Data and Scams II

by Larry Levin

Today was a very interesting day. And by "very interesting" I mean moronic, dead, slow, and ass-backwards.

It was so SLOW that Thursday's value area, where 70% of the volume traded, was a minuscule 4.50-points wide. This is so small that it makes its use for Friday's trade nearly irrelevant. For five and one-half HOURS the entire daily range was less than 6-points. I cannot remember a full trading day (non-holiday) with such low volatility. The only reason why the total range was larger was due to the end of day goose that seems to be a daily ritual. This portion of the afternoon, just the final 15-min to be exact, accounted for 38% of the TOTAL RANGE!

I have reprinted a portion of yesterday's email, then added today's data points to it.

Today (and yesterday) was your garden variety up days on Fraud Street: bad news drove the market higher again...on very low volume - again.

1. Empire State Manufacturing Index comes out lower than expected, dropping almost 50% from last month's reading. Moreover, the degree of optimism about the six-month outlook continued to deteriorate, with the future general business conditions index hitting its lowest level since early 2009.

2. Industrial Production was "as expected" but the prior month's gain was gutted by 40%.

3,Capacity Utilization came in a little worse than expectations with its prior month's reading also being reduced. (Are revisions ever positive? Said another way: Is the original headline data always over optimistic? Gee, I wonder why that would happen?)

4. Home Price declines prompted Diana Olick of CNBC to claim that the double dip in home prices has begun.

5. With this "great news" and the Fed goosing equities via POMO actions, the market had to rally. Seriously, what would you expect - a decline?

8. Weekly jobless claims were slightly better than expected but certainly cannot be argued to be getting better.

7. In more proof that the recent national ISM data was complete fantasy BS (rigged via the Ministry of Truth at the BLS) we read that the Philly Fed data was negative again at -0.7. What were economists expecting, +3.8, of course. Luckily for equities, these staggering misses are irrelevant...for now. From Bloomberg..."new orders, at minus 8.1, contracted for a third month and contracted at a deepening rate. Unfilled orders, at minus 8.5, extended their long run of contraction. Shipments, at minus 7.1, contracted for a second month as did the workweek. Delivery times, at minus 4.1, continue to shorten. Inventories, at minus 16.7, show a second month of significant destocking in a telling reading that suggests businesses are growing more defensive."

8. The bankrupt sate of California is being bailed out by CALPERS so the State can pay its bills, which many of them are...wait for it...wait for it...pension obligations owed to CALPERS! Yes sir, the fiscal I N S A N I T Y of the federal government is permeating the State level.

9. Reported today: Bank repossessions hit all time high and there is no end in sight.
Although FedEx's recent quarterly profit was large, it believes trouble lies ahead. The FedEx CEO sees future slowing, plans to cut 1,700 employees, and close facilities across the country.

Now take all of the previous ingredients, throw them in a pot, add a lack of volume, another round of POMO, and a severe lack of volatility - stew for 6.5 hours and you'll get a fresh bowl of rally-time...every time!



Previous Day's Trading Room Results:

Trade Date: 9/16/10

E-Mini S&P Trades*
(before fees and commissions):


1) No "Secrets" trades filled today.

2) Algorithm positions (4)

3) “Reading the Tape” positions (0) combined Secret’s, Algo, & “Reading the Tape” total +0.00 (b/e)



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