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Monday Market Outlook – Finally Over S&P 2,000 – Now What?

SPY 5 MINUTE2,000 finally held!  

It was a really ugly hold but we did hold 2,000 on the S&P all day long on Friday and that, as I've said for a long time, is finally a signal we need to do a little bottom-fishing.  We have already been picking up some material stocks in our Live Member Chat Room, including adding BTU ($13.29) on Friday morning to our Income Portfolio, despite a Goldman Sachs downgrade that cost them 5% pre-market.

Coal has been getting a bad rap this year as China has slowed down and, of course, its environmentally unpopular (and 300,000 people marched in NYC this weekend for action on Climate Change) but the reality is, coal use isn't going away anytime soon.  

In fact, 65% of China's energy comes from coal and, for the first time ever, China passed the EU in pollution levels per capita with each person in China producing 7.2 tons of carbon dioxide on average compared with 6.8 tons per European and just 1.9 tons per Indian.  

Of course, none of them hold a candle to the US, where we proudly produce 16.4 tons of CO2 per person!  

Still, with 1.3Bn people, China has now passed the US in overall carbon emissions, contributing to a new Global Record of 40Bn tons of CO2 added to the atmosphere in 2014.  According to a recent UN study, at this rate, the theoretical limit for carbon in our atmosphere (before irreversible damage sets in) will be hit in just 30 years.  But don't worry folks, that's just science and we can always vote Republican and ignore it. cheeky

Remember – we ARE Koch!  

Emissions grew 4.2 percent in China, 2.9 percent in the U.S. and 5.1 percent in India last year. The EU’s pollution level declined 1.8 percent because of weaker economic growth.  So coal is not going away as soon as people think and we have been literally burning off the surplus this year.  In Europe, utilities are switching back to Coal which makes about 5 Euros per megawatt-hour to produce energy while Natural Gas is losing 17 Euros per megawatt-hour as subsidies run out.  

So, if you want to offset the cost of oxygen in 2030, BTU is a nice hedge on the G20 continuing to do nothing about Climate Change for another year.  

YHOO continues to be a bargain (see Friday's post) as it went down instead of up on Friday (as did SFTBY) despite BABA winding up at $231Bn in market cap.  Morningstar calls YHOO a $42 stock and that's fine with our spread but they are citing "liquidity concerns" as the reason for not fully realizing YHOO's 16.3% remaining ownership ($37.6Bn) after cashing in $8.3Bn on Friday.  

$37.6Bn + $8.3Bn is $45.9Bn so, if BABA does hold $93/share, at $40.7Bn in market cap (at $40.93), the rest of Yahoo's business, which is making $1.4Bn a year in profits, is being valued by Morningstar (and many other analysts) at NEGATIVE $5.2Bn.  Even Morningstar is forced to admit that, without knocking 20% off BABA's current price, YHOO is worth $47 a share, not $42 and certainly not $40.  So we'll certainly be buying more of that this week!  

If the markets can avoid collapsing for another day (and, if not, see our TZA hedge from 9/10), then we'll take advantage of our Live Webinar on Tuesday (1pm) to go over our Buy List (Members Only) and do a bit more bottom-fishing.

ABX is back where we like to buy them at $15.50, CHK is $24.67, DBA at $25.16 is looking good, GSK still cheap at $47.38, HOV is out of favor again at $3.94, IRBT you know we love at $31.67, MAT still low at $33.88 into Christmas, NYT still getting no respect at $11.90, etc.  Those are, of course, just some of the stocks.  The next step is setting up trade ideas the let you buy the stocks for an additional 15-20% discount:

By the way, that AT&T example in the video is already up 90% – 3 months early!  The AAPL example had us selling the 2016 $350 puts for $30, post-split, those are the $50 puts and they are now 0.35 for a 98.8% gain since we made the video in June.  

Perhaps you want to tune in for Tuesday's Webinar so we can show you more trade ideas like those?  


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  1. Oil Lines

    R3 – 93.38
    R2 – 92.81
    R1 – 92.29
    PP – 91.72
    S1 – 91.2
    S2 – 90.63
    S3 – 90.11

  2. These people need to think hard about the future of humanity:

    Because of the damage that they are causing!

  3. Good morning!  

    While Scotland voted against independence from the UK, here's a fascinating look from at what Europe would look like if all separatist movements were able to secede.

    This article originally appeared in Business Insider. The Scottish independence movement will embolden other active separatist groups in Europe to win their…



  4. Major Earnings for the Upcoming Week:


    A.M AZO

    P.M. – ASNA



    A.M. – CCL, KMX, USAT

    P.M.– BBBY, SCS



    A.M. – CAN, KBH, PAYX, MTN

    P.M. – FUL, JBL



    A.M. – OMN, SCHL

    P.M. – DMND, MU, NKE



    A.M. – BBRY, FINL


    Economic Releases (9/22 – 9/26):


    7:30 am CT– Chicago Fed National Activity Index

    9:00 am CT –Existing Home Sales

    9:05 am CT – Fed’s Dudley Speaks

    6:30 pm CT – Fed’s Kocherlakota Speaks



    6:45 am CT – GS Store Sales

    7:20 am CT – Fed’s Powell Speaks

    7:30 am CT – Fed’s George Speaks

    8:00 am CT – FHFA House Price Index

    9:00 am CT – Richmond Fed Mfg. Index

    12:00 pm CT – 2-year Note Auction Results

    8:15 pm CT – Fed’s George Speaks



    6:00 am CT – MBA Purchase Applications

    9:00 am CT – New Home Sales

    9:30 am CT – Oil Inventories

    11:05 am CT – Fed’s Mester Speaks

    12:00 pm CT – Fed’s Evans Speaks

    12:00 pm CT – 5-year Note Auction Results



    7:30 am CT– Weekly Jobless Claims

    7:30 am CT – Durable Goods Orders

    8:45 am CT – PMI Services Flash

    9:30 am CT – Natural Gas Inventories

    10:00 am CT – Kansas City Fed Mfg. Index

    12:00 pm CT – 7-year Note Auction Results

    12:20 pm CT – Fed’s Lockhart Speaks



    7:30 am CT - GDP

    8:55 am CT – Consumer Sentiment

  5. From Bloomberg, Sep 22, 2014, 8:58:09 AM

    Packaged iPhones during the sales launch of the iPhone 6 and iPhone 6 Plus smartphones at the Apple Inc. store in Berlin on Sept. 19, 2014. Photographer: Krisztian Bocsi/Bloomberg

    Apple Inc. (AAPL) sold a record of more than 10 million iPhones in the weekend debut of two new models, as consumers flocked to stores and Web shops to buy handsets featuring bigger screens.

    To read the entire article, go to

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

  6. From Bloomberg, Sep 21, 2014, 8:44:47 PM

    The Nikkei 225 Stock Average figure, top right, and the foreign currency exchange rates, middle right, is seen behind attendees on the first trading day of the year at Japan Exchange Group Inc.’s Tokyo Stock Exchange (TSE) in Tokyo, Japan, on Monday, Jan. 6, 2014. Photographer: Kiyoshi Ota/Bloomberg

    On the wall of economist Adam Posen’s Washington office hangs a framed poster of Akira Kurosawa’s 1954 film classic, “Seven Samurai.”

    To read the entire article, go to

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

  7. From Bloomberg, Sep 22, 2014, 8:38:02 AM

    A truck driver fills his truck with diesel fuel at a Pilot Travel Center in Princeton, Illinois, U.S. Distillate fuel demand in the U.S. averaged 3.71 million barrels a day in the four weeks ended Sept. 12, the weakest level since March, according to the EIA. Photographer: Daniel Acker/Bloomberg

    Speculators are making their
    biggest-ever bet on lower U.S. diesel costs after expanding
    stockpiles drove prices to a two-year low.

    To read the entire article, go to

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

  8. Good Morning!

  9. Wait and see day, unfortunately.  

    Europe back to red across the board.  UK -0.7%, Germany and France -0.15%, Italy -0.7%, Spain flat. 

    Our futures are down 0.2% except RUT, which is down 0.5%.

    Only thing that matters is whether or not 2,000 holds up for the day.  

    Oil popped to almost $92 but now back to $91.40.

  10. Markets looking weak already.  /ES rejected at 2,000, /TF rejected at 1,135, YM rejected at 17,200 – if /NQ fails 4,075 and /YM fails 17,150 – that is bad.  /NKD is laggard at 16,215 – good for a short below 16,235.  

    YHOO $39.50!   AAPL $100.96???  

    Scariest economic indicator I saw this weekend was Jet Tickets still on sale.  I haven't seen a commercial for Jet tickets – EVER!  We have 2 football teams serving 14M people (with above average incomes) in the metro area and no competition until Philadelphia, 90 miles away (but at least the Eagles are 3:0). Meanwhile, the ticket-finding chart is great!  

