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Chinese Yuan news causes gap higher open |
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Written by Administrator
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Monday, 21 June 2010 11:30 |
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*All rights reserved. Reproduction or distribution of this newsletter without prior consent is strictly prohibited. June 21st, 2010 Chinese Yuan news causes gap higher open Stock index futures gapped higher on the Sunday night open on news of the China un-pegging the Yuan. The flexibility of the currency was seen as a positive for U.S. equities in that a stronger Yuan means higher prices for Chinese exports and, indirectly, more competitive pricing for the rest of the world's goods. The Chinese government has been under pressure for some time to allow its currency to appreciate and finally gave into the pressure. In the past, manipulations to keep their currency low has acted as a barrier to competition and enabled the country to produce and distribute some of the most affordable products on the planet....quality is another issue. Although this is a breakthrough, don't expect the Yuan to be fairly valued anytime soon. The Chinese government has pledged to limit the daily trading range at .5%. In other words, the change has more of a symbolic impact than actual and with the G20 meeting coming up it likely has a little more to do with brown-nosing than anything. Nonetheless, it is a step in the right direction. We have a feeling that the current rally might have run its course for now. The U.S. dollar appears to be on the verge of a rally and this should put pressure on stocks. Also, well respected analysts such as Mark Gongloff of the Wall Street Journal and Meredith Whitney have cast some pessimism on the markets. We had been waiting to see the S&P in the mid to high 1120's, the Russell at 675 and the NASDAQ at 1930. Thanks to China, these prices were finally seen in Monday's session and we tend to be near-term bearish from here. That doesn't mean you should sell the farm and short the S&P, but it does mean that you will likely be best off implementing a strategy of selling into rallies (this might be selling calls, buying puts, selling futures, or any combination of the three). If we do get one more run in this rally, resistance in the S&P will be 1133ish, and then again near 1140. Similarly, if the market runs up once again, Russell traders should look for 683 as a place to be a bear. |
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Last Updated on Monday, 21 June 2010 11:38 |
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Yesterday's late sellers were today's early buyers |
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Written by Administrator
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Tuesday, 15 June 2010 11:56 |
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*All rights reserved. Reproduction or distribution of this newsletter without prior consent is strictly prohibited.
June 15th, 2010 Join us for a FREE webinar hosted by PFG Best on July 29th at 3:30 pm Central to discuss "Futures Market Slang" : http://pfgbest.com/webinar/eventSummary.asp?skey=337713234 Yesterday's late sellers were today's early buyers Monday's horrendous close had the bulls nervous and the bears salivating, but despite a lack of positive news or obvious catalyst Tuesday belonged to the bulls. I recently read an internet blog that shared the same pessimistic reality that I have spoken about in this newsletter from time to time. It stated that based on the open interest of calls and puts in the SPY (the ETFy version of the S&P 500 index) the S&P would need to be a little above 1100 at expiration to cause the most pain to the most speculators and this is what the blogger expects to happen. Unfortunately, I agree; I believe the markets have a tendency to cause the most amount of pain to the most people. Don't forget that beating the market is a tough game...greedy investors chased Madoff and his 12 to 13% annual track record straight into prison, so expecting "easy" money is unrealistic. I am not saying that profitable and lucrative trading isn't possible, but it is my job to point out that as a trader it is important to be able to accept the good with the bad. That said, although our conclusions were made via different analysis relative to this blogger, the outcome is the same. We have been looking for the S&P to trade into the 1120's and maybe as high as 1130. Today's test of the 200-day moving average (near 1108) puts us well on our way. However, President Obama will be addressing the country tonight and he has been called by some un-named CME floor traders "Mr. Sell Signal". Therefore, if you have caught this up-move don't get greedy holding out for 1130...look to tighten stops and take some risk off of the table. Assuming we break 1108, the next resistance will be 1117 and then again near 1127. There are likely many buy stops above and this should translate into an extension of the rally but he bulls shouldn't get comfortable. |
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Last Updated on Monday, 21 June 2010 11:37 |
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Quality bid fades in Treasury futures |
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Written by Administrator
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Tuesday, 15 June 2010 11:05 |
