Tuesday, October 11, 2011

10/12 Almanac

On Wednesday, Oct. 12: FOMC minutes.

There are 10 trading days before the October options expire, 38 the November, 66 the December and 101 the January. (Corrected)

On the jump, market stats, econ reports, and the trading calendar . . .


Blue chip stocks (SPY) closed the latest regular session up 0.1% from the prior close. During the day SPY traversed 1.1% in a net move up of 0.7%.

The day's extremes: Open $117.68, high $119.63, low $117.67, close $119.70.

SPY closed within the DeMark pivots after trading below their range. The next DeMark pivots are $119.23-$120.52.

In total, 2.6 billion shares were traded on the three major U.S. stock exchanges, 4% more than on the prior trading day.

Implied volatility suggests a 68% chance that SPY will close, 30 days from now, between $108.46 and $130.94. The range is +/- $11.24 from the last closing price, 6¢ narrower than on the prior trading day.

Bond yields imply that inflation, over the next five years, will average 1.73%, one basis point higher than the prior report.trading day.

Econ reports:

The Federal Open Market Committee releases minutes of its most recent money-policy meeting, at 2 p.m. Eastern.

There is one other econ report: Mortgage Bankers release figures on applications at 7 a.m. The data is a leading indicator of home sales, since a mortgage application is a pre-requisite for a closing.

Treasury auctions 4-week bills at 11:30 a.m. and 10-year notes at 1 p.m.

Three Fedsters take the podium.

Dallas Fed Pres. Richard Fisher and Philadelphia Fed Pres. Charles Plosser bear close watching. Not only are they both are members of the Federal Open Market committee, but they are dissenting members. The third speaker, Cleveland Fed Pres. Sandra Pianalto, is an alternate member.

All three took office under President George W. Bush.

Fisher's pre-Fed institutional ties were to former Secretary of State Henry Kissinger’s strategic advisory firm, the private bank Brown Brothers Harriman Inc., and his own money management firm.

Plosser has had institutional ties to Chase Manhattan Bank, Eastman Kodak Co., Wyatt Co., ViaHealth Inc., RGS Energy Group Inc. and Chase Manhattan Bank, all in consulting or advisory capacities. He also co-chaired the Shadow Open Market Committee, which second-guessed the Fed’s monetary policy.

Beginning in August, Fisher and Plosser voted consistently against proposals to stimulate the economy by manipulating long-term interest rates. The minutes released on Wednesday will show whether they have dissented yet again.

Pianalto's resume shows institutional ties early on to the U.S. House Budget Committee. After that, she came up through the Fed system.

The Federal Reserve maintains an archive of speeches and testimony.

Trading Calendar:

By my rules, at this point in the cycle I can trade November vertical, calendar, diagonal and butterfly spreads, iron condors and covered calls, as well as January or later straddles, strangles, calls and puts. And of course, shares are good at any time.

Good trading!

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