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Which Way Wednesday – Is the Appleconomy Over?

AAPL is a total disaster.  

There's no denying it now, they had their IPad Mini event yesterday and investors charged out of the stock, dropping it from a high of $633 (which is already 10% off the Sept highs) to close at $613 and that was finally weak enough to get us to capitulate and roll back our AAPL positions to longer-term trades that have less upside but, more importantly, less downside as we are no longer confident they'll be able to turn it around on Friday.   

Notice how silly it seems to talk about how poorly AAPL is performing when the chart on the right pretty clearly indicates it's the greatest stock on Earth but that would be the logical conclusion for a company that's on track to earnings $43Bn this year, which is $81,811 a minute – more even than what they were tracking to make last month, when I set out bottom target at $600 (and that spread is an even better buy now) AND, only 68% of what they are projected to make next year!    

We didn't really think it would hit $600 – that was our worst-case but here we are – at the worst case and, since we are no longer able to say with conviction that it can't get any worse, we had to back our short-term plays to something that buys us more time.  In that same post we liked HPQ at $14.30 and at least they are holding that line and we also had a nice spread on that stock in the same post, which is still holding up as a new spread.  

In that post I mentioned (as usual) our primary hedge being TZA and the straight-up April $15 calls mentioned there have gone up another .40, from $2.50  to $2.90 off our $2.10 entry (up 38%) – not bad against just a 15-point drop in the Russell (down 2%). 

Yesterday, with our hedges already in place (see last Wednesday's TZA hedge and this Monday's DIA hedge) we had the luxury of doing some bottom-fishing yesterday with long trade ideas on TIVO at $9.78, USO at $31.75, AAPL at $623, CMG at $238 and our last trade idea for the day was SQQQ at $41.20 (that one, of course, is another hedge – always look for BALANCE!) – just in case things kept falling apart.  

These are, of course, hedged plays, using options for leverage but, as I often say to stock players, if we like a stock leveraged with options – of course we like the straight stock as well – but we'd prefer it if at least you sold the covered calls!   This morning we had a wide-ranging discussion in Member Chat about AAPL and a long trade idea for the QQQs $65.39), COST ($95.18), AMD ($2.14) and UBRG (0.01).  To give you an idea of what we mean by leverage and hedging – here's my trade idea for AMD from this morning's Member Chat:

Speaking of fair entries.  AMD may be good for the same reason INTC is bad – the landscape is changing and INTC doesn't dominate the new spaces.  It's risky but at $2.14 it's a reasonable gamble. The way I'd play a stock like that is to sell the 2015 $2 puts for 0.72 and buy the 2015 $2.50/4 bull call spread for .30 so you have a net .42 credit and, at $4 you make $1.92 (the credit plus the spread price) and worst case is you own AMD at net $1.58, which is a 26% discount to the current price. 

Think or Swim says the net margin on the puts is just $50 + $30 (for the spread) per contract is all you have to tie up to make up to $192 – a very nice 240% ROI in 2 years if it works out!  We can certainly afford to add 100 of those to the Income Portfolio (net credit of $4,200, using $8,000 of margin and committing to buy 10,000 shares at net $1.58 ($15,800) – so if it drops to .50, we DD and we're in 20,000 shares for $1 and sell 2017 calls for .50.  

See how that works?  Rather than spending $21,400 cash now in our virtual portfolio to buy AMD, we use margin to collect $4,200 in cash against our promise to buy AMD for net $1.58 in Jan 2015, which is 26% off the current price.  So the play is self-hedging against a 26% drop, ties up no cash (we have a credit) and can net us a $19,200 profit in 2 years if AMD just goes up .36 (17%).  Aren't options fun?  If we bought the stock, AMD would have to go up 90% to make the same $1.92 per share and, of course, we'd want to protect it and that might cost us some money anyway.  

As I mentioned yesterday, part of the market weakness was a result of Dollar strength and the Dollar climbed all the way to 82.23 yesterday as the Euro was slammmed all the way down to $1.92 on the usual paranoia caused by the dysfunctional EU.  In pre-market trading, the Dollar fell back below 80 and, if it stays down there, we have a chance for a nice bounce today.  Without taking the time to explain our system again (the 5% Rule) – the lines to watch today are:  

  • Dow 13,200 is a weak bounce, 13,300 is a strong bounce (we don't become more bullish until we hold strong bounces through the close).  
  • S&P 1,420 is weak, 1,430 is strong. 
  • Nasdaq 3,030 is weak, 3,060 is strong, 3,000 must hold. 
  • NYSE 8,250 is weak, 8,300 is strong
  • Russell 815 is weak, 820 is strong 

So we're not going to be in the least bit impressed by any move today that doesn't hold our weak bounce lines and we're still going to be very cautious until those strong bounce lines are taken back.  We have a Fed statement this afternoon at 2:15 and then it's all up to AAPL tomorrow night.  PMI reports are improving in Asia but falling still in the US and Europe so no help from that data.  

Bottom fishing is fun but watch out for the holes in the ice!  

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  1. Oil Lines

    R3 – 92
    R2 – 90.45
    R1 – 88.76
    PP – 87.22
    S1 – 85.53
    S2 – 84
    S3 – 82.30

    Yesterday's high and low – 88.92 / 85.69

  2. Woohoo FB – Super-like!!

  3. AMD / Phil – INTC doesn't dominate the new spaces, but AMD is nowhere in mobile either. Their 2 lines are competing with INTC (PC) and NVDA (graphics) and they are actually not doing so well against either. NVDA is actually better positioned as it is doing well in the mobile segment with its Tegra3 chip in phones and tablets. ARMH is another interesting company with products in many segments – computing, mobile and industrial applications. But they are quite expensive now though. NVDA and TXN are much cheaper and compete in overlapping segments.

  4. 25KPM / Phil – The 25KPA is up to date with the AAPL roll from yesterday afternoon but as I mentioned, that roll is too expensive for the KPM, requiring $90K of regular margin for the spread and the 10 short calls. Combined with the 14 AMZN short puts, it's $140K of margin. Not within our KPM guidelines.

    Should we just kill the AAPL position in the KPM and go to the QQQ trade that you outlined this morning? 

  5. Digging deeper in the Chinese PMI:


    The table which highlights the direction and rate of change shows that the inventories are subsiding and both input and output prices are rising, which is excellent news on the surplus inventories front and suggests demand might indeed actually be picking up. Although “backlogs of work” are also shrinking — and faster. It’s a little too early to say manufacturing is truly recovering.

    More ominous is the line “Employment: Contraction, faster rate”. This trend began to show up in July and it’s exactly what you (and the Chinese Communist Party) really don’t want employment to do…

  6. And Europe is definitely in need of something other than austerity. It doesn't seem to have the desired effect:

    Going in the wrong direction!

  7. Good Morning!

  8. The net on the AAPL spread is $41.77 excluding the open short sales.

  9. AAPL – I have a toe in the water and left a Jan. 13 $625 call uncovered last night.  Up $500 this morning.  I'm thinking about covering by selling a Nov. call, but trying to figure out a good strike price.  I don't think I will mess with weeklies before tomorrow night, since I don't watch the markets much during the day.  Any suggestions on strike prices?

