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| | | Jobs | | | Thursday’s Ramp & Camp session was seemingly about jobs, both Thursday’s ADP and Friday’s employment report. The S&P was shot out of a cannon at the open (Ramp), but traded in a small 4-pt range (Camp) for 90% of the day.
As usual, last Thursday’s weekly jobless claims data were revised worse than originally reported. Every week, without fail, the BLS reports data that it knows is not true; the numbers are too low so as to make the employment situation look better than reality. The following week, like Thursday morning, the data is quietly revised worse and a new data point is erroneously released…soon to be “corrected” at the proper time.
This happens every week, but nobody seems to care.
Thursday’s ADP report was supposed to be 155,000 but turned out to be 158,000 – beating expectations. With a “revised” methodology, traders are now expecting a good number for Friday’s monthly employment situation data.
Bloomberg said the following – “Market Consensus before announcement Special note: ADP has switched to a new economic consultant to revamp the data--Moody's. Essentially, there is no track record for how well the revised history really predicts. Going back however, ADP private payroll employment for September posted at 162,000 based on its old methodology. The BLS number for private payrolls in the employment situation report came in at 104,000.”
Let’s hope this “revised” model is better than the last model and by a lot. Why? Because the previous version overstated private job creation by 419,000 over the last 12-months.
Maybe the new model will overstate private job creation by 1-million? | | 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 Russell Stohr
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"I absolutely love the program!!! It hasn't been easy but I am up on the year and have been trading very well these days! It is very important that the other students know to be patient and don't over manage your stops! Charlie Thomas has been a real pleasure to work with, he is great!" | | | | | | 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 | | | Opportunities to buy cheap calendar spreads Demand for options ahead of earnings annoucements increases due to investors positioning themselves for a potentially big move in the underlying stock price after the earnings announcement. Sometimes, options prices become mispriced or overvalued/undervalued relative to each other. Yesterday, we analyzed a scenario of buying the Nov/Dec calendar spread in Allstate Corp. (ALL) ahead of their earnings announcement. Due to concerns about possible negative impact from Hurrican Sandy, the November options were trading at 31.22 implied volatility level or 22% higher than December options. Specifically, the Nov/Dec 38 calendar put spread was trading for 0.35. Today, after the earnings announcement, that same spread closed at 0.56. In our classroom, looking for mispricing in Calendar Spreads is one of our bread & butter strategies.
| | |  | | | | Currency Spotlight | | | | Some traders might not be aware that gold used to officially be a critical part of the FX market. In 1900, the Gold Standard Act was approved for allowing gold as the only option for redeeming paper money. In other words, people would not have to worry about their currency paper being worthless because it was backed by something of value. Gold’s role in FX changed in 1971 when President Nixon took the U.S. off the gold standard and shortly after, other countries followed. The value of gold doubled from the beginning of 2008 to the summer of 2011. This year gold remains rangebound between $1,600 and $1,800 as several key variables persist: The Election, The Fiscal Cliff, and Hurricane Sandy
The effects of Hurricane Sandy may distort economic statistics this quarter, but the overall reconstruction efforts, will help counter the loss in production and spending in the affected areas. The problem with statistics following a natural disaster is that they might not hold enough weight for large investors to resume longer term positions. Traders might not put much conviction in the statistics that are affected from the hurricane and the recent range may persist. Moving to politics, if President Obama wins next week’s election (according to In-Trade he is becoming a bigger favorite), QE infinity will not be disrupted and gold may finally move toward the upper bound area of the frustrating range. The ‘fiscal cliff’ will most likely return to the headlines after the election ends. If it is not addressed, the U.S. economy is expected to return to a recession. Flights to safe haven assets will become popular and despite a strengthening dollar, gold could resume its overall bullish trend. In recent years, the yellow metal been resilient and as the fundamental factors become clearer, it may continue to rally even if some of risk events do not necessarily go its way.
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|  | | | | Watch List | | | As we saw the market in a state of recovery today following a sideways day yesterday, the outlook seems to be very bullish. I don't want people to get fooled by this certain move today. Let's recall very quickly how the market was prior to NYC getting hit by the terrible force of Hurricane Sandy. We had some fairly significant down days with the exception of one day where the DOW barely finished positive by a phantom rally right before the close. Today's action just might be a precursor of things to come. I honestly feel that we won't have any significant trends in either direction until we turn over into 2013. It's really simple to gauge this speculation. While we are approaching the end of earnings season, we are now faced with the presidential election along with the "Fiscal Cliff". These two factors alone is enough to throw the market into either a tail spin down, or a strong rally to record highs. Now the questions is...."WHICH WAY WILL IT GO?!". I am more inclined to be in shorter term positions, with the understanding that significant reversals may take place at anytime. So I would highly recommend that you do protect your profits when you can, and understand that ANYTHING can happen in the market leading up to the end of 2012. I personally will be taking a very prudent approach and I highly recommend you do the same thing. The risk is certainly not worth the reward at the moment. Open Position: CHKP Stocks to Watch: AAPL IBM AMZN PCLN GS BAC C DIS NFLX GMCR | | |  | | | | Futures Data | | | ES 1422.75 / 1417.25 POC… 1422.50 YM 13181 / 13137 NQ 2681.50 / 2668.00
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