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Flip Floppin’ Thurday – Draghi and Williams Top Us Off

SPY DAILY

Flip, flop & fly
I don't care if I die
Flip, flop & fly
I don't care if I die
Don't ever leave me, don't ever say goodbye – Joe Turner

It's deja vu all over again!  

Please see Tuesday's "1,975 or BUST!" post and you will be all caught up on our battle plan for Thursday.  Remember – I can only tell you what is going to happen and how to make money trading it – the rest it up to you…  

Those DXD calls we disussed in Tuesday's post were cashed out ahead of the Fed with 100% gains in just two days.  Today, we're right back to the extact $24.52 DXD was at Tuesday morning, and the calls are back to our 0.60 entry after topping out at $1.27 yesterday (up 111%).   

We made the call to get out right at the beginning of our 1pm Live Trading Webinar (sorry, Members Only) but, FOR FREE – in yesterday's morning post – we also called a very wise exit to our TZA spread (up 190%) and flipped long on the /TF futures at 1,070 and those finished the day well past our 1,080 goal – all the way back to 1,100 for a $3,000 per contract gain.  That's in a single day folks!  

This morning, in our Live Member Chat Room (and you can join us here before the prices go up next week), we took short positions on the indexes with me saying to our Members in a 6:41 Alert that was sent out via Email as well and, for good measure, it was tweeted out (follow us here) and posted on our Facebook page (follow here):

Clearly we can short /TF at 1,100 with a stop above or /NQ 4,040 or /ES 1,965 or /YM 16,900 simply stopping out if any two of those go higher.  On the other side, Oil can be played long at $87.25 (again) and gasoline at $2.30 since it's Thursday.  

As you can see, at 8:25, our shorts are up 59 points on the Dow ($295 per contract), 9 points on the S&P ($450 per contract), 20 points on the Nasdaq ($400 per contract) and 7 points on the Russell ($700 per contract) – and we're happy to take that money and run ahead of the bell, as it's more than enough to pay for our Egg McMuffins.

SPX WEEKLYWe do expect the markets to go a bit higher and we can even go long on /ES (S&P Futures) IFF they break over 1,960 again and that should be confirmed by /YM (Dow Futures) going over 16,900 and /NQ over 4,025 and /TF over 1,095 – if all those go well, then maybe we can take a crack at 1,975 again but – another failure and DOWN WE GO!  

We predicted a 1% bounce in the indexes yesterday morning and we got almost 2%, which would be a strong bounce per our fabulous 5% Rule™ – though only almost.  We NEED to see that 1,975 line retaken today or back to bear we go!  

The Dollar is coming back this morning in anticipation of Draghi waving the Free Money Wand in his 11am speech at the Brookings Institute.  Of course it's silly to think that Drahgi will make a major policy announcement at 11am, into the EU market close at 11:30 while speaking to an American audience but hope springs eternal among the bulls and we will be very happy to take their bullish bets.  

As we noted on Monday and discussed in yesterday's Webinar, the tide turns decidedly bearish tomorrow morning with Philly Fed Governor and Uber Hawk, Plosser, giving a speech at 9am, followed by the slightly less hawkish Esther George (KC) at 1pm with Hawk Kings Fisher (Dallas, 1:30) and Lacker (Richmond, 3pm) closing out the week on a sour note.  

As I said, it's the same bearish trade ideas we had on Tuesday from essentially the same positions so we'll see if we can make another 100% on a DXD move in our Short-Term portfolio.  As to our Long-Term Portfolio – this is why we use the Short-Term Portfolio to protect it – those positions came back as quickly as they fell and, because we had our hedges – there was no need to panic out of anything.  

That's how you make trading fun AND profitable – even in these insane markets! 

154633 600 Economic stimulus of Europe cartoons

 


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  1. Good Morning

    Phil / PSW Subscription: Need to clarify that as a current month-to-month subscriber, my monthly payment will only increase by 15%? Is there a maximum term limit attached to that?

    Thanks  


  2. Oil lines:

    R3 – 89.84
    R2 – 89.11
    R1 – 88.29
    PP – 87.56
    S1 – 86.74
    S2 – 86.01
    S3 – 85.19

    Every line below $90! And BTW, the December contract is already at 86.15, a bit closer to our $85 target!


  3. And the January contract is at 85.66!


  4. stjean/oil lines — how come your oil lines are always slightly different from the ones one TOS?


  5. Funny that suddenly we don't hear about the deficit anymore – I guess it's not a problem:

    http://www.businessinsider.com/obama-budget-deficit-low-2014-10#ixzz3FZpbdJsY

    The Congressional Budget Office on Wednesday said the US budget deficit plunged to $486 billion in FY2014, which was $195 billion less than the shortfall recorded in FY2013. It's the smallest deficit recorded since 2008.

    FY2014 was the fifth consecutive year the deficit declined as a percentage of GDP. It is now an estimated 2.8% of GDP, a percentage that puts it below the average of the past 40 years.


  6. Oil lines / Toepull –  Probably slightly different calculations. I use the equations from here http://www.earnforex.com/pivot-points-calculator

    But entered them in my charting software for automatic plotting. And I use the 24 hour prices.


  7. ok i c – i figured it must be slight calculation difference.  it's always close, but never the same!

    thank u for clarifying.


  8. Good morning!  

    154624 600 Ebola Pandumbic cartoons

    154592 600 March of Doom cartoons

    154637 600 Hong Kong Protests cartoons


  9. 154611 600 LOCAL NC    Guns at the State Fair cartoons


  10. Phil- Thanks for the dose of reality on my JCP pick. I do think we will see this turn around eventually as it is a good brand, but I also don't like the debt figures which I didn't dig into far enough. I hadn't spent enough time looking over the balance sheet as I should have. I was reading headlines. Bad idea always to just read the headlines.


  11. EIA: US Crude Imports From Canada Hit Record Last Week.

    The Wall Street Journal (10/9, Dawson, Subscription Publication) reports that the Energy Information Administration said Wednesday that Canadian crude flowing into the US reached a record last week of 3.25 million bpd, rising 35% from last year due to increased production from oil-sands producers in Alberta. The Journal highlights that the new amount moves Canada to meeting US import levels from all other OPEC countries, with only a 34 million-barrel difference.

            In its coverage, Reuters (10/9) highlights that the import levels indicate that environmentalists’ opposition to export projects like the Keystone XL pipeline has not curbed oil sands development.


  12. Phil – The SearchBox up to now doesn't return ANY results.  Can you please get someone to fix it?  It's really limiting the site functionality.


  13. Good Morning!


  14. Icahn is a bag…..gotta love the "40 year old virgin" picture of him on CNBC…..  :)


  15. I missed the DXD cash out call as I wasn't on the webinar, and didn't have PC access… but that's my fault for not paying attention.  

    Anyway, I have 20 Oct17 24Calls at 0.70, now 0.60.  Would you roll out to another month today?  


  16. /RB popped over 2.30, now 2.3068


  17. Subscription increase/Decad – As long as you are a continuing subscriber, you will always keep a major discount to the current prices.  Generally, we've doubled prices every 3 years and the people who are long-term members avoid that and bump up only about 15% instead of 100%.  So there's no "term limit" – we've maintained that system for years and expect to continue so, for you, it works out to a 5% annual bump – not too bad and it should stay flat for a few more years – as long as gold is under $1,500, anyway! cheeky

    Realistically, our expenses go up and we do want to add more writers, editors, etc.  We're going to be scrapping StockWorld weekly and developing some new stuff next year – things that add more day to day benefits for our Members and, of course, we don't want to add too many people to the chat room, as it makes it hard for me to get to everybody and stay on top of things – the balance we have now is excellent and raising prices is a way to discourage too many Basic and Premium Members as we near capacity.  

    Oil/StJ – Wow, that's a significant downshift in the band.  $85 is clearly in sight now.  I guess I should declare goaaaaaaaaaaaalllllllllll if we're at $85.66 on the Jan contract but I think we still need a panic sell-off to shake out the remaining weak hands.  

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Nov'14 87.73 87.95 86.59 86.86 09:02
    Oct 09


    -

    -0.45 53846 87.31 183151 Call Put
    Dec'14 86.95 87.17 85.86 86.14 09:02
    Oct 09


    -

    -0.45 21218 86.59 263929 Call Put
    Jan'15 86.62 86.72 85.47 85.76 09:02
    Oct 09


    -

    -0.43 5425 86.19 129843 Call Put
    Feb'15 86.32 86.32 85.20 85.47 09:02
    Oct 09


    -

    -0.43 2750 85.90 49975 Call Put
    Mar'15 86.05 86.05 84.99 85.24 09:02
    Oct 09


    -

    -0.42 2263 85.66 109965 Call Put

    Gasoline (/RB) popping nicely now, up over a penny ($420 per contract) so we take that and run if $2.31 fails.  

    Deficit/StJ – Well it is improving so, of course, the GOP don't want to discuss it and the Dems never thought it was a big deal in the first place (because they know how to fix it).  It's still in violation of the EU max of 2%, so more work to be done but it's very hard to fix stupid (see Fox cartoon above).

    JCP/Craigs – Yes, a lot of times these story stocks sound good – until you look under the hood.  

    Canada/QC – Is the WSJ saying Canada is on OPEC country???  blush

    Icahn/Terra – LOL, he's so funny.  Wouldn't it be great to be a significant owner of a stock and be able to get on TV and make announcements like that?  I wonder if he buys calls ahead of his announcements?  I wonder if we have ANY regulations anymore….


  18. GILD marching it's way to 110.  Reports in late Oct.  


  19. regulations/Phil

    We obviously don't when CEO's can tweet things like get ready for a big announcement on 10/9, but we're not going to give you a hint of what it is, but buy our stock.

    Reminds me of an Ali G episode when Ali G is speaking to Dan Rather about selling newspapers and he says "What if we just put on the front page WAR BEGINS" and Dan Rather says well that would be lying and Ali G responds but on the second page we write WAR BEGINS with a W.


  20. Phil this is from my SME briefing, I do not subscribe to the wall street journal sorry


  21. Search box/Burr – One of the projects Greg is working on.  I am simply baffled as to why this is so difficult to accomplish but it has something to do with the fact that our site has a pay wall.  

    Icahn/1020 – Yeah, he's pretty buff:

    War/Rustle – Good point.  And today's the day we get to short TSLA's BS!  

    DXD/Burr – Sorry about that, I should have also posted it, we were just in the middle of a lot of crap but, as a rule of thumb, when you have a double (or 50% or 20%) on a directional bet – you should IMMEDIATELY set mental stops to lock in your gains.  If you're not going to be around, then you should set hard stops – especially on volatile things like DXD.  Last trade was .75 this morning, so not too bad and I'm looking to shift to November $24s ($1.20 or less) for the STP AFTER we get our Draghi rally this morning. 

    Meanwhile, indexes failing already!  

    /RB not making it over $2.31 so game off on them but game back on if they hold $2.30 and head up again.  

    SME/QC – No biggie, I just thought it was a funny sentence.  Still, if that's an exact quote from the SME article, I'd question the author's knowledge and the editorial oversight, because anyone who knows oil well couldn't possibly read that line without wanting to clarify the wording.  


  22. AliG/Phil

    Glad you found that clip, forgot it was Sam Donaldson not Dan Rather.  Can watch that over and over.


  23. Phil

    Here is a link to wall street journal article

    http://online.wsj.com/articles/u-s-imports-record-amount-of-canadian-crude-oil-in-latest-week-1412810863

    The SME (society of manufacturing engineers) briefing is news from different sources no writing

    Like you post new articles


  24. Whats the upside target for /rb


  25. Deficit / Phil – EU target is actually 3% so we are OK then….


  26. LTP back to 15% ($575,000) so the whole loss since last week is just GTAT, not because the market moved.  STP still up 63.7% ($163,700), so $738,700 is not too much damage in a rough week and, if not for GTAT, we'd be blasting along to new highs.  Income Portfolio similarly recovering but down 8.6% because it's only 10% invested so GTAT caused a bigger dent.  Of course, ordinarily, our strategy when one of our beloved stocks drops is to add to the position but this, unfortunately, is the exception as BK means worthless – usually, so it's just a loss we'll have to overcome.  

    $25KP is up 14.5%, Butterflies are 18.9% all normal otherwise and nothing to change so far (we made a lot of moves last week).  

    I want to short TSLA and NFLX today, though we already have TSLA in one of those portfolios.  I'm hoping TSLA gets a nice pop we can short into.

    BTU dropping 5% today after gaining it yesterday.  CLF down 5% too, so I imagine it's a sector thing.  

    Also, point I forgot to make in the Webinar yesterday.  We know, in the Income Portfolio, we have over $100,000 coming to us in 2016 if our AAPL trade works out (AAPL $120 is goal) and you have to understand whether your trades are on or off track – not just react to the balance in your portfolio – even on the individual trades.

    For example, in the STP, we have 40 Jan SQQQ $33 calls we bought for $5 on 9/30 and we sold 40 $40 calls for $2.61 the same day for net $2.39 on the $7 spread.   SQQQ is currently at $36.10 so the trade is WORTH $3.10 if it expires today and that's a 0.71 profit ($2,840) BUT, the portfolio shows the $33s at $4.40 (a 0.60 loss = $2,400) and the $40 calls at $2.75 (a 0.14 loss = $560) for a $2,960 loss, not a $2,840 gain.  

    I'm not saying it SHOULD show us a gain, premiums are what they are but this trade, despite being down (on paper) $2,960 out of a $9,560 initial investment (down 30%) is ON TRACK.  Understanding how and why you have these balances should help you not only avoid panicking out of perfectly good positions but recognizing the opportunity to add to a good position like this one that is merely underpriced at net $1.65.  I do recognize these things and that's why I picked it when Crissy asked for a good hedge in the Webinar yesterday (and it's better today!).  

    It doesn't get much better than a $1.65 cost on a $7 hedge that's currently $3.10 in the money at a point at which it's not likely the Nas has much upside (and, if not for AAPL up $4 off yesterday's low, the Nas would be down about 1% from where it is).  

    In the bigger picture, people like Icahn have BILLIONS of dollars invested in all sorts of companies and they know that AAPL, by itself, can spur a market rally that let's them unload a ton of their crap on unsuspecting retailers – especially the suckers who have 401Ks and IRAs that use ETFs and are forced to buy all their crap at close of market prices.  

    SPY 5 MINUTE

    That's why you have that massive volume into the close with very little up movement – it's people like Icahn taking a dump on the Retailers after rallying the markets on NOTHING – it was the minute of a meeting where the Fed decided to stay the course and whittle down their QE program.  It's not the Fed's job to fix Europe and Asia – only when these things actually hit home can the Fed react to it.  Meanwhile, of course they are "concerned."  

    They are just following the script we laid out Monday, so – if you weren't bearish enough on Wednesday – TRY THE SQQQs!  


  27. Phil/ Usability-- To me since a lot of discussion about changing and understanding positions centers around the STP LTP and I think Butterfly portfolio, it seems it would be way easier for users to have a persistent row of links on your main page (each of course protected by the same paywall code locking  chat commentary for each day is) 

    CURRENT PORTFOLIOS LINKS:
    Long-Term         Short Term          Butterfly  Income   etc…

    Then, under each column  keep a list of  links to the recommended changes newest first:

    LONGTERM P.

    Change List
    Sept 29
    Sept 27
    Sept 17
    ……

     

     

     

     

     


  28. Journal/QC – Well it doesn't say other now, even if it did before.  

    /RB/Burr – No upside target, if I make $200 bucks I'm THRILLED!  It's the floor I worry about, the idea is to try to find a good floor, go long off it and play it until it breaks.  Then find something else to trade with a good floor or ceiling.  

    EU/StJ – 3%, really?  I thought 2% was the limit.  3% is too much anyway.  2% is really too much when you are already 100% in debt.  This is the problem with celebrating a "balanced" budget when you still have debts – your budget isn't balanced until you pay off your debts.  Unfortunately, the GOP and Bush spent so much time and effort convincing people that Clinton's "surplus" should be given back to the people (ie. the top 1% people), that it really F'd up everyone's attitudes about debt and deficits for the last decade and a half. 

