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Will We Hold It Wednesday – Global Correction Edition

You call this a correction?

The Nasdaq is down 4%, Russell is down 5%, the Hang Seng is down 6% and the FTSE is down 3.6% but barely a pause from the rest of our Global Indexes.  The problem is, it's been so long since we had a proper pullback that people think a tiny little correction is the end of the World.  Even in the good old days, before high-frequency trading made a joke out of the market – investors didn't get too upset about a 5% pullback

That may be the problem as well.  The reason the market has marched off to record highs is BECAUSE investors have been led to believe that it's better than bonds, better than cash, even – to have your money in the stock market.  We certainly seem to have convinced a lot of Boards of Directors that the best thing to do with their company's money is to buy back their own stock or the stock of their competitors – no matter how ridiculous the price.  

$533Bn of hard-earned Corporate Profits were spent buying just the S&P 500, by the S&P 500, in the past 12 months alone.  That's 20% more than all of 2013 ($420Bn) and 30% over the 5-year average and that DOESN'T include M&A activity – also at a record pace.   While this has been going on, insiders have been SELLING their company stock at a record pace – Interesting…

So the company uses it's profits, not to invest in it's own future but to prop up it's own stock price – making earnings seem better because you are dividing the profits by a lower number of shares than there were last year.  This inflates the stock price and the insiders get out and that's when you buy – is that about right?  

What a friggin' scam - I can't believe you fell for that!  Seriously, that is such an obvious fraud that you would think people would run screaming away from equities.  The problem is, there's nowhere to run to, is there.  Your cash is being devalued, bonds don't keep up with inflation, real estate is still very iffy and the taxes on it have gone out of control and that leaves good old equites as the only alternative – so of course the market goes up, as long as the money keeps flowing in.  

But therein lies the rub:  So much of the money flow is based on stimulus from various Central Banks that we have no idea what is going to happen when it stops, let alone when it reverses (assuming they ever decide to fix their balance sheets before the next crisis hits).  Perhaps that's why, as you can see from the "Smart Money" chart above, there's been a run for the exits in 2014.

RUT WEEKLYIf you think you are smarter than the smart money, by all means, dive right in.  We, on the other hand, are still playing it cautious – especially while we still have red boxes on our major bounce lines (see yesterday's Live Member Chat Room for levels), per our 5% Rule™, while the minor bounce lines (for this week) are now:

  • Dow 17,100 (weak) and 17,150 (strong) 
  • S&P 1,990 (weak) and 1,995 (strong) 
  • Nasdaq 4,525 (weak) and 4,550 (strong) 
  • NYSE 10,875 (weak) and 10,950 (strong) 
  • Russell 1,125 (weak) and 1,135 (strong)

We went over the 5% Rule™ in detail in yesterday's Live Trading Webinar, a replay of which will be available for our Members later today.  We also debated whether or not to take the virtual money and run on our Short-Term Porfolio, which finished the day up 53% for the year as our bearish bets finally pay off.  

They're not all bearish, of course – we have bullish plays on YHOO (discussed last week), SLW, FAS (hedged) and CAKE but, yes, the rest are bearish but they are bearishly protecting our very bullish (and much larger) Long-Term Portfolio, which is now only up 19.3% for the year at $596,710.  That plus the $153,413 in the Short-Term Portfolio gives us a total of $750,123 so it is time to raise our stop from $735,000 to $740,000, locking in a combined 23% gain for the year, even if we're forced to cash into the holidays.  

We never fear going to cash at PSW.  On the average, we find over 100 Trade Ideas each month for our Members, which is why our LTP is only using 25% of it's buying power – if the market does have a significant downturn, we are ready, willing AND able to take advantage of it.  

Until the indexes show us they are capable of taking out those strong bounce lines, we reamain cautiously bullish.  We EXPECT at least to see weak bounces off of these levels (up 0.5% today).  If not – look out below!  

 


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  1. Oil Lines

    R3 – 93.51
    R2 – 92.80
    R1 – 92.19
    PP – 91.48
    S1 – 90.87
    S2 – 90.16
    S3 – 89.55


  2. If you are using Twitter, here is list of people who post interesting charts:

    http://qz.com/270072/the-22-best-chart-heavy-twitter-feeds-you-should-follow-right-this-instant/

    Check out some of the charts in the article!



  3. Good article about CEO pay – long but worth a browsing:

    http://www.democracyjournal.org/34/the-overpaid-ceo.php?page=all

    CEO pay that is ultimately based on the stock price invites another easy trick to show performance: stock buybacks. The problem, according to economist William Lazonick, co-director of the UMass Center for Industrial Competitiveness, is that funds for stock buybacks come at the expense of other priorities. By choosing to buy back publicly held shares, executives can push up the price of the stock without actually investing in the company’s capital, research and development, or workers.

    Lazonick’s research provides many examples. For several decades after World War II, IBM had a lifetime employment policy, which was the norm for that era. In the mid-1990s, IBM shifted gears from manufacturing to software and services, and global employment dropped from 374,000 to 220,000. A leader in the U.S. offshoring movement, IBM announced in 2011 a strategic plan for the years until 2015, the main objective of which is to raise their earnings per share from $13.44 to $20 by increasing “operating leverage” (i.e., layoffs) and buybacks. IBM bought back $107 billion of its stock between 2003 and 2012, $13.9 billion in 2013 alone, and $8.2 billion in the first quarter of 2014. All these financial moves have had the effect of boosting “performance pay” for executives without the slightest improvement in the company’s revenues, market share, or profits.

    Performance pay, on the model encouraged by the 1993 reform, has been tested. What we’ve learned is that it rewards not performance, but shortsightedness, excessive risk, and even fraud, and that the consequences go well beyond radical inequality to include the kind of crisis that nearly took down the economy in 2008, abrupt layoffs and plant closings to meet shareholder expectations, corners cut on products that risk consumer safety (as seen at General Motors), and desperate attempts to evade the costs of environmental and workplace safety regulation.


  4. It looks like the strong dollar is impacting a couple of sectors badly:

    http://thereformedbroker.com/2014/09/22/chart-o-the-day-the-dollars-impact-on-the-sp-500/

    Screen Shot 2014-09-22 at 7.44.23 AM

    Only 50% of energy stocks are now over their 200 DMA when it was 82% in July! Materials and industrials also hit hard. 


  5. Phil – Galaxy Notes do not bend like the iPhone 6+:

    https://www.youtube.com/watch?v=FwM4ypi3at0#t=167

    This guy actually busted his own iPhone doing the test and tried to destroy a Galaxy Note after! And he is an iPhone user, not an Apple basher. The bending should not be completely surprising given the aluminum body though. I guess, if you are buying an iPhone 6+ it's a good idea to buy a strong case.


  6. I've felt Apple's obsessions with thinness--resulting in some iMacs you can replace hard drives in--was misguided. They're down about $.65 today, but I think they'll weather it. Changing the cavity size inside the case with all that micro engineered stuff inside seems awful difficult, could they simply thicken the case on the outside making it larger?


  7. "can't" replace hard drives in reasonably easily  I meant


  8. Phil/XRT, Oct 93/88 bear/put spread. Time to close it out? Nice gain and is below the short puts. Thanks


  9. Good Morning!


  10. On the other hand, it can't hurt AAPL that much when they make that kind of money:

    http://mashable.com/2014/09/23/teardown-iphone-6-costs-200/

    Costs for the iPhone 6 Plus run from $216 to $263 for models that sell for $749 and $949 without a contract. As Re/code reports, Apple has improved its profit margin for its phones. While the iPhone 5 and the iPhone 5S both provided the same margin of around 69%, the first iPhone in 2007 gave Apple a 55% margin.


  11. STJ – This is what I was talking about a few days ago when I called IBM the poster child for financial engineering.

    " IBM bought back $107 billion of its stock between 2003 and 2012, $13.9 billion in 2013 alone, and $8.2 billion in the first quarter of 2014. All these financial moves have had the effect of boosting “performance pay” for executives without the slightest improvement in the company’s revenues, market share, or profits. "


  12. Sold some GPRO.  Up 35 points in 40 days.  Just wish I had a larger position.


  13. IBM / Albo – That's true. At the same time, their R&D is top notch but doesn't seem to impact the bottom line as much. Yet! 

    But we can be hopeful – some of their projects might pay off big 10 years from now. I would not bet against them for sure.


  14. Looks like GPRO wants to go to 80, I'll just sit back and continue to wait for the opportunity to short through calls.


  15. Phil you asked me to remind you to explain rolling criteria for spreads. For me, if you could illustrate with specific examples

    - why a spread should be rolled
    - what to look for when we roll out/up/down to 

    so we know what each term means. (spread could mean distance between the two legs of the spread or the buy-sell spread of the option) 

    For instance I have a YHOO Jan '16 40/50 Bull Call Spread now. 

    I guess theres probably at least two cases, bull spreads and bear spreads? 

    Thanks!


  16. From Bloomberg, Sep 24, 2014, 12:00:00 AM

    Sept. 17 (Bloomberg) –- Federal Reserve Chair Janet Yellen speaks about the U.S. economy and Fed policy at a news conference in Washington following a meeting of the policy-setting Federal Open Market Committee. (This is the question-and-answer portion of the event. Source: Bloomberg)

    Federal Reserve Chair Janet Yellen says she wants investors to be prepared for the possibility that the Fed will raise interest rates sooner than they currently project. Her words are going unheeded.

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

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


  17. From Bloomberg, Sep 24, 2014, 7:37:24 AM


    As Federal Reserve Bank of New York president, William Dudley is the only regional Fed chief with a permanent vote on policy and is the central bank’s eyes and ears on Wall Street. So when Dudley says something new it’s worth tuning in. Photographer: Peter Foley/Bloomberg

    As William Dudley goes, so often
    goes the Fed.

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

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


  18. From Bloomberg, Sep 24, 2014, 12:01:02 AM

    At least six residential towers aimed at multimillionaires, including Zeckendorf Development Co.’s 520 Park Ave. and Vornado Realty Trust’s 220 Central Park South, are under construction in or near Midtown, with plans to begin sales in the coming year. Source: Zeckendorf Development LLC and Seventh Art

    Sales at One57, the ultra-luxury Manhattan condominium tower that set off a high-end residential construction boom, have slowed to a trickle amid competition from newer properties reaching the market.

    To read the entire article, go to http://bloom.bg/1so2EjZ

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


  19. From Bloomberg, Sep 23, 2014, 6:00:00 PM


    Rows of houses stand in Las Vegas, Nevada. Photographer: Jacob Kepler/Bloomberg

    Norway has vaulted to the top ranks of foreign U.S. commercial real estate buyers as its $870 billion sovereign-wealth fund, the world’s largest, acquires buildings from New York to San Francisco.

    To read the entire article, go to http://bloom.bg/1B4oojI

    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 24, 2014, 4:11:41 AM


    The San Francisco skyline. Photographer: Chip Chipman/Bloomberg

    Offices on the highest floors of skyscrapers in San Francisco and New York soared in value since March, boosted by growing technology and energy businesses, Knight Frank LLP said.

    To read the entire article, go to http://bloom.bg/1sniw6o

    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 24, 2014, 3:07:37 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)

    Pfizer Inc. has approached Actavis Plc to express its interest in an acquisition that could allow the U.S. drugmaker to move overseas and reduce taxes, in a sign the Obama administration’s efforts to curtail such deals could fall short.

    To read the entire article, go to http://bloom.bg/1Cer9l3

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


  22. China….

    http://jalopnik.com/gm-is-killing-it-in-china-1638502759

    While a number of automakers are being inspected in China in an anti-monopoly probe, GM is just keeping right on chugging. And like, really chugging. The automaker is projecting that sales in China will surpass the 3.1 million cars that they sold in the Asian nation last year.

    GM and its partners in China believe that growth of the automaker there could surpass the growth of the entire Chinese automarket, which should be up by eight to ten percent this year. Well done, GM.


  23. From Bloomberg, Sep 24, 2014, 12:01:01 AM

    A Google Street View car in Brazil. Photographer: Pedro Ladeira/AFP via Getty Images

    Data from two hard drives locked up in the San Francisco federal courthouse may make or break an effort to hold Google Inc. (GOOG) to account for what privacy advocates call an unprecedented corporate wiretapping case.

    To read the entire article, go to http://bloom.bg/1uXDbN4

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


  24. From Bloomberg, Sep 23, 2014, 7:29:35 PM

    A systems control room. Photographer: Jon Feingersh/Getty Images

    If you build it, they will come. And attack.