  11. ABX and GDX not looking too healthy right now! Not unexpected given the dollar still strong today.

  12. SFTBY – Getting smoked on BABA dilution report.  Bought some.

  13. Wonder if it doesn't also apply to YHOO ?

  14. Aug home sales down 1.8% and a pathetic 5M for the year.  PATHETIC – there are 110M homes in this country – that's a turnover once every 20 years.

  15. Phil/coal  Is there any value in WLT?   Thanks.

  16. BofAML Global Research


    YHOO US: Yahoo! – Alibaba catalyst in rear view mirror; Downgrade from Buy to Neutral – Raising PO from $40 to $46. (Last Price $40.93)  

    §  Raising Yahoo price objective to $46, based a higher post-IPO Alibaba valuation.

    §  Lowering our rating to Neutral, as the stock has moved higher into IPO and we see less upside potential.

    §  Mkt Cap $40.88B (Justin Post)

  17. Phil // Crappy Karma
    For the probably the first time this year, I cashed in my TZAs on the dip Friday. Didn't get a price to reload so I thought I'd do it Monday. ( sigh )
    I also saw the crazy drop on /TF and played it long. Been working it all morning. I have +4 at 1130 – should I hold on  ?

  18. wombat

    Long /TF a bit scary. Friday I even felt off saying IWM looking for 112.4, support is below than, now basically there.

  19. WLT/1020 – It's like ABX, I'm just so much more comfortable imagining BTU will be able to make it through a 2-year downturn that it makes their competition seem horribly unattractive by comparison.  WLT is 1/20th the size of BTU so they have to mine what they've got while BTU can mine whatever kind of coal is making them the best margins at the moment.  

    Same bounce levels, by the way:

    • Dow 16,980 (weak) and 17,010 (strong) 
    • S&P 1,985 (weak) and 1,990 (strong) 
    • Nasdaq 4,560 (weak) and 4,570 (strong) 
    • NYSE 10,950 (weak) and 11,000 (strong) 
    • Russell 1,160 (weak) and 1,170 (strong)

    It's not good when you wait a week for strong bounces to be taken out…

    Plosser leaving the Fed – one hawk down.  

    BAC/Albo – Damn, I was hoping they'd go lower.  

    TZA/Wombat – Don't cry over spilled options.  I'm actually long /TF at the moment at 1,125.80 – trying to get to 1,125 on maybe 4 and play for the bounce but the fall from 1,160 on Friday means 35 points so weak bounce 1,132.50 and strong at 1,140.  

    As to TZA, the Jan $15/20 bull call spread is $1.25 and those can be offset by selling YHOO Jan $35 puts for $1.30 for a 0.05 credit on the $5 spread.

    WFC downgrates LVS, WYNN, MPEL and MGM – all down over 2.5%.  CZR escaped and is flat.  

  20. Phil // Milk
    Thanks – already did exactly that. Must be learning something here ; >

  21. TSLA looking better !!! – 12$

  22. Two Mondays in a row that momo's getting crushed.  Used to be the opposite.  Would love to see TSLA break 240.

  23. It sure is an ugly start to the week.  The damage is far worse than the weakness in the indices might suggest. Europe seems to be in a bad mood this morning so maybe the sun will come out after their markets close.  Hopefully the invisible giant hand will save the markets this afternoon.

  24. TLSA falls right through 50 dma at $251, 200 dma at $212, Musk better get a tweet going real soon. 

    Good job Wombat.   

    /NQ tested 4,050 – funny how little support there is once they slip.  

    Still, these are good bounce lines:  17,100, 1,990, 4,050 and 1,125 – long the laggard but not if any of them fail.  

    Oil extra sad at $90.88, gold $1,214.70.  VIX 13.69, TLT 114.74, XLF $23.58.

  25. Another take on the sapphire screen from a really good tech guy as part of his analysis of the iPhone 6 display:

    The use of sapphire to make the iPhone screens scratch proof was one of the most talked about rumors over past year as a result of Apple's $578M investment with GT Advanced Technologies to build a factory in Arizona. The likelihood of sapphire appearing on the iPhone 6 was close to zero because it will probably take at least another year for everything to come together. It is important to note that sapphire has some downsides over and above its much higher cost and manufacturing complexity. The most important issue for display performance is that sapphire has almost double the screen reflectance of glass (due to principles of optics), so it will be harder to read sapphire screens in high ambient light. That might be one reason why the recently announced Apple Watch Sport edition has a cover glass rather than sapphire like the other models—because it is much more likely to be used unshielded in high ambient light outdoors. Another reason is that while sapphire is very hard it is also brittle and is likely more prone to impact breakage, which is more common in sports situations. So, if given the choice, I personally would choose a cover glass with its better screen visibility and breakage protection. Others may find the scratch protection more important.

  26. At least we have cheap gas in NJ:

    How Much Is My State Gas Tax?

  27. And BTW, that makes no sense – why not raise it to $0.30/gallon and use that money to repair the roads and bridges around here. Although, knowing NJ politics, that extra money would probably end up in the pockets of the families of politicians!

  28. I can't confirm the validity of this, but I heard that over the weekend several Elliot Wave based services put out significant warnings about the stock market.  Does anyone subscribe to Prechter, or others ?

  29. STJ – It looks like South Carolina has the lowest state tax on gasoline in the country.  One would think that they'd raise it somewhat and improve their school system which ranks among the lowest in this country.  It's fortunate that they have Myrtle Beach in their state, or else they really would be in trouble.

  30. albo Waves

    Pharmboy is the wave man. I spent some time going over it and if wave theory is correct we should have be going down since 2013. 

  31. Shadow – Good one.  I believe Prechter has been preaching about huge declines for years.  As I recall, the did predict the crash of 1987, and has been living off that call for years.

  32. albo

    1987 sounds about right but I even took a seminar, my conclusion was he gives great history lesions. What really makes the theory worthless is he has non specific wave points, like sometimes it is 3, 5, 7, 9, whatever makes it work and then a bunch of excuses.

  33. Gas tax / Albo – NJ and Alaska are lower! I guess NJ schools are better than SC but infrastructure could use the help…

  34. Looks like the campaign of fear mounted by London toward old people worked in Scotland:

  35. IWM support is about 111.2 where trend line support comes in.

  36. Oh no, looks like Europe was holding us up. 

    Damage/Sibe – You are right, failing 2K and 11K on NYSE and now 1,125 on the RUT – all bad.  4,500 on the Nas better hold!  

    Sapphire/StJ – Wow, looks like AAPL really wasted $578M on that plant for GTAT.  Those guys are so dumb!  wink  This is just another in a long string of blown partnerships for AAPL like…. er….  ummm….  Anyway, thank goodness the guy from Gizmodo is there to set things straight. 

    This, of course, is yet another waste of AAPL's time, no wonder their stock is crashing (down 0.04 today) too:

    Apple Invents a Second Sapphire Glass Strengthening Process

    Buried in a sea of Apple patent applications that were published earlier this week by the US Patent & Trademark Office, an Apple invention for an alternative method for strengthening sapphire glass came to light. On September seventeenth I posted a report titled "LG Wins Contract for AMOLED Apple Watch Displays & Apple Fulfills Patent," which showed that the new Apple Watch was using a new patent pending sapphire glass strengthening process that we first covered in a report in August using ion steaming. In Apple's latest patent pending invention, we see that a secondary engineering team has worked on an alternative sapphire glass strengthening process. Whether their new process will work itself across the entire Apple Watch family over time or is being aimed for future cover glass applications for the iPhone and iPad is unknown at this time.

    The same article, however, does mention that it is brittle when there are imperfections.  I think AAPL's actual goal here is to get rid of the imperfections in manufacturing so they CAN make screens out of Sapphire but that's not going to help GTAT now – down another 2.5% today ($10.89).   Here's a clarification on brittle:

    Sapphire is considered brittle compared to some glass NOT because it more easily breaks! but because it does not flex as far as glass does before it breaks! Yet it takes a lot more force to flex sapphire enough to watch it turn brittle.

    Warnings/Albo – I know it's the "Hindenberg Omen" again.  That hasn't worked so far. 

  37. Phil,

    Any thoughts on playing silver SLV long?  I was thinking about selling an entry level amount of puts. Maybe the Jan 16's for $1.10?

  38. From Bloomberg, Sep 22, 2014, 11:26:04 AM

    Traders wait for Chinese online retail giant Alibaba’s stock to go live on the floor at the New York Stock Exchange on Sept. 19, 2014. Photographer: Jewel Sama/AFP via Getty Images

    U.S. stocks fell, led by a plunge among small companies, as sales of existing homes unexpectedly dropped and China’s finance minister damped stimulus hopes.

    To read the entire article, go to

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

  39. From Bloomberg, Sep 22, 2014, 10:33:04 AM

    Sept. 22 (Bloomberg) — Bloomberg’s Scarlet Fu reports that existing home sales disappointed in August, falling 1.8 percent to a 5.05 million annual pace. She speaks on “Market Makers.”

