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Money-Making Monday: How to Profit from a Market Correction

I love the smell of Napalm in the morning!  

That's the classic line from Apocalypse now that I'm often reminded of during Member Chat, when people start to get nervous about a market sell-off.  Rober Duval says "It smells like victory" and laments that "Some day this war's going to end." and THAT is how a prepared trader should feel about a market pullback.  

Rather than victory, it smells like OPPORTUNITY – even if you are not on the right side of the trade.  It's an opportunity to stress-test your positions and check your portfolio balance because, if you can survive this – you can probably survive anything.  

At PSW, we keep 5 virtual portfolios for our Members.  A $25,000 Portfolio (for small trades), a Butterfly Portfolio (for well-hedged trades) and a usually bearish Short-Term Portfolio (aggressive trades) which acts as a hedge for our 2 larger, portfolios, the Long Term Portfolio (aggressive and low touch) and the Income Portfolio (conservative and low-touch).  

From a balance perspective, we're primarily concerned with the sum of our Long-Term and Short-Term Portfolios and, currently, that's $175,178 (up 75.2% for the year) and $561,856 (up 12.4% for the year) for a combined $737,034 – up 22.8% from where we began the year ($600,000) despite the sharp pullback in the market.   That's BALANCED!  

Another key to our success is that we are using just $438,750 of our $1,200,000 in ordinary (non-portfolio margin) buying power (36.5%) between the two – THAT leaves us in fantastic shaped to pounce when the market throws a sale like this one.  In the Income Portfolio, we're using just 1/10th of our buying power – we've been waiting for an opportunity like this all year!  

We just had an extensive conversation in our Live Member Chat Room about portfolio allocations and scaling into positions, so I won't re-hash the strategy here but I will say that, if you are not weathering the market storm well enough to be in a buying mood – you're doing it wrong!  

Specifically, in our Short-Term Portfolio, we've been using DXD (ultra-short Dow) and SQQQ (ultra-short Nasdaq) hedges on the way down.  The nice thing about a trade like our 30 SQQ Nov $35/40 bull call spreads that we bought for $2.58 is that we can already sell the $35 calls for $5.50, which is more than the spread would net if we finish above $40 in 40 days (now $40.66).  

The net of the spread is currently just $1.90, so we're actually showing a loss even though the spread is in the money.  That's because the short $40 calls now have a large premium ($3.60) while the long $35 calls are losing theirs (as they go deeper in the money).  If we leave them alone (and this is an excellent hedge if you need a new one) those 30 spreads still have $9,300 more to gain. 

Balancing our portfolios isn't just about slapping down hedges – you have to UNDERSTAND how the hedges work!  You have to be smarter than the running balances your broker shows you – they don't reflect an accurate picture of how your option trades are doing and UNDERSTANDING this, when most retail traders playing with options are clueless, gives us a tremendous trading advantage

When the S&P fell below 900, what did Warren Buffett do?  He sold $5,000,000,000.00 worth of S&P $900 puts to SUCKERS who bet it would go lower.  Both Buffett and I knew that it was already ridiculously low and unlikely to go lower (see 2010's "The Worst-Case Scenario: Getting Real With Global GDP!") and, even if it did (it hit 666 on the spike low) – it wasn't likely to stay there.  

You see how this market can whip you around (see my take on "Flip Floppin' Thursday", for example) so, unless you are a day trader, you need to take positions you have CONVICTION in, not just whatever some idiot on TV told you to BUYBUYBUY or SELLSELLSELL last night.  

Use Rational Valuations to determine what things are worth – don't just follow a trend.  As I noted above, if the Nasdaq stays where it is and SQQQ stays above $40, then that SQQQ spread goes from $1.90 to $5 (up 163%) in 39 days.  Isn't that a great hedge?  Essentially, you will get paid 163% back on your money UNLESS the Nasdaq recovers.  

So, if you have a tech-heavy portfolio and want to stop the bleeding – this is ideal because, either your tech stocks make a comeback, our you get compensated for a move lower, flat, or even if it's not high enough to drop SQQQ back below $36.90.  That's all hedging is – it's really not that complicated.  This is what we teach you to do at Philstockworld.  

If you want more bang for your hedging buck, without getting into the fancier strategies we teach our Members, then we just have to find your panic-point and try to cover that.  Let's say, like us, your long-term positions were up 20% and now they are up just 12.4% after the Dow has dropped 850 points (5%).  We KNOW how much our current STP hedges will make ($9,300 on that one SQQQ spread alone) so figure we are already hedged for another 650-point drop 50 16,000.  

Below 16,000 is a 5% drop from here and DXD is a 2x ultra-short of the Dow at $26.  So, if the Dow drops 5-10%, then DXD will go up 10-20%, between $28.50 and $31.  Currently, the Nov $26 calls are 0.95 and the Nov $29 calls are 0.33 so it's net 0.62 on the $3 spread that has 383% of upside potential if DXD simply goes into November expiration (39 days) above $29, a bit more than 10% higher than here. 

That means, if your portfolio dropped $25,000 and you want to avoid another $25,000 loss, you can invest $5,000 in a hedge like that and that will pay you back $24,000 at $29 (+$19,000).  If the Dow goes back up, you lose the hedge but get back some or all of the $25,000 you lost on the dip, if the Dow goes flat, you lose the hedge but there's no more damage and now, hopefully, it's time for the Santa Claus Rally.  Of course we would adjust along the way – these are just the basics.  

Having a plan is step one towards not panicking in the market.  What's yours?  

 


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  1. Oil Lines

    R3 – 89.19
    R2 – 87.73
    R1 – 86.62
    PP – 85.16
    S1 – 84.05
    S2 – 82.59
    S3 – 81.48


  2. More data about the damage of austerity:

    http://www.washingtonpost.com/blogs/wonkblog/wp/2014/10/10/why-is-the-recovery-so-weak-its-the-austerity-stupid/

    Fiscal Impact Measure

    And, as you can see above, all this austerity has been hurting GDP growth since 2011. It shows the Hutchins Center's new "fiscal impact measure," which looks at how much total government tax-and-spending decisions have helped or harmed growth. The dark blue line is what policy has actually done, and the light blue one is what a neutral policy would have done. So, in other words, if the dark blue line is below the light blue one, like it has the last three years, then policy has subtracted from growth.


  3. Bill Gross not attracting as much money as we thought to Janus:


  4. Yodi – You had wrong calculations for your gas prices this morning. If gasoline is 1.6 euros/liter, it's 1.6 x 3.8 x 1.27 = $7.72/gal. 

    BTW, you can check prices here - http://www.drive-alive.co.uk/fuel_prices_europe.html. These are averages, but it looks like about $7/gal for diesel or gas across Europe. I filled up for $2.96 here in NJ on Saturday.


  5. Good Morning!


  6. STJ you right I must have divided instead It looks even worse 


  7. Now I need two bikes 


  8. Quote of the day:

    Vitalily Katsenelson, “Tops and bottoms are only obvious in the rearview mirror. You may feel you can time the market, but I honestly don’t know anyone who has done it more than once and turned it into a process.”  (Institutional Investor)


  9. Speaking of gas – maybe one reason oil prices are lower:

    http://www.washingtonpost.com/blogs/wonkblog/wp/2014/10/09/more-efficient-cars-are-putting-a-hummer-sized-dent-in-gas-consumption/

    Since 2007, new cars sold in America have grown steadily more fuel efficient, a quiet but considerable environmental success. As of September of this year, new light-duty vehicles purchased in the U.S. averaged about 25.3 miles per gallon, up from 20.1 mpgs in October of 2007.

    For some perspective on what those gains mean nationwide, look at this chart from Michael Sivak and Brandon Schoettle at the University of Michigan's Transportation Research Institute. They've been tracking the fuel economy of new vehicles sold (based on their EPA window sticker ratings) every month for several years, and this picture includes data collected on 93 million vehicles:

    It illustrates that recent gains in fuel economy have saved the U.S. more than 15 billion gallons of fuel since late 2007. That's the equivalent of all the gas used by vehicles in the U.S. in about 33 days. And it translates to saving about 297 billion pounds of carbon dioxide emissions.


  10. Phil –  WMT didn't seem to move during this sell off.  Makes me feel good.  

    Like it for a "safe" trade here?  


  11. PLX  +10.5%


  12. TSLA having two flat tires today !!!


  13. Good morning!  

    Weakness right at the open is NOT GOOD – it's Monday though and we did expect more selling into tomorrow morning's blow-off bottom so – all going according to plan at the moment.  

    Please don't confuse the above with a call to be more bearish.  We're already plenty bearish in the STP, covering the LTP and Income Portfolios.  Our last call was the bullish TNA play and I'm looking for a reason to take the short-term STP SQQQ CALLS off the table and leave the naked short $40 puts, that will flip us from $5,000 per 2% bearish in the STP to half of that or less.   

