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Which Way Wednesday – Ridiculously Overbought Edition

NYMO  DAILYCheck out this chart:  

That's the NYSE McClellen Oscillator, which hasn't been this high (overbought) since July of 2011, when the S&P plunged from 1,345 to 1,123 (16.5%) in 4 terrifying weeks.  Yesteday's rally was a very low-volume affair 101.3M on SPY (about 60% of normal) and we were goosed by Peter Schiff on CNBC at 1:10 pm, claiming QE4 was right around the corner:

Ahead of tomorrow's decision by the FOMC, Peter Schiff ventured on to CNBC to discuss the economy, the fed, and gold… among other things. Schiff rightly fears that while the Fed may well stop QE3 tomorrow, QE4 will not be too long behind it as he notes, rather eloquently, that "an economy that lives by QE, will die by QE" as the Fed's total lack of willingness to allow stocks to fall (see Bullard 2 weeks ago) or a 'cleansing' recession leaves the nation's economy in far worse shape than it was before the Fed's intervention. Schiff calmly replies to the anchor's questions (as she proclaims "I am not on the side of the Fed but…"), gently explains his view on gold when challenged about his 'wrongness', but when a guest starts hounding him for being dangerous to CNBC viewers wealth… Schiff (rightly) loses it – must watch!

 

SPY  5  MINUTEAs noted by Dave Fry:

It seems bulls are confident the Fed will end QE on schedule and at the same time give bulls dovish comments about conditions (“don’t mess with us”!) going forward. Many pundits are discussing interest rates remaining unchanged for several years and longer.

That means companies like IBM can continue (another $5 billion share buyback announced today) their financial engineering to lessen float making it easy to report better earnings at the price of future innovation and company growth. But bulls don’t care about future growth, only what takes place now. Besides, this is the season when bulls make their year, so let’s ignore anything beyond current tape action.

The S&P's 350-point (35%) run in 2011 began and ended with QE2 and our current 400-point run (25%) began with the extension of "Operation Twist", which is expected to end today.  

Here's what happened next in 2011:

Now, there's nothing wrong with a good, old-fashioned sell-off.  We'll be thrilled to get a buying opportunity if the S&P drops 200-250 points after the Fed stops easing.  After all, it was the announcement of Operation Twist in October of 2011 that saved us from that collapse and led to the current rally – why should we not expect QE4 – Santa Claus will ALWAYS come down our chimney forevermore – Poppa Schiff said so!

Just in case he doesn't though, we added another hedge in yesterday's Live Member Chat and we sent it out as a Top Trade Alert to our subscribers, along with a well-timed bullish trade idea for AAPL, who led the markets higher with a 1.5% move on the day.  We also found a nice, bullish hedge to play possible QInfinity by simply buying the TNA Nov $75/80 bull call spreads at $1.20, which pay $5 (up 316%)  at 1,173 on the Russell – which would only require a move equal to yesterday's over the next 3.5 weeks.  

As it stands now, the market is expecting QE to be extended or the end of QE to be delayed in today's Fed announcement (2pm) though I'm pretty sure they are wrong and, with the market just 2% from all-time highs – I just don't see the Fed wanting to use more firepower just so the IBanks can have a good finish to 2014.  

Meanwhile, we talked about China data that "does not make sense" in yesterday's post and today, Australia's Westpac Bank is backing me up with a report that shows China's Consumer Sentiment Indicator taking a nose-dive along with Industrial Production numbers that show a 30% decline in the past year.  

Sadly, these numbers do make perfect sense and they line up a lot more clearly with the data we get from Europe and the rest of Asia than does the "official" Chinese data.  

It's going to be another crazy day today.  If the Fed doesn't wave it's magic wand at 2pm, expect a market temper-tantrum that wipes out yesterday's gains by tomorrow.  Frankly, I'm really not sure what the Fed can say to justify the Nasdaq's 10% run in the past two weeks or the 5%+ runs put up by the other indexes:

So please – be careful out there!  

 


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  1. Good morning!  

    Wisconsin Gov. Scott Walker (R) released an ad on Tuesday in which his female lieutenant governor applauds his support for equal pay for women — just two…
    HUFFINGTONPOST.COM

     

    Interesting charting tool:

    Bradley Siderograph 2014 Deconstructed S&P 500


  2. From Bloomberg, Oct 29, 2014, 12:00:02 AM

      Oct. 28 (Bloomberg) — Michala Marcussen, global head of economics at Societe Generale SA in London, says the U.S. Federal Reserve may end its quantitative easing program tomorrow and expects the next interest rate increase in mid 2015. She speaks with Mark Barton on Bloomberg Television’s “Countdown” before the Federal Open Market Committee meets today and tomorrow after six weeks of volatility in global financial markets (Source: Bloomberg).

    Here’s what to look for when the Federal Open Market Committee releases its policy statement at 2 p.m. today in Washington. Federal Reserve officials won’t provide new economic projections, and Chair Janet Yellen isn’t scheduled to give a post-meeting press conference.

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

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


  3. From Bloomberg, Oct 29, 2014, 6:37:24 AM


    Oct. 28 (Bloomberg) — Michala Marcussen, global head of economics at Societe Generale SA in London, says the U.S. Federal Reserve may end its quantitative easing program tomorrow and expects the next interest rate increase in mid 2015. She speaks with Mark Barton on Bloomberg Television’s “Countdown” before the Federal Open Market Committee meets today and tomorrow after six weeks of volatility in global financial markets (Source: Bloomberg).

    The end of the Federal Reserve’s third round of bond purchases is proving to be a non-event for mortgage-backed debt.

    To read the entire article, go to http://bloom.bg/1tKYX8d

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


  4. From Bloomberg, Oct 28, 2014, 11:07:39 PM


    Oct. 28 (Bloomberg) — An Orbital Sciences Corp. Antares rocket exploded shortly after liftoff from NASA’s Wallops Flight Facility in Virginia. The rocket was carrying 5,000 pounds of cargo to resupply the International Space Station. It was Orbital’s third commercial resupply mission, according to NASA. (Video courtesy of NASA. Source: Bloomberg)

    Orbital Sciences Corp. (ORB) fell as much as 17 percent after its Antares rocket exploded in a fireball shortly after lifting off from a launch pad at Wallops Island, Virginia. There were no injuries, the company said.

    To read the entire article, go to http://bloom.bg/10xzN0B

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


  5. From Bloomberg, Oct 29, 2014, 7:52:51 AM


    Photographer: Chris Sattlberger/Getty Images

    Every time fossil fuels get cheaper, people lose interest in solar deployment. That may be about to change.

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

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


  6. From Bloomberg, Oct 28, 2014, 8:00:00 PM


    New Jersey Governr Chris Christie greets customers at the Honey Bee Diner during a campaign stop with Maryland Republican gubernatorial candidate Larry Hogan in Glen Burnie, Maryland, on Oct. 28, 2014. Photographer: Chip Somodevilla/Getty Images

    During his inauguration in January 2010, Chris Christie cast New Jersey as a state poised to sprint out of the recession.

    To read the entire article, go to http://bloom.bg/1tL8MD1

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


  7. From Bloomberg, Oct 29, 2014, 5:39:12 AM

      Joining today’s pledge to automatically exchange data collected by financial institutions are most EU countries, Liechtenstein, Mexico, Argentina, South Korea and jurisdictions such as Bermuda, the Cayman Islands and the Isle of Man. Photographer: Thomas Trutschel/Photothek via Getty Images

    Governments are closing in on tax evaders with a data-sharing agreement that broadens efforts by the U.S. and the five biggest European Union economies to at least 50 countries and territories.

    To read the entire article, go to http://bloom.bg/1E0wgGq

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


  8. From Bloomberg, Oct 29, 2014, 4:36:21 AM

      National officials are due to discuss the tax plan this week, ahead of a Nov. 7 finance ministers’ meeting in Brussels. Photographer: Jock Fistick/Bloomberg

    The European Union must figure out how to handle revenues from a proposed financial-transaction tax to meet a year-end deadline for moving ahead with the levy in participating nations.

    To read the entire article, go to http://bloom.bg/1u5CDa3

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


  9. Watch this video at http://bloom.bg/1DpRmMd

    Home Prices Show Slower Year-to-Year Increase

    Oct. 28 (Bloomberg) — Home prices in 20 U.S. cities rose at a weaker pace in the year ended in August as borrowing standards remain tight and wage gains fail to accelerate. Scarlet Fu reports on “In The Loop.” (Source: Bloomberg)

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


  10. Watch this video at http://bloom.bg/1wElseD

    Breaking Down Facebook’s Third-Quarter Performance

    Oct. 28 (Bloomberg) — Facebook reported third-quarter revenue that topped analysts’ projections as the social network expands efforts to advertise on mobile phones. Bloomberg Contributing Editor Paul Kedrosky and Bloomberg’s Cory Johnson take a look at the numbers on “Street Smart.” (Source: Bloomberg)

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


  11. Watch this video at http://bloom.bg/1FUVKa5

    Deutsche Bank Sees ‘Trouble in Spades’: Paula Dwyer

    Oct. 29 (Bloomberg) — Deutsche Bank reported a loss in the third-quarter as legal costs extended to $1.1 billion to settle investigations of past wrongdoings. Bloomberg View Editor Paula Dwyer discusses the factors that led to the loss on “Bloomberg Surveillance.” (Dwyer is a Bloomberg View columnist. The opinions expressed are her own.)

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


  12. From Bloomberg, Oct 29, 2014, 8:30:53 AM


    Oct. 29 (Bloomberg) — In today’s “Single Best Chart,” Bloomberg’s Scarlet Fu displays how bear markets are triggered by either Federal Reserve tightening or economic recessions. She speaks on “Bloomberg Surveillance.”

    Stocks rose in Europe and Asia and Treasuries headed for their best month since January on speculation the Federal Reserve will signal today that interest rates will stay low. Oil advanced and Facebook Inc. declined.

    To read the entire article, go to http://bloom.bg/10xumPc

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


  13. From Bloomberg, Oct 29, 2014, 8:40:09 AM


    Trucks drive through a mine in this aerial photograph taken above the Athabasca Oil Sands near Fort McMurray, Alberta, Canada.Growth from Canada’s oil sands or the Arctic will also be impaired at these levels, Sanford C. Bernstein of Standard Chartered Plc and Barclays Plc. said. Photographer: Ben Nelms/Bloomberg

    For all the noise about oil’s collapse, the market is saying not that much has really changed: Higher prices will be back soon enough because the current slowdown in demand growth will prove fleeting.

    To read the entire article, go to http://bloom.bg/1wBqO9i

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  14. From Bloomberg, Oct 28, 2014, 4:01:00 PM


    Construction workers build a waterfront apartment block on Palm Jumeirah artificial island in Dubai, United Arab Emirates. Photographer: Gilles Ledos/Bloomberg

    Alongside the Dubai Mall, one of the world’s largest shopping centers, sits an ersatz version of what would be an authentic retail experience in most Persian Gulf cities: an Arab souk.

    To read the entire article, go to http://bloom.bg/10xjctM

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


  15. From Bloomberg, Oct 29, 2014, 6:50:37 AM

      German autobahn. Photographer: Ollo/Getty Images

    For SMS Siemag AG, a pothole isn’t just a pothole.

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

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


  16. From Bloomberg, Oct 28, 2014, 11:50:45 PM


    A man on a motorcycle drives past a man pulling a cart laden with cardboard in the Dongmen area of Shenzhen. China’s economy expanded 7.3 percent in the third quarter, the slowest pace since 2009. Photographer: Brent Lewin/Bloomberg

    A doubling in the trust holdings of China’s insurers has prompted ratings companies to warn the industry may be taking on too much shadow banking default-risk.

