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What Now Wednesday – Jeff Flake Joins the Resistance

Viva la Resistance! 

Senator Jeff Flake gave a Hell of a speech on the Senate floor yesterday, calling for his fellow Senators to stand with him against the "impulses to threaten and scapegoat" which could turn the GOP into a party of "fearful, backward-looking people, " saying:

Reckless, outrageous, and undignified behavior has become excused and countenanced as "telling it like it is," when it is actually just reckless, outrageous, and undignified.

The notion that one should stay silent as the norms and values that keep America strong are undermined and as the alliances and agreements that ensure the stability of the entire world are routinely threatened by the level of thought that goes into 140 characters – the notion that one should say and do nothing in the face of such mercurial behavior is ahistoric and, I believe, profoundly misguided.

To which the President, of course, replied by theatening and scapegoating in a tweet:

This would be funny if it wasn't so tragic.  And don't think this doesn't affect the markets as losing 2 reliable Senate votes means Trump needs ALL 50 of the other Republican Senators to line up behind his agenda or nothing will be done – even with Pence's tie-breaker.  What that effectively does is put any one of those 50 Senators in the drivers seat to make demands because they can't afford to lose a single vote and, if one more Senator joins The Resistance – Trump effectively becomes a lame duck and his agenda goes out the Window. 

Remember how the Republicans told the Democrats they had to wait 18 months until the next election and "let the voters decide" who sits in the Supreme Court?  Well, now that turns around on them and Trump may not get those appointments he's been salivating over.  More to the point, why are we investing in stocks at all-time high valuations while our Government is in chaos?  Do you think it was wise to buy into France's market while people were marching in the streets?

Speaking of egalite, Ray Dalio has joined my "Tale of Two Economies" team – something I've been warning about since our 2010 Outlook.  Dalio pointed out that the Fed's use of "averages" in their statistics about what’s going on in the economy mask deep divisions that could lead to “dangerous miscalculations.”  He runs through a number of different statistics showing that the economy for the bottom 60% of the population — or three in five Americans — is much less stable than that for those in the top bracket

For example, Dalio notes that, since 1980, real incomes have been flat or down for the average household in the bottom 60%. Those in the top 40% also now have an average of 10 times as much wealth as households in the bottom 60% — an increase from six times as much in 1980.  Other points include that only about one-third of people in the bottom 60% save any of their income and a similar number have retirement savings accounts.

Image result for trickle down economics reaganThese three in five Americans have also seen an increasing rate of premature death and spend an average of four times less on education than those in the top 40%, Dalio wrote. Those without a college education see lower income rates and higher divorce rates.  Dalio wrote that all of these concerns will likely intensify in the next five to 10 years – just as they have for the past 10 as, once again, Trickle Down Economics has done nothing but make the rich much, much richer. 

I don't know if America is going to be able to take 3 more years of these policies – let alone 7!  We're waiting to see who Trump appoints as his next Fed Chair but it's very unlikely to be someone hawkish as he puts so much emphasis on the market's performance as a measuring stick for his Presidency and nothing kills a rally faster than rising interest rates.  Of course, even Dalio's "Bottom 60%" masks the damage that's really being done by the Top 10% and especially the Top 0.1% but – those are his clients – he doesn't want to paint a target on their backs, does he? 

Image result for trickle down economics reagan

This chart has gotten worse, not better, over the past 8 years and Trump's tax plan will accelerate this curve into a parobolic move higher for the Top 1% and, if you are starting your plan by giving them money and then, AS USUAL, the money doesn't trickle down and the economy doesn't grow enough to cover the money you gave them – then where do you think that money ends up coming from?   Come on, it's not hard…  I'll give you a clue: 100 – 1% = ???  That's right, the Bottom 99%, one way or another, end up paying for the stimulus and THEN, HOPEFULLY (maybe), it will come back and benefit them later

Imagine if there was a plan to give the Bottom 99% more money, which they could spend and then that money would trickle UP into the pockets of the Top 1% – LIKE IT ALWAYS HAS THROUGHOUT HUMAN HISTORY.  Hmmm, that's a toughie, right?  Do the thing that always works that's not likely to hurt or do the thing that never works and has consistently caused massive damage to the economy?

Keep in mind, this market boom Donald Trump is taking credit for is happening WITH Obama's increased tax rates (and Obamacare) and Team Trump is saying if we do the exact opposite, things will get better.  Better for who?  You simply can't keep taking and taking from 99% of the population without causing a blowback at some point.  Having party members break with you is one of the early signs of Revolution but, of course, no one in this Administration reads their history books.  

Meanwhile, in our quest to join the Top 1%, we shorted Oil (/CL) Futures again at $52.50 and the EIA Inventory Report is at 10:30, so that will be fun.  We have Gasoline (/RB) shorts to at about $1.72 avg but they spiked to $1.738 overnight – so a rough ride.  Though the Dow is up 100 since last Thursday (a $500 per contract loss on /YM shorts) the Russell (/TF) is down 12 points for a $600 per contract gain and, as I noted yesterday, the Dow's outsized gains are driven by the moves of a few key components, which is masking a broader market sell-off.  Just like the way the Top 1%'s gains distort the averages to make the Bottom 99%'s screwing look gentle.  

Viva la Revolution!  


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  1. Good morning.

    What time is the EIA report? I am 3 short at 1.68….

  2. Russell has not done much these last 10 days.

  3. Nice post Phil – Amazingly enough, people are either too dumb or too ignorant to realize that trickle down is actually trickle up. And the GOP is perfectly happy to cater to that electorate so nothing will change…

  4. Morning all!

    Join us for today's webinar at 1pm (EST)!

  5. Well I am on record on the site as saying I think CMG earnings will be bad and stock will gravitate towards mid 200's.  And if their earnings don't ramp up, they soon will be less than 200.  They can't earn $5 a share and expect to be a $250 stock in the restaurant sector.

  6. Not dumb or ignorant, most people are simply fed up. The deck has been increasingly stacked against them by a congress that has taken the money and paid them lip service. Where would we be had they not bailed out the banks? Would we have no banks? The problems we face are by design… and both parties are complicit, though we choose sides and argue constantly that OUR party has our backs. BS. It's not R vs D, that's more like a pro wrestling match. It's the government vs the 99% and it will continue until enough realize it and do something about it. I vote for a constitutional convention and rewriting the rules they have used to enslave us. Oh yeah, and END THE FED.

  7. Fed up but yet voted for someone who conned them in believing he was going to drain the swamp and yet adds water to said swamp… So easily conned would be a more apt description then!

