June 05 2012

Slow creep-up... if you follow our favorable and unfavorable trading environments, you know all you wanted to know about this day. Let me at least offer you a quote that might get useful:

"Wu Wei, “non-interference,” is one of the most important principles in trading. We have touched on its trading applications before. Let’s recall the aspects of this concept as they apply to trading. 

The most crucial way in which Wu Wei reveals itself in trading philosophy is a warning to not interfere with natural market trends. Trading in the trend direction is effortless – the market grants you profits by simply taking you with its current. Attempts to fight the trend lead to multiple losses or, if you get stubborn, one devastating loss.

Another frequently seen violation of this principle is intrusion in the normal development of the open trade. As your open position dances up and down not resolving into hitting your stop loss or achieving profit targets, such movements are nothing but noise. Until meaningful price levels are broken, this noise doesn’t tell anything about the way a trade is going to resolve. Your stop and target must be located in a way that factors in those noteworthy price levels; thus, any action taken before they are achieved is interference with normal processes. 

The Tao Te Ching instructs the trader to harmonize his actions with the market, not interfering with its natural forces that govern all price changes."

A Taoist Trader 

Session Time: Tue Jun 05 00:00:00 2012

[09:03] {dptl} gm

[09:03] {Threei}  morning dp

[09:10] {scottie} gm

[09:11] {Threei}  scottie :)

[09:11] {ese} gm

[09:11] {Threei}  ese :)

[09:12] {ese} 2 weeks of school to go vad

[09:12] {Threei}  give them numbers of pages to read and leave

[09:13] {ese} lol

[09:13] {dptl} lol

[09:13] {ese} grad day for our high school ...I have to be up at U ov Vic in just over an hour

[09:14] {ese} of

[09:14] {Threei}  they can't get drunk without you? sheesh...

[09:14] {Threei}  they at least could start...

[09:15] {ese} lol

[09:15] {ese} your hot today vad

[09:16] {nemo} slw at break out

[09:16] {Threei}  I had an inspiration yesterday evening

[09:16] {Threei}  look at this:

[09:16] {Threei}  G20 official: G20 to discuss that fiscally capable nations such as Germany or Canada boost their fiscal spending

[09:17] {Threei}  See? It's not overspending that causes problems, it's underspending by a few financially responsible. Get them in the same hole, and we'll be just fine. Get it?

[09:19] {ese} huh?

[09:19] {Threei}  ask G20 official...

[09:19] {Threei}  somehow it makes sense to him

[09:20] {ese} hmmmmmmmm  ya got me there

[09:20] {Beau} good morning you all

[09:20] {ese} B

[09:20] {Threei}  beau :)

[09:22] {Threei}  to make it very succinct, some think the solution is to borrow less and make our way out of the debt hole; others think the solution is to borrow more and wait till problem dissolves by itself

[09:22] {Threei}  their idea is to borrow while interest is low

[09:22] {Threei}  as if this very idea wasn't what originated the crisis in the first place

[09:23] {Threei}  anyone could afford the house with historically low interest rates... remember? it was so recently

[09:23] {Threei}  yet memories seem to fade away already

[09:29] {nemo} jockeying games in slw

[09:29] {ese} fade very quickly

[09:30] {Threei}  let it stabilize, SLW is too spready at the open

[09:30] {nemo} she's going

[09:30] {Threei}  bid it at .96

[09:30] {Threei}  you have a good chance to get it executed

[09:31] {Threei}  if not, you can always get .10 break

[09:33] {Threei} Long Setup:  FXC  32 break hl

[09:34] {nemo} you mean fcx?

[09:34] {Threei}  yes

[09:34] {Threei}  stop .94

[09:34] {thomcbell} long setup sbux 

[09:34] {thomcbell} waiting for mini range 

[09:35] {Threei}  half out .09

[09:35] {Threei}  stop .99

[09:35] {Threei}  if got SLW break, 1:1

[09:37] {scottie} out +.12 tyy

[09:37] {Threei}  :)

[09:40] {ese} l stx .22

[09:41] {ese} out .31 +.09

[09:44] {Threei} Short Setup: PRU  .20 break

[09:44] {Threei}  If holds  .25 

[09:46] {cipher} cat l.73

[09:46] {Threei}  no go

[09:46] {dptl} stopped pru

[09:47] {cipher} out 1/2 cat .89

[09:47] {cipher} out in full .99

[09:47] {Threei}  nice

[09:47] {cipher} ty

[09:48] {ese} wdc L .00

[09:49] {dptl} tast .10 long? sm sh

[09:50] {ese} out wdc.13 +.13

[09:50] {Threei}  no read on TAST

[09:51] {ese} good enough for today everyone....cya tomorrow.......it's grad day at our high school

[09:51] {Threei}  have fun ese

[09:51] {ese} tks vad cya

[09:55] {nemo} numbers coming

[09:56] {cipher} ibm l.17

[09:57] {dptl} lgf .65 short?

[09:57] {nemo} indices lining up for numbers

[09:58] {Threei}  let's wait out numbers at 10

[09:58] {nemo} must be good

[09:58] {cipher} out 1/2 ibm .40

[09:59] {nemo} aren't these the ones you can get early?

[09:59] {Threei}  *(US) MAY ISM NON-MANUFACTURING COMPOSITE: 53.7 V 53.5E

[09:59] {nemo} this should take us to test th 200 day

[10:00] {cipher} outy in full .57 +.40

[10:01] {Beau} gj cipher  better than good-excellent

[10:01] {dino} gj

[10:01] {cipher} thx

[10:02] {dptl} amln .10 short?

[10:02] {cipher} AMLN S .13

[10:02] {Threei}  yes

[10:05] {dptl} in

[10:05] {Threei} Short Setup: JPM  .80 break

[10:05] {nemo} right

[10:06] {Threei}  If holds  .90 

[10:07] {cipher} aapl l. 564.10

[10:07] {Threei}  change to .90 break

[10:07] {nemo} grind up day

[10:07] {dptl} stopped amln

[10:07] {Threei}  stop .97

[10:08] {cipher} out aapl .47 +.37

[10:10] {cipher} amln +.01 late post

[10:10] {cipher} busy with aaple

[10:10] {dptl} in jpm 

[10:12] {Threei}  no go

[10:12] {dptl} stopped

[10:12] {cipher} cat l .27

[10:13] {dptl} len .80 short?

[10:14] {Threei}  half lot

[10:14] {Threei}  jumpy

[10:14] {Threei} Short Setup: GLD  .90 break

[10:14] {Threei}  smaller shares

[10:14] {Threei}  If holds  .05 

[10:17] {nemo} your worst kind of day

[10:17] {Threei}  slow creep-up

[10:17] {Threei}  hate those

[10:17] {Threei}  ok GLD, let's make it double top

[10:18] {cipher} stopped cat .17 -.10

[10:20] {cipher} +.12 gld thx

[10:20] {Threei}  :)

[10:20] {Threei}  covered half

[10:20] {Threei}  stop .92

[10:21] {nemo} cat 84

[10:23] {cipher} cat l.00

[10:25] {Threei} Short Setup: LVS  .90 break

[10:26] {Threei}  If holds  44 

[10:26] {nemo} and here I am thinking bull flag

[10:26] {Threei}  double top, lower high

[10:26] {cipher} out cat .95 -.05

[10:27] {Threei}  1:1

[10:28] {cipher} cat l .80

[10:28] {cipher} out 1/2 .90

[10:28] {cipher} out in full .95

[10:29] {cipher} had enough

[10:29] {cipher} cya tomorrow

[10:29] {Threei}  lol

[10:29] {Threei}  take care

[10:34] {scottie} covered .77 +.12 ty

[10:34] {Threei}  yw

[10:35] {Threei}  ugh, missed CAT short trigger

[10:36] {dptl} ual .50 short?

[10:37] {Threei}  looks right

[10:37] {Threei}  if market helps of course

[10:38] {dptl} in

[10:39] {Threei}  LVS decent drop

[10:39] {Threei}  not a long yet though

[10:42] {dptl} half out 

[10:42] {thomcbell} looks very orderly on the 10 min chart after such a big move 

[10:44] {thomcbell} top of the Opening range around 43.25 looks like a good spot 

[10:44] {nemo} 43.40-.50

[10:44] {Threei}  lol

[10:45] {Threei}  Mayor Bloomberg: decriminalize small amounts of marijuana but make getting the large soda a felony

[10:45] {nemo} yeah, great, what are you supposed to do to wash down the munchies

[10:46] {scottie} fcx .60 ?

[10:46] {Threei}  1:2 UAL

[10:46] {dptl} out some more ual 1:2

[10:46] {dptl} bidding .20 last 

[10:46] {Threei}  if stays under .70, yes

[10:47] {Threei}  better yet, under .65

[10:47] {Threei}  to establish lower high

[10:49] {dptl} .35 stop for me

[10:52] {dptl} out ual

[10:53] {Threei}  good one

[10:53] {dptl} ty

[10:54] {scottie} fcx +.10 thanks Vad

[10:54] {Threei}  your find

[10:54] {scottie} Yout advice

[10:55] {scottie} your

[10:55] {dptl} sbux may be setting up for .70 break short?

[10:55] {thomcbell} YES - that was a nice miss this am 

[10:55] {Threei}  want to see one more bounce

[11:00] {dptl} they buying some bread company i heard?

[11:06] {dptl} gpc .50 long?

[11:06] {scottie} grpn .65 ?

[11:07] {Threei}  hl

[11:07] {Threei}  for gpc

[11:07] {Threei}  GRPN, I'd prefer pullback entry if it drops to or under .60

[11:11] {dptl} not a chance gpc

[11:12] {Threei}  bid it

[11:12] {Threei}  there

[11:12] {Threei}  sych sharp spikes often givew second chance entries

[11:13] {dptl} nah...leaving it alone

[11:16] {dptl} is jpm .10 break long looks good?

