Bill Cara’s Blog for Dec 7, 2012

CTA Trading Desk Morning Report

[7:00am ET] Good morning, Geoff here.

As we wait for the employment data, I’d like to show you two important charts for the miners:

Long Term:

ggimage01_120712.png

3 Years:

ggimage02_120712.png

You can see that there is a confluence of a major uptrend line, 2 dynamic trend lines and an important Fibonacci Retracement level.

With this morning’s Employment data and worries about the Fiscal Cliff, it is make or break for the miners. Watch the green cup area in the second chart, either it fails or provides an excellent area to scoop up shares.

Have a great trading day!


Here are the 7:00am ET snapshots of the latest equity market trading results for Europe, and futures prices plus 5-minute charts of the futures for S&P 500, 30-year US Treasury Bond, US Dollar index, Gold and Crude Oil.

Symbol Name Last Trade Change Related Info
^ATX ATX 2,336.61 6:44AM EST Down 3.44 (0.15%) Components, Chart, More
^BFX BEL-20 2,408.90 6:22AM EST Down 3.20 (0.13%) Components, Chart, More
^FCHI CAC 40 3,594.14 6:59AM EST Down 7.51 (0.21%) Components, Chart, More
^GDAXI DAX 7,517.58 6:44AM EST Down 16.96 (0.23%) Components, Chart, More
AEX.AS AEX General 341.19 6:44AM EST Down 0.10 (0.03%) Components, Chart, More
^OSEAX OSE All Share 483.58 6:44AM EST Down 2.32 (0.48%) Components, Chart, More
^OMXSPI Stockholm General 340.06 6:42AM EST Down 1.19 (0.35%) Components, Chart, More
^SSMI Swiss Market 6,906.82 6:44AM EST Down 5.20 (0.08%) Components, Chart, More
^FTSE FTSE 100 5,890.19 6:44AM EST Down 11.23 (0.19%) Components, Chart, More
FPXAA.PR PX Index 995.76 6:59AM EST Down 3.80 (0.38%) Chart, More
MICEXINDEXCF.ME MICEX Index 1,428.58 7:44AM EST Down 9.87 (0.69%) Chart, More
GD.AT Athex Composite Share Price Index 840.36 6:44AM EST Up 8.66 (1.04%) Chart, More

http://finviz.com/futures.ashx

http://finviz.com/fut_chart.ashx?p=m5&t=ES

http://finviz.com/fut_chart.ashx?p=m5&t=ZB

http://finviz.com/fut_chart.ashx?p=m5&t=DX

http://finviz.com/fut_chart.ashx?p=m5&t=GC

http://finviz.com/fut_chart.ashx?p=m5&t=SI

http://finviz.com/fut_chart.ashx?p=m5&t=CL

The team will check in during the day, reporting in the Discourse when there is a new entry.

Enjoy your day.

To learn how to trade stocks and ETFs in both bull AND bear markets, sign up to receive our best daily ETF and stock picks through The Wagner Daily swing trading newsletter.


Point and Figure on Canada


OptionOracle


Harp’s Roadmap


Cara on the Metalminers


Cara on the International Markets


CTA Trading Desk Mid-Day Report


CTA Trading Desk Post-Close Report


  1. [No set time] Monster Employment Index 8:30 AM ET... [#115760]
    By: davefairtex (5215 comments) Go to top ↑
    • [No set time] Monster Employment Index
    • 8:30 AM ET Employment Situation
    • 9:55 AM ET Consumer Sentiment
    • 3:00 PM ET Consumer Credit
  2. 1 in Accumulation Zone 2 in Buy alert 3 in Sell... [#115761]
    By: davefairtex (5215 comments) Go to top ↑
    • 1 in Accumulation Zone
    • 2 in Buy alert
    • 3 in Sell alert

    Accumulation Zone (8%): Monthly 8, Weekly 11, Daily 5
    Distribution Zone (12%): Monthly 6, Weekly 7, Daily 23

  3. Scanning Market resources this morning I came accost this... [#115763]
    By: California Kid (278 comments) Go to top ↑

    Scanning Market resources this morning I came accost this 3D Map of the Market from Finviz thought I would share it.

    http://finviz.com/map3d.ashx

  4. Good morning. 08:30 Nonfarm Payrolls (146K) 08:30... [#115764]
    By: Bull Hunter (3552 comments) Go to top ↑

    Good morning.

    08:30 Nonfarm Payrolls (146K)
    08:30 Unemployment Rate (7.7%) Full gubmint malarky here: http://tinyurl.com/t68g
    08:30 Hourly Earnings (0.2%)
    08:30 Average Workweek (34.4)
    09:55 Mich Sentiment
    15:00 Consumer Credit

    ——

    AET – Aetna upgraded to Overweight from Neutral at JPMorgan due to its ACO opportunity and upside synergies from its Coventry Health (CVH). Price target raised to $52 from $46.

    BBBY – Standpoint Initiates with a Buy. Target $70

    MCD – McDonald’s upgraded to Buy from Neutral at Janney Capital following its survey that indicates improving same-store-sales, improving year-over-year comps, and valuation. Price target is $104.

    ORCL – Oracle initiated with a Neutral at Wedbush. Target $36

    RY – Royal Bank of Canada upgraded to Sector Outperformer at CIBC to Sector Outperformer from Sector Performer. The firm expects momentum vs. peers to continue and notes the company’s above-average profitability.

    TD – Toronto-Dominion downgraded to Sector Perform from Outperform at Scotia Capital.

    TD – Toronto-Dominion downgraded to Sector Performer from Outperformer at CIBC.

    ——

    “All unemployment compensation should be tied to a job training requirement. Now the fact is, 99 weeks is an associate degree.” ~ Newt Gingrich

  5. the number of people out of the labor increased by over... [#115765]
    By: NYUGrad (4750 comments) Go to top ↑

    the number of people out of the labor increased by over 540K to 88,883,000.