  8. A desperation vote for anything other than more of the same.

  9. Stumbled across this analysis last night — does it still hold true 3 yrs later?

     Good write up stjeanluc! 

  10. Good Morning.

  11. The people are not stupid and they don't need a nanny state to take care of them… they need a federal government that follows the constitution and protects their freedom.

  12. Phil / Att.  Earnings were not impressive I think there are tough times ahead  haven't turned around customer churn and they are starting a large investment in G5 along with integrating twc.  I think Wall Street will hammer them.   They're doing the right things in investment and content, throwing off lots of cash and margins are ok.  Hope the get taken down under 133 I'd love to take a position now.   Would like your thoughts on them. 

  13. Viva la Flake!  :)

  14. Muck – You could say there are no stupid people, just ignorant people who don't give a f*ck…..

  15. Phil / French Revolution:

    !The best moment to invest is when blood is running down the street!   ….I this was Rothschild who said it.

  16. The only thing running down the street these days are republican senators…. :)

  17. CMG they bleeding already to death. You need to tripple down on that one. Humpty dumpty and all that

  18. Rustle – Nice call on CMG.

  19. Flake has been a reliable GOP vote on everything Trump has pushed. I don’t see him suddenly turning liberal and voting with Warren. He saw he was going to lose and had no f*cks to give so he wrapped himself with a righteous speech. We’ll see if he changes anything about his support of Trump’s
    “policies” for then next year.

  20. Good morning!  

    EIA/Latch - 10:30.  /RB shot back up before I had a chance to lighten up.  angry  If I were short 3 at $1.68, I'd go 3 more at $1.72 and avg $1.70 with VERY TIGHT STOPS and hope to pick up a dip into inventories but I would not risk the extra 3 into inventories.  If you get a penny dip, to $1.71, then taking the new 3 off still raises the basis of the remaining 3 by a penny ($1.69).  

    So I'm taking my /CL profits off the table:

    That way I'm not double-exposed, at least.  /KC finally perking up – that helps too.  

    As to the indexes, as long as /TF stays under 1,500 – we're still bearish. 

    CMG getting clobbered – $280!   Not in the OOP but, in the LTP, 

    Not in the OOP but the LTP has this:

    Long Call 2019 18-JAN 280.00 CALL [CMG @ $324.30 $0.00] 10 8/18/2017 (450) $70,040 $70.04 $7.86 n/a     $77.90 $-0.46 $7,860 11.2% $77,900
    Short Call 2019 18-JAN 420.00 CALL [CMG @ $324.30 $0.00] -10 7/27/2017 (450) $-30,350 $30.35 $-9.45     $20.90 $-0.51 $9,450 31.1% $-20,900
    Short Put 2019 18-JAN 350.00 PUT [CMG @ $324.30 $0.00] -10 8/21/2017 (450) $-72,000 $72.00 $-12.10     $59.90 $0.10 $12,100 16.8% $-59,900

    We had an aggressive put sale, so that will hurt a lot.  Hopefully though, we can buy back the short calls, roll the puts and roll down the longs.  

    Big Chart – Huge bearish sign if /NQ fails that 20 dma.  There has been NO weakness for ages so any weakness may indicate something is happening.  

    Thanks StJ.

    CMG/Rustle – I agree, they really need to get it together but I think all the couponing they had to do last Q is what hurt them the most.  Keep in mind they were making $15/share before this nightmare started and that's what $300 is based on.  Sales were $4.5Bn in 2015 and tracking $4.5Bn this year so it's not so much a sales problem as a cost of sales problem.  They are projecting 10% growth to $5Bn next year but it's likely to be 2019 before they are really back on track.  Meanwhile, I like having positions that will make money in 2020 – they don't all need to be instant winners.  

    Go Mkucstars!  

    Image result for viva la revolucion animated gif

    Image result for simpsons mob animated gif

    Desperation/Mkucs – The sensible "desperation" vote would have been Bernie.  Hopefully we'll get another chance but it won't mean anything unless we can get the GOP faithful to flip Congress.  As to the people not being "stupid" – that would be cruel but, have you met the people?  

    T/Batman – Well, that's what we expected but I'd let them settle down before jumping in – these investment cycles can be tough but, on the whole, I think T is in good shape.  

    Flake/Jet – True, we'll see if he takes a real stand or if that was his one yip of resistance.  

  21. New Home Sales up 18.9%?  Maybe people buying dry homes after the Hurricanes?

  22. Phil/CMG  I have the Jan 19 300/350 BCS at $25, now $17 (2 of them) and one short  Jan 19 300 put and Jan 19 280 put, sold at $32 and $31. I also had a Nov 335 short call which I closed today for a $700 gain. So down about $5K on the position on paper and close to break even at expiration. Not too worried, but thinking about selling another call and maybe improving the BCS if you think that makes sense? Thanks.

  23. TEVA … now below $14. 

    Somebody is unloading..testing weak hands. 

  24. Hilarious that Jonas from MS downgrades GM for getting ahead of themselves but less raise the price of cash burning, production plagued TSLA to a market cap above GM.

  25. Added to a dumpster diving position.

    Bought some WIN @ 1.81.  Sold some May 2 calls & puts.

  26. CMG/Jet – I would not be quick to act.  Let them settle down unless it's very small for you and you plan to add a lot more.  In that case, you wouldn't want to squander an opportunity.  There are no 2020s yet and I wouldn't waste a roll here.  Your 2019 $300s are $39.20 and the $350s are $22 so net $17 but the key is that the $300s are 60% more than you paid for the spread.  If you don't like CMG, you can take them off the table with a huge profit and wait for the $350s to expire or roll the $350s to 2x the $400s ($12) and put another $2 in your pocket and THEN, if CMG does look stronger, you can always buy a 2020 $50 spread for $25 to cover and you'd STILL have $16 in your pocket (so the whole trade is free as long as the short puts go worthless, which you can also roll to lower 2020s).   So that's what I mean when I say "I'm not worried now".  cheeky

    TEVA/Learner – Everyone is expecting disaster from the Copaxone wind-down and, of course, we're expecting the new CEO to kitchen-sink the quarter so, hopefully, we should see the low-lows on earnings and then we can get serious about recovering. 

    TEVA made $1.31 last year and $1.05 is now expected and that's down from $1.25 people expected when they announced last Q.  Of course, even at $1.05, that's $4/yr earnings for a $14 stock – ridiculous!  

