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Monday Market Movement – Waiting on the Fed

9-12-2014 4-25-40 PM bullsMore bad news today.  

China's Industrial Output is at its lowest level since the 2008 crash and Hong Kong stocks dropped 1%, the 7th consecutive down day over there and the Royal Economists at the Bank of Scotland slashed their forecast for China as worries rise that the world's second-largest economy is headed for another slowdown.  Too bad for them, they are just catching up to what we told you a month ago, on 8/18, when I said in the morning post:

Chinese Banks' Loan-Loss Reserves have fallen to the the lowest levels in 3 years — We shorted India last week (EPI) and now FXI has got my mouth watering as a potentially good short.  I'd feel better about taking up a short on FXI at $45, not $42 but the Jan $42/38 bear put spread is just $1.80 on the $4 spread and that makes it very interesting as it pays 122% on a less than 10% decline in the Chinese markets – a nice way to hedge your bullish China bets!  

As we expected, there was a little more gas in the tank but now we're right back on track as the magical China story begins to show its age.  The benchmark index for the Asian region, the MSCI All Countries Asia Ex-Japan in U.S. dollar terms, is down 2.2% since reaching the year's high earlier this month.  Saturday's weak economic data—including news that August electricity output fell 2.2%—suggest that earlier government stimulus measures lack staying power.

FXE WEEKLY"The economy is losing steam very quickly in August," said Macquarie Group economist Larry Hu. "Previously when they stimulated the economy, private companies followed, leading to a restocking cycle. But this time, the private sector is so cautious."  "The IP number is a surprise because Premier Li talked in Tianjin about a quite stable situation," said Mizuho economist Shen Jianguang. "I think, very soon, they're reaching a moment of truth. If they don't ease, the economic deceleration will come much faster."

As you know, we got a lot more bearish last week and those DXD hedges I mentioned in Thursday's post (and Friday again, actually) popped 25% as the market threw its little temper tantrum on Friday.  We're not expecting a huge correction but certainly 5-10% wouldn't be out of line and Friday was interesting as the volume (117M on SPY – see Dave Fry's chart) was the most we had since Aug 15th – also a Friday (and options expiration day).  

SPY DAILYWe have options expiration this Friday for the August contracts but, between now and then we'll get our own Industrial Production Report along with Empire State Manufacturing (which should be very good) this morning and tomorrow we have our PPI, UKs PPI and CPI and Germany's Economic Sentiment (not good, we're betting) and Koroda will weigh in early in the morning.  

Wednesday is Fed day along with Euro-Zone CPI, our CPI and some Housing data but all eyes will be on Janet, who will "tell us about" it at 2:30 pm.  Thursday we'll get the Philly Fed, Housing Starts and a look at the Fed's Balance Sheet and Friday we get Japan's Industrial Data along with our own Leading Indicators.  

We're still in "bad news is good news" mode, as evidenced by today's pop in the Futures on the terrible China news as well as the OECD cutting growth forecasts by about 20%, with the US outlook dropping from 2.6% to 2.1% and the EuroZone shaved from 1.2% down to 0.8% growth with Italy now forecast to end 2014 DOWN 0.4% for the year – that's revised down from 0.5% growth in May!  

"The global recovery from the crisis has been inadequate in several ways," the OECD said. "Economic slack has persisted, potential growth has slowed, and inequality has risen. Meanwhile, external imbalances and threats to financial stability have remained."

"Recent ECB action is welcome but further measures, including quantitative easing, are warranted," said Rintaro Tamaki, the OECD's acting chief economist.  And that's the key, isn't it?  The economy doesn't have to do well for our Corporate Masters to do well.  

In fact, in this new economy, where they are given FREE MONEY the worse the economy looks – bad news is indeed good news for the markets.  But, at some point, won't the party end?  

Ending the party is usually the Fed's job – but no action is expected this week but the next meeting (October) is when some sort of a rate increase is potentially expected.  This week, we'll be looking for clues from the statement on Wednesday as well as from Yellen's press conference after that.  

Meanwhile, let's be careful out there!  

 


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  1. From Bloomberg, Sep 14, 2014, 7:00:00 PM

    Beneath the U.S. stock market’s
    record-setting gains, trouble is stirring.

    To read the entire article, go to http://bloom.bg/ZlJBtK

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  2. From Bloomberg, Sep 14, 2014, 12:01:00 PM


    Sept. 10 (Bloomberg) — International Monetary Fund Deputy Managing Director Zhu Min talks about China’s economy.
    He speaks on the sidelines of the World Economic Forum’s “New Champions” meeting in Tianjin, China, with Stephen Engle on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    Chinese Premier Li Keqiang’s
    options have narrowed: stimulate or miss his 2014 growth target.

    To read the entire article, go to http://bloom.bg/Xin53B

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  3. From Bloomberg, Sep 14, 2014, 6:49:28 PM

    Australia’s dollar fell for a sixth
    day and New Zealand’s currency was near a seven-month low, while
    copper futures slid after factory and retail-sales data added to
    signs China’s economic slowdown is worsening. Crude oil declined
    with U.S. index futures.

    To read the entire article, go to http://bloom.bg/ZlJ0Iz

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  4. From Bloomberg, Sep 13, 2014, 12:00:23 AM


    In Guatemala, the leaf-rust fungus used to thrive only up to 3,000 feet above sea level, said Nils Leporowski, president of the National Coffee Association, or Anacafe. Now it can be found as high as 6,000 feet, he said. Photographer: Victor J. Blue/Bloomberg

    Teodomiro Melendres Ojeda, an
    organic coffee grower in Cajamarca, Peru, stands at a
    crossroads. Neither path is attractive.

    To read the entire article, go to http://bloom.bg/1soxIxO

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  5. From Bloomberg, Sep 12, 2014, 5:18:36 PM

    Treasuries declined for a seventh
    day, the longest slump in more than a year, on speculation the
    Federal Reserve may delete reference to interest rates staying
    low for a “considerable time” after it ends bond buying.

    To read the entire article, go to http://bloom.bg/1pUQd7x

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  6. From Bloomberg, Sep 14, 2014, 7:05:00 PM


    A cyclist rides past a sign for Alibaba in Hangzhou city, east Chinas Zhejiang province on June 25. Photographer: Imaginechina via AP Photo

    Zhou Nushi, a retired factory worker in Shanghai, would like to buy shares of Alibaba Group Holding Inc. as the Chinese e-commerce company prepares to go public in what may be the biggest initial share sale ever.

    To read the entire article, go to http://bloom.bg/1qV9utA

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  7. From Bloomberg, Sep 15, 2014, 1:00:03 AM

    Sept. 7 (Bloomberg) — Pier Padoan, Italy's finance minister, talks about his outlook for the European Central Bank's asset quality review and the state of Italy's banking industry. Padoan speaks with Bloomberg' Flavia Rotondi at the Ambrosetti Forum in Cernobbio, Italy. (Source: Bloomberg)

    European banks already under pressure to strengthen capital ratios may have to hold off on distributing profit to shareholders because of new accounting rules on how loan losses are calculated.

    To read the entire article, go to http://bloom.bg/1BF7oCL

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  8. From Bloomberg, Sep 15, 2014, 8:59:54 AM

    U.S. stock-index futures were
    little changed, after equities posted a weekly decline, as
    investors assessed regional manufacturing data to help gauge the
    timing of any Federal Reserve rate increase.

    To read the entire article, go to http://bloom.bg/1BFz6PR

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  9. Major Earnings for the Upcoming Week:

    Monday:

    A.M COCO

    P.M. – ALOG

     

    Tuesday:

    A.M. – FDS

    P.M.– ADBE, APOG

     

    Wednesday:

    A.M. – CBRL, FDX, GIS, LEN

    P.M. – PIR, UNFI

     

    Thursday:

    A.M. – CAG, IHS, RAD, SCHL

    P.M. – ORCL, RHT, TIBX

     

    Friday:

    A.M. – N/A

     

    Economic Releases (9/15 – 9/19):

    Monday:

    7:30 am CT– Empire State Mfg. Survey

    8:15 am CT –Industrial Production

                                                                                                                                                                                    

    Tuesday:

    6:45 am CT – GS Store Sales

    7:30 am CT – Producer Price Index (PPI)

    8:00 am CT – Treasury International Capital

                                                                                                                                                                                                                  

    Wednesday:

    6:00 am CT – MBA Purchase Applications

    7:30 am CT – Consumer Price Index (CPI)

    9:00 am CT – Housing Market Index

    9:30 am CT – Oil Inventories

    1:00 pm CT – FOMC Meeting Announcement & Forecast

    1:30 pm CT – Fed Chair Yellen’s Press Conference

     

    Thursday:

    7:30 am CT– Weekly Jobless Claims

    7:30 am CT – Housing Starts

    9:00 am CT – Philly Fed Survey

    9:30 am CT – Natural Gas Inventories

                                                                                                                                                                                                            

    Friday:

    9:00 am CT – Leading Economic Indicators


  10. AAPL & YHOO set to open strongly.


  11. From Bloomberg, Sep 14, 2014, 7:10:23 PM

    Heineken NV said it concluded SABMiller Plc’s proposal “is non-actionable” and plans no further public statements. Photographer: Chris Ratcliffe/Bloomberg

    SABMiller Plc (SAB) was rebuffed in an attempt to buy smaller brewer Heineken NV (HEIA), a deal that would have strengthened itself against a potential bid by Anheuser-Busch InBev NV (ABI), people with knowledge of the matter said.

    To read the entire article, go to http://bloom.bg/X1Q3V8

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  12. From Bloomberg, Sep 15, 2014, 7:57:28 AM

    Sept. 15 (Bloomberg) — As Scottish residents ready themselves for this week’s referendum on independence, Bloomberg’s Willem Marx reports on the potential impact on some of the country’s industries.

