1. In early November of 2011 the Prime Minster of Greece, George Papandreou, had the temerity to announce he would allow the people of Greece to vote on a referendum regarding the Greek bailouts, and thus the “austerity” they were going through. The bailouts are wildly unpopular and therefore were sure to fail. This, of course, would go against the predetermined plans for Greece, and by extension the bailouts of the banking mafia. Within hours, Mr. Papandreou was removed from office not by the people of Greece, but by unelected Eurocrats in Brussels.
2. In mid-November of 2011 the Prime Minster of Italy, Silvio Berlusconi, also had the temerity to announce he was unhappy with the talked-about “austerity” that was coming his way when Italian bond yields spiked. This would go against the predetermined plans for Italy, and by extension the actual bailouts of the banking mafia. Mr. Berlusconi was removed from office not by the people of Italy, but by pressure from unelected Eurocrats in Brussels.The unelected Eurocrats put an ex-banking mafia elitist in charge as its stooge.
3. Recently, Greece has made overtones that future “austerity” will not be welcome. It has done enough for now, Greek politicians say. This goes against the predetermined plan for Greece and may hurt the banking mafia so the pressure has been raised: Germany is demanding that Greece lose it sovereignty. The unelected Germans and Eurocrats in Brussels are demanding that Greece have no future control over its own budget. This has gone too far! How will the Greek people respond to this?
4. Finally, the president of France, Nicolas Sarkozy, has a high probability of losing the upcoming election and since he is part of the unelected bullies that pressure other countries, he must be saved. Losing Sarkozy raises the real possibility that the new president won’t go along with the predetermined outcomes they want for the banking mafia.

Larry Levin
Trading Advantage

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Developing nations are frequently the focus when it comes to commodity demand. Amidst the chaos of the Euro zone crisis, and the uncertainty facing other Western powers, it's not unusual that the spotlight should fall on them again. As dealers ramp up their bullion sales ahead of the Lunar New Year, let's take a fresh look at China's gold demand.

China’s importance to the world economy is demonstrable. The Chinese economy has fueled a lot of global business with annual growth near the 10% range. The current pace of growth has slowed, with many economists now predicting China's rate of real GDP growth will be closer to 5%. This slowdown is no surprise considering the current global economy. The extent of that impact will be felt in reduced demand for commodity related investments, and a slow down of exports, but not so for gold. Since the onset of the current economic slowdown, the Chinese have displayed an increased appetite for the yellow metal, both for jewelry and as an investment.

To appreciate the potential impact of gold demand in China consider the World Gold Council (WGC) reporting that, "demand for gold bars and coins in China expanded by 24 percent from a year earlier." Chinese gold jewelry demand increased by 13 percent to where China has now overtaken India as the world’s largest for gold jewelry. The WGC anticipates, "strong demand in investment and jewelry will drive China's total gold demand to 750 tons this year." Additionally, the Chinese government is thought to be increasing their gold holdings as they grow cautious of the increasing risks in foreign exchange stemming from international liquidity problems as countries turn to more aggressive monetary easing.(1)

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I had high hopes for Monday’s trade when I said “Are enough traders home from their holidays to make for good trading Monday? That’s a close call in my opinion; however, there just may be enough scheduled economic data releases, including the Fed, to make our first day of 2012 a good one.”

Sadly, it was not a good trading day; volume was still low; volatility was non-existent; and news was plentiful but the entire intra-day range was less than 10-points. 100% of the day’s gains were put in at the open – it was all done on Globex.

The ISM manufacturing report in the morning was good, but not good enough to extend the huge gains of the pre-open session. Consensus for this report was for a reading of 53.2, but the actual number was 53.9. A reading above 50.0 indicates an expanding manufacturing sector.

Some analysts had expected this good reading because it was the report that covered the end of the year. And what’s important about that are the many expiring corporate tax incentives and credits of 2011 that businesses made sure they received by bringing production forward. Here are a few; Credit for Construction of New Energy Efficient Homes, New Markets Tax Credit, 15 Year Straight Line Depreciation, 100% Bonus Depreciation, and many more. They have now expired.

In other news, the USSA is now officially a banana republic. As of today, the US Treasury admits that it owes more than 100% of the USSA’s GDP in debt. To be specific, our admitted-to debt to GDP ratio is now 100.3%...not including the $100+ trillion in unfunded liabilities that the government refuses to count, yet refuses to cut.

Trade well and follow the trend, not the so-called “experts.”

Larry Levin
Founder & President- Trading Advantage
http://www.tradingadvantage.com/

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Today’s early signs of life in the market were arguably due to the large drop in the Euro. And by “early signs of life” I mean the drop of US equities at the open. We don’t care which way it moves, just as long as “something” is happening. Sadly, when the Euro slowed its trading pace, which usually occurs @ 1-1:30pm CT, the mini-S&P slowed as well. In fact, the S&P traded in about a 5-pt range from mid-morning into the close.