[11:16] {Threei}  I think so

[11:17] {Threei}  scottie, I like this GRPN much more here

[11:17] {Threei}  .60 break

[11:17] {dptl} in jpm

[11:17] {scottie} Am in at .66, thought your comments on gpc was for me. lol

[11:19] {Threei}  two questions at once... I answered first, xsaw the second right away and elaborated... was a fraction of second late... :)

[11:20] {scottie} No prob, small shares

[11:25] {dino} fosl sm l .75

[11:26] {dptl} big offer at .11 jpm can't take it

[11:26] {Threei}  you think?

[11:27] {Threei}  don't look at that offer, look at SPY

[11:27] {Threei}  know what drowning man yells out?

[11:27] {Threei}  here it is:

[11:28] {Threei}  (ES) Spain PM Rajoy: Spain is in an extremely difficult situation; Europe must help with liquidity issues - Senate comments- Economic performance has been in line with govt forecasts. - Europe must reinforce the Europe project; banking union is necessary along with Euro bonds

[11:30] {dino} wasn't spain telling us friday that all was well

[11:30] {Threei}  yes but things change, you know...

[11:37] {dptl} stopped

[11:39] {Threei}  sharp market drop, no news

[11:43] {dptl} chk?

[11:45] {Beau} vad, LVS from :23 to :38  db then resistance?

[11:46] {dptl} fcx .30 short?

[11:47] {dptl} and hal .95 short?

[11:51] {Threei}  sorry guys, got distracted

[11:51] {dptl} in fcx.29 short

[11:52] {Threei}  not delighted by any of these

[11:56] {Threei} Long Setup:  FAZ  .60 break

[11:56] {Threei}  If holds  .50 

[11:57] {Threei}  target 1:3

[11:59] {dptl} in faz

[11:59] {dptl} out fcx 1:1

[11:59] {Threei}  Lack of Terrifying Headlines Boosts Confidence

[11:59] {Threei}  lol

[12:00] {dptl} stopped faz bad day

[12:01] {Threei}  Sources in the know stated that nations pressured Germany on the call to be more flexible and that Spain was strongly encouraged to request a bailout for its financial sector. Overnight, the Spanish treasury minister had commented that high borrowing costs effectively shut it out of the bond market.

[12:06] {dino} they pressure germany too much and she might leave the euro. then the remaining can print away

[12:08] {Threei}  well... they have no one else to pressure, lol

[12:11] {dptl} chk .65 short?

[12:12] {Threei}  worth a try

[12:14] {dptl} in

[12:20] {dptl} tol .60 short?

[12:22] {Threei}  if market drops....

[12:22] {Threei}  things don't move anywhere

[12:22] {Threei}  bobbing up and down

[12:22] {Threei}  (EU) ECB said to now await details on plans from EU summit at the end of June; said to be more concerned now about Spain and Italy than Greece - financial press- ECB now needs Govts to commit to financial integration

[12:28] {dptl} stopped chk

[12:33] {dptl} stopped tol

[12:33] {dptl} i think i am done for today.....

[12:34] {Threei}  stop pushing so much

[12:34] {Threei}  it's like stops make you trade even more

[12:34] {Threei}  should be just the opposite

[12:35] {dino} 1 trade today, none yesterday. 

[12:36] {dptl} missing something or ...i don't know

[12:36] {Threei}  [12:22] {Threei} things don't move anywhere

[12:36] {Threei}  [12:22] {Threei} bobbing up and down

[12:37] {Threei}  you are trying directional trades in directionless market

[12:37] {nemo} now a solid trendline on spy off yesterday's bottom

[12:44] {dptl} i'll see you tomorrow all have a good rest of a day

[12:44] {Threei}  you too

[12:45] {dino} cya

[12:45] {thomcbell} LVS feeling like a short 

[12:45] {thomcbell} range a bit too wide 

[12:47] {thomcbell} rising wedge on 10 min 

[13:07] {dino} gotta hop for hour or so

[13:08] {Threei}  probably just in time for action to resume

[13:42] {thomcbell} sbux looks like a long now 

[13:42] {thomcbell} if hlding 52 

[13:42] {thomcbell} not playing 

[13:44] {scottie} clf ?

[13:44] {nemo} lvs

[13:44] {Threei}  CLF, I'd try 47 break short

[13:44] {Threei}  for double top

[13:47] {scottie} in .98

[13:52] {Threei}  nope

[14:09] {scottie} tfm 58?

[14:10] {Threei}  small shares

[14:10] {Threei}  jumpy

[14:10] {scottie} ok I'll pass on this one

[14:13] {thomcbell} sbux - had a little help from the market but ot too shabby 

[14:32] {dino} miss anything?

[14:33] {Threei}  absolutely not

[14:39] {dino} good

[14:39] {scottie} Enough action for me, will be back tomorrow

[14:39] {Threei}  take care scottie

[14:39] {dino} cya

[14:40] {scottie} bye

[15:20] {dino} out fosl .73, +.98

[15:31] {Threei} Long Setup:  FAZ  .20 break

[15:31] {nemo} spy at trend, and it's been following it

[15:31] {nemo} frickin' keyboard screwing up

[15:32] {Threei}  trying to find eod selling

[15:36] {Threei}  invalidated but watching

[15:36] {nemo} think they rip it north

[15:36] {Threei}  if no break, then reversal

[15:36] {dino} me too nemo

[15:36] {Threei}  yeah... but it's a tough thing to trade here

[15:37] {nemo} i think we're headed for a test of the weekly pivots 130 and 75.20

[15:38] {nemo} hope abounds for europe

[15:38] {Threei}  not sure why but...

[15:38] {nemo} Die Europe!!!! die!!!

[15:38] {Threei}  lol

[15:38] {nemo} it's the nature of idiot humans

[15:38] {nemo} else we'd never get married

[15:39] {nemo} can't argue with that one, can u?

[15:39] {Threei}  hmmm... no, not really

[15:39] {Threei}  we hope they never change... they hope we do... both sides lose

[15:41] {Threei}  OOG Planning to notify users who may be targets of state sponsored cyber attacks

[15:41] {nemo} who is oog/

[15:41] {nemo} oog?

[15:41] {nemo} frickin' keyboard

[15:41] {Threei}  goog

[15:41] {Threei}  lol

[15:41] {nemo} oh

[15:41] {Threei}  (JP) Magnitude 6.3 earthquake strikes to the east of Tokyo, Japan

[15:49] {Threei}  well, 29 could have been a scalp, but there was no real setup there

[15:50] {dino} lol, fadebook

[15:50] {Threei}  lol

[15:50] {Threei}  chart is pure unbridled disaster

[15:59] {Threei}  ok guys... missed this last one

[15:59] {Threei}  thank you all

[15:59] {Threei}  have a good evening, see you tomorrow

[16:00] {dino} gn

June 04 2012

(Course on chart pattern recognition is available now: http://www.realitytrader.com/111trades.html)  


Listless day - win some, lost some, got a cool 1:4 win, took a few stops, took a few partials with balance stopped breakeven - overall,  finished about flat. Monday's are often like this.