    To read the entire article, go to http://bloom.bg/1B4BmOo

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


  25. From Bloomberg, Sep 24, 2014, 8:18:53 AM


    Sept. 24 (Bloomberg) — Phyllis Papadavid, senior global-currency strategist at BNP Paribas SA, says she expects the euro to fall to $1.25 by the end of this year and to $1.18 by the end of 2015.
    She also discusses the pound and New Zealand dollar with Anna Edwards and Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Standard & Poor’s 500 Index futures
    rose, indicating the gauge will rebound after closing at its
    lowest level in more than a month, as European stocks advanced.
    China led gains in emerging markets and the ruble strengthened.

    To read the entire article, go to http://bloom.bg/1B4BWf5

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


  26. From Bloomberg, Sep 24, 2014, 9:15:12 AM

    Saudi Arabian shares retreated the
    most in more than three months, leading declines in the Middle
    East amid investor concern that Arab nations may be at risk of
    retaliatory attacks by Islamic State militants.

    To read the entire article, go to http://bloom.bg/1rmU16V

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


  27. From Bloomberg, Sep 24, 2014, 12:35:38 AM


    Bill Gross, co-founder and chief investment officer of Pacific Investment Management Co. Photographer: Andrew Harrer/Bloomberg

    Bill Gross’s Pimco Total Return ETF
    is being investigated by the U.S. Securities and Exchange
    Commission over whether it artificially inflated asset prices to
    boost returns, according to the Wall Street Journal.

    To read the entire article, go to http://bloom.bg/1so7gqz

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


  28. From Bloomberg, Sep 24, 2014, 8:57:12 AM


    Hillary and Chelsea Clinton, seen at the Clinton Global Initiative yesterday, in New York. Photographer: Spencer Platt/Getty Images

    Hillary and Chelsea Clinton, along
    with the Brookings Institution, are spearheading an almost $600
    million effort to help disadvantaged girls, mostly in Sub-Saharan Africa and Southwest Asia, attend secondary school.

    To read the entire article, go to http://bloom.bg/1rn2h75

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


  29. From Bloomberg, Sep 24, 2014, 7:58:56 AM

    Greece’s bailout program will be a topic of discussion in coming weeks, German Chancellor Angela Merkel said yesterday following talks with Greek Prime Minister Antonis Samaras in Berlin. Photographer: Odd Andersen/AFP via Getty Images

    Greece’s government bonds fell for
    a third day, pushing 10-year yields to the highest level in six
    weeks, amid concern the nation is seeking to become self-financing and put its budget controls at risk.

    To read the entire article, go to http://bloom.bg/1Dxd5Vo

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


  30. From Bloomberg, Sep 24, 2014, 4:40:47 AM


    Syrians inspect the rubble of destroyed houses following the U.S.-led coalition’s airstrikes against the Islamic State of Iraq and the Levant on a residential area in Idlib, Syria, on Sept. 23, 2014. Photographer: Ahmed Hasan Ubeyd/Anadolu Agency/Getty Images

    As U.S.-led air strikes targeted militants in Syria, the country’s Tourism Ministry was busy organizing fireworks, songs and poetry.

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

    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 24, 2014, 6:06:15 AM


    Sept. 24 (Bloomberg) — Bloomberg’s Rishaad Salamat reports on India’s Mars orbiter, the “Mangalyaan,” successfully entering Mars’ orbit. This is the first time a mission has entered Mars’ orbit on its first attempt. He speaks on “On The Move.” (Source: Bloomberg)

    A $74 million Indian spacecraft entered orbit around Mars today after an almost yearlong voyage, and for 11 percent the cost of the U.S.’s Maven probe.

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

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


  32. From Bloomberg, Sep 24, 2014, 9:23:21 AM


    Syrians inspect the rubble of destroyed houses following the U.S.-led coalition’s airstrikes against the Islamic State of Iraq and the Levant on a residential area in Idlib, Syria, on Sept. 23, 2014. Photographer: Ahmed Hasan Ubeyd/Anadolu Agency/Getty Images

    The U.S. continued to drop bombs and missiles on Islamic State positions in Syria today as the munitions used in a few days rivaled the total in the first month of attacks on the extremist group in Iraq.

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

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


  33. From Bloomberg, Sep 24, 2014, 7:28:44 AM


    An employee uses a magnifier to inspect a finished pear-shaped diamond before final classification in Gaborone, Botswana. Photographer: Chris Ratcliffe/Bloomberg

    Antwerp’s diamond dealers, who buy and sell 80 percent of the world’s most valuable gemstones, have lost their bank.

    To read the entire article, go to http://bloom.bg/1B4GzWn

    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 24, 2014, 5:08:34 AM

    Photographer: Brent Lewin/Bloomberg

    Vladimir Putin has a secret agent in his campaign to curb the impact of sanctions on Russia’s economy: Mr. Yuan.

    To read the entire article, go to http://bloom.bg/1B49QjZ

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


  35. From Bloomberg, Sep 24, 2014, 3:33:26 AM

    The Dubai Mall, owned by Emaar Properties PJSC, is the world’s largest shopping center, known for high-end outlets, inside aquarium and proximity to Burj Khalifa, the world’s tallest building. Photographer: Gabriela Maj/Bloomberg

    After seeing a newspaper ad for the
    share sale by Emaar Malls Group, Haidar Al Hadrani jumped in his
    car and drove the 120 kilometers (75 miles) from Abu Dhabi to
    Dubai to register as an investor at the stock exchange.

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

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


  36. Watch this video at http://bloom.bg/1pbLr6D

    Europe’s Factories Close to Contraction

    Sept. 23 (Bloomberg) — Bloomberg “Money Clip” Host Adam Johnson reports on the global stock market sell-off. (Source: Bloomberg)

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


  37. Watch this video at http://bloom.bg/1ugKqkw

    War on Islamic State Won’t Be Won by Airstrikes: Bremmer

    Sept. 23 (Bloomberg) — Ian Bremmer, president at Eurasia Group, discusses how the U.S.-led coalition against the Islamic State is coming together, what it means for U.S. policy in the Mideast and why it complicates a nuclear deal with Iran. He speaks on “Bloomberg Surveillance.”

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


  38. Watch this video at http://bloom.bg/1umnUqA

    German Business Confidence Down More Than Forecast

    Sept. 24 (Bloomberg) — Entrepreneurs with plans to invest in Germany are cautious, says Gernot Nerb, chief economist at the Ifo Institute.
    He spoke with Guy Johnson on Bloomberg Television’s “The Pulse” as German business confidence fell more than analysts forecast. (Source: Bloomberg)

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


  39. From Bloomberg, Sep 24, 2014, 1:44:49 AM


    Elderly men chat as they sit on steps at Tapgol Park in the Jongro-gu area of Seoul, South Korea. The poverty rate among South Korea’s elderly was 49 percent in 2012, according to the OECD. Photographer: Woohae Cho/Bloomberg

    South Korea will redirect financial support from new mom and pop stores and restaurants to discourage retirees from pouring their life’s savings into enterprises that often collapse and leave them destitute.

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

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


  40. From Bloomberg, Sep 24, 2014, 5:26:40 AM

    Russian consumption, which accounts
    for about half the $2 trillion economy, is falling victim to
    tensions over Ukraine, stalling the country’s “main growth
    engine,” the World Bank said in a report today.

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

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


  41. From Bloomberg, Sep 24, 2014, 6:35:09 AM


    European Central Bank President Mario Draghi said, “The exchange-rate movement reflects the different path of monetary policies in Europe versus the monetary policies in other important countries.” Photographer: Martin Leissl/Bloomberg

    The euro’s depreciation is in line
    with the divergence of monetary policies around the world,
    European Central Bank President Mario Draghi said.

    To read the entire article, go to http://bloom.bg/1rmUK8d

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


  42. From Bloomberg, Sep 24, 2014, 12:00:01 AM


    Housing starts slumped 14 percent to an annual pace of 956,000 in August after reaching the highest level in almost seven years, Commerce Department data showed Sept. 18. Photographer: Luke Sharrett/Bloomberg

    Traders are accumulating options to protect against losses in an exchange-traded fund that tracks housing stocks, speculating the homebuilding recovery may be threatened by an increase in interest rates.

    To read the entire article, go to http://bloom.bg/1so2ysA

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


  43. From Bloomberg, Sep 24, 2014, 4:40:10 AM


    Sept. 24 (Bloomberg) — Entrepreneurs with plans to invest in Germany are cautious, says Gernot Nerb, chief economist at the Ifo Institute.
    He spoke with Guy Johnson on Bloomberg Television’s “The Pulse” as German business confidence fell more than analysts forecast. (Source: Bloomberg)

    German business confidence fell more than analysts forecast in September as economic and political risks in the euro area increase.

    To read the entire article, go to http://bloom.bg/1Dx8fXY

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


  44. From Bloomberg, Sep 24, 2014, 12:01:00 AM

    U.S. retail sales may increase as
    much as 4.5 percent this holiday season, exceeding last year’s
    gain, as improving incomes and job prospects encourage consumers
    to open their wallets, according to Deloitte LLP.

    To read the entire article, go to http://bloom.bg/XZda2Y

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


  45. From Bloomberg, Sep 24, 2014, 12:00:01 AM

    After the protests, speeches and corporate pledges, world leaders ended the United Nations climate summit facing as tough a slog as ever to get a deal on cutting greenhouse-gas emissions.

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

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


  46. From Bloomberg, Sep 23, 2014, 7:32:45 PM

    U.S. life insurers are piling into
    the shadows of the corporate-bond market to boost income, even
    as rising demand reduces the extra yield they get paid to hold
    the debt.

    To read the entire article, go to http://bloom.bg/1Dxdk2u

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


  47. From Bloomberg, Sep 23, 2014, 3:57:24 PM

    Bloomberg View

    Israel has moved on from this summer’s war. The press has been focused on budget battles, illegal immigrants and other matters. As is always the case before the beginning of the Jewish New Year, Israelis are interested in how far Israel has come, and what still needs to be done.

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

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


  48. From Bloomberg, Sep 24, 2014, 9:03:23 AM

    Water, water, though not everywhere.

    God, the natives like to say, is Brazilian. So with the country weathering its worst drought in decades, it’s no surprise that officials in the worst-hit regions are pleading force majeure. Geraldo Alckmin, governor of water-stressed Sao Paulo, chalked up the emptying reservoirs to “exceptional” and “unimaginable” drought.

    To read the entire article, go to http://bv.ms/1msq6da

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


  49. From Bloomberg, Sep 24, 2014, 7:43:51 AM

    Happy Wednesday! To get you started, enjoy this delightful selection of morning reads:

    To read the entire article, go to http://bv.ms/1rupJQ7

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


  50. Good morning everyone!

    Here's the YouTube replay link:

    http://youtu.be/JYjwh0WCh4I

    For those who want the webex link, so you can download it, you can find the link here:

    http://bit.ly/092314Replay


  51. Rumor circulating about activist activity in YHOO.  What's new ?


  52. Happy New Year – 5,775!  

    Markets are off to a choppy start but generally flat.  UK and Germany are flat as well with France and Italy up 0.6% and Spain down just a bit.  

    Oil very interesting as it never made $92 and now down to $91.24 despite a net 3.5Mb draw on the API report.  I guess they know it's BS…  By the way, this is what an untradeable index looks like (this morning's action):

    It's moving too fast to make a good trade but you could use $91.50 as a + or – line with tight stops, but those stops may get triggered more often than it's worth so I'd rather wait and see what happens closer to the 10:30 inventory report.  As a GAMBLE, you can play $91 bullish (/CL) into the report, if we get there but –  BE CAREFUL!  

    As to the indexes, it's pass/fail on the weak bounce lines today.  They have to hold them, not just touch them.  These are the WEEKLY bounce lines (from the post above), different than our longer-term bounce lines, which are also mostly red.  

    • Dow 17,100 (weak) and 17,150 (strong) 
    • S&P 1,990 (weak) and 1,995 (strong) 
    • Nasdaq 4,525 (weak) and 4,550 (strong) 
    • NYSE 10,875 (weak) and 10,950 (strong) 
    • Russell 1,125 (weak) and 1,135 (strong)

    With the RUT below 1,115, there's not much hope for this group.  

    Mortgage Applications sucked, as usual.  At this point they may as well just give us a count – it wouldn't take long:

    MBA Mortgage Applications:

    • Composite Index: -4.1% vs. +7.9% last week.
    • Purchase Index: -0.3% vs. +5% last week.
    • Refinance Index: -7% vs. +10% last week.
    • Fixed 30-year mortgage rate rises to 4.39% from 4.36.