    Portfolios/Sn0  - You are new so I won't rant and rave about it but that is a TERRIBLE idea because it attracts exactly the wrong kind of Members – the ones who want to be given fish and not taught to fish.  The virtual portfolios are EXAMPLES and not only is it a bad idea to try to replicate them exactly but it's DANGEROUS.  Even more dangerous if you go to efforts to broadcast your positions, moves and stops in such a way that a market manipulator can sign in, take a quick look and then push a position to force a whole group of traders out.  

    This is why hedge funds don't disclose their positions – the more people you have following specific trades, the more profitable you make it for someone to monitor your trading and game the system to take advantage of the sheeple.  I try VERY hard to teach you not to be a sheep – don't go sticking your neck out and handing predators a knife just because you want things to be "easy".  


  29. Speaking of lines – 1,080 holding up on /TF so that's a nice bull trade into Draghi (11am) and we're lined up with 16,850, 1,955 and 4,022.5 – so those can confirm a bullish bet for as long as the last but keep raising those stops!  


  30. F’ing CREE


  31. Deficits / Phil – Well 2% is OK if you are growing your GDP 3%!

    Unfortunately, economists in Germany just released new numbers today and they now see growth of 1.3% and 1.2% for 2014 and 2015 so even 3% would not work there! Austerity is really biting them in you know where. And they have no one to blame but themselves. I guess we won't see many GOP guys talking the way that Germany balanced their budget because if we had growth of 1.3% here they would be blaming Obama for that! Besides, Germany collects 45% of GDP in taxes so not a good example anyway and they spend 1.4% in defense, so another no-no! I guess they will run out of example of successful austerity models.


  32. Phil/ Usability- I see the logic of not being too obvious .

    I'm going to downgrade to Basic member so I want to fit in a couple questions before that.
    Along the lines of teaching to fish,
    I Have YHOO Bull Call Spread Jan '15 38/45 that is doing well,  today YHOO is down but the BCS still gained.

    But it's running out of time, I want to roll out and probably increase the position some, because bull call spreads are relatively limited risk.

    You've mentioned some general rules at times but could you summarize them? I think you aim for

    1) about a 150% to 200% gain if the short leg is reached,

    2) with the long leg ?% in -the -money, or perhaps a delta for the short leg at .80+? 

    If you could summarize a rule of thumb as a start point for establishing bull call spreads that would be great. Thanks. 


  33. Would you add to $line here? I have a 32 buy write that’s sucking


  34. Phil / buying back short calls

    Do you have a general rule with regards to when to do this? 50% gain? 20%? Some of my Jan16 short calls are clearly well up but contribute some hedge value to long stock in this down market (ever decreasing hedge value!) Yesterday's pop highlighted to me that perhaps I should have used this point in the market to gradually buy back some of the long term upside?


  35. Thanks Phil

    5% Rule/QC


  36. wrote GPRO 97 calls for next week for 1.35, only did 1/6th position.  Hoping it pops higher so I can get more premium.  This is quickly becoming my fav stock of 2014.


  37. I was checking out GPROs yesterday, new models out, amazing on-spot advertising — they may all turn into back-of-the-closet hula hoops some day, but going into Xmas 2014 it's hard to see anyone dumping the stock on an industrial scale.


  38. Oil/Phil – you've been talking about a $85 target for some time. What is rationale/support for $85… and not, say, a visit to $60?


  39. LOL, that was a fantastic example of what I'm talking about.  After I posted that comment, people started going long on /TF and then, a minute later, they flushed it below 1,080, down to 1,079 – that was just an attempt to flush out the people coming in and now it's already back to 1,081.30.  I bought one at 1,080, one at 1,079.50 but I didn't fill at 1,079 and then, with my average basis at 1,079.50, I sold one at 1,080.50 so now my net basis on 1x is 1,079 and it's a $200 gain at 1,082.  That's it though, now, on the way back down, we wait to see if 1,080 holds the next time (it didn't this time) and, if not, we'll see where it settles (probably 1,078.50) before getting back in (and providing the other indexes give us a good sign).  

    Remember – our premise is Draghi moves the markets up (and there should be a rally into his speech) we're going to be very quick to take gains off the table along the way because we also think the speech is going to be a "sell on the news" event.  

    Good point, StJ.  

    YHOO/Sn0 – If you still have long-term faith in YHOO but no short-term faith in $45 by Jan, I'd suggest rolling the Jan $38 calls ($4.60) to the 2016 $37/45 bull call spread ($3.65) and you drop $1 in your pocket and you have $7 of upside protection against your short caller and $3.35 of potential upside, making 100% of YHOO's gains from here ($40.87) to $45 over the next 12 months.  I don't think I've ever mentioned any kind of delta-based rule for a spread.  

    Keep in mind, I'm a Fundamentalist – I have a target and a time-frame to my trades and they are either on or off track.  If they are on track – I keep them.  If they are off track, I adjust them, including cashing out if they are performing significantly better than they SHOULD.  So, in looking at your YHOO trade, I considered the likelihood that they'd hit $45 by Jan (not very) and my upside target for them ($50) and my timeframe for that (2 AliBab earnings reports from now) and then leave a margin for error and, since the more conservative play can make a nice 100%ish – I prefer that over something riskier like the $40/50 bull call spread (and I looked at roughly a dozen possible combinations).  So that's my "rule of thumb".  

    Speaking of YHOO – they seem to be down.  

    LINE/Burr – Wow, what ugliness!  

    I've never been a fan:

    Submitted on 2014/07/01 at 10:04 am

    LINE/Burr – Very important thing to remember about them, they've changed the nature of their business so no longer an LNG play.  Good move by them while they had cash to deploy.  Also an indication that this LNG thing is not going as well as people hoped. 

    Submitted on 2014/02/27 at 10:55 am

    LINE/Burr – Bit of a falling knife at the moment.  I'd wait and see how they settle.  200 dma is way down at $28 and, by the time they get there, momentum could take them through.  Depends on what Nat Gas does too, of course.  

    Submitted on 2013/11/01 at 11:01 am

    LINE/Pstas – That one's a stay away for me.

    Submitted on 2013/09/11 at 3:54 pm

    LINE/Albo – What a flakey thing that is. 

    So, as last time, I think this MAY be a tradeable bottom ($26) but I wouldn't want to try to catch the knife until it shows a bit of stability.  

    Short calls/Mck – Well, like the above discussion, when there's a mismatch between expectations and the current price.  That one does have a rule of thumb, which goes for any uncovered directional position – If you are up 20% in the first week (assuming 3 months, so first month if a year trade, first hour if a day trade), then you should have a tight stop at 15% to take it off the table.  If you are up 50% in the first two months (2/3 time to trade deadline), then you should certainly have a stop at 40%.  If you are up 85% with two weeks to expiration, the stop should be 70% or more and, if you are up 100% at any point in your trade and you don't stop out at 85%, you are a stupid, greedy bastard who should be playing roulette – not the stock market! cool  How's that for a rule of thumb?  

    This is another thing I hate about keeping portfolios.  The idea that people should say I didn't specify taking a 100% profit off the table on DXD so they didn't do it is ridiculous.  Not to pick on Burr, we all make mistakes but if you are trading without any rules and relying on someone else to tell you to take a profit – then you really should just hand your cash to a fund manager, because it's not very likely he can do worse for you.  

    You should not make a short-term directional trade if you are unable to watch it!  I leave things on in the STP sometimes but it's BALANCED with the LTP AND we have plenty of trades in each direction so, if I have to leave for a day, I know that the $735,000 we have in the STP/LTP or Income Portfolio/STP is only going to go up or down a few thousand – even if the market goes down and up 2% as it did Tuesday and yesterday.  

    The whole point of the BE THE HOUSE – Not the Gambler strategy is to be fairly neutral while SELLING a great deal of premium that WILL expire over time.  If we KNOW we sold 20% of our portfolio in premium and we KNOW that premium will expire in 12 months and we KNOW that we are protected from a 10% market drop or a 10% market pop – then the likelihood of us making 10% or more is EXTREMELY HIGH.  We shouldn't lose money unless the market goes down 30% or up 30% so, 9 years out of 10, it's a winning strategy.  

    If you can take $600,000 (our starting balance) and make 10% for 10 years, you'll have $1.5M in year 10.  Suppose one of those years, you lose 20% instead on a 30%+ market drop.  Figure that's going to be $200,000 (assuming it comes at the midpoint) off $1M and you are knocked back to $800,000 with 5 years left.  $800,000 + 10% for 5 years is $1.28M – not so terrible from the $600,000 start and we're not even considering the ample opportunities to do better (here it is, year one and we're up 20% already).  

    This is a very simple strategy and it's very easy to follow and we don't need any MoMo stocks or hot IPOs and we're not even factoring in dividends – we just buy stocks that won't be bankrupt (hopefully) and hold them for 10 years while selling puts and calls against the positions and building them over time.  

    It's boring, but it works!  

    Here's Draghi so game on for the longs again – we just had another nice flush in the RUT for another good entry on /TF but we're just watching now to see when this rally runs out of steam and then it's Williams into the close but I don't want to wait that long to buy the DXDs – soon, I think…


  40. Looks like it's AAPL vs. the market.


  41. You're welcome, QC.  

    GPRO/Rustle – What an insane stock that's turning out to be.  

    Oh great:

    Apple Supplier GT Advanced Asks Court to Seal Filings

    GT Advanced Wants to Keep Issues With Apple Secret

    AAPL over $102 – Draghi must have a plan to get everyone in Europe an iPhone 6.  

    Upside wheeeeeee!  now, /TF 1,084.50 so 1,083.50 is the stop and then can re-enter lower or over 1,085 and, if no fail, then keep a 1-point trailing stop.

    $85 oil/Scott – That was my target when oil was $105 and, at that time, I thought there was $30 of fluff that wouldn't last.  All the demand declines, supply gluts and geopolitics are about where I expected them to be so I don't have a reason to change my target BUT, since other analysts are 6 months behind us – as they downgrade their outlook it will probably panic retailers lower.  That doesn't change my target (my often-used Levis example) but we can't control the PRICE of something, especially an over-supplied commodity.  That's why we took a light bet on USO and, if oil goes down $5 ($80) instead of up $5, we'll make a bigger bet and, if oil goes down another $5 ($75), we'll make a bigger bet and if oil goes below $70, I'll be banging my table to bet the farm on oil – unless something fundamentally changes.   

    Remember when I was pounding the table on Nat gas and everyone who made or distributed nat gas (except the LNG BS) back in 2012?  That's because $2.50-$3 was the VALUE of nat gas but it was trading at $2.  When it was $2.50, we began taking pokes and when it got to $2 we made a lot of bets – including CHK at $15 or less, when everyone said they were going BK because nat gas was dead because of this and that BS, etc.  We took a double on CHK and a double on the commodity (we had a live gain of $50,000 in one of our Webinars when /NG spiked in fact). 

    That's how you trade Fundamentally – you don't change your targets because the PRICE changes, you EVALUATE your positions, you allow for the idiocy of the average trader and you take a stand when YOU are comfortably initiating a LONG-TERM position.  With oil, the global average cost of production is roughly $75/barrel.  Then it has to be shipped for about $2 a barrel.  OPEC has the cheapest production, at about $30/barrel but it doesn't help them much since their government incomes are 80% oil and anything under $80 (Brent) is a disaster for their economy.  Once you get below $90 for any sustained period of time, high-cost wells begin to shut down AND consumer demand ($3/gallon) begins to go up.  Below $80, more stuff shuts down and more demand, below $70 even more so – so it can't last.  Oil isn't an iPhone, people/companies/countries can't decide not to buy it.  They can cut back, but they can't stop – that creates a floor.  


  42. Can anyone tell me why SLW is down 3% when silver is up 3%?


  43. GPRO/Phil

    Think the biggest steal I got was an average price of 1.80 on the DEC 130 calls.  I'm pretty confident this will not move up almost 50% from here in the next 2 months.


  44. Not much of a Draghi rally – so sad…

    NFLX earnings are 10/15 (pre 17th expiration) and we can sell 5 of the Nov $475 calls for $17.50 ($8,750) and buy 5 of the March $470/500 bull call spreads for $13 ($6,500) to cover in the STP.  That's a net $2,250 credit and we have $30 of upside coverage on our short calls.  Hopefully, NFLX stays below $475 and the short calls expire worthless and we get whatever is left on the long spread as a bonus.  As long as they stay below $490, we should have a nice winner and, if not – it will be time for the Rawhide strategy:  

    SLW/Ivan – Because retail traders are idiots.  Keep in mind SLW trades on sentiment, it's not fixed to silver.  That's what I mean about having to ignore short-term PRICES of stocks or options and concentrate on whether or not your premise is valid and the trade is on track to your goals.  

    LOL Rustle, that's an insane price.  


  45. Someone just bonked the Euro on the head, can't see why.  Other than the EU being generally screwed, but nothing new there.


  46. Dollar 85.60 so Draghi did accomplish something – Euro down 1%, Dollar up 1% and that's got the markets back down 1% – what a joke!  


  47. Another chance to go long on /RB at $2.30 as long as the Dollar stays under 86. 


  48. Very bad if /NQ can't hold 4,000 with AAPL up.  /TF 1,075, /YM 16,750 and /ES 1,940 are all lines we can short of they break. 


  49. GPRO/Phil

    When you see unbelievable froth in a stock moving to ridiculous levels, that's exactly when you have to capture that huge premium being paid in the options, in GPRO's case the calls.  As you always said, you can always roll them up and at that point, I still believe there is only so high that stock could've went. Maybe slightly past 100 but didn't think it would stay there long.


  50. DUST - down 25% yesterday, up 11% today, we have got to figure out a way to day trade this puppy.  I own the stock at $20 to cover my gold miners and I cover/uncover with calls to try to make some coin but the swings are getting nutso.


  51. So I'm up 70% on those DXD Oct 24's now.  I'm going to take the $$ and run.


  52. Phil,

     Where do you see ABX pricewise going forward? I have -5 Jan 2015 $15 puts (net $13.52), -6 Jan 2015 $20 puts (net $14.15) and -9 Jan 2016 $20 puts (net $13.97). The nets are all around the current price, so I'm not too worried, but ABX keeps getting hammered by the rising dollar, etc, so I'm unsure what to do.

    As always, thanks for the advice, particularly the comprehensiveness of your replies.


  53. Quote of the day:

    John Gapper, “There is, however, a syndrome among star managers – call it Gross’s Law. They start out being most valuable for their investing talent and end up being most valuable for their marketing charisma.”  (FT)


  54. GPRO/Rustle – Just keep in mind I said that about AMZN, when their p/e was "only" 200x.  Maybe that's why I get gun-shy now. 

    DUST/MrM – It's a crazy ETF, you're better off trading gold futures and saving yourself thousands in fees and friction cost.  

    DXD/Burr – Nice recovery and ALWAYS sell into the initial excitement  - I'd say a 200-point drop in your favor qualifies for at least 1/2 out at this point.  

    Reminds me, we didn't officially pull the trigger on the DXD Nov $24s and they already ran up  to $1.50 so not going to chase.  I think this pullback 1.25% on /ES should hold at 1,937 (about 1,945 on S&P) and we should get at least a weak 0.25% from here back (/ES 1,942.50, 1,950 on S&P) in the next half hour.  If not - look out below!  

    ABX/Kevin – It will slide with gold, which will go down with a strong Dollar.  As I pointed out to ZZ in early morning chat (end of yesterday's post) gold is only down priced in Dollars – for the rest of the World, gold is up 10% in the past 12 months.  12 months ago, ABX was at $15+, there's no reason for it to be lower than that.  The short Jan $20 puts are $6.25 and they can be rolled to the 2017 $17 puts ($4.70) for about $1.50, so you give yourself net $1.50 discount doing that.  Not as much with the 2016 puts but I'd roll 9 to 10 or 11 to keep the money near even.  