  6. Econoday reports: While the headline numbers were... [#115766]
    By: Bill Cara (4105 comments) Go to top ↑

    Econoday reports: While the headline numbers were better-than-expected, details indicate that the November is good overall but not quite as robust as indicated by headline numbers. Detracting from the headlines were a decline in goods-producing jobs and the dip in the unemployment rate being due to contraction in the labor force.

    Prior month revisions and Labor Dept accounting make this report almost worthless.

    • ... [#115770]
      By: Grym (5469 comments) Go to top ↑
    • ALOHA!! It all goes back to "interventionism" as a means... [#115781]
      By: kaimu (3289 comments) Go to top ↑

      ALOHA!!

      It all goes back to “interventionism” as a means for government and central banks to work in tandem to achieve their broader goals of monetary controls. The markets are so laden with manipulated data that there is no real “price discovery”. All levels are corrupted and this is nothing new, but what is new is the level of monetary corruption. Which of our Founding Fathers or even FDR would have believed our government could achieve annual debt issuances of $2.4TRIL???

  7. TCK - Teck Resources downgraded to Hold from Buy at TD... [#115767]
    By: Bull Hunter (3552 comments) Go to top ↑

    TCK – Teck Resources downgraded to Hold from Buy at TD Securities.

  8. As mentioned, despite several great earnings releases... [#115768]
    By: NYUGrad (4750 comments) Go to top ↑

    As mentioned, despite several great earnings releases, there have been retracements and profit taking into the news.

    Depending on your time horizon, could be a decent entry $9, or break out of $11 with tight stop.

  9. BRCM - estimates raised at D.A. Davidson through 2013, D.A... [#115769]
    By: Bull Hunter (3552 comments) Go to top ↑

    BRCM – estimates raised at D.A. Davidson through 2013, D.A. Davidson said. Positive comments from the analyst day. Buy rating.

  10. the fiscal cliff. I think Obama's long game is to remove... [#115771]
    By: NYUGrad (4750 comments) Go to top ↑

    the fiscal cliff. I think Obama’s long game is to remove any future need to debate the debt ceiling and allowing the executive branch print at will.

    Everyone should be looking to acquire and build upon gold on any dips.

  11. Detroit likely heading for Chapter 9. Would be the largest... [#115772]
    By: Dr. Strangelove (2004 comments) Go to top ↑

    Detroit likely heading for Chapter 9. Would be the largest municipal default in U.S. history.

    http://www.detroitnews.com/article/20121207/OPINION03/212070365/State-laying-groundwork-managed-bankruptcy-Detroit?odyssey=tab|topnews|text|FRONTPAGE

    This is the same city that stopped some of its bond payments for several decades until inflation allowed a pay off in the mid 20th century. States can’t print USDs to cover obligations like the federal gov’t. State gov’t dole reset could make Michigan an industrial powerhouse again with the gov’t unions’ collective bargaining gravy train spilled onto the floor, post riots of course.

    The entitlement greed displayed by Detroit city council and its minions is epic sans the police and fire departments. All this while former mayor Kwame Kilpatrick’s corruption trial drags on.

    UAW also could be in deeper trouble as the state may adopt right-to-work legislation (no union dues required and the teet goes dry).

    http://www.foxnews.com/politics/2012/12/06/michiga

    Oh, and GM may re-enter bankruptcy as a NY federal judge reconsiders its fate this week.

    This is strong evidence of the major trend change that Armstrong refers to from public to private, IMO, assuming GM is more public than private now.

    http://www.youtube.com/watch?v=NoBFhdeR9PE

  12. ... [#115778]
    By: MarkOfTheBeast (27 comments) Go to top ↑
  13. Had this article bookmarked for later read for a good... [#115779]
    By: Vadym Graifer (4341 comments) Go to top ↑

    Had this article bookmarked for later read for a good while, finally got around to it. As most complex matters, it’s a subject of interesting discussion

    http://globaleconomicanalysis.blogspot.ca/2012/11/

    • Interesting subject of discussion. Now let's add to that... [#115788]
      By: Les (7233 comments) Go to top ↑

      Interesting subject of discussion. Now let’s add to that the real fiscal risk after whatever deal is hashed out following the New Years standoff.

      http://economix.blogs.nytimes.com/2012/12/06/the-r

      When interest rates rise, at some point in the future, the pain comes home to hurt even more as serious spending cuts, taxes, printing or combination comes into play.

      Simon Johnson does propose a debt stabilisation strategy for the next twenty years if Washington takes the bull by the horns now. Best outcome, but less likely.

      Finally, what does the vulture fund vs. Argentina and their debt restructuring mean for the ballooning sovereign debts around the world? If a state is not in position to do a sovereign version of Chapter 11 and is instead liable to have assets seized in jurisdictions friendly to Manhattan, how are debt write downs possible? Is the author correct in assuming that papering over the debt with more paper is the logical outcome. Blowing bubbles to insane proportions?

      http://www.project-syndicate.org/commentary/financ

    • (What's "Really" Behind Gross Inequalities In Income... [#115792]
      By: ea32da32 (2362 comments) Go to top ↑

      (What’s “Really” Behind Gross Inequalities In Income Distribution?
      Fractional Reserve Lending
      Inflation targeting by the Fed
      Moral hazard policies of the Fed that encourage winner-take-all speculation
      Government interference into free markets
      Public unions)

      Personally I believe these are all symptoms of greed. We have states that feel (right or wrong) they are at war with all the other states so their busy extracting wealth from their own worker bees, businesses are in ‘do or die competition’ with one another, while at the same time working to bury the mom and pop system in favor of being the one source. Terrestrial wealth is subject to the same laws of physics we all are, it’s here, organized in such a way most of us are not pleased by. Does anyone believe the puppet masters behind this growing wave of redistribution have noble goals in mind; when one is to vote for revenge, or have a clue what their ‘true’ goals are? I seriously doubt it. When have people not had responses to oppression, perceived or otherwise? I do believe the answer is Sound Money but how to get there?… This fuse is already lit on this disaster.

