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Weakening Wednesday – Market Picture Begins to Look Grim

This is not pretty.

As you can see on our Big Chart, we've failed the 50 dma on the S&P, Nasdaq, NYSE and Russell and the Russell failed its 200 dma long ago.  We're still waiting for the Dow to cross below 16,940 and confirm the carnage but we made those bets long ago with our DXD Oct $24 calls, which are now 0.70 (up 55%) from our 0.45 entry back on 9/18.

In fact, we already took 1/2 of those calls off the table at 0.85 last week so, essentially, the remainder is a free put option on the Dow for the next three weeks – with DXD at $24.45, so we gain every penny from here on up as the Dow falls.  

That's what hedges are supposed to do, of course.  We discussed that in yesterday's Live Trading Webinar, where we also demonstrated a live Futures trade on the Russell (/TF Futures) that made $500 on the 2:30 bounce.  That bounce was very easy to predict because THE MARKET IS MANIPULATED and all we had to do was wait for the same fake spike that we get at the end of every quarter, courtesy of the Fed and their fellow Banksters:

SPY  5  MINUTEWhat's scary about yesterday's flood of money ($230Bn in two days) wasn't just the size of the pump job, but the ineffectiveness of it.  The volume was still anemic and declining shares outpaced advancing shares by almost 2:1 in yesterday's "mixed" trading.  

In reality, it wasn't mixed at all as big traders took advantage of every penny that moved into the market as they told their brokers to sell, SELL!!!

Still, it's not the end of the World just yet – only close to it, and we can still turn this puppy around by holding the line on the Dow as well as Russell 1,100 and Nasdaq 4,500.  This market has been amazingly resiliant in 2014 so we're not going to be complacently bearish the same way we (thank goodness) did not let ourselves get complacently bullish this summer.  

INDU DAILYWe have tilted more bearsh in our Short-Term Portfolio (see Webinar replay for trade ideas) but haven't yet found anything in the Long-Term Porfolio or Income Portfolio we're willing to part with (all long-term bullish trades) but, if the gains in the STP fail to keep up with the LTP, we're not going to risk our combined 20%+ gains for the year and we'd rather move to more cash, rather than tempt fate

China is still our main Global concern (beating out the European Recession, war in the Ukraine, ISIS, Japan and Ebola) and our FXI hedge is now 100% in the money at $38.  That was a free one from the morning post of 8/27, where we grabbed the Jan $42/38 bear put spread for $1.80 with a $2.20 upside (122%) if China weakened as expected.  This stuff isn't complicated folks it's just:

A) Read the News

B) Make a trade

In fact, in that same post, I said: "We also picked up long plays on BAC and DBA in our Live Member Chat Room and BAC has already rocketed on the settlement news but DBA is only just making the turn and still makes an excellent play that we'll be adding to our Buy List (Members Only) along with 10 more picks we'll be making this week."  

As you can see, BAC took off like a rocket but the DBA trade idea is still playable and our other 10 picks are, sadly, only for our Members (but you can join us HERE and get trade ideas like these every day).  

Sadly, if you didn't read yesterday's morning post, you missed your chance on the EWJ Oct $12 puts at 0.20 – those are already up 30% for the day and our currency call (also yesterday morning) to short the Yen at 110 has already given us a retrace to 109.64 (0.325%) for a gain of $32,400 per contract – SO FAR (at $900 per penny, which is why we very rarely play the currency markets – too scary to play when you are not certain).  

The proxy for that trade in the Futures (aside from the EWJ puts) was the short on /NKD at 16,250 (also right there in the morning post) and there we caught a 150-point drop at $5 per point, per contract for $750 per contract gains – not bad for a day's work.  And, as I often remind our Members, it is hard work.  There is a lot of reading and lot of discussion before we arrive at these trade ideas.  Sometimes we get the call right but our timing is off – it certainly keeps us on our toes.  

RUT WEEKLYSpeaking of timing, gold (/YG Futures) was called long at $1,205 yesterday morning and that line held and we're up to $1,215 this morning and that's $320 per contract and our stop should be $1,112.50 while silver (/SI) was a long at $17.15, popped to $17.40 (up $1,250 per contract) but then fell all the way to $16.85, which was down $1,500 if you were foolish enough not to stop out but now, this morning, back to $17.15 again.  

Of course, Futures trading is a very small part of what we do at PSW but it's also the most volatilie and exciting stuff, so it gets a lot of attention.  For the most part, we are content to mostly sit back and simply collect the premiums on our Long-Term trades, using our short-term trades and Futures trading to weather these occasional storms.  

 


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  1. Oil Lines

    R3 – 97.98
    R2 – 96.44
    R1 – 93.94
    PP – 92.40
    S1 – 89.90
    S2 – 88.36
    S3 – 85.86


  2. Maybe this is old news in the US, but just saw it on the Guardian website:

    http://www.theguardian.com/world/2014/sep/30/michigan-doctor-cancer-treatment-fraud-guilty


  3. Good Morning!


  4. brillion28 – That's nothing surprising, check out this clown (a well respected and wealthy doctor) who thought he could save a few cents by re-using needles…..

    http://www.medicaldaily.com/las-vegas-doctor-dipak-desai-sentenced-life-prison-after-infecting-nine-people-hepatitis-c-261045


  5. Good morning!  

    Silver nicely over $17.15 already and that is the stop (/SI).  Gold right on the $1,215 line, also the stop now (/YG).  Oil $91.90 (/CL) inching up for us and $91.85 should be the stop and that raises to $92 as soon as we clear it.  

    Watch out for craziness today:

    • Shares of Six Flags (NYSE:SIX) are on watch after a case of Ebola is reported in the Dallas-Ft. Worth area where the company operates an amusement park and water park.
    • Though the public's reaction to the case has been very calm, a minor traffic dip at some theme parks is anticipated by some industry watchers.
    • Airline stocks are tilting lower after yesterday's report on the first case of Ebola in the U.S.
    • Premarket: JetBlue (NASDAQ:JBLU) -2.2%, American Airlines Group (NASDAQ:AAL)-1.8%, United Continental (NYSE:UAL) -1.6%, Delta Air Lines (NYSE:DAL) -1.9%, Southwest Airlines (NYSE:LUV) -1.5%., Alaska Air Group (NYSE:ALK) -1.3%, Spirit Airlines (NASDAQ:SAVE) -1.4%.
    • Count Jefferies among those believing the addition of Bill Gross will boost organic growth at Janus (NYSE:JNS). The team upgrades the stock to a Buy with price target lifted to $17 from $12.50.
    • Shares +1.4% premarket

  6. At least I was able to book a cheap flight to Vegas last night!  cheeky


  7. Oil at $92.04, great call on the morning action!


  8. We're off to a crappy start at the open. 

    Thanks, Bruce.  


  9. From Bloomberg, Oct 1, 2014, 5:00:00 AM


    July 2 (Bloomberg) — Federal Reserve Chair Janet Yellen speaks about financial stability and monetary policy at the International Monetary Fund in Washington.
    Yellen, who responds to questions from IMF Managing Director Christine Lagarde after her speech, also comments on interest rates and the Fed’s independence. (Source: Bloomberg)

    The Federal Reserve is stepping up its oversight of high-risk leveraged loans, shifting to a deal-by-deal review after its previous industry-wide guidelines were largely ignored by banks.

    To read the entire article, go to http://bloom.bg/1uAMuE7

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


  10. From Bloomberg, Oct 1, 2014, 12:01:00 AM

    Oct. 1 (Bloomberg) — Douglas Merrill, chief executive officer of ZestFinance Inc., talks about the short-term loan company’s “big data” credit assesment process and the impact it may have on the loan industry. This report is featured in the November issue of Bloomberg Markets magazine. (Source: Bloomberg)

    Douglas Merrill, chief executive officer of ZestFinance Inc., jumps up, stares at the computer monitor on the wall and says, “Holy crap, that can’t be right.”

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

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


  11. From Bloomberg, Oct 1, 2014, 7:30:28 AM

    The next wave of U.S. mergers may be
    coming to a shopping mall near you.

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

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


  12. From Bloomberg, Sep 30, 2014, 12:39:44 PM


    Location, location, location.

    Apple’s relationship with Ireland, where it receives much of its profit, was always a mystery: The world’s most valuable company had clearly made some sort of deal to pay as little tax as possible, but the details of that deal had never been revealed — until today. Revealing as they are about Ireland’s practices, they require action primarily from the U.S.

    To read the entire article, go to http://bv.ms/1yy3wVX

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


  13. From Bloomberg, Oct 1, 2014, 9:04:02 AM


    A laboratory technician watches as a Proditec SAS Vistab 2 machine checks Concor blood pressure tablets for any imperfections in the laboratories at the Merck KGaA headquarters in Darmstadt, Germany. Photographer: Krisztian Bocsi/Bloomberg

    European companies are snapping up U.S. targets at the fastest pace since 2008 as they use cheap financing and record cash levels to seek growth outside of the continent.

