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Monday Market Movement – A Little Perspective Does Wonders

We're crashing!  Just look at this chart:

See – over there at the right, on top, at the end – do you see it?  We're totally crashing.  It's all over and it's OBAMA's FAULT!  

That's what I learned this weekend from the Financial Media.  While it's true that we did fail to break out over the top of the uptrending channel we've been in since early 2009, I'm sure you can see that all the forecasts for doom and gloom are nothing more than noise.  

Yes, we may drop back to 1,200 on the S&P because that's the range we are currently in but there won't really be any reason to worry unless we fall MORE THAN 20% – the trick is to simply be prepared for the possible drop and to be ready to do a little bottom-fishing while everyone else is losing their heads.  

imageIf, on the other hand, the S&P bounces off of 1,400 or even our Must Hold line at 1,360 – then we still have the possibility of breaking UP – out of that long-term channel and back over 1,500 – maybe even to 1,600.  

As you can see from the chart on the left, Corporate Profits as a percentage of GDP are taking a dip this Q but HAVE SOME PERSPECTIVE PEOPLE – they have never been stronger – EVER – the only thing that is weak is confidence and that's no surprise given this incredibly depressing election season, where we're being offered a choice between sticking with the slow progress we're making or going back to the failed policies that destroyed the economy in the first place.

People look at this chart and think the dip that occurred in 2008 can happen again but that was a fairly unique situation, mainly of massive writedowns in real estate holdings and bank earnings that is very unlikely to happen again.  Companies like AIG and FRE and FNM lost hundreds of Billions and that dragged down overall Corporate Profits but that doesn't make it "normal" and we have no reason to expect it to happen again.  The current market panic that is saturating the US media is, so far, confined to the US – the rest of the World is doing just fine:

Does this really look like a Global Market we should be running away from?  Yes, Q3 earnings WERE bad – we knew that, the Fed knew that – why do you think they rolled out QInfinity with $80Bn a month pumped into the system in October, November and December and another $40Bn through 2015 or longer if it isn't working by then.  That's $480Bn for 3 years – quite a lot of money really so how likely is it that the Financials are going to tank the markets again?  Their earnings are, so far, the bright spot of Q3 and that was BEFORE they got the promise of another $1.68Tn over the next 39 months.  

Q3 earnings are likely to be a prime example of "what doesn't kill us makes us stronger" as we're seeing all of the ugliness of the Global market laid out in the P&L statements of our US Corporations.  As we expected, the companies that do the most International business are taking the biggest hits while companies doing most of their business in the US are reporting generally uptrending earnings.  

One third of the S&P has reported so far and another 160 report this week.  So far, 18 of the 20 firms that have given guidance lowered Q4 guidance by an average of 5% and this week we'll hear from a few biggies like AAPL, T, PG, MRK, CMCSA, AMZN, COP, AMGN, OXY, MO, UTX, MMM, CAT, DD, and FCX.  

Of the 117 firms in the S&P that have now reported 3Q results (34% of total cap), 37% of companies beat earnings estimates and 21% missed. In a typical quarter, 41% of companies exceed EPS expectations and 13% miss – so it's the misses that are bothering people.  Don't forget we had set a fairly low bar for Q3 earnings too.  

As you can see from our Big Chart, the close-up view of US equities is looking pretty ugly but we haven't bent down those 50 dma's quite yet and the 200 dmas are rising too so it's probably a bit early to throw in the towel but we did publish a set of Disaster Hedges this weekend – just in case those lines fail to hold up.  

Our goals for the week are going to be simple, we'd like to see the Dow hold the 50 dma at 13,350, the S&P 1,433 is also right on its 50 dma, the Nasdaq must hold it's Must Hold line at 3,000 and if AAPL earnings don't get it back over 3,100 and it's own 50 dma – we're going to be a bit more bearish overall.  The NYSE is still well over 8,217, which is the 50 dma and still well above it's must hold line at 8,200 and we won't be in technical Hell until our broad index fails us there.  The Russell is very volatile but represents companies that do a larger percentage of their business in the US than the S&P or the Nasdaq so we REALLY need to see them back over the 50 dma at 830 and we REALLY don't want them to fail to hold their own Must Hold line at 800 – that cross, with the NYSE crossing 8,000 would officially mark the end of hope – all the way back to the 200 dmas. 

Let's hope it doesn't come to that.  Keep in mind the Nasdaq is down the most because AAPL is 20% of the index and has dropped 13.6% since September 24th, losing $90Bn in market cap in less than a month or essentially the entire value of AMZN.  That has dragged the Nasdaq down 2.7% more than it should have been and, if we adjust the Nasdaq sans AAPL, we get back to 3,086 and, guess what – that's right on the 50 dma – just like all the other indices.  

So it is a little early to throw in the towel but it's not too early to be prepared and that's what our Disaster Hedges are for.  Shorter-term, the Dow has some support at 13,200 if it fails to hold 13,350 but then it's a quick ride back to 13,000 and the DIA November $135/131 bear put spread is just $1.90 and pays $4 if the Dow is below 13,100 on Nov 16th so it's a nice little hedge where you can take a small loss if they get back over 1,350, where your $135 put is still $1.50 in the money.  

The last Presidential debate is this evening and then it's just 15 days to the election and then we have our Fiscal Cliff to worry about so we're not out of the woods yet – let's be careful out there.  

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  1. Oil Lines

    R3 – 95.96
    R2 – 94.72
    R1 – 92.66
    PP – 91.46
    S1 – 89.36
    S2 – 88.12
    S3 – 86.06

    Friday's high and low – 93.49 / 90.19

  2. Good Morning!

  3. Truly amazing that all the corporations are complaining about uncertainty and making money like never before! I would love to have Kudlow show this corporate profit chart and give us an explanation! I guess socialism is not so bad after all – stock market up 100%, corporate profits at an all time high. At least it works for the top 10%…

  4. The export numbers from Asia seem to confirm that the US is the only area still doing relatively OK:

    Japan’s preliminary September trade data tell a story not dissimilar to China’s — exports to Europe are slowing (unsurprisingly) by a lot, down 26 per cent for the month, year-on-year. Asian exports also fell, by 8.3 per cent. But US exports rose 0.9 per cent. The six months between April and September show a more striking contrast: exports to North America rose 16.6 per cent; while for Asia they fell 4.7 per cent and for Western Europe, there was a 20.8 per cent decline.

  5. Coal stocks…to the moon..until they fall back with gravity!   BTU, ANR….

  6. SVU????

  7. Good morning! 

    AAPL $615 out of the gate.  We have 5 short weekly $625s covering our long position at the moment and they are still $15, despite the move up.  AMZN is going the other way and the indexes are pretty flat so very inconclusive at the moment.  Still, let's put a stop on 2 of the AAPL $625 callers at $17.50 in the $25KP and the others (3) will be easy to roll. 

    BTU had good earnings and that whole sector is up but, as planned, let's cash BTU out of the Income Portfolio .

  8. SVU up 20%???

  9. AAPL – Net $32.82 excluding open trades
    AMZN – Net $13.63 excluding open trades

    In the this portfolio, the DIA and CGM trades are spreads to limit the margin required.

  10. A nice 84% gain on the BTU puts in the Income portfolio….

  11. Dollar at 79.66 so no pressure there for now. Euro $1.305, Pound $1.604 and the Yen jammed all the way up (weaker) to 79.82 and that makes the Nikkei very happy at 9,065 so they are now 65 points HIGHER than they were Friday morning – completely ignoring our market freak-out.  Very interesting, especially with the poor data this morning (see previous post for news).  

    CAT had poor earnings but FCX was pretty good and it's materials that have been dragging earnings and the oil strip is down to just 21,000 front-month contracts so now energy can turn back up and nat gas has, at $3.63 although gasoline is still weak at $2.68 but that's a good thing for consumers.  


    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Nov'12 89.52 90.80 89.49 90.16 09:02
    Oct 22


    0.11 3286 90.05 21318 Call Put
    Dec'12 90.05 91.27 89.85 90.57 09:02
    Oct 22


    0.13 47713 90.44 393872 Call Put
    Jan'13 90.70 91.75 90.38 91.08 09:02
    Oct 22


    0.11 5478 90.97 170515 Call Put
    Feb'13 90.96 92.17 90.87 91.58 09:02
    Oct 22


    0.13 2568 91.45 76620 Call Put


    At the open: Dow -0.18% to 13320. S&P -0.12% to 1431. Nasdaq +0.02% to 3006.

    Treasurys: 30-year -0.31%. 10-yr -0.23%. 5-yr -0.11%.

    Commodities: Crude -0.12% to $90.33. Gold +0.03% to $1724.55.

    Currencies: Euro +0.2% vs. dollar. Yen +0.62%. Pound -0.18%.

    Notable earnings after Monday’s close: CECNIDHT,HMASCCOSWFTTXNVECOWDCYHOOZION

    Market preview: U.S. futures are up but down from earlier highs after Caterpillar (-1.3%) cuts its 2012 outlook, while European shares also lose momentum and are mixed in choppy trading. The S&P benchmark is +0.2%. Following news of M&A deals, is +7.7% and BP a more cerebral +0.5%, while Peabody jumps 6.1% following its results. Later: YahooTexas Instrument earnings. 

    Friday’s 205-point Dow swoon marked the first trading day since June 25 the index fell by more than 1%, and only the 19th time since 1900 it had gone at least 80 straight days without a 1% one-day drop. The market historically struggles after such streaks end, at least in the short term. Whether the pattern repeats depends largely on this corporate earnings season, and the early results aren’t pretty.

    All it took were a few poor earnings reports and a 2.3% slide (repeat, a 2.3% slide) in the S&P since QE∞ was announced for all 21 primary dealers to expect an expansion in the asset purchase program by year's end. Look for the Fed to add Treasurys to the $40B/month of MBS purchases, they say.

