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Non-Farm Friday – Will Jobs Report Restore Market Confidence?

Ouch, that really stings!  

They say you can't keep a good market down but it remains to be seen whether or not we have a good market with almost all of August and September's BS gains (see any of my posts for warnings and hedge ideaserased just 3 days into October.  

As you can see from our Big Chart, the Russell, in particular, completed it's 10% drop yesterday and, as I said to our Members in yesterday's live Chat Room as we neared the bottom:

/TF/Jasu – Just a bit oversold and, as noted yesterday (and above) it's completing a 10% drop from 1,200 at 1,080, so that's a very firm line for a bounce and that's 20% of a 120-point drop, so we're looking for 25-point bounces to 1,105 (weak) and 1,130 (strong) now.  Anything less than 1,105 today is a failure and, if not tomorrow, then expect more downside next week.  

SPY DAILY/TF is the Futures on the Russell 2000 index and already this morning we're back to 1,097, which is up $1,700 per contract (see how easy this is?) from our 1,080 entry and just a little shy of our expected weak bounce.  

We do expect resistance at 1,100 so this is a good time to take profits off the table and we can go long again over that line or flip to the S&P Futures (/ES) over 1,950 or Nasdaq (/NQ) over 4,000 or the Dow (/YM) over 16,800.  As long as they are all performing, we can be confident on the long side. 

As we discussed with our Members earlier this morning, there's no particular reason to get bullish – this is just a technical bounce we expect off our 5% lines per our 5% Rule™ and, if they trun out to be weak bounces, then we can expect another 2.5-5% of downside next week.  That means we can use those same index lines to go short if they fail as we would to go long if they succeed this morning – that will be all up to the Non-Farm Payroll Report at 8:30.  

The SHORT-TERM bounce lines we'll be watching for today are:

  • Dow 17,350 to 16,700 is 650 points so call it 150-point bounces (rounding) to 16,850 (weak) and 17,000 (strong)
  • S&P 2,010 to 1,925 is 85 points so 15-point bounces to 1,940 (weak) and 1,955 (strong)
  • Nasdaq 4,600 to 4,375 is 225 points so we'll call that 45-point bounces to 4,420 (weak) and 4,465 (strong) but we'll also know we're not really impressed until 4,510.  
  • NYSE 11,050 to 10,450 is 600 points and we'll call it 125-point bounces to 10,575 (weak) and 10,700 (strong)
  • RUT 1,180 to 1,080 is 100 points so we'll call that 20-point bounces to 1,100 (weak) and 1,120 (strong)

NYMO DAILYKeep in mind that those measures are from yesterday's SPIKE lows, next week we will not be so generous but, for today, we're willing to accept just the weak bounce lines holding to call it a sign of improvement but if ANY of them fail today – especially if none of the strong bounces are retaken – we're going to position more bearish into the weekend.  

As you can see from Dave Fry's McClellan Chart, we're pretty ovesold – so a strong bounce SHOULD be in the cards.  Anything less would be a severe disappointment. 

8:30 Update:  Only 248,000 jobs added but the unemployment rate is now 5.9% and that's better than expected.  August was revised from 142,000 to 180,000 which means the initial number was off by 26% – totally pathetic for such an important number.  This is our first time under 6% Unemployment since 2008 so congratulations to President Obama for finally undoing most of the damage Bush did to our economy.  

I say most because hourly earnings, unfortunately, are flat and, as we see in the brand new Study on Income and Poverty by the Census Bureau, wages for 100M American families in the bottom 90% (below $150,000 annual income), have DECLINED over the last 10 years while inflation, tame though it is supposed to be, has pushed the CPI from 270.01 in Jan 2004 to 342.1 at the end of 2013 (up 26%).  

That has resulted in a horrific decline in spending power for the bottom 90% – keep that in mind when looking at this chart, which INCLUDES the top 10% in this horrific decline in disposable income:

As the US consumer runs out of cash, US Corporations are more and more dependent on Foreign Sales to pick up the slack.  Unfortunately, Asia and Europe are in worse shape than we are – so where are all these profits going to come from?  The S&P currently does 60% of their sales overseas and what happens when a strong Dollar gives them a poor conversion?  Small-Cap Russell companies do 85% of their business in the US, and that's why the Russell and the broader-based NYSE have been learing the decline – their customers are broke!  

So today's NFP report is nothing to get excited about – it's just another mile-marker on the road to the decline of the American Empire, as the middle class families (who have lost 5% of their income in the past 10 years) averaging $52,000 per household in Income, go further and further in debt to support a lifestyle that only gets more out of reach for their children each year.  

We'll get a pop off the "bullish" jobs report because more workers for less pay is the dream of our Corporate Masters and, if you listen carefully to what the Fed actually says – it's their goal as well.  As you can see from the Wealth Pyramid, the bottom 80% have nothing left to give, so now the top 1% is turning on the rest of the top 20% so they can continue their incredible income and wealth gains.  

Of course, as you can see, that's still not enough for the top 0.01%, our Nation's $100M+ club of 30,000 people – they have already turned on the rest of the top 1% to funnel more billions up to the very top which will, in turn, encourage the bottom 0.99% of the top 1% to put more pressure on the bottom 9% of the top 10% who, in turn, will put the screws to the bottom 90% until that pyramid begins to look like a gigantic screw – and guess who it is that's being screwed?

As the great George Carlin says – it's a big F'ing club and you aren't invited!  

So we're going to ignore the morning pop and, while we'll respect our technical levels if they are taken back – we're going to look for some aggressive shorting opportunities because the harsh reality is that Christmas is just around the corner and our citizens can't afford it.  We'll be watching debt to see if it mounts up into the Holidays but, one way or another, there will be Hell to pay in 2015 unless we do something SOON to help the bottom 300M people in this country.

Have a nice weekend, 

- Phil


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  1. Looks like good news might be good news today….

    Job growth bounced back in September after a disappointing August, with the U.S. economy creating 248,000 fresh positions.

    The Bureau of Labor Statistics also reported that the unemployment rate held steady at 5.9 percent. Taken together, the numbers renewed hopes that employment growth is on a sustainable track higher.

    August's meager 142,000 reading was revised up to 180,000, while the July number came up from 212,000 to 243,000.

  2. Oil Lines

    R3 – 96.52
    R2 – 94.14
    R1 – 92.94
    PP – 90.56
    S1 – 89.36
    S2 – 86.98
    S3 – 85.78

  3. Dollar rocketing past 86.50… Kudlow all happy about King Dollar!

  4. Has Draghi been tightening since 2012:

    Here was the balance sheet situation back in 2012:

    Scary for China BTW… But the ECB was also living large. And meantime:

    So while other CB were still in QE mode, it seems that the ECB had decided to stay on the sideline and the results:

    Low growth and now getting close to deflation! 

  5. Good Morning!

  6. Phil – Let's not worry about the middle class. Once Keystone is approved, it will mean prosperity and jobs for everyone!……. :(

  7. Good morning!  

    Oil failing $90.50 on second trip down from $91.  Futures still higher for the moment but we'll see what sticks.  

    What if the illegals left?</p>
<p>Somebody really did their homework on this one. Best on the subject to present date.</p>
<p>What if 20 Million Illegal Aliens Vacated America?</p>
<p>I, Tina Griego, journalist for the Denver Rocky Mountain News wrote a column titled, "Mexican Visitor's Lament."</p>
<p>I interviewed Mexican journalist Evangelina Hernandez while visiting Denver last week. Hernandez said, "Illegal aliens pay rent, buy groceries, buy clothes. What happens to your country's economy if 20 million people go away?"</p>
<p>Hmmm, I thought, what would happen?</p>
<p>So I did my due diligence, buried my nose as a reporter into the FACTS I found below.</p>
<p>It's a good question... it deserves an honest answer. Over 80% of Americans demand secured borders and illegal migration stopped. But what would happen if all 20 million or more vacated America? The answers I found may surprise you!</p>
<p>In California, if 3.5 million illegal aliens moved back to Mexico, it would leave an extra $10.2 billion to spend on overloaded school systems, bankrupt hospitals and overrun prisons. It would leave highways cleaner, safer and less congested. Everyone could understand one another as English became the dominant language again.</p>
<p>In Colorado, 500,000 illegal migrants, plus their 300,000 kids and grandchilds would move back "home," mostly to Mexico. That would save Colorado an estimated $2 billion (other experts say $7 billion) annually in taxes that pay for schooling, medical, social-services and incarceration costs. It means 12,000 gang members would vanish out of Denver alone.</p>
<p>Colorado would save more than $20 million in prison costs, and the terror that those 7,300 alien criminals set upon local citizens. Denver Officer Don Young and hundreds of Colorado victims would not have suffered death, accidents, rapes and other crimes by illegals.</p>
<p>Denver Public Schools would not suffer a 67% dropout/flunk rate because of thousands of illegal alien students speaking 41 different languages. At least 200,000 vehicles would vanish from our gridlocked cities in Colorado. Denver's 4% unem ployment rate would vanish as our working poor would gain jobs at a living wage.</p>
<p>In Florida, 1.5 million illegals would return the Sunshine State back to America, the rule of law, and English.</p>
<p>In Chicago, Illinois, 2.1 million illegals would free up hospitals, schools, prisons and highways for a safer, cleaner and more crime-free experience.</p>
<p>If 20 million illegal aliens returned 'home,' the U.S. Economy would return to the rule of law. Employers would hire legal American citizens at a living wage. Everyone would pay their fair share of taxes because they wouldn't be working off the books. That would result in an additional $401 billion in IRS income taxes collected annually, and an equal amount for local, state and city coffers.</p>
<p>No more push '1' for Spanish or '2' for English. No more confusion in American schools that now must contend with over 100 languages that degrade the educational system for American kids. Our overcrowded schools would lose more than two million illegal alien kids at a cost of billions in ESL and free breakfasts and lunches.</p>
<p>We would lose 500,000 illegal criminal alien inmates at a cost of more than $1.6 billion annually. That includes 15,000 MS-13 gang members who distribute $130 billion in drugs annually would vacate our country.</p>
<p>In cities like L.A., 20,000 members of the '18th Street Gang' would vanish from our nation. No more Mexican forgery gangs for ID theft from Americans! No more foreign rapists and child molesters!</p>
<p>Losing more than 20 million people would clear up our crowded highways and gridlock. Cleaner air and less drinking and driving American deaths by illegal aliens!</p>
<p>America's economy is drained. Taxpayers are harmed. Employers get rich. Over $80 billion annually wouldn't return to the aliens' home countries by cash transfers. Illegal migrants earned half that money untaxed, which further drains America 's economy which currently suffers an $8.7 trillion debt. $8.7 trillion debt!!!</p>
<p>At least 400,000 anchor babies would not be born in our country, costing us $109 billion per year per cycle. At least 86 hospitals in California, Georgia and Florida would still be operating instead of being bankrupt out of existence because illegals pay nothing via the EMTOLA Act. Americans wouldn't suffer thousands of TB and hepatitis cases rampant in our country - brought in by illegals unscreened at our borders.</p>
<p>Our cities would see 20 million less people driving, polluting and grid locking our cities. It would also put the 'progressives' on the horns of a dilemma; illegal aliens and their families cause 11% of our greenhouse gases.</p>
<p>Over one million of Mexico's poorest citizens now live inside and along our border from Brownsville, Texas, to San Diego, California, in what the New York Times called, 'colonias' or new neighborhoods. Trouble is, those living areas resemble Bombay and Calcutta where grinding poverty, filth, diseases, drugs, crimes, no sanitation and worse. They live without sewage, clean water, streets, roads, electricity, or any kind of sanitation.</p>
<p>The New York Times reported them to be America's new 'Third World' inside our own country. Within 20 years, at their current growth rate, they expect 20 million residents of those colonials. (I've seen them personally in Texas and Arizona; it's sickening beyond anything you can imagine.)</p>
<p>By enforcing our laws, we could repatriate them back to Mexico. We should invite 20 million aliens to go home, fix their own countries and/or make a better life in Mexico. We already invite a million people into our country legally annually, more than all other countries combined. We cannot and must not allow anarchy at our borders, more anarchy within our borders and growing lawlessness at every level in our nation.</p>
<p>It's time to stand up for our country, our culture, our civilization and our way of life.</p>
<p>Interesting Statistics!</p>
<p>Here are 14 reasons illegal aliens should vacate America, and I hope they are forwarded over and over again until they are read so many times that the reader gets sick of reading them:</p>
<p>1. $14 billion to $22 billion dollars are spent each year on welfare to illegal aliens (that's Billion with a 'B')</p>
<p>3. $7.5 billion dollars are spent each year on Medicaid for illegal aliens.</p>
<p>4. $12 billion dollars are spent each year on primary and secondary school education for children here illegally and they still cannot speak a word of English!</p>
<p>5. $27 billion dollars are spent each year for education for the American-born children of illegal aliens, known as anchor babies.</p>
<p>6. $3 Million Dollars 'PER DAY' is spent to incarcerate illegal aliens. That's $1.2 Billion a year.</p>
<p>7. 28% percent of all federal prison inmates are illegal aliens.</p>
<p>8. $190 billion dollars are spent each year on illegal aliens for welfare & social services by the American taxpayers.</p>
<p>9. $200 billion dollars per year in suppressed American wages are caused by the illegal aliens.</p>
<p>10. The illegal aliens in the United States have a crime rate that's two and a half times that of white non-illegal aliens. In particular, their children, are going to make a huge additional crime problem in t he US.</p>
<p>11. During the year 2005, there were 8 to 10 MILLION illegal aliens that crossed our southern border with as many as 19,500 illegal aliens from other terrorist countries. Over 10,000 of those were middle-eastern terrorists. Millions of pounds of drugs, cocaine, meth, heroin, crack, guns, and marijuana crossed into the U.S. from the southern border.</p>
<p>12. The National Policy Institute, estimates that the total cost of mass deportation would be between $206 and $230 billion, or an average cost of between $41 and $46 billion annually over a five year period.</p>
<p>13. In 2006, illegal aliens sent home $65 BILLION in remittances back to their countries of origin, to their families and friends.</p>
<p>14. The dark side of illegal immigration: Nearly one million sex crimes are committed by illegal immigrants in the United States!</p>
<p>Total cost a whopping $538.3 BILLION DOLLARS A YEAR !

