in premarket trading as rival Coca-Cola manages to control its costs just enough to scratch out an earnings beat. Of interest to Pepsico shareholders, Coca-Cola showed broad geographic sales gains in a variety of beverage types, a trend that PepsiCo hopes lift its own results with growth in snacks already forecast to be strong.

    More on Domino's Pizza (DPZ): Same-store sales up 3.3% Y/Y in the U.S. and 5% globally. Total store count up 116 to 10,040 with international growth outpacing domestic by 13 to 1. Shares+3.3% premarket. (PR)

    Shares of Domino's Pizza (DPZ +7.8%) rally after the company reported strong Q3 numbers (III). Management continues todraw praise for its Goldilocks approach to international expansion as the company has now extended its impressive streak of only missing profit estimates once since 2007.

  28. Phil/AAPL:
    I see your point. THX.

  29. More on A123 (
    AONE -72.8%bankruptcy protection: A123 agrees to sell auto business assets to Johnson Controls (JCI+0.4%) for $125M, including tech, products, customer contracts and facilities. JCI will provide A123 with $72.5M in financing to support its continued ops, and will license back certain tech for the company's grid, commercial, government and other ops, for which it has received interest. A123's financing deal with China's Wanxiang Group is off. 

    The bankruptcy filing of A123 Systems could turn up the heat on Tesla Motors (TSLA) with another high-profile failure in the alternative energy industry reverberating. Though the reality of Tesla's business model probably falls somewhere in between President Obama's goal of having 1M electric vehicles on the road by 2015 and candidate Mitt Romney's "loser" label on the sector, the spotlight on Tesla's repayment schedule to the government is likely to stay bright.

    StemCells (STEM +3.6%) moves higher today after launching four new human neural stem cell kits under its SC Proven brand for use in neuroscience research. Each kit will contain high purity, multi-potent neural stem cells derived from a different area of the human central nervous system, and will provide researchers with a platform with which to perform a broad range of assays and tests.

    Intel (INTC) and IBM (IBM) are expected to report contrasting fortunes when they release their Q3 earnings after the close today. Analysts estimate that Intel's EPS fell to $0.50 from $0.65 a year ago as revenue dropped 7.1% to $13.23B. IBM's EPS is seen rising to $3.61 from $3.28 but revenue slipping 3% to $25.36B.'s Pete Najarian criticizes Intel for being late to mobile but praises IBM's "magnificent job" on acquisitions, cloud and data. 

    A pep talk given by Zynga (ZNGA) CEO Mark Pincus at a meeting where he disclosed Q3 results would miss expectations wasless than inspiring, a source tells the NY Post. "He talked about the focus on mobile and looking for new ‘mechanics’ and prescribed things in a very analytical way …  nothing was mentioned about creativity." The culture fostered by Pincus, a frequent subject of criticism (IIIIII), appears to have contributed to a mass exodus of execs, and led many to ask whether the Zynga founder should step down. (also)

    Are they nuts? Microsoft (MSFT) finally announces pricing for its Windows RT (ARM-based) Surface tablets. The cheapest version (32GB, no Touch Cover) will cost $499, while the costliest model (64GB, Touch Cover included) goes for $699. The RT models run on an Nvidia (NVDA) Tegra 3 processor. Still no word on prices for the Intel-based Windows 8 Pro models (they'll likely be higher). Surface goes on sale on Oct. 26. 

    More on Microsoft Surface: The WSJ reports Microsoft hasplaced Q4 orders for 3M-5M Surface tablets, a level said to be on par with initial production for the Kindle Fire and Nexus 7. The pricing for the RT models, which don't support existing Windows apps, indicates Microsoft is either: a) Comfortable competing against the iPad without a pricing edge, in spite of the iPad's huge lead in mindshare and apps. b) Keeping prices relatively high in order to placate disgruntled OEMs.

    Amazon (AMZN) will be providing Santa with a small army to make sure Christmas presents arrive on time: the e-commerce giant says it will hire 50K seasonal workers for its U.S. fulfillment centers this holiday season. For reference, Amazon, which has beenramping capex and building fwarehouses left and right, currently has 56.2K full-time workers, more than 20K of whom work at 40 U.S. fulfillment centers. 

  30. Phil,
      I have sold JAN 13 NLY $17.50 puts with a net of $14.25. I noted you recently recommended the JAN 15 $13 puts, citing the possibility of dividend cuts knocking them down to single digits. Would you also see that as the roll for my JAN 13s?

  31. Ok Pharm
    The roll to Nov 57.5 is 1.05 mid on VRTX
    This is the money I have made on the short callers.

  32. MSFT Surface / Phil – Looks like they have decided not to compete on prices with Apple although without that keyboard cover the Surface is $100 cheaper than the equivalent iPad. Same price as the iPad with that Touch Cover. It seems that they also want to leave some room for their OEM to compete on prices! But that's for the Windows 8 RT which will not run your regular apps. The Intel based tablet will be more expensive – but will run all your windows apps. That would be more interesting for me as I would rather run the real TOS app than they iPad app for example. Or my charting software. And still have a tablet format.

  33. Phil,
      I have sold PBI (Pitney-Bowes) OCT $16 puts with a net of $15.05. Any opinion on this company? The spreads are quite wide for 2014 and 2015. I was thinking the 2014s for about half of my initial received premium might make sense.

  34. Phil,
    Sorry, that was the 2014 $12 puts I was referring to on PBI

  35. UnitedHealth (UNHQ3: net profit +28% to $1.6B. Revenue growth fueled by increase of 2.15M consumers served over the past year, including 670,000 new consumers in Q3. Consolidated medical care ratio -170 bps to 79%. Ups 2012 EPS outlook to $5.20-$5.25 vs. consensus of $5.10, and cash flows from operations to $7B.


    Right, Obamacare is not working……sheesh.

    VRTX/lionel – I try not to react to 1 day moves unless they are near a bottom or a top.  I look at the overall trend.  Right now they are hovering at the  steep decline (lower resistance) all the way back to June.  If they move through here, they could move back into the 45/47 range.  The lower BB is supporting them as well.  So, my premise is to see the next candle or two.  I have >30 days for them to make a move, and the calendar is down $400 (10 contracts).  I would be inclined to roll down only when the 5d MA starts to change direction. This is how I play calendars.  One could have rolled sold callers down, but because of that candle last week, the risk was high in one direction or another…..I DD that day with a cover….but overall, their trend is still down.  Yesterdays candle is a potential setup for trend change, but we need to see follow through today…if consolidation happens, more often than not, it is down again.