  55. Phil,

     I have 10X the Oct TZA $14/17 bull call spread. Would you advise keeping it until expiration? Rolling?


  56. Afternoon everyone! Here's the weekly webinar replay on our YouTube Channel:

    http://youtu.be/_sYWw9IBayo

    Should anyone want to download the original from webex, you can go here: http://bit.ly/100814Replay

     (And you can skip to the 18 minute mark. For some reason webex records the 15 minutes of dead time that the event is open before it actually begins.)


  57. So much for levels holding – Dollar 85.71 now and just tested 85.80 putting too much pressure for now.  Watch out for yesterday's lows and watch AAPL, Icahn is desperately trying to keep them up on CNBC right now at $102.19 – if they start falling, the Nas could collapse very fast.  

    TZA/Kevin – Well it's got 8 days to go and you almost blew it yesterday, so what do you think?  I see $4/1.35 so .35 less than your max possible gain so you are risking $3.65 to make 0.35 – are you  90% sure you can't lose?  If not – why are you making that bet?  


  58. LINE  -  So I hear you on it, but I have a personal requirement to have a "income stream" from div paying stocks.  This is for a few commercial loans I need to get.  Income from selling puts won't count as it's counted as a trade.  Anyway, my cost basis is:

    1000 LINE at 31.60

    -6 Jan16 32P at 5.8, now mid 9.30.  Only 1.30 left in time premium, but very wide spread

    -6 Jan16 32C at 1.34, now mid 0.62.  0.62 left of time premium.

    SO, if I like LINE longterm, what do you think about leave the short calls open to bleed premium

    rolling down from 6x32P to 12x25P, selling those for 4.35

    rolling down the 6x32C to 12x27C, selling those for 2.02


  59. /DX under 86, but /RB crashed down to 2.2750.  I'm guessing to go long we wait until a cross over 2.30


  60. Uh-oh, Icahn now saying "Of course I have hedges on my AAPL position – I'm worried about the whole economy."  Bye-bye $102!  


  61. Icahn is such a tool – I bet you is trading options between commercial breaks at CNBC!


  62. And speaking of day trades, playing vol is pretty fun in this environment, at the open I bot UVXY 26 calls for 2.60 and just sold them for 5.


  63. It's like having dinner with a mobster, you think it's going OK but then he says something that scares the crap out of you!  

    Now we're closing in on yesterday's lows – hopefully they hold.  Flip Floppin' Thursday indeed!  

    LINE/Burr – I get that but then why not do a buy/write with deeper calls to protect yourself?  If you HAVE to be a long-term owner, then you are in 600 at net $24.46/28.43 and you have, I assume 400 uncovered shares (why, Why, WHY???) at $31.60 with the stock at $25.85.  So the simply solution is to sell 10 2017 $25 calls for $3 ($3,000) and buy back the 6 2016 $32 calls at .65 ($390) and drop $2,610 in your pocket and knock your long average down from $27.32 to $24.71/28.36 on the 600 and just $24.71 with a call away at $25 on the others and hopefully they pay their dividend.  Oh, you could roll the 6 short 2016 $32 puts ($9.30) to the 2017 $28 puts ($8.60) – that seems worthwhile – if you MUST stay in this stock, that is. 

    /RB/Burr – I don't know, yesterday they bottomed at $2.296, they plowed right through that – we need a proper catalyst to go higher now, not just "because".  

    This drop is so much sharper and more sudden than Tuesday – it's a strong indicator things can get much worse BUT we should still get some sort of bounce BECAUSE it was such a sharp drop on no particular news.  The dip buyers haven't been burned enough times to wise up yet.  

    It's risky but I like /YM long at 16,600 (tight stops) and /ES 1,930.  /TF is too crazy (1,067.50) but TNA Oct $58/60.50 bull call spreads are $1.15 on the $2.50 spread that's 0.28 in the money – a fun way to make a bull call.  Let's get 5 in the $25KP and 30 in the STP.


  64. Phil – CHK plan.  I have the 10 CHK Jan16 25/32 bull call, with no offsetting puts.  CHK is now 19.41.

    The short 32c's have only 0.30 of premium left, so it probably makes sense to close them and roll the whole spread down to something like the  15/20 bull call for 2.7?  The 20's have the most premium to sell.

    The original spread cost 2.77, and this $5 spread would be $4.41 ITM, a little less than a 1:1 RR.


  65. Off the cuff question:  Who might benefit when all the soda and vending machines have to be configured for apple pay? Also, how about gas stations? Is there a dominant RFC reader or installer that is poised to capitalize?

    Also Phil, what's up with AA after those earnings? I know raw materials are down but doesn't the low cost of energy help Alcoa just as much?


  66. Phil/ Any thoughts on CLF? I've already rolled long calls down and out to 2017 8 calls. Thinking of rolling down to 5's, but should I wait on doubling? Looks like could go down more?


  67. Those were very weak bounces on that first attempt…


  68. Phil,

    Where (if anywhere ) would you take a poke long /CL?

    Thanks


  69. UVXY/MrM – Damn, you are a braver man than I am.  Good call!  VIX back to 18.20, where it peaked out yesterday – we'll see how it goes today.  

    CHK/Burr – CHK is another one I've gone sour on because they've spun off assets, so who can tell what they are worth now?  That's why we never pulled the trigger off the Buy List on that one but it sounds like you did.  The old CHKs include 7 per 100 of SSE ($20) and $3.55 in cash, so it's hard to say what's what but figure add $4 to the current price to see where you are (assuming you traded pre-split).  Also, keep in mind it's possible your broker is misquoting you if you do have the old contracts – that happens sometimes.  

    The long $25s are still $1.50 and you can roll them out to the 2017 $18/22 bull spreads at $1.75 and it gives you a chance to get even but, on the whole, I'd rather buy ECA but neither until the market and nat gas are done going down.  

    Machines/JMD – Good question and not in my expertise.  Hopefully one of our Members knows something about this stuff.  

    CLF/Griffin – You have just calls?  I'd just cross my fingers and hope for the best at this stage.  You bought them cheap and CLF will either recover or it won't but I wouldn't put more money in what is looking more and more like a long shot every day.  They are actually down with the coal sector again (even though just 4% of their value is based on coal mines they own to supply their own factories) because of this:

    The Chinese Finance Ministry will impose a tariff of up to 6% on coal imports, including 3% on anthracite and coking coal, on Oct. 15, according to Bloomberg. The country previously suspended similar tariffs in 2007 and reintroduced a tax on brown coal in August 2013.

    The tariffs are reportedly aimed at helping Chinese miners, 70% of which are unprofitable, according to Bloomberg.

    This is the problem with a lot of things these days.  CLF is mistakenly labeled as a coal miner in most identification systems.  Then shlock analysts like TheStreet print robot reports, like the one above, that just jam CLF's name into a stock story and a robot auto-creates a report telling investors "Why Cliffs Natural Resources (CLF) Stock Is Down Today."   It even says:

    Shares of other coal miners including Peabody Energy (BTU) , Arch Coal (ACI) , and Alpha Natural Resources (ANR) are also falling on news of the new tariffs.

    Now, we KNOW that is a stupid reason for CLF to drop 10% today but that doesn't mean their stock price won't now fall below loan covenants and trigger some sort of credit event before enough people wise up and realize CLF isn't a coal company.  

    Of course, Fundamentally, if CHINA!!! is protecting the coal industry, the iron and steel industries may not be far behind and THEN CLF has some serious problems – though nowhere near as serious as a company that doesn't derive 2/3 of their revenues from North America.  

    Oil/Sun – We did yesterday with the USO spread and we tried today on the Futures with mixed results.  At this point ($85), I'm much more inclined to go long that short on any oil play as it's now at the bottom of my expected range ($85-105).  That doesn't mean it won't go lower, just as we went up to $112 – it just means when it's too low (or too high) I get more and more interested in making bets in the other direction.  

    Finally we got a bounce – but they are still weak so I'd take that money and run on the slightest loss of upside momentum.  16,660, 1,933, 3,980 and 1,072.50.  

    Oil $86.05, Dollar 85.65, gold $1,225, silver $17.42, copper $3.03 ($3 held!), Nat gas $3.85 and gasoline $2.29.  


  70. Phil/ thanks re CLF. I also have short calls (not a problem!!) and short puts, both of which I actually know what to do with. Imagine that! I sorta know how to fish.


  71. Phil / braver – not braver, just crazier!


  72. PGH,  Phil, I think we added last time it was this low.


  73. Phil,  I have been away a couple of days. Did I miss much? Any good November SPY calls here?Thanks,  Strether


  74. spx triple bottom? 

    c'mon we've gotta crash through to those 200 dma now


  75. CRIS/Pharm – buying any more of Curis?


  76. This is the most peaceful crash day I've ever had.  Nice being prepared for a day like this.


  77. Bad reversal on the indexes – again.  

    20 of the S&P 500 are green.  

    Fishing/Griffin – Good start!  

    Crazier/MrM – I guess as long as you are realistic about it.  

    PGH/Stock – But last time we weren't so toppy overall and the Fed wasn't about to raise rates (and we didn't have 4 hawkish Fed speakers tomorrow!).  Oh, and oil wan't $85.  

    I love how calm everyone is on this site, even though the market looks like this:

    We must be doing something right…

    ICSC sees 4% gain in holiday retail sales

    • ICSC forecasts holiday retail sales will improve 4% this year to mark the best pace of growth in three years.
    • Consumer confidence is higher than a year ago, notes the research firm.
    • The forecast is consistent with the 4.1% prediction for holiday sales from the National Retail Federation.
    • What to watch: Despite the rosy forecasts from economists, some retail analyst are wary that the consumer trend of deal/comparison shopping won't be dialed back this year even with improved headline economic numbers.
    • The 10-year U.S. Treasury yield has carved out new lows for the year, down another four basis points today to 2.28%, its lowest level since the summer of 2013.
    • Yesterday's FOMC minutes suggested members may be more cautious than previously thought on hiking rates, but yields were headed south well before that news.
    • The major rally in European government bond prices continues alongside, with the yield on the German 10-year Bund down another five basis points to a record-low 0.82%. Spanish 10-year yields are off six bps to 2.04%, and Italian yields are down 7 bps to 2.27%. In the U.K., 10-year Gilt yields are lower by six bps to 2.21%.
    • Japan continues as the beacon, with 10-year JGB yields down another two basis points to 0.49%.
    • TLT +0.2%, TBT -0.4%
    • The average rate for a 30-year fixed-rate mortgage hit its lowest in a month, falling to 4.12% from last week's 4.19%, according to Freddie Mac's latest weekly survey.
    • "Fixed mortgage rates were down on a week filled with bleak forward projections from the Federal Reserve and concern over growth in Europe," Freddie Mac's chief economist says.
    • The average rate for the 15-year fixed-rate mortgage fell to 3.30% in the latest week from 3.36% in the prior week.
    • A year ago, the 30-year and 15-year fixed rates averaged 4.23% and 3.31%, respectively.

    That's why they are my favorites!  Mortgage REITs see more gains as averages slide

    • It's been a good week for mortgage REITs (REM +0.7%) which rose on Tuesday as the broad market tumbled and brought yields down with it, rose more on Wednesday, this time alongside a major broad market rally on dovish FOMC minutes, and are on the move higher again today as the averages again head south.
    • Down to 2.28% earlier in the session (a 16-month low), the 10-year Treasury yield is now flat on the day at 2.32%.
    • This week's strong move comes following a tough September in which the mREITs gave back a nice chunk of their YTD gains.
    • Annaly (NLY +1.2%) is up nearly 5% over the last four sessions. American Capital Agency (AGNC +1.5%) is ahead more than 6%.
    • Others: Armour (ARR +1%), Chimera (CIM +1%), CYS Investments (CYS +1.2%), New York Mortgage (NYMT +1.3%), Anworth (ANH +0.8%), Dynex (DX +1%), Javelin (JMI+1.5%), Five Oaks (OAKS +0.9%).
    • Other ETFs: MORTMORL
    • A check of 900 corporate and public defined benefit plans between 1998 and 2011 found listed equity REITs – with an average annual net return of 11.31% – edged out private equity (11.1%) as offering the highest net returns of any asset class, according to a soon-to-be-released report from CEM Benchmarking.
    • Coming in third were real assets other than real estate – infrastructure, commodities, natural resources – at 9.85%.
    • Why start in 1998? That's when CEM first began separating REITs from stocks in its surveys.
    • Costs are of key import. The average fee for REITs over the period was 51.6 basis points vs. 238.3 bps for P-E, and 102.6 bps for "other" real assets. U.S. broad fixed income had the lowest costs – just 17.3 bps – but produced an average net return of just 6.56%.
    • ETFs: IYRVNQWPSVNQIDRNRWXURESRSRWRSCHHICFRWOIFGL,DRVKBWYDRWREKFRIGRIFTYFFRRWXLPSRWREIREET

    Oil prices keep sliding, hitting global energy firms' shares

    • Global oil producers open broadly lower as oil prices continue to slide on concerns about high supplies and weak global economic growth: RDS.A -2.7%, STO -2.7%, TOT -2.5%,HES -2%, APC -1.7%, BP -1.6%, CVX -1.5%, COP -1%, XOM -0.8%.
    • Brent prices slump to $91/bbl, approaching two-year intraday lows, and Nymex crude tumbles to $86.67/bbl to an 18-month intraday low.
    • The EIA said yesterday that U.S. crude supplies rose by a more than expected 5% last week, while gasoline and distillate inventories unexpectedly grew as well.
    • Barclays is cutting its oil price forecasts: It now sees U.S. crude averaging $85/bbl in Q4 and $89 in 2015, down from previous estimates of $98 in Q4 and $100 next year, and Brent crude averaging $93/bbl in Q4 and $96 in 2015, down from a respective $106 and $107 previously.

    Teck Resources, coal names sink as China reinstates coal import tariffs

    • Teck Resources (TCK -7.2%) tumbles to five-year lows after China, the world’s top coal importer, said it will levy tariffs of 3%-6% on imports of coal as of Oct. 15.
    • The sudden move reintroduces taxes China had scrapped, and is seen by analysts as an attempt by the government to help its ailing domestic coal production sector.
    • TCK's sales of commodities directly into China accounted for more than 26% of overall revenue in 2013, or nearly C$2.5B; it is unclear what portion of TCK’s revenues from China were generated by coal sales, but coal represented 44% of overall revenue in 2013.
    • Among other top coal names: ACI -11.7%, CLF -11.5%, BTU -9.2%, WLT -7.2%, ANR-6.4%, CLD -5.5%, CNX -4.8%.
    • ETF: KOL

    Cameco starts producing uranium concentrate from Cigar Lake mine

    • Cameco (NYSE:CCJ) says it has started producing uranium concentrate at the McClean Lake mill from ore mined at its Cigar Lake mine.
    • CCJ says mining resumed in early September; mining at the much-delayed Cigar Lake project began in March, but was suspended in July to allow the orebody to freeze more thoroughly.
    • McClean Lake is expected to produce up to 1M lbs. of uranium concentrate from Cigar Lake ore this year and increase to its full production rate of 18M lbs. by 2018.
    • Tesla Motors (NASDAQ:TSLA) is due to make an announcement today at 10:00 p.m. EDT from the Hawthorne Airport in California.
    • Most analysts expect the EV automaker will announce details on a new all-wheel drive version of the Model S and unveil some self-driving capabilities.
    • Shares of Tesla are up 1.4% to $263.00 in premarket action.
    154510 600 Ebola Symptoms cartoons
    • Thinly-traded nano cap Dynatronics (DYNT +21.4%) jumps on a 2x surge in volume but the turnover is only 13,400 shares. A few Ebola-stoked traders bid up the price in apparent anticipation of increased demand for its non-contact digital thermometers by air passenger screeners.