    What if the illegals left?

    Somebody really did their homework on this one. Best on the subject to present date.

    What if 20 Million Illegal Aliens Vacated Americ

    See More

  8. Larry Kudlow should be wearing a baseball cap that says Keystone along with patches on his suit.  That's all he talks about day and night.  Someone is paying him to keep promoting it.

  9. Kudlow/Rustle – Good idea!  

    As fossil fuel advocates become increasingly worried that President Barack Obama won't approve Keystone XL, they are resorting to fallacious arguments to purport benefits of the pipeline. On Monday night's The Kudlow Report, Larry Kudlow declared that wildlife will benefit from Keystone XL, dismissing a letter from the Interior Department warning of the dangers it would pose to wildlife. Despite the threats to several endangered species, Kudlow believes that animals would "like to snuggle under the pipeline" for "warmth." Rayola Dougher, senior economic advisor for the American Petroleum Institute, agreed, claiming "animals like the Alaskan crude oil pipeline quite a bit."

    Holy crap, Dollar 86.69!  That's going to cheer up the Nikkei – all should be out of those EWJ puts by now as well as /NKD puts I hope!  

    Debt/StJ – That ramp-up in China is so scary.  Their economy is 1/2 our size at about $8Tn and would be much less than that without 10% annual stimulus propping things up.  That's why owning Chinese companies, including BABA, is so dangerous.  BOJ just as bad with a $5Tn GDP (less than 1/3 of ours) so Europe has a long way to go to catch up to the rest of us (as if that's a good thing).  

  10. rustle/krudlow   seriously……yesterday he was wetting himself over the prospects of energy "exports"….

  11. So, in case I wasn't clear in the post above, shorting /TF on the 1,100 line seems like a fun play (super-tight stops over).  

    /YM 16,800, /ES 1,950 and /NQ 4,000 need to go red to confirm or you can short the laggard.  Watch out for the Dollar dropping though – they might do that to goose support.  

  12. and I'm out of DIS from yesterday with almost a 3 point gain.  I don't trust this pump in the market today.

  13. The only exports I'd want to see, is what Europe will need this winter when Putin dials back theirs…..

  14. This link has a great quote from Confucius who obviously wasn't Republican.

  15. and just got some 95 calls on GPRO for next week.

  16. only did half position on GPRO calls

  17. Phil We holding the YHOO April BCS for myself the 32/39 with a 35 putter but just looking at a longer play Jan17 30/42 @ 6.45 covered by a 35 putter @ 4.05 leaving you with a net cost of 2.40 and many month of selling calls. 

  18. This guy is going to be my new primary care physician, I really like him:

  19. Wow, whipsawed back up again so now maybe long if we're over our levels but I'm not as enthusiastic about getting longer into the weekend. 

    Still, if you want to make the quick money in the Futures, just go by the levels and long the laggard until we break back down (still the RUT, /TF at the moment).  

  20. probably should've held DIS a little longer.

  21. Phil / XRT – What's your thought about doing a Nov 83/88 BCS for 3.17?

  22. DIS/Rustle – I think you'll sleep well with the cash into the weekend.  

    Good one Craigs:

    GRPO/Rustle – Too crazy for me.  Options prices are ridiculous too.

    Not much action overall but Dollar screaming at 86.72.  We have 16,865, 1,955, 4,015 and 1,100.70 so still /TF long is the best bet to catch up.  

  23. Dollar / Phil – As I pointed out the other day, not much resistance until we get around 88 or so! That could be a nice headwind for commodities including oil. Of course, this will run its course as well so we could see a bounce for commodities and markets when that happens.

  24. Phil/Re: Stripping the last assets from the bottom 80%/99%.

    I don't think they'll be hell to pay at all. As long as there's SUVs, Bigger and Bigger  SceenTVs, cheap carbs,  and Fox news, the masses will happily soak up the programming intended for them.

    Money is America's religion, and the masses view the rich with misplaced reverence, as if they were the priests who allow us contact with our God.

  25. XRT/Pfehl – I only expected a bounce off that sharp dip but I'm not bullish on XRT at all.  

    We sold the Oct $88 puts but we just cashed out the Oct $93 puts for $8 in the STP and now the short $88 puts are down to $2 so we have to put a stop at $2.50 to lock in a $4.50 gain on the spread (90% of our intention).  With luck, XRT keeps going higher and we make a $3 bonus but we're not going to let ourselves blow the trade by being greedy.  

    ISM Services was decent, more fuel for the fire – don't look too closely though!

    • September ISM Non-Manufacturing Index: 58.6 vs. 58.5 expected and 59.6 prior (>50 denotes expansion).
    • Business Activity: 62.9 vs. 65 prior
    • New Orders: 61 vs. 63.8
    • Employment: 58.5 vs 57.1
    • September US PMI Services Index58.9 vs. 58.7 consensus, 59.5 in August.
    • The PMI surveys signalled an easing in the pace of economic growth in September, but there’s good reason to believe that growth will be sustained at a robust pace in coming months and could even pick up again", said Williamson.

    OMG, oil pays off yet again at $90.50 (from $91) – it's like a broken slot machine! 

    1,102.50 now the stop on /TF – just looking for quick profits today.  

  26. yodi/ Could you clarify how to sell calls in the Yahoo BCS/puts position you described? Are you talking about covered calls ( you also will own the stock) or can you sell calls against what I see as a BCS acting as a stock ownership proxy? Thx.

  27. Phil / XRT – Makes sense and glad I asked.

  28. GPRO/Phil

    Ridiculously good, now is the time you want to write calls almost 10% above the price and still get a hefty premium.  I think this stock has seen it's short term high.  Question of where it consolidates now.

  29. XCO hedges took away some upside, but also took away some downside.  The downside is all I care about as I have been selling the Jan 16 $3 puts at an average of .60.  I also draw some solace from the fact that three of the best value managers in the world own more than 40% of the stock.  They are Wilbur Ross (18.74%), Howard Marks of Oaktree Capital (16.56%), and Prem Watsa of Fairfax Financial (6.43%).  Their average cost is well above $5.  So the stock might not have much upside, but I feel good about my $2.40 entry price.

  30. sn0gr00ve

    YHOO yes you can sell 1/2 monthly calls against your Jan17 BCS There is no stock purchase. For example you can sell 1/2 the Nov 14 42 caller for 1.70 or if you think the market will go further down the Nov 41 for 2.16 but I would rather go for the 1.70 which is 4% in 49 days not bad.

  31. FWIW – Those $3 XCO puts are now $.85 bid.

  32. sn0gr00ve

    Remember the YHOO BCS is capped at 12.00 less your cost of 2.40 

  33. Yodi/YHOO  Does "1/2 calls"  mean calls every 2 weeks/half month or are you referring to a ratio of calls sold to number of BCS positions?

  34. Dollar/StJ – That move this morning looks more like it was manipulated pre-market to give the EU the illusion that US stocks have gone up dramatically, so they BUYBUYBUY and then, when the EU closes, they'll drop the Dollar back down to try to keep US Retail shoppers buying for as long as they can – meanwhile, the Fund Managers and Banksters are running for the exits at warp speed. JMHO….

    Euro has been smashed to $1.25, Pound $1.60 and Yen back down to 109.70, that's up 1.7 from yesterday's bottom – that's a completely insane move for a currency (and, at $900 per penny – it's $153,000) in a day!

    Stripping/Sn0 – I posted an article this morning about how Bugatti has 40 $2M Veyrons for sale this year and other manufacturers have swung their attention to the super-rich.  Though that generates $80M for Bugatti (VW) and whatever for TSLA and other luxury car makers – it's not a way to really put people to work or sustain a global economy.  It's the appearance of wealth, as you say, by holding up a few shiny examples to distract the masses from their own declining shares – bread and circuses, while effective, don't last all that long (from a historical perspective, anyway).

    GPRO/Rustle – I have no doubt they make a great short but, then again, so does the Dow. 

    XCO/Albo – I keep looking at it and I can't find a reason not to like them, despite the PRICE.  

    OK, now we're heading the other way and we can play /TF short BELOW the 1,100 line.  Happy with $250 gains though (1,097.50).

    $90 failing on /CL – watch $37 on BNO, if that fails, we're sure to follow down for a nice short.  

