An Ignoble Experiment: The Mao Jones Index

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The Mao Jones Index

Mao

So have you heard the one about the guy who becomes Chairman of the Fed and turns the Dow Jones Index into the Mao Jones Index? No? It’s a doosey!

From Wikipedia…Mao Zedong (what a guy, huh?), commonly referred to as Chairman Mao (December 26, 1893 – September 9, 1976), was a Chinese communist revolutionary, and political theorist. The founding father of the People's Republic of China from its establishment in 1949, he governed the country as Chairman of the Communist Party of China until his death. In this position he converted China into a single-party socialist state, with industry and business being nationalized under state ownership and socialist reforms implemented in all areas of society. Politically a Marxist-Leninist, his theoretical contribution to the ideology along with his military strategies and brand of policies are collectively known as Maoism.

This kind of reminds me of another “Chairman” as the Dow Jones Index, henceforth known as the Mao Jones Index, makes newly manipulated highs on a daily basis.

From my wicked mind…Ben Bernanke, commonly referred to as Chairman Bernanke (December 13, 1953 – still kickin’) is a USSA big-bank apologist and make-believe expert on the Great Depression. One of the founding fathers of the Bailout Bank of the USSA from its establishment in 1987, when EZ-Al Greenspan founded the bank, he continues to oversee the Mao Jones Index ascent as Chairman of the Bailout Bank of the USSA.

In this position he converted a once free market into a one-way socialist state, where bank losses are paid by the proletariat chumps; however, when profitable the bankers keep the gains and distribute to themselves massive bonuses. Economically an Ivory Tower dreamer, his theoretical contribution to the ideology along with his massive monetization of Treasury debt and special brand of brainless policies are collectively known as Financial Maoism.

Long live Chairman Bernanke – long live the Mao Jones Index.

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

---Larry Levin

Congratulations to John Gugino!

Results:

+$320 on the day!

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Congratulations to Charlie Lewis:

The Educator of The Day today is Charlie Lewis. Charlie does our on-boarding of new students and has helped hundreds of new students get started with Trading Advantage! Thanks Charlie!!!

OPTIONS: Volatility Commentary ---Steven Lee / Michael Shorr

This morning ADP released its job report. January's job gain was actually revised upwards another 23,000 jobs to +215k. February's initial job growth was 198K. This was smaller than the previous three month's reports but is still ahead of all the prints from March to October 2012. The EIA Petroleum Inventories were released this morning. Crude +3.8M barrels vs. consensus of +1.1M. Crude slipped down below $90 after the report but rallied back a little in the afternoon.

In our commentaries, we have given insight into a lot of the strategies we employ. We have outlined our methodologies for statistical arbitrage when implied volatility across different months get out of line. We have shown option strategies that use technical analysis as the trigger for a trade signal. Are there any purely speculative plays that we will utilize? Let's take JC Penny as an example (JCP). It is no secret that things are not going well at JCP. Earnings came out after the market close last Wednesday. Since closing at 21.16 that day, the stock has traded as low as 14.20. When this happens what is a board of director's typical reaction? Fire the guy in charge. What typically happens after that? There is a relief rally due to the belief that the new CEO will turn things around. Under the assumption that this will happen sooner than later, we constructed a March asymmetrical call butterfly to take advantage of this potential correction with minimal capital outlay.

FOREX: Currency Spotlight ---Ed Moya

When was the last time the ECB cut rates? It was July 5, 2012. A couple weeks before ECB President Mario Draghi's claim that he will do "whatever it takes" to save the euro.

We must remember that the price stability is the ECB's mandate. Last week, we saw the annualized inflation fall from 2.2% to 2.0%. This key level shows that inflation is not a concern and economists are split on whether or not the ECB will cut rates before the summer.

The question is not whether or not we will see Draghi become dovish, but will it be this meeting or possibly the one on April 4^th.

The euro is trading towards the lower boundary of the key Miss Merkel’s (1.30-1.40) range and the ECB President will not want to send it plummeting.

Preserving the euro is more important than helping lowering borrowing costs for Italy and Spain. If we do get a 25 basis point cut, the euro may fall towards 1.2750, but we are not expecting a rate cut. How much will the struggling southern periphery benefit from a rate cut? Probably not a lot because these countries need changes regarding political and fiscal reform and not just lower borrowing costs.

Regardless, if we do not get a cut but a sign that we may see one shortly, the euro will remain under growing downward pressure.

STOCKS: Watch List ---Charles Moon

The market conditions today were just flat in comparison to the previous trading days we have experienced as of late. Even with economic data and positive news coming from China, we just peeled back slowly all the way into the close after the initial pop. The Dow was stuck in a tight range and stocks also bounced around with minimal percentage gains today.

Apple(AAPL) has been trying to recover from the 52 week lows and climbed back to test $435 where it failed to break this resistance point and fell back to find support at $425. If you have been reading the stock report that I posted a few days back, these were critical price points I had touched up on. The stock played this range back and forth as if I had written the script to it. If the pressure is still being applied to $425 and it breaks down, then look to $419 for immediate support. Could be stuck in a range here for a few days, and it might be an easy play if these levels hold up in the short term. Anticipate the stock to test the lower price and if it holds then look for it to shoot back up to $435. If that resistance point also fails to hold down the stock then your next price point to look at is $438-442.00. Should be fun to see as sellers have been very aggressive in this stock as of late. If you are trying to get long in this stock, then look to catch the rebound of the support levels.

I look for the market to eventually run out of steam to the upside and if jobless claims come out worse then expected tomorrow, that might a good enough excuse for the market to pullback a bit here. If we do climb higher expect a grind up, but if we slide then expect the reaction to be swift. Open 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 1542.50 / 1539.00
POC… 1540.00
YM 14290 / 14268
NQ 2798.75 / 2791.25

NOTES FROM THE PIT

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COMMODITIES: Play of the Day ---Patrick Assalone

Sorry not available today.

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