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F’d Up Thursday – Euro Deposit Rates Now NEGATIVE!

How low can rates go?  

Well, we've entered a Brave New World now where putting money into the ECB COSTS YOU 0.2% per year.  That's right – if you give them $1,000,000,000 to hold for a year, they will give you back just $998M – and people will do it!  Meanwhile, the refinancing rate at the ECB has been cut from 0.15% to 0.05% – so borrowing $1Bn for a year will only cost the Banksters $500,000 in interest while they use it to manipulate the equity and commodity markets.  

As you can see from the top chart, this is making a complete joke out of the Euro, but that's what the ECB wants as member nations are Trillions upon Trillions of Euros in debt and the ECB's moves serve to force rates lower (so debt can be rolled over cheaply) and allow countries to pay back maturing debt in Euros that are worth less (worthless?) than what they were borrowed at – saving the big 5 over $1Tn in 2014 alone.  

Will there ever be consequences to this type of behavior?  Not, as I said on Tuesday, if everyone is doing it.  However, if some people stop while others go on – it could be BIG TROUBLE for countries that need to borrow money using a combination of worthless currency and negative interest payments.  What can possibly go wrong?  Everything.  

That's why, today, right now, we are once again shorting the Futures at 17,100 in /YM (Dow) and 2,005 on /ES (S&P) and 1,175 on /TF (Russell).  Yesterday we shorted the Nasdaq (/NQ) at 4,100 – a trade idea I outlined in the morning post for our subscribers – and that trade made $700 per contract by noon.  Not a bad day's work, right?  

We already made our Egg McMuffin money this morning in our Live Member Chat Room (and you can join the fun here) as we caught a $200 bullish move on the S&P (/ES) Futures and $400 on the Russell (/TF) Futures early this morning.  I made a call to get out ahead of the ECB announcement, as it was too risky and now we're sticking with our plan and going short – but with very tight stops over our lines, as it's likely to be a crazy day.  

SPY 5 MINUTETrading volume is still very thin and very fake, with almost all of the up action coming on low-volume while the big money runs for the exits every time they trick a few retailers into holding the bag for them.  

The MSM is cheerleading the markets for their Corporate Masters, uncritically reporting a 10.5% rise in Factory Orders yesterday morning even though, ex-Transport (Boeing) they were actually DOWN 0.8%.  While that was not at all surprising to PSW Members (we were shorting the fools who rushed in), what is surprising is how many suckers are actually out there to be fooled by this BS.  

So many suckers, in fact, that I can post trades like the ones above, which anyone can follow by simply reading our morning post – and they still make money.  Usually (and we still usually do), you have to guard trades like that for fear of people taking advantage of your known position but, in this case, the market is being so blatantly manipulated and so many Trillions of Dollars are at stake for the manipulators – that our trading can't alter their plans, even when it costs them a lot of money.  Still, if they're offering – we'll take it, right?  

Speaking of trickling.  With the bottom 99% feeling the pinch this summer, it looks like we're getting some pretty anemic consumer numbers recently (and we just saw unit labor costs DROP 0.1% – even less money for the poor workers) and that means oil is probably too expensive at $95 (/CL Futures) and we can short them below that line into the 11am inventory report.  Anything but a 2Mb net draw is going to be a disappointment and we had a lovely collapse on Tuesday to below $93, which would be $2,000 per contract if it's repeated.  Set a stop at $95.15 and your risk $150 to make much, much more – a good risk/reward ratio! 

So far (8:30), the Futures are not cooperating and our watch levels are holding but it's just the usual pre-market spike in low-volume Futures trading – Europe is not even up 1% on DRASTIC Central Bank action and, if that's all we can get out of them, then we're WAY too toppy at 2,000. 


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  1. I mentioned last week to Shadow that going over 82.80 for the dollar would probably signal a breakout and here we go today… The next confluence zone is around 83.50 and we are close now.

  2. Oil Lines

    R3 – 98.89
    R2 – 97.36
    R1 – 96.22
    PP – 94.69
    S1 – 93.55
    S2 – 92.02
    S3 – 90.88

  3. Looks like missed expectations for ADP at 204K against 220K expected. But still over 200K!

  4. Looks like more free money if confirmed:

    Plans to launch an asset-backed securities (ABS) and covered bond purchase programme worth up to 500 billion euros are on the table at Thursday's European Central Bank policy meeting, people familiar with the discussions say.

    ECB President Mario Draghi will likely announce such a programme at his news conference unless it comes up against strong opposition at the Governing Council's policy meeting.

  5. 227709.strip

  6. Good morning!   

    LOL StJ!  

    Draghi adding $500Bn QE program too – so much FREE MONEY!!!

    Dollar topping out at 83.50 but, strangely, not much motion on /NKD (15,680).  I guess the plunging Euro (just hit $1.30) is offsetting the rising Dollar at this point.  

    Don't say you didn't get ample opportunity to hit those Futures shorts – RUT just failed 1,175, /ES 2,005, /YM still over 17,100 with /NQ testing 4,085 (but that one we're not playing).  Oil already plunged to $94.25 so stop at $94.55  now.

  7. Phil

    I need some, let's be serious, a lot of education about this.  So, if the euro deposit rate is negative, and the answer to Burr's question earlier was that you lose money by depositing in Euro's, why would anyone do that?  I only think I understand on a very basic level that the intent of making the deposit rate negative would be to decentivize institutions or individuals from making deposits and theoretically this pushes more money into the economy etc.

    My question I guess is, why and/or who would make deposits at a negative interest rate? And, why wouldn't anyone with existing deposits in Euros move that money elsewhere (to another currency, or simply move to cash)?


  8. Shadow,

    Thanks for the offer to buy your system….I am still in the process of doing my own research and am really not in the market to take a 2.5 year old system off your hands. 

  9. An 11-year-old San Tan Valley boy is dead after shooting himself in the head. Early indications are that he was upset after being asked to do some chores, investigators said.ik

  10. Lots more about iron ore.  No mention of CLF as a low cost producer.  Are there better play ?

  11. plays

  12. Phil- I took your advice on oil this morning and rode that sucker down from a little over 95 to 94.26 on a bold play of 2 contracts because I knew it was right and I just went for it too early yesterday. So, after a rough day yesterday, it really feels good to start my day with a nice win under my belt. I just have to keep from being cocky again and thinking I can do this at will!  Now if Apple can do exactly as you predicted all will be well in my world for now. I am too heavy AAPL at the moment, so I need to adjust and figure out why my SQQQ hedge did not work for me yesterday. I am not overly worried for now since I truly believe those guys at Apple will not disappoint. They seem to get it right just about every time, so it would be foolish to bet that they suddenly have gotten stupid.

  13. craigsa620

    Hope you are doing this on paper trade /CL

  14. TSLA/Phil

    Yesterday's clip from analysts:

  15. Deposit Rate/Jeff – It's really the rate the ECB gives to their Member Banks who want to deposit funds overnight.  In other words, it's supposed to encourage them to do something else with their money.  Whether or not the banks turn around and flip rates negative to consumers remains to be seen.  Europe is trying to address the problem that is so obvious in the above chart re. wealth gains – that all this FREE MONEY is simply making the top 1% incredibly wealthy while doing nothing at all for the bottom 99%.  

    Keep in mind, that's just income - it doesn't take inflation into account which, even at 2% means the bottom 99% lost 10% of their buying power since 2009.   THAT's why the EU has deflation – there's less money to spend (unless you are in the top 1%), so the real estate prices and yacht prices and luxury autos and hotels and restaurants and show tickets go through the roof while everything that is mass consumed turns to crap.  

    Don't forget that the bottom 99% includes the top 10-1%, and we, at least, do get trickled down on (a little) by the top 1% and, if you take out our income gains over the past 10 years – the bottom 90% are negative!  

    As to who would make deposits in negative rates?  Well, if prices are deflating at 5% and you put money in at negative 0.2%, then you have 4.8% more buying power a year later.  It's no different than why would you put money in the bank at 2% when inflation is 3%, right?  It's all relative but also hard to wrap your head around, for sure.  

    CLF/Albo – CLF produces iron ore pellets better than anyone and, when there is manufacturing activity, that's a good thing.  At the moment though, there is not and CLF will be spinning off assets, which may be a good thing if they get a good price, but it's a tough market for that.  It's their iron mines in the midwest that makes them all their money – other mines are losing, especially their Australian mines which ran into the very slow Asian economy and are just bleeding cash.  Their coal mines are also getting killed – double whammy.  I don't care if they make money this year or next – I care if they survive until the market cycles back!  

    Oil/Craigs – Congrats.  Looks like we might get a chance to re-load again at $95 but the close we get to inventories, the more dangerous the play gets – keep that in mind.  If your SQQQ is a spread, it doesn't work unless the Nas goes down AND STAYS DOWN – a one-day move won't do anything for you – especially as your long call goes in the money and drops premium while the out of the money calls you sold gain premium (because more people begin to speculate on the cheaper calls).  Whether or not AAPL "gets it right" – none of it will matter until earnings.

    Thanks Rustle!  

  16. Good Morning!

  17. jasu1

    Way more fun to build a new one. 

  18. Mixed numbers in Europe this morning:

    Germany's factory orders way up, but retail PMI diving below 50. Not much confidence in that sector!

  19. Damn, Seeking Alpha changed their news feed, I can't post it from my IPad anymore.  So that's it then, now I have no use for them at all!

  20. Phil

    Based on the response to ECB change can we conclude central banks are out of bullets?

  21. From Bloomberg, Sep 4, 2014, 9:32:16 AM

    Sept. 4 (Bloomberg) — European Central Bank President Mario Draghi speaks at a news conference in Frankfurt about the decision to start buying a “broad portfolio” of asset-backed securities.
    He spoke after the Governing Council voted to reduce all three of the ECB’s main interest rates by 10 basis points. (Statement only. Source: European Central Bank)

    U.S. stocks rose, with the Standard
    & Poor’s 500 Index near an all-time high, after the European
    Central Bank unexpectedly cut interest rates and said it will
    buy asset-backed securities to stimulate growth.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  22. From Bloomberg, Sep 4, 2014, 5:01:03 AM

    Photograph: Getty Images

    Settling back into work after an
    end-of-summer trip? You’re not alone, which suggests many
    American consumers and business leaders feel more confident
    about the pace of the U.S. recovery.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  23. From Bloomberg, Sep 4, 2014, 6:32:03 AM

    Geopolitics is on the lips of every

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  24. From Bloomberg, Sep 4, 2014, 8:11:53 AM

    A euro sign sculpture stands outside the European Central Bank mheadquarters in Frankfurt Photographer: Ralph Orlowski/Bloomberg

    The European Central Bank unexpectedly cut interest rates to spur economic growth and stave off the threat of deflation.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  25. From Bloomberg, Sep 4, 2014, 8:13:09 AM

    Sept. 4 (Bloomberg) — Charles Hecker, global research director at Control Risks Group Ltd., talks about Russian President Vladimir Putin’s seven-point peace plan, which is being considered by Ukraine President Petro Poroshenko.
    He speaks with Anna Edwrads and Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Vladimir Putin will continue his shadow war until he’s created quasi statelets in Ukraine’s easternmost regions with veto power over the country’s future, five current and former Russian officials and advisers said.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  26. From Bloomberg, Sep 3, 2014, 12:00:05 AM

    Sept. 2 (Bloomberg) — Former National Security Agency Director Keith Alexander speaks about the vulnerability of the U.S. to cyber attacks and the hacking of JPMorgan Chase & Co.
    Alexander, speaking with Trish Regan on Bloomberg Television’s “Street Smart,” also discusses tension between Russia and Ukraine, and the U.S. strategy against the Islamic State. (Source: Bloomberg)