Session Time: Mon Jun 04 00:00:00 2012
[09:07] {Threei}  ok... time to face the reality and start slowly opening my eyes...
[09:13] {scottie} gm
[09:16] {Threei}  scottie :)
[09:16] {ese} morning.......
[09:16] {Threei}  ese :)
[09:16] {thomcbell} Broke out the leather bound book this weekend Vad
[09:17] {Threei}  enjoyed it?
[09:17] {ese} which leather bound book would that be T
[09:18] {thomcbell} Very much - i like to re-read it - especially when i misbehave like i did last Thursday
[09:18] {ese} bible?
[09:18] {thomcbell} Taoist Trader
[09:18] {ese} ahhhhhhh
[09:19] {ese} that is the bible isn't it.......
[09:20] {nemo} I get a kick how everybody thinks economies can recover and really reduce unemployment...even if they do, energy costs will keep a lid on employment recovery
[09:21] {ese} they'll recover for sure but it'll be years yet
[09:22] {ese} it ain't no instataneous thing thats for sure
[09:22] {nemo} can't
[09:22] {nemo} energy costs (read fuel and food) will redefine necessity vs discretionary spending increasing the proportion of income devoted to necessity
[09:24] {Beau} good morning all
[09:24] {nemo} 70% of US economy is "consumption"  What exactly and how much will somebody consume as energy costs increase with a strengthening economy
[09:24] {Threei}  beau :)
[09:25] {ese} true......energy will be the biggie for sure.....that is going to get more and more expensive.....last couple of times to italy and europe on holidays has shown me that
[09:25] {ese} especially italy
[09:26] {Threei}  the question this morning is, do we get a relief rally or will this bounce be seen as opportunity to sell and heavy dumpong resumes
[09:26] {nemo} I think latter
[09:27] {nemo} I would want to get out of the way even if I missed the bottom
[09:28] {thomcbell} pretty constructive trading in LVS last few days ..........oof
[09:29] {nemo} I hate those stop hunters
[09:32] {Threei} Long Setup:  FCX  .15 break hl
[09:32] {Threei}  If holds  .05
[09:35] {nemo} spy going to .75 pivot
[09:36] {Threei}  no go
[09:37] {Threei} Long Setup:  LVS  .20 brea
[09:37] {Threei}  If holds  .10
[09:39] {Threei}  target 1:3
[09:40] {Threei}  hmm
[09:41] {nemo} look at spy and iwm
[09:43] {Threei} Long Setup:  GLD  157 break hl
[09:43] {Threei}  If holds  .90
[09:44] {Threei}  1:1
[09:45] {Threei}  1:2
[09:45] {Threei}  out
[09:46] {scottie} +.12 ty
[09:46] {Threei}  yw
[09:46] {Threei} Long Setup:  LVS  .55reak
[09:47] {Threei}  If holds  .45
[09:47] {nemo} oh oh, new lows spy
[09:47] {Threei}  change to .50 break
[09:47] {nemo} black monday coming
[09:48] {Threei}  change to .40reak
[09:50] {nemo} market doesn't know if deflation or inflation yet
[09:50] {Threei}  no one does, lol
[09:51] {Threei}  change to .2 break
[09:51] {Threei}  .20
[09:52] {nemo} I smell a rout
[09:53] {nemo} support at .05 lvs
[09:53] {Threei}  not a scalp if triggers here
[09:53] {Threei}  1:3 target
[09:55] {Threei}  stop .14
[09:55] {nemo} market letting go
[09:56] {Threei}  out
[09:57] {Threei} Long Setup:  SLW  .75 break
[09:57] {nemo} llong lvs .06
[09:57] {Threei}  If holds  .65
[09:57] {nemo} stop under .00
[09:58] {Threei}  Invalidated
[09:58] {nemo} this sucks
[09:58] {Threei}  it's a good entry
[09:59] {nemo} yeah, market sucks
[09:59] {ese} tough to find stuff for sure
[09:59] {Threei}  give it a chance, yout stop is tight
[09:59] {ese} factory orders dn
[09:59] {Threei}  *(US) APR FACTORY ORDERS: -0.6% V +0.2%E
[09:59] {Threei}  recovery at full speed
[10:00] {nemo} out on those
[10:00] {nemo} forgot about those numbers
[10:00] {Threei}  Apr Durable Goods revised lower
[10:00] {nemo} made .03 long, frickin' miracle
[10:00] {Threei}  ugh SLW
[10:00] {Threei}  got away
[10:01] {nemo} o.k. that should help the onslaught along
[10:02] {nemo} IWM broke yearly pivot
[10:04] {Threei} Long Setup:  CHK  .80 break
[10:04] {Threei}  If holds  .70
[10:06] {Threei}  Invalidated
[10:08] {Threei}  watching SLW for pullback entry
[10:09] {Threei}  around former trigger .75 would be ideal
[10:10] {Threei} Long Setup:  LVS  .85reak
[10:10] {Threei}  If holds  .75
[10:11] {Threei}  come on LVS, it's time
[10:11] {nemo} might as well make it .73, low is .74
[10:11] {Threei}  1:1
[10:11] {Threei}  now take that 42 and run
[10:13] {ese} L aig .51
[10:13] {Threei}  1:2
[10:14] {Threei}  1:3
[10:15] {Threei}  1:4, out
[10:15] {Threei}  that was very very overstretched band
[10:16] {Threei}  watching TZA
[10:16] {ese} out aig .64 +.14   nice doin business which ya's.....catch ya tomorrow....only 2 weeks to go and i'm back full X
[10:17] {Threei}  take care ese
[10:17] {ese} cya vad
[10:20] {Threei} Long Setup:  TZA  .60reak
[10:22] {Threei}  1:1
[10:24] {scottie} +.12 ty
[10:24] {Threei}  yw
[10:26] {Beau} still in laser paper TZA buy hung at .82 ??
[10:26] {Threei}  .82?
[10:26] {Beau} yes b
[10:26] {Threei}  .60 was trigger
[10:27] {Beau} BATSb   23.82
[10:27] {Threei}  how did .82 come up?
[10:27] {Threei}  I am not sure what you are saying
[10:28] {Threei}  BATSb is a quote
[10:28] {Beau} showing all .80's in offer.  i sold for23.82 it says
[10:29] {Threei}  it's .68 now
[10:30] {Threei}  .76
[10:30] {Threei}  is it what yo see?
[10:30] {Beau} in levelII  BATSb and BYB showing but not moving.  23.82 to 23.81
[10:31] {Threei}  I suspect your quotes stuck... demo servers may be a little more relaxed
[10:31] {Beau} tza only.  others are fine.
[10:31] {Beau} guess something in trial
[10:33] {Beau} yea must be.
[10:34] {Beau} Monday!!
[10:38] {Threei}  GDX
[10:38] {Threei}  getting interested
[10:42] {Threei} Long Setup:  GDX  .05eak
[10:42] {nemo} gdx
[10:43] {nemo} .97 bid dropped
[10:43] {nemo} oh, it's back
[10:45] {Threei}  Invalidated
[10:47] {scottie} was in at .07, out at .93 -.14
[10:48] {Threei}  hmm?
[10:48] {Threei}  it never broke .05 after the call
[10:49] {scottie} On my level II a few ticks at .07 and .075
[10:56] {nemo} spy should attempt the pivot
[11:16] {Threei} Long Setup:  CLF  .60 break hl
[11:16] {Threei}  stop under .50 if caught it
[11:17] {Threei}  started ticking up as soon as I hit alert
[11:17] {Threei}  good for secondary entry
[11:25] {Threei}  no go
[11:30] {Threei} Long Setup:  FAZ  .40 break
[11:30] {Threei}  If holds  .30
[11:31] {Threei}  After huge market drop, Chinese government blocks "Shanghai Composite Index" from internet search engines
[11:31] {Threei}  lol
[11:32] {dino} wow
[11:36] {nemo} love this:  http://bostonherald.com/news/regional/view/20220604vet_outta_here_guardsman_peace-loving_landlady__are_at_odds_over_apartment_rental/srvc=home&position=0
[11:42] {Threei}  stop to .34
[11:52] {Threei}  1:1
[12:02] {dptl} gm
06[12:02] * Threei slaps dptl around a bit with a large alarm clock
[12:03] {dptl} :) no had an appt
[12:03] {Threei}  well... O'd hate to take a slap back
[12:03] {Threei}  let it stand for the next time you sleep in
[12:03] {dptl} sure :)
[12:09] {dptl} tol .65 short?
[12:10] {nemo} well, it's either db or stb time
[12:10] {Threei}  I think so
[12:10] {nemo} stb time
[12:11] {Threei}  FAZ 1:2, out
[12:11] {dptl} in tol .64 stop .75
[12:12] {dptl} what is stb?
[12:13] {Threei}  ugh, too soon FAZ
[12:14] {Threei}  as soon as I closed it I thought, it looks like panic is about to hit
[12:15] {Threei}  I am not sure dp... and I suspect to uncover this mystery would require a trip in dark depths of nemo's perverse mind, which is an avdenture I am not ready for
[12:15] {Threei}  1:1 TOL
[12:15] {dptl} half out
[12:16] {nemo} grammatically should be "is an adventure for which I am not ready."
[12:16] {Threei}  right... see what I mean?
[12:16] {nemo} dp it's short for defecating the bed linens
[12:17] {Threei}  told you...
[12:17] {dptl} lol
[12:17] {Threei}  now, you'd think royal family should know better than peeing in the wind, right? but no:
[12:18] {Threei}  Buckingham Palace says queen's husband Prince Philip has been taken to the hospital with a bladder infection
[12:19] {nemo} .01 upro long
[12:20] {nemo} took half .10 don't like this action
[12:20] {dptl} stop to .56 tol
[12:22] {dptl} all out 1:2
[12:22] {nemo} skin of teeth there
[12:22] {Threei}  nice
[12:22] {dptl} ty
[12:22] {nemo} .10 now another entry
[12:23] {nemo} out
[12:23] {nemo} futes selling
[12:25] {nemo} well, looks like a setup
[12:25] {nemo} whaddya think vad
[12:26] {dptl} fcx .45 long?
[12:26] {Threei}  really 50/50
[12:27] {Threei}  FCX, yes
[12:27] {dptl} if holds .35
[12:27] {Threei}  I'd even go for .40
[12:27] {Threei}  aggressive
[12:28] {Threei}  invalidated anyway
[12:28] {dptl} ye
[12:33] {dptl} pay.30?
[12:34] {Threei}  I wouldn't
[12:34] {dptl} ok
[12:51] {scottie} JPM 31 ?
[12:58] {Threei}  sorry
[12:58] {Threei}  not sure
[12:58] {scottie} bmr ?
[12:58] {Threei}  such long stall, high chance of failure
[12:59] {scottie} ok thanks
[12:59] {Threei}  mini-range shouldn't be taking this long
[12:59] {Threei}  rather a sign of anemic bounce
[13:00] {scottie} approx how many 1 min candles would be ok
[13:00] {dptl} rio .70 long?
[13:02] {Threei}  can't tell on RIO
[13:02] {Threei}  there is no exact rule for that, it's a visual thing... I'd say, up to 5
[13:02] {Threei}  after that it becomes stalled
[13:03] {scottie} thanks
[13:03] {Threei}  but there are additional considerations
[13:03] {Threei}  for instance, if this mini-range holds while market drops,
[13:03] {Threei}  it becomes a validation of a long purely by the fact of staying up there while market makes new lows
[13:04] {Threei}  so longer range can be tolerated still, interpereted as "waitng for a market to turn and help"
[13:04] {scottie} I see, was not the case here
[13:05] {Threei}  no, rather opposite
[13:05] {Threei}  (ES) King of Spain: Government is working to stabilize markets; Spain's economy has solid fundamentals
[13:05] {Threei}  yes yor majesty
[13:06] {Threei}  German Chancellor Merkel: The euro zone needs deeper integration
[13:06] {Threei}  with Germany at helm... right
[13:07] {Threei}  EU zealots won't rest until push the Europ into WWIII
[13:13] {dptl} chk .40?
[13:14] {Threei}  worth a try
[13:14] {dptl} in.42
[13:15] {scottie} in too at .42
[13:15] {dptl} stop under .30
[13:17] {scottie} no help from spy
[13:18] {Threei}  no but CHK held well
[13:23] {Threei}  overwhelmed by brutal force
[13:23] {dptl} stopped
[13:24] {scottie} - .14
[13:27] {scottie} FAS db ?
[13:28] {Threei}  no
[13:28] {scottie} ok
[13:28] {Threei}  this is breakdown formation rather than bounce
[13:29] {nemo} yeah pull back to .00-.10 niche short area
[13:35] {dptl} joy?
[13:37] {Threei}  don't see anything compelling there
[13:37] {dptl} k
[13:45] {dptl} should we try chk at.40 again?
[13:46] {Threei}  too random
[13:46] {Threei}  I wouldn't
[13:46] {dptl} ye
[13:58] {Threei}  overall, bouces are so pathetic, if no news comes I'd look for eod pani
[13:58] {Threei}  panic
[14:03] {dptl} tol .25 long?
[14:05] {Threei}  nah
[14:05] {Threei}  I like .20 break short more
[14:06] {dptl} ok
[14:10] {dptl} are you in?
[14:11] {Threei}  why, you need company?
[14:11] {dptl} lol
[14:12] {dptl} did't take it
[14:12] {Threei}  don't expect me to share if it works
[14:12] {nemo} spxu or tza here if spy breaks .55
[14:12] {dptl} :)
[14:24] {scottie} Leaving now, see you tomorrow
[14:24] {Threei}  take care scottie
[14:38] {Threei}  (ES) Banco Santander Chairman: Only few banks in Spain need financial support, there is no financial crisis in Spain - financial press- Santander has no need for additional capital.
[14:56] {Threei}  plenty of noises from EU about how they are about to resolve all their problems and hnow those problems are not really problems
[14:58] {dino} sounds familiar
[14:59] {Threei}  so very much
[15:00] {nemo} iwm .35 area and spy .95 area long setups
[15:03] {dptl} hal .40 short?
[15:04] {Threei}  or .50 long if market spikes
[15:04] {dptl} ok
[15:07] {dptl} in.39
[15:07] {Threei}  if market helps, has a very nice potential
[15:09] {Threei}  1:3
[15:14] {Threei}  1:1 is here
[15:14] {dptl} half out
[15:15] {dptl} stop to .41
[15:19] {dino} grpn another ipo flop
[15:21] {Threei}  idiots
[15:21] {Threei}  can't believe they rejected GOOG's offer
[15:28] {dino} sort of like yahoo rejecting msft at 32
[15:29] {thomcbell} hubris
[15:29] {thomcbell} no other word like it
[15:29] {Threei}  eqzaktly
[15:29] {Threei}  (EU) Hearing chatter IMF head Lagarde is endorsing additional ECB easing at this week's policy meeting- Comments attributed to a press report from Sweden, where Lagarde is attending a conference.
[15:32] {Threei}  btw, what does it remind you:
[15:32] {Threei}  (ES) Banco Santander Chairman: there is no financial crisis in Spain
[15:32] {Threei}  ?
[15:33] {Threei}  Al Capone: There are no gangsters in Chicago
[15:43] {dino} santander has worst symbol ever, std
[15:43] {Threei}  rofl
[15:45] {dptl} out hal
[15:45] {Threei}  chart's fairly std-ish, too
[15:49] {Threei}  liastless day overall, with slight negative bias
[15:49] {Threei}  selling part of the day seemed to have more determination
[15:49] {dptl} how was morning?
[15:50] {Threei}  buying one was kind of hectic hope
[15:50] {Threei}  back and forth. much like afternoon
[15:50] {Threei}  with one 1:4 win
[15:50] {dptl} we'll get them tomorrow
[15:50] {Threei}  which helped to keep it about flat
[15:51] {nemo} btw, my 4 hour chart looks like we be bouncing tomorrow
[15:53] {nemo} iwm just recaptured the 2011 close
[15:53] {Threei}  I say it all matters zilch in this market
[15:53] {Threei}  we are a toy in hands of another headline
[15:54] {dino} i have no idea
[15:54] {nemo} amazingly tehcnical, both IWM and SPY basically bottomed at their Monthly S1 this morning
[15:54] {Threei}  see market gapping below all support levels aond continuing down if tomorrow's headlines are "Spain goes down"
[15:55] {nemo} NOT SINCE THE SPANISH ARMADA!!!
[15:55] {dino} june 6th is big announcement day
[15:55] {Threei}  see it gapping up and exploding if headline is "Germany ageed to backstop Eurobonds"
[15:55] {nemo} or Queen Isabella on King Ferdinand
[15:55] {Threei}  June 6, then June 17
[15:55] {nemo} sorry
[15:56] {dptl} gn
[15:56] {Threei}  thank you all, have a good evening
[15:56] {Threei}  see you tomorrow

