Place your bets, whether it’s profit-taking, hedging an existing market position(s) or new positions going into Friday’s employment data … either way the event is coming. GLOBAL EQUITIES CONTINUE THEIR SOUR TONE FROM YESTERDAY. US EQUITIES TURNED NEGATIVE AT THE END OF THE DAY…EUROPEAN EQUITIES ARE DOWN ABOUT 1.25%… THERE WAS TALK OUT OF AUSTRALIA THIS MORNING THAT THE CHINESE WERE REDUCING THEIR GDP GROWTH FOR 2014 TO 7% FROM 7.5%…WE THINK THIS IS ONLY PART OF THE PICTURE….HERE IS HOW WE SEE IT: CALL THE MARKETS INVERSE, PERVERSE, OR REVERSE…. MONDAY’S BOND PRICES WENT DOWN FOR TWO REASONS…ECONOMIC NUMBERS WERE BETTER AND BLOOMBERG RAN AN INTERESTING STORY THAT U.S. BANKS ARE REDUCING TREASURY BUYING SIGNIFICANTLY… BANK AMERICA AND WELLS REDUCED BIG TIME … CITI IS GETTING THERE … SO WITH BANKS REDUCING TREASURY BUYING AND ODDS FOR A DECEMBER TAPERING INCREASING, BONDS SOLD OFF … THEN THE INVERSE … STOCKS FIGURED OUT LATER IN THE DAY THAT TAPERING ODDS WERE INCREASING AND THEN REVERSED NEGATIVELY … EMG WAS AWFUL YESTERDAY… TODAY, EUROPE IS STARTING TO RECOGNIZE THE SAME THING … ADD A SPEECH LAST NIGHT BY FED GROUP HEAD SIMON POTTER ABOUT HOW THE FED WILL USE REVERSE REPOS TO TIGHTEN, AND YOU ADD TO THE NERVOUSNESS … DOES ANYONE REALLY BELIEVE THE FED WILL KEEP RATES AT ZERO FOR THE NEXT 2+ YEARS??? WE DON’T.
OTHER INTERESTING ITEMS: IBM REPORTED CYBER SALES UP 19% OVER LAST YEAR … MARKETS DON’T EVEN GIVE IT A GLANCE … FEAR OF FED TAPERING … BILD REPORTS THAT GERMAN AUTO WORKERS’ HOLIDAYS ARE BEING CURTAILED AS THE DEMAND FOR CARS IS ACCELERATING … CHINESE YUAN HAS SURPASSED THE EURO AS THE NO. 2 CURRENCY FOR TRADED FINANCED TRANSACTIONS.
Posted yesterday morning …william_blount (08:16) 1st 3 days of month have a buy bias, so bulls better darn well buy and if they dont – that is indicative of WEAK MKT. william_blount (08:56) 1802.5 spot was price of the weeek last week — BIG ARSE FOCB (Fish Or Cut Bait). Also, William has been pointing out other SPOTS: 1794 is a SPOT, 1787.5 is a SPOT and 1799 is a SPOT.
GLASS HALF EMPTY: Velocity Plunging - The GDP/M2 ratio, i.e., velocity, has been plunging, with nominal GDP growth less than +4% and M2 growth of +6%. This has a “pushing on a string” feel to it. GLASS HALF FULL: Marshallian K – Surging – Around 1900, the great British economist Alfred Marshall presented the Marshallian K, which is the M2/GDP ratio, i.e., the inverse of velocity. The idea is that when M2 growth exceeds GDP growth, the extra money goes into assets (equities, real estate, bonds, etc.).
Today started with 265k ESZ and 1.1k SPZ traded on Globex, ESZ trading range was 1792.00 – 1801.75. Monday’s regular trading hours (RTH’s), pit session trading range was 1797.20 – 1808.70 before settling at 1799.70, down 4.4 handles. (07:31) In Asia, 7 of 10 markets quoted closed lower: Shanghai Comp. +0.69%, Hang Seng -0.53%, Nikkei +0.60%. In Europe 10 out of 12 European markets were trading lower: DAX -1.04%, FTSE -0.69%. The regular pit session trading gapped 4 handles lower, 1794.00 – 1794.50 at the open and traded a high of 1798.50 before quietly deteriorating to 1786.30. Post-Thanksgiving price action not too friendly … new late day intraday lows, bleed into weekly lows followed by 2 week lows … Top Notch (09:46) As this trade develops in the s&p and Nasdaq, one needs to notice how skewed these two are. Both are working above their opening ranges, but the s&p has failed to see a move at this time back above its settle price of 1799.70 from yesterday, while the Nasdaq is maintaining a trade above its settle price of 3483.00. Tough to gauge.