    Purchases of previously owned U.S. homes unexpectedly declined in August for the first time in five months as investors retreated from the market.

    To read the entire article, go to

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

  40. Climate/Stj – well… there are scientists who don't agree that "the science on climate change is undeniable."  scroll down and see the pre-release movie "The Global Warming War"  at

    Yes there has been warming (and now there appears to be cooling, or some like to call a "pause"). caused by CO2? not settled. is it a problem? not settled.  Has there been politicking and money involved? oh yeah. Me, I'm happy to see the debate continue…

  41. From Bloomberg, Sep 22, 2014, 11:14:43 AM

    Sept. 22 (Bloomberg) — Federal Reserve Bank of New York President William Dudley talks about the U.S. economy, Fed policy and financial markets.
    He speaks with Bloomberg News Editor-in-Chief Matt Winkler at the Bloomberg Markets Most Influential Summit in New York. (Source: Bloomberg)

    Inflation running below the Federal
    ’s target argues for “patience” on interest-rate
    increases and may require letting the economy run “a little
    hot,” New York Fed President William C. Dudley said.

    To read the entire article, go to

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

  42. From Bloomberg, Sep 22, 2014, 11:09:50 AM

    Sept. 22 (Bloomberg) — Julian Robertson, co-founder and chairman of Tiger Management LLC, and William Conway, co-founder and co-chief executive officer of Carlyle Group LP, talk about the financial markets, private equity, hedge funds and investment strategy.
    Bloomberg’s Jason Kelly moderates the discussion at the Bloomberg Markets Most Influential Summit in New York. (Source: Bloomberg)

    Julian Robertson, the billionaire
    founder of Tiger Management LLC, said there’s a bubble in bonds
    that will end “in a very bad way.”

    To read the entire article, go to

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

  43. From Bloomberg, Sep 22, 2014, 9:50:30 AM

    A Tesco Metro supermarket store in London on Sept. 22, 2014. Photographer: Simon Dawson/Bloomberg

    Tesco Plc started a probe of accounting practices and suspended four executives, including its U.K. chief, after overstating its first-half profit estimate.

    To read the entire article, go to

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

  44. From Bloomberg, Sep 22, 2014, 11:33:10 AM

    The European Central Bank will
    actively manage its balance sheet and is willing to implement
    more stimulus if required to stave off the threat of deflation
    in the euro area, ECB President Mario Draghi said.

    To read the entire article, go to

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

  45. From Bloomberg, Sep 22, 2014, 11:46:43 AM

    The operator of the Indiana Toll
    Road, owned by affiliates of Macquarie Group Ltd. (MQG) and Ferrovial
    SA (FER)
    , sought bankruptcy protection with a creditor-supported
    restructuring plan after dwindling traffic soured a $3.8 billion
    bet on a 75-year lease.

    To read the entire article, go to

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

  46. From Bloomberg, Sep 22, 2014, 12:02:43 PM

    European stocks fell the most in
    more than three weeks as China’s finance minister damped
    speculation his government will boost economic stimulus.

    To read the entire article, go to

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

  47. From Bloomberg, Sep 22, 2014, 10:40:19 AM

    Customers enter the Apple Inc. store during the sales launch for the iPhone 6 and iPhone 6 Plus at in New York on Sept. 19, 2014. Photographer: Victor J. Blue/Bloomberg

    The bigger screens yielded bigger results.

    To read the entire article, go to

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

  48. From Bloomberg, Sep 22, 2014, 11:46:37 AM

    Wal-Mart Stores Inc. (WMT) was accused by
    three advocacy groups of violating federal campaign-finance law
    by asking employees to donate to its political action committee
    in exchange for matching donations to a company charity.

    To read the entire article, go to

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

  49. From Bloomberg, Sep 22, 2014, 10:03:59 AM

    “This is a very difficult situation for our company,” Clorox Co. Chairman and Chief Executive Officer Don Knauss said in the statement. Photographer: Peter Foley/Bloomberg

    Clorox Co. (CLX), the consumer-products
    company that sells everything from bleach to salad dressing, is
    pulling out of Venezuela after inflation and government-mandated price freezes made the business unprofitable.

    To read the entire article, go to

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

  50. From Bloomberg, Sep 22, 2014, 10:15:41 AM

    A pro-Russian militant commander stands on a hill as smoke ascends around points close to the village of Zuivka, as the front line between pro-Russian militants and the Ukrainian army moves 50 kms east of Donetsk, in the eastern Ukraine, on Sept. 18, 2014. Photographer: Philippe Desmazes/AFP/Getty Images

    Russia’s banks are feeling the effects of granting free-spending consumers loans for everything from mobile phones to household appliances and foreign holidays as late repayments surge amid U.S. and European sanctions.

    To read the entire article, go to

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

  51. From Bloomberg, Sep 22, 2014, 10:54:43 AM

    Then-President of China Hu Jintao, right, holds hands with his Brazilian counterpart Luiz Inacio Lula da Silva in Brasilia, Brazil, on November 12, 2004. Photographer: Carlos Humberto/AFP via Getty Images

    In 2004, Brazil’s then-President
    Luiz Inacio Lula da Silva and 400 executives went on a six-day
    trip to China. The mission was simple: Encourage companies to
    strengthen ties with the Asian nation to bolster growth at home.

    To read the entire article, go to

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

  52. From Bloomberg, Sep 22, 2014, 10:00:00 AM

    Sept. 22 (Bloomberg) — European Commissioner for Economic and Monetary Affairs Jyrki Katainen and European Central Bank Executive Board member Benoit Coeure speak at news conference on Europe’s economy and ECB policy.
    They spoke yesterday in in Cairns, Australia, after a meeting of Group of 20 finance ministers and central bankers. (Video courtesy of G-20. Source: Bloomberg)

    Euro-area consumer confidence
    declined in September as the European Central Bank strives to
    avert a downward spiral in prices amid political tensions in
    eastern Europe.

    To read the entire article, go to

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

  53. From Bloomberg, Sep 22, 2014, 11:51:21 AM

    How long will it stay up?

    Stocks and bonds are telling different stories about the future of the U.S. economy — a contrast that is becoming harder to reconcile as the Federal Reserve gradually removes its support for the recovery.

    To read the entire article, go to

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

  54. From Bloomberg, Sep 22, 2014, 8:03:24 AM

    Partisan anger at the polls.

    If you are a Democrat, would you marry a Republican? Would you be upset if your sister did?

    To read the entire article, go to

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

  55. CLF … wow! Taking a nasty dip today to under $13 !!

  56. DMulligan CLF I am still thinking we are beating a dead horse hear 

  57. Phil//  Given the situation with GTAT, would it be better to wait things out or start a position?  Also I'd like to see your take on CLF?  Is this a good time to roll down my long calls CLF 15 2016?  This CLF long is part of the 15/25 bcs 2016.  Thanks.

  58. if anyone is looking for a great book to read — im halfway thru "wheelmen" right now and it is outstanding! 

    best book ive read in a few years… it chronicles the lance armstrong fraud in all its glory

  59. GOGO – had some Feb $17 puts fill today at 2.25. gives a 33% return in 150 days with regular margin (79% annualized!). Did this uncovered in an IRA account as a lead-in to new entry and fully cash covered is a 13% return (*nice dividend) in the 150 days (31% annualized).

  60. Sapphire / Phil – I don't think that the article was so bad… It did turn out that sapphire was not used for the iPhone 6. As I posted last week, it does seem that once Apple invested in GTAT, people made the jump to conclude that 60M phones would use sapphire in 2015 when apparently it was not possible. This doesn't question the long term premise, but only the short term one that was basically only a rumor! The pros and cons of sapphire compared to glass are another issue altogether – the author just lists them and doesn't say that no solution are available. 

  61. Quote of the day:

    Edward Luce, “The average tenure of the US CEO is falling. Buying back shares instead of investing makes sense if you do not expect to be around for the pay-off. It is a no-brainer if you measure the time horizons of most executive reward packages.”  (FT)

  62. Someone is optimistic about Europe:

    There is no question that the Eurozone's economy continues to struggle. Issues such as the recession in Italy, manufacturing stagnation in France, and massive unemployment across the area are not going away anytime soon. China's economy and the situation in Ukraine continue to pose risks. Surveys still show worsening business and consumer sentiment. But the expectations around the area's performance have been so bad lately, surprises to the upside are increasingly likely (see example). The ECB's aggressive easing stance as well as stronger trade and industrial activity data tell us that for now the worst of the euro area slowdown may be over.

  63. This is strictly Monday morning quarterbacking, but the extremely high short interest in GTAT should have been a warning sign.  On June 30th, the short interest was 41 million shares about 30 % of the float. On August 15th it had risen to 51 million shares.