    Hackers who stole gigabytes of data from JPMorgan Chase & Co. may have been trying to send a message that U.S. financial institutions can be disrupted, the former director of the National Security Agency said.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  27. From Bloomberg, Sep 3, 2014, 11:44:43 AM

    Democrat Suzan DelBene, the first-term incumbent in the seat that includes Microsoft Corp.’s headquarters, is a former executive in the company’s mobile-phone division. Photographer: Tom Williams/Roll Call via Getty Images

    No matter who wins in one U.S. House
    district in Washington state in November, Microsoft Corp. (MSFT) can’t

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  28. From Bloomberg, Sep 4, 2014, 9:33:16 AM

    Sept. 4 (Bloomberg) — Mehdi Hosseini, an analyst at Susquehanna Financial Group LLP in San Francisco, talks about Samsung Electronics Co.
    Samsung unveiled a pair of Galaxy Note smartphones, including one with a display extending down the side, as the No. 1 seller tries to fend off Apple Inc.’s push into large-screen devices. Hosseini speaks with John Dawson on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    European stocks rose with bonds while the euro weakened to its lowest level in more than a year against the dollar as the European Central Bank unexpectedly cut interest rates and announced a bond-buying program.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  29. Yesterday one member was called on 400 stk LINE. Today LINE shows it't scares after div. payment 

    Here my play buy the stock for 31 and sell the Jan16 strangle 32/30 for 6.03 cashing in as well on their future div payments OR if you short of cash you buy the Jan16 25c @ 6.30 spending about .30 on the initial play Obviously on the stock play you discount the stock to 25$ PM margin on the option play is 270.00

  30. From Bloomberg, Sep 4, 2014, 9:12:19 AM

    Emerging-market currencies
    strengthened, bonds from Poland to Turkey gained and stocks
    advanced for a second day as the European Central Bank
    unexpectedly cut all three policy rates.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  31. From Bloomberg, Sep 4, 2014, 6:44:59 AM

    Sept. 4 (Bloomberg) — Kevin Daly, chief U.K. economist at Goldman Sachs Group Inc., discusses the Scottish independence vote.
    He talks with Anna Edwards on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc (LLOY), the U.K. banks that lend the most in Scotland, are missing out on a rally in European financial shares after a poll this week showed support for Scottish independence is increasing.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  32. From Bloomberg, Sep 4, 2014, 9:18:27 AM

    Protesters sit in front of a McDonald’s restaurant on 42nd Street in New York’s Times Square as police officers move in to begin making arrests on Sept. 4, 2014. Photographer: Mark Lennihan/ AP Photo

    Protesters clamoring for higher wages at fast-food restaurants were arrested outside a McDonald’s Corp. (MCD) restaurant in New York’s Times Square, part of a nationwide demonstration planned for 150 cities.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  33. From Bloomberg, Sep 4, 2014, 4:40:28 AM

    A Google self-driving car maneuvers through the streets of Washington D.C. Photographer: Karen Bleier/AFP via Getty Images

    A red VW Golf jerks back and forth as it maneuvers into a parking space in the English spa town of Cheltenham. The halting efforts resemble those of a new driver, and in a sense they are — just not from the person sitting at the wheel.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  34. From Bloomberg, Sep 4, 2014, 4:51:47 AM

    Sept. 4 (Bloomberg) — Alexander Mirtchev, member of the Atlantic Council’s board of directors, discusses the Ukraine crisis and the threat posed by Islamic State.
    He talks with Anna Edwards on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Al-Qaeda will start a new wing dedicated to waging jihad in the Indian subcontinent and beyond, the terror group’s leader Ayman al-Zawahiri announced in a 55-minute video posted online.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  35. From Bloomberg, Sep 4, 2014, 8:16:59 AM

    A worker operates in the blast furnace at ArcelorMittal’s steel plant in Ostrava, Czech Republic. ArcelorMittal raised its forecast of demand growth in the U.S. to as much as 6 percent from an earlier forecast of 3.5 percent to 4.5 percent. Photographer: Martin Divisek/Bloomberg

    U.K. lawmaker Ian Swales has already
    watched one steel plant close in his district, and he never
    wants to see it again.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  36. From Bloomberg, Sep 4, 2014, 12:00:07 AM

    From offices in a red-shuttered building across from an old Danish fort in St. Croix, Cane Bay’s programmers, marketers and data analysts run payday-loan websites, former employees said. Photographer: Quiana L. Adams/Bloomberg

    Alex Slusky was under pressure to put the money in his private-equity fund to work.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  37. From Bloomberg, Sep 4, 2014, 7:51:53 AM

    Governments across struggling
    southern Europe are allowing banks to shore up their capital
    with tax credits, even though this runs counter to the European
    Union’s drive to disentangle the finances of lenders and states.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  38. From Bloomberg, Sep 4, 2014, 7:30:18 AM

    The world’s biggest iron ore
    producers are targeting record shipments as lower output costs
    offset plunging prices and less competitive mines in China shut.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  39. From Bloomberg, Sep 4, 2014, 8:51:00 AM

    Companies took on fewer workers than
    projected in August, a sign that recent momentum in the U.S.
    labor market may be easing, a private report based on payrolls

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  40. From Bloomberg, Sep 4, 2014, 4:46:31 AM

    Sept. 4 (Bloomberg) –- EFG Chief Economist Daniel Murray discusses Japan’s economy, wage inflation and the success of Abenomics with Bloomberg’s Rishaad Salamat on “Asia Edge.” (Source: Bloomberg)

    The Bank of Japan maintained record
    stimulus to keep stoking inflation and boost economic momentum
    that’s been sapped by a higher sales tax.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  41. From Bloomberg, Sep 4, 2014, 7:02:14 AM

    July 29 (Bloomberg) — Christine Todd Whitman, former head of the U.S. Environmental Protection Agency and former governor of New Jersey, talks about President Barack Obama’s proposal to reduce carbon dioxide emissions by 30 percent by 2030.
    The EPA is conducting public hearings on the proposal this week. Whitman is co-chair of the Clean and Safe Energy Coalition that supports the use of nuclear energy. She speaks with Mark Crumpton on Bloomberg Television’s “Bottom Line.” (Source: Bloomberg)

    The top leaders of China and India aren’t planning to attend this month’s United Nations summit on climate change, signaling tepid support for a global pact to cut greenhouse gases among two of the largest emitters.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  42. From Bloomberg, Sep 4, 2014, 8:08:44 AM

    An employee walks past diesel gas pumps at a gas station in New Delhi. The Oil Ministry will seek a Cabinet nod to remove diesel controls once losses on the fuel end, one of its officials with direct knowledge of the matter said last week, while requesting anonymity citing rules. Photographer: Kuni Takahashi/Bloomberg

    Indian Prime Minister Narendra Modi
    is closer to scrapping controls on diesel prices that led to $66
    billion of losses on sales of the fuel in the past decade.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  43. From Bloomberg, Sep 4, 2014, 8:01:54 AM

    Mark Carney, governor of the Bank of England. Photographer: Simon Dawson/Bloomberg

    The Bank of England kept its key interest rate at a record-low today after persistent weakness in inflation and wage growth reinforced the case for keeping emergency stimulus.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  44. From Bloomberg, Sep 4, 2014, 7:26:47 AM

    Sept. 4 (Bloomberg) — John Normand, head of foreign-exchange and international-rates strategy at JPMorgan Chase & Co., previews today’s European Central Bank and Bank of England decisions.
    He talks with Anna Edwards and Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Mario Draghi has once again primed investors for action.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  45. It's a shame the rest of the world sucks:

    ISM non-manufacturing index hits 59.6 in August, versus 58.7 estimate

  46. And by the way:

    US Composite PMI – 59.7 compared to 58.8 last month
    US Services PMI – 59.5 compared to 58.5 last month

  47. From Bloomberg, Sep 4, 2014, 7:05:13 AM

    Happy Birthday to Ione Skye, 44. “Say Anything” isn’t a top-five 1980s teen movie; it’s probably not, in terms of quality, a top-five John Cusack 1980s teen movie. But there’s no denying its iconic status within the genre.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  48. From Bloomberg, Sep 4, 2014, 5:49:03 AM

    Political hotbed or tourist playground?

    Is there any reason for China to trust that the citizens of Hong Kong, long ruled by the British, are loyal to the mainland? Leaders in Beijing clearly don’t think so. That’s one reason the political reform plan that they handed to Hong Kong last weekend essentially reserved for the Communist Party the right to vet who will lead the city in 2017.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  49. Google self-driving car maneuvers through the streets of Washington D.C.

    Hope they're testing it near Capitol Hill. 8-)

  50. Thanks for the explanation Phil, much appreciated. I find that I'm starting to pick up more and more as a result of reading everyone's posts and just following along through the day, and a bonus when I can actually come up with a question.

  51. albo – CONgress won't be back in session until next week….. :(

  52. Corn Waste Ethanol Plant Opens In Iowa.

    Bloomberg News (9/4, Doom) reports that a joint venture of Royal DSM NV and Poet LLC “opened a cellulosic-ethanol plant in Iowa with capacity to produce 20 million gallons (76 million liters) of fuel a year.” The Project Liberty facility “which received a $105 million loan guarantee from the U.S. Energy Department in 2011, may eventually expand production to 25 million gallons a year, Poet-DSM Advanced Biofuels LLC said today in a statement.” The facility “produces fuel from corn cobs, husks and stalks, unlike standard ethanol that’s made from the edible parts of the plant.”

  53. Heck ! 

    FNMA & FMCC trading below the 200 dMA.

  54. Plant Will Turn Sugarcane Into Fuel, Create 81 Jobs.

    The AP (9/3) reports that Virdia Inc. is planning on building a $60 million plant in Louisiana that will “turn sugar cane waste into industrial sugars and biofuels,” according to an announcement with Louisiana Governor Bobby Jindal. The project will add 120 construction jobs and 81 full-time jobs that average $55,000 a year, and will be the recipient of a $1 million performance-based grant.

  55. on a weekly 2yr chart looks like TSLA is in a channel and wants to get up to about 315!

  56. FU NFLX!!!!

    FU TSLA!!!!

  57. @lunar

    I'll bet anything that TSLA does not get to 315 before next earnings, and those earnings or cars delivered better be good.

  58. Note: rustle123 is betting the farm! ;-)

  59. Indexes ripping higher now, back to 4,100 on /NQ and I'll like the shorts now when the EU markets close (they are pumping money in).  1,180 on /TF, 17,150 on /YM and /ES 2,010 are the next set to watch but very rough to short at the moment. 

    Oil tapped $95 again, that one I have conviction on.  Gold $1,274, silver $19.27 despite the Dollar at 83.44 – that was our theory from earlier in the week, as we expected people in Europe to begin converting out of their currency to "safer" assets. 

    Bullets/Shadow – There's no such thing as "out of bullets" when Draghi can just get out there and say "we're going to buy a kajillion, zillion Euros worth of assets" and it doesn't matter because he (like our Fed and the BOJ) can just inflate their balance sheet as much as they feel they need to.  Down the road, the blowback will be horrific, because it's all fake money and it's very hard to try to turn fake money for dead assets into real money for dead assets but, as long as we're all willing to accept the illusion without pulling back the curtain, the show will go on.  

    ISM very strong.

    You're welcome Jeff – it's a shame what they don't teach people in college, right?  

    Corn/QC – They need to something with that stuff.  It goes bad, too – big mess. 

    TSLA/Lunar – Big Breakout last month but $120 to $240 led to a 50% retrace to $180 so $180 to $270 seems to me like $225 will be tested again.  

