Now that the (empty) "Chair" of the Fed (she insists being called Chair) has finished answering questions from the equally feckless Congress, one wonders what might matter to the markets. There are many areas in the world, as well as mini-areas in the markets that can cause out-of-control conflagrations; however, with the help of the aforementioned Empty Chair, there seems to be no worry.
OK, so global QE is the new reality; but what charts are we ignoring? Ahh, let's take a peek.
World GDP...
Earnings revisions vs. real GDP = NBER recessions?
UMM - HOUSING? Not without lumber, right? Oh wait, it's different "this time."
And my favorite is the following chart that clearly shows the ability of equities to ignore macro economic data due to the non-stop buying of global banks' QE.
If it was this easy - why didn't all prior governments across the globe just buy all bonds like now?
Clearly we have a New Path to Economic Nirvana.
Trade well and follow the trend, not the perma-bull OR perma-bear "experts."
Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banking mafia.
We had a slight pullback take place in the markets today. The COMP diverged and actually extended gains into the close, making it 11 out of 12 days it has finished in positive territory. The DJI and SPX finished barely negative for the day. We could see more of the same based on the GDP numbers. I suspect we could drop early and rally late. Couple that with the end of the month trading, and we can see some volatility come into play. If volume does kick in, we could be in for a bit of a slide. If trading conditions remain the same however, we could see the COMP make a push for the 5k mark. It seems that buyers are hunting for that level, and they won't stop until we get there.
Today a note on risk management. New students often ask if we use stops when we enter into a signal. The answer is not as straight forward as you might think. We certainly have "mental stops" as part of our risk management process. We know that if the underlying breaches a certain support/resistance area, we need to exit. Or, if the price of the option or spread we have on gets to a certain level, it's time to get out. But mechanically this is difficult. Option markets are not like an underlying equity market. The bid/ask can widen out especially during times of increased volatility. Since most option execution platforms compute stops from a theoretical value, you can trigger a stop when you do not intend to do merely because the bid/ask widened out. This effect only gets amplified if you have multiple legged spreads as we often do in our class.
Watch how our instructors call out live signals, answer questions, provide detailed commentary and compare notes with fellow students. Our live classrooms offer training on all markets - where you can watch the exact techniques our top instructors use with simple, yet complete explanations of every move they make in real time.
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Keep a civil tongue.