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No Deal!

The main driver of equity gyrations Thursday was more “fiscal cliff” talk. Is it solved or isn’t it? That’s the question. The answer is that the politicians will surely wait until they drive to the very edge of said cliff, look over, and then make a very bad deal out of haste.

Until then it’s little more than bickering.

At 10:30am central Speaker John Boehner held a press conference in which he said “No deal!” Some of his comments follow…

*BOEHNER SAYS `THE WHITE HOUSE HAS TO GET SERIOUS'

*BOEHNER SAYS DEMOCRATS `COMFORTABLE' GOING OVER FISCAL CLIFF

*BOEHNER SAYS `NO SUBSTANTIVE PROGRESS' MADE IN TALKS

*BOEHNER SAYS DEMOCRATS RULING OUT `SENSIBLE SPENDING CUTS'

*BOEHNER SAYS DOESN'T KNOW WHAT WHITE HOUSE WILLING TO DO

John Mauldin is a financial expert and best-selling NY Times author, and in the following video he interviews the chiefs of staff of Senate Majority Leader Harry Reid and Senator Rob Portman. http://www.mauldineconomics.com/landing/chiefs-of-staff-video/MEC011EM1112N

No matter what you hear from the Senator’s themselves, you’ll find more truth here. Starting at 8:39 in the video (to 11:45) you will hear Harry Reid’s chief of staff discuss how Senator Reid is quite comfortable “driving off the cliff.”

Senator Portman’s chief of staff delivers his own version of truth when discussing spending cuts which starts at 36:45: “We’re not going to spend less this year than we did last year. That’s just not going to happen…”

So in point of fact, there is no deal at this moment. Moreover, no matter what BS “deal” is eventually done it *will* be a can-kicking exercise. In Harry Reid’s warped mind he may think he’s solving the issue, but since he’s a politician he is, by definition – a liar.

And why will it not be solved, and why will every politician who claims it is solved be a liar? The answer rests in Senator Portman’s comment above in which he was explaining not his own position, but that of Congress at large, “We’re not going to spend less this year than we did last year. That’s just not going to happen…”

Trade well and follow the trend, not the perma-bull OR perma-bear “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.

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Congratulations to Tom O'connor

Quotes:

[13:42] Tom O'Connor: Hi everyone. First time speaking up during room. I've been watching for several days and just graduated yesterday from Market profile with Pat.

[14:06] Tom O'Connor: thats awesome John.....I've seen some great calls while in the room so far.

[14:42] Tom O'Connor: Hi John. Thanks for the welcome. Will take it slowly. I actually currently swing/day trade / scalp using options but I have not been totally satisfied with my own success. It's funny, since I have been taking the Market Profile course with Patrick, I have already straightened out a lot of what I was doing wrong on my own and have been doing very well with my existing system while keeping Dan's room open and listening and watching too. I needed a room atmosphere to keep me focused. I have been wanting to get involved with Futures trading and I'll have to say, I am very impressed with this course / your offerings thus far...thank you!

[14:44] Tom O'Connor: It's amazing the bad habits you can pick up when on your own.

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

Herbalife Ltd. (HLF) Part 2, Implied Volatility Plunges 24 Points!

Herbalife (HLF) stock price plunged in the morning from 45 to as low as 42.18, then climbed all the way back up to close slightly up at 45.10. In after hours trading, StreetInsider.com report thatHerbalife COO Richard Goudis disclosed purchase of 45,516 shares on November 29th at a price of $43.89 has lifted the HLF stock price to above 46. Most likely, the market getting wind of this news during the trading day is what caused HLF to rebound strongly after its morning plunge. Over 7.7 million shares exchanged hands today, which is significantly over the 3-month average stock volume of 1.3 million shares.

Furthermore, we saw the 1000s of December put contracts being dumped today causing implied volatility to plunge by 28.8% ti 60.34. Remember that I wrote yesterday, it is really difficult to ascertain the true intentions of options players.