    GT Advanced requests bankruptcy details remain sealed

    • Squashing hopes that today's hearing would unearth crucial details about GT Advanced's (GTAT +2.3%) Chap. 11 filing, a lawyer representing the company stated a confidentiality agreement prevents it from sharing the cause of its bankruptcy, or its restructuring plan.
    • The agreement, said to put GT on the hook for $50M in damages per violation, almost certainly involves Apple, which is famous for demanding airtight secrecy from suppliers.
    • A lawyer from the DOJ's bankruptcy watchdog criticized GT's request. "The record is insufficient for the court to find what the court needs to find."
    • Prior GT Advanced coverage

    Disney's CEO highlights the company's bright spots

    • Disney (DIS -2.6%) CEO Robert Iger sat down with reporters with Bloomberg for some quick Q&A (video).
    • On Shanghai: Iger maintains the company will avoid the mistakes it made with Euro Disney. Disney Shanghai won't start out off with the mound of debt that its Paris park took on just to turn the lights on.
    • On sports: The exec remains confident the enormous NBA rights contract signed recently by ESPN will provide enough value to customers to justify costs. ESPN's pro football ratings are said to have shown no ill effect from the player scandals in the league this year.
    • On Star Wars: Iger says the franchise will be a bright spot for Disney. Filming in the U.K. is progressing on schedule.

    PT, Oi tumble following Espirito Santo news, CEO resignation

    • Portugal Telecom (PT -6.4%) and merger partner Oi (OIBR -9.9%) are both nosediving following news Espirito Santo Financial Group (a subsidiary of Espirito Santo International) is filing for bankruptcy. The decline also comes a day after Oi CEO/ex-PT CEO Zeinal Bava announced his resignation.
    • The WSJ reports "major Oi shareholders began to have doubts about [Bava's] leadership" following news of PT's $1.22B loan to another subsidiary of Espirito Santo International (previously a major PT shareholder). The loan has already led PT and Oi to restructuretheir merger agreement, so as to lower PT's stake in the merged company to 26% from 38%.
    • Nonetheless, many on the Street aren't happy Bava is gone. Credit Suisse: "We see the exit of Zeinal Bava and the lack of continuity at the CEO level of Oi over the years as a negative for the company’s operating performance. We had seen Mr. Bava as a key person behind the company’s plan to improve operations and deploy capital more efficiently."
    • Bava's departure comes as French cable giant Altice reportedly preps a bid for PT that (if successful) would unravel the Oi merger, and as Oi and its rivals explore ways for the Brazilian telecom industry to consolidate.
    • PT has made new 52-week lows; Oi is close to its 52-week low of $0.51.

    Alcatel, Ciena, others slump as telecom capex worries persist

    • Alcatel-Lucent (ALU -9%) is headlining a group of telecom equipment vendors selling off this morning, as worries about weak telecom capex remain following plenty of bad earnings news. Alcatel's declines come in spite of an upgrade to Buy from Craig-Hallum.
    • Morgan Stanley has cut its Q3 and Q4 Juniper (JNPR -1%) estimates due to expectations of weak AT&T capex. Jefferies reported in June AT&T had slashed its wireline capex, and Ciena (CIEN -3.7%) stated in September AT&T was responsible for its soft Oct. quarter guidance.
    • Ma Bell has slashed wireline capex ahead of the full launch of its huge Domain 2.0 SDN/NFV initiative. However, like Ciena, Morgan Stanley asserts Domain 2.0 remains a long-term positive for spending. MKM has argued it's a positive for Ciena and several other firms, but a negative for Cisco given a loss of vendor lock-in.
    • Yesterday, BofA/Merrill launched coverage on Alcatel with a Neutral rating, and expressed concerns about the company's ability to hit 2015 revenue estimates amid a weak demand environment. Two weeks ago, Dell'Oro forecast global telecom capex will fall 2% in 2015due to slowing mobile revenue growth.
    • Bulls argue a lot of bad news is priced in, and the strong Web/mobile traffic growth will provide a lift to capex.
    • Other decliners: ERIC -2.6%. ZHNE -3.2%. PKT -3%.

    Wow, what a TERRIBLE idea:  WSJ: Amazon opening first physical store

    • Amazon (AMZN -1.8%) plans to open a bricks-and-mortar store across the street from the Empire State Building in Midtown Manhattan, the WSJ reports. Moreover, sources add stores could launch in other cities, if the NYC effort proves successful.
    • The Manhattan store, due to open in time for the holiday season, would "function as a mini-warehouse, with limited inventory for same-day delivery within New York, product returns and exchanges, and pickups of online orders." It might also be used as a showroom for Amazon's Kindle hardware.
    • Though having experimented with Kindle pop-up shops and rolled out delivery lockers, Amazon has thus far shied away from investing in a more conventional retail presence, along with the requisite overhead. For the moment, it looks as if the NYC effort is more about boosting Amazon's brand and improving its online shopping experience than about directly squaring off against the likes of Wal-Mart and Best Buy.
    • Amazon already offers same-day delivery in NYC. Re/code has reported the AmazonFresh grocery delivery service will be launching in NYC soon.

    Oppenheimer upgrades Apple; iPhone demand reportedly causes iPad delay

    • While Carl Icahn pounds the table for Apple (AAPL +1%) and Apple buybacks once more, Oppenheimer's Andrew Uerkwitz has upgraded shares to Outperform, and set a $115 target.
    • Uerkwitz: "We believe iPhone 6 and 6 Plus combined will be the best selling iPhone generation to-date as iOS 8 and larger displays draw much broader consumer appeal than before." He expects new iPhone 6/iOS 8 features such as Apple Pay, HealthKit, HomeKit, and deeper iOS/Mac OS integration boosting "user stickiness."
    • The upgrade follows a bullish coverage launch from BofA/Merrill, and a Deutschedowngrade.
    • Meanwhile, the WSJ reports strong iPhone 6 demand has caused Apple suppliers to push back mass-production of a 12.9" iPad to early 2015 from December. "The output of the 5.5-inch iPhone 6 Plus remains unsatisfactory," says one source. Digitimes recently reported Apple was shifting production from the standard iPhone 6 to the higher-ASP, supply-constrained 6 Plus.
    • Icahn's $203/share Apple target assumes a valuation of 19x FY15E EPS exc. net cash. He respectively forecasts 44%, 30%, and 30% earnings growth and 25%, 21%, and 21% revenue growth for the next 3 years on the back of "significant" high-end smartphone share gains.
    • Notably, Icahn thinks Apple can sell 72.5M watches in FY17 at a steep ASP of $450. He also says (albeit while cautioning it might never happen) he has "good enough reason to expect" Apple will release a 4K TV set in FY16, and predicts 25M units will be sold in FY17 at a $1,500 ASP.
    • Carl Icahn has posted an open letter to Apple (NASDAQ:AAPL) CEO Tim Cook on his website.
    • The investor calls on the company to accelerate its pace of share buybacks and makes the case that shares of AAPL are worth $203 based on projected FY16 and FY17 earnings.

  78. Do I see GMCR up to 143.60 !!!!!


  79. What do you like for more hedges?  My Nov SQQQ 35/40   and Jan DXD 23/27 aren't doing much at all.  Both are neg.  The DXD 24C's paid off though.


  80. phil/calm — i think it's your zen

    last hour here should be fun!


  81. http://seekingalpha.com/news/2023505-wsj-amazon-opening-first-physical-store

     

    If they are selling from inventory on site, wouldn't that make purchases taxable, creating a whole new can of worms ?


  82. Phil – Congrats on the excellent call for oil to hit $85 !   What do you think now ?  Too early to buy some beaten down energy plays ?


  83. Miss much/Strether – Nah, same old, same old…  laugh  I'd stay off the SPY call but I do like the TNA spread above as an upside bet.  

    /TF held 1,065 – yesterday's low.  /ES holding 1,920, 3,965 on /NQ and 16,600 on /YM – we're still set up for a bull run on Williams (3:30) into the close.  I think, of the group, I feel safest playing /ES over that line bullish but not if ANY of them are failing.  

    Oil $85.63, gold $1,225. Dollar 85.65.

    GMCR – WTF?? 

    Keurig Green Mountain Sued for $600M by Club Coffee

    I guess that's a good thing?

    Hedges/Burr – I like the SQQQ Jan $33/40 best, was great bang for buck.  Jan spreads won't do much unless the market goes down AND stays down.  If it doesn't stay down, you didn't need the hedge, right? 

    Zen/Toe – I do my best.  

    AMZN/Albo – So will they now get valued like a retails store?  That would drop them to about $50.  

    Energy plays/Albo – We have with RIG and XCO – way too early it seems.  I'd rather add to those than open up new battlefronts at the moment.  

    Looting Public Pensions: A New Study | Rolling Stone

    Pension-Fund Looters Get Tax Breaks, Too | Rolling Stone


  84. DIS/Phil – has had a heck of a run last couple years. have shares, cost basis $28, thinking of writing Jan16 $85 calls to cover/protect. Or do you see $100 coming soon?


  85. Back from a work day off, wow, market trashed!!  Long Apple, short the Euro has kept me green and calm — is there something I should be buying?


  86. Ah, the TNA spread.  Cool.


  87. DIS/Scott – I'd sell now.  Ebola MIGHT cut tourism drastically, especially if they are going to stop people from flying just because they have a fever – how can people make travel arrangements if they never know for sure they'll be allowed on the plane?  If DIS crashed ($75?), I'd love to buy them but down from $91 was a 225% gain for you and now, $86, it's 207% so are you going to wait for 200%, 150%, 100% – when will you take it off the table if you can't be satisfied with 225%?  If you LOVE DIS and don't think it can ever go down and jeopardize your 200% gain – then why not sell 2x the 2017 $65 puts for $4.50?  That's net $61.50 so you can cash out now, put another $9 per current share in your pocket and, worst case to the downside is you own twice as much at $61.50.  If you are not confident enough to do that – then why the Hell are you still in this stock? 

    Buying/ZZ – Yeah, I'd buy more cash!   Also, see  TNA spread above – that's fun I think.  

    Oh good, you saw it.  


  88. Phil/Dis – any change to the butterfly position?  The short calls aren't offering much protection at this point, and the short puts are going to hurt real bad if Dis loses another 10-20%. 


  89. Every time Larry Kudlow is on CNBC, I throw up a little in my mouth.


  90. OMG – Larry Kudlow saying it's a great time to add to your 401Ks and IRAs – EXACTLY what I warned you these bastards were trying to get people to do this morning!

    Kudlow promises Draghi will do whatever it takes to keep Europe solvent – despite what Draghi just said.  

    DIS/Palotay – Our target for next Friday was $87.50 and DIS is at $85.91 on a terrible day. We sold the puts and calls for $6.35 so we are profitable (into Jan) between $81.15 and $93.85 (more so when the Oct caller expires and we sell more calls).  What exactly do you want me to do? 

    LOL – Kudlow says we can fix things by slashing the corporate tax rate.  What a tool!  And the loud girl with an equally annoying voice agrees with him.  

    Me too, Rustle!  The sound of that guy's voice is like nails on a chalkboard to me.  


  91. Loud girl/Phil

    She was definitely a member of the Young Republicans in college.  When you say our tax rate is unpatriotic, you pretty much gave everyone a clue that you are an idiot and belong on Fox.


  92. Krudlow – I've learned to keep a burping towel nearby….. ;)


  93. Kudlow….KUDLOW!!!


  94. So dont put either iPhone 6+ or Note 4 in you back pocket and sit on it for hour unless your ass-to-phone ratio is not damaging! ?#‎apple? ?#‎dumbasses?

    Bendgate continues, but this time, it's not the iPhone 6 Plus at the center of the controversy.
    MASHABLE.COM
     

    M) "Only two things are infinite, the universe and human stupidity, and I'm not sure about the former." – Albert Einstein

    In a rant that would make Sarah Palin blush with pride, Fox host Gretchen Carlson strung together all the conservative manufactured conspiracies and scandals…
    ADDICTINGINFO.ORG
     


  95. FSLR/phil – big down day.. gas too cheap for solar now?


  96. Consumer Reports did a bend test on the new iPhone 6 and 6+ and found that it did not bend any easier than any other phone.  Many people think the how easy it bends thing was a hoax.


  97. BTW, been using mine for a little over a week now (iPhone 6+), best phone I ever had, hands down and definitely go for the bigger screen.  It's not awkward to hold or use at all.


  98. Oh, Gretchen, you reinforce the stereotype of Blondes being dumb !  Make that stupid.


  99. I have been carrying a Samsung Galaxy Note II [the large one] S4 in my back pocket for two years.  Nary a bend, flex or malfunction.  Journalists need to find productive work, like pimping for Putin.


  100. I guess it's goal on oil as we are printing a low $85 handle now! Putin must be panicking in Moscow now making call to his generals to prepare an invasion of Ukraine! 

    They produce 10M barrels per day and he need $110/barrel (Brent) to balance his budget. Brent is at about $91 now so a shortfall of about $190M per day. That's $1.33B per week. Pretty soon it adds up to real money! Not counting how much money they have to spend to defend the ruble which is in freefall and reimburse his cronies whose assets are being frozen. 


  101. No S4, misprint.


  102. DD on that USO spread now long?


  103. FSLR/Scott – I like solars when they are low but not those guys. Low oil prices bad for solar companies (bad comps to lower energy prices) so too early to catch knives.  

    Williams didn't say anything helpful.  Tomorrow is hawk day – I'm concerned but, down 2%, it's hard to take an aggressive bear play.  

    CNBC is also watching the DEADLY Ebola virus very carefully.  Good to know..

    Hoax/Rustle – I wrote a post on it when it happened, exaggerated is probably more accurate.  I think combination of a design flaw (if you apply enough pressure to just the right place) and uneven manufacturing quality on a very small percentage of phones – the kind of thing AAPL has quickly and quietly fixed already. 

    Oil hit $85.02 on the Nov contract – that really is goaaaaaaaaaaaalllllllllllllllll!!!  Now I have to find a new great prediction to make.  How about AMZN $200 by next Christmas?  

    TSLA already selling off and they haven't even announced yet.  

    AAPL still $101.10.  

    Putin/StJ – Desperate men….

    USO/Burr – Way too soon, let's see how things settle out.  We expected more downside, we just didn't want to miss out if we were wrong.  We'll roll down if the price of the call falls near the net of the spread – but nowhere near that yet.  

    Well, another interesting day in an INTERESTING week – can't wait for tomorrow!  


  104. New BIG telescope – Hawaii-based 30m telescope with adaptive optics expected to out-image Hubble..
    http://www.space.com/27374-giant-telescope-construction-hawaii-protests.html?cmpid=558393
     


  105. Putin – Desperate man for sure.  But who says he needs to balance the budget ?  We have perfected the art of not balancing our budget for years. 8-)



  106. sorry – ' you're '


  107. scottmi: You can bet no one's out there building a new telescope to look at us.  They've seen quite enough. I actually had a ufo fly within 100 meters of me once.  No drugs, I promise.  They're are out there, which, statistically speaking, only makes sense.


  108. Putin / Albo – Well, when you can't sell your bonds because there is no demand and you have to pay 10% interest as the result and your currency is making new lows every week, you can't run deficits for too long… 

    These guys are not exactly in the same boat and they don't have a great track record:

    http://en.wikipedia.org/wiki/1998_Russian_financial_crisis

    Defaulting on your debt is usually frowned upon!


  109. The next area of resistance for oil is around $78. I can't believe that there would be no reaction before that but then again 4 months ago we were at $106.

    Putin is a student of history I am sure although after meeting my Russian colleagues it's probably a highly edited version of it. But the US won the Cold War with our economy mostly. Maybe we'll bring some pain his way by producing as much oil and gas as we can to bring down the price…


  110. Telescope/Scott – Cool!  

    Putin/Albo – It's not like the US, Europe or Japan – Putin isn't part of the clubs.  Europe and Japan have their exports as well as asset demand for their currencies, we have the asset demand for our currencies, still quite a lot of exports and, of course, most commodities trade in Dollars.  Think about oil – a constant demand for Dollars in exchange for something that literally is burned by the user.  Then they need more oil and more Dollars to buy it with.  That keeps a constant support for us – no matter how much we print.  No one is storing Rubles under the mattress – not even Russians.  With no external demand for the currency – any printing done by Putin pretty quickly devalues the currency and raises the interest he has to pay to investors (forward risk).  Not so easy for them. 

