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WTF Friday – Japan’s 80 TRILLION Yen Stimulus Dresses the Windows

She knows how hard her heart grows under the nuclear shadows

She can't just escape the feeling repeating in her head

When after all the urges some kind of truth emerges

We felt the deadly surges discovering Japan – Graham Parker 

Happy Halloween!

The shorts are certainly getting a scare this morning as the BOJ hands out another $124Bn (yes, we did the relative math in this morning's Alert to our Members) and that was more than enough to pop the Nikkei 5% in 90 minutes, with the /NKD Futures now testing 16,850 – almost catching up to the Dow for the 3rd time in 2 years.  

Unfortunately, each time the Nikkei has matched up with the Dow's gains, it's marked and overbought top and led to a sell-off so we were forced to officially reverse our long call on Russell Futures (/TF) from yesterday morning's post and flip short at 1,169 (with tight stops over 1,170).  That's OK though because a move from 1,132.50 to 1,169 on /TF is a profit of $3,650 per contract – not bad for a day's work, right?  

See, I told you we could pay for your trip to our Las Vegas Live Seminar next week with a Futures trade!  

Not that we advocate holding Futures positions overnight – it could just have easily gone the other way.  That's what Wednesday's TNA spread was for – the longer-term long position on the Russell, which will pop TNA well over our $80 goal this morning – that trade has a 316% profit potential in less than a month! 

Notice how we're popping out of the channel.  It would be one thing if we were doing it based on US earnings but doing on Japanese stimulus, coming at the last day of the month just rubs me the wrong way and we'll be beefing up our shorts over the weekend to prepare for the post-election sell-off next week.  

NYMO  DAILYMeanwhile, back in the real World's economy, German Retail Sales were TERRIBLE just now plunging 3.2% in September, the worst monthly drop since May of 2007.  THAT's what's REAL in the economy – it's just being masked by endless stimulus:

This all follows the grim news earlier in October that the country's industrial sector seems to be grinding to a halt. There's no doubt that this data point is going in the pile suggesting that Germany might be about to fall into recession.

The plunge in German retail sales, the biggest drop since May 2007, indicates that the German economy was very close to a technical recession in Q2 and Q3.Retail sales were on track for a decent quarterly expansion before September data, but today’s data are bad enough to indicate that retail sales fell back to a modest contraction in Q3.

The Analyst Who Predicted Germany's Horrible Industrial Numbers Has Another Terrifying Forecast

Jakobsen has not changed his stance, telling Business Insider about his extremely bleak outlook for the currency union: "The end game is that Germany is very likely to be in recession — that will bring the rest of the eurozone into recession. I think that will be in the first quarter of next year."

So, as crazy as it may seem on this super-bullish run, we're going to be looking for shorting opportunities into the weekend in our Live Member Chat room today – seeking to lock in the crazy gains we've made in our long-term portfolios from our "V" recovery:

Have a great weekend, 

- Phil


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  1. CNBC this morning they were interviewing the guy who owns the Milwaukee Bucks, MArc Lasry, and the discussion was about how he has made money had over fist with the all the free money that has come his way. I think he is also in the business of investing in distressed stuff and they asked him how the average investor can join the party and make money like he has. He basically said,"they can't, not without having the huge amount of capital he and others like him have". They then just yukked it up as though they weren't insulting most of America. It was a weird moment, I thought. 

  2. Come on Craigs – get with the plan – you've gotta learn to scrape them off!  

  3. Oops, Personal Income up 0.2, Personal Spending down 0.2 – good for consumers but not so much for the companies that are employing them and trying to sell them stuff.  

  4. Sure do hope all you guys who were short GPRO got out before now. Wow is all I can say about that one. Up 16.5% this morning! I guess they had earnings that were even better than expected, but still is this really a sustainable product? I can't believe this is that popular and something that will continue being so popular. I must be getting old, but my 20 something kids don't have or want them either, and they have always been my leading indicator for products that are the latest must have. This one isn't even on their radar. I can't figure this out and am probably missing something. Wish I had some shares to sell today though.

  5. Good morning, by the way.

    Bill Murray is in two of my all-time favorite movies; Scrooged and Groundhog Day.  Then there's Caddyshack and Ghostbusters, Meatballs, Stripes and I really liked Lost in Translation and Where the Buffalo Roam too.  

  6. Phil- Love Bill Murray and Scrooged is underrated, but I still think the greatest version of A Christmas Carol is the Mr. Magoo version. Jim Backus was a genius and I wonder if Thurston Howell would be a billionaire today instead of just a lowly millionaire.

  7. Phil,   DXD  it seems like a good naked call,?  If not what do you think?

  8. Phil- I am a huge Bill Murray fan and I have heard that St. Vincent is great and he is brilliant in it! I think my all time favorite character of  his is either the Caddyshack assistant groundskeeper who invented a hybrid kentucky bluegrass/sensimilia that you can play nine holes on in the morning and get stoned to the bejeezus at  night with or Nick Rails from the Amtrak lounge. Brilliant stuff.

  9. Anyone feel good about going long oil under $80 today? Or is this the day it heads to $75? I made a bunch playing it in channels yesterday and I think it should bounce today with the market going up up up, but who knows anymore?! BTW, Chevron misses revenue by 4 billion, but still beats EPS by an amazing .40/share. I guess they're profit margin is just fine.

  10. /CL- Wow, $79.80 now! Why am I still paying more than $3 for gas. Actually $3.15 yesterday.

  11. GPRO/Craigs – Actually, those are the perfect kinds of products these days, things that appeal to top 10%'ers, who are very flush with cash.  GPRO doesn't have to sell many cameras to have a huge impact on sales and, as a bonus, the same people who buy their stuff buy their stock – like TSLA, it's a self-feeding cycle.  

    DXD/Advill – Didn't we try that yesterday?  Wasn't so good but yes, I still like it.  

    Murray/Craigs – So many good cameos by him over the years.  

    Oil/Craigs – Consumer spending argues for lower, especially coupled with Germany numbers.  You're right, the crack spread on gas is crazy now, refiners are raking it in for now.  