    Heavy short interest isn't always a negative, but it certainly means that the stock Is controversial, esp. with those lofty numbers of shorts.

  64. stjean

    Sapphire is brittle because of density, take that away and you get scratching. What is so far out that 1 AAPL has lots of cash, 2 sapphire is used for camera, 3 finger print, and 4 the watch. There is also the light transmission issue noting to do with breaking or scratching but battery life.

  65. Hello Phil,

    (This is sort of an esoteric question and can wait until after hours or weekend, etc.)

    I was doing some research over the weekend about the "Roosevelt recession" of 1937-38.  In some ways I know this sort of thing is bogus, as you can find people all over the internet who can put up a chart and say that the current environment is "just like" 1929, 2001, 1987, 1952, or who knows what.  So I fully understand the risks of that kind of approach; also when researching about it, I notice there is not any clear consensus even now about what caused that recession, was it monetary and fiscal tightening?  "gold sterilization?"  etc.  But I guess the reasons I started having a look at it were:

    1.  It represents a period where asset values have recovered quickly after a severe financial crisis, and under conditions of a large scale expansion of the money supply;

    2.  It occurred during a period of darkening world geopolitical situation;

    3.  This is somewhat editorializing on my part, but it seems like it occurred in a situation where asset values had recovered / appreciated quickly, but there was not yet a stable foundation which could support long term stability and growth.  Carrying the analogy out, that stability did come, but not until later, of course after a major world war, etc.  But just in terms of the stock market, after turning down about 47% in 1937-38, it did hit bottom and sort of recovered / traded sideways until after the war was over and the postwar boom got started.  So, after the 1938 bottom, investors who got in from that point forward would have done OK (quite OK actually), but going long in 1935-37 would have had painful results.

    So I guess the point of this is, I'm a bit queasy about my longs (and when considering to put on new longs), and I've been that way for most of this year, although probably the biggest problem for me is, I can analyze many things, but I don't yet have the experience across several cycles, to where I can have confidence in the signals that I think I'm seeing.  (For example, during the 2008 crisis, I did not really have assets to invest, so I didn't really go through that experience as an investor).  So I raise the issue, hoping I can benefit from your experience and also possibly from others on the board who have been through a few more turns of the screw than I have.  But, when I look at the current environment, it does appear that asset prices have gone up quite high, but there is not yet a solid foundation in the overall political economy for long-term growth (too much inequality, political dysfunction, geopolitical uncertainty, etc.).  Some people would likely say, yeah, but we won't have a recession like that because the central banks have kept policy loose this time rather than tightening, but that seems sort of flimsy.  Also I notice the downturn in stock market in 1937 started before the policy tightening began, not after.  So, when I think about a potential 47% drop in the context of my own longs, I get sort of queasy.

    At any rate, many thanks in advance for your tolerance, and of course this can wait until such a time as you might have a chance to look at it..

    Thanks again..

  66. scottmi 

    Analysing your GOGO trade  Feb. 15 17p I receive 220.00 (yours 225.) CSP cost you 1,700.00

    Look at the Feb 15 12/17 BCS costing  690.00 with an expected gain of 155.00 No risk of assignment 

    Actually if I only set up two trades costing 1380.00 could bring 310.00 against your 225.00 I show a 218.00 PM margin per option play. So if you really think GOGO will stay the same or go up you could spend 1800.00 and you looking for 465.00 

  67. Speculating on an outlier:  

    Putin is an efficient dictator governing the largest country in the world, by territory.  It has become a deteriorating economic basket case second only to North Korea in its negative potential.  The NATO allies are pressuring Putin with trade sanctions over his invasion of the Ukraine, and dictators don’t remain dictators by allowing other countries to push them back to the stone age.  N. Korea is a small place seen mostly as a renegade province of South Korea.  Russia is the largest country in the world, measured in territory, and has a very large conventional and nuclear arsenal with global reach.  I would not place any bets on the status quo of Russia allowing itself to be strangled by trade sanctions being sustainable.  I would guess that the NATO countries are far more concerned with their deteriorating economies than with Ukrainian independence.


     If I were Putin, I would invade the Eastern Ukraine and simply declare that it was necessary to create a buffer zone to protect the Russian-speaking Ukrainian population from foreign interference.  To give me a few things to bargain with, I might even cross the borders of Belarus, Latvia, Lithuania and Estonia to really ram home the point.   Would the spy satellites see this coming?  Yup, you betcha.   But since your average European citizen – and certainly the American ones – couldn’t locate Belarus or Latvia on a map with a gun to their head, I’ll bet Putin could move negotiations forward with alacrity once the EU markets open down 5-10% on the Monday [Putin is market savvy enough to invade on a Saturday] and demonstrate once and for all what price the West is willing to pay to liberate countries of whose existence their citizens are barely aware.  Caveat Emptor.

  68. CLF / Yodi … Appears so at the moment!

  69. DMullian I have been holding that sucker since March 13 and have seen it only go one way.

  70. Phil // CLF
    -40 Oct $15 short calls ( .14 )
    +40 Jan15 $15 calls ( 1.73 )
    -20 Jan15 $17 short calls ( .68 )
    -20 Jan15 $15 short puts ( 4.00 )

    The $17 short calls are part of the spread ( $15-17) I was waiting until they rose in price to equalize the spread. I'd like to take this into 2016, but not sure the right combo to make it less risky.
    Help …

  71. zeroxzero

    Putin My two cents the western world would do nothing but only wet their penties

  72. GTAT – Another Monday morning look at GTAT also reveals a disturbing practice (IMHO) by the top executives of GTAT to sell off optioned shares almost as quickly as they get them.  In the past 3 years, the CEO, who makes $2 million a year in salary and generous stock options, has sold off hundreds of thousands of shares, and has fewer shares now than he did in November 2011.  Again, it doesn't prove anything but if I had been a long term investor accumulating shares in this compay, it would be a definite red flag.

  73. wombat

    My take on CLF you can forget the Oct 15c they will be worthless Roll the 40 15 long calls to Jan16 10calls If you still believe in miracles and sell an other 20 Jan16 15calls but not on a day like today They might creep up .50 cents in stk value. The Jan 17 callers keep an eye but they will be toast as well. Just put this in your note book

  74. GOGO/yodi – In my IRA, I do make a number of 'covered' put sales that reduce margin and give higher projected returns, but for this trade, I think there is a very good risk of assignment on the Feb $17s--and i'll be happy to take it and keep that cash locked up for it. If assigned, then will write another set of ATM puts and maybe cover with calls. This is an initial entry for a 3x-4x ($15-$20k) final position.. if the shares are put to me. If not, and GOGO walks away, still a 31% (annualized) return on my IRA cash. I really do not want to be over-levered in this market.

  75. GOGO/yodi – I want to keep the premium from the GOGO puts if it is put to me so not interested in a BCS just yet. If it "breaks out" over $20 and holds it, I may add a BCS at that time.

  76. SLV/Button – I prefer SLW.  We had a chart last weeks showing huge outperformance for SLW over time.  SLW is at $21 and you can sell 2016 $20 puts for $2.70 and leave it at that (net $17.30) or you can add the $18/25 bull call spread for $2.95 for net .25 on the $7 spread that's $3 in the money.  

    Climate Science/Scott – Wow, really?  There are still guys like you out there?  Do you also stand in front of burning buildings and encourage the firemen to debate on the nature of the flame before taking action?  

    CLF/DM, Yodi - Oddly enough, according to The Street, anyway, they are down because they are a coal miner – even though they are not.  They do own 3 coal mines but it's mainly to supply their own needs:  

    GTAT/Rookie – If you're not in (or if you are), it's better to wait to let them find a bottom than take stabs on the way down.  Same goes with CLF.  If the VIX were higher – I'd feel better but we're getting such poor rewards for the risk of short put selling – it's better to make sure we have a good floor first.  

    CLF/Rookie – The 2016 $15 calls are $1.70.  You can roll them to the 2017 $12 calls at $3.70, spending $2 to roll out one year and down $3 in strike.  Or you can roll to the 2017 $10s at $4.50 and sell the $15s for $2.50 for net $2 and buy back the short 2016 $25s for $.40 and that's net 0.70 to roll to the 2017 $10/15 bull call spread, which is a pretty good spread.  

    As a new trade on CLF, I do like the 2017 $10/15 bull call spread at $2, selling the $8 puts for $1.90 for net 0.10 on the $5 spread but CLF is always a rough ride.

    GOGO/Scott – I like those, we put them in the Income Portfolio on 9/17.

    Sapphire/StJ – It was never supposed to be used for the iPhone 6.  AAPL only gave them $570M to build a plant that isn't built yet – the way GTAT was manipulated is by floating an untrue rumor that they would be included to run the price up and then to beat the crap out of them when they weren't included to drop the stock back – it's a classic con that plays off the kind of NDA's AAPL makes its suppliers sign and we go through this every couple of years with a different supplier but people seem to NEVER learn.  It's both amazing and annoying to me. 