    If we allow for an overshoot to $300 and a month to turn and a month to fall, that brings us to Nov, so Oct puts may be jumping the gun but I do like the Oct $285/270 bear put spread at $7 or just the Oct $250 puts at $3. 

  60. definitely note that.  2 main factors (and we won't even consider fundamentals), shorts just got squeezed out, stock has moved 60 points in a little over a month with China news and gigafactory crap out.  Nothing to push them higher to that level.  They can drift upwards to try and test 300 but I think if market comes down and it is due because we are overheated in a bunch of the momo names that TSLA will most likely consolidate in 270's to mid 280's for awhile, barring another TSLA on fire.

  61. Oh and 3rd factor, all bs upgrades were now made.

  62. TSLA/Rustle – The next announcement will be electric planes – mark my words!  

  63. TSLA/Phil

    I won't be flying on one.  Plane fire at 35,000 feet is not a risk I want to take.

  64. GWPH-up again 3.00, over 90. Looks like another TSLA! I can't believe this market-like waiting for the shoe to drop. (& it really never does). I am sitting on cash & waiting to make some plays. Guess I should just "dive in."

  65. It'll be interesting to see if AAPL announces a mobile payment system next Tuesday, and if they do, the effect it'll have on PayPal and EBAY.

  66. phil/lol!!  great bernanke wizzard of oz cartoon!

  67. Yodi – What does this mean?

    " Today LINE shows it't scares after div. payment "

    I rebought shares yesterday to keep 1000 line in my account.  I sold the Jan16 32Straddle though, as at the 32 strike, the options had the most extrinsic value.

    The 32C had 1.35 of time value and the 32P has 4.76 of time value.

    The sales price of the 32 straddle is mid a credit of 7.28

  68. EBAY/Albo

    Icahn is hedged either way

  69. Hello again. Back to my question about portofolios. I went to the Virtual Portofolios tab but all I found were some articles. To be more specific about my question: Is there a place where I can see the positions or I need to go through the articles since the portofolios have been started and reconstruct them?

    And second question, how do I access premium education?(Or what is defined as premium content vs basic membership?)


  70. Burr,

    LINE this is how I have set it up today the stk has gone from 31.80 to 31.00 so I bought the Jan16 25c @ 6.16 and sold the 32/30 c/p for now 5.85 so about .31 cents cash outlay 

  71. whats happening with /CL right now?

  72. Burrben- is there an easy way to explain/share your measure of extrinsic value and where you get the time value figures? Or can someone point me to a place to learn about this that is written so it can be understood by someone who doesn't have a PhD in mathematics? Thanks for any help with that stuff. 

  73. Interesting on ICAHN.

    You go girl !   Lizzie and I are on the same page on this one.

  74. Oil inventories down just 905,000 – not enough.  Gasoline down a good 2.3M though and distillates I didn't get yet but not what we wanted (under 2M) so no short for now – but we'd still like to catch them back below $95.

  75. Ricbah- I am not an expert but sometimes you see it shoot up or down in opposition to where it should go to shake out us little guys before moving down or up for real in the expected direction. 

  76. craigsa620

    Time value

    If you have TOS trading platform go to the trade tab and where it says lay out just  under custom put in extrinsic value and extrinsic value plus what ever you wish to have like open interest theoretical value etc 

  77. Phil- I am confused about your oil comment. Wouldn't a bigger decrease in inventory signal more demand, thus pressuring price up and smaller decrease, as we have, signal less demand pressuring price down? So, a smaller decrease than expected would support the premise of shorting, yet you are calling off the short ? What do I have wrong?

  78. More Musk fun:

    • Following a quarter in which it more than tripled its number of new customers compared to the same period the prior year, SolarCity (SCTY +3.9%) now plans to open 20 new operations centers across seven states.
    • The new centers are expected to create more than 600 jobs in Arizona, California, Delaware, Maryland, Massachusetts, Nevada and New York.
    • Within the last six months, SolarCity opened its first operations center in Nevada and Delaware, a second and third location in Massachusetts, a third location in Maryland and new operations centers in Hawaii and Long Island.

    That's really not good for oil.  Remember yesterday we had that chart showing Electric Power consumes 38.4% of our fuel, not much oil but it doesn't matter because Industrial (21%) uses 40% Oil and 42% Nat Gas so, if Electric Power uses less Nat Gas, then Industrial switches away from oil and the same for the Commercial Sector, which already uses 79% Nat gas and can easily ditch oil completely.  

    Not only that but people with solar homes have more reason to get electric cars as the cars suck up excess energy during the day and can power the home at night if needed. 

    Shoes/Pirate – Hey, I sat on my hands from mid 1998 to 2000 waiting for the market to get sane – it's very hard to be a rational person in an irrational market.  

    AAPL/Albo – I think, long-term, that's a given.  Good for another $100Bn for them in market cap (20%) I'd say.  


    • Aug ISM Non-Manufacturing Index: 59.6 vs. 57.5 expected and 58.7 prior (>50 denotes expansion).
    • Business Activity: 65.0 vs. 62.4
    • New Orders: 63.8 vs. 64.9
    • Employment: 57.1 vs 56.0

    • The ECB cut its growth forecast for the EU for 2014 and 2015, says Mario Draghi at his post-meeting press conference, but raised its outlook for 2016. Inflation is seen at lower-than-expected levels in the coming months before increasing gradually in 2016.
    • The central bank, says Draghi, will start to purchase a broad portfolio of euro-denominated covered bonds and also begin to buy ABS, with further details coming in October. It sounds like the Germans are on board: "Should it become necessary, the Governing Council is unanimous in using additional measures."
    • The Stoxx 50 is now higher by 1.5% and the euro lower by 1% to $1.3015.

    August US PMI Services Index

    • August US PMI Services Index59.5 (final) in-line with consensus, 60.8 in July.
    • Service sector maintains sharp pace of expansion in August.
    • Input cost inflation picks up from July’s 15-month low.

    More on Hovnanian's FQ3 results

    • Hovnanian (NYSE:HOV): FQ3 EPS of $0.11 beats by $0.02.
    • Revenue of $551M (+15.2% Y/Y) misses by $8.47M.
    • Press Release
    • Net income of $17.1M, or $0.11 per share vs. $8.5M, or $0.06 per share in the prior year's third quarter.
    • Deliveries, including unconsolidated joint ventures increased 3.1% to 1,549 homes vs. 1,502 in the fiscal 2013 third quarter.
    • Consolidated active selling communities increased 5.4% to 196 communities vs. 186 at July 31, 2013.
    • Consolidated net contracts decreased 6.3% to 1,357 homes vs. 1,448 homes in last year's third quarter.
    • FQ3 results
    • Crude -0.9M barrels vs. -1.1M expected, -2.1M last week.
    • Gasoline -2.3M barrels vs. -1.3M expected, -1.0M last week.
    • Distillates +0.6M barrels vs. -0.5M expected, +1.3M last week.
    • Futures -0.59% to $94.98
    • BP agrees to revise its deal to develop the giant Rumaila oil field in southern Iraq, shrugging off security fears in the country since the rise of Islamic State militants.
    • Under the new agreement, production at Rumaila would rise by ~800K bbl/day within the next decade to 2.1M bbl/day, with the production plateau extended by five years to 2034.
    • BP accounts for about half of Iraq’s production of crude from the giant Rumaila field, whose huge reserves and poor infrastructure mean BP can maximize output with modest levels of investment compared with greenfield projects elsewhere.
    • Despite the heightened security concerns, BP CEO Bob Dudley attended the signing.
    • BP (BP -4.3%) plunges on word that the company was found to be "grossly negligent" in the 2010 Gulf oil spill.
    • "Court finds and concludes that the discharge of oil was the result of BPXP's 'gross negligence' and 'willful misconduct'" under the Clean Water Act, U.S. District Judge Carl Barbier wrote in the decision that may force BP (BP -4.5%) to pay billions of dollars more for the 2010 Gulf of Mexico oil spill.
    • “BP’s conduct was reckless… Transocean’s conduct was negligent. Halliburton’s conduct was negligent," Barbier wrote in apportioning fault for the disaster at 67% for BP, 30% for Transocean (RIG +1.5%) and 3% for Halliburton (HAL +0.2%).
    • Barbier did not rule on how much oil was spilled, a key factor in determining the extent of BP’s liability.
    • Halliburton (NYSE:HAL) and Transocean (NYSE:RIG) are said to be cleared of negligence.
    • Joy Global (NYSE:JOY): FQ3 EPS of $0.80 misses by $0.04.
    • Revenue of $876M (-33.6% Y/Y) misses by $58.25M.
    • Press Release
    • Net income of $71.3M, or $0.71 per share vs. $183.2M, or $1.71 per share, a year earlier.
    • Net sales fell 34% Y/Y to $876M, from $1.3B in the same period a year ago.
    • Bookings climbed 33% to $923M vs. $695.4M a year earlier.
    • Based on a downgraded production profile for U.S. coal and the current geopolitical circumstances in Eastern Europe and Russia, the company is tightening its revenue and earnings guidance for the year.
    • Fiscal 2014 revenue is now expected to be in the range of $3.65B to $3.75B compared with previous guidance of $3.6B to $3.8B.
    • Full year earnings are estimated to be in the range of $3.15-$3.30 per diluted share vs. previous guidance of $3.10-$3.50 per share.
    • FQ3 results
    • JOY -2.7% premarket

    AutoNation reports on August sales

    • AutoNation (NYSE:ANreports retail sales of 32,660 new vehicles in August.
    • The tally is a 7% improvement over last year's level.
    • Segment sales growth: Domestic +8% to 10,053; Import +5% to 16,931; Premium Luxury +11% to 5,676.
    • General Motors (NYSE:GM) saw the largest jump in average new vehicle transaction price in the U.S. of the major automakers during August, according to data from Kelley Blue Book.
    • The automaker's ATP ended August at $37,120 which was 7.1% higher than last year and well-above the industry average of 2.7%.
    • A shift in mix and a lower level of incentive spending compared to peers helped to boost GM's price performance.
    • GM has been under a spotlight with analysts to see if the wave of recall news this year would force it to dial up promotions.

    Las Vegas Sands rating chopped by Argus on Macau concerns

    • Argus chops its rating on Las Vegas Sands (NYSE:LVS) down to Hold from Buy.
    • The investment firm thinks the Macau growth train will remain derailed in the short-term.
    • LVS -0.5% premarket

    Walgreen comparable store sales rose 3.7%

    • Walgreen (NYSE:WAGreports Aug sales rose 3.6% Y/Y to $6.39B.
    • Total comparable store sales rose 3.7% during the month, calendar day shifts impacting 1.4%, generic drug introduction impacting 1.2%.
    • The company ended Q4 sales +6.2% Y/Y to $19.06B and FY14 sales +5.8% Y/Y to $76.43B.
    • The company opened 23 stores during Aug.

    J & J to accelerate Ebola vaccine development

    • Johnson & Johnson (NYSE:JNJannounces that it will fast track the development of its new combination vaccine regimen against Ebola and collaborate with its partners in global health to deliver relief aid to help combat the current outbreak.
    • Its vaccine candidate is a prime-boost regimen where one vector primes the immune system and the other boosts it. The product features two components based on the AdVactechnology from Crucell N.V. (part of Janssen) and the MVA-BN technology from the Danish biotech firm Bavarian Nordic. The National Institute of Allergy and Infectious Diseases (NIAID) is providing direct funding and preclinical services to bring the program forward. Human clinical trials may start as soon as early 2015.
    • Crucell and Bavarian Nordic are both developing preventative vaccines against filoviruses, including Ebola, with the aforementioned support from NIAID. More than 1,000 humans have received Crucell's adeno-platform-based vaccine in clinical trials. Bavarian Nordic's MVA-BN platform is the basis for the smallpox vaccine registered in Canada and Europe with a safety record of use in more than 7,300 people.