  12. hi phil

    do you think the dollar will get rejected at 87 or keep going


  13. Good morning, by the way.  

    Dollar/Tommy – I think it keeps going for today because the BOJ is just trashing the Yen, really pulling out all the stops and Europe won't take that lying down so there's going to be rumors of QE in Europe too and the Fed has nothing to say over the weekend so the reality of the Yen and the rumors of the Euro should keep the Dollar super-strong.  

    Silver already failed $16 and gasoline failed $2.14 ($2.12 now), this is the total opposite of a strong economy BUT, keep in mind that our market is popping 4% (so far) this week on just $8.8Bn of inflows – imagine what $124Bn pumped into the market by Japan will do!  

    Sector                    Flow Chg  % Assets  Assets     Count
                               ($Bil)              ($Bil)     
     All Equity Funds          8.774     0.22      4,160.164  11,019
     Domestic Equities         8.032     0.27      3,098.672  8,014
     Non-Domestic Equities     0.742     0.07      1,061.491  3,005
     All Taxable Bond Funds    6.409     0.34      1,873.571  5,625
     All Money Market Funds    1.775     0.08      2,172.130  1,294
     All Municipal Bond Funds  0.037     0.01      313.910    1,429

    Case in point – /TF at 1,173 with 30 mins to open.  17,290, 2,010.75 and 4,152 at the moment. 

  14. Russian Ruble not too strong either:

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  15. Good Morning!

  16. I don't know if this is all coordinated or not, but it seems to me that any stimulus works for the US regardless of where it originates.  Some of that money will invariably park itself in our markets. So now our FED can pretend to show discipline while another FED continues to provide more fuel to the fire. And what a great way to temper the maniac in Russia. But, how far can they squeeze Putin before he explodes? At some point he has to either make nice, or engineer some volatility. In the meantime, it's going to be a hard winter in Russia.

    I do like our April USO play.  We may have to adjust it a bit, but the timing looks pretty good.

  17. Thank goodness there's no inflation:

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    Who does goosing the markets benefit most?  Beuller???  

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  18. Bill Murray/Phil

    St Vincent is one of his best movies.  You'll love it.  As for GPRO, small float is why I stayed on the sidelines, I can see this ripping to the 90's again, then it's short time since their valuation is crazy even at 80.

  19. Maya1 
    October 31st, 2014 at 12:19 am | Permalink | Tweet thisIgnore this user


    Good morning!

    I own 700 shares of Marriott at $50 cost and I also have 5 Marriott April 65 calls for $7.4, now about $11 ( I acquired the longs to protect the below shorts

    I am also short 3 Jan $65 calls at $3, now $11 (sold a long while back, against actual stock which I still own) and short 2 Jan $70 calls at $3, now $6.

    I would like your opinion on whether I should do anything right now, wait to roll the shorts to April or later to convert the longs into a BCS?

    I know what I should do but want your opinion to confirm

  20. Cramer doesn't seem to understand that XOM and CVX have huge refining and chemical operations that benefit from low oil prices.  

    Oil $79.50.

    Coordinated/DC – Very much so.  It's Europe's turn next, based on the chart above, they have a long, long way to go to catch up to Japan and the US.  

    Speaking of Europe, up 2% on the continent and 1% in the UK now.  

    St. Vincent/Rustle – Never saw that one.  GPRO I agree, that's why I said it was unplayable yesterday – even though I did expect the good numbers as the IPO publicity drove sales this Q.  

    87.17 on the Buck.  Gotta love that CASH!!!

  21. OK, they got to post a new all-time high on the Dow – now we'll see what sticks.  

    Futures at 17,300, 2,012, 4,160 and 1,174 and you can see why we needed tight stops to short.  We can try again here with stops if 17,300, 2,015, 4,160, 1,175 break over, still favoring /TF and /NQ but if you can't play with tight stops – don't play at all! 

  22. Wow, that was super-quick!  Back to 1,170 already.  

  23. Like I said, it's like a wave the rocks your boat and, if you aren't too imbalanced, you just take the hit and let it wash over you…

  24. Phil,

    ABX – down 5% more (of course Gold is down)

    XRT – touching 89 again..good short if is reaches close to 90?

    Gold closing in on 1150….

    all because of strong buck. how long do you think they can keep the buck strong. looks little toppy on the weekly chart.

    thanks as always

  25. Done with that nonsense for the moment (all out at 1,165):

  26. DAMN!  I woke up late today and wasn't around for the market open short opportunity… tragic.

  27. Central banks balance sheet.  No where to go but up.  If one collapses, the rest will follow, so why does the trend seem so… so… so… manufactured.  Oh wait…..

  28. "Think maybe the buyer of 5,000 next week $89 puts at $0.35 in the yesterday saw this BOJ move coming?" – Joe Kunkle

  29. damn – was posting on yesterdays thread >>> arghhh
    was trying too walk you guys through 'The Honeybadger'

    Anywho – 5K day on /TF
    I'm gonna spend it with my daughter.

    See ya >>

  30. Pharm – any thoughts on the BMY pop yesterday based on the Opdivo trial results?

  31. Those puts are now $2.05….FWIW.  We can't win folks.  Unless you are super rich, they will continue to steal from us…so craig….that joker was right…

    Deano – Opdivo results were pretty good.  There is competition in the space, but it does bode well for future revenues.  Now, if their investment in IPF pays off (results are due 2016 I think), then the ITMN deal from Roche will be a doozy, as BMYs is much, much safer and more palatable to patients.