      Earl

    • The rising increase in the inequality of income... [#115822]
      By: MarkOfTheBeast (27 comments) Go to top ↑

      The rising increase in the inequality of income distribution is due to globalization and automation, where all of the labor on the planet is competing for the shrinking number of total jobs due to automation, but the 1% is able to move without hindrance to those areas of the globe with the lowest taxes, the cheapest labor, and the least regard for the environment. Looks like it will take WWIII to improve things!

      • WWIII - I don't see that as a necessary consequence; but... [#115830]
        By: ea32da32 (2362 comments) Go to top ↑

        WWIII – I don’t see that as a necessary consequence; but then again, I don’t think the current peoples are going to change their ways without some divine intervention so maybe it will happen. The one really bright area is that of science although we can’t expect them to pull us out of a big problem – at least scientist are now finding that the universe ‘is organized’, the info has not trickled down to the average classroom yet – but the admission is a nice start. The Copernican Principle dethroned humankind, dethroned earth from its special place but that was never Nicholas Copernicus idea at all, it was something Carl Sagan that promoted that mal-applied view – my point being much of our system of education is geared toward holding theories up as fact (example of evolution when there is no evidence of it and never will be – they still teach it as fact in our schools when real science has left it behind) and it’s all crap. Darwin has been accused of plagiarizing his work and there is some scholarly evidence that supports this conjecture – http://creation.com/images/pdfs/tj/j16_3/j16_3_58-… not that this makes it wrong but regardless much of it sent us off track… and the people that grew up learning this won’t let it go… What do you think you get when you have a system teaching 1+3=8? But that’s exactly what we do – we have a ignoble state run school system, dummying down everyone it touches and now we’re all concerned because jobs have been shipped overseas and manufacturing has all but dried up in this country and we elect someone to the highest office in the land while lowering the bar for the job of presidency of the US to ground level – I mean where is the bar, should I crawl under it or step over it… so we can lay the blame for inequality of income distribution on globalization and automation, or anything else we want to blame it on, unions, early retirement, reckless deregulation – when you start with 1+3=8 what do you expect will exist as a ‘person’ and in general, what’s that person going to become if the system their organized in starts from wrong supposition? Ok, well I’m really rambling so good night.
        Earl

  14. From Jeff Miller of "A Dash of Insight" "...most... [#115780]
    By: MarkOfTheBeast (27 comments) Go to top ↑

    From Jeff Miller of “A Dash of Insight”

    “…most importantly, it would be helpful if anyone would realize that the BLS is just one estimate among others — and perhaps not the best.”

    http://oldprof.typepad.com/a_dash_of_insight/2012/

  15. NEW YORK/OTTAWA (Reuters) - Canadian authorities have... [#115782]
    By: c2ski (94 comments) Go to top ↑

    NEW YORK/OTTAWA (Reuters) – Canadian authorities have approved the acquisition of Nexen Inc by China’s CNOOC Ltd, a source familiar with the matter said on Friday.
    The ruling follows months of debate over how much of Canada’s energy sector should be controlled foreign oil companies. Investors have watched developments closely.
    CNOOC has offered $15.1 billion to buy Nexen, which has Alberta oil sands assets and offshore operations in the North Sea, Gulf of Mexico and Nigeria.
    Canada’s Industry Ministry said it would hold a media briefing at 4 p.m. (2100 GMT) on Friday with information embargoed until 5 p.m. Prime Minister Stephen Harper will make a statement at 5:15 p.m, the government said.
    Industry Canada did not reveal the topic for the announcement. The source spoke on condition of anonymity because the matter was not yet public.
    CNOOC’s takeover of Nexen was overwhelmingly approved by Nexen shareholders in September, but the government delayed approvals while it drafted a long-promised update to the rules governing investments by state-owned foreign companies.
    It also had to deal with the qualms of some of its own members over whether companies from the communist country should be allowed to buy up Canadian energy assets.

  16. ...and avoiding the mistakes of the Great... [#115784]
    By: M R Ducks (84 comments) Go to top ↑

    …and avoiding the mistakes of the Great Depression.

    According to Professor Steve Keen it’s not the ever-increasing public debt that we need to worry about (for the moment) but rather the private debt that over hangs like the “Boulder”(rather than Sword) of Damocles.
    This 43 minute video of Prof Keen speaking recently in the Rayburn House Office Building takes a somewhat different attitude on what could very easily happen if Congress does not act.

    As a complete novice to US and world economics and as one who relies a lot even on the sometimes conflicting ways-of-seeing here in the Cara Community, I would really like to hear what any of the “senior” members here think of Professor Keen’s projections should our lawmakers take us over the so-called “fiscal cliff” as it appears at this time they are bound to do.

    Here’s the video for weekend viewing:

    http://www.youtube.com/watch?v=THelXGcKQd0&feature

    TIA

    • ALOHA!! I am not so much concerned with private citizens... [#115785]
      By: kaimu (3289 comments) Go to top ↑

      ALOHA!!

      I am not so much concerned with private citizens and corporate debt as none of us ever have to “debate” whether to cut spending or increase taxes. We just do as our revenues and budgets dictate in order to survive. The Federal government because of monetary laws and their privileged debt issuance status rarely have the same debt/budget concerns as the private sectors does. Government has indentured slaves to keep pouring revenues into their system in the form of payroll taxes. Even though we know the system is corrupt we have no choice.

      What I have pointed out time and time again is how the Fortune 500 would be the Fortune 5 without government contracts. That is a portion of what Keen eludes to here. True enough as any Public Works contrator or trade union knows all too well.