Nemo's Findings 6/3/2012

(Course on chart pattern recognition is available now: http://www.realitytrader.com/111trades.html  

Here are the levels for next week (I hope they don't go lower...;-()

Here is a short video:

http://youtu.be/2O3z_0NIDg8 

Market Week Wrap-Up

- Panicky investors dumped risk assets wholesale this week as fears about Spain and the very weak May US payrolls report destroyed confidence. Markets shifted their worried gaze from Greece to Spain and its troubled financial sector. Late last Friday the Spanish government promised Bankia a €19B bailout, although early on in the week sources indicated that Madrid would need an additional €30B on top of that to save its entire banking system. Meanwhile, the government scrambled to come up with a mechanism to shore up the deteriorating fiscal position of its heavily indebted regions. There were various rumors that the (still unfunded) ESM would be used to recapitalize banks and that the IMF was developing a plan to aid Spain, although the Germans shot down the former and the IMF denied the latter. With yields on Spanish debt as high as 6.6%, it was unclear how Spain could afford to fund a bailout without international aid. There were moments of risk-on activity following reports that China would launch a massive new stimulus plan, however Beijing warned that any additional spending would be limited and highly targeted, dimming hopes. Then on Friday, the US May payrolls data missed expectations by more than half, adding a mere 69K to the non-farm payrolls and 82K to private payrolls, while the unemployment rate ticked higher to 8.2%. There was very little to be said to explain away the terrible showing, although analysts noted that May is seasonally the worst month for payrolls and pointed to the 642K increase in citizens participating in the workforce, which the BLS said was the biggest rise in five years. In addition to this data, a round of dire manufacturing PMI reports out of Europe and a five-month low in the China manufacturing PMI data only intensified fears about global growth. All of these indicators of slowing global growth knocked oil prices down another 7.9%, its fifth consecutive weekly loss. Meanwhile gold ripped higher after Friday's payroll disappointment, rising 3.7% in one day to its highest point in three weeks. European equities were a major casualty this week, with Germany's DAX Index dropping 5.5% and the CAC down approx 4.25%. Major US equity markets closed below their 200 day moving averages on Friday, and the DJIA went negative on the year dropping 2.7% on the week, while the S&P500 fell 3% and the Nasdaq declined 3.2%.

- Nowhere was the aggressive flight to safety more evident than the flows seen in global bond markets. Investors sent yields careening to new lifetime lows in the 10-year bonds of the United States, the UK, Canada and Germany. The yield on the US benchmark 10 year is now below 1.5%, at the lowest level in over 100 years, while the yield on the 10-year gilt is said to be at the lowest levels since the foundation of the Bank of England 300 years ago. The yield on the 10-year bund appears on its way towards 1%. The yield on the two-year German Shatz yield went negative for the first time ever as curves continue to compress. The US two/ten-year spread has now narrowed below 125 basis points. With funds gushing into sovereign safe havens, large Wall Street firms have held talks over concerns about declining levels of liquidity in the corporate bond market, while analysts wondered what would happen if sovereigns further crowded out investment in corporates. Data from Lipper showed that the Barclays junk bond ETF (JNK) had record outflows in the week ended May 16th, while in the week ended May 30th, junk-bond funds had outflows of $382M. Bond buying plus discouraging data strongly suggest that another round of coordinated stimulus action is in the offing and major investment banks now suggest the launch of QE3 could come as soon as the Fed's June meeting. However, with rates ultralow and money cheaper than ever, many wonder what could be accomplished by another round of easing except to prove that global central banks are out of ammunition.

- The May same-store sales numbers were pretty good, with notable strength among apparel names. The numbers seemed to disprove a common thesis that the unseasonably warm weather in Q1 would steal retail strength from Q2. Discount chains TJX, Steinmart and Ross Stores saw especially strong comps, widely beating consensus expectations. The major department store names were more in line with analysts' projections, with one notable exception - Kohl's saw a big slide in its comps. Executives didn't give any good explanation for the decline, but did warn that they now expect Q2 SSS to be modestly negative.

- EUR/USD began the week consolidating within the range established late last week with 1.2500 as the floor and 1.2630 the ceiling in the pair. The direction of the euro hinged on the trend in the Spanish 10-year yield, which hit 2012 highs above 6.60%, just shy of its all-time high of 6.80%. Recall that the 7.0% level in yields is widely seen as the point where government borrowing costs become unsustainable, and was the level at which Portugal, Greece and Ireland were forced to seek bailouts. EUR/USD proceeded to hit fresh two-year lows throughout the course of the week, dropping briefly to 1.2290 after the poor US payrolls report on Friday. Expect the key psychological level of 1.20 to be tested over the coming weeks.

- The yen exhibited strength throughout the week. Japanese Finance Ministry officials reiterated that they were closely watching for currency volatility stemming from the chaos in Europe and warned that rapid gains in the value of the yen were counterproductive. USD/JPY saw all of its post-February gains evaporate as it approached the 78.00 level. Some dealers pondered whether the ministry would authorize the Bank of Japan to resume currency interventions (last performed back on Oct 31st, 2011). EUR/JPY hit 12-year lows below 96.20 level.

- Late in the week dealers were watching the 1.5370 support line in GBP/USD, a key level that dated back to the early stages of the financial crisis in January 2009. A sustained break of the level on Friday ignited pound sell stop orders and the level gave way pretty easily. The pair tested four-month lows below 1.5290 ahead of the US payrolls report, however dollar weakness attendant to the data prevented further declines in sterling. Analysts noted that the BoE might extend QE next week if PMI manufacturing data is weak enough.

