Wednesday, October 12, 2011

10/13 Almanac

On Thursday, Oct. 13: International trade deficit and jobless claims.

There are nine trading days before the October options expire, 37 the November, 65 the December and 100 the January. (Corrected.)

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


Blue chip stocks (SPY) closed the latest regular session up 0.9% from the prior close. During the day SPY traversed 1.5% in a net move up of 0.1%.

The day's extremes: Open $120.60, high $122.14, low $120.33, close $120.75.

SPY closed above the DeMark pivots after trading within their range. The next DeMark pivots are $120.54-$122.35.

In total, 3 billion shares were traded on the three major U.S. stock exchanges, 16% more than on the prior trading day.

Implied volatility suggests a 68% chance that SPY will close, 30 days from now, between $110.02 and $131.48. The range is +/- $10.73 from the last closing price, 51¢ narrower than on the prior trading day.

Bond yields imply that inflation, over the next five years, will average 1.74%, one basis point higher than the prior day.

Econ reports:

A one-two punch at the open, with the international trade report and weekly jobless claims at 8:30 a.m. Eastern. Each has the ability to move the market, and both have significant impact on how traders assess the top three political and economic issues now on the table: Jobs, jobs and jobs (or, as some have it, debt, deficit and no new taxes).

Petroleum inventories will be reported at 11 a.m., and natural gas at 10:30 a.m. -- always big weekly events for the energy sector. And the Treasury budget at 2 p.m. can sometimes cause a shiver among traders.

Also out, Bloomberg's consumer comfort index at 9:45 a.m., and two from the Federal Reserve: The balance sheet and the money supply, both out at 4:30 p.m.

Treasury auctions 30-year bonds at 1 p.m., and announces funding requirements for 3-, 6- and 52-week bills and 30-year inflation-indexed TIPS at 11 a.m.

Minneapolis Fed Pres. Narayana Kocherlakota, a member of the Federal Open Market Committee's dissident Gang of Three, gives a speech to a business group. Kocherlakota took office under President Barack Obama. He was an academic before joining the Fed.

He has voted three times against monetary easing policies favored by the majority. So, where is this guy coming from as he embraces a relatively tight monetary policy?

The FOMC minutes released on Wednesday said, "Mr. Kocherlakota's perspective on the policy decision was again shaped by his view that in November 2010, the Committee had chosen a level of accommodation that was well calibrated for the condition of the economy. Since November, inflation, and the one-year-ahead forecast for inflation, had risen, while unemployment, and the one-year-ahead forecast for unemployment, had fallen."

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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