  35. Albo/Xco

    I read about the hedges yesterday and thought it was good news. I watched the stock drop further due to the headline about limiting future profits and wondered what I was missing. The rebound since then I think is the correct move.

  36. Phil-Wynn   I saw the Bloomberg article you posted this AM where Wynn said he feared US regulators more than China.  Perhaps this is why:  Boston Mob Ties Charged in Wynn Casino Land.

    Federal and state grand juries have indicted three owners of the waterfront land that Wynn Resorts plans to develop into a $1.6 billion resort casino, alleging they concealed from Wynn and regulators that one of the owners is a convicted felon.

    The U.S. Attorney's office in Boston unsealed indictments Thursday alleging that Charles Lightbody, Dustin DeNunzio and Anthony Gattineri concealed the interest that Lightbody, a convicted felon and reputed New England mafia associate, had in the land in Everett, a Boston suburb. The three are charged with conspiracy to commit wire fraud, wire fraud and aiding and abetting.

  37. Dow/Phil

    But playing GPRO recently can leave you just short of having a heart attack, do you get that anxiety from the DOW?  I think not.  Have paddles ready here at all times.

  38. sn0gr00ve Well you can go on weeklies but sometimes it is just penny pinching and more money for the broker but say you buy 6 BCS you can safely sell 3 callers without paying extra margin. I closed the BCS for 6.55 and sold 1/2 the Nov 14 42c for 1.72 jan17 putter still pending 

  39. WYNN/Rev – LOL, that cracks me up.  Aside from the fact that those 3 names came right out of Central Casting for Mafia names, Wynn and his people had to avoid even a simple Google search to do a background check on their "partners":





    • Protester Charged With Punching Casino Rally Organizer…/protester-charged-with-punching-casino-rall…



      Oct 16, 2013 - Charles Lightbody, 53, of Revere, was arraigned in Chelsea District Court … When he did, Lightbody claimed Ciarlone hit him with a sign first, …


    INDICTMENT – Queens County District Attorney


    Dec 7, 2006 - CHARLES LIGHTBODY of the crime of ENTERPRISE … DAVOLIO, andCHARLES LIGHTBODY, along with other persons known and unknown …

    I mean, come on – that was about 2 mins work!  It's WYNN's responsibility to vet their potential partners and, obviously, there's no possible way they didn't know. 

    GPRO/Rustle – Well, I guess if you need the rush but I'm happy watching oil and the RUT.

    Big wheeeeeee! on oil, by the way, $89.60 and of course we're going to be bouncy here so TAKE THE MONEY!!!  We can always re-short if $89.50 breaks.  

  40. CLF HOW LOW CAN YOU GO Limbo time?

  41. VIX fell 20% from 18 to 15 in less than 24 hours.  

    Gasoline hit $2.35!  Gold $1,192, silver $16.75, copper $2.9965, nat gas $3.965 – crazy numbers.  Oil $89.74 at the moment, failing $89.75 would be a bad sign.   Dollar 86.86, Euro $1.2500, Pound $1.595, 109.85 Yen – VERY EXCITING!!!

    CLF/Yodi – Every week Barrons knocks them!  

    Cliffs Natural Resources: The Clock is Tickingat, Sep 22)

    Amazing, isn't it?  We'll see what's what at the end of the month:

    Cliffs Natural Resources Inc. Announces Quarterly Conference Call for Third-Quarter Financial Results on October 28, 2014

    Here's their Q2 earnings presentation from 7/24 – apparently, the World has ended since then…

    They have $350M in the bank and their cash-flow last Q was -$4M and they are now priced for bankruptcy!  Oh, and the 3 qs before that were cash-flow positive…

    You can sell the 2016 $8 puts for $2.55, that's net $5.45 on the $9 stock - 40% off!!!  

    As expected, Dollar being knocked down into EU close (11:30) and indexes going up again – madness!  

  42. Phil/Gambling – I'm sponsoring a forum on the Casino repeal vote here in Massachusetts.  The pro-casino crowd has declined our invitation, and aren't debating because they think they have it in the bag.  I don't know if enough people are paying attention to make a difference, even with the mob story.  We get fired up about stuff here in Northampton that no one else cares about much.

  43. From Briefing Trader:

    "Tesla Motors: Many believe Musk will unveil an all wheel drive version of the Model S on October 9 ."

  44. Rev –  Good luck.  It preys on the poor.  It's OK to have it confined to one state (Vegas), but not OK to tap tbe desperation of mothers who can't feed their children throughout the country.  I have seen this close up.

  45. Will CLF be purchased?

  46. Gambling,

    It seemed, as we toured the country in August, that every little berg we stopped in for gas had a casino.  Efforts are underway to build one or more near my home in Albany despite having one only 30 miles away in Saratoga and despite the news about the NJ casino BKs.  Crazy.  Apparently we are out of ideas on building anything productive.  But you'll be able to pay your gambling debts with your cell phone…so I suppose that's progress. 

  47. Damn, oil took a real tumble, right down to $89.25.

    Gambling/Rev – That's the scam these guys run, the Mob guys buy up the land and then they get their politicos to push for a casino (and they already control the zoning, so they know where it will go).  Notice Lightbody was arrested while trying to stop a casino from getting approval at an existing race track while, in fact, he owned the city land where they wanted to steer the development to.   Anyway, on the whole, casinos aren't terrible things but they also aren't going to solve a community's problems – especially with the oversupply that's coming on the market.  

    TSLA/Albo – Yawn… 

    Casinos/ZZ – My feeling is that people who want to gamble are going to gamble anyway, so better if it's done under somewhat regulated and supervised situations.  

    And what Sibe said! 

    CLF/ZZ – X might want them but they have their own problems at the moment.  AA should buy them, could be an interesting combo.  It's all about iron ore prices, which are in the crapper at the moment but, as with any cyclical commodity, this too shall pass:

    Don't forget CLF has an advantage because they are 64% US-based and most of the competition is overseas.  That gives them time to deliver and pricing advantage to US, Canada and Mexico.  The problem with that is that, at the moment, the rail cars are stuffed with oil so those rates are more expensive than usual.  It's always something…

  48. CLF / Phil – There is also that Casablanca wild card in the mix… 

  49. Phil – Regarding the Q yesterday I asked about portfolio losses.  Thank you for the reply, it makes sense it a planning perspective.  Although I was looking for a bit more specific opinion about my personal situation.  

    When I left on Sept 8th, the SPX was around 2000 for the day.  On Oct 2nd, the market was down to 1925 and settled at 1945.  After the market closed my account was down 5.5% from where I left it on Sept 8th.  

    So the SPX looks like it was down about 3.3% and my acct was down 5.5% with only 18% of my buying power used (I have portfolio margin, so it's hard to say exactly).  

    What do you think about those numbers?  Too long?  About right?  

  50. Phil – Yeah on TSLA.  But never fear there's always another tweet to keep the stock up.  Tell'em the stock is overpriced but give them some mysterious tweets to make sure it stays that way. 

  51. Cassablanca/StJ – True, that's still a wildcard as well. 

    Possible top here at 16,900, 1,960, 4,025 and 1,105 on the Futures.   I'm poking at the /TF shorts – CAREFULLY!

    On the indexes we have:

    • Dow 16,850 (weak) and 17,000 (strong)
    • S&P 1,940 (weak) and 1,955 (strong)
    • Nasdaq 4,420 (weak) and 4,465 (strong) but we'll also know we're not really impressed until 4,510.  
    • NYSE 10,575 (weak) and 10,700 (strong)
    • RUT 1,100 (weak) and 1,120 (strong)

    So progress from this morning but really nothing more than we expected (1% up is a 20% weak retrace of a 5% drop).  If we do take out another strong (Dow 5 points away), then we could take a poke at an aggressive upside play like TNA (since the RUT is barely over their weak bounce line).  But, for now, let's see if they can even hold the weak levels.  

    Portfolio/Burr – On Sept 8th we had 2,000 and now we're at 1,950 so it's a 2.5% drop and you lost 5% so you are 2:1 bullish, apparently.  That is, of course, WAY more bullish than we are in our virtual portfolios.  In fact, on this 1% pop, our LTP is back to 16% ($580,000) but our STP has fallen to 55% ($155,000) for a net of $735,000 – about where we were yesterday, so we're back to neutral, which makes me happy into the weekend.  I'd take advantage of this move back up to hedge something, I still like the SQQQ spreads we have in the STP. 

    Speaking of the STP, those XRT Oct $88 puts are now $1.65 and it's just greedy not to close them here. 

    Also, on FAS, we should take advantage of this pop and sell 10 Oct $107 calls for $2.05

  52. Portfolio Burr … sounds like you are either very bullish in your positions or perhaps over allocated in stocks which suffered a very tough few weeks and are down way more than the 2.5% drop in the S&P … stocks like CLF, BTU, RIG, ABX etc .. you might want to adjust to lower your breakeven points etc … just my tuppence .. have a nice weekend all :)

  53. From Bloomberg, Oct 3, 2014, 12:39:41 PM

    Oct. 3 (Bloomberg) — The U.S. jobless rate declined to a six-year low of 5.9 percent in September and employers in the U.S. added more workers than projected.
    The 248,000 gain in payrolls followed a 180,000 August increase that was bigger than previously estimated, the Labor Department reported in Washington. Peter Cook reports on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

    U.S. stocks rallied, paring a second straight weekly loss in the Standard & Poor’s 500 Index, as a better-than-forecast payrolls report and expansion in service industries boosted confidence in the world’s largest economy.

    To read the entire article, go to

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

  54. From Bloomberg, Oct 3, 2014, 10:09:17 AM

    The U.S. economy effectively added
    almost 600,000 jobs in September. No, that’s not a typo.

    To read the entire article, go to

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

  55. From Bloomberg, Oct 3, 2014, 12:05:18 PM

    It’s getting increasingly difficult to blame the incredibly shrinking U.S. workforce on bummed-out Americans.

    To read the entire article, go to

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

  56. From Bloomberg, Oct 3, 2014, 11:55:43 AM

    Oct. 3 (Bloomberg) — Bloomberg’s Andrew Davis reports on pro-democracy protests in Hong Kong as scuffles begin to break out between protesters and their opponents. He speaks on “Bloomberg Surveillance.”

    Hong Kong’s pro-democracy demonstrators were attacked by hundreds of men at two sites in the city, prompting student leaders to shelve talks with the government aimed at ending street protests that engulfed the city for the past week.

    To read the entire article, go to

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

  57. From Bloomberg, Oct 3, 2014, 12:04:15 PM

    One of Russia’s prized oils, facing increased competition in Asia, is traveling to a rather unlikely destination: the U.S. West Coast.

    To read the entire article, go to

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

  58. From Bloomberg, Oct 3, 2014, 12:34:37 PM

    Barry Barker’s flock of macaws and
    kites were squawking for food last year when he went online for
    a payday loan to save them. The automatic debits got so costly
    he had to close his bank account to stop them.

    To read the entire article, go to

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

  59. From Bloomberg, Oct 3, 2014, 12:44:08 PM

    Oct. 3 (Bloomberg) – Bloomberg’s Michael McKee discusses former Federal Reserve Chairman Ben Bernanke’s struggle to get his home refinanced. He speaks on Bloomberg Television’s “Market Makers.” (Source: Bloomberg)

    Ben S. Bernanke says he can’t refinance his house. With his book advance and speaking fees, why does the former Federal Reserve chairman even want a mortgage?

