Everyone is making a big fuss over the fact that four U.S. banks went 61 days in a row without any losses. Well, the better question in this environment is how did any bank manage to not make a profit on all 61 days? These big banks are borrowing from the Fed for nothing and can effectively sell low risk bonds back to the government for a 3%+ annualized gain. This is a no-brainer when it comes to making money. If you’re a big bank you’re just laddering into a massive fixed income portfolio without almost no risk. The confusion or misrepresentations made by many regarding this “phenomenal performance” is that these firms are just sitting around “trading” the Nasdaq 100 like Joe Schmo does at home. That couldn’t be farther from the truth. These firms make most of their “trading” revenues by playing market maker or “trading” in these low risk fixed income markets. They’re essentially just pairing buyers and sellers and scraping a fee off inbeteween. Yes, there are other higher risk portions of their portfolios, but for the most part these firms are just vacuuming money up from off the NYSE floor at every twist and turn. It should shock no one that the big banks are making profits. A better question for the Morgan Stanley’s and Goldman Sachs’s of the world might be why they still have their bank holding company status? Allowing these firms to borrow from the Fed at 0% is a slap in the face to every other hard working financial firm.
“Dollar money-market rates to highest levels since August. The cost of inter-bank borrowing for three-month dollar funds increased to the highest level in almost nine months, as the IMF/EU’s $1 trillion financial plan for Europe failed to boost confidence sufficiently in commercial banks to step up their lending. The three-month London interbank offered rate, or LIBOR, for dollar funds increased to 0.43% this morning from 0.423% yesterday, the most since August 17, according to the British Bankers’ Association. Meanwhile, the three-month rate for euro, or EURIBOR, fell to 0.624% today from 0.628% yesterday, after soaring to 0.634% last week. Notably, EURIBOR established fresh lows each trading day over January 2010 to date. The
Monday, Tyler Durden ofZero Hedge noted that the ISE had instituted special rebates for specific option liquidity providers in an attempt to bolster volumes and capture market share ~ "Let The Churn in QQQQ, Citi and Bank of America Hit Infinity…." And the NYSE didn’t miss a beat; responding in kind with an extremely aggressive option pyramid pricing scheme.
NYSE Euronext’s U.S. Options Exchanges Announce New Pricing and Fee
New York, April 5, 2010 – NYSE Euronext’s U.S. options exchanges, NYSE Arca and NYSE Amex options, announced new rate changes for each market center that became effective April 1, 2010. NYSE Arca options is introducing higher posting credits in premium tier products, tiered customer rebates in non-premium penny pilot issues and a reduction in the LMM rights fees. NYSE Amex options is introducing a reduced electronic broker dealer rate, a reduced electronic firm rate, tiered pricing for firm proprietary manual trades and the implementation of the Professional Customer designation.
In an effort to dredge a moat around market share for Amex & Arca, the NYSE has implemented a new Penny Pilot "Premium Tier" pricing schedule for the options of 15 specific issues. Liquidity providers transacting serious size across these anointed sticker symbols … AAPL, BAC, C, DIA, EEM, FAZ, GDX, GE, GLD, IWM, QQQQ, SPY, UNG, USO & XLF … will (yet again) enjoy additional rebates as the NYSE attempts to  stave off competition from other options exchanges and  further buoy an anemic equity market, which continues to plow forward on phantom volume at 3 am on Sunday night (like the accelerator of a Toyota Camry beneath a sleep-driving Ambien junkie approaching a raised drawbridge with both eyes closed shut, one hand on the wheel and the other on his sixth bear claw).
OK, I got a new toy today so I’m going to put up some charts!
Rather than my usual spreadsheets, I thought a visual representation of what I think is going on would be appropriate. So far this week, we have failed to break my levels, which were predicted by our own 5% rule way back in July. I don’t have a drawing tool for the 5% rule but I’ll try to give you an idea of what I see when I look at a chart, now that I can capture them for you.