    And what StJ said!  

    UFOs/ZZ – I've seen things, they were certainly unidentified.  Lots of people have who travel extensively but who knows what it is.  Anyone sophisticated enough to build ships that can visit other solar systems would certainly be able to study their destination in advance and I'd say that this race of knuckle-draggers would be about as interesting to them for a visit as Liberia or the Fauklands is to us but, for them, they would have millions of other jungles and civilizations to choose from, even if they did have an inkling to check out some poor folks.  

    Oil $84.89!   


  111. what is happening to oil right now??


  112. Correction, oil at $84.25… Pretty much in free fall right now. Maybe we hit $78 tonight. Someone must be unwinding a position AH.


  113. Heck, oil was at $91 earlier this week. It's down over 6% in one week. Unreal.


  114. that was weird.


  115. So I am struggling with hedges.  I want to have a low-touch, income portfolio that doesn't cause ulcers and has modest but dependable returns.  I have held some hedges in my portfolio for much of 2014, but they have consistently lost money while my main holdings have done really well.  Too well, in retrospect, and I suspect I was over-invested for my goals.  Being up 20-30% for the year in August, I should have listened to Phil and just cashed out, or at least reduced holdings, but all my positions looked great and safe with lots of downside cushion.  Come September and now October, my main portfolio is down about 20%, thanks to rising premiums (and a lot of help from CLF, RIG and FCX).  I have an SQQQ Jan 30/40 BCS which has LOST money since I bought it and a TZA spread that is profitable when I was assigned the 15 call and I now have a nice gain in TZA, which I have parlayed into another BCS (the Jan 17/24).  My question is, how can I tell if I have too many short put and BCS holdings when I am not even using half of my margin? I don't want to drop 20% when the market is down 10% and REALLY couldn't afford to be down 40% if the market drops 20%.  But I would have to hold HUGE hedges to prevent that and those would eat up my meager gains in a flat or up-trending market. So what level of hedge should I have?  Also, SQQQ or DXD hedges don't help when one has an overweight in materials, as many of us here do.  I think Phil's hedges sound good in theory, but I haven't had them work in real life and I am wondering about other PSW members' experiences and of course would appreciate a good ass-kicking and chew out from Phil.


  116. Jelutuck – I have struggled with the same thing.  My current strategy for making sure I'm not too invested, is keeping track of my actual put obligation for each position, so I know how committed I am.  You can't go by margin alone, especially with portfolio margin!  I also keep track of how much actual cash I had to put into a position, which is another good thing to keep an eye on.  Right now my total put obligation is about 120% of my portfolio size.  So on a $800k portfolio, I have about $1M in put obligation if everything was put to me.  I also have 3-5% of my portfolio invested in SQQQ, DXD and TZA January 2015 spreads.  SQQQ and DXD are at a slight loss, but will kick in big if the market goes down another 5-10% from here and stays down at the end of the year.  TZA has been a huge gainer for my portfolio, as the RUT has been down all year.  I also have shorts on NFLX and TSLA.


  117. What volatility?

    All 5 indices crossed a support line today – not seen in a while. I am registering the PSW Omen as a technical signal! 


  118. jelutuk,

    I have had a similar experience with hedges.  I recently added layered SQQQ and DXD BCS positions with Nov. and Jan. expirations.  I am showing a gain on DXD today but SQQQ is still a slight loss despite the jump today.  Unfortunately, the BCS need time to pass for the premium to decay.  If today were expiration these would be full winners.  So, to the point Phil made earlier today you need a sustained drop in the market to realize the full benefit of the hedges.  If the market recovers before expiration then in theory your long investments should recover also making the hedges unnecessary.  If we have a waterfall market tumbling into expiration the hedges should do the trick providing you have enough and can sell them when you want (this was a problem I recently had) .


  119. jelutuck, palotay: I decided to forgo hedging with inverse ETF's and just decided to keep my portfolio smaller and hold a larger cash position.  I find it much easier to calculate and manage my portfolio this way and it helps me sleep better. 

    I think some people also forget the most classic hedge: fixed income.


  120. From Bloomberg, Oct 9, 2014, 5:35:18 PM

    Symantec Corp. (SYMC) said it’s splitting into two companies, a move that reverses a decade-old expansion effort by the biggest maker of security software.

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

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


  121. Putin and oil,

    What are the chances that some of the price pressure on oil is part of stealth sanctions against Russia?  With demand falling it probably hasn't been too hard dump a little extra oil from reserves exacerbating the supply picture, promote the heck out of the falling oil price news etc., and combined with the various sanctions on Russia it seems to me that 'the west' can inflict quite a bit of pain on Putin.  Or is that too much of a conspiracy theory?


  122. From Bloomberg, Oct 9, 2014, 3:00:00 AM

    Musician Ray Charles performing c. 1960. Source: Express Newspapers/Getty Images

    The 1960 Ray Charles lyric — “Them that’s got are them that gets” — rings true today in the U.S. mortgage market.

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

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


  123. From Bloomberg, Oct 9, 2014, 4:00:46 PM

    The Four Corners area (red) is the major U.S. hot spot for methane emissions in this map showing how much emissions varied from average background concentrations from 2003-2009 (dark colors are lower than average; lighter colors are higher). Source: NASA/JPL-Caltech/University of Michigan

    A tiny patch of the southwestern U.S. produces the nation’s highest concentrations of methane, the potent greenhouse gas that President Barack Obama has vowed to tackle as part of his assault on climate-change pollution.

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

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


  124. From Bloomberg, Oct 9, 2014, 5:32:02 PM


    Oct. 9 (Bloomberg) — Federal Reserve Vice Chairman Stanley Fischer says that to him, the central bank’s “considerable time” language for keeping rates low refers to between two months and a year.
    He speaks on a panel at the 2014 International Monetary Fund-World Bank Annual Meetings in Washington. (Excerpt. Video courtesy of IMF. Source: Bloomberg)

    There they go again.

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

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  125. From Bloomberg, Oct 9, 2014, 4:29:55 PM

    Chief Executive Officer Elon Musk on Oct. 1 posted on Twitter that the electric-car maker will “unveil the D and something else” and included a photo of a darkly lit Tesla and the date Oct. 9. Source: Elon Musk Twitter Page

    Tesla Motors Inc. (TSLA) Chief Executive Officer Elon Musk today will unveil new technology that helps keep drivers from drifting off the road and what analysts predict will be an all-wheel-drive variant of its Model S.

    To read the entire article, go to http://bloom.bg/1sidRB2

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  126. From Bloomberg, Oct 9, 2014, 5:15:25 PM


    A worker unloads new items to be stocked in front of a Fairway Group Holdings Corp. market in New York, on April 17, 2013. Fairway Group Holdings Corp., the grocery-store chain focused on greater New York, surged 33 percent in its public debut after pricing its initial stock offering above the proposed range. Photographer: Victor J. Blue/Bloomberg

    Fairway Group Holdings Corp. (FWM), the New York City grocery chain that’s plunged 77 percent since selling shares to the public, awarded its directors $12.1 million last year, making it the fourth highest-paid board in the Russell 3000 Index.

    To read the entire article, go to http://bloom.bg/1sikm6S

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


  127. From Bloomberg, Oct 9, 2014, 4:21:20 PM


    Fracking in the Eagle Ford shale formation, underlying an area of South and East Texas. Photographer: Eddie Seal/Bloomberg

    Lee Tillman, chief executive officer of Marathon Oil Corp., told investors last month that the company was sitting on the equivalent of 4.3 billion barrels in its U.S. shale acreage.

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

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  128. From Bloomberg, Oct 9, 2014, 3:50:28 PM

    West Texas Intermediate oil tumbled into a bear market on concern rising global supplies will be more than enough to meet slowing demand. Brent crude slipped to the lowest level in 27 months.

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

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


  129. From Bloomberg, Oct 9, 2014, 3:53:42 PM


    Traders in the CBOE Volatility Index (VIX) pit at the Chicago Board Options Exchange (CBOE) in this July 30, 2013 file photo. Photographer: Scott Olson/Getty Images

    Squalls turned into stock market storms this week as concerns about the global economy and Federal Reserve send day-to-day swings to the widest in eight months.

    To read the entire article, go to http://bloom.bg/1vRDJ5U

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


  130. From Bloomberg, Oct 9, 2014, 4:12:09 PM


    Oct. 9 (Bloomberg) — The number of Americans filing applications for unemployment benefits unexpectedly fell last week, pushing the average over the past month to the lowest level in eight years and signaling that employers are hanging on to workers as the economy improves. Olivia Sterns reports on “In The Loop.” (Source: Bloomberg)

    A healthier job market helped spark the biggest gain in Americans’ confidence in almost a year, raising prospects for the economy at the start of fourth quarter.

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

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


  131. Sorry guys, my Putin comment was tongue in cheek.


  132. I think Putin is a worry.  When the going gets tough, the tough do weird things.  Being mousetrapped by sanctions and plummeting oil prices doesn't really change anything in Russia — Russians have had it worse, and are nothing if not long-suffering.  But Putin cannot afford to appear impotent — he has made a lot of formerly-powerful enemies, and if one of these many enemies were to get to his praetorian guard,  one round of 9mm "for the Rodina." would change Russian history.  No bets, but it's risk-on, geopolitically.


  133. I guess that much Albo, still a good opportunity for an history lesson! 


  134. From Bloomberg, Oct 9, 2014, 12:00:01 PM

    Pedestrians look at demonstrators taking part in a protest in the Mong Kok area of Hong Kong on Oct. 7, 2014. Sales at major Hong Kong retailer chains have fallen as much as 50 percent. Photographer: Tomohiro Ohsumi/Bloomberg

    As thousands of pro-democracy protesters thronged Hong Kong’s major retail and business districts, blocking roads and forcing shops to close, it wasn’t just legal establishments feeling the pain.

    To read the entire article, go to http://bloom.bg/1v8wl9n

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


  135. From Bloomberg, Oct 9, 2014, 4:15:19 PM


    Kip Tindell, founder and CEO of the Container Store, at a store in San Diego, California. Photographer: Brad Swonetz/Redux

    Container Store Group Inc. Chief Executive Officer Kip Tindell, who watched the stock decline almost 27 percent this week after cutting the company’s forecast, may stop providing guidance to investors.

    To read the entire article, go to http://bloom.bg/1vRvff0

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


  136. From Bloomberg, Oct 9, 2014, 12:27:48 PM


    Demonstrators gather on Connaught Road outside the Central Government Offices in Hong Kong on Oct. 9, 2014. Photographer: Brent Lewin/Bloomberg

    The Hong Kong government canceled
    talks with pro-democracy protesters who have blockaded key city
    roads for nearly two weeks after leaders of the movement called
    supporters back into the streets.

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

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


  137. From Bloomberg, Oct 9, 2014, 1:41:33 PM

    Supporters of Senate Minority Leader Mitch McConnell (R-KY) in Kentucky. Photographer: Win McNamee/Getty Images

    Mitch McConnell once said his goal was to make Barack Obama a one-term president. Nowadays, he boasts about how often he negotiates with Obama’s vice president as evidence of his influence in Washington.

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

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


  138. Putin / Zero – The situation economically speaking has gotten much better for the Russians (not so much in the democracy side of the equation). Incomes have doubled since Putin took over (at least in big cities) so there are risks for Putin if people start getting hit in their wallet. Part of his popularity rests on the fact that the situation has gotten better, should that change, he would need to double down on the populist message and look for "enemies" to blame for the situation. 


  139. Watch this video at http://bloom.bg/1xv5q5J

    Will the Deflation in Europe Carry Over to the U.S.?

    Oct. 9 (Bloomberg) — Brean Capital’s Peter Tchir and JPMorgan Asset Management’s Philip Camporeale discuss investor fears about deflation with Bloomberg’s Trish Regan on “Street Smart.” (Source: Bloomberg)

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


  140. From Bloomberg, Oct 9, 2014, 4:24:13 PM


    A trader works on the floor of the New York Stock Exchange on Oct. 8, 2014. Photographer: Andrew Burton/Getty Images

    The Standard & Poor’s 500 Index plunged the most since April, erasing its biggest rally this year, on concern that slowing growth in Europe will hurt the American economy as the Federal Reserve ends its bond purchases.

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

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  141. From Bloomberg, Oct 9, 2014, 1:06:55 PM


    Bill Gross, started managing the Janus Global Unconstrained Bond Fund this week after leaving Pimco. Photographer: Scott Eells/Bloomberg

    Bill Gross, the former manager of the world’s largest bond fund who last month took over a new fund at Janus Capital Group Inc. (JNS), said investors should say “bye-bye” to the days of double-digit returns.

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

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  142. From Bloomberg, Oct 9, 2014, 1:25:27 PM

    Billionaire investor Carl Icahn. Photographer: Scott Eells/Bloomberg

    The world’s biggest company isn’t big
    enough for Carl Icahn.

    To read the entire article, go to http://bloom.bg/1xu57ry

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  143. From Bloomberg, Oct 9, 2014, 6:49:09 PM


    This picture taken by North Korea’s official Korean Central News Agency (KCNA) on December 12, 2012 shows North Korean leader Kim Jong-Un giving the final order for the launch of the Unha-3 rocket, carrying the satellite Kwangmyongsong-3, at the general satellite control and command center in Pyongyang. North Korea’s leader has ordered more satellite launches, state media said on December 14, 2012, two days after Pyongyang’s long-range rocket launch triggered global outrage and UN condemnation. TOPSHOTS AFP PHOTO / KCNA via KNS —EDITORS NOTE— RESTRICTED TO EDITORIAL USE – MANDATORY CREDIT “AFP PHOTO / KCNA VIA KNS” – NO MARKETING NO ADVERTISING CAMPAIGNS – DISTRIBUTED AS A SERVICE TO CLIENTS (Photo credit should read KNS/AFP/Getty Images)

    Kim Jong-un, the 31-year-old leader of North Korea, has been missing for over a month, creating the perfect breeding ground for conspiracy theories. While U.S. and South Korean analysts believe the young leader is sick — he has a family history of diabetes, gout and high blood pressure — the international community has heard from a number of sources (of various level of reliability) claiming he’s sick, deposed, or just fine. 

    To read the entire article, go to http://www.bloomberg.com/politics/articles/2014-10-09/whats-going-on-with-kim-jongun-a-list-of-theories

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  144. From Bloomberg, Oct 9, 2014, 5:06:59 PM

    A Matsumura Engineering Co. employee arranges “Super S” counterfeit 100 U.S. dollar bank for a photograph at the company’s headquarters in Tokyo, Japan, on Wednesday, July 9, 2014. Matsumura Engineering Chief Executive Officer Yoshihide Matsumura calls the new counterfeits “Super S,” which stands for “super special”. They’re a forgery of the Series 1996-2003A $100 note that features an image of Benjamin Franklin. Photographer: Tomohiro Ohsumi/Bloomberg

    The Internal Revenue Service calls them “social welfare” groups – they don’t disclose their donors and so far this cycle they’ve spent $100 million trying to influence elections.  Never before have these types of organizations spent so much, so soon in Congressional races, according to a new analysis by the Center for Responsive Politics.

    If the past is precedent, that means roughly $200 million in dark money will go toward influencing the 2014 elections, CRP estimates.  The trend means it’s harder than ever to know who the big spenders are or which interest is taking which side in an election. The social welfare groups, organized under section 501(c)(4) of the tax code, raise and spend unlimited amounts of money. Their cousins, super PACs, also raise and spend unlimited cash, but must disclose contributors.

