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| | | Two Martini Lunch | | | There’s nothing like a lunchtime speech from Ben Bernanke to make you want to head straight to the bar. Speaking in front of the Economic Club of New York, Ben seemed downright depressed about the economic morass he has of course helped to create. His hopium seemed all but gone, claiming that he can no longer fix the problem that is the U.S. economy. Like the kid on a playground shouting, “NOT IT”, Ben took Congress to task and ran away from the looming fiscal cliff. Claiming there’s no bullets left in his bailout gun, Ben said that Congress and the White House are on their own. Oh yeah, it’s solely their fault for leading the nation to this dire fiscal situation that could cause another recession. From blatant blamer to obvious overstater, Ben went on to call the economic recovery "disappointingly slow" and then claimed that the fiscal cliff would in fact, be bad. "The realization of all of the automatic tax increases and spending cuts that make up the fiscal cliff, absent offsetting changes, would pose a substantial threat to the recovery — indeed, by the reckoning of the Congressional Budget Office and that of many outside observers, a fiscal shock of that size would send the economy toppling back into recession," Wow, Ben thanks for that bit of wisdom! Needless to say, the markets headed south after Ben’s musings temporarily giving back some of Monday’s gains. This came on top of news from Hewlett Packard that stunned investors. In their earnings report, HP announced that it had effectively bungled the massive acquisition of Autonomy, despite extensive prior warnings about the accounting practices of the UK firm. HP paid over $10 billion for a transaction that is now clear will provide zero income statement benefit. But come market close, poof, all this bad news disappeared and the E-mini rallied back on miraculously light volume. The Thanksgiving holiday celebration must have started early. Like all too often, everyone will be okay with drinking on credit and letting the house figure out a way to pay.
| | 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 Nathan Hudgins Results: "I made +470 today on my first trade of the day...took the sd at 88.04 stopped out at 87.57. Kept moving my stop as you do to the successive high swings" | | | | 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 Futures Spreads Most traders do not consider putting on spreads in futures--usually spreads are stragies in the options world. VIX futures spreads, however, are superior risk/adjusted stragies to consider when playing for both relative value AND directional view on volatility. Today in class, we analyzed selling the VIX December/January futures spread, where one would buy the Dec futures and sell the Jan futures. Today's closing prices were 16.40 & 18.05, respectively. Thus the spread or the differnce in the two prices went out at 1.65. Normally, the average premium difference between the front month & second month VIX futures at the start of a new expiration month is ~6% difference. Currently, that premium difference stands at ~10%. Therefore, the spread is considered 0.70 points "overvalued". Furthermore, when volatility or VIX rises, the spread tends to narrow, while on the other hand, when volatility is declining, the spread tends to expand. Therefore, the ideal setup to execute this VIX futures spread would be 1) the spread is wider than normal (as it is now) and 2) if VIX was expected to rise or at least not fall (currently still in a declining trend).
| | |  | | | | Currency Spotlight | | | | The Reserve Bank of Canada is the poster child of how a central bank should conduct business. They are doing such a good job of keeping their economy robust, that the International Monetary Fund is also considering adding them along with the Australian dollar, to a very elite group of global reserve currencies.
Canada remains strong as they post a stellar triple-A credit rating, wealth in resources (such as oil), and a financial system that is better shape than their neighbors south or on the other side of the Atlantic.
With a reserve status, governments will want to own the Canadian dollar versus the U.S. currency. Even Russia has already started to hold Canadian dollars and according to Russian Ambassador to Canada, Georgiy Mamedov, they will double their reserves to 1.6%.
Canada’s currency might be heavily correlated with oil prices, its largest export, but investors might see this correlation end in the near future. The safe haven trade (dollar and yen strength) might soon change and traders might start to see Canadian strength during times of risk aversion.
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|  | | | | Watch List | | | Today the market action was quite dull for the most part, that is until Mister Ben Bernanke spoke when he took the podium around lunch time. The market swiftly decided that what he had to say was very unfavorable and we saw a very quick slide down. Then sure enough it bounced right at a support level and rebounded to slowly grind its way back up to close right where the market had opened today. In essence it was a sideways day with lighter volume and decent volatility.
We saw some movers in the market today and most notably it was Hewlett Packard(HPQ) announcing they might have uncovered possible fraudulent accounting in the acquisition of the company Autonomy. That has fueled a hard sell off in not only HPQ, but INTC and DELL followed suit. The tech sector gets hit again, and if you are trying to go long in this sector I would say choose wisely because when one goes, the others generally follow suit.
Look for a quiet market tomorrow and if you are considering Friday a day to trade, may I suggest you take a 4 day weekend and look to get it going the following Monday. Unless of course you enjoy almost non-existent volume and very minimal movement in the markets, it's best to relax and worry about fighting people for door buster deals instead. Open Position: CHKP Stocks to Watch: AAPL AMZN GOOG PCLN GMCR NFLX FB BAC C
Now with the market is a fast rally, I had stated that if we trade above 1375.00 on the S&P and close above that price it can be the start of the "rally" into the next year. Of course the rally has to sustain and grow some legs, but it is something to watch going into the end of this wee. It will be interesting to see if we can sustain that price point and how the market reacts from a technical standpoint at that 1375.00 mark. Open positions: CHKP Stocks to Watch: AAPL AMZN IBM GOOG PCLN BAC C NFLX GMCR
| | |  | | | | Futures Data | | | ES 1385.50 / 1379.00 POC… 1384.25 YM 12753 / 12703 NQ 2592.75 / 2580.25
Notes from the Pit
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| | | | | |  | | |  | | |  | | | | Patrick Assalone - Best and Worst Time to Trade | | |  | | | | | | | | IMPORTANT NOTICE: Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. Nothing in our website shall be deemed a solicitation or an offer to Buy/Sell futures and/or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on our site. Also, the past performance of any trading methodology is not necessarily indicative of future results. | | | | DAYTRADING involves high risks and YOU can LOSE a lot of money. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those talked about in our site. | | | | | |
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