    In fact, at $7 for the SQQQ Nov $35 calls ($21,000 for 30) and /NQ at 3,850 and the Nas at 4,250 – let's take a chance and cash those in, leaving the naked $40 calls (30) and, of course, we'll add more hedges if these levels don't hold (and I still like the Futures longs we went over this morning) 


  14. The analyst who just raised his target on GPRO to 105 must be feeling pretty smart right now.


  15. I suspect a sell program went into effect on a lot of the momo's names because they all dropped in chunks at exactly the same time without the market moving as much.


  16. VIX at the highest level since December 2012.


  17. so do you think it worth putting some hedges in place phill atm… (was late to the party) or just wait and see what happens in the next day or two???


  18. WMT  Oct 14 77.5 c have to be rolled premium is less than the div they pay !!!!


  19. Europe is GREEN and up almost 0.5% across the board.  If they are not worried – why should we be?  

    Austerity/StJ – Well Congress holds the purse-strings and they did promise to do whatever it takes to make Obama look bad – I guess knocking a point off the GDP is a good start.  

    JNS/StJ – He's attracting almost exactly as little as I thought he would!  Still not at my $13.50 target yet and we had to bail, but it was a good play. 

    Gas demand/StJ – And who was it that raised the CAFE requirements to lower that demand?  Hint – no one from the GOP!  

    WMT/Burr – I like them but not cheap at $78.25.  Down around $72.50 they get interesting.  This is a flat stock, it matters whether or not you pay that $6 because your upside expectations are extremely limited.  

    TSLA/Yodi – About friggin' time!  

    Looks like the 7 short Jan $275 calls in the STP are safe!  $14,700 on that one.  Now I'm worried about the short Jan $140 puts ($4,400)!  

    SQQQ filled but now we have to worry if it goes too far (-0.5% at the moment) and we'll have to re-cover or risk (embarrassingly) not being short enough on the next leg down!  

    GILD/Burr – Sounds like a blockbuster to me.  Probably priced in, though.  

    GPRO/Rustle – Great job sticking to your guns on them.  

    VIX/Albo – Yay!!!  

    Hedges/Triboy – If you got caught long, you should have something.  If you put, for example, $5K into the DXDs from the post, that's got almost $20K upside potential for the next 5% drop and you can stop them out (or roll them out) at $2,500 so $2,500 risked to make $20,000 is a very good hedge if you have none.  Keep in mind though, they only work if the market goes more than 2% lower from here but at least they are cheap if this is our bounce spot.  Notice we just officially got more BULLISH, not bearish but that's because we were early for the party and want to take some cash off the table (and $21,000 is a good place to start, right?).  


  20. Phil/CCJ

    I have the Jan 16 17/22 BCS, purchased for 2.37, I'm thinking to roll the 17's down to the Jan 16 13's for about 2.15.  That puts me net 4.50 on the $9 spread that would then be about $2.80 in the money.  Good adjustment?  Would you suggest anything else?

    Thanks


  21. What is wrong with CLF today up .70 


  22. GILD's new drug approval appears to be already discounted as Pharm suggested.


  23. Phil, when you refer to a "blow off bottom" are you essentially describing a quick spike down with a rapid reversal?  Or actually blowing off the bottom and continuing to fall?  You've used this terminology before and described it, I just haven't been able to remember what you intend to mean when you say that.


  24. Oops !  Phil, I was writing as you were posting.  Didn't know you had already said that.


  25. My entry at $2.40 on XCO  via short $3 puts not looking so hot.


  26. Phil / GTAT

    GTAT below $0.50… Do you still intend to DD or bail?


  27. CCJ/Jeff – They went crazy low but you are catching a knife at the moment.  

    There are no 2017s yet, so I'd wait.  The 2016 $17s are $1.95 and you are right that now is the time to act but I'm not sure what it accomplishes to just roll to a lower strike with a higher delta that will burn you harder if you are wrong on your timing.  If you feel brave, why not buy back the short $22s (0.85) as they have a delta of 0.25 so it's .25 if you are wrong and $15 fails vs 0.72 you would lose on the $13s (which would also make for an even cheaper roll from the $17s if CCJ drops more).

    So, mechanically (ignoring that I'd rather wait for 2017s), if I pay 0.85 for the $22s and then CCJ drops $2, I miss making 0.50 from the $22s and my $17s drop the 0.96 they would have dropped anyway but the $13s fall $1.44, so I end up about even as my roll is cheaper and THEN I can sell the $17 puts for about $1 so my net cost of rolling from the $17/22 bull call spread to the $13/17 bull call spread would be about 0.44 but, doing it my way, you get to test your premise each step of the way over time, rather than making a rash decision all at once.  

    LOL Yodi!  

    And what Aldo said Pharm said!  And then what Aldo said I said that he was also saying when I said it. cheeky

    XCO/Albo – At $84.58 on oil, that whole sector is going to turn to crap soon.  If you are worried, consider flipping to OIH or XLE so at least the risk is spread.  

    Not that any of them are looking in the least bet good.  

    GTAT/Akad - No DD – probably dead money but hoping for a miraculous save (hope is NOT a valid investing strategy).  


  28. It's not about whether or not it's priced into GILD, it's that the FDA didn't deny the drug which would have a major effect.  So I'm stating that the drugs are on-track, and from my friend who sells GILD lots of imaging equip, they are building and buying out the wazoo.   

    I'd much rather continue to be long GILD than PLX right now, that's for sure.


  29. PS:  I'm obviously saying that tongue in cheek today…. PLX is up 35% on news of positive GCD


  30. Phil/CCJ

    Thanks!  Glad I asked, wait I will for the 2017's.  Definitely learning, but a long way to go…


  31. Phil/AAPL – AAPL's dropping a bit today, good time to get a Bull Call Spread on sale? what would be good price points, Jan 2017 97.5/115 costs about $7.00..


  32. phill/all i was wondering if there was info somewhere on the site about setting up a portfolio, ltp, stp et allocate funds et… use of margin et… thanks guys


  33. Boy great fight between the bulls and the bears today !!!!


  34. approaching 1904 on S&P again, might be a squeeze on the market if we pop above that today.


  35. Phil congrat on NFLX no faces


  36. AAPL is in consolidation but it's still up 25% over the past 6 months.  It isn't a bad price based on the analysis I've read but I wouldn't call 3% below its all time high a sale!


  37. Greetings All, finally have some time to check in here, it's been at least a month. Back in Wa state for a little vacation and it feels great! 

    Pharm- was just curious what you think about PLX's announcement it "could" produce zmapp and if you're using this spike to lighten your load? 


  38. ABB -10% from where it was added.  The short calls are now up 73%.  Might be time to roll them down to get some more premium.


  39. JPH/ AAPL, good point maybe 95 would be a better lower strike. It's just they've got so many billions in cash a and everyone wants one or another of those widgets… it's hard to imagine it dropping a lot for very long…PEG ABOUT 1.3
    Here's an article on low PEG stocks, and lo and behold, class bullying victim RIG is one of the lowest as of Sept at about 0.05
     http://seekingalpha.com/article/2499825-the-cheapest-and-most-expensive-s-and-p-500-stocks-utilizing-cape-and-peg-ratios


  40. Clark Schultz, SA News Editor

    Tesla Motors (TSLA -4.7%) slips lower again in an ongoing reaction to last week's D-announcement from the EV automaker.

    As noted by Wired, the slide in TSLA lines up fairly close to the post-Musk tweet run-up.

    Credit Suisse is out with a positive note in defense of the EV automaker.

    The investment firm has increased confidence that Tesla will reduce its battery costs and thinks the Model X will be highly competitive in the premium SUV segment.


  41. Phil, how big a role do you think election uncertainty is in this selloff? 

     

    I'm doubtful that Syria or Ebola have much to do with it, and even if the fed turns off the tap, trillions in QE will still be floating around out there for some time keeping assets bubbled. 

     

    I would guess we consolidate for a few more weeks with some earnings volatility and provided things still overall look good there, we head back up to S&P 2000+ into EOY. 


  42. Looks like snapchat people got hacked somehow.  200,000 pictures will be released, mostly nudes.  Some of underage kids.  They are calling it the Snappening in reference to the Flappening that happened to celebs.


  43. @Burrben

    Stephen Collins will like that, um too soon?


  44. After bad experience on GTAT I am going back to good old boring (with lower option premium) healthcare stocks like BAX which have come down a nice 10% … pay 3% dividend .. although earnings due out Thurs. I won't have to worry about them announcing bankruptcy :)


  45. STP just passed 80%, that's $80,000 we get to go shopping with!   Now we have to watch VERY closely as we have 30 short Nov SQQQ $40s that we sold for $1.87 that are now $4.50 with SQQQ at $42.20.  If anything, as we just sold the $35s for $7, I'm thinking of slapping on the March $45/55 bull call spreads at $2 – just in case, but let's mark these numbers and see what happens first.  The benefit of the March cover is it's not likely to lose more than $1 if SQQQ drops a few bucks and that would wipe out the short $40s and then we will have collected net $6.29 on the spread.  

    GILD/Burr – I'm not saying there's anything wrong with them, this is great news that likely justifies $100 but they already rallied from $40 last year (+150%) during this development cycle so – it's priced in.  The approval isn't a reason for them to rally.   Had they not been approved, they'd be down 20-30%.  At $94,500 per cure, it will be interesting to see if they get blowback on this one. 