    Taser +7.6% on announcement of multiple orders

    • Following its announcement for several new orders, including one from the Cleveland Police Department for 300 next-generation Smart Weapons, shares of Taser (TASR+7.6%) have soared 7.6%.
    • Additional orders include 85 TASER X26P Smart Weapons from the Bryan Police Department in Texas, 129 X2s from the Florida Department of Law Enforcement and 65 X26Ps from the U.S. Fish and Wildlife Bear River Migratory Bird Refuge. All orders will ship in Q3.

    New $1B buyback program launched at Nordstrom

    • Nordstrom (NYSE:JWN) approves a new $1B share repurchase program that will run through March 1, 2016.
    • The company expects to tap cash on hand for the buybacks.

    Mobileye lower following Q2 report

    • In its first earnings release as a public company, Mobileye (MBLY -3.3%) reports its automotive OEM revenue rose 115% Y/Y in Q2 to $28.8M. Aftermarket product revenue rose 14% to $4.9M.
    • Gross margin rose 110 bps Y/Y to a high 74.9%. Excluding $43.1M in stock compensation expenses (boosted by the IPO), opex rose 44% to $20.6M. R&D spend totaled $14.5M, sales/marketing $3.6M, and G&A $2.5M.
    • Q2 resultsPR
    • Yesterday: Mobileye soars on Morgan Stanley's $100/share bull case

    GoPro -3.8%; JPMorgan downgrades on valuation

    • Citing valuation, JPMorgan has downgraded GoPro (NASDAQ:GPRO) to Neutral. The firm has provided its share of positive commentary on the action camera vendor since its IPO.
    • Shares closed yesterday at nearly twice their post-IPO opening trade of $28.65. They're currently valued at 56x 2015E EPS.
    • Previous: GoPro squeezes higher on strong volume

    3D Systems -2.7% on Pac Crest downgrade

    • Citing poor execution and too much diversification, Pac Crest has downgraded 3D Systems (NYSE:DDD) to Sector Perform.
    • Pac Crest started 3D at Outperform on Dec. 9, when shares were at $75.38. A long list of sell-side firms have argued Stratasys is a better 3D printing play than 3D – the former hasoutperformed the latter by a sound margin this year.
    • Yesterday: 3D Systems buys metal printing service bureau

  79. BP Found Grossly Negligent in 2010 Spill; Fines May Rise

    The volatility in BP has certainly increased today. 

  80. Glad I'm not a Nevada resident

    like this quote

    "Though Musk is big on talking about the free-market, his firm needs a lot of taxpayer help to survive."

  81. craigsa620  –  What I would do if I were you, it take a week and go through the CBOE options education site.  They have free courses, videos, and webinars.  Intrinsic and extrinsic value (time value or premium are other names) are fundamental option concepts you need to know before trading a portfolio.  Other concepts that are very important are volatility, skew, term structure, delta and theta.

    It isn't rocket science, but it's important to understand these concepts before trading real $$.

    PSW is an "advanced" site for using options to express a leveraged bet on a fundamental opinion.  Phil has weeded through much of the details, and presents a good pointer where to look for opportunity.  What he doesn't cover much is the technical aspects are trading options.

    For example, ask yourself some questions, "If vol increased X%, and my portfolio is short vega and long delta, what would happen?  Does my margin increase?  What are the parameters my broker uses for a margin call?, etc etc"  Risk management is the #1 rule for any trader. 

    Here is the answer to you're question though:

  82. Portfolios/Gatok – I'll be going over all 5 Portfolios later, they'll be right here in this post.  As to Education, if it's a Premium Only article, if you are a Premium Member, you'll see it, if not, you won't – very simple.  If you have service questions, please contact Greg (greg at phistockworld dot com) – he can walk you through anything that wasn't clear in your New Member Email.  As you can see, we're kind of busy here trying to figure out the markets – not much time for customer support.  wink

    Oil/Ricbah – Just the normal nonsense around and inventory.  As noted by Criags, the usual head-fake to shake people out of shorts before it heads back down (hopefully).  What happened right at 11 was the release of inventories (usually Weds 10:30 but shifted due to holiday).  

    Extrinsic/Craigs – Intrinsic is how much of the price of an option is in the money, extrinsic is how much is out of the money.  No physics required.  

    Warren/Albo – I may have to go work on her campaign if she runs:

    "This is wrong," Warren said in regard toCantor's new role as vice chairman and managing director at Moelis & Co. "People work in Washington and, man, they hit that revolving door with a speed that would blind you." She went on to claim that banks hire politicians like Cantor "not because they bring great expertise and insight, but because they’re selling access back into their former colleagues who are still writing policy."

    Oil/Craigs – On a holiday weekend, a 2Mb draw in gasoline is nothing.  Small draw in oil indicates there wasn't much pull from the refineries either so, as we expected, the holiday weekend demand looks like it was a bust.  I called off the short AT 11, because the net draw of 3M wasn't enough for an immediate sell-off but it didn't change our interest in shorting at the $95 line – we just wanted to avoid a potential pop at the time. 

    BP/Diamond – What a ride on that one!  

    Will make a nice long when things come down but it would be nice to get a firm number on the fine first.  

    TSLA/Rustle – Whoa, that is sickening!  $3Bn in tax breaks on a $5Bn factory.  Why doesn't Nevada just spend $3Bn on infrastructure and create 60,000 $50,000 jobs?  The factory is projected to create 6,500 jobs, so Nevada is paying for 10 years of labor for Musk and Co and you know those factory profits will never trickle down to the state because that's not where the investors live!  

    This crap is just too stupid to believe that the politicians are innocent dupes in these deals – they are just selling their citizens down the road to Corporations.  

    Wheeeeee!   Nice little dip in the indexes.  Don't turn your nose up on those nickels and dimes.  As expected – it's coming on the EU close (11:30).  

    Now we have 17,110, 2,005, 4,090 and 1,176.50 – all nice profits and we can get a fresh horse if /ES fails 2,005 or /YM fails 17,100 so TAKE THE PROFITS!!!

  83. Yodi – LINE

    Correct, the stock dropped due to the dividend payed out yesterday.  Always a good time to re-buy.  I just didn't understand the english phrase "LINE shows it't scares after div. payment "  Did you mean "shows it's scars?"

    Anyway, why did you decide to go long the synthetic stock instead of buying the stock?  You won't recieve the dividend, although you do have limited downside = to the price paid.  Just wondering.

    PS:  I need to own the stock as it's a form on "Monthly Income" that I'm using for another "project"

  84. Giga/Phil

    And you know when the tax breaks run out, TSLA will threaten to move the factory if they don't get more.  That is if the gigafactory is still in business.

  85. In case other people don't know, the CBOE provides a full education for options.  Excellent courses, all free.

    The webcasts are excellent as well.  I try to watch at least one a week while going to bed.

    For example here is one on spreading, which is almost required here

  86. Phil – Re: BP … 

    Why do I get the feeling that taxpayers (somewhere) will be picking up the tab?

  87. But Phil, Warren has no foreign policy experience.  Sarah Palin had more – She could see Russia. ;-)

  88. Burr- thank you for that answer. You made my brother very happy! He has been pushing me to learn more on that.   

  89. TASR –  I still like the Jan16   -13P, +15/17 bull call for a current mid of -0.35, with a ask of 0.25.  So even if you paid full price, you are speding 0.25 to possibly make 1.75 on the $2 spread.  

    Worst case you own close to $13.  The spread is 100% ITM now.

  90. Albo – Trying again to get our blood boiling before lunch :-)

  91. TSLA – interesting bit about the batteries..

    "Today, what they’re doing when they get to the lithium-ion battery is making special, hybrid forms of synthetic graphite … they’re trying to create certain properties in that battery, it’s not a simple synthetic graphite. … when you’re talking about the companies that are making the high-end synthetic graphite for lithium-ion batteries, they’re picking out very, very special precursors. They’re doing very special heat-treating processes and then special milling to create a special shape with a certain density. That material is a lot more expensive to make. It’s probably costing them five to 10 times what it costs to make natural graphite…"

  92. Phil –  To clarify, as I'm putting in part of my 10K hours today on futures, which is you're fresh horse, if /YM and /ES fail?  Are they the horses? Or is it /TF or /NQ.  

    I know you short the laggard right.  So maybe he's the horse…..    (I'm being serious)

    "Now we have 17,110, 2,005, 4,090 and 1,176.50 – all nice profits and we can get a fresh horse if /ES fails 2,005 or /YM fails 17,100 so TAKE THE PROFITS!!!"

  93. BKW came down a bit today.

  94. Burr,

    Sorry for the spelling sometimes comes out wrong so read between it.

    I do have stock as well but look at it that way at a 100 stk I receive 384.00  less 15% tax) till Jan16 the 6.00 cost on the opt is only 600.00 The value of the 25c at sept 14 is the same as Jan16 so no loss at this stage. Delta is .90 For my strangle I receive 590.00 against 384.00 Obviously there is a risk at the put side. But if the stock goes down my break even is at 30 – 5.90 = 24.10. Actually the same discount if you would have bought the stock only higher cash lay out!

  95. Apparently Tesla cars are a bargain:

    How much a mile of range costs in an EV based on MSRP

    What these metrics don't account for is the extra gizmos and doodads you get in something like the i3 or the extra cargo capacity of the RAV4. It is simply a comparison between the price of the vehicle and how far you can actually drive it between charges. In reality, a shopper in the market for an EV probably won't be comparing the Tesla Model S with the Chevrolet Spark EV, but if you're someone who wants the most bang for your buck, cost per mile of range can be a valuable metric.

  96. CBOE/Burr – thanks for the links. haven't been there for a while and can always benefit from more review!

  97. STJ – Just tongue in cheek my friend.

    BTW – Buckle your seat belt – FNSR reports after the close.

  98. FNSR do u think they going to beat earnings?

  99. Yodi – Right, but you don't get the div on the long call, which is where my disconnect is.  Generally it's fine to be long a call on a stock that will appreciate.  But with high div paying stocks, they tend to not move up very much since they are paying a high div.  The cash outlay is less, but you have decay with the call.  

    The "phil" way to do high div stocks is to buy the stock and sell the ATM straddle, which max's out the div and maxs out selling the premium in the options.

    Maybe I'm missing something.  Unless the cash outlay is really the largest concern.  

    With portfolio margin, IB actually encourages me to be long the stock, as they give something like 5x leverage….more than the call

  100. Abseth85 – Don't think it'll be a good quarter earningswise.  They could beat lowered estimates.

    It is interesting that different analysts can arrive at essentially the same EPS
    estimates for FY-2015; but come to very different opinions about a price target.

    Analyst Revenue EPS Price Target
    Barclays $1.343b $1.32 $32.00
    Janney $1.341b $1.38 $23.00
    Jefferies $1.340b $1.31 $19.00
    Needham $1.352b $1.45 $31.00

    Also, Raymond James has FNSR as a strong buy and a $30+ target.

    It should be interesting.  Will add on significant weakness.

  101. Oil $94.40 now, so stop at $94.50 for another $500 and, if they go back to $95 – we'll just short them again.  We LOVE this game!  If you learn to take these $200, $300, $500 moves of the table, you'll  find you can do that 2 or 3 times a day – rather than waiting for one time a week you might catch a $1,000 ($1) move.  

    TSLA/Rustle – Happens all the time, just another one of the ways corporations never actually end up paying taxes.  

