I’ve been taking a bit of a break and spending time out of town with my family…look for more detailed information in the coming weeks, as I have decided to upgrade the information on the blog and provide more actual technique for trading.
The Fractal Futures Trader
Learn to Make $500-1000 a Day Trading the E-mini Contracts
Archive for December, 2008
I was talking with Ray Epley about this….
Mr. Epley, who shares a common interest in the economy as I do, where discussing the new year in relation to car sales and potential for growth. Of course, if you read and follow most of the recent economic reports, of which there have been few of positive note, the prospects for next year seem to bleak. Unemployment continues to climb, food prices continue to climb, while oil prices have continued their gradual descent.
What does it all mean? Well, to Ray and I, a unique event seems to be in the set-up stages….that is to say that higher end products seems to be in a period of deflation, and daily essentials, such as food..etc, seem to be continuing to inflate. I have looked through a large amount of literature for previous documentation on this condition and have found little in the way of explanation. Of course, this is in keeping with my overall view that economics is ruled by chaos theory and that each individual economic event is unique unto itself. Which, I want to point out, is a distinct departure from the random theories, as there is nothing random about what has happened in the markets for the last several months.
Today’s trading, like the trading in recent weeks, was a bit slow until the end of the day when the Dow miraculously rose 100 points…seemingly out of the blue. As Ray is an amateur economic enthusiast, this raised his eyebrows some. And it should…how does the market stage these last minute rally’s with such frequency. Some say it was short covering, which might be plausible…but there had to have been a tremendous amount of shorts to raise the market 100 points. The whole thing has Ray shaking his head. Is there manipulation going on here? It’s anyones guess.
The day ended down nearly 60 points…
About the charts
Just a quick note to let you know that I will once again be posting charts in the coming weeks. I had a minor misunderstanding with one of the charting services I used and they took their time resolving the charting problem. It is was my fault in thinking that merely crediting them with the charts that I would not infringe on their copyright laws. In any event, the situation is near resolution, so I will once again be posting daily charts.
As for today’s action, the market reminds me of the weather here in Central Illinois. If you don’t like the weather today, just wait for tomorrow because it will be different. We reversed course today, and everything isn’t peachy and wonderful with the traders. Worries over oil revenues, the Big 3 Bailout (if there is such a thing) and the usual dismal economic news actually made someone think that maybe things aren’t so rosy….in any event, we were down near 200. The market wasn’t particularly difficult to trade as a wave of unexepected orderliness rules the day.
Hope everyone is preparing for a fine Christmas….as for myself, I have had a difficult time staying out of the sweets and can see my New Years resolution will be to shed the ten pounds I’ve gained in the last month. Yuck
From the Calculated Risk Blog
This is quite a statement … I guess we are just going to start giving money away!
Fed will hold rates low for an extended period.
Fed Statement:
The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.
Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.
Meanwhile, inflationary pressures have diminished appreciably. In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.
The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.
The focus of the Committee’s policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve’s balance sheet at a high level. As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities. Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco. The Board also established interest rates on required and excess reserve balances of 1/4 percent.
Another week of tough news
The market is off early this morning, as the economic news streaming from our government has been pretty dismal. The manufacturing reports this morning confirmed the manufacturing segment of our economy remains tattered and in a shambles, as inventories pile up and new orders vanish. The week should be one where more negative news will be the norm…of course, that does not necessarily mean the market will head south, as the traders have shown an appetite for equities of late, despite the bad news.
I would also like to wish everyone a Merry Christmas and hope next year will profitable for us as we match wits with the markets. All the best….
Some Random News that the Market doesn’t seem to think is too important
The Census Bureau reports that retail sales collapsed in October:
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for November, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $355.7 billion, a decrease of 1.8 percent from the previous month and 7.4 percent below November 2007.
Total sales for the September through November 2008 period were down 4.5 percent from the same period a year ago. The September to October 2008 percent change was revised from -2.8 percent to -2.9 percent. Retail trade sales were down 2.0 percent from October 2008 and were 8.5 percent below last year. Motor vehicle and parts dealers sales were down 25.2 percent from November 2007 and gasoline stations sales were down 22.0 percent from last year.
The following graph shows the year-over-year change in nominal and real retail sales since 1993. Click on graph for larger image in new window.To calculate the real change, the monthly PCE price index from the BEA was used (November PCE prices was estimated as the same as October).
Although the Census Bureau reported that nominal retail sales decreased 8.4% year-over-year (retail and food services decreased 7.4%), real retail sales declined by 10.1% (on a YoY basis). This is the largest YoY decline since the Census Bureau started keeping data.Retail sales are a key portion of consumer spending and real retail sales have fallen off a cliff.