    You're welcome Jeff.  

    Wheeeee!  Now the Nas comes back after giving us a scare.  

    AAPL/Sn0 – The "dropped " from $101.91 to $99.92 and now back to $100.81 – I'm not sure what exactly you think you will be taking advantage of in that narrow of a range.  

    I like our Income Portfolio Spread on them with 70 2016 $85.71/107.14 bull call spreads (now $10) and 20 short 2016 $87.14 puts (now $7.10), which are well on track for 10 gains.  

    Setting up/Triboy – In the Wiki there's discussion on Portfolio Management as well as links to "Smart Portfolio Management", position sizing, covering and hedging, rolling, managing risk – etc. articles (and don't forget the comments underneath the posts are often useful as well.  

    Squeeze/Rustle – I guess but do you really think people went from overcommitted bull to overcommitted bear that fast?  

    Thanks Yodi.  Still, we have to see if it sticks in this crazy market.  

    Hey Jrome – Happy birthday!  

    ABB/Income Portfolio, Burr – It was the straight stock at $22.85, selling March $23 calls for $1.10 and the March $22 puts for 0.95 and ABB is at $20.50.  The net on the buy/write is $20.80/21.40 and ABB pays a 0.77 dividend (about 4%), so we do like it long-term.  On the whole, I don't see any reason to do anything, the short $23 calls are still 0.35 and, if ABB pops back up, I'd hate to have capped my gains by rolling down to the $20 calls fro $1.20 more.  I'd rather wait for longer months to come out and see where the short puts (now $1.90) will have to roll to.  

    Keep in mind, this is just my preference based on what I think ABB is worth over time.  If you are worried and would rather have $1.20 and cap the gains – it's a perfectly valid move – just a more conservative one than I would put on our Income Portfolio since I am comfortable with owning 2,000 shares at net $21.40 – even if the stock happens to be below $20 at the time, so it doesn't make sense to me to spend money buying back short calls and spend money on fees selling more long calls – just because they took a dip with the broad market.  

    Election/DrC – I don't think people care all that much about mid-term elections.  It's the Fed that matters to the people who matter.  Glad you have such a clear confident picture – I'll just follow your lead then….

     


  46. Phil, can you touch on what you mean by "blow of bottom" from earlier this morning


  47. DRYS - back to 2012 prices.  DSX heading there, would love more DSX at 6 unless the world is truly ending.


  48. Phil/TNA, you had suggested, i think, adjusting the 58/60.5 spread when the longs got to 1.25.  this morning they have been down to .95 and now back to 1.35.  any adjustment or watch?


  49. Phil//  Is it a good time to go long or wait for the 2% retracement. Looks like you have decided to remove the long calls on SQQQ. Is it based on the 5% rule for a (weak or a strong) bounce back? 

     Here is my calculation on the 5% rule

    Dow:

    17350 (High) – 16500 (current) = 850. So a retracement of 1% (i.e) 170 from the current range, 16670 would be a weak bounce back and a 2% retracement (i.e) 340 from the current range, 16840, would be a strong bounce.

    Nas:

    4600 (High) – 4220 (current) = 380.  So a retracement of 1% (i.e) 76 from the current range, 4296, would be a weak bounce back and a retracement of 2% (i.e) 152 from the current range, 4372, would be a strong bounce.

    Let me know.

    Thanks.


  50. Snapchat/Burr – People need to realize there is no such thing as privacy and then just deal with it.  

    Boring/DM – Much more relaxing over the long haul.

    Blow-off/Jeff – I mean a sharp downturn on volume that reverses.  Yes, a spike down.  

    TNA/Lunar – Good job keeping track but given the quick up and down action, I think holding them is prudent for now.  Also, it's Monday, nothing that happens on Monday matters very much.  

    Going long/Rookie – As I said above, for one thing it's Monday and for another thing, we haven't even come close to our weak bounce lines yet and, even if we did – it's Monday.  Long on SQQQ was in anticipation of AT LEAST a weak bounce (called that early this morning) before we get any more downturn so, either way, we were probably over-covered short (probably).  

    Global Signs of Slowdown Ripple Across Markets, Vex Policy MakersGovernments, Central Bankers Have Fewer Tools Left to Revive Economies After Years of Sluggish Growth. Gathering signs of a slowdown across many parts of the world are roiling financial markets and confounding policy makers, who after years of battling anemic economic growth have limited tools left to jump-start a recovery. Slumping exports in Germany are adding fuel to worries about a third recession in the eurozone in six years. China is slowing in the wake of its credit boom, weighing on countries throughout the region. Japan’s…

    • "Active managers have totally panicked," says Ryan Detrick, commenting on the latest NAAIM survey showing a cliff-dive in equity exposure to its lowest level since May 2012.

     

    Top Investors See More Pain as 10% Losses Spread; S&P 500 'Painting a False Picture'. For most American stocks, the correction has arrived. While gauges such as the Standard & Poor’s 500 Index cling to gains for the year, declines that exceed 10 percent are spreading in the broader market. In the Russell 3000 Index, for example, 79 percent of companies are down that much from their highs, according to data compiled by Bloomberg. That’s a bad sign to Doug Ramsey, the chief investment officer of Leuthold Group LLC who correctly predicted in July 2013 that the U.S. bull market had months more to go. He said that when losses multiply in stocks away from benchmark indexes, it usually means the bigger companies are next. “We’re not expecting a bear market, but we are expecting a significant additional correction,” Ramsey, who helps oversee $1.7 billion at Minneapolis-based Leuthold, said by phone. “We’re seeing very classic late-cycle action where the Dow and S&P 500 are painting a very false picture of what’s going on underneath.”

    Goldman Sachs's Broderick Sees Liquidity Risk in Market. Goldman Sachs Group Inc. Chief Risk Officer Craig Broderick said markets will encounter a shock that would expose liquidity and other risks that aren't apparent today. “When you think about the market in its current form, it does feel very benign,” Broderick said today at an event sponsored by the Institute of International Finance in Washington. “It does feel like investors across lots of different classes, not just the shadow banks, do not actually understand that in fact these crises do periodically occur, and when they do, they’ve potentially significantly underpriced risk.” The ability of the biggest banks to serve as market makers in derivative and off-the-run bond markets has been hindered by new capital rules, Broderick said. While market liquidity appears adequate because non-banks are stepping in, those new entrants may not remain involved when volatility picks up, he said. “There’s no doubt in my mind that some idiosyncratic event will occur, and that will result in a shock that will be very surprising to a lot of market participants,” Broderick said.

    The Four Questions Goldman's "Confused, Understandably Frustrated" Clients Are Asking

    • It's not only the drop last week that's noteworthy, it's the volatility, Mohamed El-Erian says on Sunday Morning Futures With Maria Bartiromo, noting that during the first 10 days of October the DJIA covered more than 10% of its overall value in its wild ups and downs.
    • El-Erian says there is "nervousness among central bankers, that if asset prices come down, then that is going to affect the real economy," hence recent cautious comments coming out of the Fed.
    • He thinks volatility will continue, notes that stock values remain above fundamentals, and thus urges cautiousness for those thinking the time has come to go bargain shopping.
    • Allianz's chief economist also noted that comments out of the Fed last week focused on global economic concerns were somewhat out of character; Fed bankers usually constrain their commentary to the U.S. economy.
    • China's central bank chief, Zhou Xiaochuan, believes that the country will meet its 7.5% growth target this year despite a slowing manufacturing sector and the woes in the property sector.
    • The job market is performing above expectations and and inflation remains tame, Zhou says.
    • Meanwhile, passenger vehicle sales climbed 6.4% on year in September to 1.7M, although that's down from August's +8.5% and July's +9.7%. January-September sales increased 10% to 14.2M vehicles.
    • Other data today shows that exports and imports blew past expectations in September.

    How an unstable eurozone could topple the world economyStalling growth is hitting hopes of wider global economic recovery. The recognition is there, but the political will is lacking.

    Draghi Weidmann Fight Intensifies as ECB Debates ActionMario Draghi and Jens Weidmann are clashing anew over how much more stimulus the ailing euro-area economy needs from the European Central Bank. As Europe’s woes again proved the chief concern at weekend meetings of the International Monetary Fund in Washington, President Draghi repeated he’s ready to expand the ECB’s balance sheet by as much as 1 trillion euros ($1.3 trillion) to beat back the threat of deflation. Bundesbank head Weidmann responded by saying that a target value isn’t set in stone.

    Draghi Says Growing ECB Balance Sheet Is Last Stimulus Tool LeftPresident Mario Draghi said expanding the European Central Bank’s balance sheet is the last monetary tool left to revive inflation although there is no target for how much it might be increased. “It’s very difficult for me to give you an exact figure at this point in time,” Draghi told reporters in Washington today during the annual meeting of the International Monetary Fund. “I gave you a kind of ballpark figure, say about the size the balance sheet had at the start of 2012.” 