    To read the entire article, go to http://bloom.bg/1vw86iT

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


  14. Watch this video at http://bloom.bg/1vu5jpC

    Hong Kong Protesters Defiant on China’s National Day

    Oct. 1 (Bloomberg) — Bloomberg’s Andrew Davis reports on pro-democracy demonstrations in Hong Kong as protesters continue to block streets for a sixth day in a standoff against the Chinese government. 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


  15. From Bloomberg, Oct 1, 2014, 5:42:12 AM


    Euro-area manufacturing expanded at the slowest pace in 14 months, according to today’s report. The gauge stood at 50.3 in September, just above the 50 mark that divides expansion from contraction, and below a preliminary estimate of 50.5. Photographer: Martin Leissl/Bloomberg

    Euro-area factories cut prices in September by the most in more than a year and German manufacturing shrank, underlining the mounting challenge facing Mario Draghi.

    To read the entire article, go to http://bloom.bg/1vwa0A1

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


  16. Phil / Insurance … with S&P just after failing 50MA and a little bit of a laggard relative to the Russell it looks like a good time to build some SDS insurance positions … would you consider December bull call spreads (although may be 'risk' of Santa rally) or prefer Jan 2015 play? I am considering closing all my Oct 18th TZA call spreads $15/19 if Russell gets back over 1,100 rather than be greedy. Thanks 


  17. From Bloomberg, Oct 1, 2014, 9:00:00 AM

    The International Monetary Fund urged
    regulators to pay closer attention to a shadow banking system
    that has grown to as much as $60 trillion worldwide to help
    prevent risks from building outside the bounds of traditional
    financial oversight.

    To read the entire article, go to http://bloom.bg/1vwJV3O

    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, Oct 1, 2014, 9:03:53 AM

    Fannie Mae (FNMA) and Freddie Mac plunged in
    early trading after investors including Bruce Berkowitz’s
    Fairholme Capital Management LLC lost a legal bid yesterday to
    force the bailed-out companies to share profits with private
    shareholders.

    To read the entire article, go to http://bloom.bg/1uB9bbo

    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, Oct 1, 2014, 9:45:38 AM

    Doral Financial Corp. (DRL), the Puerto
    Rico
    bank that lost more than half its value this year, said
    U.S. regulators found it to be “significantly
    undercapitalized” and in need of an immediate fix.

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

    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, Oct 1, 2014, 9:33:30 AM

    Chrysler Group LLC’s and Nissan Motor
    Co. (7201)
    ’s U.S. sales in September rose 19 percent, beating the
    average of analyst estimates, while Ford Motor Co. (F) narrowly
    missed. All three reported increasing sales of sport-utility
    vehicles.

    To read the entire article, go to http://bloom.bg/1uB6ZR8

    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, Oct 1, 2014, 7:26:40 AM


    The biggest order was for 1.96 billion shares of Toyota Motor Corp., or 57 percent of outstanding shares at the world’s biggest carmaker, for 12.68 trillion yen through an off-exchange transaction. Photographer: Kiyoshi Ota/Bloomberg

    Japan’s over-the-counter market was bombarded with $617 billion of erroneous stock orders in dozens of Asia’s biggest corporations. They were canceled before they could be executed.

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

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


  22. From Bloomberg, Oct 1, 2014, 5:45:23 AM


    A view across historic Naples. Photographer: Christopher Furlong/Getty Images

    As Europe’s central bankers gather in Naples to discuss the state of the region’s economy, the city stands as a stark warning of just how bad things can get.

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

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


  23. From Bloomberg, Oct 1, 2014, 5:45:22 AM

    Thailand’s biggest money manager
    isn’t backing down from his call that the country’s stock-market
    rally is about to fizzle out after valuations climbed to the
    highest level in 14 months versus developing-nation peers.

    To read the entire article, go to http://bloom.bg/1vw3HMQ

    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, Oct 1, 2014, 6:00:10 AM


    Pershing Square Holdings Ltd., one of the funds managed by activist investor Bill Ackman, seen here, has raised $2.7 billion in an initial public offering in Amsterdam. Photographer: Jin Lee/Bloomberg

    Pershing Square Holdings Ltd. (PSH), one of
    the funds managed by activist investor Bill Ackman, has raised
    $2.7 billion in an initial public offering in Amsterdam.

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

    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, Oct 1, 2014, 8:11:19 AM


    Catalan Pro-independence demonstrators protest in front of the Barcelona City Hall on Tuesday, Sept. 30, in Barcelona. Photographer: Alex Caparros/Getty Images

    Regional President Artur Mas vowed
    he’ll deliver Catalans a vote on independence despite the legal
    obstacles, as a Spanish minister warned that risks dragging the
    country back into an economic crisis.

    To read the entire article, go to http://bloom.bg/1uB2xli

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


  26. I don't think TSLA is hitting that 315 mark on the chart noted a month ago anytime soon or the $400 target put on by that idiot at Stifel Nicolaus


  27. phi, sorry for the delay as some personal things came up…am reposting positions for follow on…and wanted to get back to you……..

    21x jan6 64.29 @ 19.70

    14x jan6 78.57 @ 9.65

    -35x jan6 100 @ 11.35

     

    -35x jan 5 91.43 @10.

     

    35x jan6 bcs 100-120 @ net 5.70

    -35x jan6 81.03 puts @ 5.03

     

    thank you for your thoughts on monday….

    to recap you suggested selling the 64 and 78 and adding a 90-120 jan7 bcs x70

    couple of follow ons …….
    the short 91. calls were jan 15 and i felt i could always roll them out and up to jan 16 to higher strikes……if aapl never pulls back…./ or market doesnt……

    you asked why the put sale (early sept)…….the puts sales were to help hedge/pay for the addtl jan 6 ..100-120 bcs to cover the sht jan5 calls.

    i put your suggestion (sell the 64's and 78's and buy the 70x bcs) in the analyze trade of tos and the delta on aapl goes from a -219 to -1450
    i would have thought with the addtl covers it would have been delta positive …..fyi the sell of the itm's were a -3000 delta and the 70x bcs was  +1800……..is it driven by the leap aspect of the covers ? as i am concerned to increase the short aspect of my postion…..

    also point taken on the buy back of calls….i thought about it and it seems i read more about rolling and covering vs buying back and think that way…..i guess your comment is a good reminder……

    again tks as still a work in progress.and working to get my head around "fishing"

     


  28. Now crappy ISM data and poor Construction Spending on top of everything else:

    • August Construction Spending: -0.8% M/M to $961B, vs. +0.5% expected, +1.2% (revised from +1.8%) prior.
    • Private construction spend: $685B
    • Public construction spend: $276B.

    Insurance/DM – I still like the DXD, SQQQ combination.  Look at the Big Chart – the Nasdaq is still 12.5% over the Must Hold line, S&P is only 7.5% over and should have great support at 1,940 (the 5% line) while the Nas has almost no support for 100-point drop (2.5%).  You can't just chase whatever you see, you have to think about which scenario gives you the best chance of success.  Especially with a play like our SQQQ spread – it's not so much that we're betting the Nas will go down as we're betting it won't go up.  Why is that – BECAUSE it's the highest index with the most stretched valuations within its components.  And yes to closing Oct spreads with tight stops – not much time to make it up if it goes the other way on you.

    TLSA/Rustle – Still a lot of fluff at $238.  

    AAPL/Mill – Yes, the delta of short-term short calls vs a bull call spread is extreme.  Just look to simplify your position so you don't have so many moving parts.  In PowerOptions (the program we use to track the Member portfolios) they only let a spread be 4 legs – that's actually a nice reminder to me not to let the positions get too complicated.

    Silver (/SI) hit $17.35!  SLW still laying around though.  

    For the LTP, I want to add 30 of the SLW 2016 $18/22 bull call spread at $1.70 and sell the $15 puts for $1 for net 0.70 ($2,100) on the $4 spread ($8,000 for a 300%ish upside) that's $2 in the money.   Worst case would be owning 3,000 shares at net $15.70 (47,100) but, of course, we'll certainly roll the puts to lower strikes down the road.  

     


  29. XRT at support at $84.50 (200 dma), good time to take off those puts if you still have them.  XRT Oct $93 puts now $7.70

    Oil inventories down with a big net draw, about 6Mb – that's good for /CL to the bull side, now $92.15 but tricky to play because people still want to get out.  I do like them long here but VERY tight stops below.  


  30. Good morning everyone! The webinar replay is up on the YouTube Channel!

    http://youtu.be/wcpY3DWT8H8

    Here's the direct webex link if you'd like to download the webinar instead:

    http://bit.ly/093014Replay


  31. DX – x-dividend by .25 today.  Nice.


  32. Phil!  Good call on /CL, just made a load of money.


  33. In the STP, it's time to take $1.10 (up 144%)  and run on the DXD Oct $24 calls.  We'll find another spread that's less volatile.  