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

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


  17. Watch this video at http://bloom.bg/1FSmsjn

    What Happens If Oil Prices Keep Falling?

    Oct. 28 (Bloomberg) — Scarlet Fu reports on the plunging price of oil on “In The Loop.” (Source: Bloomberg)

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


  18. From Bloomberg, Oct 29, 2014, 7:10:44 AM

         Oct. 28 (Bloomberg) — Francesco Garzarelli, co-head of macro and markets research at Goldman Sachs Group Inc., says the European Central Bank may only buy sovereign bonds if growth in Europe’s biggest economies “is going nowhere.” He talks with Jonathan Ferro on Bloomberg Television’s “On the Move.”

    European policy makers have been their own worst enemy in the fight to avoid recession and deflation.

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

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


  19. From Bloomberg, Oct 28, 2014, 9:43:30 PM

    Oct. 28 (Bloomberg) — Fan Cheuk Wan, the chief investment officer for Asia-Pacific at Credit Suisse Group AG’s private banking and wealth management unit, talks about Japan’s economy, stocks and policies. She speaks with Rishaad Salamat on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

    Japanese industrial production rose the most since January in a sign that companies are recovering from the blow of a higher sales tax.

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

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


  20. From Bloomberg, Oct 28, 2014, 11:18:21 PM


    Singapore’s private home prices fell 0.7 percent in the three months ended September, the fourth quarter-on-quarter drop, bringing the slide in the past year to almost 4 percent. Photographer: Munshi Ahmed/Bloomberg

    Singapore‘s longest stretch of property price declines since the global financial crisis may not be enough to prompt the city to ease its housing curbs.

    To read the entire article, go to http://bloom.bg/1Dtn9M0

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


  21. From Bloomberg, Oct 28, 2014, 1:01:45 PM

      The final frontier of political polling.

    What if the polls are wrong?

    To read the entire article, go to http://bv.ms/1zez3Md

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


  22. Is oil a good short at $82.50?


  23. At the open, it looks like 16,982, 1,980 (good bull/bear signal), 4,084 and 1,148 on our indexes.  1,150 should be very hard for /TF to cross and below 1,147.50 can be shorted but, of course, the RUT has been burning us for two days.  

    The Dollar is 85.41 and below 85.40 may support the indexes.  Oil just hit $82.50 but quickly rejected and it's going to be very dangerous to call into inventories.  Gold $1,223, Silver $17.21, copper $3.0995 (can't close the deal at $3.10), nat gas $3.78 (up .23 in two days) and gasoline $2.18.

    Oil/Bruce – I like any short below the 0.50 lines but we have conflicting API reports so there could be violent swings and the Dollar is weak so I'd wait for the inventories.  


  24. Schiff/Phil

    They really went off on Schiff, and I do remember him calling the housing bubble when everyone else on there said, at most you'd get a 10% drop.  Wish they would confront everyone instead of one guy and Schiff might've been wrong but if you were buying gold for the last 13 years, you did pretty well.


  25. Looks like /TF burned our group again!


  26. Good Morning!


  27. Why so quiet?  Did everyone go to cash?

    • Dow flat at 17,031.50. S&P +0.02% to 1,985.50. Nasdaq -0.25% to 4,552.76.
    • Treasurys: 30-year -0.13%. 10-yr -0.07%. 5-yr -0.03%.
    • Commodities: Crude +0.91% to $82.16. Gold -0.48% to $1,223.50.
    • Currencies: Euro +0.05% vs. dollar. Yen -0.03%. Pound +0.08%.
    • MBA Mortgage Applications:
    • Composite Index: -6.6% vs. +11.6% last week.
    • Fixed 30-year mortgage rate rises to 4.13% from 4.10.
    • The share of occupied homes in which homeowners live fell nearly a full percentage point over the last year to 64.4%, says the Census Bureau, the smallest ratio since 1994. Alongside that number, naturally, the share of rentals that are vacant fell to its lowest since the mid-90s.
    • The story is a familiar one: Tight lending conditions and an anemic recovery coming alongside rising prices for entry level homes as institutional investors gobble up the available supply.
    • Homebuilder ETFs: ITBXHB

    Can't make this stuff up: Fast traders profiting from SEC system

    • The SEC's job is supposed to be ensuring a level playing field, but two academic studies find the agency's system for distributing filings is giving some fast traders an information edge of several seconds.
    • At issue is the Edgar system – an outside contractor hired to run it disseminates filings to paying subscribers (about $1,500 per month) and the SEC website at the same time, but the SEC website can take anywhere from 10 seconds to more than a minute to post the documents, giving the paying subscribers a crucial edge.
    • “We have reviewed the working paper and are taking the issues raised by it seriously,” says an SEC spokeswoman.
    • “It violates the basic principles of fairness that underpin our markets, and I urge the SEC to put a stop to this as soon as possible," says Rep. Carolyn Maloney, the ranking Democrat on the House Financial Services Committee.

    Chinese consumer sentiment plunges

    • The Westpac MNI China Consumer Sentiment Indicator fell markedly in October from an already weak level, printing 110.9 vs. 113.2 in September, -2% M/M and -9.5% Y/Y. The survey indicates that the anxieties gnawing away at the Chinese consumer through most of this year remain very much in evidence as Q4 opens.
    • The survey does not augur well for Nov. 11 "Single’s Day" online sales – China’s version of Black Friday.
    • The results underscore the contrast with economic growth, which is being supported by exports. The domestic side tells a different story.

    SunPower beats by $0.06, beats on revenue

    • SunPower (NASDAQ:SPWR): Q3 EPS of $0.30 beats by $0.06.
    • Non GAAP Revenue of $704.2M (+13.7% Y/Y) beats by $75.51M.
    • Shares +4.7% PM.
    • Press Release

    Movement to raise tobacco age to 21 gains momentum

    • The tobacco industry is gearing up for its next serious challenge, as more cities raise the legal age for buying tobacco products to 21.
    • As states ponder similar moves, the $100B U.S. tobacco industry could suffer yet another large blow over consumer sales.
    • The FDA is also expected weigh in on the matter early next year, after it receives a report from the Institute of Medicine evaluating the potential benefits of increasing the age to 21 or 25.

    Shanghai exempts Model S buyers from license fees

    • The city of Shanghai has exempted close to 400 Model S buyers in the region from paying $12K each for a license plate.
    • The initiative by the local government falls in line with efforts by Beijing to promote the electric vehicle industry.
    • Tesla Motors (NASDAQ:TSLA) is in discussions with other major cities across China on scoring similar exemptions for buyers.

    Sell-side on Facebook: Weakness a buying opportunity

    • Buy the dip, says Needham's Laura Martin, noting the company's focus on the long-term on the earnings call is giving investors the jitters about the short-term. The upped expenses guidance for FY2015, she says, suggests Facebook (NASDAQ:FB) will be reinvesting profits in longer-term opportunities.
    • "Facebook’s execution continues to be strong and we believe very few companies in the world have the reach, the audience engagement and the monetization opportunity that Facebook has in front of it today," says Sterne Agee's Arvind Bhatia, reiterating a Buy rating and $85 price target.
    • Similar sentiments are voiced by GoldmanCowenSusquehannaEvercore, andSunTrust.
    • Shares -7.7% premarket
    • Last night's earnings coverage
    • Alibaba (BABA -1%) has received 14 bullish ratings on underwriter coverage day to go with one neutral rating (from Goldman).
    • Pac Crest, which appears to have the highest target ($125), forecasts a 30% GMV CAGR from 2015-2017, and thinks Alibaba will also grow its blended take rate as mobile take rate (currently 54% below PC levels) improves. At the same time, it forecasts a 620 bps 2015 op. margin decline. Its target doesn't account for Alibaba's investments (paging Dan Loeb).
    • Deutsche: "Similar to its peers, with scale firmly established, we see Alibaba pursuing ever deeper forms of monetization through business model shift, heightened competition for the advertising tools on its platform, and the introduction of a growing array of valuable ancillary services."
    • Nomura thinks Alipay parent Ant Financial provides an "option value" of $32B ($13/share). SunTrust sees Alibaba hitting a $1T annual GMV (up from a current $296B) by 2020. JPMorgan joins others in arguing China's weaker physical retail infrastructure will work to Alibaba's advantage.
    • Goldman, for its part, considers Alibaba's near-term prospects "well-discounted." But it still thinks shares could reach $133 ($350B market cap) in two years.
    • Prior analyst coverage (mostly bullish): JefferiesUBS/BofAMacquarieSusquehanna,Rosenblatt/MKM

     

    • The Federal Trade Commission sued AT&T (NYSE:T) yesterday, alleging that the company sold millions of customers "unlimited" data plans while cutting data speeds to near-impractical levels after the user crossed a usage threshold.
    • The FTC warned Verizon over similar practices, called data throttling, earlier this month.
    • The lawsuit seeks to bar AT&T from misleading consumers and asks for monetary relief for the alleged harm to the company’s customers.

     

    • Why Americans Will Believe Anything You Tell Them, in One Chart (Businessweek)
    • The Timeless Allure of Stock-Market Timers (Barron’s)
    • The Downside to Stock Buybacks: There Could Be Better Uses for the Money (WSJ)
    • Facts and Rubbish About Bank Leverage Ratios (Mediumsee alsoEurope’s Banks Are Too Feeble to Spur Growth (FT)
    • Is the Affordable Care Act Working? (NY Times)
    • If GOP Takes Senate, Climate Change Deniers Will Control Key Committees (National Memo)
    • Apple’??s Surprising Growth Driver: The Mac (WSJ)
    • As Gas Prices Drop, Hybrid Sales Shift Into Low Gear (NPR)
    • Flying Car Approaches Liftoff as Most Advanced Prototype Yet Is Unveiled (The Guardian)

  28. Good Morning.

    I guess there's method to OPEC's current non-interventionist madness. Drive the shale producers out of business…


  29. Schiff/Rustle – Yeah, that was a great segment.  Overall, Schiff has the accuracy of a broken clock.  He is pretty much always down on the economy, up on gold and commodities and emerging markets.  If you are as consistent as he is and around for a long time, you do get to go on TV once in a while and say "I told you so".  Anyway, I'm not cherry-picking but this was an interesting video summary I just found:

    /TF/Jasu – Fortunately the S&P gave us a GET OUT signal for shorts first, I still don't believe it (over 1,150) but it's painful to bet against.  

    Speaking of which, the TZA Jan $15s we bought yesterday for $1.75 in the STP are now $1.35 but the $13s are down to $2.05 so let's spend 0.70 to roll our TZA longs (50 = $3,500) to the Jan $13s.  The short Nov $17s are 0.20 so we got 0.22 back on those so net 0.48 for the roll is a very good deal!  

    OPEC/Decad – That has been their historical tactic.  A few months of low prices spooks the financing off alt energy and alt suppliers for a year and gets a lot of people to choose SUVs again.   Cheap oil gooses demand and it's very slow to contract as prices go back up.  These guys aren't stupid…


  30. Schiff/Phil

    Wish they did this with Gartman who is even worse and on more.  Or best yet, Cramer.


  31. Phil….I am a little light on hedges.  Would you just add more TZA or???  Thanks a bunch!


  32. 5 CMG Nov $600 puts for $2.40 in the $25KP

    Hedge/Wilsons – Yes, I like those TZA Jan $13s a lot at $2.05, I'd see how the day goes because you might get lucky or, if not, you can sell a call and roll lower.  