    LQMT 0.1875 by the way!  

    Quote of the Day/StJ – Actually, I have to go with Bloomberg earlier, who said:  "But happiness can't buy money."

    Recession/Pwright – It's very hard to compare now to then because then we were on the gold standard and money had value, now it's just an abstract concept, which allows it to be inflated without anyone actually spending it.  In other words, in 1935, if the stock market had gone up 40% without a 40% inflow of capital – it would have been very easy to demonstrate that there simply wasn't enough gold in the World to cover the apparent rise in prices and, therefore – bubble.  These days – it's not so simple.  

    That is what almost happened in 2008, banks had over-leveraged and were reporting profits that simply did not exist using assets that were nowhere near as valuable as claimed.  They could get away with it as long as the money supply kept growing but the housing market began to suck money out of the rest of the economy faster than it could be printed by the Fed and the Banks and liquidity dried up and BOOM! "sudden" crash that had to find a level where actual money was available to buy stocks, bonds, homes and commodities – and it wasn't anywhere near the amount that had been previously assumed.  

    So, the question is, after 6 years, have we really doubled the supply of money in the world to bring home prices back up and the markets back up or are we simply fooling ourselves somewhat less than last time?  Probably a bit of both but it's the nature of the re-supply I object to – as it's been done from the top down, benefiting only those with access to the FREE MONEY and doing nothing to improve the lot of the working class – who were just as damaged by the crash as the rich folks were.  By repairing the balance sheets of the rich and not the poor – we've considerably widened the wealth gap and left ourselves in a very unhealthy situation – the kind of situation that did, ultimately, lead to the 1929 collapse.

    As to what to do.  It's what we're doing in the STP and the LTP, we're investing while holding our noses and making sure we have a lot of hedges.  In fact, on Friday the STP was up 30% and today it's up 43.4%, so + $13,400 on that little dip while the LTP is still chugging along at 19.3% ($596,000) for a combined $144K – still well over our $135K worry line.  That's the point of running these portfolios – to give you the experience.  

    The market can always drop 47%, that's why we are using less than 1/3 of our buying power.  In fact, we WISH it would drop 47% so we could use 2/3 of our buying power!   You are young so stick to conservative, small entries on stocks you REALLY want to own for 20 years and just begin to work your way into them SLOWLY.  I talk about this strategy in great detail in Vegas as it's really important – you should come out.

    Putin/ZZ – I don't think a guy with $40Bn wants to cap off a great career by becoming a war criminal.  He took Crimea, that's what he wanted, the rest is already setting up for his magnanimous concession. 

    CLF/Wombat – They're at $13 so, unless you sold the $15 puts for less than $2, what's the big deal?  The Jan $15 puts are are $3 so I assume $4 is what you paid but then, if you sold Oct $15 calls for 0.14 I can't imagine what you ever thought the point of that was?  Anyway, the 2017 $10 puts are $2.80 so you gain $5 in two years.  That means, in 2021, you should have free stock! 

    The Jan $15 calls are still 0.60 and this is the part where I remind you that you need to do your rolls BEFORE the price of the calls falls below the net of the spread.  If you want, I'm sure I can find 5 or 10 times I've specifically said this to you.  Anyway, so I'd roll the puts but another spread is simply a new play at this point – do you want to play CLF or not?  If so – see above. 

  77. Scottmi GOGO I can not say to much about the IRA acc. as I do not know to much about it as German.

    If assigned at 17 you actually have bought the stk at 14.80, the so called discount but facing a loss overall. Say the stock would drop to 15.55 you could still sell it with a profit of .75 In my case the stock can go down to 15.55 and I still get my cash outlay back, but no assignments. So there are two sides to look at. 

  78. Wombat sorry misread the Jan15p for calls Phil got a point there they still have to wear down the premium.

  79. "Still guys like you"/Phil – LOL!  What, who, me? ;-)

  80. RIG, by the way, at $33.82 still pays a $3 dividend (7.6%) and you can buy the stock and sell the 2016 (no 2017 yet) $30 calls for $5.10 and the $28 puts for $2.75 for net $25.97/26.99, which make the $3 dividend 11.5%.  RIG made $1.5Bn last year and has made $500M in each of the last two quarters, has $3Bn in cash, a ton of rigs (assets) and $10Bn in debt with OK cash flow – so it's being serviced.  

    YHOO/STP, $25KP – Let's buy back the Jan $45 calls for $1.15 (about even) and roll the Jan $38s ($3.50) to the April $32/39 bull call spread for $4 so we pay +$1.65 and drop to $7 in the money at net $3.25 overall.  In the STP only, let's also sell the April $37 puts for $3.10.

  81. Phil, many thanks for your comments.  What you are saying makes good sense.

    Re: Vegas, I can't come this year, cost issues, young daughter and just getting back from China at that time, but I'll get there one of these years !  I've been doing OK this year, but churning too much, making some mistakes but learning the tools in the shed. 

  82. Quote for the day: "Losers average losers" – John Tudor Jones, in reference to the practice of averaging down when prices fall..

  83. No worries Pwright, we'll work on it together. 

    Quote/Scott – Reminds me of this, good for discussion above:

    Benjamin Graham: Three Timeless Principles

    Warren Buffett is widely considered to be one of the greatest investors of all time, but if you were to ask him who he thinks is the greatest investor, he would probably mention one man: his teacher Benjamin Graham. Graham was an investor and investing mentor who is generally considered to be the father of security analysis and value investing.

    His ideas and methods on investing are well documented in his booksSecurity Analysis (1934) and The Intelligent Investor (1949), which are two of the most famous investing books. These texts are often considered to be requisite reading material for any investor, but they aren’t easy reads. Here, we’ll condense Graham’s main investing principles and give you a head start on understanding his winning philosophy.

    Principle No. 1: Always Invest With a Margin of Safety

    Margin of safety is the principle of buying a security at a significant discount to its intrinsic value, which is thought to not only provide high-return opportunities but also to minimize the downside risk of an investment. In simple terms, Graham’s goal was to buy assets worth $1 for 50 cents. He did this very, very well.

    Join Steve Forbes, Muriel Siebert and an all-star lineup of investment advisers and market experts on March 12 at the Online Investor Conference, Finding Value During Uncertain Times. Register now, it’s free.

    To Graham, these business assets may have been valuable because of their stable earning power or simply because of their liquid cash value. It wasn’t uncommon, for example, for Graham to invest in stocks in which the liquid assets on the balance sheet (net of all debt) were worth more than the totalmarket cap of the company (also known as “net nets” to Graham followers). This means that Graham was effectively buying businesses for nothing. While he had a number of other strategies, this was the typical investment strategy for Graham. (For more on this strategy, read “What Is Warren Buffett’s Investing Style?”)

    This concept is very important for investors to note, as value investing can provide substantial profits once the market inevitably re-evaluates the stock and raises its price to fair value. It also provides protection on the downside if things don’t work out as planned and the business falters. The safety net of buying an underlying business for much less than it is worth was the central theme of Graham’s success. When stocks are chosen carefully, Graham found that a further decline in these undervalued equities occurred infrequently.

    While many of Graham’s students succeeded using their own strategies, they all shared the main idea of the “margin of safety.”

    Principle No. 2: Expect Volatility and Profit From It

    Investing in stocks means dealing with volatility. Instead of running for the exits during times of market stress, the smart investor greets downturns as chances to find great investments. Graham illustrated this with the analogy of “Mr. Market,” the imaginary business partner of each and every investor. Mr. Market offers investors a daily price quote at which he would either buy an investor out or sell his share of the business. Sometimes, he will be excited about the prospects for the business and quote a high price. Other times, he will be depressed about the business’s prospects and will quote a low price.

    Because the stock market has these same emotions, the lesson here is that you shouldn’t let Mr. Market’s views dictate your own emotions or, worse, lead you in your investment decisions. Instead, you should form your own estimates of the business’s value based on a sound and rational examination of the facts. Furthermore, you should only buy when the price offered makes sense and sell when the price becomes too high. Put another way, the marketwill fluctuate–sometimes wildly–but rather than fearing volatility, use it to your advantage to get bargains in the market or to sell out when your holdings become way overvalued.

    Here are two strategies that Graham suggested to help mitigate the negative effects of market volatility:

    –Dollar-cost averaging: Achieved by buying equal dollar amounts of investments at regular intervals. It takes advantage of dips in the price and means that an investor doesn’t have to be concerned about buying his or her entire position at the top of the market. Dollar-cost averaging is ideal for passive investors and alleviates them of the responsibility of choosing when and at what price to buy their positions. (For more, read “DCA: It Gets You In At The Bottom” and “Dollar-Cost Averaging Pays.”)