    Scotland’s nationalists have a 45 percent chance of winning the independence referendum this week and there’s a risk of a capital flight from the country if that happens, according to a Bloomberg survey of economists.

    To read the entire article, go to http://bloom.bg/1Da8zMl

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  13. From Bloomberg, Sep 15, 2014, 8:55:44 AM

    Sept. 15 (Bloomberg) — Apple reports more than 4 million pre-orders for the iPhone 6 and iPhone 6 Plus in the first 24 hours of availability this weekend. Bloomberg’s John Butler looks at what that portends for Apple’s sales in the current and coming quarter. He speaks on “In The Loop.”

    Apple Inc.’s iPhone 6 and iPhone 6 Plus topped 4 million in pre-orders in the first 24 hours, as early demand for the smartphones outstrips supply.

    To read the entire article, go to http://bloom.bg/1BFVMj3

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  14. From Bloomberg, Sep 15, 2014, 7:42:43 AM


    Sept. 15 (Bloomberg) — As Alibaba completes its roadshow, there’s talk of the company boosting the price of its IPO, which could make it the largest offering in history. Bloomberg’s Leslie Picker reports on “Bloomberg Surveillance.”

    Alibaba Group Holding Ltd. plans to boost the price of its initial public offering amid strong investor demand, people with knowledge of the matter said, potentially making it the biggest in history.

    To read the entire article, go to http://bloom.bg/1BFg0t5

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  15. From Bloomberg, Sep 15, 2014, 12:00:00 AM


    New Jersey Governor Chris Christie said a proposal to let New Jersey participate in the program didn’t require recipients to show they needed heating assistance, a violation of new federal guidelines. Photographer: Andrew Burton/Getty Images

    Three states are ending a program
    that qualified residents for extra food paid for by the federal
    government — including two, New Jersey and Wisconsin, that are
    led by potential Republican presidential candidates.

    To read the entire article, go to http://bloom.bg/1uz0EE7

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  16. From Bloomberg, Sep 14, 2014, 12:00:00 PM


    The fuel-station business is a “huge gold mine” whose full potential “hasn’t been tapped,” Sinopec Chairman Fu Chengyu said on a March conference call with analysts. Photographer: Jerome Favre/Bloomberg

    China Petroleum & Chemical Corp. (386),
    Asia’s top refiner, agreed to sell a 107 billion yuan ($17.5
    billion) stake in its retail business to a group of investors
    including China Life Insurance Co.

    To read the entire article, go to http://bloom.bg/1uwGn20

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  17. Good Morning!


  18. From Bloomberg, Sep 15, 2014, 12:00:01 AM


    Officials including Boston Fed President Eric Rosengren have said it’s time to consider dropping a pledge to keep rates low for a “considerable time” after the completion of the central bank’s bond-purchase program, which is set to end after the October meeting. Photographer: Brendan Hoffman/Bloomberg

    Options bets on higher interest
    rates are surging as traders speculate that the pace of the
    Federal Reserve’s tightening will be quicker than most other
    investors anticipate.

    To read the entire article, go to http://bloom.bg/1Da6aRM

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  19. From Bloomberg, Sep 15, 2014, 6:03:18 AM

    Ensuring calm is job No. 1.

    Tomorrow was supposed to be the kickoff of a straightforward, two-day policy meeting for the “steady as she goes” Federal Reserve. Instead, recent data releases have turned the gathering into a cliffhanger for markets and a challenge for a central bank that has struggled before to effectively and ably communicate tricky policy transitions.

    To read the entire article, go to http://bv.ms/1s37oLS

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  20. From Bloomberg, Sep 14, 2014, 6:00:01 PM


    German Chancellor Angela Merkel has ruled out alliances with the AfD, which failed to win seats in national elections on its first try last September. Photographer: Krisztian Bocsi/Bloomberg

    Germany’s anti-euro party swept
    into two eastern state parliaments, expanding its challenge to
    Chancellor Angela Merkel in a region mostly dominated by her
    Christian Democrats since the Berlin Wall fell 25 years ago.

    To read the entire article, go to http://bloom.bg/1qUBe1p

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  21. From Bloomberg, Sep 14, 2014, 11:05:39 PM

    Sept. 15 (Bloomberg) –- Bill Clinton talks to Bloomberg Politics Managing Editor Mark Halperin on Sunday in Indianola, Iowa about his take on key Senate contests in Georgia, Arkansas, and Kentucky. Clinton demonstrates his fabled mastery of the minutiae to advise on the way to win tough races, especially in his native South. Clinton also discusses the Arkansas House race of his former FEMA director and close friend James Lee Witt. (Source: Bloomberg)

    Bill Clinton remains a political strategist at heart.

    To read the entire article, go to http://bloom.bg/1s6WcYP

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  22. General Aviation Industry Developing Diesel-Engine Craft.

    The Wichita (KS) Eagle (9/14) reports that various general aviation manufacturers are looking into the possibilities of diesel engines as “the next big thing for general aviation airplanes,” partly recognizing “a need for alternative fuel sources.” Cessna, for example, is planning on making its first deliveries this year of the Turbo 182 Skylane JT-A, although “the first step is to get the 182 certified so the pathway is understood with the Federal Aviation Administration and with those in the field.” Cessna senior vice president of piston aircraft Joe Hepburn stated, “We want to take out time and make sure we get this done correctly with our local FAA.


  23. Honda, Chevy Entering CNG Market.

    The Los Angeles Times (9/12) reported that Honda and Chevy are attempting to sell CNG cars in the US. This year Honda unveiled “an updated version of its natural gas-fueled Civic this year,” while Chevy will unveil “its dual-fuel Impala in a few months,” which will run on CNG and gasoline.


  24. Remember this exchange?  This is why most charts on stocks are bs.  They don't take into effect manipulation or news.

    lunar
    September 4th, 2014 at 10:24 am |

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

    rustle123
    September 4th, 2014 at 10:28 am |

    @lunar

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

    diamond
    September 4th, 2014 at 10:34 am |

    Note: rustle123 is betting the farm!

    rustle123
    September 4th, 2014 at 10:37 am |

    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.

    rustle123
    September 4th, 2014 at 10:37 am |

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


  25. Why we should all take a little bit of Lithium…..interesting and thought provoking!


  26. Oil Lines

    R3 – 94.93
    R2 – 94.30
    R1 – 93.22
    PP – 92.60
    S1 – 91.51
    S2 – 90.88
    S3 – 89.80


  27. There was another article about GTAT over the weekend for a different problem:

    http://apple.slashdot.org/story/14/09/14/1440232/sapphire-glass-didnt-pass-iphone-drop-test-according-to-reports

    Sapphire screens were part of the iPhone 6 design until the glass repeatedly cracked during standard drop tests conducted by Apple suppliers. So Apple abandoned its sapphire plans before the iPhone 6 product launch September 9. VentureBeat has learned that recent supplier channel checks by an IDC analyst yielded several reports of the sapphire failures and Apple's decision against using the glass material. 


  28. Betcha didn't know,

    Lithium drinks were in huge demand for their reputed health-giving properties, so much so that the element was added to commercial drinks. 7-Up was originally called Bib-Label Lithiated Lemon-Lime Soda and contained lithium citrate right up until 1950. In fact, it’s been suggested that the 7 in 7-Up refers to the atomic mass of the lithium. (Maybe the “Up” referred to mood?) Even beer made with lithia water was available.


  29. Good morning! 

    Nice shorting lines at 16,900, 1,975, 4,060 and 1,150.  /NKD will be a good one too below 15,850.  Tight, tight stops above!  


  30. From Bloomberg, Sep 13, 2014, 12:00:02 AM


    The oil production platform at the Sakhalin-I field in Russia, partly owned by ONGC Videsh Ltd., Rosneft Oil Co., Exxon Mobil Corp. and Japan’s Sakhalin Oil and Gas Development Co. on June 9, 2009. Source: ONGC Videsh Ltd. via Bloomberg

    Rex Tillerson, the Texas-bred Eagle Scout atop the world’s largest energy company, and Vladimir Putin confidante Igor Sechin, his counterpart at Russia’s state oil company, forged a partnership to tap billions of barrels of crude together in Russia.

    To read the entire article, go to http://bloom.bg/1AHBfYW

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  31. From Bloomberg, Sep 13, 2014, 5:06:00 AM


    European Investment Bank Chief Werner Hoyer said in an October 2012 interview in Washington the EIB is “highly sensitive” about maintaining its top credit rating, which is higher than that of many of its shareholders, the 28 EU countries. Photographer: Andrew Harrer/Bloomberg

    European Investment Bank chief
    Werner Hoyer suggested European Union policymakers are placing
    exaggerated hopes in the lender’s ability to boost growth in
    Europe and called for budgetary commitments if the EIB is to
    assume bigger risks in financing cash-strapped companies.

    To read the entire article, go to http://bloom.bg/1rY6omh

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  32. Big number and tough to verify:

    http://qz.com/265580/the-us-shale-oil-boom-is-saving-the-world-almost-5-billion-a-day/

    Oil prices continue to plunge today despite the beheading of another western hostage by the Islamic State, tensions between Russia and the West, and mayhem in Libya. As Quartz has reported, one of the main reasons is surging US oil production, which has made up for supply disruption almost barrel for barrel—and is also a bad sign for the leaders of petrostates.

    Now we have an estimate of where oil prices might have been absent the American oil boom—a sobering $150 a barrel, former BP CEO Tony Hayward told the Financial Times (paywall).