    To read the entire article, go to

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

  60. From Bloomberg, Oct 3, 2014, 10:36:43 AM

    Oct. 2 (Bloomberg) — President Barack Obama speaks about U.S. economic progress under his administration’s policies.
    Obama, speaking at Northwestern University in Evanston, Illinois, also discusses challenges facing middle-class Americans, public education and the Affordable Care Act. (Source: Bloomberg)

    President Barack Obama yesterday devoted his first full speech in two months to the economy’s strength. It was just what Nancy Pelosi wanted.

    To read the entire article, go to

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

  61. From Bloomberg, Oct 3, 2014, 12:00:01 AM

    Sept. 30 (Bloomberg) — White House Press Secretary Josh Earnest speaks about security breaches at the White House and President Barack Obama’s confidence in the Secret Service, the outlook for Afghanistan and the fight against Islamic State extremists.
    Earnest speaks at the daily White House news conference in Washington. (This report is an excerpt. Source: Bloomberg)

    An unidentified man posing as a member of Congress made it into a secure area backstage at President Barack Obama’s appearance at a Congressional Black Caucus Foundation awards dinner in Washington Sept. 27, according to a White House official.

    To read the entire article, go to

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

  62. From Bloomberg, Oct 3, 2014, 12:01:00 AM

    A tutor goes over SAT test preparation with an 11th grader. Photographer: Joe Raedle/Getty Images

    A new wave of colleges including
    Wesleyan University, Bryn Mawr College and Temple University are
    scrapping standardized tests as an admissions requirement,
    saying there are better ways to evaluate applicants and expand

    To read the entire article, go to

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

  63. From Bloomberg, Oct 3, 2014, 11:04:23 AM

    Russian inflation accelerated to the
    fastest pace in three years, putting pressure on the central
    bank to raise interest rates even as economic growth shrivels.

    To read the entire article, go to

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

  64. From Bloomberg, Oct 3, 2014, 9:17:31 AM

    German Chancellor Angela Merkel said
    she won’t stop pressing euro-area governments to comply with
    debt and deficit rules because Europe’s credibility is at stake.

    To read the entire article, go to

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

  65. From Bloomberg, Oct 3, 2014, 8:30:01 AM

    Demand from the nation’s trading partners is holding up even as the global economic expansion cools, giving American output a lift. Photographer: Luke Sharrett/Bloomberg

    The trade deficit in the U.S. unexpectedly shrank in August to the lowest level in seven months as exports edged up to a record.

    To read the entire article, go to

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

  66. From Bloomberg, Oct 3, 2014, 10:39:29 AM

    Maybe he can find what’s missing.

    There is a natural tendency in markets and the news media to accompany every monthly set of U.S. employment data with its own suspenseful narrative. This time around, the story line focused on whether the jobs report would endorse or refute the prior month’s disappointing numbers. New job creation, at 142,000, was well below expectations and the monthly average of more than 200,000.

    To read the entire article, go to

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

  67. From Bloomberg, Oct 3, 2014, 12:32:03 PM

    When worlds collide.

    OK, so you work in finance. You’re an asset manager, a bond trader or a financial adviser. You have exposure to broad economic risks. Obviously you want to know how the Federal Reserve makes decisions. The amount I don’t know about the Fed could fill a library the size of the universe, so don’t regard me as a Fed expert (for that, go to Tim Duy). But I do think I may have a little bit of insight about one of the issues behind the Fed’s thinking, so I’ll try to explain.

    To read the entire article, go to

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

  68. From Bloomberg, Oct 3, 2014, 11:24:00 AM

    What do I type in to get a raise?

    Anyone looking for signs of inflationary pressures — or hoping to see workers getting a raise — will be disappointed by today’s jobs report. Wage growth stalled in September, though folks who work in service and with their brains did better than others.

    To read the entire article, go to

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

  69. From Bloomberg, Oct 3, 2014, 10:52:02 AM

    It will cost you.

    It’s pretty much universal knowledge that Manhattan real estate is expensive. What isn’t so well known is what’s happening at the top of the market: Price increases have been crazy.

    To read the entire article, go to

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

  70. From Bloomberg, Oct 3, 2014, 7:46:08 AM

    European Central Bank President Mario Draghi has disappointed investors and economists by failing to detail the size of the expansion he’s seeking in the central bank’s balance sheet. This much is clear from today’s investment bank research reports. Parsing Draghi’s comments from yesterday, as his favorite inflation measure fell to a record today, raises the chilling prospect that it may already be too late to avert deflation in the euro region — and that he knows it.

    To read the entire article, go to

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

  71. who was mentioning INVN ?

  72. Phil/ABX BCS Roll Question

    Still working on the process for rolling BCS’s.

    Current Position on ABX 

    2016 15/20 BCS purchased at 1.66

    Net spread value when position was initiated  = 1.66

    Current value of 2016 15/20 BCS = 1.04

    Current long call value = 1.67



    Roll to the 2017 10/17 BCS for 3.26

    So for an extra 2.22 I can buy 5.00 and widen the spread from 5.00 to 7.00.

    This is the part I want to make sure I have correct.  I have 1.04 in value left on the current BCS so the 2.22 is the additional amount I have to commit to get that extra 5.00, correct?

    It also moves the position from OTM to 4.14 ITM

    What are your thoughts?

    Thanks as always

  73. Interesting.  A break in the ranks ?  Clinton probably would acted differently, I guess.

  74. And wheeeeeee! it is on the RUT, back to 1,102!  

    ABX/John – That's the right trigger, when your long call hits the net purchase price of the spread, it's a good idea to take action to preserve your initial investment.  The short calls are 0.65 and that's important so perhaps, since the delta is 0.23, you put a stop at $1, which would be roughly a $1.40 (10%) pop in ABX to stop you out.  Then you take your $1.68 (at the moment) for the 2016 $15s, and you can buy the 2017 $13/20 bull call spread for $2.20 so, for a cost of net 0.52 out of pocket ($2.19 net total), you now have the $7 spread that's $1.18 in the money against the short 2016 $20s and the only way they'll stop out is if ABX is over $15.50, which would put your long spread $2.50 in the money at net $3.19 – nothing wrong with that, right?  I'd also sell the 2016 $13 puts for $1.40, but that's just me!  cheeky

    Now, why not the $10/17 spread?  I'd roll the 2017 $13s ($3.45) down to the $10s ($5.05) for $1 if ABX fell lower but, if ABX doesn't go lower, you won't need to be so low so why spend the money when you don't have to?  If you can't afford to have the short call open (margin), even with the offsetting short put, then I'd still feel good about the 0.65 more ($2.87) for the clean $7 2017 $13/20 spread – essentially you would have spent $1.79 more than you intended but now you have a $2 wider spread that's $2 lower in strike with 12 more months to get to your target – not a terrible trade-off.  

    What kills people in these spreads is NOT taking advantage of a dip to re-position to longer, deeper spreads.  Once your long call falls below 75% of the net of the original spread – it becomes very hard to roll out of trouble.  

    Also, you should ALWAYS plan on spending double what you start with – that goes for ANY position, even the ones you are doubling into.  If you are not totally comfortable with that – maybe it's better to just stop out now – before you back yourself into a corner…

  75. Wombat – I shorted some INVN puts as they are an AAPL supplier.  Still there with a small loss.

  76. Wombat- My breakeven is $15.80 on the stock.

  77. From the Twitterverse:

    Fool Me Once, Shame On You; Fool Me 4 Times In A Week, Shame On Me

    “Money Bubble” Predictions Coming True, Part 1: Stock Market Volatility Surges

    Right now 2014 is on pace to be the best year for both total and private sector job growth since 1999.

    The Walmart wealth gap is getting much more troubling

    You can't refinance, or get rid of the debt through bankruptcy. How student loans are more of a sham than you know

    Good list: Value Investing the David Herro Way – 24 stocks in today's via

    Industries expected to grow most in the year ahead:

    EIA will discuss its outlook for heating costs at the 2014-15 Winter Outlook Conference

    Siemens’ energy arm warns on margins

    Gold breaks below $1200 as Icahn demands board seat, buyback

    Negative rebate on GoPro— the cost to short — is sitting at 100% annually.

    Betting against this company is MADNESS:    

    91% of iPhone owners plan to buy another iPhone. From our September Pulse survey: $$



    Embedded image permalink

    The art market in one quote


  78. Now for reference on this mornings YHOO play the jan17 35 putter now has been sold for 3.95 Setting up the complete play.

  79. Nice Yodi! 

  80. Embedded image permalink

    & Martin Guzman offer their sharp perspective on sovereign-debt restructuring mechanisms

    Moore's Law in one image:

    Embedded image permalink

    Embedded image permalink

    Car use has dropped by more than 20% in central :

    LA's push to ramp up its minimum wage to $13.25 could be an experiment on a grand scale

    Embedded image permalink

    Media coverage of Moody's "$2 trillion" gap is incomplete at best

    Compression Continues as Breakout Beckons in Apple (AAPL): Apple shares (AAPL) continue their triangle or “EMA…

  81. CEO / Phil – So these guys are now making about 500% more than in 1989. If we take into account that these guys are obviously superheroes, don't need sleep and work tirelessly and therefore deserve some premium, we can maybe expect that they would be OK with a 200% raise for the employees! Or be OK with raising the minimum wage by 25%. Too much, too soon?

  82. Some trading lessons for this group from my interesting day.

    I woke up to find that I was short /CL and down $2K on it, I had no idea how.

    I figured out that I had the auto-send feature enabled in TOS charts, and if you right click on a chart to work with drawings, the Buy option is right below drawing and I must had inadvertently clicked it late in the evening. No confirmation, it just silently created a Buy Limit order that went off while I was asleep. So…

    Lesson #1 – check your open orders before bed!

    Lesson #2 – don't enable the auto-send setting if you are a clutz.

    Lesson #3 – patience.  I watched oil all morning, found the bottom, doubled down, and got out even just now.  After a few hours of screaming at my monitor.  

    So be careful out there.

  83. Phil/SLW

    Thanks for the ABX guidance.

    Now, I have a SLW 2016 18/17 BCS purchased at 3.67 and sold the 2016 18 Puts for 2.04 for net 1.63 on a 9.00 spread.

    The net spread value of 3.67 was punctured today. Should I work out a roll today or should I hold off for the 2017’s to come out?

  84. Burr – I'm in a similar situation as you, and I think the major reason is that I am over allocated to material stocks (to echo what DMulligan said).  I have CLF, ABX, RIG, BTU, XCO, HK, etc.  They all combine to be a big chunk of my portfolio.  I need to work on keeping track of sector allocations, so I'm not exposed this much next time.  


  85. AAPL – Looking at the ten day chart, it's drawing one of Phil's Triangle Squeezy Thingies ™, should resolve later next week, that will be fun.

  86. Palotay - I see your list of painful stocks and raise you a PBR and an SLW, I picked the wrong year to invest in things you dig out of the ground instead of things that ride the Net.  I wasn't much of a Dollar watcher before this quarter but I sure am now, learned something new.

  87. Why is the dollar rallying, bonds and the market?  TRIN remains elevated.  Volume is low.  I don't believe it.

  88. Anybody think we get a 3rd Monday in a row where the market gets killed again?

  89. Pharm – I've never owned GILD outright, but have had some success trading it.  I believe ledipasvir is expected to be approved this month.  If that happens, how do you think the stock will react ?   Thanks.