First of all, let’s look at the S&P, which the analysts are ga-ga over as they make a 50% retracement of the March dive:
Notice the 50% mark is right about our 1,127 watch zone but we didn’t get 1,127 from that spot, we calculated 1,127 as it was a 30% move off the real floor of 867, which is our 5% rule drop. The 5% rule sensibly tells us to throw out spikes and, while it’s hard to think of a 3-month, 200-point drop as a spike, in the grand scheme of things it still is. Here’s how the same Fibonacci series looks if we take 867 as a bottom, rather than 666:
Not quite as impressive a recovery is it? Do you see how the adjusted chart makes far more sense on the way down – with support at the 61.8% line, then at the 50% line and then clearly at 0. The big difference is, in my view of the action, it has been an easy slog to make the effectively dead-cat bounce back to 38.2%. This recent action proves nothing as we have yet to test 1,135, which should provide heavier resistance. It’s going to be a long time before we do a "life cross" (where the 50 wma moves above the 200 wma) so that 1,220 mark is going to weigh very heavily in the future as well, probably all the way into August before the S&P is ready to make a real move up (assuming we don’t fall down in between).
Running the same series on the Dow, we get this:
Of course the problem with the Dow is that the Dow we have now is NOT the same Dow that fell last year. We jettisoned GM and C for CSCO and TRV – a very good trade…
The NYSE hedged its bets earlier by invoking the rarely used Rule 48, which "provides the exchange with the ability to suspend the requirement to disseminate price indications and obtain floor-official approval prior to the opening when extremely high market-wide volatility could cause delay opening securities on the exchange." The full disclosure was made on the NYSE blog:
Rule 48 is intended to be invoked only in those situations where the potential for extreme market volatility would likely impair floor-wide operations at the exchange by impeding the fair and orderly opening of securities. Accordingly, the rule sets forth a number of factors to be considered before declaring such a condition, including:
Volatility during the previous day’s trading session;
Trading in foreign markets before the open;
Substantial activity in the futures market before the open;
The volume of pre-opening indications of interest;
Evidence of pre-opening significant order imbalances across the market;
News and corporate events; and,
Any such other market conditions that could impact floor-wide trading conditions.
And some other "do not panic, we have nothing under control" information dissemination by the NYSE:
The invocation of Rule 48 is in effect only for today. Previously, the NYSE invoked the rule on 11 March, 2008; 23 Jan., 2008; 22 Jan., 2008; and 12 Dec., 2007. The rule was approved by the Securities and Exchange Commission on 6 Dec., 2007.
Now add 17 March, 2008 to the list. I kind of had an uneasy feeling all weekend about Bear Stearns, and felt even worse upon seeing the announcement on Sunday night. To my train buddy at Bear Stearns and his colleagues, I’m sorry to see this happen.
Elements of Deflation, Part 3
Outrageous! – Artificial Deflation!
If You Are in a Hole, Stop Digging!
The Hole in the FDIC
How Can Just Four Stocks Be 40% of the NYSE Volume?
New Orleans and a Mauldin Migration to Europe
This week we continue to look at what powers the forces of deflation. As I continue to stress, getting the fundamental question answered correctly is the most important issue we face going forward. And the problem is that we cannot use the usual historical comparisons. This week we look at one more factor: bank lending. I give you a sneak preview of what will be an explosive report from Institutional Risk Analytics about the problems in the banking sector. Are you ready for the FDIC to be down as much as $400 billion? This should be an interesting, if sobering, letter.
Outrageous! – Artificial Deflation!
Speaking of deflation, let me mention something I find totally outrageous. Normally, I actually take up for the bureaucrats who are stuck with the task of trying to monitor inflation. It is a tough job, and like Monday-morning quarterbacks, everybody thinks you should have done it differently. I can understand the rationale for hedonic measurements, housing rent equivalents, etc., even if I don’t agree with them. You have to set some rules and live with them. But the latest imbroglio is disgraceful.
It seems the US Bureau of Labor Statistics, in the CPI next week, will treat the subsidy received by those 800,000 car buyers who bought a car in the "Cash for Clunkers" program as if the price of a car fell by $4,500. Really? My tax dollars account for nothing?
This does several things. It will decrease the inflation used to adjust the GDP for this quarter. Not the end of the world, but annoying But what really matters is that the CPI is used to calculate Social Security increases and interest paid on TIPS.
If I tried to defraud one of my clients using such accounting legerdemain,…
Duncan: can you please clarify who the current SLP actors are at this point, and why, if it is so economic, are more Broker/Dealers not funneling in? From this morning’s NYSE conference call.
"In addition to speed improvements we are also in the process of modernizing the floor to accommodate more floor based trading businesses and to expand the SLP program by adding new participants.
Please do not be confused about what SLPs do and what the type of programs are. The SLP program is open to anyone. And any SLP who wants to collect the rebate for providing liquidity is strictly performance based.