  10. HPQ Idaho news
    A $180,000,000 hangs on Prop 1,2,3 that is bombarding the media saying don't let unions destroy education in Idaho.
    1. Idaho teachers are not unionized and the lowest paid in the nation.
    2. Those Props esp. 3 need to pass or the HPQ contract is void.
    3. Now there is an investigation into the advertising mess.
    3. All local TV is owned by FOX so what you hear is claiming the investigation is a fraud.
    I report you decide!

  11. Nicha – thx.  Read him every day….his is a contributor to our newsletter as well.

  12. It is early and you also wouldn't know that the proposals are to give every teacher and student in the state laptops maintained by HPQ and close down those expensive schools and eliminate lots of teachers.
    The add say kids are not learning how to think but how to pass tests linked to No Child Left Behind.

  13. Mid-week update for the Strangles portfolio:

    Navigating the rough waters quite nicely so far!

  14. StJ / Phil,
    I have not participated in any trades lately, but it looks like you have been running a very active strategy with AAPL calls.  It's hard to tell from the portfolio sheet, since many trades are already closed.  Just curious what the current net gain/loss is to-date.  

  15. I will update the KPM when I get some guidance from Phil on the AAPL position.

  16. Phil
    Since you mentioned HPQ instead of AAPL I thought you all should know that HPQ has signed a voidable contract. To me that sounds like a company looking for any port.

  17. AAPL / rky – I keep track of the P&L for AAPL online. Right now we are showing a -21K loss on the closed position.

  18. Phil,
    What do you still like if anything on the long term put list?  I was in AMZN for a while and took profits.  Found this to be a great hedge as the market was dropping.  I am back in V Jan 13, 135 P.  Looking for a few more hedges at this point.

  19. Good morning! 

    BA had nice earnings, glad we picked them up for the Income Portfolio while it was down.  

    Not even hitting weak bounces at the open – very sad.  

    How can people be so enthusiastic about FB and so down in general?  

    AMD/StJ – I'm not saying AMD is great, just even on the playing field with INTC for a change.  They do good work and will have the same painful adjustments to make but they were NEVER going to beat INTC in the desktop game – now they have a chance to pick up market share as they shift their focus.  We're giving them 2 years to turn it around – I think that's reasonable.  ARMH is a good one but priced for very heavy growth already – that's why they are flatlining for 2 years – they were way ahead of expectations at $30 ($14Bn cap) with not even $1Bn in revenues, let alone profits (about $200M this year).   Despite the nice beat yesterday – all they can really do is grow into those expectations and a mis-step would be your buying opportunity AFTER they drop like a rock.  

    MNST coming back from the gates of Hell.  Should have pulled the trigger yesterday ($40 was the low).  

    $25KPM/StJ – Yes, let's go ahead and do that (substitute this morning's QQQ trade for AAPL).  Good educational trade with a lot less margin.  

    Asia PMI/StJ – Weak bounce rules apply there as well – after falling from 57 to 45 (12), we need to see 47.5 (rounding) for a weak and 50 for a strong bounce so no "turn-around" until we at least put up 2 reports over 47.5.  

    FAS Money – Such a relaxing way to make money!  Let's sell 2 weekly $105 puts for .60 ($120) and 2 weekly $114 calls for .53 ($106).  No reason not to pick up another 4% for 2 days work, right?  $5 move in either direction is 4% so 1.3% on XLF (now $15.90) to $15.70 or $16.10 and we can only lose one side and easy to roll so, why not?  

    Jack chart/Nicha – He's very right – strong downtrends need to be respected but this would be a good spot for a trend reversal.  

    AAPL/Rev – Big gamble not to cover into earnings.  If you are willing to put in 50% more and work it off – I'd be willing to take that chance on an April call, but not a Jan.  Your Jan $625 is $40.70 with a .53 delta.  The April $630s are $56 and have a .52 delta but you can sell the Nov $650s for $13 and you're just spending $2.30 net to buy 3 months and giving yourself some downside cover.  If AAPL goes up, then it has to be over $663 before you are even giving the caller his money back (AAPL up 6% on earnings) and the Nov $650s can currently roll to the Jan $700s ($13) so it's not like you're giving up much upside.  Flat, of course, you're much better off and down $50, for example, the caller is gone and you are net $43 on the calls and the April $680s are $35 so you'd only be down about $8 and then (and this is just estimating) you sell the Jan whatevers for $15 and use that to roll yourself down $40 (the roll from the $680s to the $640s is $16) and now you're staying on the money with a few more months to sell while you wait for a bounce (and you still have Jan earnings to make it all back).  I like this as a new trade….

    Idaho/Shadow – Madness over there.  Idaho ranks 30th in education – you get what you pay for with teachers more or less (have to take lower cost of living into account, some states have teachers much worse off).  That's what drives us nuts in NJ – everyone complains about well-paid teachers but we ran 3rd (Mass and Minn beat us) in the country and our SERI (math and science) scores are 4.04 vs national average of 2.82.  Why is it people seem to understand you pay up for a good college but they don't get how important it is to pay for a good primary education.  Without the primary education – you're not going to make it to a good college.  

    Also very scary with education, Mississippi scores 1.11 – imagine being trapped in that state!   Of course, what do they call the bottom 10 states in education – SC, AR, OK, NE, NV, AZ, NM, AL, LA, WV and MS?  The Republican base!  Doesn't matter what the facts are – they know who they're voting for…

    Top 10 states are 50 – 100% above the national average – MA, MN, NJ, NH, NY, VA, MD, CT, IA, ME – all blue.  This is not a coincidence folks – there's a real link between voting preferences and education, which is why the Reps have been on a 40-year mission to defund education in America.  

    AAPL/Rykroma – I'd say we're down about 50% on those trades so far.  

    Voidable/Shadow – I would hope the state would not sign one that couldn't be cancelled – that would be stupid.  

  20. Legal expenses may cut into Tesla's cash reserves …
    U.S. Dealer Group Seeks Tesla Meeting on Retail Plans – Bloomberg

  21. Oil inventories with a big 5.9Mb build, gasoline up 1.4Mb and Distillates up 600K – way more net than expected (about 3Mb).  That's going to spook them below $86 but I think $84.50 will hold if not $85.  Damn good thing we got out of the weeklies…

     EIA Petroleum Inventories: Crude +5.9M barrels vs. consensus of +1.8M. Gasoline +1.4M barrels vs. +0.7M. Distillates -0.6M barrels vs. -0.5M. Crude -0.76% at $86.01.

  22. Hi Phil,
    I followed ur SCO NOV 47 call short position — have a small loss any idea on the roll please. Looks like Crude is going for 80

  23. Phil / GLW
    My portfolio is still 90% cash, so have been looking at my watch list and waiting for good prices. Is it still too early to get GLW off the drop today? I can do a B/W with 2015 $12's at   $4.65 for net $7.75/9.88 making dividend 4.6% 

  24. Phil IDAHO = STUPID
    A former Idaho doctor complained to me she could not find decent help. Said that colledge educated was high school when we went to school on the east coast! Closed down, moved to Florida where her Daughter lives, and did it after the housing crash. Smart Doc!