  90. I will add NAK to the list of pain. Big ouch!

  91. Albo – so much of GILD is on HepC but the question is now, how much is baked in on sofosbuvir with its combo with the above mentioned?  They most likely, IMHO, will stay flat, but probably pop up early on anything positive.  BMY, JNJ and MRK are hot to trot, as is ABBV, so GILD has best in class, and will continue to rake in cash for the Pharmasset purchase, but they better be ready for a war of the HepC world.

  92. Pharm – Thanks.  I was thinking that maybe it had already been discounted in the stock price.  Will be interesting to watch.

  93. CEOs/StJ – Way too soon.  After all, where do you think that money comes from in the first place?  

    Auto-send/MrM – LOL, good lesson.  I learned that about my touch-screen too, be very careful pointing to make an example or you end up owning what you point at!    Congrats on keeping calm and getting out.

    SLW/John – $18/17 bull call spread???  SLW is at $19.24 so I'm not sure what you have with the short puts but I'm bullish on SLW over that period myself.  Nothing wrong with the short $18 puts, they are now $1.25 so I'm thinking maybe you mean $18/27 and your problem is you are too greedy with the $9 spread in the first place.  Let the short puts pay for the whole spread and you'll have much less trouble.  Anyway, yes, I'd wait for the 2017s but you may as well buy back the short $27s ($1.05) and you'll be net $2.68 (ignoring the short puts) on the $3.65 long call and, if SLW drops $2 and causes the calls (delta 0.53) to drop $1, then you can sell the $20s to someone ($2.75) and roll down to the $15s ($5.40) and then you'd be in the $15/20 bull call spread with the short $18 puts for net about $2.68 – not too bad as a fallback strategy.  When you like your fallback strategy, anything bullish from there is a bonus!  

    Materials/Palotay, Burr – It's not the worst to increase your allocation to a certain sector as it goes on sale – just don't overdo it!  

    Not all the basics have been thrown out the window in the "new" economy.

    Speaking of which, CLF down 15% today!  $8.42.  

    AAPL/MrM – I am worried it will pop out violently and give us trouble on our short calls. 

    Belief/Pharm – SPY volume just 90M into 3pm, I wouldn't believe anything going on today.  

    Date Open High Low Close Volume Adj Close*
    Oct 2, 2014 194.18 195.06 192.35 194.38 157,170,400 194.38
    Oct 1, 2014 196.70 196.77 193.91 194.35 177,798,000 194.35
    Sep 30, 2014 197.69 198.30 196.61 197.02 131,302,000 197.02
    Sep 29, 2014 196.20 197.89 196.05 197.54 95,112,000 197.54
    Sep 26, 2014 196.70 198.39 196.42 197.90 103,547,000 197.90
    Sep 25, 2014 199.04 199.05 196.27 196.34 150,300,000 196.34
    Sep 24, 2014 198.04 199.69 197.52 199.56 107,276,000 199.56
    Sep 23, 2014 198.43 199.26 197.95 198.01 111,393,000 198.01
    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

    You can't erase a 1Bn+ sell-off with a 100M bounce!!!

    Monday/Rustle – I'm going to have to stick with neutral as this was a strong bounce today (but barely).

    NAK/John – Another one that needs loads of time.  

  94. Phil/SLW

    You were correct they were the 27's.  Typo.


  95. Mr. Mocha, I saw the triangle squeezy thing on Apple too and if I remember correctly it usually means a breakout in either direction, up or down. I sure hope that with todays news about the registrations in China being very good and the Ipad event coming soon that it will be a breakout to the upside. I sure could use something to offset the red on my RIG, CLF, BTU, IRBT, CIM, NLY and other down issues I am currently waiting to roar back between now and Jan 2016 as I wait for the signs to use my cash and double down on all of these once the carnage is over. 

  96. Speaking of adjustments, in the STP, I think we could go a bit more bearish as we only lost about 4% today ($4,000) and we KNOW the LTP and Income Portfolios will gain $15-25,000 if we have another couple of days like this so let's grab 50 of the DXD Oct $24 calls for 0.75 – a good price with DXD at $24.52.  DXD dropped 0.64 today so a very small pullback would put us in the money and add $3,000 per day like this to the downside for $3,750.  I'll sleep better over the weekend….

    In the Income Portfolio, let's add 20 more of the SQQQ Jan $33 calls for $5.15 (about what we paid for them earlier this week.  No additional short calls.  

  97. USD/JPY back at $109.80, gotta take another stab at it but tight stops over 110.1 (very dangerous stuff!)

  98. So, Phil, you think we should take off some of the short AAPL calls….?

  99. AMZN and PCLN did not hold their highs….Biotechs are ok, but not stellar.  I still remain in the camp that more down is coming.  This is a dead cat bounce.

    Good weekend to all.

  100. AAPL/Taihu – That would be in the Income Portfolio but we already increased the coverage to 100 long spreads against 35 short calls (Oct $84.29s) so no.  Though I have a "feeling" it will annoyingly pop higher – that's no reason to go naked long on 100 bull call spreads – that would be irresponsible.  Our plan is to do a 2x roll and currently we're down $6 on the short calls – if we end up down $20 (@ $115), we can still roll to 50 short $10 calls longer-term and, while that would be annoying – it's no more annoying than AAPL dropping to $90 when we're uncovered and us taking a $20-30K loss because we were too dumb to hedge our position!  

    I have to run for a school thing – have a great weekend folks, 

    - Phil

  101. May be wishful thinking, but CLF is touching the bottom of a channel that goes back to 2011. Easy to see on weekly chart. And couldn't this big volume big decline today be capitulation?:) Keep wishing…

  102. Phil I saw your message about ABX and how to protect your positions, but am still unclear and this is the part I really need help with. So, can you help me with a couple of my spreads that need help, I think. I am sorry if you have made adjustments since first recommending that I missed, which is probably the case, so tell me what I should have done, or should do now. I don't think they are in horrible shape, but is there an adjustment I missed or should be making now? 

    GTAT Jan '16 10/17 BCS paid $2.65 now $2 also holding Jan'16 12 puts paid $3.95 now $4.25

    IRBT Mar'15 33/37 BCS paid $2.10 now $1.20 

    BTU Jan'16 13/18 BCS paid $2.35 now .88

  103. I woke up this morning and found out that I killed it on a long Apple call flyer.  Took profits, went to Fidelity and actually took out the cash, headed for Aventura Mall in a thunderstorm with wife and two daughters and obliged them to spend it on themselves over a five hour period.  Just returned with smiles and laughter all around  -  it reminded me of why I do this in the first place, quite an inspiration. 

  104. The strong bounce levels were reached and exceeded on the DOW, the S&P and Nas yesterday, but my portfolios were still down for the week, first time in a year.  I noticed the number of stocks making new lows exceeded new highs by a wide margin yesterday.  So I have to agree with Pharmboy there may be more downside to come.

    Zero, congratulations on your Apple picking.  It is that time of year, after all.

  105. 200 DMA retaken by the NYSE. It would be nice to the Nasdaq and S&P get over their 50 DMA to confirm the bounce. But could be resistance now. The Dow is not that indicative at this point.

  106. This has to be some kind of records with 12 Fed speeches next week. And to top it off, we have speeches from Jack Lew and Draghi as well. I underdstand Bernanke will also be at some event Tuesday and Wednesday. Grab some popcorn!

  107. INVN // Also
    Thanks BTW

    I read a few papers about them out here
    Im in.

  108. Tianamen II, coming soon to your local CNN channel.  "Streets must be clear by Monday!" – Leung.  Which is not going to happen, voluntarily.  They already sent in thugs, without the desired effect, so overwhelming force -- running 'em over with tanks or whatever China sends over the border --is next.  An authoritarian regime tasked with controlling 1.3 Billion Chinese can't afford to be sentimental.

  109. If the facts don't backup your ideology, just change the facts:

    They want to adopt a method called "dynamic scoring," popular among conservatives since the 1970s, which scores budgets under the controversial assumption that tax cuts generate economic growth and make up for lost revenue — something critics have likened to "fairy dust." The nonpartisan Congressional Budget Office, the official scorekeeper, does not use the method, but Republicans, and even some conservative Democrats, want it to.

    House Budget Committee Chair Paul Ryan (R-WI), who expects to chair the tax-writing Ways & Means Committee next year, floated the idea of requiring CBO to use dynamic scoring at a Financial Services Roundtable speech on Sept. 18. Likely next Majority Leader if Republicans can win the Senate, Sen. Mitch McConnell (R-KY) championed the method in a 2013 interview with the National Review. Outside proponents of supply-side economics, such as the Wall Street Journal editorial board, also like the idea.

    "In practice, dynamic scoring is just another way for Republicans to enact tax cuts and block tax increases," economist Bruce Bartlett argued in the New York Times in 2013. "It is not about honest revenue-estimating; it's about using smoke and mirrors to institutionalize Republican ideology into the budget process."

    The fundamental problem with dynamic scoring is that it requires the CBO to make dubious assumptions about the future economy, and extrapolate those assumptions into job-creating effects as a result of tax cuts.

  110. CLF – I have to keep saying to myself, "have I seen them stop going down yet?"

    Phil, thoughts on likelihood of them cutting dividend? And any thoughts on BHP?

  111. Phil/thankyou. Phil, I went over the recording of last weeks webinar. I liked it a lot and wanted to thank you. I thought the case studies (company reviews) were detailed, I learned more about selling puts process and also what happens if stock continues to go down after that, I liked the fact that we discuss so many different avenues like stocks, optiond, futures, oil, commodities etc… I replayed portions of it multiple times to make sure I was grasping it but wanted to say good job. Thanks… 

  112. Phil I like your view on this matter possible as well a learning experience for others:

    BA holding the Jan16 BCS 115/135. 

    Paid for the 115c 32.27 now 17.57

    Rec. for the 135c 20.36 now 7.70

    No Jan17 yet. I check my position for rolling by adding what I received plus the todays value of the long call = 37.93 (17.57 +20.36) deducting the 32.27 I paid = 5.73 This is the amount I am still above water!!!

    As we have no Jan17 I can wait or do the following:

     Roll the long caller from 115 to 105 a 10$ improvement for a cost of 6.85. (Sell 115c for 17.55 and buy the 105c for 24.40) I would prefer it if you improve by 10$ not to pay more than 50% with other words max 5.00. However I could reduce the cost by selling a Jan16 100p for 4.10 leaving a net cost of 2.75. BUT exposing myself to buy the 100p for 95.90.

     Slicing the trade to the bone you could roll the short 235 caller to 130 for about a credit of 2$ having to pay only .75 cents. But we still have 14 month to go and I feel reducing the 135 to 130 is cutting it a bit fine.

    Or simply do nothing!!!! As patience can solve a lot of problems.

    I hope some of the newbies will understand if not simple ask. Thanks Phil

  113. Yodi,

    I appreciate you posting your positions as it is often helpful to see how you, Phil, and others assess and adjust your trades.  It looks like you entered the position for $32.27 – $20.36 = $11.91 debit and it is now valued at $9.87, so you are down $2.04 on paper.  Your break even is $115 + $11.91 = $126.91.  If you are only down $2 on paper and have more than a year to run why would you consider spending another $6.85?  If you are expecting the stock will drop in value over the time period, wouldn't it be better to place a short bet with the new money?