    Aug New Home Sales are up 18% but the pace is just 504,000, which also sucks – it's just that the prior trend was 427,000.  Keep in mind there are 110M homes in this country so that's a replacement rate of 0.4%, meaning it would take 250 years just to replace our existing home stock at this pace – that's pathetic!  

    Also putting pressure on the market is the Dollar, which sprang back over 85, now 85.17 and at least that's making the Nikkei happy (16,200) but we'll have to see how this plays out.  We want to see the Dollar turn down to short the Nikkei, preferably with some kind of reason.  Yen is 108.84 and of course 110 will be rejected (Dollar about 86) but hard to say if 109 will be.  

    Gold is $1,218, silver $17.54 (and I do like a long on /SI over $17.50), copper $3.03, Nat gas $3.81 and gasoline $2.61.  VIX is 14.70, TLT 115.35 and XLF $23.32, so people are concerned.

    Obama speaking soon, probably about the war (and I love the above article about bomb drops – go RTN!) and maybe about Climate as this shit is really hitting the fan (according to "scientists").

    Pat Bagley - Salt Lake Tribune - Ice Free Climate Follies - English - Climate, Global Warming, Warming, Heat Waves, Arctic, Ice, Antarctic, Climate Change, North Pole, GOP, Republicans, Sustainability, Denial, Denialism,


  53. Drought in Brazil/Phil – Monday morning I saw signs posted in the elevator of my building that water reserves (for the building….as each building/house is responsible for their own water) are at "warning" level. In many areas around Sao Paulo water trucks are only passing every-other-day to refill tanks, which result in many people and businesses running out of water on the "off" day. And the rainy season doesn't start for another couple months.


  54. Drought….coffee could be a good bet this year again. Most of the local articles I read this past year said that the next two harvests would see decreases because of the water shortage at the beginning of the year. If there continues to be a lack of rainfall, there could be a very dramatic decrease in Brazilian coffee production.


  55. Phil I know we discussed LMT before I am looking at a new entry  Jan16 BCS 155/175 @ 11.85 discounting the same by selling  a Jan16 160 put @ 10.60 for starters. Again selling 1/2 Nov 14 180 c for about 3.00 


  56. Twitter list/StJ – Thanks!  I used to get good charts from StockTwits but they seem to by dying out.  

    This chart says it all on China – big problems ahead:

    China-home-prices-monthly-change-China-city-home-price_chartbuilder

    Keep in mind this is WITH $1Tn+ annual stimulus – more than 10% of their GDP!  

    Did I mention I like FXI short?  

    CEO pay/StJ – Did you see that super-cool chart from the HBR article yesterday?

    Estimated and Ideal chart

    This is why I used to love hanging out at Harvard – so many smart, creative people there. 

    Galaxy/StJ – Wow, I stand corrected!  Not hitting AAPL too badly so far.  

    AAPL/Sn0 – As a customer, I consider people dumbasses who think that phone is not fragile.  I certainly wouldn't buy it though for the same reason I didn't buy an IPad mini.  I love my IPad, I wouldn't mind a bigger one of those (if still light) but I sure don't want to walk around with it.  If anything, I'd like a smaller phone, like an iPod nano, with a small screen that's fine for messages and stuff.  They have an iWatch, so why not an IPhone with a small screen too?  If you told me I could have an iPhone that's half the size and weight – that would be my favorite toy.  

    XRT/STP, Jomp – Didn't we have this conversation yesterday?  Of course they are going to be bouncy off support at $86 but that spread is $93/88, not $86.  If XRT stays below $88 for 23 more days, that spread is $5, currently it's $4.15 and we paid $3.12 so we've made $1.03 of our expected $1.88.  With 20% more to gain, are we less than 80% sure XRT will stay down?  Not while we don't even have weak bounces.  

    Using the 5% Rule on XRT, a fall from $90 to $86 is $4 so a weak bounce is 0.80 to $86.80 and a strong bounce would be $87.60, still short of our goal.  In fact, even a 50% retrace is still good for us.  Time is on our side and XRT has to gain 0.10 per session to hurt us from here (because, at $4.15, $88.85 is our break-even).  Look at the last time they dropped like this in July and found support – it took them a lot more than 23 days to make a strong bounce but, if you feel that the July/Aug-type action will make you panic and stop out – you may as well take the money and run now because that is almost certain to happen over the next 3 weeks.  

    As to the $25KP, we have a naked XRT Oct $88 put and that is now $2.40, since we do expect a bounce and we're not covered, we should either sell some puts against it (to turn it into a bear put spread and lower our risk) or just take that money and run.  Since the $25KP is only up 15% vs the STP, which is up 50%, we don't have room to screw around so let's cash in the XRTs in the $25KP

     

  57. API got it right for a change, nice draw in oil of net 4Mb:

    • Crude -4.3M barrels vs. +0.4M expected, +3.7M last week.
    • Gasoline -0.4M barrels vs. -0.1M expected, -1.6M last week.
    • Distillates +0.8M barrels vs. +0.6M expected, +0.3M last week.
    • Futures -0.04% to $91.56

    That's got oil rocketing up to $92 and I'm not too keen on shorting at the moment – let's just see what happens.  


  58. AAPL/StJ – Samsung has to sell 20 phones to make the same money AAPL makes selling one.  

    IBM/Albo – Yes but they also dropped $120Bn to the bottom line over that period so, like AAPL, it may be that, for IBM, there actually is no better use for the money than buying back their own undervalued stock.  They were buying back stock at about $100 per share, now it's $200 per share and I wish they'd stop now, but the results can't be argued with.  Next year they should make $20 per share, that's a p/e of 10 at this level – that's why they are on the Buy List.  

    GPRO/Albo – They are up 5% today despite the Polaroid news.  $76.54 means you can stop out at $80 on the April $90/75 bear put spread at $12.25 with 100% upside if GPRO drops below $75 – and the IPO was $25 in June so still up 200% in it's first year at $75.  Let's add 5 of those to the STP and see how it plays out.  The net delta is 0.06 so a move over $80 shouldn't cost us more than a buck or two – worth a gamble vs the potential $12.75 gain.  


  59. Wow, did the market like Obama's speech that much?


  60. TOS the P&L calculations of the today on the trading platform is all screwed up no correct numbers. For example  Stock is up and your long calls are down!!!!


  61. Damn, should have re-shorted oil at $92, back to $91.67 already.  That's crazy, I guess it wasn't the inventories but Obama war talk that was rallying oil and nothing new there so back to the sell-off.  Indexes were happy and we're up 0.2-0.4% at the moment but 0.5% is our weak bounce and not even the RUT is there yet. 

    IBM/Albo, StJ – Oh, and let's not forget they also paid out $4Bn/yr in dividends (2.5%).  Man I love that company!  

    Rolling/Sn0 – Oh damn, that was the comment I lost yesterday!  As noted above on GPRO, a spread should be rolled or killed when your premise isn't playing out.  That goes for any trade.  You need to remember WHY you are in a trade and WHAT you expected to happen and WHEN you thought it would happen.  That's why I began keeping a blog in the first place!  As you see each week or so, I put my thoughts on all our portfolio positions in writing, so I can look back and check my reasoning any time I see one of our positions turn against us.  On our Buy List, we have the buying premise laid out BEFORE we initiate a position. "Plan the Trade – Trade the Plan" is one of the things I used to drum into people's heads on this site – always a good thing to remember.  

    Once you have a spread and assuming you want to keep it but need more time, then you want to make sure that the price of the long position you own doesn't drop below the net entry price of the spread before you take action, usually rolling.  

    Your "for instance" on YHOO is lacking the price you paid, not including that means you need a LOT of work before you should be messing with these things.  Let's assume, however, that you bought it for $4.50 and now it's $3.35.  Well, for one thing it's right on the money, so what matters here is whether or not you still believe YHOO will hit $50 by Jan 2016.  If so, then the $40 calls are $5.70 and you are miles away from having to do anything with them.  

    If you had, for some reason, foolishly paid $6 for them, then it would have been a bad spread in the first place but, going from there, you would want to take that $5.70 off the table and then you look at a roll.  Since you have lost faith in $50, you could pick up the 2017 $45/60 bull call spread for $3.50 and drop $2.20 back in your pocket or go 2x on the longs and leave the short 2016 $50s to expire worthless or you could then take the 2016 short $50s ($2.35) and sell the 2017 $30 puts for $2.75 and put another 0.40 in your pocket and then you could still sell 1/2x the Jan 2015 $45s at $1.40 to pick up some more cash.

    Then there are 100 other ways to play it but those are the two you asked for…

    Now we're getting those bounces.  Dow 17,130, S&P 1,990, Nas 4,535, NYSE 10,850 and RUT 1,125 - so S&P and RUT right on the weak bounce lines with Dow and Nas over by just a bit so far.  

    YHOO/Albo – Sure, now there's a big pile of cash, everyone will want some.  

    Brazil/Brill – As a rule of thumb, I try not to live anywhere where water trucks are necessary in the first place!  Thanks for the local report – I love information like that.  

    Coffee/Brill – Sometimes a drought in Brazil can mean a bumper crop in Vietnam or other coffee-producing area.  I know you probably think that's not a valid substitution but GMCR and SBUX could care less.  Coffee recently failed $2, despite the drought news.  I'm not sure why but I will be liking it long again (we were long at about $1 in the fall and out at $2) if it busts over.  

    LMT/Yodi – $160 is a good entry but you're entering at $177, which is a mile above the 200 dma ($160) and they usually pull back to less than 10% of it so I'd wait a bit, though the higher VIX does make it tempting.  Maybe start with a small put sale and see how that goes before buying a spread? 

    Obama/StJ – He sounded very confident we are getting this thing under control and war is very, very profitable.  


  62. TSLA does NOT want to give up $250.  

    DBA with a nice pop, I'm liking my bottom call at $25.  

    Still no 2017s but you can sell the 2016 $24 puts for $1 and buy the $24/28 bull call spread for $1.80 for net 0.80 on the $4 spread that's over $1 in the money.  TOS says just net $3.60 in margin to sell the puts so it's efficient enough that I don't mind committing 20 in the LTP, since I firmly believe in the bottom on this one.  


  63. Just wrote some 85 calls for next week on GPRO.  Figure the RSI is approaching 81, that would be extremely overbought if it went straight up there with no pause (it's actually extremely overbought now) and I can just roll the options higher for the next week if it does.  There is a limit to how high this can go for the time being.  Only bought half position, hoping to get higher average if stock moves higher.


  64. Phil – I hear you on IBM.  If Watson means higher sales in the future, then IBM is very attractive indeed.

    Thanks for the idea on GPRO.


  65. Phil // YHOO
    When you get a chance can you repost the YHOO move from yesterday – somehow I screwed it up.
    Thanks


  66. shorting /TF at 1120


  67. ….and Buffett likes it. :-)


  68. Phil, GPRO trade is a $15 spread so max gain is $3. Ccorrect


  69. Phil

    What would be a new trade on IBM?

    Thanks


  70. qc // IBM
    I asked Phil the same last week. No play, he thinks anything is baked in.


  71. Europe flying higher into their close – FTSE up 0.5%, DAX up 0.75%, CAC up 1.25%, Italy up 1.67%, Spain up 0.5% – all bot-driven numbers but hell of a recovery.   That makes it much more pathetic if we can't hold weak bounce levels, at least.  

    On the whole, it was the new home sales report but what a bunch of crap that is:

    Woo-hoo 500K!!!  Durable goods are tomorrow (and they can't possibly be good compared to last month's huge Boeing-driven numbers) and Friday we get yet another GDP estimate and 2nd estimate was 4.2% so anything less than another upward revision will be a disappointment.  

    • Dow 17,100 (weak) and 17,150 (strong) 
    • S&P 1,990 (weak) and 1,995 (strong) 
    • Nasdaq 4,525 (weak) and 4,550 (strong) 
    • NYSE 10,875 (weak) and 10,950 (strong) 
    • Russell 1,125 (weak) and 1,135 (strong)

    GRPO/Rustle – Very brave.  Hopefully they finally stop at $80.  

    You're welcome Albo.  

    YHOO/Wombat – In the $25KP, we sold the old and now have the April $32/39 bull call spread at net $4.05 (5).  In the STP, we have the same bull call spread (30) and we also sold the Apr $37 puts for $3.10.  

    Good short on /TF, Wombat (1,120).  

    GPRO/STP, Options – Holy crap, I thought it was a $25 spread!  Wow, I am so sorry guys but let's CANCEL that GRPO bear put spread.  I would never have wanted it without a 100% upside – it's not worth the risk for $2.50, not in the least.  If I were bullish on GPRO I'd be happy to sell it, but I'm not.  