    CBOE/Burr – Good one.  We mention them at the beginning of every webcast.  

    Taxpayers/Diamond – We already do, over and over and over again.  

    This is you being robbed by big business.  Small business (the kind most of us ran) pays the full boat but the BIG Companies get away with murder so of course the system seems unfair to those of us with normal-sized corporations as we are double-taxed but the scam is that they get you to believe it's the Government that's the problem, when it's actually businesses who are bigger than you that pay so little that you are forced to make up for it.  

    It amazes me how they can brainwash half the country into believing that this is fair or even acceptable but the message is on Fox and CNBC and Bloomberg and in the WSJ and most newspapers 24/7 to make sure you accept the lies they feed you.  

    Warren/Albo – Unlike Palin, Warren is smart enough to understand she would need advice.  I'd rather have a President who needs to learn foreign policy than have a President who needs to learn how the economy works.  

    Why don't we have an SAT-type test for political candidates?  We test doctors, lawyers, teachers and other professionals before we let them practice – why is it OK for completely unqualified people to be elected to office?  

    Wouldn't it be nice to know your candidate scored over 80 on Basic Government Structure, Economics, Constitutional Law, International Relations, etc?  A little English and Math testing would be nice as well.  

    TASR/Burr – I always like them.  

    Graphite/Scott – It's possible the whole Gigafactory is essentially a scam but it won't matter because Musk's shares of SCTY and TSLA are going through the roof on the promise of infinite, cheap battery power —-- just around the corner!  What does Musk care if the $2Bn bond he floated for the Factory busts out?  The bondholders and Nevada will foot the bill. 

    Fresh horse/Burr – Fresh horse IS /YM 17,100 or /ES 2,005 – generally you want to try to pick the index that's giving you the best cross line (so you have a clean, clear stop-out).  In other words, when I noted above that we had 17,110, 2,005, 4,090 and 1,176.50, the idea is we take the money on /NQ and /TF, which were likely to bounce, and IF THEY DIDN'T, then we still had /YM and /ES to play as they crossed below better lines.  If /NQ and /TF bounced back to 4,100 and 1,180 – then of course we want to get back on the short side of them.  Capisce? 

    Range/StJ – That's funny, nice arbitrary way to make themselves look good.  What's the cost of driving a TSLA 36,000 miles in 3 years vs a Honda Fit 36,000 miles in 3 years – well then it's 2x more for the Tesla, isn't it?  And I bet you'll have a much easier time selling your used Fit for $18,000 (50% off) than your used TSLA for $40,000.  Cost per mile of range has nothing to do with cost of ownership – it's like measuring cost per watt of stereo speaker to determine which is the right car – unless range is your primary concern, of course.  

  102. LOL, people are lining up at the AAPL store to buy a product that hasn't even been announced yet.  How can I get that kind of free time?  

  103. Capisce…  my mind just doesn't work that way yet.  Trying to fix…

  104. Phil –  PM

    Why not sell the ATM Jan16 85 straddle, instead of selling the 75/85 strangle on PM?  Just wondering why this change.  I'm guess you are giving them a little room to fall before assignment risk.

  105. FNSR / Albo – Expected to beat at $0.33 against $0.32. A big move up would make a good birthday present!

    And of course, I knew you were joking with Palin and so was I… Good clean fun.

  106. TSLA / Phil – Hey, that the new lipstick color for that pig today…. They need to be creative!

    But once again, we can't confuse the stock price with the product – they do look like nice cars. Not that I would spend that kind of money, but nice anyway.

  107. Happy Birthday !

  108. Thanks albo, Happy birthday STJ!

  109. Burr First LINE you pay 600 against 3,100.00 to get the div while I get the cash right in my hand If the stock goes up my long goes up to a higher delta than the 32 caller. So the play is caped at 7.00 

    As you see on PM not always good a straddle I entered the same Strangle as shown (Phil) as the stock can go down as well. I very much agreed with Phil's call and closed the play.

  110. PM/Burr – Yes, I wanted to be conservative, especially with a dividend-payer where I'd usually go for a bigger allocation than, say, if I were just selling RIG or CLF puts for an entry position.  Also, PM not particularly low AND we are worried about the overall market.  If they fall back to $80, I'd still like them and set up a much more aggressive play as I don't see them going below $70 – value-wise.  

    You should go into every position EXPECTING a 20% drop and you shouldn't be starting at all unless you will be THRILLED to double down on a 20% drop.  That's the premise for all our LTP and Income Portfolio Positions.  

    TSLA/StJ – Love the cars, just not the price of the company.  And Happy Birthday!  mail

    DGLY up again today:

    • "It's the beginning of the end of the bond market rally," David Tepper tells Bloomberg. "We are done." His comments come after the ECB earlier today cut interest rates and set about launching an asset purchase program.
    • After dipping to 2.39% in the aftermath of the ECB action and a minor miss in the ADP jobs report, the U.S. 10-year Treasury yield has shot back higher, up five basis points on the session to 2.45%
    • The German 10-year Bund yield is up one basis point at 0.97%, while Spanish and Italian 10-year yields are sharply lower, with both – Spain at 2.18%, and Italy at 2.35% – comfortably lower than the U.S. 10-year.
    • TLT -1%, TBT +2%
    • "What I do know is that [current] conditions are creating a degree of risk for which there is no commensurate risk premium," writes Oaktree (OAK +0.6%) chief Howard Marks in his latest memo. "Although I have no idea what could make the day of reckoning come sooner rather than later, I don't think it's too early to take today's carefree market conditions into consideration."
    • While Marks says investor behavior hasn't quite sunk to the lows seen just ahead of the financial crisis, it's starting to get close. Reiterating his recent mantra of "move forward, but with caution," Marks today would boost the emphasis on the last three words.

  111. Yodi – I'm having a hard time understanding you're writing today.  But, I have 31,000 in LINE and IB holds only 3100 in margin.  If I had 3100 of LINE in stock, I'd only have to hold $310 in margin. 

    The stock I have is a 100 delta (of course), higher than a 90 delta of the call with no decay.

    What are you referring to with Phil and the straddle, I don't understand this.  Which stock?  He didn't comment on LINE today.  Are you referring to PM?  Why did you close it, wasn't it just opened yesterday?

    As you see on PM not always good a straddle I entered the same Strangle as shown (Phil) as the stock can go down as well. I very much agreed with Phil's call and closed the play.


  112. thats amazing bush and kerry had the same academic record at yale wow!

  113. PM is referring to Philp Morris.  It's not referring to Portfolio Margin…to be clear.

  114. What happened at EBAY?

  115. Bond rally/ Phil

    Tepper is saying Bond rally is over.  What in your mind could happen and its impact on stocks if indeed it is the situation?  Money chases stocks in the short-medium term and then bust in both?

  116. Musk has created a situation where between tax breaks and Panasonic the cost is close to zero. Of course that effects the cost of batteries but that will never shave over 30% on costs. Scottmi brought in one small part cost that will continue as it is essential to avoid breakdown which can cause explosion. Lots of limited resource products will not continue down in price. One might want to associate the electronics costs halving every 18 months but batteries are not the same, energy density is more or less fixed while micro circuits continue to get smaller and material cost is minimal and decreasing.

    The biggest scam in all this is the cost and consequences of power generation. The alternatives will take more time but eventually the ugly truth of battery storage inefficiency will emerge. There is one way more efficient way to power electric vehicles now. Most significant is heavy vehicles could be clean where it matters most, cities with magnetic induction. Losses are way less now than batteries and as the system is similar to a transformer transfer efficiency could be improved to 90+%. The kicker in this is in less densely traveled areas where the underground line flunk economies of scale fuel cells take up the missing.

    I believe all this could happen quickly if we could just say no to big oil, put the money in new development.

  117. From the BBC news: Woman beheaded in Edmonton garden: here

    An horrific event. However, the first time I have seen reports of the police using Tasers in the UK.

    'A Taser was used during the arrest of the man and a firearms officer is believed to have suffered a broken wrist.

    Police said they were initially called to reports of a man armed with a knife and eyewitnesses said he had attacked a car'.

  118. TASR/all – ok, having a hard time keeping my finger off the sell button, and need support from you guys. I bought 500 shares of TASR on Aug. 13 for $12.90. I should keep hanging on to it, right?

  119. Burr on LINE the PM margin at TOS is 230.00 for the Jan16 32/30  one option play It cost me only some .24 cents per opt to set up the play  25 call and the 32/30 strangle,so on your side you land up with a cost of 3,100 per 100 stk and you still land with 3,100 in Margin. Obviously discount the strangle.

    Now when I said I closed the play on Philp Morris I mean I bought the stock and sold the option with other words I closed the deal!!!! Should you have problems to understand this I will translate in German. 

  120. NFLX consolidating for a move up to 500 probably.  i doubt there is room for any kind of reality in this market.

  121. $25,000 Portfolio Update ($25KP):  We were simply wrong getting bearish in August and it's cost us 10% ($2,500) in a month – really awful.  I still don't see bullish bets I want to make so very hard to decide what to do here – where we are unable to sell premium and are forced to buy it.  

    • GMCR – That's been our biggest loser of the year but I STILL think they'll tank on Nov earnings or maybe sooner if the market corrects.  I doubt we'll hit $110 at this point but the Jan $120 puts are $6, so a $10 drop would give us a chance to cash out with a little dignity.  
    • XLE – Oil is still under $95 and not strong so I still like this play. 
    • XRT – Reports are coming in today.  COST was up 7%, BKE +0.8% (big disappointment), AN up 7%, WAG up 3.7% but a miss – we'll need to get more reports to make a decision so hold for now. 
    • YHOO – That one is actually doing well and on track.  Potential there is another $1,250.
    • TQQQ – Going very badly but TQQQ is at $89.12 and we can buy back the $80 puts for .35, so let's do that, which puts us in position so we can take advantage of a drop to cash in the $86 puts (now $1.10).  The net entry was $2.30 and the Delta is .30 so we need a 3-point drop in TQQQ, which is 4% and that's a 1.5% pullback on the Nasdaq.  Is that realistic over 15 days?  Sure it is!  

    Butterfly Portfolio Update:  We dropped 1.4% in the past month but nothing is particularly bad, just the way it's rolling at the moment.

    • BTU – The cost of rolling the 2016 $20 calls (.85) to the $15 calls ($2.40) is $1.55.  Considering that we have not sold short calls for 3 months waiting for BTU to move higher and that we COULD sell Dec $16 calls for 0.66, I'd say it makes a lot of sense for us to execute that roll and sell those short calls.
    • DIS – We got burned by the short Sept $85 calls but no big deal as we sold the puts and calls for $4.96 and we owe the caller back $5.70 and the short puts will expire worthless.  No reason to rush it, next week, we'll simply consider our rolling options.
    • JPM – Why didn't we sell a put?  I forgot.  As with DIS, no particular tragedy, the Sept $57.50 call is $2.60 and we can roll it to the Nov $60 call at $1.60 and the Nov $57.50 put for $1.  If we do that, we'd be keeping the $1.72 we were paid for the short calls – we're just delaying when we officially collect it (by having puts and calls expire worthless).
    • OIH – Finally, one that is right on target!  We'll just look to do more of the same next months.  That's the trade-off with ETFs – they are less likely to burn you but also don't pay as well.  
    • TXN – Also on target.  
    • WMT – Just a bit higher than we want but not worth worrying about as we're net ahead anyway.  I'm still more worried WMT has poor numbers and goes lower.  

  122. Yodi –  The margin is $310.00 on 100 LINE at $31.00.  Anyway, doesn't really matter.  You say PO-tato, I say POTA-to.  