  114. Maybe not as easy to compete against Netflix:

    If you thought that Redbox Instant would have trouble competing against a streaming video behemoth like Netflix, you were right. The Verizon-backed service is telling customers that Instant will shut down just before midnight on October 7th, roughly a year and a half after it got off the ground. Should you be a customer, you'll get a notice about any relevant refunds on October 10th. The closure isn't entirely surprising — Outerwall (Redbox's parent company) wasn't happy with Instant's subscriber numbers, and a credit card fraud incident prevented it from taking new customers for three months. Still, this isn't good news if you liked Redbox's unique hybrid of online and kiosk-based rentals.

  115. Good morning!  

    CLF/Griffin – Nomura downgraded them Friday and Barron's continues to bash them, there's a glut of iron ore (and coal) and it's not going to turn around soon.  Nomura says $5 next year but it's based on their expectation of iron ore staying this low, which may or may not happen.  

    Nomura's Woodworth said in a report Friday that the sub-$55 per-ton price for iron ore this year "has significant negative implications for medium-term earnings and should severely limit strategic options with regards to potential asset sales."

    China's slower economic growth this year has been a major drag on the mining industry.

    China has been a major user of metal ores amid rapid expansion in recent years. The reduction in demand from China comes amid an oversupply that Nomura expects to continue until 2017, creating a very challenging situation for miners.

    Woodworth said that a shutdown for Cliffs' Eastern Canada operations seems like the only viable option. "Given weak ore prices and Cliffs' high debt leverage, we don't believe CLF would be able to finance the phase-two build-out in eastern Canada."


    Cliffs isn't alone in its troubles. The 49-company Mining-Metal Ores group is ranked a dismal 159 on IBD's list of 197 industry groups.

    I don't disagree with that analysis at all other than the fact that CLF does have some advantage selling in the US market that is outside simply looking at the International price of iron ore.  So, if your investing horizon is from here to 2017 – this is probably not a good stock. 

    If however, you have a longer-term view, then $8.32 isn't all that far from $5 and, in the Income Portfolio, we have 1,000 shares of CLF in a net $9.70/10.85 buy write, so we can expect to own 2,000 shares at net $10.85 in Jan 2016.  We also have 30 of the 2017 $8/15 bull call spreads at $2.05 and we sold 30 Jan $10 puts at $4, so, assuming the spreads expire worthless, we end up with 3,000 more at net $8.05.

    That puts us into 5,000 shares at an average of $9.17 and let's assume we can roll our short puts and sell some more calls and knock another $1 off that by Jan 2017 and that would put us at $8.17 for $40,850.  

    Even if we assume the stock is still at $5, we could double down at $5 and have 10,000 shares at $6.59, which is $65,900 and not much more than a full $50,000 allocation.  Keep in mind, this is the Income Portfolio and we WANT to be in long-term positions that can produce an income.  CLF currently pays a 0.60 dividend and, even if they cut that in half, it  would be 5% of our 10,000 share net.  

    Meanwhile today, with the stock at $8, we can sell the 2017 $8 calls for $2.60 and the $8 puts for $3.50 so let's assume that at $5 we could sell the $5 puts and calls for 1/2 that.  That would still be $3 so we wouldn't DD but we'd sell the 2019 $5 puts and calls (or $7.50 puts and calls if we felt braver) for $3 and our net would be knocked down to $6.17 on our first 5,000 and $5 on the next 5,000 for $5.59 in 2019 but, in Jan 2017, we'd only be $27,950 into the position and tying up less than $14,000 of our $1M buying power.  

    THAT is the context under which I still like CLF and I will still like them at $7 and I will still like them at $6 and I will LOVE them at $5 because they are not down because they are a bad business, they have been in business for 167 years and have been through cycles much worse than this – they are down simply because, AT THIS MOMENT, the commodity they sell is down and it's down because CHINA!!! faked demand by stimulating their economy and ordering a lot of things they didn't need and now they've caused a glut.

    There hasn't been a new, cheaper, better way to make iron ore pellets that's been invented, CLF isn't being crushed by local or International competition – it's simply a price fluctuation and the people who can imagine a time-frame long enough to see the big picture will make money on the rebound and the people who can't see past the next turn in the road will bail.

    It's up to you to choose the kind of investor you want to be.

    I will be banging the table on this one in Vegas the way I was banging the table on BBY two years ago at $11 – they too were "doomed" and "failing" and their business model was "over" because of on-line ordering and "showrooming" and all the usual BS spouted off by short-sighted idiots who can't see past the next bend in the road.  

    So I'm telling you now, CLF is this year's table-banger but you have to do your own homework and get comfortable about the business or you won't be able to hold on for the ride and I can't spend the next two years holding everyone's hand – this is what it's like to invest in cyclical stocks and notice we had this chart earlier Friday and 2 years ago, in Vegas, we were talking about Retailers and last year I was banging the table on REITS and now we're done with REITS and I like the materials stocks.  

    According to this chart, next year we will probably want the beaten-down tech sector again but we're not slaves to any single chart – it's just a tool that gives us an idea of what has been going on for the past 200 years of market cycles – this time MAY be different – maybe…

  116. Spreads/Craigs – See above re. CLF – that somewhat applies to any stock you are buying in a down cycle.  As long as you are sure they'll be a survivor, usually the economy comes back eventually (it has so far, anyway).  What's important, more so than worrying about the price is managing your position sizes, so you don't overcommit.  If you have any stock, no matter how far it's gone down, that you wouldn't be THRILLED to double down on if it was 50% cheaper next week (for no devastating reason that changes the Fundamentals), then it probably shouldn't be in your portfolio in the first place.  That being said, let's go over your 3 positions:

    • GTAT @ $11.05 –  You got a net $1.30 credit for the 2016 $10/17 bull call spread with the short $12 puts so your net entry is $10.70 and you are in the money with 16 months to go.  There are no 2017s and that limits your options but there's no reason not to wait and see what those options will be when the new contracts come out.  If anything, I'd consider buying back the $17s ($1.95), which would raise the net of your $10s to $4.60 (and net 0.65 on the spread with the short puts) and they are currently trading at $4, so no major damage.  This let's you take advantage of good news and, if you regret the position, you can dump out of the calls back at $4.60 and you'd be left with just the short $12 puts at $3.95 (net $8.05) or you could re-cover on a move up or you can roll out to 2017 when they come, etc.  See how buying back the short calls opens up a ton of options.  You could also cash out the long spread at $2 and take the 0.65 loss and then you're in the short $12 puts for net $3.30 and still that's a net $8.70 entry, which is 21% below the current price.  Of course, if you don't think GTAT is worth more than $9, why are you still in it at $11.05?  
    • IRBT @ $30.59 – See why I like selling puts on these spreads?  March is the last month at the moment so you don't have a lot of options though I'd be happy to sell the $26 puts for $1.80 and spend $1.80 to roll the $33 calls ($2.55) down to the $28 calls ($4.65) and wait for it to come back.  
    • BTU @ 11.16 – Same cycle as CLF and no 2017s yet.  You waited too long on these and now the $13s are $1.28 so you don't have an easy time adjusting like you do with IRBT, where the calls you own are still worth more than the spread.  Here I'd certainly sell the $13 puts for $3.20 for a net $9.80 entry and you can then splurge 0.40 to buy back the short $18 calls but you really need to wait for either the stock to pop or for 2017s to come out to be able to do something intelligent with the long $13s.  

    VIX/Burr – That's nice but if they keep up these ridiculous spreads, I still won't play them.  

    Splurging/ZZ – That's great, way to enjoy life my friend!   I hope you bought at least one iPhone…  wink

    Speaking of iPhones – Now that Jackie has touched one, she has been coming up with a new scheme every hour or so to get one.  Again it's the camera.  I'm not a camera guy but both my kids think it's the best camera they've ever seen in a phone (and of course they all compare with their friends).  Jackie was grilling me about phone contracts yesterday and want's to figure out if she can break out of the family plan and get her own 6 because my time-frame no longer suits her (she'd be lucky to get one by next Christmas with our family upgrade cycle).  

  117. SPY 5 MINUTEWeakness/Sibe – I agree, the bounce, so far, is pretty narrowly focused and not to be taken too seriously.  A next-day weak bounce means stop shorting but, even if you get a strong bounce in one day – it doesn't mean much unless it can hold it the next day and participation means all 5 indexes end up strong bounced – not just one or two.  Per these closes we have:

    • 16,850 (weak) and 17,000 (strong)
    • S&P 1,940 (weak) and 1,955 (strong)
    • Nasdaq 4,420 (weak) and 4,465 (strong) but we'll also know we're not really impressed until 4,510.  
    • NYSE 10,575 (weak) and 10,700 (strong)
    • RUT 1,100 (weak) and 1,120 (strong)

    That's not all that great and those were the very generous short-term bounces, which measure spike to spike.  That means, even though the panic sell didn't last and bounced back the same day on Thursday, we still counted the rebound from that as a weak bounce, in a longer-term chart, we would throw that out (as well as the high spike) and, in the Dow for instance, we'd measure from 17,250 to 16,900 for 350 and that would be 75-point bounces (Dow tends to hit 25s) to 16,975 and 17,050 for a strong.

    So those short-term bounce lines are only impressive if we make them back in the short-term.

    And, as StJ notes, those 50 dma lines now have to be taken back before we can take anything seriously, so it's up to SPX at 1,975 tomorrow.  


    Fed speak/StJ – WOW!!!  I have never seen such a thing.  This may be our Fed's version of emergency measures to prop things up and spin those meeting minutes.  

    I like this version:

    So, obviously, it's ALL about the Fed next week.  Not even any data to counter them.  

    I imagine German Factory orders and Euro-PMI will not get us off to a good start tomorrow.  

    Hong Kong/ZZ – Really heading down to the wire now:

    Dynamic Scoring/StJ – What total crap!  It really is a good idea to have an escape plan in place from this country if these guys get more power. 

    BHP/Scott – Same a CLF but I like having the floor on CLF $8 away and not $58 like BHP.  It's easier to hedge CLF, which is why I like them better and also CLF has less China/EM exposure.  

    You are very welcome Nramonuja!  

  118. Sibe 14 Thanks for your observation. Each stock has its own behavior and BA can move very much Observe it was 138 and went down to 125. now 126. A drop in stock value could just be some one hearing the back  fire of an engine in flight. !!! Just look at it this way for some 2.75 I lower my long call by 10$ opening my spread to 30 dollars against before 20$ This I do while the stock has gone down. Please note I leave the caller of 135 as is. Ignoring the present value of the caller my long call has dropped by 14.70 in value and is closing in on the net  cost position of the BCS as explained above. As explained I am still some 5$ above water but here I like to take advantage of the drop in stock value. Alternative possible do nothing. Normally I do not like to tinker with my tree planted garden. I would not consider buying puts to protect this position. My intention is better to sell near month callers against my leap position once we see the market makes a bit of sense again. Hope this explains it. 

  119. Why do I have SEVEN stockworld weekly emails in my Inbox?  They date all the way back to Aug 24th.  

    Is Greg going back in time or something?