    IBM/QC – I'm still hoping they fail the 50 dma at $191 and come back to $186 so not dying to get in here but at least the VIX is up a bit so you can sell the 2017 $150 puts for $9 and that feels like free money to me with a net $141 entry (26% off).  


  72. WE do have an IBM BCS from 9/9/14 Jan16 170/190 pd 26.93 against 14.95 you can still do a bit better today as well sell some puts to reduce cost and sell the 195 Nov caller 1/2


  73. IBM/QC – Sorry, 2017 – it's going to take me a while to get used to that.  

    And what Yodi said.  


  74. wombat 

     

    Thanks


  75. Thanks Phil and Yodi


  76. These are not good numbers:

    http://fivethirtyeight.com/features/the-american-middle-class-hasnt-gotten-a-raise-in-15-years/

    casselman-feature-income-1

    More detailed charts at the link! 


  77. You can call me stupid, old, or whatever but Watson could be way further along but I believe it is in a holding pattern because it results in displacing people if fully developed. Everything sounds super except what will people do when 99.9999% are not close to as smart and 100% are astronomically slower? If you believe in "one rich guy eventually" is the natural order go with it.


  78. Phil,

    I have the /CLF  JAN16 10/18 BCS at $3.35.   The 10 call option is now $3.40.  Do you have an adjustment to suggest if CLF drops a little further?


  79. One last thought on Watson, machines already displace workers, and Watson displaces brains. What is left is money or not!


  80. Stocks bounce back; Wal-Mart leads blue-chip gains

    U.S. stocks rose on Wednesday, with the S&P 500 rebounding after a three-day slide pushed it to a five-week low.

    Read more: http://www.cnbc.com/id/102028581

    Sent from the CNBC app. Available on the App Store


  81. GPRO/Phil

    Not really that brave.  Just moved up 13 points in a week, almost an 81 RSI and I have 7.5 points from here it can still go up.  But if it goes down tomorrow or dips to even 75 on Friday, I'm out with over a 50% profit considering there was extra premium in these options from the move up to begin with.


  82. Fed’s Mester criticizes use of ‘considerable time’

    Mester, the new president of the Cleveland Fed, is thought by some to be on the hawkish end of the central bank’s spectrum.

    Read more: http://www.cnbc.com/id/102029027

    Sent from the CNBC app. Available on the App Store


  83. From Bloomberg, Sep 24, 2014, 10:12:38 AM


    An advertisement for the new BlackBerry Passport in Toronto on Sept. 24, 2014. Photographer: Hannah Yoon/Bloomberg

    Even BlackBerry Ltd. (BBRY) couldn’t resist taking a jab at the world’s most popular phone.

    To read the entire article, go to http://bloom.bg/1rk4P4q

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


  84. Phil, how about a new FXI suggestion?


  85. From Bloomberg, Sep 24, 2014, 12:16:56 PM


    Sept. 24 (Bloomberg) — U.S. President Barack Obama speaks about the situation in Ukraine, his strategy to combat the Islamic State, unrest in the Middle East and global terror threats.
    Obama addresses the 69th General Assembly of the United Nations in New York. (Source: Bloomberg)

    President Barack Obama told the United Nations that the world must “reject the cancer of violent extremism” and confront Russia’s aggression in Ukraine, laying out a more forceful U.S. approach to foreign policy.

    To read the entire article, go to http://bloom.bg/1rnb4G5

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


  86. From Bloomberg, Sep 23, 2014, 7:00:01 PM


    A volunteer demonstrates the removal of a protective suit used when treating Ebola patients at a training camp operated by Doctors Without Borders in Brussels, Belgium, in this undated handout photo released to the media on Monday, Sept. 22, 2014. Photographer: N’gadi Ikram/MSF via Bloomberg

    Inside the eight-piece protective suits worn by doctors on the front lines of the Ebola outbreak, the temperature reaches at least 115 degrees Fahrenheit. One of the most dangerous moments on the job is going through the 12 steps to take the suit off, which can take 30 minutes.

    To read the entire article, go to http://bloom.bg/1B4wWXY

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


  87. From Bloomberg, Sep 23, 2014, 9:00:00 PM

    Aid workers enter the suspected ebloa case ward at the Bong County Ebola Treatment Unit in Monrovia, Liberia, on Sept. 16, 2014. Photographer: Michel du Cille/The Washington Post via Getty Images

    Massive amounts of supplies and additional health workers are still needed in Liberia, Sierra Leone and Guinea to help control the Ebola outbreak there that may grow to more than 1 million infections under one worst-case scenario, according to aid agencies.

    To read the entire article, go to http://bloom.bg/1rjTJ0I

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


  88. From Bloomberg, Sep 24, 2014, 10:18:06 AM

    New-home sales in the U.S. surged in August to the highest level in more than six years, a sign that the housing recovery is making progress.

    To read the entire article, go to http://bloom.bg/1rn5OSU

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


  89. phil, you've said that the time to roll a bull spread down is when the long call has dropped to the net paid for the spread.  Is this always a wise thing to do to improve one's position even if one believes the drop is temporary?  i am not giving any particulars, but the question applies to a lot of the spreads we have opened like ABX, CLF, CHK, RIG.  thanks.


  90. Phil:

    RIG: At 10 year lows! I know that commodities are out of favor, and that oil prices have dropped, and that fracking is putting pressure on deep water drillers and suppliers, but RIG IS now at a PE 6.5, where Benjamin Graham would start buying deep value (PE of 7) They must think this .great company is going BK.


  91. spider00

    Study and learn from Phil's explanation just given above on YHOO:


  92. Phil,

    1st time post here. Just wanted to say I've been "listening" for a few years now and have learned a great deal and very much respect your opinion about a lot of issues. One of those issues is the future: I notice, when referring to the mess the economy is currently in, the sham of a recovery and the appalling efforts done to "fix" things, you often use the phrase "this will not end well." I'm very curious: what do you think actually happens going forward? How does this actually end in your opinion?

    Thanks
     


  93. Phil

    Just in case you weren't paying attention 2 new season shows, Scorpion and Person of Interest have gone back to analog because digital is not secure.

    As to the question above, I think we end in depression and world wide deflation. History repeats itself.


  94. Phil/ rolling  I have a CLF 2016 13/20 bull call bought at 3.55/1.45, now 1.45/.67, sold 2016 10 put 1.77. Wondering if it makes sense to roll JUST the long 13 call to 2017 8 call (5.12) and keep the 2016 short 20 calls for now to decay further, with plan to maybe roll to 2017 short 15's later, depending on what CLF does. Many thanks as always for your help in thinking about all the possibilities!  


  95. Out of the rest of GPRO for now

    Rustle – Your play looks interesting, but aren't you risking an awful lot to make a little?  Of course, 50% is 50%, but if you have to risk 170k to  make 1k, is it worth it ?  Maybe I misunderstood what you are doing ?


  96. Welcome, dino!!  I think Phil would say "zombie apocalypse", but he will speak for himself.


  97. ABX:  I have been a fan of ABX, all the way down, convinced that the massive money printing would come home to roost.  It will.  Someday.  But, in the meantime, Japan, China and the EU are experiencing their own zombie apocalypse, the money flow into the dollar is massive, and the Euro may strain itself trying to stay above 1.20 this year now that the zombies have invaded Germany, too [never mind my previous speculation about Russian invasions].  What's the bull case for ABX, other than "in the long run" category in which our sun burns out and another ice age looms?


  98. Not good folks, we're pulling right back at the weak bounce lines.  That indicates more downside to come.   All downhill since the silly Europeans stopped buying.  

    You're welcome, QC. 

    Median Income/QC – Very sad picture.  Downright tragic for people 35+.  Take out the top 10% and I bet that chart looks like total Hell.  Not that these don't already:

    casselman-feature-income-3

    casselman-feature-income-4

    Yeah, keep voting Republican folks!  

    Watson/Shadow – I have to assume that Siri and other phone assistants are about as good as it gets in AI and they are still quite a ways away (10 yrs) from being able to replace a typical customer service agent.  No one is slowing it down to protect workers – there are hundreds of Billions of Dollars at stake for whoever can replace the most workers the fastest – full speed ahead and damn the consequences!  

    This is happening now, there used to be three people on that side of the table:

    CLF/Spider – The 2016 $10s are still $3.40, so what you paid for the spread.  You can invest $1.70 to roll to the 2017 $8 calls and you are buying one year and $2 of position for $1.70 – not too bad.  In fact, I'd offer $1.50 for that roll and see if it fills.  You can also offer to sell the 2017 $8 puts for $2.20 (now $2.02) and, if that fills, it's a net $5.80 entry on CLF and more than pays for the roll.  When the 2016 short $18s expire, you can then sell 2017 somethings and collect more cash and knock your basis down to near zero with a worst-case owning CLF at net $8ish.  

    I'm highlighting this because I like it as a new spread but I'd make it (if from scratch) the 2017 $8s for $5, selling the 2016 $15s for $1.45 and the 2017 $8 puts for $2.20 for net $1.35 on the $7 spread with a year advantage on your longs.  

    GPRO/Rustle – April $80 calls are $8 and I do like selling those and you can SELL the $90/75 bear put spread for $12.50 to protect yourself because, below $78.50, you can only lose up to  $2.50 on the short bear put spread but you would already have $8 from the short calls and, above $80, you have up to $12.50 of upside protection.  

    FXI/JMD – We did our FXI play on 8/28 when they were at $41.  At the time the trade idea was:

    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!  

    That spread is now $2.35, so still not bad with a $1.65 upside.

    Rolling/Lunar – Making a decision to do nothing is a valid decision as well but, generally, if the long part of your spread is down to the net of the spread then, even if you still firmly believe in the position, it is usually worth your time to try to improve it.  Of course, position management comes into play so it depends how much you have committed.  In the $25KP, for example, we could do the new spread but we couldn't sell the puts, in the STP we could because we have plenty of margin for it.  ABX, CLF, CHK and RIG are all very low in their channels but could still collapse further if the market goes lower so we will watch and wait because – if the market does go lower, the VIX should go up and we'll get better prices for new sales or option contracts.  Also, 2017 contracts will become a bit more liquid as people begin trading them - so no harm in waiting.  All these things are situational – I know people love to have rules but, if there were hard and fast rules for this stuff – then the Bots would have traded us out of existence already….

    Good long on /TF over 1,120 as long as /YM gets over 17,100 and /ES hold 1,985 and it would be nice to see /NQ take out 4,080 but holding 4,075 is good enough.

    Oil may make it back to $92, now $91.91 so good time to start scaling into a short with tight stops over the line.   

    /SI topped out at $17.73 so call the stop $17.70 for a $1,000 per contract gain there (and Albo owes me an extra $500 for that one this morning!).  


  99. Phil, what's your take on $BIDU?  Its been a beast today.  


  100. Phil;  You started this comment with ~~Not good folks, we're pulling right back at the weak bounce lines.  That indicates more downside to come.   All downhill since the silly Europeans stopped buying. 

    You end with long on TF.  Not sure I follow


  101. opened 2016 RIG $30/$40 bull call spreads. 1/3 position.


  102. /SI – Checks in the mail.  …but why me ?


  103. Lunar – If you like that play on RIG, you should really like selling some Jan16 $25 puts for $2 or more.


  104. Snippets from Briefing.com.  Just one guy's opinion.

    Shares of GPRO have been on an absolute tear and are now up an astounding 224% vs its IPO price

    Without question, the risks of establishing a new position have greatly increased. Not surprising, its valuation is stretched with a 1-year forward P/E of 76x and a forward P/S of 6.5x.

    To wrap up, there is plenty of reason to be excited about GPRO's future and the fundamentals remain very attractive. The valuation is rich, no doubt, and the risks are elevated with its skyrocket move. But, the odds of a continuation move higher seem to be in the stock's favor.

    There's no doubt the stock is spiky, no make that very spiky.


  105. That last comment was from me, not Briefing Trader.


  106. RIG/Jbur – I do love them down here but keep in mind that they spun off assets and, with them, future revenues so I'd say that the old bottom of channel was $40 and now $35 is about fair and the rest is overshoot to the downside.

    This is how charts lie to people, businesses change – charts don't show you that at all.  

    Hola Dino – welcome to chat!  As to how things "end", one thing I like to talk about in our live conferences is the concept or money and the economy to set a macro background.  The SUPPLY of money, from the Fed, etc has more than doubled since the crash but the VELOCITY of money has dropped by half (but only by 1/3 since right before the crash), which negates most of the effect of pumping money into the system. 

    So, actual people end up with very little money because it goes to top 1% Individual and Corporate Citizens, who hoard it to increase their wealth, rather than spend it and spread it around.  Even worse, they invest it in commodity, medical and finance companies, whose profits act like a tax on the bottom 99%.  