Chicago politicians, the Democratic machine which is empowered by the get-out-the-votes union workers is breathing heavy, as well as the bond holders that are pissing their pants about Detroit being eligible to seek protection against its numerous creditors – more court battles for sure!
By 10:30 the [DJT] & [DJIA] were trading new lows too … iceChat (10:31:24): european close >> extending the 1792.00 globex low / euro & yen reversing adding pressure too / not holding very well on that double POMO – ouch! [SPX] bulls now on a 3 day furlough. Haven’t seen a 4-day drop since Sep 25. Only 2 in 2013… http://t.co/N5I3CYzVq5 thx Jasmin. iceChat (13:29) [WMT] WALMART.COM HAS ITS BEST SALES DAY EVER ON CYBER MONDAY 2013. [NDX] … Sam_E (13:48) nq 7550 decides it all / clear this and nq gets 83. the bulls are not done yet folks. a punch in the eye yes, but es bulls will try and go get 1801 and convert someway somehow. still long es. heres the deal. its a long till wrong. only problem is it was a very weak nano fib that supported us. so long there and its an add at 1782.75 and a cover and go short at 1801. cartervxs (14:02) gonna be tough without the banks helping / [AXP] on LOWS. Roger_Sawyer (14:03) [XLF] and [BKX] bounces were weak.
At 2:00 the S&P index was trading 1791 area when (14:00) MrTopStep MiM Closing Imbalance was showing a modest 67%, $312M to the sell side. Early MOCs. Trend continues, 43-7 sells over buys among 50 top weighted, $470mil notional to sell. At (14:20) the MiM was showing 58%, $440M to sell. At (14:40:15) the MiM was showing 66%, $389M. The imbalance was reduced to a small iceChat (14:48) MOC sell $130mil as the index quietly clawed its back to the opening range. The cash close traded 1793.40 area before settling at 1791.40, down 8.3 handles.
Coming events: http://www.investing.com/economic-calendar/
December seasonality strong: http://marketsci.wordpress.com/
December liquidity – a different view: http://bit.ly/IAKvtn
Michelle_T (14:43) New here – is there a tutorial or a schedule of what happens in this chatroom? PivotBoss Hi Michelle! Here’s a brief rundown – 8am CT is pre-mkt report, 12:30pm CT is midday report, 2pm is MiM and last hour trade…everything in between is make money
Below here was posted yesterday: New month – asset allocation, selling bonds and buying equities. Rotation within the sectors looks like they were buying S&P and the Nasdaq while selling the bonds, Russell 2000 and Dow stocks. william_blount (08:16) 1st 3 days of month have a buy bias, so bulls better darn well buy and if they dont – that is indicative of WEAK MKT. william_blount (08:56) 1802.5 spot was price of the weeek last week — BIG ARSE FOCB (Fish Or Cut Bait).
We don’t know exactly when, but when the spoos roll and they may … Raph shared, I guess we don’t discuss 0% scenarios now, that’s what its come down to. <<#thatswhatwetalkinabout
A few things to note from the Las Vegas Traders Expo — We spent yesterday afternoon at the Las Vegas Traders Expo. It was a great opportunity to get in the trenches, talk to other traders (both experienced and green), vendors, brokers, etc. We delivered a speech on option selling which gave us an opportunity to network with a community of traders that shared our advocacy of the strategy.
Many of the option sellers we spoke to were primarily (without diversification in other markets) selling puts against stock indices (S&P, NASDAQ, Russell). Not surprisingly, all of them have had a great run throughout the last few years (I only wish we would have been smart enough to be “all in” on short index puts). We are well aware that 2013 has seen a raging bull market in equities, and there is no telling when or where the party will end. Nonetheless, each day that goes by with traders growing more and more complacent in bullish strategies raises the stakes. Complacency will eventually lead to panic; it always does (unfortunately, there typically isn’t a happy medium).
Similarly, just as a market can get overcrowded and become vulnerable to a sharp correction, perhaps the strategy of selling stock index puts has become overcrowded. If the market ever pulls back, the short put traders will likely be forced to sell futures to hedge their option bets … due to mass quantities participating in this strategy, there could be significant fuel flaming the fire – @carleygarner aka Carley Garner