Full Speed Ahead

Follow us:      Share this content:     Full Speed Ahead   Last Wednesday the Fed shocked not only Wall Street but arguably the world, when it announced "no taper." It would not cut back the massive QE3 stimulus by one penny. It was a surprise because Ben "Bubble Blower" Bernanke had brought up the idea of a stimulus reduction himself. Wall Street knows that this type of comment is not made lightly so it traded on that comment. Stocks initially fell and bonds fell hard – then stayed there. The drop in bond prices caused yields to rise, and the Fed didn't like that at all. It was reported that, had the Fed recently sold its mountain of Treasuries (it can't), it would have lost an enormous amount of money. So there was no taper. EZ-Credit Bernanke concomitantly believes that the economy is in such bad shape that he cannot afford to lift his heavy QE-foot off the accelerator, and that the economy is so great that stocks trading at never-before-seen-in-human-history-highs is A-OK. No problem there he says. But to the average non-egghead, it doesn't make a bit of sense. Most importantly says Benny, of Benny & The Inkjets, is that his QE experiment must continue in order to keep the current job growth robust. Where, exactly, that is happening he did not say. Was it on Mars? Have you wondered just how much counterfeit money is printed out of thin air to get this fantasy job growth? Take a look at chart above. Yeah, seems to be working great and according the Helicopter-Ben, you're going to get a lot more of it. "We have got to turn the page on this kind of bubble-and-bust mentality that helped to create this mess in the first place, we have got to build a housing system that's durable and fair and rewards responsibility for generations to come. That is what we have got to do," Barack Obama, August 6, 2013 Funny how a stock market rally on counterfeit money from the central bank is never called a bubble, until it bursts. Here's another thought: Are pension payout expectations in a bubble too? After all, pension fund managers pretend that they are making 8% per year in perpetuity. But with the Fed's policies, they aren't making even close to that – hardly 2% in "safe" Treasuries – and EZ-Bucks Bernanke has just promised to keep ZIRP until at least 2016. Hmm, that will be 7-years (at least) of the bubble-of-lies in the pension industry. What say ye about that bubble president Obama? (Cue the sound of crickets now.)     ---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 Doane Robinson Congratulations to our student of the day Doane Robinson whom made $942 in the Market Profile Masters Classroom trading crude oil futures. It has been a profitable fall for many of the students who have taken advantage of the signals in multiple markets. Congratulations Doane! 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 Our students are not huge institutional entities that have the large stables of capital to finance an outright sale in options. The naked sale of options poses too much risk and margin to be a viable option for any of our trade signals. What to do then when you believe that implied volatility is too rich compared to your expected value of realized volatility? As noted above, we cannot just sell straddles. The open-ended risk is not appropriate. But, we can construct an iron butterfly or iron condor. Let's take our real-life example in Lamar Advertising (LAMR). 30-day IV for LAMR is ~35%. Realized volatility, depending on your time frame is 12%-17%. A signal was generated to sell the LAMR OCT 42/44/46 Iron Butterfly at $1.65 or better. This spread benefits from the price of LAMR staying as close as possible to $44 as expiration nears. The maximum potential profit from this trade is the premium we collected or $1.65. The maximum potential loss is $0.35 which yields a reward to risk ratio of 4.71:1. Our break even prices are $42.35 and $45.65. This give us a very efficient way to synthetically "sell" rich implied volatility without incurring the undefined potential risks.     FOREX: Currency Spotlight ---Charlie Lewis   On the day after the FOMC announcement and ensuing bull market extravaganza,we are back to dealing with the hangover .One of the unforeseen consequences in the currency markets is that most majors appreciated considerably against the U.S Dollar during the course of the celebration.And they are now pegged at recent highwater levels, which will make their respective economies less competitive and vulnerable to inroads from international 'cheap currency' exporters. Europe in particular is only now starting to show signs of stability,and a more expensive Euro certainly will not help their international competitive position.Unless,of course,they produce their goods in the good old U.S.A.     STOCKS: Watch List ---Charles Moon The markets were very flat from the start of the trading session, and this carried over throughout the day into the close. The Dow finished down 40 points for the trading session. The S&P 500 finished down 3 points, while the Nasdaq finished up over 5 points for the day. It was somewhat a surprise that the session was so flat after the volatility yesterday, but it could be due to the uncertainty over Syria and who will be taking over the Fed Chair. Without the follow through today, we can speculate that the confusion is still present and hanging over the markets. We can also look and refer to this as the markets taking rest and profit from resistance at all time highs. Tomorrow and Monday's trading session should shed light on the true directional play here in the markets. Without the follow through today, I wonder what the possible ceiling could be in the markets. If the defined trend is to be up, the surprise was how flat the overall trading session was today. Usually the day after FOMC announcements tend to play out with some volatility, but today was flat and boring to say the least. The truth is we saw pullbacks in major caps, while a lot of Nasdaq stocks made runs higher today. If the markets make another jump today, the recovery could be swift. If not expect the correction to continue. Open Position: FB Stocks to Watch: INTC AAPL GOOG IBM AMZN BIDU LNKD FB TSLA GRPN CTXS CSCO NTAP JBL BAC PRU WFC GS JPM MS NFLX WDC 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 1720.50 / 1715.00 POC… 1715.50 YM 15607 / 15565 NQ 3232.75 / 3227.25 NOTES FROM THE PIT Click here to read     COMMODITIES: Play of the Day ---Patrick Assalone   Crude Oil once again had a number of good trading opportunities on Thursday with continued volatility and well defined support and resistance. Based on our educational methodology, we would look for reversal signals in the large High Volume Area from 105.49 to 106.42 or a reversion to the mean short signal with a break below 105.20. Click here to watch video   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.

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