  33. Phil,

    30 minute lag on your short /TF…..good to remember some one big is tracking PSW and faking me out


  34. Phil/CMG,

    Do you see a short term drop in CMG and then back up? If not then why not buy puts for dec or Jan.

    thanks as always.,


  35. /TF/Jasu – That's why I generally ladder /TF, they go against almost anything you initially do.  After that, it's a matter of who has the stronger stomach.  Completely ridiculous up 10, down 10 move in less than an hour but great if you are scaling into a short position (I have 10 now).  

    CMG/Pat – I think the $40 pop to $650 was overdone so I expect a pullback to $642 or, if we are lucky, $634, which should make about 50% on the $600 puts.  As a bonus, if the market tanks on Fed disappointment – then we could see $610 tested again for more than a double.  

    Wow, what a ride on /TF – 1,141 now.


  36. /YM is the lagging short as it crosses below 16,950 and watch /ES staying below 1,980 to confirm a short is a good idea.  


  37. Hello all! Yesterday's webinar replay is now up on our YouTube Channel here:

    http://youtu.be/htQuHN5aFTE

    You can also download the original from Webex if you'd like, here: 

    http://bit.ly/102814Replay


  38. /TF – I definitely got hit by the "ladder" or Martingale Strategy on the futures yesterday.  Highlights the risk of leaving your computer with open positions.  I came out of a 5 hour block of meetings to see my position down $20k.  Although had I been sitting at my computer not sure I would have been able to cover a parabolic up move like yesterday.


  39. So much for getting a short signal from /ES. Done shorting /TF, of course, need to get that /ES cross below 1,980 to be safe.  Matches up with 1,145 on /TF, 4,085 on /NQ and 16,950 on /YM so those will be our bull/bear signals now. 

    Oil inventories up just 2.1Mb, gasoline down 1.2M, distillates down 5.3M on heating oil sales so bullish for oil and we'll see where they stop (now $82.30).

    Dollar down to 85.25, that's helping the indexes as much as it can.   


  40. $20K/JJ – Wow, that's a lot.  Of course it's all in perspective, depending on what you can afford to lose but you should always expect a potential 5% move against you overnight and, if that's not a level you could then double down at – you are too invested.  So, to play the futures at all, you need to expect a 5% move catches you by surprise.  Of course, that pretty much never happens but – 9/11.  

    5% on the RUT is 50 points, so $5,000 per contract can be gone in 60 seconds.  If you DD, then you have $10,000 at risk and then $20,000 if you DD again.  If you aren't comfortable with the risk – DON'T DO IT!!!  That's a very aggressive way to play and, as I've mentioned before, the only reason you are doubling down is to reduce the basis so we take lightning quick profits on a DD and get back to 1 share (or whatever your 1x is).  

    There's 1,140 by the way.  


  41. H-P unveils 3D printing tech; 3D printer makers sell off • 10:39 AM

    Eric Jhonsa, SA News Editor

    After promising a 3D printing tech breakthrough for months, H-P (HPQ -0.2%) is finally sharing some details. The company plans to leverage a proprietary 4-step inkjet process known as Multi Jet Fusion. H-P claims the process can operate 10K nozzles at once, and allow objects to be printed more than 10x faster than conventional approaches.

    "That means a fundamentally lower cost," says H-P SVP Stephen Nigro. He adds H-P is focusing on the high-end/industrial segment, and suggests its printers will be priced towards the low end of the segment's traditional $150K-$500K price range.

    3D printer makers aren't taking the news well: DDD -6.2%. SSYS -6.1%. XONE -8.1%. VJET -3.6%.

    H-P's printers won't be widely available until 2016; some customers will get to test them next year. Industry analyst Terry Wohlers thinks H-P's offerings could potentially "put some other companies out of business," and also expand the addressable market for printing sophisticated products.

    Forrester's Sophia Vargas is more cautious: Though calling H-P's solution well-suited for plastic printing, she notes the company hasn't yet proven it can work with metals and other materials.

    Also unveiled by H-P: Sprout, an $1,899 desktop featuring an overhead 3D scanning camera. The camera can turn anything placed on a mat in front of the PC's monitor (objects, sketches, written material) into digital content. It ships next month.

    Gartner recently forecast 3D printer shipments "will more than double every year between 2015 and 2018," reaching 2.3M units in 2018. Total end-user spending is expected to grow to $13.4B in 2018 from $1.6B in 2015.


  42. /TF  - No offense, but what happened to using .10 or .25 stops when playing futures?  Just like we do with oil.  If we have a line like 85, and it crosses below then go for ride.  If it crosses down through another line, then add if you want to, like 84.50.  But if it pop's up to 85.10, get ready to stop out.  

    I understand the martingale strategy, and how it will help you raise avg cost to a better break even, but it seems like it's not respecting "the trend is you're friend" philosophy.


  43. There goes /YM


  44. That's two weeks in a row with a lucky escape on a Wednesday - I am bound to get burned at some point but that's got to be in perspective – mostly, I just need to be right more often than I'm wrong.

    Also, I think next week we'll just wait until Wednesday, instead of initiating the play during the seminar – which has not been good timing…


  45. GMCR Phil … I have played this several times using a strategy you used on TWTR, SCTY in the past.. it has worked perfect each time albeit with a little bit of luck on timing .. although I only open this play AFTER GMCR has run up … I like selling the Nov $152.50 naked calls for $5.80 and covering with a long call spread in Dec $155/170 for a cost of $3.70 .. gives me a net credit of $2.20 per set and cover for a move against me all the way up to $170 … am I mad :)


  46. ORB/Phil – any idea who the insurers are for rocket, cargos?


  47. Phil – Papermoney.  

    Why not just login to Papermoney on TOS on Tue during the seminar.  Then you could play all you want with no real impact.   All you have to do is ask TOS to enable realtime quotes in papermoney, so it's exactly like the real thing.


  48. Phil;  I would be interested in how you converted yesterday's loss to that huge gain today.  How big did you get on the short side?  Do you still expect a negative reaction to the Fed today?  When would you enter a short again, just after the news?


  49. HPQ/Burr – That was my bullish premise on HPQ ages ago.  

    Submitted on 2014/08/25 at 3:23 pm

    3D/Burr – I think it's way too soon to start betting on these things but – GE, ADSK (they make the software for whoever wins), HPQ are the ways I think 3D printing will go.  I went to the Maker store in Boston a few weeks ago, you need to go before you shove money into these things – soooooooooooooooo tedious.  Years away from real commercialization.  

    /TF/Burr – Well if it's not clear to you then I need to make this clear to all:  That is a DIFFERENT strategy for playing the Futures for more aggressive players.  Laddering (or Martingale) is a high-risk, high-reward way to play a channel but, when the channel breaks, you can get KILLED.  The reason we went for the ladder last week and this week in the webinars is because we were not at the top of the channel but wanted to, HOPEFULLY (not a valid investing strategy), take advantage of a big Russell pop that we THOUGHT was overdone.  Because we weren't SURE, however, we had to play a ladder as we didn't have a backstop we could count on.  

    • martingale is any of a class of betting strategies that originated from and were popular in 18th century France. The simplest of these strategies was designed for a game in which the gambler wins his stake if a coin comes up heads and loses it if the coin comes up tails. The strategy had the gambler double his bet after every loss, so that the first win would recover all previous losses plus win a profit equal to the original stake. The martingale strategy has been applied to roulette as well, as the probability of hitting either red or black is close to 50%.
    • Since a gambler with infinite wealth will, almost surely, eventually flip heads, the martingale betting strategy was seen as a sure thing by those who advocated it. Of course, none of the gamblers in fact possessed infinite wealth, and the exponential growth of the bets would eventually bankrupt "unlucky" gamblers who chose to use the martingale. It is therefore a good example of a Taleb distribution – the gambler usually wins a small net reward, thus appearing to have a sound strategy. However, the gambler's expected value does indeed remain zero (or less than zero) because the small probability that he will suffer a catastrophic loss exactly balances with his expected gain. (In a casino, the expected value is negative, due to the house's edge.) The likelihood of catastrophic loss may not even be very small. The bet size rises exponentially. This, combined with the fact that strings of consecutive losses actually occur more often than common intuition suggests, can bankrupt a gambler quickly.

    The reason I don't call what we do "Martingale" is because Martingale is for idiots.  What we do is pick a line, like 1,120 yesterday.  We tried that (standard strategy with tight stops over the line) and stopped out with a failure.  At 1,130, we tried again and again failed (standard strategy).  At 1,135, however, as noted in yesterday's webinar. the 25-point gain from Monday seemed too strong and we decided to make a conviction short LADDER play.

    So, at 1,135 we go short, doubling down at 1,140 (1,137.50 avg. on 2x) and again at 1,145 (1,141.25 avg on 4x) and again at 1,150 (1,145.625 avg on 8x). 

    At any point along the way, if we get a pullback to our avg, we drop back to 1x.  We got that drop, FINALLY, at the 6pm re-open of trading so back to 1x with a remaining basis of 1,145.625.  /TF moved back to 1,150 so back to 2x there (1,145.625 avg on 2x) and then we got lucky and caught a good drop. 

     If you are not going to scale out – DO NOT SCALE IN!!!  Also, before you sell your first short contract, you should already do the math and KNOW where you will quit.  8x, if it's 8 contracts, at 1,145.625 when /TF is at 1,150 is down $4,375 – BEFORE you risk a single penny on a ladder strategy, you have to be comfortable knowing that, when you are already down $4,375 on 4x, you will be doubling down at 1,150 and risking another $4,000 loss at 1,155 (if there's never a pullback).  

    This strategy doesn't stop you from losing the entire $8,375 – that WILL happen sometimes but, as we saw last week and this week, what also happens is you end up heavily invested as the index you are shorting (or long) moves from 1.25% to 2.5% to 5% and, per the 5% Rule, we keep putting us into a position where any weak retrace SHOULD make us money.  

    This is a strategy only for people who think winning $5,000 is "nice" and losing $10,000 is "annoying" ($1M portfolio players) - otherwise, wait patiently for good lines and use VERY TIGHT STOPS!  

    Also, keep in mind that my underlying preference is to play these strategies as a hedge.  As I said in yesterday's webinar, the LTP popped $10,000 since our Weekend Review and the STP popped over 100%, gaining another $6,000 and the Income Portfolio jumped $59,000 (AAPL) so we NEEDED an aggressively short position to protect our gains and THAT is why we liked the conviction short on /TF – we don't do these things in a vacuum.  


  50. GMCR/DM – A lot less mad than we are with our naked puts that never seem to work.  I like it but you still can get burned on earnings though I'd press that bet unless they have a shockingly different business than I think they do.  Generally, I think they are SODA -1 year or so:

    ORB/Scott – I don't know but I'm fairly certain it would be LYG or BRK.A or Munich Re. – they tend to go for those things.  Lots of non-public specialty shops too.  Believe me, they charge $20M to insure $200M and there are dozens of missions each year and not too many failures.  

    Papermoney/Burr – Good idea!  I think I didn't like something about the way Papermoney played the Futures but maybe it was something I could straighten out with the TOS people.  

    Converted/Options – See above, that's the gist of the strategy.  2.5 hours to the Fed I'm happier with our TZA and SQQQs now on the short side, the Futures are too risky.  However, if we do pop back to 1,150, I think I'll probably be in with 1x again with a DD if the Fed pops us higher but over 1,170 I'd give up (I think).  


  51. Page Formatting/Greg – is it just me is or is there a problem with PSW today? Takes forever to load and then the page looks like it's 1995 again. Seems like we lost a .CSS file.

    On a mac with yosemite, same problem with all browsers.


