2012: Reflections on a bumpy ride

MrTopStep.com

For traders, 2012 probably will go down as the year of the fiscal cliff. Although the year has shown some solid returns (NASDAQ +14.6%, Dow +7.51%, S&P +12.40%), fiscal issues have dominated the market since the presidential election, and we can’t forget that the credit crisis that started in 2007 is still alive and well.

If you’re like me, you’re sick of hearing about the seemingly ineffectual negotiations in Washington, so let’s take a moment to look back at the non-trading-related names and events that made 2012 the year that it was, both good and bad.

In sports, Lance Armstrong has to top the list. America’s No. 1 cyclist threw in the towel after years of being accused of using performance-enhancing drugs. An even more shocking story came out of Penn State, where longtime football coach Jerry Sandusky was arrested and convicted on child molestation charges. Or how about the recent death of the Cowboys’ Jerry Brown Jr.

On the good side was the London Olympics and how well the Miami Heat played in the NBA finals and how well the San Francisco Giants played in the World Series.

Remember when sports used to bring people together?  

In national news, David Petraeus caught the public off guard when he was accused of having an affair that took down the head of the CIA. I am not reading from anything as I write, so these are the things I remember about 2012. One thing that really hurt was the devastation of Hurricane Sandy and how it slammed into Seaside Heights, NJ, and all the burning homes in Breezy Point, NY, and all the damage done to the East Coast. I can honestly say my heart goes out to all of those affected.  But the big heartbreaker in 2012 and one that makes all of the above seem small was the senseless deaths of 27 children and adults murdered at Sandy Hook Elementary School in Connecticut. No matter how bad things may be, nothing can compare to the pain and suffering caused by that day.

By now I am sure you're saying that this is not the lighthearted read you would expect at the end of trading the ES all year. We can't change the past, but we can learn from our mistakes and we can plan forward. I remember the ugly June 1 unemployment report that sent the Dow down 275 points, and I remember back on Sept. 6 when the Dow closed up 244 points after Mario Draghi unveiled a program to buy government bonds, and I remember when the Dow dropped 313 points the day after President Obama was re-elected.

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And most recently I remember how the S&P has been down 5 out of the last 5 trading days for a loss of 56.6 handles as the government drags its feet on the fiscal cliff. As I have always said, there is no free money out there. This is not about trying to become a millionaire, it's about holding on to what you have. It’s about making a plan and executing it.

Now we have a whole new 365 days to talk about the S&P! Have a happy New Year and be safe. Don't drink and drive, and we will see you Wednesday.

Thank you,
Danny Riley
President, MrTopStep.com

Dec 21 SPH -14.7 handles
Dec 24 SPH -6.1 handles
Dec 26 SPH -6.3 handles
Dec 27 SPH -2.8 handles
Dec 28 SPH -26.7 handles =
ESH -56.6 handles in 5 days

Our view: I really thought the government would come together for the good of the people, but I have been 100% wrong. I knew there was a good possibility that the cliff talks would drag on and that there was potential for a letdown, but I thought the folks in Washington would strike a deal before the end of 2012. They haven't. I said weeks ago that the markets hate uncertainty and that is what is playing out. I want to get to the floor before talking any buying and selling. See you in the IM Pro room ...

  • It’s 7:30 a.m. and the ESH is trading 138.50, up 4.5 handles; crude is down 71 cents at 90.09; and the euro is down 30 pips at 1.3201.
  • In Asia, 6 out of 11 markets closed higher (Shanghai Comp. +1.61%, Hang Seng -0.04%).
  • In Europe, 6 out of 11 markets quoted are trading higher (CAC +0.35%, DAX -0.57%).
  • Today’s headline: “No End In Sight: Fiscal Cliff Goes into 2013”
  • Economic calendar: Today: Dallas Fed mfg survey, farm prices, 'fiscal cliff' deadline. TUESDAY: New Year's Day -- markets closed. WEDNESDAY: Weekly mortgage applications, PMI manufacturing index, ISM mfg index, construction spending. THURSDAY: Challenger job-cut report, ADP employment report, jobless claims, FOMC minutes, Fed balance sheet/money supply, chain store sales, auto sales; Eearnings from Family Dollar. FRIDAY: Employment situation, factory orders, ISM non-mfg index, oil inventories and the Fed's Yellen speaks.
  • Globex volume: 1mil ESH and 7k SPH traded
  • Fair value: S&P -7.75, NASDAQ -14.50

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DISCLAIMER: The information and data in the following report(s) were obtained from sources considered reliable. Opinions, market data, and recommendations are subject to change at any time. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any commodities or securities. MrTopStep, its officers, directors and its contributors may, in the normal course of business, have position(s) which may or may not agree with the opinions expressed in this report.

 

 

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