    That’s 55% higher than the current benchmark price of $96.27 that was trading in Asia this morning. If Hayward’s number is right, it means that the US boom is saving the global economy about $4.9 billion a day in oil spending. Global consumers currently demand about 92 million barrels of oil a day, and without the extra US supply the market would be about 3 million barrels short, sufficient to send traders into a frenzy bidding up the price.


  33. From Bloomberg, Sep 14, 2014, 7:01:01 PM

    Mario Draghi’s 3 trillion-euro
    ($3.9 trillion) ambition could be a stretch to achieve.

    To read the entire article, go to http://bloom.bg/1qV9edT

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  34. From Bloomberg, Sep 13, 2014, 12:01:00 AM

    At least 14 expensive biotechnology
    medicines
    that have never before faced generic rivals in the
    U.S. are being targeted by drugmakers who want to sell
    imitations at cheaper prices, according to regulators.

    To read the entire article, go to http://bloom.bg/1AGyerI

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  35. Diesel/QC – Not sure how diesel is an "alternative fuel" – it's still made from the same stuff.  I would worry about diesel in planes because it's thicker than gasoline but I guess they have trucks in the arctic, so I expect they've worked out those issues.  I would have thought you need a heavier engine for diesel and that would be a non-starter for a plane.  One more issue would be that diesel engines emit more particulates than gasoline, so planes would be spraying soot below them and that would really suck for people on flight paths. 

    TSLA/Rustle – Nice little sell-off this morning – 4%! (a lot of Momos heading down):

    Submitted on 2014/09/04 at 10:35 am

    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. 

    Of course we already have a $20,000 short on TSLA in the STP (the short Jan $275 calls naked).  

    Very interesting Pharm. 

    GTAT/StJ – Not sure if I believe that.  Could be a rumor to drive them down.  Working though, down 5% today at $12.15.  

    I find it hard to believe that this is the first time the glass was tested.  It's not like the invented Sapphire last week, it's been in production for years on watches and they were capable of showing AAPL all sorts of sizes BEFORE AAPL invested in them.  Not going to change my stance on them unless there is definitive evidence that there's a problem.

    $5Bn/StJ – That's a stretch to say oil would be $150 otherwise but, using that premise, the rest is right. 

    Speaking of oil – attempted $92 and failed.  

    Ozone/Albo – Not so good because it will make the Climate Deniers believe the Earth is self-healing and there's no need to take action.  


  36. By the way, those TSLA Oct $250 puts just popped $5, you have to take at least 1/2 off the table when you get a gift like that on a directional play!  


  37. 2017 options are out on MAT and ABX, and yes the spreads are wide


  38. All right, getting bounces finally.  Nas (/NQ) and Rut (/TF) failed their Sunday lows but Dow (/YM) and S&P (/ES) both held their lines, so far.  Those Sunday lows were also pretty much the Friday lows so, for simplicity's sake, I'm going to do the weekly 5% rules (going back 1-3 weeks to find upside consolodated top) to figure the bounce levels.  These are for the indexes and I'll add Futures too (hopefully not too messy):

    Dow 17,100 to 16,950 is 150 points so 30-point bounces to 16,980 (weak) and 17,010 (strong).  On /YM, we'll use the 16,840 bottom and assume the same 30-point bounces to 16,870 and 16,900 (strong) and we're already back to 16,900.  

    INDU DAILY

    S&P 2,005 to 1,980 is 25 points so 5-point bounces to 1,985 and 1,990.  /ES hit 1,970 so 1,975 (where it is now) and 1,980 would be strong. 

    SPX WEEKLY

    Nasdaq 4,600 was the non-spike top and 4,550 was the bottom until this morning (4,530).  I'm going to consider this morning a spike for now and throw it out (though we're still at 4,531) and I won't consider it a weak bounce until 4,560 and strong 4,570.  Intraday, using the 4,530 line, we'd look for 12 points weak to 4,542 and then 4,554 bit. of it does take it back intra-day, then we'd throw out the spike anyway – get it?   As to the /NQ, at 4,025 we can apply the same 12-points but, since 10s are significant, let's watch 4,035 and 4,045 but not be actually impressed until 4,050 is taken back.  

    NDX WEEKLY

    NYSE 11,100 was the top but we know 11,000 is our Must Hold line so that's way more significant.  Still, it was a 200-point drop and that's 40-point bounces but, 50-point lines matter so 10,950 and 11,000 will be what we're going to watch this week.

    Russell 1,200 of course, was the top and we just tapped 1,150 and that works out to 50 points so 10-point bounces to 1,160 and 1,170 very simple or, it would be, if /TF wasn't at 1,144 now.  Still, let's call 1,140 the bottom on the Futures and look for 1,150 and 1,160 there.  

    RUT WEEKLY

    If we fail these weak bounces today, it does not bode well for the week – though the Fed might save us on Wednesday – they're watching these levels too….


  39. Question regarding TZA hedges:

    I didn't get in yet to the recommended 14/18 Jan '15 BCS on TZA
    When recommended the spread was about 1.00, but now about 1.50

    However, the April '16 spread for the same strikes is only about 1.00

    Would you recommend going for the further out expiration? 
    THX


  40. Actually an error on TZA spread there, it's April '15 and it's still about 1.50. Guess question should be should I adjust entry point on a hedge spread here now that spread has spread. 


  41. TZA/Sn0- If you go out that far you will get very little effect unless the RUT goes down and stays down into next year.  The net delta on the Jan $14/18 spread is 0.28 and Oct is 0.50 but the real key is when that premium expires so you can collect good value.  Of course, if you are spending 50% less than that .28 is 28% of $1 vs 0.50/$1.50 = 33% so, looking at it that way, not too bad.  As long as you understand what to expect and feel comfortable waiting for your gains – nothing wrong with April – but, keep in mind, they won't do much for you unless there's a sustained drop.

    Oops, if it's $1.50 for April – I'd stick with Oct for now and you can always roll the $14s (now $1.40) to something longer later on if they drop to $1.  


  42. GTAT / cracking

    Well… Let’s remember that hardness prevents scratches, but not cracking. Both sapphire and diamond are very hard, but also brittle. Even if you could make a phone with a diamond screen, it would probably shatter on a regular desk-height fall. I think they will have to “dope” the sapphire in order to make it more resilient, but that takes years and millions $… Maybe those years and millions have already been expended and they are close to a final product, but I can’t tell. Falling knife or great opportunity? I do not know.


  43. If the SEC is not going to act against Elon Musk, how is there not a class action lawsuit about bs statements on deals with Toyota and autonomous cars that are used to pump the stock up?


  44. Oil / Phil – Even if it's not $150, it quite certain that another 3M barrels a day on the market gas a negative impact on price. Even $5 is $500M saved every day. No chump change there… And also taking money away from some unsavory characters!


  45. Opinions on Bull Put Spread AAPL Nov '14 95/90 about a dollar credit each? 

    I put on a Oct BPS 93.57/92.14 that is slightly profitable right now. 

    Iphone 6 order are doing really well. 


  46. Who let the air out of TSLA's tires?


  47. @yodi

    Morgan Stanley came out today and said they still hold the 320 PT but they think the stock got ahead of itself.


  48. AAPL holding up the nasdaq!


  49. Now some caution from Morgan Stanley on Tesla Motors • 8:12 AM

    Clark Schultz, SA News Editor

    Morgan Stanley analyst Adam Jonas keeps his Overweight rating on Tesla Motors (NASDAQ:TSLA) in place, but backs off his $320 price target.

    Jonas, who's been a bit of a Tesla acolyte, says shares of the EV automaker are running ahead of themselves for the wrong reasons.

    It's a take that's not too far off of what CEO Elon Musk said earlier this month about Tesla's share price.

    TSLA -2.4% premarket to $272.50.


  50. AAPL must sound like it is working on broken glass but do they really care enough to make two simple changes or is it style matters more? I think the latter.


  51. GTAT/Akad – I find it very hard to believe that AAPL would make a $500M pre-order on a product they haven't fully tested.   LQMT, for example, has a similar deal and AAPL has been sending out little do-hickeys that are made of liquid metal with their IPhones for a couple of years now and have filed several patents on liquid-metal production techniques.  These guys don't mess around so the idea that they only found out, right at launch time, that Sapphire didn't work the way they thought – is very unlikely.  

    Much more likely is AAPL knew for a long time that it wouldn't be ready but, as with everything they do, they don't tell people what they are doing.  That allows manipulators to spread rumors about what AAPL is doing (because they won't shoot it down) and drive people out of GTAT to depress the price ahead of some actual announcement of it being used down the road that will rocket the stock.  

    Meanwhile, as noted last week, Sapphire for tech is NOT a big part of GTAT's revenues and they are growing well without it.  With it is just a huge bonus.  Meanwhile, the funds that were short all headed for the exits while the retailers were scared into dumping out – business as usual:  

    Short Sellers Retreat From Advanced Energy Industries, Inc., First Solar, Inc. & GT Advanced Technologies Inc

    Musk/Rustle – I know!  Is anything illegal anymore?  Why doesn't he just say "I think, in the next 3 years, AAPL will buy 5M TSLA's and customize them as iCars"?  What the Hell – at least AAPL won't deny it a week later like TM did…

    Impact/StJ – I don't disagree with that at all, I just think the amount of the impact is a stretch because people still can't afford $100 oil – no matter how scarce you pretend it is.  Of course, with facking, in 10 years we'll be paying $1 a gallon for drinking water instead…

    TSLA/Yodi – I think it was just a dose of reality, finally.  

    Back at 16,900 on /YM for another potential short opportunity.  /NKD right at 15,850.  Nas and RUT still near the day's lows so watch those lines.  