  32. Thanks Pharm, I was net short, and deciding what to do. Sounds like buying some spreads at least.

  33. Phil, I'm behind in my reading and sorry if you addressed this but: I'm in the SLW 2016 18/27 BCS and sold 2016 18 puts-about the same prices as you quoted in original spread. I'm not too worried about the short puts but roll the calls lower now or wait until the 2017's come out? Thanks

  34. MCD and IBM the only $DJIA stocks in the red…

  35. Phil – I have 35 of the TZA Nov17's short and 35 of the TZA Jan15 13's long.  Seems like today might be a good day to close out the 17's and roll the 13's down at least.  Maybe even sell some too…


    On another note, this is REALLY going to help race relations here in FL (the most racially charged state I've ever lived)

  36. ABX/Pat – You just have to ignore it, which is easy to do if you REALLY want to own it but hard if you overextended and sold too many puts.  Think of it like this – let's say you owned a local water company and, you bought them in a hot summer when water was 5 cents a gallon and they were selling 10Bn gallons a year with a cost of 3.5, making $150M.  Then, in the winter, water slumps (as usual) to 4 cents (down 20%) but you're not worried because it averages out over time.  

    Then the next summer it rains a lot and it's cool so the pools don't evaporate and lawns don't need watering and water stays at 4 cents and even drops more in the winter so here you are 18 months into your investment and now the average selling price is 3.75 and the profits are just $25M and that means your p/e shot up 6x!!!  

    Do you panic out of the stock or do you take the long view that prices fluctuate up and down over the years and you simply need to put the stock under your pillow and wait for the next dry, hot summer?  

    Most people, of course, panic out.  Warren Buffett buys. 

    How does that compare to your portfolio?  

    Damn, popped right back up to 1,170 – should have flipped long in that strong channel.  

    XRT/Pat – Don't forget that includes luxury retailers and the top 10% is having a very merry Christmas (see BRK-A chart).  I know it's tempting but retail sales have been pretty good and jobs are coming back so I think it's a rough Christmas to bet against.  

    Here's $16 crossing back on /SI – that's still my favorite long at the moment.  

    Buck/Pat – See earlier comment.  

    Good morning Ricbah!  Be careful with those regret plays, there's significantly less chance of a pullback the 2nd time something is tested the same day.  

    Balances/Pharm – Financial engineering at it's finest.  Hey, if it works, it works.  What if they can give us 100 years of prosperity before the great collapse?  Who's going to say it was a bad idea then?  No one who's alive today (though maybe our clones).  

    Someone made a nice call on FXY!  

    Welcome Wombat.  Nice job, we made the same trade, I guess – enjoy! 

    BMY/Deano, Pharm – That's pretty impressive.  Looks like it was pre-announced though:

  37. Damn, it's only 7:30 AM here and it's already been a hell of a day… I picked the right week to go offline!

    In the meantime, all these commodities stock are killing my portfolio! FU commodities…

  38. OMG, just looked at McClellan and it was +215 coming into today.  This might be an all time high after today. 

  39. Phil- First question is with all this new stimulus do you still look for a significant drop after the election or should we bail on the DXD calls now? 

    Second question, depends on your answer to the first question, but if we do get a drop next week, I have some YHOO Jan '16 40/50 bull call spreads bought for $3.30 now $4.65. Should I cash out early, look for a post election drop and try to come back in at a better price and improve my position with a different spread? I like YHOO and this play, but I think you adjusted to a different spread a while back and I may have missed it, which may or may not have been a good thing, but that's what I am asking, are you feeling good about $50 target for 2016? 

    Lastly, St. Vincent is new. Just came out and there is actually oscar buzz for Mr. Murray in this role, as he is apparently that good. Also stars Melissa McCarthy who was hilarious in Bridesmaids and had the memorable sink scene.



    Good morning!

    I own 700 shares of Marriott at $50 cost and I also have 5 Marriott April 65 calls for $7.4, now about $11 ( I acquired the longs to protect the below shorts

    I am also short 3 Jan $65 calls at $3, now $11 (sold a long while back, against actual stock which I still own) and short 2 Jan $70 calls at $3, now $6.

    I would like your opinion on whether I should do anything right now, wait to roll the shorts to April or later to convert the longs into a BCS?

    I know what I should do but want your opinion to confirm

  41. Sold short U.S. Steel, immediately sold off.  Anything the Japanese can sell cheaper will savage U.S. competitors, I believe, as they drop the Yen through the floor.  Not the season for basic materials, I wouldn't think.

  42. wombat/tf — dang!  apparently dude has it figured out .. confidence oozing from his posts

  43. Steel/zero – I like your thinking..  here is a brief note from 2010 re Japanese steel industry

    Some great deals on new Land Cruisers coming soon?

  44. GILD/Phil- between your advice yesterday and reading that Express Scripts has an asterisk in their formulary saying they can stop reimbursement on Sovaldi at any time in 2015, I figured this morning was a good time to cash in my GILD shares at 116.50 or so which were held in an inherited IRA (got rid of my IRA years ago when I figured out what a crappy deal it was too). While it may soar higher, and probably will in the near future, I feel better about it now that it's down more than $1.42 on the day to $112.80. If the market dives post election and takes GILD with it, I can get back in at a reasonable valuation, using a much less expensive BCS . 

  45. SLW/STP, Jomp – The 2016 $18s are still $2.85 and our net on the spread was about $1.50 and there are no 2017s to roll to so I'd stand pat for now as 2016 is a long, long way away (440 days to expiration) and SLW was at $26 80 days ago (20% of that time).  While it's tempting to press the bet – the Dollar is strong for good reasons and do we REALLY want to own 2,000 shares (if we DD) of SLW at net $18ish if silver drops another 20% ($14)?  

    That would be an $8K hit vs a $4K hit on what we have now (at $14).  At $17.50 it's barely a loss at all and obviously rollable so what would the logic be of doubling our risk unless we're POSITIVE we've found a bottom – especially if we don't REALLY want to own 2,000 shares at $18 ($36,000).   On  the other hand, if SLW dropped to $9 (50%) and THEN we doubled down – our avg would be about $13.50 ($27,000) and we would have saved $9,000 by not jumping the gun and we'd still have 50% of our allocation block to play with and then, if they go to $4, we'd end up with 4,000 shares at $8.50 avg ($34,000) and we'd STILL have enough money to go to 8,000 shares at $2 for a $5.25 avge ($42,000).  