    "We need that housing start number double to really start to move the economy," says CAT CEO Olberhelman (appearing on Squawk Box), putting some perspective on the recent bounce in sales. Viewers (and readers of CAT's earnings release) are treated to the CEO of a great old company more or less pleading for central banks to bail his firm out. (earnings earlier) 

    There's a lot of bad news out of Japan, the latest being aplunge in exports to China thanks to tensions over the islands dispute, but the Nikkei quietly continues to rally. After opening sharply lower last night following Friday's big decline in the U.S., the Nikkei managed to eke out a 0.1% gain, and is now +5.9% over the past few sessions. EWJ +1.2%

    Shanghai erases an early decline following a big losses in the West on Friday, and closes +0.2%. One of the worst-performing major markets for some time, China has quietly put in a nice rally as the U.S. has stumbled over the past few weeks as investors look forward to November's power changeover and perhaps action from the new government. FXI +1.6% premarket.

    Peabody Energy (BTU): Q3 EPS of $0.51 beats by $0.17. Revenue of $2.06B beats by $90M. Shares +3.3% premarket. (PR)

    More on Peabody's (BTUQ3 results: Issues in-line guidance for FY12, seeing EPS of $1.88-$2.08 vs. $1.88 consensus estimate. Targets 2012 adjusted EBITDA of $1.75B-$1.85B, total sales of 240M-250M tons. Projects global seaborne thermal coal demand will rise ~100M metric tons in 2012 to 900M, with continued increases in 2013. BTU +6.2% premarket; also ANR +3.7%CNX+3.6%ACI +2.9%.

    Freeport-McMoRan Copper & Gold  (FCX): Q3 EPS of $0.86 beats by $0.13. Revenue of $4.42B beats by $60M. Shares+0.6% premarket. (PR) 

    More on Freeport-McMoRan's (FCXQ3 results: Reflects production growth in North America and Africa, offset by anticipated lower ore grades in Indonesia. Says on track to achieve "meaningful increases" in copper production with return to higher grade ores at Grasberg and expansions in the Americas and Africa, which should add 1B lbs. of copper annually over the next three years. Shares flat premarket.

    Caterpillar (CAT): Q3 EPS of $2.54 beats by $0.31. Revenue of $16.45B misses by $340M. Shares -1.4% premarket. 

    More on Caterpillar's (CAT) Q3 earnings: CAT confirms it's tough out there. FY2012 outlook is lowered to $66B revenue and EPS of $9-$9.25 from $68-$70B and $9.60, "reflect(ing) global economic conditions that are weaker than we had previously expected." "Cat dealers have lowered order rates to well below end-user demand… Production across much of the company has been lowered, resulting in temporary shutdowns and layoffs." Shares -1.4% permarket. (PR)

    More on Caterpillar (CAT) Q3 earnings: There's no sugarcoating from the company in what may turn out to be its "kitchen sink" quarter of the cycle. "Our sales will probably remain relatively weak in early 2013 … While there's reason for optimism … we are prepared and stand ready to take action no matter what happens to the global economy." Maybe it's all baked in – shares off just 0.7%premarket. (earnings call webcast is at 11 ET)


    RBC Capital say McDonald's (MCD) should see sales pick up again after Q1 of 2013 after the company got stuck in a rut of sub-3% growth. The restaurant chain is seen promoting new menu items to boost traffic numbers as it tries to stay ahead of rivals such as Burger King and Wendy's that have narrowed the gap in offerings.

    Yay!  Shares of Supervalu (SVU) race 9.5% higher in premarket trading to reach their highest level in over a month. The drive upward has been buoyed by speculation on how much a bidder would pay in a buyout to take on the challenge of running the Albertsons, Cub Foods, Jewel-Osco, and Save-A-Lot food chains.

    Texas Instruments (TXN) is scheduled to release its Q3 earnings later, when it is expected to report that EPS fell to $0.46 from $0.61 while revenue slipped 3.7% to $3.34B. Some analysts are concerned about macro weakness and that competition from tablets and smartphones will hurt TI's computing market, although the majority believe that the company's analog and embedded operations will continue to drive growth.

  12. Corporations/StJ – What they're complaining about is how they don't get to keep 100% of it.  THEN they would hire people (sure, they would be Chinese people but whatever).  

    2 of our AAPL callers stopped out so now we put a sell-stop on 2 Nov $640 calls, now $18.50 at the $17.50 we just bought back the $625s for so that becomes a roll of those two if it triggers.  If we keep going up, we'll just roll the 3 weekly $625s we have left to 5 or 6 Novemeber whatevers but the week is young…

  13. Go SVU!!!

  14. SVU/Jabob – Yes, I may have mentioned once or twice they were a bit undervalued…  Up 26% now.  

    AMZN/$25KP – Let's take $13.50 and run on the Nov $240 puts and that will leave us with the naked Oct $235 short puts but we'll fix that later.  At the moment, we'll be even with the $6.10 credit and we can cover with the Jan $225/185 bear put spread at $6.50 if we have to.  With APPL so far behind, it's not worth having both open.  

  15. $25KP/DIA, StJ – It doesn't make any sense to take a bear put spread when the point was we were bullish on the short DIA puts.  I'd just kill that trade right away. 


  16. Hey Phil
    any 2015 HOV trades?

  17. Phil 
    I am a bit confused now on your comments about killing the DIA bear put trade. I thought that the whole idea was to have a hedge against the long position. What gives?

  18. 25KP / Phil – It was confusing on Friday, but I recall rolling the long 133 puts to the 131 puts while we shorted this week 134 as the margin for the 134 is like $50K. But the current play is more like a calendar and is somewhat bullish in this week's expiration period as long as we stay above 133 and below 137 or am I wrong?

  19. If you feel, investing alongside Carl Icahn is a smart bet, check out MOTR….
    Yes, I do have a small slice. :)

  20. neverworkagain
    I like using SPY puts to hedge my SPY long portfolio.  How far OTM are the puts you are buying?  Are they in the neighborhood of the 10% to 20% below current prices?
    I have had good luck buying ITM puts (about 10 points above current price) to lower extrinsic value  and selling ATM front month or weekly puts (maximum extrinsic value) as covers.

  21. AAPL/
    I just came back from a business trip in China.
    Apple Stores are crammed with consumers!
    Even in Tier 2 cities Apple stores are really busy.
    And I cant even described the queue at the front of the store at the IFC in Hongkong this weekend…
    Samsung is doing very well also.

  22. Debtwire reported on Friday evening that Cerberus was in discussions with financing sources regarding a leveraged buyout of SVU. The article says that Cerberus plans to refinance the debt at SuperValu Inc. and leaves the debt at Albertson's in place. The sources of financing the LBO would include a new asset backed revolver, secured term loan, CMBS and $800-900mm of equity from Cerberus.

  23. BTU – Right back on a solid growth path but no sense in leaving that one open with such a big early gain.  

    SVU/Terra – I don't know why no one believes me on these things.  Just last Thursday I said right in the main post:

    Our friends at SVU put in a good report this morning and are up to $2.25 pre-market.  This is one of our favorite cheap stocks with a $415M market cap, which just happens to be the exact same as the amount of free cash flow they generated in the first 3 quarters of this year.  Although the headline number is a loss of .52 per share, it's pretty much all non-cash impairment charges and write-downs that don't stop cash from pouring to the bottom line.  They've refinanced $1.65Bn in debt and are reducing overall debt by $450M – all part of the reason we doubled down on their recent dip in our Income Portfolio, which only needs SVU to hit $2.50 to realize some very serious gains.  There's also rumors of a potential buy-out, maybe it will be discussed at the 10am CC. 

    Up 34% now, almost $3 and my target was just $2.50 for Jan!   Good time for profit-taking if you have a short-term directional play but too soon for the Income Portfolio spread, which is still just net .60 on the $1.50/2.50 bull call spread and we're up .40 (25%) on the short $3 puts so lots of money still to make.  What we'd really love is a buy-out at $3 – that would be fantastic but, as long as they finish at $2.50 or better, we collect $20,000 off a net $6,000 spread (at $3 it's $20,000 off a net $4,000 credit as we started with $12,000 worth of .60 spreads (200) and 100 short $1.60 $3 puts).   

    In the $25KP, we also had an aggressive target at $4 for Jan but we were paid $1.60 for them so really anything over $2.40 is a winner but we can be patient as they are still $1.40. 

    HOV/Willie – Another cheapie I liked a lot.  $4.41 is no longer cheap but the profits are coming in ($34M last Q) and they are still valued below $600M so a p/e of about 5 and that's not taking into account the write-offs that mean they won't need to pay taxes for another Billion or so.  They've written their land holdings down to about zero though so they will show some really good profits as they sell stuff off.  Debt has been refinanced at record low rates in a dead housing market and, as I have said all along – this is a management team you want to bet on who concentrate their efforts in the country's most stable RE sector (Northeast Tri-State).  So, since they are still $4.41 and you can sell the 2015 $3 calls for $2.40 and the $3 puts for $1, that's net $1.01/2.01 on the buy/write and you've gotta love your worst case being owning the stock for less than 50% of the current price with a 200% profit if called away 30% below the current price – a great example of a self-hedging position.  

    DIA/Gandhjo – Actually I mis-read that as I thought it was a vertical we slapped on but it's the original play without taking the profit on the Nov puts.  Still, it's a dime loss and not worth the hassle and I'd rather have the vertical from today's post than that spread if the Dow can't hold 13,350 for the day. 

    DIA/StJ – My bad, I thought you added it to make a vertical but it's still a calendar.  Still, as noted above, if we need a DIA hedge, I'd rather take the dime loss on this one and make the $135/131 Nov bear put spread, which is now $1.76 with the Dow just under 13,350.  Then there's no margin issue and we don't have to mess with it unless the Dow makes it back over. 

    MOTR/1020 – Sounds nice but very little (22.6M cap) – really just a penny stock and, obviously, chump change to Icahn – even if he owned 100% of it but it looks like about 15% ($3M).  They haven't moved too much off the .36 bottom and I'm not sure when the Icahn news came out but keep in mind that's the probable catalyst and don't be too greedy.  

    AAPL/Lionel – Are they buying or just looking?  

  24. Phil, What are your thoughts on MSFT here?  It just broke support around 28.50.  Is it a good time to add a little or do you think there is more room to the downside?