  120. Phil/CLF Thank you SO much for the detailed explanation/plan. I am using my very small CLF position as an instructional instrument, which is reaping many benefits so far:)


    "…scientists say the country's safest regions are the Midwest, Pacific Northwest and Alaska.   'The best place really is Alaska," Camilo Mora, a geography professor at the University of Hawaii, told the Times. "Alaska is going to be the next Florida by the end of the century.'"

  122. BA/Yodi – It's not about the puts when you are looking at when to roll your calls, it's the net of the bull call spread itself, which was about $12 and now they are $17.50, so no big deal yet.  Once you are looking to break up the spread, the puts become their own thing and, of course, it's a much better thing if you REALLY want to own BA for the net put price.  

    So, looking at it that way, it's all about making sure you don't lose the net $12 you put in.  $17.50 for the 2016 $115s with BA at $126 means they have $11 of intrinsic value and you won't burn your $6.50 premium that quickly over 6 months.  The delta is a steep 0.66 but you are still covered with the short $135s with a delta of 0.40 so not much net movement, even if BA does drop $5.  That means no urgency at all.  

    That means the real question is, what do you think BA will do for the next 3, 6 & 16 months.  I think BA is always a dangerous stock because a plane could crash or whatever and they can drop 20% on you in seconds so I'm not keen on going uncovered and I also don't think they have any major reason to go up more than 10% ($140ish) so I'd be inclined to roll back to a 2017 bull call spread (and sell puts if you haven't when BA goes lower) and leave the naked short calls – when the 2017s come out.

    There's nothing wrong with spending money to roll down and improve, of course, if you think there is an immediate upside catalyst pending.  I still worry about a broad-market sell-off so I would rather wait than commit cash now.  

    Redbox/StJ – That's why we lost interest in those guys a long time ago (was Coinstar) as they went the wrong way.  Doesn't mean NFLX is hard to match, just done the wrong way by those guys.  

    StockWorldWeekly/Burr – That's not good, I'll have it checked out.  

    You're welcome Griffin.  

    Alaska/ZZ – And we can swim to Russia from Sarah's back yard!  

  123. Burrben – SWW – I'm getting that also.

  124. SWW – me too, it has been not uncommon to get one old one, but today was the record,

  125. /CL with a big dip at the open!

  126. Apparently HPQ splitting up their business – they had tried that in the past and that didn't work so well. Better luck this time?

    HP's home-focused and business divisions have frequently seemed at odds with each other, and apparently the company agrees. The Wall Street Journal claims that the tech giant is about to split into two companies, one focused on PCs and the other dedicated solely to corporate hardware and services. If the report is accurate, the separation could be announced as early as Monday. The exact reasoning behind the move hasn't been mentioned, but the PC-centric group would be headed by one of its existing executives, Dion Weisler; current CEO Meg Whitman would run the business group and keep an eye on the other company by serving as its chairman of the board. However true the rumor may be, such a move wouldn't be all that surprising — much of the computing industry has been restructuring and rescaling to cope with a world where the PC's role is rapidly evolving.

    Update: Recode also says it's aware of the split, and has an explanation for it. Supposedly, HP had no luck in early talks to sell its PC division to Dell or Lenovo. It had similar problems offloading server and services groups, and a merger with the data storage gurus at EMC also wasn't meant to be. The breakup would effectively revive plans shelved when CEO Leo Apotheker got the boot in 2011; getting rid of less successful products (in this case, PCs) would improve the chances of an EMC merger or similar deals.

  127. My iPhone 6 plus arrived this weekend, and it is NICE! 

  128. S&P futures seem to be up right now. Oil stable.

    I saw gas under $3 for the first time in while at some stations! Cheap gas in NJ – makes waiting in traffic at the GW bridge cheaper!

  129. Craigs/positions which go agaist you.  I use a sold put strategy and set stops so that no position can lose more than 1% maximum of my portfolio value. Tomorrow I will stop out of 5, 2016 put positions which have hit their stops and take a loss. I'm up 38.7% for the year after these stop out trades at a loss of 3.45% so per trade it equals on average 0.69%. Phil encouraged me to stress test my portfolio which I did again today, Sunday, and if I closed all of the 48 positions and went to cash my YTD profit would be 28%.

  130. Looks like we're up about 0.25% but nothing too exciting so far.  Asia up about the same at their open. Yen coming down a bit (109.58) with Dollar 86.74.  Oil $89.70 is about flat, gold hit $1,180 but bounced there, silver $16.64 was the low, now $16.795.  Tempting but too late at night to play….

    Merger Monday still going strong:

    Told you so on this one:

    Yahoo to Buy Stake in Snapchat

    BHP Plows Ahead on Iron Ore

    Minimum Wage, Maximum Politics

    Tech World Vexed by Slow Progress on Batteries

  131. Phil, as always thanks for your inside on BA. It was a nice thought exercise and one can never stop to learn. As one of my thoughts do nothing and wait for the jan17 to come out, as there is no instant rush. These were just some different moves. 

  132. Good morning!  

    You're welcome Yodi – I agree, always a good exercise.

    Oil blasted up to $90.25 but was harshly rejected back to $90 – still trending down where old supports become new resistance on the way back up. 

    Silver zoomed back to $17 and stopped there, gold failed to retake $1,200 and the Dollar is still at 86.60 and 86.50 is now acting as support on the way up.  

    /NKD ended up flatlining and couldn't get over 16,000 – now 15,925 but the Nikkei itself shows a 1.16% gain on the day based on the morning pop they got on Friday from us – so it was a 3-day's pre-market jam-up for them with NO follow-through during actual trading. Both Hang Seng and Shanghai got power-pumps into the close and Hang Seng gained 1% and Shanghai just 0.25% with India down a bit – that's AFTER seeing our FANTASTIC Friday. 

    I notice the WSJ coverage has turned against the protesters – I wonder what kind of deal Murdoch cut with China?  Notice the complete change in tone from the articles I posted earlier from the same front page of the same WSJ:

    Here's the reality of what the Journal is spinning:

    OccupyCentral Protesters End Government Building Blockade After Hong Kong Police Unleash Tear Gas, Pepper Spray "To Avoid Injuries"

    Asian Stocks Rise on U.S. as Hong Kong Swings; Gold Falls. Asian stocks rose, rebounding from a six-day slide in the regional index, while Hong Kong shares fluctuated as protesters in the city vowed to fight on. The dollar was near a four-year high after American payrolls data and gold slid to a 2014 low as platinum and palladium tumbled. The MSCI Asia Pacific Index added 0.5 percent by 11:36 a.m. in Tokyo, as Japan’s Topix index jumped 1.3 percent after the yen’s biggest drop for 2014 on Oct. 3.

    Citi Warns "The Land Of The Rising Sun Is Setting"

    Game Over Abenomics: "This Week Japan Will Acknowledge It Is In Recession", Goldman Reveals


    Seven Economic Shifts Underlying Hong Kong’s Divide With BeijingUnderlying the test to China’s control of Hong Kong with pro-democracy protests over the past 10 days are economic tensions that have fueled social unease and concern over the city’s place within the nation. Without the release valve of free elections to vent their frustration, demonstrators have taken their anger towards what they perceive as an unrepresentative government to the streets.

    • As it seeks growth beyond smartphones, Samsung Electronics (OTC:SSNLF,OTC:SSNGY) says it will invest 15.6T won ($14.7B) to build a new chip plant in South Korea.
    • Construction of the facility will begin next year, with the aim to be completed in 2017.
    • Samsung has been on a falling cycle of capital expenditure, which dropped to 10% of sales last fiscal year from 14% in 2010. It plans to devote the bulk of its capex, or W14.4T, to semiconductors this year.

    World Bank Cuts Developing East Asia 2015 GDP Forecast. The World Bank lowered its forecasts for growth in developing East Asia this year and next as China’s expansion moderates and policy makers brace for tighter global monetary conditions. The region is forecast to grow 6.9 percent in 2014 and 2015, down from 7.1 percent projected in April, the Washington-based lender said in its East Asia and Pacific Economic Update released today. China will expand 7.4 percent this year and 7.2 percent next year, compared with 7.6 percent and 7.5 percent previously forecast, the report showed.

    Neves to Face Rousseff in Brazil in Surprise ComebackAecio Neves pulled off a surprise second-place finish to force a runoff with Brazilian President Dilma Rousseff, pitting a candidate favored by investors against an incumbent who says the end of her party’s 12-year rule threatens policies that pulled 35 million out of poverty. The incumbent of the Workers’ Party, or PT, has 41 percent of the votes, followed by Neves of the Brazilian Social Democracy Party, known as PSDB, with 34 percent and Marina Silva with 21 percent, Brazil’s Superior Electoral Court reported based on 97 percent of ballots counted.

    Europe had a nice pop into the open but that's fading now, with things up about 0.25% except France and Spain, which are up 1%, but well off their opening pops.  

    This is how bad the EU economy is – DIS is struggling!  Walt Disney gives financial backing to struggling Euro Disney
    • Euro Disney (OTCPK:EUDSF) has agreed to a €1B funding deal backed by its largest shareholder, Walt Disney (NYSE:DIS).
    • The plan includes a rights issue of €420M open to all shareholders and backed by Walt Disney. The move would improve the cash position of Euro Disney by about €250M.
    • In addition, about €600M of the group's debt owed to Walt Disney will be converted into equity, while credit lines extended to Euro Disney by its parent will be consolidated.

    Here We Go Again: Greece Will Be In Default Within 15 Months, S&P Warns

    Hans-Werner Sinn: eurozone doomed to 'decade of crises'Hans-Werner Sinn, the president of the respected Ifo think-tank, says France could put the future of the single currency at risk and warns that the Ukrainian crisis threatens to trigger a "triple-dip depression" in parts of the bloc.

    Bundesbank's Weidmann Warns of ECB Taking ABS Credit Risk. ECB risks being offered lower-quality asset-backed securities, Bundesbank President Jens Weidmann quoted by Focus magazine as saying. The ECB is at risk of overpaying, he said.

    ECB Measures Will Have Limited Impact, Ackermann Says. Recent liquidity-enhancing steps by ECB, including TLTRO program, ABS purchases will have limited impact as stand-alone measures, former Deutsche Bank CEO Josef Ackerman cited as saying in interview. ECB's policy tools are exhausted, he said. It rests up euro area national govts to implement structural reforms that will kick-start private investment, Ackermann said. US-style quantitative easing not likely in euro area due to political difficulties. The Federal Reserve may start raising rates in 1Q, instead of 2Q currently projected, and faster than currently anticipated, he said.

    We're still up 0.25% but the RUT has run down to flat at 1,102 on /TF.  /YM just failed 17,000, /ES testing 1,965 after being rejected at 1,970 and /NQ back to test 4,025 from the top – certainly good to short the laggard if /TF fails 1,100 or we can short /TF with tight stops over that line.  

    Obama's Economic Recovery In Pictures

    Market Breadth Has Collapsed Around The World

    Time to buy insurance on an ‘unsustainable’ market

    "Off The Grid" Indicators Suggest US Economy Anything But On Solid Ground

    Risky Asset Outflows Surge Again As "Up-In-Quality" Rotation Accelerates

    Low-Volume Melt-Up Fails To Stall Small Caps Worst Streak In Over 2 Years

    Bridgewater Warns Low Volatility Markets "Sow The Seeds Of Their Own Demise"

    Saudi Arabia Is Losing Its Grip On Oil

    Robots replace humans in mines as commodity slump forces cost cutsMajor mining firms could have converted around 40pc of their machinery to operate autonomously by the end of the decade.