  34. Phil / RIG and ABX:

    would you recommend either as new entries today. I know we have talked about RIG a lot but its mixed. we stated that they have spun off business units so not the same company but we are also saying they are returning a 20% dividend at this price.

     

    ABX should we wait for a panic lower or things look good for an entry at 15ish now ?

     

    Thanks

    David


  35. Phil;  Big gain on FAS this month.  Worth adjusting positions?


  36. The Yen bottomed out at $109.24, up another 0.40 and a strong bounce will go to $109.55 and I'm still thinking $109 is right for a pullback but over $50,000 gained means don't look gift horses in mouths!  

    Thanks Ricbah and congrats!  Stop on /CL should now be $92.75. 

    RIG/Micro – Nothing is a good entry the day the market is failing key supports.  I do like both for the long haul and I certainly like taking a poke by selling some puts but I wouldn't make a big commitment until we see something that looks like more than a weak bounce on the indexes.  RIG did not spin off significant businesses, got cash for the spin off and owns 50% of the spin off – not at all like SHLD.  On ABX, I think this is panic with $1,150 an ounce the level at which enough production shuts down to make a solid floor on gold.  

    FAS/STP, Options – About time!  We already bought back the 15 FAS Oct $105 short calls we sold for $7.50 (now $1.92) last week for $2.50 because we don't look a gift horse in the mouth.  If you didn't follow that one, now's your 2nd chance!  


  37. Phil – That's the exact stop I used for myself.  I guess I'm learning a thing or two haha!


  38. Microflux -20% divd on RIG ?


  39. phil, i have the SLW 2016 $20/$27 bull call spread paid for by $20 puts.  entry was $2.90 for the spread minus $2.00, or $0.90 net.  would you adjust? or just add?  my thought is that it's on track and to leave it alone--but i'd like your opinion.  thx.


  40. Phil / Futures Trading:

    With regard to Advil's request on the previous post, you may want to add a live futures trading screen to your offerings. Additional source of revenue with potentially a one day payback for the subscriber. 


  41. From Doug Kass:

    @DougKass

    Long Oct GPRO $85 puts at $5.20.

    I have defined risk (at a high premium cost) of an indefensibly priced equity.

    Now I'm scared that Doug Kass is short it too


  42. How many of us are doing futures  or any other kind of day trade while chatting and reading?


  43. Rustle / GPRO;

     

    Perhaps  something in this comment is true, or at least is people buying the idea.

    "GoPro as a hardware play is good but GoPro as a social network opportunity is phenomenal.  CEO Nick Woodman never gives an interview without mentioning the word ‘ecosystem’.  GoPro has already launched it’s own channel to compete with Youtube; it will soon be available on Apple TV.  GoPro users upload an average of 6,000 videos per day to Youtube.  In Q2 there was 160% growth in user videos submitted, 200% growth in page views, and 220% growth in minutes watched.  GoPro content is already getting more than 1 billion views per quarter.  This company could make Instagram look like Polaroid in 5 minutes.  Instagram doesn’t even let users zoom.  Instagram videos are short snippets.  In a world that craves content of real people and real things, GoPro is empowering the individual to do what used to be reserved for movie studios.  In the long run, GoPro has the potential to become the next Facebook or even replace Facebook if it enables high quality sharing of content inside a closed ecosystem."


  44. The fact is that there are a lot of " me too"   products without the traction of GPRO, including a name product as Polaroid.


  45. Europe closing all red now.  Majors down 1% (UK too) and others down 0.5% with Draghi up tomorrow morning.  If he doesn't put up tomorrow – look out below.  

    Time for new bounce lines as we nestle at lower lows:

    • Dow 17,350 to 16,900 is 450 points so call it 100-point bounces to 17,000 (weak) and 17,100 (strong)
    • S&P 2,010 to 1,960 is 50 points so 10-point bounces to 1,970 (weak) and 1,980 (strong)
    • Nasdaq 4,600 to 4,450 is 150 points so we'll call that 25-point bounces to 4,475 (weak) and 4,500 (strong) but we'll also know we're not really impressed until 4,510.  
    • NYSE 11,050 to 10,650 is 400 points and we'll call it 100-point bounces to 10,750 (weak) and 10,850 (strong)
    • RUT 1,180 to 1,090 is 90 points so we'll call that 20-point bounces to 1,110 (weak) and 1,130 (strong)

    The Futures are another issue entirely:

    • /YM 17,250 to 16,800 is 450 so 100-point bounces to 16,900 (weak) and 17,000 (strong) 
    • /ES 2,010 to 1,950 is 60 points and we will use 12.5 bounces to 1,962.50 (weak) and 1,975 (strong)
    • /NQ 4,120 to 4,000 is 120 points and that's 25-point bounces to 4,025 (weak) and 4,050 (strong)
    • /TF 1,185 to 1,090 is 95 points and that's 20-point bounces to 1,110 (weak) and 1,130 (strong)
    • /NKD 16,400 to 16,000 is 400 points and we'll call it 100-point bounces to 16,100 (weak) and 16,200 (strong)
    • /CL $95 to $91 is $4 and we'll call that $1 bounces to $93 (weak) and $94 (strong) but $92.75 and $93.50 should be significant.  
    • /YG $1,300 to $1,200 is 100 points so 20-point bounces to 1,220 (weak) and 1,240 (strong)
    • /SI $20 to $17 is $3 so that's 0.60 bounces to $17.60 (weak) and $18.20 (strong)

    So that's what we want to trade off – bullish at those bottoms unless they (or more than one of the others) breaks and weak or strong bounce lines are good places to take profits and look for fresh horses.  

    From an option perspective, the Russell is often bouncy and TNA has been smashed down to $62 with the Oct $60/64.50 bull call spread at $2.50 so just 0.50 of premium with $2 of upside (80%) if the Russell comes back just a little.  A good trade if you think you are too bearish.  

    In the STP, we're already more bullish by simply cashing in the DXDs but we will add more if those lows begin to break down (or if the weak bounces fail).  


  46. Phil is that 92.75 stop on CL for long plays above it or a short play below? I wasn't sure which way you called that last? 


  47. Out of FXI with a gain.  Regime won't do a  "Tianamen";  bad for business, and biz ain't that great right now. They're going to wait it out, let winter come (it's neither wet nor cold, however) and, when the youthful enthusiasm wanes, the regime will let the Movement declare victory by dumping the former's current choice and initiating (non-binding) "consultation" on future candidates.  The Chinese are nothing if not pragmatic.


  48. Right now there are great long entries at 1,950 on /ES, 4,000 on /NQ and 1,090 on /TF.  /YM is at 16,785 and we'd like to see 16,800 to confirm but, otherwise, those 3 are worth a bullish play as long as they ALL stay above those lines.  


  49. XRT /  TZA – Phil , thanks … closed out XRT puts and TZA Call Spreads both Oct plays… lovely making profits on the down market moves :)


  50. Stops/Ricbah – Very nice and a very good stop as it turns out.  Once you lean not to be greedy, these trades are lots of fun!  

    SLW/Lunar – You can roll the $20s down to the $18s for $1 and that's buying $2 of intrinsic value for $1, which I consider a good deal.  I'd roll the short $27s ($1.25) to 1/2 the short March $22s ($1.25) because, when they expire, you can sell another 1/2 for the next few months and you'll be clean into the end of the year if silver drifts higher.  If it moves up sharply, you have plenty of room to roll.  

    LOL, Najarian repeating my list of concerns on CNBC.  

    Futures/Decad – 99.9% of the time it would be blank.  Futures trades are generally very quick in and out trades, like the one we did yesterday.  So, not sellable and also a massive distraction I don't have time for.  I don't want this site to turn into Phil's Futures World in the same way I don't want a bunch of day-traders in our chat room.  I enjoy sensible long-term investing – the Futures are just something fun to do while we wait for our longs to come in but don't go turning a hobby into a business – that ruins it.  

    Already the lows are not holding so long trades are off until they are ALL retaken (and then we can go long the laggard).  This is the main use of weak bounce lines, when you get a bounce, and it turns back down before weak, that's a sign to get the hell out of longs right there.  

    GPRO/Rustle – Still in their range (up, up and up):

    If that's all they pull back on a massive market sell-off, doesn't bode well for the shorts.  

    Oil/Craigs – I'm not so fickle.  The inventory report was bullish and oil was very low in the channel so we look for the weak bounce (92.75) and then a retrace of that 0.75 run (0.15 or 0.30) and then, if they hold and back over, we look for a move back to the strong bounce at $93.50 and THEN we might want to consider shorting again, but not based on today's news.  

