| | "Ominous" | | |  There was record volume in interest rate futures Friday as the ten year note yield rose near the sessions end. As the floor session for interest rates closed, stocks began to sell off, as perhaps some sort of correlation play has returned. In the last hour the ES fell out of bed and dropped 20 handles to 1626.25 low. Is this portentous of things to come? Who knows what to think in this good news is bad news new world order. Still, there may be actual good news for traders as it appears it may be a more active June than usual, as the middle of the month has the FOMC and a G8 meeting plus a bevy of economic data this week. In addition to the market crapping out late session, we learned Friday that Sallie Mae's plans to split the company in two, sort of a good bank/bad bank deal, with current bondholders secured by the bad bank. Sallie is the student loan agency and “the bad bank” will have the servicing rights to government guaranteed loans (slow or no growth) and also the current unsecured loan portfolio, while the "good" part is going to focus on making higher yielding private loans. Ratings agencies downgraded the debt. Currently there is $1 trillion student debt, $850 billion guaranteed by the government. Again this year in July, the rate for government student loans is set to double from 3.4% to 6.8%. The administration has proposed a plan of market rates plus 0.93 spread, or currently around 3.1% given the ten year, fixed over the life of the loan. The House plan is the ten year plus 2.5% and floats every year. Certainly there will be another "last minute" save, but the market action and downgrade of Sallie bonds is indicative of a large government and perhaps another sign that government, whether the Fed or the administration, setting of rates is likely to eventually cause problems. Now that’s ominous. Trade well and follow the trend, not the perma-bull OR perma-bear “experts.” | | ---Larry Levin |
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In conjunction with TheStreet.com and Bar Chart, Trading Advantage Senior Market Analyst Alan Knuckman provides a daily morning update on the global action in stock futures, gold, oil and interest rates. |
| | | | | | | | | Congratulations to Bill Livingston Trading on whip saw days like Friday is never easy. With a bevy of economic data releases affecting all markets, Bill Livingston took advantage of a reversal signal in gold and made $500. Congratulations Bill on navigating tricky markets.
Bill livingston +$500 GC
| | | 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. |
| | | | | OPTIONS: Volatility Commentary | ---Steven Lee / Michael Shorr | Per forecasts, the eurozone unemployment rate up ticked to 12.2% in April with a stunning 19.4M Europeans without jobs. Inflation rose in line with consensus to an annual rate of 1.4% in May which was 0.2% higher than April. Core CPI increase to a greater than expected 1.2% from 1%. Inflation remains low and these reports give the central bank further room to continue their loose monetary policy. The Nikkei made a run, finishing up the day +1.4% but still down 0.6% for the month of May. This was the first time in ten months the index realized a loss. Japan's core CPI dropped for the sixth straight month having prices drop 0.4%. Their central bank has a lot of work ahead of them if they want to hit their target rate of inflation of 2%. Here in the U.S. April personal pending and personal income both missed the mark printing flat and down -0.2%. Also, to pile on that, the savings rate remained flat at a very low 2.5%. One bright spot today was the Chicago PMI reporting their Business Barometer rose 9.7 points to 58.7. All sectors measured by the index rose. Recently news broke out that a rogue genetically modified strain of wheat developed by Monsanto (MON), had been found in an Oregon field late last month. What makes this worse and more concerning, as Reuters reports: "even after weeks of investigation, experts are baffled as to how the seed survived for years after Monsanto had ceased all field tests of the product. It was found in a field growing a different type of wheat than Monsanto's strain, far from areas used for field tests, according to an Oregon State University wheat researcher who tested the strain." So far, two major importers of U.S. wheat, Japan and now South Korea, have halted incoming shipments. There are more than a couple of other countries considering the same measures. This is not good news for Monsanto. If they are proven responsible, they are liable to the producers (farmers) for any loss of revenue. For example, Bayer CropScience had to pay $750M to crop growers in 2011 over contaminated rice. But consider that the U.S. is the world's largest exporter of wheat and not even in the top 10 for rice. Think of the economic ramifications if this embargo spreads to other Asian countries. We are considering a bearish play on Monsanto (MON). |