    The money is pumped into the top 1% through creation at the Fed level who buy dead assets from the bank at face value (even if the banks foreclosed on them at 1/5 value), which puts cash in the banks that they, in turn, are able to leverage 10:1 and lend out.  The Fed also lends money at 0.25% to the banks, even though it costs the US government 2.6% to borrow money for 10 years.  Since this has been going on for 5 years, you can't say it's a short-term situation and the people of the US are losing 2.45% on every dollar the Fed lends out (which is Trillions) because, ultimately, we fund that. 

    So now we are $17.75Tn in debt, NOT counting the $4Tn on the Fed's balance sheets and we're paying a couple of percent of our GDP in interest cost (because debt is 100% of GDP and interest is a couple of percent), but look what the CBO says is going to happen as the debt mounts and interest rates rise (along with rising medical costs due to our aging population):

    Long term national debt interest payments.jpeg

    That's 80% of our ANNUAL GDP that will need to go to pay the bills in 70 years – THAT is what I mean by "not ending well".  In the shorter run, if the economy does pick up, then the velocity of all that money that's laying around will increase and cause massive inflation yet the Fed's solution continues to be pouring more money into the top.   And why not?  Because the Fed is not our Government, the Fed is a Banking Cartel whose main mission is to enrich the bankers, not the vanishing middle class or any other part of America that isn't a banker or a bank-investor.  Did you know the kind of inflation the Fed tries hardest to control is WAGE INFLATION?  That they have been doing a great job of!  


  107. Wow, now we can try to get back into oil shorts at $91.45 - should have been more patient with the 2:35 NYMEX close still ahead of us.  Hopefully that time will mark the end of the pump job.  


  108. MU/Stj – any earnings expectation/play?


  109. Shows/Shadow – What do you mean?  Are they not broadcasting in High Def?  That makes no sense.  Do you have a link to an article?

    Holy crap, oil hit $93, losses of $100 at $92 and $92.50 lines so far so 2x short at $92.95 (looking to get $200 back on 1x at $92.75, of course) and I think I'll make a stand here – especially as it was a ridiculous $1.50 spike into the close for no reason at all that I can find.   


  110. Phil/ YHOO Bull Call Spread strategy answer-- Thanks for explanation--I didn't say how much I paid for spread, but healthy craven fear prevents me from paying significantly more than  you recommend when you issue a suggestion for a BCS. ;-)  

    Follow up question: you posted "…..you can sell the 2016 $24 puts for $1 and buy the $24/28 bull call spread for $1.80 for net 0.80 on the $4 spread that's over $1 in the money.  "

    What do you see as the benefit(s) of the long leg being in the money? Thx.


  111. UTHR/Pharm – a new MOMO?


  112. Light volume on a lot of stocks today, think market is being pumped higher knowing that Jewish holiday might have a lot of traders out today.


  113. phil/ Watson and Siri for the poor

     

    https://www.youtube.com/watch?v=JzF5VawGgiA


  114. Tight stops on /TF longs, of course, now 1,121.8 so 1,121.50 for 1/2 and the rest at 1,120.90 if 1,121 fails to lock in a small gain.  /ES at 1,989 still, YM 17,122 so /ES over 1,990 would make us more comfortable with the long.  

    CLF/Griffin – Well you paid $2.10 and there's $1.45 left on the long and CLF is at $12.49 so who cares what the put says as it's all premium with 20% to go before any of it kicks in.  The 2017 $10 puts are +0.80 but it's not really worth the roll as that's 848 days for $2.90 vs 477 days for $2.10 so clearly you are not being well-compensated for the next 371 days, so no roll.  Meanwhile, the short $20s you sold are now 0.65 so, if you want to spend money, I'd just close the $7 spread you have now for 0.80 and pick up the $8/15 bull call spread at $3.  That would be the net 0.30 credit you started with less $2.20 for the roll is net $1.90 but now you've dropped the spread from $13/20 to $8/15, so your chance of success is much greater.  Still $5 of upside potential and, of course, when it's worth it, you should be able to pick up another $1+ when it's time to sell 2017 puts.  

    This is why I love these spreads – even when they go tragically against you, you can roll and adjust to a position that's BETTER than what you started with for just a little bit more money. 

    That's also why you should enter these positions PLANNING to double down if the stock drops 40%.  If you already have the cash waiting – you are practically salivating for the opportunity to improve your positions. 

    Zombie Apocalypse/ZZ – Oh, I would have thought that goes without saying – this being Zombie Preparedness Month….

    ABX/ZZ – There is no bull case other than a bottom for gold with ABX the World's biggest gold miner.  If you think that gold will go below it's $1,150 extraction cost for a prolonged period of time – don't buy it.  If you think that's not likely to last, then owning the World's largest producer and owner of gold (unextracted) is a nice hedge against possible future inflation.  


  115. Phil no links you can replay them. Your answer is really silly, the FCC isn't changing anything, it is show content and People who pay attention know last year on Person of interest the machine was robbed by the bad guys. Opening show they gave in for fear but found a safe communication link using old analog antennas on all the roofs, back in business saving people. Scorpion had to find an old guy with an analog cell phone on a plane and wire it to a car racing down the runway to save all the planes.

    Digital was adopted in the US so the government could spy on everyone. Why can't I make the phone from scottmi upload? RS232 analog interface that can't be controlled. The writers of these 2 shows know what I have been saying and frankly you don't understand. Digital is not better or god forbid close to perfect as Sony said 25 years ago with the CD and what returns? Analog LP!


  116. Phil unless there is news about a world event that threatens to disrupt oil, this spike up seems like one of those fake ones you talk about , that will drop back down fairly quickly. 


  117. Sorry camera from scottmi


  118. Shadow- You had  me going there, because I remembered that everyone in the US needed to broadcast in digital, but now I understand that you are quoting fiction as though it has actually happened! Maybe it has, but those shows are fictional, not reality shows. ;)


  119. RIG/Phil:

    Doing some more research and found these to be on help and interest:

    Easing Legal Issues, Lower Costs and MLP Creation Support Our $42 Estimate For Transocean

    So RIG is only spinning off three of their current 74 rigs into the MLP, and theyhave 14 new ones under construction.

    http://www.trefis.com/stock/rig/articles/254288/easing-legal-issues-lower-costs-and-mlp-creation-underpin-our-42-estimate-for-transocean/2014-09-09

    How The MLP Spin Off Helps Transocean

    http://www.forbes.com/sites/greatspeculations/2014/06/25/how-the-mlp-spin-off-helps-transocean/

    To me it looks like RIG has a pretty bright future, especially if and when the world economy picks up.


  120. sn0gr00ve 

    Your long leg ITM In deed you need to read the lecture on " The man who planted trees". Our complete plays are based on buying a long call well ITM with a delta of .85 to .90 and possible a short call ATM but around a delta of say .50. Mostly you hope the ATM call will lose all premium you received and will be worthless and the ITM call will at a delta say at .90 hold 90% of the stock value until it expires. 


  121. Camera/Shadow – use the memory card. if your computer does not have a memory card reader (pretty standard now for many years) most any laptop has them. as do many printers, for years now. Or just buy one from TigerDirect which will plug into your USB. They start at $3.97 for regular retail guys like me.

    http://www.tigerdirect.com/applications/SearchTools/search.asp?lowprice=1&highprice=24.99&keywords=memory card reader&sort=1&recs=30


  122. BIDU/Lolo – We had a plan for that:

    Submitted on 2014/09/18 at 3:21 pm

    BIDU – Wheeee!  We did it!  So glad we held those short puts.  Stop on those at $1 but they should expire worthless and maybe we will consider buying back those $185 puts if BIDU goes crazy on the AliBaba IPO news.  If not though, then this is a good hedge to our long YHOO play.

    This is not what I'd call crazy yet but I do look forward to deconstructing the March $220/185 bear put spread (4) in the STP as we own it for net $1,600.  

    Comment/Options – Well it takes me a while to write these things so maybe I started looking at bad signals but then the bounces began to be taken so I followed our 5% Rule and flipped bullish.  

    Speaking of flipping – holy crap am I glad I switched to conviction on oil at $93 because it spiked up to $93.30 which gave me a chance to raise the average to $93.05 and get back out so now a nice $93.05 avg short entry.  What a crazy ride!  

    CNBC now saying oil is up over bombing somewhere near an oil field.  Nice excuse for a stick save…

    No stop on /TF, now 1,122.90 so 1,122.50 is the new stop but I wouldn't risk them overnight

    $500/Albo – Sorry, it was Advill who offered to pay more money for clear futures trades.  I got confused but thanks for the check!  blush


  123. craig fiction yes but the ideas for those plots are very real. You can join Phil as a non believer but every day the truth comes out proving what I have said for more than a decade. Person of Interest was fictionally exposing the spy digital facts, people watched in boxes, now they change to circles. I get a big laugh out of this but why we went digital and why all the analog printers, cameras, and dam near everything that never wore out had to be made useless is clear.  Even my analog to USB converter had the driver disabled. BIG BROTHER!


  124. DBA?/Sn0 – I think you switched from YHOO to DBA.  I like in the money spreads because, if the stock spikes up earlier than anticipated, you generally get a good enough appreciation to be able to close it out early and take advantage.  Out of the money spreads tend to trap you until you are very close to expiration.  The reason we DON'T have DBA now is because our original, conservative spread was cashed out in the spring when they ran up to $29, now we're getting back in at almost the same price.  

    Also, you do realize that that spread makes 400% on cash if it hits goal at $28 – do you REALLY need to take more risk than that just to make a little more money?  

    Holiday/Rustle – Good point.  Looks like 76M on SPY at 3:10 so figure just over 100M at the close – not terribly impressive vs the slide volume:

    Prices
    Date Open High Low Close Volume Adj Close*
    Sep 23, 2014 198.43 199.26 197.95 198.01 111,259,500 198.01
    Sep 22, 2014 200.35 200.38 198.73 199.15 125,553,000 199.15
    Sep 19, 2014 201.52 201.90 200.29 200.70 121,649,000 200.70
    Sep 19, 2014 0.939 Dividend
    Sep 18, 2014 201.36 201.85 201.10 201.82 94,990,000 200.88
    Sep 17, 2014 200.77 201.68 199.75 200.75 151,266,000 199.82

    This is a point I keep trying to hammer home to people – you can't erase 5 down sessions of 600M shares with one session of 100M shares, even if we did fully retrace (SPY now $199.65). 


  125. May sound strange to you young people but you needed to be educated before the early 70s. By 1980s everything was being removed, by the 90s economics and history had to be rewritten to allow the new world order control. Well now they are in control and dam few of us were smart enough to see it coming and even less now that are still alive care. It seems obvious why I have been monitored along with others that did communication before all the changes, I could muck up their big plan. The shows I mention are mocking the new way and I think it is funny.


  126. How is that possible that cable companies like Comcast can't be regulated like utilities and fight against Net Neutrality:

    http://arstechnica.com/business/2014/09/comcast-says-its-too-expensive-to-compete-against-other-cable-companies/

    A lot of this comes from the history of cable and the extensive capital investment in cable, which is that the cable part of this industry has never competed against each other. We were granted franchises—although they were initially exclusive, they’re not exclusive anymore. But given the expense to build in any particular community, I think no cable company, or only rarely would a cable company choose to compete against another cable company.

    So basically, these guys were given monopolies on territories and now, even though these monopolies have somewhat expired, they say it's too expensive to compete against each other so they don't do it. But, by gosh, we don't want to put any restrictions on free markets. Insane…


  127. ABX – Thanks, Phil — No rationalization, just reason.  Nice.  I sold some Jan 16 $13s for a little under a buck, for the same reason I keep a few thousand rounds in a mountain fastness in the Rockies.  You never know when those zombies will cut loose.


  128. LOL, good clip Stock.  

    TV/Shadow – I thought you were talking about the actual shows on the network, not the content of the shows.  And of course you are right about digital, my Great-Grandmother thought motor cars had an awful smell and swore that a nice carriage ride was the way to go – you two would have gotten along great!  cheeky

    Oil/Craigs – As I said yesterday, when we're this low in the channel, it doesn't take much to pop oil up again.  These are the kind of spikes we were looking for but you have to stay in very small portions and just keep laddering up your basis when you can (while reducing back to 1x when you can too!).  We're early in the Nov contract cycle and it's very easy to get burned for $1,000 per contract on days like this.  

    One good indicator is that BNO (Brent) is only up 0.34% while USO is up 1.83% so, to that extent – it does seem like BS.  