    China/ZZ – I don't think the Government can afford to capitulate and, from reports, the crowds are growing, not diminishing.  I'd agree with your strategy if it were November but it's only October and (with apologies to George Martin) "winter is not coming" soon enough.  I think, after the holidays, arrests will be made for anyone blocking the flow of traffic or commerce – that's something the Government can pretend to be doing for the good of the people.

    Good job DM, congrats! 


  51. Phil/ Jns

    still coming down despite the upgrade, I'm in at a higher avg than you .45 so just starting to show a profit, do you still think they should trend lower near term?  I'm considering taking it off now ahead of Draghi tomorrow if he gooses the markets.  I know, if in doubt sell half, but I still  wanna know what you think!! 

    Thabks


  52. @advil

    That's crap, the amount of media revenue they would need would be be more than 20x what they have now to justify this price.  You have to remember that last quarter their earnings brought the stock down.  They are one downgrade from GS or a bad earnings from falling 30 points. Their profit margins are small and they have the Polaroid Cube and Sony's new camera coming out soon.  Not like they don't have competition and there will be more.  Seems I remember another IPO that did something similar in the same time frame after coming public and before lock up, oh yes TWTR.  Ran from 40 to 73 in 3 weeks, then started cracking, then earnings brought them down to the 30's.  These stories usually end the same.  TSLA was not like this because it was public for awhile and in their space they have no real competition yet.  That's why it's held better (still overvalued but wouldn't go short at this price or long either).


  53. YHOO/Phil- What were your last comments about YHOO? I can't find what you said post IPO and if you adjusted the Jan 38/45 BCS you had earlier suggested. I seem to recall you saying that you would stay away for now until you saw where their strategy was headed, but I may have seen that elsewhere, so please remind me what is your current position on YHOO please?


  54. I´m trying a short , IB says that  GPRO is hard to borrow!, same you guys?


  55. I did it by writing calls.  Gives me room to make a mistake and I did by doing it to early on last round.  My break even is 91.85 for Friday.  You can still get 1.00 for the 94's that expire in 2 days.  Hell you can get 1.40 on the 130's for Dec of this year.


  56. Phil/TF – TF is at the day's low now.  Any long here?


  57. GTAT   you can now sell the 2016 10 calls  and 7 puts for damn near $5.00


  58. ricbah:

    yes /tf at day's low…..watch…dont catch a falling knife yet!


  59. jasu1/TF – Haha good advice!  It plummeted even further!


  60. Hi Phil.  Been busy so unable to keep up with postings.  Have you suggested any BABA trades?


  61. CAT slowly working it's way down 98.00


  62. Phil/TEX:

    OK, so 2 days ago we adjusted the TEX trade as follows:

    "9-29-14 TEX – 5 2016 $30/40 bull call spreads with 10 $35 puts for 0.45 credit @ $32.30.  The $30 calls can be salvaged for $6.20 and rolled to 10 of the 2017 $28/37 bull call spreads at $4.20 and the short 2016 $35 puts ($6.50) can be rolled to the 2017 $30 puts at $5.60. " 

    I assume were leaving the short Jan16 40's on the table to let them burn premium. In PLANNING AHEAD on the trade: when do we take these callers off IF we get a move up?


  63. I'm waiting to see if I can get DIS lower.  Think Star Wars in January will be huge for them plus any merchandising at Christmas on anticipation of it.


  64. JUST remember to act in the excitement Ebay yesterday up to 59 now 55.53!!!!


  65. /CL went long at 91.75 out at 92.05

    ez


  66. Rustle123 – Interesting thought on DIS and Star Wars.  Personally, haven't had luck with movie plays.  I got so excited when the DaVinci Code came out in 2006 starring Tom Hanks.  I bought some calls on SNY.  Unfortunately, the movie wasn't the blockbuster that I anticipated.  Plus, even if it had been, hard to move the needle on companies as big a SNY and DIS.  Hopefully, you'll have better luck than I did. :-)


  67. Look what Frozen did for them alone last year.  This will make that look like a cartoon short.  Plus I'm sure they will rerelease all the other movies in one form or another.


  68. JNS/Jeff – Oh, I wasn't really worried about the upgrade, not since we ran the math on that one.  I think we should get $1+ ($13.50ish) for those puts so I'm still willing to risk it for the moment:

    GPRO/Rustle – There you go applying logic to these media darlings again – when will you learn?  blush

    YHOO/Craigs – In the $25KP and the STP we still have the bull call spreads (April $32/39 bull spread with short $37 calls in STP are still cheap with YHOO over $40).  I'm not overly concerned with their "strategy" just the value of BABA ($86.50 today).

    /TF/Ricbah – As you can see above, an attempt was made at 1,090 but they failed it and now 1,082 was the low – indexes looking very weak so far and no clear, new support here so we wait to see if those levels (previous lows) cross over again.  Otherwise, it's just too weak to play.  

    BABA/Taihu – We're still trying to figure out TSLA and NFLX.  Give us time on BABA!  

    TEX/Jbur – What I have left on them is 15 of the 2017 $28/37 bull call spreads and 5 short 2016 $40 calls and 10 short 2017 $30 puts.  TEX is at $31.59 so I'm certainly  not worried about the short calls and, if we don't recover, I'd be inclined to sell more as we're only 1/3 covered.  On the way up (15% from here), I'm not worried as we can do a 2x roll and still not be fully covered.  

    DIS/Rustle – I agree, good to own for another $1Bn movie (after Guardians just did $1Bn too).  Not to mention updated theme park stuff ahead.  

    Good point, Yodi.  

    Nice, Ricbah.  Very good technique, adapt to the shrinking channel.  


  69. LTP down to 16.8% @ $583,870 and STP at 65.9% @ $165,933 for $749,803 and I think we said $745K was our new stop so we're OK for now but we need more bearish cover if things don't turn.  From a balance perspective, I'm inclined to add some longs and also take an aggressive short so I guess more put selling against an aggressive bull spread on an ultra-short would be a good combo.  

    That's my project for the next hour.  


  70. FXI down another 2% today – $37.50!  

    EWJ coming down nicely too:


  71. PHIL/ REAGAN

    Jon Stewart compares Modi the Indian PM to Reagan…..don't know much abt Reagan other than he was US Presdient…..your views on what this would mean and what Reagan is famous/ notorius for in the US/ world context?  MODI seems to be whipping a frenzy…..If he achieves 10% of what he is saying India's growth rate may explode!


  72. PHil all hedges like TZA QSSS DXD and even the Bull put on TQQQ are all good horses but even on a drop like today they do not show what one would expect, Some good stocks losing up to 2 $ while the hedges only rise say .60 .80 etc 1.40 yes TQQQ over 3.40 I do not see the relationship .


  73. How long before the Head of the Secret Service resigns?  Surprised Obama didn't ask for a resignation yet considering it's his life she's endangering.


  74. Did I miss the petroleum status report earlier, didn't see it posted.  Know we had a surplus for the week.


  75. Thanks Phil


  76. Looks like Stifel Nicolaus is batting 1.000 as a month ago they raised their S&P target to 2300 for the year and they were so confident about that.


  77. The SQQQ Nov 35/40 bull call isn't doing anything for my portfolio.  Both legs are actually showing a loss.


  78. Modi/Checho – I think he was talking about Modi's business-friendly policies (trickle-down, etc).  I think he's promising a lot that I'm not very sure he can deliver but he's wise to move quickly, while he has a lot of good will and no history of mistakes yet – that's something Reagan did as well.  

    Hedges/Yodi – If you are talking about bull call spreads, then no, they only work if the index goes down and stays down, not if you get a dip that corrects.  That's what those DXDs were for and we took them off the table with more than a double and now we have SQQQ spreads that are mostly in the money for another $16,000 if SQQQ stays up.  If instead, between now and Jan, the Nasdaq comes back, then we won't make money on SQQQ but, in theory, the LTP will come back but, so far, it's not even $20K off it's highs.

    Secret service/Rustle – I think that would be a bit overdone.  Doesn't mean they won't do it but it was a security flaw and they'll fix it.  This isn't a cartoon or a movie where every time a guy messes up they shoot him and get a new guy 5 seconds later.  

    Petroleum Status/Rustle – Big draw, net 6M.

    You're welcome Jeff.  

    SQQQ/Burr – See above.  Geez, you guys and your need for instant gratification…  blush


  79. Having no luck closing the DXD BCS today.  No takers at the mid-point even with the position improving.


  80. Secret Service/Phil

    The second blunder about having a contractor they didn't know was armed with a gun riding up the elevator with the President is a major blunder. 


  81. DXD/Sibe – I'm not sure what bull call spread you have, we just had long puts.  Those went out at $1.20.  

    Contractor/Rustle – Hey, it's America, we let everyone have a gun, don't we?  Actually that's a new one, I didn't know about that.  How is that even possible?  