    The Home ATM Is Back: HELOCs Surge To 2008 Levels

    Old favorite:  Another dip-buyer in Genworth

    EXCLUSIVE-Privately, Saudis tell oil market: get used to lower pricesSaudi Arabia is quietly telling oil market participants that Riyadh is comfortable with markedly lower oil prices for an extended period, a sharp shift in policy that may be aimed at slowing the expansion of rival producers including those in the U.S. shale patch.

    • Arch Coal (ACI +4%) pops higher at the open after saying it expects to record Q3 adjusted EBITDA of $70M-$74M vs. analyst consensus estimate of ~$67M.
    • ACI says it held $1.05B in cash and short-term investments as of Sept. 30, vs. ~$990M at June 30; available liquidity as of Sept. 30 totaled $1.3B.
    • ACI, which reports its full quarterly results on Oct. 28, says it published today’s preliminary earnings because of “recent unprecedented market conditions.”
    • Other coal names also open higher: BTU +4.1%, ANR +4.1%, WLT +3.3%, CNX +1.3%,CLD +0.8%, WLB +0.7%.

    Zambia plans to triple royalties for copper miners

    • Zambia plans to more than triple royalties on open-pit mines, underscoring a growing trend across Africa where governments are changing tax regimes and adjusting ownership structures to get a bigger share of natural resources.
    • The finance ministry says in a budget report that starting in Jan. 2015 royalties will increase to 20% from 6% for open-pit copper mines and to 8% from 6% for underground mines.
    • Mining companies with open-pit mines in Zambia include Barrick Gold (NYSE:ABX) and First Quantum Minerals (OTCPK:FQVLF), while Glencore (OTCPK:GLCNF,OTCPK:GLNCY) and Vedanta Resources (OTCPK:VDNRF)  operate underground mines.
    • Zambia has withheld $600M of tax refunds from miners since last year, already straining the relationship between the government and mining companies.

    The M&A pot gets stirred in railroad sector

    • There's some bets being placed on M&A activity within the railroad sector after a weekend report of interest by Canadian Pacific in CSX (CSX +12.6%) stirs the pot.
    • Gainers: Norfolk Southern (NYSE:NSC) +5.1%, Kansas City Southern (NYSE:KSU)+4.2%, Canadian Pacific (NYSE:CP) +3.2%, Union Pacific (NYSE:UNP) +1.0%, Canadian National Railway (NYSE:CNI) +1.3%.

    3D Systems gets another $150M in financing

    • 3D Systems (DDD +0.3%) has obtained a 5-year, $150M credit facility from PNC. The company has the option to increase the facility's size to $225M.
    • Acquisition-hungry 3D is less than five months removed from carrying out a 5.95M-sharestock offering (gross proceeds of $317M). It had $570.3M in cash at the end of Q2, and $18.9M in debt.

    What's next for Dave & Buster's

    • Dave & Buster's (NASDAQ:PLAY) says it will consider opening outlets in new U.S. markets and international expansion after bringing in IPO capital last week.
    • The company has managed to grow same-store sales at a +5% rate this year and tighten up expenses amid a challenging environment in the restaurant sector.
    • PLAY finished Friday trading up 8% from where shares were priced.

    iRobot's Android-based robot control system draws attention

    • iRobot's (NASDAQ:IRBTuPoint MRC controller consists of an Android tablet running a proprietary app that can control the company's defense/security robots. Supported features include a virtual joystick to handle steering, autonomous driving modes, video recording, and the ability to quickly switch from controlling one robot to another.
    • The WSJ observes various uPoint MRC features mesh with the Pentagon's interest in "robots that can steer and perform tasks themselves through tricky environments such as urban conflict zones or the sites of natural disasters," even if the controlled robots are still far removed from being fully autonomous.
    • Like several other fields where the use of A.I./deep learning algorithms are driving tech advances, Google has shown a major interest in robotics. Last fall, the Web giant bought Boston Dynamics, a maker of advanced military robots (much larger than iRobot's offerings) that rely on algorithms and sensor-based controls to navigate difficult terrain and hit speeds nearing 30 mph.
    • iRobot currently expects 2014 defense/security robot sales of $45M (compares with total revenue guidance of $555M-$565M). Backlog for the business stood at $20M at the end of Q2, roughly half of which was for international orders. Q3 results arrive on Oct. 21.

    GoPro -12.7%; Schumacher's injuries blamed on camera

    • GoPro (NASDAQ:GPRO) is off sharply after French journalist Jean-Louis Moncet suggested over the weekend a GoPro camera was responsible for the severe head injuries suffered last December by Formula 1 racing legend Michael Schumacher during a skiing accident.
    • Moncet, who has talked with Schumacher's son: "The problem for Michael was not the hit, but the mounting of the GoPro camera that he had on his helmet that injured his brain … The helmet completely broke. It was in at least two parts. ENSA analysed the piece of the helmet to check the material, and all was OK … The laboratory has been testing to see if the camera weakened the structure."
    • Are investors looking for a reason to take profits? Though shares have made new October lows, they're still up over 3x from their $24 June IPO price.

    Barron's: Samsung near a bottom with major upside ahead

    • Amid evaporating profits from its key mobile phones operation, Samsung (OTC:SSNLF,OTC:SSNGY) has fallen out of favor with investors thinking the company could be the next Motorola, Nokia, or BlackBerry, writes Andrew Bary. Another view, however, says Samsung looks more like Apple from a year and a half ago when it's stock plunged below $60 (split-adjusted), and traded at 6.5x earnings (excluding cash). Samsung today sells for 4.8x earnings, net of a $60B pile of cash and investments.
    • "[Samsung's] semiconductor division and the cash are worth more than the current market cap," says Bernstein's Mark Newman, meaning investors are getting for free the world's largest maker of handsets, the leading display business, and the largest and most profitable TV maker.
    • With $60B in cash against a $150B market cap (Apple has $133B and a $608B market cap), Samsung could find itself the target of an activist investor seeking share repurchases or a boost in the dividend (current yield 1.3%), but then again the Carl Icahns of this world can't as easily pressure family-controlled Korean companies the way they can Apple.
    • The last word goes to CLSA's bullish Shaun Cochran: "It is ludicrous to compare Samsung to Nokia, BlackBerry, or Motorola … Samsung has a history of reinventing itself time and time again. There is an institutional paranoia, a constant sense of crisis that has helped make Samsung so great.”

    Ebola traders need to rest

    • Ebola-stoked traders are becoming manic. Seemingly any tiny stock with even a remote chance of an upside due to healthcare's activities to address the risk are now fair game. Shares of thinly-traded micro cap Protalix BioTherapeutics (PLX +30.5%) jump on a 2x surge in volume albeit on turnover of less than 600K.
    • The company has a next-generation recombinant protein expression platform calledProCellEx that utilizes plant (carrot and tobacco) cell culture technology. Traders apparently perceive it has a shot, along with (IBIO +58.5%) at a slice of the U.S. Government's plan to ramp up ZMapp production.

  51. Look out below: Stocks that are down 40% this year

    Stocks have taken a pounding, with small- and mid-cap indexes already in correction territory-but some shares are doing a lot worse than others.

    Read more: http://www.cnbc.com/id/102082965

    Sent from the CNBC app. Available on the App Store


  52. Phil/RIG, I have 2016 short $33puts (sold at $4.20, now $8.80).  I could do an even roll right now to 2017 $30 puts.  While undoubtedly I would improve my position, I would also add a year to the payout.  And since I do think RIG is worth more than $33, I should just leave it alone right? But if I think it is worth more than $33, I should be willing to double down now…


  53. Makers of Ebola protective gear soaring

    Stocks for makers of personal protective equipment are jumping as Ebola fears are leading traders to speculate on hazmat suits and face masks.

    Read more: http://www.cnbc.com/id/102082909

    Sent from the CNBC app. Available on the App Store


  54. Ackman’s fund Pershing dips on Amsterdam debut

    Shares in Pershing Square, a fund run by activist investor Bill Ackman, opened down 2 percent on their Amsterdam debut on Monday.

    Read more: http://www.cnbc.com/id/102081853

    Sent from the CNBC app. Available on the App Store


  55. Good NFLX article:

    http://www.newyorker.com/magazine/2014/10/20/content-discontents

    Netflix has real advantages—the sophistication of its streaming technology, the trove of data it’s amassed on viewing habits—but competition will make it hard to boost profits. HBO is making noises about a stand-alone streaming service, and Amazon’s service comes free with Prime, so it’s unlikely that Netflix will risk raising prices anytime soon. Content costs, meanwhile, will keep going up. The situation is an unusually stark example of competitive capitalism in action: someone invents a new market and thrives, but the success shows competitors just how lucrative the market can be. This may be hard on companies, but it’s great for consumers, since they’re getting more new shows and movies without having to spend another dime. We can sit on our couches, while Netflix runs as fast as it can just to keep its place.


  56. Thanks Phil, I'm fortunate to be out of the sh!thole that is west Texas for a week to celebrate it in Washington!


  57. MrMocha -I agree with you on DSX.  Has been a consistent winner for me over the past 2-3 years.  Am currently underwater in some Jan 15 $10 calls, but not afraid to roll those down and farther out.


