Sorry, but this "rally" is just too much BS for me.
As you can see from Dave Fry's SPY chart, we're running up on ZERO volume in the Futures and then we sell off all day on very low volume (because there are no buyers and the Funds are exiting slowly) and then we have dip at the finish as the ETFs that HAVE to buy at MOC (Market on Close)pricing get shares jammed down their throats by the pumpers.
It's a complete and utter farce and completely ignored by the MSM, especially the Financial Media, who just play along as if none of this matters. While you may consider the manipulation of currency and metals markets to be news (both are under international investigation at the moment) – it doesn't rate a mention in the Financial Media, who's advertising revenue comes mainly from the companies that are being investigated for fraud and manipulation.
April Fools! The above is what I wrote along with the chart on March 7th in "Non-Farm Friday – America Still Not Working." That was 30 days ago, we've come a long way since then because, THIS TIME, we have SPY at 188.63 coming into Non-Farm Payrolls, so take THAT 188.10 – IN YOUR FACE!
Despite the month-long flatline, the bullish trade idea we had back on 3/7 was a big winner. Our trade idea in that mornings post (which you can get delivered to your mailbox, pre-market by subscribing here) was:
10 UDOW April $105/110 bull call spreads at $3.50 ($3,500), selling 10 DIA April $159 puts for $1.30 ($1,300) for net $2.20 ($2,200).
UDOW is an ultra-ling ETF on the Dow and is now at $113 and that spread is 100% in the money, on track for $5 ($5,000) while DIA is at $165.50, on track for $0 so net $5,000 will be up 127% if we close here at April expirations. Of course, we were also skeptical and our more aggressive short plays (also right there in the morning post) were shorting Oil Futures (/CL) wat $102.50 and shorting Russell Futures (/TF) at 1,212.
We took the money and ran on our oil Futures Wednesday, at $99 – up $3,500 per contract and the Russell Futures hit 1,175 yesterday, up $3,700 per contract. In fact, we were still shorting the Russell Futures on Tuesday, when we had our live Futures trading workshop and, though we were in trouble at Tuesday's close, our faith was finally rewarded on yesterday's dip as well!
Not that you had to hold those Futures for days to make nice money. Aside from our usual TZA hedges (ultra-short ETFs on the Russell), my morning call in Member Chat at 3:50 am yesterday was:
16,500 on /YM, 1,885 on /ES, 3,660 on /NQ and 1,190 on /TF – I'm all in favor of shorting the laggard if those don't hold. Still can't bring myself to play the upside.
As I noted, the /TF contacts fell to 1,175 for a $1,500 per contract gain by 2pm (and we reiterated short calls during the day at 1,185 for a $1,000 gain and 1,180 for a $500 gain – so you don't have to get up early if you don't mind making a bit less!). The Dow (/YM) was more subtle at 16,450 (up $250 per contract). /ES (S&P) hit 1,877 (up $400 per contract) and the Nasdaq (/NQ) fell to 3,610, for a $1,000 per contract gain. Not a bad day for a "flat" market…
We are still generally short-term bearish, with pretty much exactly the same sentiment as we had on 3/7, when I said:
It's been a hell of a rally – one of the all-time greats – and perhaps it will keep going and, if it does, we are HAPPY to get more bullish but, as you can see from this nice chart from Pension Partners (thanks StJ), we're testing some very serious resistance at this level and there's no harm in CONFIRMING a move over the line (1,900 on the S&P, adjusting for the currently weak Dollar) before throwing our perfectly good money into the mix.
I laid out our expectations for our Members earlier this morning, where I noted that U6 unemployment, which includes involuntary part-time workers and "discouraged" workers, is still shockingly high, so it doesn't matter much what the NFP report says, we still have a long way to go before the economy is "fixed".
8:30 Update: NFP came in at 192,000, pretty much in-line with expectations and still not enough to change anything. The Futures are doing their expected head-fake higher (same thing they did last month) and again we get a chance to short the S&P Futures (/ES) at the 1,890 mark and those are my favorites, at the moment, with tight stops over that line. On the UDOW play, I'd take the money and run on the long $105 calls and leave the short $105 calls and buy back the puts, in anticipation of a pullback next week. This is not the kind of payroll report that supports all-time market highs.
What's really funny is listening to CNBC spin the lame NFP number by noting that the average workweek increased by 0.2 hours to 33.7 hours. There is a point there, as 0.2 more hours for the 156M people who do work is like adding 312,000 jobs but why didn't they make that case in the past year, as we're only now getting back to last March's 33.8 average hours. It's so cute how they count on us to never check anything they say, isn't it? And, of course, here's the thing no one in the Corporate Media likes to talk about:
Wages still suck, not even keeping up with the Fed's BS lowball inflation estimates. Certainly not keeping up with the price of gas (was under $2 in 2009) or the 9% ANNUAL rise in the cost of FOOD.
LOL, you silly poor people with your eating and driving – now get back to work – record profits don't make themselves, you know!
Have a great weekend,
– Phil
