| | Waiting Game | | 
There was no action Thursday. Traders are waiting on Friday’s monthly employment situation report.
The way Chairman Ben has the market cornered, either a better than expected or worse than expected outcome can be spun like cotton candy into a bullish reaction. That is the normal course of business on Fraud Street; however, because the market has gone up almost every day this year without a pullback, traders are looking for a reason to book profits. Although the odds are probably low, it is a possibility to be sure due to the ridiculous Financial Maoism of Chairman Ben.
Market consensus is for job gains of 171,000 and the unemployment rate to fall to 7.8% from 7.9% and that’s a long way from Chairman Ben’s edict that the money printing (read: counterfeiting) shall not stop until the rate is below 6.5% - and surely that is a moving target, to be changed whenever the Chairman feels it necessary. After all, changing his mind is a Chairman’s prerogative.
Bloomberg posted this of the morning report…
Market Consensus before announcement
Nonfarm payroll employment in January continued to grow at a moderate pace, advancing 157,000, following a gain of 196,000 in December and an increase of 247,000 in November. Private payrolls posted a gain of 166,000 in January after increasing 202,000 the month before. Average hourly earnings rose 0.2 percent in January, following a boost of 0.3 percent December. The average workweek held steady at 34.4 hours. Expectations were for 34.5 hours. However, the unemployment rate reversed course a bit, rising to 7.9 percent in January from 7.8 percent the month before. Trade well and follow the trend, not the perma-bull OR perma-bear "experts." | ---Larry Levin
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 | | Congratulations to Ron Bazar! We have a great SOD today!!! Hailing from the great and powerful Option Volatility Room!!! The Student of The Day Today is Ron Bazar hailing from the great and powerful Optioin Volatilaty Room! Using great trading acumen and identifying his risk tolerance!!! Based on the methodology taught in this Options Volatily Signal Room there was a signal generated for a put condor that will be expiring tomorrow. The 425/415/410 put condor. The signal was generated and we paid .65 to get in. It is a bearish play on the price of AAPL. The signal exit was generated for 2.00 or the students discretion when AAPL was making new daily lows. Ron exited at 1.85 as he didn't want to take the risk of a reversal to the top side. Guess what? AAPL did reverse to the top side... Ron exited this signal and realized profits of $120 per lot and based on this signal there was a total of ten lots on. Results: (03:00 pm) Ron Bazar: $1080.00 in profits!!! Quotes: (09:19 am) Ron Bazar: I exited at 1.85...didn't want the risk of a reversal up. (02:59 pm) Ron Bazar: original trade was 15 lots...sold 10 yesterday and 5 this morning. Thanks for the honor! | | 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 Ed Moya: The Educator of The Day today is Ed Moya as he is working smart and putting in extra time for the students! It doesn't hurt his case that based on four signals that were generated the London Calling Forex room is up +86pips! This is potentially $860.00 on the day!!! There is still one signal that is open and holding, the rest have been great! Ed is going above and beyond with his extended coverage today in the room until 4:30pm et. He will be reporting on and analyzing the Bank Stress Test. Hopefully, for the banks sake, the "synthetic" funds will help to produce a "shinning" review! |
OPTIONS: Volatility Commentary ---Steven Lee / Michael Shorr
| A slow day in economic reports. Initial unemployment claims came in better than expected. Down 7k to 340k versus and expectation of 355k. The central banks of Japan, the ECB and England kept their interest rates unchanged as widely expected. The markets are in a holding pattern as we await the monthly employment report tomorrow morning. Also, pay close attention to the release of the World Agricultural Supply and Demand Estimates (WASDE) Report for grains tomorrow morning at 11 am CST. What's more frustrating than trading a secular bull market? How about a sideways market? Take a look at Exxon Mobile (XOM). The stock has been in a steady bull formation for nearly three years. Since the beginning of February it has languished in a two dollar range between $88 and $90. It's next earnings report is April 23. This is after the April options expire. We examined the term structure of the April and May options and found that May implied volatility is only slightly higher than April and that overall implied volatility is nearly at two-year lows. We constructed a ratio call spread calendar that will maximize a continued uptrend in the price of the stock and will also benefit from any increase in implied volatility with clearly defined risks and very low capital outlay. Specifically, -1 XOM Apr 90 call, +2 XOM May 92.5 call for a debit of $0.18. |
FOREX: Currency Spotlight ---Ed Moya
| | The Fed will be the first major central bank to exit these extraordinary quantitative easing measures. This is reflected in the consistently improving data points. Yesterday Jobless Claims fell to 340,000, much better than the prior week's print of 347,000 and the forecast of 354,000. Consumer Credit also climbed to 16.2 billion. This was the best reading since November and it surely will make the Fed happy. With near zero interest rates, it is important for banks to increase their loans. We will need to see continue improve in order for the Fed to consider some tightening.