  52. Papermoney –  You didn't like the delayed quotes.  Just open up a Chat to support and tell them to enable RT for you're papermoney acct.  You might even be able to copy all of your real money layouts to papermoney.  Ask them that too.

    I use papermoney to practice trading futures.  I need practice, I've lost 25K this week.  BUT I'm trying stuff out, and in a "fake" acct is where you want to do that.  I'm practicing using their tools, ordertypes, etc.


  53. By the way, on the Ladder Strategy – it's also not just a TA play.  The reason we kept conviction overnight last night (very dangerous) was because we went up on those QE4 comments, which we thought were BS.  Without knowing that, I would have taken a small loss and quit without risking an overnight move (where Asia and Europe responded bullishly to the same rumor).  

    Formatting/Ivan – I'm not seeing an issue on my IMac.  

    PaperMoney/Burr – Thanks.  I only wish practice made perfect but we can only realistically hope for 60%.  blush


  54. Hi Ivan,  My mac looks fine (both safari and chrome), but I'm using Mavericks. 


  55. Formatting/Greg/Phil – thanks. Weird…


  56. SGMS/Phil – perhaps a play for the Vegas trip? Looks like just completed the right shoulder for an inverted head and should pattern on the weekly chart, but quarterly net income has been cascading negative..  Thoughts on these guys? A different angle on casinos…


  57. If you want to practice a bullish ladder into the Fed at 1,140, it would be 1x long at 1,140, stop at 1,139.50.  1x long at 1,135, stop at 1,134.50, 1x long at 1,130, 2x at 1,120 (avg 1,125, where you go back to 1x on a bounce), 4x at 1,100 (avg 1,112.50, where you go back to 1x on a bounce), 8x at 1,100 (avg 1,106.25 where you go back to 4x on a bounce and then tight stops with another 2x out at 1,112.50 or wherever you get nervous).  

    At 1,106.25 you would be down $5,000 and long 8 with /TF at the 1,000 line.  Setting a stop at 1,097,50 risks another $2,000 loss so that should be limit down on the trade and we'll see how it goes – PAPER MONEY ONLY!!!

    Keep in mind, when I say stop out even at our goals, it doesn't mean you can't ride up past them – just that you should be nervously looking for any excuse to take the money off the table at (OR NEAR) that strike.  

    SGMS/Scott – I don't know about you but I'm leaving on Saturday.  I would like them much better if they made money but we can't play my beloved IGT anymore (bought) and the only other one I know is GTKYY in Italy (because SGMS has already offered to buy BYI).  So, it's likely to be choppy as they are looking to borrow $3Bn to buy BYI (who actually make $100M a year) and, combined, you have a bigger company breaking even with $3Bn in debt.  Figure 6% interest is $180M a year and they'll need to save 10% to be overall attractive – seems reasonable.

    So I'd poke a toe in and sell the 2017 $8 puts for $3.20 for net $4.80 and see how that goes.  If the buy goes through and SGMS holds $10, plenty of time to buy the 2017 $10/17 spread for about $2.50-$3.  


  58. Phil;  Re Ladder.  Is your logic that there will be an bearish overreaction to the news and then a quick recovery?  If so why not play bearish into the news?



  59. phil, any earnings plays for this week?


  60. Ladder/Options – This is a PRE-Fed play where I think there will be a bullish bounce off 1,140.  The goal is to make $200 or so and the fallback is to go conviction long but PAPER TRADING ONLY to go over the effectiveness of this strategy into a major event.  


  61. Earnings/Lunar – I usually use StJ's calculations to look for them but, if there are ones you like, let me know.  

    Notice on that Nest Egg chart above that the average is $301,000 but the Median is $45,000.  That means that the top 50% + the Median/2 = $301,000 (roughly) so the top 50%+Median = $602,000 which means the top 50% have $556,000 vs $45,000 or less at the bottom half.  Now, you know the 50-40% people don't have $556,000 and you know the 40-30% people don't have it either… so imagine how many times richer the top 10% are than everyone else.  


  62. no juice in GPRO options anymore, with earnings tomorrow, has less premium than it did 3 weeks ago without earnings.  Sitting on the sidelines till earnings are over.


  63. Apple Pay competitor CurrentC says it was hacked

    One of Apple’s competitors in the mobile payment space sent out an email Wednesday telling users it has been breached, CNBC confirmed.

    Read more: http://www.cnbc.com/id/102132750

    Sent from the CNBC app. Available on the App Store


  64. As Fed leaves bond market, here’s who will step in

    The end of Federal Reserve’s quantitative easing program and its fight against “too big to fail” banks are on a collision course in the bond market.

    Read more: http://www.cnbc.com/id/102132221

    Sent from the CNBC app. Available on the App Store


  65. As QE3 fades, Wall Street already thinking about QE4

    As the Fed gets set to stop QE, Wall Street is already speculating it could crank up a new bond-buying program to take its place if the economy sours.

    Read more: http://www.cnbc.com/id/102132192

    Sent from the CNBC app. Available on the App Store


  66. ‘Most ignorant’ countries revealed in new poll

    Italy has been named as “most ignorant” country in a new poll which gauged how much citizens know about their country’s social affairs, with the Unites States coming in second.

    Read more: http://www.cnbc.com/id/102132770

    Sent from the CNBC app. Available on the App Store


  67. Ivan… keep me posted. Especially if you get specific errors or error messages. Email them to me at admin(AT)philstockworld(DOT)com.


  68. How Facebook just blew a great quarter

    Even before Facebook investors could start celebrating a strong quarter of earnings growth, the company cooled off the party.

    Read more: http://www.cnbc.com/id/102131186

    Sent from the CNBC app. Available on the App Store


  69. Don’t panic, OPEC secretary general says

    Low prices will help curb competing supplies and require OPEC to pump far more by the end of the decade, OPEC’s secretary general said.

    Read more: http://www.cnbc.com/id/102132424

    Sent from the CNBC app. Available on the App Store


  70. $600,000 for rent? Only the filthy rich can afford

    JFK and Jackie slept there. William Randolph Hearst owned it. Now, this Beverly Hills house could be the most expensive rental in America.

    Read more: http://www.cnbc.com/id/102129373

    Sent from the CNBC app. Available on the App Store


  71. The world’s most unaffordable housing markets

    CNBC counts down the 10 most unaffordable housing markets in the world – and U.S. homebuyers are in for a surprise.

    Read more: http://www.cnbc.com/id/102069526

    Sent from the CNBC app. Available on the App Store


  72. Want to fly like the 1%? A guide to private jets

    Had it with first class? Check out Turney Duff’s guide to flying like the 1% from the “Starbucks card” option to the “I’ll have what Oprah’s having.”

    Read more: http://www.cnbc.com/id/102129008

    Sent from the CNBC app. Available on the App Store


  73. Ho, ho ho! UPS predicts jump in December packages

    UPS is predicting an 11 percent hike in packages in December.

    Read more: http://www.cnbc.com/id/102132766

    Sent from the CNBC app. Available on the App Store


  74. How 25 percent of global GDP could be washed away

    Think it’s tiny island nations that climate change will wash away? Consider this: A UN report indicates a quarter of global GDP is in at-risk nations.

    Read more: http://www.cnbc.com/id/102111398

    Sent from the CNBC app. Available on the App Store


  75. Finally /TF bounces back!  

    GPRO/Rustle – I think they'll have good numbers – their IPO sparked huge interest.

    This was funny:


  76. Phil, what do you like for a options play pre fed?  I'm not in the mood right now to be so hyperaware as you need to be trading futures.  Maybe some TNA calls?



  77. Meanwhile, on 2nd attempt, /TF crossed higher for us so we had a $50 loss on the first try and the 2nd cross over 1,140 now gives us $250 so we put a stop at 1,142 to lock in $200 (net $150) and, at 1,144 we move the stop to 1,143 and keep a 1-point trailing stop up from there (until we cross 1,145, then we go to 1.5 and 2 at 1,150, etc).  


  78. Just for a matter of interest TSLA sold Jan14 to Sep14 573 cars in Germany.

    The month of Sept 53


  79. Fed/Burr – It's kind of a coin flip but, as I said earlier, I like those Jan TZA $13s (now $2.35) because the $11s are $3.70 so up $1.35 (57%) if TZA goes up $2 (13%), which would be a 4.5% drop in the RUT (1,091) so 10:1 leverage to the downside and, if the RUT pops up, then (as I also said earlier), we simply sell calls and roll our long calls lower and longer in anticipation of a rejection at 1,200.  TZA's year low was $13.21 when the RUT was over 1,200 in June – so I like the odds on this one (we're already up 0.30 from our morning roll (14%), not bad for a half-day's work…  

    TSLA/Yodi – Sounds like they are generally on the same track then.  

    Just over 30 mins to the Fed…

    Last statement was:

    Information received since the Federal Open Market Committee met in June indicates that growth in economic activity rebounded in the second quarter. Labor market conditions improved, with the unemployment rate declining further. However,ly suggests that economic activity is expanding at a moderate pace. On balance, labor market conditions improved somewhat further; however, the unemployment rate is little changed anda range of labor market indicators suggests that there remains significant underutilization of labor resources. Household spending appears to be rising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has moved somewhat closer tobeen running below the Committee's longer-run objective. Longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators and inflation moving toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for economic activity and the labor market as nearly balanced and judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year.

    The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in AugustOctober, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $105 billion per month rather than $150 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $150 billion per month rather than $2015 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee's sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

    The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. If incoming information broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in further measured steps at futureend its current program of asset purchases at its next meetings. However, asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.

    To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.

    When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.

    Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Stanley Fischer;Richard W. Fisher; Narayana Kocherlakota; Loretta J. Mester; Jerome H. Powell; and Daniel K. Tarullo. Voting against was Charles I. Plosser whothe action were Richard W. Fisher and Charles I. Plosser. President Fisher believed that the continued strengthening of the real economy, improved outlook for labor utilization and for general price stability, and continued signs of financial market excess, will likely warrant an earlier reduction in monetary accommodation than is suggested by the Committee's stated forward guidance. President Plosser objected to the guidance indicating that it likely will be appropriate to maintain the current target range for the federal funds rate for "a considerable time after the asset purchase program ends," because such language is time dependent and does not reflect the considerable economic progress that has been made toward the Committee's goals.

    [Statement Regarding Purchases of Treasury Securities and Agency Mortgage-Backed Securities](http://www.ny.frb.org/markets/opolicy/operating_policy_140730.html(PDF)](/newsevents/press/monetary/monetary20140917a1.pdf)

    We'll see which 10 words they change this time that will send the markets into a frenzy.  

    Last time, we got this (17th is 4th candle):


  80. "The Media always uses averaged numbers" graphic uses the same technique itself, with predictably misleading results.  "When you take away the superrich, the average nest egg goes from $300k+ to $45,000."  Well, what happens when you take away all the poor that are entitled to government benefits of various kinds? 

    In short — what is the average nest egg of Americans that will in fact have nothing to rely on but their nest egg?    Propaganda is propaganda, no matter from which direction it emanates.  Although it is only common sense to understand that Americans, with a falling standard of living, rising life expectancy and afflicted by a giant consumer advertising establishment designed to "create" needs rather than an economy designed to fulfill what is really needed, are going to run short.


  81. All true, ZZ but who's responsibility is it to fix all that?  Kind of hard for the bottom 80% to invest in solutions, since they are broke and ridiculous for those who are on top and have 10x to 100x more money to object to some of that money being used to either build a better economy for those down below OR stop complaining when the bottom 80% need help to survive.  