  25. Don't see when you got out of weeklies, or do you mean when you added Nov's to cover weeklies?

  26. $80 oil, That is a start to recovery!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  27. USO/Phil.
    We are still in the weeklies. Both the Oct4 and Now 1 33s.

  28. Phil—I did the roll and sold the Nov 655 calls on AAPL--is there anyway to still keep track of this

  29. Long Put List/Button – We quit those when our levels popped in early Sept but some ideas that can be recycled are.

    • DIA March $120 puts for $2.45.  
    • DIS April $48 puts at $2.15
    • HD Feb $57.50 puts at $1.40 
    • JNJ Mar $67.50 puts for $1.35
    • MA April $355 puts at $5
    • MON April $75 puts at $2.30
    • MRK Jan $44 puts at $93
    • SPY Jan $132 puts at $1.97
    • V April $120 puts at $1.15
    • WMT Mar $70 puts at $1.52
    • XRT Mar $58 puts at $2.10

    Always keep that in mind, these puts are defense against a major collapse, not really a minor one.  On the whole, these are stocks that A) should move down with the market but B) Are already toppy and not likely to move much higher on their own.   

    Keep in mind the main reason we like these is because they are overbought, liquid and rollable.  Our goal is to buy the ones that get cheaper, take quick profits and move to the next ones that haven't fallen yet (fresh horses).  In an up market, this is a sell the pops kind of exercise but, if you don't take profits on the dips – it will be a losing strategy. 

    Scale in, scale out.  We'll watch the list and add to it over time but, primarily, this is a good way to guard against a big crash – not a small pullback.

  30. Thanks Phil

  31. Here is the updated 25KPM portfolio. Out of AAPL because of margin. We are now in a QQQ spread.

  32. NY Islanders moving to Brooklyn! Holy crap, Islander fans heads exploding all over Nassau county! The only time Islander games will be sold out is when the Rangers play away vs the Islanders. Big mistake.

    Free bridge that may never happen thanks to lobbyist

  33. Phil- I may have missed your comments if any on playing AAPL earnings on the downside. If you were to do that what would be an optimum strategy if margin is an issue. Thanks.

  34. The Nasdaq comes and goes with Apple.

  35. That would be one good reason to buy AAPL now:

    We noticed during the iPhone 5 launch that Apple had a big caveat with its Lightning to 30-pin adapter: no video or iPod out support. Now that the new iPads are here with that same connector, the problem's been partially rectified — for a sum. Namely, you can grab the Lightning to VGA or digital AV (HDMI) adapters for a rather princely $49, though there's no sign of any iPod support yet. If you're still holding out for generic models instead, you may want to rethink that plan, as there's a control chip inside each, and so far only Apple holds the authentication keys. Also, a new $19 12W USB power adapter (which connects directly to the Lightning port) has also appeared for the 3rd and 4th generation iPads, bumping the previous version's 10W — meaning your slate might get charged a bit quicker.

    Geebus, these video adapters cost about $1 to make and they sell them for $49 with a control chip inside so that you cannot buy a generic brand for 1/2 the price.

  36. Anyone know why the VXX is up even with the VIX down 2.5%???
    FU VXX!!!

  37. kustomz:  I hear they're changing their name to "Ice Dodgers."

  38. Iflan -  what would you do if you had the APPL Jan 620's

  39. TSLA/Diamond – The auto business is such a scam – manufacturers can't sell their own cars – ridiculous!  Laws that protect middle-men are generally bad laws.  If I were TSLA, I'd tell them to screw off and spend the money putting the cars in Malls and having experts right on the floor talking to people – they can't stop that.  Then they can just open up service centers in each state and, if some of the service reps turn out to be very knowledgeable about the cars and are willing to talk to people – what can you do? 

    SCO/Amit – It's 3 weeks out and you have a small loss and SCO is at $46.20 so the position is 100% premium.  If you have no confidence in the position (and we originally said we were good to below $85 and here's your test) then get out.  Do NOT sell short puts or calls against positions you are not willing to have assigned for the long-term – it's a practice that will always lead you to panic out of positions at the worst times.  The Nov $47 calls are $2.60 and the Dec $53 calls are $2.60 and the Jan $59 calls are $2.60 and $59 is up $13 from here (28%) which would be a 14% additional drop in oil to $73.50.  If you think oil is going down to $73.50 by Jan – you should be dumping out of this immediately and buying SCO hand over fist.  Me, I haven't changed my mind that they'll hold $85 and find some reason to go higher within a week.

    GLW/RJ – At .35 per share this Q, it's down a lot from last year (.51) but they say it's international revenues and I believe them.  Might be a bit early to catch a falling knife but I love them at $10 so keep an eye on selling the 2015 $10 puts, now $1.60 for $2+ or, if they turn up at $12, you can always sell the $12 puts (now $2.60) for no less than $2 and you still have net $10 – then you can fill the short calls and the purchase of stock if you wish.  AAPL not using glass in the back of the new IPhone was a big hit to them.  

    Idaho/Shadow – And then businesses complain they can't find qualified applicants.  You reap what you sow – farmers should understand that….

    Weeklies/Davidkor – Are you talking to me or someone else?  I feel like I'm coming in in the middle of a conversation… 

    USO/Zip – Right, we held the weeklies hoping they'd improve.  Not looking good now.  5% off on USO so we need $90+ oil by Friday to get out of the weeklies.  If we don't get a bounce this afternoon to at least $87, probably better off taking the .05 off the table.  

    AAPL/Savi – Not sure what you mean by keeping track of it but, if you have a question, just ask of course. 

    You're welcome Button.  

    Bridge/Kustomz – There's a nice microcasm of everything that is wrong with Capitalism and the influence of the top 1% over the needs of society.  Now we let one rich guy control the international boarder – great.  

    AAPL/Chakra – I have no belief whatsoever in a downside AAPL play – but I could be totally wrong.  I think the QQQ Jan $61 puts for $1.13 can double up on a 5% drop in the Nas – so that's one way to play (while a 10% jump in AAPL will only goose the Nas by 2%).  On the AAPL side, things are just way too expensive – unless you have the guts to just sell calls, like the Jan $700s for $11 but very ugly if AAPL goes up more than 10% so you have to want to be short AAPL now and still be short if they blow out earnings.  

    And what Rustle said. 

    Adapters/StJ – See, that's a bad sign.  I really don't think Jobs would do that to people.  It's very MSFT of them and even top 10% customers don't like to feel like they are being nickeled and dimed to death.  

    VXX/Jabob – That think is just stupid.  We gave up even looking.  It seems to exist solely to take people's money.  

  40. IACI beat on everything, why are they dropping like a rock, attached to a larger rock?

  41. USO/Phil
    When you say – Right, we held the weeklies hoping they'd improve.  Not looking good now.  "5% off on USO so we need $90+ oil by Friday to get out of the weeklies.  If we don't get a bounce this afternoon to at least $87, probably better off taking the .05 off the table."
    By that you mean both — the Oct and the Nov 33s — or just the Oct and keep the Nov to see if we can get some money back?

  42. jabo
    Just a guess but institutions are not worried (VIX) and the sheeple are (VXX)

  43. FU GLW!!!

  44. Morning All – I was looking at A&Ts numbers and in Q2, they sold a total of 5.1M smartphones.  In this recent quarter, they sold 6.1M smartphones of which 4.7M were iphones.  Seems like decent iphone sales numbers to me. 