| | | | | FOREX: Currency Spotlight | ---Ed Moya | | | The China Official Manufacturing PMI for May printed at 50.8, a reading better than the 49.9 forecast, and most importantly a reading that avoided the first contraction since last September. The end result of the manufacturing momentum lead to a slight rebound for the commodity currencies early on Sunday. Tonight, the Reserve Bank of Australia is expected to keep the cash rate at 2.75% as they await impact of the 25 basis point cut in May. Traders will pay special attention to whether or not the central bank emphasizes concern for slower economic growth for the second half of the year. Key support remains at .9500 for AUDUSD. If downside momentum continues, traders may see price make a run for the .9400 which in 2009 and most of 2010 served as key resistance. A key commodity to follow will remain Iron Ore Spot 62 (TI). The last couple of months underscore a key bearish trend which could underline weaker Chinese demand. If Iron Ore prices break below 100, the AUDUSD may have its catalyst for new lows. |
| | | | | STOCKS: Watch List | ---Charles Moon | | | | We had raced up to the highs early on in the Dow, only to slowly slip down and then slide in the last few minutes of the trading session. The Dow closed down over 208 points for the session. This was the worst drop in over a month, but markets still finished up for the month. This has been 2 weeks in a row the markets have finished lower though, as we are heading into typically one of the worst months for the markets. The possible start of the highly anticipated correction can be on the horizon, as fears over the economic state of the EU and Japan weighs heavily on investors minds. Seeing the VIX starting to spike, and more aggressive selling in the market, this can help fuel a sell off for the summer. Now that being said, we still have QE in play and the big money will still look to take advantage while it still can. Look to see how the market reacts this week to economic news. If we slump once again this week, then it might be the start of the correction. If we do end up rebounding this week, then look for more of a tug of war action in the market to follow. There is uncertainty and fear starting to loom over this market. Look for the trading action to act like it. One of the Sectors that can possibly withstand the aggressive sell off is the Financial Sector. It was the best gainer of May, and even during the aggressive selling in the market, the bank stocks were gaining for the day. While I do expect a pullback of sorts to come in, I still think the banks progress higher. The two stocks I like the most from the Sector is Goldman Sachs(GS) and Prudential Financial(PRU). They look to be the most aggressively bought the last month, and can really make fast percentage gains if the stocks can sustain their momentum. Watch the economic data this week with great interest. If we see weak data and a very aggressive reaction to the news, then look for the suppression to take hold for the week. If the markets can rebound or progress higher on the news, then we can gain some of the losses this week. Continue to look for early profits, and keep it close to your chest. You don't want to see your profits move into losses quickly, as the losses can pile u quickly in these conditions. Open Position: TSL, MS, PRU Stocks to Watch: NTC AAPL GOOG IBM AMZN PCLN BBRY FB LVLT CHKP CTXS CSCO BAC C PRU WFC GS JPM MS CMI CAT NFLX WDC GE AIG LULU LNKD DIS KORS COH FOSL CROX STZ NKE UA CHKP JNPR POT GMCR HLF HOG YUM LOW HD LEN TOL V MA AXP DFS LVS MGM TSL FSLR JASO |
| | | | | FUTURES: Technical Data | | | | | ES 1653.75 / 1635.25 POC… 1651.00 YM 15337 / 15193 NQ 3016.75 / 2993.75 | |
| | | | | COMMODITIES: Play of the Day | ---Patrick Assalone | | | | Gold futures settled lower on Friday, falling below $1,400 after strong U.S. economic data and a rise in the dollar. Chicago PMI increased in May to the highest reading in more than a year while the consumer-sentiment index rose more than expected in May. ce. Gold futures fell more than 5% in May, but we had signal opportunites from both the long and short sides of the market with reversal entries on Friday. With the start of the new contract, we will look for signal opportunites with tests of the recently established contract highs and lows. |
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