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Merrillville, IN 46410

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One day closer to massive illiquidity

Top Day Recommendations

12.21.11

One day closer to massive illiquidity.

In addition to yesterday’s second consecutive increase in German business confidence, the key to the considerable rally was the allocation by the ECB of

€489.2 billion or $644 billion to 523 institutions through long-term repurchasing operations. Initially, the market had been expecting the liquidity injection of €300 billion. This was the first time that the ECB had extended loans for a greater maturity than one year. The institutions who received this money will pay the current interest rate of 1%. Do the math. This is a fantastic opportunity for them to make money on very cheap money. What this does is reduce what is known as the tail risk of a Lehman type of event. Otherwise, these institutions, all 523 of them, would’ve gone into the new year facing a morass of refinancing problems with probable difficulty in accessing the market at favorable rates. Of course the euro zone problems are bigger than just this one aspect but nevertheless it did provide breathing room, at the very least. Earlier in the week the ECB President had said that helping smaller banks is crucial because they provide most of the credit to small businesses. To some

extent this action does that. Usually banks borrow short and lend long. In a highly liquid market this works just perfectly however because of euro zone stress this need to constantly roll money over has become more and more difficult. Also strong demand at the recent Spanish debt auction drove down yields, a positive. Also, there are no further such actions scheduled for the remainder of this calendar year.

Now of this €489.2 billion only approximately €200 billion is new money. The remainder is basically recycling previous debt. With that said, all in all, it was a constructive day, finally and enabled S. Claus to make an appearance at Wall and Broad.

Week of December 19 - December 23

Date ET Release For Actual Briefing.com Briefing.com Prior Revised
          Forecast Consensus   From
Dec 10:00 NAHB Housing Dec   19 19 20  
19 Market Index    
             
Dec 08:30 Housing Starts Nov   600K 627K 628K  
20    
               
Dec 08:30 Building Permits Nov   625K 633K 653K  
20    
               
Dec 07:00 MBA Mortgage Index 12/17   NA NA 4.1%  
21    
               
Dec 10:00 Existing Home Sales Nov   5.20M 5.03M 4.97M  
21    
               
Dec 10:30 Crude Inventories 12/17   NA NA -  
21   1.932M  
             
Dec 08:30 Initial Claims 12/17   380K 380K 366K  
22    
               
Dec 08:30 Continuing Claims 12/10   3650K 3650K 3603K  
22    
               
Dec 08:30 GDP - Third Estimate Q3   2.0% 2.0% 2.0%  
22    
               
Date ET Release For Actual Briefing.com Briefing.com Prior Revised
          Forecast Consensus   From
Dec 08:30 GDP Deflator - Third Q3   2.5% 2.5% 2.5%  
22 Estimate    
             
Dec 09:55 Michigan Sentiment - Dec   68.0 68.0 67.7  
22 Final    
             
Dec 10:00 Leading Indicators Nov   0.3% 0.3% 0.9%  
22    
               
Dec 10:00 FHFA Housing Price Oct   NA NA -0.1%  
22 Index    
             
Dec 08:30 Durable Orders Nov   3.2% 2.0% -0.5% -0.7%
23  
  Dec 08:30 Personal Income Nov 0.0% 0.2% 0.4%
  23
             
  Dec 08:30 Personal Spending Nov 0.4% 0.3% 0.1%
  23
             
  Dec 08:30 PCE Prices - Core Nov 0.1% 0.1% 0.1%
  23
             
  Dec 10:00 New Home Sales Nov 315K 313K 307K
  23
  Dec   Durable Goods          
  08:30 Orders -ex Dec -0.2% 0.3% 1.1% 0.7%
  23
    Transportation          
               

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
Mar D 1164 1187 1210.75 1249.25 1244 1277
           
ES              
Mar D 2149 2191 2249 2295 2298 2363
           
Nasdaq              
Mar D 127.76 128.62 128.36 128.93 129.18 129.66
           
Yen              
Mar D 127.08 128.72 130.10 131.49 132.93 135.50
           
EC              
Mar 10 U 129.01 130.31 130.12 131.03 131.25 132. 13
           
Year              
               
Mar 30 U 139.02 142.06 143.12 145.15 146.31 148.22
           
Year              
Mar U 10.92 11.16 11.46 11.61 11.51 11.63
           
Soybea              
ns              
March U 5.61 5.72 5.99 6.11 5.85 6.12
           
Corn              
Feb D 1471 1536 1600 1637 1692 1783
           
Gold              
Mar D 25.87 27.80 28.43 30.23 31.98 34.23
           
Silver              
Mar D 304 319 330 341 353 372
           
Copper              
Feb U 8730 90.65 95.11 99.76 99.40 Wow
           
Crude             4.80
             
               

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.