      I think there will be another round of job losses if the Feds do cut spending. I mean last I looked 1+1=2! Government does create jobs but government does not take risk … it doles out risk to the real entrepreneurs. As a small business owner I take the risk and I put up start-up capital while Uncle Sam intervenes into my profits. Key to this is the vast uncertainty that covers the US business sector. This is one of the economic detriments that comes with interventionism. I also believe no amount of tax increases on the rich will solve the bigger issue of government spending. California would be proof positive of that as unrelenting taxation increases have only moved the state closer to insolvency.

      Geithner and Obama are correct to eliminate the “debt ceiling” since it has proven completely useless in curbing debt. What would truly curb debt is a money system where debt is not the basis of the currency. Since man first farted debt has been part of finances, but civilizations survived because the currency was not backed by debt. Now we have global currencies where debt is at saturation levels and indebted paper currencies “float” based on debt auction yields. It seems that now whoever has the most debt at the cheapest cost “wins”!

      As an FYI, even the Vatican has $66MIL of debt according to the BIS. Even GOD is in debt!!

    • ... [#115786]
      By: Grym (5469 comments) Go to top ↑
    • To sum up: reducing public increase of spending by $500... [#115821]
      By: MarkOfTheBeast (27 comments) Go to top ↑

      To sum up: reducing public increase of spending by $500 billion (the “fiscal cliff”) will impact private increase of spending by as much as $2 trillion- resulting in a double dip a la 1937! As the professor makes clear about WWII, “… the massive increase in public spending in WWII produced a many times increase in overall spending [by spurring a correlated massive increase in private spending]. If that had not happened, the depression could have lasted for another one or two decades.”

      Right on! If you are a Republican, you had best be careful what you wish for- you might get your wish and plunge us once more into a depression which will take WWIII to get out of. (The war also helped by removing about 8 million ‘surplus’ labor force members- producing labor shortages which allowed wages to shoot up and labor unions to grow strong.)

      Sounds like the professor knows what he is talking about- it seems he has predicted the EU’s ‘second’ dip. If we get that ‘austerity’ the Tea Party is so longing for, I guess we will join them!

  17. Argex has a new 52 week high of $1.40 . Its not speedy but... [#115787]
    By: BOB 47 (361 comments) Go to top ↑

    Argex has a new 52 week high of $1.40 . Its not speedy but goes back and forth and once in a while hits a new high . Much better than a new LOW . Yes I own some average , price 43 cents . Thank you Bill for sharing your thoughts ! http://tinyurl.com/bq2g9cu

    • BOB 47, Argex (RGX.V) was the one stock out of over 20... [#115789]
      By: Bill Cara (4105 comments) Go to top ↑

      BOB 47,

      Argex (RGX.V) was the one stock out of over 20 that I picked as having the most upside — saying it could go from about $0.40 to maybe $3.00 (750% gain) inside two years. I still think there is a chance it could hit $3.00 by conference time in Toronto next Sept 13-15. I think Enrico the company’s key officer will make a presentation at the conference. He tried this year, but wanted the same times I had already promised to Rob McEwen and Marc Farmer, so I couldn’t make it happen. Titanium Dioxide prices are high and going to really zoom once the global economy picks up. Argex started with a tiny plant to prove up their production process. That worked out and they increased the pilot plant size, which also worked out. It is still to be proven that they can product the product in vast quantities, but if they can the stock is likely to soar well beyond $3.00, likely on a take-over.

  18. 'HFT increases liquidity' challenged by this study by... [#115790]
    By: Dr. Strangelove (2004 comments) Go to top ↑

    ‘HFT increases liquidity’ challenged by this study by Princeton and Univ of Washington researchers and a CFTC economist:

    “The ever declining trading volume for U.S. stocks has apparently sufficiently reduced the number of traditional investors needed to support the skimming operations of HFT. When the flock diminishes the shearing productivity goes down and the number of shearers who can make a living is reduced.”

    http://econintersect.com/b2evolution/blog1.php/201

    No surprise. Just front running the bid/ask, IMO. Should be banned.

    • "Just front running the bid/ask" OK... pray tell what it... [#115795]
      By: Vadym Graifer (4341 comments) Go to top ↑

      “Just front running the bid/ask”

      OK… pray tell what it means.

      • Vad, From what I understand, market makers are voicing... [#115801]
        By: Dr. Strangelove (2004 comments) Go to top ↑

        Vad,

        From what I understand, market makers are voicing frustration for some time now over these HFT order blasts when trying to execute what had been a typical transaction order pattern.

        Hope that answers your prayer because I’m just giving my view. Nothing more.

        • No, it doesn't. You said that HFT frontruns bids and asks... [#115802]
          By: Vadym Graifer (4341 comments) Go to top ↑

          No, it doesn’t. You said that HFT frontruns bids and asks, and thus should be banned. It makes zero sense, so I asked what it meant. Explanation you gave above is a few words strung together without any meaning behind them either.

          Having views is great – when they are informed. You however continue talking about things you know nothing about and express strong views, all the while arguing with those who make a living in the area. It’s going to be probably 12th time when I ask you to stop misinforming this community and stop introducing nonsensical diatribes in what could have been useful discussion about real downsides of HFT and remedies required.

          Unless you are willing and able to explain that “frontrunning bids and asks, and ban” nonsense, please refrain from continuing. Let’s see if you answer this prayer.

          • HFT's will eventually implode and some newer scheme will... [#115807]
            By: Ilya (572 comments) Go to top ↑

            HFT’s will eventually implode and some newer scheme will eventually emerge. Everyone seeks the ‘holy grail’ of winning with ever complex systems that work…until they don’t. LTCM is a prime example of some very book smart people that were horn-swaggled by believing their own gibberish.

            Technical squiggly lines, pattern recognition, obscure mathmatician’s ‘golden means’, card counters and other ‘whatevers’ seem to attract the lazy as a sure fired way to enrichment. I remember a book from the 60′s, “Explore Europe on $5 a Day” which was true if you walked and only ate every other day.

            To understand markets and investing, begin with the theory of accounting. Double entry book-keeping was and is the first great gift of Western Civilization. All else pales by comparison.