Courtesy of Calculated Risk
————————————————————————-
SEC Charges Bernard L. Madoff for Multi-Billion Dollar Ponzi Scheme
FOR IMMEDIATE RELEASE2008-293
FOR IMMEDIATE RELEASE2008-293
Washington, D.C., Dec. 11, 2008 — The Securities and Exchange Commission today charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The SEC is seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for the firm.
The SEC’s complaint, filed in federal court in Manhattan, alleges that Madoff yesterday informed two senior employees that his investment advisory business was a fraud. Madoff told these employees that he was “finished,” that he had “absolutely nothing,” that “it’s all just one big lie,” and that it was “basically, a giant Ponzi scheme.” The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the principal received from other, different investors. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from this fraud were at least $50 billion.SEC Charges Bernard L. Madoff for Multi-Billion Dollar Ponzi Scheme
What’s going on here?
We have broken a rather dubious record for unemployment today as more people are unemployed than anytime in the last 26 years. In addition, consumer spending is slowing and, for the first time in 50 years, consumers have begun to pay down their debt. There are a number of lengthy explanations for this, but one could summarize the phenomena by saying people have become very risk averse.
Yet with all of this less-than-rosy news, the market chugs right along, ignoring all the negative news, at least for the time being. It is a vexing situation, as the market seems to be defying gravity.
As for trading, today was fairly decent, but we still have some very long bars in the market swings and the potential for getting caught in one of these monsters is ever present. I traded fairly successfully today and avoided most of the chafe, but did find myself stopped out on a long bar that formed in what seemed to be microseconds. POOF….stopped out.
I have trimmed the number of contracts I am trading to 2 to offset the inherent market volatility and that has seemed to work pretty well, along with paying close attention to the volume readings as the market nears pivots, support and resistance. Gosh I long for the old days when the market used to swing in a semi-coherent fashion….let’s hope it isn’t too long before the whole situation settles down.
From Financial Armageddon Blog
Financial Armageddon
|
Posted: 08 Dec 2008 07:29 PM CST
Analysts naturally factor in the number of people who are out of work when they try to figure out future consumption patterns. But there is more to it, of course. People who are afraid they might lose their job are just as likely to economize or clamp down on spending as those who have no real choice in the matter. In fact, some might say that changes in the attitudes and behavior of the 85-95 percent (depending on which statistics you believe) of those who are employed matter much more than the financial wherewithal of those who aren’t. Under the circumstances, the following Reuters report, “More Americans Worried About Jobs,”
offers little reason for optimism.
One-third of U.S. consumers are worried about their jobs, a growing number that should be the latest sign of concern for retailers during the key holiday shopping season, a consumer research firm said.
“Job security (concern) is the only thing that will shut a customer down from shopping,” Britt Beemer, founder and chief executive of America’s Research Group, said.
In questions asked for Reuters as part of a larger survey, 33.6 percent of respondents said they were concerned about job security. That number is up from about 24 percent a month ago when a similar question was asked, and up from about 3 percent last year, Beemer said.
The survey was conducted just after the Labor Department announced that U.S. employers cut 533,000 jobs in November, the most since 1974.
Retailers are in the midst of what some experts see as the worst holiday season in nearly two decades, as job losses, the credit crunch and falling home prices all push consumers to keep their wallets shut.
In the America’s Research survey, 25.4 percent said they had already completed their holiday shopping, compared with only about 18 percent to 19 percent who were finished at this point last year, Beemer said.
“That’s not good for retailers,” he said.
Also, 24.3 percent said that the stock market’s declines were impacting their ability to spend. That was up from 16 percent who answered a similar question a month ago, Beemer said.
U.S. retailers have already seen the impact of weak spending. Sales at stores open at least a year fell 2.1 percent on average in November, according to Thomson Reuters data. That number fell to a 7.8 percent decline when Wal-Mart Stores Inc was excluded.
Wal-Mart has been the winning retailer so far this season, attracting consumers with low prices on many items.
According to the survey, 9.3 percent said they shopped at Wal-Mart for the first time this year.
Of those, a whopping 98.9 percent said they would shop there again and the same number said they would continue to shop there once the recession ends.
“We’re now watching a retailer take over the Christmas shopping season,” Beemer said.
In other results, 41 percent said that they feel more guilty about spending money when others are struggling more this year and 38.6 percent said they were waiting until closer to Christmas to get better deals.
The survey included 1,000 people and had a margin of error of plus or minus 3.8 percent.
-
-
Sign up for your free emini starter kit ($500 value) and learn about the high successful Trading Concepts ES Emini Trading program
-
-