    Keep in mind Copaxone is a drug that's 20% of TEVA's revenues (17% as of last Q) and will likely drop to 10% or maybe 5% as generics kick in over the next 18 months (it's off patent) but the underlying assumption it that TEVA has no new drugs in pipelines (they have 100s) and that nothing will replace that revenue.  For one thing, TEVA can make their own generic and keep much of that market share (but at a cheaper price).  

    Meanwhile, at $14Bn with $4Bn in profits, even at $20Bn (5x earnings), they are an interesting pick-up for MRK ($171Bn market cap, $4Bn profits) or PFE ($214Bn market cap, $7Bn in profits) who could pay off all of TEVA's $35Bn debt with their overseas cash.  

    Oil looks like it was up 900,000 with gasoline down 5.5Mb and Distillates down 5.2Mb so same as API essentially.  Now we'll see if the traders consider it bullish.  Unfotunately, we need to wait for 1pm to get the export numbers.  Not likely we'll do more than re-test yesterday's highs ($52.62 and $1.74).

    • EIA Petroleum Inventories: Crude +0.9M barrels vs. -2.6M consensus, -5.7M last week.
    • Gasoline -5.5M barrels vs. -0.1M consensus, +0.9M last week.
    • Distillates -5.2M barrels vs. -0.9M consensus, +0.5M last week.
    • Futures -0.53% to $52.19.

  27. TEVA – Phil I was thinking the same thing.  Sold a few Jan 12.5 puts for .83 a couple of minutes ago.

  28. Jonus/Rustle – That's purposely trying to chase sector money out of GM and into TSLA, which happens to suit me fine as we're short GM and hoping TSLA goes back up so we can short them too!   Not helping TSLA though – down another 2% this morning. 

    WHR still going down – $160 now. 

  29. This is why I like Maddie's idea to go to U Toronto:

    That's my kind of school!  

  30. Good morning,

    I find it interesting when stock opens higher on earnings and then falls. Look at IRBT and SIX

  31. Wheeee on everything!  

    Now I can lighten back up on /RB.  

    Interesting/Baron – Amazing how often the initial reaction is the wrong one.

    Image result for very interesting animated gif

  32. ALK – WTF?

  33. WBA – solid earnings (in a challenging environment), positive guidance and stock opens up 3% and then ….sells off 4%!  What am I missing?

  34. Flipped long on /TF – tired of having it reverse on me (1,482.50) 

    ALK/Dave – Wow, that's nasty.  Companies are really getting spanked all of a sudden.  

    Alaska Air Group's profit, revenues rise in third quarter

    WBA/8800 – Someone is getting out of stuff in a big way.  Will probably pass and we'll level out later.  

  35. That's SIX too, which I like.  Thanks for letting me know about WBA.  WBA was being sold, so that's people getting out.  But SIX is different, it was going up

  36. You all might have noticed WATT is getting killed on news AAPL bought …

    25-Oct-17 05:48 ET


    Apple acquires wireless charging company PowerbyProxi, according to reports  (157.10)

    AppleInsider Article

  37. Done with /TF longs (5-point gain), fresh horse is /ES at the 2,550 line.  Over that bullish with tight stops below is a great risk/reward play.  

  38. 25-Oct-17 07:04 ET


    Walgreens Boot Alliance beats by $0.10, reports revs in-line; guides FY18 EPS in-line  (67.29)

    Reports Q4 (Aug) earnings of $1.31 per share, excluding non-recurring items, $0.10 better than the Capital IQ Consensus of $1.21; revenues rose 5.3% year/year to $30.15 bln vs the $29.93 bln Capital IQ Consensus.

    Co issues in-line guidance for FY18, sees EPS of $5.40-5.70, excluding non-recurring items, vs. $5.47 Capital IQ Consensus Estimate.

    Rite Aid (RAD) Transaction: The company expects to complete integration of the acquired stores and related assets within the next three years, at an estimated cost of approximately $750 million, which will be reported as acquisition-related costs. In addition, the company plans to spend approximately $500 million of capital on store conversions and related activities.

    24-Oct-17 11:22 ET


    Walgreens Boot Alliance target lowered to $73 at Pivotal Research Group ahead of earnings  (67.91 +0.40)

    Pivotal Research Group lowers their WBA tgt to $73 from $85. While recent speculation about Amazon (AMZN) getting into the online pharmacy business has shaved blns of market cap off the major drug retail stocks, they still prefer a better entry point. Firm also remains cautious about the impact of the Rite Aid transaction. Although the final version of the Rite Aid asset purchase is intended to be neutral to FY18 earnings, Rite Aid's financial and operational performance has sharply eroded since the original merger announcement from Oct. 2015. The latest guidance on transaction related synergies seems to reflect a more tempered outlook for Rite Aid. Currently, $300 mln of synergies are expected within four years of the transaction close (compared to $400 mln contemplated in the June 2017 announcement and $1 bln of synergies anticipated in the original $17.2 bln merger announcement from 2015).

  39. Phil,

    Thanks for the reassurance on WBA. However, the sell-off seems to be more widespread (CHL, STOR, ALK) and on positive news, not sure this is one source. On the other hand, SPY seems to have found some temporary footing.

  40. Comment content omitted because it is too long.

  41. Durable Goods

    • Sept. Durable Goods:+2.2% vs. +1.0% expected, +2.0% prior (revised).
    • Core +1.3% vs. +0.5% expected, +1.3% prior (revised).
    • September new home sales came in at a seasonally adjusted annualized rate of 667K, up a whopping 18.9% from August, and 17% Y/Y. That rate is also a 10-year high.
    • At least some of September's big print is no doubt spillover from a weak hurricane-hit month earlier – sales in the South of 405K vs. 322K in August.
    • The Northeast saw 48K vs. 36K, the Midwest 73K vs. 66K, and the West 141K vs. 137K.
    • On a year-to-date basis, sales in 2017 are up 8.6% from the same period a year earlier.
    • Full report
    • The homebuilders (ITB +0.5%) are in the green vs. the S&P 500's 0.4% decline.
    • Treasurys continue under major pressure, with the 10-year yield up another three basis points to 2.45%. TLT -0.7%TBT +1.4%
    • Previously: New home sales soar (Oct. 25)

    Saudi prince holds meeting with investors

    • At an event in Riyadh meant to highlight the kingdom’s influence in the business world, Crown Prince Mohammed bin Salman told investors that Saudi Arabia was returning to "moderate" Islam and intended to "eradicate" extremism.
    • The comments follow announced reforms on women's rights, plans to sell a stake in Saudi Aramco and creating the world's largest sovereign wealth fund.
    • The U.K. economy grew by 0.4% in Q3, bringing the year-on-year growth rate to 1.5%, and potentially boosting the chances of a rate hike by the Bank of England.
    • Prior to the release, sterling was trading very slightly down against the U.S. dollar at $1.3129, but quickly turned higher on the data, up 0.5% to 1.3204.