    So, if you REALLY want to own 8,000 shares of SLW for net $5.25 – then you should be THRILLED (and patient) to see it going lower.  That is literally how Buffett looks at the market!  

    By the way, notice how BRK-A and our paired portfolios have almost identical performance this year?

    TZA/Burr – Well, the Nov $35s are just .13 so no reason to keep those unless you have no need of the margin and can let it expire.  Your Jan $13s are $1.63 and you can spend $2.12 to roll to the $10s ($3.75) and sell the Nov $15s for .58 and then you're spending net $1.54 to gain $3 in strike and still have a nice time advantage.  That nursing home stuff really pisses me off.  

    Commodities/StJ – Going to be a long, hard road to come back on those the way these Central Banksters are tipping the top 10% and ignoring the rest.  Gold is so cheap Trump just gold plated his tennis court.  Not me, I like the simple things:

    Can you believe they didn't plate the side panel?  That's ridiculous (not that the gold-plating isn't ridiculous in the first place).  Why pay all that money and cheap out on a panel?  

    McClellan/Rustle – Yep, maximum bat-shit crazy now.  

    CNBC making fun of people who sold in May.  

    Nasdaq up 12% from the low (2 weeks ago).  

    DXD/Craigs – I plan to evaluate after this round of questions but I'm not off my "wait until after election" plan.  We just got struck by lighting and it's not the first time the BOJ has jolted the markets higher.  

    Still, this time IS different because they have drastically changed the MIX of purchases and tilted towards equities with $1Tn in buying power now pouring $250Bn into the markets.  So we see $8Bn in a week giving us a 4% pop and $250Bn is $4Bn a week for 2% so, in the very least, they should be able to sustain a 2% gain (even if it's all given back each week) but, since we can assume the marginal buying is affected, probably good to maintain a 5-10% rise – so these new levels may be her to stay (barring Ebola or war with Russia or Isis attack or German Recession or China Bubble popping or Greece or Italy or Portugal collapsing…).

    An hour or so to go and Europe testing the 2.5% rule with London tugging along at 1.25%.

    YHOO/Craigs – They are well on track and BIDU had great earnings so I imagine BABA is cranking it out as well.  I think $50 is a conservative goal for YHOO and you have $5.35 left to go (100%+).  We went with the April $32/39 bull call spread at $3.95 and sold the $37 puts for $3.10 for net 0.85 on the $7 spread in the STP.  30 of those are up about $2.50 ($7,500) so far with a goal of $21,000 at $7 so, actually, this spread is much more in the money and will make (if all goes well) $4 9 months before your spread make $5.35, so maybe you do want to switch or, when in doubt – do half. 

  46. Phil – Remember you have 50 of those TZA's in one of the portfolios.

  47. Phil, Thanks on SLW, thats what I thought (wait until 2017's). I have been selling calls on the position so that helped some also.

  48. DRYS 2016 $1 puts can be sold for $0.20.  currently trading at $1.5.  earnings mon.

  49. DRYS 2016 buy/$1.50 call write for $0.97.  i think they occasionally pay a dividend too.

  50. /DX – Phil, how would you apply your 5% rule to /DX today? what would you use for bottom of range? how would you select that point? Would you do this with a daily, weekly, or hourly chart?

  51. How the heck can the BOJ be "spooked" when they raised taxes on their consumers? Pure, absolute insanity! If Ryan/Walker have their way, that's what will happen to us!

  52. Really shoddy job on that BBQ Phil! What's their return policy?

  53. This King Hawaiian Brisket from Arby's isn't half bad, people. And I usually don't even eat stuff from this place.

  54. ABX – well, today isn't really a day to roll out the short puts, either.. I think the gold miners should start buying physical gold on the open market… cheaper than cost of extraction, and already in nice, neat, tradable bullion form, and can even lay off all the pesky striking labor. A real win-win, central banker-style.

  55. MAR/Maya – ALWAYS sell into the initial excitement.  Not SOMETIMES but ALWAYS.  When in doubt, sell half.  Don't make me whip out Rule #3 on you…  While the first pause at resistance was OK to hold out for, this pause at much bigger resistance is not!  You have a 50% gain on your 700 shares and you are right, you do know what to do (gold star!).   

    I would CASH the 700 shares, why tie up $53,000 for a 1% dividend?  That leaves you with 5 Apr $65s covered with 3 short Jan $65s and 2 short Jan $70s.   The April $65s are now $12ish and, since you just sold 700 shares for $75, you should have no problem buying them back for $57.50 so you can sell 5 2017 $62.50 puts for $5 and roll your Apr $65s to 5 2017 $70/85 bull call spread for $7 (net $2 on your new longs) and roll the short puts ($8.50ish) to the April $70s at $7.70 so another $1 and now you have all but $3 off the table so that's all you can lose down to $62.50 and, going up, you are covered to $85 and if $75 calls, another $1,000 buys you 5 more longs (or maybe $2,000 if it pops to $4 for the $15 spread).   

    By the way, per when to do something above.  If the VIX is high and the 2017s are out – then it's a good time to roll your play – especially if you think it's currently stretched and you can take advantage to take some gains off the table like above.  

    Steel/ZZ – Doesn't matter much what Japan does in the grand scheme of things:

    And, just to CEMENT that concept for people:

    We're simply not in those businesses anymore – not in any kind of World-mattering way.  

    Land Cruisers/Scott – You should be able to get a fantastic deal on a car made in Japan these days.  Yen is now down 15% since July so they can knock 15% off the sticker price of a car sold in the US for sure.  

    GILD/Craigs – Wise move.  Once you get used to it, you realize how relaxing it is to just take the profts and then go relax (like Wombat is today).  It takes a while to BELIEVE it but those profits do add up over time so you can just play these channels from the bottom to the top and stay out of the undiscovered countries.  

    TZA/Burr – Sadly, I'm aware.  

    You're welcome Jomp.  That's another thing to get used to – the next year always comes, no need to rush.  The positions you want to roll to only get cheaper when your do too.  

    DRYS/Lunar – That's one crazy-assed stock.  

