| | Easy A | | 
If students today had it as easy as the big banks, they would lovetheir report cards. The banks didn't really do the hard work necessary to improve their fiscal health, but their grades have dramatically improved.
We learned Thursday the results of the so-called stress tests, and lo and behold, the big banks are much better prepared to weather futurefinancial shocks. Whether or not this is actually true, we can’t know for sure. Last year, some of the banks failed the stress tests because of their planned dividend and stock repurchase plans. So this year, the Fed allowed banks to alter capital distribution plans prior to the release of stress test results if they exceed levels deemed appropriate by the Fed. This is somewhat akin to allowing students to grade their own exam papers. So it’s no wonder the big mega banks ,like Citi, all passed. The real students however, don’t have it so easy. If they are going to college, they will most likely end up graduating with mountains of debt, living in their parent’s basement because of their inability to find good-paying jobs.
Of course don’t tell the market that because it spent Friday celebrating the non-farm payroll beat. According to Zerohedge:
http://www.zerohedge.com/news/2013-03-08/what-difference-jobs-12-trillion-debt-makes
A print of 236,000 on expectations of 165K, why that has to be great. Well, it is. Until one looks to the number from February 2012, which happens to be 271,000.
And even the Keynesians will agree that February follows January, which in 2013 was a downward revised 119,000. January 2012? 311,000. Which in turn happened just as Europe was fixed again - after all who can forget the LTRO euphoria (and what happened after).
In other words, the first two months of 2012 saw a 582,000 increase in non-farm payrolls. In 2013: 355,000. But something else happened between February 29, 2012 and February 28, 2013... Oh yes, the US government issued some $1,198,397,883,967.30 in debt. Oh, and the Fed monetized about half of this amount, and virtually all of the Treasurys issued to the right of the ZIRP period (i.e., risky debt).
To summarize: $1.2 trillion in debt buys the US.... 61% of the jobs created a year ago. But at least the Dow Jones is at an all-time high. Who else can hardly contain their excitement at what the jobs number a year from today will reveal that yet another $1.2 trillion in debt will do to the US job market
They sure don’t teach this nonsense in schools. Trade well and follow the trend, not the perma-bull OR perma-bear "experts." | ---Larry Levin
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 | | Congratulations to Zoe Leung! The Student of The Day today is Zoe Leung as she followed Scott Bauer and Michael Shorr's trade signal generated in the Option Volatility Room to a "T!" These signals give the student the ability to change the contract size to match their risk parameters and tolerance!
Signal Generated:
Entry:
(02:46 pm) Michael Shorr: Entry signal: (10:17 am) Scott Bauer: 3-8-13: Based on our methodology, a signal has been generated to buy (opening) the CF April 205 call, sell (opening) two (2) of the CF April 215 calls and buy (opening) the CF April 220 call for a maximum debit of $2.75. This signal is not GTC and is valid with CF trading $203.25 or higher.
Exit:
(02:46 pm) Michael Shorr: Exit signal: 3-18-13: Based on our methodology, an exit signal has been generated to sell (closing) the CF April 205 call, buy (closing) two (2) of the CF April 215 calls and sell (closing) the CF April 220 call for a credit of $3.15 or better. THIS SIGNAL IS A DAY ORDER ONLY.
Zoe's Execution:
(02:47 pm) Michael Shorr: (02:44 pm) Zoe Leung: i filled at 3.20(02:44 pm) Scott Bauer: fantastic(02:45 pm) Michael Shorr: Nice Zoe!
(02:48 pm) Michael Shorr: Zoe's entry signal: (10:25 am) Zoe Leung: filled at 2.72
(02:50 pm) Michael Shorr: That's a .48 cent winner in one day!