    Bank of Canada steady on rates, loonie stumbles on dovish comments

    • As expected the Bank of Canada paused its rate hike cycle, leaving its benchmark overnight rate at 1%.
    • Traders are selling loonies (NYSEARCA:FXC) though, as the bank calls the current stance of monetary policy "appropriate" and says it will be "cautious" before making any further adjustments.
    • The loonie has slid more than 100 pips since the news, now buying $0.7834, the weakest in more than two months.
    • Canadian stocks are down a hair.

    Healthy earnings beat for Visa

    • Visa (NYSE:V) flies past estimates with its Q4 report as it generates just short of $5B for the quarter.
    • Payments volume growth and cross-border volume growth both rose 10% during the period. Total processed transactions jumped 13% Y/Y.
    • Looking ahead to FY18, Visa says it expects a revenue growth rate in the high single digits and operating margin in the high 60s. EPS growth is seen landing at a mid-teens rate.
    • Previously: Visa beats by $0.05, beats on revenue (Oct. 25)
    • Shares of Visa are up 1.05% premarket to $109.55.
    • (NASDAQ:OSTK) CEO Patrick Byrne announced at the Money 20/20 conference today additional details relating to the tZERO proposed initial coin offering that is being unveiled by portfolio company Medici Venture.
    • tZERO is working with the Argon Group and RenGen to launch a U.S. regulated "Alternative Trading System" and platform capable of trading both security tokens and app tokens issued via ICOs and SAFTs.
    • Byrne says tZERO SAFT pre-sales are expected to open on Nov. 15 and run until Dec. 31. The proceeds from the sale are expected to fund, among other things, scaling tZERO's technology development and regulatory teams and potentially acquiring or establishing a custody and clearing firm to complement tZERO's existing infrastructure.
    • tZERO is working with the Argon Group and RenGen to launch a U.S. regulated "Alternative Trading System" and platform capable of trading both security tokens and app tokens issued via ICOs and SAFTs.
    • "Three years ago I stood up in front of an audience for the opening Keynote speech at Bitcoin 2014, in Amsterdam, and told the world that the main event of Bitcoin is not Bitcoin, it is the Blockchain, and it would change the world,” said Byrne.
    • More from Byrne: “While many doubted, the tZERO team worked hard to be at the tip of the spear in creating and launching credible, capable and institutionally scalable blockchain technologies for crypto assets."
    • OSTK +2.07% AH to $39.40. Shares are up 121% YTD.

    Argentina’s YPF to invest $30B to boost oil production

    • YPF (YPF +2.2%) says it plans to invest more than $30B over the next five years, in a move aimed at reversing an energy deficit that has hurt Argentina’s finances for years.
    • The pledge makes the state-controlled company the top investor in Argentina as Pres. Macri's market-friendly government is seeking to attract investments to consolidate an economic rebound after six years of stagnation.
    • YPF wants to raise overall oil and gas production by 5%/year to reach 700K boe/day in 2022 while exploration efforts continue, with reserves targeted to rise by 50%.
    • Hess (HES -5.2%) falls sharply after reporting a smaller than expected Q3 loss which nevertheless was nearly 90% higher than last year's comparable quarter due to changes in tax accounting.
    • Hess also warns operational issues caused by U.S. hurricanes will weigh on production for the rest of the year, after downtime due to Hurricane Harvey pushed the company's Q3 Gulf of Mexico production down 3.3% Y/Y 59K boe/day.
    • Total Q3 net production fell 4.7% Y/Y to average 299K boe/day, excluding Libya, with Bakken shale output reduced to 103K boe/day because of "adverse weather and delays in completing new wells."
    • Tortoise Capital Advisors portfolio manager Robert Thummel thinks certain energy infrastructure plays will thrive even if oil has trouble breaking out of a $45-$55/bbl trading range over the next several months, saying the group is relatively insulated from oil price volatility.
    • Thummel tells CNBC that his top energy pick is Cheniere Energy (NYSEMKT:LNG), which he says he bought in 2015 as it was struggling, and he still finds reasons to be bullish even with shares down ~3% over the past two years.
    • Thummel likes Cheniere's "pivotal role in helping the U.S. export more liquefied natural gas," and perhaps he's on to something, as shares have climbed 7% in the past two months.
    • Freeport McMoRan (NYSE:FCX+2.1% premarket after reporting a solid beats in Q3 earningsand revenues, assisted by a big jump in copper prices.
    • FCX says Q3 operating cash flows totaled $1.2B and $3Bi for the first nine months of 2017; based on current sales volume and cost estimates, and assuming Q4 average prices of $3/lb. for copper, $1,300/oz. for gold and $8/lb. for molybdenum, it expects full-year operating cash flows of ~$4.3B, exceeding prior guidance of $3.8B.
    • Q3 consolidated sales totaled 932M lbs. of copper, 355K oz. of gold and 22M lbs. of molybdenum; for FY 2017, FCX expects 3.7B lbs. of copper, 1.6M oz. of gold and 94M lbs. of molybdenum.
    • FCX says the average realized price of copper rose to $2.94/lb. during the quarter from $2.19 in the year-ago period, while the price of gold fell to $1,290/oz. from $1,327.
    • Q3 capex totaled $308M and $1B for the first nine months, and full-year capex is expected at ~$1.5B, including $700M for underground development activities in the Grasberg mine in Indonesia; prior full-year capex guidance was $1.6B.
    • FCX says it is "encouraged by continued progress" in negotiations with Indonesia's government regarding long-term operating rights in the country.

    • Q3 core EPS of $2.72 per share fell from $3.51 a year ago, but last year's result included $0.98 of favorable tax items.
    • Commercial airplanes operating margin rose to 9.9% from 8.5% a year ago. Defense, Space & Security margin rose to 10.2% from 9.8%. Global Services margin dipped to 14.2% from 14.9%.
    • Operating cash flow of $3.4B up from $3.2B a year ago. 11M shares bought back during Q3 for $2.5B, and $900M paid in dividends.
    • While full-year EPS guidance was lifted to $9.90-$10.10 per share, the midpoint trailed consensus of $10.04.
    • The light guidance makes for a good excuse for satiated bulls to lighten up – shares are up 68% YTD and nearly 90% Y/Y, but down 1.7% today.
    • Earnings call presentation slides
    • Previously: Boeing beats by $0.06, beats on revenue (Oct. 25)
    • Lockheed Martin (NYSE:LMT) CEO Marillyn Hewson urges the U.S. Congress to pass a budget bill for the full fiscal years, warning of potential order impacts if federal budget constraints extend past Dec. 8.
    • The current short-term spending bill, or continuing resolution, was passed last month but keeps the federal government operating only through early December and keeps the Pentagon budget essentially at last year's levels, potentially affecting new defense start programs.
    • "Even with the CR, we are not going to see an immediate impact," Hewson said during today's earnings conference call. "What it affects is if it extends in the next year," although she said she's "actually feeling optimistic that it's not going to do that."
    • LMT shares slid 2.3% in today's trade after Q3 earnings and revenues came in slightly below estimates, but the stock is up more than 24% YTD.