- Whispers of China preparing another fiscal injection have grown more audible, as May manufacturing PMI echoed a downturn evident in other parts of the world. The official manufacturing print was barely in expansion at a 5-month low of 50.4, well below the 52.0 consensus and falling for the first time in 6 months. The HSBC final May PMI figure was just as troublesome, remaining in contraction for the 7th consecutive month at 48.4 while also indicating that conditions deteriorated further in the 2nd half of the month from the flash print of 48.7. Data from regional commodity-sensitive Australia was just as disappointing, as retail sales fell at the fastest pace in 11 months while building approvals saw a near double-digit sequential decline. S&P/ASX is bumping along its 6-month low while AUD/USD briefly fell below the $0.96 handle, its lowest level since early October.

TradeTheNews

June 1 2012

Strong day to finish the week, with a lot of nice wins under the belt. As it's usually the case, we did well in the downward market, once again. One chart is worth posting:

(Course on chart pattern recognition is available now: http://www.realitytrader.com/111trades.html)  


Session Time: Fri Jun 01 00:00:00 2012

[08:30] {Threei}  *(US) MAY CHANGE IN NONFARM PAYROLLS: 69KV 150KE; CHANGE IN PRIVATE PAYROLLS: 82K V 164KE
[08:30] {Threei}  mama
[08:42] {nemo} see we bounced at teh 200
[08:42] {Threei}  200 what?
[08:43] {nemo} SMA
[08:52] {Threei}  interesting, gold is up
[08:52] {Threei}  expectations of QE3?
[08:55] {nemo} safe haven
[08:55] {Threei}  not really an answer - up to today it was moving with market, not asgainst
[08:55] {Threei}  what changed overnight?
[09:02] {thomcbell} lvs - tell me that news was not known yesterday - lol
[09:02] {thomcbell} selling it like there was no tomorrow
[09:03] {Threei}  yeah
[09:05] {scottie} gm
[09:06] {cipher} gm
[09:06] {thomcbell} "There is no tomorrow Rock"
[09:06] {cipher} tza l .22
[09:06] {nemo} fat finger
[09:06] {Threei}  scottie, cipher :)
[09:11] {cipher} gld l.80
[09:11] {cipher} out 1/2 .89
[09:11] {Threei}  you decided to end trading day beofe it even started?
[09:11] {cipher} out 1/2 tza .30
[09:12] {cipher} lol
[09:13] {cipher} out remainder gld 154 +.20
[09:14] {Threei}  wtg
[09:14] {cipher} ty
[09:17] {cipher} out tza .36 +.14
[09:17] {dino} gm
[09:17] {Threei}  dino :)
[09:18] {Threei}  Romney, looking at the jobs report: damn, I wish election was today
[09:18] {ese} morning
[09:18] {Threei}  ese :)
[09:18] {dptl} gm
[09:18] {Threei}  dp :)
[09:18] {ese} dino
[09:18] {ese} vad
[09:18] {ese} dp sorry
[09:19] {dino} they've been fudging that unemployment number for years
[09:20] {ese} does anyone know a symbol that mimicks the 10year bond rates for europe......italy/ spain maybe
[09:21] {dino} ttm gap filling
[09:21] {ese} rates go up = stocks go dn/rates go dn = stocks go up
[09:21] {Beau} morning all
[09:21] {Threei}  beau :)
[09:21] {Threei}  the saddest thing is, these idiots will really launch another round of QE in response
[09:30] {Threei}  first reflexive bounce should get sold
[09:30] {thomcbell} looking for lvs long entry
[09:31] {Threei} Short Setup: FCX  .80 break hl
[09:31] {Threei}  change to .90
[09:32] {Threei}  1:1
[09:33] {Threei} Long Setup:  TZA  .10 break
[09:33] {Threei}  If holds  23
[09:33] {Threei}  change to 23
[09:34] {Threei}  Invalidated
[09:36] {Threei} Long Setup:  SLW  .05 break
[09:36] {Threei}  If holds  .95
[09:37] {Threei}  TZA got away
[09:37] {Threei}  SLW valid
[09:38] {Threei}  1:1
[09:38] {scottie} +.12 ty
[09:38] {Threei}  :)
[09:38] {Threei}  1:2, out
[09:39] {dptl} out ty
[09:39] {Threei}  welcome
[09:39] {dino}  fosl sm l .76
[09:39] {Beau} nice vad
[09:40] {Threei} Long Setup:  FAZ  .70
[09:40] {dptl} mpel .25 long?
[09:40] {Threei}  If holds  .60
[09:41] {Threei}  nah, anemic trading on MPEL
[09:41] {dptl} k
[09:42] {dino} stop fosl -.30
[09:42] {Threei}  FAZ valid
[09:43] {Threei}  target 1:3
[09:43] {dino} ]1289 gap filled
[09:44] {cipher} tza l .05
[09:44] {Threei}  1:1
[09:45] {Threei}  play by the book
[09:46] {Threei}  1:2
[09:47] {cipher} out 1/2 tza .15 +.10
[09:47] {scottie} .12 ty. going to scalp for a while
[09:48] {Threei}  welcome
[09:48] {nemo} look slw
[09:49] {Threei}  no
[09:50] {Threei}  after your latest "drink this" I decided to ignore your suggestions for a while
[09:50] {Threei}  out on a trail
[09:53] {cipher} out rest tza .25 +.20
[09:53] {dino} gj
[09:53] {cipher} ty
[09:54] {ese} L wcrx .65
[09:56] {dptl} etn .80 long? hl
[09:56] {ese} out .81 +.16
[09:57] {ese} man ...do not like the way that one trades
[09:58] {Threei}  nah dp... no energy there
[09:59] {dptl} i see
[10:00] {Threei}  ISM manufacturing 53.5 V 53.8E
[10:00] {cipher} inm l .82
[10:00] {ese} L gfi .75
[10:00] {cipher} out .27 +.42
[10:00] {cipher} ibm
[10:04] {dino} met sm l .40
[10:05] {dino} fosl sm l .11
[10:07] {ese} 1/2 out gfi .84 +.09 800 to go
[10:07] {ese} stop to break even
[10:08] {ese} balance
[10:10] {ese} stopped balance even
[10:10] {ese} .75
[10:23] {ese} L gfi again .81 does not want to go dn this one
[10:26] {Threei} Long Setup:  TZA  .20 break
[10:26] {Threei}  If holds  .10
[10:29] {Threei}  *(IE) IRELAND PASSES REFERENDUM ON NEW EU FISCAL COMPACT (AS EXPECTED) **REMINDER: with Ireland adopting the plan, 5 member states have now passed it (the others are Sweden, Denmark, BLANK, and BLANK). 12 of 25 participating EU members must ratify the fiscal compact to make it binding (the UK and Czech Republic opted out).
[10:29] {Threei}  BLANK, and BLANK?
[10:30] {Threei}  ok, Slovania, and Latvia
[10:31] {Threei}  SPY loss of 129 is needed to catapult TZA
[10:31] {Threei}  let's trail to .14
[10:38] {Threei}  1:1
[10:41] {dptl} can stop be under .25 now?
[10:41] {Beau} took the scalp .09  thx vad
[10:41] {Threei}  welcome
[10:41] {scottie} +.12 ty
[10:42] {Threei}  if feel very stingy, dp...
[10:42] {Threei}  I'd still prefer .19
[10:42] {dptl} ok
[10:43] {cipher} IBM L .10
[10:46] {dptl} out
[10:47] {cipher} out 1/2 ibm .35 +.25
[10:48] {Threei}  nice
[10:49] {Threei} Long Setup:  X  .30 break
[10:49] {Threei}  If holds  .25
[10:49] {cipher} out rest ibm .46 +.36
[10:50] {Beau} very nice
[10:50] {cipher} ty
[10:51] {Threei}  Invalidated
[10:52] {cipher} x stopped -.01
[10:52] {cipher} sorry vad didn't like it
[10:52] {Threei}  it never triggered
[10:52] {cipher} oh
[10:52] {cipher} my bad
[10:57] {cipher} aapl l .00
[10:57] {cipher} out .49
[10:58] {cipher} beauty of hotkeys
[10:58] {Threei}  when you hit the right ones {G}
[10:59] {Threei}  give them to someone with my fingers...
[10:59] {cipher} I used to get confused :-)
[10:59] {Threei}  used to, eh
[10:59] {cipher} same with paddle shifters
[10:59] {cipher} now it's second nature
[10:59] {Threei}  I wake up confused, go through the day dazzled and go to sleep overwhelmed
[11:00] {Threei}  just ask ese
[11:00] {ese} double dn gfi avg .74......cya monday....have a great weekend
[11:00] {Threei}  there you go
[11:00] {ese} what he said
[11:00] {Threei}  take care ese :)
[11:01] {ese} cya vad
[11:01] {cipher} cya ese
[11:01] {ese} C
[11:01] {dino} cya
[11:02] {dino} gaps below, 11766, 2393, 1257
[11:02] {cipher} ok gotta leave early... martini time
[11:03] {cipher} have a good weekend all
[11:03] {Beau} you too C
[11:03] {dino} lucky dog
[11:04] {Threei}  take care cipher
[11:05] {dptl} joy .15 short?
[11:06] {Threei}  smaaaaaal shares...
[11:07] {dptl} and what about bhp .75 short?
[11:09] {Threei}  half lot
[11:09] {Threei}  you see the spread
[11:10] {dptl} ye
[11:14] {dptl} stopped bhp
[11:14] {Threei}  don't push it
[11:14] {Threei}  you are trying to pick thin directionless stocks in a sideways market
[11:15] {Threei}  surefire way to get chopped to pieces
[11:15] {dptl} ye, stopped joy
[11:30] {dptl} chk short?
[11:31] {Threei}  I think so
[11:32] {dptl} .08 with .15 stop
[11:34] {dptl} or may be agrresive here with .20 stop better
[11:43] {dino} dhi sm l .10
[11:54] {dino} pvh gap fill
[11:56] {dino} pvh sm l .11
[12:13] {dino} gco sm l .54
[12:19] {dino} qcom sm l .50
[12:37] {dino} out pvh .60, +.49
[12:39] {Threei}  nice one
[12:39] {dino} ty
[12:40] {Threei}  participating in a discussion elsewhere, I quoted a few pieces from A Taoist Trader, let me paste them here
[12:40] {Threei}  "An unclouded mind listening to the original market language maintains a magical mix of simplicity and sophistication."
[12:40] {Threei}  "A Taoist Trader possesses the ability to simplify the situation and outline his options in a straightforward way. One�s trading approach must be simple enough for a trader to see clearly; overcomplicated systems that are difficult to explain, understand, and remember are not very effective. Vagueness in a trading approach is a sure sign of a bad design."
[12:40] {Threei}  "A Taoist Trader, in his quest for clarity and simplicity disregards a large part of the body of knowledge commonly considered necessary for trading. He dismisses TV channels, newsletters and the endless flow of opinions expressed in numerous blogs and articles. In conversation with pundits well versed in seemingly useful information he may seem �dull of comprehension.�"
[12:41] {Threei}  "His straightforward thinking may strike some around him as �devious,� as social customs call for a more �nuanced� approach. His skills express such simplicity that, in spite of being robust, they may appear �clumsy.� His words express such profound and simple truth that they may sound too simple for those listeners who like to think of themselves as more sophisticated."
[12:41] {Threei}  "After the initial stage of �learning day by day,� a �student of knowledge� must turn into a �student of Tao� and start �losing day by day� � discarding the knowledge that does not contribute to his effectiveness. Getting rid of numerous indicators, studies and channels of information while leaving only the simplest forms of visual aid, is a common theme for many successful traders describing their learning process. Trimming unneeded information, a Taoist Trader uses less for better results, thus achieving higher effectiveness."
[12:41] {Threei}  end
[12:47] {dptl} cnq?
[12:49] {Threei}  probably worth a try long
[12:49] {dptl} lets see if it pulls back now
[12:51] {dptl} got away
[13:00] {Threei}  hey, fear not: president will speak of job report any minute now
[13:01] {Threei}  that'll fix things
[13:01] {dino} gco stop
[13:05] {scottie} .
[13:05] {Threei}  good point
[13:14] {dptl} slb?
[13:16] {Threei}  short if anything
[13:23] {Threei}  disregard, no trigger, ruined setup
[13:24] {dptl} bhp?
[13:25] {Threei}  looks short to me too
[13:26] {dptl} ok
[13:30] {Threei}  took it?
[13:30] {dptl} no
[13:31] {Threei}  why do I bother answering your inquiries... :)
[13:31] {Threei}  look at this beauty
[13:32] {dptl} well, i was thinking diferent, so left it alone
[13:32] {dptl} but ye nice short was it
[13:32] {Threei}  you know what your mistake was, riht?
[13:33] {dptl} tell me
[13:33] {Threei}  THINKING
[13:33] {Threei}  look at the room topic
[13:34] {dptl} you right , don't know how to get rid of this :)
[13:34] {Threei}  easy
[13:34] {Threei}  get together with nemo
[13:34] {Threei}  you will get seriosuly drunk, and he will beat the thinking out of you
[13:35] {dptl} lol
[13:35] {Threei}  he has mean roundhouse
[13:36] {Threei} Short Setup: FCX  .30 break hl
[13:38] {dptl} in
[13:38] {scottie} in too
[13:38] {Threei}  stop .45
[13:39] {dptl} chk 16 short?
[13:40] {Threei}  not sure... very narrow
[13:52] {Threei}  stop to .41
[14:02] {Threei}  half out
[14:03] {dptl} not 1:1 yet?
[14:04] {scottie} out +.12 ty
[14:04] {dptl} half out
[14:05] {dptl} where is stop now?
[14:05] {dptl} .31
[14:05] {dptl} ?
[14:05] {Threei}  .32
[14:05] {dptl} k
[14:08] {nemo} arguably this is setting up long on spy
[14:09] {dino} yes, but when? still see relatively close gap at 1257, could hit that monday gap down and pop
[14:10] {dptl} stop make me think lol
[14:11] {Threei}  seriously
[14:12] {Threei}  pour man a drink
[14:12] {dptl} ye
[14:13] {dptl} can we trail above .20 now?
[14:13] {Threei}  .25
[14:14] {dptl} k
[14:15] {Threei}  guys, I need to leave for 20 min, manage this one youself from here
[14:15] {Threei}  be back asap
[14:42] {Threei}  back
[14:43] {scottie} That's it for me. Very nice day, 4 winners in a row, thanks Vad
[14:43] {Threei}  great to hear
[14:43] {Threei}  we tend to do well on don days
[14:43] {Threei}  down
[14:43] {scottie} I can see that
[14:44] {scottie} Have a great weekend everyone
[14:44] {Threei}  you too!
[14:45] {dino} out dhi .24, +.14
[14:45] {dptl} got to go..have a good weekend all
[14:47] {Threei}  take care dp
[14:51] {dino} qsft drop
[14:52] {dino} buyout cx
[14:53] {Threei}  by DEll... yeah
[14:55] {Threei}  US) President Obama: US economy is still facing headwinds, is not growing as quickly as possible- Congress should pass laws now help states prevent more layoffs at the local level, and to fund infrastucture projects that will create construction jobs.
[14:55] {Threei}  one answer to everything - more spending
[15:04] {dino} lol, he's still talking about construction jobs 4 years later.
[15:04] {nemo} "shovel ready"
[15:04] {Threei}  hehe... "my dog produced more shovel-ready projects..."
[15:05] {nemo} higher quality output too
[15:06] {dino} lol
[15:38] {thomcbell} nice
[15:39] {Beau} finished several days working with Laser on paper.  Go for real next week.
[15:39] {Threei}  cool
[15:48] {Beau} have a good weekend you all
[15:48] {thomcbell} good weekend
[15:48] {Threei}  Ok guys, thatk you all
[15:48] {Threei}  have a great weekend
[15:48] {Threei}  see you all on Monday
[15:50] {dino} unbelievable, daughters' 11th softball game cancelled because of rain. as a coach, this is driving me nuts
[15:57] {dino} gn all

