| | | Deja Vu | | | | 
We haven't gone easy on Detroit in this column. Unfortunately, payback might be a bitch – Chicago is in the middle of its own economic morass. The city and Illinois in general are crumbling under the weight of its underfunded pension liabilities setting up a potential Detroit déjà vu. Well, last week the city was slammed with a three-ratings-notch downgrade by Moody's from AA3 to A3. This type of drop is extremely out of the ordinary for a large municipality barring a natural catastrophe like Hurricane Katrina that hit New Orleans. Yes, we have spoken about the irrelevance and corruption of the ratings agencies, and note that Moody's amazing track record includes gigantic screw-ups like giving sterling grades to toxic mortgage garbage. Still, this type of seismic drop needs to be examined. Justified or not, the city's borrowing costs will rise and its ability to use creative financing will now be seriously limited. But here's where the story gets really interesting. According to Naked capitalism, a group of prominent CEOs colluding with Mayor Rahm Emanuel pushed for the ratings downgrades in order to play hardball with the unions, putting the onus on them to find a solution. Rahm can now claim the city is uber-broke so he is in no position to cave to union demands. Of course these are the same unions that backed Rahm in the election. http://www.nakedcapitalism.com/2013/07/chicago-ceo-club-with-rahm-and-pritzkers-on-board-pushed-for-chicago-bond-downgrade-whacking-local-investors-and-pension-holders.html Stay tuned, there will be more backdoor dealings to come from Chi-town. We are just hoping not to share the trunk with the motor city. | | ---Larry Levin | | |
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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 Thomas Macchione Congratulations to our Student of the Day Thomas Macchione. Thomas has been an active student in the options signal classroom and used our methodology to construct a trade of his own in AMZN. He entered the trade at $.75 and exited at $2.19. A $375 investment to make $1095 overnight! Congratulations Thomas. | | 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 | ---Michael Shorr | | | Japan's CPI was a mixed bag. The core number (ex-food and energy) rose for the first time in over a year to come in at 0.4%. The metric that did include food and energy actually dropped 0.2%. This is what brought Japanese shares down 3% on the day. The University of Michigan/Bloomberg Consumer Sentiment Index was encouraging. The number printed 85.1 which is the best reading since July 2007. Amazon's (AMZN) Q2 earnings missed expectations as the company's massive spending on distribution and IT centers once again hit the bottom line. Amazon swung to a net loss of $7M from a profit of $7M a year earlier, losses per share were $0.02 and revenue jumped 22% to $15.7B. Today we concentrated on Lowe's Corp. (LOW). This is a directional call deriving from a buy signal (Hull/Congestion) in Lowe's (LOW) generated out of Dan O'Brien and Charlie Moon's Beyond Buy and Hold Classroom here at Trading Advantage. Their entry price was anywhere below $43.90 targeting the $46 area. We constructed a positive delta spread entry as well. Should we realize our targets, we would be risking $0.60 to make $1.40 ($2.00 wide spread less premium paid) or reward to risk ratio of 2.33:1. Again, this exemplifies our ability to leverage the different backgrounds and strengths of our instructors to help our students maximize their knowledge base and earnings potential! |
| | | | | FOREX: Currency Spotlight | ---Ed Moya | | | |
The directional bias has been very strong in recent weeks for EURUSD, but volatility should pick up shortly.
In less than two months, German Chancellor Angela Merkel's centre-right coalition will no whether or not they are still in control. Early polls over the weekend from Thomson Reuters highlight the three main opposition parties are making some progress. While Merkel's party commands a 40% edge, the coalition partner lost a percentage point is now only at 5%.
The euro however remains bid as the U.S. dollar remains under pressure because many market participants believe the Federal Reserve will keep its bond-buying program steady after its two-day meeting this week.
Market volatility should definitely pick up this week. The euro may remain bid until further action is required by the ECB. Many newspapers highlighted the one year anniversary of ECB President Mario Draghi's speech on how the "ECB is ready to whatever takes to preserve the euro." The threat of action save the euro last summer.
It also turns out that the creation of OMT was a very effective band-aid, but that wound has not healed and we may actually soon the OMT come into action. Disappointment may be likely and the euro may weaken tremendously. Eventually, the ECB will have to decide on how to implement its own stimulus program. |
| | | | | STOCKS: Watch List | ---Charles Moon | | | | The markets started off down for the trading session. It pressed to the lows of the day, the Dow was down over 150 points at the low point. Then the rally kicked in and did not stop until the end of the day. The Dow bounced near the 15,400 range to barely close in positive territory, up a little over 3 points for the day. The Nasdaq Composite finished up nearly 8 points, while the S&P 500 closed up over a point. While it wasn't a very aggressive buying spree, it was continuous and persistent off the lows. With this being the 5th week in a row for the Dow to finish with gains, the trend will be dependent on earnings reports, and a slew of economic data that is due out. Also with the FOMC meeting and the ECB/BOE announcements, we can have a strop pop or a shake up to take place in the markets. While I am not fully expecting a volatile week in trading, we can see fast and aggressive movements take place this week. We will see flat conditions as traders usually sit out before the FOMC meeting announcement. The economic data coming out might change that up a bit. I wouldn't expect too much, but that will also be dependent on the numbers. Bad misses or strong beats can bring some directional momentum. If you will be playing the markets this week, you must pay attention to the numbers and reaction. I would look short term or stay away completely, until we get an Idea what comes from the meetings. Otherwise you can get on the wrong side of the market against momentum.
Ebay Inc(EBAY) has been struggling to recover after the stock slid off earnings. While it made a jump during Friday's trading session, the stock has looked to test the support levels the past week. The immediate resistance point this stock must clear is the 200 day moving average(52.76). If it can not break this level, then look for the stock to press down to the $51.00 and $50.00 price level. The last major support level is also right there at $49.50-$49.20. If this fails to hold and then becomes resistance in this stock, the stock can possibly drop further to $45.50 in the near future. It will be really dependent on if the stock can maintain the $50.00 price, which I believe to be key in this stock. If it drops below that level, then the trigger could be a 10% loss. If the level holds then it can swing back to test the 200 day moving average. If it can break above that level, then you would have to look at the 50 day moving average(53.35) as your next technical resistance level. Being under both moving averages shows lots of weakness in tthe stock, so a sell to the downside is the preferred play. Open Position: MON Stocks to Watch: INTC AAPL GOOG IBM AMZN ADBE LNKD FB TSLA GRPN CTXS CSCO NTAP JBL BAC C PRU WFC GS JPM MS RIG DE CMI CAT NFLX WDC GE AIG LULU DIS CROX STZ NKE UA LULU CHKP JNPR POT GMCR VZ T HOG MON YUM MCD LOW HD LEN TOL V MA AXP DFS LVS MGM |
| | | | | FUTURES: Technical Data | | | | | ES 1684.75 / 1673.75 POC… 1678.50 YM 15474 / 15372 NQ 3065.00 / 3044.50 | |
| | | | | COMMODITIES: Play of the Day | ---Patrick Assalone | | | | Crude Oil futures made new lows on Friday pressured by investors concerns for decreased demand from China, the world's number two consumer. Based on our educational methodology, we are looking for break out short signals below the contract low at 103.90 or for reversal opportunities at the edges of participation in the large High Volume Area from 105.54 to 104.50. Click here to watch video |
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