    Normally when we initiate a new trade, at least in the US, we say, we opened a trade.  When we exit the trade, we closed the trade.  How do you say that you exited a trade?  

  123. Burr Good deal on the stock as far as margin is concern. 

    Your term on new trade is clear and correct. Possible my way of expressing it is not to clear here.

    Still hope you see the difference between spending 3,100 and 600 even with a delta of .90 if you look what you get for LINE now Sept and pay for Jan16 it is just about the same price! You get paid 16x100x.24= 384.00 over a period of 16 month while I receive 590.00 cash on my hand. 

  124. Kerry/Angel – Was he a bad student too?  

    EBAY/Grant – Only thing I see is web outages, though AAPL is going to be challenging PayPal somewhat.

    Facebook, EBay and Apple Experience Interruptions on Websites

    Bonds/Checho – Well, if you assume Tepper is right, then money comes out of bonds and heads to stocks but I don't see that.  The kind of people who are buying 10-year bonds at 3% are not the kind of people who will buy TSLA for $286.  Tepper is a hedge fund manager – he's just another one of those guys who are trying to manipulate the sheeple into the markets so he can unload his high-priced crap.  He made $3.5Bn on last year's rally but, if he can't unload the fund's holdings and turn all those paper profits into real money – he could be in big trouble and you don't make $3.5Bn in one year without being VERY bullish with not too many hedges.  

    Induction/Shadow – I'm not quite sure how that would work in practice.  Do you have a link to any kind of research on the subject?  

    Beheading/Winston – Things are definitely getting crazier.  

    TASR/Snow – When in doubt, sell half.  You can sell 200 for $18 and sell 3 2016 $15 puts for $2.30 so your worst case re-entry is $13.70 (about where you came in) on 300 more and you can sell 3 2016 $17 calls for $4.45 and that would put $3,600 + $690 + $1,335 = $5,625 back in pocket, which is most of the $6,450 you started with and you are left with 300 shares which may get called away at $17 ($5,100) or, worst case, you'd be back to 600 shares but the net would be 300 x $15 ($4,500) + the net $825 you are leaving on the table means the worst case would be owning 600 shares at $5,325 ($8.87 per share).  If you don't REALLY want to own 600 shares of TASR for net $8.87 per share – then that answers your question and you should definitely cash out at $18!  

    I do like the fact that you can get $2.30 for selling the TASR 2016 $15 puts and you can use that money to buy the $15/22 bull call spread for $3 for net 0.70 on the $7 spread that's $2.80 in the money (+300%) to start.  It's a 10-bagger if it works out!  

  125. And the irony doesn't escape this guy – O'Reilly commenting about the Daily Show:

    Although O'Reilly said Stewart had conveniently omitted comments that were critical of the Ferguson police and sympathetic to Brown, he didn't get too bent out of shape about the comedian's "distortions."

    But O'Reilly closed with some advice to Fox viewers that was more than a little rich.

    "So, here is the Factor tip of the day: When you hear something on a partisan-driven program, do not believe it," O'Reilly told his audience. "And that includes the 'net. Don't believe this stuff. Distortions are how some people make a living. Stewart's going for the laugh. He doesn't really care if it's true or not."

  126. PHIL BOO AND KERR  that they were BOTH  c plus students is scary

    ecb fighting deflation embarks on hugely deflationary policy 

  127. Universal Display (OLED) up 10 % today.  Probably due to LG's Display of their 4K OLED TV at the IFA Technology show.

  128. Phil / TQQQ
    I have a number of TQQQ 87.5 / 75 bear puts spreads – same logic apply that you mentioned ?

    ""TQQQ – Going very badly but TQQQ is at $89.12 and we can buy back the $80 puts for .35, so let's do that, which puts us in position so we can take advantage of a drop to cash in the $86 puts (now $1.10).  The net entry was $2.30 and the Delta is .30 so we need a 3-point drop in TQQQ, which is 4% and that's a 1.5% pullback on the Nasdaq.  Is that realistic over 15 days?  Sure it is!  ""

  129. Quote of the day:

    Susan Pinker author of The Village Effect, “In a short evolutionary time we have changed from group-living primates skilled at reading each other’s every gesture and intention, to a solitary species, each one of us preoccupied with our own screen..”  (FT)

  130. here comes TSLA 300!

  131. Phil / TASR.  On the trade I posted earlier, it filled for a credit of -0.18c today.  The max value of the spread is $2.  So while yours is a 10bagger, isn't mine an "infinity" bagger, since we can't divide by 0? :)  

    It's also 100% ITM.   So for each 1 combo you do, you receive $18 in credit, with a max payout of $200.  So if I do 10 of them, all I need is for TASR to hold 17, and I make $2000.  Worst case I own them at $12.88.

    Isn't that better?

  132. A good synopsis of SCTY on Briefing Trader :

    "Money started to roll back into the solar sector the last couple weeks in reaction to CSIQ's earnings. Yesterday we saw a number of other stocks in the sector start to move on volume. Today that move is accelerating. This is a disparate group, that have different focuses and valuations. Some look to be downright value plays. CSIQ trades for less than 10x's forward earnings."
    "Not so SCTY, which has the market convinced to value it on something called Retained Value, an alchemy derived from government subsidy, the moon being in the 7th house and Jupiter aligned with Mars. It's higher on good volume today, threatening to break out of a four week bull flag."

    But he failed to mention the "Musk Mystique".


  133. FU lunar!!!! 



  134. Yodi – Last post from me on LINE, since I don't want to bore people.  But by having the stock I get the div, like you said.  I'm also selling the Jan16 32 straddle, which filled for $7.08 today.  That straddle has a premium value of $5.95.  Therefore I'm getting the monthly div AND the decay of the straddle.  

  135. …meanwhile, astronomers are mapping our place in our galactic supercluster, "Laniakea"

  136. Income Portfolio Review:  Right on track for our 10% goal for the year (conservative, retirement, low-touch strategy) but not on track for building up a stable of dividend payers – we'll have to work on that in Q4. 

    • CHL – what's not to love?  Here's where we have a margin dilemma – we sold the 2016 $37.50 puts, the stock is at $64.50 so we're NOT going to get assigned.  Is it worth keeping them open?  TOS says we're using $2,000 in margin and the last sale was .35 (today) so our max gain is $175 if we keep it open for another year.  It's just not worth it so let's pay the .35 and get out.  As I often say, you know it's a good put sales if you are angry you only collect the money and don't get to buy the stock for the net price!  
    • DIS – Also a mile out of the money but they still have plenty to give us.  Another one I wish had been assigned to us.  
    • FCX – On track.
    • GTAT – On track
    • HOV – Recovering 
    • SBUX – On track.  
    • ARO – On track.  
    • ABB – On track, still playable. 
    • CLF – On track, still playable. 
    • NLY – On track, still playable. 
    • OPTT – Not dead yet.  
    • XCO – On track, still playable.  
    • AAPL – Huge position for us and I hate the fact that we're covering half of it but it would also be silly not to.  The hedge here is the reason this portfolio is flat while the LTP took a hit this week on AAPL's drop.  
    • ABX – On track
    • CCJ – On track 
    • CLF – Let's buy back the 2016 $25 calls for 0.40 and double down on the $15 calls at $2.25 and see what happens next
    • CZR – The bondholders are suing them so the stock is down again.  The 2016 $22.50 calls are $1.25 are ridiculous, so we won't buy those back but we can certainly double down on our $15 calls at $3.  
    • EBAY – On track
    • IRBT – Dec $35 calls ($1.50) can be rolled to the March $30 calls at $4.60 for net $3.10.  Very worth it as the stock is at $32.27, so we're buying $2.27 of intrinsic value and 4 months of time for $3.10
    • LULU – On track.  
    • PFE – On track, still playable.  
    • PNRA – On track, still playable. 
    • RIG – On track, still playable. 
    • TASR – On track.
    • TEX – On track, still playable. 
    • TM – On track, still playable. 
    • TWTR – On track.
    • UBNT – On track
    • WFM – On track. 

    Not bad for a portfolio we barely touch once a month!  Positions like TWTR are so deep in the money that all we have to do is wait PATIENTLY and the net $12 spread turns into net $17 – good for another 41% on the cash ($6,000) that's sitting there now.  The short puts will pay a bonus $2,000 as long as TWTR doesn't fall more than 40%.  This is what we call a well-planted tree – nothing left to do but wait and pick up the fruit when it drops. 

    By the way, it could be argued that the TWTR 2016 $23/40 bull call spread at $12, selling the $30 puts for $2 for net $10 on the $17 spread is actually a really good entry as it stands now.  As noted, you make 70% if TWTR simply stays over $40 (now $50.74) through next Jan.  It only doesn't sound exciting to us because we bought that combo for net 0.15 and, at $17, we'll be up 11,233% on cash.  cheeky

  137. Phil / JPM put Butterfly

    Check your comment:

    It surprised me since you always wait until the last minute!

  138. Phil / TQQQ
    Sorry – this were Jan15

  139. O'Reilly/StJ – His ratings must be off and he wants Jon Stewart to mention him.  He can't possibly be so oblivious that he doesn't realize how ridiculous that statement sounds coming from him.  

    OLED/Albo – Fantastic if you have $17,000 for a TV set.  

    TQQQ/Wombat – Sure, it would be the same logic, if we get a nice dip, it's easier to cash out if we don't have to worry about the short puts.  Of course, way down at $75, you might want to consider leaving them naked rather than buying them back – not all that likely TQQQ will give up 20% (7% Nas drop).  Or half!  

    Primates/StJ – I'm raising two of them. 

    Oops, once again the S&P fails to hold 2,000 for the day.  Bad index!!!  

    Infinity/Burr – Those are the best kind.  They're both good, your trade is the short $13s covering the $15/17 spread (2016) for $0 or a small credit while I went for the short $15s covering the $15/22 bull call spread at net 0.70.  For you to make $1,400, you have to buy 7 sets and risk being assigned 700 shares at net $12.88 ($9,016) for my play to make $1,400, we need 2 sets and we risk being assigned 700 shares at net $15.70 ($3,140).  At $17, I only make 0.70 less than you do so, on the whole, I'd rather have $6,000 on the side because, if TASR drops 40% to $11, I would be THRILLED to double down and commit to owning 400 shares at about $13 while a similar adjustment by you would commit you to 1,400 shares and suck up $12,000 more than my trade.  

    Still it's a matter of preference as they are not too dissimilar so one is not way better than the other.  I am simply trying to teach people how to make good money from very conservative trade allocations – you are not – that's the biggest difference.  

    LOL Albo. 

    JPM/Akad – Ah, that's what happened to it, thanks.  I was worried we'd get a big sell-off and we wouldn't be in a position to sell new puts, that's why I went early.  Still, I hate paying the extra 0.06!  

    TQQQ/Wombat – Still the same thing, we thought Nas was toppy at 4,100 (/NQ) so, if you are inclined to take a chance – that's the spot!  

  140. Option price shenanigans. There should be some kind of code of conduct for option intermediaries. Even with 10 or 20 contract orders placed, almost inevitably the bid/ask prices seem to magically change the moment the order is entered. Another scam seems to be the wider bid/ask prices on 2016 options of certain stocks. I follow AMGN & GS closely, and my word, from one day to the next the 'manipulation' that seems to go on is nothing more than a suckers move. Maybe this market is meant to make us paranoid before it destroys us.

  141. It'll be interesting to see the market's reaction to the jobs number tomorrow.  Lately, good news is good news and bad news is good news.  That could change tomorrow if the market looks at a weak number as bad news and a strong number as bad news cause it could usher in higher interest rates.  Just a thought, and not an original one at that !