    Some of the election cycle’s mega-groups toggle between using dark money groups and super-PACs depending on need and donor preference. The David and Charles Koch-backed political network stopped using their dark money group for TV ads in the final 60 days of the cycle, and are now funding election spots with their new super PAC.  

    To read the entire article, go to http://www.bloomberg.com/politics/articles/2014-10-09/dark-money-groups-set-record-in-2014-midterms

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  145. From Bloomberg, Oct 9, 2014, 12:00:01 AM


    A member of the Park Police places police tape in front of the Lincoln Memorial due to a government shut down in Washington, D.C., on Tuesday, Oct. 1, 2013. Partisan conflict has been easing since May and is down 54 percent from a record level a year ago, when a deadlock between Republicans and Democrats shut down the U.S. government. Photographer: Joshua Roberts/Bloomberg

    Just in time for U.S. mid-term elections, there’s a new measure of the partisan rancor in Washington.

    To read the entire article, go to http://bloom.bg/1ndfrn9

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


    Pedestrians pass in front of the JPMorgan Chase & Co. headquarters in New York. Photographer: Ron Antonelli/Bloomberg

    The hackers who raided the data banks of JPMorgan Chase & Co. (JPM) used computers now linked to possible attacks on at least 13 more financial companies, according to a person familiar with the investigation.

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

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  147. From Bloomberg, Oct 9, 2014, 6:16:28 PM

    European Central Bank President
    Mario Draghi and German Finance Minister Wolfgang Schaeuble
    differed over what further steps to take if the euro-area
    economy keeps weakening as the region came under renewed foreign
    pressure to revive growth.

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

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  148. From Bloomberg, Oct 9, 2014, 9:01:00 AM

    Australia’s key data agency is at a
    loss to explain a sudden bout of volatility in jobs figures that
    forced it to abandon the numbers, as labor unions warn budget
    cuts are damaging the organization.

    To read the entire article, go to http://bloom.bg/1sj5MMu

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  149. From Bloomberg, Oct 9, 2014, 12:45:18 PM


    Mario Draghi, president of the European Central Bank, speaks at the Brookings Institution in Washington, D.C. on Oct. 9, 2014. Photographer: Pete Marovich/Bloomberg

    Mario Draghi said investors predict
    the European Central Bank will start increasing interest rates
    by 2017 as he pledged to expand stimulus measures if needed.

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

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  150. From Bloomberg, Oct 9, 2014, 5:43:53 PM

    How long will it last?

    Will China be the source of the next global financial disaster? The evidence increasingly offers reason for concern, though the nature of any calamity could be very different from what the world endured in 2008.

    To read the entire article, go to http://bv.ms/1o21skQ

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  151. From Bloomberg, Oct 9, 2014, 2:07:25 PM


    The fault in our star managers?

    When Bill Gross left Pimco, I said we’d have to wait and see how markets reacted. Well, we have an answer now: Investors quickly pulled billions out of Pimco’s flagship Total Return Fund, which Gross managed.

    To read the entire article, go to http://bv.ms/10VYJPd

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  152. From Bloomberg, Oct 9, 2014, 9:10:29 AM

    I was busy yesterday afternoon, did anything interesting happen while I was out?

    To read the entire article, go to http://bv.ms/1yPN9V1

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  153. Russia’s Economy Is Spiraling Downward And Bleeding Out Capital
    http://www.businessinsider.com/russian-economy-is-crumbling-2014-10


  154. Airbnb Banned From Condo Complex After Guest Caused $10,000 Of Damage
    http://www.businessinsider.com/airbnb-guest-caused-10000-of-damage-2014-10





  155. Meet The World’s First “Undercover, Super-Secret Central Banker”
    http://www.zerohedge.com/news/2014-10-09/meet-worlds-first-undercover-super-secret-central-banker


  156. Goldman On Q3 Earnings: “Expect Disappointing Revenue Results And Negative EPS Guidance”
    http://www.zerohedge.com/news/2014-10-09/goldman-q3-earnings-expect-disappointing-revenue-results-and-negative-eps-guidance


  157. G.O.P. Theme in Fall Election: It’s a Dark and Unsafe World
    http://www.nytimes.com/2014/10/10/us/politics/republican-strategy-midterm-elections.html


  158. Report: Wal-mart owners throw their weight behind anti-solar groups
    http://www.salon.com/2014/10/09/report_wal_mart_owners_throw_their_weight_behind_anti_solar_groups/


  159. Obama Wants 6 Million Children In Preschool By The End Of The Decade
    http://www.huffingtonpost.com/2014/10/09/president-obama-preschool-goal_n_5953916.html


  160. The Ad Agency For Apple, Pepsi and McDonald’s Is Advising Clients To Slash Millions From Their TV Budgets
    http://www.businessinsider.com/omnicom-tells-advertisers-to-shift-tv-spend-to-online-video-2014-10


  161. Samsung’s Profits Crash Sixty Percent And Android Takes The Blame
    http://www.forbes.com/sites/ewanspence/2014/10/07/samsung-profits-down-sixty-percent-no-recovery-plan/


  162. 3 Ways Travel Will Be Completely Different In 2024
    http://www.businessinsider.com/how-travel-will-be-different-in-2024-2014-10


  163. The Big Banks’ Quarterly Earnings
    http://graphics.wsj.com/quarterly-bank-earnings/


  164. Fed’s Fischer signals dollar rise appropriate
    http://mobile.reuters.com/article/idUSW1N0MU0320141009?irpc?2


  165. The World’s Most Valuable Sports Brands 2014
    http://www.forbes.com/pictures/mlm45fhklg/7-mlb-world-series/


  166. Did Today’s “Satan Signal” In S&P Futures Give The ‘All-Clear’ For Selling To Begin?
    http://www.zerohedge.com/news/2014-10-09/did-todays-satan-signal-sp-futures-give-all-clear-selling-begin




  167. Fed’s Williams: it’s wage growth we’re waiting for – fastFT: Market-moving news and views, 24 hours a day
    http://www.ft.com/fastft?post!8412


  168. Republicans Hint At Another Government Shutdown Over Obamacare. Seriously.
    http://www.huffingtonpost.com/2014/10/08/obamacare-government-shutdown-2014_n_5956270.html


  169. It Would Actually Be Very Simple To End Homelessness Forever
    http://thinkprogress.org/economy/2014/10/09/3577980/end-homelessness/



  170. Hedges:  Oh I forgot to add that another great thing about hedging with a large cash position is that the US Dollar has been going through the roof this year. Take a look at the US Dollar Index: http://stockcharts.com/c-sc/sc?s=$USD&p=D&b=5&g=0&i=t27647088747&r=1412909154429

    If you have lots of cash, take heart that its basically gained about 10% this year.  For those of us living in foreign countries the gain is even MORE acute because some currencies (like the Yen) are falling faster than the dollar is rising so for a person like me who lives in Japan but keeps my savings in USD, I am actually looking at a 42% Y-o-Y gain in my cash pile. 

    Never forget your cash is also going up and down in value all the time as well.  I hope it offsets some of your misery, because I know it makes the pain of GTAT go down a little easier


  171. phel:

    So does that mean it just didn't work, or that they signed an impossible contract with AAPL and felt the need to cut their losses before every part of their business was lost. Incredible and so ridiculous at the same time!  Amazing this can happen today with a board of directors so intent on setting "high standards" for their employees!

    http://investor.gtat.com/governance.cfm

    FROM GTAT WEBSITE:

    Corporate Governance

    The Board of Directors of GT Advanced Technologies Inc. (the "Company") sets high standards for the Company's employees, officers and directors. Implicit in this philosophy is the importance of sound corporate governance. It is the duty of the Board of Directors to serve as a prudent fiduciary for shareholders and to oversee the management of the Company's business. To fulfill its responsibilities and to discharge its duty, the Board of Directors follows the procedures and standards that are set forth in these guidelines. These guidelines are subject to modification from time to time as the Board of Directors deems appropriate in the best interests of the Company or as required by applicable laws and regulations.


  172.  

    XCO

    EXCO +5% AH after Pickens

    says company approached by buyers

    EXCO Resources (NYSE:XCO) +5.1% AH after T. Boone Pickens says the company has been approached by buyers, reported by Bloomberg.


  173. From Bloomberg, Oct 9, 2014, 11:38:41 AM

    Village women stand near a well which dries up during the summer months near the Coca Cola Co. bottling plant in Mehediganj, Varanasi. India draws 230 cubic kilometers of groundwater a year, more than a quarter of the global total, World Bank data shows. Photographer: Prashanth Vishwanathan/Bloomberg.

    Savitri Rai winces as she recounts how police beat her when she protested against groundwater extraction at a Coca-Cola Co. (KO) plant near her farm in India. A decade later, she said her water supplies keep dwindling.

    To read the entire article, go to http://bloom.bg/1t37CTC

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  174. From Bloomberg, Oct 9, 2014, 11:33:14 PM


    Construction cranes operate on residential building developments in the Punggol area of Singapore. Despite the weaker demand, the number of new residential dwellings being built remains high. Photographer: Bryan van der Beek/Bloomberg

    Singapore’s listed developers and
    real-estate investment trusts face their heaviest burden of
    near-term maturities on record just as home prices drop.

    To read the entire article, go to http://bloom.bg/1vS8h7o

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  175. From Bloomberg, Oct 10, 2014, 2:26:56 AM


    Oct. 10 (Bloomberg) — Jim McCaughan, chief executive officer of Principal Global Investors, discusses the U.S. and euro-zone economies and his equities investment strategy.
    He talks with Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    European equity-index futures fell,
    signaling stocks may drop a fourth day, on concern the region is
    slowing, hurting global growth. Asian shares retreated with
    metals and Brent crude dropped to the lowest since 2010.

    To read the entire article, go to http://bloom.bg/1v8Kao8

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  176. From Bloomberg, Oct 10, 2014, 2:43:45 AM


    A worker walks through an Anadarko Petroleum Corp. hydraulic fracturing site north of Dacono, Colorado. U.S. oil production increased to 8.88 million barrels a day last week, the most since March 1986, according to the Energy Information Administration. Photographer: Jamie Schwaberow/Bloomberg

    West Texas Intermediate extended its
    slump into a bear market amid speculation that rising global oil
    supplies will be more than enough to meet slowing demand.
    London’s Brent traded at the lowest price since December 2010.

    To read the entire article, go to http://bloom.bg/1vScA2L

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  177. From Bloomberg, Oct 10, 2014, 2:17:57 AM

    Russia’s currency interventions
    crossed $3 billion this month as a domestic dollar shortage and
    slumping oil prices batter the ruble.

    To read the entire article, go to http://bloom.bg/1srfuN3

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  178. From Bloomberg, Oct 10, 2014, 2:07:31 AM

    Uber Technologies Inc. will change
    its business model for services offered in Berlin to comply with
    German regulations and a ban issued by the German capital’s
    traffic authorities.

    To read the entire article, go to http://bloom.bg/1xu1Ybo

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  179. From Bloomberg, Oct 10, 2014, 1:23:18 AM


    Naoyuki Shinohara, deputy managing director of the International Monetary Fund. Photographer: Yuriko Nakao/Bloomberg

    The Bank of Japan won’t reach its 2
    percent inflation target next year and needs to manage
    expectations, according to the International Monetary Fund.

    To read the entire article, go to http://bloom.bg/ZxQjg6

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  180. From Bloomberg, Oct 9, 2014, 7:44:31 PM

    Whether because of a fear that Islamic State fighters or Ebola-infected illegal immigrants scurrying across the Mexican border into the United States, GOP politicians from all over the country are drawing attention to what they perceive as a security threat.

    To read the entire article, go to http://www.bloomberg.com/politics/articles/2014-10-09/republicans-who-want-mexican-border-secured-from-islamic-state-and-ebola

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  181. Watch this video at http://bloom.bg/1vTePEF

    U.S. Airports Step Up Screening for Deadly Ebola Virus

    Oct. 9 (Bloomberg) — Bloomberg’s Shelby Holliday reports on new U.S. airport policies to help prevent the spread of Ebola from West Africa airline passengers. She speaks on “Bloomberg Surveillance.” (Source: Bloomberg)

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  182. Watch this video at http://bloom.bg/1vTePEF

    U.S. Airports Step Up Screening for Deadly Ebola Virus

    Oct. 9 (Bloomberg) — Bloomberg’s Shelby Holliday reports on new U.S. airport policies to help prevent the spread of Ebola from West Africa airline passengers. She speaks on “Bloomberg Surveillance.” (Source: Bloomberg)

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  183. Watch this video at http://bloom.bg/1skFxFq

    Hacker Links to Russia State Worth Questioning: Chertoff

    Oct. 9 (Bloomberg) — The hackers who raided the data banks of JPMorgan Chase & Co. used computers now linked to possible attacks on at least 13 more financial companies, according to a person familiar with the investigation. Former Homeland Security Secretary Michael Chertoff speaks on “Market Makers.” (Source: Bloomberg)

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  184. Watch this video at http://bloom.bg/1vxZ0kP

    H.K.’s Leung Appoints Lam to Hold Talks With Protesters

    Oct. 2 (Bloomberg) — Hong Kong Chief Executive Leung Chun-ying speaks about his decision to appoint Chief Secretary Carrie Lam to hold talks with leaders of pro-democracy protesters who have crippled parts of the city for the past week.
    Leung and Lam speak at a news conference in Hong Kong. (This report is in Cantonese and English. Video courtesy of APTN. Source: Bloomberg)

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  185. Watch this video at http://bloom.bg/1yOTZKi

    Barclays Says ECB to Conduct QE Before End of Year

    Oct. 9 (Bloomberg) — Barclays Plc’s Head of Global and European Equity Strategy Ian Scott said that the European Central Bank will conduct a quantitative easing program before the end of this year and that “should have a pretty positive impact on the stock market.”
    He spoke to Bloomberg’s Guy Collins in London yesterday. (Source: Bloomberg)

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  186. Watch this video at http://bloom.bg/1yJ0FcZ

    H.K. Citizens Should Rule City: Democratic Party’s Lee

    Oct. 7 (Bloomberg) — Martin Lee, founding chairman of Hong Kong’s Democratic Party, talks about the pro-democracy demonstrations in the city.
    He speaks with Angie Lau on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

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  187. From Bloomberg, Oct 9, 2014, 12:00:01 AM


    Bill Gross’s resignation on Sept. 26 from the firm he co-founded more than four decades ago triggered record redemptions from his Pimco Total Return fund. Photographer: Tim Boyle/Bloomberg

    Pimco’s pain isn’t Bill Gross’s gain, at least not yet.

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

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  188. From Bloomberg, Oct 9, 2014, 10:10:20 AM

    Billionaire hedge-fund manager John Paulson. Photographer: Jin Lee/Bloomberg

    Billionaire hedge-fund manager John Paulson posted losses in his main strategies in September as
    stock and corporate bond markets fell.

    To read the entire article, go to http://bloom.bg/1vTx6C3

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  189. From Bloomberg, Oct 9, 2014, 7:01:00 PM

    U.K. house prices grew at the
    slowest pace in 10 months in September as the prospect of higher
    interest rates deterred buyers.

    To read the entire article, go to http://bloom.bg/1v8Nwr7

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  190. From Bloomberg, Oct 10, 2014, 12:12:16 AM

    European Central Bank Governing
    Council member Jens Weidmann said targeting the amount of assets
    owned by the ECB is a risky endeavor.

    To read the entire article, go to http://bloom.bg/1vSITP7

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  191. From Bloomberg, Oct 9, 2014, 3:35:15 PM

    U.S. retail sales fell in September
    after posting the biggest increase in four months, while
    industrial production and housing starts rose, separate reports
    may show.

    To read the entire article, go to http://bloom.bg/1neHD98

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  192. From Bloomberg, Oct 9, 2014, 5:00:01 PM

    Russian President Vladimir Putin’s
    effort to defend the ruble and shield citizens from the pain of
    international sanctions risks further eroding the country’s
    already shrinking official reserves.