  58. Make that puts, not calls.


  59. Phil,

    When you have a moment to review the funda's of GNW, I'd be interested in your take as to its appeal (apart from the neg longterm care issues).

    Return on eq 4% vs ind avg of 11; zero 5 yr eps growth vs ind of 19% ;  neg1% rev gr vs ind of +13%. Stk @12  is at 1 yr low and 50% retrace of 2 yr range (6-18). And the appeal is ??

    Thanks


  60. Hey Seahawk fan!  Welcome home?……. ;)


  61. Hahaha 1020, that was an awful welcome home. I was going to splurge and try to go to the game.. However, things are a little tight right now and couldn't justify 600-750 for two tickets. Sooooooooo glad I made that decision! 


  62. I was counting on my 'second' favorite team to beat them Cowboys!


  63. Netflix increases monthly rate for 4K access • 1:16 PM

    Clark Schultz, SA News Editor

    Netflix (NFLX -1.9%) increases the rate for streaming Ultra 4K HD content to $11.99 per month for new customers.

    The company has positioned access to 4K content as a premium service.

    The development was first reported by HD Guru last week.


  64. RIG/Lunar – You sold the $33 puts for $4.20 and that nets you into the stock at $28.80 and it's now at $29.80.  What would you do if you owned the stock?  Probably noting since it's still higher than when you bought it and it seems silly to sell calls and cap your gains and it's clearly too high for your to double down, right?  The 2016 $33 puts at $8.80 have a ridiculous $5.50 of premium on them.  Would you pay that premium NOT to buy RIG?  If not, then why do it?  Why would you give them one penny of the $5.50 that is wearing down at almost 0.40 per month for the next 15 months?  The rolling only gives them more time to be right – you don't need time, RIG is already higher than $28.80 – as long as it stays there – there's no real problem.  

    NFLX/StJ – I've been saying that for years!  Not that that's stopped people from buying them up from $100 to $450 during that time…  angry

    Very nice, Jrom, back in civilization.

    GNW/8800 – I loved them at $5, at $10+ I have no interests because the risks are huge.  GNW sold a lot of long-term care policies to boomers who have yet to find the need – that will change over time.  The stock just plunged in Aug over those issues.  What's good about them otherwise is what's good about any insurance company – it's a gigantic scam to take people's money.  As an investor, you have to love that!  Still, a tremendous amount of their revenue (about 30%) comes from LTC, so they can't cut it loose and the damage is done anyway so they have the same long-term problems as SS and Medicare – they are on the hook for taking care of people who very likely will live 30 years after they retire.  The only other segment they have of note is Life Insurance (about 20%) – it's just not good enough.  

    Arrgh!  Annoying weak but nondescript movement on the indexes – not really a way to play it.  Oil too, still at $84.50.  

    VIX 20.80 – still nervous.  


  65. I guess our adjustment in the STP worked – 82.2% now!  


  66. Phil,

    Thx for your confirming thts on GNW; I couldn't see the bull arguments from Barrons, Mac or KBW.


  67. Embedded image permalinkWho us?  

    Richest states in America in 2014: Washington, D.C. New Jersey Connecticut More:

    We're not in a "deflation trap." We're in a Soviet-Style Central Planning Central Banker Price-Fixing Crony Bankster Econ PhD Debt Trap™

    FED'S EVANS: 'We should be exceptionally patient'

    New Post: Finland Downgraded, Zone Left with Only 2 AAA Rated Countries

    Germany, France Ask Economists for Advice to Avoid ‘Lost Decade’

    Germany will stick to zero deficit target, Merkel aide says – http://www.streeteye.com/t/2xhb – Mail Online

    I took a break from today b/c too many people asking me about stocks they think I like that i don't. Just a drag, sorry

    Will cheap oil choke the Russian economy?

    Venezuela calls emergency OPEC meeting to address oil's new bear market:

    Quantum computing is about to be the biggest breakthrough of the century

    Another potential buyer backs away from T-Mobile.

    GT Advanced Technologies Inc Reveals $50M Penalty By Apple

    Maybe this will make GOP want to close : The prison spends $2.7 million per detainee, per year

    You're welcome 8800, not much bull to be made with that noose around the necks.  

    Good volume for a semi-holiday, 144M on SPY already – not taking us anywhere, though.  


  68. Phil/RIG.  thanks!  I appreciate your logical reasoning.


  69. Any one  has an idea what happened to LYB dropped over 5? today Can not find any news???? Thanks 


  70. You're welcome Lunar. 

    LYB/Yodi – Possibly their refining operations are dragging them down as gasoline collapses. Gasoline is down to $2.25 from $3 so figure 25% and it's probably accounting for 20% of LYB's profits.  What's worrying with them is that polymers are half of their business and mainly to North America and that business doesn't seem to be going anywhere either.  That's not a good sign for US manufacturing.  


  71. Well, about that multibillion dollar valuation on snapchat…I wonder what that value is today after "the snappening".


  72. Snapchat/JPH – Will be interesting to see if anyone cares.  

    Nice round-trip on that indexes back to the day's lows – not a good sign.  

    RUT hanging on to flat but other down about 0.8% on a Dollar that's down 0.5% so bad signs all around.  VIX flying up to 23 but, of course, we were expecting a blow-off bottom tomorrow morning.  

    Airline stocks reversed after the morning rally.   Not surprised if the rest of the Transports turned lower too.  Now STP 79.6% so we lost 3% on the reverse.  Maybe too bullish now but we can take a little hit in the morning and adapt if we have to.  

    MoMos are sucking wind.  


  73. 1885 on the S&P, a very big number.


  74. Phil, still anticipating a blow-off bottom for tomorrow or rethinking that?  Another nasty day…


  75. The bots are cleaning up today, no matter where I place a stop they run to it and then turn, you'd think they wouldn't care about a small fish…


  76. Two stocks with over a 90 RSI because of Ebola news, LAKE and APT.  No options.  Wish I got into those a week ago.  What a run up.


  77. Anyone like LAKE and APT as shorts over the next few weeks as hopefully our worries over Ebola turn out to be overblown?


  78. I'd think it'd be very difficult to find the stock to short in these names.


  79. PLX/jro – lighten my load.  No, I am all backed up…..I am also way short this market and that truck is getting full.  May need another.  Cha Ching.


  80. Gold – I have rolled to Dec5 2014 123 and 124 Calls for 1.09 and 1.54.  DD on both.


  81. Speaking of overbought, UVXY RSI is 72, only the second time above 70 in a year.  Could mean a blow off, could portend a crash :)


  82. GPRO….nice Bull Put Spread.  all out….+100% profit…Zoom Zoom


  83. That was a quick and severe downturn.  I can't believe yet again I did not buy calls on UVXY.  Up 10 points from low of day.


  84. Big push down into the close = BAD!  

    Blow-off bottom/MrM – That's the usual pattern but that close was really awful.  Volume was 215M at close, that's heavy but I can't even see what all the selling was about.  No fish is too small for these bots. 

    Ebola/Craigs – It's not a needless panic.  They are NOT controlling this in African and they will need insane amounts of supplies to get it under control or it will begin popping up in other countries.  The chance of it spreading in the developed world is slim but it only takes one case in London, one in Paris, one in Berlin… and people will really start going nuts.  

    Someone in Boston is isolated now.  

    Poor GPRO – 10% Rule for today indicates more follow-through to the downside.  


  85. Phil- so what happens in a blow off bottom, if that turns out to be what happens? Does it mean markets will open sharply lower tomorrow, followed by some kind of rally later in the day? 

    Pharm- can you share how you shorted this market? I have seen you mention a few different ideas over the last couple of months, but was wondering if you could highlight what has worked best for you. I have been trying to make notes for myself so that in a few years as history repeats I can refer back and try to utilize what has worked this time around, and what has not. 


  86. Austerity's other victims. Cutting these science budgets is starting to pay off – in human lives:

    http://www.motherjones.com/kevin-drum/2014/10/theres-no-ebola-vaccine-yet-because-we-cut-nih-budget-ten-years-ago

    "NIH has been working on Ebola vaccines since 2001. It's not like we suddenly woke up and thought, 'Oh my gosh, we should have something ready here,'" Collins told The Huffington Post on Friday. "Frankly, if we had not gone through our 10-year slide in research support, we probably would have had a vaccine in time for this that would've gone through clinical trials and would have been ready."

    Is that what is called intelligent design?


  87. Let's not forget some Islamic radical could also contract Ebola on purpose and instead of seeking treatment  run around NYC and spread it. It could do more damage than a suicide bomb and definitely cause more fear. 


  88. Speaking of austerity, I just got off the phone with my daughter who is a first year special education teacher in rural Vermont. She was warned today that she may be going on strike as they can't resolve issues for the contract that expired July 1. They have already forced the teachers to add extra night hours with no additional pay, threatened to add to the self pay portion of their health care, and are cutting out art teachers and music, etc. when will we as a country realize that we need to pay our teachers more, and start funding education again? In Philadelphia where I live, they just unilaterally tore up the current contract, saying they will no longer recognize the teachers union. No discussion,no warning. Kids have died here because schools no longer have nurses, except 1/2 day per week as the few that are left go from schoolo to school. Meanwhile, I bet Wall Street bonuses will still be in the billions this holiday season, as retail investors lose their life savings again! 