    AVEO – holding that last sell off spot….I am very tempted to go long here with stock and sell the Nov 10s.

  36. AAPL
    well it made it back to 635 max pain and getting up to 665 current pain so strangles are safe for expiration

  37. Pharm-- I followed ur play on ASTX.  Is it time to roll the October 3 puts please.
    I have the jan 3/4 BCS


  38. ASTX/amit – why roll?  They are barely ITM, and the chart looks like it is going to hold up.  Barring a huge sell off, you can roll to the Nov for a credit.  I would wait until the last minute to move the puts.

  39. Thanks Pharm

  40. AAPL/phil – nice little pop to just above a fib line for recent high to low fibonacci. add some covers again here or keep the longs open?

  41. I've seen bankruptcy stocks double in the past. Anyone tempted to bite on AONE for a gamble?

  42. Look at AAPL go – it's almost like it's a valuable company or something…

    NLY/Kevin – Sure, it's a good roll.  You got $3.25 for them and they are now $2.45 so not even a loss you're rolling and the 2015 $13 puts are $2.25 so, even giving back .20, the net is you sold them for $3.05 and your net entry is $9.95 – a very good deal as long as you seriously want to own them long-term, of course.  

    Surface/StJ – Sure but it's essentially a laptop with a new design.  Could be good product but very good for AAPL that MSFT isn't really competing with them.  

    PBI/Kevin – The fact that you think you have to say (Pitney-Bowes) shows you how far these guys have fallen.  Years ago people asked me about them and I compared them to buggy-whip makers.  They may be the best darned buggy-whip maker in the World but they're also selling into a declining market and their efforts to branch out simply have failed to recapture the revenues of old.  There's just no growth there and not likely to be any down the line so I just don't like them for a long-term play BUT, in your situation, you're down about $1.30 and you can sell April $13 puts for that much and, if the economy improves, PBI will show some better numbers and hopefully bounce so that may be worth a roll.  They made people happy with each of their last two earnings but the excitement faded and they went back on track to single digits – keep that in mind as we get to 10/30 earnings. 

    UNH/Pharm – That's nothing compared to where they might go if Obama stays in.  

    Europe closed very strong – FTSE 1.15%, DAX 1.6%, CAC 1.8%, Italy 2.05%, Spain 3.16% – we're lagging by a lot now:

    DAX is 10% ahead of us for the year!  

    Dollar failed to hold 79.50 – very helpful. 

    AAPL/$25K, Scott – I'd like to see $648 but greedy now.  We can sell the $645s for $6.50 so we'll keep an eye on them but I'm a bit worried AAPL blows past $650 and gets back to $666 and we'll miss it.  Nothing has changed since we bought the stock – I think they will be well over $700 after earnings – what we're playing with here is picking up a couple of bucks for this week but if I'm worried that selling a $6.50 cover will tie us up from making $15 on a move back to $666 – it's hard to pull the trigger.  

    Manufacturing issues or not, Apple (AAPL +0.7%) has raised calendar Q4 iPhone 5 build orders to 60M-65M units from a prior 55M-60M, thinks Jefferies' Peter Misek – if true, that's a positive for component suppliers such as CRUSOVTIQCOMBRCM,SWKS, and TQNT. Misek, who adds iPhone 5 lead time remain at 3-4 weeks in the 31 countries where it's available, continues to expect 55M iPhones will be shipped this quarter.

    More on Apple: Digitimes reports Foxconn and other Chinese suppliers have demanded Apple accept price hikes due to rising labor costs. Apple's stringent manufacturing quality-control and yield rate requirements, recently said to be the cause of Foxconn labor disturbances, are said to be pressuring supplier profits. Sources claim Apple hasn't yet responded to the price hike demands. 

    I'm watching the Nas very carefully.  As long as they keep making incremental gains, no reason to panic on AAPL. 3,100 should be a tough nut to crack and that's close.  If they fail it, then maybe a part cover to lock in some of our gains. We're actually closing in on 13,600 again. 

  43. Pharm – how much for Nobu?

  44. "“The whole problem with the world is that fools and fanatics are always so certain of themselves, but wiser men so full of doubts.” ? Bertrand Russell"

  45. 10,000 sh AONE filled @ 0.064
    Maybe Obama throws a lifeline. Given that it's 3 weeks to the election and ANYTHING can happen I'll take the gamble.

  46. AAPL/phil – thanks. i'm thinking of that seller you saw at 636 that hasn't run out of shares yet.

  47. Nobu  /  Anyone
    I must have missed the posts about Nobu.  What's the $148 for, just dinner?  

  48. Search on PSW
    Oh, the Search is even worse than before.  I tried to search for Nobu, but it doesn't order by date, and the same post comes up about 15 times using different URL's.  Some say "part 15" or "part 57".  

  49. The AAPL Jan15 320 Puts have been released.  Now trading for $20.  

  50. Burrben/Nobu – Check yesterday's comments – after market close….. :)

  51. AONE/BDC – It is a huge gamble but the loan they were getting is now dead and I don't think they are a going concern.  Also, it's going to be a political football.

    AAPL $650!  Up $25 from yesterday morning.  

    AAPL/Scott – I guess he was done.  Now $650 is lined up with Nas 3,100 and it will be a big deal if we pop them.  AAPL up 2%, Nas up 1.13% – could be interesting but certainly expect a pullback here.  

    Search/Burr – I find you have to put in more than just one word. 

    AAPL/Burr – $320 is way low, nice for selling. 

    AAPL $25KP – Let's sell 6 $645 calls for $8 with a stop of $10 on 2 and $12 on 2 more.  

  52. Phil,
    What effect do you expect tonight's debate to have on the markets tomorrow?

  53. $25KP – TNA, let's take .95 and run on that one too – all out.  

  54. Managing Long Term AAPL Trade / Phil,
    Had a question on the single $665 weekly call that I had sold on Friday last week for $1.64. It had gone down to $0.40 by yesterday but has come back to $1.27 due to the strength in AAPL today. Would you just exit the position or wait, and as necessary, roll?
    Learning to trade this position over the long term is what I'm seeking. Preferably to just place the one trade each week, and keep an eye on it to manage exceptions… but not actively day-trade/cover….

  55. Coal/Phil – when you get give it some consideration, what is your macro outlook on coal for the next 1, 2, 5 years? i'm concerned that nat gas is going to price coal out of business. Costs a lot to get US coal to who does still want it (china) and the whole damn industry may do the 'big fade…'  thx

  56. I sent an alert out on Nobu for Vegas last night.  $148 to Savi…..pronto….

  57. Debate/Chas – I think if Obama blows it again the markets will pull back as Romney has said he will stop Bernanke.  Don't take our free money away!  