  52. Interesting thought from Briefing Trader that the MoMos are selling off as managers make room for Alibaba.  The same thing happened just before the FB offering.


  53. Water / Phil – That was the plan the entire time wasn't?


  54. Good morning Phil, re: YHOO, I'm in a few of those spreads hoping to piggyback on Alibaba IPO, I was wondering, are you thinking to cash those either directly pre- or post-IPO?  Or do you think they'll hold value all the way to expiration?

    Thanks


    • Dow +0.03% to 16,993.00. S&P -0.02% to 1,985.20. Nasdaq -0.01% to 4,567.21.
    • Treasurys: 30-year +0.3%. 10-yr +0.17%. 5-yr +0.08%.
    • Commodities: Crude -0.42% to $90.99. Gold +0.33% to $1,235.60.
    • Currencies: Euro -0.42% vs. dollar. Yen +1.93%. Pound +0.3%.
    • Dow +0.1%.
    • 10-yr +0.15%.
    • Euro -0.2% vs. dollar.
    • Crude +0.16% to $91.52.
    • Gold +0.19% to $1,233.80.

    Industrial Production declines in August

    • August Industrial Production: -0.1% vs. 0.3% consensus, +0.2% (revised) prior.
    • Capacity utilization 78.8%, 79.3% consensus; 79.1% (revised) prior.
    • Sep Empire State Survey27.5 vs. 15.9 expected, 14.69 prior.
    • New Orders: 16.9 vs. 14.1 prior.
    • Shipments: 27.1 vs. 24.6 prior.

    Tensions escalate between U.S., China over antitrust probes

    • U.S. Treasury Secretary Jacob Lew has warned Chinese Vice Premier Wang Yang regarding the recent wave of Chinese antimonopoly investigations against foreign companies, saying it could result in serious implications for relations between the two countries.
    • At least 30 foreign firms, including Microsoft, Qualcomm and many automakers have come under investigation as China seeks to enforce a 2008 antitrust law.
    • China's regulators say they are not targeting multinational firms specifically and the enforcement work is fair and transparent.

    Trading activity growth ends – for now – at E*Trade

    AmEX higher after making the Barron's cover

    • Sounding like he attended the AmEx presentation at the Barclays Financial Services Conference last week, Barron's Avi Salzman says the company's focus on being more inclusive should be a big boost to profits and the stock price.
    • The latest effort is the EveryDay card with its ad campaign featuring "regular-girl" Tina Fey using her AmEx (NYSE:AXP) card to buy stuff like acne cream and dryer sheets. There's also Bluebird, the prepaid debit card launched with Wal-Mart, and Serve, another prepaid card which can be reloaded at places like Family Dollar and 7-Eleven. RIght now, Bluebird and Serve represent a tiny fraction of AmEx revenues, but the opportunity – according to AmEx and the analyst community – is huge, with about half the customers under the age of 35 and 90% new or former AmEx cardholders.
    • Shares +0.9% premarket

    Chevron shuts gas pipeline after fatal accident, raises nat gas futures

    • Chevron (NYSE:CVX) has shut down a natural gas pipeline that feeds Gulf of Mexico production to the Henry Hub storage and delivery point in Louisiana after a deadly accident.
    • A contractor died and two other workers suffered minor injuries while performing routine maintenance on the pipeline on Saturday.
    • CVX did not say how long the pipeline would be shut-in.
    • Natural gas futures are up ~2% on the news: UNGDGAZUGAZBOILGAZKOLD,UNLNAGSDCNG.
    • Investors are underwhelmed by Sinopec's (SNP -5.5%) plan to sell a $17.5B stake in its sprawling network of gas stations to 25 local investors, after expectations for the sale were for $20B-$30B.
    • The stake sale didn't turn out to be as valuable because it isn't real reform, writes Heard on the Street's Abheek Bhattacharya; the fragmented set of investors consists mostly of local Chinese funds and businesses who have little know-how in retail petroleum operations.
    • No individual stake will exceed 2.8% of the retail business, making it unlikely that any of the investors will have much clout to press for meaningful changes.
    • SNP's story will now return to its business fundamentals instead of reform, says Macquarie's James Hubbard; on the plus side, SNP is selling lower-sulfur fuels to combat pollution, which earn it higher margins.
    • After announcing the sale of a $17.5B stake in its retail unit to investors, Sinopec (NYSE:SNP) now says it will use the cash toward optimizing its retail fuel business, boosting its non-fuel sales and paying down debts owed to its parent.
    • The deal comes as the Chinese government pushes to restructure its state-owned enterprises by bringing in private capital.
    • The stake will be sold to a group of 25 Chinese and foreign investors.

    All eyes on FedEx during earnings week

    • FedEx (NYSE:FDX) could post stronger numbers than expected for FQ1 with freight traffic trends improving and fuel prices lower, tip analysts.
    • A comprehensive restructuring of the express business could also start to feed down to the bottom line.
    • FedEx reports FQ1 earnings on Wednesday.
    • What to watch: Look for some Q&A on Amazon during FedEx's earnings call amid speculation that the e-commerce giant has peeled back some volume from FedEx.
    • FDX earnings previews: SA contributor Selerity ResearchSA contributor Brian Gilmartin.

    Now some caution from Morgan Stanley on Tesla Motors

    • Morgan Stanley analyst Adam Jonas keeps his Overweight rating on Tesla Motors (NASDAQ:TSLA) in place, but backs off his $320 price target.
    • Jonas, who's been a bit of a Tesla acolyte, says shares of the EV automaker are running ahead of themselves for the wrong reasons.
    • It's a take that's not too far off of what CEO Elon Musk said earlier this month about Tesla's share price.
    • TSLA -2.4% premarket to $272.50.
    This is what Musk thinks he can do better:  Nissan faces tough times over battery production
    • After setting out to be a leader in battery manufacturing, Nissan (OTCPK:NSANY) is preparing to cut production, reversing its previous stance toward electric car manufacturing.
    • The move would see Nissan following alliance partner Renault (OTC:RNSDF) by purchasing cheaper batteries from South Korea. Nissan currently makes all its own electric car batteries.
    • The financial hit for Nissan will depend on what else can be done with the plants, with hefty charges likely if facilities are closed.
    • Terex (NYSE:TEX) -7.8% premarket after lowering FY 2014 earnings guidance, citing weakness in its cranes segment.
    • TEX now sees FY 2014 adjusted EPS of $2.35-$2.50 vs. $2.56 analyst consensus estimate and down from the company's earlier outlook for $2.50-$2.80; also sees Q3 EPS of $0.55-$0.65 vs. $0.80 consensus.
    • TEX says the order rate for cranes has dropped significantly in July and August despite a positive trend in book-to-bill ratios over H1; also, cranes customers in developing markets are struggling to secure financing for orders scheduled for delivery in H2.

    Raytheon starts production for TALON rockets

    • Under a $117M contract, Raytheon (NYSE:RTN) has begun production of the TALON Laser Guided Rocket for the United Arab Emirates.
    • Under terms of the deal, Raytheon will maintain full integration of the TALON system into the UAE Armed Forces to include logistics, training and warranty support. The company is also exploring options to integrate TALON onto armored vehicles of the UAE Armed Forces.
    • Earlier this year, the U.S. Army awarded TALON Air Worthiness Certification on the Apache attack helicopter.
    • RTN +1.1% premarket

    The beer rally is on

    • Shares of Diageo (DEG +1.1%) and Constellation Brands (STZ +0.9%) are both higher in early trading with beer consolidation talk continuing to build up.
    • Molson Coors (NYSE:TAP) is up over 6.4% on volume already 3X normal activity.
    • Carlsberg (OTCPK:CABGY), which has been tapped as a potential merger candidate, is also in rally mode with shares +2.1%.
    • Altrai (NYSE:MO) is 2.5% higher with its stake in SABMiller rising in value.
    • Beer news: Heineken rebuffs SABMillerA-B lines up financing for potential SABMiller bid.
    • Shares of SABMiller (OTCPK:SBMRY) are ripping in London trading with reports out that Anheuser-Busch InBev (BUD +3.2%) is talking to banks about coming up with financing for a bid.
    • SABMiller is more vulnerable after Heineken (OTCQX:HEINYrejected its buyout overture.
    • A deal between the beer giants would require significant divestiture massaging, possibly including SABMiller shedding its interest in MillerCoors (NYSE:TAP) in the U.S.
    • What to watch: A-B has to decide before the end of the year if its wants to renew a soft-drink bottling contract with PepsiCo. If the brewer declines, it could be an indication that it has its eyes on SABMiller's deal with Coca-Cola in Africa.
    • SBMRY +12.2%.

    Abbott's dissolving stent comparable to metallic version

    • In a randomized controlled trial, Abbott's (ABT +0.1%) absorbable scaffold, Absorb,performed comparably to the company's metallic stent, Xience, in patients with coronary artery disease.
    • At one year, the patient-oriented clinical endpoint of all adverse events (death, heart attacks, revascularizations) was 7.3% for Absorb and 9.1% for Xience. The device-oriented clinical endpoint of target lesion failure was 4.8% for Absorb and 3.0% for Xience. The rate of definite stent thrombosis was 0.6% for Absorb.
    • Absorb is a first-of-its-kind device that functions like a stent by opening a blocked artery and restoring blood flow, but dissolves over time. It is made of polyactide, the same material as dissolving sutures. It is the world's first drug-eluting vascular scaffold to be commercially available internationally. It achieved CE Mark clearance in Europe in January 2011.

    ReWalk set for strong open

    • New IPO ReWalk Robotics (NASDAQ:RWLK) is set for a gap up at the open. Shares are up 18% premarket on robust volume. Prices  rocketed up 114% on Friday closing at $25.60 on turnover of 12.8M.