Some folks were perplexed: “Why is the Euro falling? Wasn’t the Italian auction excellent?” Yes it was; however, it was only an auction for 6-month Bills. Heck, I’ll bet even Greece, California, and Illinois can auction off 6-month Bills. Nevertheless, the yield demanded by investors was 50% lower than the Nov. 25th auction.

What probably worried the markets were the recent actions of European banks and Thursday’s next Italian auction.

This morning’s news from the European Central Bank shows us that (ECB) overnight deposits swelled to a record high of €455 billion. Why would banks park their money at the ECB and get 0.25% when it costs 1%? Isn’t that a guaranteed loss? Doesn’t this imply rather forcefully that the banksters know there is another shoe ready to drop? It sure seems like it, and that’s why I believe the Euro fell apart today.

So what could be that other “shoe to drop?” Well, if there is one, it suggests that the bankers know they will not be buying the Italian junk…pardon, debt…and therefore the trading desks slammed the Euro and bought “safety” in the US dollar.

Perhaps they know something else entirely? Is a major downgrade of sovereign debt coming to a EuroZone country and that caused the move in the Euro/Dollar? Thursday could be interesting.


Larry Levin
Founder & President - Trading Advantage

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On the face of it you wouldn’t expect the news to drive down equities,but this is the only thing of importance that hit the tape.Perhaps the market is worried that the government subpoenas will spread. Are Citibank, JPM, and Goldman execs next on the list.
From the lawsuit:
This action arises out of a series of materially false and misleading public disclosures by the Federal National Mortgage Association ("Fannie Mae" or the "Company") and certain of its former senior executives concerning the Company's exposure to subprime mortgage and reduced documentation Alt-A loans. Eager to promote the impression that Fannie Mae had limited exposure to- subprime and Alt-A loans during a period of heightened investor interest in the credit risks associated with these loans, Fannie Mae and its executives misled investors into believing that the Company had far less exposure to these riskier mortgages than in fact existed.

Between December 6, 2006, and August 8, 2008, (the "Relevant Period"), Daniel H. Mudd ("Mudd"), Enrico Dallavecchia ("Dallavecchia") and Thomas A. Lund ("Lund") (collectively, "Defendants"), made or substantially assisted others in making materially false and misleading statements regarding Fannie Mae's exposure to subprime and Alt-A loans.
…The result of these disclosures was to mislead investors into materially underestimating Fannie Mae's exposure to reduced documentation loans. Fannie Mae made similarly misleading disclosures concerning its exposure to reduced documentation loans in public filings throughout the Relevant Period.

Larry Levin
Founder & President- Trading Advantage

Larry Levin's Trading Advantage is a leading investment education firm that empowers traders to achieve and surpass their financial goals. More than 50,000 students have used Larry Levin's proven techniques for powerful results.

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Some people might look forward to singing "Silver Bells" at this time of year, but did you know that gold prices also have a song to sing? Believe it or not, there is a tendency for gold prices to gain strength approaching the holiday season. Therefore, it is a topic worth considering as gold’s previous seasonality is meaningful for speculators and investors. It just might offer some welcome insight, brighten the holiday spirit and help those interested in fine tuning the timing of precious metal trades.

Let's get one important thing out in the open first. Seasonal and weather trends might already be priced into the market, and any past movements in price are not a promise of future results, so keep that in mind.

Seasonality is not something that is often associated with the price of gold. Typically seasonality or weather related patterns are often thought of as something that applies to crops, or even certain stocks like Toys R Us. It is in cases where a commodity is planted, grown and later harvested during certain times of the year that triggers a thought towards seasonal patterns. Seasonality is even logical with some stocks. Who would think that there is a similar tendency for the yellow metal since gold is extracted or mined, in all types of weather and at all times of the year?

The supply side is only one side of the story. Demand also plays an important role. Demand is the sometimes overlooked part of the equation, as there may be regular seasonal forces at work. Think of how demand for toys picks up as Christmas approaches or the seasonality of certain clothing like bathing suits. This can also be the case with gold, where purchases and interest are driven by a seasonality of demand.

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Today’s missive – R&R - is not about rest and relaxation, but “rollover” and “rumors.”

Thursday begins the S&P500 futures rollover. This is when traders switch from December (the current contract) to the next contract month, which is March 2012. Stock futures trade quarterly. Please switch all of your charts before the open.