  25. Phil,  How do you feel about a bounce off of 90 here on oil?

  26. Phil/MOTR   It's my version of HOV….. :)

  27. Phil
    Just to be clear – I have added the DIA bear put spread (from your morning post) against the longs positions that I am holding (AAPL, XLF) as a hedge. Is that good to go or do I need to change anything?

  28. SVU:  It was a 40.8% short float.  Now who doesn't cover down below $2 a share?!  "Special Victims Unit" indeed.

  29. Phil, MOTR is moving due to Icahn's move to 30% of shares outstanding – still chump change….

  30. ….and his Son needs the job…. ;)

  31. Phil,
    And Chinese Apple stores are pretty big.
    Prices are exactly the same.
    it is impressive to see people working on a $10/$15,000 yearly income splashing $800 on a smartphone.
    Apple has become a luxury item brand and in my opinion should be priced like LVMH with a PE in the low 20s.
    AAPL $1000?

  32. MSFT/JMM – Gotta get down to $25 before I'm interested (another 10%).  Ballmer and Co should be arrested for the way they run that company.  

    Oil/Opes – I think they'll be a good long up from $90 into Wednesday's Inventory Report – maybe back to $93 but I'd wait for the NYMEX close (2:35) to see if there's sill a final dumping of the front-month contracts, which terminate today.  As it is, they are down $1 from the open.  I think the best way to play at the moment would be shorting the SCO Nov $44 calls at $1.90 as that's net $45.90 and SCO is now $42.13 and it's a 2x on oil so $3.77 on SCO is 9% and that would be 4.5% lower on oil, down to $86, which isn't too likely – plus there's the normal decay of the ultra-ETFs to give you an additional edge.  Those short calls can be rolled to the Jan $55 calls, now $2 and that's another 22% past $45 and then we'd be talking about $76.50 oil and that seems like a good thing to bet against as it's held as a dead bottom since October 2010.  

    MOTR/1020 – Looks like fun, just a tiny fish.  

    DIA/Gandhjo – That's a good spread but make sure you stop out sensibly if the Dow rallies back over 13,350 – better to lose .10-.20 quickly than suffer through it if we begin to rally again.  That's the on/off line for that trade.  

    SVU/Kinki – Trading 23M already today (6M is normal) but there's 213M shares outstanding so if 80M were short – there's still a lot of squeeze left.  

    MOTR/1020 – As I said, a lot of the move, maybe all, is Icahn-based so take the rally for what it's worth.  He's not buying for a quick flip and the excitement of having him in will die out when the momentum stops and, unless they have something amazing to announce before Nov 14th (earnings) it's still a $22M company that lost $200M last year and is on track to lose another $30M this year.

    Impressive/Lionel – Do you know what they pay for data charges?  They can't be paying $100/month like we do…  AAPL $1,000 seems right to me but when is the question.  

  33. Not a bad morning.  As per it's slightly partisan flavor: " we're being offered a choice between sticking with the slow progress we're making or going back to the failed policies that destroyed the economy in the first place" — I suppose it's to be expected on "debate night,"  but my entirely non-partisan response would be there are structural forces driving the various national economies that are quite beyond the power of any political leader to change much. 
    The U.S. economy is in better shape than Europe's for a lot of reasons — their dysfunctional Euro only being one, a long history of quasi-socialist labor policies being another [good for the "window sitters," bad for the future of the, e.g., 54% of Spanish youth out of work], an aging population hostile to immigration being another.  The U.S. will continue it's slow progress under either President.   Obama will have a more enlightened social policy.  Romney will have a halcyon period with the Congress in which he might actually get some useful legislation passed.  Both will face facts the way all leaders must, which is why politics has been called "the art of the possible."  I wouldn't worry about America; worry about Europe, or the Middle East having a nuclear arms race.  Or Google's share price falling below Facebook's.

  34. Phil
    You think the weekly USO 33 at .60 are worth a trade  ?

  35. Phil
    that was .60 for the USO calls

  36. Thanks Phil!

  37. Phil/ Iphone 5 seem to be sold only in HK and plans start at about $25 a month on a 24 month contract.
    In Mainland China stores were selling tons of iphone 4S. I didnt see the new 5.

  38. Pharmboy,
     Are You still holding NOK ?NOK had another bad quarter but the company was saved by its Network Equipment unit, another example of the importance of diversification.

  39. AMZN/MoMo – i had a few of the Nov 245 calls per lflan momo port.  sold half cover oct4 245 calls and used proceeds to roll the Nov 245s to Nov 240s with some change back in pocket.

  40. TZA/ Phil: Did you suggest the Wkly BCS 16/17?

  41. MOTR is really struggling.
    They main technology was in cell data space for non-smart phones (pre-smart phones)
    With rise of iPhone and Android they need to re-invent themselves.
    It takes time. and it's gamble

  42. Good Afternoon…..scottmi/AMZN/MoMo……I'm way out of that trade.

  43. Phil, could you clarify "the roll" in your comment below when buying back the short callers weekly 625C and possibly stopping out the NOV640 calls?  I'm not sure I understand the roll, because the short OCT4 weekly 625 is bought back so we'll have reduced shorts and longs in equal amounts.
    2 of our AAPL callers stopped out so now we put a sell-stop on 2 Nov $640 calls, now $18.50 at the $17.50 we just bought back the $625s for so that becomes a roll of those two if it triggers.  If we keep going up, we'll just roll the 3 weekly $625s we have left to 5 or 6 Novemeber whatevers but the week is young…

  44. Resubmit with proper formatting
    Phil, could you clarify "the roll" in your comment below when buying back the short callers weekly 625C and possibly stopping out the NOV640 calls?  I'm not sure I understand the roll, because the short OCT4 weekly 625 is bought back so we'll have reduced shorts and longs in equal amounts.
    2 of our AAPL callers stopped out so now we put a sell-stop on 2 Nov $640 calls, now $18.50 at the $17.50 we just bought back the $625s for so that becomes a roll of those two if it triggers.  If we keep going up, we'll just roll the 3 weekly $625s we have left to 5 or 6 Novemeber whatevers but the week is young…"


  45. Sorry, forgot to post the MoMo portfolio!

  46. I never really considered how I would change my investments based upon a Romney win because I simply figured, collectively, Americans simply are not dumb enough to elect him. But based on 538, intrade and electoral-vote I'm starting to consider it.
    Take this data point: under "businessman" presidents, the GDP has grown 0.12% and under non-businessman presidents, has grown 5.46%, or 45 TIMES better. Hmmm, maybe that's because the point of the government is to GOVERN, and not to RUN A BUSINESS??? Go figure…
    I can tell you right now under a R***** "administration" I would become bearish fairly quickly, and I wouldn't trust this magic-underwear, get-my-own-planet when I die cultist with a finger on a really big button if it was my choice in the matter…. So it would be gold and guns type investing (and a geiger counter), especially near the end when it really falls apart….

  47. Structural forces/ZZ – Actually, it's kind of the same "chicken in every pot" BS that passes for politics that has put the entire global economy in this mess.  Back in the day, when a politician told you there was a free lunch, people simple ignored them and voted for the other guy.  Now, there is no other guy – they all say that and, even worse, people believe it.  We're not teaching basic economics to our kids because God forbid the voting public ever learns how the economy actually works – it would blow the whole gig.   The Euro is "dysfunctional" because countries can't print away their debts – how is this a bad thing?  Only because that's what EVERYONE else does and it places them at a terrible competitive disadvantage – forced honesty.  

    Romney not only promises a chicken in every pot but tells people there will still be eggs every day after you fry the bird – it's completely insane.  It's the same BS are Reagan used – things will be better because we're going to let America be great again and once we are great again then there will be jobs and we'll make so much money all the debts will be paid even with lower taxes.  Forget the fact that not only has this never, ever worked before anywhere, anytime on the planet Earth but that it has historically led to wider wealth imbalances and structural deficits off disastrous proportions.  You can blame Obama for all $5Tn of additional debt but it's still 5/11 or a 45% increase.  The deficit went from $700Bn to $2Tn under Reagan – up almost 200% and from $2Tn to $4Tn under Bush 1 – up 100% in just 4 years and then Clinton was handed that disgrace and we went from $4Tn to $5.6Tn under his watch (40% in 8 years) and then Shrub doubled us down to $11Tn in his term and, of course, it's fashionable to say Obama ran up the debt since – as if you can just shut it down the day you take office.  Oh wait, I guess you can – Mitt says he will.  I guess I'll go out and buy some more pots – FREE CHICKEN!  

    USO/QC – It should be a fun gamble but only until Weds am (inventories).  I'd go light into the close today though, we still may have a little sell-off.  

    You're welcome Gandhjo.  

    Hong Kong/Lionel – People in the US don't realize it but if we paid $800 for the Phone and $25 a month for the plans ($1,600 over 2 years), we'd be better off by $1,200 over 2 years at $100 with a $400 phone ($2,800).  So really, in China, IPhones are almost half as expensive as they are here!  

    TZA/Newt – I don't think so.  That's very short-term and way out of the money.  I'm a bit more bullish now that we haven't collapsed at the open.

    AAPL/$25KP, Hemas – We had 5 short weekly $625s this morning we sold those for $15.  We stopped out 2 at $17.50 but, IF the AAPL Nov $640 calls, now $19.50, drop to $17.50 THEN we will add two of them as shorts.  This effectively completes a roll from 2 of our weekly $625 calls to 2 Nov $640 calls.  We still have the $15 but we are $15 higher in strike.  If, on the other hand, AAPL keeps going up, we never trigger the additional cover and, BEFORE the $625 calls lose more than 2/3 of their premium (around $650) then we will roll those 3 short calls up to 2x (6) of something in November at a higher strike – at the moment that would be the Nov $670s, which are $9.  Since we collected $15 for 3 $625 calls, if we roll them to 6 of the Nov $670 calls, we still have the $15 so we effectively collected $7.50 each and that means AAPL has to go over $677.50 before we're even giving the money back and, by then, our own $640 calls will be $37.50 in the money and we still have 4 uncovered.  

  48. Pete / SPX Mattress:  I buy puts around 5% out of the money, and my normal covers are close to ATM, but only around half the number of contracts. So it is basically a put backspread that does really well in a crash (being delta negative and vega positive), and hopefully can break-even, or just lose a little bit the rest of the time.