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

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  193. From Bloomberg, Oct 9, 2014, 6:00:01 PM

    Rents are a particularly sensitive topic in Berlin because 85 percent of its residents are renters, compared with about 50 percent across Germany. Photography: David Gannon/AFP/GettyImages

    Wearing black masks and hoodies,
    they torched garbage cans, smashed windows and splashed red
    paint on the glass façade of a new luxury apartment building.
    When police arrived, the perpetrators repelled them with a hail
    of rocks and fled.

    To read the entire article, go to http://bloom.bg/1v90TYx

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  194. From Bloomberg, Oct 9, 2014, 9:46:34 PM

    Small earthquakes spiked while the Three Gorges Dam was being built.

    Take your pick: Air pollution or earthquakes?

    To read the entire article, go to http://bv.ms/1o2mNuk

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  195. /CL – seems to be near a bottom for the current situation. We probably had some short covering and panic and maybe even some "punish Putin" mindset but at this level we are below the production costs of some shale and tar sand operations so pretty soon the closure announcements will start, then OPEC with the production reduction announcement (as toothless as that is) and then maybe a pipeline accident somewhere or Putin getting all agro again, etc. Then someone is going to make plenty money on the way up. I think Phil nailed it…again.


  196. Good morning!  

    Futures back to flat after being down a bit (-50 on the Dow) overnight.  Nas is still weakest, down 0.25% at 3,959 and this is a good example of how useful our Big Chart and 5% levels can be in picking our hedges.  We had that tug boat discussion the other day and that's exactly what we're seeing as the other indexes yank the Nasdaq back a bit.  Knowing that was going to happen let us focus on the SQQQs for hedges.  If AAPL hadn't saved the Nas, they'd be down another 1%.

    EWJ WEEKLYNot all that much damage in Asia considering – Nikkei down 1.15%, way down at 15,300, Hang Seng down 1.78% at 23,113, Shanghai down 0.62%, India down 0.56% and Singapore down 1% – could have been a lot worse.  

    Fears of housing crash in China raise global alarm. Fears of a housing market crash are weighing on forecasts for global growth. But this time it is China, not the US, which is causing concern in a sign of the shift under way in the world economy. Ask economists what factors could hamper global growth this year and the majority will reel off a list that includes a hard landing for the Chinese economy.

    Beijing Won't Likely Remove Home Purchase Curbs. Beijing won't likely remove home purchase restrictions as the city's property market hasn't cooled down noticeably, citing researchers with the nation's housing ministry.

     

    Global Alert From Chongqing: Foxconn Strike Is An Epochal Inflection Point

    China Supreme Court Tightens Controls Over Internet. Supreme People's Court releases document urging courts to order network service providers to provide personal data of users suspected of rights violations, including real names, contract info, IP addresses. Information can be used by investigators, plaintiffs.

    IEV WEEKLYEurope coming back off a bad open (-1%) and only down about half a point now but, obviously, nowhere near bouncy.  

    IMF: The Eurozone Will Slide Back Into Recession 'If Nothing Is Done'

    Eurozone on cusp of triple-dip recession as German exports crumbleGermany's Wise Men slash their growth forecasts for next year and call for fiscal stimulus, warning that the ECB's 'QE-lite' will achieve nothing?

     

    Investors 'increasingly nervous' markets have peaked, warns SocGen strategistAlbert Edwards has warned of "increasing nervousness in the market”.

    Gaping Portugal Bid-Ask Spread Keeps Investors Wary: Euro CreditGlance at Portugal’s government bond yields and you’d think the securities should’ve been lifted to investment grade months ago. Dig below the surface, and market conditions tell you it’s a case of buyer beware. The debt outperformed that of regional peers this month as analysts at Danske Bank A/S predict the nation’s junk status will be removed by Fitch Ratings today. Yet with the gap between offers to buy and sell the bonds 15 times bigger than for Germany, Lombard Odier Investment Managers and Pacific Investment Management Co. are cautious. Even with Portugal’s yields more attractive than Germany’s, the investors are unsure about finding enough buyers when prices drop.

    SPY 5 MINUTEThe Dollar is up at 85.75 and that's knocked oil down to the $83.50 line overnight but back to $84.28 now.  Gold holding up well, considering, still $1,222.  Silver $17.27, copper $3.007 and I like a long over the $3 line on /HG, nat gas $3.846 and gasoline bottomed at $2.2267 and now back at $2.2373.  Even my kids noticed gas was under $3 this week – we should see some rising retail numbers as that money is freed up for more productive things – hopefully it will last.

    VIX Shoots to Eight-Month High in Selloff as Bears Reclaim Edge. Squalls turned into stock market storms this week as concerns about the global economy and Federal Reserve send day-to-day swings to the widest in eight months.

    Carl Icahn Is Hedging, Warns A Big Correction Is "Definitely Coming"

    Fed's Williams: Can't wait too long to raise ratesA top Federal Reserve official warned on Thursday that the U.S. economy could overheat if the central bank waits too long to raise interest ratesJohn Williams, president of the San Francisco Fed, predicted that inflation and employment will be back to normal levels by 2016, which he said suggests that rates must start rising mid-2015.

     

    • Crushed by relentless anxiety about oversupply and weakening global demand, Nymex crude oil futures closed down $1.54 at $85.76/bbl, their lowest close since Dec. 2012, while Brent crude fell below $90/bbl for the first time in more than two years.
    • Including today's losses, WTI crude is down 6.2% since the start of the month and Brent has surrendered ~5%.
    • In the face of surging output, a move in WTI below its 10-year average at $82 is not out of the realm of possibility, Brown Brothers Harriman says, adding that "a break of $73/barrel could send WTI toward $64, which corresponds with the 2010 low."
    • Among big oil names so far today: APC -6.3%, LINE -4.6%, EPD -3.8%, DVN -3.8%, MRO-3.6%, HES -3.8%, KMI -3.7%, TOT -3.5%, STO -3.3%, RDS.A -3.1%, OXY -3%, KMP-3%, XOM -2.6%, COP -2.6%, MUR -2.6%, CVX -2.5%, BP -2.4%.

     

    • Global stocks are mainly lower as crude prices continue to tumble, with Brent Oil falling to $88.11 a barrel at one point, its lowest since December 2010. At the time of writing, Brent is -1% at $89.18 while Nymex is -1.35% at $84.61.
    • A 5.8% plunge in German exports in August – the figures were released yesterday – is continuing to weigh on world markets.
    • Asia: -1.1%, Hong Kong -1.8%, China -0.6%, India -0.7%.
    • Europe: Euro Stoxx 50 -0.5%, London -0.5%, Paris -0.5%, Frankfurt -0.7%, Madrid -0.4%, Milan -0.5%.
    • U.S. stock futures: Dow flat, S&P +0.1%, Nasdaq -0.3%.
    • Gold -0.6% at $1217.80
    • Offshore drillers have company now that falling oil prices are hitting the shares of land drillers such as Helmerich & Payne (HP -3.7%), Patterson-UTI (PTEN -6.8%), Nabors Industries (NBR -4.7%) and Seventy Seven Energy (SSE -5%) – with good reason, Susquehanna analysts say.
    • The firm views land drillers at considerable risk to estimate revisions, given high current dayrates and significant newbuild construction activity, which could be problematic if lower crude prices persist or a weaker outlook on U.S. E&P spending comes out of earnings season.
    • Nevertheless, the firm finds valuations much better in land drilling for now, and it prefers PTEN and NBR at a respective 3.7x and 4.5x 2015 EBITDA.

    Gold Heads for Biggest Weekly Jump Since June on Slowdown SignsGold is 2.8 percent higher this week, set for the biggest such advance since the period to June 20, and a fifth day of gains today would be the longest run since February. The Bloomberg Dollar Spot Index is poised to halt a seven-week rally as investors assessed the timing of increases in U.S. interest rates, which the Fed has pledged to hold near zero for a “considerable time.”

     

    • The price of gold may be rising, but gold mining stocks are getting hammered today; after all, "they are still stocks," Barron's Johanna Bennett writes.
    • Gold prices rallied today to $1,234/oz., their highest level since Sept. 23, a day after the dovish minutes from the Fed’s September policy meeting excited gold bugs, but shares of the mining companies are falling along with the broader market selloff.
    • Among the top mining names: IAG -6.9%, KGC -6.2%, SLW -5.9%, NGD -5.5%, AU -4.9%,GG -4.7%, ABX -3.9%, AUY -3.9%,  GFI -2.8%, BTG -2.7%, RGLD -2.6%, AGI -2.1%,GOLD -1.8%.

     

    Copper Leads Metals Lower Amid Signs of European Slowdown“The biggest economy in Europe is going down,” said David Lennox, a resource analyst at Fat Prophets. “When you see the weakness, it reinforces that pessimism.” Copper for delivery in three months on the LME was down 1 percent at $6,652.75 a metric ton at 10 a.m. in Hong Kong. In New York, the December contract dropped 0.7 percent to $3.0095 a pound, while in Shanghai metal for the same month fell 0.9 percent to 47,340 yuan ($7,718) a ton. ?

    Elon Musk Has Always Been Completely Open About Depending On Government Money

    GE says data business headed for $1.1B in sales this year, $4B-$5B by 2017

    • GE predicts it will generate up to $1.1B in sales this year and $4B-$5B by 2017 from its growing data collection business that enables clients to leverage information gathered from their industrial equipment.
    • CEO Jeff Immelt says the company is striving to capture the market for processes associated with the "industrial internet," in which GE harnesses data from large industrial machines such as power-generating turbines and jet engines to yield productivity, efficiency and other improvements for customers.
    • As companies have embraced big data to improve operations, GE says it now has 10M sensors analyzing data from the wind turbines, medical imaging devices and other equipment it has sold.

    Infosys surges on EPS beat, stock dividend

    • Infosys (INFY) +5.9% in India after posting strong FQ2 results.
    • EPS of $0.89 beats consensus by $0.08.
    • Revenue at $2.20B (+3.2% Y/Y) in line with consensus.
    • The company revenue maintained revenue guidance at 7%-9%.
    • The company declares 1:1 stock dividend.
    • Interim Dividend of approx. $0.49/share.
    • 49 clients were added in FQ2, down from 61 in FQ1 and 68 a year ago.
    • Net addition of 4.1K employees, raising Infosys' total headcount to 165.4K.

    GT Advanced seeks to wind down sapphire manufacturing ops

    • GT Advanced (NASDAQ:GTATplans to file a motion seeking authorization to wind down operations at its sapphire manufacturing plants, and has been ordered (.pdf) by bankruptcy judge Henry Boroff to immediately file it. A hearing on the motion is set for 2PM ET on Oct. 15.
    • Boroff also orders GT (referred to as "the Debtor") to "provide all such information as shall be reasonably requested to any party in interest and the United States Trustee and, in the Debtor’s sole discretion, to the public press, except that in the event that any such information relates to the details of the Debtors’ business relationship with Apple."
    • The order follows a GT request to keep its bankruptcy hearing (with Boroff and Apple) and court documents private. The WSJ says it "inquired about registering a protest over GT’s motion to seal the documents that explain what went wrong between GT and Apple," but didn't receive a response before today's court session.
    • GTAT -27.9% AH to $0.93.
    • GE "machines and devices" addressing markets such as rail, aviation, energy, and healthcare will support Verizon's (NYSE:VZ) machine-to-machine (M2M) connectivity services, as well as Verizon's cloud services.
    • The companies declare the tie-up will allow them to deliver plenty of value-added services" for GE's Predix software platform for connecting and managing industrial device, including "remote monitoring, diagnostics and the ability to resolve maintenance issues" Verizon and GE will also work to create a global SIM for the connected hardware.
    • Like AT&T, Verizon has been busy rolling out services providing mobile connectivity for embedded devices, hoping they can provide a top-line boost as standard mobile service revenue growth slows. Big Red's embedded offerings include services for cars and smart grids.
    • M2M module vendors Sierra Wireless (NASDAQ:SWIR) and Novatel (NASDAQ:NVTL) must be pleased to see the partnership. Both companies count Verizon as a client.
    • Previous: GE says data business headed for $4B-$5B in sales by 2017

    Cuba Stands at Forefront of Ebola Battle in AfricaIsland Nation Outpaces Larger Countries in Sending Medical Staff; Unlikely Partner for U.S. With risks growing that Ebola could flare on foreign shores, the U.S. is calling for nations to dispatch doctors and nurses to West Africa, where thousands of lives are on the line. Few have heeded the call, but one country has responded in strength: Cuba. In the weeks since U.S. President Barack Obama sent the first of nearly 4,000 troops to West Africa, the struggle to quell Ebola has created odd bedfellows. Perhaps none is quite so odd as the sight of Cuban doctors joining forces with the U.S. military to combat Ebola… ?

    Obama Weighs Options to Close GuantanamoAny Move to Override Congressional Ban on Bringing Detainees to U.S. Would Spark Fight.

    Ebola fear causes hazmat-suit maker’s biggest one-day jump. Lakeland LAKE, +52.50% surged nearly 53% to close at $17.72 on very heavy volume Thursday. Shares hit an intraday high of $19.79, a level not seen since July 2004. More than 47 million shares changed hands on the session, more than four times its previous record volume high.

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    Shortable?  

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  197. Don't forget all the Fed Hawks coming today – otherwise I'd want to play for a bounce but this might be good if we flush out.  

    Oil back over $84.50 for the moment.  We have our USO bull spread to bet on Rent-A-Rebel activity over the weekend.  If I were Putin, I'd halt Russian production for a week.  Better to take that hit (2% of the year) and kick prices up 10% than keep selling at a loss.  Actually if I were Putin – I'd set up about $10Bn worth of long on Futures and options and THEN cut production for a week and get a nice 10-bagger.  

    Hedges/Jet – Hedges are SUPPOSED to lose money but, if your longs aren't making 2x what you lose on hedges, you have too many hedges.  It took us a few months to get our Portfolios balanced out – a lot of it is trial and error.  When the market drops 1%, I like to benchmark that against the Portfolio performance and, if I'm bearish, my Portfolio better be going up at least 0.6% on a 1% move down.  If I'm bearish and the market goes against me 1%, then I expect not to be down more than 0.5% (because my hedge covers 1/2 of my losses).  

    If that's not happening, we adjust.  Another thing I like in hedges is to have them paid for.  So, when I take a bull call spread on SQQQ, I like to offset some or all of the cost with the sale of some short puts in a stock I REALLY do want to own if the Nasdaq drops 20% and triggers my buys.  

    As you see, taking winners off the table is key – at least lightening up.  It's important to keep perspective – you are not supposed to make more than 20% in a year so, when your portfolio is up 20% in August, it's a good time to cash in and take a 3-month vacation or, in the very least, lighten up so you're not risking 120% of your starting capital at the top of a rally.  

    Generally, as a rally tops out, I like to get more and more aggressive with our hedges.  So, over the summer, each time we made more and more ridiculous gains in the LT and Income Portfolios, I took about 25% of the profits (still on paper) and put them into bearish STP positions.  That's the "cost" of hedging – about 25% of your profits.  The trick is to learn to be realistic about your profit expectations so you know when you are making "too much" money.  If you make too much money – you should KNOW something is wrong.  If the markets went up 20% a year then everyone in America with an IRA would be a multi-millionaire and coffee at SBUX would be $100 a cup.   

    We talked about the Jan SQQQ spreads yesterday, they aren't going to make money unless the market goes down AND STAYS DOWN.  The purpose of spreads like that are to protect LONG-TERM positions you have no intention of selling.  In the STP, we had Oct, Nov and Jan protections in place with the Oct DXDs up to 200 ahead of the dip – because we kept pressing them as our Long-Term Portfolios made TOO MUCH MONEY.  

    Read the STP commentary as we added to the DXDs over time, we bet, we lost, we rolled, we doubled, we lost and we doubled again over the course of a month or so.  That was our short-term hedge so we could take advantage of a fast market correction.  Those profits in the STP ($63,000 at the moment) become the cash we then use to press our long best on CLF, RIG, FCX, etc.  