  82. Phil,

    I have DXD Oct $24/$25 BCS that I am hoping to close today while the markets are down, but not takers.


  83. CNBC really working that Ebola story.  

    Anyway, so here's our indexes for the year:

    Obviously, the Nas and the Dow are way up compared to the others (4% gap) so those are the ones we want to short.  We have QQQ so it's back to DXD I suppose.

    If you don't have SQQQ, you could consider the TQQQ Jan $90/76 bear put spread for $6, which is $8 in the money at $82 so you get 100% of the upside up to a potential $8 gain (133%).  That's a nice hedge by itself and, basically, it makes money unless the Nasdaq goes up from here (4,425).  

    For our portfolios, however, I just want to add a new, longer-term DXD to the STP. 

    The DXD Jan $23/27 bull call spreads are $1.30 and we can get 50 of those for $6,500 and they pay $20,000 at $27 but are already $10,000 in the money to start, so they don't lose money unless the Dow goes higher.  

    Now, to offset those, we find some puts to sell in stocks we REALLY want to own if the Dow drops 20%, like:

    WFM 2016 $33 puts at $2.70 – let's sell 10 MORE of those in the LTP.

    CLF 2017 $12 puts at $5.60 - we're already short 10 2016 $15 puts ($7.20) in the LTP, so we'll roll those and sell 10 more to net $4,000 back. 

    There, that was easy, new $20,000 hedge all paid for!  


  84. Phil on DXD we had long CALLS I think that what I had !


  85. DXD/Yodi – Oh sorry, yes we had just the Oct $24 calls, which used to be the $25 calls but we rolled them down when the trade originally went against us.  

    DXD/Sibe – Oh, a $1 bull call spread will never make you happy until about the last day.  The problem is the short callers have way too much premium until you are either deep in the money or right at expiration.  You'd be lucky to get .65 cashing in early, even though they are 100% in the money but, if you still want protection long-term, you can invest $1 to roll the calls to the Nov $23s ($2.25) and then you can let the short Oct $25s expire and just roll them if they are in the money or, if out of the money, then you can sell something else in Nov to cover the $1 you spent rolling (the $25s are currently $1.05).  

    Secret Service/Rustle – Wow, that's crazy but it was at the CDC, not the White House.  If you think he ties up traffic now, wait until they start following stricter protocols!  

    “You have a convicted felon within arm’s reach of the president, and they never did a background check,” Chaffetz (R-Utah) said. “Words aren’t strong enough for the outrage I feel for the safety of the president and his family. “

    Gee, maybe if it wasn't so easy for convicted felons to own handguns, this sort of thing wouldn't happen?

     Of course, this would NEVER happen under a Republican administration, would it?  


  86. /CL appears to be basing, good place for poke long with stop at the low of the day?


  87. Check this out from the wacky World of Conservative Media:

     

    Only IF they offended…

    Paul Ryan's support of the free market system does not conflict with his Catholic faith, the congressman told HuffPost Live on Tuesday. During a conversation…
    HUFFINGTONPOST.COM

     

    Fox News host Steve Doocy on Wednesday asked CDC Director Dr. Tim Frieden how he could be trusted to tell the country the truth about Ebola when President…
    RAWSTORY.COM

     

    CNBC's Dominic Chu and Art Cashin of UBS discuss the down day. Be wary of rumormongers, he says.
    VIDEO.CNBC.COM

     

    http://ftalphaville.ft.com/2014/10/01/1991072/the-collapse-in-physical-demand-for-precious-metals-in-the-usa/



  88. I had that made today…..ahhh, what a day!  What a week!  And more to go.  Finally.


  89. Phil // DXD
    Sorry mate – I'm confused. I thought DXD was an inverse ultrashort, hence, if the DOW goes lower from here, our bull spread would gain value. Why do you say "they don't lose money unless the DOW goes lower ?"
    What am I not understanding ?

    The DXD Jan $23/27 bull call spreads are $1.30 and we can get 50 of those for $6,500 and they pay $20,000 at $27 but are already $10,000 in the money to start, so they don't lose money unless the Dow goes lower.  


  90. Well, I tested Jackie to see if she's scared of Ebola and she's not.  I know she's feeling sick so I just texted her an article that says the first symptoms are headaches and fever and she texted me back not to be an idiot.  I'm so proud of my child!  

    Oil/MrM – Very tempting but very dangerous.  I'd rather just see what happens.  Hopefully a panic sell-off and then we can poke long tomorrow into the weekend but there's no natural support at $90.65 or $90.50, $90 – on the other hand…

    Bear thing/Pharm – I bid $2M!!!  It will go nicely with my $50M doggie:

    DXD/Wombat – OK, you got me, I meant higher.  


  91. LOL Phil.  Been waiting way too long for this…way too long.  1937 SPX is a good place to lighten up on shorts.  If it is taken out, then 1905…Oh the thought of it!! 

    Zoom Zoom……


  92. FYI…long GLD now.  For a month or so.


  93. Yen bottoming out at 109.10.  Unfortunately, that was the easy money made already.  

    About time/Pharm – Yep, I was beginning to feel like I was crazy with everyone telling me I was too bearish all summer. GLD is another one we're probably ahead of the curve on.  


  94. Pharm/GLD,

    What is your trade? are you using options?

    Phil/BTU,

    5% down today….

    Thanks


  95. GLD…Options.  Yes.  October 124Cs for 11c.  I am expecting a pop soon.  Not a small one either.  Major move.


  96. Margin call….more down to come??

    CRIS….how about a DD now at 1.30.  Come on?

    SGEN – sell a few Dec 30 Ps for 1.40 or better.  Might take a day or two.  Spreads are wide. 


  97. CLF – Now in single digits.


  98. Pharm/GLD,

    Thanks. Why not go for further out options? I understand that the premium increase but you get more time to get the move in your direction.

    Thanks


  99. Phil, Thanks for advice on DXD, now trying to roll long calls.  No takers, a tough crowd… Thanks too for the CLF $12 puts, will either be a nice cheap entry or a nice return on margin. 

    Speaking of run-down industries, I have a friend in the gold mining business who tells me they (big players) are really hurting.  Decades of poor management, propped up by high gold prices combined with huge environmental liabilities, nobody with any cash flow so no way to sell, and burning through cash.  Heading for BK and industry shake up if gold prices do not turn around. 

    It will be interesting to see how long we can go with no iron ore, coal, deep-water oil drilling, or gold mining.  I guess there must be an app for those things now.


  100. Pat…any of those are fine as well.  I am on all black.  Waiting for the final spin of the wheel.


  101. BTU/Pat – Amazing decline on that one.  

    That 0.34 dividend is now 2.8% on this decline (if they keep it).  CLF going right down with them:

    That one's even sillier because CLF isn't a coal company.  

    Gold/Sibe – That's why I like ABX, they get to swoop in and cherry-pick mines on the cheap.  We can, however, go a long time without a turnaround in materials.  BTU fell below $30 from $80 in 2008 and didn't come back to $40 for almost a year.  This time, they only fell from $20 at the beginning of the year. 

    Damn, now I have to recalculate all those bounce lines!   Essentially the weak bounces from earlier are now the strong bounces – either way, we're not going to be impressed until they are taken back.

    And this might be a problem:


  102. I like 16,700 long on /YM because, if that doesn't hold, we're all doomed anyway…

    1,080 on /TF, 1,940 on /ES and 3,975 on /NQ will hopefully confirm.

    /CL just crossing over $91 if you are brave for a long there as well (very tight stops below!). 


  103. By the way guys, does anyone remember dropping 250 points last Thursday?  That almost totally reversed on Friday (low was Dow 16,950, Friday's high was 17,150).


  104. US Secret Service Director Julia Pierson has resigned, Homeland Security Secretary Jeh Johnson says.


  105. Yep, Rustle was right, 2 in one week is too many….


  106. VIX is only 16.7, not really panic so far.  TLT 118.12, XLF $22.93 – these are not panic signs, which is kind of strange ojn a down 1.5% day.  


  107. Unfortunately being right about Secret Service didn't make me any money.


  108. Though I'm having a good day today so can't complain.


  109. Locked & loaded for tomorrow bull retrace.  SPX, Ebay, big FXE [Euro] hedge, the bull's not dead yet, methinks.  Or you could look for a safe alternative and send your money to PIMCO. (-:


  110. Thanxs for the clarification on DXD. Thought I was just plain not getting it!!


  111. R we expecting a 5% bounce tomorrow?


  112. Don't forget Draghi goes tomorrow!  

    DXD/Pirate – I do get the occasional brain dyslexia. 