    • Toyota's (NYSE:TM) solid-state battery technology under development could be a "game changer" for pure EVs, but that does not mean the automaker is moving away from hydrogen-powered fuel cell vehicles, EVP Didier Leroy said at the Tokyo Motor Show.
    • He noted that Toyota was introducing two new fuel-cell vehicles, including the six-seater "Fine-Comfort Ride" concept car, with a cruising range of about 620 miles.
    • Lumber Liquidators (NYSE:LL) shoots higher in early trading after the company settled a class action lawsuit related to Chinese-made laminate flooring.
    • The terms of the agreement will see Lumber Liquidators pay $22M in cash to the plaintiffs and provide $14M in store credit.
    • SEC Form 8-K
    • Shares of LL are up 4.36% premarket to $36.40.
    • Coca-Cola (NYSE:KO) slides past estimates with its Q3 report on flat unit case volume growth.
    • Organic revenue was up 4% during the quarter, driven higher by a three percentage improvement in price/mix. Reported revenue was higher in the Europe/Middle East/Africa, Latin America and North America segments during the quarter.
    • In North America, Sprite volume was solid while Diet Coke went in reverse.
    • Looking ahead, Coca-Cola maintains guidance for full-year organic sales growth of 3% and expects EPS of $1.87 to $1.91 vs. $1.91 consensus.
    • Previously: Coca-Cola beats by $0.01, beats on revenue (Oct. 25)
    • KO +0.5% premarket to $46.41.
    • Dr Pepper Snapple (NYSE:DPS) reports volume increased 1% in Q3 as the addition of the Bai business contributed. The hurricanes in the U.S. and earthquake in Mexico impacted volume by about half a percentage point.
    • Sales were up 10% in the Latin American Beverages segment, while the Beverages Concentrates and Packaged Beverages segments both showed 3% growth.
    • The company's core gross margin rate fell 10% to 58.9% of sales. SG&A expenses were up $37M during the quarter, including $20M in marketing costs tied to Bai.
    • Looking ahead, Dr Pepper expects organic growth of over 1% for the full year and sales growth of about 4.5%. Full-year EPS of $4.50 to $4.57 is anticipated.

    • Chipotle (NYSE:CMG) is down 14.81% to fall to its lowest level since early in 2013.
    • The restaurant chain's ability to return comparable sales growth and margins back to pre-health crisis levels is being widely questioned.
    • Credit Suisse analyst Jason West sums up the mood from Wall Street on the restaurant stock: "Despite some sales lift from queso and pricing, we view this result and outlook as disappointing, particularly for those looking for a more meaningful recovery following multiple food safety events."
    • CS lowered its price target on CMG to $275 from $320.
    • Other PT revisions: Wells to $280, Wedbush to $290, RBC Capital to $320, SunTrust to $355, Cowen to $240, Canaccord Genuity to $325.
    • Previously: Chipotle limps in with Q3 results (Oct. 24)
    • Sources: Bloomberg, CNBC and
    • IHOP Restaurants announces the opening of its first post-security airport location with an IHOP Express at the DFW Airport.
    • The IHOP Express will be opened 24 hours a day.
    • The broader plan of IHOP owner DineEquity (DIN -1%) is to introduce smaller prototype IHOP restaurants and build out the portfolio of locations at "captive" places like airports, travel centers, casinos and universities.
    • The IHOP Express concept was first introduced in 2011.
    • Source: Press Release

    Glaxo would consider bid for Pfizer’s consumer health business, CEO says

    • GlaxoSmithKline (GSK -5%would consider bidding for Pfizer's (PFE -0.5%) consumer health business if the PFE puts the unit up for sale, GSK CEO Emma Walmsley says.
    • PFE said earlier this month that it was exploring a sale or spinoff of the business, which analysts say could fetch more than $10B; GSK’s consumer health business is one of the world’s largest, with revenue of £7.19B ($9.44B) last year.
    • Walmsley says regardless of any deal to strengthen its consumer health business, GSK’s top priority is to sharpen the company’s R&D operations after trimming dozens of research programs earlier this year to focus on four key disease areas.
    • The CEO's comments come as GSK reported higher Q3 profits and revenues, driven by growing sales for its prescription drugs and consumer healthcare products.
    • Bloomberg reports that a consumer group has files petitions with the U.S. patent office to challenge Gilead Sciences (NASDAQ:GILD) patents on hepatitis C drug Sovaldi.
    • The nonprofit group Initiative for Medicines, Access & Knowledge has challenged Sovaldi patents around the world, accusing Gilead of making pointless changes to the drug compound to keep cheaper alternatives from the market. 
    • Gilead earned $4B from Sovaldi last year.
    • Gilead was on the losing end of a $2.54B court decision because Merck developed the compound class containing Sovaldi. 
    • The patent board will decide in about six months whether the consumer group has a case against Gilead’s patents. 
    • Gilead shares are down 0.81%.  