  82. No posts on Ending QE?  


  83. Burrben:  Bottomless punchbowl, with stern admonitions against getting drunk.  Anything else would be Russian roulette with 5 chambers loaded.  A guess, of course.


  84. Sorry, bad timing on an emergency that came up.  

    Anyway, just what we expected, QE3 does, in fact end but the Fed will keep rates low for a "considerable" period of time.  Job outlook improved, that's not actually good for the bulls.  

    The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see how the Fed’s views are evolving.

    The following tool compares the latest statement with its immediate predecessor and highlights where policy makers have updated their language. This is the October statement compared with September:

    Information received since the Federal Open Market Committee met inJulySeptember suggests that economic activity is expanding at a moderate pace. On balance, lLabor market conditions improved somewhat further; however, the unemployment rate is little changed and, with solid job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that there remains significant underutilization of labor resources is gradually diminishing. Household spending appears to beisrising moderately and business fixed investment is advancing, while the recovery in the housing sector remains slow. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee's longer-run objective. LInflation has continued to run below the Committee's longer-run objective. Market-based measures of inflation compensation have declined somewhat; survey-based measures of longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators and inflation moving toward levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the outlook for economic activity and the labor market as nearly balanced and. Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year.

    The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. In light of the cumulative progress toward maximum employment and thehas been a substantial improvement in the outlook for the labor market conditions since the inception of theitscurrent asset purchase program. Moreover, the Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in October, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $5 billion per month rather than $10 continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stabillion per month, and will add to its holdings of longer-term Treasury securities at a pace of $10 billion per month rather than $15 billion perty. Accordingly, the Committee decided to conclude its asset purchase program this month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee's sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandateis policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

    The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue itso support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4puerchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. If incomingent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent informlation broadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward it. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readinglonger-run objective, the Committee will end its current program of asset financial developments. The Committee anticipates, based on its current assessment, that it likely will be appropriate to maintain the 0 to 1/4 puerchases at its next meeting. However, asset purchases are not on a preset course, and the Committee's decisions about their paceent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain wiell remain contingent on the Committee's outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchasesanchored. However, if incoming information indicates faster progress toward the Committee's employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. Conversely, if progress proves slower than expected, then increases in the target range are likely to occur later than currently anticipated.

    To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. In determining how long to maintain the current 0 to 1/4 percent target range for the federal funds rate, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators ofWhen the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflationparessures and inflation expectations, and readings on financial developments. The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in thate longer-term inflation expectations remain well anchored run.

    When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer runVoting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Stanley Fischer; Richard W. Fisher; Loretta J. Mester; Charles I. Plosser; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action was Narayana Kocherlakota, who believed that, in light of continued sluggishness in the inflation outlook and the recent slide in market-based measures of longer-term inflation expectations, the Committee should commit to keeping the current target range for the federal funds rate at least until the one-to-two-year ahead inflation outlook has returned to 2 percent and should continue the asset purchase program at its current level.

    Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Stanley Fischer; Narayana Kocherlakota; Loretta J. Mester; Jerome H. Powell; and Daniel K. Tarullo. Voting against the action were Richard W. Fisher and Charles I. Plosser. President Fisher believed that the continued strengthening of the real economy, improved outlook for labor utilization and for general price stability, and continued signs of financial market excess, will likely warrant an earlier reduction in monetary accommodation than is suggested by the Committee's stated forward guidance. President Plosser objected to the guidance indicating that it likely will be appropriate to maintain the current target range for the federal funds rate for "a considerable time after the asset purchase program ends," because such language is time dependent and does not reflect the considerable economic progress that has been made toward the Committee's goals.[Statement Regarding Purchases of Treasury Securities and Agency Mortgage-Backed Securities (270 KB PDF)](/newsevents/press/monetary/monetary20141029a1.pdf)

    [Statement Regarding Purchases of Treasury Securities and Agency Mortgage-Backed Securities](http://www.ny.frb.org/markets/opolicy/operating_policy_140917a.html)

    Now that the music stopped – we'll see if the market has any chairs left to sit on. 


  85. Will the rising interest rates start affecting companies like AGNC, NLY, CIM


  86. Phil,

      Do you still recommend buying the TZA Jan $13 calls now that they are up to $2.40?


  87. Notice we now have doveish dissent from Kocherlakota – that's a new one!  

    Dollar is flying – over 86 again and that's up 0.65% for the day but from down 0.3% call it up 1% so that puts a lot of pressure on the indexes and commodities (gold $1,217, silver $17.20, oil $81.98, copper $3.089, nat gas $3.79 and gasoline $2.176) so cut them a break for jamming down and wait for the Dollar to calm down before drawing any conclusions. 

    To some extent, the Fed is CONFIDENT that we are recovering and that's not a bad thing.  Also, removing QE3 puts the Fed back on the sidelines so I'm now CONFIDENT that they will be able to avert a major sell-off (more than 10%), which we just found out we are well-prepared for in the last dip.  

    These are not bad things and, as you can see, after a very small tantrum, the indexes are stabilizing already. 

    I'm still liking /TF bullish over 1,140.  

    Rates/Burr – I think a bit but the Fed is staying accommodative, just not buying more bonds (but they will roll over the bonds they already have). 


  88. TZA/Kevin – Not if we hold these mild losses on our indexes.  We're not getting the big tantrum we expected but, then again, look at the S&P chart from the last Fed meeting – it took until the next week for things to hit the fan…


  89. TASR earnings tomorrow


  90. 1,143.50 on /TF so stop is 1,143 – nice bonus money.

    TASR/Burr – Hopefully they will show some progress.  Actually, we don't have them in any of our portfolios so hopefully it's a disaster and we can BUYBUYBUY!  

    It's not terribly exciting but you can sell the GLD Jan $114 puts for $2, which is net $110 – super-unlikely and, if it hits, CHEAP GOLD!  


  91. EUR/USD – Whee! Bucky up and my Euro position is now closed. Yay!


  92. Phil/Gild

    I have  a 2016 62.5-72.5 BCS which has reached almost maximum profit. Would you recommend what level to roll to?


  93. Nice job Scott – especially on the non-greedy exit.  

    Thank goodness for the non-greedy exit on /TF too.  See, that's how we make $450 – Lost $50, make $200, make $300 – wash rinse repeat and try to win more than you lose….

    GILD/Zten – It's not a roll, it's just a new trade with your $10 (or whatever).  I would just take the money and, next time GILD is cheap – THEN  I'd go bullish but why take your winnings and go bullish at the top of the channel?  Are you just going to keep making bullish bets until you lose?  Not the best strategy…

    You KNOW what a good entry is – it was $75 (or wherever you started).  Now it's $109, that's 45% more than where you entered.  When you bought the stock, would you have bought it for 45% more the day after you decided to?  Of course not.  What's changed since then (6 months) to make 145% of your entry price a bargain that you can't resist?  You can sell the 2017 $80 puts for $9.70 – that's as much as you made on the spread and the worst case is you own them for net $70.30 – if you think $109 is a can't miss opportunity, then that put sale is a no-brainer, right?  If not – then go find a cheaper stock to trade and put this one back on the Watch list around $90, if it comes back down.  If not, 9,000 other stock to look at…


  94. Phil,

    TASR/Burr – Hopefully they will show some progress.  Actually, we don't have them in any of our portfolios so hopefully it's a disaster and we can BUYBUYBUY!  

    isn't TASR in the LTP?


  95. TASR/Spider – Oh, there it is.  OK, back to hoping they have good earnings (though we only have 10 so don't mind if they do fall, actually). 


  96. I think I'm going to add a little to my IRBT position.

    The Mar15 -30p, +30/35 bull call is mid $1

    With IRBT at 34.70 and spread width being $5 the spread is 94% ITM.

    Worst case you own them at 31.


  97. Burrben

    Check out the IRBT JUN15  30/37 bcs, selling the 30p for .40 credit.  Nice additional return possible for less risk. Worst you own them for $29.60 three months later

    Just a thought!


  98. Cameco cuts production forecast, expects up to 5% fall in 2014 revenue • 3:13 PM

    Carl Surran, SA News Editor

    Cameco (CCJ -3.9%) says it expects full-year revenue to fall up to 5% as it trims its 2014 uranium production forecast to 22.6M-22.8M lbs. from an earlier view of 22.8M-23.3M lbs.

    CCJ says it cut its production outlook to reflect the impact of labor issues at its McArthur River mine and Key Lake mill, and lower than expected production from Cigar Lake mine; McArthur River, the company's biggest mine, was offline for two weeks in August and September due to a lockout.

    CCJ reported Q3 earnings and revenues that fell short of expectations, as its average realized uranium price fell to $45.87/lb. from $50.73 in the year-ago quarter.


  99. rvnelson  - Yeah, I did look at the June's, but I do like to have a month extra to roll out and down in case of two possible bad earnings reports.


  100. Burrben,

    Good point!  I am in Ft Myers (Gulf Harbour) are you anywhere near hereand available for a cup of coffee!


  101. IRBT/Burr – Your robot masters will be proud of you in the not too distant future.  

    Good call, RV, a better combo but also less flexible – depends how much you REALLY want to own them. 

    CCJ – A long way to go for that turnaround.

    Meanwhile, nice showing by the markets in the face of losing QE and the Dollar at 86.03.  Nothing much matters today or tomorrow – we're kind of parked in neutral (STP/LTP, Income Portfolio) through the weekend and probably through election day at this point.  


  102. I'm in New Smyrna.  I don't make it to the gulf very much.


  103. Burrben,

    OK sorry,I thought I remembered you saying you were on Sanibel Island, just minutes from here.  That must have been someone else. Anyone else on this board from Ft Myers area?  It would be nice to make contact and compare notes.  


  104. scottmi:  A short Euro position also kept my nuts out of the fire today with a big plus sign on my board. A near-run thing.  Phil's week-long "cash" admonition kept it real.

    I suppose that trading, as has been said about war, is not about who is right — but who is left.


  105. EUR/zxz - it was a nice pop. have to take it off and see if retrace or continues.. i'll reenter once that shows.. longer term, i'm with you, the dollar is going to be ascendant.  


  106. cough cough…bulldookey.  My only chime in for the day, waiting for the Fed to make is announcement.  Now we go straight UP since 3 pm.  Zoom zoom.  Splat.


  107. Wow, nice pop into the close!  Maybe we'll get green.  

    Who is left/Z – Very true.  

    Splat/Pharm – Maybe after election day.  Congressmen don't like a down market when it's time to get re-elected – puts the voters in a bad mood.  


  108. abx ouch!


  109. ABX is almost in very oversold range, about another point and it's a very good short term buy.


  110. Note /ES still can't retake 1,980 – that's not bullish then, is it?  

    ABX/Jabob – F them!  Gold touched $1,210 that's not very helpful for ABX.  

    /SI down to $17 – wish it wasn't EOD as I still like them long here.  Hard to say what the QE news will do to the Dollar overnight, we topped out at 86.87 at the beginning of this month.


  111. INVN – Got crushed today

    CFO Mark Dentinger on the conference call said InvenSense was selling into products with lower average selling prices, crimping InvenSense’s own prices and margins.

    "While unit volumes exceeded our expectations, a greater than anticipated contribution of this quarter’s revenue came from our largest customers, and these customers generate lower average selling prices. We also sold some of our older product at prices that diluted our margins in Q2. The combinations — the combination of these pricing issues  resulted in a 3 percentage point quarter over quarter decline in gross margin. We expect that the customer mix issue will continue for the rest of the fiscal year and we have factored this expectation into our Q3 guidance."

    Phil – A good example of your point of the dangers in dealing with AAPL & Samsung.