June-July 2012 Market Outlook

This summer we fully expect to see a market that evokes one of baseball personality Yogi Berra's greatest lines: "It's deja vu all over again." The next few months are shaping up to be a rehash of the dogs days of 2011. Greece is still the boogeyman of the euro zone, threatening to start a domino effect that could tear apart the common currency. Politicians on both sides of the Atlantic are butting heads over the balance between austerity and growth policies once again. Beijing continues to give assurances it can manage a soft landing for the Chinese economy, even as many indicators are souring faster than expected.

The potential for a replay of last year's issues has once again unsettled markets that were off to strong start earlier in 2012. Equity markets had a blockbuster first quarter, but the US and Chinese indices are now well off their highs and European stock markets are largely in the red for 2012 (the Greek market hit a 22-year low). The flight to safety has pushed 10-year government bonds in the US and northern Europe toward record low yields, trumping gold as a safe haven play - this year the precious metal has failed to regain traction as a store of wealth after nearly reaching $2,000 at the height of last year's crisis. That is due in part to the strengthening of the dollar index, which has also helped tame the price of oil, despite an impending embargo of Iranian supply. The euro, which has remained surprisingly strong throughout the EMU crisis, has finally begun to erode against the dollar as the Greek tragedy heads into its third act.

Uncertainty remains the watch word for the global economy in this environment. Market forecasters are still predicting more stimulus from in the form of a third three-year LTRO and QE3, but officials at the Fed and ECB have been held off on more accommodation so far. Despite unprecedented transparency from central bankers, it's still unclear how much worse the global economy has to get before they will swing into action again.

Leaders in Washington are deadlocked over looming budgetary problems (the so-called "fiscal cliff"), Europe is reliving a situation in Greece that was supposed to have been resolved by the PSI debt swap, and there are fears that China's gradual slowdown will be bumpier than its leadership, now in transition to the next generation, can manage.

"When you come to a fork in the road, take it"

European leaders, struggling with severe austerity plans, have recently tacked toward trying to have it both ways by exploring growth measures alongside austerity. The election of Francois Hollande as the new president of France prompted an immediate shift toward growth measures to balance the austerity that was the foundation of the plan forged over the last year. Within a week of the French vote, German Chancellor Merkel and the EU's top brass conceded that austerity alone won't work. Mr. Hollande also pushed hard to revive the idea of common euro bonds at the recent informal EU summit. Germany and the rest of northern Europe have continued to reject the idea, noting common bonds would unfairly raise their own borrowing costs, but have also appeared to be more open to smaller steps toward burden sharing. The idea of creating an FDIC-style bank deposit insurance for the euro zone seems to be gaining traction - with talk of a 1 percent levy on bank deposits to fund a resolution reserve - and leaders appear ready to grant Greece some small growth oriented concessions on its bailout/austerity agreement.

There are hopes that some decisions will be made at the formal EU leaders summit on June 28-29. European leaders raised expectations for impactful decisions at the upcoming summit after cautioning that May's "informal" summit was just a brain storming session to set the table for an action plan in June.

Europe is in a holding pattern until Greece conducts new elections on June 16. The recent EU gathering discussed a variety of additional support measure that could be offered to a compliant Athens, but the euro zone needs to confirm that Greece will remain a member before any new decisions can be made on the future of the group. Polls suggest that the Greek people overwhelmingly want to remain in the EMU, but sentiment is much less favorable when it comes to the design of the bailout agreement, which the rest of the EMU insists must be abided by. The anti-bailout Syriza party is looking to play spoiler again and is running neck and neck with the conservative New Democracy party. Syriza is attempting to use contagion as a lever to pry bailout concessions from Europe. If Syriza wins outright (garnering 50 bonus seats granted to the biggest vote-getter in the 300-seat parliament) or runs a strong second as it did in the last round of inconclusive elections it could herald a rapid and messy Greek exit from the euro zone. On the other hand, if New Democracy and its pro-euro coalition partners in the socialist Pasok party manage to squeeze out a majority, then Greece will likely remain in the common currency, at least long enough to make an orderly exit.