            Tricking a profit day to day is the way of our modern ‘money market pirates’ who attempt to intervene amongst the interveners and gamble with money as a ware. This ‘gift’ is no more ignoble than that of a professional gambler who earns his profits from the ignorance of the haphazard rube who probably also plays the lottery. Truth said, if you are a master of what you do well, you can live a comfortable life but that effort is only a form of quasi capitalism. Trading may provide some liquidity but it has never built a bridge or contributed to a new electronic widget standard.

            There is no perfect investment style. If you are a value investor, stay with that theme. If you are a trader, trade. Do not attempt to meld the two less you become confused and confusion is always a money loser.

          • Ilya - Agreed. For the record, it was the House of... [#115812]
            By: Dr. Strangelove (2004 comments) Go to top ↑

            Ilya -

            Agreed.

            For the record, it was the House of Medici, based on Florence, that pioneered the double-entry bookkeeping system tracking credits and debts. Giovanni and his son Cosimo pioneered currency or trade exchange banking interest free (forbidden by the church) in the 14th century. Family included two popes (Leo X and Clement VII); two queens of France (Catherine and Marie); and three dukes (of Florence, Nemours and Tuscany). Machiavelli wrote their history.

          • Vad, That's now personal, and I have just been giving my... [#115810]
            By: Dr. Strangelove (2004 comments) Go to top ↑

            Vad,

            That’s now personal, and I have just been giving my views, that’s all.

          • Views with no knowledge is logodiarrhea. This community... [#115811]
            By: Vadym Graifer (4341 comments) Go to top ↑

            Views with no knowledge is logodiarrhea. This community pursues knowledge and information. Here, let me make it easier for you to show that you don’t just string words together but actually intend some meaning behind them:

            Stock is quoted $20 x 20.10. What action, in your views, by HFT would constitute “bids and asks frontrunning” and should be banned?

          • ... [#115813]
            By: Dr. Strangelove (2004 comments) Go to top ↑
          • High speed "issuing and canceling orders" aka "quote... [#115814]
            By: Vadym Graifer (4341 comments) Go to top ↑

            High speed “issuing and canceling orders” aka “quote stuffing” is a) whole different matter that you never mentioned before and b)the only (minor) problem with HFT that I can identify, being right in the middle of the battle. It’s easily corrected by instituting minimal time between entering and canceling an order, say 1/2 of a second, or even whole second. Poof, problem solved. No banning whole legit activity, no taxing with incredibly harmful side effects. There is more to the ridiculous idea about “bullying slower investors into giving up profits” (what on Earth investors are doing looking at Level 2 on second by second basis??) but let’s simplify this by simply showing how this whole problem can be done away with in one simple step. There, you are enlightened.

            Your turn now. What does “they front run bids and asks, and should be banned” mean? To avoid general phrases with nothing concrete behind them:

            Stock is quoted $20.00 x 20.10. Which action constitutes frontrunning bids and asks and should be banned?

          • Vad, Okay. Wouldn't "quote stuffing" be a form of... [#115815]
            By: Dr. Strangelove (2004 comments) Go to top ↑

            Vad,

            Okay. Wouldn’t “quote stuffing” be a form of frontrunning and instituting a minimal time between orders be, in essence, a ban?

          • This had to be a joke, I suppose. Stringing words together... [#115816]
            By: Vadym Graifer (4341 comments) Go to top ↑

            This had to be a joke, I suppose. Stringing words together continues. Please stop squirming and explain what you mean by frontrunning bids and asks using example above or withdraw your whole entry #115790 as meaningless.

          • I believe the SEC report on the May 6, 2010, flash crash... [#115817]
            By: Dr. Strangelove (2004 comments) Go to top ↑

            I believe the SEC report on the May 6, 2010, flash crash would explain the frontrunning algos and exposes how these ‘aggressive’ HFT can go bad, as a well documented example. This form of HFTs started trading each other after exhausting non-algo, or at least, non-aggressive algo market participants. If ‘frontrunning’ or ‘quote stuffing’ is the wrong nomanclature for this manic trade, so be it. The flash crash and declining market participation suggests to me that at least some form of HFT is bad for the markets.

            #115790 references a study critical of an ‘aggressive’ form of HFT that I consider noteworthy. I can’t withdraw my entry nor do I consider it meaningless, as you suggest.

            Since it’s not generating much commentary from others, I will refrain from commenting any further on this thread. It’s an interesting topic to me but this is perhaps not the place for me to comment since it’s become personal.

            I have just been giving my views, that’s all. Moving on.

          • To sum it up, you've no idea what you said and how it... [#115823]
            By: Vadym Graifer (4341 comments) Go to top ↑

            To sum it up, you’ve no idea what you said and how it relates to any actual market activity. Just FYI, no one ever found any evidence that flash crash was actually caused by HFT, nor did SEC report you for more reason refer to make such conclusion (although those who don’t understand market mechanics continue making this claim). Nor was anyone able to attribute declining market participation to any single factor (although, again… see above). Oh, and “aggressive” form of HFT refers to hitting existing bids and offers – if that’s activity to be banned, market will cease to exist the very next second. And “passive” one refers to bidding and offering within the spread – let’s ban it too? Heh.

            It’s great that you finally decided to move on from commenting and expressing strong views (as opposed to asking questions) on market mechanics you have no knowledge about. I hope it stays this way.

          • I read through that study. It seems to suggest that HFT... [#115828]
            By: davefairtex (5215 comments) Go to top ↑

            I read through that study. It seems to suggest that HFT profits depend on strategy and timeframe.

            As Vad said, “passive” HFT basically wait for someone else to hit their bids or offers, and they try and make money on the spread. “Active” HFT hit bids or offers, and must overcome the spread in order to make money.

            Active HFT make money on longer term (intraday) trades, while Passive HFT make money on shorter term trades.

            An Active HFT must effectively predict market direction in order to profit.