  112. Euro- from the FWIW dept.- had a meeting yesterday with a guy who is handling some of my money. He has traded currencies for about 20 yrs and his "theme" for the coming year is continued dollar strength (conditioned on EU QE & geo/political risk (Putin/Russia). He said EURO trading at par to the $ may be in the cards.


  113. I find gold mysterious.  I thought the Chinese, with a falling currency and tanking economy, would be stuffing it under their beds.  And Draghi's New-QE mode should also have given it a push up.   To the extent I can conclude anything, it is that "the Dollar is the new Gold" and no one wants gold. Keying off of the dollar is the new standard of currency value.

    Why?  Perhaps what appears to be a widespread investor deprecation of gold, and it's value, is perhaps not mysterious at all.  Keynes didn't really think gold was a "barbarous relic" despite this being frequently quoted.  His more nuanced position was "Keynes's famous description of the gold standard as a "barbarous relic" does not quite capture his opinion of the metal, which he thought would be useful as a constitutional monarch but disastrous as a despot." 

    I hypothesize that having gold as a constitutional monarch — not a "tied directly to the value of currencies" relationship, but a reference point which must be heeded by the monetary authorities in the U.S., Japan, China and now Europe — is exactly what these authorities do not want.  

    What they seek — as Phil points out incessantly — is the devaluation of currencies writ large  -- that is, all currencies together, if possible, so that trade arrangements are not disrupted in terms of relative values of goods and services, but at the same time the salaries and wages of the general public in all countries are lowered in real terms.

     This benefits the capital-owning class worldwide, in a period where genuine increases in the value of goods and services are not forthcoming.  And -- and, as long as forex rates don't diverge too visibly -- it will be possible to keep wage earners in every country complacent until a real recovery comes around — or even if it doesn't.  Gold, in that context, is an embarassment, as it provides a concrete reference point for the value of paper money, and that is inconvenient to policy makers worldwide.  Just an idea, mind you.  And, no, I'm neither Utopian nor Marxist, just trying to be one of those who is Left.


  114. Putin push-back on sanctions.  

    October 29, 2014 6:56 pm

    Nato fighter jets intercept Russian military aircraft

    http://www.ft.com/intl/cms/s/0/2dd3bdb6-5f95-11e4-8c27-00144feabdc0.html?siteedition=intl#axzz3HYP5qwLt


  115. From Bloomberg, Oct 29, 2014, 2:40:52 PM


    Traders gather on the floor of the New York Stock Exchange on Oct. 29, 2014. Photographer: Richard Drew/AP Photo

    The knee-jerk reaction in markets to the Federal Reserve policy statement was clear: Hopes that this month’s volatility would inspire the central bank to take a more dovish stance were left unfulfilled.

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

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


  116. From Bloomberg, Oct 29, 2014, 2:18:24 PM

      Oct. 29 (Bloomberg) — Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ, talks about today’s statement from Federal Reserve policy makers that the central bank sees further improvement in the labor market and confirming it will end an asset-purchase program that has added $1.66 trillion to its balance sheet. (Source: Bloomberg)

    The Federal Reserve said it sees further improvement in the labor market while confirming it will end an asset-purchase program that has added $1.66 trillion to its balance sheet.

    To read the entire article, go to http://bloom.bg/1tDskb4

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  117. From Bloomberg, Oct 29, 2014, 10:35:47 AM


    Oct. 29 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan talks about U.S. economy, Fed policy and financial markets. Greenspan speaks with Gillian Tett, U.S. managing editor at the Financial Times, at the Council on Foreign Relations in New York. (Video courtesy of the Council on Foreign Relations. Source: Bloomberg)

    Former Federal Reserve Chairman Alan Greenspan said he doesn’t think the Fed can unwind years of extraordinary stimulus without causing turmoil in financial markets.

    To read the entire article, go to http://bloom.bg/1E1DSIB

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  118. From Bloomberg, Oct 29, 2014, 3:44:04 PM


    They just can’t hide it.

    What if the Democrats win?

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

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  119. From Bloomberg, Oct 29, 2014, 4:52:16 PM


    Source: WHO (Data as of Oct. 17, 2014)

    The number of Ebola cases in Liberia, one of three West African countries in the grip of the worst outbreak on record, is rising more slowly as safer burial practices help limit the spread of the disease.

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

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  120. From Bloomberg, Oct 29, 2014, 4:20:09 PM


    Sam Ramirez of Bonanza Creek, who has a major oil and gas lease on 70 Ranch in Weld County, fills his water truck so he can do dust control on the road in the ranch near Kersey, Colorado, on Oct. 23, 2014. Fracking operations on the ranch are in full swing. Photographer: RJ Sangosti/The Denver Post via Getty Images

    Add the bear market for oil prices to the list of reasons that U.S. inflation is still tame and why some investors see bigger losses in gold.

    To read the entire article, go to http://bloom.bg/1rT4LqF

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  121. From Bloomberg, Oct 29, 2014, 4:15:50 PM

      IBM’s Watson is seen in the immersion room at the company’s headquarters in New York. Photographer: Michael Nagle/Bloomberg

    International Business Machines Corp. (IBM) will help clients use Twitter Inc. (TWTR)’s social networking to make business decisions, a deal that lets both companies harness a surge of consumer data to find new sources of growth.

    To read the entire article, go to http://bloom.bg/1vgy9YU

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


  122. From Bloomberg, Oct 29, 2014, 4:11:11 PM

    Hewlett-Packard Co. (HPQ) unveiled a new 3-D-capable computer and speedier 3-D printer technology as it prepares to spin off its personal-computer and printer businesses into a stand-alone company.

    To read the entire article, go to http://bloom.bg/13bpbFJ

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  123. From Bloomberg, Oct 29, 2014, 5:01:54 PM

    To understand the direction that the Federal Reserve is taking in its new policy statement released today, look at who dissented — and who didn’t.

    To read the entire article, go to http://bloom.bg/1rT7Pmz

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  124. From Bloomberg, Oct 29, 2014, 4:55:28 PM

    Visa Inc. (V), the world’s largest payments network, posted fiscal fourth-quarter profit that beat analysts’ estimates as consumer card spending increased. Shares climbed as much as 4.7 percent in extended trading.

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

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


  125. From Bloomberg, Oct 29, 2014, 5:22:31 PM

    The Baidu Inc. logo hangs in the lobby of the company’s headquarters in Beijing, China. Photographer: Nelson Ching/Bloomberg

    Baidu Inc. (BIDU)’s third-quarter sales missed analyst estimates as the owner of China’s largest Internet search engine pushes deeper into mobile services.

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

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


  126. From Bloomberg, Oct 29, 2014, 2:27:42 PM

      U.S. Attorney General Eric Holder speaks at the sixth annual “Washington Ideas Forum” in Washington on Oct. 29, 2014. Photographer: Manuel Balce Ceneta/AP Photo

    Bankers may yet face federal prosecution for their roles in the 2008 financial crisis, U.S. Attorney General Eric Holder said today.

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

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  127. From Bloomberg, Oct 29, 2014, 5:18:27 PM

    Uber Technologies Inc. is gaining more regulatory approvals to operate in the U.S. and abroad, said David Plouffe, the company’s senior vice president of policy and strategy.

    To read the entire article, go to http://bloom.bg/1tDO6LS

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  128. From Bloomberg, Oct 29, 2014, 5:00:01 PM

    Nikolai Borisov, the proprietor of three Italian restaurants in Moscow, has been forced to take Gorgonzola cheese and Parma ham off his menus after President Vladimir Putin banned some food imports in August.

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

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  129. From Bloomberg, Oct 29, 2014, 12:29:40 PM

      

    Scott Walker has a cold. It’s nine days before the Republican governor of Wisconsin will face voters, and his Milwaukee County twang is flattened out by the stuffiness. He stands on a soapbox, campaign bus at his back, and shows off a Green Bay Packers jersey to a hundred or so conservative Fond du Lac voters. It’s No. 84, the jersey of a retired player named, conveniently, Javon Walker.

    To read the entire article, go to http://www.bloomberg.com/politics/features/2014-10-29/the-real-reason-why-a-scott-walker-loss-would-crush-the-gop

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  130. From Bloomberg, Oct 29, 2014, 11:51:47 AM


    Donald Kohn, a member of the BOE’s Financial Policy Committee, told lawmakers last year that the current Basel minimum is “not enough,” while a U.K. parliament panel recommended a 4 percent leverage ratio. Photographer: Andrew Harrer/Bloomberg

    U.K. banks are bracing themselves for tougher debt-financing limits than their European competitors as executives warn that higher leverage ratios will lead to more expensive loans for homeowners.

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

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


  131. From Bloomberg, Oct 29, 2014, 12:01:00 AM


    A worker pulls the aircraft refueling equipment below a plane at Denver International Airport in Denver, Colorado, U.S. Photographer: Matthew Staver/Bloomberg

    Air travelers filling planes in the U.S. at a record pace are missing out on the fuel savings that motorists are finding at the pump.

    To read the entire article, go to http://bloom.bg/1u5GJz4

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


  132. I have been reading Denise Schull's "Market Mind Games" and wanted to share this passage, relating to Markowitz's Portfolio Selection.

    ==== Schull: Market Mind Games ====

    We Ignored Markowitz's Step One!
       When Markowitz shared the Nobel Prize in 1990, he explained that while interested in philosophy initially, he subsequently became intrigued with "the economics of uncertainty." He admitted to always having given thought to applying mathematical techniques to problems of uncertainty and when it came "time to choose a topic for my dissertation; a chance conversation suggested the possibility of applying mathematical methods to the stock market."
       I would like to know his thoughts on Knight, who we can imagine may have thought he shouldn't waste his time or talent on the immeasurable; but as it turns out, his application of math always existed in a context that absolutely gave nod to Knightian uncertainty.
       It may come as a great surprise to many of you, but Markowitz's first paragraph states:
    The process of selecting a portfolio may be divided into two stages. The first stage starts with observation and experience and ends with beliefs about the futures performances of available securities. The second stage starts with the relevant beliefs about future portfolios, the paper is concerned with the second stage.

    What? This paper starts with the second stage? Did he really say that?
       So what happened to the first? And how can the whole world of finance, investing, and trading have skipped step one? Honestly, I don't know how they did it. I don't know how market academicians and real-world Wall Streeters ignored this for six decades; but I can promise you, in our minds, in what makes our decisions, lay our all-important beliefs. Those beliefs architect and color what we see. Markowitz wanted us to keep that in the forefront of our minds. People want markets to be fully quantifiable. They want that certainty. Some are rumored to believe there is natural law-type truth somewhere in the patterns. But could skipping over the foundation-analyzing the beliefs that build the numbers —be the turn where we went (and still go) wrong? Markowitz himself couldn't really emphasize this point enough. Later in the paper he said it again: "This paper does not consider the difficult question of how investors do (or should) form their probability beliefs."

    ==== end excerpt ====


  133. Scottmi – I attended a UCLA Anderson event featuring Harry Markowitz last year.  I remember he said that investors who'd who hadn't stayed invested in large caps through the 08-09 lows were "shmucks".  There was some noticeable cringing in the audience.


  134. These DMA that were resistance until yesterday seem to be providing support now! We need to hold!


  135. Schmucks/rdn – no kidding. I know someone who panicked and sold out of her GE stock at $6.. She had a very sizeable position for 40+ years. This is one of the unspoken crimes of the "Lehman event".. The wholesale gutting of so many 'retail' account holders. I don't know what kind of broker she had, but he sure didn't do her a favor by not talking her out of it. Yikes, I better not get started on that rant.
    (How do you post the really @#$% angry face with steam shooting out the ears?)!!