  142. Hi Phil.  AAPL:  Holding 70 Jan16 450/600 BCS (64.20/85.71), and 70 Jan16 500/650 BCS (71.43/92.86).  Also long 35 bought at 450.  I've taken some gains off of the table.  I'm bullish for the foreseeable future. Good time to lighten the shorts, or other advice?  Thanks.

  143. SEPTEMBER 4, 2014. Transocean Ltd. ("Transocean") issues the following statement in connection with the U.S. District Court ruling related to the Macondo Well Incident:

    "This is a favorable and welcome ruling for Transocean, its employees, and all offshore drilling contractors, as the court has again ratified the industry-standard allocation of liability between drilling contractors and the owners and operators of oil wells."

  144. Way to suck up to the Judge RIG! ;-)

  145. Phil – TASR

    Hmm, I see what you are saying, but I would argue that my trade is actually a more conservative way to achieve the full potential profit on the spread, while you're spread has less probability of max value.  

    You are right, that you need more of mine (which is more commish) to achieve the same potential profit, but the stock doesn't have to move.  It can actually decline 5% and still achieve full profit.  TASR has to rally 22% from here, a market top, to get to 22.  My spread also allow TASR to decline 28% and still show no loss (paper losses will surly show due to vega increase).

    Anyway, I think a combo approach would be best.  If you like TASR here and believe that they will hold 17, mine is easy $$.  If you believe TASR will continue to rise 22% in the next two years, then you're is a better buy.

    As with life, depends on the goals you wish to achieve.  My goal was to have a intelligent trade that you didn't laugh at.  I think I finally achieved that!

  146. If I knew then what I know now. If I had just started my premium membership of PSW I would do three things:

    1. Buy the TSLA ABW that Phil mentioned today; Jan 16 15/22 BCS financed by the sale of the Jan 16, 15 put.

    2. Think for myself what would be the equivalent IRBT trade and ask Phil for his views. 

    3. For six months do nothing. Read the PSW comments, read about those two companies, follow the daily action of the stock price and the option pricing and how they respond to the market movements and company news. Check out their company websites, annual reports, and investor presentations.

    Think of how confident you would be after six months to apply the same thinking and rational to look at other opportunities in the market. This is a long game. I came to it late in life and still benefited immensely. For those of you with many years ahead of you in your investing career, thing what that could translate into. Financial independence for you and your families. What a gift!

  147. I think that you mean TASR trade, not TSLA Winston.

  148. Sorry, momentary flash of dyslexia. I did indeed mean TASR. (That piece of @@@@ called TASR is always uppermost in my mind these days – too many shorts). Thank you StJ, and I wish you a very happy birthday.

  149. Joan Rivers died, 81

  150. Well, thank you Winston!

  151. Who rode Phil's horse's named Eee-Sss and Ymmm today?  Congrats on a profitable ride!

  152. ROFLMAO – I can't blame that one on dyslexia – it's the whisky talking now!!!!! If I could remember now what I thought I remembered then the recommendation is the company that uses electricity to great effect (TASR), instead of the company that has simply turned electricity into a highly leveraged commodity (TSLA).

    As Christopher Robin said '…………and so to bed.'

  153. Phil – when did you cover the AAPL position in the STP? I didn't see this and was curious what you said to do? Can you put that back out there please?

  154. RICHMOND — A federal jury Thursday found former Virginia governor Robert F. McDonnell and his wife, Maureen, guilty of public corruption — sending a message that they believed the couple sold the office once occupied by Patrick Henry and Thomas Jefferson to a free spending Richmond businessman for golf outings, lavish vacations and $120,000 in sweetheart loans.

    The height of stupidity and greed !

  155. It's funny, I had placed a lot of closing orders into TOS at rather ridiculous prices (favourable for me) and multiple bells started ringing as I was writing the post. Methinks that maybe we will not see 2,000 on the S&P again for quite some time – maybe December 2014.

  156. This guys who just joined T3live, employees the PSW -p, +bull call, but he adds a protective put below the sold put, to make a bull put credit spread + a bull call debit spread to express a long view.  

    He's also using DrJ's trademonster…which isn't all that bad of a platform.   He give a trade for long VIX idea (I'm not sure if he knows VIX options are priced off the future, not the VIX index), and long aapl

  157. I'll have to do the STP and LTP tomorrow.  

    Shenanigans/Winston – The most important thing to do put in limit orders and just leave them.  For stocks that go up and down each day, you fill both sides at good prices more often than not.  Never let "them" dictate what you pay.  

    Jobs/Albo – If they are not satisfied with Draghi's gift today, I don't know what's going to make them happy.  Still, they'll be looking for an excuse to end the week with a rally. 

    Time to cash in those futures shorts if you haven't already – tomorrow is another day.  17,035, 1,992.50, 4,060 and 1,164 with oil $94.50 again - very nice!   Dollar 83.78

    AAPL/Taihu – This is just minor nonsense, up and down 5%.  I'd wait and see what the reaction is to the new products on the 9th.  If we get a silly dip, THEN you might want to buy back short calls and, if AAPL flies up – the you have a lot of money coming to you, so why worry now, when you are only guessing?  

    TASR/Burr – Well now you are saying you are simply not very bullish on the stock.  That's a different discussion.  Also, you miss the point, the spread I laid out is a nice 1x entry and, if TASR drops 28%, we'll be thrilled to DD and then, if we get back to $17, we'll make a ton of money.  As you know, I favor the kind of trades you outlined, just not with a stock I feel is very undervalued and ready to move higher which, if I'm timing it wrong, I'd be more than happy to double and triple down on.  

    Thanks Winston – glad we can help.  

    Joan Rivers/Rustle – That's sad, I liked her.  She was friends with my Uncle Lou (long dead) and her parents belonged to the Yacht Club I used to work at, so I'd see her there sometimes too.  She was super-impressive a couple of years ago when she won The Apprentice.

    LOL Winston – my Grandpa always had his nightly glass of whisky, used to force it on me too!  

    AAPL/Craigs – Cover AAPL?  We didn't.  We don't even have AAPL in the STP.  It's in the Income Portfolio above.  

    Corruption/Albo – Wow, Republicans are just so blatant about things!  

  158. Thank you, Phil….actually, I'd love to own 600 shares of TASR at $8.87. Done and done.

  159. Phil- I meant in the income portfolio, which is where you made the comment. What was the trade?

  160. Scottmi / Universe:   A supercluster of galaxies with the weight of 100 Million Billion Suns.  Very cool map. Kinda puts us out on a limb; not surprising, given the way we behave.  No, no more monkey comments, I promise.  But if I were the Supreme Being of Maitre D's, no way we'd get a center table.

  161. The last time TASR was over 20 was back in the very beginning of  2005.  So let's just say, I'm cautious…..

  162. Phil induction

    I had linked it a month or so ago but I don't keep them. The same thing is done to charge my Sonic Care toothbrush, cell phones placed on or close to pads. The concept works better with high voltage that radiates further. AC transmission lines usually run 55,000 volts and if run under a road surface would emit a magnetic field as a primary coil. The vehicle would have the load coil mounted low, on high trucks might need a suspended device possibly with wheels to get close enough for good transfer but the magnetic field induces voltage in a wire or coil of wires. That how transformers work and how power is generated. Of course a hot rail would be better but also deadly. I think you even posted a dream project that was going to extract power from the sky, could work in a thunder storm, Radio waves same thing. Bonus new power grid all underground! Get the big buck backers behind me!

  163. AAPL/Craigs – So what's the question?   The spread is right there (image above the text) but it's old and not something I'd chase (and we're actually covered deeper than we want to be on the short calls).  

    Universe/ZZ – We are totally in the ass-end of this galaxy.  I'm sure all the cool species live near the core – it probably doesn't even occur to them to look out this way for signs of intelligent life, much in the way that people in NY don't look to the Midwest.  cheeky

    Induction/Shadow – Good point on toothbrush but not sure if you could run a car that way.  Also, I'm not sure I'd be too comfortable with 55,000 volts underfoot.  I think more like cars should have runners like bumper cars do but underneath them to drag along the road and pick up a constant charge – at least on highways, where there's no pedestrians (though you'd get a lot of pre-cooked road kill).  

    2,000 FAILED at the close!!!  So lame…


    Phil down a way is Basic principals and a simple diagram. Put one side under the road and the other in the car. The rest of the power goes to power customers as always in buildings. 

  165. FNSR halted, good earnings!

  166. Phil not only could but has been done I just don't remember where, Europe? Not as dangerous as power lines on poles that fall down. Now I know NJ is so advanced that they know better but where I live the 55,000 volt line is under my neighbors front yard and my power comes from the step down transfer in his yard across the street and to my house. If you need to dig you call and the power company comes out and marks the line with red paint. Better in every way except the east cost disagrees.

  167. FNSR – Looking at a down quarter, same as Ciena projected.  Not company specific, but not good news.

    "I am pleased to report that first quarter revenues were $327.6 million, a new all-time record for Finisar. Quarterly revenues increased by $21.6 million, or 7.1%, over the fourth fiscal quarter of fiscal 2014. Quarterly revenues grew for the eighth consecutive quarter," said Jerry Rawls, Finisar's executive Chairman of the Board.

    "While demand for our transceivers that address wireless applications was very strong in the first quarter, demand for these products is now expected to decrease in the second quarter. We expect the demand to return and revenues to increase sequentially for these products in the third quarter. As a result of this decrease in demand for wireless transceivers, as well as a decrease in demand for telecom products due to soft carrier spending and a decrease in demand from several datacom customers with lumpy order patterns, we expect our overall revenues to decline in the second fiscal quarter," said Eitan Gertel, Finisar's Chief Executive Officer

  168. AAPL/Phil- I misunderstood your comment that you were covering half, thinking you meant changing the position, which I now see just meant that you covered the spread by selling half the number of contracts with the Oct calls. Sorry, I still occasionally am confused by terminology which happens when I am reading this stuff on the run. I understand now! 

  169. Phil – SPX 2,000 failed at the close, but SPY 200 did not!

  170. FNSR / Albo – Time to cover I think. I'll see what they do tomorrow, but not the big move I wanted so far. I'll be happy to roll if needed in 3 months!

  171. Tony Blair gets GQ's Philanthropist of the year award.

    Hmm.. can't think of any good reason for that except must be buddyfriendpal with Sammy Newhouse..  QC > Conde Nast > Advance Publications : 

  172. Best.Tech.R&D.Company:

    Stuart Parkin, an IBM fellow heading up research into the field of magnetoelectronics andspintronics, is the man overseeing the creation of this new storage solution that's poised to kill your hard drive. Which is ironic because IBM invented the HDD back in the mid-1950s. So what exactly is racetrack memory? Imagine a series of tiny magnets, all built one atomic layer at a time by Parkin's team, that can be moved up and down along a (figurative) racetrack "in a highly coherent fashion" with the application of a simple current. That arrangement not only guarantees increased read/write speeds, but it's also cheaper to produce, is incredibly resilient due to the lack of moving parts and boosts storage capacity significantly.

    Already, Parkin's team has been able to demonstrate the advantages of this new storage solution by applying it to existing flash memory chips. His team was able to generate about "250 of these magnetic domain walls in one racetrack" which, when applied to flash, could increase storage capacity by a factor of 100. And, what's more, it won't ever wear out, meaning it'd be infinitely rewritable. That's something flash memory simply cannot do in its current state.

  173. STJ – I should've taken a cue from CIEN this morning.  Looks like it'll be a least 3 mos.  FNSR isn't easy to trade, but has been a consistent winner.  But it does take patience.  Will be willing to sell some puts if it drops much from here.

  174. Indeed Albo – I'll cover my long LEAPS in my IRA but might sell some puts otherwise. But now my worst position in my portfolio. Argh!