    Barclays lines up AMC Entertainment for out-performance

    • Barclays lifts its rating on AMC Entertainment (AMC +1.3%) to Overweight from Equal Weight.
    • The investment also boosted its price target on shares to $29.
    • JPMorgan rings the register on Rackspace (NYSE:RAX), pulling its Overweight rating after the big late-summer rally in the stock. Rackspace's current price has baked in a purchase by CenturyLink, a deal JPMorgan is skeptical of ever happening.
    • Shares -2% premarket

    LED pair trade from Goldman, with Cree cut, Acuity upgraded

    • Positive on LED lighting adoption, analyst Brian Lee says CREE shares have already price in solid execution in this segment by the company. Cree's price in the mid-term will instead be driven by the chip business (LED chip cycle accounts for 50% of Cree revenue) where Cree faces numerous headwinds. He downgrades to Neutral and cuts the price target to $48 from $60.
    • Acuity Brands (NYSE:AYI) is the play in LED lighting, he says, upgrading the stock to a Buy with price target raised to $153 from $128.
    • "We expect Acuity to see continued upside in growth vs. peers, as well as margin stability and FCF generation, given tailwinds from (1) “smart lighting” – where Acuity is growing in the $3-$4B sensors/controls market and (2) non-resi construction – where near-term trends suggest upside, plus LED paybacks are favorable vs. retrofits."
    • CREE -3.1%, AYI +1.6% premarket
    • Netflix (NASDAQ:NFLX) is continuing its international expansion this week, launchingservice in in France, Germany, Austria, Switzerland, Belgium and Luxembourg.
    • "This is the biggest international launch we’ve ever done,” says CEO Reed Hastings. "It represents nearly 80M broadband households and about 200M people."
    • International expansion is critical to Netflix's growth prospects. The company's current international investments, such as Latin America and the U.K., are on track to be profitable by the fourth quarter.

    eBay-Google deal seen unlikely at Piper Jaffray

    • Piper Jaffray's Gene Munster views last Friday's reports that Google (GOOG -0.7%) is in talks to buy a stake in eBay (EBAY -0.4%) as largely unsubstantiated and thinks a deal between the two is unlikely despite Google's penchant for making big bets.
    • But the analyst goes on to say that if Google were to buy a stake in eBay, he believes it would specifically target PayPal, particularly given Apple’s unique Apple Pay feature on the iPhone 6.
    • Munster maintains a Neutral rating and $55 price target on eBay shares.
    • Tax authorities in the Indian state of Karnataka have ordered some merchants to stop storing Amazon (NASDAQ:AMZN) products at warehouses due to a dispute over taxes.
    • The company is currently negotiating with the Karnataka government amid its  warning that it will close some operations in India if an agreement can't be struck.
    • E-commerce in India is expected to explode over the next few years, moving from $2.3B in sales last year to $32B by 2020.

    Alibaba to boost IPO size

    • Alibaba (Pending:BABA) is planning to increase the size of its IPO due to strong investor demand.
    • Previously setting a $60-$66 price range per share, the Chinese e-commerce company plans to announce the new price range as early as today, and intends to raise the top end of the price range to above $70, Bloomberg reports.
    • Alibaba is expected to set a final price for the shares on Sept. 18, with trading to begin the next day.

    Even more insane than we thought:  Microsoft to acquire Mojang for $2.5B

    • Microsoft (MSFT -0.2%) has reached an agreement to buy Mojang, and the company’s iconic Minecraft franchise for $2.5B.
    • The acquisition marks the largest purchase ever for chief executive Satya Nadella, who says the purchase "is more than a great game franchise – it is an open world platform, driven by a vibrant community…with new opportunities for that community and for Microsoft."
    • Microsoft expects the acquisition to be break-even in FY15 on a GAAP basis. The acquisition is expected to close in late 2014.

    Trials set to begin for Apple's HealthKit

    • Doctors at Stanford U. are set to begin an evaluation of Apple's (NASDAQ:AAPL) HealthKit in the management of patients with diabetes. The goal is the improve the sharing of data between patients and physicians. HealthKit will provide a critical link between monitoring devices, frequently used at home, and medical information services relied upon by doctors.
    • Initially, two young diabetes patients will each be sent home with an iPod touch to monitor their blood sugar levels between visits to the doctor. Their blood monitoring equipment (DexCom is currently negotiating with Apple, Stanford and the FDA about integrating with HealthKit) measures glucose levels every five minutes via a tiny sensor inserted under the skin in the abdominal area. It then sends the data to DexCom's mobile iPhone app which can then be uploaded into charting software for viewing by clinicians.
    • Duke University is developing a similar pilot program to monitor blood pressure and other vitals for patients with cancer or heart disease.
    • The trials will be expanded rapidly if there are no significant problems.
    • Apple mentioned the Health app in its June 2  iOS 8 press release.
    • Calling the introduction of Apple Pay an "iPod moment for cash and credit cards," the team at the FT - citing those who are familiar with the terms of the agreement – reports Apple (NASDAQ:AAPL) will get $0.15 for every $100 worth of purchases, a deal others – including Google – have been unable to negotiate with credit card companies.
    • "That makes Apple Pay unique," says mobile payment veteran Dickson Chu. "It's somewhat surprising that Apple was able to negotiate something Google couldn’t.”
    • Another executive at a payment technology company is surprised banks were so willing to concede to Apple after what happened to the record labels. Banks, however, are wiling to give up per-transaction revenues in the hope of more volume. “What Apple really announced was the end of the plastic credit card, but not the end of paying by credit,” says the head of the Electronic Transactions Association.
    • In other news – without giving details - AT&T announces a record iPhone pre-order launch day, and Apple announces first day pre-orders of  the iPhone 6 and 6 Plus of more than 4M units.
    • APPL +1% premarket

  55. Diesel aircraft

    It might be too late but 30 years ago everyday working people who loved it owner aircraft. Some still do but flying is very expensive. First air is not an efficient transfer of power and aviation fuel is double the price of diesel. For small planes, one engine prop, the higher efficiency and lower cost would make flying the plane less than half the cost per hour. Above 0 F no additive would be needed and modifications get an easy -20, that it will be like my truck very cold in the cabin. Small planes would not fly then and other than Alaska the restriction in unpressurized cabin altitudes would be only days.

    Still a problem with only the well to do can afford a new small plane.


  56. Phil

    FAS roll to OCT

    Thanks


  57. Phil – what are your thoughts on TWTR here?


  58. From Bloomberg, Sep 14, 2014, 9:37:41 AM


    Sept. 13 (Bloomberg) — U.S. Secretary of State John Kerry speaks at a news conference in Cairo following a meeting with Egyptian Foreign Affairs Minister Sameh Shukri. (Source: Bloomberg)

    Several Arab countries have offered to join the U.S. in bombing Islamic State militants in Iraq and potentially in Syria, according to a U.S. official.

    To read the entire article, go to http://bloom.bg/1qOeqlg

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  59. AliBaba/Albo – True to some extent, I'm sure.  There's only so much money in the World (until the Fed prints some more, anyway).  

    Water/StJ – Was and still is the master plan – privatizing water and running up the prices, something I've been warning about for years.  

    T. Boone Pickens Invests in Water – Should You? – PICO …

    Water: Good as gold for investors – 1 – - MSN Money

    Wall Street Mega-Banks Are Buying Up The World's Water …

    Nestle CEO: Water Is Not A Human Right, Should Be …

    Nestle's Wet Dream: They Mark Up Water 53 MILLION Percent

    Wall Streeter Says You Don't Have Water Rights Other Than …

    YHOO/Pwright – I think AliBaba holds $160Bn and probably hovers around $200Bn, which is plenty to get our YHOO trade in the money.  Of course, if we're able to get out early with 85% of our potential profits – I'm not going to object to that at all. 

    Diesel/Shadow – Thanks.  

    FAS/QC – Not today but Weds or maybe tomorrow in Webinar.  

    TWTR/Wilsons – I think $40-$50 is fair value for them but I don't have any interest in playing.  


  60. ATVI – heck of a slap for… a bad review on Forbes?


  61. actually surprised they haven't brought TSLA back at all yet.  Was thinking of doing a bull call spread but still waiting, might wait till tomorrow.


  62. PHIL/AA

    I am short the Jan '16 15 Call in the Short term portfolio. The stock is 16.29 and can be rolled to Jan '17 17 call for a small credit. What do you think?


  63. rustle

    The leaf was a disappointment, battery costs were the reason for it's cost and range. Even 30% cheaper batteries on the general taxpayer is not enough 50% isn't enough to make mass sales. Musk had 2 things right the range must be over 200 miles and charging must be fast, they are also major problems. Both cost too much.


  64. @shadowfax

    Are you sure you meant that for me?  I didn't talk about any of those issues in anything I wrote.


  65. Two things:

    1) I'm still holding Sept 86 TQQQ Puts with no cover.  think I should hold, close, or cover the position?

    2) Diesel aircraft is a brilliant idea.  The 'soot' issue is a non starter.  Soot is dramatically reduced with modern high pressure fuel systems as the poor atomization of fuel is the reason soot is created--it's unburned hydrocarbons.  Create a finer spray of fuel using higher pressures and finer pitch fuel injectors and the soot volume plummets.  Secondly, soot is primarily created when you are operating in an excessive fuel situation.  If you remove the excess fuel (which you ALWAYS do when operating at constant engine load, as you would when flying), the soot and emissions plummet.  The reason a diesel truck produces a significant amount of soot is the constant change in engine speed for varying conditions (stopping, starting, turning, etc).