  136. BOJ is next scheduled monetary announcement, late Thursday..


  137. From Bloomberg, Oct 30, 2014, 3:19:51 AM

      A worker handles a computer controlled cutting machine to build a piece of furniture at Casa Kids’ Red Hook facility in the Brooklyn borough of New York, U.S. Fed officials said that “solid job gains and a lower unemployment rate” since their last meeting in September allowed them to end the quantitative-easing program by the end of this month. Photographer: Craig Warga/Bloomberg

    The dollar climbed to a four-week high after the Federal Reserve judged the U.S. economy strong enough to end its asset-purchase program. Metals and oil fell while European equity-index futures increased.

    To read the entire article, go to http://bloom.bg/1via7g1

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


  138. From Bloomberg, Oct 30, 2014, 12:00:00 AM


    Job seekers wait in line to enter the Eagle Ford Shale Job Fair at the American Bank Center in Corpus Christi, Texas, U.S., on Oct. 29, 2014. Non-farm payroll gains have averaged 227,000 this year, heading for the best showing since 1999. Photographer: Eddie Seal/Bloomberg

    Federal Reserve officials dismissed recent turmoil in global financial markets, and focused instead on “solid” employment gains that will keep them on a path toward an interest-rate increase next year.

    To read the entire article, go to http://bloom.bg/1tE2iED

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  139. From Bloomberg, Oct 29, 2014, 9:10:40 PM

      Aug. 6 (Bloomberg) — Yasuhisa Shiozaki, deputy policy chief of Japan’s ruling Liberal Democratic Party, talked yesterday about the Government Pension Investment Fund in a keynote speech at Bloomberg’s seminar “GPIF Reform and the Future of Japan’s Economy.” Takatoshi Ito, professor at the National Graduate Institute for Policy Studies who led a panel that advised the government on overhauling the GPIF, Shuhei Abe, chief executive officer of Sparx Group Co., a Japanese asset manager, and Yasuyuki Konuma, executive officer for the new listings department at Japan Exchange Group Inc.’s Tokyo Stock Exchange, participated in a panel discussion. (Excerpt. Source: Bloomberg)

    Japan’s $1.2 trillion pension fund will double its allocation target for local stocks, according to analysts, who’ve ratcheted up expectations for equity buying while sticking with projections for a reduction in bonds.

    To read the entire article, go to http://bloom.bg/1tE3oQX

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  140. From Bloomberg, Oct 29, 2014, 10:36:17 PM

    Oct. 30 (Bloomberg) — Vincent Mo, chairman and chief executive officer of SouFun Holdings Ltd., China’s biggest real-estate information website, talks about the country’s property market and the company’s business outlook. He spoke yesterday in Singapore with Bloomberg Television’s Haslinda Amin. (Source: Bloomberg)

    China property prices may decline as much as 10 percent this year and the slump may extend into 2015, according to SouFun Holdings Ltd.

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

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


  141. From Bloomberg, Oct 29, 2014, 9:54:08 PM


    Oct. 27 (Bloomberg) — Jim Antos, a Hong Kong-based analyst at Mizuho Securities Asia Ltd., talks about China’s banks. China Construction Bank Corp., the first of the nation’s big lenders to post third-quarter earnings, reported falling fee income, rising bad loans and the weakest profit growth since 2009. Antos speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)

    Industrial & Commercial Bank of China Ltd., the world’s largest lender by assets, reported its biggest jump in bad loans since at least 2006 as the property market slumped and the economy cooled.

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

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


  142. From Bloomberg, Oct 29, 2014, 4:30:37 PM

      Still muddling through.

    The Federal Reserve delivered today what I and many others expected, in both actions and words. Rather than sending a well-telegraphed signal for going forward, it is keeping its options open in an unusually fluid economic, political and global environment.

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

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


  143. From Bloomberg, Oct 30, 2014, 12:20:23 AM

      Japan Prime Minister Shinzo Abe said on Oct. 7 yen depreciation is hurting small companies and households, almost two years after triggering the currency’s slide with a call for unlimited monetary easing to end deflation. Photographer: Tomohiro Ohsumi/Bloomberg

    Bank of Japan Governor Haruhiko Kuroda says yen depreciation is good for Japan. For many companies, it’s good that it has stopped.

    To read the entire article, go to http://bloom.bg/1p4O8g4

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


  144. From Bloomberg, Oct 29, 2014, 9:05:04 PM

      Oct. 30 (Bloomberg) — Vincent Chow, group general manager of Chow Sang Sang Holdings International Ltd., a Hong Kong-based jewelry chain, talks about the impact of the pro-democracy demonstrations taking place in the city on business. He speaks with Yvonne Man on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    After tear gas and talking failed to dislodge all of Hong Kong’s pro-democracy protesters in the first four weeks, the government has entered the second month of the demonstrations with Plan C: a war of attrition.

    To read the entire article, go to http://bloom.bg/1vixoP4

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


  145. From Bloomberg, Oct 29, 2014, 7:21:54 PM


    Alexandre Tombini, president of the central bank of Brazil. Photographer: Andrew Harrer/Bloomberg

    Brazil unexpectedly raised its key rate for the first time since April, after President Dilma Rousseff said she would vigorously fight inflation (BZPIIPCY) in her second term.

    To read the entire article, go to http://bloom.bg/1tDUTW2

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


  146. From Bloomberg, Oct 29, 2014, 6:27:01 PM


    Oct. 29 (Bloomberg) — U.S. State Department spokeswoman Jen Psaki talks about an article in The Atlantic magazine citing an unidentified Obama administration official criticizing Israeli Prime Minister Benjamin Netanyahu for not reaching an agreement with the Palestinians of Sunni Arab states. (This report is an excerpt. Source: Bloomberg)

    The White House defended its commitment to Israel as it sought to tamp down controversy over an anonymous comment attributed to a top Obama administration official denigrating Israeli Prime Minister Benjamin Netanyahu.

    To read the entire article, go to http://bloom.bg/1rSlRF1

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


  147. From Bloomberg, Oct 30, 2014, 12:46:01 AM


    The San Francisco Giants celebrate after defeating the Kansas City Royals to win Game Seven of the 2014 World Series by a score of 3-2 at Kauffman Stadium in Kansas City, Missouri, on Oct. 29, 2014. Photographer: Jamie Squire/Getty Images

    Madison Bumgarner pitched the San Francisco Giants to their third World Series title in five years, leading them to a 3-2 road victory last night against the Kansas City Royals.

    To read the entire article, go to http://bloom.bg/1zLU7uN

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


  148. From Bloomberg, Oct 30, 2014, 3:32:47 AM

    Iran’s revenue from crude sales, the OPEC member’s biggest export, dropped 30 percent because of the recent decline in global oil prices, according to President Hassan Rouhani.

    To read the entire article, go to http://bloom.bg/1tDbZ6g

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


  149. From Bloomberg, Oct 29, 2014, 7:00:29 PM

    Winning bidders at the Treasury’s auction of $35 billion in five-year notes were looking at losses an hour later after the Federal Reserve said it sees further improvement in the labor market.

    To read the entire article, go to http://bloom.bg/1tDs8ZB

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


  150. From Bloomberg, Oct 30, 2014, 2:42:25 AM

    Deutsche Lufthansa AG (LHA), Europe’s second-largest airline, cut its forecast for operating profit next year as weaker economic growth weighs on ticket prices.

    To read the entire article, go to http://bloom.bg/1E4v8S9

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


  151. From Bloomberg, Oct 30, 2014, 3:17:28 AM

    Royal Dutch Shell Plc (RDSA) said third-quarter profit rose, beating estimates, as earnings from refining and natural gas offset the impact of lower crude prices at Europe’s biggest oil company.

    To read the entire article, go to http://bloom.bg/1E4z45n

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


  152. From Bloomberg, Oct 29, 2014, 7:02:53 PM


    BELMAR, NJ – OCTOBER 29: A man shots slogans to New Jersey Governor Chris Christie while speaks to the audience during a public event in Belmar, two years after Hurricane Sandy on October 29, 2014 in Belmar, New Jersey. Hurricane Sandy was recorded as the deadliest and most destructive hurricane of the 2012 Atlantic hurricane season. It caused over $68 billion in damages, and hundreds of people were killed along the path of the storm in seven countries. Today marks when its storm surge hit New York City and the surrounding area which flooded streets, tunnels and subway lines and cutting power in and around the city. (Photo by Kena Betancur/Getty Images)

    Chris Christie may have met his match. The New Jersey governor went off on a persistent heckler Wednesday at an event commemorating the second anniversary of Hurricane Sandy in Belmar, New Jersey. His frustration mounting, Christie yelled at the man to “sit down and shut up,” a line that received applause from many in the crowd. Moments later, Christie’s security detail succeeded in confiscating the man’s television-camera-obscuring protest sign that read “Get Sandy Families Back in Their Home / Finish the Job.”

    To read the entire article, go to http://www.bloomberg.com/politics/articles/2014-10-29/christie-heckler-does-not-want-to-sit-down-and-shut-up

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


  153. From Bloomberg, Oct 29, 2014, 11:18:32 PM

      Residential buildings stand illuminated at night along the Haidian River in the Haidian Island district of Haikou, Hainan Province, China. Property prices may decline as much as 10 percent this year and the slump may extend into 2015, according to SouFun Holdings Ltd. Photographer: Brent Lewin/Bloomberg

    With China headed for its slowest full-year expansion in a generation, the government has listed housing as one of the six consumption areas to be encouraged after years of trying to cool the property industry.

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

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


  154. From Bloomberg, Oct 30, 2014, 3:21:14 AM

    U.K. house price growth slowed for a second month in October, adding to evidence that the market for residential property is cooling.

    To read the entire article, go to http://bloom.bg/1E4zpoA

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


  155. From Bloomberg, Oct 30, 2014, 12:30:30 AM

    The push to end a four-decade limit on exporting U.S. oil may get a boost from a government study set for release as soon as today that will explain the relationship between crude oil and domestic gasoline prices.

    To read the entire article, go to http://bloom.bg/1vhV5XK

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


  156. From Bloomberg, Oct 29, 2014, 8:30:00 PM

    International Monetary Fund Managing Director Christine Lagarde reiterated her call for a “new multilateralism” to overcome a mediocre global recovery and solve problems such as climate change, gender bias and income inequality.

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

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


  157. From Bloomberg, Oct 30, 2014, 12:01:04 AM


    There were about 2 workers vying for every job opening in August

    Unemployed (USURTOT) and pregnant with her second child in late 2013, Shantel Burris knew she needed to make a change. In a year, the 24-year-old went from jobless benefits to earning double the New York minimum wage.

    To read the entire article, go to http://bloom.bg/1zM2Vk6

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


  158. From Bloomberg, Oct 29, 2014, 8:01:00 PM

    Bank of England Chief Economist Andrew Haldane said international rules have lagged developments in the financial system, exposing economies to risk and fragility.

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

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


  159. From Bloomberg, Oct 30, 2014, 2:03:26 AM

    Europe may struggle to keep the lights on as temperatures drop as the switch to greener sources of energy complicates the balance between supply and demand in the region. The inconvenience of brownouts, though, should have the welcome effect of forcing governments to address their attitudes toward both nuclear power and fracking for shale gas.

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

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


  160. SPY  5  MINUTEGood morning!  

    Interesting action as the Dollar is still ripping higher, now 86.50 but the Futures are up about 0.3% anyway. 

    Not so much commodities, they are getting whacked with oil back to $81.50 (from $82.88 high), gold $1,203, silver $16.77, copper $3.075, nat gas $3.79 and gasoline $2.17.