    • The SEC has signed off on Uber’s (Private:UBER) business model of treating its drivers as the customers, according to MarketWatch.
    • Uber has already adopted the new revenue-recognition rules from the Financial Accounting Standards Board so it can report net revenue when a transaction happens, which means the company won’t have to report driver pay.
    • Uber’s auditor PricewaterhouseCoopers signed off on the tactic and the SEC didn’t object.
    • The SEC could still change its mind once Uber files its S-1.
    • New CEO Dara Khosrowshahi said in August that he wants to take Uber public in 18 to 36 months.
    • Previously: Uber CEO wants to go public in 18 to 36 months (Aug. 30)

    GrubHub +7% after Q3 beat, healthy revenue guidance

    • GrubHub (NYSE:GRUB) is charging out of today's open, up 7%, after a comfortable Q3 earnings report that beat expectations on top and bottom lines and some upbeat guidance on the current quarter.
    • Revenues rose by nearly a third to a record, and adjusted net income rose 23% to $24.5M. EBITDA per order also hit a record $1.54.
    • Active diners increased by 28% to 9.81M, and "daily average Grubs" rose 14% to 304,500.
    • Gross food sales were up 18% to $867M.
    • For Q4, it's guiding to revenue of $194M-$205M, above consensus for $183M, and EBITDA of $51M-$56M vs. consensus for $51.2M.
    • Conference call to come at 10 a.m. ET.
    • Press Release
    • Six Flags Entertainment (NYSE:SIX) reports revenue just short of estimates with its Q3 report as the U.S. hurricanes factored in.
    • Attendance was up 3% during the quarter to 12.9M guests, while guest spending per capita rose 2% to $42.94. Admissions per capita increased 4 percent to $25.63 and in-park spending per capita decreased 1 percent to $17.31.
    • International licensing revenue was up 23% Y/Y.
    • The theme park operator generated $301M in adjusted EBITDA for the period vs. $317M consensus estimate.
    • Shares of Six Flags are up 1.47% premarket to $63.00 vs. a 52-week trading range of $50.56 to $65.19.
    • Previously: Six Flags beats by $0.32, misses on revenue (Oct. 25)

    Sirius XM beats and raises, adds subscribers again

    • Sirius XM (NASDAQ:SIRI) is down 0.7% premarket despite Q3 earnings where it beat on top and bottom lines with solid profit growth, and again raised guidance.
    • Net income jumped 42% to $276M, and EBITDA was up 12% to $551M, above consensus for $534M
    • Revenue breakout: Subscriber revenues, $1.14B (up 6.2%); Advertising revenue, $41.5M (up 21%); Equipment revenue, $32.3M (up 3.3%).
    • Total net adds were 119,000 after losing 191,000 paid promotional subscribers (lower shipments from automakers offering paid promos); total subscribers came to about 32.2M. Self-pay net subscribers rose by 311,000, to hit about 27M.
    • ARPU, meanwhile, rose 3% to a record high of $13.41.
    • Operating cash flow rose 24% to $521M, and free cash flow grew 22% to $434M, a quarterly record.
    • It's boosting full-year expectations for revenue, EBITDA and free cash flow: It now sees revenues coming to $5.4B (in line), EBITDA approaching $2.1B vs. consensus for $2.07B, and free cash flow of $1.54B. Self-pay net subscriber adds are forecast at about 1.4M.
    • Press Release

    Sprint +0.9% after narrower-than-expected loss, strong subscriptions

    • Sprint (NYSE:S) is up 0.9% premarket after its loss was narrower than the Street expected and it marked healthy subscriber additions in its Q2 earnings.
    • As with T-Mobile (NASDAQ:TMUS), it's not holding a conference call to discuss earnings, leading pro-merger investors to believe the deal is imminent.
    • Net loss declined to $48M from a year-ago loss of $142M (EPS loss of -$0.01 vs. a year-ago -$0.04), and EBITDA climbed 16.3% to $2.73B.
    • In its ninth straight quarter of adds, postpaid phone net additions came to 279,000 (better than Wells Fargo expectations for 225,000).
    • The prepaid business has turned around as well, recording 95,000 net adds vs. net losses of 449,000 in the prior year.
    • Total company net adds were 378,000 (postpaid net adds of 168,000; prepaid net adds of 95,000; wholesale/affiliate net adds of 115,000).
    • It reiterated full-year expectations for EBITDA of $10.8B-$11.2B, operating income of $2.1B-$2.5B, and cash capex of $3.5B-$4B. It sees free cash flow around break-even for that period.
    • Press Release
    • T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) are laying the groundwork for special committees of their board of directors to decide on a merger, Reuters reports.
    • The boards are important because the companies are majority owned by Deutsche Telekom (OTCQX:DTEGY) and SoftBank (OTCPK:SFTBY), and could be left vulnerable to potential lawsuits from minority shareholders if they don't establish independent mechanisms to review the deal.
    • Cisco (NASDAQ:CSCO) and Google (GOOGGOOGLannounce a new hybrid cloud solution for deploying and managing apps and services across Cisco’s on-premises environments and Google’s Cloud platform.
    • The solution gives developers access to Kubernetes, the cloud platform’s Service Catalog, Cisco networking and security, and Istio authentication and monitoring.
    • The cloud solution will launch to limited customers in 1H18 with a wider launch later in the year.  
    • Google has struggled to steal cloud infrastructure service market share from leaders Amazon Web Services and Microsoft Azure. In Q2, Google held 5.9% of the market, according to data from Canalys. AWS and Azure held 30.3% and 13.8%, respectively. 
    • Previously: Microsoft releases Teams roadmap, beta version of Azure Container Service (Oct. 24)
    • Texas Instruments (NYSE:TXN) shares are down 1.39% aftermarket following Q3 results with EPS and revenue beats. Q4 outlook puts revenue between $3.57B to $3.87B and EPS from $1.01 to $1.15, compared to the consensus estimates of $3.66B and $1.01, respectively.
    • Segment results: Analog revenue was up 16% on the year to $2.7B with a 32% jump in operating profit to $1.3B. Embedded Processing revenue was up 17% to $931M with its operating profit up 45% to $325. The Other segment (DLP products, calculators, and custom ASIC products) revenue fell 13% to $487 and the operating profit fell 14% to $195M. 
    • Cash flow from operations TTM was $4.8B with FCF at $4.2B or 29% of revenue for the same period. Texas Instruments returned $4.3B to shareholders in the past year through dividends and stock repurchases and announced a new 24% dividend increase and $6B share repurchase program in September. The company ended the quarter with $1.3B in cash and equivalents and $3.1B in long-term debt. 
    • Press release  
    • Previously: Texas Instruments beats by $0.12, beats on revenue (Oct. 24)
    • Goldman Sachs expects Amazon (NASDAQ:AMZN) will disappoint with its forecast when it reports Q3 earnings on Thursday but maintains a Buy rating and $1,275 price target.
    • Analyst Heath Terry expects Amazon to forecast revenue growth of 26% to 34% on the year with up to $1B in GAAP operating profits compared to the $1.5B sell-side consensus estimate.
    • But Terry believes investors underestimate “the potential for organic growth reacceleration as the ~70% growth in infrastructure spend (CapEx and Capital Leases) over the TTM begins to deliver returns and AWS comps ease."
    • In other news, Amazon will now allow for premium subscriptions to Alexa Skills, which opens up a way for developers to monetize after the company shut down the voice assistant’s ad network.
    • The first live Skill to get the premium option was Jeopardy!, which now offers Double Jeopardy questions and the ability to play missed days from the same week.
    • Prime members can have access to the Double Jeopardy clues for free but non-members will need to pay $1.99 per month for a subscription to the Skill.
    • The six clues per weekday offered before will remain free.  
    • Amazon shares are down 0.59%.  
    • Previously: Amazon launches Alexa security camera, Key for in-home deliveries (Oct. 25)
    • Amazon (NASDAQ:AMZNannounces an intelligent indoor security camera with Alexa integration.
    • The Amazon Cloud Cam can livestream to the Echo Show, Echo Spot, Fire TV, or Fire TV. 
    • Features include 1080p Full HD resolution video, night vision, a wide viewing angle, two-way audio, and the ability to replay the previous 24 hours in the app. 
    • Competing products exist from Alphabet’s Nest unit with the newest camera featuring Google Assistant integration and a $299 price tag. 
    • Cloud Cam pre-orders start today with a November 8 ship date. One Cam costs $119.99, a two-pack is $199.99, and a three-pack is $289.99.    
    • Amazon also announces Amazon Key, a service that integrates with the Cloud Cam and third-party smart locks to allow secure in-home deliveries. 
    • Amazon will verify that the delivery driver is at the right place and the Cam will start recording when the Key unlocks to ensure security. Drivers never have access to sensitive codes or keys. 
    • The Amazon Key In-Home Kit includes the Amazon Cloud Cam and a compatible smart lock from the likes of Yale and Kwikset with pricing starting at $249.99. 
    • Amazon Key will launch on November 8 in 37 U.S. cities.      
    • Previously: CNBC: Amazon considering deliveries inside homes, into car trunks (Oct. 10)
    • Bloomberg reports that Apple (NASDAQ:AAPL) allowed suppliers to reduce Face ID accuracy to speed up iPhone X production.
    • The iPhone X relies on Face ID for unlocking tasks previously managed by Touch ID, which the newer device lacks. 
    • Limited supplies were initially expected due to the difficulty of producing the OLED panels but a problem with the 3D sensor system caused a later bottleneck that could severely constrain launch supplies. 
    • KGI’s Ming-Chi Kuo predicts 2M to 3M units available on launch day and 25M to 30M in the holiday quarter. Apple sold 78M units in last year’s quarter. 
    • In better news for Apple, HSBC initiates the company at Buy and a $193 price saying, “We believe a very large installed base of loyal, yet patient users can’t wait to get their hands on iPhone X.” 
    • Analyst Steven Pelayo predicts 13% iPhone unit growth in CY18 with ASPs up 12% on the year due to the higher iPhone X price. He also forecasts a 20% unit growth for the Apple Watch with an 8% ASP increase.  
    • Previously: WSJ details 3D sensor delays for iPhone X (Sept. 27)
    • Previously: KGI: Apple will ship 2M to 3M iPhones for X launch (Oct. 20)