    Biodiesel (generally no soot) which, in San Diego at least, is cost comparable to regular diesel (when I checked at $100 oil), has lower non-NOx emissions (NOx is higher due to some great benefits of the fuel and can reduced or nearly eliminated if you use NH3 injection--I RECALL…this should be fact checked).  If you want more info on it, ask.  I'm pretty knowledgeable in engine stuff.

    There's a chart at the following website that shows the emissions of biodiesel.  http://www.afdc.energy.gov/vehicles/diesels_emissions.html


  66. IBM has 2017 options available


  67. Phil those SQQQ we bought back are doing great, thanks. Any thoughts on NFLX, and GILD.


  68. rustle

    Yes to you I have decided that saying negatives on any stock is taken wrong. TSAL stock may be down more and holding lower longer because the Leaf points out battery cost is way too high. The giga factory is not a solution, long rang and fast charging demand an expensive car! Even 50% reduction, very unlikely still means $20K for the battery. Much of car cost is safety, this is a $40K gas tank.


  69. I think this is a real buying opp here for GILD.  

    --

    Gilead Sciences will allow seven large Indian generic drug producers to make and sell its blockbuster hepatitis C drug Sovaldi in more than 90 developing countries, in a move it says will ensure affordable access to the potentially life-saving treatment.

    The deal with companies including Cipla andRanbaxy Laboratories follows months of fierce debate over the price of Sovaldi, which has been hailed as the biggest breakthrough in treatment for hepatitis C since the virus was discovered in 1989.

    Sovaldi is on course to become the most successful new drug in industry history after generating $5.7bn of sales in the first half of this year. But its high price – at $1,000 a day in the US – has drawn criticism from politicians, activists and insurers.

    California-based Gilead said on Monday it would introduce Sovaldi to the Indian market at a price of $300 per bottle, or around $900 for a 12-week course – about 1 per cent of the US price.

    But Gilead also said seven India-based generic manufacturers would be free to set their own prices for the drug – without any mandated floor price. The companies are to pay 7 per cent of their revenues as royalty to Gilead, which will provide full technology transfer to the Indian manufacturers, allowing them to produce both the active pharmaceutical ingredients and finished formulations


  70. burrben: thanks,i am a big fan of GILD but took profits in all positions at 110. I think it's a $500/share company in the future!


  71. I'm adding to this spread:

    GILD 2016 -75P  +82.5/100 bull call for 3.50.  Max value is 17.5.  Downside you own them at 75.  Spread is 100% ITM.  

    Phil will probably have a better spread if you want to play a run in GILD.  He generally will sell the upper call OTM


  72. Phil / BIDU – What's your thought about our short Sep 220 puts with Bidu at 209.50 now? 


  73. Phil / GTAT    Would you consider a buy/write as a new position on this.

    But stock at 12.10  sell Jan16 12 puts and calls at 3.50/3.60  for a $5/8.5 entry.


  74. TSLA really getting hammered now


  75. Have we adjusted the butterfly portfolio lately and I missed it? I'm specifically interested in the OIH play. We sold the Sept. 53 calls and puts. With OIH at about $52 the roll to the Oct. 53 puts gains us about $0.50 credit. For the calls I almost want to wait for a run up before selling anything in Oct. Any thoughts?


  76. Some of the 2017 LEAPS being added today:

    ABX, AAPL, AA, ADBE, ADSK, AMD, AMZN, CHK, CLF, CSCO, DIS, EBAY, FAS, FAZ, IBM, INTC, ISRG, JNPR, MSFT, NLY, OIH, PCLN, QCOM, SBUX, SCTY, TZA, VZ, X, YHOO

    And more…

    You can download the listing at:

    http://www.cboe.com/tradtool/DailyNewListings.aspx


  77. rustle TSLA

    Now do you understand what I was saying all along about electric cars? A few got the message today and Musk didn't get as much as he wanted from Nevada or any state so I wonder if the giga factory is going to be built. His cost saving were mostly to get subsidized battery production.


  78. seems very suspicious that /NQ and /TF getting hammered but /ES not down much at all and /YM up…


  79. Very shocked that the lawsuit by Hank Greenberg wasn't thrown out.  He didn't like the take it or leave it deal by the US which ended up lending them 184.6 billion but no one else would've lent them the money and AIG would be out of business today and they would have 100% losses.  It's ridiculous to say the US took advantage of the situation.  This was their only hope.


  80. WMT Butterfly

    This is the only one I have on, and first month.  Should we just roll the short 75 C's and P's to short 75 in the next month?


  81. ya, I think Phil said we were going to do the Butterflies today


  82. So Stifel Nicolaus is the firm of the month.  Coming out with a $400 PT on TSLA and an end of year 2300 on the S&P.  Congrats.


  83. Here’s How Easily Someone Can Steal Your ATM Pin Code Without You Noticing And How To Prevent This From Happening

    Read More: http://www.trueactivist.com/heres-how-easily-someone-can-steal-your-atm-pin-code-without-you-noticing-and-how-to-prevent-this-from-happening/


  84. Phil // IBM
    Can you recommend an IRA IBM play for the 2017's ?


  85. ATVI/Scott – New game got poor reviews, that's not a good thing.  

    TSLA/Rustle – Oct $250 puts now $9.80!  Gotta be satisfied with that, though they don't look bouncy at all. 

    AA/Zten – You're giving them another year to gain on you so what's the point?  Are you short with no cover or covered?

    TQQQ/JPH – Come on man, those expire in 4 days and you should be THRILLED TQQQ dropped 3.5% today.  The $86 puts are $2.20 and, if you want to keep a hedge, I'd move to the Oct $85/80 bear put spread at $2.30 so you get another $2.70 of downside after the roll, without putting more money in.  More likely the Fed will bounce us (plus window-dressing on Friday) and you can get a better entry on a new play by waiting.  Thanks on diesel info.  

    IBM/Willsons – 2017 $155 puts can be sold for about $10.50 – not bad.  

    NFLX/Abseth – No change, we are short NFLX at $475 and GILD is no change from my last note on them:

    Submitted on 2014/09/03 at 4:31 am

    As to a NEW trade on GILD, it's a bit high in the channel… 

    GILD/Abhish – Yesterday's trade idea still about the same price:

    On GILD, think they beat so I'd go with the 2016 $80/100 bull call spread at $9.50 (same as AAPL) and sell the $70 puts for $5 for net $4.50 on the $20 spread. 

    So right question on GILD – just a few months later to get in but things have a habit of cycling around if you are patient.  

    STP up 50% now – seems almost a crime not to cash it out!  LTP still holding up nicely at $606,355 so that's $756K between them – a new high for our main portfolios!  

    $25KP back to $28,233 (+13%), that one has TQQQ Sept $86 puts, now $2.20 so, as I just said to JPH above – let's take that and run as it was a bet, not a hedge.

    Butterfly Portfolio is up 20.2% – same old, same old.  Income Portfolio having a rough time at 5.6%, we'll have to look that over carefully tomorrow.  

    GILD/Burr – I do think it's a big thing but that's why we liked them when they were in the $80s in the first place.  Certainly they won't make as much with this new deal as people have been expecting, so I don't think it makes them worth more than $100 but it will depend how they project earnings under the new strategy.  Long-Term, I think they are great – just a bit ahead of themselves at the moment and I simply wouldn't play them until we get a nice pullback. 

    BIDU/STP, Pfehl – Well, it's part of a spread (March $220/185 bear put) and we sold the Sept $220 puts for $12 (but only 3 of 4) and those are now $11.40 with BIDU at $208.85 so we're simply "on track" and no reason to worry as the Sept $220 puts can be rolled to the Oct $210 puts ($8.50) or the Nov $200 puts ($9) or the Dec $200 puts ($10.50) or the Jan $190 puts ($8.50) and then our 4 March spreads, that we paid net $1,600 for would be $12,000 in the money and that means our 3 BIDU Jan $190 puts would have to be $40 each (BIDU $150) before they hurt us.  So, if we think BIDU is worth more than $150 – there's no need to worry about the short Sept $220 puts now, right?

    Also, those puts were right on the money at Friday's close – it's never a good idea to overreact to one-day moves…

    GTAT/Brit – The way they are dropping, I think I'd avoid owning and go for the 2016 $10/17 bull call spread at $3 and sell the $10 puts for $2.45 so you net .55 on the $7 spread that's $2 in the money and, worst case, you own 1x at net $10.55 rather than 2x at $8.50.

    TSLA/Rustle – Are people finally realizing Emperor Musk has no clothes?  

    Butterfly/Daveo – Actually, the point of the Butterfly Portfolio is NOT to adjust it until expiration week, usually Tues and Weds we decide what to do. OIH is $51.88 and we sold the $55 calls and the $53 puts for Sept and all we're going to do is roll the losing side (probably the short puts) and sell more calls.  Wash, rinse and repeat for the next 16 months.  Thinking is not advised in these portfolios – your job is to sell premium – as much as you feel comfortable with (re. risk of hitting strikes) every month.  

    OIH
    10 OIH 2014 20-SEP 55.00 CALL SC $ 50.00 8/11/2014 $ 1,200.00   35
    $ 1,150.00 95.8 %
    10 OIH 2014 20-SEP 53.00 PUT SP $ 1,350.00 8/11/2014 $ 880.00   35
    $ -470.00 -53.4 %
    10 OIH 2016 15-JAN 48.00 PUT LP $ 3,520.00 8/11/2014 $ 4,000.00   35
    $ 480.00 13.6 %
    10 OIH 2016 15-JAN 60.00 CALL LC $ 2,780.00 8/11/2014 $ 1,500.00   35
    $ -1,280.00 -46.0 %
    Total Gain/Loss for OIH
    $ -120.00 -1.6 %

    I know it's tempting to gamble because you think you know stuff but the point of BEING THE HOUSE is that we assume you don't know stuff and you don't need to know stuff – we are playing the odds and the odds are that, if you sell $1.50 worth of premium for 18 months – you WILL collect $27.  