  89. Craig – Thankfully you might get a better governor in PA sometimes soon!


  90. Speaking of GoPro…

    http://www.autoblog.com/2014/10/13/michael-schumacher-brain-injury-gopro-helmet-cam-report/

    It seemed like a freak accident when Michael Schumacher suffered a traumatic head injury while skiing in France last winter. After all, while he may have embarked off the marked trails, he knew that ski hill well, and was wearing a helmet when he fell over and smacked his head on a rock. So why did the helmet not protect him better? The latest reports may have the answer.

    According to photography blog PetaPixel, the integrity of the seven-time world champion's ski helmet may have been compromised by the GoPro camera that was attached atop it. While Schumi almost certainly would have died if not for the helmet, it may have been the camera that prevented him from skiing away from the incident unscathed instead of putting him in a coma.

    Apparently the ENSA alpine sports academy in Chamonix, France, is investigating the influence of the camera's attachment to the helmet's integrity. Preliminary findings suggest that the presence of a solid object in between the helmet and the rock would cause the helmet to split open, severely reducing the level of protection it would provide the head inside.


  91. I say: "Craig for Governor!"


  92. Ebola/jrom – that may be the scariest post I've ever seen on this site. 


  93. jromeha: supposedly once you start showing symptoms it completely floors you and you are puking and pooping and in pretty much no condition to go running around.   A more effective approach would be for other healthy terrorists to collect body fluid from an infected ebola patient and starting applying it to as many subway seats, stairway/escalator handrails, doorknobs etc… as they can.   Virus specimens can survive a very long time if frozen. 


  94. Kinki- when they attack our bases in Afghanistan they traditionally will drive a vehicle-borne improvised explosive device up to the entry point, detonate it, and then 10-30 jihadists will charge through what's left of the entry point. A common theme among the suicide attackers is they are usually all high on meth. I have no doubt Ebola leaves one in a weakened state but all it takes is a day or two when the symptoms aren't as bad ( although they aren't quite as contagious) while they are high on meth to shake hands with, cough on, touch people to potentially spread this virus. But you're right, they could spread it on subway seats as well. One thing you can be sure of is the Islamic State is exploring possibilities…


  95. Looks like the technicals are catching up to the fundamentals! Might be the big one now…


  96. Phil,  If, as is now reported, there was a big bot sell program behind the ES mimi  dump late today, and if we look  also at the huge spike in put call volume that occurred today--this opex expiration monday— are there some Oct SPY calls that would be good experiments to buy if there is a reversal and upward  surge tomorrow or Wednesday? Thanks. Strether.  


  97. Where is the plunge protection team, maybe too busy selling stocks


  98. UVXY / rustle - option pricing on this one is nutty, I just play the stock in 1,000 share lots, but you have to be really quick on the trigger, today it was swinging plus and minus $2,000 within a single minute so it's like the futures where you can't leave the room. And futures-wise, you could just play the /VX instead, it you called today's low-to-high correctly you would have pocketed $4K.



  99. Scott – Interesting how the "official" government standards will be changed to eliminate panic and put the population at risk instead of dealing with the problem.  


  100. Txchili – indeed. 


  101. From Bloomberg, Oct 13, 2014, 8:10:02 PM

    Asian stocks fell, with the regional
    benchmark index heading for a six-month low, extending a rout in
    global equities after the Standard & Poor’s 500 Index capped its
    biggest three-day loss since 2011.

    To read the entire article, go to http://bloom.bg/1p7ki59

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


  102. From Bloomberg, Oct 13, 2014, 7:00:01 PM


    Richard Fisher, president of the Federal Reserve Bank of Dallas. Photographer: Jim Stem/Bloomberg

    When it comes to spurring inflation
    in the U.S. economy, the bond market is becoming convinced that
    the Federal Reserve has almost no chance of achieving its 2
    percent target before the end of the decade.

    To read the entire article, go to http://bloom.bg/1sCZNn0

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


  103. From Bloomberg, Oct 13, 2014, 7:01:00 PM

    Too big to fail is likely to prove a
    costly epithet for the world’s biggest banks as regulators
    demand they increase debt securities to cover losses should they
    collapse.

    To read the entire article, go to http://bloom.bg/1w4B5eS

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


  104. From Bloomberg, Oct 14, 2014, 12:57:10 AM

    Employees work on a storage tank inside the Chevron Corp. Richmond Refinery in Richmond, California. U.S. crude stockpiles probably expanded by 2.5 million barrels last week to 364.2 million, according to a Bloomberg News survey. Photographer: David Paul Morris/Bloomberg

    U.S. equity-index futures rose,
    signaling the Standard & Poor’s 500 Index may rebound from its
    worst three-day drop since 2011, while Treasuries climbed.
    Japanese stocks dropped as crude oil slumped.

    To read the entire article, go to http://bloom.bg/1p79TpR

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


  105. From Bloomberg, Oct 13, 2014, 7:00:01 PM

    Passengers arriving at London’s Heathrow airport will be screened for Ebola starting today as the U.K. steps up its preparations for combating the disease.

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

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


  106. From Bloomberg, Oct 13, 2014, 10:00:00 PM


    Venezuela should default on its foreign debt as a shortage of dollars makes it impossible for the government to meet its citizens’ basic needs, Harvard University economists Carmen Reinhart and Kenneth Rogoff said. Photographer: Jin Lee/Bloomberg

    Venezuela will probably default on
    its foreign debt as a shortage of dollars makes it impossible
    for the government to meet its citizens’ basic needs, Harvard
    University economists Carmen Reinhart and Kenneth Rogoff said.

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

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


  107. From Bloomberg, Oct 13, 2014, 10:15:50 PM


    Oct. 14 (Bloomberg) –- CIMB Research Regional Economist Seng Wun Song discusses Singapore’s economy growing more than estimated on global demand. He speaks on “First Up.” (Source: Bloomberg)

    Singapore’s economy expanded more than analysts estimated in the third quarter, adding to evidence that increasing global demand is fueling the island’s manufacturing pickup.

    To read the entire article, go to http://bloom.bg/1p7hHrI

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


  108. From Bloomberg, Oct 14, 2014, 12:00:01 AM

    Stock volatility has increased to
    “a less than propitious level for future market outcomes,”
    according to Tobias Levkovich, Citigroup Inc.’s chief U.S.
    equity strategist.

    To read the entire article, go to http://bloom.bg/1vZ5Ild

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


  109. From Bloomberg, Oct 13, 2014, 11:17:47 PM


    Oct. 14 (Bloomberg) — Some protesters aren’t deterred by the government’s move against them. Student Cherry Kwong says she’ll fight for democracy to the bitter end. Here’s a look at a life in the day of a street campaigner. (Source: Bloomberg)

    Hong Kong police used chain saws and sledgehammers to clear barricades in the city’s business district erected by pro-democracy demonstrators, hours after Chief Executive Leung Chun-ying signaled he’s losing patience with the protests that are in their third week.

    To read the entire article, go to http://bloom.bg/1p7tqXr

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


  110. From Bloomberg, Oct 13, 2014, 5:50:57 PM

    With no earnings or economic data to
    guide them, traders are focusing on charts of the Standard &
    Poor’s 500 Index (SPX)
    , and what they’re seeing isn’t promising.

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

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  111. From Bloomberg, Oct 13, 2014, 12:01:00 PM

    Oct. 13 (Bloomberg) — Hundreds of men attempted to break through barricades erected by Hong Kong pro-democracy protesters near the city’s business district, as a third week of rallies tried the patience of truck and cab drivers.
    Police lined streets as roads remained blocked by barricades. David Tweed reports from Hong Kong with Anna Edwards on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Hong Kong’s economy weathers three major typhoon warnings each year. So far, the Occupy Central protests have proved to be just another passing storm.

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

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  112. From Bloomberg, Oct 13, 2014, 11:25:57 PM


    Commercial buildings in the central business district are reflected on a building facade in Singapore, on Monday, Dec. 9, 2013. Singapore’s economy may expand 3.9 percent in 2014, according to a median of 21 economists and analysts in the Monetary Authority of Singapore’s Dec. quarterly survey. Photographer: Brent Lewin/Bloomberg

    The high-rise buildings that make up Singapore’s skyline aren’t soaring as much these days.

    To read the entire article, go to http://bloom.bg/1w4UnAY

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  113. From Bloomberg, Oct 13, 2014, 12:01:00 PM

    Oct. 14 (Bloomberg) — China’s exports rose more than estimated in September and imports rebounded, helping underpin growth in the world’s second-largest economy. Bloomberg’s Yvonne Man takes a look at the doubts that have arisen over the data. She speaks on “First Up.” (Source: Bloomberg)

    Hong Kong unexpectedly overtook the
    U.S. in September as the top destination for Chinese shipments.
    Not everyone is convinced those flows were genuine.