In the meantime, European leaders will be watching for other warning signs that their actions may not be rapid enough. Their worst nightmare would be a series of bank runs in the peripheral nations that cause the financial system to lock up again. Alarm bells went off in the days after Greece failed to form a new government when it was revealed that the slow bleed of deposits in Greek banks had accelerated considerably. This immediately raised concerns about the Spanish banking system, which is saddled with doubts raised by the Bankia's request for a €19B bailout. There have been no immediate signs of a potential bank run in Spain, but about 4 percent of its bank deposits have been transferred out to stronger EMU economies over the last year.

If Greece is cast out of the euro zone, Spain is poised to be the next battleground. Aside from the threat of Greek contagion and the deep problems within its banking system, Spain's economy is laboring under record high unemployment rates (above 24 percent, triple the pre-crisis level), and budgetary problems that extend to its regional governments. The President of Catalonia, the wealthiest of the Spanish regions, accounting for about a fifth of the nation's GDP, recently told reporters that his government will need assistance making debt payments if they can't find a way to raise more funding. He said the option of funding via patriot bonds (paying 4-5 percent) has been exhausted with a quarter of Catalan savings already pledged, and implied that taking short term loans from the market at 7 percent as some other regions have resorted to is unsustainable. Catalan officials later backed away from the executive's statement and said they were not seeking a bailout, but made it clear that some sort of debt mutualization was desired.

Spain also has to develop a bank bailout plan that is acceptable to its EMU partners. Initially the Spanish government floated the idea of recapitalizing Bankia by directly injecting €19B in government debt into its parent BFA, amounting to an IOU that the bank could deposit with the ECB in return for liquidity at the central bank's three month refinancing window. Subsequent reports said that the ECB shunned this scheme as it might blur the distinction between these IOUs and the ECB's normal liquidity operations and set a dangerous precedent for other euro zone nations that are seeking to recapitalize their banks without going to international sources for bailout funds.

As European officials insist over and over, Spain is not Greece. Its economy has more breadth and its debt problems are not as acute. Spain has a lower debt-to-GDP ratio than Greece and has already issued debt for more than half of its financing needs this year. Yet with its banking system and regional finances under a cloud, the Spanish 10-year yield has edged back above 6.5 percent, not far from the 7 percent threshold that pushed Greece, Ireland, and Portugal toward seeking bailouts (and near a spread that will likely move LCH.Clearnet to increase margin requirements on the sovereign debt). On top of that, another quarter of GDP contraction is expected in Q2.

If the ECB remains unwilling to bend its charter to become the lender of last resort for sovereigns, Spain will need to need to look at other options. One alternative might be modeling a bank resolution law on those in German and the UK that allow for restructuring failed banks and boosting equity by writing down creditors rather than using taxpayer funds. A more controversial strategy that has been resisted by EMU officials would be to wipe out shareholders and convert their debt to equity. Rumor has it that Spanish regulators are also considering reinstating a short selling ban on financial stocks. Meanwhile, the IMF is said to be working on standard contingency plans in the event a Spanish bailout becomes necessary, though both the fund and Madrid deny any dialogue about a bailout has taken place.

The bond market appears ready to put Spain to the test as its 10-year yield has crept back above levels it saw after the launch of the LTRO that stabilized European debt markets earlier this year. A Spanish scare could be exacerbated by the banks that used the cheap money from the LTRO to load up on more sovereign debt. All of this has put renewed pressure on the euro currency.

"A nickel isn't worth a dime today"

The action in government bond markets indicates that the declining strength of the euro has been precipitated by the weakness of the peripheral nations. Cash is pouring into the German 10-year government bond, which has hit fresh all time lows around 1.2%, and record lows have been established in other northern European 10-year bonds as well (Netherlands, UK, Finland, Denmark). These bonds are definitely not cheap at this point, and these flows are strong indicator of mounting concerns that the worldwide recovery could be tripped up if southern Europe stumbles again.

The euro has tumbled to 2-year lows below 1.237 against the greenback as the shearing forces hitting the currency zone exacerbate the divergences between its member economies. As the forex market awaits the latest master plan out of Europe, the euro could next probe the psychological support at 1.2000 and test its 2010 low (and 1999 launch level) of 1.1874. This seems quite plausible as the price action this year has seen the fourth instance of the Euro breaching a January high and low since the launch of the common currency (in all but those four years the January trading range has tended to mark either the high or low for the Euro for the remainder of the trading year).

The weakness in the euro could have a silver lining: A 10 percent drop in the euro's trade weighted value should boost economic growth by about half a percentage point. But the impact would not be felt equally across the zone. The weakening euro could boost exports for the continent's strongest industrial economies, like Germany and the Netherlands, but it will be of little help to the weaker peripheral economies, only increasing the imbalances within the zone.

Meanwhile the firmer greenback has weighed on dollar-denominated commodities, helping ease some inflation concerns. In May WTI crude had its biggest drop in over three years, falling 15 percent and dipping below the $90 mark even as the US summer vacation driving season begins.

As the dollar index strengthens in the absence of good alternatives, US treasuries(what PIMCO has dubbed "the least dirty shirt") have continued to attract risk averse money. The 10-year treasury yield has been pushed back to near record lows around 1.70%. The Fed keeping the prospect for QE3 alive has helped suppress rates, though the end Operation Twist, the program to extend the average maturity of its portfolio, could lead to a modest reversal, steepening the yield curve.

"You can observe a lot just by watching"

The Federal Reserve has used its greater transparency to strongly indicate that it remains in 'wait and see' mode. At the last FOMC meeting, stimulus addicted markets were hoping for a better indication of shape and timing of the next quantitative easing package, but Chairman Bernanke folded his arms and merely reiterated that more [unspecified] action will be taken if needed. Fed watchers believe that QE3 would most likely focus on adding MBS to the Fed's portfolio, but FOMC officials have doggedly avoided fueling speculation about any new program. Instead they have largely tried to downplay expectations for a new round of quantitative easing, exemplified by Dallas Fed President Fisher commenting that he is perplexed by Wall Street's fixation on the subject and that QE3 would only come if the economy takes a "dire" turn. The Fed has also indicated that Operation Twist will conclude on June 30th as scheduled with no extension or renewal, and has taken pains to assert its end does not amount to tightening and will have no ill effects even though a successor program was not announced. The final FOMC policy meeting before the end of the Twist comes on June 20.

The ECB has been even quieter than the Fed on the prospects for more accommodation. Since the launch of the two LTROs, President Draghi has noted the calming effects it had on European markets, and in the next breath urges political leaders to use this respite to forge ahead with fiscal consolidation efforts. Yet market pundits are still anticipating more extraordinary measures from the ECB.

For both central banks the incoming data will be crucial to their efforts to manage expectations of more easing. The euro zone eluded a technical recession after Germany posted solid Q1 growth, but most of the EMU is still struggling. In total, the euro zone is now experiencing its highest unemployment rate since its inception in 1999, with joblessness near 11 percent. Even with the German machine humming along, the latest euro zone PMI reading was at its lowest since June 2009, showing significant contraction (at 45, below the break even 50 level). The recent drop in energy prices, a weaker euro aiding exports, and more political will to consider growth measures may help retard this slide, and could even bring a snap back later this year. But it's a dangerous waiting game with restless populations worried about their economic future.

For the Fed, economic prospects are a little better, with US growth slow but steady, and unemployment improving a little faster than expected, even if the underlying reasons why aren't entirely clear. Inflation is under control, and since maximum employment is the other half of the mandate, the payroll numbers are of paramount importance to the Fed at this point. After three straight months of nonfarm payrolls topping 200 thousand, the last two readings have slipped well below that level, prompting concerns the jobs rebound is losing momentum. To counteract these worries several Fed officials have recently taken to the podium to reiterate that one or two data points do not make a trend. Fresh US employment data on June 1st will shed more light on whether a downward trend is emerging. Washington partisans await the data with baited breath.

"We made too many wrong mistakes"

It has become clear that the biggest drawback of the extraordinary interventions by the Fed and ECB is the loss of a sense of urgency among the political class. That is to say, the stabilization created by the QEs and LTROs has to some extent lulled the US and Europe into a certain amount of complacency. In Europe, some leaders are questioning the extent of planned austerity programs and starting to discuss "balancing" austerity measures with growth programs (even ECB President Draghi addressed this head on, saying fiscal consolidation and growth are not mutually exclusive). Europe is also making slow progress on passage of its fiscal compact which decrees stricter budgetary monitoring and sanctions to prevent another debt debacle like the one in Greece. Seven national parliaments have already ratified the compact (with some of those still awaiting a presidential signature), and Ireland is expected to follow via its referendum. By design the agreement should be relatively easy to enact as only 12 of 25 participating nations need to adopt the treaty to make it binding but it must be ratified by January 2013 (the other two EU states, the UK and Czech Republic, opted out).

In the US, which has yet to honestly broach the subject of fiscal consolidation, the Fed is locked into extraordinary stimulus programs through 2014 because it is compensating for the failure of fiscal authorities to take action. Congress and the Administration appear to have entered a cold war agreement to wait for the November election to determine the course for the future. This timeframe may be entirely impractical however as the US heads toward the $500B "fiscal cliff" at the end of 2013, when the extension of the Bush tax cuts are set to expire, the automatic across-the-board budget cuts forced by the "sequester" kick in, and the debt ceiling will again be reached. Chairman Bernanke has made it crystal clear that there is no way that monetary policy could offset the sizeable the impact of such a confluence of fiscal events, so Congress must act. Washington has made some noises about addressing these issues, but the two parties appear to be digging in for the election battle.

Another event due in June with vast political implication is the US Supreme Court decision on the national healthcare reform law ('Obamacare'). The justices grilled government lawyers for three days in March, and swing vote Anthony Kennedy appeared to lean toward the conservative side of the court looking to strike down the legislation. Yet the high court is often unpredictable in close cases so the outcome is still in doubt. The lynchpin of the decision will be whether the individual mandate is constitutional under the Commerce Clause. Justice Kennedy called the individual mandate an "unprecedented" change in the relationship of the individual to the government, and questioned whether Congress can "create commerce in order to regulate it."