  45. UK FTSE +0.4%
    German DAX +0.3%
    French CAC +0.3%
    Spain IBEX +0.4%
    Italy MIB +0.8%

  46. Phil, in your AMD idea of this a.m. you state "so if it drops to .50, we DD".  Are you referring to a drop in the underlying Stock, the value of the BCS or sometinhg else? TIA

  47. Willie – I would liken the VIX to Romney the flip-flopper and the VXX to Corzine the Corziner.

  48. Iphones/AT&T – Just saw that AT&T's iPhone sales are up 1M units from the previous quarter despite supply constraint issues.  Again, seems good to me but what do I know…FB has a P/E of 100+(the makers of virtual crap and annoying ads) yet is up 20%+ and Apple with a P/E in the low teens if on the verge of dropping.  Go figure.

  49. lnk/AT&T – they don't break it down by iPhone 4 vs iPhone 5, right?

  50. Nicha – No, not that I could see. 

  51. IPAD Locked?
    Can anyone tell me if I buy a Ipad with Cellular, and I take it to another country, can I buy a SIM chip for it and use the data.  In other words, is it Unlocked to begin with, or are there carrier restrictions like the Iphone?

  52. Zipla / on oil:  I'm always cautious about the dollar level, both with stocks and commodities.  The U.S. economy has likely bottomed, Europe very likely not.  The end game on Europe isn't Spain or Italy, although those countries may precipitate it.  It's France & Germany — the French 10 year yield rose today while the German 10 year fell, for example.  This will evolve [or, rather, dissolve] relatively slowly, but the pace of U.S. recovery will tend to accelerate the deterioration of Europe's finances, as investors continue to move money out of Europe.  I know Spaniards who have never owned an overseas investment who are actually flying around the U.S. seeking project opportunities, something never seen in past years. Plus the wealthiest man in France, the head of LVMH,, Bernard Arnault, has applied for Belgian citizenship.  Not a good sign.  It will be a slow meltdown, but the heat is inexorable.  If you see an actual Frenchman on a U.S. investment tour, you'll know the end is nigh.

  53. And poor Romney — "with friends like these…."

  54. Kustomz, How many jobs are expected to be created by the bridge construction?

  55. Burrben:  Don't know the answer directly, but when I switched my iPhone for a Samsung, I handed my iPhone to a local guy who unlocked it — removed the chip, obtained, installed and activated a local carrier-enable chip, for $150.   Of course, I'm not in the U.S., so it's standard fare around here.

  56. Education – money isn't the only factor. Notice that California isn't in top 10, although Californian teachers in top 5 compensation wise.
    You can argue that we have take into account cost of living,
    then Minnesota teacher salary is just #23. NY 22, NH 45, NY 34, MD 27, IA 30, ME 47
    Those states are getting good results and able to keep cost under control.

  57. Burrben--yes, you can get a sim card in another country and use it--most often they cut it to size (ipad has a micro sim card)—- I used my ipad on my trips

  58. Phil—could you please give your opinion on /RB—TIA

  59. Phil
    I am travel from the 1 to 12 Nov.  Away from my computer,
    What would you recommend for cover?

  60. Burrben/I have iPad 1(ATT) and though they are loath to admit it, it is unlocked. I don't know about the iPad 2 & 3, but the 3G in Europe (at least) seems much faster than here, so the 1 is adequate. I have used Orange in Spain and ITM(?) in Italy.

  61. Phil/ Irobot is recentring on home robot business and I quite like that move
    MAR put 17.5 are $1.55
    MAR call spread 15/20 is $2.90
    If IRBT stays above $16.90 (9% down from here) the trade breaks even

    Do you see a better trade idea?
    (I will wait for AAPL earnings to put on the trade)

  62. Good day for a stick.  Maybe even a carrot

  63. AAPL/Phil – Wow.  Haven't made a peep in ages.  Anyhow, I liked and am in the Nov 635-665 bcs you mentioned the other day.  Think I paid about 11.25.  Tho I'd rather not be in anything – esp AAPL – around earnings, I like the little to no-risk element here.  To confirm:  if they tank Thurs-Fri, I'm just shopping for a January put to sell for 12-ish – and hopefully get as low as 500-ish – yes?  That is just a nice trade, PD.  .  

  64. Phil,
    Nice call on oil holding $85.  I got into the Nov 32 calls based on your conviction. I dumped the 33's at the open this morning for a penny loss. Let's see if it can hold now!

  65. IACI/Rpme – They forecast a loss for next year, that wasn't expected.  Some whole thing going on with cancelled trades too.

    USO/Zip – No just the weeklies, the longer ones have plenty of time to bounce.  Just silly to waste a nickel that has no chance of hitting on the weeklies. 

    IPhone/Ink – I agree but amazingly, AAPL languishes.  

    AMD/Hemas – Yes, just noting a very bad case and we're still not in terrible shape shy of BK. 

    LOL Ink – Good VIX/VXX guide.  

    IPhones/Ink – If they are up 1M from 4M then we can infer a 25% sales bump for AAPL in a Q that everyone assumes will be lower than the last – what a blowout potential!  

    Republicans/ZZ – I can't wait for some rapist to use the defense that he was only doing God's work…  This commercial is not good for Romney's now "soft on pro-life" image that he's been cultivating this month.  

    California/Lol – Yes but you have to take into account cost of living.  You need to be in top 5 in compensation to live there.  Who can afford to be a teacher in LA or SF?   It's not at all apples to apples to just pick a number and say it's a "fair salary" – the real way to do it is compared to average income for college grads in the state with similar degrees.   

    /RB/Savi – I'd stay away.  Maybe they are driving it down into the election.  Keep in mind it's not to favor Obama but incumbents in general – none of whom are very likely to be voted in by people who fill up a $75 tank on their way to the polls.  

    Travel cover/QC – Still TZA.  It's not magic but the Jan $14/19 bull call spread is $1.60 on the $5 spread so pays 3x and you can offset it by selling puts on something you REALLY want to own if it gets cheap like BA May $65 puts at $2.50 so let's say you sell 10 of those for $2,500 and you buy 30 of the spreads for $4,800 and then you have net $2,300 or about .40 each and the spreads pay $15,000 if TZA hits $19, which is up 18% from here so a 6% drop in the RUT to 766 is what you're covering.  Meanwhile, it's $2 in the money so unless the RUT is up 3%+, you're not going even going to lose money on the cover and, of course the BA puts are over 10% out of the money and rollable (2014 $55 puts are $2.60 and 2015 $45 puts are $2.77 – 30% lower).  

    Another alternative if you don't want to offset is to say that you don't mind a 5% drop but want to cover anything more and then you just need the TZA Jan $18/23 bull call spread at .65 so just $2,600 gives you 40 for $20,000 protection if the RUT drops 10% but doesn't pay if it only drops 5% and, of course, by the time you get home, you have a good chance of getting 1/2 your money back so not too expensive for pure disaster insurance while you're away. 