    Special Offer: Invest like the legends–Graham, Buffett, Lynch, Piotroski and others. The Validea Hot List takes the best current picks based on the strategies of the world’s best investors of all time. Click here for the complete list of current buys.

    –Investing in stocks and bonds: Graham recommended distributing one’s portfolio evenly between stocks and bonds as a way to preserve capital in market downturns while still achieving growth of capital through bond income. Remember, Graham’s philosophy was, first and foremost, to preserve capital, and then to try to make it grow. He suggested having 25% to 75% of your investments in bonds, and varying this based on market conditions. This strategy had the added advantage of keeping investors from boredom, which leads to the temptation to participate in unprofitable trading (i.e., speculating). (To learn more, read “The Importance Of Diversification.”)

    Principle No. 3: Know What Kind of Investor You Are

    Graham said investors should know their investment selves. To illustrate this, he made clear distinctions among various groups operating in the stock market.

    Active vs. passive: Graham referred to active and passive investors as “enterprising investors” and “defensive investors.”

    You only have two real choices: The first is to make a serious commitment in time and energy to become a good investor who equates the quality and amount of hands-on research with the expected return. If this isn’t your cup of tea, then be content to get a passive, and possibly lower, return but with much less time and work. Graham turned the academic notion of “risk = return” on its head. For him, “work = return.” The more work you put into your investments, the higher your return should be.

    If you have neither the time nor the inclination to do quality research on your investments, then investing in an index is a good alternative. Graham said that the defensive investor could get an average return by simply buying the 30 stocks of the Dow Jones industrial average in equal amounts. Both Graham and Buffett said getting even an average return–for example, equaling the return of the S&P 500–is more of an accomplishment than it might seem.

    The fallacy that many people buy into, according to Graham, is that if it’s so easy to get an average return with little or no work (through indexing), then just a little more work should yield a slightly higher return. The reality is that most people who try this end up doing much worse than average.

    In modern terms, the defensive investor would be an investor in index funds of both stocks and bonds. In essence, they own the entire market, benefiting from the areas that perform the best without trying to predict those areas ahead of time. In doing so, an investor is virtually guaranteed the market’s return and avoids doing worse than average by just letting the stock market’s overall results dictate long-term returns. According to Graham, beating the market is much easier said than done, and many investors still find they don’t beat the market. (To learn more, read “Index Investing.”)

    Speculator vs. investor: Not all people in the stock market are investors. Graham believed that it was critical for people to determine whether they were investors or speculators. The difference is simple: An investor looks at a stock as part of a business and the stockholder as the owner of the business, while the speculator views himself as playing with expensive pieces of paper with no intrinsic value. For the speculator, value is only determined by what someone will pay for the asset. To paraphrase Graham, there is intelligent speculating as well as intelligent investing–just be sure you understand which you are good at.

  84. Yodi & Phil // CLF
    Christ, I wrote this three times and Safari keeps crashing – arghhh.
    Thanks Yodi  - thats very close what I had in my notebook already !! I reread your post – I think you got it right.
    The only difference is Phil wants to roll the Jan15 $15 puts out to Jan17 $10 ( $2.15 debit ) Phil, what do you think of a straight roll to the Jan17 $15's for $6 ( $2.15 credit ) Assignment pretty close to the $10s with a lot more premium ?

    Yodi, I was thinking rather rolling the whole +40 Jan15 $15 longs, just roll +20  to the Jan16 $10 longs 
    ( 5K vs 12K cost and no margin )
    and then use your idea of keeping the short Jan15 $17s to expire, and then when things calm down sell the Jan17 $15's for a better price.

    Am I understanding you both ?

    I can't believe I actually understood what I just wrote ; >

    P.s. Phil, I just sold the October calls this morning. I know it's non-sensical, just a little bit of cash to remind to write premium every month. AND I missed the long call roll because the spread was uneven. At least thats my excuse …

  85. Merck-GA is buying Sigma. 

    SeekingAlpha let's this slip thru:

    Drugs and chemical maker Merck (MRK) announced Monday that it would acquire life science and technology company Sigma-Aldrich (SIAL) for $17 billion in the cash.

    They are now officially off my list….

  86. guys, sorry – in re-reading this, the Jan15 $15 puts are short, just to be clear.

  87. BABA just below $90. 

    Crashing/Wombat – I always hit CTRL-A and CTRL-C before submitting a comment.  That way, if something goes wrong, I have a copy in memory.  

    CLF/Wombat – If you REALLY want to own CLF (as opposed to getting out of a trade that went against you), then sure, I like selling the 2017 $15 puts for $6 – that's net $9 anyway with the stock at $12.83.  And see, you are catching on.  Nothing wrong with placeholders – I use them myself…

  88. USO – interesting, /CLs last deep swing low on 1/13/2014 went to 91.45 with USO going to 32.81. Current dip of /CL to 90.41 only took USO to 34.03.. keeping about 4% higher while oil went a buck lower. VIX was right in the same neighborhood around 13.

  89. While the Russell 3000 Index touched an intraday record at the end of last week, fewer than 55 percent of its components traded above their 200-day moving average, a combination that hasn’t happened since the peak of the dot-com bubble




  91. scott I was expecting USO to go to 33.83, think that was August, for sure the match up is wrong.

  92. USO/shadow – i'd sure be delighted to see it go lower and lower still. Wondering what is keeping USO up against oil when, as phil once pointed out, it used to decay so made a better short vehicle than long.

  93. Phil



    Hi and good afternoon!


    Since they have a dividend, why not set up a buy write?

  94. USO/Scott – Due to the constant contract rollover, it's not always a good correlation but that's pretty far off for a year.  Does kind of favor shorting USO – especially if $90 breaks.  We shorted XLE too and that's been very slow to respond to low oil. 

    Bubble/Angel – That's what I kept sayin'!  

    LQMT/Angel – Already got them, 0.18 is my buy point – going for $1 but take 1/2 off at 0.24+ and reload at 0.18 so it's all net free at the moment.  

    CLF/Maya – Because, unlike RIG, you can argue that they may not be able to support their dividend.  In the very least, they will be under pressure to cut it – and that may make the stock go down even lower.

  95. MO/Phil – bullish day after bullish day. Is this really just marijuana prospects?  Or if we get a new big war, more cigs to soldiers?

  96. HLF down sharply.  Guess Ackman's happy.  Icahn, not so much. ;-)

  97. TRV knocking on breakout to new all time high.

  98. MO/Scott – I'm pretty sure it's pot.  I thought we decided to make a trade on them but I can't find it (MO is too common to search for):

    HLF/Albo – Just in time as Ackman's raising money for a new fund.

    By the way folks, keep in mind that CLF and BTU are meant to BALANCE our bearish bets on the World Economy.  The logic for stocks like that is:  If we're wrong on the short side and the economy is getting better, then it's good to have some basic material plays.  If we're right and the economy crashes and takes materials lower – then we don't mind doubling down on materials and waiting for the next up cycle:

    • Cliffs Natural Resources (CLF -8.5%) plunges to 52-week lows as worries grow over the potential for an economic slowdown in China.
    • Chinese steel production grew a mere 1% Y/Y in August, well off 2.6% YTD and 9%-10% growth recognized over the past few years; Wells Fargo's Sam Dubinsky views the data as negative for iron ore pricing, and thinks it means trouble for CLF, whose results could disappoint as the value of assets likely will diminish as pricing continues to fall.
    • Also, a Bloomberg weekend report says coal demand in China may peak as soon as this year, which could further hurt coal miners such as CLF.
    • Iron ore giants are lower: BHP -3.2%, RIO -2.7%, VALE -4.8%.
    • Coal producers: ANR -9.7%, WLT -9.2%, ACI -7.7%, CLD -4.6%, BTU -4.4%, WLB -2.7%.

    ABX too:

    • After touring Barrick Gold’s (ABX -1.8%) Cortez mine in Nevada, Credit Suisse analyst Anita Soni lowers ABX’s projected EPS for 2015 and 2016 as well as its expected stock price target after projecting another two years until Cortez sees production rivaling the levels it achieved in 2013.
    • Cortez produced 1.3M oz. of gold at all-in sustaining costs of $433/oz. in 2013 – making it one of the largest and lowest-cost mines in the world – but Soni cuts her 2015 production estimate to 950K oz. from 1.17M oz. and 2016 to 1.08M oz. from 1.13M, with estimated all-in sustaining costs for 2015 of $671/oz. from $510/oz. and 2016 to $605/oz. from $577.
    • RBC's Stephen Walker attended the same investor tour of ABX’s Nevada operations but comes away more positive overall, impressed with the quality of the core producing assets and the Nevada operating team; he thinks ABX’s Nevada mines could produce 2M oz./year of gold, or ~30% of ABX’s current total, on a sustained basis for 15-plus years, assuming key permits are issued.