Zoe's Realized Profit:
(02:57 pm) Michael Shorr: Well, she was in the signal with 1 contract when the signal was for 10, making sure she was within her risk tolerance. So, that would be $48. Maybe better to say a one day ROI of about 17.6%
Potential Profit Based on The Signal Generated With All Contracts:
$480.00
Nice job Zoe, Scott and Michael!!! You are making some sweet music together! | | 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. |
| | Congratulations to Chris Mullaney: The Educator of The Day today is Chris Mullaney in our Market Profile Signal Rooms, whom happens to be Trading Advantage's newest addition to our powerhouse of educators!!! We are all very impressed with his ability to jump in and take control with a ton of confidence and knowledge! Chris brings a huge amount of knowledge and experience to the "Dream Team!" Here is a little more about Chris and his history trading with the "Guru" himself, Larry Levin. Let's here it from him:
(01:46 pm) Chris Mullaney: I first met Larry when I was 18 or 19 years old. I came down to the CME building looking for a job and landed one with Lind Waldock. Larry was running one of their biggest desks at the time and I became a runner for him! Over the years Larry taught me the intricacies of the business. After a few years Larry started trading for himself and I was lucky enough to become his clerk. Several years later I started trading and really struggled... Larry helped me by taking me into his program and I have been involved ever since! I am now very happy to say I am working with him again! Larry has been the biggest contributor to my success!!!! |
OPTIONS: Volatility Commentary ---Steven Lee / Michael Shorr
| An active day with Non-farm Payrolls out today. The headline jobs number was +236k versus a consensus expectation of +160k. Dampening the exuberance was the usual revision from the previous month from +157k to 119k. And also, from Zerohedge: "The most surprising development in February from a quality standpoint was that the number of multiple job-holders rose by a massive 340K, which just happens to be a record". The unemployment rate now stands at 7.7%. Japan may be out of its recession as a revision of Q4 GDP showed and annualized growth of 0.2% versus the previous reading of -0.4%. The French ratings company, Fitch, downgraded Italy's sovereign debt to a BBB+. They cited four main reasons for the downgrade: "election results which and 'non-conducive' for further structural reforms, deeper than expected recession, greater than expected budget deficits, and a weak government less able to respond to shocks". Some insight into the some of the Commodities markets we follow here on the Options Trading Desk: In response to the Unemployment report markets quickly retraced their initial moves except bonds, which is definitely in the midst of a bearish trend and prices have broken below their support levels. Implied volatility on bonds, however, are not moving up, probably indicative of a slow decline from here on.
Gold has moved sideways for the past 6 trading days and may continue for a few days more...gold still remains in a bearish trend. Crude oil has been creeping up, which makes sense with stronger economic #s reported all this week. However, Brent oil is moving down indicating plenty of global oil supply situation. I would expect crude oil's rebound not to last long.
Grain markets continue to be confusing. Wheat is clearly in a down trend. Corn is overall in a downtrend, but price is whipping around resulting in whipsaw trades. The implied volatility and realized volatility trends are also diverging, leading to further confusion. Soybeans had an initial drop after crops report, but found support at 1450 and remains in a slightly bullish trend. |
FOREX: Currency Spotlight ---Ed Moya
| | The start of the trading week had the Aussie dollar initially hold up after disappointing Chinese inflation and industrial production suggested that Chinese economic growth could be hampered. Inflation for the second largest economy climbed 3.2% in February, a 10-month high and a significant surge from the 2.0% level in January. The other key negative headline was that industrial output for the first two months of the year only rose 9.9%. The forecast was for a 10.4% increase. January–February retail sales did not impress as the 12.3% print was the lowest reading since 2004. This may force China to consider further easing options after many expected a more neutral stance. With inflation rising and the new government focused on making China also focused on growth coming from their own consumer, the next two quarters may not be as robust and demand may fall for Australian commodities. China also announced the government’s plan to dissolve the railways ministry. Several large changes and new policies will occur in the first half of the year regarding transportation, the pending housing bubble and ever so growing difference between the top 1% and the rest of China. Uncertainty seldom brings confidence to the markets and a technical breakdown of parity with AUD/USD could start to gain some serious momentum. |
STOCKS: Watch List ---Charles Moon
| The Dow took off right at the market open following the Monthly Employment Data which was much better then expected. After we hit the highs of the day in the first few minutes of the open, we slid back down and we just inched back up for the rest of the day. Overall the market conditions were pretty flat, and for the week the Dow finished at a historic high once again. The one stock I am following close is IBM. On Friday the stock high price of the day was right at a major resistance level. As the Dow has climbed, so has IBM along with it. There is a correlation between the two so it is important to see the market reaction in the Dow and IBM. If we see the momentum fail to carry IBM beyond the 52 week high, then it might be a great opportunity to get in on the dip at $206.25-$206.00. If it fails to hold support there, then look to $203.25-$203.00 as another opportunity to enter. With the markets failing to show that it will stop going up, this might be a fantastic play in the short and intermediate term to take advantage of the market rise. IBM has been on our watch list and it has been reaping rewards for investors the last few months. Until the market shows you otherwise, look to remain bullish in your overall perspective. Now that does not mean you can't look to get in on a sell if it presents itself, but know the market will continue to climb here. I will caution though that the market conditions can feel like a tug of war throughout the day, so be cautious of being overly aggressive in the markets. I do feel these are advantageous conditions and there will be prime buying opportunities. Position: ABT X RHT Stocks to Watch: AAPL GOOG IBM AMZN PCLN BBRY FB CTXS BAC C GS CMI CAT NFLX WDC LULU LNKD DIS KORS FOSL X QCOM STZ NKE CHKP JNPR POT GMCR HLF ABT LOW HD LEN TOL |
FUTURES: Technical Data
| | Value Areas: ES 1544.75 / 1539.25
POC… 1540.50
YM 14317 / 14285
NQ 2801.25 / 2793.25 | NOTES FROM THE PIT
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| COMMODITIES: Play of the Day ---Patrick Assalone | | |
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