            Don’t we all try and predict market direction in order to make a profit?

          • Right on the money Dave - passive ones play a market maker... [#115829]
            By: Vadym Graifer (4341 comments) Go to top ↑

            Right on the money Dave – passive ones play a market maker, active ones play a trader. Both do what other market participants do. Ban any of those kinds of activity, and you destroy the market itself – conclusion to which I tried to drive this whole back and forth by asking what exactly constituted the activity supposed to be banned. Tried unsuccessfully I might add since opponent wasn’t able to articulate anything of substance, so I had to do it myself in the end.

          • I don't know anything about HFT - not studied it but I was... [#115832]
            By: ea32da32 (2362 comments) Go to top ↑

            I don’t know anything about HFT – not studied it but I was under the impression it also adds liquidity to the market and shrinking the bid/ask spread. I read that somewhere and it made some sense to me although I also feel (without knowledge) their there to skim trades and money – why else would they be there???

          • Earl - The Passive HFT folks provide liquidity making... [#115834]
            By: davefairtex (5215 comments) Go to top ↑

            Earl -

            The Passive HFT folks provide liquidity making money off the spread in return for taking on the short term risk of holding a position. They end up shrinking the spread because the more of them there are, the greater the competition to provide a spread that will maximize their order flow vs. assessed market movement risk.

            If the market trades flat, Passive HFT are happy campers because they collect the spread. If the market moves dramatically, they stand to lose if they don’t adjust their bids & offers quickly. Presumably speed helps them moderate that risk – i.e. they can withdraw or adjust bids or offers really quickly that might otherwise result in them losing more on market movement than they would make from the spread. Passive HFT seems to be all about risk management and honestly, I think they deserve their penny because its a tough problem to solve.

            Active HFT suck up liquidity – they’re just intraday traders looking to make money by figuring out intraday market direction. If they’re wrong about direction, they lose money. Just like the rest of us.

            Neither of these two participants seem bad to me.

            There is a third sort of HFT participant I’ve heard about that tries to sniff out big institutional trades that take a long time to fill, and front-run them. The big institutional trades aren’t just limit orders that sit there – they try to get the best price within a range by being sneaky and filling the big order a little bit at a time at various prices with a range. The HFT front-runners figure out what that order range looks like by watching market activity and they hit incoming bids first because they’re faster, and then sell to the big institutional guys at a small markup (but still within the price range). If they’re right about the big orders, its free money for them.

            Perhaps that’s what all the complaints are really about: the big institutional traders end up getting worse fills, because the algorithms their buyers use are stupid and slower, and so they are getting their lunch eaten a few pennies at a time by this third type of HFT trader who is smarter and faster.

            This third type of trader doesn’t add liquidity, nor do they try and predict market direction. They simply recognize market patterns and take advantage of the institutional trading firm’s bad algorithm and slow execution.

            Does anyone think this is particularly reprehensible? Rather than complaining about the problem, perhaps the institutional brokers should simply improve their algorithms?

          • Thank you. Was waiting for someone to answer the question... [#115839]
            By: Les (7233 comments) Go to top ↑

            Thank you. Was waiting for someone to answer the question. Guessed that robbing liquidity meant hitting bids and offers – interesting note on the time frames. Such a definition would put me in the camp of aggressive HFT. Ban me too and I’ll just buy physical and a bomb shelter.

            ———————

            Vad pulled up another interesting article on the cost of kidding oneself as pertaining to the US economy and coincidentally, the stock market’s behaviour in relation to said shrinking economy.

            http://acrossthestreetnet.wordpress.com/2012/11/28

            As Bill is pointing out, many charts are setting up for a breakout, even as the US economy shrinks on the global stage. WHY?

            If you don’t know the answer to this, read “When Money Dies”, particularly the chapter pertaining to the wealthy Austrian widow. I’ll try and find my PDF copy for those who’d like to email me for it.

    • DR. It may be interesting to see the finished report... [#115809]
      By: Grym (5469 comments) Go to top ↑

      DR.

      It may be interesting to see the finished report. Whatever new tech delivers newer tech (or some other unexpected surprise) seems capable of taking away.

      Grym

  19. ... [#115791]
    By: Grym (5469 comments) Go to top ↑
  20. For what's it's worth.....I'm sensing that gold &... [#115793]
    By: 14them34me (295 comments) Go to top ↑

    For what’s it’s worth…..I’m sensing that gold & silver may rebound a bit from a short term oversold. I closed out my covered calls on SLW and sold my put options on SLW Friday. Also bought some CEF.A looking for a slight bounce. We’ll see.

    • I am with you on this one. It is basically on the next fibb... [#115794]
      By: Sync (166 comments) Go to top ↑

      I am with you on this one. It is basically on the next fibb retracement support. You probably have more experience than I do (unless you are also in university), however I also sense that it is oversold.

      • Sync, University was decades ago for me. Nonetheless, to... [#115796]
        By: 14them34me (295 comments) Go to top ↑

        Sync, University was decades ago for me. Nonetheless, to me, learning is a life time journey. I hope I never stop learning. Especially the stock markets, there’s always something new to learn; but some of the old adage never dies. I work with young adults all through my career. It keeps me on my toes as well as keeps me always with young outlook. May be that’s why I “sounded” young and “look” younger than my age (so I’ve been told).

        btw, I don’t know if you are still keeping an eye on RGX. It is going parabolic. This is one reason why I’m getting a little nervous above $1.40. What do you think ?

        • If you want to learn more, head over to Vadym Graifer's... [#115797]
          By: Sync (166 comments) Go to top ↑

          If you want to learn more, head over to Vadym Graifer’s chatroom. Do a free trial. It is quite impressive what they do over there.

          http://www.realitytrader.com/

          And it’s great you work with the the younger generation. I just hope I will find a job coming out of Schulich. I have a cumulative GPA of 8.4, however I have little work experience. Last summer I took my elective for this year, and traded. Made more than I could have with a part time job, but I do not suppose I can pull up my record of trades to show an employer.

