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Testy Tuesday – 10% and/or Bust!

How low can we go?  

So far, the Russell is the only index that's gone through a full 10% correction – falling from 1,180 in early September to 1,050 yesterday – actually 11% – so far.  According to our 5% Rule™, if the 10% line is going to hold over the long term, we should hold -12.5% on any additional move down – that would be 1,050 from the 1,200 line.  Let's call that our line in the sand for now

Meanwhile, as I noted in our Live Member Chat room – we're comfortable going long on the Russell Futures (/TF) over the 1,150 line, looking for a nice run back to 1,080 but THRILLED with 1,060 – as that's already +$1,000 per contract!  Failing to get back over 1,060, however, will be a sign that there's likely more downside to come. 

Of course, thanks to the 5% Rule™ and our Big Chart, we knew to get bearish as soon as 1,200 failed on the Russell, way back in July.  In fact, on June 30th, I titled our morning post: "Monday Misgivings – CASH!!! Is King as we Begin Q3" saying:

I'm NOT going to depress you.

If you want to be depressed about the market, check out my Twitter Account, where I posted our Morning Alert to Philstockworld Members (and you can become one of those HERE) in which I aired my concerns with the Global Macros.  

Last week we discussed the various forms of market manipulation that are keeping us at record highs and, on Friday, I asked "How Many Countries are Faking Economic Data?"

While we can keep dream-walking for quite some time (especially with all the drugs the Fed is giving us), there's always the danger that people will eventually wake up so keep one hand firmly on the exit door at all times.   On Friday we discussed a DXD hedge in the morning post and, for our Members, we had TZA (now $14.19) hedges as well and, as I've mentioned, we are VERY LIGHTLY INVESTED in our major portfolios.  

If the crash never comes, then we have plenty of cash to buy things with but, if it does – then we have plenty of cash to buy things with.  That's a win-win! 

TZA is now at $19.23, up 35% from that post and the TZA spreads we identified using options are up 300-400% (they had October targets, in fact), as did our DXD spreads.  So let's keep in perspective that this is the sell-off we've been expecting based on the exact same Big Chart and the exact same 5% lines we've been tracking all year.  So far, this is just a CORRECTION – as in the market is coming back to the CORRECT levels (as opposed to overbought).  

SPX WEEKLYThe bad news is, if you foolishly bought overbought positions in the "rally" and are now HOPING (not a valid investing strategy) that they will "come back" – you may not be getting that wish.  Based on what's real in the Global Economy, these are probably the right prices for equities.  In fact, Members have been asking about a lot of "bargain" stocks in the past week and, more often than not – they are still not cheap enough - yet.  

Our current drop, from mild consolidation on the way down for our indexes is generally around 4% in the last 3 market sessions.  What we need to see is weak bounces (1%) off of these lines which will be (try to follow) a strong bounce (2%) off the -5% drop we never hit as well as being a weak bounce (2% total) off the larger 10%(ish) drop.  Or to put the whole thing in numbers:  

  • Dow 17,200 (long-term levels ignore spikes) less 10% is 15,480.  The weak bounce line is a 20% retrace of that 1,720-point drop (which hasn't happened yet), so +344 to 15,824 and a strong bounce is another 344 unit up to 16,168.  So, if the market is to be stabilizing, 16,168 should hold.
  • S&P 2,000 is the general top so easy math says 1,800 is the -10% line and the 200-point drop means 40-point bounces to 1,840 (weak) and 1,880 (strong).  At the moment, the S&P is just over that strong bounce line and holding it will be a bullish sign.  
  • Nasdaq topped out at 4,600 and 4,140 is the -10% line which makes for 92-point bounces to 4,232 (weak) and 4,324 (strong).  Yesterday, we finished just below weak and need to take it back quickly or we'll have to lower our expectations.  
  • NYSE 11,000 is a fat enough line to round off to and it was also our Must Hold (it didn't), whose failure kept us skeptical of the narrow market rally all along.  That makes 9,900 the -10% line – just as it is on our Big Chart, so that's easy!  Bounces off the 1,100-point drop would be 220 points each to 10,120 (weak) and 10,340 (strong), we finished last night at 10,166 – barely hanging on.  
  • Russell topped out at 1,200 and then it dropped to 1,107 (-7.75%) and then recovered to 1,183 (-1.5%) and now down to 1,050 (12.5%).  This is, at the moment, our most critical index because, IF WE ARE DONE GOING DOWN – then 1,050 MUST HOLD.  With the 150-pont drop from the top, we're looking for AT LEAST a weak bounce to the 10% line at 1,080 and then a stronger bounce to 1,110.  If we don't accomplish them this week – look out below!  

NYMO  DAILYSorry I don't have better news than that for you but, if we assume that our Must Hold levels were, in fact, the correct Fundamental levels for the indexes, then we can expect to see a consolidation pattern as much as 10% below those lines and that means that any stock that is still trading over its 200 dma is probably still not a good buying opportunity.  

As you can see from Dave Fry's McClellen Chart, we are HOPEFULLY hitting an oversold condition although, as you can see in July, we can get more oversold than this.  Either way, those -12.5% lines MUST HOLD and then we MUST get quick bounces back to at least our weak bounce levels by the end of the week (options expiration on Friday).  If not, we'll start looking for the lower end of our trading range and will place our bets accordingly (see yesterday's post for some great hedging ideas).  

We'll see how the day goes and we'll hold a LIVE Trading Webinar at 1pm today, where we'll review our levels and look for some new opportunities on both sides of the market.  Our expectations for this morning were to end the dump with a blow-off bottom but we already had nice volume yesterday and a big dump – so hopefully not too much more damage before we turn up.  

Be careful out there.  


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  1. Oil Lines

    R3 – 87.72
    R2 – 86.79
    R1 – 85.92
    PP – 85
    S1 – 84.12
    S2 – 83.19
    S3 – 82.32

  2. Fight for Kobani intensifies; ISIS takes Iraq base‎

    Horror of Kobani: Headless corpses left in the street and victims with their eyes 'cut out', the savagery of Isis laid bare

  3. Big pop back up in the futures…

  4. Bank stocks up on results from C, JPM, & WFC.

  5. Was hoping for a wash out this AM.  We may still get it later today. 

    Hard to believe that with all the carnage in small caps, energy, materials, etc. that the large caps have stayed relatively unscathed, except for the Momos.  Concern now is earnings season.  Many of the large caps are muti-national.   Weakness in Europe could affect their forecasts.

    INTC reports after the close.  Have to see if they agree with MCHP's outlook for semis.  If so, could be more pain ahead for the bulls.

  6. Good Morning!

  7. Good Morning Everyone!

    Today's 1pm (Eastern) webinar link is:

    Event number, if you need it, is: 667 775 361

  8. Good morning!  

    Oil clinging to $85 but it might not hold, if not, more pain ahead as it's such a big part of the S&P:

    LONDON, Oct 14 (Reuters) – Brent crude fell to a fresh low below $88 a barrel on Tuesday, trading at the weakest level since 2010 after the West's energy watchdog cut its estimates for oil demand this year and next.

    The global oil benchmark has dropped almost 25 percent from its 2014 high in June as supplies have risen and global demand has slowed, creating a glut in many markets.

    The International Energy Agency said on Tuesday world oil demand growth would be much weaker than previously expected and raised questions about OPEC's willingness to rein in supplies, suggesting oil prices may drop further.

    "Recent price drops appear both supply and demand driven," the IEA said in its monthly oil market report. "Further oil price drops would likely be needed for supply to take a hit – or for demand growth to get a lift."

    Brent crude dropped $1.30 to $87.59, its weakest point since December 2010, before recovering slightly to around $87.81 by 1112 GMT.

    U.S. crude dropped $1.01 a barrel to $84.73 after it pared sharp intraday losses on Monday to settle down 8 cents.

    The IEA, which advises industrialised countries on energy policy, cut its estimates for global oil demand growth by 250,000 barrels per day (bpd) for this year and by 90,000 bpd for 2015. It said demand for OPEC oil would be 200,000 bpd lower for both years.

    The Organization of the Petroleum Exporting Countries, which supplies more than a third of the world's oil, has shown little sign that it will cut output, despite a glut in many markets.

    Saudi Arabia and Kuwait have both played down the possibility that the cartel would reduce output when it next meets on Nov. 27.

    "IEA is pulling the plug in the oil market today," Bjarne Schieldrop, an oil analyst at SEB Enskilda, told Reuters Global Oil Forum.

    Swiss oil market analyst Olivier Jakob said world oil inventories would rise by around 2 million bpd in a "major stock-build" in the first half of 2015 unless OPEC cut output.

    "And that is without accounting for any easing of sanctions against Iran and with a still very strong demand growth rebound for next year," Jakob said.

    No oil report tomorrow since Monday was sort of a holiday.  

  9. Phil / disaster hedge – A number of events could lead to 20% correction.  S&P 1600.  what do you like in this case?  assuming this happens by January.  I already have several of your SQQQ bull call spreads and DXD Nov 24 calls.  thanks. 

  10. Remember, anything less than a 1% bump today is a failure.  

    Very little action from XLF (+0.36%) considering decent bank earnings.  

    Wash out/Albo – We had a nice-volume sell-off yesterday, perhaps it just came a bit earlier than we expected.  

    SPY  5  MINUTE

    Disaster hedge/Terra – In yesterday's post we discussed the logic of the Nov $26/29 bull call spread at 0.62 with 383% of upside on a 10% run in DXD (5% drop in the Dow).  That's my favorite new hedge at the moment as the Dow is still lagging to the downside, especially now that the RUT has lapped it on the way down on the Big Chart.   PS, Terra, please contact Greg re. getting the projectors to Caesar's for the conference.  



  11. Liquidity

    How about that? Who would have thought? Wasn’t HFT supposed to provide liquidity in these events?

  12. SWKS disagrees with MCHP's call

    “Skyworks’ upwardly revised outlook demonstrates the broad-based strength of our business and our ability to capitalize on positive underlying market trends to connect everyone and everything, all the time,” said David J. Aldrich, chairman and chief executive officer. “These multi-year technology trends are setting the stage for us to outperform the broader semiconductor industry in the December quarter and for the foreseeable future.”

  13. Speaking of the conference:   JOIN US for the PhilStockWorld Las Vegas Conference! Nov 9-10, 2014 - the room rates are now set, just $239 for the Nobu Hotel (pure luxury within Caesar's Palace, where the conference is) and $99 for Bally's across the street from Caesar's.  It's just 3 weeks from Saturday (Sunday is official start) and I'm looking forward to seeing you all out in Las Vegas!  

    I'm telling you, you have never had better room service in your life – and I stay in luxury hotels all over the World!   We're not combining the conference with Market Tamer this year so it should be more intimate and we'll be able to concentrate more on making sure everyone is on track with our best trading techniques.  

  14. Phil/TNA, longs on the 58/60.5 spread $1.25 again.  Adjust?

  15. Phil JNJ down 3$ possible a good way to sell some Jan17 85p for 8.10

  16. Wow, that was a nasty rejection, lost a lot of our gains already.  Fortunately, RUT made it over 1,060 before pulling back, now 1,054.50.  

    TNA/$25KP, STP, Lunar – Yes, if the RUT can't hold 1,050, then we should probably give up on it.

    Watch that 3,800 line on /NQ, very BAD if that fails to hold.  16,250 on /YM, 1,870 on /ES along with 1,050 on /TF need to hold or we need to get shorter.  

  17. JNJ/Yodi – So much is tempting but I would like to see at least an overall weak bounce before tossing cash into new positions.  

    At least there seem to be buyers at these levels – we'll see if they or the sellers get tired first…  

  18. Phil you favorite stock HOV hoovering around the 3.10 what you think ?

  19. HOV/Yodi – See JNJ.  

  20. Glad I sold DIS last week at 88 for the quick trade, didn't figure it would be going down because of Ebola news.  Got lucky.

  21. BABA - Hearing BofA/Merrill initiating with a Buy, $112 tgt.  Not confirmed at this point.


  22. Phil—With the bot-driven high volume drop late yesterday, and the SPY put/call ratio at high levels, and October options expiring this week, are there any Oct or Nov SPY calls that would be exciting experiments? Thanks, Strether

  23. swks- only 188.7 million float & 590K shares sold in insider trading. They sold their options as fast as they got them & now they are guiding higher? Why wouldn't they hold them if it is going "higher?" Interesting.

  24. I observe today again a lot of rope pulling. Having 3 stocks on top of my observation list on TOS TSLA AAPL and GOOG they are going in wild swings from green to red. AAPL holding more or less the balance. 

  25. GPRO and TSLA are both not looking great.  I wrote some 240 calls on TSLA for this week.  Not much of a bounce considering it fell 35 pts in 2 days.  GPRO barely up today but I had 97 calls for this week so not writing anymore till they have a significant bounce or will write puts if they have a much steeper decline.

  26. FU RUSTLE!!!!!

  27. Looks like I can't read rustle ;-)

  28. Phil- For those of us not fortunate enough to be able to make it to Vegas on Nov.10 will there be any activity here in chat during the Monday session of the seminar ? Also, if by some slim chance I can find someone to look after my son and convince my wife, are spouses welcome to join the group for meals? I realize this is probably not for trading hours, so feel free to address this stuff after close of markets. Thanks.

  29. Threat of fines against Irish government and corporate partners like Apple prods Irish officials to take action Ireland is expected to announce Tuesday, alongside a 2015 budget hearing, plans to close the tax loophole that allowed U.S. companies the opportunity to dodge taxes in many of the regions in which they do business. A report in Reuters cites inside sources as saying the announcement is highly like for tomorrow.

  30. CLF up big.

  31. Back to trading questions. Phil if the market should begin to recover and we see prices start to rise over the next couple of weeks with positive earnings news (not saying I expect this, just hypothetical for my question) would the price of oil likely follow the markets up due to an assumed rise in demand or is this completely disconnected if the inventories continue to remain high? Really just asking if the oil market is connected to the stock market that closely or if the simultaneous drops are just a coincidence?

  32. So are the implications of tax changes good or bad for stocks?  If tax rates go up, but more of the cash comes to the US, does that mean increased dividends and/or buybacks or do the reduced profits cut into EPS more than the likely return of capital?

  33. XCO – Catching some.  Up 20% at this moment.

  34. XCO – and here I was waiting for $2.00 even to double down

  35. Today reminds me of the Fed day last week when it seemed like a short squeeze rally.

  36. New Trade HD my old usual Jan17 BCS 75/90 cost 8.33  sell Jan17 80 put for 8.65 This puts up a bit of margin but no cash out lay and you could make a steady return of 1 to 1.5 % per month while waiting to see the tree grow, selling 1/2 monthly calls. The Nov 95 c still pays .98 cents. But look out they reporting in Nov. 

  37. DIS/Rustle – That was my concern last week:

    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? 

    BABA/Albo – They can have their damned MoMos, not a game I'd play at the moment.

    Nice recovery for our indexes right off those lows – maybe forming a real floor.  Volume on SPY already over 80M, so strong in the morning gyrations.  

    SPY/Streth – As a bullish play, I'd go for the Nov $188/194 bull call spread at $3.30.  That's a $6 spread that's $1.25 in the money and it's very liquid so you can make 20-30% and get out on a nice run.  If it fails, the $188s are $5.25 so you just want to roll out to a March spread before they drop below $3 to preserve the cash you put in.  

    Ropes/Yodi – Give them enough and they may hang themselves…  Hopefully we're make progress today but we're in a very precarious spot. 

    Vegas/Craigs – I don't know what we did last year.  There will be Members in Chat who aren't there but we once tried to broadcast audio and I don't think it went well (see last year's Monday post).   Here's an audio clip that got saved from it.  

    Yes, spouses can join us for dinners in Vegas but let Greg know so we get the reservation number right.  

    Ireland/JPH – About time but now on to the next tax haven is all it will accomplish.  

    CLF/Albo – Was ridiculously low for all the wrong reasons.  I think I may have mentioned that…  blush

    Submitted on 2014/10/10 at 8:06 am (part of a large rant on CLF)

    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!!!!

    Oil/Craigs – I hope so as we bought the USO Jan $32/34 bull call spread, which pays at about $90.  Also, it depends WHICH earnings are good.  It has to be Manufacturers, not Financials, that are doing well.  There needs to be signs of sales and shipping and trade going on, not just buybacks and cost savings driving earnings higher.  That's why oil doesn't seem connected to stocks – the market is cyclical and sometimes the market can be up while the sectors that drive energy consumption are down and vs. vs.  Unfortunately, people want simple rules that don't require them to think and thus made-up "connections" like this one seem unreliable although, in truth, they are merely over-generalized. 

    Tax changes/JPH – In theory, if the companies stopped hiding money overseas, their US earnings would rise but, in practice, there are 100 other countries they can shove things off to.  Go bullish on Tax Lawyers if you want to play it.  

    XCO/Albo – Another undervalued favorite.  

    One of the most valuable thing about keeping a blog and logging our chat sessions is going back and reviewing how we handle a sell-off like this.  

    XCO/Rookie – Well, had we not just taken such a big hit from GTAT, I would be gung-ho to DD on XCO in the Income Portfolio but, at the moment, we'll be thrilled to get our money back.  If you are in at $5 and don't mind riding them out long-term, I'd sell the 2013 $5 puts for $3.10 and the $3 calls for 0.40 to knock the basis down to net $1.50/3.25.  So, if they get back to $3, you still make $1.50 which, even over 2 years is a good return on $5 or, if they go lower, then you have your DD at net $1.90, not net $2.32.  

    It takes practice and experience to get the emotion out of your trading.  No matter how much you like a stock, it's very hard to pull the trigger and add to a position when it has a harsh sell-off.  As noted above, we didn't do it because we had just got whacked by GTAT but, had that not happened, XCO would have been one of our stocks to DD on for sure.  

    We still don't know if that's the right move, what's 0.32 after that drop?  But, conceptually, these are the times you DO want to deploy more capital – as long as you understand WHY your stock is down (low oil prices, in this case) and whether or not they can weather the storm (balance sheet, income, cash flow, debt levels) and whether that fits within your risk profile and time horizon for the trade.  Those are all LOGICAL things to look at when a stock is falling but you have to fight the fear all the way down to play them right.  

    HD/Yodi -Of course a weak bounce off the 50 dma ($89.40) after a rejection at $95 so call it a $6 drop and then you want $1.20 bounces to $90.20 and $91.40 (now $90.24).  If that weak bounce fails – that 200 dma is a long way down at $81.30.  

    I'm always a little suspicious of quick bounces off dmas. 

  38. way outside the lines:

    The S&P 500 closed yesterday at nearly 3 standard deviations below its 50-day moving average.  The late-day selloff that we saw was extreme to say the least.  As shown below, the index has now clearly broken its uptrend channel, so the bulls certainly have work to do.  That being said, the market hasn't been this oversold in more than two years.  You would expect to see a short-term bounce back soon.  

  39. HD Thanks Phil but remember I give them 2 years to have it's ups and downs. Meanwhile you handle the monthly callers!!! No FACES YET

  40. Oil $83.68 – wow!  

    VIX 22.44, XLF $22.50, TLT 120.92.  Gasoline gave up all of yesterdays gains ($2.265) and now testing our long spot at $2.20 again (/RB).  A little too dangerous now heading into inventories.  

    Indexes right on those weak bounce lines (+1%) led by the RUT testing 1,070.  

    Webinar in 15 mins!  

  41. XCO -Wonder who their next CEO is going to be ?  Aubrey McClendon, formerly CEO of CHK ?  Naw, just wishful thinking on my part.

    Exco Resources May Buy Properties From Its Next CEO.  at Bloomberg(Fri, Oct 10)

  42. CPST/Phil – is there any value here to just buy some shares?

  43. Why can I no longer join the webinars using an iPad? This limitation sucks!

  44. Any chance of removing the massive formatting error in the middle of today's chat (right after the idiot suing Obama)?  I am on an iPad so I don't know if it applies to everyone…

  45. No blips on a laptop.

  46. craigsa620 / iPad – I know that webex has been "upgrading" their site over the past month, which, as always, could cause issues. I'm going to call tech support and find out what they say. Can you email me any specifics? Can't join at all? You getting any specific errors or does it just boot you out, or freeze or something? Send me an email at admin(AT)philstockworld(DOT)com.

  47. formatting error froze my iphone at lunch. 

    PS   Today in Texas regular gasoline was $2.89

  48. cdel360, stockbern / error – which error? Is it still there? Unfortunately I don't see it (Surface Pro 3, Windows 8.1, Chrome) If it's still there, can you shoot me a screen shot or something (to my admin email) so I can go find the errant HTML code that borked the site on iPads/iPhones?

  49. Phil/DAL…  I saw your note on DIS and would like to ask if your thinking carries over to the airlines?


  50. Phil- when you made the change to the webinar broadcast in August it wiped out the ability to view them on an iPad. I get a message saying the webex service being used does not support your browser. Use your computer. Any chance you can change it to allow us to use tablets?

  51. Greg, I'm now back on my regular computer and there are no problems.  On my phone it  looks like it was in the graph with the picture of Bush, right under the red type. 

  52. Greg- using my iPad I have the same issue too with the error. Not sure how to pull off a screen shot using the iPad. Hopefully someone else can. 

  53. Greg,

    I just emailed the error. It appears as a massively long smeared graphic on my Ipad. When I copied into a mail message to send it, it pasted as a readable graphic, if that tells you anything.

  54. Phil / RIG

    I current have the following RIG positions and would appreciate your thoughts on how to get out of the hole.  Thank you in advance!

    Long    200      Shares                        at         $52.0

    Long    20        JAN 2015 $38 CALL     at         $5.25

    Short   3          JAN 2015 $47 PUT      at         $6.0

    Short   10        JAN 2016 $33 PUT      at         $3.1

    Short   10        JAN 2016 $38 PUT      at         $5.5

    Short   10        JAN 2016 $43 PUT      at         $3.75

    Short   20        JAN 2016 $47 PUT      at         $5.6

  55. Craig / iPad – When we first started doing this on our own, we were using "webex meeting center" which actually was different from the setup we used with Darwin. So we talked to the webex people who told us that Darwin was using "Webex Event Center" (Which is apparently a different thing.) and so we "upgraded" to what we're using now. Question: Were you able to join the webinars on your ipad when we were doing them with darwin? (Don't know if you attempted back then.) That may be the difference between Meeting center and Event Center.

  56. Thanks for all who sent screen shots. It actually helps me narrow it down even though I can't see it in any of the screenshots you've sent me. (Leads me to believe it's a mobile Safari specific bug.) Lemme go poke around a bit….

  57. Knew this was a sell the fade day.  Feeling good.

  58. I'm watching this guy from the CDC speak on CNBC and thinking, what great timing for the series "The Strain".  He reminds of the CDC guy from the show.

  59. Is the weird error still there for you iPhone/iPad users? Better or worse?

  60. still there…switched to PC, no problem there

  61. Still on iPhone for me

  62. Wow, looks like we might soon test my next support line at $78 for oil… They must have waken up Putin to give him the bad news.

  63. Market action = BAD! 

    CPST/Scott – Wow, they really fell apart.  I think it's a reasonable gamble to take a stab at but clearly people have been abandoning ship and they'll get de-listed from the Nas at this price (below $1) so I think I'd keep it on my list with a small gamble at 0.50 if they drop but, otherwise, I'd rather catch them going over $1 with a $1 stop than gamble at 0.82 that they get over it before they go lower.  

    Webinar/Craigs – I don't know what might have changed.  Have you tried the WebEx Meetings App?  Would seem strange if that doesn't work.  

    Formatting/Cdel – Should be fixed.  

    Oh no, Dow and Nas turning red!  

    DIS/IHS – To some extent there will be a lot of disruption if this continues (and it likely will).  My Mom doesn't want to go on a cruise, for example – that kind of stuff spreads.  I sure wouldn't be playing the airlines until they bottom out.  

    RIG/Bshing – With RIG at $28.77 you have to take a realistic view of the loss.  You sold 50 puts between $33 and $47, call it $42 avg, so that's the price at which you "own" 5,000 shares of RIG (plus 200 hard shares that I have no idea why you bothered).  You also have long calls so you were 1,000% bullish or maybe you sold calls that you already bought back (I sure hope so).   So, given you have $200,000 worth of RIG at $42 and it's now $29 ($145,000), you are down $65,000 – essentially.  

    The lowest short puts are the 2016 $33 puts, now $9.20 but you sold them for $3.10 so down $6.10.  The 2017 $25 puts are $5.60 so I'd roll the loss over there.  Same goes for all your short puts, I'd just roll the losses along to the 2017 $25 puts and figure you'll end up with 100 short $25 puts you sold for net $0 and now you are on the hook for $250,000 worth of RIG.  If you want, you can also sell 10 of the $23/27 bull call spread for $3 ($30,000) because, if RIG is below $25, you get $20-30,000 and if RIG is above $25 you can't lose more than $10,000 (at $27) but you will have gotten back the $65,000 you lose so a major victory.  While you wait, it knocks down the margin a bit.  

    Remember, when you are behind, getting out even is a major victory.  

  64. Lows are holding again – what a tease!  

  65. Greg and Phil I tried using the Webex meetings app which gave me the message;

    The meeting was scheduled through a WebEx service that is not yet supported on your mobile device.
    To join the meeting now, please use a computer.

    tried using the safari browser and got a similar message. Greg I was able to use the iPad before when it was Darwin. I guess I will just have to bust out the old laptop when I am not home instead of my IPad :(

  66. Wow, I keep deleting the pictures from that comment and then it comes back!  

    OK, I'll redo it without pictures.

    Guy suing Obama says: "I do not advocate violence, and I want Obama to be taken alive to be deported and pay for his inadequacies under the rule of law,” Klayman writes. “But he must be forced from office as soon as possible, before all is lost."

    NIH funding cuts led to Ebola Crisis.  

  67. McClellan Oscillator barely moved down yesterday, went from -195 to -214, but I bet this little blip brings the McClellan up at least 50 pts indicating the market has more selling off to do.  Would expect a -300 reading before really playing for some rally.

  68. Greg the weird streak just got much worse. I think I need to bow out until I get home. Bummer . 

  69. McClellan/Rustle – That's what I'm worried about too, this may be a brief pause on the way down.  

    Streaking/Craigs – It's not on my iPad air.  I don't see how it can be – I deleted the post with those images.  

  70. Craig… try to manually refresh the page now. (With the auto-refresh the "bad" comment may have been stuck in your cache. Now that it's gone you should see improvement.)

  71. LAKE and APT 2-day spike up and down very similar to PLUG back in March.    

  72. I shorted LAKE at 26 yesterday

  73. fixed on my iPad now…thanks

  74. "ITS NOT MY JOB TO SUPPORT THE MARKETS"  repeat 3 times

  75. Post is fixed now on my Ipad.

  76. Some of these dividends might be at risk…

    The S&P 500 Energy sector makes up about 10% of the entire S&P 500.  The sector rallied 23% from late February through June 23rd, and it was one of the top performing sectors in 2014 at that point.  But things have turned ugly for Energy lately.  Real ugly.

    Since it's all-time high on June 23rd, the sector has dropped more than 20%, putting it in bear market territory (along with oil).  Below is a table showing stocks within the Energy sector that pay dividends.  As shown, every single one is well below its 50-day moving average, with most 10-20% below.  A stock that's 10% below its 50-day is pretty oversold, and it's like that across the board in Energy right now.

  77. And BTW, gas prices at their lowest in a while:

    Funny we don't hear any more complaints about gas prices from the GOP! 

  78. Were there any portfolio trade adjustments or hedge adjustments in the webinar?

  79. INTC – Out with good guidance.

    4Q revenue guidance:  $14.7 billion midpoint +/- $0.5 billion.  Gross margin guidance raised to 64% from 63%.

  80. I guess, having gone over the Buy List in the Webinar – I'm excited enough about some things that my gut says we're not going down much more but I'm only into buying things that are at their lows (since we made the list in May), not things that have simply pulled back a bit. 

    Oil $82 now – wow!  Dollar 85.95, gold $1,233, silver $17.395, copper making steady gains at $3.078, nat gas $3.827 and gasoline stays weak at $2.18.  

    So funny to see CLF the best performer on my watch screen.  BTU good too. 

    My cousin died today and the funeral is tomorrow (Jews do not waste time!) – I will probably leave in the afternoon.  It sucks, he's just two years older than me – cancer got him really fast.  

    • Down 1.3% today amid tumbling energy prices, Canada's S&P/TSX is now off more than 10% from a high hit on September 11. The index is dominated by energy and materials stocks – a combined weighting of 71% – good news in a strong global economy, and bad news when oil drops $15 per barrel in a month.
    • Earlier, the IEA slashed its estimate for global oil demand and crude is down more than 4% on the session to the lowest in over two years.
    • The MSCI Canada Index ETF (EWC -1.1%) is off a similar amount to the TSX over the same time frame. Five of its top-10 holdings are banks, but beyond that there's a lot of energy and materials.

    Good mantra Stock.  This is why we don't rush in (that's the job for fools).  

    Adjustments/Burr – Not today but tomorrow I'll try to get to the portfolios.  

    INTC/Albo – Giving me hope, earnings have been OK so far.  

  81. Not that convincing of a close I don’t think

  82. phil// what is the plan for our USO 32/34 bcs?  Is it time to roll or hang in there? Thanks.

  83. phil/ i am sorry for your loss..  my thoughts are with you and your family. 

  84. Sorry to hear about your cousin Phil.  Take care.

  85. Rustle/ Are you clairvoyant? Sounds like you're having a good week so far!

  86. I'd expect more down on oil tomorrow morning, when people start liquidating to meet margin calls

  87. My condolences to you and your family, Phil.

  88. condolences,

  89. Phil, my condolences on your loss.

  90. so sorry for your loss Phil

  91. Oh man, so sorry to hear! Jeez, why even come in tomorrow? Take the day / week off. Not like we can't handle ourselves and give you a well-deserved break to be with family and friends. All my best to you and your family.

  92. My condolences to your family.

  93. Sorry for your loss Phil!

  94. Phil – Sorry to hear about your cousin.

  95. Phil// Sorry to hear about your cousin.

  96. Phil: Sorry for your loss…It seems that cancer, which one in three Americans contract, is taking an ever increasing toll.

    If you have a chance please look at the DO Jan 16 $30 Puts STO and give me your opinion. Rig is another interesting Put Candidate.


  97. Phil / condolences to you and your family.

  98. From Bloomberg, Oct 14, 2014, 4:57:43 PM

    A police officer sprays a pro-democracy protester in the face with pepper spray in Hong Kong. Photographer: Alex Ogle via AFP/Getty Images

    Scores of Hong Kong police officers moved in on pro-democracy protesters who blockaded a road near the city government’s headquarters early this morning, using pepper spray and taking away some demonstrators.

    To read the entire article, go to

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  99. Phil / very sorry for your loss, someone close in age does hit home.

  100. From Bloomberg, Oct 14, 2014, 9:46:20 AM

    A worker prepares to do voltage output tests on a section of solar modules at the Southern California Edison (SCE) solar array in Porterville, California, U.S. Photographer: Ken James/Bloomberg

    At a windy mountain pass on the edge of the Mojave Desert, North America’s most potent collection of batteries used for storing unused power is humming its way toward an electricity revolution.

    To read the entire article, go to

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  101. From Bloomberg, Oct 14, 2014, 7:29:14 PM

    A rig hand removes drill pipe from a natural gas well at a hydraulic fracturing site located atop the Marcellus shale rock formation in Washington Township, Pennsylvania, U.S. Oil futures have collapsed as shale supplies boost U.S. output to the most in almost 30 years and global demand weakens. Photographer: Ty Wright/Bloomberg

    Japanese and U.S. index futures
    advanced with Australian and New Zealand stocks after the
    Standard & Poor’s 500 Index rebounded. Oil in New York rose from
    a two-year low, while the dollar maintained gains.

    To read the entire article, go to

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  102. From Bloomberg, Oct 14, 2014, 6:41:04 PM

    Oct. 14 (Bloomberg) — Stacy Smith, chief financial officer of Intel Corp., talks about the computer-chip maker’s third-quarter results and fourth-quarter forecast.
    He speaks with Trish Regan and Cory Johnson on Bloomberg Television’s “Street Smart.” (Source: Bloomberg)

    Intel Corp. (INTC), the world’s largest computer-chip maker, forecast fourth-quarter sales that may exceed analysts’ estimates as companies replace aging office hardware with newer, faster machines.

    To read the entire article, go to

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  103. From Bloomberg, Oct 14, 2014, 4:29:51 PM

    Cliffs Natural Resources Inc. (CLF), the
    U.S. iron ore producer cut to junk by Standard & Poor’s last
    week, said it’s in talks with steelmakers about selling a stake
    in its Bloom Lake mine in Canada.

    To read the entire article, go to

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  104. Phil – condolences

  105. From Bloomberg, Oct 14, 2014, 10:01:14 AM

    Customers browse make-up at a Sephora store in the Brooklyn, New York. Photographer: Victor J. Blue/Bloomberg

    Call it America’s $11 trillion advantage: Consumer spending is likely to steer the U.S. economy safely through the shoals of deteriorating global growth and turbulent financial markets.

    To read the entire article, go to

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  106. From Bloomberg, Oct 14, 2014, 1:53:28 PM

    One of my favorite charts to show people is about long-term market returns since 1900. I find it incredibly telling, in the information provided by a simple line chart.

    To read the entire article, go to

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  107. I would guess we get an up day tomorrow… 

  108. Phil – sorry to hear the sad news.  

  109. This guy is spot on.  S&P needs to retake 1905 or it's headed to 1600 by Nov absent any new stimulus or policy changes.

  110. Quote of the day:

    Howard Lindzon, “Panics are good because they force people to rethink. It’s a forced time to garden.”  (Howard Lindzon)

  111. That's my way of thinking now – keep it simple:

    I’m generally not much of a follower of technical analysis, but I don’t dismiss it either. In particular, I like to look at the 200-day moving average. So it was big news for me when the S&P 500 finally closed below its 200-DMA yesterday. That hadn’t happened in nearly two years. This was the second-longest streak in the last 58 years. We came about three months shy of tying the July 1996 to August 1998 streak.

    I’ve looked at the historical data, and the 200-DMA has a decent track record. When the S&P 500 is above the 200-DMA, the market does well. When it’s below the 200-DMA, it does poorly. Not very complicated.

    Since the beginning of 1933 to yesterday, the S&P 500 has traded above its 200-DMA 67.8% of the time. It’s traded below the 200-DMA the other 32.2% of the time. When the S&P 500 is above its 200-DMA, it’s risen by an annualized rate of 11.29%. But when it’s below the 200-DMA, it’s fallen at an annualized rate of -1.06%.

    (Technical note: For consistency, I excluded Saturday trading which lasted until 1952. For the annualized numbers, I assumed a year of 253 trading days.)

    Why is this so? I think this is a good example of a dumb rule that works for complex reasons. The complexity part is that the stock market does show momentum. Changes in the market are not normally distributed. Good times tend to lead to good times. Bad times lead to more bad times. The hard part, of course, is spotting when the trends change. The 200-DMA is about the sweet spot in that it’s long enough to capture the trend, but short enough to pick up on reversals. The more dramatic the reversal, the quicker the 200-DMA will flag it.

  112. On the other hand, it seems that the 200 DMA is not working as well:

    To be sure, the pre-1990 results paint a different story. So, in order to determine your response to the market’s current violation of the 200-day moving average, you must decide whether the last couple of decades are just an aberration — or, instead, whether something more or less permanently has changed that renders the moving average less effective.

    One important straw in the wind in this regard is research conducted by Blake LeBaron, a Brandeis University finance professor. He found that moving averages of various lengths stopped working in the early 1990s not only in the stock market, but also in the foreign-exchange markets.

    Since those two markets are not linked in any obvious way, that would otherwise explain why moving averages would fail simultaneously in both. LeBaron’s research provides support for those who believe that the moving average’s fading effectiveness is more than just a fluke.

    What might have caused that to happen? LeBaron speculates that it could be the confluence of several factors. One big one, he told me, could be the advent of cheap online trading, especially the creation of exchange traded funds — all of which made it far easier to trade in and out of securities according to the moving average.

    Another factor, he said, could be the moving average’s popularity. As more investors begin to follow a system its potential to beat the market begins to evaporate.

    In any case, it’s worth stressing that the results presented here don’t necessarily mean we’re not in a bear market. What they do mean: If we’re now in a bear market, it will be for other reasons besides the violation of the 200-day moving average.

  113. Interesting article about the iPad:

    The past seven years in mobile has essentially boiled down to people discovering which sizes of glass they prefer in their pocket.  In 2010, it seemed like consumers would want a phone, tablet, and laptop/desktop, with the tablet eventually replacing the laptop/desktop, although many in Asia and emerging markets disagreed. As phones become larger and more powerful and wearables become more popular, I suspect consumers will be content with just a phone and wearable device. I still see a future for iPad, but it looks more like Mac instead of an all-encompassing mobile device next to iPhone and maybe that is what Apple had in mind all along. 

    I feel the same way – I will probably buy the new Nexus 6 phone that seems to be a phablet and then toss my small 7" tablet and look for something bigger like 11 or 12" for my tablet. Maybe even a Windows tablet so that I can run my usual software on it.

  114. From Bloomberg, Oct 14, 2014, 9:56:26 PM

    Virologist Heinrich Feldman handles blood samples while testing them for the Ebola virus in a “glove box” at a mobile laboratory for Ebola testing near Monrovia, Liberia, on Aug. 21, 2014. Photographer: John Moore/Getty Images

    The Ebola virus circulating in West
    Africa is already different from previous strains.

    To read the entire article, go to

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  115. From Bloomberg, Oct 14, 2014, 4:54:47 PM

    U.S. airlines rose the most since 2011, ending a six-day losing streak, as fliers ignored Ebola worries and continued to fill planes. Jet fuel dropped to the lowest price in almost four years.

    To read the entire article, go to

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  116. From Bloomberg, Oct 15, 2014, 4:09:01 AM

    Brent crude extended its biggest
    one-day collapse in four years amid speculation OPEC will
    refrain from eliminating a glut while demand growth slows to its
    lowest since 2009.

    To read the entire article, go to

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  117. From Bloomberg, Oct 15, 2014, 12:41:59 AM

    Lee Ju Yeol, governor of the Bank of Korea, hits a gavel as he starts a monetary policy meeting at the central bank’s headquarters in Seoul, South Korea, on Wednesday, Oct. 15, 2014. Photographer: SeongJoon Cho/Bloomberg

    The Bank of Korea cut its benchmark
    interest rate to a four-year low as Governor Lee Ju Yeol risks
    spurring capital outflows in his effort to bolster the economy.

    To read the entire article, go to

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  118. From Bloomberg, Oct 14, 2014, 12:36:25 PM

    Oct. 14 (Bloomberg) — U.S. Centers for Disease Control Director Thomas Frieden speaks at a news conference in Atlanta about his agency’s response to the infection of a Dallas hospital worker with the Ebola virus and plans to improve Ebola infection control.
    Dr. David Lakey, commissioner of the Texas Department of State Health Services, also speaks. (Source: Bloomberg)

    The number of new Ebola cases in three West African nations may jump to between 5,000 and 10,000 a week by Dec. 1 as the deadly viral infection spreads, the World Health Organization said.

    To read the entire article, go to

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  119. From Bloomberg, Oct 15, 2014, 1:07:37 AM

    Hideo Hayakawa, Bank of Japan’s former chief economist. Photographer: Tomohiro Ohsumi/Bloomberg News.

    The Bank of Japan should quit while
    it’s ahead. That’s the advice of the central bank’s former chief
    economist, Hideo Hayakawa.

    To read the entire article, go to

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  120. From Bloomberg, Oct 15, 2014, 2:52:16 AM

    Cranes operate at a residential construction site in Beijing, China. Local governments in 37 out of 70 major cities have eased mortgage restrictions to help avert a slump in the property market, according to a Moody’s report yesterday. Photographer: Brent Lewin/Bloomberg

    China’s weakest developers are
    getting weaker as Agile Property Holdings Ltd. (3383) became the latest
    company to struggle with debt repayments.

    To read the entire article, go to

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  121. From Bloomberg, Oct 15, 2014, 12:01:00 AM

    These days, PAs and nannies do what they can, but in the golden days of Rome, life required slaves. Lots of them. How and where to buy the best gets “The Roman Guide to Slave Management: A Treatise by Marcus Sidonius Falx” off to a captivating start. Source: The Overlook Press via Bloomberg

    These days, PAs and nannies do what
    they can, but in the golden days of Rome, life required slaves.

    To read the entire article, go to

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  122. From Bloomberg, Oct 14, 2014, 11:52:49 PM

    Oct. 13 (Bloomberg) — Simon Cox, investment strategist for Asia Pacific at BNY Mellon Investment Management, talks about protests in Hong Kong, the impact of Europe on global stocks, and China’s economic challenges.
    He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Christmas shoppers rejoice!

    To read the entire article, go to

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  123. From Bloomberg, Oct 15, 2014, 12:00:01 AM

    Oct. 15 (Bloomberg) — Max Rowland, project manager for Walsh Construction, and Robert Morphonios, project director for WBV East End Partners, talk with Bloomberg’s Mark Niquette about the Ohio River Bridges Project.
    The work, being shared by Democrat-led Kentucky and Republican-dominated Indiana, could serve as a model for rebuilding U.S. infrastructure in a time of partisan gridlock. (Source: Bloomberg)

    The concrete piers of two new bridges are rising out of the Ohio River between Louisville, Kentucky, and southern Indiana, as crews blast limestone and move earth to build the roads and tunnels that will soon connect the twin spans to nearby interstate highways.

    To read the entire article, go to

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  124. From Bloomberg, Oct 14, 2014, 11:18:22 PM

    A flag with Albanian national symbols attached to a remotely operated drone flies in the stadium during the EURO 2016 group I soccer match between Serbia and Albania in Belgrade on Oct. 14, 2014. Phototgrapher: Andrej Isakovic/AFP/Getty Images

    A qualifying match between Serbia
    and Albania for soccer’s European Championship was abandoned
    after a remote-controlled aircraft buzzed the field in Belgrade.

    To read the entire article, go to

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  125. From Bloomberg, Oct 15, 2014, 4:20:35 AM

    Ever since the oil shock of the
    early 1970s, central bankers have fretted that rising energy
    prices spelled recession.

    To read the entire article, go to

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  126. From Bloomberg, Oct 14, 2014, 5:00:40 PM

    CEDAR RAPIDS, IOWA – OCTOBER 13: Former Massachusetts Gov. and GOP presidential candidate Mitt Romney makes his way through supporters of Iowa Republican State Senator and U.S. Senate candidate Joni Ernst on October 11, 2014 in Cedar Rapids, Iowa. Ernst and Romney met with around 300 supporters at the event, one of many in the final weeks of Ernst’s campaign for a U.S. Senate seat. U.S. Representative Bruce Braley (D-IA) and Ernst are virtually tied in polling to replace the seat occupied by retiring U.S. Senator Tom Harkin (D-IA). (Photo by David Greedy/Getty Images)

    To understand why the Mitt-Romney-should-run-again camp won’t take its marbles and go home, even after wife Ann says he’s “done, done, done” with presidential campaigns, look to wide-open Iowa.

    To read the entire article, go to

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  127. From Bloomberg, Oct 14, 2014, 11:30:42 AM

    Oct. 14 (Bloomberg) — Facebook Inc. founder Mark
    Zuckerberg and his wife, Priscilla Chan, are donating $25
    million to the U.S. Centers for Disease Control’s nonprofit arm
    to help fight Ebola, saying most governments don’t realize the
    disease is at a “critical turning point.”

    To read the entire article, go to

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  128. From Bloomberg, Oct 13, 2014, 1:39:23 PM

    Oct. 14 (Bloomberg) — U.S. and local health officials want
    to set up dedicated hospitals in each state for Ebola patients,
    part of a new emphasis on safety for health-care workers after a
    nurse caring for an infected patient in Dallas tested positive
    for the virus.

    To read the entire article, go to

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  129. From Bloomberg, Oct 14, 2014, 7:12:15 PM

    From Fox News to the opinion section of Fox News’s website, RNC Chairman Reince Priebus is ringing the alarm bells about voter suppression. Republican voter suppression. “Tom Steyer’s dark money special interest group,” writes Priebus, scaffolding together two terms typically deployed by the left, “[has] a new plan: suppress the Republican vote.”

    To read the entire article, go to

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  130. Watch this video at

    Mobs Confront Hong Kong Protesters in Business Zone

    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)

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  131. From Bloomberg, Oct 14, 2014, 9:52:49 AM

    If you’re governor of Texas, it’s probably best to stay close to home during hurricane season and when Ebola is spreading in your state. This week, Rick Perry is in Europe.

    To read the entire article, go to

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

    Oct. 14 (Bloomberg) — James Beauchamp, president of Motran Alliance Inc., and Winston Dixon and Rose Vasquez, residents of Odessa, Texas, talk with Bloomberg’s Mark Niquette about the city’s infrastructure and increase in fatal traffic accidents.
    Almost 60 people died in crashes in Odessa and surrounding Ector County last year, a 157 percent increase since 2009, as an influx of workers at booming oil fields in the area generate traffic on roads not designed for the load. (Source: Bloomberg)

    Gus Pando lost his mother last year in a crash at an intersection where a county road crossed four lanes of vehicles barreling by at 75 miles an hour. At the same Odessa, Texas, junction in August, a family friend was killed in a wreck when the driver of a Jeep smashed into his minivan, a day after new stop signs were installed.

    To read the entire article, go to

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  133. Watch this video at

    U.S. Banks Not Ready for Another Crisis, Kelleher Says

    Oct. 14 (Bloomberg) — Dennis Kelleher, chief executive officer of Better Markets Inc., talks about U.S. bank capitalization and the adequacy of the Federal Reserve’s stress tests.

    Kelleher speaks with Betty Liu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

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  134. Watch this video at

    Outdated Texas Roads Show Infrastructure Can Kill

    Oct. 14 (Bloomberg) — James Beauchamp, president of Motran Alliance Inc., and Winston Dixon and Rose Vasquez, residents of Odessa, Texas, talk with Bloomberg’s Mark Niquette about the city’s infrastructure and increase in fatal traffic accidents.
    Almost 60 people died in crashes in Odessa and surrounding Ector County last year, a 157 percent increase since 2009, as an influx of workers at booming oil fields in the area generate traffic on roads not designed for the load. (Source: Bloomberg)

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  135. From Bloomberg, Oct 14, 2014, 6:01:01 PM

    President Francois Hollande is going
    all out to show he’s serious about putting France’s house in

    To read the entire article, go to

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  136. From Bloomberg, Oct 15, 2014, 3:42:04 AM

    Lights illuminate the facade of the Swiss National Bank’s headquarters in Bern. Photographer: Gianluca Colla/Bloomberg

    The Swiss National Bank is likely to
    keep its cap on the franc in place until at least 2016 as
    central bankers in the surrounding euro area loosen policy
    further, economists say.

    To read the entire article, go to

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  137. Watch this video at

    Breaking Down the Bank Earnings: JPMorgan, Citigroup

    Oct. 14 (Bloomberg) — Bloomberg Contributing Editor Bill Cohan and Bloomberg Intelligence’s Allison Williams discuss the banking industry, earnings and Jamie Dimon’s return from sickness to helm JPMorgan. They speak on “Market Makers.” (Source: Bloomberg)

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  138. From Bloomberg, Oct 15, 2014, 12:16:22 AM

    Oct. 11 (Bloomberg) — Federal Reserve Vice Chairman Stanley Fischer talks about the impact of weaker global economic growth on Fed policy.
    Fischer delivers the annual Per Jacobsson lecture at the annual meeting of the International Monetary Fund in Washington. Former Mexican central bank governor Guillermo Ortiz moderates. (Video is courtesy of the IMF. Source: Bloomberg)

    This summer, the U.S. economy enjoyed the easiest financial conditions of the post-crisis era. Those days are probably over.

    To read the entire article, go to

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  139. From Bloomberg, Oct 15, 2014, 2:37:09 AM

    Merkel’s government isn’t making promises on infrastructure beyond a boost of 5 billion euros ($6.3 billion) in federalspending through 2017 pledged last year. Photographer: Thomas Trutschel/Photothek via Getty Images

    Germany’s state governments stepped up calls for infrastructure spending, adding another source of pressure on Chancellor Angela Merkel to boost investment as economic growth falters.

    To read the entire article, go to

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  140. From Bloomberg, Oct 14, 2014, 6:03:23 PM

    Hong Kong’s leaders aren’t as professional as the police.

    China has the Great Hall of the People. Hong Kong has the “Great Hall of the Tycoons.”

    To read the entire article, go to

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  141. From Bloomberg, Oct 14, 2014, 2:30:17 PM

    Change comes to the church.

    The world’s Roman Catholic bishops issued a report yesterday that contained little that was new in church teachings and is unlikely to affect church policies anytime soon. Yet it was variously described as heralding a “revolutionary change,” “a new era” and a “pastoral earthquake.”

    To read the entire article, go to

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  142. From Bloomberg, Oct 15, 2014, 3:25:20 AM

    Exports are down, so are prices.

    Inflation hawks might want to take a closer look at China‘s latest data, which just go to show how warped their worldview is becoming.

    To read the entire article, go to

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  143. From Bloomberg, Oct 14, 2014, 4:46:31 PM

    In the late 1870s, the Mississippi Valley was ravaged by yellow fever. 

    Although the likelihood of a large-scale outbreak of Ebola is almost immeasurably tiny, Americans have begun to ask: Who, really, is in charge of snuffing out a potential epidemic? The Centers for Disease Control? Texas Governor Rick Perry? The local alderman?

    To read the entire article, go to

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  144. From Bloomberg, Oct 14, 2014, 1:43:09 PM

    Careful. That car may have a bug.

    This would be remembered as the Year of the Hack, if 2015 didn’t promise even more cybersecurity breaches. Ordinary users shouldn’t wait for businesses and government to respond to the growing threat.

    To read the entire article, go to

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  145. From Bloomberg, Oct 14, 2014, 1:03:43 PM

    It’s not about health-care costs.

    I’ve said it before and I’ll say it again: Outside a few lonely hawks, no one cares about the budget deficit — at least, not as long as they have any chance of getting some tax cut, or some spending, that they favor. Liberals were huge budget hawks in 2007, outraged about the George W. Bush deficit that was, by that point, running a little more than 1 percent a year. Fast-forward to 2014, when the Bush tax cuts have been partially repealed, helping President Barack Obama to slash the budget deficit to its lowest point in his administration — 4 percent — and the left is curiously uninterested in deficit reduction.1 Meanwhile, the Republicans who couldn’t be bothered with the deficit as long as it was going to fund tax cuts have suddenly rediscovered their inner accountants. Should the presidency flip parties, so will the outrage, with depressing predictability.

    To read the entire article, go to

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  146. From Bloomberg, Oct 14, 2014, 12:15:44 PM

    Growth most countries only dream of.