    Be careful with DRYS, they are rolling debt by selling 250M shares at $1.40, which is a 33% dilution for current shareholders (but the company gets $350M – I don't mind those kinds of plays) and that has a lot of people bailing and it's possible, based on the timing of the raise (pre-earnings) that there's going to be bad news today that they hope to paper over by saying "but look – $350M!"  On the other hand, BDI rates are miles up from last earnings so, if they don't beat and raise guidance – I'd get out real fast!  

    Dollar/Scott – I would not apply it to currencies.  Currencies are directly affected by Central Bank action both from the host country and others (as we see today) and, as noticed in the news recently, then it's manipulated by the Banksters as well – it's a total BS market.   Broadly, we went long on the Dollar at 80 earlier this year when we were liking UUP but I think Japan's already at the point (115 Yen to the $) where the blowback may make them stop the nonsense.  

    Careful What You Wish For: Plunging Yen Leads To 140% Surge In Bankruptcies

    Don't forget, for Japan, oil and other commodities haven't dropped the way they have for us:

    For us, copper is down from $3.80 last year to $3.05 now (20%), for Japan it's flat – that's generally where they are on input costs.  

    BOJ/Pirate – Because they are already 250% of their GDP in debt so, in able to transfer more wealth to the top 1% through monetary easing, they have to force it out of the bottom 99%'s wallets with a tax they can't get away from.  And yes, that is the GOPs idea of utopia.  

    Return/StJ – I'd buy it with the AMEX, they are good at forcing people to take things back.  wink

    Brisket/Kwan – I'll have to try that.  Haven't seen an Arby's in years though…  Jon Stewart was raving about brisket in Austin and Jews know their brisket!  

    Gold/Scott – That's an interesting idea.  More to the point, they'll shut mines like FCX is doing with copper and we recover pretty soon after.  

  56. I dunno, I'm in unknown territory here.  I just bought ABX Dec. 20 2014 $10s for $2.07.  It's trading at $12.04.  So I paid $.03 for them in premium?  Doesn't anyone buy gold jewelry for the holiday season anymore?  Is this what happens when bearish expectations runneth over?  Inquiring minds…..

  57. Gold/ZZ – Don't forget the low price of gold triggers ETF selling, which floods the market with physical gold.  That's why we overshoot the mark to the downside so often.  

    /SI flying past $16.10 and that's $500 per contract – don't be greedy and set a stop on at least half at that line.  

  58. Phil, Pharma,Others:

    I have PLX November 4 puts that I can roll down to 2X the May 3 puts for a credit.  The stock is currently at $2.23.  What is your take on PLX these days, is it still worth having either by allowing myself to be assigned in November, or by doubling down on the puts.  I also can simply close the position and take the loss $1.10 loss per contract. Do you still feel PLX has potential or is it a BK candidate?  Thank you.

  59. Pet costumes – the economy must be swell for some, but just who are these people!? I don't think I know a one:  Americans will spend $350 million on costumes for their pets this year

  60. If  you are bored enough to be interest in pet costumes today — I am — here's some math that you might appreciate, now that Russian Backfire bombers are being sent by Putin into controlled airspace over the European periphery with no transponders or radio commo.

  61. PLX/John – Well, I can't speak to their prospects but the trend sure isn't your friend here.  

    I don't see a credit, I see $1.80 for the Nov $4 puts and $1.05 for May $3 puts so it would cost you 0.75 to do the roll.  The May $4s are only $2, so barely worth the effort to roll.  If you REALLY want to own them, you could accept your assignment (net $3.30, I guess) and sell the May $3 calls for 0.40 and the May $3 puts for $1.05 and then your basis for 2x drops to net $1.85/2.43, so you're even to where the stock is now if assigned or, if called away, you make $1.15 – which is great compared to losing it.

    Very expensive going bearish on the STP yesterday, down to about $171,000.  Fortunately the LTP is now up 21.1% ($605,450) so we're still netting out $771,000 on that pair for a respectable 28.5% gain on the year.  The Income Portfolio took it's own hit on SQQQ (because we got so burned last time) and is back down to $537,636 but, paired with the STP, it's still $708,000 and way ahead of our 10% goal at 18%.  

    One major issue is, of course, the spread loss as we changed positions, those will work out over time but, for now, we can make a few adjustments I'll get to shortly.  Butterfly is at 18% and $25KP took a hit too (also flipped bearish) and now up just 15.2% ($28,800).  

    Pet costumes/Scott – LOL, I just spent $100 to get a dog carrier for my Mom!  

    Math/ZZ – No thanks, too depressing.  

  62. Math/zero – here you go.. some history of nonlinear dynamics and chaos theory. The history part is good, even for lay geeks.

  63. Hi Phil.  This is a re-post from me after I received your comments. Please help:  Thanks Phil.  Great advice, it has been very good to me on APPL.  And, I too am a victim of GTAT, so lesson learned both directions.  However, I think you mis-read my position.  The 20 long 75 calls are Jan15 and the 20 short 120 calls are Jan16 (basis 12.75, today 16.40).  What is the remedy for that???

  64. PLX/John – they are blowing thru about 26M/yr.  They have 70M on hand.  I don't see them going bankrupt.  I have been in them a very long time, and yes the reaction to the price is disappointing, but the technology is the investment.  It will be a slog for sure, and will it recover, IDK.  There low is $1 in 2008, and they may very well make it there, so I think it depends upon the resolve and the price points.  I will surely continue my investment in the technology, but I may be wrong.  For a $200M market cap company and a technology that can produce biosimilars (and that is the wave of the future), I will place my bet. (I already did at $5….a long, long time ago, in a galaxy far, far away……)

  65. hey everyone — have a great time in vegas!

    phil/wombat strategy — i wish he could have shed a little bit more light on what's working so well for him in tf.  i went back to his post at the end of yesterday's thread and i didn't really get what he was saying.

  66. Pharmboy:  Thanks for the insights.  I'll keep my fingers crossed for both of us.  GTAT has made me a lot more conscious of the possibility that many small, seemingly promising companies have for BK, so I guess I am more gun-shy these days than I used to be, especially when I have sold short puts.  I appreciate your help.