    Bounce/Pirate – Well let's see how far down we are:

    • Dow 17,350 to 16,800 is 550 = 3.17%.  That could be 2.5% with a 0.5% overshoot or it could be (since we finished at the low) a fairly good indicator that we'll be completing the 5% drop to 16,500.  
    • S&P 2,010 to 1,945 is 65 = 3.23%.  Same as above 
    • Nasdaq 4,600 to 4,400 is 200 points = 4.35%.  This one is past the overshoot, would be very surprising not to see follow-through to -5% at 4,370.  
    • NYSE 11,050 to 10,550 is 500 points = 4.5%.  Like the Nas, we should watch for -5% at 10,500.
    • RUT 1,180 to 1,080 is 100 points = 8.4%.  -10% is 1,062 BUT there's a larger retrace at work there from 1,205 and that's 125 points and THAT is 10%, so this is where we would expect the RUT to be bouncy and, if not, then certainly down 1.6% to complete that 2nd 10% leg (from minor consolidation). 

    RUT WEEKLY

    Per the 5% Rule, finishing at the lows of the day indicate that follow-through to the next line but Draghi is a big wild-card tomorrow and Friday is Non-Farm Payrolls so it's still anyone's week. 

    Long-Term Portfolio down to 16.3% ($581,630) but STP is up to 67.1% ($167,078) for $748,708 so we took a risk pulling those October DXDs (but we sell into the excitement, right) and now we're playing for a Draghi bounce and, if we don't get it, we may really have to consider getting to more cash. 


  113. Anyone know of a website to put in a list of stocks and get info on how correlated they are to various index's?  It would be nice to know which hedge I should focus on.  


  114. Burr – here you go – not sure how accurate:

    http://www.buyupside.com/calculators/stockcorrelationinput.php


  115. Site/Burr – I just use the compare function on Yahoo charts for that sort of thing, like the one I posted earlier.  I'd rather look at it than trust one of those calculators.  


  116. When is Draghi speaking?




  117. BREMMER: ‘We’re Likely To See Violence’ If Hong Kong Protests Continue
    http://www.businessinsider.com/bremmer-were-likely-to-see-violence-if-hong-kong-protests-continue-2014-9


  118. Adapt or Die — Some Chilling Lessons From the Ice Industry
    http://www.entrepreneur.com/article/236783


  119. Republicans’ New Black Friend Is Either A Stock Photo Or Is Having A Very Interesting Day
    http://thedailybanter.com/2014/09/republicans-new-black-friend-either-stock-photo-interesting-day/


  120. The Only Voice Of Reason In Argentina’s Government Just Quit
    http://www.businessinsider.com/fabrega-quits-argentine-central-bank-2014-10


  121. This short-sale promo is absolutely hilarious
    http://www.cnbc.com/id/102049744



  122. Republicans’ Latest Pitch To Women: Voting Is Just Like Picking A Wedding Dress
    http://thinkprogress.org/election/2014/10/01/3574672/say-yes-to-the-candidate/


  123. U.S. Light Vehicle Sales decrease to 16.34 million annual rate in September
    http://www.calculatedriskblog.com/2014/10/us-light-vehicle-sales-decrease-to-1634.html



  124. Goldman Global Leading Indicator Drastically Revised, Collapses Into “Confirmed Slowdown”
    http://www.zerohedge.com/news/2014-10-01/goldman-global-leading-indicator-drastically-revised-collapses-confirmed-slowdown


  125. U.S. restaurant patrons support minimum wage hike: survey
    http://www.reuters.com/article/2014/09/30/us-usa-restaurants-wage-idUSKCN0HP2DC20140930


  126. Phil / XRT & BIDU – Just wanted to throw a thanks for your Oct XRT bear put spread. I exited the spread today with a big grin on my face and it looks like the BIDU put spread is also going to put a smile on my face. ?


  127. And of course I'm learning lots along the way too. 


  128. Ty all.

    Q: anyone near Belfast Maine?



  129. liked this one "Wacky Food Of The Week: Denny's new Wall Street location offers a $300 Grand Cru Slam breakfast with a bottle of Dom Perignon. Drink in style before heading to the office to steal from pension funds! "


  130. Time to sell some TSLA puts?  Looks like the tweets are about to begin!

    http://www.businessinsider.com/elon-musk-tesla-d-2014-10


  131. Phil, here's a short and simple article correlating RUT action telegraphing SPY action. Good food for thought.


  132. From Bloomberg, Oct 1, 2014, 8:08:31 PM

    Asian stocks fell, with the benchmark
    index heading for a fifth day of losses, amid concern over the
    end of the Federal Reserve’s stimulatory bond-buying program and
    signs of weakness in the euro-area economy.

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

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


  133. From Bloomberg, Oct 1, 2014, 11:57:15 PM

    China announced plans to cap the
    amount of debt local governments can take on and ban them from
    additional borrowing through financing vehicles as authorities
    step up efforts to control risks to the financial system.

    To read the entire article, go to http://bloom.bg/1uf0PVi

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


  134. From Bloomberg, Oct 1, 2014, 11:16:43 AM

    A funny thing happened after Michael Lewis’s book “Flash Boys” put the structure of the U.S. stock
    market under a microscope in March: The whole system ran pretty
    smoothly, at least compared with its recent past.

    To read the entire article, go to http://bloom.bg/1vx5MZ6

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


  135. From Bloomberg, Oct 1, 2014, 5:01:00 PM

    The bloody conflict in Ukraine’s east
    is severing the arteries that connect the nation’s economy.

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

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  136. From Bloomberg, Oct 1, 2014, 5:11:54 PM

    Brazilian stocks plunged for a third
    day, pushing the benchmark gauge down 7.6 percent this week, and
    the real sank to a five-year low as investors abandoned wagers
    that elections will bring a new government into office capable
    of turning around the slumping economy.

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

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  137. From Bloomberg, Oct 1, 2014, 9:44:46 PM


    A liquefied petroleum gas (LPG) tanker sails past an oil refinery in an industrial area of Kawasaki City, Kanagawa Prefecture, Japan. Asia will account for more than half of global crude demand growth this year. Photographer: Tomohiro Ohsumi/Bloomberg

    Asia is getting a greater choice of
    crude from Alaska North Slope to Venezuela’s Carabobo and Iraqi
    Basrah Light as the U.S. shale boom cuts American demand for
    overseas oil.

    To read the entire article, go to http://bloom.bg/1v8TDYY

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  138. From Bloomberg, Oct 1, 2014, 9:33:35 PM

    Japanese investors boosted purchases
    of foreign stocks last week to the most since 2009 as bets the
    yen will weaken spurred buying outside their home market.

    To read the entire article, go to http://bloom.bg/YU5iAg

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  139. From Bloomberg, Oct 2, 2014, 12:50:24 AM

    Japanese companies forecast sustained
    price gains over the next five years, signaling progress in
    reflating the economy, albeit below the central bank’s target.

    To read the entire article, go to http://bloom.bg/1v8LvYk

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  140. From Bloomberg, Oct 1, 2014, 5:10:59 PM

    Fairholme Capital Management LLC Founder Bruce Berkowitz. Source: Fairholme Capital Management LLC via Bloomberg

    The collapse of securities tied to
    Fannie Mae (FNMA) and Freddie Mac punished some of Wall Street’s best
    known money managers, with star investor Bruce Berkowitz’s main
    mutual fund losing more than $600 million.

    To read the entire article, go to http://bloom.bg/1vxu9WC

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  141. From Bloomberg, Oct 2, 2014, 12:00:01 AM

    Yahoo! Inc. has taken on “a Walking
    Dead discount” since Alibaba Group Holding Ltd. completed its
    initial public offering two weeks ago, according to Aswath Damodaran, a finance professor at New York University.

    To read the entire article, go to http://bloom.bg/1vwnZF6

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  142. From Bloomberg, Oct 1, 2014, 7:01:01 PM


    Speculation on how far European Central Bank President Mario Draghi will go sent Greek bonds higher today for the first time in four days after the Financial Times reported that he wants looser requirements on the quality of assets the ECB can accept. Photographer: Martin Leissl/Bloomberg

    When Mario Draghi writes his first
    check to pay for asset purchases, he might not use much ink.

    To read the entire article, go to http://bloom.bg/1rI62E4

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  143. From Bloomberg, Oct 1, 2014, 5:38:41 PM


    Revel Atlantic City stands in Atlantic City, New Jersey, on July 17, 2014. Photographer: Ron Antonelli/Bloomberg

    Brookfield Property Partners LP (BPY), the
    winning bidder for the shuttered Revel casino and hotel in
    Atlantic City, New Jersey, said it plans to reopen the property
    as it expands its investments in gambling venues.

    To read the entire article, go to http://bloom.bg/1rHE2R4

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  144. From Bloomberg, Oct 1, 2014, 11:57:26 PM


    Oct. 2 (Bloomberg) — Fraser Howie, a director at Newedge Singapore and co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise,” talks about the pro-democracy demonstrations in Hong Kong.
    He speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    China’s central government is “very satisfied” with Hong Kong Chief Executive Leung Chun-ying and will continue to support his leadership as protesters block streets in the city, the official People’s Daily said.