  42. NLY/Phil – why down today and not even so much volume. earnings next Wednesday Nov 1

  43. Think it's a good time to trade small.  Bellwether stocks GOOG, INTC, MSFT, & AMZN all report after the close tomorrow.

  44. Phil

    What do you think of FCX 2020 $12 puts a $1.60

  45. NLY/Scott – I see nothing.   I think some large fund is cashing out – so many stocks dropping on no particular news.

    Big boys/Albo – The way stocks are getting hammered on earnings, they should put it off!  

    FCX/Baron – I like those guys a lot.  Good target.

  46. NKE – some dramatic price action today

  47. Scott -

    ~~  NKE

    NIKE CEO at Investor Day expects sales to grow high single digits, EPS to grow in mid-teens over the next 5 years (expects 75% of growth to come outside of US)

  48. WPM – does it look like this consolidation is starting to angle upward? Yes. 30ma has crossed over 50ma. certainly been some volatility compression..

  49. ABX/phil, any earnings play?.  earnings tonight.

  50. NKE/Albo – yep, looks like someone heard what they wanted to hear…

  51. HON – another company have never bot because didn't want to chase… gotta have cash for when the market dips.. but with expectations of continued huge inflows to ETFs through 2018 (at least) market will not drop.   Phil, do you have a handle on boomer demographics and a schedule for cashing out their funds?

  52. DF – selling a couple more March 10/12 put/call combos.. just got .65 credit.

  53. DF – partial fill.. only one through so far.. but waiting.

  54. OMER – well now. back to where I wanted to enter… the Jan2019 $13 puts for 3.50 look pretty good.

  55. Phil – this AM's rant, there are idiots, look around. We need extreme vetting alright, in the procreation department, la mamma dei cretini è sempre incinta, a high five brother.

  56. Muck – "Having party members break with you is one of the early signs of Revolution but, of course, no one in this Administration reads their history books."

    Refer to what I said above.  That's the problem, neither does the public, so they never learn from their history.  The idiots (typical of that video) either can't read or don't.  Most of the "educated" ones, due to revisionist history that is taught, and very effective programming which limits their ability to think outside the box, are effectively rendered ignorant.

    The 1% only have to worry about, the other 1 or 2% who are on to their game.  The rest are compliant sheeple.  Just look at the list of dupes that have been elected since Johnson. 

    Nixon #32 Crook, Carter #27 Rockefeller Republican, Reagan #17 Ex-Actor CIA Drug War, Bush #22 CIA, Clinton #20 43% vote neoliberal (Republican dressed as New Democrat), Shrub #34 50% vote Neocon CIA, Obama #18 Backlash neoliberal CIA.  Can't even crack the top 15 in that list and before 2020, Trump will be #44 Backlash Reality TV Manchurian Candidate. 

    Now for your moment of Zen… in 1968 the Crook, like Clinton, got elected with 43.4%, HHH 42.7%, Little Hitler George Wallace diverted 13.5% or the uber ignorant. And our dysfunction has been all downhill since then.  By design? Playoffs? Unequivocally, as you never really had any choice or a chance and Out.

  57. Naybob – you may enjoy "Adults in the Room" by Varoufakis.

  58. OMER – Dec $14 puts @ 1.25 nice way to start tiptoeing in.

  59. Phil,

    Trial ballon: GSK interested in PFE consumer Business….Any put sale on GSK for 2020 you like; Thanks as always…

  60. Phil / TEVA,

    I am holding 1000 Teva in stock @ avg of 15 per share, do you recommend selling calls to cover me for upcoming earnings ? I am in it for the long haul as it is a great deal at this price.