          I have a small position in RGX. Cost of 1.18. If you look at price history, you should be expecting a decline, perhaps down to 1.20. Overall, it should keep moving up. By the way–it is moving on SPECULATION. Part of the reason why I am not bothering to chase it.

          Once again, check out Vadym’s chat room. One issue with Vadym’s website–the membership fee. You could easily make many times over what they charge per month, however I cannot afford to stay home and trade as I have school. I am considering purchasing a membership, and trying to get in a few hours in the morning when I can. Not sure yet.

          • Sync, thanks for the good word, appreciate it. If you... [#115798]
            By: Vadym Graifer (4341 comments) Go to top ↑

            Sync,

            thanks for the good word, appreciate it. If you decide to try it, e-mail via Contact Us for the info on discounted program for the students who want to test the waters on part-time basis.

          • Thanx Sync and Vad. I know many on this site and people who... [#115800]
            By: 14them34me (295 comments) Go to top ↑

            Thanx Sync and Vad. I know many on this site and people who attended Bill’s conferences were impressed with Vad’s presentation. I just have not checked it out because I suck at short term or day trade. But I’ll look into it.

          • "I just have not checked it out because I suck at short... [#115803]
            By: Vadym Graifer (4341 comments) Go to top ↑

            “I just have not checked it out because I suck at short term or day trade”

            Not sure I follow the logic… wouldn’t sucking at day trading be exactly the reason to check out educational outfit that helps improve? :)

          • I'll check it out..."so much to do so little time" is my... [#115804]
            By: 14them34me (295 comments) Go to top ↑

            I’ll check it out…”so much to do so little time” is my main problem. I’m also wondering where to find ideas from – what to buy what to sell ideas at any given moment. Unless I have some auto-alert mechanism or system to track a few dozen stocks and ETFs, it’s humanly impossible to track them all intraday. Any suggestions ?

          • Our approach is, define setups you want to trade and hunt... [#115805]
            By: Vadym Graifer (4341 comments) Go to top ↑

            Our approach is, define setups you want to trade and hunt for stocks/ETFs that form them. We have a scanner that is programmed to find just that and a list of “usual suspects” that give us trades consistently. Go over single day log, http://tradinglog.realitytrader.com/2012/12/dec-06… for instance, and you will see how it works. Instructions at http://www.realitytrader.com/tradingroom/#instruct… help understand the format of calls and how to follow them.

  21. Barron's Saturday summary: positive on MW, XTXI; cover... [#115799]
    By: Vadym Graifer (4341 comments) Go to top ↑

    Barron’s Saturday summary: positive on MW, XTXI; cover story on top picks for 2013

    - Cover Story: Barron’s list of 10 favorite stocks for 2013 includes both large and small companies, several of which appear sharply undervalued; story says all these stocks could produce returns of up to 15-20% next year, including dividends (positive on AAPL, BKS, BLK, GD, JPM, MPC, NVS, RDSA, VIAB, WDC).

    - Features: positive on Men’s Wearhouse (MW): Shares dropped after recent guidance, but could rise again in 2013 as traffic rebounds and investors become attracted by good yield and lack of debt, p. 18; Positive on big pharma names (PFE, MRK, SNY, NVS): Drug companies have had to contend with patent cliff, but are “reaching the other side with rich dividend yields and opportunities for growth.”A look at potential candidates for Treasury chief should Timothy Geithner step down, with top contenders including current chief of staff Jack Lew, undersecretary of the Treasury Mary Miller, and BLK chief Larry Fink, p. 16

    - Small Caps: positive on XTXI: Energy company is a good way for investors to benefit from growth of natural-gas liquids and oil business.

    - Tech Trader: mixed comments on HPQ, DELL, INTC: PC stocks are up because many investors think Wall Street is too negative on sector, and some hope for end-of-year boost, but Tiernan Ray says market is still troubled and a “good feeling about PC stocks will fade”; + GOOG: Companys Google Fiber project could eventually pose serious competition for VZ and T; + Twitter: Investor Kevin Landis of SVVC has boosted stake, saying he thinks company has learned from watching FaceBook’s mistakes.

    - Trader: In rush to pay out cash to investors before the end of the year, companies such as HCA have loaded up on debt, but some experts say stock market returns and taxes don’t strongly correlate; +/- LVS, BYD, ASCA: Companies have outperformed based on news PENN may turn into a REIT, but gaming REITs may not be such a good idea, given various regulatory issues and other complexities faced by industry.

    - Follow-Up: Barron’s continued reporting on U.S. listed Chinese shares notes American accounting firms say their employees in China could be jailed for violating secrecy laws if they cooperate with the SEC; +/- STI: Shares have seen rally recently, but investors should be cautious about buying in, as there may not be much more upside.

    - European Trader: positive on SHPG: Selloff over fear of generic competition for ADHD treatment Adderall is overdone, and shares are likely to bounce back. Asian Trader: Despite damage from recent typhoon, Philippine stock market is likely to keep seeing gains, and country will soon have region’s fastest-growing labor force. Emerging Markets: Bond investors in Eastern European countries such as Poland and the Czech Republic won’t see much promise, but equity investors should do well when economies stabilize.

    - Streetwise: The stock market, says Kopin Tan, “seems immobilized by crisis fatigue and the vast range of potential fiscal-cliff outcomes” + PRU: Amid worry about life insurers, company has “less rate exposure than its peers” and is one of the cheapest financial stocks.

    - Commodities: Oversupply of cotton and weak demand have driven down prices, but trend is likely to reverse this year.

  22. http://tradinglog.realitytrader.com/2012/12/nemos-... BTW... [#115806]
    By: Vadym Graifer (4341 comments) Go to top ↑

    http://tradinglog.realitytrader.com/2012/12/nemos-

    BTW, in light of discussion above about the method of finding trades and general market read, this Nemo’s write-up is very useful and many in our trading room have added his pivot levels and VWAP to decision-making process.