  49. lol730/MOTR   I look at it as a biopharma kind of bet….   :)

  50. Wow, AONE is up to 0.19! (+54% today, and +200% since the recommendation to buy).
    That's one of my better calls this year and it's not even an option play. The play is over though, I got out of this one.

  51. Phil:  Regrettably, I agree with every word you say.  My lovely Baby Boom generation forgot [or, rather, never learned] that "being American" doesn't exempt you from education, work, savings or common sense.  The per capita income of the global population is @ USD $10K.  The U.S. population's is closer to $50k.  Of course, both these numbers are skewed by the wealth; an American having the average income of the bottom US decile is better-off than 2/3 of world population.  Not bad, when you consider that American students, in the latest rankings, came in 25th in math, 17th in science and 14th in reading.  I suppose "a false sense of entitlement, ignorance, and luck" all count as "structural factors."

  52. The Repubs need to win this election b/c with the shifting demographics and people becoming more accepting of gays, abortion ,etc this may be their last decent chance.

  53. AAPL/Phil – Do you have a plan yet for your position goal for heading into earnings on Thu?  I realize that it will be based in part on the stock's movement before then…but, I guess, net bullish?  Hedging with weekly call sales will be risky given the upside potential…but the Nov 640 calls will be worth nothing if they miss.  I haven't done the math but won't that pretty much cripple the 25K portfolios?  For the record, I am not in any AAPL positions but am looking to initiate a small, defined risk bullish position going into Thu PM…

  54. BDC   What would be the ROI on AONE if you would have used BITCOINS?  LOL

  55. I'm tempted to say AAPL's 13%+ fall is basically the market reaction to their earnings "pre-earnings," if that makes any sense. I think they rise here, either a snap on earnings or a Xmas run afterwards. A big move isn't out of the question but likely a BCS isn't a bad play for Tuesday. You could buy the 620's for about 30 and sell the 650's for 15.50 and if they at least impress the market a little make 100% overnight but if they get crushed down you have a 620 call for 14.50 that's good until Nov 16 and you roll it down and out to Dec or Jan for a Xmas run.
    I would be nervous with puts on AAPL. Not so much on PNRA and FB though which announce Tue as well…

  56. 10:00 AM On the hour: Dow -0.07%. 10-yr -0.23%. Euro +0.24% vs. dollar. Crude -0.18% to $90.28. Gold +0.23% to $1727.95

    11:00 AM On the hour: Dow -0.11%. 10-yr -0.27%. Euro +0.37% vs. dollar. Crude -0.51% to $89.98. Gold +0.11% to $1725.95.

    12:00 PM On the hour: Dow -0.14%. 10-yr -0.23%. Euro +0.32% vs. dollar. Crude -0.69% to $89.82. Gold +0.28% to $1728.85.

    1:00 PM On the hour: Dow -0.31%. 10-yr -0.21%. Euro +0.28% vs. dollar. Crude -0.54% to $89.95. Gold +0.24% to $1728.15.

    The S&P 500's performance is topping the list of asset classes – Treasurys, corporate bonds, commodities, the dollar, and overseas equities – YTD for the first time since 1995, according to Bloomberg. That year – with PE ratios then similar to now – was near the beginning of an epic run for the stock market. Skeptical investors, says fund manager Max King, remained poorly positioned for it.

    Are the glory days of swashbuckling hedge fund managers coming to close? Interested in attracting more conservative pension fund assets, hedge funds are giving up their high-roller ways andalienating rich, private investors in the process. HNW investors wanted big returns, and weren't concerned with monthly numbers or volatility, says an industry vet. Institutions think a bit differently.

    A story worth following unfolds in California where San Bernadino attempts to get a handle on pension costs by stopping biweekly contributions to Calpers. "A David and Goliath moment," says a bankruptcy attorney. At stake? Check out Vallejo, whose average post-bankruptcy pension cost for a fireman is greater than the starting salary of a NYC fireman. More than $200K to pay a safety worker? It's hard to make the numbers work. 

    If we just eliminate our one abundant source of energy, things will be great!  Backers of liquefied natural gas launch the first major campaign to press lawmakers to allow the export of more U.S. gas, Reuters reports, making the case that selling surplus natural gas to foreign countries will yield strong economic benefits and not drastically raise prices. After allowing gas exports from one project, Cheniere's Sabine Pass, the Obama administration has put off approving more applications.

    A123 Systems (AONE +54.6%) soars to a lofty $0.19 after China's Wanxiang Group files a 13-D waiving any right to exercise warrants to purchase A123 shares, or otherwise go through with its cancelled financing deal. Last week, Wanxiang said it still wants to acquire bankrupt A123, and announced plans to outbid Johnson Controls for A123's battery business. (also)

    Speaking on the earnings conference call (webcast), Caterpillar (CAT) CEO Olberhelman says it's not yet translating into orders, but a recent visit to China reveals a positive "attitude change" among his customers, with November's leadership reboot expected to be a "watershed event." (earnings earlier) 

    One more on the Caterpillar (CATcall: The company is setting either very low or even contracting growth targets for each of its divisions for 2013, potentially setting up easy marks to beat if anything can go right with the economy. CAT expects any 2013 improvement to be in the 2nd half of the year (curious how improvement is seemingly always back-weighted).

    Ford (F -0.9%) marketing exec James Farley says the company expects to sell about 8M units per year by FY15. Previous estimates from the automaker were similarly optimistic, but were also made before European auto demand slumped off even worse.

    Auto supply stocks fall after Advance Auto Parts offers soft guidance for Q3. Though execution is an issue with the company, according to analyst Rahul Sharma, the auto parts sector also looks to be stuck in neutral as a whole. Decliners : PBY -0.9%AZO -1.4%,ORLY -1.4%. - Suffering from more new cars on the road (less need for parts).  

    The frenzied trading in Supervalu (SVU +28.8%) is tied in part to a note out to clients from JPMorgan citing a 50% chance for a leveraged buyout. The firm's stance is that Supervalu sits as a relatively easy target with its low-cost debt and real estate assets as it upgrades the stock to Neutral from Underweight.

    Naming names: The picture on Supervalu (SVU +30.6%) comes into focus with Debtwire reporting that Cerberus Capital Management wants to line up $4B-$5B in debt financing to take over the grocery store operator.

    Shares of Lululemon (LULU -1%) slip below their 200-day moving average as last week's negative take from Credit Suisse and a Chipotle-inspired momo scare keeps the selling pressure on. SA author Robert Broens sees more downside risk ahead with high revenue growth over the next few years needed to sustain the stock's lofty multiples. He says if LULU hits $75 again before Q3 earnings are announced, a short sale is tempting.

    Keybanc thinks the market is unnecessarily pricing in a "high probability" of a significant downward revision from Green Mountain Coffee Roasters (GMCR +0.9%) on its FY13 guidance as itbacks the Buy-rated company to ride through the K-cup price war relatively unscathed. If the take is correct, a major hurdle will be cleared for the company and challenging both the Einhorn thesis and accounting gadflys will be a bit easier.

    Netflix (NFLX +4%) rallies after the The Next Web notices ajob listing for linguists capable of translating "marketing, UI and content materials" into "Turkish, Dutch, Hindi, German, Italian, Norwegian, Korean, and Japanese." That's fueling speculation Netflix is planning to enter some of the markets where those languages are spoken. Norwegian audiences are already covered by last week'sScandinavian launch. Netflix is now up 25% from its Sep. 25 close – Q3 results arrive tomorrow.

    While others are bullish on SanDisk (SNDK -1%) due to a favorable NAND flash supply situation, RBC's Doug Freedman warns the NAND market could still see oversupply in Q1 due to a seasonal slowdown. Freedman, who's downgrading shares to Sector Perform, also notes SanDisk's plans to boost its 2013 NAND capacity at the low end of expected industry growth could lead to share loss. SanDisk rallied on Friday thanks to the guidance and margin improvementaccompanying its Q3 report, though it gave up the majority of its gains.

    Facebook (FB +1.2%) outperforms ahead of tomorrow's Q3 report after Susquehanna forecasts in-line results, but also suggests ad sales growth could be at an "inflection point." Less positive is Citi, which thinks Facebook has hit an "air pocket," and that Google's mobile and European issues don't bode well for the company. (Wedge Partners)

    According to The Next Web, Google (GOOG) will use an Oct. 29 event to launch: 1) 32GB and 3G-capable versions of the Nexus 7. 2) A 10" high-end Nexus tablet launched with Samsung (previous). 3) A rumored Nexus phone launched with LG, and featuring Qualcomm's (QCOM) top-of-the-line APQ8064 processor. 4) Android 4.2, which will allow multiple tablet accounts to be set up on the same device.

    Barnes & Noble (BKS -0.8%announces the Nook HD and Nook HD+ are available for preorder online. The consensus on the Street is that the new Nook products keep Barnes & Noble in the game, but that finding room for margins is going to be quite tricky. Prices for the new Nook products are set below the expected prices for Apple's soon-to-be-unveiled smaller iPad, but in a tight range with other rival products.

    My favorite Chinese stock: China Mobile (CHL +2.7%) is rallying after posting its Q3 report, and is giving rival China Unicom (CHU +1.9%) a lift along the way. A ~9M Q/Q 3G subscriber increase is going over well, as is the company's claims that its declining ARPU is stabilizing due to rising mobile data traffic. Citi is reiterating a Buy, touting CHL's 3G growth, 4% yield, and budding 4G network (still in trial stage), but expects margins to remain pressured in Q4.

    Sure we lose money on each sale – but we make it up with VOLUME!  Shortly after having discontinued the oversized Kindle DX, Amazon (AMZN) appears to have discontinued the Kindle Touch,paidContent observes. That would leave the costlier and favorably-reviewed Kindle Paperwhite as Amazon's only touchscreen e-reader. Amazon, which is using aggressive pricing to prop up e-reader sales in the face of a tablet onslaught, also sells an inexpensive non-touchscreen Kindle and the legacy Kindle Keyboard.