    AAPL/Sank – Well you should have taken .40 because the danger of losing $2 was equal to the probability of making .40 but it's probably safe and more so if you don't mind rolling it along.   Notice you say you would like to do it once a week – well, isn't making a quick $1.20 and then waiting for a good entry again better than sitting on it and trying to make $1.64 3 days later?  It's obvious when you think about it – gotta protect those 50% profits. 

    Coal/Scott – Nat gas is going to stay cheap and that will keep coal in check.  BTU is the only one I'd play – the world won't stop using coal this decade but it certainly isn't a growth story other than comparatively to the current very low demand but it may take years to turn back up.  

  58. Nobu – I'm just wondering what the $148 is for, I didn't see the original posts about it, and it's quite a lot for some sashimi.  I really did try to search for details, but Search is more broken than even here.  
    I search for "Nobu las vegas".  I get 5 pages of results, all out of order.  I click Page 2, and then pages 3 – 5 disappear.  
    Really, I'm not stupid, I'm just not in the mood for tech issues right now.  

  59. Search – Oh and by the way, the links you get from Search results don't even work.  
    For example :
    Doesn't take you to a post about Nobu…..

  60. AMZN 25kp / Phil,
    Your thoughts, please, on this trade in terms of what you expect and how you may manage the trade. Are you expecting to hold the long Nov $240 Puts through earnings?
    Sometime back when the original trade was being long the Oct $245 Put and when you had recommended selling a weekly $250 Put, that really confused me. I hadn't comprehended the concept of the short term cover and buyback to use the short term profit to roll to a better position.
    The current 25kp AAPL trade has taught me a lot in this respect.

  61. NTE/Angelcur – nice consolidation. update?

  62. Should we be buying the Pandit ouster [C]?

  63. Got it on the AAPL call sale, Phil. Thanks.

  64. Nobu – Burr here is the link from last wed.  here is the menu from last monday….

  65. 'they' are forcing funds to buy this rally.  Shadow, my charts say 'high' followed by a move down that will be swift and decisive…..

  66. Pharm – and when do your charts show this 'high' and following collapse happening.

  67. Supervalu (SVU +2.7%) breaks outs of its doldrums after Kroger paints a rosier picture for the grocery store sector than what's been passed off as conventional wisdom lately. Despite fundamentals that may or may not look enticing, the dominant theme on the name is still whether or not a deal to sell parts or all of Supervalu's business is in the works. On that point, Cantor Fitzgerald analyst Ajay Jain unearths a key trading point: For CEO Wayne Sales to be able to cash in his performance shares, SVU needs to trade higher than $1.23. He's got a bit of room to play, but the clock could be ticking.
    Supervalu CEO’s magic number is $1.23

  68. Hi Pharm – any thoughts on the YMI drop?  TIA

  69. Don't worry Burr – I'm having programmers look into it for you.

    AMZN/Sank – Well it sounds like you know how to manage the trade already.  We sold premium and WHEN WE SUCCEED, then we use the premium to improve our position.  Last week, we failed as AMZN closed low so we rolled the short puts to this week and now we hope they expire worthless or we'll have to roll them again.  Don't forget, weeklies come out on Thursdays so, unless you are really screwed in a position, you just wait patiently for the next set to publish.  

    C/ZZ – I was hoping for a better dip.  Just a stay away now.  I don't think it's a negative for C but I think they're fairly priced.  

    You're welcome Sank.

    AAPL barely pulled back off $650 – pretty bullish if they pop back over.  

    SVU/Diamond – Nice but $1.23 ain't gonna make me happy. 

    VZ and T selling off nicely, probably just people pulling money out of "safety" stocks as the get more risk-on.

    DIA Oct $135 puts at .65 – 20 in the $25KP for overnight. 

  70. YMI – risk. 

    Drop – after the election to early next year.  Things are setting up still.   Which, of course, I thought that last year, as did JRW…and we were a tad off…happened in May, not Feb.

  71. Man, if Oil would drive over the cliff, the consumer may, just may have a chance….fat chance at that though.

  72. Might be time for a little FAZ mataaazzzz…..

  73. Burrben
    I am following you commentry on the 148$ dinner. In deed we did have a good laugh about the question is this just for dinner. No wonder things are going of the rail in the US.
    The other night my friend had a birthday dinner in Franfurt Germany super restaurant entree soup main dish and deserts all drinks included wine beers etc for six people there was real meat on the plates, a feats for a king, but no gogo girls all tips and tax included I paid the bill as a gift to my friend  total cost for all 115.25 Euro!!!! No comment

  74. Phil / GLW – any 2015 plays you like on this one?  I sold five Jan '14 puts back in June and am up a bit.  50 dma moving up and heading towards 200 mda.  

  75. Burrben
    Just if you can not find the city it is Frankfurt I was typing to fast sorry

  76. Phil

    WFR — thru assignment and purchases I'm sitting on 3000 shares with b/e @ $4.  (2.48 today)

    Not sure how fast/when solar will be back in vogue..
    If I sell the Jan 13 $3.00 p&c at $1. 00 I at least get out even if it's over $3 by then.
    If it settles under $3 in Jan I'll accept another 3000 at net $2 which gets me to $3 on the 6k shares which is more than I want but seems a better chance to maneuver from there
    Could I get a Phil opine on this?

  77. 12:00 PM On the hour: Dow +0.9%. 10-yr -0.27%. Euro +0.69% vs. dollar. Crude -0.17% to $92.16. Gold +0.48% to $1745.95.

    2:00 PM On the hour: Dow +0.93%. 10-yr -0.31%. Euro +0.77% vs. dollar. Crude -0.06% to $92.27. Gold +0.51% to $1746.45.

    The Housing Bottom and the Unemployment Rate (Calculated Risk

    US Households Are Not "Deleveraging" – They Are Simply Defaulting In Bulk. (graph)

    The HELOC may be coming to Europe and it gives markets there a big boost, the Stoxx 50 closing 2.5% higher, led by Spain +3.5%. Today's rumor has Spain maybe asking for a line of credit rather than a full-blown rescue from the ESM. This gives Spain access to the funds only if necessary – theoretically meaning it may never have to draw on them.

    The yen is on the move (as much as a currency that mostly flatlines can be) on headlines from the Kyodo news service suggesting the government is set to craft a new stimulus plan. This one is sure to work. The dollar +0.4% vs. the yen and buying ¥79.95.FXY -0.3%. Japan shares ETF: EWJ +1.3%.