    Thanks as always


  61. Phil – I like your TSLA play discussed on the webinar.  This was my play a couple of months ago..  Only sold 5 of them.  Just went with the naked calls. Think it's just a matter of time until people realize that Elon has no clothes on.


    September 1st, 2017 at 2:53 pm | Permalink | Tweet thisIgnore this user 

    Phil, I am very tempted to sell far OTM calls on TSLA.  For example, sell 10 Jan 2019 550 calls and take in $13,000.  Would use a stop, of course.  And the margin's no problem.

  62. I was actually hoping you'd talk me out of it.  Had previously played a losing game by selling OTM calls on NFLX.

  63. Lots of trade ideas during the Webinar today.  Back shorting /RBZ7 at $1.685 – be careful in /RB as the /RBX7 expires tomorrow.  

    NKE/Scott – Should have sold puts on them.  2020 $45 puts are only $2.50 – not worth it.  

    WPM/Scott – Imagine how they'd do if Silver stopped laying around. 

    ABX/Lunar – Yes, in the Webinar we decided 50 2020 $15 ($3.45)/$22 ($1.35) bull call spread at net $2.10 ($10,500) and 25 short $15 puts at $2.20 ($5,500) for net $5,000 on the $35,000 spread was an excellent trade into earnings as we're not worried if they go lower as we'd be happy to buy more and, if they pop, you'll be right in the money with $30,000 (600%) upside potential.

    Boomers/Scott – Flee the country before it's too late:

    Image result for baby boomer retirement

    And it's up to Donald Trump to guide us through this critical period!  About 4M people per year hitting $65 going forward but it's worse because the people in their 80s aren't dying to make room.  74% of the people have less than $100K to retire on.  This is going to get so ugly!  

    Procreation testing/Naybob – I'm all for that.   Of course, imagine the outrage in Trumpland when the Government tells them they can't have baby voters…

    GSK/Jasu – It's not like buying PFE, they are buying a business arm for cash flow and PFE would rather have the actual cash (probably rather than downsize to increase profits – let GSK do the dirty work).  GSK makes $2.70 per $38 share, so not too bad.  Not a short I'd play as they've already come down to a reasonable price.  Try asking when a stock is at the top of a range – way easier! 

    TEVA/Pat – New CEO might kitchen sink the Q and then we'll see where the bottom is but I wouldn't sell calls just to avoid maybe going $1,500 more red on a 10% drop because you are screwing your upside if they pop.  If it does make you feel better, you could sell 6 of the Jan $15 calls for 0.95 ($570) which would mitigate some of the damage on a drop and should be easy to roll up and out, even if TEVA runs up 20% on you ($16.80).

    TSLA/Albo – Yeah, the options prices are crazy on those guys.  Very tempting.  

  64. Speaking of sticking it to the poor and saving for retirement.  I was talking to a guy who's a mortgage broker and he makes about $80K but lives in North Jersey so very little left to retire on and his kid got in a bar fight and was arrested and charged with a felony so he had to spend $8,000 on a lawyer (just the retainer) and $2,500 for a PI to check things out, establish a time-line whatever.  Whether it is a BS charge or not, the police are very quick to do things like that and they don't consider the financial repercussions on the families of the kids they jam up.  That's a very nasty, unexpected expense and, for people who can't afford a good lawyer and private investigators – well they just go to jail and become slave laborers – whether they did it or not.  

    The other conversation I had yesterday was because our Real Estate project is gathering bankruptcy data and it turns out that, in 20 years in NJ, about 1M out of 9M people have gone bankrupt.  There's only 3M households but I figure if one household goes BK then husband and wife both get hit.  Still, that's an insane statistic and the leading cause of bankruptcy by a mile (75%) is Medical Expenses!  

    Image result for what a world animated witch melting gif

  65. Quick question – does anyone use Excel and MarketXLS or a similar program to populate option prices on some time frequency?

  66. Phil – RBX7  — TD says 6 days left, Oct 31.

  67. IB says Monday 9 am is auto liquidation cutoff for shorts. 

  68. ESRX – Pretty negative piece …. no talk of the new acquisition or the 1.2B savings target.  Very one sided I'm surprised by this uneven reporting


    Express Scripts Only Looks Cheap 

    Pharmacy-benefits manager’s low valuation masks challenges including growth, regulation and competition

  69. Why is RBX7 not moving. It shows volume and bids but price is flat line. 1.7348. ?

  70. That’s odd, is /RBZ7 trading.   As to the date, TOS says there’s one day left and that’s what I trade on, so I’m not messing around.

    ESRX/Batman – Well, that is certainly a glass half empty kind of report.

  71. APNewsBreak: Trump opposes massive California water project

  72. Republican group threatens to block budget over tax deduction fight

  73. Phil. RBz7 is 1.68 and X7 is 1.735. Would it be good to roll the X7 into z7?!!!? 

  74. Yes, that’s what we did in the Webinar.  I don’t like to be in expiring contracts.  

  75. Phil,

    Is /TF a good short at 1500? What level are you looking for? Seems to me it makes lower highs and lower lows

  76. Also, what's your target on /RB shorts before the weekend run up?

  77. Good morning! 

    We're likely to drift along into the big tech earnings tonight.

    I don't think /TF is a good short at 1,500, we talked at length about that in the Webinar, 1,512 (see big chart) is the line we've been shorting around for good reason – we have not yet established that the channel is breaking down.  

    /RB/Japar – I don't have "targets" – I short something and, if I make money and I think the move might reverse on me – I get out.  Still, look at /RB the past two weeks – nothing justifies this move (10%):

    Not even the move on oil (4%)!  

    So "expectations" of course, would be for the 5% Rule to kick in at 10% over $1.55, which is $170.05 so call it $1.70 and call the weak retrace (or overshoot) 0.03 and 0.06 for strong and we did top out at $1.73 so now we need to see $1.70 fail and then we could expect $1.67 (weak) or $1.64 (strong) pullbacks.  At each level down, you look for a bounce of 0.6 (20% of the drop that takes us there) or 1.2 to know whether the downtrend is reversing.  /RBZ7 topped out at $1.69 but it's the same calculations so $1.66 was the goal line ($1.69 is the weak overshoot) and then we look for $1.66 and $1.63 on the way down.  

    Twitter kicked ass!  

    Dollar just popped – not sure why. 

  78. Dollar popped – likely because the ECB announced plans to taper its bond purchases

  79. TWTR – outlook looks encouraging. 

    GAAP profitability by next quarter and 11% increase in EBITDA. 

    If they deliver next quarter, this could really take off.