    And everything else:

    • Commodity prices as measured by the Total Return Bloomberg Commodities Indexreaches new five-year lows, hit by a strengthening dollar, the prospect of a record grain harvest in the U.S. and concerns over weakening economic growth in China.
    • The index has dropped more than 12% since the end of June amid falling prices for commodities such as crude oil, soybeans and gold.
    • Even industrial metals, one of this year’s best performers in commodities, have started to come under pressure; nickel has dropped 10% since the end of June, copper prices are at three-month lows, and iron ore trades below $80/ton for the first time since 2009.

  99. That was not a good way to start the week.  We lost 10,950 (weak bounce) on NYSE but held the rest but still not getting those final bullish signals, which keeps us bearish and, from the STP's performance today – it's a damned good thing we do wait for the proper signals from our bounce levels!  

    • Dow 16,980 (weak) and 17,010 (strong) 
    • S&P 1,985 (weak) and 1,990 (strong) 
    • Nasdaq 4,560 (weak) and 4,570 (strong) 
    • NYSE 10,950 (weak) and 11,000 (strong) 
    • Russell 1,160 (weak) and 1,170 (strong)

    We'll see if the S&P and Dow can hold up now but it's time for more hedges if not…

  100. Nice crowd on Wall Street……

  101. Phil- Not quite grasping  your evaluation recommendations for rolling ( when the price equals spread..). Could you illustrate with an example defining the terms ( I grasp what the price of each leg is) so we can see the logic.

    I looked at your valuation rundown on BabaYahoo and it seems sound so I'd like to stay in but 
    I have and should perhaps roll one or both of the YHOO

    Jan '15 38/45 BullCallSpread
    and/or the
    Jan '16 40/50 one?

  102. LXK/Phil – dipped enough or more to fall? continuing to come down off recent high while other computer companies are at/making new ones (HPQ, AAPL, MSFT, XRX, EMC)

  103. So how many wars is the US fighting right now? Depending on how you count, "Somewhere between zero and 134…"

    Can't afford to fix our infrastructure, have to spend on all those bombs and soldiers and travel to all those faraway places..

  104. scottmi

    The weakness in oil is undeniable. This is Tuesday run up to Wednesday numbers but keep in mind expiration Monday was a bust. I believe the RUT will lead us further down and what does oil have? A higher dollar! Not a hint of demand and I don't see coal saving energy. The banks are about to bust and as far as Phil's words of wisdom we are closer to 1929 than the late 30s, 8 years not 5 years after demarcation. 

  105. From Bloomberg, Sep 23, 2014, 3:14:41 AM

    European stocks fell for a second
    day as investors awaited data that may show manufacturing in the
    U.S. and the euro area continued to expand. U.S. index futures
    were little changed, while Asian shares rose.

    To read the entire article, go to

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

  106. From Bloomberg, Sep 23, 2014, 3:30:00 AM

    German manufacturing expanded at the slowest pace in 15 months in September. Photographer: Jasper Juinen/Bloomberg

    German manufacturing expanded at
    the slowest pace in 15 months in September as new orders fell,
    signaling uneven momentum in Europe’s largest economy.

    To read the entire article, go to

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

  107. From Bloomberg, Sep 23, 2014, 3:00:00 AM

    An employee stitches merino wool inside the factory of 174-year-old beret-maker Laulhere in Orolon-Sainte-Marie. With an economy that failed to grow in the first two quarters and a budget deficit that’s rising for the first time in five years, today’s data add to evidence that France will probably stagnate in the second half. Photographer: Balint Porneczi/Bloomberg

    France’s manufacturing and services
    industries shrank in September, in a sign the outlook for the
    euro area’s second-largest economy is continuing to deteriorate.

    To read the entire article, go to

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

  108. From Bloomberg, Sep 23, 2014, 3:51:40 AM

    Sept. 23 (Bloomberg) — Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd., talks about a report today showing a Chinese manufacturing gauge unexpectedly increased this month and the outlook for the economy.
    He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    A Chinese manufacturing gauge unexpectedly increased this month, suggesting export demand is helping the economy withstand a property slump.

    To read the entire article, go to

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

  109. From Bloomberg, Sep 23, 2014, 3:09:01 AM

    Residential buildings stand illuminated at night in the Nanshan district of Shenzhen, China. Home prices dropped in August from July in 68 of 70 cities tracked by the government, including in Beijing and Shanghai. Photographer: Brent Lewin/Bloomberg

    China’s four biggest banks may ease
    mortgage lending, the latest in a series of policy steps aimed
    at supporting the country’s sliding property market, the 21st
    Century Business Herald reported yesterday.

    To read the entire article, go to

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

  110. From Bloomberg, Sep 23, 2014, 2:15:02 AM

    Cordoned-off sidewalk outside an Apple store in Berlin, on Sept. 20, 2014. Photographer: Jörg Carstensen/dpa/AP Photo

    If bandits rob banks because that’s where the money is, then it makes sense to hold up an Apple Store in Germany on the day after a new iPhone is released — because that’s where the cash is.

    To read the entire article, go to

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

  111. From Bloomberg, Sep 22, 2014, 11:00:00 PM

    Sao Paulo’s most expensive real estate got even pricier this year, surging 10 percent as wealthy buyers in search of safe neighborhoods ignored Brazil’s recession. Photographer: Paulo Fridman/Bloomberg

    Sao Paulo’s most expensive real
    estate got even pricier this year, surging 10 percent as wealthy
    buyers in search of safe neighborhoods ignored Brazil’s
    recession, according to one of the city’s biggest brokerage

    To read the entire article, go to

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

  112. From Bloomberg, Sep 23, 2014, 4:00:00 AM

    A gauge of new orders for the euro area slipped to 51.2this month, from 52.4 in August, the data showed. An index ofservices growth slowed to 52.8 from 53.1 and manufacturing fellto 50.5 from 50.7.Photographer: Akos Stiller/Bloomberg

    Euro-area manufacturing and services growth unexpectedly slowed in September to the weakest pace this year, adding to signs that the economy is faltering.

    To read the entire article, go to

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

  113. From Bloomberg, Sep 23, 2014, 12:00:01 AM

    Sept. 22 (Bloomberg) — Julian Robertson, co-founder and chairman of Tiger Management LLC, and William Conway, co-founder and co-chief executive officer of Carlyle Group LP, talk about the financial markets, private equity, hedge funds and investment strategy.
    Bloomberg’s Jason Kelly moderates the discussion at the Bloomberg Markets Most Influential Summit in New York. (Source: Bloomberg)

    BlackRock Inc. (BLK) said the corporate
    bond market, which is one of the cornerstones of global finance,
    is “broken” and must be retooled to improve liquidity.

    To read the entire article, go to

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

  114. From Bloomberg, Sep 23, 2014, 12:01:00 AM

    Sept. 23 (Bloomberg) — University of Melbourne Environmental Scientist Tim Flannery discusses the politics of climate Change and why there is an urgent need for action with Bloomberg’s Angie Lau on “First Up.” (Source: Bloomberg)

    President Barack Obama joins more
    than 100 world leaders today at a United Nations summit on
    climate change that’s designed to move the issue beyond talk to
    action — though not just yet.

    To read the entire article, go to

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

  115. From Bloomberg, Sep 22, 2014, 7:10:07 PM

    A Palestinian militant from the Ezzedine al-Qassam Brigades, Hamas’ armed wing, attends a rally in Gaza City, on August 27, 2014. Photographer: Mohammed Abed/AFP via Getty Images

    Arab Bank Plc, the biggest lender in Jordan, helped Hamas militants carry out a wave of violence in Israel that killed and wounded hundreds of Americans, a New York jury decided in the first trial of its kind in the U.S.

    To read the entire article, go to

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

  116. From Bloomberg, Sep 22, 2014, 8:31:31 PM

    Sept. 23 (Bloomberg) — China’s economy remained stuck in “low gear” this quarter, with struggling retail and residential real-estate industries countering improvements in manufacturing and transportation, a private survey showed. Stephen Engle reports on “First Up.” (Source: Bloomberg)

    China’s economy remained stuck in “low gear” this quarter, with struggling retail and residential real-estate industries countering improvements in manufacturing and transportation, a private survey showed.

    To read the entire article, go to

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

  117. From Bloomberg, Sep 22, 2014, 7:01:00 PM

    The slump in commodity prices to a
    five-year low signals investors are cautious about the strength
    of the global economy even as U.S. equities rise to a record.

    To read the entire article, go to

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

  118. From Bloomberg, Sep 22, 2014, 4:22:10 PM

    A sharply stronger dollar could
    hamper Federal Reserve efforts to spur growth and lift
    inflation, a senior Fed official said today, in unusually direct
    remarks about the U.S. currency from the central bank.

