| | Rally Time | | |  Yesterday I quoted something I had previously written and I have to do it again now. Near the end of yesterday’s missive I said “If the Fed isn’t careful, a free market may break out in this rigged QE levitation machine. Luckily for the market and Benron Bernanke, there is a huge POMO day scheduled for Thursday where the Fed may buy up to $3,500,000,000.00 of securities.” That massive QE buying spree (POMO – Permanent Open Market Operations) sure helped a lot. This may be the reason why the market refused to sell off, despite the massive -6% Nikkei drop in Japan. And since the global financial markets are intertwined like never before, it is surprising indeed. The Fed’s colossal securities purchases then helped to create a strong short-covering push. Remember, the prior day the indices had been hammered as short sellers drove the markets lower. When the shorts are forced to cover, they do so by buying. When strong enough, this begets wave after wave of buying. Fairly late in the afternoon it seemed like the markets had rallied as far as they could. The short covering buying spree was over. Or was it? Approximately 30 minutes before New York closed, another Jon Hilsenrath of the WSJ Fed-puff-piece hit the tape - "Fed Likely to Push Back on Market Expectations of Rate Increase: Federal Reserve officials have been trying to convince investors for weeks not to overreact when the central bank starts pulling back on its $85 billion-per-month bond-buying program. An adjustment in the program won’t mean that it will end all at once, officials say, and even more importantly it won’t mean that the Fed is anywhere near raising short-term interest rates. Investors aren’t listening." At this time, the ES exploded an ADDITIONAL 8 points in just eleven minutes. Moreover, the 10-YR Note also exploded at the exact same time, which drives interest rates lower. Isn’t it nice how the Fed can so easily manipulate the markets…via reporters? Trade well and follow the trend, not the perma-bull OR perma-bear “experts.” | | ---Larry Levin |
| | | |  | | | | 
In conjunction with TheStreet.com and Bar Chart, Trading Advantage Chief Market Strategist Alan Knuckman provides a daily morning update on the global action in stock futures, gold, oil and interest rates. |
| | | | | | | | | Congratulations to Robin Sigler Congratulations to our Student of the Day Robin Sigler. Robin had herbest day yet trading the E-mini S&P 500 and the Nasdaq making 6.5 points today. Robin has been an active student in Patrick's Level 2 classroom. Congratulations Robin! | | | 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 | Concerns about the U.S. Fed beginning its taper of QE is continuing to roil global markets as the Nikkei plunged 6.4% to close the day at 12,445.38. The dollar has weakened against the Yen by 1.8%. Chinese stocks followed suit as well as the emerging markets. Due to stronger than expected revenues, the U.S. is expected to finish its fiscal year with a surplus of $23.7B. A piece of caution goes along with this seemingly good news as investors may have sold assets ahead of the capital gains tax increase. Going forward, states are going to be dealing with federal spending cuts, health care expansions and increasing pension obligations. Initial jobs claims fell by 12k to 334k versus a 350k consensus. Continuing claims rose 2k to 2.97M. We are coming to an interesting part of the trading cycle. We have the June options expiring next Friday, June 21. So, only 6 trading days left. These options very soon are going to be either worthless or exercised into stock. One has to be very careful not to apply the same methodology to one week options as you do to an option that has more time to expiration. The traditional attributes for the tools we use for options analysis such as Delta, Gamma, Vega and Theta change very quickly as time to expiration nears. The Delta of an option will very quickly move towards 100 or zero as it moves from in-the-money to out-of-money. This is because of Gamma (the speed of the change in delta). Gamma increases exponentially as time to expiration approaches zero. The Vega of a short dated option decreases very quickly as expiration approaches and Theta (time decay) increases. So in short, the mathematics break down at expiration. You become more of a stock trader if you are going to trade short dated options. It is imperative that you do not "hide behind the math" of a short dated option to provide you comfort in a trade. The relationships simply are not valid anymore. |
| | | | | FOREX: Currency Spotlight | ---Ed Moya | | | If we keep getting robust US Statistics today, we may see another risk-on trading day. Yesterday’s better than expected retail sales for May and strong jobless claims number helped USDJPY continue its corrective rebound after the other day’s massive hedge fund liquidation sale of the Nikkei and yen shorts. If USDJPY is able to maintain the 95.00 level by the end of the trading day, a run towards the century mark may happen within the next couple weeks. |
| | | | | STOCKS: Watch List | ---Charles Moon | | | | We had another wicked run today in the Dow as it climbed out of a early hole to finish up 180 points for the day. Today showcases the prevailing trend as of late with big moves taking place in the markets. We had yet another 200+ point range day in the Dow. This is coming from the fallout of the Nikkei getting crushed last night to the tune of being down 6% for the trading session. As the markets continue to make large swings back and forth, the dull days of summer trading is gone for now. Enjoy the ride while the volatility is still in play. Lululemon(LULU) had a nice bounce after initially selling off at the open. Once they came down to the close price of yesterday, the stock rebounded for nearly a 4% gain today. This could be the bounce that we have been looking for in this stock. After facing aggressive selling off the announcement of the CEO departure, the stock has fallen to a very favorable price point. If we can take out the highs of 6/11, this can start making a move to fill the gap. It still has some technical levels to clear, but the volume that has been traded in this stock the last 3 days, have been well above the 50 day average raging from 5-10x the normal amount. Seeing the value here, it can be a great buy if the trend can continue the next few days. If it starts following the markets though, it will be hard pressed to keep making substantial gains when the market starts pressing down. Watch the markets closely and play this tight as the stock can whip around here with the huge volume coming into play. Well since tomorrow is Friday, normally I would say expect the market to finish positive. Well with the way the market has been swinging, we can be down 100 points, and finish positive 100 points for the trading day. I am looking for fast swing and hard liquidations of positions to come into play here. So look to take advantage of the fast swings in the market and keep looking short term. Anything else can leave you hanging out to dry so to speak. Don't let a profit turn into a losing trade. Very easy to do in volatile market conditions. Open Position: INTC, ADBE, JBL Stocks to Watch: INTC AAPL GOOG IBM AMZN ADBE FB TSLA GRPN CTXS CSCO NTAP JBL 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 HOG YUM LOW HD LEN TOL V MA AXP DFS LVS MGM TSL FSLR JASO |
| | | | | FUTURES: Technical Data | | | | | ES 1633.50 / 1611.00 POC… 1636.50 YM 15144 / 14982 NQ 2955.25 / 2921.75 | |
| | | | | COMMODITIES: Play of the Day | ---Patrick Assalone | | | | Gold continues to head lower with the market headed lower again on Thursday. Based on our educational methodology, we are only looking for short entries with a break out into white space down below the contract low. Click here to watch |
| |  | | 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. | | | | | | 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. Trading Advantage LLC provides only training and educational information. By accessing any Trading Advantage content, you agree to be bound by the terms of service. Click here to review the terms of services. 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. | | 
|
No comments:
Post a Comment
Keep a civil tongue.