  23. ... is up. I need a... [#115819]
    By: Bill Cara (4105 comments) Go to top ↑

    … is up.

    I need a break.

  24. ALOHA!! Politicians have a way of diverting attention. I... [#115824]
    By: kaimu (3289 comments) Go to top ↑

    ALOHA!!

    Politicians have a way of diverting attention. I like to eat “Cliff Bars” especially the peanut butter ones, but what I am talking about here is setting the “bar” for the newest “cliff”. We go over cliffs every fiscal year at the US Treasury. Every year Congress goes further and further into uncharted territory, setting the “bar” for corruption higher and higher!

    Lets look back and then explain to me why we need so much debt again …

    FY2001
    US Debt = $5.7TRIL
    Unemployment rate = 4.7%
    Fed Funds Rate = 5%
    Gross Debt/GDP = 56.6%
    Interest on Debt = $259BIL
    Trade Balance = ($375BIL)
    Per Capita Debt = $19,930.00
    US population = 286 million

    FY2011
    US Debt = $15.1TRIL
    Unemployment rate = 9.4%
    Fed Funds Rate = 0.25%
    Gross Debt/GDP = 102%
    Interest on Debt = $454BIL
    Trade Balance = ($550BIL)
    Per Capita Debt = $49,185.00
    US population = 307 million

    So politicians and bankers and the economists they hire practically tripled the US Debt and what benefit was it? In 2001 we were not yet in a housing bubble yet every one had plenty of jobs, even in a post Tech Crash economy.

    Why do we need so much debt to save the economy again?

    • ... [#115833]
      By: ea32da32 (2362 comments) Go to top ↑
      • ALOHA!! I am now back in Kalapana, Hawaii after traveling... [#115841]
        By: kaimu (3289 comments) Go to top ↑

        ALOHA!!

        I am now back in Kalapana, Hawaii after traveling to Los Angeles, Houston, Galveston, Shreveport, Minden and Haynesville. I met up with Earl on my way down to Galveston, TX about a week ago. We had a most enjoyable chit-chat over an early dinner at Denny’s. Every Caraista I have met over the years have truly been inspirational. If only we were all elected to the US Congress instead of the “spend-as-you-go” types who now proliferate the debt pit. Yeah-h-h, then there would be some HOPE and CHANGE for once! HA!!

        I had an idea. Today at the farm we were talking about the War of 1812 and how the “Canadians” came down and burned down the White House. Okay, it was the Brits, but when I am in Canada they say it was them! HA! Anyway, this time burn down the Rotunda too! Just think of the new jobs that would create!

        That attitude you speak of is “trickle down”. When I was doing Public Works projects for many San Francisco area school districts the project managers and school administrators were most concerned about spending more than their budgets so they could get a larger budget the next year. They were all penalized for spending less since their budgets would be cut. Is that capitalism? In reality you could say capitalism is the “accumulation of capital”. That is as KISS as it gets! It seems that even under Communism there are those elites who are more adept at accumulating capital than the masses. It matters not what system of government is employed to control the masses there is always an elite level whereby the accumulation of capital is accomplished with the least productivity and the maximum corruption. Such has been human nature for centuries. In that instance I see little difference between US politicians and those of their tin horn Third World brethren. The similarities are accelerating rapidly as we slide down the slippery slope of unlimited debt creation.

    • The amount 'interest on debt' is somewhat telling. There... [#115835]
      By: Ilya (572 comments) Go to top ↑

      The amount ‘interest on debt’ is somewhat telling. There seems to be a few hundred billion missing from the debt cost to the treasury vs. (interest income) to savers.

      Seems to me that since interest rates are artificially manuplated to the benefit of the government that one is discouraged by saving and can only prosper by borrowing at cheap rates. That is the current game.

      Don’t ask if it is fair, realize that it is the ‘real politic’ of the day and protect yourself in the clinches…

      • ALOHA!! Totally! I made a typo on the FY2001 "Interest on... [#115842]
        By: kaimu (3289 comments) Go to top ↑

        ALOHA!!

        Totally!

        I made a typo on the FY2001 “Interest on Debt”. The first number should have been a “3″ not a “2″, so the real number is $359BIL.

        Still that changes nothing in terms of concept.

  25. Hi Kaimu - Thanks for inspiring some of us to consder PMI... [#115825]
    By: Luggie (639 comments) Go to top ↑

    Hi Kaimu – Thanks for inspiring some of us to consder PMI, much as Bill pointed out the merits of Argex – we are blessed with Bill’s, your’s and so many others counsel here. Perhaps some in the political arena venture in here, and consider the daily wisdom as we move into the unknown. Regarding PMI I hate it when winners get sucked up before their time – much like BEXP was out of my Bakken litter. Happy Trading to All

    • ALOHA!! Regarding PMI I hate it when winners get sucked up... [#115838]
      By: kaimu (3289 comments) Go to top ↑

      ALOHA!!

      Regarding PMI I hate it when winners get sucked up before their time …

      What makes you think this will be the only bid? I know a number of the largest shareholders who are not too happy about the KGN bid …

      Mahalo for your kind words!

  26. ... [#115826]
    By: Vadym Graifer (4341 comments) Go to top ↑
  27. ... [#115827]
    By: ea32da32 (2362 comments) Go to top ↑
  28. It's looking like some accumulation going on here. Maybe... [#115831]
    By: ea32da32 (2362 comments) Go to top ↑

    It’s looking like some accumulation going on here. Maybe, hopefully…

  29. just for fun, write me a private (contact the author) msg... [#115836]
    By: jock (1011 comments) Go to top ↑

    just for fun, write me a private (contact the author) msg if you know. I’ll tally them, report back, and comment.

    clue: she’s one of the most powerful women in the world. She’s had an incredible career.

    Who is she?

  30. ... [#115837]
    By: California Kid (278 comments) Go to top ↑