    IRBT/Lionel – I love those guys, we used to buy them when they were around $10 and then they got expensive ($39) and we lost interest.  Now back to $17.50 but that fiscal cliff makes it hard to buy anyone who makes money on defense.  I'd wait and see what they can hold before making a big commitment but, long-term, I still like them – especially if Romney is elected and he starts another couple of wars to pay back his buddies.  They guided way down and that's without the fiscal cliff.  If Obama is re-elected and goes through with his insane peace plan – then the poor Afghans won't have any more IRobots to blow up on a daily basis.  They are currently forecasting a 50% drop in military robots going into 2014 so I really don't think there's any hurry to rush in. 

    AAPL/NF – Wow, long time no see!  We pulled back to April and sold Nov calls to pay for it.  If AAPL goes below $600, you  won't have anything left in the Nov spread but April is protected by Jan earnings (not April as it probably comes after but the uncertainty will help anyway).  As to selling a Jan put, why not sell Nov $650 calls for $9.80 and use that to roll your spread ($8) to the April $640/685 bull call spread at $16.50 and you only need to sell puts IF AAPL tanks because then you'd get a much better price on short puts and you can get your whole $12 back by selling something really silly like April $350 puts, which are now $2.  On a big move up, you have a $10 advantage to the caller and plenty of time to roll and if AAPL is zooming higher you can still sell some puts to help out. 

  66. chasw, they say 11,000 jobs and 1600 permanent.

  67. Yes, we need more ships in the Navy:

    How are we doing? In 1916, America controlled about 11 percent of the world's naval power. In 2010, we controlled about 50 percent. We may have fewer ships than we did during World War I, but we carry a way bigger stick than we did back then. Measured in the only way that makes sense, American naval strength today is greater than it's ever been in history.

    I guess we could make a case that it would be good stimulus spending but then why does stimulus only work when it's defense related?

  68. Wow, forget oil, gold is testing $1,700.  

    Nice USO adjustment Button! 

    Oil for futures players – Notice how, if you play the system, which is not very complicated, it's generally very effective.  We failed to make $87 this morning so no play.   We broke right below $86 so no play and then we finally bounce at $85 and now $85.74.  Even if we took a dime loss at $86.50 and $86 (though that should never have been played) and $85.50 – that's .30 and this move up still gives a .30+ profit.  The whole key to the Futures is making a quick exit when your levels don't hold – there's always another chance to play. 

    TOS has a great paper-money system for playing the futures and it's ALL about practicing and getting a good stopping (and profit-taking) discipline.  One thing about the Futures is they can really save your assets when something strange happens after hours and you are able to slap the brakes on losses by covering the Dow or other indexes.  Also something fun to do at 3am – if you are so inclined….

    Naval power/StJ – Well and then you could consider that one of our current ships could hunt down and wipe out the entire 1916 fleet in a couple of weeks…

  69. FU PNRA!!!

  70. Thanks Phil on IRBT

  71. Thanks Phil

  72. Stimulus/StJ – Absolutely does not work when Defense related.  When you pay $1,000 for a single hammer instead of $10 – you put 100 hammer-makers out of work.  That's the fallacy to the whole thing – defense spending, like health-care spending, disproportionately goes to profits for the donor companies.  

    PNRA/BDC – Told you so.  

    You're welcome Lionel.  

    You're welcome Savi.  Best to only bet when we have a solid premise.  This early in the cycle and with politics in play – it's just too risky – especially with supports broken.  

  73. Navy – it's been awhile since we've been measuring the size of a stick

  74. CSCO falling off a cliff! Word is out that their basic business – routers & switches is under attack. Time to sell puts??

  75. Nicha – I read that ATT appears to have sold 1.3M iphone 5s and VZ is estimated to have sold about 615k in Q3.  If those numbers are accurate and considering the iphone 5 was rolled out in 22 countires in September, 5M units sold in q3 seems light to me.  I guess we'll find out if they actually get counted in the Q3 report. 

  76. I need to start posting some possible earning plays! I'll look tonight what is on deck tomorrow besides AAPL!

  77. Stimulus/Phil – To your point, I read yesterday that the DoD is spending $750k to build a soccer field in Gitmo.  Unless they have to move a mountain, I fail to see how it costs $750k to flatten some ground and draw some lines/put up some orange cones.  

  78. CLF is tonight AH StJ

  79. CSCO / Button – The lows since 2009 is $13.49. The Jan 15 13 puts are now $1.55 so worst case you get CSCO at $11.50 or so. That's 15% lower than the lows of 2009! Margin is about $1.3 so about 115% return o margin in about 2 years with a company loaded with cash! That's a very conservative play. Phil probably has something more aggressive.

  80. lnk/AAPL – wudnt you add those numbers 5m + 1.3m + 651k to get to 7m?

  81. AUD breaking out and AAPL looks like it wants to run

  82. CLF / lnk – Let me check what we have for them.

  83. BMRN – Nov $32 P STO for $1.10.

  84. Nicha – Not sure.  I think that 5M they reported might include the ATT and VZ sales as the iphone 5 was released on 9/27.  I guess we'll find out tomorrow.

  85. SO much for BREAKING out

  86. Phil—I have the AGQ Mar 58/75 ($10.30/$5.30) bcs —--sold some ABX  Jan 15 30 puts against it—should I roll down the 75 caller?--how do you suggest I adjust this position?

  87. CLF / lnk – OK, they move about 5% on average following earnings. The estimate is for $1.05 but the whisper is for a miss at $0.99. They are all over the place with beats and misses – beating 55% of the time on earnings but only 25% on revenues and they never raise guidance.

    The weekly 43.5 straddle pays you about $2.55 which is about 5.8% so not out of line given we expect a 5% move! Not something I would jump on. I guess you could sell calls in anticipation of a miss and be ready to roll. There seems to be a decent resistance line around 46. Like I said, not crazy about that one. Maybe Phil has an idea.

  88. Nasdaq still under 3,000, Transports down 1.65% today, only 5,022.  SOX still up but only slightly.  Transports below 5,000 very bad as is the Nas at the moment but it's 4 minutes to Bernanke!

    CSCO/Button – I would not go after falling knives in this market.  Let them find a floor – they are just under the 200 dma now ($18.30) so, until they are back over – you're not missing anything.  

    IPhones/Ink – AAPL just said 5M first weekend and that was, I think the end of the quarter.  But, what's interesting is we THOUGHT the old IPhone sales were weak but T says total sales were up 20% – that's a big deal.  

    Soccer/Ink – Exactly, government spending on Defense creates about 1/10th the amount of jobs as spending on infrastructure – it's ridiculous.  

    No change from the Fed but reiterating $85Bn a month for Q4 – what more can people want anyway.  Doesn't matter, we're having a little sell-off on the news but I think it's a bit silly. 

    Fed really pushing for Congress to do something. 

    Fed Statement:  


    Release Date: October 24, 2012

    For immediate release

    Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to expand at a moderate pace in recent months.  Growth in employment has been slow, and the unemployment rate remains elevated.  Household spending has advanced a bit more quickly, but growth in business fixed investment has slowed.  The housing sector has shown some further signs of improvement, albeit from a depressed level.  Inflation recently picked up somewhat, reflecting higher energy prices.  Longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.  The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions.  Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook.  The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective.