    As sanctions crush rial’s value, Iranians point fingers at Ahmadinejad (Christian Science Monitor)

    "It was my decision," Vikram Pandit tells the WSJ as he and the board – anonymously or otherwise – rush to get their version out of the issues surrounding his abrupt resignation from Citigroup (C). The board has reportedly had ousting Pandit on its agenda for months, upset by setbacks such as the rejection of the bank's dividend plan and the $2.9B writedown on Smith Barney.

    Murphy Oil's (MUR +7.8%) move to spin off its U.S. fuel-making and distribution business into a new company could unlock up $5/share in trapped enterprise value, Simmons analysts say, and “could be a sign for more aggressive moves to continue to improve the valuation in shares (more aggressive divestments, for example)." Chalk up at least one item, and maybe two, on Dan Loeb's wish list.

    Natural gas prices between $4 and $5/MMBtu will trigger a return to large-scale drilling in U.S. dry gas sites, Platts writes, quoting execs at its Appalachian Gas Conference. The exception would be the Marcellus Shale region, where up to $3B of new pipelines could unlock the equivalent of 5% of daily U.S. natural gas supply in the last months of this year and in 2013.

    Two things about U.S. coal are true right now: the industry really is in decline, and the EPA really has enacted new rules that will require coal-fired power plants to cut pollution. But it’s not true the Obama administration is wholly responsible for coal’s woes, Brad Plumer writes; the industry would be struggling anyway thanks to the influx of cheap natural gas in the U.S.

    First Solar (FSLR +8%) jumps after signing an MOU with Indeonesia's PJB Services to develop 100MW worth of solar plants. First Solar, whose stabilizing financial position has much to do with its newfound emphasis on utility-scale solar projects relative to regular module sales, says the MOU is its first in Indonesia. (PR) (other recent deals: IIIIII) 

    Airline industry roundup: 1) Industry watchers see the recent fare hike fired off by Southwest Airlines (LUV +0.8%sticking with other carriers soon to follow. The higher fares could hit an environment where capacity is already trimmed and oil prices are off highs. 2) Delta Air Lines (DAL -1%) has its own little gig going with a refinery now spitting out jet fuel – an event that has analysts sharpening pencils. Which carrier will follow? 3) US Airways (LCC +1%) still quietly looks for a way to make a merger with American Airlines (AAMRQ.PK) fly before the firm exits bankruptcy so management can get their hands on what would be a powerhouse combined airline. 

    Toyota (TM +1.2%plans to halt its production at a major plant in Tianjin, China for up to a week as its adjusts production plans in the wake of slumping demand in the nation. Anti-Japan sentiment stirred up by a territorial dispute near islands south of China was expected to be a short-term event, but Chinese warships in the region tell a different story. 

     Et tu, Target. Not willing to get left behind this holiday season, Target (TGT +1.6%) says it will match the online prices of rivals Amazon, Wal-Mart, and Best Buy. The comments came at a special presentation by execs in NYC and included a few other nuggets: 1) EPS reaffirmed at $8. 2) Private label Threshold expected to roar to higher sales. 3) Expects $100B in revenue by 2017.

    Kroger (KR +4.3%raises its long-term EPS estimates, saying it now expects profits to grow at a 8%-11% clip, up from prior guidance of 6%-8%. Mobile and digital channels as well as new store formats are expected to help boost results. The company also approved a $500M share repurchase program to replace an existing program that still had $340M remaining. (Previous: Jefferies ups to Buy)

    Isis Pharmaceuticals (ISIS -16%) drops after an FDA panel posts briefing documents for its Hypercholesterolemia treatment Kynamro. The briefing shows an "unexpected" level of concern because drug, which heads before a panel of non-FDA experts Thursday charged with recommending approval, has shown to cause an increase in cancers in rat studies. Additionally, it's also been attributed to fat buildup in the liver that can lead to long-term damage.

    TiVo (TIVO -0.9%) gets some new competition in the form of Boxee TV, a $99 device that combines access to online video services with dual TV tuners and (most intriguingly) a $15/month cloud DVR service that supports unlimited recording and mobile viewing. Boxee already has a deal with Comcast to gain access to encrypted basic cable content, and is hoping to strike additional deals with pay-TV providers. But for now, TiVo's support for premium channels remains a big competitive edge. 

    Oppenheimer and MKM both believe Cisco (CSCO) is about to strike a reseller deal with Citrix (CTXS) related to the latter'sNetScaler application delivery controllers (ADCs) – Oppenheimer thinks it could pave the way for Cisco, which recently said it would de-emphasize its own ADC hardware, to eventually acquire NetScaler for $1.5B-$2.1B. MKM argues F5 (FFIV), which is believed to control half of the ADC market to Citrix's 20% and Cisco's 15%, and maintains an edge in 3rd-party developer support, remains on solid ground. (also)

    Barnes & Noble (BKS -1.1%) edges lower after details on the pricing of Microsoft's Surface tablets adds to the uncertainty over the company's future. Is the company a partner or a rival with Microsoft? And can profits ever be found on the highly-competitive content side of the business? Shares have meandered between $15 and $16 over the last few trading sessions without building any forward or backward momentum.

    "We've got a little more to show you," says Apple (AAPL+1.9%) in an invite for a widely-expected Oct. 23 event to be held in San Jose at 1PM ET. All signs point to an iPad Mini launch – will new Mac Minis and a 13" retina MacBook Pro also arrive?

    LCD panel makers LG Display (LPL +6.1%) and AU Optronics (AUO +9.4%) jump after getting upgraded all the way to Outperform from Sell by Credit Agricole. Both companies are exposed to a weak TV market, but are also benefiting from their supplier relationships with Apple - LG provides in-cell touch panels for the iPhone 5, and both LG and AU are reportedly providing LCD panels for the iPad Mini. 

    Three lunchtime reads:

    1) DJIA close to all-time high: How it gets there, what's next

    2) Which continent should you be invested in?

    3) In reversal, cash leaks out of China

  78. Phil – do you see any BCS setups on inverse ETFs that look good to you? Would like to use yesterday and today's pop to hedge some. Thanks! 

  79. Dow volume at 2:40 is 67M – about average.

    AAPL popped right back up and looks to retest $650 very bullish if it breaks up here.  

    Dinner/Yodi, Burr – Well, I guess it's because I live next to NYC, $148 for dinner (with tax and tip included) seems very normal.  Going to Nobu in NYC for less than $200 a person takes quite an effort, the Vegas one is a good deal.  Last year I think it ended up being $100 – not sure why the big increase but it was never going to be $50 or $80 anyway.  As with last year, I'll be buying the saki – otherwise it would be $200 pp. 

    GLW/Terra – I don't understand why that stock just lays around but at least it finally got over its 200 dma after 18 months below.  I like selling the 2015 $12 puts for $2.20 and buying the 2015 $10/15 bull call spread for $2.45 for net .25 on the $5 spread that's $3.50 in the money to start.  Net entry if put to you is $12.25 so 10% down from here on 1x and, if you are willing to buy 1,000 (10 contracts) at $12.50, then you tie up $250 in cash to make $5,000 at $15 – not bad.  

    WFR/Ban – With 3,000 at $4, I'd try to get $2.25 for the 2015 $2.50 puts and calls (the 2014s are $1.10 so should not be hard) and that drops you to net $1.50/2 so your worst case is owning 6,000 at $2 instead of 3,000 at $4 but you put $6,750 back in your pocket right now.  If you're a long-term investor, BE a long-term investor – it pays better.  

    Ultra hedges/Bdon – You just can't beat TZA at $15.  The Jan $12/15 bull call spread is $1.50 so 100% upside if TZA simply doesn't go any lower.  If they do go lower, you can sell the April $11 puts, now .50 for $1 (the Apr $12 puts are .92) before your $1.50 is even out of the money and then you'd be in the Jan $12s at net .50 and worst case is you get assigned at net $11.50 in April but, of course, you can roll or simply accept the assignment and cover and then you have more long-term protection.  

  80. I'm holding the AAPL weekly 650 call to see if it follows through tomorrow. Since this position is in a cash account it'll pay for the entire PSW LV trip if it does. So I guess I just set my sell target: AAPL @ 670 or bust!
    Go AAPL. FU Bears!

  81. PCLN not cutting it. I expect a drop at earnings for this one (Mon 11/5, probably after market close but not sure)

  82. Pharm:  NPSP – buy, sell or hold?  Have some, obviously.

  83. Noway – For $148 per person, somebody had better be cutting up a cow…… :)

  84. Phil, thanks so much! I was following TZA – just not sure what series of prices for the BCS looked best to you. 12/15 is beautiful. Thank you again. 

  85. NPSP/0 – if you are up, better darn well cover and get 1/2 out.  Sell a few puts if you are afraid….but I think their market share is small…but what do I know.

  86. Phil – assuming we're not stopped out of the Oct 645 AAPL callers, are we holding them overnight, or AAPL is just too bullish for that?

  87. Nobu – that price with gratuity and tax aint bad….I think there are more people this year, and core prices are up, no?  Oh, wait, not according to Dr. Ben….

  88. Actually Pharm, he wouldn't know as he doesn't look at food prices.  I imagine him closing his eyes, covering his ears and singing some tune when someone tries to talk to him about rising food prices.

  89. Pharmboy
    Nobu I must be living on a different planet I could not resist of looking at the dishes you showed yesterday,
    I would think you will get the same or better deal at a Chinese take out to feed the whole gang for 148$ possible 200$

  90. Good Afternoon!    AAPL…..just stay the course with Jan 620 calls.    See you tomorrow!  

  91. Yodi – I was thinking:
    Yes, The 'ol Old Spaghetti factory would get 'em each fed for a Hamilton and change….. :)

  92. lflan:
    You going to hold those through earnings?

  93. dclark….AAPL/hold through earnings….depends upon where they are the day before earnings. 

  94. lflantheman
    You don't day trade AAPL any more?

  95. lflan:
    Think they beat?

  96. You're welcome Bdon.  

    AAPL cutting it close with the $645 calls at $9.40 but now we're into the close so I'm less inclined to stop out so make sure we're really heading up and not spiking – we can always roll to the $650s (now $650) or the $655s (now $4.20) and all we're looking at is a $2 loss on the $645s at $10 so no worries. 

    AAPL/Jerconn – It would be very irresponsible to go naked overnight with the debate being such a wild card.  With 6/10 cover and 5 weeks to roll, better safe than sorry.   Don't forget, we can always plow the $4,800 into a roll, the Nov $645s are + $8 ($8,000) so for $3,200 out of pocket we can pick up $15,000 in position and, since the Oct $645 caller is still over 50% premium with 3 days to expiration, there's not much harm in waiting.  

    Chinese take-out/Yodi – All those Mexican spices have obviously destroyed your taste buds….

  97. Phil NO I have been spoilt with good German cooking here. But as they say there is a sucker born to pay these prices every day. P.S. I do not like spicy food.

  98. Thanks PHil!

  99. Phil/AAPL
    Good fight going on at $650. The sellers keep showing up, but may be winding down. Good call on the shorts with the debate. I agree that if Obama doesn't show up again it will mute the enthusiasm a bit.

  100. Whoa. A rush of buyers at the close. The stick is back!

  101. Mr Stick is back!  

    AAPL $650 and the $645 calls are still $9.20 so not a lot of believers out there, we are NOT going to stop out today. 

  102. German cooking/Yodi – Now that's good stuff!  

    You're welcome Jerconn.

    Debate/DC – And what you said.  Hopefully this one isn't another catastrophe: 

  103. neetcorp…Of course I daytrade AAPL.  But I have to agree with comments made a few days ago by Lincoln…….I think the way I daytrade AAPL is unique to my trading style, and I believe most of you guys would lose money if you tried to do it.  I would rather post trades that are not daytrades.  Believe it or not, I really do want you guys to make $ trading AAPL.  I just think it's not a good idea for you to try to emulate my daytrading style on AAPL.  You have to develop your own trading style based on your knowledge of…..first….yourself.   That doesn't mean I won't tell you how I do it.    Of course I will.   But I think you should create your own trading style first and foremost. 
    dclark….I think they beat.  But that is not the right question……which is…."How will investors respond to AAPL's earnings report, beat or miss?" 

  104. Phil/AAPL:
    Did you see that large sell on the 5min. chart?!

  105. Wow, been a long time since we had a stick into the close.  

    We'll see what happens tonight but quite the market recovery off all the doom and gloom last week. 

  106. Phil I am glade you see my point Looks that there is still hope for you

  107. AAPL/DC – Still don't see it on TOS.  Doesn't matter though, they're holding up OK.  

  108. Cooking/Yodi – Tina's German, first generation born here.  

  109. The BART stations in SF are covered with MS Surface adds

  110. lflan:
    I agree. The reaction is whole different can of worms, but it will be hard to swallow (if they beat, and don't have any negative forward comments) if we re-visit the $620's.

