Tuesday, October 18, 2011

10/19 Almanac

On Wednesday, Oct. 19: Inflation, housing starts.

There are three trading days before the October options expire, 31 the November, 59 the December and 94 the January.

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


Blue chip stocks (SPY) closed the latest regular session up 2.0% from the prior close. During the day SPY traversed 3.6% in a net move up of 2.0%.

The day's extremes: Open $120.14, high $123.50, low $119.20, close $122.58.

SPY closed above the DeMark pivots after trading within their range. The next DeMark pivots are $120.89-$125.19.

In total, 2.9 billion shares were traded on the three major U.S. stock exchanges, 13% more than on the prior trading day.

Implied volatility suggests a 68% chance that SPY will close, 30 days from now, between $111.46 and $133.70. The range is +/- $11.12 from the last closing price, 19¢ narrower than on the prior trading day.

Bond yields imply that inflation, over the next five years, will average 1.79%, six basis points higher than the prior trading day.

Econ reports:

The Labor Department will release the consumer price index at 8:30 a.m. Eastern. It is a closely watched market mover because if it shows a sharp rise in inflation, then that could mean the Fed has gone too far, too fast in trying to stimulate economic growth.

Another government report that moves markets -- housing starts -- will also be out at 8:30 a.m.

Other reports on the calendar: The Mortgage Bankers' weekly report on purchase applications at 7 a.m., petroleum inventories at 10:30 a.m., and the Federal Reserve's monthly Beige Book summary of economic conditions in each of its districts at 2 p.m..

Two Fedsters, three appearances. Someone is over-reaching here.

And that someone -- with two appearances -- is Atlanta Fed Pres. Dennis Lockhart, an alternate member of the Federal Open Market Committee appointed to his position by President George W. Bush. His resume shows institutional ties to Citigroup (then called Citicorp/Citibank), Heller Financial and the private equity firm Zephyr Management L.P.

Also speaking, with a modest single appearance, is Boston Fed Pres. Eric Rosengren, who plays no role on the monetary policy committee. Also a Bush II appointee, he came up through the Fed system as a research economist. He has served as an advisor on Japanese banking.

The Federal Reserve maintains an archive of selected 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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