    Apple (AAPL +2%) roundup: 1) Ahead of tomorrow's iPad Mini event, 9to5 Mac reports the cheapest model will likely go for $329, Higher-capacity and 3G/4G-capable models are said to range from $429-$659. 2) In addition to the Mini, Apple will reportedly unveil a slight update for the regular iPad. 3) A Japanese court rules Apple didn't infringe two Samsung patents. It had already cleared Apple of infringing two other Samsung patents, and also cleared Samsung of infringing an Apple patent.

    More on Apple: Shares are rebounding today with the help of bullish comments from Goldman's Bill Shope, who declares shares oversold. "We continue to believe the best time to buy Apple’s stock is amid periods of supply-centric concerns," Shope argues ahead of Thursday's FQ4 report, while asserting Apple will be able to raise production and meet demand this quarter. BTIG's Walter Piecyk is more cautious, believing iPhone 5 shortages could translate into lost sales. 

    Three lunchtime reads:

  57. Laugh at my AONE play if you want but it made some serious cash in less than a week….

  58. AONE/bio – crying more like…nice one

  59. HOV has been a PSW favorite for some time and now that it's moving we don't hear much about it. The early-recovery head fake to 8 probably had something to do with it but I see this stock at 20+ in 1.5 –  3 years. I bought some KBH Jan13 10 calls awhile back for 0.75 and been selling them as a serious cash machine — just got another couple out today at 7, it just keeps going!
    Pick a long-term trend and ride it and if you're right, let those winners run-baby-run!

  60. AONE/BDC – Congrats on that one, a gutsy call that paid off well.  

    LOL ZZ – too true unfortunately.  

    AAPL/Cdel – Net bullish but if AAPL doesn't make progress over $640 ahead of earnings, then less so.  At the moment, something is spooking people out of positions and we're pulling back but not AAPL so far at $624 but we have to watch that 3,000 line on the Nas and 820 on the RUT just fell again.  Yes, I have no intention of still being in Nov calls at earnings.  

    As a new, bullish play on AAPL earnings, I like the Nov $635/665 bull call spread at $11.30 and the plan would be to sell Jan puts for $12 if AAPL has bad earnings and dives.  If AAPL stays above $600, then this spread should hold $5-6 and, if AAPL is below $600, the Jan $500 puts are already $7.50 so figure you'll be selling AAPL puts $100 out of the money AFTER AAPL drops to win your money back off this spread.  If that appeals to you – there's not much risk in taking the bull spread.  


    HOV/BDC – I do tend to get less interested after a stock has already doubled – especially as to calling new plays on it but this morning we looked at a very nice spread where we can make 200% if it just holds $3 – don't really see the point of spending money betting it gets to $20 if they'll pay us that well for $3. 

  61. BDC   Not laughing at AONE.  Didn't you come on here and hype Bitcoin?  Once it blew up, you didn't post for a week. Selective memory I guess.

  62. FU market!!!

  63. Thanks for that AAPL idea…any on GOOG post their earnings disaster?  They are testing the 100DMA today…

  64. Why is there no volume today? Could it be fear that someone will win tonight?

  65. Phil / JRCC – nice call on selling Jan '14 $2.5 puts on this one back in July at $1.50, now $1.15.   

  66. Got it, thanks Phil.

  67. Phil / TIVO – Any adjustment here now that it's below 9.75? Thx

  68. I wasn't sure if i "hyped" bitcoin, it's a stable digital crypto-asset that has interesting implications that I certainly won't waste any more time in this forum describing, but if anyone had interest there's a bunch of pumpers and haters all over the internet where you can take sides.
    PSW is, for the most part, a forum of fairly sophisticated investors that I feel comfortable sharing potentially esoteric investments ideas with, which they certainly have the faculties to determine interest on their own. Bitcoin is obviously something that interests me greatly, certainly from an academic standpoint (programming and economics) more so than 'investment' but I do play around with it and my friends and I send payments back and forth. I wasn't sure if the others in forum here had heard of it or had any interest so I weigh in now and again. Around the time I last was talking about it last the price was about 10.50 in early August and it did make a move to 15.50 before a big sell-off (that only sent it back to 10) and it has since reconsolidated around 11.50-12.00 (which is still 36% gain annum). If that's somehow considered a bad investment, certainly let me know what you invest in.
    The recent crash from 15 to 10 was blamed largely on the evaporation of the TYGGR.BOND-B mining bond fund that evaporated overnight, and even though there are documented scams AROUND bitcoin, there's never been any successful hack to the currency itself, and if you take a gander at the currency's 3 year chart it still looks like to me something to get behind (albeit, for a very small percentage of ones overall investment portfolio).

  69. BDC – Always appreciate your sharing!……

  70. Wow, sounds like PSW needs a cheer injection: How about the Korean Komedy Hour?   I didn't know you could shoot down balloons with heavy artillery — airbursts?  Shapnel?  Sounds like Dear Leader Jr.  was prepared!  
      From Stratfor:  October 22, 2012 | 1537 GMT

    "A group of North Korean defectors launched balloons loaded with 120,000 propaganda leaflets Oct. 22 in Ganghwa, despite being blocked from the initial launch site by South Korean police forces, Voice of America reported. According to reports by South Korean media, there were signs that North Korean forces were readying artillery hours before the balloons were launched. Pyongyang has in the past threatened to retaliate should South Korean-based activists continue to invade North Korean air space with such balloons."

  71. BDC  OK. Cool.

  72. Phil
    I wanted to thanks you for the help over the last few years.
    I will not be attending the meeting in Vegas.
    My sister in law is finishing a fellowship   in Munich at the same time.
    I looked forward to meeting you and thanking you in person, maybe next year.
    I hope someone take good notes and shares.

  73. Wow, and once again no reason for this selling – just widespread dumping by some program.  

    Nas failing 3,000 so we'd better stop here and turn back up but very ugly.  

    XLF failing $16 – watch Transports at 5,000 (now 5,022 so 0.5%) as that would be a bad break.

    GOOG/Cdel – I think they are priced right around $650-$700 so not too much to play with.  They're going to make $42 for the year so 15x = $630 so that should be the low as they're still guiding $50 for next year and 12x holds $600 so that's a buy point for sure.  Keep in mind they missed this Q by $1.60 but still $9 – up from $7.05 last year (28%) so people need to get a grip on these "disappointments".  

    I guess if were going to play GOOG, I'd sell the 2014 $550 puts for $31.50 and buy the $640/740 bull call spread for $46 for net $14.50 on the $100 spread that's $37 in the money and sell Nov $710 calls for $5.  If you get away with 6 $5 sales, you don't need the short puts anymore and you have $85.50 of upside and plenty of time to roll the callers so GOOG would have to hit $800 before you get in trouble.  

    Fear/Shadow – Market hates uncertainty in general but we won't know anything until November unless one of those guys majorly screws up.  

    JRCC/Terra – And what a ridiculous premium they now have with JRCC at $5.25.

    MNST getting killed just because they killed 5 people….

    You're welcome Hemas.  

    TIVO/Opes – What's the position?  They're resting on the 50 dma at $9.75 and I think they are being artificially depressed by the funds, who are accumulating, before the patent story catches on:


    TiVo (Nasdaq: TIVO  is no stranger to the courtroom. A series of settlements in patent infringement lawsuits has netted the digital video recorder pioneer at least $1 billion in damages and license royaltiesDISH Networks(Nasdaq: DISH  was first in line, and the biggest paycheck so far. Then came AT&T (NYSE: T  with a smaller Rolodex of DVR-toting customers, and hence a smaller settlement.Verizon (NYSE: VZ  rounds out TiVo's victory roll so farwith a 7-year agreement to put TiVo-approved software on every FiOS-branded video recorder.

    The next domino is about to fall. The last major action on TiVo's American docket is an indirect attack on holdout Time Warner Cable (NYSE: TWC  , by way of suing the companies who make Warner's set-top boxes. And it's a potential whopper.

    How big is "big?"
    In legal filings this week, TiVo said that it is looking for "billions of dollars" in damages alone (emphasis TiVo's, not mine!).

    The motion was filed to join the cases against Cisco Systems (Nasdaq: CSCO  and Motorola Mobility, now a division of Google (Nasdaq:GOOG  . Like I said, TiVo sees a much larger damage claim this time, and makes similar claims against Cisco as well.

    Beyond the direct cash payments from these settlements, the legal campaign helps TiVo transform into a lightweight business model. Based on more than a decade of innovation and tons of spit-shine polishing, TiVo sits on a valuable portfolio of software and patents related to video recording and content management. These are being shopped around to cable and telecom operators around the world.

    TIVO is a $1.2Bn company with $600M of cash and investments and $172M in debt that dropped $100M to the bottom line last year but now they will be getting cash settlements and long-term licenses and I imagine at least another $500M from GOOG/MOT so the selling off is a little silly and likely manipulated to flush out the weak hands.  

    Bitcoin/BDC – I thought the discussion on Bitcoin was very interesting and it was impressive that they rode out that little scandal.  

    Korea/ZZ – Funny going to war over balloons but you never know…

    You're very welcome QC – sorry we won't see you in Vegas (just a few weeks now!). 

  74. AAPL over $625 – very nice!  

  75. AAPL breaking out!

  76. INTC – still looks like a short (though i wouldn't). getting down near weekly trendline ($21) and weekly 200MA support. may start selling puts if touches 21 but still looking for the fall to stop. will it get back to under $19? very possible..

  77. Oil hit $89 and time for NYMEX to close so NOW is a good time to pick up some USO weekly $33 calls at .37 – 20 in the $25KP.

  78. Pretty telling charts from Cullen Roche:

    Divergence between the US economy and Europe using the PMI numbers:

    As I’ve shown in the past, big budget deficits during a balance sheet recession haven’t only bolstered economic growth relative to austerity.  Where it’s really helped is corporate profits.  As we know from Michael Kalecki’s work (see here), when domestic investment is as weak as it is now, government deficits can play a much larger role than usual in steering corporate profits.  This makes sense from the view of understanding Monetary Realism since the economy is largely a system of flows.   When the domestic private sector stops spending (ie, their flow stops) as it has to a large degree in recent years (due to de-leveraging) then it can be extremely beneficial for the government to step in and turn on the flow.  It’s not a coincidence that huge budget deficits are being run while corporate profits hit all-time highs.