  67. Anyone have a sense of what next week will look like on the S&P500 index?  Sell off?  

  68. Math/Scott – Damn, isn't today a holiday?

    GILD?/Taihu – Assuming that's GILD and not GTAT $75 calls – at least now you know why I never make a trade like that.  Long Jan $75s are $37.50 and short 2016 $120 calls are $15.  Remedy is to cash out or you could, rather than pay the $15 to buy back the short caller, spend $15 on the 2017 $100/140 bull call spread and then you put $22.50 in your pocket and wait to see how the rest plays out.  Good if you are still bullish on GLD and, if not, you can use a higher spread for less money to cover just the upside of the $120s.  

    /TF/Toe – On the whole, it's a lot like asking someone to write down how you hit a baseball – it's not the way you learn.  The best way is to papertrade a lot and expect to go through months of practice before you are ready to risk real money (which you will almost certainly lose).  After enough losses, you'll either improve and begin to see the light or you will decide it's not for you (and it's certainly not for everyone).  As Wombat said, he took some major hits, walked away and came back with a fresh outlook – that helps sometimes too. 

    Speaking of which, nice to take a poke on /TF short into the close below the 1,170 line as long as we're below 17,300, 2,007.50 and 4,140 – small play, just for fun. 

  69. Next week/Secret – I think we tank after the elections, maybe another 5% pullback, maybe more.  

    GTATQ/John – Too bad we didn't take a chance back at 0.45, 0.57 now.  

  70. Phil – any best choice ETF to just buy as cover to a long portfolio, and not the options (in my kids accounts, the broker fees for options is higher than buying the stock/etf).. TZA? DXD?  Thinking something to buy here today and hold through elections..

  71. ORB – the explosion, from a plane:

  72. Yes, GILD not GTAT.  Thanks Phil.

  73. Velocity of Money is at multi-decade lows….go figure where it is going…!!!

  74. STP adjustments:

    • No change to DXD (now 0.30) it either works or it doesn't next week.  
    • BIDU looks hopeless but let's buy back the short March $185 puts ($3) as step one of getting out. 
    • TZA – No change 
    • USO – No change
    • FAS – No change
    • NFLX – Buying back Nov $475 call for 0.10, selling long March $470s for $9
    • SQQQ – Buying back 50 March $45 calls at $1.60

  75. SPX earnings/pharm – stunning that materials reported so well, yet is hammered so hard, while many consumer disc corps are unscathed or even at highs..

  76. I'm waiting for the last  half hour express to take us up, up & away. Btw, seems the pharma small stocks have been sinking all day except gwph which isn't a small stock though it is down 2 bucks + from the days high.

  77. In terms of price, the value of the S&P 500 has increased by 1.1% (to 1994.65 from 1972.29) during the month of October. This marks the 7th time in the past 12 quarters that the bottom-up EPS estimate has decreased while the price of the index has increased during the first month of the quarter.


  78. SpaceShipTwo, a rocket plane that is to carry tourists on a short ride to space, crashed in the Mojave Desert on Friday during a test flight.

    “During the test, the vehicle suffered a serious anomaly resulting in the loss of SpaceShipTwo,” the company reported.

    The test flight, the plane’s first under its own power since January, was conducted by Scaled Composites, the designer and builder of SpaceShipTwo.

    “There is one fatality,” said Ray Pruitt, the public information officer for the Kern County Sheriff’s Office. “The pilot was able to eject from the aircraft." Mr. Pruitt said the injured pilot was taken to a nearby hospital with “moderate to major injuries.”

  79. Back to the highs…..what would happen if the algos were unplugged?

  80. Wow.  No where to go but up.

    02:49:38 TRADINGDATA2: (driley) MOC buy 2bil 02:49:48

    TRADINGDATA2: (driley) SPX buy 2.6bil

  81. All up over 1% right on schedule!

  82. Phil/ I have read that low oil prices could cause a shutdown of fracking operations in the US. What are the implications for our economy if there were a widespread shutdown that lasted for more than a short period? Do you think there is an effort on the part of other countries to make this happen? Is this all just crazy speculation:)

  83. Pharm- seems like most of the. Biotechs and Pharm's I follow went down today late. Did you see anything unusual to indicate that?

  84. ETF/Scott – If it's a long-term hedge, you need to consider the time decay of ultra ETFs.  If it's a "nervous until Jan" kind of thing, that's what our remaining STP position is for.  Currently we're left with 100 June $35 calls ($3.90), short 50 (1/2 cover) June $45 calls ($2.50), but that's because we were able to profitably buy back our March $45s so, as a fresh play, I'd go with the full ball call spread as a cover. 

    GILD/Taihu – Yeah, I win!  

    Explosion/Scott – Damn, what if that had hit a town?  That's crazy that they do those near civilization. 

    Earnings growth/Pharm – Isn't it funny how it's led by materials, which are considered toxic at the moment (not by us, we're BUYBUYBUYing).   Financials, of course, the money keeps flowing, Health Care has you buy the balls and Industrials saving on oil – all makes sense.  Notice Consumer at the bottom but XRT makes new highs – MADNESS!  




    And what Scott said.  

    See – now, sadly, I'm a Fundamentalist, and I can't let go of these FACTS and those facts lead me to think that this rally is not sustainable because it's causing irrational moves like this that are completely ignoring the underlying FACTS.  

    Velocity/Pharm – Down about 60% in 30 years – more madness…  This country is slowly but surely grinding to a halt because, since Reagan, the only place money goes is into the bank accounts of the top 1%, where it does nothing for the economy.  

    Stick/Pirate – What a move that is, a thing of beauty.  

    Oil/Griffin – There's no absolutes.  Have you ever been in a business with cash-flow issues?  You don't stop producing.  If the price is lower, you produce more but, no matter what, you get as much cash as you can to keep your creditors at bay.  Some companies are diversified, like XOM, who have wells all over the country and yes, they will often shut down more expensive operations – OR – they may frack their asses off, hoping to bankrupt their neighbors so they can take over all their wells.  As to our economy – sucks for Texas and North Dakota and maybe PA but not too many states benefited from fracking (and there's plenty of people who would love to see them gone).  

