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Chinese reduction of the reserve requirement

Top Day Recommendations

12.01.11

Welcome to the end of the year. Quiet this morning after the biggest three day rally since 09. Drilling deeper, the rally was a quantum revaluation based on the basis cut on the swap lines and the lower of the reserve requirement by the Chinese. The market shot higher then flat lined on low volume. The low volume suggests short covering. The liquidity add is fine, it shows cooperation and something proactive. I think that when the Germans went to auction recently and could only sell 70% of the issue, fears of a credit market lockup in the Euro Zone intensified. It doesn’t solve the solvency issue. Also, the Chinese reduction of the reserve requirement means that their economy is slowing. This isn’t good news for the Euro Zone.

Week of November 28 - December 02

Date ET Release For Actual Briefing.com Briefing.com Prior Revised
          Forecast Consensus   From
Nov 10:00 New Home Sales Oct   310K 312K 313K  
28    
               
Nov 09:00 Case-Shiller 20-city Sep   -3.0% -3.0% -3.80%  
29 Index    
             
Nov 10:00 Consumer Confidence Nov   44.0 43.0 39.80  
29    
               
Nov 10:00 FHFA Housing Price Sep   NA NA -0.1%  
29 Index    
             
Nov 07:00 MBA Mortgage Index 11/26   NA NA -1.2%  
30    
               
Nov 07:30 Challenger Job Cuts Nov   NA NA 12.6%  
Date ET Release For Actual Briefing.com Briefing.com Prior Revised
          Forecast Consensus   From
30                
Nov 08:15 ADP Employment Nov   110K 120K 110K  
30 Change    
             
Nov 08:30 Productivity-Rev. Q3   2.6% 2.6% 3.1%  
30    
               
Nov 08:30 Unit Labor Costs Q3   -1.9% -2.1% -2.4%  
30    
               
Nov 09:45 Chicago PMI Nov   56.0 57.5 58.4  
30    
               
Nov 10:00 Pending Home Sales Sep   -2.0% 0.1% -4.60%  
30    
               
Nov 10:30 Crude Inventories 11/26   NA NA -  
30   6.219M  
             
Nov 14:00 Fed's Beige Book Nov          
30          
               
Dec 08:30 Initial Claims 11/26   395K 390K 393K  
01    
               
Dec 08:30 Continuing Claims 11/19   3650K 3650K 3691K  
01    
               
Dec 10:00 ISM Index Nov   50.5 51.0 50.8  
01    
               
Dec 10:00 Construction Oct   0.2% 0.2% 0.2%  
01 Spending    
             
Dec 15:00 Auto Sales Dec   NA NA 4.27M  
01    
               
Dec 15:00 Truck Sales Dec   NA NA 5.84M  
01    
               
Dec 08:30 Nonfarm Payrolls Nov   75K 118K 80K  
02    
               
Dec 08:30 Nonfarm Private Nov   110K 133K 104K  
02 Payrolls    
             
Dec 08:30 Unemployment Rate Nov   9.0% 9.0% 9.0%  
02    
               
Dec 08:30 Hourly Earnings Nov   0.2% 0.2% 0.2%  
02    
               
Dec 08:30 Average Workweek Nov   34.3 34.3 34.3  
02    
               

Numbers are good up until the close of business today. These are strictly technical in nature, not fundamentally based or biased.

Legend

U is Up

D is Down

PRD is Potential Reversal Day

S2 is Weekly strong support

S1 is Weekly good support

DS is Daily Support

DR is Daily Resistance

R1 is Weekly Good Resistance

R2 is Weekly Strong Resistance

Levels are for the most active futures contract

Daily Support and Resistance

  Trend WS2 WS1 DS DR WR1 WR2
Dec ES U 1108.50 1131.00 1205 1267 1192.50 1231.50
           
Dec D 2067.50 2107.50 2229 2328 2215.75 2284.00
           
Nasdaq              
Dec PRD 127.45 128.09 128.18 129.61 129.85 130.97
           
Yen (U)            
Dec EC PRD 129.83 131.10 132.85 135.60 134.68 136.97
           
  (U)            
Mar 10 PRD 129.05 129.18 128.26 129.29 130.16 131.01
           
Year (D)            
               
Mar 30 PRD 141.18 142.19 140.13 142.28 144.31 146.10
           
Year (D)            
Mar U 10.65 10.90 11.23 11.57 11.62 12.09
           
Soybea              
ns              
March U 5.68 5.79 5.96 6.17 6.086 6.29
           
Corn              
Feb U 1637.5 1663.00 1719 1768 1721.50 1754.5
           
Gold              
Mar U 29.25 30.14 31.61 33.49 32.52 34.01
           
Silver              
Mar U 310.30 319.50 337 370 340.20 351.70
           
Copper              
Jan U 93.11 94.94 98.95 101.70 98.65 100.53
           
Crude              
               

N.B.: if you initiate a trade using ANY of these numbers use a STOP at least equivalent to 2 ½%. Repeat: use Stops. Don’t think about using Stops.

Use Stops. Some find it appropriate to look at the margin requirement and use that as a Stop or if it’s a steep initial requirement, use half. But whatever you do, stop thinking about any other alternative and use Stops.

********************************************

Futures trading entails considerable risk and is not for everyone. An account can lose more than its initial investment.

Stops are not necessarily filled at the stop level. Past performance is not a guarantee of future results.

Charles Kespert

***********************

HYPOTHETICAL PERFORMANCE RESULTS HAVE

MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, AL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETIOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.