    RIG/Jbur – Also, RIG owns 50% of the MLP, so they still make half the profits.  It was a BRILLIANT move.  

    Cable/StJ – Don't even get me started.  What ever happened to WiMax?  That was supposed to make all those guys obsolete.  

    You're welcome/ZZ – Now I know where to go when the zombies take over NJ.  

    Wow, our species is really doomed!  


  129. stjean cable regulated

    You have to pay attention to my rants and consider I may actually know what I am talking about. No need to regulate cable because it is actually an analog medium. Yes you can do limited digital but eventually it will be fiber and light is pulses where wire likes AC or DC best, a sign wave. Variable light would be lost on weak at distance, besides we must have all those D/A A/D converters until the change over is complete at the highest cost/profit.



  130. Thanks Phil, that's quite a response (and I expected no less). I'm familiar with that video, btw. Good stuff.

    So something has to give. What do you think gives? I suppose we can just continue to trudge along with infinite QE like Japan has for the next x amount of years. A friend of mine who has been a financial advisor since the mid-80's believes we will continue in this economic steroid-driven state for the next half century! Seems inconceivable this could last that long. But I suppose anything is possible. 

    I've read many times about the idea of a "global reset." How does that translate? A wiping out of mutual debt?  Is such a thing even possible without global conflict? ( Or is that the point: the "global reset" is just the "Arab Spring" gone mainstream.) A new monetary system seems inevitable, although I can't quite imagine what that would be.

    I often get the feeling that I'm working hard to preserve wealth that will, one morning, just cease to exist. But I usually just chalk that up to paranoia. Lol.

    Thanks again for your insight!


  131. Phil what did you mean about switching to conviction at 93? I saw your message going short at 91.50 then go 2x at 92.95. Did I miss a message from you in there? 

    Also I can't find any news story about a bombing that affects oil. Just a nat gas plant fire in the midwest.


  132. thanks Phil //



  133. Phil

    I don't like horses anywhere near me, too many flies and other nasty bugs. I actually love new cars computers, all of it but there is a sinister plot in all this called we control everything. Watch out they want to put black boxes in every car under the disguise of safety but with it things be yond accidents is recorded. So go ahead and say I want a Model A Ford when I don't. Ike new technology but I like freedom and person rights more.

    ZZ keep your power dry and don't waste any because they are working on $5,000 bullets if you can buy one.


  134. ZZ – nice, but I prefer sine waves!

    https://www.youtube.com/watch?v=FCcdr4O-3gE


  135. Shadow:  Raising the price of bullets?  Or making a smart bullet into which I can download a digitized photo and it will fly around for a year or two until it finds the guy and takes him out?  Hell, I'd buy 20 of 'em today!!!  


  136. that's a fantastic entry today from Mauldin on thoughts from the frontline


  137. EZCH/albo – any updates on the "sleeper?"


  138. I'm Euro hedged, that bad boy is falling out of bed, under 1.28 now, heading for 1.19.


  139. spiked /TF into close // shorting at 1124


  140. Dollar/oil/gold – not much synchronicity today.. dollar UP, oil UP (instead of down), gold flat..  


  141. ZZ

    Call me crazy but the GOP has much more gun control on tap than the blue team. First wave was make everything a felony crime, can't own a gun and most important can't vote. You can own all the guns you want but ammo shortages are already hitting and eventually like analog printers they will be worthless as you can't but anything to shoot. Raytheon is finally have a picnic. They want to expend those old cruise missiles 2 years ago. Well they started 2 days ago and they have the new 1.2 million each new version that can do almost nothing new, still once shot can't be saved. I had an older friend that loved to shoot, he collected his wad cutter lead bullets all smashed and melted them back to new bullets, reload in used brass and shoot again.


  142. scottmi

    Love you video "CONTROL EVERYTHING" 1963! ZZ's was silly.


  143. albo, thanks.  with RIG, I started out selling $33 puts some time ago for $4.20.  i was planning to buy  bull call spreads if it kept going down, which i've now done.  but for the second round i might sell $25 or $30 puts. are you in RIG also?


  144. Global reset/Dino – That's what hyperinflation is.  We did something similar in the 70s when Nixon took us off the gold standard.  At the time (1972), Our GDP was $5.5Tn and our debt was $2Tn (about 40%) – at the time, that was considered bad so we inflated our GDP to $7Tn by 1980 and $9.2Tn by 1990 (causing the S&L crisis along the way) and, pre-Reagan at least, the Debt was only $2.3Tn and down to 1/3 of GDP.  It was all just inflation BS but that went on around the World and allowed everyone to pretend to pay down their debt with inflated dollars – a default in all but name.  That is our most likely exit strategy to our own 100% debt now.  

    I don't see how we can keep it up that much longer when Japan is already 250% of their GDP in debt.  Even at 1% interest, that starts to hurt.  And it's not paranoia – just good observation:

    Conviction/Craigs – Generally, a conviction play means we're either going to ride out a spike against us or scale in (depending on your budget).  At $93, assuming it can hit $93.50, you want to go 1x at $93 (or close as you can), 2x at $93.25 to bring the total up to $93.10 or better, then 4x  at $93.40 to average $93.20.  Of course, at any point you get a pullback to even, you go right back to 1x and reset your scale.

    Bombing/Craigs – It's just something they said on CNBC.  I think it's BS that was planted by oil traders.  They meant bombing in Iraq or something, not A BOMB going off somewhere but still – what did we expect with a war on?  We've had bombing in Iraq for most of this century (and some of the last) – this is not a reason for oil to jump 2%.

    Freedom/Shadow – We are the last generation that will even know what that really is.  No sense in fighting it – Big Brother loves you….

    OK, that was a fun day!  So where are we finishing?

    • Dow 17,100 (weak) and 17,150 (strong) 
    • S&P 1,990 (weak) and 1,995 (strong) 
    • Nasdaq 4,525 (weak) and 4,550 (strong) 
    • NYSE 10,875 (weak) and 10,950 (strong) 
    • Russell 1,125 (weak) and 1,135 (strong)

    Huge move today but 1% off a 2.5% drop is the definition of a strong bounce and it means little if we don't hold it into the weekend so we'll see how things look tomorrow.

     

     

    .  


  145. /CL- Phil  I am really seeing how this oil market works, It looks like I was right after all as it has come back down under 92.90 and ill likely drop further this evening. At least that is what happens most often. You never can count on anything for sure, but watching this day in and day out as I have for months now (not all day, but checking it frequently) you really can see behaviors that repeat. Just like you keep saying. 


  146. LOL

    Phil, thanks for downplaying my paranoia!!

    Knowing you think we'll just repeat the whole inflation BS is kind of a relief. That's something we can more or less prepare for…let me know if you change your mind. ;)


  147. Phil

    Can you find links that prove me wrong? I have a feeling this is like GOP facts, it is like this because I say so. Wonder how old the show writers are or how old are their friends? Really wonder if I knew them? I lived in CA back when this all started to change. It was a small group and I really did make those first changes so I know before and after. I even worked on distributed data processing that utilized new communication technology that eventually became the web. That is why Bill Gates wanted me and why I know some interesting characters in Silicon Valley. If only I knew then what I know now but I still wouldn't like what was happening 40 years ago. Just never thought it would be allowed to go this far.


  148. Phil/Reset/inflation:  If there are finite sets of goods — food, houses, bullets, etc. — in what manner does the Federal Reserve balance sheet interact with the price of these goods?

     The Fed has been printing trillions for years now, as you frequently point out.  U.S. salaries haven't risen since the beginning of the recession -- they have fallen in real terms.  Stocks have risen in price [or perhaps just "kept pace" with Fed printing in money supply-adjusted terms], allowing your "1%" to not actually become any richer but rather to maintain their previously existing purchasing power due to stock market appreciation [assuming, as I do, that they all hold stocks] while the 99% non-stockholding class, whose salaries have fallen in purchasing power terms, have become relatively poorer.

     

      I am not trying to be an academic here. The question I am trying to answer here is whether you are anticipating future inflation, or whether we have already had inflation for years now, which is the proximate cause of the 1%  pulling away from the 99% in wealth.  Are we now waiting for a second phenomenon, or simply expecting that the current one — no increase in the real wages of the 99% — will continue?  If the "second phenomenon" is a sudden hyperinflation, what would trigger it?  Since it's all just paper on a balance sheet, couldn't the U.S., the EU, and China simply keep up their steady money-printed-caused drop in real wages indefinitely, or at least until real wages reflect the real value of work in a world whose population has doubled in a generation?  


  149. ~~dino3466

    It will repeat, but what happens before inflation? That is what needs preparation, could be 2 to 4 decades.


  150. GPRO/ Phil … I noticed your suggestion to cover the naked $80 calls by selling a Bull Put spread (90/75) .. Any particular reason for this instead of the usual cover which seems to be buying the out of the money call spread .. Maybe it is same difference?? Thanks. 


  151. ZZ still no cause for inflation without radical change. In the meantime look at history, the resetting of ALL assets must come first. That includes the top falling down!


  152. Mauldin/pwright – thanks for calling that out. Excellent piece.


  153. Let's hope they fall soon….two more to add to the GOP "undead"……. :(

    http://www.rollingstone.com/politics/news/inside-the-koch-brothers-toxic-empire-20140924


  154. 1020

    Where do you live? In Idaho only on Sunday morning farm shows they advertise like they are farmland green, especially during the republican primary they trash both frontrunners because neither GOP candidate meets their requirement at the same time knowing the democrats don't even bother to advertise.

    In ID and WY better red or dead!


  155. shadow

    I agree about the deflation – we're living it, in an indirect sort of way. (you don't really see it in the food store). 2-4 decades? I find it hard to believe in such a prolonged period without the influence, directly or indirectly, of other stimuli. But what do I know?


  156. dino

    I wish I was experiencing deflation especially at grocery stores and gas stations. How do you mean living it indirect? I also see lots of influence and it all seems like price inflation. I more or less think the world will revisit the 1930s and then decades later inflation because inflating wages will be the only way to get anything going. To bad the rich don't understand that everything starts with a foundation.


  157. Quote of the day:

    Eddy Elfenbein, “When you’re investing in a company, you’re really investing in human ingenuity—the way that people can come together and figure out how to make something useful from those assets.”  (Crossing Wall Street)


  158. Craigs / CL

    Be careful. Confirmation bias can be a bitch


  159. Iran Sees Oil Prices Continuing To Slide

    Brent crude oil fell below $97 on Wednesday morning as ample supply and waning demand continued to weigh.

    The commodity traded at $96.94 at 8:20 GMT with weak economic data driving prices.

    Oil prices have been largely unaffected by the growing tension in the Middle East where the US and its allies have begun air strikes in Syria.

    The strikes, which the Pentagon has said are just the beginning, are said to have destroyed several key buildings used by Islamic militants as command centers and weapons storage. 

    Instead, investors focused on eurozone PMI data which showed that the region’s business activity fell short of expectations in September. Manufacturing and services PMI in the bloc’s two largest economies, France and Germany, also waned.

    The data added to growing concern that global demand will not be able to catch up to rising supply, thus creating an even larger supply glut.

    So far, OPEC has been optimistic about oil prices, saying that the market’s natural ebb and flow will help boost prices in the future. However on Tuesday, The Wall Street Journal reported that the director at National Iranian Oil Company took an opposing view.

    Mohsen Ghamsari said he sees oil prices falling to $90 by April 2015 due to the imbalance in supply and demand. Ghamsari’s remarks came just days after Saudi Oil Minister Ali al-Naimi said he is not concerned about the recent drop in prices and that OPEC is not considering a supply cut.

    In any case, investors will be watching the group closely as its November meeting approaches for any indication that a supply reduction is coming. Many of the group’s members require prices to be above $100 in order to balance their budgets, so a forecast of $90 could warrant a cut.


  160. Markets – Phil's comment about stock buybacks, and overall consideration of how there is nowhere else to put money than US stock markets brought this David Epstein TED talk to mind.. is performance (of the market) really better, or is it other attributes?

    David Epstein: Are athletes really getting faster, better, stronger?
    http://www.youtube.com/watch?v=8COaMKbNrX0


  161. Brent prices / Phil – I really can't believe that they will accept lower prices going forward. As noted in the article, these guys need at least $100/barrel to break even. 

    I believe it's $114 for Russia as well – so big shortfalls there!

    Russia has balanced its budget at $114 a barrel this year as President Vladimir Putin is ramping up social military spending amid a conflict in Ukraine, which sent relations between Moscow and the West to their worst since the end of the Cold War.


