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| | | Europe | | | Yesterday we spoke about Japan – today we discuss Europe.
Greece avoided a default yesterday when the ECB allowed it to lie about assets by saying, get this: assets for collateral in Greece had recently gone UP in value! The hilarity between the ECB and Greece never ends. Since the Eurocrats and other politicians are running out of cans to kick in Greece, they just changed the rules (again). Greece no longer has to meet its overlord’s debt-to-GDP demands in 2020…it has been extended to 2022. There, problem solved.
Greece is not alone – the rest of the Eurozone is slowing as well. Recent data across the region suggests that Thursday’s GDP data will be less than bullish.
Data from Eurostat showed industrial production fell 2.5% in September, which was the worst drop since 2009. On the year, output dropped 2.3% after a 1.3% decline in August. Economists “only” missed the industrial production number by 25% as they expected a 2.0% fall. The 2.8% month-on-month decline in production of non-durable consumer goods was the steepest since January 2000. French auto production fell 2.7%. German auto production fell 2.1%. Industrial production in Portugal plummeted 12% in September alone. Industrial production in Ireland plunged 12.6% in September. Greece is in an outright depression as its recent GDP data showed a staggering (annualized) GDP fall of 7.2%.
Although the news sounds depressing I’m sure our European friends are keeping their collective chins up. After all, they know that the “next” Eurozone Summit will solve it all.
Like Japan’s QE11 is, umm, surely going to fix Japan…Summit 11 (or is it 25?) at an ultra-exclusive resort will solve it all in Europe.
Done & done. | | Trade well and follow the trend, not the so-called “experts.” | | Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banking mafia. | | | | | | | | | |  | | | | is a leading investment education firm that empowers traders to achieve and surpass their financial goals. More than 50,000 students have used Larry Levin's proven techniques for powerful results. | | | | | |  | | | | Congratulations to Keith Ippolito
Results: +$202.50 from Market Profile
[02:27 pm] Keith Ippolito: No bad at all. I'll take it everyday
[02:29 pm] Keith Ippolito: Program is going well. Alll I could offer is just follow the rules. Listen to Pat he knows his stuff, and it just starts fall into place.
| | | | NOTICE: Testimonials are believed to be true based on the representations of the persons providing the testimonials, but facts stated in testimonials have not been independently audited or verified. Nor has there been any attempt to determine whether any testimonials are representative of the experiences of all persons using the methods described herein or to compare the experiences of the persons giving the testimonials after the testimonials were given. The average reader should not necessarily expect the same or similar results. Past performance is not necessarily indicative of future results. No person was compensated for providing a testimonial. | | | |  | | |  | | | | Volatility Commentary | | | VIX being this low is unusual--just 15% probability When S&P500 Index is falling, VIX is rising most of the time. This inverse relationship is the reason why VIX is often referred to as the "fear index". Furthermore, the more and faster equity prices fall, the higher and faster VIX rises. During this most recent market sell-off, however, VIX has been very subdued. Despite the S&P500 Index trading below its 200-day moving average, VIX closed yesterday at 16.65. Even today's 1.39% fall in the S&P500 Index failed to boost VIX above 18 level. How unusual is this? Since 1994, VIX remaining below 17 level occurred only 13% of the time, when S&P500 Index was below its 200-day moving average. Furthermore, despite VIX rising 7.63% today, VIX being under 18 level occurred only 15% of the time, when S&P500 Index was below its 200-day moving average.
| | |  | | | | Currency Spotlight | | | | Early in the 70’s the exchange rate for one U.S. dollar was 300 Japanese yen. The 80’s had a wild range of 275 to 135. In 1995, dollar yen fell to a record low of 79.70 and three short years later, it reached 147.65. The financial crisis of recent years have now contributed to the recent yen strength and made a new all-time low for USD/JPY at 75.56 in October 2011.
Japan’s economic crisis and deflationary problems began in the early 90’s. Dealing with a shrinking population, high debt, energy uncertainty and a complex relation with China have not bold well for its economy.
Yesterday, we found out that Japan’s Parliament is set to dissolve this Friday, prompting an election next month and according to current polls, the removal of Prime Minister Noda for Shinzo Abe, the head of the leading opposition Liberal Democratic Party. Mr. Abe’s political agenda includes to adopt a firm 3% inflation target (currently 1.0%) and to print an unlimited amount of yen until they reach their goal. Let the currency wars begin…. again.
No trader will want to be caught on the wrong side of this currency intervention, so the Japanese yen could finally start to devalue beyond the 85.00 level. The only problem is that investors appear adamant in buying yen and selling both euros and dollars every time the Greek Exit or Fiscal Cliff seems to be panicking the markets. Once both cans are successfully kicked down the road, the yen may finally start trending lower to joy of Japanese Finance ministers. It appears that with increasing borrowing costs for Japan, Mr. Abe’s tough stance on China, and a potential future credit downgrade might just be what this export driven country needs to weaken its currency and jump start its economy.
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|  | | | | Watch List | | | Today the market action was both fast and swift, and also a grind em out bore. The movement was abrupt at times with aggressive sell offs in some stocks, but on a strong down day there were a couple of big gainers. Cisco along with Facebook had nice percentage gains and showed strength in a very weak market susceptible to aggressive selling. These two stocks may just end up as short term value buys, so it's important to watch the trend over the next few weeks to see if they can sustain this aggressive buying.
Now seeing the market conditions the last week or two, It's almost like the market is in a high alert state of near panic. It seems poised to just sell off in swift and abrupt movements and then consolidates while looking for another reason to sell. With the continuing worries about Europe and the pending Fiscal Cliff, it might be the start of a slide until the government can come to some sort of resolution. While I expect the markets to be both a volatile AND a sideways grind on the same day, I also can see a downtrend developing all the way into the next year. If this profit taking/aggressive selling couples with panic and momentum, the down turn can be very sharp with continued sells well past 1250.00 in the S&P. I highly doubt that will happen, but I also would not be surprised one bit.
1325.00 in the S&P is a very important level. We should see some support, but if we break and stay below that price, it will confirm a very bear trend and the sells will be in play. Now on the other hand if they S&P bumps up and get past the 1395.00-1400.00 level and holds, then expect the bulls to be in play. We are at a pretty critical time as far as the market goes, and the next few weeks will be quite interesting and much more active then historically. Use prudence and caution in these market conditions, and look for more short term movements in stocks as they can swing in either direction at any given time it seems. Even the lunch hour trading has seen strong moves as of late. Open Position: CHKP Stocks to Watch: AAPL AMZN BAC C GS FB HD LOW IBM | | |  | | | | Futures Data | | | ES 1383.50 / 1372.00 POC… 1379.75 YM 12828 / 12740 NQ 2581.00 / 2563.50
Notes from the Pit
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