    To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month.  The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed  securities in agency mortgage-backed securities.  These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

    The Committee will closely monitor incoming information on economic and financial developments in coming months.  If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.  In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.

    To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.  In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen.  Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and disagreed with the description of the time period over which a highly accommodative stance of monetary policy will remain appropriate and exceptionally low levels for the federal funds rate are likely to be warranted.

    What more can you expect them to do?  

  89. Nice P-bar…..

  90. If the Fed isnt taking any further action AAPL earnings must be good!

  91. Ann Coulter…you can kiss his arse…..Republicans, get a grip.

  92. Ann Coulter – A woman with a laryngeal prominence? ;-)

  93. Dow volume 60M coming up on 2:30.  Essentially the indices are flat.  

    AGQ/Savi- That spread is down to $2.50.  The ABX is fine, still 20% in the money but good time to spend $2 and roll the $58s down to the $52s, which are just $3 out of the money and you can roll the $75s ($1) down to the $66s and gain $1 back so net $1 to roll the spread down $6 is a pretty good deal.  With gold at the $1,700 mark, you could risk doing your roll and buying back the caller and not covering unless gold fails to hold $1,700.  Silver just bounced off $31.50 so that's another line you can use for a sell trigger.  

    CLF/StJ, Ink – Hard to imagine they are doing well as they do a lot of business in Asia but I think it's somewhat priced in as earnings are expected to be 35% less than last year.  Next Q expected even worse and this whole year is supposed to suck BUT, next year  they are expected to recover so there's the wild-card.  Still, the stock is down 50% from last year's highs so I like selling 5 Jan $40 puts for $3 ($1,500) against 4 April $36 puts for $3.20 ($1,280) for a $220 credit.  

    Fed/Lionel – Good point for the Appleconomy.

    Coulter/Pharm – Boy is that guy barking up the wrong tree.  Nice letter though. 

  94. Yes, speaking of trees:

  95. Yeah, that Andy Coltour is one strange dude…… ;)

  96. RUT right on weak bounce line at 815 but S&P and NYSE were rejected at theirs this morning.  


  97. Pharm – George Carlin was on to something.

  98. AAPL – Thanks, Phil.  I thought we were thinking the Nov spread I mentioned was a flyer – if we they tanked, we'd make back our cost with a Jan put.  The idea being we got "see" earnings before we made a move.  Are you saying changes since presser yesterday make it not worth holding as is?  Happy to roll. You da boss.

  99. coulter
    the guy is being very nice and eloquent in his op/ed.  it probably went right over Ann's head.  Any way he is probably one of the 47% so she doesn't need to worry about him.

  100. As I have said….it is about biotechs and pipelines.  Big pharma has deep pockets, and no pipes…

    Bristol-Myers Squibb's ($BMY) third quarter continues the generics-are-poison trend. The company saw sales drop by 30%--yes, 30%--as copycats siphoned off sales from its big-selling blood-pressure drugs Avapro and Avalide, and its even bigger clot-fighting treatment Plavix.

    Plavix sales in particular took a spectacular suicidal plunge. The drug faced multiple generics as soon as its U.S. patent expired in May, rather than the usual one or two. So, prices went into free fall, and brand sales plummeted by 96%. The once-mighty drug brought in only $64 million for the quarter, Bristol-Myers said.

    The bottom line wasn't pretty either. Bristol-Myers reported a per-share loss of 43 cents, thanks to a one-time hit from a failed hepatitis C progam. The company took a $1.8 billion charge after dumping that in-development drug. Excluding charges, the company would have posted profits of $685 million, or 41 cents per share.

    In something of an understatement, CEO Lamberto Andreotti said, "Bristol-Myers Squibb faced challenges in the third quarter." He went on to say he was proud of the company's response to those challenges. And he touted the company's big accomplishment for the quarter--its buyout of the diabetes specialist Amylin Pharmaceuticals. Also on the bright side: Without the Plavix and Avapro/Avalide effects, sales grew by 7%.

    Among the next big questions are these: Will Eliquis, its new blood thinner, finally win approval--and, more importantly, fulfill its promise on the sales side? Will the Amylin deal--and a related partnership with AstraZeneca ($AZN)--really send diabetes sales into warp speed? Stay tuned for 2013.

  101. AAPL fell $700 to $610 so $18 is 20% retrace = $628, then $646 – note $628 was this morning's reject for them as well.  AAPL making a little move up now but very heavy lifting to get the Nas going. 

    Media/Pharm – Even worse is that Viacom (Redstone) and Fox (Murdoch) are essentially controlled by Billionaires and not really public companies.  NBC/Universal now controlled by Comcast, who are still controlled by their founders but Roberts is a good guy at least.  Time/Warner is a well-distributed company, as is Disney/ABC but if someone with a lot of money wants to take them over one day – that's that…

    Laryngeal Prominence/Diamond – Reminds me of mammalian protruberances.  

    AAPL/NF – Yes, we no longer have confidence that AAPL will get back over $660 on earnings – ridiculous as that may be.  

    30%/Pharm –  Wow!  Hardly reflected in the stock so far.  

  102. They keep testing /ES 1406 and /YM 13,035…bulls need to break away from those lines with some authority

  103. Oil should be at $40 we have so much of it….

    It's getting ridiculous!

  104. Looks like we are breaking down again…

  105. You wonder how come GLW is so underrated:

    In addition to the mostly upbeat third quarter fiscal results you'll find after the break, the firm brags to us that more than one billion devices have shipped with some variant of Gorilla Glass in place, spread across 33 major brands and 500 individual models that are occasionally very immobile. We can't give Corning all the credit when alternatives like Dragontrail exist, but numbers like these make it hard to dispute that millions of gadgets have been spared an untimely end (or a flimsy plastic display) by some clever primate chemistry.

    That's a lot of devices!

  106. AMZN   

  107. AMZN/  The persistent and steady downward price  movement and associated  volume over the last two weeks appears to be indicating that somebody(s) are unloading AMZN before tommorrows earnings anouncement.  It appears that they smell a miss.

  108. PNRA:
    I know, Phil, I know….

  109. AMZN…… I agree

  110. davidkordack/AAPL/11:21   What to do with AAPL Jan 620s…….put full covers on them before EOD tomorrow.  Then hold your breath and enjoy the ride. 

  111. I guess that will play well on the comedy shows:

    Donald Trump, the impossibly coiffed real estate mogul, reality TV star and de facto leader of the "birther" movement, made his "big announcement" about President Barack Obama on Wednesday, saying he would give $5 million to a charity of Obama's choice in exchange for the release of the commander in chief's college records and passport application.

    What a moron! Another person who clearly got where he is because of his family name and money!

  112. AAPL / lflan – The next earning release is after the January expiration, isn't it? 

  113. AAPL/Phil –   Thank you, PD – done.  One more related question and this will round out my queries for another six months (lol).  I'm sitting on aapl Feb 670 long calls – bought awhile ago at 40 (averaged down) – I've written against them a few times.  Any thought on handling these?  

  114. US FED: With the drop in unemployment, the Fed is easier than ever. This is less for the sake of stimulus, and more to put foam on the runway out of fear of the fiscal cliff and bad news from Europe and China.