    Considering the BIG picture, what's going on at the moment is the strong Dollar is goosing the global markets, with the Nikkei at 15,775 (up 100) and Shanghai up 0.76%, India up 0.77% but Hang Seng down 0.5% as they can't get rid of those protesters (and housing prices are falling).  They Yen is testing 110 (109.25), so of course the Nikkei is happy (lowers their export prices).  

     

    Europe is totally thrilled that we're done easing as it makes their easing so much more effective.  The Euro dove to $1.256, down from $1.40 in May, so down 10% in 6 months to "stimulate" their economy. Think about that, their currency is down 10% yet they are still in deflation – that means people aren't buying ANYTHING.  

    /ES just got rejected at 1,180 and that's still a bearish signal and we can short them below the line or be more aggressive shorting /TF at 1,145 — buy you know how scary that can be.  If /ES goes over 1,180 – GET OUT OF THE SHORT POSITION!  If /TF goes over 1,145 – GET OUT OF THE SHORT POSITION.

    RUT WEEKLY

    SPX WEEKLY

     Simple plan, right?  For reference, we missed /YM 16,995 because under 17,000 is also a great short line (now 16,965) and /NQ is 4,082 and below 4,080 confirms a shorting premise and, of course, watch the Dollar, which is likely to be rejected at 86.50 and a lower Dollar makes shorting more dangerous so quick profit-taking is also a must.  

    Fed Closes Chapter on Easy MoneyBenefit of Bond-Buying Experiment Remains Unclear as Central Bank’s Focus Returns to Interest Rates.

    Santelli Slams The Fed As "Weak-Data"-Dependent; Lacy Hunt Warns "We're Not On The Right Path"

    Globalization = Permanent Instability

    Goldman Cuts 2015, 2016 EPS Forecasts On "Diminished Global GDP Growth" Just As Fed Surprises With Hawkish Outlook

    • China Opens Door on Credit Cards

      China is taking a step toward easing its grip on credit cards, potentially allowing foreign companies like Visa, MasterCard and other electronic payment processors to have a greater presence there.

    U.S. prosecutors reopen probes against several big banks -NYTU.S. prosecutors are reopening investigations into big banks on suspicion they may have violated agreements under which the institutions settled prior cases against them, The New York Times reported, citing lawyers briefed with the matter. With the settlements, the banks avoided criminal prosecution and instead paid fines and implemented reforms. Among the banks named in the report were Standard Chartered Plc and Bank of Tokyo-Mitsubishi UFJ.

    Visa(V) sees mobile payment as big growth driverVisa Inc reported a better-than-expected adjusted quarterly profit and said the mobile payment industry would be "a great driver" for business, sending its shares up nearly 4 percent in extended trading. ?

    Mysterious Chinese Buyer Of Record Crude Oil Cargoes Revealed

    Is It About To Get Worse? Lakeland Hazmat Suit Orders Go Exponential, Surpass 1 Million

    NASA explosion fuels concerns about Russian engines, oversightThe explosion of an Orbital Science Corp supply rocket over Virginia could accelerate U.S. efforts to replace aging Russian space technology with a pricey homegrown rocket engine. Even before the crash on Tuesday, Orbital had planned to switch to another engine for future launches, given the age of Soviet-era motors now in use as well as uncertainty about future supplies.

    China's Baidu(BIDU) posts Q3 revenue below analysts' targets. Baidu Inc posted a less-than-expected 52 percent surge in third-quarter revenue, even as mobile traffic for China's dominant Internet search engine continued to grow.

    Akamai(AKAM) expects strong US dollar to weigh on 4th-qtr revenueAkamai Technologies Inc, whose service helps speed up delivery of Web content, said a stronger U.S. dollar would hurt revenue growth in the current quarter, sending its shares down as much as 5 percent in after-market trade. ?

    Samsung Profit Sinks 49% On Slowing Mobile

    There Are 48 Billion Reasons Why Retailers Are Going To War With Apple(AAPL)

    Democrats Crash-Land the PlanetRepublicans are hammering Democrats with the wrecked world their priorities created. Want to know how to really scare a Democratic candidate for Congress on Halloween? Forget the Sarah Palin mask. Don’t say “Boo!” Just slip up behind them and whisper, “national security.” They’ll jump from here into next week’s election.

    20-Year CBS News Veteran Details Massive Censorship And Propaganda In Mainstream Media

    NYMO  DAILY


  161. Nice little drop already and the stop on /TF is now 1,142.50 but hopefully we'll see 1,140 again for a quick $500 per contract gain.  Others are 16,944 (/YM is the fresh horse below 16,950), 1,975 and 4,075 (another bearish line to watch).  


  162. INVN/Albo – Absolutely, it's never good to let one client dominate your revenues (see GTAT) – even GLW has trouble getting their margins up, despite there no longer being a competitor.  

    Euro/Pstas – Par?  Another 25% drop is not likely to happen outside of a severe economic downturn.  Maybe over 3-5 years but not very soon, I would think. 

    Gold/ZZ – I think gold is being manipulated down by the Central Banks (one of the reason Schiff is foaming at the mouth) in order to protect their phony-baloney fiat currencies.  As you say, it's a potential embarrassment. If gold reflected the actual inverse to the money supply it usually does – it would be well over $3,000 by now.  Of course, the poor economy lowers demand for ornamental gold (1/2 of consumption) but I imagine bar hoarding is way up.

    We had a major dump out of the ETFs as prices fell (something I predicted when gold was $1,800) that exaggerated the drop and, of course, you are looking at gold in Dollars – gold in Yen is up more than 10% since last summer and gold in Euros is up 10% since December.  So, if you are an Asian or European buyer of gold, you are patting yourself on the back for your brilliant investment while your US counterparts are SELLSELLSELLing before it goes any lower.  Strange, isn't it?  

    1,140 on /TF!  If this isn't bouncy – look out below.


  163. Oops, forgot to mention, 1,140 is lining up with 16,900, 1,970 and 4,065 and they are all looking weak!  /YM still the laggard but very tight stops now that we've gotten a good drop.  


  164. Putin/ZZ – Market all-time highs and NATO tinderbox is not a good mix.  

    Market Mind Games/Scott – Good book.  Of course that's my main philosophy – get the Fundamentals right and the rest will take care of itself and the main thing I got out of Schull is to keep the emotions out of investing (very hard for most people).  

    Schmucks/Rdn – That's what I was pounding the table on in March 2009.  It was so hard on this site to keep people from freaking out and try to convince them that it was time to buy, not sell.  

    Actually, that's a very important point I want to make right now – as we may have another crash.  It's not about HOLDING your blue-chips (or whatever) on the way down – it's about using your CASH!!! to make buying decisions at the bottom.  There are really two different issues here – both are true and that makes it confusing:

    1) If the market is collapsing and you were stupidly over-invested and you didn't stop any losses and now you have a portfolio that's down 50% – DON'T SELL.  Even if we go down 75%, the chances are we'll come back to 50% so, literally, things are not likely to get worse.  

    On that basis, we always keep a bearish STP to protect our Long-Term Portfolios (LTP or Income, depending on your risk tolerance).  That way, even if our long portfolios take a 50% hit (-$250,000), our STP should gain $100,000 and that leaves us with $450,000 of our original $600,000 BUT the market is down 50% so our $450,000 can now buy what were $900,000 worth of stocks.  

    2) Which brings us to 2, which is – BUYBUYBUY at the bottoms.  Having an STP that we can cash half out on a 50% drop (that will then make another $100,000+ on another 50% drop) automatically means we will have $100,000 cash (20% of our original LTP) to spend when there's a 50% off sale – even if we are "stuck" in our down 50% longs because we were way over-invested.  

    So, mechanically (and it could be $50,000 and $10,000 – doesn't have to be $500/100) if the market drops 50% and our longs are down to $250,000 then our STP should be at least $200K (it's $200K now and the market is up!) and we drop $100,000 into the LTP and keep a bearish STP of $100K and now, at a 50% discount, we have $350,000 worth of longs and a $100,000 flexible STP.  

    If the market pops back up, we'll have $700,000 in longs (started with $600K total) and probably a $50,000 STP.  THAT is the function of the LTP/STP pairings.  You don't see it very much in normal +/-10% market moves but, when we have a big crash – that's when you see the value of a system like this.  

    Final point is, looking at that review post from 2009, we deployed $13,000 on 13 option plays ($1,000 each) at our bottom call and turned it into $61,000 (up 469%) in 6 months.  That's a side benefit of the LTP/STP strategy, you have CASH!!! to use at the bottom that's completely free and you can make those aggressive plays WITHOUT having to cash out your beaten-down long positions.  

    Big Chart – How ridiculous.  All gone now with /TF hitting 1,135 (wheeeee!) and we're lined up at 16,875, 1,965 and 4,055.  Europe down 1% as well.  

    Schmucks/Scott – That's another key component of our system, we make enough money that we can always be 50% or more in cash EXCEPT when the market black swans lower (happens a lot more often than people realize).


  165. Good time to take the money and run on those Future shorts – that was a great run, now we can just see what sticks. 



  166. Next wave down has started.  Same lines can be used for more bearish bets.  


  167. /TF 1,132.50 I'm willing to go long now and play for a bounce – tight stops!   16,850 (/YM) also good to play (and watch), /ES 1,960 must hold and /NQ 4,050 needs to confirm. 


  168. ………………strong going down feeling…..gut feeling?


  169. 1,960 should be good support as should 16,850 and 4,050 so worth playing for a bounce.  This is the kind of move you want to wait for – you have 3 solid support lines so you go long and, if ANY of them fail – you stop out.  /TF is already up $120 per contract from that call and now we can stop at $100 because we're just playing for the bounce.


  170. Good morning Phil, I hope you've been doing well.

    I've been scarce recently, because overseas for a lot of October, and also because I had gone to basically 100% cash at end of September.  I've got a few shorts on, which aren't performing (yet, anyway :) ), but what I wanted to ask is, in terms of the Fed, it's good that they have confidence in the economy, and I'm glad they ended QE (to the extent that the people of Earth may care a great deal about my opinion).  But now that they have taken these steps, is it possible to justify current valuations in an environment not being inflated by the Fed? 

    I mean, if the ball bearing manufacturer is trading at 25 times forward earnings, and in his earnings report he shows a 2% increase in ball bearings sales and a $0.10 increase in earnings per share, is the market going to reward him with a PE of 28 or 30?  If he actually reports 3% and 0.15, does it really make all that much difference?  Or will the market decide that maybe 18 or 20 is more appropriate?  And if so, and if that happens often enough, is there enough leverage in the system to where that can lead to a bit of a panic?

    So that's why I'm in cash and short recently, as Bob Mould once said, "everything's so expensive !"  But the market has been making me look sort of dumb for the last couple of weeks.  Do you think the markets are fairly valued currently, or if not, around where would be fair value?  If possible to be bullish here, are there sectors you are focusing on?  I notice a lot of cyclicals / materials, CLF, ABX, etc., but jeez, those have been weak recently, I'm wondering if, with China rebalancing, commodities may be weak for some time to come.

    At any rate, let me know your thoughts when possible; whatever the case, hoping for better conditions coming up, looking forward to getting back in the game..

    Thanks


  171. Pwright:   Uff, luckly  s Phil who will answer you, I have the same  idea about the P/E levels, perhaps playing some sectors assuming they will restore historic  P/E levels is a good LT strategy.

    Enjoy tour  "out of line"  travel.


  172. Please copy Qs to new post, good topic for discussion today, thanks!