The healthcare industry may soon have more clarity, but the banking sector is a different matter. The US banks that the Fed regulates have been limping along in the aftermath of the 2008 financial crisis and the subsequent EMU debt crisis. Delays in the setting the final rules for the principles set out by the Dodd-Frank law are compounding the banks' difficulties by prolonging uncertainty about the new regulatory framework. The Volcker Rule, mandating the separation of banking from proprietary trading and hedge fund operations, was supposed to go into effect on July 21, but the Fed Chairman has stated that regulators will not meet that deadline.

"If the world were perfect, it wouldn't be"

The next two months will also see a bevy of global gatherings that could impact markets. The G20 heads of government meet in Mexico June 18-19 to approve the final comminque on agreements related to finance, growth, employment, and trade that have been carefully constructed in ministerial level meetings earlier this year. In April, ministers tentatively agreed on boosting IMF resources by over $400B, a little less than the IMF sought, but still bringing its lending capacity above $1T. There are still some details to be worked out on how much each country will pledge after the BRICS nations were reluctant give specifics until Europe works out its debt crisis.

The G20 meetings may overshadow a concurrent session in Baghdad as the major powers (P5+1) hold a follow-up meeting with Iran on the nuclear issue. With just weeks until the European embargo on Iranian oil goes into full effect it remains to be seen how many concessions Iran is willing to give. Both sides said the last round of meetings in May were constructive, but pressure is still on Iran with the embargo set to start on July 1st and likely to deal a crippling blow to the country's economy. The Iranian delegation played politics as much as it could, making an effort to flatter the new socialist French President, but even its traditional supporters Russia and China appear to be losing patience. So far the major powers appear to be resolute that Iran has to open up all of its facilities, civilian and military, to inspection, and that it must halt uranium enrichment beyond the levels normally used for civilian purposes.

With its production already down 12 percent in the first quarter, reports indicate that Iran is now storing large quantities of excess oil production in tankers sitting offshore. The nation has a fleet of about 40 tankers with 80M barrels of storage capacity, less than a month of production at current levels (though Chinese shipyards are scheduled to deliver one 'very large crude carrier' to Iran by the end of May as part of an order for 12 new VLCCs). It appears the country will quickly run out of storage capacity when the embargo hits and force some production to be idled which can permanently damage oil wells, reducing future capacity.

Just before the Iran dialog takes place, OPEC will hold its 161st ordinary meeting on June 14th in Vienna to set production quotas. The OPEC conclave holds less meaning than it has in the past since the meeting last June when some delegates stormed out of the session after Saudi Arabia declared it would unilaterally boosts its production level to compensate for disruption caused by Libya's civil war. Since then OPEC oil ministers have generally indicated that they believe oil at $80-100 per barrel is appropriate.

OPEC holds almost all of the world's spare oil production capacity, which is at its lowest level in four years at about 2.4M bpd, down from 3.7M bpd a year ago. That's less than 3 percent of total world crude oil consumption, with Saudi Arabia still in control of most of the spare capacity. Recent reports indicate that the Saudis have agreed to keep production elevated in the event of an SPR release, which the G8 discussed as a potential reaction to any price spike precipitated by the Iran oil embargo. Also of note for the energy market (and insurance), the Atlantic hurricane season starts on June 1.

Last but not least on the global events calendar are the Games of the XXX Olympiad hosted by London (July 27-Aug 12). With the world watching, the Olympics are always deemed a tempting terrorist target, and London is still recovering from the memory of the attack on its subway system just seven years ago.

"I ain't in no slump. I just ain't hitting."

Meanwhile, the concerns about China remain the same as they have since they hosted the 2008 Olympic Games: the slowing pace of the nation's dazzling economic boom from double digits to high single digits to the current official target of 7.5 percent. Outside forecasters have been trimming their targets for China GDP this year to the low 8 percent range, still above that official government forecast, but reflecting a clear slowdown seen in the data. China PMI data has contracted for seven straight months and bank lending has slowed to a crawl. This slowdown has already prompted rampant speculation about what the Chinese government will do to reinvigorate its economy.

China's control-capitalism has the advantage of allowing the central government to take action quickly if deemed necessary. Expectations are that the government will enact more reserve requirement ratio (RRR) cuts for its banks to spur sputtering lending, and the latest word is that a new stimulus package of up to 2T yuan (about half the size of the 2009 China stimulus package) is being prepared. Beijing has officially denied this talk, but the record shows the government is not going to stand by idly if things deteriorate much farther.

According to recent reports documenting the slowdown in Chinese lending, banks in China may miss their loan targets in 2012 for the first time in seven years as the economic slowdown curbs demand. Declines in lending activity in the last two months have put banks on a trajectory for 2012 loans of 7T yuan, significantly below the government target of 8.0-8.5T yuan.

The most recent RRR cut in early May, however, appears to have been ineffective in shifting this trend leading to speculation about what other actions might be taken on this front. With inflation now in check, in part helped by a slower economy, an interest rate cut may now be a more practical solution for China after a rate tightening cycle last year. The Chinese inflation rate is down to around 3.5 percent, about equal to the deposit rate and the lending rate stands at 6.57 percent. The PBoC typically moves both interest rates in tandem, but it could instead choose to enact an asymmetrical rate cut, reducing the lending rate while maintaining the deposit rate steady which might spur lending where the last RRR cut has failed. This scheme would of course depend on the inflation rate stabilizing at the current level or lower.

The global malaise could also undo years of Chinese promises to appreciate its currency. China recently widened its trading band to 1 percent as it edges towards floating rates, but as the month of May ended, the yuan declined by over 0.9 percent m/m against the USD, its largest monthly decline ever.

A slower economy in China naturally dampens the prospects for the rest of the region as well, particularly raw material suppliers like Australia. Three straight months of subpar Australian export data appear to confirm the softening Chinese industrial data. Australian PMI has also seen a two straight months of contraction, another bad sign for the region. The Indian economy also appears to have hit a roadblock with its latest GDP reading well below expectations and industrial production readings flagging.

In Japan, downside pressure on the yen has been further capped by the undersubscribed Bank of Japan purchase program earlier this month, which effectively undermined the likelihood of additional policy easing. In response, BOJ has taken a decisively more "glass-half-full" approach, turning a blind eye to the slow progress of achieving its 1 percent inflation target. The latest BOJ decision was slightly more positive on the domestic economy, while the government's Cabinet Office went as far as upgrading its assessment of economy for the first time in 9 months. Analysts suggest the BOJ is waiting on the outcome of the Greek elections in June while keeping some easing powder dry. The extent to which credit rating agencies focus on the sustainability of Japan's fiscal state may be the only factor keeping the yen from strengthening markedly, especially considering PM Noda's consumption tax hike initiative is being met with resistance from the DPJ's once-again politically-relevant Ozawa camp. Mr. Noda has warned he may have to extend the Diet session beyond June 21st in order to pass the consumption tax legislation. Meanwhile, Fitch cut Japan's sovereign rating two notches earlier this month amid concerns about the nation's rising public debt ratios, and Moody's warned the Diet that the failing to enact the fiscal reform bill would be a credit negative.

The yen currency has retraced most of its early 2012 weakness as dealers ponder what more the BOJ could do to get the yen reflect its fundamentals given the background noise from European contagion concerns. The ripple effect from Europe could eventually push the USD/JPY below the 70 handle, but in the short term the pair will likely consolidate in the 78 neighborhood.

"It ain't over till it's over"

With the EMU periphery in crisis, growth slowing after a promising start and politicians putting partisanship first, this summer could be a replay of last year with one big exception: the central banks have used up all of their surprises. Quantitative easing, dollar swaps, Operation Twist, and the LTROs each provided timely relief. It appears at this point that central banks could launch another round of what has already been tried, but they would surely see diminishing returns. Markets may remain strained this summer as the European crisis assails more peripherals and the China economy slows, while US indicators are expected to pick up only modestly. Yet we may not see the same kind of market tumult as last year with the 'Bernanke put' firmly in place and expectations that the ECB would step up to the plate again with another LTRO if the European situation becomes dire.

Euro zone officials have made it clear that the next Greek election is going to be a referendum on EMU membership, and though the Greek resolution is again the center of attention, it is not the endgame. A "Grexit" appears to be built in to most forecasters' models, and some even believe that excising the EMU's weakest member could spark a rally, but the wider implications for the rest of the zone are coming to the forefront. If Greece is able to depart from the euro zone, an action that is not provisioned within the legal structures of the EMU, it means that other troubled members are not immune from being shown the door. Thus, the latest market convulsions over Greece are really a barometer for Italy and Spain, the third and fourth largest economies in the single currency.

Spain is up against the dual risks of sputtering regional finances and shaky banks, leading many observers to conclude it's only a matter of time before Madrid will have to ask for a bailout package from the IMF and its euro partners. A credible plan to recapitalize its banks could buy enough time for Spain to benefit from a more overarching plan for bank supports emerging from the next European summit, but Spain's plans are still amorphous.

The US and China have been the backbone of the nascent global recovery, but now face renewed difficulties at home. If not dealt with, the year-end fiscal cliff could be a recession trigger for the US economy, and the rising tide of campaign rhetoric will only complicate these efforts. The Fed has QE3 in reserve but has made it clear to Congress that monetary policy alone cannot fix the economy. In China, not much action has been taken yet, but speculation is rampant that a new layer of stimulus measures is in the offing. As in the US, a leadership transition is underway in China which can create complications even in a one party system.

Indeed it may be a rocky summer for the markets as a global leadership in transition tries to hold hands and find solutions beyond the rhetoric. Can the efforts of politicians and policy makers in the G20 stabilize the global recovery before it slides back into recession? As the wordsmith Yogi Berra put it, "I wish I had an answer to that, because I'm tired of answering that question."

TradeTheNews