    Thousands Sign Petition To Ban Flights From Ebola Countries; Two Removed From Newark Airplane By Hazmat Crew

    During An Ebola Pandemic All Of Your Rights Would Essentially Be Meaningless

  133. RT US 5y5y breakeven inflation expectations (Fed-adjusted) now at QE-launching, not QE-stopping levels:

    This is why I can't get gung-ho bearish – so far, the Fed has stepped in every time we got to this point.

    Done with USD/JPY shorts as they bounce at $109.30 – this is the second time at that well – doesn't pay to be greedy!  

  134. TIGER index shows a loss of global econ momentum with the US now the only major engine of global growth.

    "In a sense, central banks have begun to resemble medieval philosophical faculties," writes Harold James

    Mario Draghi hasn’t moved any closer to full-blown quantitative easing:

    Decline in German factory orders points to lower growth or even econ stagnation in . Chart by

    .: Eurozone retail sales fall fastest in 17 months

    "Though Chinese government always was authoritarian, it was not always as corrupt as it is now" Great read

    "Even in China one Lehman Brothers-size bankruptcy could lead to a major panic." (Rogoff)

    may introduce fines for use of . Digital currency plunges briefly below 300$.

    Ruble Weakens Beyond 40 Per Dollar For First Time Ever.

    Embedded image permalink

    New research confirms that "inequality actually reduces economic growth."

    Here's the huge difference in public sector jobs between Obama and the Presidents that came before him.

    Free spending by startups stir memories of dot-com era excesses

    Analysis of ammo used by ISIS carries an implicit warning for policy makers and advocates of intervention.

    Nine killed as Pakistani and Indian troops fire on each other in disputed region of Kashmir

    "What really matters is whether the jobs outside of the robot-computer economy remain valuable and in high demand"

    Embedded image permalink

    Macau casino revenue slumps most in 5 years amid China crackdown, Hong Kong protests

    Macau casino spending slumps as VIPs stay away

    Embedded image permalink

    The departure of Bill Gross from PIMCO can be portrayed as a Shakespearean drama

  135. From Bloomberg, Oct 6, 2014, 6:01:32 AM

    Oct. 6 (Bloomberg) — Lewis Wan, chief investment officer at Pride Investments Group, talks about the impact of pro-democracy protests in Hong Kong on the city’s stocks and the outlook for People’s Bank of China policy.
    He speaks with John Dawson on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Shares rose around the world for a
    second day after American payrolls data beat estimates and
    European government bonds climbed. The dollar weakened from a
    four-year high and platinum tumbled to the lowest since 2009.

    To read the entire article, go to

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  136. From Bloomberg, Oct 6, 2014, 5:52:34 AM

    Oct. 6 (Bloomberg) – Bloomberg’s Caroline Hyde reports on Lloyds Banking Group planning to cut thousands of jobs and close branches as Britain’s largest retail lender adopts a new digital strategy. She speaks to Mark Barton, Anna Edwards and Manus Cranny on “Countdown.” (Source: Bloomberg)

    Lloyds Banking Group Plc, Britain’s largest mortgage provider, is poised to eliminate thousands of jobs in what may be the biggest round of cuts since at least 2011, a person familiar with the matter said.

    To read the entire article, go to

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  137. From Bloomberg, Oct 5, 2014, 11:51:38 PM

    An Anadarko Petroleum Corp. oil rig site stands in Fort Lupton, Colorado, on Aug. 12, 2014. U.S. crude output reached 8.867 million barrels a day in the week ended Sept. 19, the most since March 1986. Photographer: Jamie Schwaberow/Bloomberg

    Hedge funds increased bets on rising
    oil prices just before crude futures tumbled to a 17-month low
    on signs that global supply is outstripping demand.

    To read the entire article, go to

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  138. From Bloomberg, Oct 6, 2014, 6:26:17 AM

    An employee sorts through cocoa beans during the early stages of processing at the Rossiya chocolate factory, operated by Nestle SA, in Samara, Russia, on Sept. 16, 2014. Photographer: Andrey Rudakov/Bloomberg

    Surging cocoa prices mean making a
    KitKat bar is getting a lot more expensive.

    To read the entire article, go to

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  139. From Bloomberg, Oct 6, 2014, 6:23:07 AM

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

    Companies in the Standard & Poor’s 500 Index (SPX) really love their shareholders. Maybe too much.

    To read the entire article, go to

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  140. From Bloomberg, Oct 6, 2014, 5:25:23 AM

    Two tower blocks of residential apartments stand in the Silvertown district of London, U.K. Property is facing a “turning point” after Bank of England financial-stability officials took steps to prevent property overheating and mortgage lenders introduced stringent affordability tests, the CEBR said. Photographer: Matthew Lloyd/Bloomberg

    London house prices are set to fall
    for the first time since 2009 next year as a lack of
    affordability and proposals for a so-called mansion tax deter
    buyers, the Centre for Economics and Business Research said.

    To read the entire article, go to

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  141. From Bloomberg, Oct 5, 2014, 7:00:01 PM

    Oct. 6 (Bloomberg) — Phyllis Papadavid, senior global-currency strategist at BNP Paribas SA, says she expects the euro to fall to $1.18 by the end of 2015 as Federal Reserve policy supports the dollar.
    She spoke with Bloomberg on Oct. 3. (Source: Bloomberg)

    One German bank rode the euro’s
    weakness to become the world’s most-accurate foreign-exchange
    forecaster, and it sees no reason to give up on that view even
    with the currency at its weakest level in two years.

    To read the entire article, go to

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  142. From Bloomberg, Oct 4, 2014, 1:18:19 PM

    Oct. 3 (Bloomberg) — Pentagon spokesman Rear Admiral John Kirby speaks about the deployment of additional U.S. soldiers to West Africa to help fight the Ebola outbreak and the latest on U.S.-led airstrikes in Iraq and Syria.
    Kirby speaks at a news conference in Washington. (Source: Bloomberg)

    Kurdish fighters battled to repel Islamic State militants attempting to seize their Syrian stronghold of Kobani on the border with Turkey after nearly three weeks of fighting.

    To read the entire article, go to

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  143. Watch this video at

    Hong Kong Violence Will Get Worse: Gordon Chang

    Oct. 3 (Bloomberg) — Gordon Chang, author of “The Coming Collapse of China,” and Bloomberg’s Mia Saini discuss the Hong Kong protests with Trish Regan on “Street Smart.” (Source: Bloomberg)

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  144. Watch this video at

    Is France `Finished?’

    Oct. 6 (Bloomberg) – Bloomberg’s Caroline Connan reports on French Prime Minister Manuel Valls arriving in London to explain his economic strategy after a top British executive suggested that France is “Finished.” She speaks to Mark Barton on “Countdown.” (Source: Bloomberg)

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

  145. From Bloomberg, Oct 5, 2014, 7:01:00 PM

    Vince Cable, U.K. business secretary. Photographer: Simon Dawson/Bloomberg

    Business Secretary Vince Cable said
    Britain’s economic growth is being hampered by stalled exports,
    partly as a result of the high value of sterling.

    To read the entire article, go to

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  146. From Bloomberg, Oct 5, 2014, 8:33:32 PM

    If Republicans fail to win the Senate majority in November for the fifth election in row, Democrat Harry Reid retains control of the chamber. Surely such an outcome would give the Nevada Democrat reason enough to celebrate in his Washington D.C. Ritz-Carlton condo. Here’s another: It may open some crucial Republican-held Senate seats heading into 2016, and give him a better shot at broadening his majority.

    To read the entire article, go to

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  147. From Bloomberg, Oct 5, 2014, 2:40:21 PM

    Here’s something no election analyst would have said two months ago: the toughest U.S. Senate seat for Republicans to hold in the Nov. 4 election is in Kansas.

    To read the entire article, go to

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  148. Phil – Thanks for the answers on the spreads that are currently underwater. I am happy to say that I was one step ahead and had already begun buying back the short calls for a nice profit on those legs while I now wait for the long calls to recover, which I know they will eventually. I may wait a bit longer on buying puts in CLF or BTU, but I get the strategy and will be happy to own shares eventually at what I am sure will be bargain prices down the road.  I am really understanding how to work this system and it makes a lot of sense for a patient long investor like myself. The biggest problem I have is that some of the portfolios I am managing are IRA's which makes it harder to sell puts due to the margin hits. 

  149. From Bloomberg, Oct 5, 2014, 8:07:42 PM

    So you think the 2014 midterms don’t matter? Do you wish we could skip November and get straight to the 2016 primaries? Were you among the people who thought this year’s Iowa Steak Fry this year was about Hillary Clinton’s non-launch campaign launch and not the Democratic congressional candidates on the ballot? If you answered yes to these questions, you’re wrong (except for the last one – no argument here.) 

    To read the entire article, go to

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  150. From Bloomberg, Oct 5, 2014, 3:13:04 PM

    A group of young British children watching television in October 1988. (Photo by Express/Getty Images)

    From Anchorage to Atlanta and Des Moines to Denver, voters are being pummeled by political advertising in states with competitive races for Congress and governorships.  They break up “Wheel of Fortune” and punctuate the nightly local news. Viewers in Iowa and North Carolina put up with three commercials every five minutes, according to one report

    To read the entire article, go to

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  151. From Bloomberg, Oct 5, 2014, 8:49:58 PM

    The new Samsung Electronics Co. Galaxy Note Edge smartphone is displayed for the media in New York, on Sept. 3, 2014. Photographer: Victor J. Blue/Bloomberg

    Samsung Electronics Co. (005930) the world’s
    largest smartphone maker, is heading for its roughest quarter in
    years amid rising competition from Apple Inc. (AAPL) and China’s Xiaomi

    To read the entire article, go to

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  152. From Bloomberg, Oct 5, 2014, 6:43:12 PM

    The International Monetary Fund and
    World Bank hold their annual meetings in Washington, and the IMF
    releases its outlook for the global economy.

    To read the entire article, go to

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  153. From Bloomberg, Oct 5, 2014, 6:03:24 PM

    Economic growth requires energy.

    For all their calculating nature, economists are surprisingly optimistic about humanity’s ability to have as much prosperity as it wants. Express concern about the negative impact of excessive growth on our planet’s ecosystems, and many will simply chuckle and say you don’t understand what growth means.

    To read the entire article, go to

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  154. Despite all the bad news, so much for shorting – 1,100 held and we're turning up.  

    Europe bottomed right around 12.  We're at 16,983, 1,967, 4,030 and 1,103.50 with the Dollar sliding below 86.50. 

  155. Margin/Craigs – Have you considered selling the put legs in a non-IRA account?  If you win, they are long-term gains and you can put the profits in your IRA and, if you lose, they are write-offs.  

  156. phil, do you think it is time to go long on oil.  via USO calls or bull spreads?

  157. Phil-If I understand what you are saying, you are suggesting I move the assets out of the IRA into a non IRA account, but is the next step to just leave it and recognize the income or to put it back into the IRA  before 60 days? I do not understand what you mean for me to do? To move assets from the IRA's to non IRA accounts would generate some tax consequences that would be costly.