  115. Yes, it should be.   So you are probably thinking it would be better to own Feb spreads or later, no?   I agree.  I'm primarily in April spreads now. 

  116. Stj: / Oil :  I realize that "Middle East tensions" is hackneyed reply to your observation that we're swimming in oil.  But it's a worry with any leveraged position, because it really is tense right now.  Iran is being pushed very hard, the just had a gas pipeline blow up today,,  which was probably sabotage, they've lost 60+% of their currencys value, hey're probably too embarassed to admit, a Syrian gasline was blown up today in Hasakah province, Israel has closed the Gaza the major Lebanese militanta groups have announced a pact to respond jointly to an Israeli attack, a militant blew up a bomb in a north Cairo apartment which contained RPGs, Syria is filling up with Jihadists from all over who will become unemployed as soon as Assad flies to Russia, and the Russia, a one-trick pony with oil, is fast becoming irrelevant in the Middle East and is not happy about it.  Just the usual noise?  Probably.  But there's no doubt that the "Arab Spring" has raised tensions throughout the region, and that there any number of power seeking to to advantage of it.  If you're shorting oil, make it quick.

  117. AAPL/ lflan – That is correct as we only have tomorrow to help in a big way. My guess is that like last year, AAPL will have a good Q4 and will beat handily. Would it make sense then to adjust the MoMo portfolio to a Feb spread before earnings?

  118. O.K……disclosure….I went long FB yesterday with Nov 20 calls after selling some Jan 15  20 puts to finance the sale.  Obviously the trade is up significantly.  Point is, I think FB is a buy right now.

  119. Breaking/Kustomz – We're breaking but not the good way.  

    Oil/StJ – Wow, that gaps getting big.  When we got this high in June, oil fell to $77.

    GLW/StJ – I think it's their new stuff (flexible glass) that's really exciting.  

    AMZN/Den – I smelled a miss to but now it's kind of baked in, down from $264 is more than 10% off.  

    Trump/StJ – Hopefully Obama takes him up on it.  Meanwhile, that's Trump's shocker on Obama – he had nothing?  What a tool.

    You're welcome NF.  I'd take the $25 and spend $11.50 to drop your calls down to April $615s and then, if AAPL drops, you can spend the other $13.50 to roll them lower.  So you're buying $25 for $10 – that's a good way to get back to $40 without over-committing.  

    Foam/Angel – Yes but the real fix will be needed after we crash on a cliff.  Not likely we'll "soft land" from a Government shut-down.   

    Middle East tensions/ZZ – Yawn.  That's why oil isn't $50 in the first place.  

  120. Oil / Zero – Shorting oil in the long term (meaning longer than 5 minutes unattended) is not a dangerous game I would play especially when the main source is a tinderbox!

  121. stjeanluc…let me think about that and do some calculations this evening.   I'll post an answer in a.m.   Thanks. 

  122. Man, they could at least have the decency to stick the close green – just for appearances….

  123. Oil / Phil – I just noticed that the oil inventory is almost a perfect inverse curve of oil prices!

  124.  15 of 17 dow stocks that have reported have dropped on report day

  125. UBRG up 20% today!   Be careful though – it might be just because I mentioned it.  I can't touch it since I'm talking about it as penny stocks too easy to manipulate but a very cute play and paused at the 200 dma now.  

    FB/Lflan – Very nice.  I would have sold $25 calls this morning if I were watching – going to be hard to break. 

    Oil/StJ – That's interesting as fundamentals don't usually matter that much to those guys.  

    Dow at 85M with 2 minutes left and down 27 points.

    Transports right on 5,000 line.  I would take a break below tomorrow very seriously.   They are down 2% (100 points) today! 

    SOX suddenly fell 1.5% too – they were green a while ago.

    These are not good signs but here's Mr. Stick….

  126. Woo Hoo this market is quite a ride. Disney ain't got nuthin on the Dow and AAPL

  127. Nope, too late to do any good.  

    15 of 17/Angel – Ouch!  

    Dow finishing at 103M, no big surge in the end and super-low overall volume.  

    RUT got the best pump at close but still below weak bounce at 813.50 

    Now it's up to these guys:

    Notable earnings after Wednesday’s closeABACOM,AEMAKAMAMPCCICDNSCLFCMOCROXCTXS




  128. PHIL/AMZN   Barclays revised revenue projections downward for current quater at 1:30 EDT. This accounts for some of the late drop this afternoon.   In same quarter in 2011, AMZN missed and stock dropped from 245 to 175 by late December. 
    I have 16 contracts on Nov 245 puts.  I have been letting the profits build.  I was going to leave them uncovered into earnings.  Do you have any advice?

  129. Phil:  Laugh if you like, but don't fall asleep, Oil should probably be $35.    But Putin is an old-school dictator, none of that namby-pamby "Asian collectivist leadership" nonsense.  Power won't slip from his fingers, only pried from his cold, dead hands.   I was steeped in Russian power politics from a tender age, and Putin is its most perfect incarnation since Stalin.  His problem::

    “Russia’s pre-crisis growth model, experts agree, is exhausted. Oil prices are unlikely to rise much, Russia’s oil output has peaked. Consumer spending is no longer exploding. So now Russia badly needs investment, domestic and foreign. But a lousy business environment is holding back both….even with continued high oil prices but without an improved business climate, annual Russian growth between now and 2030 would average 3.1 per cent. Under “moderate” oil prices, it would be 2.1 per cent. With the same scenario forecasting average global growth of 3.7 per cent over the period, Russia’s share of world output would fall… The poor climate is also contributing to capital flight of tens of billions of dollars a year…[lack of] opportunity and stifling politics are prompting scores of the country’s best and brightest to leave…. 68 per cent of Russians with above-average incomes wanted their children to study and work abroad, 37 per cent wanted them to live outside Russia for good. Today’s Russia, says a prominent economist, is “exporting oil, money and people”.

  130. Sorry, I fell into the formatting-included trap, my apologies.

  131. Phil / AMZN
    I am getting a bit nervous about my 3 short Nov 220 puts , down to 8.20 from 2.74. Still have a long Nov 230 put but feel the need for some more protection. Thank

  132. That $616 Fib line has worked well on AAPL today! We have been straddling it all day.

  133. /ES back over 1406 and /YM back to 13035 AH. Got to love the bots.

    FFIV with a nice dump.

  134. Neverworkagain: On your SPY/SPX put backspread / mattress plays, I have a few questions: Do you adjust the long puts during the 6-9 month period or do you just let them run even if the market moves up? Do you set up one backspread sized to protect your portfolio or do you set up part-sized backspreads every 3 or 6 months or so? Do you set your short front month puts – slightly in or slightly out of the money? You talked briefly about the difficulties of sizing – how do you approach that problem? TIA!