It must be they must execute at the inside market and then and only then if they performed they received a rebate, this is very different from some of these other programs that our competitors are using which have no obligations and in many cases not even a to attract the order this is all part of ongoing efforts to the extend liquidity on the NYSE classic platform is specifically on the floor."
But we appreciate the NYSE recoginizing just how critical clarity is on this major issue, which provides certain actors with half the NYSE PT order flow.
In yet another move to make a mockery of so-called market transparency, and again with mad props to Zerohedge, we have this:
The Exchange has filed with the SEC to implement the decommissioning of the DPTR requirement following the July 10, 2009 trade date. Accordingly, the last required submission of the DPTR will be on July 14, 2009, which is the second business day after the last trade date for which the DPTR is required.
Go read the entire Zerohedge article; what this means, in short, is that the ability of people (like you and I) to see the fact that a handful of banks, most specifically Goldman Sachs, constitute the majority of NYSE trading volume – and they’re trading for their own book, not for customers, will no longer be disclosed.
This "back and forth trade" between a handful of institutions is nothing more than the old "pump and dump" game that has been played in the OTC market forever – and almost always screws the individual investor.
This is no different than you and I selling a house back and forth between us repeatedly, each time at a higher price. We both appear to be geniuses as we’re both making a "profit", right?
Well, no. One of us is destined to take a horrifying loss if we do not find a sucker to make the final transaction with.
The embedded scam is that real gains require real parties at interest and not a closed system of a couple of guys passing an asset back and forth in a transparent attempt to "bait" someone else into becoming the sucker to offload that asset to.
The parallels to the housing bubble are not coincidence. There is no "value" being created nor is there any actual value appreciation taking place when people pass an asset back and forth at ever-higher prices. Only when there are lots of parties participating on their own, organically, does a market truly exist and does value align with price. Otherwise the so-called "price" is nothing other than a cheap parlor trick.
Zerohedge has been documenting this game now for months as Goldman in particular has come to represent an outrageously large percentage of the entire NYSE volume.
It wasn’t Ali who shocked the World knocking Joe Frazier down it was George Foreman.
In 1973 the undefeated Frazier had beat the unbeatable Muhammad Ali (everyone’s favorite Muslim) to take the title and had defended it twice in 1972 before being knocked out in just 2 rounds by Foreman (everyone’s favorite grill salesman). Frazier had 29 consecutive victories up to that point and seemed unstoppable but then, suddenly… unexpectedly… he was stopped. Giving Frazier huge credit he was knocked down 6 times before they stopped the fight but it was a beating nonetheless.
As recently as May 26th, we had looked to copper as a bullish sign as they broke out over $200 but oil was only $60 at the time. Since then, both copper and oil have rocketed 25% to the point at which I warned of hyperinflation in a special post last Thursday. Let’s take this move VERY seriously as it took days after I started worrying about copper for the commodity to finally drop and my observation on May 12th was that investors had finally realized that "China buying copper to stack it up in warehouses wasn’t a buying premise." That gave us a great week last options expirations as we took bearish stances on Agriculture, Oil and Metals right into Monday’s mega-pump as the Dow then gave up 600 points between that Monday’s post, where I called for a meltdown, and that expiration day Friday when I said: "We are already on vacation, having followed our plan to cash out at the bottom yesterday anticipating some short covering today that would take up the markets."
That gave us a very happy holiday weekend and we did get our rally on light volume during the next, short week…
A computer glitch at the New York Stock Exchange halted floor trading of more than 200 stocks around noon today. Electronic trading is continuing, apparently.
The NYSE says floor trading has halted while the exchange installs replacement computer equipment. The NYSE put up [an alert] on its Website saying the issue was related to a server problem.
The situation is reminiscent of the famous "glitch" of 2007 that made the print of the Dow Jones Industrial Average inaccurate. It’s not currently clear whether the current reported Dow levels are correct.
While it may have been pushed back from the front pages to keep confidence high, things in the Crimea, and in Ukraine in general (which may or may not waved goodbye to its gold reserves) are going from bad to worse with every passing day, with the near term catalyst of course being this Sunday Crimean referendum vote, which seems like a done deal, and which will give Russia a carte blanche to annex the territory over the howls of protest from Ukraine's coup government, and the west of course.
Making this outcome one step clower, overnight the parliament of the Autonomous Republic of Crimea adopted an independence declaration from Ukraine which is necessary for hold...