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

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  145. From Bloomberg, Oct 2, 2014, 12:11:58 AM


    Oct. 2 (Bloomberg) — Fraser Howie, a director at Newedge Singapore and co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise,” talks about the pro-democracy demonstrations in Hong Kong.
    He speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    Hong Kong Chief Executive Leung Chun-ying faces a deadline from student leaders today to resign or see an escalation of pro-democracy protests that have choked city streets for nearly a week.

    To read the entire article, go to http://bloom.bg/1uBEJ0J

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  146. From Bloomberg, Oct 1, 2014, 11:42:00 PM

    Japanese 10000 yen notes. Photographer: Tomohiro Ohsumi/Bloomberg News

    The weakening yen is starting to squeeze Japanese consumers as prices rise for everything from Burgundy wine to instant noodles, threatening Prime Minister Shinzo Abe’s plans to revive the country’s economy.

    To read the entire article, go to http://bloom.bg/1mSQGN4

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  147. From Bloomberg, Oct 2, 2014, 12:00:43 AM

    The dollar may slide toward 106 yen,
    according to Tokyo-based Gaitame.com Research Institute Ltd.,
    citing trading patterns.

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

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  148. From Bloomberg, Oct 1, 2014, 11:44:35 PM

    Japanese stocks fell, with the Topix
    index heading for its biggest drop in two months after the yen
    climbed against the dollar, weakening the earnings outlook for
    exporters.

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

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  149. From Bloomberg, Sep 30, 2014, 6:03:30 PM

    Modi’s U.S. visit has been heavy on atmospherics.

    As a campaigner, Indian Prime Minister Narendra Modi has drawn comparisons to the man he met for dinner at the White House on Monday night: U.S. President Barack Obama. Both men are dramatic orators who make good use of their personal story in speeches. Both have exploited new technologies, especially social media, in the effort to rally grassroots supporters to donate and come out to vote.

    To read the entire article, go to http://bv.ms/1uaLAN2

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  150. From Bloomberg, Oct 1, 2014, 11:12:15 AM


    Pacific Investment Management Co. has to persuade customers to stick with the company after the surprise departure of co-founder Bill Gross on Sept. 26 triggered investors to review their holdings with the world’s largest bond-fund manager. Photographer: Scott Eells/Bloomberg

    One man shook a $42 trillion bond market last week, highlighting just how vulnerable bond prices are to shocks.

    To read the entire article, go to http://bloom.bg/1rHKc3O

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  151. From Bloomberg, Oct 1, 2014, 5:02:54 PM


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

    The Pimco Total Return Fund (PTTRX), managed by Bill Gross until last week, suffered an estimated $23.5 billion of withdrawals last month, its worst month ever for redemptions.

    To read the entire article, go to http://bloom.bg/1sNxfb3

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  152. From Bloomberg, Oct 1, 2014, 6:00:23 PM


    King Felipe VI of Spain and Queen Letizia of Spain receive Esther Koplowitz, center, and Esther Alcocer Koplowitz during the reception at the Royal Palace after the King’s official coronation at the parliament in Madrid, on June 19. Koplowitz rarely attends public events like the palace reception. Photographer: Pablo Cuadra/WireImage

    Like any family business dynasty
    worthy of the title, the Koplowitzes have provided their share
    of drama.

    To read the entire article, go to http://bloom.bg/1rJt3Xk

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  153. From Bloomberg, Oct 2, 2014, 1:35:19 AM


    Oct. 2 (Bloomberg) — Kelvin Tay, chief investment officer for South Asia Pacific at UBS Wealth Management, talks about Asian stocks and currencies.
    He also talks about the pro-democracy demonstrations in Hong Kong and its potential impact on China’s economy. He speaks from Singapore with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    Asian stocks dropped, led by the
    biggest drop in six months in Tokyo shares, while sovereign
    bonds rose with precious metals before the European Central Bank
    reviews policy today. The U.S. dollar weakened the most in
    almost four months, driving commodities higher.

    To read the entire article, go to http://bloom.bg/1v83j5W

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  154. From Bloomberg, Oct 2, 2014, 1:02:29 AM

    National Commercial Bank, the largest lender in Saudi Arabia, plans to raise 22.5 billion riyals ($6 billion) from the biggest initial public offering this year after Alibaba Group Holding Ltd.

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

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  155. From Bloomberg, Oct 1, 2014, 7:01:00 PM


    Forbes says she still sees complacency over the risk that financial turmoil will spread beyond a single country, even with Europe’s struggle to curb its sovereign-debt crisis. Photographer: Kelvin Ma/Bloomberg

    Bank of England policy maker Kristin Forbes said the pound’s downward pressure on U.K. inflation may
    start fading and there’s a risk of a pickup in wage growth.

    To read the entire article, go to http://bloom.bg/1pGb5Qh

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  156. From Bloomberg, Oct 1, 2014, 11:59:04 PM

    The biggest political unrest since violent protests in the 1960s led by pro-Communist groups inspired by Mao Zedong’s Cultural Revolution is testing China’s control of the city after British rule ended in 1997. Photographer: Lam Yik Fei/Bloomberg

    Chinese tourists are descending on Hong Kong for annual holidays and finding an event not listed in their travel brochures — huge pro-democracy demonstrations that are being met with a mix of astonishment, pride and annoyance.

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

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  157. From Bloomberg, Oct 1, 2014, 7:01:01 PM


    European Central Bank President Mario Draghi. Photographer: Ralph Orlowski/Bloomberg

    Here are five things to watch for
    from Mario Draghi today. The European Central Bank president
    holds a press conference at 2:30 p.m. in Naples, Italy, 45
    minutes after the Governing Council’s announcement on interest
    rates.

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

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  158. From Bloomberg, Oct 1, 2014, 11:53:25 PM

    Malaysia raised fuel prices for the
    first time in more than a year as Prime Minister Najib Razak
    seeks to narrow the budget deficit.

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

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  159. From Bloomberg, Oct 1, 2014, 4:12:09 PM

    It’s complicated.

    No means no, silence means no and the absence of a continuing yes means no, too: That’s the upshot of a controversial new California law governing disciplinary proceedings at colleges that receive state funding.

    To read the entire article, go to http://bv.ms/1yzt4SP

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  160. From Bloomberg, Oct 1, 2014, 4:05:39 PM


    An incomplete picture of unemployment.

    When will central banks in the U.S. and U.K. start raising interest rates? The question preoccupies financial markets, and much turns on the answer. What’s happening in the two countries’ labor markets — and what the Federal Reserve and the Bank of England think is happening — is the crux of the matter.

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

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  161. From Bloomberg, Oct 1, 2014, 4:51:36 PM


    Florida Governor Rick Scott hopes voters will reject the Charlie Crist number.

    Democrats are guffawing about new ads from the College Republican National Committee that compare gubernatorial candidates to wedding dresses. The spots show hip young women who say they prefer the “Rick Scott” model to the “Charlie Crist,” which is “expensive and a little outdated.” I’m not sure the target audience of young women who might be open to voting Republican will be swayed by these way-hip (or not) presentations, but what do I know?

    To read the entire article, go to http://bv.ms/1uCj6NZ

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  162. From Bloomberg, Oct 1, 2014, 3:03:13 PM

    The real problem is in western Africa.

    Health officials have known for weeks that it would happen, and now it has: A case of Ebola has been diagnosed in the U.S. More such cases are to be expected, in others who travel to the U.S. from infected areas in Africa without realizing they’ve picked up the virus.

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

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  163. From Bloomberg, Oct 1, 2014, 2:48:07 PM


    No good way out.

    It’s hard not to notice the similarities between Hong Kong’s “umbrella revolution” and the recent rebellions in Kiev and Moscow. The crucial question is whether the Chinese protesters will topple their leadership like the Ukrainians did, or gradually crumble under government pressure like the Russians. I would bet on the latter outcome.

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

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  164. From Bloomberg, Oct 1, 2014, 1:47:42 PM

    We’ve written about the rich and the 0.01 percent.

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

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  165. From Bloomberg, Oct 2, 2014, 5:16:02 AM

    West Texas Intermediate crude fell
    below $90 for the first time in 17 months as fracking drives
    U.S. output to its highest in four decades.

    To read the entire article, go to http://bloom.bg/1vaujl6

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  166. From Bloomberg, Oct 2, 2014, 4:06:19 AM

    It was four years ago last week that
    Brazilian Finance Minister Guido Mantega declared a “currency
    war” was underway as the U.S. dollar fell amid easy monetary
    policy from the Federal Reserve.