    Well, that was fun – didn't get a big dip on the RUT but no harm either  in the end.

    Have a great weekend – I'm off to Vegas! 

    - Phil

  85. GTATQ –  the judge decided to hell with a settlement that could help shareholders, he is making everything public, which could likely make things even worse, since it removes Apple's incentive to work it out. 

  86. NOC is a partner on Virgin Galactic – didn't affect their stock price though.  

  87. GTATQ/Craigs – At this point, better to get it out in the open for them but worse for AAPL.  As I said the other day, the facts of the case I've seen so far tell me never to invest in any small company (under Billions) that makes a deal with AAPL and probably not most big companies either.  

  88. The industry spokespeople said they could still be profitable at 40 a barrel for oil, so this other stuff is just apparently baloney, as usual. The oil industry have been making exorbitant  profits for ages, subsidized by our wonderful government, of course. Can't really believe any of these crooks if they are in the industry.

  89. LQMT – do they have a deal with Apple?

  90. Oil/Pirate – I believe $70 is still very comfortable to supply the 90Mbd we need, below that, supply will slowly begin to tighten up as oil sands, deep sea and fracking begin to wind down.  As noted above, it doesn't mean we won't go lower as people pump their asses off to make up for getting paid less per barrel but, after a quarter or two of that, people begin to go BK (just ask Bush, he busted a couple of oil companies).  

    LQMT/Craigs – Unfortunately, yes, it's all about AAPL for them.  

  91. I don't really know why materials reported well but got hammered, but I would guess looking at the numbers that it's all about the dollar level.  The Euro has been knocked down @ 11% against the dollar since May — more than 2% per month.  Heavy weather;, no exotic explanations required.

  92. Great TED Talk on why people make bad decisions:

  93. Biotechs/Craig – they are a leader, not a follower…so, you do the math.  Where to we go?

  94. From Bloomberg, Oct 31, 2014, 6:08:09 PM

      The 800-mile Trans-Alaska pipeline snakes it way across the tundra north of Fairbanks, Alaska. Photographer: Al Grillo/AP Photo

    For signs of how the U.S. shale boom is transforming the global flow of oil, look halfway across the world at South Korea.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  95. From Bloomberg, Oct 31, 2014, 12:58:54 PM

      Senate Minority Leader Mitch McConnell (R-KY) greets a supporter while campaigning at Cumberland Valley Electric during a two day bus tour of eastern Kentucky on Aug. 7, 2014 in Gray, Kentucky. Photographer: Win McNamee/Getty Images

    Most of America isn’t interested in next week’s elections. Wall Street is an exception.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  96. From Bloomberg, Oct 31, 2014, 5:30:00 AM

    Baily Deeter, 14, left, and his sister, Skylar, stand for a photograph on Aug. 21, 2014. Baily’s parents agreed to give him an Uber Technologies Inc.’s account when he started ninth grade. Source: Byron Deeter via Bloomberg

    As the oldest of three kids, Baily Deeter was often the last to be picked up from school by his mother. Then Uber Technologies Inc. came along.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  97. From Bloomberg, Oct 31, 2014, 5:00:04 PM

    The Russian central bank’s gambit worked for all of about two minutes yesterday.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  98. From Bloomberg, Oct 31, 2014, 2:03:41 PM

    Chinese prosecutors said they seized a record 200 million yuan ($33 million) in cash from the home of a former energy official accused of taking bribes.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  99. From Bloomberg, Oct 31, 2014, 12:10:04 PM

      Walk softly and carry a big chart.

    Bank of Japan Governor Haruhiko Kuroda stunned investors today by announcing a big expansion of the central bank’s bond-buying program. The move won’t fix Japan’s ailing economy by itself, but it might help, and Kuroda is right to try.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  100. From Bloomberg, Oct 31, 2014, 1:18:12 PM

    Howard Schultz, chief executive officer of Starbucks Corp. Photographer: Andrew Harrer/Bloomberg

    The afternoon coffee run may become a thing of the past if Starbucks Corp. (SBUX) gets its way.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  101. From Bloomberg, Oct 31, 2014, 4:09:55 PM

      Customers browse appliances for sale in Sarasota, Florida. Photographer: Ty Wright/Bloomberg

    The drop in fuel prices couldn’t have come at a better time for the U.S. economy.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  102. From Bloomberg, Oct 31, 2014, 4:09:45 PM

      Chairman and Chief Executive Officer Rex Tillerson’s search for big discoveries may be hindered by collapsing crude prices, which erode cash flow needed to pay for exploration costs such as floating drilling rigs that rent for upward of $600,000 a day. Photographer: Andrey Rudakov/Bloomberg

    The cheapest crude in 2 1/2 years has the world’s two biggest oil producers glad they held onto their refineries when rivals were shunning the business.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  103. From Bloomberg, Oct 31, 2014, 3:20:00 AM

    ICBC, the world’s largest lender by assets, posted the biggest decline in funds during the third quarter, with its deposits dropping by 388 billion yuan ($63 billion) from June to 15.3 trillion yuan. Photographer: Brent Lewin/Bloomberg

    Chinese bank deposits dropped following a crackdown on lenders manipulating their numbers and “illicit” means of attracting money, threatening to weigh on credit growth and hinder efforts to reignite the economy.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  104. From Bloomberg, Oct 31, 2014, 3:09:50 PM

    Oct. 31 (Bloomberg) — Federal Reserve Bank of Richmond President Jeffrey Lacker talks about the Bank of Japan’s expansion of record stimulus today, inflation expectations in the U.S. and the likely impact on Fed policy, and resolution planing for large banks. Lacker speaks with Kathleen Hays and Vonnie Quinn on Bloomberg Radio’s “The Bloomberg Advantage.” (Source: Bloomberg)

    Inflation below the Federal Reserve’s target shouldn’t keep the central bank from raising interest rates, said Jeffrey Lacker, president of the Federal Reserve Bank of Richmond.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  105. From Bloomberg, Oct 31, 2014, 6:19:16 AM)

    The Bank of Japan’s surprise decision to ease monetary policy further may increase pressure on South Korea’s central bank to cut its benchmark interest rate again.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  106. From Bloomberg, Oct 31, 2014, 10:02:27 AM

    Consumer confidence rose in October to a seven-year high as employment opportunities and declining gasoline prices boosted Americans’ spirits.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  107. From Bloomberg, Oct 31, 2014, 7:14:20 AM

    The Bank of Japan’s expansion of record stimulus today may see it buy every new bond the government issues.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  108. From Bloomberg, Oct 31, 2014, 12:21:15 PM


    (Corrects spelling of Stephen Colbert’s first name in 11th paragraph.)