  162. Petroleum Status Report – the Con Job Continues:

    Brent/StJ – It's not what they break-even at, it only costs an average of $25/barrel to pull it out of the ground – this is about what their budget projected oil will sell for.  The problem OPEC has is that non-OPEC production is skyrocketing and the only thing keeping it from going up faster is prices under $100:

    Saudi Arabia is 1/3 of OPEC at 12Mbd and they are the only ones that could even consider cutting production but even they can't afford to cut because they're already getting 12.5% less per barrel than last year – that's like taking 1Mb off-line already.  Not only that but look how oil is piling up over here – that's what it's like all over the World, we're swimming in oil – and that's with Libya and parts of Iraq still off-line.  

    So both OPEC and Non-OPEC producers can either gamble that cutting their production by 10% will lead to a 10% rise in prices and get them even eventually or they can just pump 10% more oil and get even with projections now.  This is how commodity markets often crash themselves.  The US alone is projected to produce 1.25Mb/day more than this year in 2015 and this year was 1.5Mb/day more than last year and last year was 1.25Mb/day more than 2012 – and we're not the only country ramping up production:

    So I still think oil will bottom out this winter at $85 and that will finally shut enough production to lead to a rally back in the spring.  In between, I predict we will go up and down.  wink

    Meanwhile, I do like shorting /CL below the $93 line but tight stops over now that it's back to it.  


  163. AAPl update

    Bombed so bad that they withdrew it. CBS news! 

    Oil Phil

    Fuck the Koch brothers and their OPEC partners. I couldn't get myself to post what you did after hours!


  164. HD Breach // Zip Codes
    This is what I was remarking on last week about why the last few have been so potent. It took HD 5 MONTHS to shut it down !!

    "batches of cardholder accounts that are tied to specific ZIP Codes, they said. "


  165. wombat

    Do you really believe they shut it down? I have a lot of things for sale.


  166. Wombat

    That includes my house and the kio9tchen sink!


  167. From Bloomberg, Sep 24, 2014, 7:49:25 PM

    West Texas Intermediate traded near
    the highest price in almost a week as crude stockpiles dropped
    in the U.S., the world’s biggest oil consumer.

    To read the entire article, go to http://bloom.bg/1rkVk5d

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


  168. From Bloomberg, Sep 24, 2014, 4:21:09 PM

    Apple Inc.’s iPhone 6 is displayed at the company’s Omotesando store in Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg

    Apple Inc. (AAPL) pulled an update for the iPhone operating system after the new software caused some people to lose cellular service.

    To read the entire article, go to http://bloom.bg/1xh559t

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


  169. From Bloomberg, Sep 24, 2014, 8:12:54 PM


    Sept. 24 (Bloomberg) — AustralianSuper Deputy CEO and CIO Mark Delaney discusses his investment strategy in the strong equity market, the search for yield and what he’s keeping an eye on with Bloomberg’s Angie Lau on “Asia Edge.” (Source: Bloomberg)

    Asian stocks climbed and the dollar
    extended a four-year high after surging U.S. new-home sales
    signalled improvement in the world’s biggest economy.

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

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


  170. From Bloomberg, Sep 24, 2014, 6:11:12 PM

    U.S. and Arab warplanes struck
    small oil refineries in eastern Syria controlled by Islamic
    State extremists to reduce the radical Sunni group’s revenue,
    the Pentagon said.

    To read the entire article, go to http://bloom.bg/1rkJtE3

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


  171. From Bloomberg, Sep 24, 2014, 3:58:54 PM

    Convinced Alibaba Group Holding
    Ltd. (BABA)
    is doomed to fall after the world’s biggest initial public
    offering? Now you can make that bet in the stock market.

    To read the entire article, go to http://bloom.bg/1xhX7N6

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


  172. From Bloomberg, Sep 24, 2014, 6:11:33 PM


    Sept. 24 (Bloomberg) — Federal Reserve Bank of Chicago President Charles Evans talks about factors contributing to central bank monetary policy decisions and the U.S. labor market.
    Evans, speaking at Washington conference on labor-market slack, also discusses inflation expectation and the Fed’s stimulus exit strategy. (Source: Bloomberg)

    Three Federal Reserve presidents
    are calling for patience as the central bank weighs when to
    raise interest rates above zero, arguing moving too soon poses a
    greater risk to the economy than waiting too long.

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

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


  173. From Bloomberg, Sep 24, 2014, 11:00:00 AM


    Kathy Matsui, chief Japan strategist of Goldman Sachs Group Inc.,. Photographer: Tomohiro Ohsumi/Bloomberg

    Japan Prime Minister Shinzo Abe is running out of policy options to extend a rally that sent stocks to a six-year high, according to Goldman Sachs Group Inc.

    To read the entire article, go to http://bloom.bg/1v14pTc

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


  174. From Bloomberg, Sep 24, 2014, 5:00:00 PM


    Liu Tienan, then deputy chairman of the National Development and Reform Commission (NDRC) and director of the National Energy Administration, attends a press conference in Beijing, China, Imaginechina via AP Images

    China’s former deputy planning chief brokered deals and helped approve projects in return for cars, furniture and a phantom job for his son, prosecutors said at a corruption trial yesterday that detailed a culture of back-room dealings in the world’s second-largest economy.

    To read the entire article, go to http://bloom.bg/1rk7lYp

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


  175. From Bloomberg, Sep 24, 2014, 5:55:28 PM

    A slump in the U.S. junk-bond
    market stretched into a third day as the biggest exchange-traded
    fund that buys the debt fell toward the lowest level this year
    and yields climbed to the highest since October.

    To read the entire article, go to http://bloom.bg/1v0NyzZ

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


  176. From Bloomberg, Sep 24, 2014, 5:07:35 PM

    Treasuries fell for the first time
    in five days as the U.S. received the lowest demand at a five-year note auction this year with investors speculating the
    Federal Reserve is moving closer to raising interest rates.

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

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


  177. From Bloomberg, Sep 24, 2014, 4:26:22 PM

    Enrollment in U.S. colleges and
    universities declined in 2013 for the second straight year as
    registrations in two-year colleges tumbled.

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

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


  178. From Bloomberg, Sep 24, 2014, 4:13:14 PM

    U.S. stocks rebounded after a
    three-day slump for the Standard & Poor’s 500 Index, as new-home
    sales climbed to a six-year high and health-care shares rallied
    with producers of consumer staples.

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

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


  179. Oil / Phil – What's funny is that member can all pledge to cut production, it might not impact the prices and then revenues will be even lower because the prices won't budge and production is lower. The result is that OPEC members will cheat and get more oil on the market to make up the lost revenues. How often have we seen that?

    BTW, pumping oil from the ground doesn't cost $25 everywhere! In the Middle East, probably, but in other places, it's higher. Deep water, shale and oil sands are all over $60/barrel:


  180. From Bloomberg, Sep 24, 2014, 4:12:00 PM

    Starz, the pay-TV channel
    controlled by billionaire John Malone, has hired an investment
    bank to seek potential buyers, according to people with
    knowledge of the matter.

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

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


  181. From Bloomberg, Sep 24, 2014, 5:17:46 PM

    People wait in line to see an agent from Sunshine Life and Health Advisors as the Affordable Care Act website is reading, “HealthCare.gov has a lot of visitors right now!” at a store setup in the Mall of Americas on March 31, 2014 in Miami. Photographer: Joe Raedle/Getty Images

    The federal government’s Obamacare enrollment system has cost about $2.1 billion so far, according to a Bloomberg Government analysis of contracts related to the project.

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

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


  182. From Bloomberg, Sep 24, 2014, 3:41:16 PM

    Customers compare an Apple Inc. iPhone 6, left, and iPhone 6 plus at an Apple store in Palo Alto, California, on Sept. 19, 2014. Photographer: David Paul Morris/Bloomberg

    The fix for a bent IPhone 6 Plus may be to simply bend it back into shape.

    To read the entire article, go to http://bloom.bg/1DxF4UK

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



  183. From Bloomberg, Sep 24, 2014, 1:01:00 PM


    A worker enters a factory site at the Vietnam-Singapore Industrial Park in Thuan An, Binh Duong province, Vietnam. The number of business closures in the country increased 13 percent in the eight months through August from the same period a year earlier, government data showed. Photographer: Brent Lewin/Bloomberg

    Do Thi Hien points to about two
    dozen sewing machines lined up on one side of her apparel
    workshop near Hanoi’s Red River. They have been gathering dust
    as she tried to get a loan to increase output for exports.

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

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


  184. From Bloomberg, Sep 24, 2014, 2:51:07 PM


    Sept. 24 (Bloomberg) — Federal Reserve Bank of Chicago President Charles Evans talks about factors contributing to central bank monetary policy decisions and the U.S. labor market.
    Evans, speaking at Washington conference on labor-market slack, also discusses inflation expectation and the Fed’s stimulus exit strategy. (Source: Bloomberg)

    Federal Reserve Bank of Chicago
    President Charles Evans said he favored patience as the central
    bank ponders when to raise interest rates for the first time
    since 2006.

    To read the entire article, go to http://bloom.bg/1Dxvf9q

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


  185. From Bloomberg, Sep 24, 2014, 3:14:15 PM

    Today’s chart comes from a very interesting article on stock buybacks from Aswath Damodaran, a professor at New York University.

    To read the entire article, go to http://bv.ms/1ruN4kJ

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


  186. From Bloomberg, Sep 24, 2014, 6:31:55 PM

    The U.S. regulatory probe into Bill Gross’s Pimco Total Return ETF is separate from a broader
    scrutiny of disclosure in the exchange-traded fund industry,
    according to a person familiar with the matter.

    To read the entire article, go to http://bloom.bg/1rkPtN4

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


  187. I guess Europe will go up tomorrow because we are up today, so maybe they drag us over the 2000 line again!


  188. stjean

    tomorrow up is in serious question, we will se tomorrow AM before and after open.



  189. From Bloomberg, Sep 23, 2014, 2:44:39 PM

    Gold advanced from an eight-month
    low after airstrikes in Syria boosted demand for the metal as a
    haven.

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

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


  190. From Bloomberg, Sep 24, 2014, 9:36:52 PM

    Gold resumed a drop toward erasing
    this year’s advance as U.S. economic data that beat estimates
    boosted expectations for higher borrowing costs, strengthening
    the dollar and damping demand for a store of value. Platinum
    sank to the lowest level since July 2013.

    To read the entire article, go to http://bloom.bg/1v1nQeB

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


  191. From Bloomberg, Sep 24, 2014, 9:33:34 PM

    Wheat rose for a second day,
    extending its biggest increase in two weeks, on speculation that
    prices near the lowest since 2010 may spur demand.

    To read the entire article, go to http://bloom.bg/1v1n41b

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


  192. From Bloomberg, Sep 24, 2014, 8:12:53 PM

    Members of Liberia’s Ebola Task Force enforce a quarantine on the West Point slum on August 20, 2014 in Monrovia, Liberia. Photographer: John Moore/Getty Images

    It was a small victory in a grim,
    relentless, and runaway catastrophe.

    To read the entire article, go to http://bloom.bg/1v1ahM7

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


  193. From Bloomberg, Sep 24, 2014, 10:07:55 PM

    Goldman Sachs Group Inc.’s Jeffrey Currie says the worst isn’t over yet for gold after prices
    erased almost all of this year’s gain.

    To read the entire article, go to http://bloom.bg/1v14TZv

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


  194. From Bloomberg, Sep 24, 2014, 12:30:56 PM


    It’s got the bends.

    To qualify as a hipster, you need to wear skinny jeans, own an iPhone and be an early adopter of technology. These requirements were easy to meet — until the iPhone 6 and the scandal known as Bendgate.

    To read the entire article, go to http://bv.ms/1yr03IJ

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


  195. Watch this video at http://bloom.bg/1ukvzFH

    Killing Cancer With Electricity

    Sept. 24 (Bloomberg) — British surgeons are experimenting with a new way of treating cancer patients who’ve run out of options. NanoKnife uses high-voltage currents to kill cancer cells that are embedded in soft tissue. (Source: Bloomberg)

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


  196. Phil / AAPL – I hold the 2016 $85.71 call at 8.36 and 2016 $71.43 put at 6.02. Both are very much in the money but I'm wondering what I can do to better my position or should I take the profits and put the money to work on your AAPL play in the morning post on Tuesday. Thanks as always for your insight.


  197. Watch this video at http://bloom.bg/1ve8DpB

    Will iOS Problems and Bendable iPhones Hurt Apple?