    To read the entire article, go to http://bloom.bg/1p6hGV7

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  114. From Bloomberg, Oct 13, 2014, 5:30:24 AM


    Oct. 13 (Bloomberg) — China can bring capital into Europe while also moving up-market and becoming more of a competitor, according to Giles Keating, head of research at Credit Suisse Group AG.
    He spoke in London with Bloomberg’s Guy Collins on Oct. 10. (Source: Bloomberg)

    China’s slowing economy received a shot in the arm from faster export growth in September, with external demand spilling over to boost imports for processing and re-shipment of goods such as the iPhone 6.

    To read the entire article, go to http://bloom.bg/1sy7bQv

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  115. Watch this video at http://bloom.bg/1vlgSQQ

    Targeted PBOC Easing Measures Expected: Chang

    Sept. 26 (Bloomberg) — Chang Jian, chief China economist with Barclays Plc in Hong Kong, talks about the world’s second-largest economy and its government policies.
    She speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

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  116. Watch this video at http://bloom.bg/1w3ub9P

    Economic Forecasts Are `Too Optimistic,’ El-Erian Says

    Oct. 13 (Bloomberg) — Mohamed El-Erian, a Bloomberg View columnist and former chief executive officer of Pacific Investment Management Co., talks about the outlook for the U.S. and global economies, Federal Reserve policy and market volatility.

    El-Erian, who is also chief economic adviser at Allianz SE, speaks with Betty Liu, Matt Miller and Julie Hyman on Bloomberg Television’s “In the Loop.” (El-Erian is a Bloomberg View columnist. The opinions expressed are his own. Source: Bloomberg)

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  117. From Bloomberg, Oct 13, 2014, 7:00:01 PM


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

    European Central Bank President
    Mario Draghi’s pledge to do “whatever it takes” with a bond-buying plan to save the euro-area goes on trial before the
    European Union’s top judges today.

    To read the entire article, go to http://bloom.bg/1p7a9p1

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  118. From Bloomberg, Oct 14, 2014, 12:48:30 AM


    Sept. 26 (Bloomberg) — Chang Jian, chief China economist with Barclays Plc in Hong Kong, talks about the world’s second-largest economy and its government policies.
    She speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    China’s central bank cut the
    interest rate it pays lenders for 14-day repurchase agreements
    for the second time in a month, spurring a bond and stocks rally
    on bets it will lower borrowing costs and help the economy.

    To read the entire article, go to http://bloom.bg/1o8oyq5

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  119. From Bloomberg, Oct 14, 2014, 12:43:47 AM


    Tom Williams, Chairman and Chief Executive Officer of Universal Parks & Resorts. Photographer: Munshi Ahmed/Bloomberg

    Comcast Corp. (CMCSA) will team up with
    Chinese investors to spend more than 20 billion yuan ($3.3
    billion) to build one of its Universal theme parks in Beijing.

    To read the entire article, go to http://bloom.bg/1w51I3z

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  120. From Bloomberg, Oct 12, 2014, 6:05:56 PM

    Political upheaval is on schedule to arrive the first Tuesday in November—but Washington D. C. may not be the place to look for it. While the House and Senate may well return in essentially the same shape they left (deadlocked), as many as 11 incumbent governors are locked in tight re-election races.

    To read the entire article, go to http://www.bloomberg.com/politics/articles/2014-10-12/the-sittingduck-sitting-governors

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  121. From Bloomberg, Oct 13, 2014, 5:05:05 PM

    WASHINGTON, DC – SEPTEMBER 18: Sen. Elizabeth Warren (D-MA) greets supporters during a rally in support of Social Security and Medicare on Capitol Hill September 18, 2014 in Washington, DC. The rally was organized by American United for Change, a liberal advocacy group founded to fight the privitization of Social Security. (Photo by Chip Somodevilla/Getty Images)

    Fresh from going after President Barack Obama and his economic team for siding with Wall Street (again), Massachusetts Senator Elizabeth Warren is heading back to the campaign trail to try and boost three of her Democratic colleagues. 

    “With just 22 days to go until the election, I’ve decided this week to go back to Colorado and Minnesota for Mark Udall and Al Franken, and to go to Iowa for Bruce Braley,” Warren said in a fundraising e-mail

    Warren’s decision to dive into Colorado and Iowa means the two endangered Democrats will be getting a boost from one of the party’s premiere fundraisers and stars. A base favorite, Warren has brought in “over $6 million for Democratic candidates and committees this election cycle,” she goes on to say in the e-mail. 

    Warren continues to be the left’s favorite potential 2016 non-candidate (she has repeatedly demurred about running herself, while saying that  Hillary Clinton “is terrific” and should run) and as her fundraising prowess shows, few can secure the support or checks like the consumer advocate-turned senior senator from Massachusetts. As for whether her populist message may cause problems in such close races? It’s a populist, anti-establishment year on both sides, and the reviews of her swing through the red states in the summer were generally positive. But but that hasn’t stopped Republicans from expressing some enthusiasm about tying their opponents to the hero of the left—something Jon Kohan, the campaign manager for Iowa Republican Senate candidate Joni Ernst, made clear with the following tweet: 

    To read the entire article, go to http://www.bloomberg.com/politics/articles/2014-10-13/elizabeth-warren-basejumps-into-midterm-finale

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  122. From Bloomberg, Oct 10, 2014, 2:01:50 PM

    US Senator Barack Obama (L) (D-IL), and Senator Hillary Rodham Clinton (D-NY) listen to President George W. Bush speak during the National Prayer Breakfast 01 February 2007 in Washington, DC. AFP PHOTO/Brendan SMIALOWSKI (Photo credit should read BRENDAN SMIALOWSKI/AFP/Getty Images)

    This has been the week of the long-awaited, full-bore, balls-to-the-wall return of the Clintons to the campaign trail, first with Bill in Arkansas on Monday and Tuesday, then with Hillary in Chicago on Wednesday and Philadelphia last night. Every move the former First Couple makes is viewed through gimlet eyes and subject to instant judgment. Does WJC still have his mojo? Has HRC found a message? Will they be able to move the needle for Democrats they aim to help between now and Election Day?

    To read the entire article, go to http://www.bloomberg.com/politics/features/2014-10-10/move-over-barack-obama-the-clintons-are-taking-over

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  123. From Bloomberg, Oct 13, 2014, 11:02:30 AM


    Oct. 11 (Bloomberg) — European Central Bank President Mario Draghi talks about the management of the ECB’s balance sheet and the outlook for inflation in the euro area.
    Draghi speaks at a news conference in Washington at the conclusion of the annual meetings of the International Monetary Fund. (Source: Bloomberg)

    Mario Draghi’s latest strategy for the euro area is failing to win over economists.

    To read the entire article, go to http://bloom.bg/1w0yTDq

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  124. From Bloomberg, Oct 13, 2014, 7:05:15 PM


    Guy Debelle, Assistant Governor of the Reserve Bank of Australia. Photographer: Ian Waldie/Bloomberg

    Australia’s currency remains
    overvalued on most measures while any sell-off in global fixed-income markets could be “relatively violent,” central bank
    Assistant Governor Guy Debelle said in a speech.

    To read the entire article, go to http://bloom.bg/1p77USu

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  125. From Bloomberg, Oct 13, 2014, 7:01:00 PM

    Ireland is moving into the post-austerity era as the economy recovers, and companies using the
    country to avoid tax may be the government’s next target.

    To read the entire article, go to http://bloom.bg/1p7aack

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  126. From Bloomberg, Oct 14, 2014, 12:31:17 AM


    Oct. 1 (Bloomberg) — Vishnu Varathan, an economist at Mizuho Bank Ltd. in Singapore, talks about India’s economy, government and central bank policies.
    He also talks about Indian Prime Minister Narendra Modi’s meeting with President Barack Obama in the Oval Office. Varathan speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    India’s retail inflation slowed more
    than economists had estimated after central bank Governor
    Raghuram Rajan held one of Asia’s highest interest rates for a
    fourth straight meeting.

    To read the entire article, go to http://bloom.bg/ZAWDn0

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  127. From Bloomberg, Oct 13, 2014, 5:16:43 PM


    Don’t take it personally.

    A catch to Kevin Drum for his analysis of why the national media clobbered Alison Lundergan Grimes, the Democrat who is challenging Mitch McConnell in Kentucky, for ducking a question about whether she voted for President Barack Obama. Why is the “neutral” news media going easier on some Republican Senate candidates who have ducked questions on far more substantive issues? Drum asked.

    To read the entire article, go to http://bv.ms/1v4PXd5

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  128. From Bloomberg, Oct 13, 2014, 2:32:08 PM


    Going Rove?

    No, Democrats aren’t venturing into the kind of polling denialism that turned “unskewed” Republicans into a joke two years ago. That, you remember, led Karl Rove and other party strategists to dismiss unfavorable opinion surveys as politically biased against them.