  175. Digging through the ISM numbers:

    Not bad! Jobs are on deck for tomorrow morning!

  176. Don't read if you are a climate change denier – this won't matter:

  177. I found this report about Apple negotiating with the major credit card issuers to lower the transaction fees charged when using their mobile payments platform on the new phone. Did anyone else see this and do you believe as I do that this is a huge win for them getting people to adopt this platform?  Here is what I got from Bank Innovation website blog written by Ian Kar

    Apple reportedly has reached deals to lower its card transaction fees with five of the largest financial institutions in the nation as part of the Silicon Valley giant’s to-be-launched payments venture.

    The financial institutions are American Express, JP Morgan Chase, Citigroup, Capital One, and Bank of America.

    We’ve reached out to all parties involved and all declined to comment.

    Rumors about the deals were first made public by Tom Noyes, a financial technology investor and former head of channels at Citi, and confirmed by Bank Innovation sources.

    The first thing Apple has done is convince these four FIs to consider transactions from Apple’s upcoming payments venture — said to launch with its forthcoming iPhone 6 introduction — as “card present” transactions, which carry a lower discount rate than “card not present” transactions, because of lower fraud risk.

    Beyond that, Apple has also managed to bump down the actual “card present” rate by 15 to 25 basis points, according to people with knowledge of the talks. Normal “card present” discount rates, which are shared by issuers and networks but determined by the network, are about 1.5%, which means that Apple appears as though it will get around a 10% discount on the processing rate it will pay. Last quarter, Apple generated $4.5 billion of iTunes revenue — this implies that Apple will save at least $27 million as a result of these deals with the banks. Of course, more revenue volume is expected upon launch of Apple’s payments venture.

    Reports about the Apple payments platform continue to surface. Re/Code and Bloomberg reported that financial networks Visa, MasterCard, and American Express were in talks with Apple, and, on the merchant side, our report regarding discussions with Nordstrom led to a wave of reports on Apple’s retail partnerships.

    But why does Apple need a deal with the banks?

    By partnering with Visa, MasterCard, and American Express, Apple will be able to conduct these transactions and cut banks out of the process all together. So why partner with the issuers?

    According to Noyes, while banks control the card-present/not-present rates,  the networks negotiate the rates with payments processors. The differences can be dramatic. Apple was apparently adamant about getting the card-present rates and told issuers that it would assume some of the fraud risk inherent in every transaction by providing a secure element via biometric authentication (its TouchID feature) and location data provided through an NFC chip. The Apple payments platform will work with all of their cards.

    Banks offered the discounted fee for two reasons: for the Apple payments platform to accept all of the cards from the issuers, and for Apple to assume some of the liability by including two secure elements that will authenticate transactions — location data via the NFC chip, and biometric security. This is essentially a wash for the financial services industry: they lowered fees for Apple for the privilege of being included in Apple’s payments initiative, but managed to put some of the transaction risk to Apple.

    This deal could also lead to issuers making similar security-focused deals to ease the risk, and accompanying compliance costs, with the tech industry. Banks own transaction data. It is  not clear whether or not Apple will have access to this extremely valuable data.

    On Apple’s side, the deal with the issuers was the “polite” way of entering the financial services industry. We’ve heard of only one one other merchant that has received a price break similar to Apple’s (cough, cough Walmart). Who knows whether Apple’s deals will foster additional price reductions on card transactions for retailers.

  178. I recently made a comment along the lines that the U.S., and likely the rest of the Western Hemisphere, may be retreating into a kind of "new isolationism,"  reminiscent of the 1920s after World War I in which the U.S. sought to become less involved in world affairs,refusing to join the League of Nations. This would primarily encompass the political sphere — no more military interventions by the U.S. in the Eastern Hemisphere [e.g., Vietnam, Iraq, or practically anywhere in the Middle East, Asia or Africa], but would be inevitably reflected within the economic sphere and in U.S. global trade balances.  I wrote that, given the doubling of the global population within a generation to @ 7.3 billion people, of whom only 980 million live in the West, there might, could develop a distinct reduction of foreign trade balances.

    The prime facilitator of this new isolationism would not be political but economic|:  America's newfound energy independence.  Just search "US energy independence, trend" and you'll see the many references to that effect.  No one has every argued that the U.S. custom of "projecting power abroad" won it many friends, nor did it confer much in the way of trading benefits [given our negative tradable goods balance].  But it did ensure that foreign oil blackmail was never on the table for very long, which, given America's traditional energy gluttony [I don't need to trot out figures], allowed a reasonable argument to be made for the U.S. having by far the largest military force in the world [leaving aside nukes, a whole different ball of wax].


    The second facilitator appears to be a perception, correct or otherwise, that the best days of the global economy are behind us.   For the last six months global trade growth has been below world growth in industrial output – the longest period that has happened except during the Great Recession itself.  National capitalist economies cannot expect to escape from weak domestic expansion by selling more exports if world markets are growing even slower than world industrial output.  This is a recipe for more intensive competition in those markets and probably attempts to devalue national currencies relative to others to improve exports in shrinking markets.  The Euro may be a case in point, now that Germany’s trade balance appears to have peaked, narrowing further in June.

    Contributing to this trend, from the political side, would be highly visible events like the disintegration of parts of the Middle East accompanied by levels of inhumane behavior that would embarrass Attila [if there were a CNN back then].  This has been accompanied by the [correct] perception that the U.S. is now gradually emerging from this recession, while most of the world appears not to be. 


    In conclusion, it appears that both the political and economic trajectories of East and West will tend to increase this new isolationism, and not without reason.  I don't have anything like Phil's perspective on the business prospects of U.S-based large caps versus foreign or multinational companies,  but it wouldn't surprise me at all to see a continuing divergence between the equity prices of companies serving primarily U.S  versus overseas markets, due to a significant de-coupling of company performance between U.S. versus European and Asian markets.  Globalization slammed into reverse, in other words.

    Here is something along those lines from FT:

  179. Looks like we might see a little dip again! Or a big one! Who knows?

  180. Phil/ levels & 5% rule: phil, I have been reading prior archives and explanation on the 5% rule and interpreting levels which stjeanluc posts every day. I am still trying to thoroughly grasp it and have not yet… may be in one of yoyr upcoming webinars we can talk about how you arrived at the current levels? Thanks, nr

  181. Did anyone see a reason for the swoon in ABX today? 

  182. Heyoon – special for you Ann Arbor folks.. :-)

  183. Joan Rivers – I was amazed by the energy she had when she won Celebrity Apprentice – actually watched it. I have a fond memory of Joan from the fall of 1980 in Vegas. She was opening for Tony Bennett and we had a table at the corner of the stage that had a support post obscuring our view. When she came on stage she noticed us immediately and walked over and asked us if we could see okay. We said no and she had us drag our chairs to the side of the stage for a better view, as everyone waited for her to start her routine – which was great.

  184. Climate/stj – yeah, still some deniers out there.. (G*d bless 'em!)

  185. Origins of our economic woes – it's all Bill's fault!  

     I think if any one person can be named the best facilitator of the global financial mess, it was Bill. Over and over he blew it. Ending the Glass-Steagall Act was perhaps the most egregious of the multiple steps he took to ultimately bring about the global meltdown and royally shaft the tax payers.

    (and this is the paper of our local hippies and retired liberal professors…!)

  186. SPY 5 MINUTEGood morning!  

    We had a nice little run up in the Futures into 3am but all failing now and we're down about 0.2% at the moment.  17,090, 2,000, 4,075 and 1,167.50 were the fails, now back to 17,047, 1,993, 4,063 and 1,162.50.  

    Europe just announced 0% GDP growth.  

    Oil back to $95, gold $1,265 after topping at $1,280 yesterday and bottoming at $1,260 last night – pretty wild swings.  Silver fell from $19.40 to $19.02 and now back to $19.12 – that drop was a $1,900 swing – CRAZY!  Copper flatlining at $3.15, Nat gas $3.81 and gasoline $2.62 should hit $2.65 into the weekend. 

    Yen hit a record low 105.69 to the Dollar overnight and /NKD popped to our shorting spot at 15,800 again at 10pm (Nikkei open) but it was all downhill from there  and now back to 15,650, a 1% drop intraday.  Yen still 105.19 so crazy reaction there.  Draghi wins the Craziest Banker Award with Euro $1.295 at the moment and the Pound got dragged down with it to $1.63.  Dollar looks like 83.79 at the moment after topping at 83.965.  A big jobs number (over 300K) could pop us over 84. 






    More likely we're in the mid 200s on jobs – disappointing if not but low is good because:  MORE FREE MONEY.  Over 275K might worry people Fed is off the table and in the middle is priced in so anything over 230K is not likely to be bullish unless it's like 350K (super-doubtful) and then there's a new recovery story that kicks in. 


    Notice how quickly we work off an overbought condition on a tiny dip – that's a bullish sign and indicates any correction we have is likely to be shallow but it still looks like we could be good for a 5% dip before we're seriously oversold.  

  187. Induction/Shadow – Turns out GM tried and gave up on induction charging for one of their EV's.  If it doesn't work standing still, I would be very concerned about how it performs at 60 mph.  

    FNSR – Good earnings, bad guidance.  Interesting. 

    Blair/Scott – Don't forget the purpose of those awards is to sell magazines and Blair is a nice high-profile guy with lots of cool friends they can photograph and interview at a reception.

    IBM/StJ – That's why they are one of our perma-buys.  

    LOL StJ, this picture from the north pole says it all:

    AAPL/Craigs – AAPL is playing "nice" rather than starting their own CC company.  That's smart because, as the Joker says "nobody wants a war."  Actually, that's probably how the meeting went between AAPL and the CC companies.  Also, AAPL is offering a system that can greatly reduce fraud if they are combining fingerprints and pin access with an encrypted signal from the phone to verify transactions.  As to WMT, AAPL's customers are HNW by comparison (as evidenced by spending breakdowns between iOS clients and Android), so very desirable for CC companies to work with anyway.  

    Velocity/Pstas – That's where inflation will ultimately come from.  We keep making the pile of money bigger and bigger and bigger and, one day, it will begin to move and the momentum will make it very hard to stop.  

    Reverse Globalization/ZZ – Yes but no.  Don't forget China is essentially our "factory floor" now – that would take decades to unwind.  That forces us to be Global, whether we like it or not.  Also, we do export 15% of our GDP – nothing to sneeze at.  

    What's more important is that we collect almost 60% of the S&P profits from overseas as we're generally a service economy so it's not really about exporting goods, it's about selling services around the World and that means there are PLENTY of Corporate Citizens who would fight tooth and nail to make sure we don't pull back like that. 

    Big Chart – Not really big enough to capture this slow-rolling, potential double-top that's forming:



    RUT looks way worse:


    Nas could care less what the other charts are saying:


    That means S&P will break the tie:


  188. 5% Rule/Nram – Try this post (and comments) and this post (and comments) and, from our strategy section, the comments under this post as well as the section in our Wiki which is titled "5% Rule".  

    It would be really great if more people used and updated the Wiki.  Are there any Wiki people out there (it's all a mystery to me).  

    ABX/Deano – Sure, gold weak, ABX weak – gold strong, ABX strong.

    Glass-Steagall/Scott – Here's a nice article by Barry on how it all unraveled.  It's very easy to look back and blame Clinton because his signature was on a bill but the pressure at the time to repeal was enormous.

    Here is Bill Moyers:

    After 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic.

    It is quite a tortured history. Corporations can exist forever, and their lobbyists and paid advocates can slowly whittle away laws they don’t like. It is nothing short of amazing to see how effective they can be when confronted with laws they don’t like.