    And yet, they keep on pushing austerity in Europe! Just like tax cuts never, ever pay for themselves, austerity measures have never shown to speed up a recovery!

  79. Oh damn, I have to leave at 3:30 today for doctor.  Almost forgot.  

    Our selling program seems to have terminated, Nas back over 3,000, Transports heading back up – hopefully we keep it up.  XLF essentially held $16 with a quick dip below and, most importantly – AAPL $626!  

  80. How embarrassing – just when I gave up on oil going lower, we're getting a push down into the close.  Looks like they don't want to take delivery of ANY contracts – isn't it funny then, that they have 388,000 on fake order for next month.  This is such an obvious scam it's shameful no one does anything about it.  


    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Nov'12 89.52 90.80 88.72 88.84 14:12
    Oct 22


    -1.21 12993 90.05 16703 Call Put
    Dec'12 90.05 91.27 89.06 89.19 14:12
    Oct 22


    -1.25 202037 90.44 388468 Call Put

    No change in wanting USO calls, now .33 – just a little impatient to get in….

  81. Austerity/StJ – I don't even understand how it's debated – it seems like a mathematical fact that austerity is a disaster but, then again, it also seems pretty obvious that Global Warming is a fact as well yet the Kochs manage to find hundreds of "scientists" that disagree and that's proof enough for half the people to believe it….  Austerity is good for bankers – keeps inflation in check and guarantees they get paid their loans – no matter how stupid they were to make them in the first place.  It's good for the top 1% as it creates plenty of cheap and available labor and tons of people lose their homes and businesses so they can be taken over as cheaply as possible by the top 1%.  It's not a conspiracy – it's just the way things are….

    2:00 PM On the hour: Dow -0.62%. 10-yr -0.2%. Euro +0.18% vs. dollar. Crude -1.29% to $89.27. Gold +0.13% to $1726.25.

    Stocks turn decidedly lower in afternoon trade, the DJIA's0.7% drop paced by a 2.6% decline in Microsoft, reeling from last week's poor Windows division results, and with a worrisome Barron'sarticle over the weekend tacked on. Apple, +2.4%, supports the Nasdaq, -0.1%. Bond yields aren't cooperating, the 10-year +3 basis points to 1.79%.

    It’s Really Different This Time. It’s Much Worse. (Barron’s)

    Individual investors are destroying their wealth (MarketWatch)

    "The fundamentals haven't changed, but the prices certainly have," says fund manager Mark Egan, explaining why he recently sold Bank of America (BAC) bonds yielding 3% that he had picked up last year when they were yielding 8%. He notes the great balance sheets of the financials mean good times for bondholders, but not so much for the owners of the common stock.

    Are We At The End of Record Low Rates? (The Basis Point)

    Morgan Stanley (MS) loses heavy-hitting ($2.5B in client assets) financial adviser Rebecca Rothstein and her team to BAML. Frustrated with technology issues and the culture clash resulting from the MSSB merger, a number of major rainmakers have exited Morgan this year.

    Retailers want to edge into the holiday shopping season asearly as possible this year with most forecasts calling for steady – but not spectacular – spending numbers. Trends to watch: 1) Increased online couponing and promotional activity from fringe players. 2) Managing inventory should be easier with the season starting early and big data initiatives firing up which could help margins. 3) The calendar comes through for retailers with a lush 32-day window between Thanksgiving and Christmas extending the crucial part of the season. 

    Toyota expects to reach global production of 9.8M-9.9M units in 2012, instead of becoming the first automaker to ever blow past the 10M mark, according to The Nikkei. But being tagged the world's largest automaker isn't of paramount importance to the automaker as GM and Volkwagen nip at its heels. The automaker trades with a market cap 3X as high as GM with its balances sheet and profit-making ability still praised by analysts and industry insiders.

    Tesla Motors (TSLA -0.7%) CEO Elon Musk explains in ablog post the rationale for the company setting up its own retail stores to disrupt the dealership model by noting any salesperson selling a electric vehicles alongside gas-powered cars faces a conflict of interest. Musk on dealers: "It is impossible for them to explain the advantages of going electric without simultaneously undermining their traditional business."

    More from Tesla Motors (TSLA -0.8%) CEO Elon Musk (previous): The company plans to add 9 stores, 3 galleries, and 26 service centers by the end of this year. After the expansion is done, he notes 85% of all Model S reservation holders in North America will be within 50 miles of a Tesla Service Center and 92% will be within 100 miles.

    Monster Beverage (MNST -9.7%) dives after incident reports released by the FDA cite the company's energy drink as a possible link in five separate deaths over the last few years. The agency doesn't draw any conclusions, but an increased focus on the sector seems likely. 

    A lawsuit filed against Monster Beverage (MNST -13.2%) over the death of a teenager tied to its drinks alleges (court filing .pdf) alleges the two cans consumed by the girl contained 480 milligrams of caffeine. Though it's the equivalent of more than a dozen Coke soft drinks (caffeine database), short-term trading opportunists note it's only 60 milligrams more than one Starbucks Venti coffee. In a statement, Monster Beverage maintains it has safely sold over 8B energy drinks worldwide.

    Wedbush's Betsy Van Hees slashes estimates on Broadcom (BRCM -0.4%) ahead of tomorrow's Q3 report, and predicts its Q4 guidance will fall short of consensus. While admitting Broadcom's strong exposure to Apple and Samsung, Van Hees expects macro issues, inventory draw-downs, and limited visibility to hurt guidance. Several chip industry companies have already provided weak earnings figures (IIIIII) this month. Broadcom, like other chip stocks, has sold off a bit in recent weeks.

    ServiceNow (NOW -2.9%) slides as H-P (HPQ) introduces cloud-based IT service desk software with fairly aggressive pricing - $89/month for dedicated users, $178/month for a "floating" account that's shared between users. H-P's pricing suggests a willingness to cannibalize sales as of its traditional Service Manager software in order to stem the share gains of ServiceNow and other cloud-based rivals. Citrix (CTXS) entered this market last month by acquiringstartup Beetil.

    More on Facebook: The WSJ's Rolfe Winkler decides to play devil's advocate: he argues Facebook's Gifts e-commerce service (helps build a base of credit-card numbers) and mobile ad network are reasons to be positive, as is the sheer scale at which Facebook can push new products. On the other hand, a recent poll of Facebook users found only 17% claiming they used Facebook "to get inspiration on what to buy," compared with 70% of Pinterest users who said the same about Pinterest.

    Microsoft (MSFT -2.3%) heads south as a harsh Barron'scolumn is followed up by a flurry of media articles related to Windows 8, some of them critical. The NY Times becomes the latest to observe many early Windows 8 users have become confused by its radical, tile-based UI. Reuters, meanwhile, joins others in noting early corporate interest in Windows 8 is limited. Gartner predicts Windows 8's PC penetration within large organizations will only reach 20% at its peak. A shift towards subscription-based licensing could buffer Microsoft a bit.

    More on Microsoft: 1) The WSJ notes Microsoft is making unprecedented retail efforts to promote Windows 8, even dictating retailer demo PCs show e-mails and photos belonging to a fictional "Allison Brown" (she's Franziska Fiegler in Germany). 2) CNET provides an in-depth profile of secretive Windows chief Steven Sinofsky: he receives high marks for his intelligence and passion, but his hierarchial management tactics are said to have alienated workers and hurt innovation. (marketing plans) 

    Samsung (SSNLF.PK) says it has terminated its LCD supply contract with Apple (AAPL), and will no longer provide panels to the company due to price disagreements. Rivals LG Display (LPL+2.2%), AU Optronics (AU -1%), and Sharp (SHCAY.PK), who arealready supplying Apple, should benefit. Apple has already shiftedmemory purchases away from Samsung, and reportedly wants to migrate its app processor manufacturing to TSMC. 

    Ever Bipartisan, Bloomberg Jabs Both Candidates (NYT)

    Joel Zimmerman – 99 Life Hacks to make your life easier! (Tumblr)

  82. Hey Phil- SVU – I did make the initial trade on this when we first opened up the position, but then didn't double down on the dip. I got my put assinged to me on the 20th at $4. I have a few hundred shares of SVU right now that I am into for a net of $2.68/share. I was thinking of selling the Jan 2014 $3 Puts and Calls. What do you think?

  83. Phil – today I bought this weekly $620 AAPL calls, up nicely but would you recommend that I cover them into the close today?  Or even possibly just sell and take them off the table…

  84. Phil/AMZN          I’m really surprised you sold the last of the 240 puts. You have been down on them for so long (rightfully with their outrageous p/e). There chart pattern over the last two weeks has deteriorated preceding earnings later this week. With a bad announcement I could see them sliding to 200 or below.
    Phil/V    You have commented at least twice recently regarding what are people buying?  The answer is everything.  Customers use plastic everywhere – the gas station, grocery store, 7eleven, Walmart and fastfood.  Where plastic was once used for dining out and major purchases, it has become the payment option on almost all purchases.  Visa has dramatically expanded its percentage of the portion of each customers monthly expenditures.  I have friends that use their credit card to pay all their monthly bills including their mortgage payment simply to get the added miles.

  85. SVU/Japar – Over $3 now.  I'd sell the 2015 $3s for $1 and the $2 puts for .65 and that drops your net to $1.03/1.52 so, next time they drop 50%, you won't forget to DD!  It puts most of your outlay back in your pocket and you still pick up another $2 if they just hold $3 (or get bought).  

    AAPL/Jerconn – I''d take it and run the way this market's been trading.  You can always buy the whatevers tomorrow with your $23.50 but won't you feel like a total moron if we open tomorrow back at $610 and all your profits are gone?  

    Speaking of AAPL in the $25KP.  While things are going well, we did spend $5 to stop out of 2 calls so let's also not leave things to chance and sell one Nov $665 call for $11.10 so we have that money and another $5 stored up for stopping out more tomorrow.   That will leave us with the 3 short weekly $625 calls, now $21 and down $6 each and the one short Nov $665 at $11.10.  