Yesterday, the Bank of England surprised some when they decided not to add more economic stimulus. Almost one out of four Bloomberg economists expected an increase of 25 billion. The reaction saw cable rally over 75 pips against the US dollar. The surge however did not last as pound bears comfortably sold into the rally. Earlier that day, Prime Minister David Cameron also confirmed that he will try to reduce the deficit, but hoped that the BOE will keep low interest rates in place. Austerity will remain and ultimately choke the economy. The U.K. is far from rebounding and many expect the central to eventually add additional stimulus. We may get a sign in two weeks, when the minutes are released. In the last minutes, we learned that only 3 members, including Governor Mervyn King voted for more QE, while the other 6 did not.
The ECB shortly followed the BOE and they did not disappoint. The EURUSD got its mojo back for a day as Draghi did not give any signs of a rate cut for next month. Despite inflation being broadly balanced, 2013 GDP forecasted @-0.9% to -0.1%, and downside risks firmly in place, growth should pick up towards the second half.
Mission accomplished, Draghi preserved the euro and help distract the bearish tsunami of limited economic growth that is currently plaguing the southern countries and slowly making its way to France. A euro sell-off would trigger a jump in Italian and Spanish yields and the central bank wants to avoid that potential night mare scenario. The euro rallied strongly across the board, but still remains vulnerable. EURUSD will need to clear 1.3250 before bears will become discouraged. |
STOCKS: Watch List ---Charles Moon
| With the news that came out, it was surprising to see such a muted response in the market today. This goes in line with what I had mentioned yesterday, and that we will just grind up slowly. If we do ever sell off in this market, the reaction will be swift and strong. It seems the market is anticipating a pullback, and for now we are in a holding pattern of sorts. Watch for the early economic data(Unemployment) tomorrow morning and watch the reaction in premarket trading. If a bad number is posted and the market is selling hard before the cash open, we can have our sell off.
Carl Icahn is in the news once again, taking another huge share position in a company. This time it is Dell(DELL) he took a active position in and is now the 2nd largest shareholder only behind Michael Dell himself. He has been very active in the markets, and the stock usually reacts positive once he announces his position. Look for DELL to make a spike here in the next couple of days. If the stock pulls back at all, it might be a great buying opportunity for short term gains in the stock. There should be support at $14.15 in the stock, so if it does sustain this price point, then look for the rejection off this level and watch the stock climb up from here. If it fails to hold then you would look to 13.70 for your next layer of support.
We have closed in positive territory every Friday so far this year, and last week the market pressed down over 100 points before rallying to close up for the day. Now if we have terrible unemployment numbers, then the market will be hard pressed to make any rally as traders are looking for any excuse to short at the moment. Even with that being said, the downfall can be short lived and a rally can take place. Some food for thought as tomorrow morning will be telling of the market conditions we can expect. 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 1544.50 / 1542.00
POC… 1543.50
YM 14330 / 14312
NQ 2800.75 / 2793.75 | NOTES FROM THE PIT
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| COMMODITIES: Play of the Day ---Patrick Assalone | April crude oil prices traded higher during the early morning hours as they continued to recover from yesterday's downdraft. Crude oil imports for the week stood at 7.308 million barrels per day compared to 7.958 million barrels the previous week. The refinery operating rate was down 2.9% to 82.2%, which compares to 83.9% last year and the five year average of 82.87%. Having filled the gap and considering that we are still in a long term defined down trend, we are looking to enter the market to go short off of the defined resistance at 91.61 or 90.74 View Video Here
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