    To read the entire article, go to http://bv.ms/1EQ1NMl

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  129. Tasty trade guys make a great point about volatility - TP SAYS
    You want to know what VIX over 20 means?  Back on April 21, 2014 when the SPX was roughly the same price it is now (1871 vs 1874), the VIX was 13.25.  On that day, the SPX options had the same number of days to expiry as they did yesterday, so it makes this analysis easier.   The SPX puts that were 10% OTM and had 32 days to expiry were $1.80 with the VIX at 13.25.  They’re $10 with the VIX at 24.  The 10% OTM calls were less than $.10 with the VIX at 13.25.  They’re $.35 now.  The difference in the puts is more dramatic than in the calls because of a steeper skew.  But the point is that the richer prices are why we love high vol when we sell options. I don’t care if you’re bullish, bearish or neutral.  If you’re a premium seller, now is the time to step up your trading activity.   The VIX tends to be mean reverting, and could drop right back down in a few days taking option premium with it.


  130. Phil-  could this news finally move the price of AAPL stock up? 

    http://seekingalpha.com/news/2027965-chinese-iphone-6-pre-orders-reportedly-top-20m


  131. catGood morning! 

    VIX/Scott – That's very clever sentiment as you ignore the fact that we've had VIX in the 40s in 2010 and 2011 and VIX in the 80s in 2009.  It's A factor in wanting to sell more premium but we still have to keep our heads and make intelligent plays, not start thinking that just selling volatility is a sure thing.  

    Meanwhile, our Futures are about half off their highs at 0.25%ish but were all off their highs about an hour ago (5:30) as Europe opened badly (3-4) and the selling resumed.   Asia wasn't terrible except the Nikkei was down 2.4% and we know that's BAD and remember when we used to not have the word BAD come up every day – or every quarter for that matter so, when I say BAD – it's BAD!!!

    Kudlow: The Chinese are not our friends

    catEurope was flattish in the Futures but, the minute the bell rang it was SELLSELLSELL – Germany is to blame as all that austerity they jammed down everyone else's throats is coming back to bite them in the ass:

    • The German ZEW survey of investor confidence has unexpectedly dropped into negative territory for the first time in almost two years, tumbling to -3.6 in October from 6.9 in September and missing expectations of 1.
    • The current situation print has slumped to 3.2 from 25.4, falling short of consensus of 18.
    • Sentiment for the eurozone plunged to 4.1 from 14.2 and missed forecasts of 7.1.
    • "Geopolitical tensions and the weak economic development in some parts of the Eurozone, which is falling short of previous expectations, are a source of persistent uncertainty," says ZEW President Professor Clemens Fuest. "These factors are tarnishing growth expectations in Germany. Disappointing figures concerning incoming orders, industrial production, and foreign trade have likely contributed to the growing pessimism among financial market experts." (PR)
    • The DAX is -0.5% and the euro is -0.8% at $1.2653.
    • European stocks follow some of the major Asian bourses lower after CPI surveys across Europe exacerbate fears about deflation and the world economy, with a poor German investor survey not helping matters.
    • "There remains a palpable concern amongst investors that the worst may still be to come," says analyst Angus Campbell. "The market is aware that tapering is due to end later this month and they are also aware that that means the next move for the Federal Reserve is to hike interest rates."
    • Euro Stoxx 600 -0.8%, London -0.6%, Paris -0.9%, Frankfurt -0.6%, Milan -1.2%, Madrid-1%.
    • U.S. futures: Dow flat, S&P +0.1%, Nasdaq +0.1%.
    • Italian CPI -0.4% on month in September vs -0.4% in August and consensus of -0.3%.
    • On year, CPI -0.2% vs -0.2% and -0.1%. (PR)
    • Spanish CPI stayed at +0.2% on month in September, as expected. On year, CPI -0.2%, as forecast, vs -0.5% previously. That's the third consecutive month of annual price declines in Spain. (PR [Spanish])
    • ETFs: EWIEWPQESP
    • French CPI -0.4% on month in September vs +0.5% in August and consensus of -0.3%.
    • On year, CPI +0.4%, as expected, vs +0.5%.
    • The largest contributions to the monthly drop were seasonal decreases in the prices of some services at the end of the summer holidays and from a new fall in energy prices. (PR)
    • Current account -€4.5B in August vs -€2.2B in July.

    The great Lira revolt has begun in ItalyThe biggest single party in the Italian parliament by votes has thrown down the gauntlet, calling for a euro referendum to end depression and save democracy, writes Ambrose Evans-Pritchard.

    Remember how UK used to be the "good" economy over there?

    • U.K. CPI was flat on month in September, down from +0.4% in August and below forecasts of +0.2%.
    • On year, inflation dropped to a five-year low of 1.2% from 1.5% and missed consensus of +1.4%.
    • Core inflation +1.5% on year vs +1.9% previously and predictions of +1.8%.
    • "Falls in transport costs (notably sea fares and air fares) and prices for a range of recreational goods provided the largest contributions to the slowdown in the rate of inflation between August and September," the U.K.'s Office for National Statistics says. (PR)
    • Factory output prices (PPI) stayed at -0.1% on month, as expected. (PR)
    • "Inflation falls much faster than expected…kiss goodbye to a U.K. rate hike any time soon,"tweets Reuters' James McGeever.
    • The pound adds to its losses and is -0.7% at $1.5974, while the FTSE 100 is -0.5%.
    • Earlier: U.K. retail sales tumble
    • U.K. comparable retail sales surprisingly slumped 2.1% on year in September after rising 1.3% in August and badly missed forecasts for a rise of 1%.
    • Food sales continued to fall, while and clothing and footwear sales hit record lows.
    • The pound is -0.2% at $1.6051, while the FTSE 100 is -1.5%. (PR)

    Is This The Real Growth Scare That Markets Fear

    The Defining Problem Of Our Times (In 1 Simple Chart)

    Ebola virus threatens state failure, World Health Organisation warnsThe Ebola outbreak is threatening “state failure” in west Africa, the World Health Organisation warned, as the US said it needed to overhaul its management of the virus following the infection of an American nurse.

    Here Are The Countries Where Ebola Is Most Likely To Show Up Next

    Face Mask And Hazmat Suit Companies' Shares Explode Higher On Monday

    And we have this to look forward to:  Study Bolsters View That San Francisco Area Is Due for Big EarthquakeSections of San Andreas Fault Zone Running Beneath Bay Area ‘Are Locked and Loaded,’ but Timing Is Impossible to Predict, Scientist Says.

    SPY  5  MINUTE

    SPY DAILY

    SPX WEEKLY

    INDU DAILY

    INDU WEEKLY

    RUT WEEKLY

    NDX WEEKLY

    XLB WEEKLY

    XLE WEEKLY

    XLF WEEKLY

    XLP WEEKLY

    XRT WEEKLY

    IYT  WEEKLY

    IBB WEEKLY

    HYG WEEKLY

    TLT WEEKLY

    GLD WEEKLY

    GDX WEEKLY

    USO WEEKLY

    DBC WEEKLY

    EWJ WEEKLY

    EWG WEEKLY

    NYMO  DAILY

    FINALLY OVERSOLD!!!  But, can get a bit more so first – hopefully, this is the last day. 

    NYSI DAILY

    Getting near where we topped out last year. 

    VIX WEEKLY


  132. Blow-off bottom/Craigs – Funny you should ask, that's what today's post will be about I think.  Short story is we assume now that this is a 10% correction so we'll look for -10% lines to be tested and maybe a spike down to -12.5% but it must be a quick bounce or we may be heading to 20%, which wouldn't be out of the question since this whole rally is based on Free Money and not real earnings growth.   Earnings growth usually lasts, free money does not…

    Intelligent design/StJ – Sure, a species so stupid as to elect Republicans ends up going extinct – evolution at its finest!  In fact, I heard the Dinosaurs were Libertarians and refused to fund a space program that might have alerted them to a pending catastrophe.  Good thing we're smarter than that!  

    NASA budget 2015: More cuts, more politics. – Slate

    Proposed NASA Budget Cuts Spark Bitter Debate in Congress

    Vermont/Craigs – I thought those guys were progressive?  Well, I suppose everyone is choking from lack of funding these days.  I am disgusted beyond words at how the arts are being carved out of the education process in this country.  

    Big Chart = BAD Chart!   Still, Dow only down about 5% from it's top (where it was lagging) so possibly a sign that the Dow was right and the other indexes are now correcting back to more realistic levels.  Watch the NYSE very carefully as it's now on par with the Dow (-7.5%) and what we'd like to see is the Nas hold their 2.5% line (4,100) and the S&P hold the good old Must Hold at 1,850.  See how useful these lines are for LONG-Term investing?

    SPY calls/Streth – Remind me after the open and we'll see what looks attractive.  

    PPT/Jomp – It doesn't make sense to try to save an overbought market.  This is what I've been saying since the summer – we were simply too high and people were too greedy.  Our Must Hold lines on the Big Chart reflect the proper value of the indexes given current conditions – we don't change them unless circumstances seriously change for a reason, which I suppose is now obvious.  So the markets correcting back to their proper range is not an emergency anyone should be wasting firepower trying to avoid.

    Fukushima/Scott – Nuclear energy just isn't worth the risk.  

    AAPL/Craigs – It's currently being dragged down by the broad market – should be much higher.  Of course, if the economy does collapse, then AAPL will go down on fears consumers may decide not to buy $800 phones.  


  133. Good lecture on education: