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Will We Hold It Wednesday – Strong Bounce Edition

What an amazing recovery!  

Just one week ago the World was coming to and end and now everyone has their rally caps back on.  Investors really are sheep – except I think sheep have better memories…  We're still right on plan of dropping 10% and then bouncing 4% (strong bounces) by Wednesday (today) that was initiated on October 6th by our friends at the Fed (see yesterday's post for the summary).  For those of you keeping score, our strong bounce predictions for today were:

  • Dow 16,466 (weak) and 16,632 (strong).
  • S&P 1,878 (weak) and 1,903 (strong).
  • Nasdaq 4,280 (weak) and 4,360 (strong).
  • NYSE 10,360 (weak) and 10,540 (strong).  
  • Russell 1,104 (weak) and 1,128 (strong).

INDU WEEKLYThe Dow is just 17 points away from our goal and we'll just need the NYSE and the Russell to confirm their bounce lines and THEN we can get bullish again.  Meanwhile, we actually got a bit more bearish in our Short-Term Portfolio (also in yesterday's post) as our Long-Term Portfolio popped right back to up 18.1% for the year so we wanted to lock those gains in with the STP, which finished the day up 81.8%, down from 92% in the morning as the markets rocketed.  

If the rally is real, the Dow should have no problem at all popping our 16,632 line – after all, it jumped 234 points yesterday but stopped dead right at our strong bounce line.  The 200 dma on the Dow is 16,586 and the NYSE also stopped just short of it's strong bounce line (10,540) in yesterday's action, but far short of it's 200 dma at 10,620 - which let's you know right there that the 5% Rule™ trumps TA every time!  

10-21-2014 7-04-26 PM FRedEarnings have been good so far (cough, BUYBACKS, cough, cough) and why shouldn't they be when $5,000,000,000,000.00 has been pumped into the Credit Market (10%) in order to get our GDP up 1.5% since 2009.  

You know, I don't mind being robbed by our Corporate Kleptocracy but PLEASE – at least TRY to make efficient use of the money you steal…  

It's worth every Dollar of debt the nation took on to the top 1% because they captured over 90% of those gains while wages and wealth for the bottom 90% declined over the same period.  Don't worry though kids, the debt burden will be equally shared by all of us because, while wealth distribution doesn't have to be fair at all – don't even think about asking the rich to pay more taxes – that's Commie Talk!  

Seriously, it amazes me that, just 5 years later, people seem to have already forgotten all the crap that almost destroyed the country and are ready to vote for the same idiots with the same plan to do it all over again.  Even in Kansas, where EVERY state official is a Republican and they have driven the economy completely into the toilet – it looks like the people are going to vote to re-elect some of those morons.  As noted in the Washington Post:

GOV. SAM BROWNBACK of Kansas (and the Kochs) says he has come to regret characterizing his policy agenda as a “real live experiment” that would test the efficacy of deep tax cuts to spur jobs and economic growth. In fact, Mr. Brownback’s choice of words was apt. Few if any governors have undertaken such an extreme trial-by-revenue-deprivation in a state so clearly lacking the economic means to withstand it.

Mr. Brownback’s Kansas trial is rapidly becoming a cautionary tale for conservative governors elsewhere who have blithely peddled the theology of tax cuts as a painless panacea for sluggish growth. Most key indicators suggest that job creation and economic growth in Kansas are lagging those of its neighbors.

Like Kansas, the US economy is NOT strong – it is merely stimulated – it's an economy on steriods and investors are betting on it to last for the long haul, and they are not expecting any harmful side effects – no matter how much stimulus we take.  Speaking of Kansas and people who need steroids:  Did you see the World Series last night?  San Francisco kicked their asses!  

Without steriods, home runs are down over 10% since the 2006 ban in baseball and the overriding concern in the markets is what will happen to us when the Fed withdraws our economic steriods.  As you can see from the Fed's own chart above – the injection has left us bloated with record amounts of debt – so much worse than when the "unsustatianable" debt of 2008 crashed to economy

What was the solution?  MORE DEBT! 

Good luck with that…


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  1. Good Morning.

    Phil, you sound like Ned Isakoff in that morning post…

  2. McClellan Oscillator is +209, highest reading of the year.  Market is extremely overbought according to it.  Will be adding more dia puts for next week on an up opening today.

  3. Good morning!  

    Isakoff/Decad – Shhh, or you'll get me banned at Hop Sing's.  wink

    The incumbent Republican governor probably would have been better off talking about the fan.



    McClellan/Rustle – yep getting way high now:


    We need a little pullback to stay healthy but the powers that be do not want to give it a rest.  

    Europe is up about 0.3% this morning, so they are out of gas but our Futures have turned green again – only slightly and we'll just have to see what sticks. 

    Oil popping over $83 (/CLX4 is new contract) even though Dollar is up to 85.81 but gold got hit, back to $1,243.  Silver down to $17.25, copper $3.032, nat gas $3.68 and gasoline $2.224.  Euro $1.266, Pound $1.603 and 107.26 Yen to the Dollar.  If our markets stay green and go higher, /NKD can be played bullish over 15,250 but I'm thinking 1% pullback today.  


  4. Good Morning!

  5. Commodities Trader: Capesize rates rise 10% overnight following yesterday's huge 38% ($4,000) surge; overall Baltic Dry Index climbs over 4%.

  6. Advil,

    If you're playing /RB, 2.20 looks like a long if it holds after inventories. 

  7. Oil Lines

    R3 – 84.98
    R2 – 84.12
    R1 – 83.29
    PP – 82.43
    S1 – 81.60
    S2 – 80.74
    S3 – 79.91

  8. All that tax engineering has to stop – they are truly stealing money from their potential customers:

    Facebook’s corporation tax in the United Kingdom for 2013 came to a grand total of £3,169 ($4,005). The company also received £185,196 in credits from a previous year, leaving it with a credit balance of £182,027, according to documents filed with Companies House on Tuesday, Oct. 21.

  9. A bunch of charts showing that the US economy is getting stronger:

    This one for Fox News


    So are we about to enter an era of broadly shared and ever-increasing American prosperity? Of course not! We’re talking about the American economy not the American populace. There’s always a giant difference between the health of the overall economy, and how the fruits of that economy are parceled out to the different members of society. The short version is that the US economy is doing pretty well. It’s just the overwhelming majority of the people who rely on it who are having problems.

  10. Shipping Rates/Albo – Rates just broke over their 200 dma for the first time since March – due for a pop:

    Capesize rates are sitting on a “powder keg” driven by Chinese iron ore demand according to Commodore Research & Consultancy.

    Tuesday saw a $1,094 jump in capesize rates to $17,493 per day as availability of vessels has become scarce, particularly in the Atlantic.

    “The Atlantic basin capesize market remains tight and capesize rates are sitting on a metaphorical powder keg, with rates set to increase soon by a very large amount very quickly,” said Jeffrey Landsberg, managing director of Commodore.

    Last week saw 30 bulkers, mainly capesizes chartered to ship iron ore cargoes to China, the seventh time the weekly number has hit 30 this year, compared to only four weeks in the whole of 2013, and just two weeks in 2012.

    “This year, iron ore production in both Brazil and Australia will be even higher during this September through December, so a great many more weeks will see a very large amount of dry bulk vessels chartered to haul iron ore import cargoes to China.  This is extremely promising for capesize rate prospects,” he said.

    I guess they forgot to tell that to CLF!  

    • Stocks futures suggest little change at the open, pausing after the three-day rally; Dow+0.1%, S&P and Nasdaq flat.
    • The major European bourses all hold small gains, while most Asian markets rose, led by the Nikkei's 2.6% surge which moved the index back above its 200-day MA.
    • Earnings received since yesterday's close have mostly come in better than expected, with Boeing, Broadcom and Yahoo all indicated to register opening gains after beating earnings estimates.
    • Treasury prices are at their lows, with the benchmark 10-year yield up 2 bps at 2.24%.
    • Still ahead: EIA petroleum inventories.
    • MBA Mortgage Applications:
    • Composite Index: +11.6% vs. +5.6% last week.
    • Fixed 30-year mortgage rate falls to 4.10% from 4.20.

    Disappointing Canadian retail sales sends loonie even lower

    • Pulled down by lower gasoline prices, and sales of new cars and food, Canadian retail sales fell 0.3% in August vs. a forecast of no change. It's the 2nd consecutive monthly drop in retail sales.
    • After removing the effect of price changes – particularly for gasoline – retail sales in volume terms slipped 0.1%.
    • Time to book that trip to Whistler? The news sends the loonie (NYSEARCA:FXC) lower by 60 basis points, now off 0.6% on the session and buying just $0.8861.

    Simon Property beats and lifts guidance

    • Q3 comparable FFO per share of $2.25 vs. $1.97 one year ago.
    • Comparable property NOI growth of 5.3% (excludes now spun off WPG properties). Occupancy of 96.9% up 140 basis points. Base minimum rent of $46.29 per square foot up 10.9%. Total sales per square foot of $613 up 5.9%.
    • Full-year FFO guidance is boosted to $8.84-$8.88 per share, and guidance for net income is lifted to $4.45-$4.49 per share. This represents an increase of $0.15 per share from the midpoint of previous guidance from this summer.
    • Conference call at 11 ET
    • Previously: Simon Property beats by $0.31, beats on revenue
    • SPG flat premarket

    Norfolk Southern misses by $0.04, misses on revenue

    • Norfolk Southern (NYSE:NSC): Q3 EPS of $1.79 misses by $0.04.
    • Revenue of $3.02B (+7.1% Y/Y) misses by $50M.
    • Shares -2% PM.
    • Press Release

    Report: Gigafactory cost savings begin in 2018 or later

    • A new report from Advanced Automotive Batteries dissects Tesla Motors (NASDAQ:TSLA) and its gigafactory battery project.
    • It's quickly noted that most major automakers are designing EVs around government mandates instead of looking to be transformative.
    • The research firm forecasts Tesla and Panasonic (OTCPK:PCRFY) will strike a deal which will stage in Panasonic's investments through 5- to 10-GWh plant capacity additions at a time.
    • Cost reduction benefits from the gigafactory are expected to kick in after 2018.
    • Tesla's annual unit sales could topple 200K by 2020 if demand in China is strong.
    • Extracts from Tesla battery report (.pdf)

    More on Boeing's Q3 results

    • Boeing (NYSE:BA): Q3 EPS of $2.14 beats by $0.16.
    • Revenue of $23.8B (+7.5% Y/Y) beats by $780M.
    • Shares +3% PM.
    • Press Release
    • Net income of $1.4B, or $1.86 per share vs. $1.2B, or $1.51 per share in the same quarter a year ago. Core earnings, which exclude some pension and other costs, rose to $2.14 per share from $1.80.
    • Revenues by segment: Commercial Airplanes +15%; Military Aircraft +3%; Network & Space Systems -9%; Global Services & Support -1%.
    • The company repurchased 8M shares during the quarter for $1B, leaving $5.8B remaining under the current repurchase authorization expected to be completed over approximately the next one to two years.
    • Total backlog at quarter-end was a record $490B, up from $440B at the beginning of the quarter, and included net orders for the quarter of $73B.
    • The company updated its core earnings outlook for 2014 to $8.10-$8.30 per share from a prior $7.90-$8.10.
    • Q3 results
    • Boeing (NYSE:BA) and Commercial Aircraft of China have launched a pilot project to turn used cooking oil (referred to in China as "gutter oil") into jet fuel.
    • Their plant, based in the southeastern Chinese city of Hangzhou, will be able to convert just under 240K liters, or 63.4K gallons, a year of used cooking oil into fuel, Boeing said in a news release.
    • The two estimate that 1.8B liters of fuel could be produced in China a year using the oil.
    • BA +0.7% premarket

    Dow Chemical surges on upbeat Q3 earnings

    • Dow Chemical (NYSE:DOW) +3.2% premarket after reporting a 44% Y/Y rise in Q3 earnings, which also beat analyst expectations.
    • Performance plastics, Dow’s biggest revenue driver, posted an 8.5% sales gain to $3.92B, performance materials sales rose 8% to $3.57B, and feedstocks and energy segment sales gained 2% to $2.4B.
    • Sales rose in all geographic areas; sales in developed geographies gained 4%, led by North America, where sales rose 7%.
    • EBITDA rose 24% to $2.3B, while adjusted EBITDA margin widened more than 240 bps to 15.9%.

    Biogen EPS up 77%, guidance raised

    • Biogen Idec (NASDAQ:BIIBQ3 results ($M): Total Revenues: 2,511.4 (+37.4%); Net Product Revenues: 2,117.4 (+45.7%); Joint Business: 290.7 (-4.1%); Royalty: 67.1 (+24.0%); Corporate Partner: 36.3 (+114.9%); COGS: 302.6 (+28.9%); R&D Expense: 417.2 (+1.7%); SG&A Expense: 570.4 (+40.6%); Net Income: 856.9 (+75.7%); EPS: 3.62 (+76.6%); Quick Assets: 1,861.3 (+178.4%).
    • Gross Profit: 2,208.8 (+38.6%); COGS: 12.1% (-6.2%); Gross Margin: 87.9% (+0.9%); Operating Profit: 1,221.2 (+57.1%); Operating Earnings Yield: 48.6% (+14.3%); Net Earnings Yield: 34.1% (+27.9%).
    • Product Sales: Tecfidera: 787.1 (+98.0%); Avonex: 741.8 (+1.1%); Tysabri: 501.2 (+25.0%); Alprolix: 25.3; Eloctate: 21.6; Fampyra: 20.4 (+22.1%).
    • 2014 Guidance: Revenue growth: 38 – 41% (unch); R&D Expense: 20 – 21% of sales (unch); SG&A Expense: 22 – 23% of sales (unch); CAPEX: ~$300M (unch); GAAP EPS: $12.00 – 12.10 from $11.26 – 11.46; non-GAAP EPS: $13.45 – 13.55 from $12.90 – 13.10.
    • Shares off 3% premarket on light volume.
    • Johnson & Johnson (NYSE:JNJ) will begin testing an Ebola vaccine in humans in January, and plans to have 250K doses of the experimental vaccine ready for use in clinical trials in May.
    • The drug will combine a shot from the company's Janssen unit with one developed by Bavarian Nordic (OTCPK:BVNRY).
    • J&J will invest about $200M to study and expand production of the vaccine, and aims to produce 1M doses next year.

  11. Finally done with my /TF shorts at 1,107.50 – let's not do that again!  

  12. /RB  / Decadence:

    I was thinking about that precisely when read your comment !!….thanks for remember!

    Yes will be in my scope today, Phil…..what is your opinion?

  13. Taxes/StJ – So sickening.  They have really bent the narrative in this country to the point where they have the GOP base FIGHTING to pay way more taxes than they should in order for Corporations to pay less.  

    If Corporation still payed their 35% share, Individual Taxes could be 20% (1/2) and we'd still be able to pay off the National Debt in 10 years.   And all the Corporate Profit charts you see are misleading because they are after those massive depreciation expenses as well as whatever other write-offs they taken (and what little taxes they do pay) and they include the LOSSES of other Corporations, including start-ups that have many Billions in losses that in no way should stop the people who are making tens of Billions from paying their fair share.  

    Stronger/StJ – Definitely we're improving but how much and how sustainable?  

    CHINA!!!/StJ – I keep waiting for that shoe to drop… never does.  

    /RB/Advill – Too tricky to call at $2.22.  At $2.20 I would have liked a long if we had caught it (same line as last week).  

    Speaking of lines, /TF back to 1,113.5, which is where I added shorts earlier this morning.  Might be worth playing again of it fails 1,113 but it has been quite the roller-coaster.  Good if /ES stays below 1,940 but, then again, just playing /ES short there with a tight stop is far less stressful.  /YM at 16,561, /NQ at 3,976 and the Dollar is 85.79.  

  14. Sustainable / Phil – Clearly not if all the excess money goes in the pocket of corporation who don't pay taxes to begin with. It's so shortsighted anyway. Look at Apple for example (an easy target in this case) – how long can you plan on selling $900 phones if the income of your biggest customer base (the US) actually declines because you avoid paying taxes in that same country. It's the same for Google, MSFT and others. The 50's and 60's showed more growth because it was balanced!

  15. Phil IRBT Your stock of the century up 16% today congrat.

  16. Buying GT, FITB

  17. Mark Cuban obviously did a good NFLX show.  In one week it went from the worst stock to own to a screaming buy.

  18. Wheeeee!  What a ride on /TF!  Back to 1,111 already after a quick trip to 1,107 again.  I guess we could play both ends of the channel but I'd rather be caught short (like yesterday) than long as I have faith in a pullback (but super-risky nonetheless).  

    Sustainable/StJ – We're in a very unique period where there is a growing EM Middle Class that is offsetting the decline of the Middle Class consumer in the US and Europe.  That's allowing the top 1% (who mostly sell to the top 10%) to really prosper without feeling any effect of what they are doing to the bottom 90%.  

    This is how empires collapse though because, eventually, the base crumbles and the whole house of cards falls down and the top 1%'ers can't understand how they went broke and, inevitably they ask "who could have seen this coming?" 

    Wow, you need some major intestinal fortitude to play the Futures today.  

    Oil inventories out and, as we suspected, not enough to hold $82.50 as it was a huge net build in crude (7Mb).  So far, oil under $85 isn't doing anything to slow down production (or increase demand), it seems:

    • Crude +7.1M barrels vs. 8.9M last week.
    • Gasoline -1.3M barrels vs. -4M last week.
    • Distillates +1.0M barrels vs. -1.5M last week.
    • Futures -0.85% to $81.79.

    IRBT/Yodi – Thanks.  About time they get back on track – it's early in the Century but they have to get to my target of $1,500 (100-bagger) in 86 years, that's an average gain of 100% each year!  

    Of course, it doesn't really have to gain 100% a year.  It only actually takes 7 doubles over 86 years to get there and they've already doubled since 2010 so once a decade is right on track for the patient investor!  

    NFLX/Rustle – More like a screaming short!  

  19. Right now I'd love to see Mark Cuban crash his plane into a Tesla driven by Elon Musk.

  20. Phil/AAPL- I am holding some 2016 85.71/100 spreads which I paid $4.37 for and some 2016 80/100 spreads bought at $10.15. They are now at  $8.40 and $12.48 respectively. Should I leave these alone as they have more upside left, or is there a more attractive (potentially more profitable) AAPL spread I should move to? This is the part I haven't quite  gotten yet, how to calculate the differences in the various spreads and expiry dates and knowing which is best. 

    IRBT- I have some Mar2015 $33 calls I am holding after buying back the short calls a while back at a nice profit when the stock was down. (It took a chance) should I hold these or take the 30% profit and look to buy a new spread? 

    YHOO- I did the same thing here, buying back my short $45 calls last week when they went down to .69 and leaving the Jan '15 $38 calls while I waited for a bounce. So, now I have a nice gain on these as well, so I have the same question, should I cash out? Do you think it would be worthwhile sticking with Yahoo at this point? 

  21. Phil – Yahoo – the April 32/39 spread is 5.25 out of $7. The 35 putters are down to $1. I think this qualifies for a bird in hand…

  22. Phil/BTU – I have a BTU position that is in need of some work. 

    I sold the 2015 18 Puts for 3.30.  Current value on the 2015 18 Put is 7.20.

    The question is should I roll to the 2016 18 put for 7.80?  I would get an additional .60 to wait a year and see if the stock recovers.

    Or do I wait for the 2017 and see what they have to offer at that time?


  23. HBM on sale again – Just sold another put on HBM.. was paid $65 for the promise to buy 100 shares in January at $750 if the price is under 7.50 share. This equates to getting an 8.6% dividend up front on the stock. If put to me, my net entry is $6.85/share, and I will be delighted to start a position in HBM at the net price. If not put to me, works out to a 32.3% return on margin (only requires $201 margin) in just 86 days, which is a 135% annualized return. 

  24. EBAY having a hell of ride this week.

    AAPL/Craigs – Well, there's a certain value in being 13% in the money – it's like a free hedge.  If AAPL doesn't go down more than 10%, you WILL get $14.30 back on the first spread (+5.90 = 70%) and you WILL get $20 back on the 2nd (+$7.50 = 60%).  So the question is, do you see a better, SAFER way to make 60% using the same AAPL premise?  As you know, the spread I like is the 2017 $90/120 bull call spread at $12 and that pays $18 (150%) if all goes well.  While 150% is more than 60% or 70%, it's also 2 years down the line so 75% a year and it's also $7 out of the money while you are $13 in the money (so $20 safer = 20% safer).  

    I think the real thing you haven't gotten is to let a position play out.  I know it's boring but you just have to fight the urge to keep changing things every time the market wiggles.  Aside from churning fees that eat into your profits, you take a loss on the bid/ask spreads every time you move a position – it's hardly ever worth it!   If you see a roll that is CLEARLY better than what you have – sure, take it.  But, since the trade you are already in is sooner and SAFER than our favorite new position – why mess around at all?  

    That being said, the 2016 $85.71 calls are $17.70, which is more than your spread's max pay-off.  If you want to be aggressive, you can roll those to the 2017 $90/120 spreads, which are $10 in the money before you owe the short $100 calls a penny and you are double-covered by the $80/100 spread anyway.  It's risky but you have $15 more upside potential – as long as you have the margin to manage the spread over time, because it could get messy. 

    IRBT/Craigs – Let's review:

    • Rule #1 – ALWAYS sell into the initial excitement.  
    • Rule #2 – When in doubt, SELL HALF
    • Rule #3 – If you didn't follow Rule #1 or Rule #2 then why are you looking for a Rule #3 you stupid, greedy bastard?!?  

    Clear enough?  

    You won that one, take the profits.  NOW, at $37, if you still want to play IRBT long-term without actually owning the stock, then the June $33/40 bull call spread looks like $3 and, if the stock drops, you can sell puts and roll the June $33s lower or longer.  That's how you take half your money off the table and still make a play.

    YHOO/Craigs – Same thing.  When a stock is popping (the initial excitement), you tend to get better option prices anyway, maybe more so than if they stop where they are and drift up another 5% over the next week.  You also are able to sell long-term calls for more money and, since our job is to sell premium whenever we can – our rules force us to do our jobs and not be greedy.  

    With the YHOO Jan $38s, I'd take the $5.60 and move to the 2016 $35/45 bull call spread at $5 so I have another 100% upside at $45 and, if YHOO goes lower (because I make 40% if it stays over $47 and I'm not a stupid, greedy bastard), then I can sell the 2017 $33 puts for $4+ (now $3) to pay for my spread.  

    YHOO/Nicha – If you are talking about the STP, we have $21,000 coming to us and I don't see any reason to settle for $15,750.  Since that's $5,250 (33%) we stand to make in 176 days (70% annualized) unless YHOO fails $39, which I doubt, why do I want to bail out of the position?  If YHOO does go lower, the calls are $11, which is $2 more than the spread and let's say they fall to $9 - since the calls have a delta of .90, that would be a drop back below $40.  So, the long calls fall to $9 because YHOO is below $40 and that should make the 2017 $35/50 bull call spread (now $7) a bit cheaper (the delta is 0.30 so maybe $6) and I could roll out to that, pocket $3 and still have a $15 upside spread against the short April $39 calls along with my rollable short $32 puts.  I'm not seeing the downside there that makes me want to cut and run at a 33% discount right after great earnings, are you? 

    BTU/John – Finally, an actual problem! cheeky  Not a big one because you netted in for $14.70 and BTU is at $10.87 and that's only $3.83 below your net entry.  Paying $7.20 to roll out is fine (net $10.80) and I'd roll to 2x the 2016 $13 puts at $3.60 since that's an even roll and you are on the hook for 2 x at net $11.85 vs 1x at net $14.70 so it's like you are doubling down at $9.  You could wait for 2017s, I'm sure it will be a better deal than that but nothing wrong with getting it all back at just $13 next Jan.  

  25. CLF- anyone notice this one is up over 12% right now! I guess that report Phil posted earlier on the demand and shipping of iron ore is finally being seen by CLF investors after all. 

  26. Phil – rule #3 appears to have evolved a bit over the years. Name calling now, are we? :)

  27. Phil / webinar: phil is the link for yesterday's webinar out yet ? thanks

  28. IRBT/ Guess I can't complain about selling the call at $7.63 when the last trade is $6.50 less than 15 minutes later.


  29. CLF/Craigs – That one baffles me.  No one seems to understand their business.  

    Rule #3/Kwan – It only applies to people who didn't follow Rule #1 or Rule #2.  The earliest iterations I can find are:

    Submitted on 2007/07/12 at 9:30 am

     Rule #3: I told you so dumbass!

    Submitted on 2007/08/29 at 3:58 pm

    Rule #3: Weren’t rules 1 & 2 clear enough?

    Submitted on 2007/10/12 at 10:12 am


    Submitted on 2008/01/29 at 11:10 am

    Rule #3, which is: “If you didn’t follow Rule #1 or Rule #2 then what then what the hell is the point of asking me for more advice that you’re not going to follow?”

    Submitted on 2008/04/17 at 11:06 pm

    There is no rule #3 because, if you don’t follow rule #1 OR rule #2, there is no sense talking to you.  

    Submitted on 2008/08/22 at 11:32 am

    Rule #3 is:  If you didn’t follow Rule #1 or Rule #2 and are looking here for some justification to ignore them, then you are a greedy bastard and will probably blow all your gains…  8-)

    Submitted on 2009/01/23 at 11:06 am

     Rule #3 is "If you blew past Rule #1 and Rule #2 and you still didn’t sell half then why the hell are you even asking for more advice?"  


    Submitted on 2009/08/06 at 9:37 am

    There is no rule #3 because people who don’t follow Rule #1 or Rule #2 usually aren’t in the markets long enough to keep reading…

    Submitted on 2009/12/10 at 9:53 am

     Rule #3 is "If you didn’t follow Rule #1 or Rule # 2 then why the hell are you even bothering to look for a Rule #3 when you never listen anyway."

    So yes, it's evolved over time but still true to its roots!  wink

    Webinar/Micro – You'll have to write an angry letter to Greg, that's his thing.  Usually it's up by now.  

    IRBT/JPH – That's why we ALWAYS sell into the initial excitement.  Understanding those mechanics can make you an extra 5-10% – especially on earnings plays.  

  30. Hello All!

    This week's webinar replay is now up on our YouTube channel here:

    (You can also download the original webex version here:

  31. Wow, talk about speaking of the Devil – what timing, Greg!  

  32. Good timing indeed!

    I was just finishing the upload to YouTube when I decided to hop into chat and prep the links…

    (Long conversion time today… almost the entire run-time of the webinar. That's what took so long. And Youtube's upload was kinda pokey today too.)

  33. where do you see webinar the link??? 

  34. Phil / Greg : thank you !

  35. The links are posted on the morning of the live webinars here in chat.

    Once the replay video is available from webex, then I convert it and put it up on the YouTube channel and post the link here in chat as well. (Usually they're up by noon-ish.) (I just posted the link to yesterday's here.)

    Replays can also be found on the YouTube channel, and Phil and/or I usually tweet about it too. (Follow us! @philstockworld and @GregPSW)

  36. Micro – No problem!

    Triboy – Do you see my comments? (I'm wondering if you hit "ignore this user" by my name and are now not seeing my comments…)

  37. Another nice move down on /TF – these things are paying $200-400 like clockwork!  

    Triboy, do you have Greg on "Ignore" per chance?  

  38. Phil- I guess your 3 rules did sink in at some point because I sold the IRBT and YHOO calls as soon as I asked the question. I figured I would learn from your answer while still booking a profit, so yay for me! 

    AAPL- this answer confused me. I guess I don't understand how the spreads play out, so perhaps now I will. But in your answer you said that the 2016 $85.71 calls are 17.70. I am showing a bid/ask of 22.10/22.45, so what are you referring to? Also if I am holding long calls at 85.71 and short calls at 100 that expire Jan 2016, don't I need to buy back the 100 calls if I am selling the 85.71's? If I leave the short 100's and the stock keeps going up I lose money right? If I hold them to expiration, I will get assigned and have to give shares at 100 that now cost more? Did you think I was holding the 85.71 calls without the short calls sold against them? Your answer was confusing.

  39. hi phill, yes he was… is there any reason they are blocked??? I unticked him now…

  40. OCN – will there be any arrests? Clawbacks?

    "An investigation by the state's Department of Financial Services found that Ocwen Financial Corp. inappropriately backdated foreclosure warnings and letters that rejected mortgage loan modifications, making it nearly impossible for borrowers to appeal the company's decision…"

  41. Phil,

    Do you now feel that "run-up" has run its course on RUT, or are you looking to go long on /TF. I missed the short per your level at 1113.5, and now wondering your next move!

    Thanks as always…. 

  42. Selling into excitement/Phil – does that include rolling short calls out/up?  I have a YHOO diagonal: long Feb $35 calls, short Nov $39s.  Should I leave alone (I am for now) or right away roll the 39s up? Or roll them out to Dec.. or Feb?  Or up and out?   My play and plan was for the initial spread, but with a jump like this, and so soon, of course should reevaluate..  

  43. Triboy – no one should be blocked by default… but WordPress puts that button in an inconvenient place. (It's pretty easy to accidentally click it.) 

    Scroll up a few comments… the link to this week's replay is up.

  44. Phil/TXN – Should we be selling calls on the butterfly position now that it has largely recovered?

  45. ABX – if CLF can pop +10% on demand news, why not ABX? "In the past few months, the gold price has fallen back from around $1,340 down at one time to $1,190 and now hovering back seemingly trying to breach $1,250 on the upside again, yet by all accounts demand in the two biggest consuming nations (China, India) has been soaring and they are, between them, taking in virtually everything the world’s gold mines can produce."

  46. yes thanks phill 5 were blocked …

  47. Yay indeed, Craigs – nice job.  As to AAPL, I guess I was looking at the Jans, not the 2016s.  You don't NEED to buy back the $100s, they simply become the short calls that offset your long hedge but it's margin-intensive and even worse if AAPL does pop and you have to roll but it's the correct way to play it for now.  

    The short 2016 $100s are $13.70 so, if you don't buy them back now for $13.70, AAPL would have to be at $113.70 in 2016 before it costs you the same $13.70.  If you are rolling your $22.30 call to a $12 2017 $90/100 spread, you are putting $10.30 in your pocket and you have a spread that would be $23.70 in the money (at $113.70) before you have to pay the short caller one extra penny.  That would mean, rather than cashing out at net $8.60, the 2017 $90/120 spread plus the $10.30 in your pocket means AAPL would have to be over $131.70 before you are not better off – and that's not even counting for put sales or additional rolls you may be able to take advantage of.  If you think AAPL will be 30% higher in 12 months – then of course buy back the short callers while they're cheap!  

    Block/Triboy – Sometimes you hit ignore by accident on people when scrolling but it's easy to unignore.  

    OCN/Scott – This kind of stuff was rampant in that industry and it's sickening how few people are being prosecuted and, even when they are, it's a drop in the bucket to the Trillions in damages they caused homeowners.  

    RUT/Jasu – Turns out there's been a shooting in Ottawa at Parliament.  Seems like 2 gunmen and at least one still on the loose.  Can't believe this isn't being mentioned on CNBC or Bloomberg!  

    One suspect dead after soldier shot, gunfire at Parliament Hill

    So that's probably what spooked the markets and that puts us in watch and wait mode since we don't have enough facts to know which way is a good bet.  

  48. Palotay/Phil/TXN

    Yesterday at the Webinar we sold the Jan $46 calls

  49. Phil / OIH Butterfly

    Thank you for the explanation on rolling the longs.

  50. craigsa620

    Your AAPL get very involved I look at in a very simple way the 85.71/100 spread should pay you in Jan 16 14.29 less what you paid for the spread. I can see nothing wrong with what you have. But if you want to see what it brings today just close the spread and you will see it brings you 8.35 so still a long way from 14.29 Because the "TREE" is not fully grown yet! So I would leave it alone and set up if you wish a new play as Phil said Jan17 90/120. Obviously you can not sell only the 85.71 call and leave the 100 caller naked My two cents.

  51. Interesting seeing BA down 3.5% on good earnings ???

  52. Ottawa/Phil – isn't that in, like, Canada, or somewhere, um, or maybe France? Why would that ever be on the news in the USA? I mean, it's clearly a totally irrelevant place…is it in Greenland?

  53. RUT/Jasu – As I was about to say, I was TEMPTED to play the RUT long at the bottom of the channel (1,109) but I felt that we might go lower (and we have) and, if I got burned (like I did yesterday) I know I can gut out a move up because I don't believe that will stick but a move down when I'm betting wrong would really piss me off as I didn't want to be long and it was only by being a stupid, greedy bastard and trying to play both sides like some TA moron that I would get caught in that position.  So that's why I didn't go for the long play…  cheeky

    Oil (/CL) on the other hand, at $81.50, I like bullish as long as it holds (ie, tight stops).  

    Selling/Scott – Think of the mechanics of a move up.  What happens when YHOO goes up?  The internal VIX goes down but, since the move is up, the calls begin to gain value.  That makes it the worst time to buy back a short caller and the best time to sell one.  On the other side, it's the best time to sell your long calls and the worst time to buy them.  If you can leg out of a position, it's great to dismantle a spread and take advantage of moves but you can get burned if you time it poorly.  Those short Nov $39s were $2.50 yesterday and $1.15 last week and now $3.65 after peaking at $4.18 and YHOO is at $42.16 so they are $3.16 in the money so $1 of premium on them which you KNOW will expire in 30 days.  So what is you urgency to pay that $1 in premium?  Do you absolutely not need any downside protection?  Will you get much more premium for the longer calls?  Will you improve your position so much that it's worth the risk of paying $1 to give up $2.65 of protection?   If you are so positive that YHOO can't go below $39 in 30 days, why not sell the $40 puts for 0.72?  That doubles your short premium and the short calls are already covering the short puts, so it's just bonus money.  If you think YHOO might go lower, on the other hand, then why the hell would you pay $1 to take off the short calls that are protecting your long gains?  

    Could you guys imagine if we adjusted the virtual portfolios as often as you all ask about adjusting positions?  It would be all we do every day – rolling things up and down and forward and backwards, just because the current PRICE of the stock moves up or down 5 or 10%.  Wouldn't that be silly?  And wasteful?  

    TXN/Butterfly, Palotay – I think we talked about it in the Webinar but I wasn't thrilled with the call prices.  Now we're up a bit more and we can sell the Jan $46 calls for $2.10, so let's do that as it's $1.10 in premium and we already sold the $45 puts for $3.30 and we can buy them back for $1.15 and sell the $47 puts for $2, so that's $6.25 collected with a $5.25 profit between $46 and $47, which is a pretty good target range and, even at $50, we keep $2.25.  

    Thanks Akad and you are welcome.  

    ABX/Scott – I fully expect it to suddenly pop at some point.  I think something will pop gold $50 and all the miners will jump 10% or so.  

    /TF 1,100 now – wish I'd kept all of those shorts from this morning.  

    Now you'll notice if things are blocked Tri.  

    TSLA/Scott – Not surprising there.  

    BA/Yodi – Really nit-picky as it's about their low cash amounts (caused by filling massive orders of planes that are in process).  Analysts just don't understand how businesses work – it's pathetic.  I'm not complaining though – I'd love them to drop 20% so we could BUYBUYBUY.  

    Ottowa/Scott – I thought it was a casino name.  cheeky  I am dumbfounded that there is no mention of it on CNBC or Bloomberg.  It did make the cover of the Journal though:

    Maybe this is why no one cares:

  54. Ottawa/Phil

    All over CNBC

  55. Craigs, I just wanted to make a comment on your earlier post on IRBT where you said you bought back the short calls and booked a profit.  Bear in mind that you are credited with the proceeds upon the sale of a short position.  If you close the position at any time before expiration you are reducing the amount of your gain (your account is debited) so the gain you see on the ledger is actually less than you would receive at expiration.  When a BCS goes against you, you can roll the long leg out in time and down in strike and leave the short leg alone to expire before the long leg, thus keeping the full premium you were paid for that leg. 

  56. Canadians seem half asleep or stoned when they speak.

  57. Phil/Webinar – Were there any other official plays discussed in the webinar?

  58. Shots were fired at Canada’s national war memorial in Ottawa.

    From Dr. Strangelove :  "You gentlemen can't fight in here, this is the War Room."

  59. Phil, can't make vegas (newborn stuff) but I'll ping you RE your NYC greencoin contact

  60. 1,100 on /TF seems to be holding, that's a reasonable long.  In the STP we can buy back the TNA Nov $63 calls ($4.65) as well as we're plenty bearish without them on the SQQQs.  

    Webinar/Palotay – Not that I recall.  

    LOL Albo.  

    Sorry BDC, would have liked to see you there.  

  61. Also in the STP, I don't think we ever sold more FAS calls.  We already sold the Jan $95 puts and FAS is at $99 so we can be aggressive and sell the Nov $100 calls for $3.90 as well

  62. Phil,Sibe, and Yodi- Thanks to all of you. I am finally definitely getting this! Sibe I need to look at that and compare the two results. I will let you know what I see.

  63. Surprised Cuban hasn't tweeted that the US Embassy while in lockdown should sign up and watch some NFLX.

  64. That's great Craigs, all part of your 10,000 hours.  I wish there were some magical way to teach this without all the actual trading over time but I haven't figured that out yet.  

    I'm not seeing any other negative news but Canada and they are having a press conference soon so I think it's over and then we'll see if we get a relief rally.

    OMG – they suspended tonight's hockey game!  This may be far more serious than we realized

    Oil failed to $81 and I'm not liking that long.  VIX only 17.75 with Dollar at 85.81.  Gasoline really collapsed to $2.164!  

  65. IRBT / Phil (I posted this very late in Tuesday's thread)

    I have the Dec 30/35 BCS and am short the March2015 33 Put.

    Just wondering if I should be rolling the Dec BCS – any recommendations?- TIA

  66. Suspended the hockey game!! WTF. That's it, we're declaring war on somebody.

  67. YHOO/Phil – looking over prices in the last few days on the calls, I see that, although the % difference in a roll from Nov to January (same strike looking at 41s this time) is lower, my net take is higher after this spike.. e.g. If I rolled the calls out from Nov to January on Monday, I would pocket .93 per contract, on Tuesday .82 per contract, right now, 1.05 per contract. Is that worth acting on (still protecting my longs with same strike cover) but still there is the existing premium to burn off.. You are suggesting that is better to let burn off before considering a roll forward (to collect even more premium now)? I know in other discussions you have said to roll when there is only 25% of premium left in the short contract.. Right now, if I am calculating properly, the 41s are sitting at about 58% of the original premium to collect.  How do you calculate that?  I sold the 41s for 1.86. Right now there is a 1.08 spread from current contract price to what I would collect (buy out at) at expiration. 1.08/1.86 = 58% Is that right?

  68. Wow, /CL getting tested again at 81.00. If we see that boundary fail and the trend continue downward, we could likely see the markets follow it like rats to its Pied Piper.

  69. yo_mamma – If that happens, hello VXX puts!

  70. IRBT/Julianz – The spread is net $3.50 out of a possible $5 on the bull spread and the short puts are on track with IRBT at $35.71.  Do you not want to risk $3.50 to make $1.50 (42%) in 58 days?   Is it because you don't like IRBT and don't think it can hold $35?  If you don't like IRBT, why would you want to spend money to roll to another long?  And, of course, if you don't like IRBT at $35.71, why didn't you take the money and run on your longs when it hit $38 this morning?  Why didn't you set a stop at $37.50, or $37, or $36.50 or $36?  Do you have any kind of plan for this position?  

    If you made 50% or whatever and you don't believe in the stock as a long-term hold, then take the money and get out but, if you do like IRBT and think it's worth more than $35 – then why don't you LEAVE IT ALONE???  Why???  What is with you people???  Please tell me – I don't understand this unquenchable desire you guys have to screw around with perfectly good positions….

    IRBT just went up 12% today and you guys are acting like they just went toxic.  I seriously don't get it – don't you know how to be happy and enjoy a winning position?   We fix things that AREN'T working, not the things that are…

    YHOO/Scott – I take it that's a short Nov $41, right?  At the moment, it's $2.20 and YHOO is $42.14 so about $1 in premium and much of that is because YHOO just popped.   If you roll it out to the short Jan $41s, they are $3.30 so $1.10 in your pocket but what have you accomplished.  You've sold $2.10 in premium vs $1 but you've given the caller 86 days instead of 30 so the Nov $41s lose 0.033 per day in time value while the Jan $41s lose just 0.024 per day, so you are screwing yourself out of 0.009 per day for the next 30 days AND you are giving your caller 56 more days to gain value on you AND you have decreased your rolling opportunities by skipping over 2 months.  As to the premium, the Nov $41s at $2.20 are 50% premium.  It doesn't matter what the premium was – what matters is how much of the call is still premium but, as usual, people want RULES when rules should not exist.  It's simply a rule of thumb that you should roll when the position is less than 25% premium but that assumes that you believe the stock will continue to go higher and you don't want to maintain the 75% in the money short call to protect your long position.  THEN it matters that you execute your roll before all the premium is burned out because, below that line, the rolls tend not be advantageous.  

    What you want to do is 1st – have a friggin' premise.  The premise has nothing to do with the price of the calls or the delta of the calls or whatever about the options.  WHERE do you think YHOO will be in the next 30, 60, 90, 180 and 360 days.  THEN given that premise – how do you want to be covered over that time-frame.  THEN, when you look at your potential covers – how sure are you about your targets and is the risk/reward profile of what you are setting up worthwhile?

    In the case of YHOO, I think it's likely the bottom of the channel will be $40 and the top of the channel will move up around $46-48 and that means that the Nov $41 calls are likely a bit low.  HOWEVER, I'm not all that confident in the overall market and I don't think that YHOO will be able to avoid a broad-market sell-off and, in fact, it fell 15% right along with the market just the past few weeks.  

    So, on the whole, at the moment, I sure don't see why I would spend $1 in premium to take away $2.20 of downside protection against my long position but I will keep my eye on my intended roll target, which would be the Jan $43 calls, now $2.30, which is currently an even roll.  If YHOO goes up to $43.20 – I'd be paying the same $2.20 it would cost me now to roll them so I'm certainly not even consider a roll if YHOO is under $42.50 and, over that line – I would have to evaluate YHOO as well as the broader market picture and likely set a stop at a cost of maybe net 0.50 to make the roll, knowing that the only way that roll would trigger is if YHOO is going higher and my longs are making money and I'm less likely to need the protection of the short $41s.  

    /CL/Yo – Well that failed fast, $80.35 now.  That's going to be a drag on the indexes.  

    VXX/JPH – Good call, over 18 already.  

  71. Now they are saying there may have only been one shooter – looking good for /TF long (1,099 now).  

  72. By the way, getting back to YHOO – You don't see me making crazy-assed plays where I have naked short calls against a stock I think is undervalued.  When we are discussing those trades above, it's because it's the situation I've been presented with, not one I approve of.  YHOO could easily pop or drop 10% in a day and rip your face off – it's not the kind of stock you should have naked anythings on – other than puts at strikes you REALLY want to own the stock for…

  73. Phil – I do like IRBT. I'm happy to let the Dec BCS run to expiry and take the money.

    Just wondered about the longer term as it is your 'stock of the century'. 

    Or do I just 'wash, rinse, repeat'.

    I'm in a different time zone so slept thru' the earlier highs but, as I said, I'm happy to let it run. Thanks

  74. / RB really COLLAPSED! , It took my long at  2.1850!


  75. YHOO/Phil – thank you! great review, printed and will be studied.  Also, no naked short calls for me, ever. These particular Nov 41s are paired with long Jan $35s. It's been a great trade so far up 85%, burning off premium ever day per original premise. Just reviewing now with pop (if ahead of schedule, do I want to make a change?) and making sure I understand plusses and minuses of any considered change. Still getting a hold of/working to internalize these evaluations of remaining premium and time. A few (hundreds of?) hours yet to go.. 

  76. CAKE / Phil -  in the STP (Nov 45 call @ 2.30, now 1.29) – earnings after market – any adjustments?  Thanks.

  77. In our AGGRESSIVE Short-Term Portfolio, we have had 30 YHOO April $32/39 bull call spreads with short $37 puts since 9/23.  YHOO was around $42 at the time and it dropped to $37 and we did nothing and now it's at $42 again and we are doing nothing because we took a nice, sensible position and we have a value target in mind for YHOO that we felt would be realized into earnings and we stuck with it.  The net of the spread was 0.95 x 30 = $2,850 and, if successful, it will pay off $21,000 for an $18,150 gain (636% on cash in 7 months).  I find that very exciting and see no reason to mess around with it.  

    In the $25KP, we couldn't sell the short puts so we just went with 5 of the same bull call spreads at net $3.95.  Those will pay $7 if successful and that's $3,500 back on $1,975 for a $1,525 gain = 77% using no margin at all.  That's 10% per month on that trade and, like the STP, when YHOO went down to $37, we did nothing and now, back at $42, we continue to do nothing because, on the whole, it's simply ON TRACK. 

    This is how I want to teach you guys to trade – this makes good money without all the stress.  When you have a trade like that in the STP that's on track to making $18,150, you learn not to worry about some GMCR puts that aren't going your way and THOSE you can adjust – using some of the $18,150 you made on the YHOO spread.  

    If you keep taking trades with high reward/risk ratios, you don't need too many of them to work out to do very well overall.  We've been demonstrating this all year in the STP and, at the moment, it's up 93.5%, despite getting our asses kicked all year long on protective index shorts.  

    IRBT/Julianz – Well you don't have the stock, just options and they all expire in the relatively short term.  If you want to OWN IRBT, you want to begin setting up buy/writes and work your way into ownership.  If I REALLY want to own a stock like IRBT, now $36.15, I'll aggressively sell the June $35 puts ($5.20) and that nets me in for $29.80.  That way, I either end up owning the stock cheap or I get paid $5.20 not to own it, which is 14%, so not terrible.  If I am extra-enthusiastic about the stock, I might pair it with a bull call spread, like the $33/40 bull call spread at $3 so I have another potential $7+2.20 of upside against my now net $32.80 entry.  Should IRBT go lower, since I REALLY want to own it, I'm happy to roll my short puts along and put more money into rolling my long calls or, should it go higher, now I get paid $9.20 at $40.  

    Using that system, the only way you end up actually owning IRBT is if you get a nice entry, at least 10% lower than it is now.  If it goes flying up on you, you still get $9.20 (33%), which is fine and you can then set up for the next leg.  If it's flat, this spread pays $4.20 at $35, which means you have a 10% discount towards your next round purchase.  This system works fantastically if you use PORTION CONTROL and PLAN on being assigned 1x at the net and then selling more puts and calls for 2x 20% lower and then again for 4x 40% lower.  That then FORCES you to own a 4x position (full allocation block) only on stocks that are 50% cheaper than where you liked them in the first place.   

    /RB/Advill – As I said, too tricky to call but after that bearish inventory report, I don't get why you went long at all.  

    Good job Scott – you are certainly asking the right questions (and great opportunity to teach some valuable lessons today).  

    CAKE/Bai – No, I have faith that they are undervalued but wouldn't want to put more money on it.  

  78. Thanks for that Phil – still learning….

  79. Wow, I totally pulled that out of my ass after yesterday's terrible start (flat now):

  80. I'm telling you guys, if you want to really learn how to trade the futures, nothing beats spending a few hours sitting live in Vegas and trading the market together.  Greg has the hotel codes now so sign up, get a beautiful room and come hang out with us!  

    I don't want to oversell the Futures as it's only part of what we're doing but, when I retire, my plan is to move to Europe and only trade the futures each morning, make $300-1,000, and then go about my day.  With enough practice – it's very realistic to do that on a daily basis but it is a skill and you do need years of practice to get used to playing.

    Not only that, but when you are on the wrong side of the market when an event happens – the Futures can really save your ass by getting longer or shorter to buffer your portfolio from an unexpected move hours before the market re-opens.  

    It's a valuable tool to have in your tool-belt and, like many tools, it can be dangerous if used incorrectly but, when you get skilled at using it – you won't understand how you ever lived without it!  

  81. phil/futures — like most everything phil, you make it look so easy

  82. Phil/futures – wow, nice work!  My record is a +$9,000 day but I only started trading for real 2 months ago and am down overall.  It's a work in progress but I'm getting better.

  83. "I don't understand this unquenchable desire you guys have to screw around with perfectly good positions…."   Well, that's because most of us live in Canada, and, well, you know, nothing……………………"

  84. Notice how 5% Rule once again trumped pivot points on the RUT chart (from this morning):

    October 22nd, 2014 at 2:53 am | (Unlocked) | Permalink

    The Dow is shy of a 5% move and needs to get to 16,720, NYSE made a 5% move and 1% more takes it to the 200 dma (10,620) Nasdaq is hitting a 7.5% move up with a 50% retrace of the 15% drop so looking strong (and 50% is 40% strong bounce with the 20% overshoot) and the RUT is up 5% from 1,050 at 1,102.5 and 1,113 is up 6% – so we'll watch that closely too.  

    So we got that 6% move to 1,113 and that gave us a great shorting opportunity and the pullback was from 1,050 to 1,113 so 63 points means 12.5 point retrace (weak) to 1,100.50 was exactly what we were playing for .  The next retrace line is 12.5 lower (1,088) for a strong retrace but still generally bullish until that fails.  

    Easy/Toe – Did I ever tell you about the time I left 5 oil contracts open as I took a plane to Houston and, when I landed, I found out it was a $50,000 flight?  I learned the hard way, just like everyone else.

    Futures/Ricbah – Like poker, the trick in the first few years is simply learning to avoid big losses.  Once you get that figured out, the wins tend to add up.  In one of our first webinars of the year we hit a $40,000 gain on /NG – that was a good day to play!  

    LOL ZZ – Say no more….

  85. Keep in mind this is the 1% pullback expected by the 5% Rule.  No special volume and, taking into account the disruption in Canada – not much to read into at the moment.  

  86. I was wondering why the market was so weak, then I saw this from Monday.

    "Cramer calls the market bottom: Safe to buy again."

    Now I understand ! !

  87. Have to love the McClellan.  Can make you so much money if you follow it.

  88. I am so tired of making mistakes-I sell the short calls on the BCS & then can't take profits! My bottom line looked good for awhile, but since I had to buy back the gtat puts, its really horrific. I actually did better with straight calls, puts on a short-term basis. But as soon as you turn your back, you take big hits. There has to be a way to learn patience. Not there yet.

  89. Larry Kudlow: "I'm a bull, and the US is just turning the corner. This dip is a buying opportunity. If America wanted to do the right thing, all it needs to do is toughen up on immigration, lower the corporate tax rate, and get the oil/gas industry to drill, drill, drill! That would make buying even better."

    I honestly want to waterboard this a-hole in the bathtub of a cheap motel that's located in a distressed, low-income community where virtually everyone is a minimum-wage service worker, drowning in debt, and who hasn't seen a single instance of things getting any better for them.

  90. rustle/mcclellan — how are you using it?  just watching for eod reading +/- 60 and then position for a reversal?

  91. Phil,

    Gut check (yours) on mkt  direction at  this point. RUT is betw  weak & strg bounces (20/40% retrace) but it sure did move up with authority.


  92. Yo-that is called "his head up his butt" as he has no concept of what "real" people have to go through to survive. I'd be there to help you-stopped watching CNBC because of him & Cramer. They should volunteer at a food bank, or free clinic once a week & get their eyes opened to the struggles of the middle class. Or volunteer at a school where 50% of the kids get free lunch.

  93. Goodbye YELP

  94. IRBT/Phil – ok, here is another for a check-in evaluation:  Call diagonal, Long March 28s, short Dec 33s, entered at net $3.15. Currently up 31% (or ~50% of potential gain at Dec expiration).  Remaining premium on the 33s, if I am reading it right, is about 26%.. so close to Rule of Thumb roll threshold. Premise? Of course, I have no idea what the stock is going to do, but there are scenarios: 1) remain channel-bound between 30-36; 2) manages to break and hold over 200MA, 3) falls back to groveling around $30 for another couple months..  Until it breaks over 200MA, i'm sticking with premise one, in which case, no change to current setup until premium burns off further to finally get under 25%. If it moves up, will bring premium under 25% and so.. what roll to make? Where could the stock be in March? Roll out even, roll out to ATM (37ish) or roll up to $40.. Need to see whatever strength and volume comes with the break over the 200MA.. If scenario three, well, now that earnings passed, I'm tracking a moving stop on the whole trade at breakeven, which is currently at 32.50.  But I'm not finding that very satisfactory, actually. Perhaps it need's to hold 34 or I exit, Hmm.. I also have short Dec 30 puts so is all good, but my specific concern is what is best to do with the short 33 calls (spread), depending…  Overall, premise really is that they 'go up' over time, but can easily languish with the market.  For today at least, it's staying as is…

  95. Larry Kudlow / He's right about the corporate tax rate…only reason we don't all agree on the corporate tax rate is the ease with which you can avoid taxes if you're a huge multi-national corp.  Small business owners (my brother & dad are perfect examples) will have losing years and winning years.  The part that damns them is when they lose money for a couple years and pay little taxes, then turn around and have a good year where they show a decent profit, use the "profit" to pay off debt, and then get hit with a massive tax bill when all they did the year prior was pay their bills and their employees.

    The tax system is a mess in this country, and big corporations don't pay their fair share, but corporate tax rates ARE too high.

  96. I thought today went fast…

  97. Phil \ retirement – I'm sure I speak for most but you are not allowed to retire anytime soon. Just started learning and I'm about 9999 hours short of you being allowed  to retire and I haven't even started on futures! (Wink face)

  98. AT&T earnings: 63 cents on $32.96B in revenue; shares slide

  99. Cramer/Albo – Human weather vane.  

    Learning/Pirate – That's why we strongly recommend paper trading for a few months in the New Member's Guide – it's a lot of stuff to take in, that's why Med students practice on cadavers too and law students do mock trails – this is serious stuff you don't want to screw up when it's real.  If you'd like to review a couple of mistakes after hours we can go through them – good learning experience for all that way.  

    Kudlow/Yo – I'd pay to see that show!  

    Direction/8800 – I think I have to give today a pass as it was driven by events in Canada (whatever that is) and we held up our obligatory retrace.  But, as Rustle notes, what we really care about is how fast the oversold condition on the NYMO worked off on this small pullback.  If we get a quick move to neutral, then this is likely to be a very minor pause on the way back up but, if we're still oversold after today's action, then we'll look for the full 2% retrace (another day like this, at least).  

    YELP/Rustle – Ouch indeed!  

    Yelp results top forecasts; shares down on sales outlook

    $5Bn for that company – people are on drugs!  

    IRBT/Scott – March $28s are about $8.20 and short Dec $33s are $4 with IRBT at $36.  Yes to 25% premium, 25% OF THE PRICE is premium and the rest is intrinsic, in the money.  On the other hand, pretty much 100% of your $28s are in the money so, realistically, if you leave it alone and IRBT goes up from here, you net no less than $5 on the trade or 58%.  If you are going to roll, first look at what is an even roll – so what is $4 in June.  Looks like the $37s.  Rolling the Dec $33s to the June $37s gives you $4 more upside, that seems worth it.  You still have $4 of downside protection but that would only apply if you were Ready, Willing AND ABLE to stop out your March $28s (maybe at $7.50) and leave the short June $37s to burn off, perhaps if IRBT fails the $35 line.  

    What you do with the trade very much depends on how flexible you are with the position.  As noted with YHOO, if this were in the $25KP, we'd be limited in our options since we can't support a naked short call in that Portfolio.  In the STP, however, I'd do the Dec-June roll and leave my March calls but offer to roll to the June $29s even, as I'd be willing to give up $1 to not have to mess around with the time difference but, unless I got it, I'd also be happy to be assigned the stock in March and ride into June with my covered caller.  In either case, my plan if IRBT were to fail $35, would be to sell June $30 puts for $4 (now $3) because then, when I cash out my March $28 calls at $7.50, I'd have $11.50 in my pocket and the short June $30 puts and the short June $37 calls and I can certainly live with that and, if IRBT went back over $35, I could buy a call or I could buy the stock for $35 and that would net me into the buy/write at $23.50/26.75 with a call-away at $37 and the stock over $35 (or I wouldn't have been buying it).  

    See – simple plan!  blush

    Corp Taxes/JPH – True.  When Liberals talk about the Corporate Tax rate, they certainly don't mean small businesses.  Sounds like your family needs better accountants though – a good tax accountant is worth every penny you pay him (which is why big corporations have armies of them).  

    I still favor a 20% VAT on all goods and services.  We have an $18Tn GDP and that would raise $3.6Tn, which is $1.2Tn a year more than we take in taxes now.  There would be no taxes, no Social Security, Medicaid etc – just 20% of every transaction goes to the Government with no deductions and no exceptions.  People who make under $30,000 per family (64M families) would be given $10,000 to more than offset the taxes they pay – that's $640Bn and still leaves us with $3Tn and a MUCH happier bottom 40%.

    A VAT would also stop foreign companies from avoiding taxes and US Corps as well.  We have the World's best consumers in the US and people should pay to have access to them!  

    Unfortunately, this would put all accountants and tax lawyers out of business, saving consumers and corporations hundreds of Billions a year in fees.   We could also cut the IRS dramatically, another $100Bn a year saved from the Government Budget.  

    Fast/Scott – It's been an exciting couple of weeks – I love it when the markets are like this. 

    Retiring/Pfehl – Don't worry, I'm only 51 – just looking forward to those Golden Years!  

  100. I keep threatening my girls that one of my retirement goals is to grow white whiskers like Pai Mei so I can gesticulate with them:

  101. YELP might be an opportunity to buy cheap calls or a bull call spread on speculation that YHOO might want to buy them.  It's been rumored for a while.  I think YHOO might want to wait till they get a little cheaper like possibly 40's before making a bid if they do.

  102. YHOO has to be careful who they buy.  $5Bn is a LOT for YELP's traffic.  If they asked me, I'd certainly say let's burn $500M first coming up with our own thing because, even if it fails, it would likely spook YELP more than $500M lower so we could buy them – so we get a free stab at making our own.  

  103. Didn't say it's a good idea, but they are a desperate company.  TUMBLR wasn't a good buy either and most of FB buys were extremely overpriced too.  Wacky market makes CEO's do wacky things if they think it could help their stock.

  104. Phil//  YHOO – making your own.  Doesn't it take time to make your own and isn't there an opportunity cost associated with it? 

  105. Yes but what's the moat for YHOO, who are already the 3rd most trafficked site on the Web?  Give me $500M and 6 months and Yahoo Dining! will be as big as OPEN or YELP and I'll have created at least $2.5Bn in value or I could buy YELP for $5Bn, who make no money and MAYBE recoup my investment over the next decade – opportunity costs indeed!

    Ask Kwan – I already went over a better version of Groupon with him and it's totally doable, but neither one of us has the time to get it going and a lot of our functionality crosses over to Yelp and OPEN – we figured $500K would do it, not $500M.

  106. From Bloomberg, Oct 22, 2014, 4:39:05 PM

    Oct. 22 (Bloomberg) — Atul Lele, chief investment officer at Deltec International Group, discusses the conditions that lead to last week’s global selloff and why he believes the U.S. economy will benefit from an increase in business investment. He speaks on “Bloomberg Surveillance.”

    U.S. stocks retreated, after the Standard & Poor’s 500 Index rose the most in a year yesterday, as energy shares led losses amid a drop in oil prices.

    To read the entire article, go to

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  107. From Bloomberg, Oct 22, 2014, 4:39:46 PM

    Oct. 22 (Bloomberg) — U.S. consumer prices rose 0.1 percent in September, holding inflation in check as fuel prices plunged. Bloomberg’s Scarlet Fu breaks down the data on “In The Loop.”

    The cost of living in the U.S. barely rose in September, restrained by decelerating prices for a broad array of goods and services that signal the Federal Reserve can keep interest rates low well into 2015.

    To read the entire article, go to

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  108. From Bloomberg, Oct 22, 2014, 5:03:06 PM

    AT&T Inc. (T), the second-largest U.S. wireless carrier, missed profit estimates and cut its sales forecast as promotions and price cuts took a toll.

    To read the entire article, go to

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  109. From Bloomberg, Oct 22, 2014, 10:23:30 AM

    Oct. 21 (Bloomberg) — David Bloom, the global head of currency strategy at HSBC Holdings Plc, said the U.S. dollar is set to benefit as economies from the euro area to Israel and Japan seek to export their deflationary problems. He spoke to Bloomberg’s Priyanka Sharma on Oct. 17. (Source: Bloomberg)

    Currency wars are back, though this time the goal is to steal inflation, not growth.

    To read the entire article, go to

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  110. From Bloomberg, Oct 22, 2014, 1:15:09 PM

    OPEC needs to reduce crude output by at least 500,000 barrels a day, Libya’s governor to the group said, the first time since prices plunged into a bear market that a representative from a member nation has suggested how much production should be cut.

    To read the entire article, go to

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  111. Sibe- I was headed out when I read your note about the short legs of the spreads. While I was out I figured out how to have my cake and eat it too! I originally sold the IRBT 37 calls as part of the Mar'15 33/37 BCS that was recommended at end of July for $2.60. I then bought them back for $1.25 when they were way down and since my 33's did not sell today at the price I was trying for, I will just resell the 37's which are currently at 2.85 and just reestablish the spread and make a bit extra if the price can stay up here and be over 37 near expiration to give me full value on the spread along with an extra 1.35 for the short leg I got in and out of. You were correct about waiting for the value to be realized at expiration, but in this case through my not understanding exactly how you achieve that full value until today, I accidentally gave myself the opportunity to make a few extra bucks. I may try this out again if I have a spread where the underlying equity drops for no reason and I have conviction that it will recover, although I can hear Phil saying that it is not a good idea to leave a long call unprotected. Usually I will still be able to roll the long call out further if it hasn't recovered before we are close to expiration. In most cases if you have done your homework and have a solid pick the price doesn't stay down forever. 

  112. From Bloomberg, Oct 22, 2014, 5:02:51 PM

      A 787 logo sits on the tail fin of a Boeing 787-9 Dreamliner aircraft, produced by Boeing Co., as it stands on display in Farnborough. Photographer: Simon Dawson/Bloomberg

    Boeing Co. (BA) fell the most on the Dow Jones Industrial Average (INDU) as investors signaled concern that the world’s largest planemaker isn’t moving fast enough to curb costs on the 787 Dreamliner.

    To read the entire article, go to

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  113. Phew, you had me worried with that retirement talk. By the way, love the whiskers idea and can already hear you say:

    "We make sacred pact. I promise teach investing to you, you promise learn. I say, you do. No questions.” Miyagi 

  114. From Bloomberg, Oct 22, 2014, 5:45:20 AM


    Unlike most Election Days, this one has a decent chance of ending without a clear winner. Blame the excruciatingly tight races around the country that could lead to recounts, the two potential runoffs that may dictate control of the U.S. Senate, and the Supreme Court for taking action on state voting laws just weeks before Election Day. 

    To read the entire article, go to

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  115. From Bloomberg, Oct 22, 2014, 5:11:15 AM

    Business Man Displaying a Spread of Cash

    The Koch-backed political network makes its closing arguments starting Wednesday in six Senate contests, with new political commercials set to run in Alaska, Arkansas, North Carolina, Colorado, Iowa and New Hampshire. The buy is $6.5 million, according to Freedom Partners Action Fund, which is paying for the spots. 

    To read the entire article, go to

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  116. From Bloomberg, Oct 22, 2014, 11:09:31 AM


    In last night’s New Hampshire U.S. Senate debate, moderator Chuck Todd asked Republican Scott Brown to expand on his argument that ISIS could cross the Mexican border to attack America. What happened next was a little surprising to anyone who’d paid even fitful attention to the race.

    To read the entire article, go to

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  117. From Bloomberg, Oct 22, 2014, 8:54:46 AM

      Oct. 21 (Bloomberg) — Ashok Kumar, an analyst at Imperial Capital LLC, talks about the financial results and business outlook for Apple Inc. and International Business Machines Corp. IBM plunged to a three-year low after abandoning an earnings forecast for 2015, as the company struggles to transform fast enough to handle the shift to cloud computing. Kumar speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    Coca-Cola Co. (KO) and International Business Machines Corp. (IBM) got a stark message from investors this week: If they can’t keep their businesses in growth mode, they’d better do something about it — and fast.

    To read the entire article, go to

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  118. From Bloomberg, Oct 22, 2014, 1:26:53 PM

      South African Finance Minister Nhlanhla Nene will give more details on plans to help plug a 225-billion rand ($20 billion) funding gap at Eskom, which could include selling some “non-strategic assets,” according to the National Treasury. Photographer: Simon Dawson/Bloomberg

    South Africa will sacrifice economic expansion in the next two years by limiting spending growth and raising more taxes as it seeks to avoid a debt trap.

    To read the entire article, go to

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  119. From Bloomberg, Oct 22, 2014, 11:30:47 AM

    Oct. 22 (Bloomberg) — Bill Blain, a strategist at Mint Partners Ltd., says by buying corporate debt the European Central Bank won’t “be putting cash into the economy.” He speaks with Jonathan Ferro on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    The European Central Bank bought Spanish covered bonds in a third day of asset purchases that has seen it acquire notes from Italy to Germany, according to people familiar with the matter.

    To read the entire article, go to

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  120. From Bloomberg, Oct 22, 2014, 7:56:33 AM

    The European Central Bank said media reports about lenders passing or failing its Asset-Quality Review and stress test before the release of results on Oct. 26 are “highly speculative.”

    To read the entire article, go to

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  121. From Bloomberg, Oct 22, 2014, 1:24:44 PM

      Uber but for consumer credit.

    The more I use Uber, the more I am convinced of the transformational power of recent technology innovations, especially when it is intelligently combined with behavioral science and economic principles. Indeed, it is only a matter of time until this potent mix disrupts an increasing number of industries, including certain segments of finance.

    To read the entire article, go to

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  122. From Bloomberg, Oct 22, 2014, 1:08:20 PM

    Time for another reinvention.

    More than anything else, with the possible exception of supercomputers that can win game shows and chess matches, IBM is famous for reinventing itself. International Business Machines Corp. has sustained decades of B-school case studies, academic research and cocktail-party anecdotes about how companies should respond to the dangers of disruption.

    To read the entire article, go to

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  123. From Bloomberg, Oct 22, 2014, 3:31:22 PM

    Rob Arnott of Research Affiliates writes:

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  124. From Bloomberg, Oct 22, 2014, 8:05:33 AM

    The U.S. stock market: Come for the volatility, stay for the confusing explanations. Here are our morning reads:

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  125. Craigs, So you made $1.35 on the leg that would have paid you $2.60, but were able to resell it at $2.85. So if you let it ride you'll collect $4.20 all together at expiration.  Nicely played.  The trick there is being right on picking bottoms/tops and direction so you don't get caught on the wrong side of the bet.  Not my strong suite.  In fact, if you need something to drop just let me know and I'll buy some (ie. MCHP, IBM, T, F, BTU, ABX, etc.) I could go on, but you get the drift…

  126. Sibe – no worries about my needing others to try this with. I am already there on BTU, having bought back the short 2016 $18 calls for .40 that I sold for $1.65. I am still holding the 2016 $13 calls and now I will wait and hopefully between now and Jan 2016 BTU recovers and I sell the higher strike calls again well before expiration to have the same result, of course I am risking BTU falling further and the coal markets staying depressed, but energy usually rebounds before too long. RIG is another possibility for me, but not so sure if I want to push my luck. 

  127. Phil- I had that moment of clarity today where something I have read about over and over, but never quite got, finally became clear. The spreads work and the gain is limited to the amount of the spread because, at expiration the options are basically worth the difference between the trading price of the equity and the strike price of the option! (example APPL stock is $103 the $80 options expiring in 2 days are around $23 and the $100 options are around $3, duh!) For some reason, as much as I have read about spreads and how they work, this simple point was never as clear to me as it is today. That simple concept now enables me to really grasp how the options are valued and how time along with volatility affect this relationship of stock price to strike price to value an option. I know I understood it on some level, but not with the clarity I achieved today which will enable me to better understand the concepts you are teaching, I realize I am making myself look stupid, but perhaps this will help someone else to "get it". I just didn't know how it boiled down to this simple pricing concept at expiration.

  128. IBM – if anyone is tempted by IBM at these prices, be sure to read this first..

  129. Craigs, I liked your 6:46 post.  Sometimes we make trading options too complicated.  We should all strive to decipher the TRADING range of a stock and then sell as much premium as we are comfortable with whether it be selling puts or calls. I am positive for the 9 months of this year because all I basically did was sell  6 months and 9 months premium. ( Some index funds are barely positive this year.) I tend to make most of my $ the first half of the year because the last 6 months seem to be more volatile, especially August, September, October. I would like to read a study of market performance of a portfolio that did not trade those months versus one that did.

  130. BIIB- wish I had the cojones to jump on this early today when it was under $300. They posted another great quarter with EPS up 77% and guidance that revenue growth would be around 40% and yet they were way down on a report that their blockbuster MS drug Tecfidera had caused a patient to die. The patient it turns out died of pneumonia, not anything drug related. I think the street also was looking for even better numbers from the drug than the 98% yoy growth it posted. I have to believe this one will be right back in the mid 300's very soon.

  131. JPH1121 / Taxes - 

    Phil makes an excellent points about a VAT, both in that it would serve the needs of revenue generation more effectively by cutting out the middlemen who doctor tax returns so that people like Mitt Romney pay 13.9% on their income and corporations pay virtually noting (hedge funds effectively pay less than 10% on their earnings because of exemptions such as carried interest). 

    I think Kudlow is using the corporate tax rate as a proxy for a larger argument, namely that the view that taxes – all taxes – are out of control. No. They are not. In fact, current corporate tax levels are at historical lows as a share of GDP. As for the nominal rates, here is the breakdown of current corporate tiers:

    Taxable Income ($)
    Tax Rate[27]

    0 to 50,000

    50,000 to 75,000
    $7,500 + 25% Of the amount over 50,000

    75,000 to 100,000
    $13,750 + 34% Of the amount over 75,000

    100,000 to 335,000
    $22,250 + 39% Of the amount over 100,000

    335,000 to 10,000,000
    $113,900 + 34% Of the amount over 335,000

    10,000,000 to 15,000,000
    $3,400,000 + 35% Of the amount over 10,000,000

    15,000,000 to 18,333,333
    $5,150,000 + 38% Of the amount over 15,000,000

    18,333,333 and up

    If you've done your job and kept your receipts that exempt your a small business from transactions & production costs, you're going to be fine. Rates tend to decline once the exemptions kick in. I'm not an accountant, but I put together our family business' costs together and we tend to get a decent return after we pay our estimated taxes.

    Agreed that corporate tax evasion is the stickler, but just because you lower the rates to 25% or 20% as Kudlow suggests doesn't mean corporations won't continue their globe trotting in search of new tax shelters across the globe and those shelters equilibrating to attract multinationals by reducing their rates accordingly.

  132. All/VAT:  Travel to any nation that has VAT and compare what it cost you to buy a suit, dine and rent a hotel room and you will not be so enamored with installing a VAT in America. Better we redo the tax code going with a flat tax and close the tax loop holes on the corporations. Finally, stop the transfer payments to businesses where the larger prosperous owners are overly compensated.

    Also, it is not wage inequality that is at the root of our problem but educational inequality, and government handouts in leu of  people working for a living.

  133. The soldier who was killed in Ottawa today was from my hometown, Hamilton. RIP Cpl. Nathan Cirillo.

  134. ISH4GOD / "Government Handouts" 

    Go for a nice regressive flat tax that hits lower-wage earners harder than high-income earners on the marginal value of each dollar they earn? 

    Educational inequality and government handouts are the problem rather than wage inequality?

    Go join the Tea Party, if you aren't already a member. 

  135. From Bloomberg, Oct 23, 2014, 12:02:26 AM

      Oct. 23 (Bloomberg) — Michael Syn, head of derivatives at Singapore Exchange Ltd., talks about the prospects for the. He speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    Asian stocks pared declines and the yen weakened after the Bank of Japan auctioned debt at a negative yield for the first time. Oil traded near $80 a barrel while New Zealand’s dollar weakened.

    To read the entire article, go to

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  136. From Bloomberg, Oct 22, 2014, 10:59:12 PM

    Oct. 23 (Bloomberg) — HSBC Greater China Economist John Zhu discusses China’s HSBC October Manufacturing PMI data and what it all means for the country’s economy with Bloomberg’s Rishaad Salamat on “On The Move.” (Source: Bloomberg)

    A Chinese manufacturing gauge rose in October, adding to signs a resilient labor market and export demand are helping the world’s second-largest economy weather a housing market downturn.

    To read the entire article, go to

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  137. From Bloomberg, Oct 22, 2014, 11:05:31 PM

    Oct. 23 (Bloomberg) — Rita Fan, Hong Kong deputy for the National People’s Congress, talks about the pro-democracy demonstrations taking place in the city. She speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Public support for Hong Kong’s pro-democracy protesters has grown, particularly among younger people, a survey shows, underlining the difficulty for the government to resolve four weeks of demonstrations.

    To read the entire article, go to

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  138. From Bloomberg, Oct 22, 2014, 11:05:36 PM

      July 15 (Bloomberg) –- Bloomberg’s Lulu Chen reports on Alibaba teaming up with Lions Gate Entertainment to stream Hollywood movies and television shows as China’s biggest e-commerce operator expands its video content. She speaks to John Dawson on Bloomberg Television’s “On The Move.” (Source: Bloomberg)

    Billionaire Jack Ma is stepping up his Hollywood dealmaking push, leading a team of Alibaba Group Holding Ltd. (BABA) executives meeting with studios to acquire online content, people with knowledge of the situation said.

    To read the entire article, go to

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  139. From Bloomberg, Oct 22, 2014, 6:32:47 PM

      Billionaire Jack Ma, chairman of Alibaba Group Holding Ltd., listens during an interview on the floor of the New York Stock Exchange in New York, U.S., on Sept. 19, 2014. Photographer: Scott Eells/Bloomberg

    Alibaba Group Holding Ltd. (BABA) rose to a one-month high, leading gains among Chinese e-commerce companies trading in the U.S. amid speculation they’ll report quarterly earnings that may exceed analysts’ estimates.

    To read the entire article, go to

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  140. From Bloomberg, Oct 22, 2014, 8:51:54 PM

      Employees in an administrative department at the Xiaomi Corp. headquarters in Beijing, on Sept. 12, 2014. Photographer: Brent Lewin/Bloomberg

    Xiaomi’s company mascot is a stumpy bunny who wears a red-starred Chinese army hat. That sort of patriotism probably helped the startup cultivate a fervent fan base in its home country, catapulting Xiaomi past Apple and Samsung Electronics to become the No. 1 smartphone maker in China. But it’s not boosting the company’s image off the mainland.

    To read the entire article, go to

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  141. From Bloomberg, Oct 20, 2014, 9:47:10 PM

    A woman counts Hong Kong dollar banknotes as people resell Apple Inc. iPhones across from the company’s Causeway Bay store during the sales launch of the iPhone 6 and iPhone 6 Plus in Hong Kong, China. Photographer: Jerome Favre/Bloomberg

    On Alibaba’s vast Chinese shopping site, you can buy a pedicure-massage chair for $800. If you want to buy a new iPhone in China, it’ll typically cost you more than that. Millions of Chinese do anyway.

    To read the entire article, go to

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  142. From Bloomberg, Oct 22, 2014, 5:00:27 PM

      Oct. 22 (Bloomberg) — Tohru Sasaki, Tokyo-based head of Japan rates and currency research at JPMorgan Chase & Co. and a former Bank of Japan official, talks about the value of the yen and the nation’s economy. He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    A 26 percent depreciation of the yen versus the dollar in the past two years has boosted Japanese companies’ profits while hurting workers’ purchasing power, intensifying debate among officials on policies to increase inflation.

    To read the entire article, go to

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  143. From Bloomberg, Oct 23, 2014, 12:57:02 AM

    Jeffrey Gundlach, Chief Investment Officer and Chief Executive Officer of DoubleLine Capital LP. Photographer: Patrick T. Fallon/Bloomberg

    The U.S. dollar gained as two of the world’s biggest bond investors said they expect it to extend the strongest rally in six years.

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  144. From Bloomberg, Oct 22, 2014, 6:37:39 PM

    Heightened U.S. regulatory scrutiny of leveraged lending is leading the biggest banks to back away from funding some takeovers financed by debt, creating an opportunity for smaller competitors to step in.

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  145. From Bloomberg, Oct 22, 2014, 9:44:00 PM

      An Ottawa police officer outside Parliament Hill on Oct. 22, 2014. A soldier standing guard at the National War Memorial was shot by an unknown gunman and people reported hearing gunfire inside the halls of Parliament. Prime Minister Stephen Harper was rushed away from Parliament Hill to an undisclosed location, according to officials. Photographer: Sean Kilpatrick/The Canadian Press via AP Images

    Terror invaded Canada this week when a “radicalized” convert to Islam on Monday ran down and killed a Canadian soldier with a car and a gunman yesterday invaded the nation’s capital. He murdered a soldier at a war memorial before entering Ottawa’s lightly-guarded parliament building with a rifle before being shot to death by a guard.

    To read the entire article, go to

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  146. From Bloomberg, Oct 22, 2014, 7:47:20 PM

    Could global warming lead to the creation of the nation’s 51st state? Officials in the City of South Miami have voted to cut Florida in two because, they argue, politicians in the northern parts of the state are ignoring the problem of rising sea levels brought on by climate change. 

    To read the entire article, go to

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  147. From Bloomberg, Oct 22, 2014, 3:54:36 PM


    The 2014 congressional elections are, officially, the most expensive midterms ever. The price tag? About $4 billion, beating 2010 by $400 million.

    To read the entire article, go to

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  148. From Bloomberg, Oct 22, 2014, 3:45:44 PM

    Oct. 22 (Bloomberg) — Luis Costa, an emerging markets foreign-exchange strategist at Citigroup Inc., says Brazil’s real is very expensive considering “we are off the commodity cycle.” The real has plunged 11 percent in the past three months, the worst performance among major currencies. He talks with Anna Edwards, Mark Barton and Manus Cranny on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Twice in the past three weeks, Brazil’s benchmark stock index has posted gains that surpassed any rally in the past 27 months — in both cases, on speculation Aecio Neves would win the presidential election.

    To read the entire article, go to

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  149. News from Germany.

    Shares of Daimler Benz are expected to go up today as their sales have increased by 8 % however interesting is the investors have welcomed the separation from TSLA, indicating that you not always can pull a rabbit out of a hat. 

    Today it is Expected the DAX will open 1% in the minus. 

  150. Well 3 hours in the opening DAX up .60% and the CAC .32% only the FTSE down .38%

  151. SPX WEEKLYGood morning!

    We got a big half-point pop on Europe's open and we've held it so far.  16,520, 1,936, 3,969, 1,100 with Dollar 85.83, oil $80.67 and gold $1,239.

    Asia was mixed, with India and Singapore up about 1% but Shanghai was down 1%, Hang Seng off 0.3% and Nikkei down 0.37%.

    Asian, European shares fall on investor anxiety over global growth

    • Asian shares plummeted this morning, as yesterday's Wall Street retreat and falling crude prices renewed investor worries over slowing global growth, while a mixed picture on Chinese manufacturing failed to impress markets.
    • The flash HSBC/Markit manufacturing purchasing managers' index edged up to 50.4 from a final reading of 50.2 in September, while the manufacturing output subindex in October slipped to a 5-month low of 50.7 from 51.3.
    • European shares are also down, with investors rattled by the threat of recession in Europe. Reports from Europe due later in the day will give investors another chance to determine the pulse of the world economy.

    The "China-And-Japan-PMI-Beat-So-Things-Must-Be-OK" Meme In 2 Simple Charts

    Weak Yen’s Tap on Worker Wallets Fuels Debate: Chart of the DayA 26 percent depreciation of the yen versus the dollar in the past two years has boosted Japanese companies’ profits while hurting workers’ purchasing power, intensifying debate among officials on policies to increase inflation.

    • The IMF is urging Japan to go ahead with its second tax hike next year in order to maintain credibility of its fiscal framework.
    • Japan's national sales tax rose to 8% from 5% in April and the government is due to decide by year-end whether to proceed with a second tax increase to 10%.
    • The IMF expects Japan's economy to grow by an annualized 3.4% in July-September, rebounding from its deepest slump since the 2009 global financial crisis last quarter following April's tax hike.

    NYMO  DAILYEurope isn't even up much:  FTSE down 0.4%, DAX up 0.66%, CAC +0.36%, Italy and Spain are flat.  They are all, however, way up from their down opens (about 1%).  

    The US Economy Needs Some Improvement Soon To Avoid Rolling Over

    How The Federal Reserve Is Purposely Attacking Savers

    It Will Take 398,879,561 Years To Pay Off The US Government's Debt

    Central Banker Admits Central Bank Policy Leads To Wealth Inequality

    Clouds Darken for America’s Blue-Chip StocksCoke, IBM, Others Find Once-Reliable Formulas Leave Them Too Big to Change Direction Quickly. The approach was time-tested and hard to beat: Put your money in blue chips, decades-old companies that could be counted on to perform through thick and thin.

    Goldman(GS) Explains 'The Road To Recovery' In 1 Simple Chart

    Late Subprime Auto-Loan Payments Cause for Vigilance, Citi Says. Late payments on auto loans to borrowers with spotty credit have increased at a "disproportionate" pace, rising to higher levels than before the financial crisis, according to Citigroup IncThe delinquency rate for such debt that has been packaged into bonds rose about 15% from a year earlier to 3.8% in August, Citigroup analysts led by Mary Kane said yesterday in a report. Borrowers are falling behind with sales of asset-backed securities tied to subprime auto loans surging as six years of near-zero interest rates pushes investors toward riskier assets. Concern is mounting that looser underwriting standards may lead to higher losses for bondholders. 

    • U.S. options market operators have agreed in recent months on the need for new automatic trading halts when stock options prices suddenly surge or plunge, similar to the "Limit Up/Limit Down" rules, fully implemented this past May.
    • Sources tell Reuters that the first part of the plan, which creates a uniform set of rules on how to deal with erroneous trades, is soon to be filed with regulators.
    • Related Stocks: NDAQICE

    Corn and Soybeans Decline as U.S. Harvest Accelerates. Corn futures dropped from the highest price in seven weeks as dry weather aids farmers harvesting the biggest crop ever in the U.S., the world’s largest grower. Soybeans also fell, while wheat gained. Conditions in the southern and eastern Midwest are improving after rains caused delays in fieldwork, according to Gaithersburg, Maryland-based MDA Weather Services. Thirty-one percent of the corn crop was collected as of Oct. 19, trailing the five-year average of 53 percent, according to the U.S. Department of Agriculture.

    Nokia +8.1% premarket on strong results, updated FY outlook

    • Nokia (NYSE:NOK) shares +8.1% premarket after the telecom-equipment supplier reported net profit of €747M ($941M) compared with a €91M loss in the three months to end-September last year, helped also by a large tax gain in the quarter.
    • The company says net sales increased to about €3.3B, the first annual rise since the first quarter of 2011, benefiting from the deployment high-speed mobile networks in North America and China.
    • Nokia also gave a more bullish full-year financial outlook, saying it expects an operating profit margin slightly above 11%, having previously expected the margin at high single digits.

    Insurance Companies Have Started Writing 'Ebola Exclusions' Into Policies

    Here it comes!  For $100,000, You Can Clone Your Dog

    These two were made to order in a South Korean lab. They’re only the beginning

  152. /TF at 1100, good spot to short? 

  153. Sometimes  a photo explains a complex situation, I think is the case with this newspaper front page 

    Spain has the only  EU borderline into Africa, are 2 small cities into Morocco  that has been under spanish administration for over 500 years, it has a fence system as in TX but here you are not allow to use firearms or taser guns, so a  " cat catching mouses " game is in place.

    If the immigrants "touch Europe" they are subject to legal process and asylum petition right so with North Africa in flames this is what we have.

  154. Well,  I can´t  paste  the image in the chat , sorry. if interested try to see it here

  155. /TF/Jeff – If anything, it should make a good long line but already the indexes are faltering.  I'm going to be really concerned if we fail our bounce lines again today.  

    Photo/Advill – I see what you mean:

    Portada de El Mundo (España)

    What's this thing in Mexico where they mayor of a town seems to have killed a bunch of people?  

    Missing Mexico students: Iguala mayor 'ordered attack'

    Mexico Mayor Suspected Over 46 Missing Teachers

    That's one way to bust a union, I guess…

  156. Anyway, Futures look too crazy to play.  Ideally, we like to take positions where we feel we have strong support so, if we're wrong, we can quickly get out with a small loss.  1,100 hasn't been much resistance, more like 1,090, which is just over our expected retract to 1,088 (yesterday morning's lines) and then we have 1,102.50 and 1,113 so that's our channel until it breaks.  

  157. Any plays on /CL now that the new contract is out?

  158. The most amazing thing about that El Mundo picture is that woman in the middle of her backswing, just playing as if she is waiting for the fence people to ask if they can play through. Perhaps she thinks this how the caddy's get to work or that Bill Murray hired them to come kill gophers. 

  159. Phil I am wondering what is the best way to protect yourself with a speculative stock,(short of not buying it in the first place). For example if we had known the risk that GTAT could end up not being able to make sapphire and go to zero, what would have been the best way to hedge a move to zero from $11 versus the possibility of the stock doubling or tripling if successful? I own one or two speculative biotechs that could skyrocket if they hit, but also could become worthless if they fail phase III trials. Options are very cheap on both, so I thought I could protect at least a portion of the small amounts at risk.

  160. craigsa620

    Just buy puts to cover. I am still licking my wounds on GT should have read Shadowfax's comments more clearly even that some do not like to hear this.

  161. Craigsa620,

    Just electrify the fence it keeps out another 75% and the rest can be collected at the bottom.

  162. Das 'Manager Magazin' liefert nun einen anderen Erklärungsansatz für den Ausstieg: Daimler soll ein eigenes elektrisches Modell mit einer Reichweite von 400 Kilometern entwickeln – und damit den bisherigen Partner und sein Model S herausfordern. Das Modell solle mit einer E-Klasse oder S-Klasse vergleichbar sein, so das Magazin. Die endgültige Entscheidung des Vorstands stehe allerdings noch aus.

    For the once not reading German It looks like MBenz will bring out it's one electric model with a range of 400 Km. Will be a bit of a problem for TSLA in Europe I think.