    Sept. 24 (Bloomberg) — Unbox Therapy’s Lewis Hilsenteger and Piper Jaffray’s Gene Munster debate whether bendable iPhones and iOS problems will hurt Apple’s sales. They speak with Emily Chang and Cory Johnson on “Bloomberg West.” (Source: Bloomberg)

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


  198. SPY 5 MINUTEGood morning!

    Draghi just dumped the Euro with more FREE MONEY talk.  This is really insane.  Euro just bounced at $1.27, like a 10-year low.  Dollar topped out at $85.60 and back below 85.50 now.  Oil $92.63, been drifting lower since the close and this should give us a push down to $92.50 or lower.  

    Our Futures are dead flat 17,138, 1,990, 4,085 and 1,123.6 – dead flat is usually manipulated that way. 

    The Nikkei jumped 1.28% (/NKD 16,385 is a nice short below 16,400) but the rest of Asia was a huge disappointment with Hang Seng down 0.64% and Shanghai flat and India down 0.7% and Singapore flat. 

    • Japan Survey Tipped to Show Weaker Corporate Sentiment

      The Bank of Japan's tankan survey next week will likely show a slight worsening of corporate sentiment, economists say, as the economy struggles to shake off a greater-than-expected blow from the government's move to raise the sales tax. 3:53 AM

    • India Court Cancels Coal Licenses

      India's Supreme Court canceled hundreds of coal-mining licenses, adding uncertainty beyond the struggling coal industry to the heart of Asia's third-largest economy.

    Europe was opening red (a very bad sign after our fake rally) but then GOLDMAN SACH's Draghi came out with more happy talk and the markets jumped, but only a about half a point into lunch with FTSE flat. 

    Euro at lowest since 2012 on Draghi's dovish comments

    MarketWatch-8 minutes agoShare
    The euro extended its overnight losses after Draghi repeated that the ECB could use additional unconventional policy measures if it felt that its inflation target …
     

    ECB's Draghi says Russian downturn to affect European demand

    euronews-8 minutes ago
    VILNIUS (Reuters) – European Central Bank President Mario Draghi said on Thursday the downturn of the Russian economy would affect Europe, although the ..
     

    Italy Premier Pledges 'Believable' Anti-Austerity Push

    Prime Minister Renzi says Rome can't successfully push back against austerity in Europe until it shows it is credible in driving through economic overhauls at home.

    USO WEEKLYThis is the kind of crap that does make me want to cash out and just watch from the sidelines but, on the other hand, it is a fun market to play.

    Based on that being the only major news, I'm all for shorting the above levels (short the laggard!) as long as /ES is below 1,990 and /TF is below 1,125 and /YM is below 17,150 and /NQ is below 4,085, so those are the stops along with $92.75 on /CL with a long on /YG at 1,210 and /SI just crosed $17.50 but we missed $17.40, which would have been great.  



  199. From Kimble:

    Anyone heard that some unrest is taking place in the mid-east of late? In the past what usually happens to the price of Crude Oil when this takes place? As we all know, frequently it pushes up the price of Crude.

    So why is Crude soft in light of this unrest? Crude oil looks to be inside of a rising channel that dates back almost 30-years, with a failed breakout of this channel a few years ago.

    Over the past 5-years, Crude has remained above a support line of a pennant pattern.  A break of support would be bearish, for the most influential commodity on the planet, especially when events are taking place that is usually bullish for this asset. If 5-year support fails to hold, long-term support comes into play around the $70 zone.

    I believe what happens to Crude over the next 6-8 weeks could tell us a good deal about where the macro state of the economy will be around Christmas.

    Joe Friday shared a month ago that the TR commodity index was nearing a breakdown. (see here) Since then, the trend remains down.

    Continued softness in the sector often means global softness is in the cards going forward.  Humbly, I believe what happens to Crude and the broad based commodity complex in the near future is important to portfolio construction going forward.  


  200. WTF?  "How DC’s conservative elite view liberals":

    Here’s the view from the Heritage Foundation: Liberalism creates self-indulgent, licentious hedonists willing to cede every other kind of freedom to an increasingly authoritarian government.

    “Give up your economic freedom, give up your political freedom, and you will be rewarded with license,” said Heritage’s David Azerrad, describing the reigning philosophy of the left. “It’s all sex all the time. It’s not just the sex itself—it’s the permission to indulge.”

    Liberals, said editor Bill Voegeli, want to create “the United States of Feeling Good About Ourselves.”

    At the Tuesday’s event, a curious portrait of modern-day liberalism emerged. Liberalism meant Robert F. Kennedy Jr. and Gawker (for wanting to punish climate change deniers), Senate Democrats (for wanting to undo Citizens United), writer Matt Yglesias (for wanting to eliminate summer vacations), the term “mansplaining” (for being a symptom of P.C. extremism), and Rolling Stone magazine (for givingvoice to far-left writers in “the most frivolous consumer product in the history of frivolous consumer products,” per Williamson).

    But more than anything, the panelists stressed, liberalism is an idea, and a deadly one at that: a Janus-faced monster of moral relativism and authoritarianism. 

    Given liberals’ fixation with pleasure, “I fear the next great frontier for the left will be trying to lower the age of consent,” said Azerrad, head of Heritage’s center for principles and politics

    The real cracks in liberalism would begin to show when existential threats begin to threaten America at home and abroad, the panelists said.

    “Should the world continue to become a more dangerous place, should the homeland be threatened, or should we witness a return to 1970s levels of violent crime, I think that would put a considerable damper on prospects of liberalism,” said Azerrad, who called the liberal outlook “the luxury of a bored, prosperous and safe people.”

    When an audience member pointed out that Americans had elected Democrats in times of war, too, Azerrad replied that the priorities of modern-day liberals had changed. “Woodrow Wilson and FDR were not fighting for gender-neutral bathrooms,” he said.

    This is a not too subtle strategy session from Heritage, letting their base know that, to win the next election – it might be a good idea to let crime run rampant for a while and make sure the voters don't feel "safe enough" to elect any more liberals.   These are very sick people….


  201. Oil/Craigs – It's so hard to trade with your head when the chart is going the other way.  I felt much better about my bet after finding out why oil was up (bombing ISIS) and going over the Petroleum Status Report to see where that 4Mb draw came from.   Still, you never know how the global situation will shake out overnight and then you have powerful guys like Draghi fighting against you – well, at least it's exciting! 

    Paranoia/Dino – It's not paranoia when "THEY" really are out to get you…

    Links/Shadow – No I cannot find links to prove that digital beats analog, especially from within a TV show, other than Knight Rider, of course.

    Inflation/ZZ – There are finite goods and more money chasing them – that's inflation.  But goods includes stocks and luxury homes and first class seats on planes, etc. and you can see that the increase in the money supply is going to the people who buy those goods, causing a specific kind of inflation and not to the people who buy gas or coal or Happy Meals or movie tickets in mass quantities.  Even though a limo consumes 3x more gas than a passenger car – there just aren't enough of them to offset the poor folks having to cut back.  

    The trillions the Fed produces doesn't go to workers to increase demand and create more workers, it goes to the banks who make M&A deals to combine companies with declining sales and make them more efficient by laying off more workers, which leads to lower demand and more declining sales and more M&A to "fix" the problem.  This is why I left the M&A biz – I couldn't stand being a part of that BS.  

    Of course combined businesses with less available jobs have pricing power over an oversupplied labor pool – yet another win for our corporate masters!  Still, yes, I anticipate future inflation because all things go in cycles and this record-high stock market bubble will pop and stocks will be cashed out and rich people will go back to housing and accidentally create some jobs and then the velocity of money will pick up and, once it does – we can see inflation rise very quickly.  Wages will rise because the workers are realizing they do have the ability to pressure change – though it's just getting started and may still take a while before we see any real change.  

    GRPO/DM – As I was saying in Tuesday's Webinar, if you see an option that you think is a terrible deal to buy – find a way to sell it.  The bear put spread at $12.50 was so ridiculous ($12.50 risk/$2.50 reward) that, when I first looked at it, I thought it was a $25 spread because how could a $15 spread be just $12.50.  As it turns out, the sentiment on GPRO is so bearish, that those are the prices on that side (as if it's a sure thing to go down).  Since we can only lose up to $2.50 on that short spread (below $77.50) and since we can collect $8 for selling the $80 calls, that puts $20.50 in our pocket and the break-even on that spread is ($77.50-20.50=) $57 on the put side and ($80+20.50=) $100.50 on the call side so any finish between $57 and $100.50 is a profit on that spread.  

    This is why I like to teach people to UNDERSTAND options and not just toss out trades, there are often imbalances like this that we can take advantage of and often they don't last too long (remember how amazed I was that we kept getting those great prices for CZR?) and I can't watch every stock but YOU, if you understand how these trades work, will often be able to take advantage of positions you are watching, once you get comfortable with these trading strategies. 

    Good article, 1020 – thank goodness for Rolling Stone, one of the last independent voices out there:

    The volume of Koch Industries' toxic output is staggering. According to the University of Massachusetts Amherst's Political Economy Research Institute, only three companies rank among the top 30 polluters of America's air, water and climate: ExxonMobil, American Electric Power and Koch Industries. Thanks in part to its 2005 purchase of paper-mill giant Georgia-Pacific, Koch Industries dumps more pollutants into the nation's waterways than General Electric and International Paper combined. The company ranks 13th in the nation for toxic air pollution. Koch's climate pollution, meanwhile, outpaces oil giants including Valero, Chevron and Shell. Across its businesses, Koch generates 24 million metric tons of greenhouse gases a year.

    For Koch, this license to pollute amounts to a perverse, hidden subsidy. The cost is borne by communities in cities like Port Arthur, Texas, where a Koch-owned facility produces as much as 2 billion pounds of petrochemicals every year. In March, Koch signed a consent decree with the Department of Justice requiring it to spend more than $40 million to bring this plant into compliance with the Clean Air Act.

    OPEC/StJ – I was talking about OPEC's costs, not deepwater, shale or tar, of course.  Looks like it's up to $30 now…  All the more reason they'd rather sell more with a $60 markup than cut production and hope to get $65 for the lower output…

    Gold/StJ – Or heading for an epic breakdown.  

    Big Chart – Strong bounces except RUT and NYSE so they are the laggards now if we have to flip bullish.  Back to TNA longs maybe.  

    Oil back to $92.80, indexes up a tick.  

    Good Ted Talk Scott. 

    Carplay/Wombat – Sure, that's from last year, just starting to gain traction as the new models finally come out.  

    AAPL/Pfehl – I assume that's a short put and yes, I'd take the profits and switch to a spread, which has plenty of upside but more cushion to the downside. 


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  203. Oil at $93, back to conviction shorting.  Top yesterday was $93.30 so it's 1x short at $93, 2x at $93.20 for avg $93.10 then 2x more at $93.40 for 4x at $93.20 avg.  If we get a retrace back to even at any time, we go back to 1x, of course.  


  204. Oh, very important – if oil jumps up from $93 to $93.20 and doesn't look like it's stopping, you don't pull the DD trigger, you wait until it is done and, if you still have 1x and it hits $93.40 so fast you never got to DD, then maybe it's a better idea to get out until the upside momentum stops! 


  205. Phil; what is your target for CL short?


  206. Good morning Phil.  Thought you might find this Facebook post on tax inversion from Robert Reich interesting:

     

    Yesterday, the Treasury Department announced new rules, effective immediately, to make tax “inversions” (translated: tax desertions) less profitable for American firms that seek to become foreign firms to lower their taxes. The new rules seem to be working, at least momentarily, judged by the drop in stock values of American companies that had been on the verge of deserting. But tax desertion is only the tip of a much larger iceberg of corporate tax avoidance. As Gabriel Zucman of the London School of Economics shows in a forthcoming paper, large American companies are now shifting 20 percent of their annual profits abroad. That’s a tenfold increase in tax evasion over the past fifteen years, accounting for seven of the ten percentage points by which corporations have reduced their effective tax rates on average from 30% to 20%.

    When congressional Republicans (and a few Democrats) talk about “reforming” the tax code for corporations, they really mean cutting corporate taxes even further. The real answer is to tighten the law, close loopholes, and make corporations (and their executives and shareholders) pay their fair share for the benefits they receive of being American. And if they leave America, remove those benefits, including U.S. protection of their intellectual property and their foreign assets, as well as their "right" to lobby and influence American elections.


  207. Excellent points by Reich, thanks Rev.  

    /CL/Options – I'm hoping they at least come back to $92.50 but tricky with daily bombing of oil fields.  Often on Thursdays, oil holds up until the 10:30 nat gas inventories (not that there's a good reason for that, but they do).  

    Gasoline (/RB) just hit $2.74 and I like them short under $2.75 per the above EIA Report but super-tight stops above.  


  208. Phil – What's up with posting garbage from alex jones?……