    An increasing number of people are afraid that the economic slowdown in China is bad news for the rich economies of the West. Lord Turner, the former head of the U.K.’s Financial Services Agency, calls the slowdown the “biggest risk to the global economy.” Hedge-fund billionaire George Soros agrees. In an age where we’re always on the lookout for the next big macroeconomic risk or black swan, a China slowdown seems like an obvious candidate for Next Big Thing to Worry About.

    To read the entire article, go to

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  147. Good morning!  

    Thanks for condolences.  I'll be here until the afternoon and same tomorrow.  Just found out that taking kids out of school for their Uncle's funeral is an "unexcused absence" per our lovely school district!  

    Futures are flat after being up half a point and then down half a point overnight.  Either we're finding a floor or consolidating for the next leg down.  

    Asia was up mildly but it's Europe again, falling 0.5% from the open into lunch.  

    Oil found another cliff to fall off, plunging from $82 to $80.37, now $80.85.  Dollar 86.04, gold $1,223, silver $17.09, copper $3.07, nat gas $3.85, gasoline $2.15!  

    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Nov'14 82.32 82.45 80.37 80.75 06:18
    Oct 15


    -1.09 49254 81.84 124480 Call Put
    Dec'14 81.73 81.76 79.66 80.10 06:18
    Oct 15


    -1.10 22325 81.20 307693 Call Put
    Jan'15 81.25 81.28 79.19 79.57 06:18
    Oct 15


    -1.17 4476 80.74 158765 Call Put
    Feb'15 80.78 80.78 78.89 79.22 06:18
    Oct 15


    -1.18 2065 80.40 55413 Call Put
    Mar'15 80.63 80.63 78.59 78.92 06:18
    Oct 15


    -1.24 2355 80.16 111200 Call Put

    November contracts settle on the 21st (Tues), so they have 5 days to wriggle out of 124,480 – that shouldn't be too tough but, on the other hand, they only dumped about 60M in the past 5 days and look at the damage that's done.  Still, $80 SHOULD be bouncy support in the very least and we're down from $85 on Friday so that's 5% ($4) with a 20% overshoot ($1) so the chance of not bouncing back to at least test $81 is about zero.  If $81 fails, then we could be heading for a 10% correction and check out the perfect way we held the strong bounce lone ($82) before falling to the weak bounce line ($81) and then not quite completing the journey to $80. 

    That line wants to be touched, that line NEEDS to be touched!  

    USO/Rookie – NOW we roll 'em.  

    Week off/Yo – Good idea but too many things going on as I packed my calendar ahead of leaving for Vegas on the 1st – that's my week "off" if "off" means waking up at 3am and "only" working until 1pm that week.  Hell, who am I kidding, even while I say it it sounds like a vacation to me!   I'm usually up at 3 anyway, just not writing yet but there's nothing I like better than getting a nice room service breakfast while I'm working in the morning.  

    DO/IHS – Nothing wrong with any of these guys except the price of the stuff they sell is going down.  Since demand is pretty inelastic, that means less revenues and less profits.  Will they come back?  Hard to say, last time we had a Democrat in the White House, oil was $20 a barrel…

    Idiots on CNBC trying to tell people sub $80 oil is bad for the economy.  OMG Corporate Media is EVIL!!!  Are there really people who believe what they are saying?  

    Big Chart – Those spinning top things only signal a reversal when the next day opens higher than the candle and stays above it all day.  Otherwise, you get what we had in early October, that merely signaled a pause on the way down.  

    1,600/Terra – Ah but below 1,800 is almost certain to spark new stimulus.

    200 dma/StJ – Well, we've been above the 200 dma on the S&P since Nov 2012 so that's about 750 days over the 200 dma – seems like enough to me.  Hopefully we don't spend the next 750 days under it – that would suck!  Keep in mind it's broken, not because of program trading but because of QE – how does a person not make that connection?  

    The Fed (and other Central Banks) have for years now been timing their announcements specifically to boost the markets before they had a chance to correct back below the 200 dma.  The problem is, as the total market cap grows from $40Tn to $80Tn to $120Tn, the QE is bound to get less and less effective:

    At this point, the Fed has probably decided it would be WORSE if they announce another round of QE and that failed to support the market than if they let it correct a bit first and THEN announce some easing around the time the market was going to bounce anyway – so they can keep up the illusion of control (which is actually an important thing).  

    IPad/StJ – Reminds me of articles about how most people will certainly keep their old, reliable Blackberrys and not go for this "smart" phone craze.  As to that chart showing "alarming" y/y growth declines:

    iPad Sales

    Oh no, the HORROR:

    This is what AAPL cares about:

    Of course bigger phones will eat into iPad sales, especially the iPad Mini, which is now a 6+ without a phone function.  Of course, so is the iPod Touch an iPhone without the phone function so I guess there's room for all kinds.  I think the real key is, whatever size and type you want, AAPL has it.  MSFT does not, Samsung does not – not in the cohesive way AAPL does.  Now AAPL has wearables and I predict a Siri-only phone, like a blue-tooth headset but it's the complete unit, will be coming down the pike.  Can Star-Trek communicator pins be far behind? 

    Same Futures watch lines as yesterday:  16,200, 1,870, 3,800 and 1,050 all need to hold.  Too crazy to play at the moment.  Beige Book this afternoon:

    • Japan +0.92%.
    • Hong Kong +0.40%.
    • China +0.60%.
    • India Closed.
    • London --1.00%.
    • Paris -0.61%.
    • Frankfurt -0.56%.

  148. Ouch!  Futures just sold off sharply, now down half a point at new lows, except the RUT (/TF), which is, so far, holding the line at 1,050, where I'll like it long again with tight stops.  Not if /ES fails 1,860 though! 

    Mortgage apps weren't that bad – not sure what the fuss is about:

    • Composite Index: +5.6% vs. +3.8% last week.
    • Purchase Index: -1.0% vs. +2.0% last week.
    • Refinance Index: +11.0% vs. +5.0% last week.
    • Net income of $168M includes a $5.3B or $0.43 per share pre-tax legal charge for global mortgage settlement. Earnings one year ago were $2.5B, or $0.20 per share.
    • Net interest income of $10.4B flat from a year ago.
    • Noninterest income gained 2% Y/Y, when excluding DVA adjustments. Net charge-offs of $1B fell 38%. Net charge-off ratio of 0.46 compares to 0.73 one year ago.
    • Noninterest expense of $19.7B vs. $16.4B a year ago. Excluding litigation expense, noninterest expense of $14.2B fell 7% Y/Y, thanks to sizable personnel cutbacks (mostly in legacy mortgage).
    • Consumer and Business Banking net income of $1.856B vs. $1.787B a year ago. Average deposit balances up 4%. Mobile banking customers up 15% to 16.1M – 11% of deposits were made via mobile vs. 8% a year ago.
    • Consumer Real Estate Services net loss of $5.184B vs. loss of $990M a year ago, thanks to the mortgage settlement. $11.7B of mortgages originated and $3.2B of home-equity loans vs. $22.6B and $1.8B a year ago.
    • Global Wealth and Investment Management net income of $813M vs. $720M a year ago.
    • Global Banking net income of $1.414B vs. $1.137B a year ago.
    • Global Markets net income of $769M vs. a loss of $875M a year ago. FICC revenue of $2.2B gains 11% Y/Y, driven by currencies as volatility returned late in the quarter.
    • Tangible book value per share of $14.13 vs. $13.62 one year ago.
    • Conference call at 8:30 ET
    • Previously: Bank of America beats by $0.08, beats on revenue
    • BAC +1.2% premarket

  149. I ALMOST bought a NFLX put. Damn.