  86. $25KP – Let's sell 7 AMZN Jan $205 put for $5.70, which will cover the loss on the short $235 puts if we have to stop them out but, if AMZN turns up as I expect, then we make money on both short puts.  

  87. Thanks Phil, those were my sentiments exactly…take it and run

  88. AMZN/Den – Had we not been losing on AAPL, I would have stuck with them, as it is now, I'm bullish on AMZN ahead of earnings but hopefully we'll be out of both puts by Thursday evenish.  Can't fight battles on all fronts so I'm concentrating firepower where it will do the most good.   I still like a short play on AMZN for earnings but we don't have the luxury of guessing when we're down 35%.  Good point on V but I would have thought we've been cashless long enough that they just move with the overall purchases.  

    OK, gotta run – If, for some reason, AAPL fails to hold $630 into the close then watch the Nov $650 calls, now $16.75 and we want to cover with 2 more in $25KPs if they go down to $15 so we'll be 5.5 out of 10 covered but hopefully not because tomorrow is IPad mini day.  

    Later all.

  89. TSLA should re-make an electric version Model T as sort of an American-manufacturing-nostalgia marketing gimmick.
    That would be cool.

  90. MoMo portfolio note……..   sometime before earnings I will be converting the January AAPL 620s to a bull call spread. 

  91. Mr Stick!!!!!

  92. Flan: How come?

  93. SVU – anyone have thoughts on fair value for a buyout?

  94. .aapl propping entire market..oil trades like another preelection swoon coming
    yhoo jumping a whole 2% on earnings….great now we have to hear 24 hours of commentary about yahoo again…a company that doesnt matter..lmao

  95. newt….to mitigate losses in case of a miss.

  96. Nice stick into the close – I missed all the excitement for the day.  

    Good decision Jerconn – did you see those crazy moves after hours?  Up and down $15-20 a bunch of times. 

    SVU/Bot – $3.50-4. 

    YHOO/Angel – I totally agree.  Who could possibly care what YHOO does anymore? 

    3:00 PM On the hour: Dow -0.65%. 10-yr -0.23%. Euro +0.18% vs. dollar. Crude -1.92% to $88.7. Gold +0.16% to $1726.75.

    Dow -0.03% to 13340. S&P +0.03% to 1434. Nasdaq +0.38% to 3017.

    Treasurys: 30-year -0.52%. 10-yr -0.32%. 5-yr -0.15%.

    Commodities: Crude -1.42% to $89.16. Gold +0.32% to $1729.55.

    Currencies: Euro +0.27% vs. dollar. Yen +0.77%. Pound -0.02%.

    After-hours top gainers, as of 5:15 p.m.: FXEN +8.9%;MTW +6.7%NLSN +6.2%WETF +5.9%TPLM +5.7%.

    After-hours top losers: ODP -6.6%RCII -5.7%VECO -5.5%GHL-4.4%OEH -4.2%.

    Market recap: Stocks recovered nicely from steep earlier losses to end above breakeven, led by techs that have lagged the market for weeks. Apple jumped 4% on bullish analyst comments. The S&P held above key support at 1,420, which represents highs set in April. Crude oil slid 1.9% and nat gas plunged 4.6% on worries over weak energy use. NYSE advancers and decliners finished nearly even.

    U.S. Stocks Top All Other Assets for First Time Since ’95 (Bloomberg)

    U.S. bond issuance topped $1T YTD last week, nearing 2007's all-time high as companies take advantage of low rates and yield-starved investors, and rush paper to market. "This is a Fed-engineered bubble," says a senior banker, who adds he sees no catalyst to derail things. Others say it's wholesome – businesses refinancing existing debt at lower rates. LQD +7.7% YTD.

    Countdown to change at the Fed (Market Watch)

    When Banks Were Able to Print Their Own Money, Literally (Echoes)

    IMF’s epic plan to conjure away debt and dethrone bankers (The Telegraph)

    Will central banks cancel government debt? (FT Alphaville

    The Bank of Canada is expected to drop its tightening bias at tomorrow's policy meeting. Replacing it could be a Fed-like pledge (actually first introduced by the BoC in 2009) to keep "ultra-low" rates for a specific period of time. Well north of parity with the greenback a month ago, the loonie has been following risk markets lower of late, currently buying $1.0067.

    Moody's downgrades the ratings on 5 Spanish regions by 1 or 2 notches, "driven by the deterioration in their liquidity positions, as evidenced by their very limited cash reserves … and their significant reliance on short-term credit lines." 

    Reminding of MetLife's (MET) prescient 2004 bet to hedge against  tiny interest rates (now contributing about $500M/year in profits), New York Life buys hedges to produce a big gain in the event of a spike higher in yields. Genworth (GNW) hedges the Bank of Bernanke by buying paper in markets where the Fed isn't involved (are there any left?). "I'd hate to be in the agency market … when (the Fed) stops playing."

    JPMorgan (JPM) gets Barney Frank in its corner, the Dodd-Frank co-author saying the government shouldn't go after the Bank of Dimon for infractions committed by Bear Stearns. "To prosecute JPMorgan because of activities undertaken by Bear Stearns before the takeover unfortunately fits the description of allowing no good deed to go unpunished." (Earlier: the suit, Dimon's comments)

    S&P more than doubles to $10B the amount of annual profit it estimates banks stand to lose as a result of the Volcker rule. "Stricter rules could lead us to take negative rating actions on certain banks." In addition to the usual 6 TBTF names, PNC and USB were included in the analysis. The combined profits of all 8 lenders will sum to less than $100B this year. 

    Goldman Sachs (GS) loses its bid to dismiss a $1B lawsuitover CDOs loaded with toxic subprime mortgages it sold to an Australian hedge fund. One of the CDOs – Timberwolf – was famously described by Goldman mortgage department chief Thomas Montag as "one s—— deal."

    John Paulson Doubles Down on Real Estate (WSJ)

    These Pictures May Give You Nightmares About The Canada Oil Sands (Business Insider)

    Solar stocks (TAN +0.8%) enjoyed broad strength today as LDK Solar (LDK +21.1%) signed a share purchase agreement with Heng Rui Xin Energy and a new poll showed a large majority of Germans support the switch from nuclear to renewable energy despite the elevated cost. FSLR +1.1%TSL +4.1%SOL +4.8%STP +9.3%.

    Western Digital (WDC): FQ1 EPS of $2.36 beats by $0.06. Revenue of $4B (+50% Y/Y) in-line. Shares +1.4% AH. (PR)

    Western Digital (WDC-3.6% AH after guiding on its FQ1call (webcast) for FQ2 revenue of $3.55B-$3.7B and EPS of $1.65-$1.85, below a consensus of $4.13B and $2.43. Seagate (STX)-4.5%. Expectations for hard drive shipments have been deterioratingas PC sales dive, but it looks as it they need to fall further still. Controller chip supplier Marvell (MRVLwarned last week. Seagate reports on Oct. 30.

    Texas Instruments (TXN): Q3 EPS of $0.52 (excludes one-time charges) beats by $0.06. Revenue of $3.39B (-2% Y/Y)beats by $50M. Expects Q4 revenue of $2.83B-$3.07B and EPS of $0.29-$0.37, below a consensus of $3.24B and $0.42. Shares -1%AH. (PR) 

    More on Texas Instruments' Q3: Wireless sales, hurt by declining Amazon and Nokia orders, -44% Y/Y – TI is planning to exit this space. Embedded Processing -4% (hurt by telecom), analog (boosted by National Semi deal) +18%. Other businesses (includes calculators) -11%. Analog and Other made up lion's share of operating profit. Orders +6% Y/Y but -5% Q/Q. EPS boosted by $600M in stock buybacks and $60M earthquake insurance payment. CC at 5:30PM ET (webcast). TXN nearly unchanged in spite of guidance, could bode well for peers who still have to report. (PR)

    NBC (CMCSA -0.2%) keeps its strong ratings rolling, beating network rivals for young viewers for three week running. While NBC has racked up a 15% increase in the 18-year to 49-year demographic this year compared to last, ABC (DIS -0.9%) is down 12% and CBS without Charlie Sheen to drum up business is down 24%. Analysts say one more week at the top could be enough to get ad rates heading north.

  97. Hi Phil – I'm up about 22% on your 2015 CLF $25 puts(thank you by the way) and was wondering if I should take the money and run going into earnings release on Wednesday?  Thank you very much!

  98. Bullish About the Future
    In his second "Executive Decision" segment, Jim Cramer spoke with Jack Hartung, CFO of Chipotle Mexican Grill (CMG), a stock down over 200 points after the company reported two disappointing quarters in a row with single-digit same-store sales growth.
    Hartung said Chipotle continues to see value in its stock price, which is why the company is opportunistically buying shares as part of a $100 million buyback program. He said the company has $22 million of that buyback remaining but has also just authorized a second $100 million as well.
    Hartung said Chipotle couldn't be more bullish over its long-term future as it only has 1,350 restaurants so far, but the opportunity to build thousands more. Plus, Chipotle's Asian Kitchen concept is gearing up to open a second location in Washington, DC, and one in Los Angeles and the company is only beginning an expansion in Europe.
    Hartung said Chipotle is still delivering pretty good results considering the U.S. economy. Most of the company's declines are from food price inflation and not from customers dining any less. Hartung noted that while some business lunches have been curtailed and others have cut back on drinks and sides, overall just as many customers are visiting as before.
    When asked about competition from Taco Bell, Hartung noted that customers are smart enough to know the difference in their food. He said customers can see Chipotle's food being made fresh in their open kitchen, while that's not the case at Taco Bell.
    Jim Cramer said that while Chipotle has clearly lost its momentum, at just 22 times earnings, the stock is once again representing a real value.

  99. The pattern is intact – hit the 50 DMA with doji candle (looks like bullish dragonfly there) and hopefully bounce back. The difference this time is that we had a one day correction (a big one) rather than a multiple day one. NASDAQ saved by a big AAPL move today! The RUT is clearly not as bullish now.

  100. Phil – What is your opinion of the debate?

  101. Obama decimating Romney. This is the Obama I have been waiting for!

  102. Best tweet so far: "You say PACK-a-stan, I say POCK-ee-ston. Let's call the whole thing off. #debate"

  103. Tomorrow's oil line today (well tomorrow)

    R3 – 93.27
    R2 – 92.27
    R1 – 90.57
    PP – 89.57
    S1 – 87.87
    S2 – 86.87
    S3 – 85.17

    Yesterday's high and low – 91.27 / 88.57

    Good night!

  104. South Korea: Clothing, Shoe Manufacturers Leaving China
    October 23, 2012 | 0343 GMT

    Korean clothing and shoe manufacturers are leaving China and heading to Southeast Asian countries seeking cheaper labor and looser business regulations, industry sources said Oct. 22, The Korea Times reported. South Korean underwear manufacturer BYC Co. plans to close two of its three Chinese factories beginning next year and another underwear firm, SBW Co., is seeking outsourcing firms in Vietnam, Cambodia and Myanmar. As wages and input costs rise in China's coastal manufacturing centers, companies from Japan and other countries are shifting production to countries like Indonesia, Vietnam and the Philippines.

  105. Wow, markets not happy about something.

  106. Good morning and WTF?  

    Euro took a massive dive of about 0.5% and is only just now holding $1.30, Pound slammed right through $1.60 and is at $1.5985 but also bouncing off $1.598.  Yen is down to 79.84 to the Dollar, up (down) from 79.2 yesterday so 1% and the Dollar is up half a point at 79.90 so that's part of the reason the Futures are off but not the whole story.

    Oil just bounced at $87.50 so /CL is, of course a good long there with a tight stop on the line – same for gasoline at $2.60.  Nat gas fell to $3.45 and copper right behind it at $3.57.   Silver way down to $31.80 also a tempting long (/SI).  

    EUR/USD is actually kind of a no-brainer currency long at $1.30 (until it breaks) and, of course, that then marks these commodity bottoms we can play off. 

  107. Nothing but misses this morning is part of the reason – not just here but Europe too.  Europe is down well over 1% so far but should be bouncing here too.

    I also think there's a bit of worry that Obama gets reelected and the Reps punish America by driving us off the fiscal cliff.  Obviously, that's not the way they're spinning it but that's the message they are sending – "Vote for Obama and America dies" – very patriotic.  

    From Slate:  


    Consider what's scheduled to happen automatically if Barack Obama gets re-elected:

    — Substantial cuts in domestic spending that nonetheless leave core Social Security, Medicare, and Medicaid programs intact.

    — Equally large cuts in military spending.

    — Repeal of various tax cuts that, together with other Obama-era changes, will leave taxes meaningfully higher than they were in the Clinton years.

    This is all utterly wrong. Bipartisan agreement is not necessary to fix the debt. Nothing is necessary to fix the debt. It is as if the network of activists, wonks, business leaders, and Beltway elder statesmen who have devoted themselves to building cross-party support for a deficit deal have grown more attached to the means of bipartisanship than to the ends for which it was intended. The budget deficit is a legislatively solved problem. It is, indeed, an oversolved problem. In the absence of any agreement between the president and Congress, the deficit will shrink to less than one percent of the economy by 2018, and remain below that level through 2022. The budget deficit declines so sharply and so drastically, and in ways that neither party is entirely comfortable with, that the task for Washington is to pull back on deficit reduction.

    And, from last night's debate:  

    President Barack Obama and Republican challenger Mitt Romney pledged not to allow automatic defense cuts to go ahead on January 1. "It will not happen," Obama said during last night's presidential debate. Whoever wins, though, will have to come to an agreement with Congress to forestall the sequestration, which has got the defense industry mightily spooked. 

    Tuesday's economic calendar:

    FOMC meeting begins

    7:45 ICSC Retail Store Sales

    8:55 Redbook Chain Store Sales

    10:00 Richmond Fed Mfg.

    1:00 PM Results of $35B, 2-Year Note Auction

    Notable earnings before Tuesday’s open: 



    Notable earnings after Tuesday’s close: 




    Zillow Home Value Index +1.3% Q/Q to $153,800 in Q3, representing the biggest rise since Q1 2006, although the recovery is uneven across America due to differences in foreclosure conditions and employment. Values decline in 17 of 41 states covered, with the biggest increases in Phoenix with +5.9% and the biggest fall in Atlanta with -2.2%. (PR)

    Sixty-five percent of U.S. housing markets are worse off than they were four years ago, according to a new RealtyTrac survey; of 919 counties studied, 580 showed results in three of five metrics as being worse off vs. 2008 levels. While the overall U.S. housing market is showing strong signs of life, RealtyTrac says many local markets continue to struggle and remain hobbled by persistently high unemployment.

    Just maybe the French economy has not bottomed. Industrial confidence declined to 85 in October, the lowest read since August 2009. European shares are at session lows, the Stoxx 50 -1.4% in what seems to be a continuation of yesterday's selling – cut short by a furious late rally in the U.S. The euro -0.4% to $1.3000. Spain:Downgrades, and missed targets, but that's not news.

    Spain's economy probably shrunk 0.4% Q/Q in Q3 vs -0.4% in Q2 and consensus of -0.7%, the Bank of Spain estimates in its latest monthly report. On year, GDP was likely to have been -1.7% Y/Y vs. -1.3%. If the correct, the economy will have contracted for the fifth consecutive quarter. (PR)

    More on Spain outlook: the central bank says it "can't be ruled out" that Spain's government will miss its budget deficit target for 2012, mainly due to tax-revenue shortfalls.

    Facing increased pressure and a weakening economy, the BOJ is leaning towards further easing at its policy meeting next week, Reuters reports, but there is not yet a consensus on what the next steps should be. Economics Minister Seiji Maehara wants to attend again, although Finance Minister Koriki Jojima denies that the government has asked for a ¥20T increase in asset purchases.

    Hong Kong is forced to buy greenbacks for the 2nd time in a week as the HKD bumps against the top of its trading band vs. the U.S. currency. With what does it buy these greenbacks? Freshly minted Hong Kong dollars. The stock market gives a thumbs up, continuing a big 5 month rally, +0.7%.

    Gartner now expects 2012 global IT spending of $3.6T (hurt by forex), down a bit from a prior forecast of $3.75T. Spending is expected to grow a muted 3.8% next year to $3.7T. Microsoft and IBM's Q3 reports and commentary (III) have already raised fears of a soft IT spending environment. Also: Gartner expects half of all non-PC devices sold in 2016, and half of all business IT devices sold at the end of the decade, will be bought by employees – that's a long-term trend that could benefit Apple and hurt Microsoft.

    Android Central has leaked pictures of the HTC DLX, which will likely be the first U.S. smartphone to feature a 1080p display. Of particular interest is the fact the DLX, due to be sold by Verizon, contains (like the pending LG/Google Nexus phone) a powerful Qualcomm (QCOM) APQ8064 app processor, something that might not be overkill for a phone containing such a high-res display. Qualcomm and Nvidia (NVDA) should both benefit from the adoption of 1080p displays. (previous) 

    Amazon's (AMZN) $199 Kindle Fire HD tablet has been thebest-selling product on its Web site since the device went on sale at the start of last month, the company said yesterday. The news came ahead of today's expected launch of Applie's iPad Mini.

    As Apple (AAPL +4%gets ready to unveil a smaller and cheaper iPad, the education market is taking center stage. Schools and colleges have already begun buying iPads en masse – education-related iPad sales doubled Y/Y in the June quarter – and the iPad Mini launch could accelerate this trend. Among Apple's efforts to cater to educational institutions: dedicated sales teams, regular meetings with school officials, financing for volume orders, and a digital textbook initiative. 

  108. CLF/Ink – Depends on your goal.  The short puts are almost 50% down and you have 122% out of 200% possible so your current position still stands to make 78% more or 64% of the current position so if you REALLY would like to own CLF in 2015 for net $20 – it's kind of a non-issue but if you were just in it for the trade and you would stop out with a 20% loss – then your risk/reward into earnings is 50/50 and, the way earnings are looking so far – there's no reason to think they don't pull back.  Also, from a conservative trading standpoint – I would point out that if you cash your sure thing $25 puts now ($5.30) and take the profit – what's the worst thing you would miss?   Say CLF goes up 10% to $50 – so then you just sell the $30 puts, now $7.70 for the same $5.30 you just bought back the $25s or you re-sell the $25s for $3.60 (current price of the $20 puts) and all you miss is $1.70 of the $5.30 you would have made best case but you didn't risk losing $1.70 on a 10% drop, which would be all your profits gone.  Still, even if CLF drops 20% to $36 – your net entry is $20 so we won't be running away from these in the income portfolio, where we REALLY want to own them.  

    AAPL $630.  AMZN $234. 

    Debate/Diamond – Romney lost clearly.  He gave up on blaming Obama for Libya, which makes him look like a huge liar to everyone who heard him bluster about it before last debate's smack-down on the subject.  He also looked like a moron when Obama pointed out that there's a difference between how many frigates we had in 1916 compared to how many battleships we have in 2012 – make Romney look like he makes decisions based on faulty facts – not very comforting to the citizens.  When Obama said "Nothing Gov Romney just said is true" he had no comeback – that was REALLY bad.  

    Romney also doesn't know where Syria is, saying Iran is their route to the sea but Syria doesn't actually boarder Iran – doesn't matter, no one watching knows geography anyway.  Obama calling Romney out for his statements on letting the car companies go BK and Romney's untrue response are something people in Michigan and Ohio are keenly aware of.  When Romney said it, it was a huge deal and those voters are very clear about what he actually said.  

    Romney claiming he would "fix" the middle east made him look clueless, not brilliant.  We've been trying to fix it since Nixon so it's not just Obama that Romney claims is ineffective but also Carter, Reagan, Clinton and a couple of Bushs.  Mitt saying it's something he's fix right away only makes it clear he hasn't got a clue what he's talking about.  

    I challenge anyone to explain what the Hell Mitt was trying to say about what our troop levels should be in Iraq and Afghanistan – just seemed like a guy caught in a lie who kept trying out different excuses and Obama was having none of it. 

    Oops, time to work!