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  109. From Bloomberg, Oct 31, 2014, 10:25:29 AM

    They’re filming a slasher flick.

    The hottest game in financial markets is trying to guess when the Federal Reserve will finally raise its benchmark interest rate. Fed officials have said that their main concern is over how much slack, or spare capacity, exists in the economy, because workers will become emboldened to ask for higher wages — and employers will come under pressure to provide them — only when the slack diminishes. On one measure, the Fed should already be reaching for the rate-rise button.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  110. Amazon Exec: ‘We Didn’t Get The Price Right’ On The Fire Phone

  111. Are Americans Ignorant or victims of Yellow Journalism?

  112. Martin Armstrong Rages “Government Is Corrupt & Rotten To The Core”

  113. Japan’s latest economic stimulus exposes its dirty debt secret

  114. 25 Of Banksy’s Most Clever Works

  115. If the U.S. economy is so good, why do we feel so bad?

  116. What Can Emerging Markets Do to Protect Against Hot Money Flows? Not Much, Apparently

  117. Trick or treat – next week will tell with plenty of data!

    In the meantime, it's like October never happened:
    200 DMA crossed – check
    50 DMA crossed – check
    All time highs – check
    Overbought – check

    Fasten your seatbelts – it's the most expensive roller coaster in the world…..

  118. Overbought it is! 


    Still, the longer-term NYSI indicates we could get to massively overbought levels on McClellan before a proper correction begins – that would be kind of interesting:



    10-31-2014 6-38-10 PM Yen



    SPY  5  MINUTE


















    This makes no sense at all – everyone can't be a winner (or can they?):


    I suppose the strong Dollar (that T-Bills are priced in) offsets the declining value of low-interest bonds (if you had to put a spin on how it's possible for 2.5% bonds to rise when rates tick up towards 3% (now 2.77%)).  

    As a rule of thumb – 100 on the above chart represents 3.5% so, if rates tick up from 2.77% to 3.5%, which is +26% than TLT goes back to 100, which is down 16.6%.  Most retail investors who buy bonds simply don't understand that can happen to them.   130 was the max on TLT – that was when rates dropped from 4.5% to 2.5% in about 6 months in 2011, but then it quickly calmed down again – so I'm thinking a TLT short position may be well-timed now as an inflation hedge.  

    Before 2011, 90 was normal for TLT.  The 2016 $105 puts are $3.40 and I think I like them better than a $120/110 bear put spread for $10 because the spread doesn't let you take quick advantage of a dip and, if we assume $130 is a max – then a move up against us is only an opportunity to roll and DD – as we would have been forced to do if we were in the position on Fed day this week and we hit that spike against us.  

    That's one of the reasons I like to have small "placeholder" positions like this – it helps remind you that you wanted to make a commitment when something like that happens and you have a few contracts that suddenly drop 30-50% on something silly like that.  









    Here's a couple of good bullish bets (if the rally is real):







  119. Phil/MAR


    THANK YOU for your ideas.

    I sold the stock, but will probably only roll the short calls out in time. With my time constraints, it gets complicated to manage a lot of positions.

    Regardless, thank you!

  120. Hi Fellows,

    Here I wish to present you with a win win situation and ask you to punch holes in my argument.

    We take the stock GSK presently trading at 45.13. having a yield of 5.39% PA.

    Meaning I receive 245.00 per year on a 100 shares. x 2 years = say 500.00 to round it.

    Is there a way I get more. 

    I do not buy the stock but sell the Jan17 45 put for 6.60 possible say 6.50 and receive 650.00 paid out now! and I do guarantee to deliver the stock at 45.00. Even that I need to have to deliver the stock at 45.00 my net cost is only 38.50 before I lose any money. With other words I would be buying the stock at a discount of 14.4%. 

    Looking good but what if the stock goes down to 35 or even 30. Well in that case I would be losing money.

    Now what if I set up a win win situation? 

    Again I sell the Jan17 45 put for 6.60 and buy the jan17 42 put for 5.10. Here I receive a credit of 150.00

    Now here my statement:  where ever the stock might go I do have 150.00 in my pocket. If the stock goes up to the moon I will not get more than 150.00. But even if the stock goes down to zero I only have to return the 150.00 which are in my pocket. That is if the stock goes below 38.50 any value above 38.50 I will remain with change in my pocket.

    Go and punch holes in this one. 

  121. Yodi/GSK

    Let's say the stock is at $35 in Jan of 2017. Your $42 put would be worth $7, but the sold $45 put would be worth $10. If you closed the trade it would be a $3 loss, less the $1.50 you originally received for a total $1.50 loss, which would be a 100% loss.

  122. Phil/TLT

    That trade you mentioned might be a good hedge for my REIT's.

  123. Good morning from Vegas!

    You're welcome Maya.

     What RJ said, Yodi.

    TLT/RJ – Yes, it's great to hedge a specific sector, or if you have variable interest loans outstanding…


  124. Let's move comments to the new post please as I'm on my IPad and it's easier for me. 

  125. rj_jarboe

    Sorry do not find the new post but here you caught me on GSK you 100% right and as clear as water I do have 150$ in my pocket but I do have to give 300$ back and that is my bad !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!