  111. lflantheman,
      I think your style make sense. Please still let me know how you do it. Thanks.

  112. Yodi
    Girlfriend born in Germany moved here at 13 months.

  113. Pharm – I noticed that you said they are forcing funds to buy this rally – what type of fund data do you track? Also I was curious what on your charts leads you to believe in the potential for a swift move down? I do a fair amount of charting – I like watching the MACD on weekly charts and still see a potential bearish divergence building depending on how the week finishes. Hard to say as Oct and Nov are usually very strong months for the market. 

  114. Where is this "Postal Service hitting its debt limit" charade going? It must now operate on stamp sales?  Should I be loading up on UPS and FedEx [sounds like I'm late]?  Will this be a debate talking point tonight?  Inquiring minds, as they say…

  115. ISRG roller coaster – up on a upgrade during the day and down $15 on earnings. 

  116. I've read very interesting article interesting.
    Actually, big chunk of Post Office losses comes from subsidy to businesses. "Bulk rate", which is used to litter you post box with printed advertisements, is the single most operating-at-loss item in post office menu.
    if they would allow to get rid of this service, the mail can be profitable.

  117. dclark – yea, the AAPL bars are right after the close, dip to 635…..look like Pharm's phantom bars….there were some Monday after the close also, and look what happened today.  Maybe clearing trailing stops before a pop…….was seeing those on the upside during the down drafts last week or so….something to keep an eye on.
    Still holding my Nov 635s 1/3 covered…..went to Disney World last Wed through yesterday, so was off the board.  Didn't do anything during that time, just kept 1/2 covered.  Took it down to 1/3 covered this am and am leaving it.  My premise remains in place, so feel no need to adjust at this time.  
    Strategy will be to cover on any weakness below 640 and otherwise run 1/3 covered(sold the Nov 665 calls so 30 pt spread for net 14.00) until closer to earnings to catch any earnings ramp.  Will probably fully cover around earnings just in case.  I'm not around to sell any weeklies this week, but those $1 and $2 pickups really make the adjustments much easier to swallow.  
    Middle term, I would like to cash and roll the Nov position to Jan, but maybe a smaller position because of the cliff risk.  But still think Phil's right about this being the last time to get AAPL below 700 for a long time(barring epic collapse, in which case AAPL's stock price will probably be the least of my worries).

  118. Phil. With ISRG down after earnings, do you think it's worth looking at as a long-term play, especially if it drops some more in the next day or two? If so, would a play like a Jan15 $500/$600 bcs and short Jan15 $450 puts be something you would recommend? Should yield better than 110% on margin, almost 50% annualized, after the earnings drop, if it makes $600 by Jan15. As a leader in the robotic surgery field, I have to think this is fundamentally a good long-term or 'retirement' stock?

  119. Phil: IBM/INTC

  120. Phil – I am still at the conference today and will be busy tonight so no big chart tonight. And I will be in flight when the market opens tomorrow morning. I will update the portfolio early afternoon. 

  121. NOBU: dinner suggestion
    sell the amzn nov 280 C/170 P strangle= $146 , should pay off before you pay your CC bill.
    unfortunately I now have a conflict and will have to take a miss

  122. Relative likelihood that an indidual voter will determine the Electoral College Winner.
    1 Nev.12.8
    6 Va.4.3
    11 N.M.0.4
    2 Ohio10.0
    7 Colo.3.7
    12 Minn.0.2
    3 Iowa6.7
    8 Me. Dist. 22.0
    13 Neb. Dist. 20.1
    4 N.H.6.5
    9 Fla.0.7
    14 Mich.0.1
    5 Wis.4.3
    10 Pa.0.6
    15 N.C.0.1
          I'm a Nevada voter, so the heat's on!!

  123. P.S.  from Intrade.

  124. Probably unrelated to oil prices, but this just came in from Stratfor:
    "October 16, 2012 | 1719 GMT

    The Syrian government is interested in discussing the proposed cease-fire in the 19-month conflict, a Syrian Foreign Ministry spokesman said Oct. 16, AFP reported. The rebels would need to be part of discussions in order for the cease-fire to be successful, the spokesman said. He added that the Syrian side is looking forward to speaking with international envoy Lakhdar Brahimi, who proposed the truce, and to hear the positions of countries that have supported the rebels. The urgency to negotiate the Syrian transition is escalating just as the cohesion of the Alawites appears to be breaking down."

  125. Hoss:
    I thought I was the only one seeing those blips. Selling against the AAPL longs has certainly been an education in discipline and diligence. I agree with you about covering before earnings; just not sure where at this point.

  126. Dc. –  I suspect, but this is mere conjecture, it's an algo that runs stops on close.  Looking back it seems to run opposite the direction of the open.  So, I hypothesize it's an algo programmed to clear out stops.  Why would one want to do that?  Two reasons I guess, take advantage of better entry prices since the gap is likely in the opposite direction.  And create more pressure to buy(in this case) or sell, as those who got stopped out now have to re-enter.  If it gaps up, they have to buy higher.
    Just a thought…….

  127. OK, I lied… I have time for the big chart now!

  128. Hoss:
    I will leave the specific interpretations to you, Phil, and others who are more adept at technicals. But I do appreciate your opinion of what happened.  How do you interpret the volume from 12-4pm where there seemed to be fewer but higher volume spikes on lower prices? Am I saying that correctly. I am trying to learn how to read charts better. TIA.

  129. That sums it up…

    Asked how we are going to bring iPad assembly to America, Mitt Romney says American can compete with China as long as the playing field is level. Which I guess means he wants to low wage, low skill jobs.

  130. Big Chart: Inverse H&S forming on $INDU, $SPX, $COMP & $RUT? DB on $NYA?

  131. who won the debate?

  132. There you go: Rope-a-dope.  Romney showed his hand in the 1st debate and Obama adjusted his strategy for the rebuttal.  Obama is going to pin him on all this flip-flopping back and forth in the 3rd debate.

  133. Dc – I'm not really a squiggly line guy, I use it short term to help guide entries/exits, but overall I see it as more of a self-fulfilling prophecy kind of thing.  It will tell you what you want to see.  And since algos are programs, they see what their programmers want them to see, so TA works to some degree.
    But looking at the afternoon, it looks to me like there is some buying going on.  The larger volume bars come on sharp rises in price, followed by pullbacks on lower volumes.  Can indicate lack of selling interest…looking for people to panic out so they can buy cheaper.  Not unlike running it down to 623…….now the volumes in the AM were solid buying.  So either the big seller is waiting to spring, or he's gone.  Guess we will see if it breaks 650.  I see that as the next test….and the pullback from the run to it was not very deep, so there's buying interest.  
    Still think it could be back to 700 by end of year, and am trading that premise……moved to Nov 690 calls two weeks ago, and moved those down to 635 through a series of selling covers and rolling on dips…..that's the plan, and sticking to it for now.  
    Careful with the noise, TA is also like fractals, the images appear similar as you scale in/out through time.   Don't get caught looking so short term you lose sight of the fractal you are trading(it's hypnotizing and I can quickly find myself worried about day to day when I should be looking for a good roll for a month down the road)…….I'm trading Nov right now, and will move to Dec in about two weeks most likely.

  134. My one-cent contribution to the AAPL trade is that strictly limited position size, a newfound rarity in my trading, enabled me to ride AAPL all the way down over the last month from $680 without spilling enough blood to panic out, adjusting and [perforce] increasing exposure as it fell, and the whole operation went quite green today.  Amazing.  Of course, without Phil's fundamental view of the company, I wouldn't have even thought of trying to pull it off.  Thanks to all;, I'm in Decembers now, bought with profits, and have fingers crossed for earnings, mini-pads and a feel-good post-election rally going into the year-end.  But I can now cut and run without significant battle damage if buyers view Microsoft's expensive me-too device as the wave of the future!

  135. Hoss:

  136. bdonnelly – I follow several trends, and MACD, RSI, AROON, etc.  My point was that the funds need to show a return that is greater than the SPX itself, and all are lagging the indexes.  That is not a good thing.  Thus, they will be forced to buy any rallies, and if they are not hedged, they will lag considerably the indexes.  Hedge funds are no different.  There are many things that are pointing to a decline on TA analysis, esp. the 'Jaws of Death pattern that is formed on the SPX. 

  137. Gimme a frickin' break….Romney is an idiot…or is that I-dot…

  138. Okee dokee

  139. Phil – What is your personal impression of the debate?

  140. Wow, if you flip between MSNBC and FNC it's like shifting realities.  They are analyzing the same debate but Fox has it 2:1 Romney and MSNBC has it 2:1 Obama and they are both "proving" it with their experts and polls and fact checkers and charts etc.  It's really amazing how there is no objective reality anymore…

    I thought Obama did well but Romney held his own but certainly couldn't be called a winner.  The markets are holding up pretty well but that's with the Dollar slammed down to 79.20 off another 0.3 from the close so call that 0.5%, which means we're actually a bit weak in the indexes, not reacting to the Dollar drop.  

    Big moment was what Obama did and did not say about Libya attacks.  Here's a transcript – he never says anything other than that it was an act of terror – that's not good for Romney – especially if people who read it understand that he was also trying to be diplomatic in his speech the day of the attack (before all the facts were in) so obviously he's not going to go on TV and foam at the mouth and declare war, which is essentially what the right demands should have been done.  

    Postal Service/ZZ – I think they should shut down for the last two months of the year.  See how people like it, especially the businesses who lose their cheap catalog delivery systems that are bankrupting the post office anyway.  What's the function of the post office – bill delivery and advertising for Big Business – no one sends letters anymore.   What the Government needs to do is get off the Post Office's back and let them charge realistic rates for their services.  UPS and FDX charge 10-20x what the post office does to deliver a letter – if the post office charged just $1 per letter, they'd be making $10Bn a year instead of losing $5Bn.  Congress controls what the post office charges and Congress wants the post office to die – this whole thing is a total sham…


    During the 112th Congress, the House has introduced 60 bills to rename post offices. In fact, of the 151 laws produced by this Congress, 17 percent have been to rename post offices. But not one bill geared towards salvaging the Postal Service has reached the floor, and the USPS desperately needs Congressional action to stay solvent.

    The Postal Service does not receive taxpayer dollars for operational costs, but is nonetheless under congressional control. The USPS is legally obligated to deliver mail to every single house in the country, including in remote areas where UPS and FedEx won’t venture. And while other private delivery companies have continued to grow and diversify, Congress has stymied the Postal Service from directly competing.

    Moreover, a Republican-led 2006 Congress passed the Postal Accountability and Enhancement Act (PAEA), an unprecedented piece of legislation that requires the USPS to prefund its pension benefits for 75 years through the $5.5 billion annual payment. Congress has turned a blind eye here, allowing offices to close and hundreds of thousands of jobs to be lost instead of addressing the pension payments.

    Without the one-of-a-kind prefund program, estimates show the USPS would have a $1.5 billion surplus instead of a $20 billion shortfall. Republicans have nonetheless responded to this manufactured crisis by pushing for legislation that would layoff workers.

    People are simply not aware of the BS tactics this Congress uses to undermine this country.  If I were Obama, I'd be running on a campaign against Congress and pointing this crap out.  There's no point in getting 4 more years if you're still stuck with these bastards…

    ISRG perfect for our bet. 

    Post office/LOL – Right, it's nothing but a constant bail-out for big business but the USPO's hands are tied because Government (Congress) stands between them and the consumer, micro-managing them into insolvency.  Hypocrites! 

    AAPL/Hoss – Now TOS is showing a quick spike down to $635 at the close but seem like normal stop-flushing activity to me.  

    ISRG/Ceegee – It's not really down, just lost the run-up into earnings.  They were $495 last week and $505 yesterday and today they shot up to $535 for whatever reason and now back to $505.  


    Intuitive (ISRG) earned $4.46 a share in Q3 — $3.54 excluding a one-time tax benefit. That still beat analysts' consensus of $3.50 and was up 16% from $3.05 a year earlier. Sales rose 20% to $538 million, beating views of $535 million. The company sold 155 of its da Vinci surgical systems vs. 133 a year ago, more than most analysts expected.

    But some important metrics fell short of expectations. The revenue stream depends on the number of surgical procedures performed, which drives sales of instruments and accessories used in performing surgery. William Blair, JPMorgan and JMP Securities had all expected procedure growth of around 26%, but Intuitive reported 22%. Instrument and accessories sales of $218 million also came in on the low side.

    I think the slow procedures are partially economic in nature as people lose jobs and health care and put of getting treatments.   Also, this is a big one:

    Last spring, the U.S. Preventive Services Task Force advised eliminating routine prostate screening for healthy men. Prostatectomy was one of the earliest procedures using the da Vinci and growth had flattened; in Q3 procedures fell 20% vs. a year ago.

    At this point, the company is no longer going to have rapid growth because their machines are already well-distributed so, while I like them as a steady, long-term investment, people who think they're going to grow 20% a year will be disappointed and their p/e (31) is still priced for pretty rapid growth so they may drop back to the low 20%, down 20% from here to $400-450 and that's where I'll like them for an entry.  Another problem with them as a long-term investment is that someone may build a better mouse-trap.  Their system is the best but that doesn't mean a better, cheaper one won't come along down the road.  If you want to make 110% on margin with these guys, why not just sell the 2015 $350 puts for $30?  TOS says net margin $35K so 85% but, since your put-to price net's out 20% below your other spread, you can sell 20% more.  I wouldn't though, I'd sell 1/2 and look to DD if ISRG drops $100 and they shoot up to $60 (the price of the $450s) and then you'd have a full sale at net $45 for a $305 net entry and that's 43% down from here.

    IBM/Lincoln – They took a big FOREX hit, which is what we're expecting to see from multi-nationals, so it's hard to get a clean view of their numbers. Still, everything was weak but Gross Margins were impressive at 48.1%, which indicates they are not panicking and holding the line on prices.  Their services backlog is up at $138Bn and that's also knocked down by FOREX so you can see why they're not worried.  Their presentation is excellent and, unlike ISRG, IBM has a forward p/e of 13.6 and they just reiterated $15 per $205 share for next year.  If this is how they perform in a crap economy – I sure want to own them when things get better!   Still, they ran up too far, too fast and now reality sets in – $200 is the right price for them and $180 will be a good entry. 

    INTC/Lincoln – Different than IBM as they are more sensitive to Consumer Demand and are truly pegged to the Global Economy – the price you pay for having 80% of the chip market.  I mentioned the other day that I no longer like INTC long-term.  They have 80% of the chip market so nowhere to go but down and cloud computing (where things are moving) simply doesn't require state of the art chips, not even on the server farms because the chips are no longer the bottle-neck.  INTC faces a very rough transition from having the best tech that sells itself to having to compete for the most cost-effective solutions.  Due to excessive inventories that need to be cleared, INTC forecasts gross margins falling from 64.3% to 58% next Q and they are cutting back cap-ex to make up for the shortfall.  This is not a great outlook. 

    Thanks for the no Big Chart, StJ!  8)  

    12.8/ZZ – That's a lot of pressure.

    Syria/ZZ – That will piss off the Romney camp. 

    LOL Diamond!  

    Big Chart – Big Improvement.  RUT needs to catch up but will be impressive if we just hold gains tomorrow – especially on the Nas as the INTC report should send shocks through the SOX.  

    IPad assembly/StJ – I liked that Obama said "some jobs will just never come back" – nice to hear some honesty after the Romney BS answer.  Too bad Obama was scared to push solar as jobs of the Future – it's the right play for America but he's too vulnerable to attack because he actually attempted to create an industry and it's off to a rocky start.  

    TA is like fractals/Hoss – Good analogy.  

    APPL/ZZ – Nice job sticking with it.  

    LOL Pharm – I like that projection of Dow 0 – the DIA 2014 $80 puts are just $1 so $20,000 turns into $1M at 3,000 – unfortunately the broker you bought them from will have gone BK by then and you'll wish you spent that $20,000 on guns, ammo, canned food and water filters…

  141. Phil – You (or your family) might be interested in this:
    HiLO Lens for iPhone & iPad

  142. Lincoln
    Like your AMZN trade 280/170 strangler buys food for 14 days at the chinese take out

  143. Wow, the day is not starting well. We had to make a medical emergency landing in Minneapolis on the way to Detroit where I have a connection. 

  144. Good morning! 

    Lens/Diamond – I guess it's a good idea but I don't like sticking stuff on my phone – never really had a problem turning it when necessary.  

    Markets holding up very well, so far.  Japan gained another 100 to 8,835 and China was up 1% on the Hang Seng and up 0.3% on the Shanghai.  Europe is up slightly except Spain, who are very excited to get a non-junk rating from Moody's and they're up 1.5%.  

    4:07 AM Asian and European shares are broadly flat-to-higher higher, boosted by Spain avoiding a ratings downgrade from Moody's and as the country moves towards asking for a bailout. Japan +1.2%, Hong Kong +0.9%, China +0.3%, India -0.1%. Euro Stoxx 50 +2.5%, London flat, Paris flat, Frankfurt flat, Madrid +1%, Milan +0.2%.

    Spain's 10-year bonds -26 bps to 5.56% after Moody's affirms its rating for the country and as expectations increase for a bailout request. Two-year bonds -27 bps to 2.89%.

    More and more it seems like a good idea to just give the middle their own country:


    This is a WSJ map, somehow they think Michigan (16 pts) and Illinois (20) are up for grabs.  As far as I know, PA (20) isn't even in question and I can't see New Hampshire (4) voting Romney either.  That's 60 more points for 239 but still not enough to win for Obama so it really will come down to Florida (29) Ohio (18) and Virginia (13) but Virginia is full of people who don't want to see Government cut (even though it's more likely Obama will actually cut Government – Romney will still talk like he will).   

    Emergency/StJ – Wow, that sucks.  Hope you make the connection. 

  145. Phil –  Have you seen any futures plays you like for the 6am timeframe recently?  I've been waking up way too early

  146. Futures/Burr – I'm usually up early and if I see something, I say something (HomeSec would be proud).  90% of the time, I don't see an obvious play and the "obvious" plays are only right about 2/3 of the time so no sense in guessing when the signs are not clear.  Just yesterday I picked silver for a long at $32.85 (end of Monday's chat) and they popped right over $33 for a nice $750 per contract gain ($50 per penny).  Notice what I said was:

    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.

    As it turns out, silver is the only thing that had a good run yesterday although oil is now at $92.25 on the weak Dollar but we thought they'd test $93.50 today – I just didn't think it was as "obvious" as silver at the time (6am) and, in fact, oil did drop to $91.40 before turning back up while silver went pretty much straight up.  

    That's the secret to Futures trading success – NOT trading most of the time.  Same goes for stock trading but, unfortunately, people like to gamble..

  147. Oil / Phil  What do you see for oil today?

  148. Phil – RE: HiLO Lens for iPhone …
    You do not leave it on, it is only used temporarily to take pictures from interesting angles. 3M makes the product that allows it to "stick" temporarily to the iPhone. It does not damage the iPhone surface or leave anything sticky on the iPhone. You remove it after you are done using it.