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*All rights reserved. Reproduction or distribution of this newsletter without prior consent is strictly prohibited. June 14th, 2010 Quality bid fades Investors took a small stride toward risky assets on Tuesday in the face of firm equities and despite signs of interest from foreign banks and hedge funds in holding Treasuries. Once again, we are left with little fundamental news to discuss but we are looking forward to the remainder of the week. Once the data begins to trickle out, Treasuries might finally pick a direction. Nonetheless, we did hear about the Empire Manufacturing index which came in at a slight miss. Also, the net long-term TIC Flows described an inflow of $83 billion in U.S. securities. It is far less than the previous inflow of $140 billion but given the higher dollar and lower yields, the numbers seem positive. Strength in the Euro has also played a part in the recent Treasury market reversal. Not too long ago, and even at this weekend's Trader's Expo in Pasadena California, most vocal analysts/commentators/traders were bearish the Euro. The term "parody" seemed to be used very casually and, accordingly, the bearish Euro trade became very crowded. There were simply too many bears...if everyone already thinks that the market is going down, there is nobody left to sell and that is exactly what we are seeing in the Euro. There are likely several more shorts to squeeze and stops to run in the Euro. Therefore, I expect that this move will continue to the 126 area. If my currency analysis holds true, this should be a common factor in enabling bonds and notes to continue to slide in the near term. We are still looking for the September t-bond futures to see prices near 121 and the note to trade just under 119.
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Last Updated on Tuesday, 15 June 2010 11:14 |
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Treasury Futures Basics Webinar |
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Written by Administrator
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Friday, 09 April 2010 09:03 |
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Futures Trading Webinar Overview:Treasury futures are among the most popular of the leveraged trading vehicles. However, many traders fail to take the time to understand exactly what they are speculating on. This class will focus on the underlying asset of a Treasury futures contract, the mechanics of the market place and the benefit of trading in this arena relative to ETF's such as the TBT. We will also explore some of the economic reports and inter-market relationships that are capable of dominating Treasury pricing.
What you will learn about Treasury Futures:- What is a Treasury futures contract (deliverable asset, contract specs)?
- Cash market vs. Futures market pricing
- Why trade Treasury futures relative to Treasury specific ETF's?
- Fundamentals that drive Treasury futures pricing
- Treasuries and seasonal tendencies
- Spreading between bonds and notes
DeCarley TradingLocal: 702-947-0701 Toll Free: 1-866-790-TRADE (8723) Fax : 702-947-6534 **There is substantial risk of loss in trading options and futures. Doing so may not be suitable for everyone. |
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Futures Trading Plan webinar with SFO Magazine |
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Written by Administrator
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Friday, 09 April 2010 08:45 |
| |  | | Alternative Look at the Trading Plan | |  |
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| | | | | | | | | | | | | | | | | Carley Garner, commodities analyst, broker and author of "A Trader's First Book on Commodities," discusses the challenges of system trading, the necessity of human intervention in trading, choosing the right trading vehicle for you, timing and risk-reward management. | | | http://www.sfomag.com/TraderUniversity/WebinarArchive.aspx | | | |
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Last Updated on Friday, 28 May 2010 07:05 |
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Traders are often lured to into the futures markets with a fascination for day trading. The thought of trading leveraged contracts without overnight risk is appealing to many, but underestimated by most. As a retail broker I have had the pleasure, and the pain, of watching day traders attempt to profit through strategies ranging from scalping to "position" intra-day trading which spans several ho...
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A Brief Introduction to Options
Options offer traders an unlimited number of strategies with various levels of risk and reward. Unfortunately, many retail traders are stuck in a long option only "rut" and may not be aware of the potential flexibility offered by alternative option strategies. There is certainly a time and a place for buying outright options, but in my opinion most circumstances seem to favor an alternate approach. 
How to create a Synthetic Put
Options are eroding assets; therefore it isn't always wise to spend a lot of money to purchase an option that will face depreciation as well as dismal odds of success. Instead, it is often a better idea to sell options of different types or strike prices in order to pay for those that you would like to purchase. A put ratio spread does just that. A trader that is interested in buying a put option in hopes of a market decline or to simply protect other positions in their trading portfolio may finance their purchase through the sale of two distant strike priced puts. Here are the details of a put option ratio spread. 