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

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  167. From Bloomberg, Oct 2, 2014, 4:54:23 AM


    A trader works at a foreign exchange brokerage in Tokyoe. Photographer: Tomohiro Ohsumi/Bloomberg

    Foreign-exchange traders are proving to be among the biggest beneficiaries from the tumble in markets ranging from stocks to bonds and commodities brought on by prospects for higher interest rates in the U.S.

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

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  168. From Bloomberg, Oct 1, 2014, 9:56:42 PM

    U.S. President Barack Obama acknowledges applause as he arrives to speak at the Global Health Security Agenda Summit at the White House in Washington, on Sept. 26, 2014. Photographer: Nicholas Kamm/AFP via Getty Images

    Steve Wynn, founder of the Wynn Resorts Ltd. (WYNN) casino empire, once called President Barack Obama’s administration “the greatest wet blanket to business and progress and job creation in my lifetime.” Barry Sternlicht, chief executive officer of Starwood Property Trust Inc. (STWD), said Obamacare was driving down wage growth and “affecting spending and the desire to buy houses and everything else.”

    To read the entire article, go to http://bloom.bg/1oCLW9O

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  169. From Bloomberg, Oct 2, 2014, 5:00:07 AM


    Some 7.3 million people were involuntarily working part time in August, compared with 4.6 million in December 2007, at the outset of the recession. Photographer: Sam Hodgson/Bloomberg

    The labor-market recovery that Federal Reserve Chair Janet Yellen seeks is proving incomplete as many U.S. workers languish in part-time jobs.

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

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  170. From Bloomberg, Oct 2, 2014, 5:18:45 AM


    CEO of German startup company Rocket Internet, Oliver Samwer (C), CFO Peter Kimpel (L) and Group Managing Director Alexander Kudling pose for a photograph after the company’s IPO in front of the stock exchange in Frankfurt, Germany on Oct. 2, 2014. Photographer: Daniel Roland/AFP via Getty Images

    Rocket Internet AG (RKET) shares fell on their first day of trading in Frankfurt, failing to replicate in Europe the investor hype over e-commerce stocks sparked by Alibaba Group Holding Ltd.’s debut.

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

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  171. From Bloomberg, Oct 2, 2014, 3:57:37 AM

    Trading screens across Tokyo showing $617 billion of over-the-counter stock transactions were the result of a broker reporting error, according to the Japan Securities Dealers Association.

    To read the entire article, go to http://bloom.bg/1tj6DJp

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  172. From Bloomberg, Oct 2, 2014, 4:31:33 AM

    European stocks fell, extending their lowest level in more than five weeks, on concern the European Central Bank’s asset-buying program will disappoint. U.S. index futures were little changed, while Asian shares dropped.

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

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  173. Holy Crap did we miss some fun!  

    I went back to sleep at 3 as I wanted to be wide awake for Draghi this morning and I missed oil COLLAPSING to $88.18!  

    That's why A) We take our stops VERY seriously and B) We don't go to sleep with an open oil trade!  

    Tempting at $88.50 looks , there's no real support there – the real support was $89 and that failed already.  This is all about the combination of oversupply and lack of demand as we head into the low-consumption fall and warmer weather is keeping heating demand off the table too and now Ebola has people thinking travel will be curtailed further.  

    Or, essentially, what I said last Wednesday:

    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.  

    Or last Tuesday:

    As you can see there's "only" 600,000 open barrels in the front 3 months, less than the 700K last month so, we can assume, less downside pressure.  Without negative news, they should be able to give it a lift on almost any excuse – so best to wait for them to make a play.  As we're now in the bottom of the big channel ($105-85) it's harder and harder to make short bets but, until we test $85 – I'm not too keen on making long ones either!  

    Or the week before that:

    Oil/Pwright – Those are all factors but they are also merely indications of expectations of the average trader, don't read too much into it.  We make our best money betting against the trend but, unfortunately, you can't come up with little crib notes for Fundamentals – so hardly anyone is interested in doing the homework that we do here at PSW.  Right now, I'm waiting for a bottom to go long – I'd like to see $85 but I'm also going to wait patiently to see where a new channel forms rather than jump in and guess.  As our first stab on being bullish on oil, we picked RIG – so far, so bad on that one!   If that's not working – why would I want to play oil at all?  

    Or July 2013, for that matter!  http://www.philstockworld.com/2013/07/04/thursday-theft-this-1-2bn-crime-affects-you/

    So anyway, now we are so near our $85 goal on oil but you have to be very careful with commodities as they unwind because people get caught with margin calls and such and are forced to unwind – especially something as widely held as oil.  Don't forget, almost ALL of these open orders on the NYMEX are FAKE, not only don't these traders actually want to own these barrels but it's physically impossible for them to take delivery as the capacity at Cushing, OK is only 50Mb and it's almost full already.

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Nov'14 90.74 91.00 88.18 88.70 06:11
    Oct 02

    -

    -2.03 48026 90.73 260981 Call Put
    Dec'14 89.81 89.96 87.22 87.73 06:11
    Oct 02

    -

    -2.01 13460 89.74 245862 Call Put
    Jan'15 89.08 89.23 86.57 87.06 06:11
    Oct 02

    -

    -2.05 6740 89.11 95252 Call Put
    Feb'15 88.67 88.75 86.17 86.54 06:11
    Oct 02

    -

    -2.12 2664 88.66 47089 Call Put

    NYMEX traders have violated one of our trading rules – they sold puts in something they don't REALLY want to own if the price drops!

    So, let's be careful playing oil Futures here as we could get more downside pain BUT $88.50 is 2.5% down from $91 so it SHOULD be bouncy back to $99 (weak) and $99.50, so that's worth a long trade but NOT A PENNY UNDER $88.50.  

    Once the market opens, we'll look at maybe an ETF play long on oil.


  174. Meanwhile, what's going on in the markets?

    The ECB Rate Decision is 7:45 and official expectations are they hold steady at 0.5% (higher than us or Japan).  Whispers are for a cut to 0.25% and Germany is already negative on their bonds but anything other than a cut is likely to disappoint.  

    Even more disappointing would be Draghi not formally announcing those "drastic measures" he keeps promising.  Keep in mind, Europe is in a Recession, this will be their 2nd consecutive declining quarter and that's what a Recession is.  He speaks at 8:30 and he'd better be coming out in one of those suits that are made of money at this point.  

    Oh yeah, and it better be made of Dollars because Euros aren't worth much! 

    That's one of the problems with stimulus when reality kicks in (ie. when printing money finally makes your currency devalue) – the more stimulus you make the less effective each unit is as the units lose their value and then the print more and they become more worthless and the problem is (going back to Dollars) that the US GDP is $17Tn and the Money Supply is about $12Tn (up from $10Tn a few years ago) and the people's net worth is $100Tn and Corporations are good for another $100Tn so if you print $1Tn, like the Fed did last year, and you knock 5% off the value of the Dollar – then you've lose 5% of the GDP in buying power ($850Bn, but only the half that is our imports) while decreasing wealth by $10Tn – it's a no-win game.  

    You can get away with it once in a while but when you relentlessly devalue people's life savings – they do begin to notice!  That's how Japan ended up with deflation – their people are, by nature, savers and their reaction to their wealth declining was to spend less (as everything you buy loses value) and save more and that created a savings glut that kept rates low – no matter how much money the BOJ printed.  

    We're different, if you print money, our people will take it and spend it – even if they can't pay it back!   Our Corporations are happy to spend it to because, if they buy their own stock or another company, their earnings go up and the CEOs personally get huge bonuses and they, for the most part, really don't give a crap about the company they run – it's just a paycheck and the way boards fire CEOs – they may as well grab what they can, when they can.  

    And, of course our Banksters love it because it generates fees so our lend and spend economy generally responds better to stimulus than Asia or Europe.  It's also because our people are simply worse at math and less economically educated than people in Europe and Asia and they don't understand what's happening to them!  

    Buy nothing day is a thing in Europe – can you imagine that happening here?  That's another problem with these attempts to find International solutions to economic crisis – we're not homogeneous enough to pull that off!  

    Anyway, today the Nikkei plunged 2.6% to 15,600 – very good for those EWJ puts!  China is still closed for their holiday (and Hong Kong is still a mess with the protests).

    Europe is mixed with FTSE, CAC and DAX down slightly, Italy down 1% and Spain down 0.6% – not too bad considering the horrible lead-in they got from us but that's all about Draghi as they are SURE he will save them in half an hour.

    Oil just tapped $89 so there's our $500 for the morning – DON'T BE GREEDY.  If it goes over $89, you can play that bullish with tight stops but I think $89 may be a line of contention and we'll go above and below it a lot, and I don't have the conviction to play either side of it so I'd rather not risk it. 


  175. That, by the way, is the closest thing we have to a sure thing in the markets – the 0.5% retrace off a 2.5% drop – that is the heart and soul of the 5% Rule!