    Since ourlongs cost us $6.30, there's  up to $21.70 of profit there if OIH stays in our range.  Why on Earth would you want to mess that up by guessing?  Does Steve Wynn tell his dealers to not take black bets on Roulette if they think it's going to come up black?  

    Nope – the big money is made by taking ALL the bets ALL the time and letting statistics work in your favor.  

    Electric cars/Shadow – Don't get too excited.  They got a negative note and the Nas is having a big sell-off – that's the main reason TSLA is down.  It does not, by itself, prove anything about the operation of the company though, of course, we've never thought it was worth it in the first place.  

    Speaking of TSLA, that is goallllllllllllllllllllllllll! at $250, all greed now if you are still in the Oct $250 puts (now $11.50) and the short Sept $270 calls are below 0.75 and that's a gift too, so a stop at $1 would be prudent.  

    Suspicious/Sun – Flight to safety in large caps to some extent.  Volume is very low so might be people pulling money for AliBaba – $20Bn is a big outflow for a low-volume market.  Fortunately, we don't take Monday's seriously anyway.  

    Long View/Burr – Tough lesson to teach.  

    AIG/Rustle – I agree, when a company is floundering, you don't complain about what kind of life preserver they ended up using to be rescued.  After the fact, it's always nice to play quarterback but, during the crisis – you can't blame the board for making decisions to save the company (as long as they were not self-dealing, of course).  

    WMT/Butterfly, Burr – WMT is at $75.82 and we sold the Sept $75 puts and calls for $2.65 and they are now at $1.20, even though they are just 0.82 in the money and expire on Friday with no premium.  So you are dying to spend +0.40 this month on the roll?  Will you do that all 16 months for $6.40?  You know that's $3,200 you are throwing out the window, right?  Do you do that on all your positions?  That's a pretty expensive habit!  


  86. Somebody just kicked off the 2:PM buy express!?


  87. @jasu

    Curious to see how tomorrow's 9:30 train looks before making any major moves.


  88. Phil re: JPM butterfly, I've got the short Sept 55 calls and do not have a short put at the moment, I was thinking just to roll the Sept calls forward to Oct for minimal credit at some point next couple days and leave off selling puts for the time being.  I think JPM is at the top of the channel with a lot of overall weakness, I might get a better price on my puts (and a better roll out of my Oct calls) if I wait for 2-4 weeks.  Let me know what you think..

    Thanks


  89. Charts/StJ – That education line tells the whole story, that's how we have endemic poverty:

    How can there be equal opportunity when education is out of reach for the bottom 20%?  

    IBM/Wombat – There's not much money to be made in IBM.  I'd sell the 2017 $155 puts for $10.50 and buy the $170/210 bull call spread for $19 and net in around $8.50 and, if all goes well, you make $31.50, which is 20% of margin(ish).  It's not thrilling, but if you want to put IBM in a restricted account, that's what you can expect.  Compare that with the same play in a margin account ($15 margin + $19 cash) where you make 100% on margin and pay 20% capital gains vs making 20% with no tax in an IRA and I'm still baffled at why people think those things are good ideas.

    JPM/Butterfly, Pwright – We don't have a short put either, they never came down enough since we bought them back on 8/26.  We sold the Sept $57.50s for $1.72 and JPM is currently at $59.81 so we'll owe $2.31 if they hold it, losing 0.59 on this side after making $1.06 on the other side.  Earnings are 10/14 and we can sell Oct $57.50 calls for $2.78 and $60 puts for $1.52 for another $4.30, which is net $3.71 plus the $1.06 we made on this month's short puts is $4.77 – seems like good money to me but I guess gambling is fun too.  


  90. Phil // IBM
    Thanks. Thats why I asked. I was running the numbers and I couldn't really find a worthwhile trade. Shame, because I really think IBM is going to do well in the next 10 years.


  91. Phil

    I agree with JPH on every point but I don't bother with no belief. Another point is weight is a non issue as todays high output turbo diesels don't weigh much more. The biggest cause or black smoke, soot from diesels is a dirty air cleaner!

    Batteries are the problems, no excitement just like it when things come out to back what I said long ago. Sometimes, many times I have no link, there is no link, because it was my thought based on what I know, if not sure I never say a thing. I am done on AAPL, todays comment was on liquid metal and shattering glass.


  92. Wombat – Curious why you think IBM will do well going forward.  Their revenues haven't grown since 2007.  They are the poster child for the benefits of financial engineering.


  93. albo // IBM
    I am particularly keen on their work in nano-technology, their solar research as well as their quantum computing. They don't get a lot of press, but I think a company thats been around for 100 years is doing something right, not to mention Watson ( which I think will take over half the jobs in the USA by 2030 )


  94. Phil / WMT.  So as this is my first month playing, do you roll the option that is ITM on Thur or Fri once there is no time value barely left?  Then you let the other option expire worthless?  


  95. Maybe so, but they've been stagnant for many years.  Scary thought on Watson 8-)


  96. A very long time ago watches came out with break proof glass. Soon the claim was changed to scratch resistant crystal, sapphire glass. I remembered that and today a link to testing on phones shows it flunks the drop test. Only saying I only say what I know or remember. Don't care what AAPL reports, they could have consulted me on both products and save even more.


  97. PHIL/AA

    Calls are covered. If I roll the Jan '16 15 call up to 17 strike for about $1 I pick up $2 in strike price. I generally like to roll when the strikes go in the money (long 10 call, short 12 put, 15 call and Jan '15 18 call)


  98. Phil re: JPM, if I sell the $60 puts instead of the $55s, I'm giving up $5000 in intrinsic value to make $1520 in premium.  Also my margin requirement is going to go up by $5000 on it, since there's now a $10K gap between my long and short puts rather than $5K.  Once I give up that $5K in intrinsic value, I now have to make up at least that much in premium sales in order for the whole thing to end up profitable.  Also I'm now in a position where, if JPM drops, whatever benefit that might be to my short calls I will be giving up to the short $60 puts, there is no way to get ahead in this scenario.  Am I missing something on this?

    Thanks


  99. Phil // IRA
    Fairly soon I would like to add some LEAPS to some IRA's ( ideally high div with covered calls )
    Is there anything from StJ's 2017 release this morning that you would recommend ?
    I already have max of NLY, CIM, ABB, PLUG, PLX and StJ's VXX ongoing buys.
    Or, are you keen on anything to watch for a pullback to hop on >> I'm keeping a list >> thanks
    heres an IRA list I have so far
     

    CIM

    NLY

    WEC

    AEP

    LO

    ETE

    NYMT

    EWZ

    AA

    CAT

    BA

    GE

    DIS

    IBM

    KO

    MCD

    PG

    T

    VZ

    AFL

    JLB

    VLO

    STX

    AMAT

    CAT

    DD

    CSX

    ADP

    X

    NUE

    FCX

    INTC

    HD

    PG

    TRV

    TRW

     

    >>> Thanks


  100. sorry about the formatting


  101. IBM/Albo – I also think Watson gives them huge upside potential over the next 20 years.  Of course, others could come up with better AI – that's going to be an arms race (one in which people lose). 

    WMT/Burr – Yes, unless there's something horrible happening, we wait for the premium to bleed out before rolling (assuming we have to).  

    Only weak bounces so far.  

    AA/Zten – So is it worth staying in them another year to make $2?  It really comes down to whether or not you have something better to do with $15 than try to turn it into $17 over the next 12 months.  Since I can sell the 2017 puts for $2.35 and net back in at $12.65, I think I'd rather take the $15 now (or let it get called away) and sell those and tie up just $2 of margin to make the same $2 as you make on the roll – if all goes well and AA is over $17.  

    Don't lose site of the fact that your rolls are new trades – are they really the best thing you can do with the money?  Look at the LTP, we ended up selling a lot of puts that we never got to own and we "only" made 20% – this is not a terrible thing?  If a stock doesn't pay a dividend (a good one) what do we care whether we own it or not?  You might miss big rallies selling puts, but you also give yourself automatic hedges.  

    With AAPL, for example, the 2017 short $85 puts are $10.  The price changed but we could have sold the 2015 somethings for $10 and the 2013s and the 2011s and the 2009s since the crash and we would have made $40 off the $20 entry point, which is 200% in 6 years on 4 sales.  Is that a bad way to play?   Even now, the net ordinary margin on the short 2017 $85 puts is just $8.50, so we're getting back 100% on margin every two years with a basic, simple strategy and we never own the stock – not a tragedy at all.  

    JPM/Pwright – In the Butterfly portfolio we have the 2016 $62.50 calls and the $45 puts long.  We sold the $57.50 calls for $1.72 and they are now $2.40 with JPM at $59.80.  If you sell the Oct $55 puts, you get 0.26 but if you sell the $60s, you get $1.52.  Yes, there is more margin but you also have $1,300 more cash which should give you $2,600 more margin and, if you are that tight on margin – these trades are not for you.  

    Also, the broker should take into account that your risk on the $57.50 short calls has been cut by $1.52 (since they can't both win) and that should cut margin on the other side but, again, this isn't about margin – it's about selling premium and it's not about a single month – it's about selling it for the next 16 months.  When you sell the $57.50 calls and $60 puts, the most you can have to pay back is $2.50 in between and you already owe $2.50 on one side – so this is better.  