Bert Dohmen of the Wellington Letter comments on Apple Inc (no association with readtheticker)
Readtheticker.com Gann Angle Review. As you can see a very technical time for Apple Inc.
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.."The market is like a slowly revolving wheel: Whether the wheel will continue to revolve in the same direction, stand still or reverse depends upon the forces which come in contact with it hub and tread"...
Richard D Wyckoff .."Look at market fluctuations as your friend rather than your enemy; pr...
The EPI had an interesting chart and comments in its report The Vast Majority of the 5.8 Million Missing Workers Are Under Age 55. Since the start of the Great Recession over six years ago, labor force participation has dropped significantly. Most of the drop—roughly three-quarters—was due to the lack of job opportunities in the Great Recession and its aftermath. There are now 5.8 million workers who are not in the labor force but who would be if job opportunities were strong.
It is possible that some of these missing workers who are at or near retirement age have given up hope of...
Bayer HealthCare Pharmaceuticals (OTC: BAYRY) and Onyx Pharmaceuticals, Inc., an Amgen subsidiary (Nasdaq: AMGN), today announced that a Phase 3 trial evaluating the investigational use of NEXAVAR® (sorafenib) tablets as an adjuvant treatment for patients with hepatocellular carcinoma (HCC), or liver cancer, who had no detectable disease after surgical resection or local ablation, did not meet its primary endpoint of improving recurrence-free survival. The safety findings were consistent with the known profile of sorafenib. Data from this study will be submitted for presentation at an upcoming scientific congress.
"While the primary endpoint of this adjuvant trial was not met, Bayer and Onyx remain de...
Today was the beginning of “spring break” for the market. At least it seemed that way with a very low trading volume of only 600M shares on the NYSE. Either the college crowd does more trading than we imagined or parents are taking the week off as well.
The market barely woke up for the session with the S&P 500 down 0.05% and the NASDAQ down 0.03%. However, the DJI must have gotten extra sleep this weekend as it was up 0.21%. Small caps took a bigger hit with the Russell 2000 dropping nearly 0.50% percent. There was nothing major in the news other than a disappointing trading figure from China. Indeed, the whole week will only include a meager four major economic reports with Wholesale Inventories tomorrow, Retail Sales and Jobless Claims on Thursday, and Producer Price In...
The dramatic moves in fuel cell related stocks continues this week, with shares in Plug Power (Ticker: PLUG), FuelCell Energy (Ticker: FCEL) and Ballard Power Systems (Ticker: BLDP) beginning the trading week with explosive gains ahead of FuelCell Energy’s first-quarter earnings report after the closing bell, and following on the heels of a large order from Walmart for Plug Power, which the company confirmed in a press release on February 26th.
Shares in PLUG rose as much as 38% to touch $11.41 this afternoon, marking a near 150% move to the upside in the price of the underlying since Monday morning of last week when the stock opened at $4.60....
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This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
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Ladies and Gentlemen, hobos and tramps,
Cross-eyed mosquitoes, and Bow-legged ants,
I come before you, To stand behind you,
To tell you something, I know nothing about.
And so the circus begins in Union Square, San Francisco for this weeks JP Morgan Healthcare Conference. Will the momentum from 2013, which carried the S&P Spider Biotech ETF to all time highs, carry on in 2014? The Biotech ETF beat the S&P by better than 3 points.
As I noted in my previous post, Biotechs Galore - IPOs and More, biotechs were rushing to IPOs so that venture capitalists could unwind their holdings (funds are usually 5-7 years), as well as take advantage of the opportune moment...
Welcome to the fouth update of the IRA Virtual Portfolio. First I am going to summarize the current state of the Portfolio then I will get into all the activity we had during September expiration.
Profit and Loss – Net of closed positions the portfolio is up a total of $769
Market Commentary – Last expiration I said, "I would like to put a total of $20,000 to work by the end of SEP expiration. If the VIX pops up to around 20 I plan to put about $50,000 total to work." The market didn't quite reach the goal but I did manage to deploy $15,000 of buying power. I still feel the market is too high and expect a correction during October. If the vix pops up to around 20 I still plan to put about $50,000 to work. If a correction doesn't happen I still plan to have a total of $25,000 in buying power put to work by October expiration. Now on to the act...
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d/b/a PhilStockWorld (PSW) nor its affiliates
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