  135. FB – #1 for money flow out on wsj's "selling on strength" today..

  136. No AAPL conference call?

  137. Sorry – Wrong day.

  138. CROX at a 2 year low afterhours

  139. AAPL – block trades. a fair bit of support for AAPL via block trades today. Just Apple keeping up their own stock?
    172,594 shares bot via block trades vs 33,950 sold.
    "A single block trade is calculated as a trade that is greater than or equal to 10,000 shares. The block trades screener gauges institutional sentiment for stocks. The net cash flow is calculated as the composite dollar value of buy side block trades minus the dollar value of sell side block trades. The bought/sold ratio reflects the volume of block shares that were traded on the buy side relative to the volume of block shares that were traded on the sell side."
    Block Trades Bought/Sold, Ratio, Net Cash Flow
    10 trades, 5.08:1, $85.95M
    Oct 24, 2012 03:49 PM, BOUGHT,  $616.25,  18000
    Oct 24, 2012 03:43 PM, BOUGHT,  $617.60,  10000
    Oct 24, 2012 03:04 PM, BOUGHT,  $616.50,  11594
    Oct 24, 2012 02:57 PM, BOUGHT,  $620.95,  47500
    Oct 24, 2012 02:41 PM, BOUGHT,  $619.57,  28000
    Oct 24, 2012 02:16 PM, BOUGHT,  $617.85,  47500
    Oct 24, 2012 02:05 PM, SOLD,  $616.99,  10200
    Oct 24, 2012 01:41 PM, SOLD,  $614.07,  12950
    Oct 24, 2012 11:01 AM, SOLD,  $615.19,  10800
    Oct 24, 2012 09:47 AM, BOUGHT,  $623.70,  10000

  140. Looks like selling the CLF calls would have worked! Oh well…

  141. Thank you Greece for saving the World!

  142. Phil / Futures (/CL) – I look forward to tutorials on futures during the Vegas gathering.  Education is priceless.

  143. Still going in the wrong direction. The NASDAQ is only about 9 points from its 200 DMA. The RUT is closer than that (in points, not percentage). NYSE and S&P still the healthier indices.

  144. Phil was mentioning the Dow Transport index this afternoon and it is looking pretty sick – below its 50 and 200 DMA and approaching 5000 now. But this index has been in a descending channel since June, making lower highs and lower lows. 

    Probably some combinations of factors such as a global slowdown that would affect freight for example. Technical indicators seem to point to more downside.

  145. And look at the divergence that opened up with the Dow over the last few months:

  146. FU BBY!!!

  147. BBY is more attractive on that buy out.  Maybe the catalyst.

  148. Good morning!

    Futures up half a point but we need to make and hold those bounce levels.  

    6:00 AM Overseas: Japan +1.13%;. Hong Kong +0.21%. China-0.68%. India +0.38%. London +0.44%. Paris +0.66%. Frankfurt+0.66%.

    UK GDP was up 1% and that cheered people up this morning but probably reflects bump from the Olympics:

    U.K. Q3 GDP +1% Q/Q vs -0.4% in Q2 and consensus of +0.6%. It's the fastest quarterly growth in five years and takes Britain out of recession as nine months of contraction come to an end. On an annual basis GDP flat vs -0.5% and -0.5%. (PR)

    More on U.K. GDP: output of production industries +1.1% Q/Q vs -0.5% in Q2, construction -2.5% vs -3%, services +1.3% vs -0.1. Q3 GDP boosted by Olympics and loss of workday in Q2 due to Queen's jubilee celebrations, so Q4 figures may give better idea of U.K.'s economic health, says RLAM economist Ian Kernohan. Pound spikes vs the dollar is now +0.5%.

    Thursday's economic calendar:

    8:30 Durable Goods

    8:30 Initial Jobless Claims

    8:30 Chicago Fed National Activity Index

    9:45 Bloomberg Consumer Comfort Index

    10:00 Pending Home Sales

    10:30 EIA Natural Gas Inventory

    11:00 Kansas City Fed Mfg Survey

    1:00 PM Results of $29B, 7-Year Note Auction

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet

  149. Notable earnings before Thursday’s open: ABBAET,AUOAVTAZNBENBGBIIBCABCCECELGCL








    Apple (AAPL +0.6%) estimates were lowered today in response to Tim Cook's iPad comments and worries about iPhone 5 supply issues. But with shares now at 11x FY12E EPS (exc. cash), these concerns might be baked in ahead of tomorrow's report. TheiPad Mini's pricing is yielding plenty of debate. Nomura: "A 65% price premium ($129) is significant and … allows for Amazon and Google to continue to build out their positions." Baird: "Though priced above [rivals], the device is thinner, lighter, boasts a bigger screen and better cameras, and … much wider app selection." 

    Boy, that Obama is really holding things back:  2020: That’s the year U.S. oil production will overtake Saudi Arabia if current rates of production growth hold steady. U.S. output is on track to surge 7% this year, to 10.9M bbl/day – the biggest one-year gain in more than 60 years. The production turnaround is pushing down imports, too: Today, the U.S. imports just over 40% of its oil, the smallest share in 20 years.

    Plunging natural gas prices have turned the U.S. into one of the most profitable places in the world to make chemicals and fertilizer, spurring hopes for an industrial renaissance in places such as Beaver County, Pa. A proposed multi-billion dollar Royal Dutch Shell (RDS.A) chemical plant there would be the first such plant built in the U.S. in more than a decade.

    According to data from Bloomberg, approximately 69% of S&P companies who have reported Q3 results so far have beaten analysts' estimates on earnings, while 59% of companies have missed sales forecasts. Collectively, overall profits for companies in the S&P 500 are expected to decline in the third quarter, which will be the first quarterly decline in three years. 

  150. AAPL/Phil – looking for an insurance play for about $20k against an apple miss that would whack apple to ~$580 zone.  Say 10% cost so is there a $2000 play to give me $20k cover at AAPL $580?  Short term as in the hit will be tomorrow or else it will be up.   thinking long puts for either AAPL itself, and/or SQQQ calls.  Staying with AAPL puts for the moment, and as this is specific and AAPL earnings event driven, would you go with something close and cheap like this week or next OTM puts or spend more up front, go longer date like January puts which won't collapse and can be sold back (for a smaller loss) if AAPL does hold up?  where would you look first for this? thanks

  151. AMZN/Den – If you have profits, I'd take them and run.  It's a coin flip.
    AMZN/$25KP, Jyoti – I was hoping they'd pop into earnings but obviously not so we're going to pull back our bets and just roll the losses at this point.  We can always sell more puts AFTER earnings to make money but no point in gambling ahead of them more than we have to.  So you're down $5.50 and I'd just roll that to maybe the $210 puts ($5.10) or the Jan $200 puts ($4.50) but I think the Nov as long as you can roll to 2x the Jan something lower.  
    BBY/Kinki – At least an offer in the low $20s should be considered much more attractive now.  Interesting that BBY wanted to wait for after earnings to begin negotiations – did they not know they would be bad?  

    CROX/RJ – They do a lot of Europe and Asia business – all down and they manufacture overseas with a weak dollar.  They'll be a good buy on this sell-off – selling long puts.

    CLF/StJ – Right on our $40 line – perfect for the trade if it holds. 
    LOL Jacalyn – I love that guy.  
    Big Chart – Yuch! 
    Transports/StJ – Yeah, they looked like they were going to make it out the top but then huge disappointment (along with everything else this month) – holding 5K, as the did earlier in the month would be an important step to turning things around.  Divergence shows why you can't ignore Transports.  
    AAPL/Scott – Remind me in new post (which I'd better go write!).