    If JPM goes higher, you are $1.52 less screwed than you are now (vs 0.26) and, if JPM goes lower, you have an excellent chance of being $1.52 better off.  $1.50 x 16 months is $24 and the longs cost less than $5 so, even if you just make the $1.50 – that's kind of nice, right?  Whichever way JPM goes, you'll just roll the loser and, over time, we widen the spread and HOPEFULLY, one day, we actually find a price that expires between them and they both go worthless and then we keep all the premiums we sold. 

    Your problem is you are trying to win and lose each month and not playing the long game.  If you ever had a sports coach – I'm sure you can see the flaw in that.

    IRA/Wombat – Sure, I recommend the ones that are on the Buy List when they are low in the channel. 

    Oil tapped $93, contracts roll over next Monday so this week is tricky.  They only have 144K contracts to roll in 5 days – not a big burden but the 4 front months are 700K and that means there will be pressure – more so because Dec to Jan is a tough roll due to the calendar change (tax issues).  So I do like oil short here ($93 on /CL) but tight stops as we may get a better pop than this but I think we'll see $91 again by next week.  

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Oct'14 92.13 93.03 90.63 92.94 15:30
    Sep 15

    92.92
    0.65 239489 92.27 144779 Call Put
    Nov'14 91.24 92.06 89.76 92.00 15:30
    Sep 15

    91.99
    0.62 94902 91.37 253889 Call Put
    Dec'14 90.60 91.42 89.30 91.37 15:30
    Sep 15

    91.37
    0.60 55582 90.77 218734 Call Put
    Jan'15 90.22 91.07 89.08 91.03 15:30
    Sep 15

    91.03
    0.55 17978 90.48 90316 Call Put

  102. Phil,

    Looking at 2017 Options on NLY what's your view of buying the stock selling the $12 strike Caller and $15 strike Putter?

    Thanks


  103. NLY/CSL – Now there's one we WANT to own for the dividend.  The spreads are so crazy wide, it's hard to say I like any of it but, if you can sell the $10s for $1.70 or better, I'd do that because, if you get called away – it's more than the dividend.  The $12s at .40 offer no real downside protection and selling the $15 puts is needlessly aggressive, I'd sell the $12 calls and, since the 2016 $12 puts are $2.46 and the 2015 $12 puts are $1.25, I'd expect another $1.20 for the 2017 $12 puts, which is $3.66.   

    Keep in mind you are only collecting $1.20 a year in dividends so, if you were going to sell the 2017 $15 puts – why do anything else since they are $6.70 (using same logic) and you net in for $8.30 and that's all you need to do.  


  104. That was a lame finish – not impressive action.  /NKD should be good overnight.  


  105. UBNT
    Jan16 30 P / Jan16 40 / 50 BLCS  +.10 credit, 30% ITM 


  106. Thanks Phil re: JPM.  I guess the issue for me is, I'm short the Sept 55 calls and not the 57.5s.  There isn't a way to roll this forward to a higher strike without paying for it.  I've been in this trade for about 3 months or so, I'm showing as down about $1K, I think because I'm down about $5K in intrinsic value on the short 55 calls, and I've made about $4K in premium.  Believe me, I understand the need to be patient, but also from where I'm sitting in terms of the short calls, I either have to roll forward at same strike for minimal credit, or raise the strike and pay for it.  What's the best way to go in this case, given I'm short the Sept 55s?

    Thanks


  107. JPM/Pwright – So selling the short $60 puts puts a $1.52 dent in what you owe.  Same thing.  Also, why do a month then, the Sept $55 calls are $5 and the Jan $57.50 calls are $3.75 and the Jan $57.50 puts are $1.85 so $5.60 for those two and ONE of them will expire worthless and maybe both if you are really lucky.  


  108. Ah, but you concede there is an element of luck involved :)   Basically I get paid net $600 and give up my ability to sell premium out to January; however if I'm pretty close to 57.5 in Jan, premium decay will make me net profitable, I see the logic.  Still, either way I'm depending on a pullback in JPM in order to get me back on track; waiting for that pullback and then getting a better price for my premium seems like a reasonable approach also, maybe not an open and shut case is all I'm saying.  At any rate, I like these trades, I'll noodle on it and do something next couple of days. 

    Thanks



  109. What's next for TSLA:

    http://www.bespokeinvest.com/thinkbig/2014/9/15/teslas-tsla-september-15th-bloodbath.html

    Maybe we play for a bounces on stats alone! Or maybe this time it's different.


  110. Interesting calculation by large enterprises in France:

    http://www.lemonde.fr/les-decodeurs/article/2014/09/15/non-deux-jours-feries-de-moins-ne-donnent-pas-un-point-de-croissance-en-plus_4487802_4355770.html#xtor=RSS-3208

    It's in French but basically the organization that represents large enterprises in France claimed that cutting 2 of the 11 national holidays in France would create 100,000 jobs and add 1% to the GDP growth for the year. Which is obviously total non-sense (demonstrated in the article) but good try! If that was the case, let's go a year without holidays (people get 5 weeks vacation anyway so no huge loss) and go for 5% growth. That would resolve many problems in one swoop. 5 years like that and France is out of the woods! Idiots!


  111. Phil / BIDU – thanks for the explanation. I only got $8.7 for my Sept puts and show a loss but your explanation to keep rolling those along makes sense. Let me see if I got it right: One day, after rolling the front month puts down and along, they will expire worthless and in the meantime the bear put spread is working as the stock is going down as predicted.


  112. No 50 DMA save for the Russell and the NYSE and it's a matter of fact we have an approaching death cross on the Russell although statistically speaking not that significant. But more so psychologically.


  113. The latest tweet of God:

    Ray Rice. Michael Vick. And now Adrian Peterson. Congratulations, NFL. Your woman/children/animal abuse trifecta is officially complete.


  114. Quote of day but I remain skeptical:

    Ben Thompson, “I think it [Minecraft] has the potential to continue to grow and, along the way, not only make Microsoft a whole bunch of money, but also enable an entire ecosystem. It really could be the Office of gaming.”  (stratchery)


  115. Slowing down: the world economy grew 2.6% in the year to the second quarter

    Embedded image permalink

    Wow, way to take all the fun out of Pizza:

    I love how "a human-free environment" is a big feature.  surprise

    A recent study at MIT found that people would rather work for a robot boss who gave out tasks than a person:

    Hong Kong delays morning trading sessions as third-highest typhoon signal issued

    Study suggests that religion doesn’t make people more moral

    ‘Ratings shopping’ makes a comeback in the US – http://www.streeteye.com/t/2oz0 – Financial Times

    America's most respected public pension fund, CalPERS, to exit hedge funds. Too complicated, fees too high.

    Sweden's election yesterday cost the country's richest $14.9 billion.

    Why NYT editors will start using "Islamic State" instead of ISIS or ISIL ?

    NETFLIX TO BE PROFITABLE IN EUROPE IN 5-TO-10 YEARS, CEO SAYS. So same time as Greece has 120% debt/GDP

    When you die that’s it.


  116. NLY/Phil – Looking at your suggestion from earlier today and I must be missing something.  If I buy 100 and sell the $12C and $12 P, I am in at $7.34 (11.40 – .40 – 3.66) / $9.67.  If I buy 100 and sell the $12C and $15 P, I am in at $4.30  (11.4 – .4 – 6.70) / $9.65.  Since the $3 difference between the 12P and 15P is completely covered by the difference in price, why do you call it needlessly aggressive?  It seems like the only difference by selling the $15P is that I am collecting more premiums now with the possibility of having the right to buy more NLY after it has appreciated (between 12 and 15) – What am I missing?  Thanks again for all of your insight!


  117. Good morning!

    NLY/Ldm – Only because NLY is only at $11.38 so, selling the $15 is essentially committing to double down right out of the gate. Also, of course, you are committing more margin.  It's "needlessly aggressive" in the context of a spread since there is limited upside and, as I mentioned above, you make $6.70 at $15 by simply selling the $15 puts (net $8.30 entry) so what would be the point of your spread, which makes the same $6.70 at $15 on a 2x commitment at $9.70?    Don't forget NLY turns their profits into dividends, they are not a big grower in value over time.  Also, we expect the Fed to raise rates and NLY will very likely go lower and you will not be able to roll the $15 puts as easily as the $12 puts.  

    [$$] Nevada Gets Musked

    So maybe Mr. Musk really is a genius, of the political kind at least. He's figured out that as long as you pick a politically favored industry you can be one of the world's richest men and still get taxpayers to finance your operations and become even richer. Not so smart are the Nevada politicians who seem to have no idea how thoroughly they've been fleeced.

    Holidays/StJ – It's true.  If we can get workers to stop taking vacation days, weekends off and obliterate wages – it will be great for the economy.  Just ask any plantation owner!   You can see how far we've moved towards an elitist society when BS like that gets serious consideration – workers are considered commodities to be exploited, not partners who deserve a fair percentage of the profits.  

    BIDU/Pfehl – That's the plan.  A sharp, sudden drop in BIDU can mess that plan up, of course.  

    Big Chart – If you discount the BS bounce in the Dow – really, Really bad.  Death cross on RUT may be a preview of things to come and it's really not that far.  The 200 dma on the NYSE is 10,500 – just 400 points (4%) away.  On the Dow it's 16,500, 500 points is just 3%, etc.  We're expecting a 5-10% correction and that will make them all look like the RUT.  NYSE's 50 dma is already curling over.  

    Futures are down just a bit.  /CL is a short below the $93 line still.  /NKD at 16,840 after bottoming out at 15,800 and then running back to 15,900 overnight.  Dollar 84.34, gold $1,241, silver just tested $18.85, copper $3.10, nat gas $3.90,  gasoline $2.536.

    9-15-2014 7-04-21 PM Diary

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  118. Man I love this show!  Scotland:


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