Conversation

by Larry Levin

I had an interesting conversation with a friend this afternoon after the close. Among other things, he wanted to know how excellent trading was today due to the indices huge gains.  He was rather surprised when I told him how lame trading has really been intra-day, since the closing gains or losses had seemed so large.
 
It went something like this...
 
Wow, what a great day it was, the Dow, S&P, and Nasdaq were up huge.

Although many people would see a Dow that closes higher by 202-points as a "volatile" or “great trading” day, I’m an intra-day trader and that was miserable. For weeks now the majority of most days we'll see a quick move higher or lower that is immediately followed buy hour after hour of absolutely no trade.  Tuesday's big up day was no exception.
 
Oh, that’s odd. Why do you think this is happening?

Perhaps it is just the "summer" trade, but volume is also very low.  As an example, Tuesday's huge up day should have come with about 3.5 to 4-million mini-S&P contracts traded.  Even with the late surge of position squaring after the NY close it only managed 2.09-million.  This is pathetic.
 
Earnings probably helped, right?

Sure, earnings before the bell were very good for Coke and IBM so I wasn't surprised by the good open.  Sadly, that was followed by what I just mentioned: NO volatility. The ES traded in a very narrow range for four hours until the market somehow got a boost from a supposed debt ceiling deal. 
 
Oh yeah, I saw the president on TV again. Did they all finally agree on something?

No they didn’t agree on a specific deal so I was surprised by the reaction to this.  Furthermore, there isn't a single person on this planet that doesn't believe Congress will, without a doubt, raise the debt ceiling.  The bond market sees it this way with a trading range of just 4-handles in the 30-YR for 2 and a half months.  How could this be "news?" I guess the market was looking for any excuse to go higher.
 
Well, when they do agree I guess that will be great for the economy, right?

What?  It is a scam.  Congress and Presidents of both sides of the isle have claimed for DECADES that they had a "10-yr plan to reduce the deficit."  None of them worked. None of them will ever work because that's the way Congress wants it. Congress will fix nothing because they like it that way. Congressmen would make good punters for the NFL because they keep kicking the can down the road and this is simply another can-kicking exercise. 
 
I have NO FAITH in any of them, with the exception of Ron Paul who will actually tell you the truth, whether you like it or not.
 
For example, we are supposed to believe that "too big to fail" banks miraculously turned the corner, but we are never told how that happened, which was the repeal of FASB 157. Congress just changed the rules and voila - all better.
 
Similarly, Congressmen will soon be on television telling us all how they agreed to a crummy $150 or $200-billion per year cut (for 10-yrs, big deal) in a $1.5 TRILLION annual deficit. But they will NOT tell you how the majority of that is getting done, which is yet another change to the CPI.  With this change in the CPI, granny won't be getting her COLA increases and that will cause more spending in the future. You can bet that once the AARP threatens to cut off campaign contributions if there are no "put backs" with new legislation and it's off the headline news, it will be put back.  Thus, no actual cut in the deficit.
 
Moreover, our cost of living will also go up with granny's, while the Fed & BLS tell us there is no inflation because with the stroke of a pen - Congress decreed it to vanish.
 
So you don't believe in the potential agreement then.

No Jim, it's a scam.

 

Trade Date: 7/19/11

E-Mini S&P Trades*

(before fees and commissions):

1. OTF buy @ 10:08am at 1314.00 = -0.50 & -1.50 (2 lots)

2. Algorithm positions (0)

3. "Reading the Tape" positions (2) ...combined Secret's, Algo, & "Reading the Tape" total...-2.00

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