    If we are wrong about pressing our bets between now and Jan, then those SQQQ spreads will begin to pay off – and we'll have MORE MONEY to buy MORE long-term positions.  Oh, I guess it's important to point out that the main goal of this strategy is to build a BULLISH portfolio of LONG-TERM positions over the course of many years.  It's a strategy that FORCES us to buy low (because we sell puts) and sell high (because we sell calls) – no matter how much we get caught up in a frenzy.  

    Now, to the question of how can you tell if you have too many short puts and bull call spreads – you have too many (or too little protection) if the market drops 5% and you lose more than 5% – that's for sure!  The LTP, which is completely unhedged as a stand-alone, fell from 22% at the top to 14% at yesterday's close.  That's -$40,000 from $610,000 is 6.5% but the STP (our hedges) went from near flat to up 60% (+$60,000).  The Income Portfolio was much less invested with many more short puts and it got killed by GTAT and it dropped to -10% and that's down $50,000 but still covered by the STP hedges.  

    If you are losing 20% on a 10% drop – you are simply WAY TOO BULLISH!!!  I don't know how you've been reading our stuff for the past few months and stayed 2:1 bullish but, I can certainly tell you in retrospect – that was WAY TOO F'ING BULLISH!  That's not a problem with the strategy, that's a problem with your positions.  

    We have picked a lot of material stocks and pressed our losses because we feel that, over the long haul, the materials offer a good bargain at this point in the cycle.  That doesn't mean they are going to magically go higher when the whole market goes lower – it simply means that, if we had to buy something on the way down – those felt safest to play initially.  Go back and read our posts from the crash of 2008 – we did the same thing and they crashed even further and, you know what – WE BOUGHT MORE! 

    We didn't begin buying Financials or Tech until the great crash of '09 (except AAPL, which I was foaming at the mouth about at $85 ($12 post-split).  I think you might benefit from reading the review of the great crash of 2008.  Not that I expect that to happen again but, if you are freaking out about a 10% market correction – you NEED to get context for what can happen if the shit really hits the fan:

    Stock Market Crash – Year One in Review – The Gathering Storm

    Stock Market Crash – Year One Review II – The Next 30% Down

    Stock Market Crash – Year One Review III – March Madness!


  198. LOL, at least I'm consistent!  I was just reading the Crash Review and I love my own quote in part one re. what I was just saying to Jet:

    Do not mistake what Buffett is saying for hitting the BUYBUYBUY button.  You need to plan on doubling down on the Valero shares you buy at $17.50 when they hit $8.75 but picking some entries here on strong companies that you don’t mind owning NO MATTER WHAT THE TICKER SAYS, is a prudent way to play these volatile markets.

    See, it's not a new strategy – this is what we do in crashes but, if you don't keep your portions under control or if you panic and abandon the plan in the middle (VLO bottomed at $11) – then of course "the strategy didn't work".  It's easy to buy VLO at $17.50 and SAY you are in for the long haul but then, a month later when it's at $11 and you are showing a 40% loss (or a 200% loss if you sold $15 puts for $2 that are now $6) you end out freaking out and "cutting your losses" – what you are only doing is LOCKING IN YOUR LOSSES and you miss out on the recovery to $60 (this year's high).  

    DO NOT INITIATE THESE POSITIONS IF YOU DO NOT BELIEVE IN THEM!!!

    There's a VERY SIMPLE rule of thumb and it's in our strategy section – when you lose 20% – of a trade, of your portfolio balance – GET OUT!!!!  Get to cash, take a break, rethink your strategies because certainly the ones you were using weren't working.  It's pretty easy to recover from a 20% loss – all you have to do is make 25% off the 80% you have left so a simple move back in the market to the highs would do that for you.  

    BUT, if you lose 40%, you only have 60% left and you need a 66% gain just to get even.  That's 164% HARDER than coming back from a 20% loss.  What is Buffett's Rule #1?  DON'T LOSE MONEY!!!  There's  a very good reason for that!

    Meanwhile, Europe has completely flipped lower – down 1.5-2% now.  Our Futures are down half a point, led by the Nas, down 1% (SQQQ anybody?).  


  199. Also from Part One of the Crashiversary post:

    On Monday, October 27th we had nice test of Dow 8,000 on a massive global sell-off and during the day, in Member Chat, I called a bottom saying:

    I’m not saying anything will turn around right now but the point is we can buy low and get paid to wait by selling premiums.  We’ve seen how fast this market can whipsaw up and I wouldn’t be too surprised to see even the anticipated Fed cut Weds boost us 1,000 points by Thurs.  Whether or not we hold it is another story but this is starting to look more and more like rotation out of commodities and into some very beaten down stocks.  Can they get more beaten down?  Sure – but then we buy more and sell more premium.   Don’t forget there is the old saying that "you can’t fight the Fed" but this isn’t just the Fed, this is the entire G7 acting in unison to move the markets.  Perhaps the global crisis is so severe that not even that will help but, if so – then nothing really matters anyway does it?



  200. PM/Palotay – Good point on that, PM is a wonderful thing – until you use it!  Sounds like you have a good handle on managing it.  Good deal on TSLA, nice drop on that useless announcement last night.  

    Big Chart/StJ – Actually, it's more or less a nice, orderly sell-off.  RUT down 15% is getting scary and, as expected, the NAS couldn't hold that top green box when the last green on the RUT disappeared – that's the tug boat action.  

    Nas down 1.15% now.  VIX looks like it's hitting 20.  

    Nice job, Sibe – you really get this stuff! smiley

    Stealth sanctions/Lotter – I thought about that but the mechanics of pulling it off would involve too much of a cover-up and the Government interfering with commerce that way would set a terrible precedent.  I'm sure there are surreptitious ways to do it.  For example, I'm sure the Army has tens of millions of barrels of oil (probably tankers) that are "off the books" and could be used to tactically disrupt prices without much of a paper trail.  It is a good way to put the squeeze on Putin, but I think the reality is this was coming one way or another anyway and it would have come sooner if Putin HADN'T invaded Ukraine.  

    But, if he hadn't, we'd all still be calling it THE Ukraine – so at least we learned something…


  201. What I learned for all this last year was : PATIENCE.  Most of my positions are Jan 2016, so why am I freaking out about them now in Oct 14?  

     

    One other point Phil that you don't speak to much is how a spike in Implied Vol will impact any short option positions in a negative way.  So on a sell off we experience a loss in the delta of the position, but many times the IV spike inflates option prices just as much, so it's twice as painful.  Once IV calms down, the account will show a gain even though the stock may not move up.


  202. Phil/ Did you see John Stewart's take on AIG lawsuit last night? Funny. 


  203. I just watched it – excellent, clip:

    Patience/Burr – By far, the hardest thing to teach people.  I did talk about IV in the Webinar but, you're right, can't be explained often enough.  


  204. Taking a long and nervous poke on /TF @ 1,057.  Lined up with 16,520, 1,915 and 3,932.50 – obviously out if any 2 fail.  Dollar 85.76 needs to stay below 85.80.  Oil at $84.82 – I'm not the only one that believes in $85.  /RB doing nicely already – just hitting $2.25 and no sense in riding out a pullback here – we can just jump back in long once they get over with stops at that line.  


  205. Phil- I recall at this point in the 2008-2009 crash the "experts" were still all telling us that it wasn't going to be more than a mild correction and we should buy as this was an opportunity. This time, at this point, I keep reading about all these "experts" saying that we are headed for a global meltdown and how there is much further to fall. Perhaps they don't want to be wrong again, or they found that if you predict disaster and it happens you can make a career out of saying you called the last crash, but if things get better, no one remembers that you said it would get worse. My point is that usually when all the noise says the "sky is falling", and the so called experts all agree that we need to get out of the way, it means that the worst is just about over. When they are all telling you that "the sky is the limit", well then is when it is time to run for cover. Of course this is anecdotal and just my feeling about the way it works, but when all these talking heads get around to agreeing I find that it means things are getting ready to break in the opposite direction. For example, in fall 2012 all of the Apple analysts insisted that we were headed to $1000 a share, and of course we know what happened. When it began rising again in 2013  many were saying the stock still had further to fall since Tim Cook wasn't able to innovate and Apple had lost its mojo. A few still insisted correctly that there was still plenty to be optimistic about.  My conclusion is, that by the time the news makers all agree on a direction, it has already happened for the most part and it is usually time to do the opposite. I hope I am right and things start to stabilize in the next few weeks without seeing a drop of more than 25% in the stock markets this time and a global meltdown that sends the world into financial crisis as everybody is now predicting. This is "Craig's contrarian concluding conjecture". 


  206. [$$] Apple Supplier Wants to Wind Down Production

    I can't believe the Judge is allowing the details to be "secret" – that is such BS for shareholders and a terrible precedent.  So all corporations who want to collude can now just exchange confidentiality agreements?  This stuff just gets worse and worse…

    Dollar/Kinki – Good point.  

    Kass/Rustle – He and I are on the same page with this one:

    While equities are less frothy than fixed income. I don't feel stocks are inexpensive or compelling buys at the margin. I don't buy the either/or argument, as cash is an asset class. At numerous times in history, not losing money (and being in cash) is a reasonable alternative to being in risk assets.

    1,060.2 on /TF – just like /RB - that's the stop now (1,160) and simply reload with tight stops if it pokes back over as a momentum play.  16,550, 1,919, 3,937.50


  207. GTAT/DC – I think it means that their defect rate in production is still unacceptably high and that's why they were, at first, going to limit it to watches (the bigger the surface area, the more defects were likely).  AAPL has already filed several patents on Sapphire glass manufacturing and they've made a big point about preserving the factory jobs so I'd say AAPL is simply taking over the whole Sapphire operation and will keep developing the process until they can get it to work big enough for phones.  

    It was the same with Gorilla Glass – GLW would make a 6' x 4' sheet of glass and then cut out sections that were defect-free and be able to use maybe 20% of a sheet in the end.  Sapphire, apparently, is even worse than that to work with and GTAT simply didn't have the money to keep trying and AAPL would look more foolish giving them another $500M than they look by forcing GTAT into a bankruptcy that lets AAPL take over the glass operation.  

    For AAPL (assuming I'm right), this is a huge potential win.  In theory, Sapphire is totally superior and, unless someone comes up with Diamond Glass, it literally cannot be beat on the periodic table!  That means, if AAPL can ultimately perfect the product – even if it takes 3 years and costs Billions – they will have something that is completely unique and not available to any other competitor.  

    XCO/DC – Looks like +20% pre-market.  That's the problem with our Buy List – some of those companies are such good deals that they get bought and we don't get a chance to build a long-term position.  

    Oil/Ivan – The November contract expires in 10 days and yesterday there were 180M fake orders (open contracts) and today it's 169M so, yesterday, only 11M contracts were dumped in that sell-off (6%) and there aren't enough business days left (7) to get rid of 140M barrels (the very least they need to dump) before the expiration.  Those guys are already taking a ridiculous haircut and so are the idiots that rolled their 273M barrels into December.  These traders are F'd and there's no actual reason for oil to go up from here and the longer it stays down (and NYMEX traders are staring at 1-second charts, so we're talking hours, not days), the sooner real panic will set in, so there's a chance of a massive panic low – I can't even guess where it ends.  

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Nov'14 84.39 85.00 83.59 84.92 07:28
    Oct 10

    -

    -0.85 49992 85.77 168912 Call Put
    Dec'14 83.64 84.21 82.80 84.13 07:28
    Oct 10

    -

    -0.92 16465 85.05 273581 Call Put
    Jan'15 83.33 83.76 82.41 83.68 07:28
    Oct 10

    -

    -1.01 4574 84.69 145668 Call Put
    Feb'15 83.12 83.35 82.14 83.32 07:28
    Oct 10

    -

    -1.11 2040 84.43 49913 Call Put
    Mar'15 82.87 83.32 81.96 83.11 07:28
    Oct 10

    -

    -1.12 2884 84.23 109117 Call Put

    Usually, the 169Mb from Nov would be rolled to leave Dec with about 350M fake orders and then the other 80Mb would be distributed along longer months.  Unfortunately, rolling past Dec has tax consequences that traders might not want and, with the long month getting lower and lower – once these guys start thinking that $84 March contract might drop 20% to $70 – then they may as well take the loss at $85 now.

    So, while I don't mind playing for a bounce in oil – I certainly wouldn't go making any big bottom calls until they clear out this month's overhang of FAKE orders – that's fake, Fake, FAKE!!!

    Opposites/Craigs – Not to be harsh about it but that's a very lazy and DANGEROUS way to look at the market.  The analysts are, for the most part, right about half the time and wrong about half the time and sometimes the consensus is right and sometimes it's wrong but, in general, they don't know crap.  Making things worse, the days of the professional analyst are over as computer models that follow trends have taken over (there are now hedge funds that trade based on Twitter) and that's why you have a market that can go down 2%, then up 2%, then down 2% on 3 consecutive days – no one has a clue what's going on except to follow the other guys. 

    You need to make investments based on things you are sure of and then, once you do, you need to ignore the BS moves and focus on what's really happening.  CLF is a good example, it has followed coal down because it's classified as a coal company and, no matter what the CEO says or what kind of presentations they do – it doesn't matter because somebody misclassified them and they will go down with the ETFs and funds that dump the coal sector – as well as the materials sector – even though they uniquely service the US, which is, by far, the most active part of the Global Economy.  

    People understand US Steel is in the US – it has US in it's name.  They are down but not the way CLF is down.  X does 80% of their business in the US, CLF does 66% in the US.  Iron ore pellets (what CLF makes) are used in steel production (what X makes) so, logically, there should be a very close correlation between CLF and X, and there was – until CLF began to be misclassified as a coal company this year.  

    Even as I went to make this chart, the compare button on Yahoo Finance defaults to ANR, CNK and BTU – because that is how CLF is classified and compared to by all the mindless computers that run the markets.  

    Unfortunately, being smarter than the computers doesn't help much when so many people are following the computers.  If this were a natural market, where reason mattered, I'd be making CLF 10% of the Long-Term Portfolio at this price – BECAUSE IT'S A MISTAKE!!!  Unfortunately, it's not a mistake that will likely be corrected anytime soon and who knows what damage is being caused to CLF, who have $5Bn of loans against what is now a $1Bn market cap – that's the kind of thing that can make lenders nervous and cause them to call in loans – even when they are being serviced (and CLF's cash-flow is fine BECAUSE THERE'S NOTHING WRONG WITH THEIR SALES OR PROFITS!!!!

    Anyway, this isn't about CLF, nor is it Alice's Restaurant so, to get to the point, you have to make your own decisions and not just assume the crowd is right or wrong.  I love to catch the time when the crowd is wrong and bet against them, because that's very rewarding – but I don't ASSUME the crowd is wrong – I just find good ideas and, if there's ALSO a trading advantage to going against people – then I know I have a better than average chance of being profitable because – if we are right half the time but we take bets from people who think they have a 60-70% chance of being right – then they will be paying us 20-40% too much to make the bets.  

    That means, if we are right half the time, we make a 20-40% premium for taking those bets.  That's what BEING THE HOUSE – and Not the Gambler is all about! 


  208. Phil- I wasn't saying I would bet using my theory, I was just making an observation that was also somewhat tongue in cheek, though not completely. I agree that it would be dangerous to make investments using this type of anecdotal observation and I also think I did not take into account the way computer driven trading has changed the markets and made it even more irrational than ever, so there is that. My only point was that it always seems like the pundits who call these things only seem to be in total agreement when it is late in the game and the end of whatever they are agreeing on is nearby. Definitely not anything to bet on, but it will be interesting to see if it plays out that way this time and things do turn around some within the next month or if it goes on much longer than that. Perhaps I am engaging in wishful thinking, but you predicted a while back that at around 16500 on the Dow we should be getting near to the amount that the markets needed to correct to (with the caveat that it could easily overshoot by quite a bit), so hopefully we will both end up being close on this call.