    To read the entire article, go to

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

  119. From Bloomberg, Sep 23, 2014, 12:00:23 AM

    Sept. 21 (Bloomberg) — U.S. Treasury Secretary Jacob J. Lew speaks about the U.S. and global economies, financial regulation and tax inversions at a news conference in Cairns, Australia, following a meeting of Group of 20 finance ministers and central bankers. (Video courtesy of G-20. Source: Bloomberg)

    Treasury Secretary Jacob J. Lew’s
    crackdown on inversions will get an immediate test as eight U.S.
    companies with pending deals decide whether to proceed — and
    other companies contemplating a foreign address now have to
    think twice.

    To read the entire article, go to

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

  120. Good morning!

    Shanghai got a major stick save off 2,300 to finish up 0.87% but Hang Seng a more honest -0.5%.  Nikkei finished at the day's low, -0.7% with /NKD at 16,055 and India fell 1.2%.  I love the headline on China PMI above – very excited about going from 50.2 to 50.5, right?  Here's a more accurate headline:


    China Should Cut Reliance on Property Sector. The country should accept GDP growth of about 7-7.5%, citing IMF Deputy Managing Director Zhu Min. To maintain sustainable growth, China shouldn't overly rely on monetary or fiscal policies to boost economy.


    Brazil cuts 2014 GDP growth forecast, keeps fiscal goalBrazil cut its economic growth forecast to 0.9 percent in 2014 but maintained its key annual fiscal goal for the year, according to a government report published on Monday. The government had previously expected the economy to expand 1.8 percent this year. The downward revision remains above market forecasts for growth of 0.30 percent in 2014.

    Europe has been straight down since the bell, down 1% across the board, led by France, down 1.5%.  Israel shot down a Syrian plane but, other than that, I think they are just following us. 

    Our Futures are down about 0.4%, /ES testing 1,980, /TF 1,116.50, /YM 17,050 and /NQ 4,037 with the Dollar at 84.61, oil $91.03, gold $1,225, silver $17.86, copper $3.046, nat gas $3.985 and gasoline $2.59.

    "Smart Money" BTFATH At Most Furious Pace In Over A Year, 2Y Short-Squeeze Possible

    Some U.S. hedge fund advisers run afoul of advertising rules -SECSome newly registered U.S. hedge fund advisers are "cherry-picking" investments to showcase their performance and improperly changing how they value securities, an agency official said on Monday. ?

    US launches first wave of bombing strikes over SyriaThe United States launched its first wave of bombing attacks over Syria early Tuesday against an expected 20 to 25 Islamic State targets, U.S. officials said. The operation, expected to last several hours, involved planes launched from U.S.destroyers in the Persian Gulf and Red Sea. Planes from five Arab countries also participated in the strikes. The first explosions from Tomahawk missiles were heard in northern Syria. Targets were expected to include command and control centers, training camps and weapons depots.

    Despite airstrikes, ISIS appears to hold its ground in IraqAfter six weeks of American airstrikes, the Iraqi government's forces have scarcely budged Sunni extremists of the Islamic State from their hold on more than quarter of the country, in part because many critical Sunni tribes remain on the sidelines.

    Six energy firms to sign UN-brokered pact to cut methane emissions

    • Six global energy companies – including Southwestern Energy (NYSE:SWN), Statoil (NYSE:STO), Eni (NYSE:E) and BG Group (OTCPK:BRGXFOTCQX:BRGYY) – reportedly have agreed to work to reduce emissions of methane in partnership with more than a dozen national governments through a new United Nations framework.
    • Officials from the UN and governments that back curbing emissions are increasingly looking to push companies and emerging economies to take voluntary steps to reduce emissions, since the international community has failed to adopt strict binding regulations.

    The iron ore industry is headed for a brutal shakeout as prices collapseA bloodbath in iron-ore prices could get much uglier before things turn around. And it’s not all China’s fault, either. While Chinese demand, a major force in the market, has slowed, big iron ore producers, including Brazil’s Vale, BHP Billiton, Rio Tinto  and Fortescue plan to boost production and shipments despite the glut. Australian producers BHP Billiton, Rio Tinto and Fortescue aim to boost output by 170 million tons this year, equal to around 7% of 2013 global supply and 11% of global production outside China, notes Capital Economics. Vale and Anglo-American are also looking to increase output, too. Why are they boosting production in the face of falling demand?

    AutoZone(AZO) sales disappoint as customers prefer new cars to repairs. AutoZone Inc reported weaker-than-expected quarterly revenue as a strengthening U.S. economy encouraged consumers to buy new vehicles instead of repairing existing ones, sending the auto parts retailer's shares down as much as 5 percent.

    Facebook(FB) Fraud 2.0: Academic Study Exposes "Like Farms"


    • Sony's (NYSE:SNE) PlayStation TV set-top box will hit stores in the U.S. on Oct. 14, with a $99 price-tag for a standalone unit.
    • Earlier this month, Sony signed a deal to carry 22 Viacom channels, including Comedy Central and MTV, but still has not announced the launch date for its online TV service.
    • The PS TV will also allow users to access movies, TV episodes and games from the PlayStation store.
    • Yahoo's (YHOO -5.6%) remaining 384M-share Alibaba stake is worth $34 pre-tax, but perhaps only $21/share post-tax, estimates Bernstein's Carlos Kirjner, who downgraded shares earlier today. "This makes it clear why the tax treatment of the Alibaba stake is such an important swing factor for the value of the stock."
    • Kirjner thinks Yahoo could be worth $44/share on a sum-of-the-parts basis. He suspects Yahoo's discount to this valuation stems from " the risk perceived by the market that Yahoo!’s management will invest some of the cash it currently has .. in ways that could destroy value."
    • He also points out Yahoo's bottom line is about to be hurt by the ending of Alibaba royalty payments (~$120M over the last 12 months). FBR's William Bird does the same, and also observes a 1-year lockup agreement exists for Yahoo's remaining Alibaba stake.
    • "It’s going to be a very interesting fall … And it could go either way," Kara Swisher reports hearing a Yahoo exec tell her. By "either way," the exec meant Yahoo could either make a big acquisition, or become an M&A target itself (previous).
    • Swisher notes many rumors claim Yahoo has been looking for a major ad tech purchase, and that the company is also likely to eye content companies. However, she once more throws cold water on rumors Yahoo is looking to buy AOL. "In all my checking of numerous sources, this is not in process and such a deal seems just a fervent hope of [AOL] CEO Tim Armstrong."

    New Level of Smartphone Encryption Alarms Law EnforcementMoves by Apple(AAPL) and Google(GOOG) Are Latest Fallout From Snowden's Disclosures. Moves by Apple Inc. and Google Inc. to put some smartphone data out of the reach of police and the courts are raising alarms inside U.S. law-enforcement agencies, current and former officials say. Several officials in Washington said they were bracing for a confrontation with Silicon Valley on the issue, the latest fallout from the revelations by former National Security Agency contractor Edward Snowden about government…


    • Re/code: "Based on conversations with people familiar with Apple’s (AAPL +0.1%) thinking: Apple won’t shutter the [Beats Music] streaming service. It may, however, modify it over time, and one of those changes could involved changing the Beats Music brand."
    • Re/code's report follows one from TechCrunch stating Apple is planning to shut down Beats Music and "sunset the Beats Music brand." Apple spokesman Tom Neumayr says TechCrunch's report is "not true," but doesn't elaborate.
    • Gene Munster estimates ~8M of the 10M+  iPhone 6 units Apple sold over the weekendwound up being purchased by consumers, with the remaining ~2M going into the channel. That implies 45% consumer sell-through growth over estimated first-weekend iPhone 5S sales of 5.5M.
    • Patently Apple notes Apple has filed a patent application for a new sapphire glass-strengthening process. The application relates to the use of coatings on a material such as sapphire.
    • GT Advanced (GTAT +1%), whose shares were hit hard by news that the iPhone 6 (unlike the Apple Watch) doesn't use sapphire cover glass, closed higher today. Last week, Time took a look at the technology challenges that may have led Apple to opt against using sapphire cover glass for the iPhone 6.


    A Pro-Family, Pro-Growth Tax Reform by Mike Lee and Marco RubioTwo simple income-tax brackets: 15% and 35%. End the marriage penalty and increase the child tax credit. Too many Americans believe the American dream is slipping away for them and their children. They see their cost of living rise while their paychecks remain stagnant. They see an economy that benefits stockbrokers but not stock clerks.

  121. Be careful, they are ditching the Dollar to prop up the markets (84.49, -0.4%)

  122. Brilliant – Jon Stewart on Climate Change:


    Congress is simply terrifying. 

  123. Phil- There's an concept you explained I'm not quite following--

    Could you explain with an example the criteria you recommended about when to roll a spread ( something like "when the price equals spread..").

    What's the spread mentioned mean in this case? If you  illustrate with an example defining the terms ( I grasp what the price of each leg is) so we can see the logic.

    I have Yahoo:

    Jan '15 38/45 BullCallSpread
    Jan '16 40/50 one