The question is was all this manipulation? Heavy buying of put spreads could cause a stock price to fall with heavy volume. HLF stock price fell from 47.68 to as low as 42.18 in less than 3 days. (It would be easy for an insider to scoop up a chunk of company stock during a selloff on heavy volume). Furthermore, heavy buying of options could also boost the price of those options further as other traders and market makers try to piggy back off of the initial big trades. Then the players that bought the December 45/January 32.5 put spread could dump the December puts at elevated implied volatility levels but hold on to their short January put option positions, which would lose most of their value because of the combination of the rising stock price and collapse of implied volatility. Something smells very fishy with both stock and options activities over the past few trading days...whether this type of activity gets investigated is uncertain.

Currency Spotlight

Did you know that FX is the one truly global marketplace? But FX trading has its own unique lingo. For example, the unit of measurement to express the change in value between two currencies is called a "Pip." If EUR/USD moves from 1.2250 to 1.2251, that .0001 USD rise in value is ONE PIP. A pip is usually the last decimal place of a quotation. Most pairs go out to 4 decimal places, but there are some exceptions like Japanese Yen pairs (they go out to two decimal places).

As each currency has its own relative value, it's necessary to calculate the value of a pip for that particular currency pair. In the Trading Advantage FX course, we demystify the intricacies of the currency market and give actionable strategies so you can potentially make money almost round the clock.

Watch List

I find this market almost hilarious and I am sitting here chuckling under my breath as I write this. We esentially had a replay of yesterdays market action and condition. The same type of slide followed by the immediate rally, that was followed by choppy volatile market conditions, only to have the day close with a small rally. It seems we maybe seeing quite a few more press conferences by the government to update us on their daily fights and disagreements, only to finish the conference by saying "We are still working together to find a solution". Thank you Mr. John Boehner for letting us know that Republicans and Democrats are not in agreement, yet they are looking for a solution that can benefit their parties...ahem I mean the public interest.

RIMM was a stock that traders were highly active in today. It has gotten a few "Buy" or "Upgrade" ratings as of late, and today was another that saw the stock ramp up big premarket, only to falter right after the open and pull back to close at $11.54, down .60 from its opening price. RIMM is on our Stocks to Watch List and has been on a very nice run since it hit the 2012 lows of $6.22 back in late September. This is a stock that can progress upward for a month just off speculation that the new Blackberry 10 will have decent sales numbers and nothing else. Now of course the earnings date for RIMM is 12/20/2012 and it can easily end up back down to the $7.00 price range, but I think the interest in this stock has been proven as of late that retail investors and institutional traders are bullish coupled with short position holders unloading their trades to take profits.

Coming into tomorrow I expect the action to take place early, and the afternoon to follow suit with a more ramp and camp type of market action. I also feel volatility will be a bit less then normal, but still will be in play none the less during the market hours. Watch for the market to move up, but not without fast retracements and rallies. Keep looking for shorter term plays, and look to take profits early and often. Open Position: IBM Stocks to Watch: IBM AMZN PCLN GOOG AAPL NFLX GMCR FSLR BAC C RIMM FB RGR

Focus was on retail stocks today in the market. While stocks like Target(TGT) and Walmart(WMT) took a slight hit, Ebay(EBAY) and Amazon(AMZN) made moves to the upside today. Pretty easy to see on a day like "Cyber Monday" where the traffic to these websites almost double, if not triple on this day, as people scramble to get the hot deals advertised by the 100+ emails that must have hit your inbox starting at 4am cst. It will be interesting to see if these are short term plays, or if these stocks can maintain the momentum for the holiday season. I am still Bullish on EBAY and bearish on AMZN, and only time will tell if I am right. Let's shake off the access weight we have all put on since last Thursday, and take advantage of the short term plays that are showcasing themselves this week. Open Position: IBM Stocks to Watch: IBM AMZN AAPL NFLX FB BAC C GMCR FSLR RIMM

Futures Data

Value Areas:

ES 1416.00 / 1411.00

POC… 1415.50

YM 13024 / 12976
NQ 2684.00 / 2675.00

Notes from the Pit

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