Rollover is normally an unfriendly trading environment because traders gradually switch from one quarterly contract to the next. With volume spread between two contracts, we often see small choppy ranges; however, we’re not in normal times. The current times are all about financial central planning, mad-Keynesian spending plans, bailouts, currency rigging, etc. And since there is currently a little of all of the aforementioned on tap, the market may indeed be active during this roll.

In fact, the most recent “roll” was one of the best I can remember. I’m expecting that again.

The other “R” is rumors and we had a lot more of that nonsense today. This morning there was a rumor that may become fact, which mentioned Germany would force its banks to (finally) recapitalize like the US banks did. The banks will be bailed out by a rescue fund called Soffin. The market put in its low and every single sell on the bid was covered, while every available offer was lifted.

The other rumor was denied within roughly 30-minutes but that didn’t matter, the initial sell-off was simply bought back before the close. It started with more BS from a news outlet (NIKKEI): G20 CONSIDERING $600 BILLION IMF LENDING PROGRAM FOR EUROPE.

How many super-special IMF, G20, EFSF, ESFS-squared, ECB, EFSF bonds, etc bailout funds were there? Too many to count in my opinion. However many; how many were legitimate? None.

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Let me introduce you to one simple technique I've used to pick intraday market direction with 80% accuracy.
Using just two key numbers each day, floor traders and other professionals can try to pick the direction, entry price, stop loss and target price of a particular trade. It doesn't matter if the market is going up or down - this simple to learn method has a historical accuracy of 80%. In fact it's called the 80% Rule.
Here are the basics for the 80% Rule:
The Value Area (Secret Tip #12): The range of prices where 70% of yesterday's volume took place. For instance, if the value area in the S&Ps is 115800-117200, then 70% of the previous day's volume took place between the prices of 115800-117200.
The 80% Rule: When the market opens above or below the value area, and then gets in the value area for two consecutive half-hour periods. The market then has an 80% chance of filling the value area.

The value area and the 80% rule can be excellent tools for judging potential market direction. Many traders familiar with the value area and the techniques that go along with it use it to help them decide what trades to do each day.

A couple of key points to remember:

If the market opens above the value area, try to enter a short position as close as possible to the top of the value area.
Conversely, if the market opens below the value area, aim to enter any long position as close as possible to the bottom of the value area.
The 80% rule is a simple way to ride the market as it potentially fills the value area. However, there is an exception to be alert for. If the market opens inside the value area and then migrates above or below it, the 80% rule can still come into play. Watch for it to get back into the value area for those important two consecutive brackets or 30-minute bars.

Best Trades to you,

Larry Levin
Founder & President- Trading Advantage

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Monday was another Ramp & Camp day: it ramped higher on very low volume and set up a camp site. The volatility was ridiculously low – again. For the vast majority of the session, the ES traded in a scant 3.50 point range despite being up over 35.00 points. All of it happened on Globex.

What caused the massive gap open that eventually stayed still throughout the entire day? More hopium – of course. Late Sunday evening there were reports that Germany would join five other AAA-rated countries to issue common bonds to fund more profligate spending. Odd thing is – Germany DENIED this rumor quickly. Another rumor Sunday evening was that the IMF had a EUR 600bln loan for Italy ready to go, if things got worse in that country. Odd thing is – the IMF DENIED this rather quickly as well.
No matter – hopium is hopium is hopium…and who needs anything else, especially when the market is technically oversold and ready to bounce. Funny how these BS rumors always hit the tape when a short-covering pop is immanent (read: it’s a fix).
What was ignored in favor of the known FALSE aforementioned rumors?
Moody’s believes “The probability of multiple defaults (in addition to Greece's private sector involvement programme) by euro area countries is no longer negligible.”
The morning housing data showed that the average new home price drops to the lowest level since 2003.
A judge tells ********* & the SEC that their prepackaged “deal” over fraudulent CDO/MBS sales is bogus and will go to trial. There is a good chance the next judgment will be close to $500million. Will actual justice spread?
Italy was downgraded by Egan Jones ratings agency.
After the close, Fitch moved the USA’s rating outlook to “negative.”
After the close, reports surfaced that S&P may move France’s rating outlook to “negative” within 10 days.

Larry Levin
President & Founder- Trading Advantage

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There is no candy-coating the economic woes facing the U.S. and Europe. Stalled growth, high unemployment, and an unprecedented economic climate have investment markets nervous. Add to that mix the continuing saga of the back and forth regarding European debt. Not a day goes by without another announcement that drives markets up or down, keeping volatility abnormally high. Stir in the MF Global bankruptcy and missing money and what does it suggest about the state of the financial industry, the health of the economy and the impotence of government regulatory agencies? And more to the point, what does it mean for precious metals prices?

As more and more defaults and bankruptcies occur, increasingly more investors become timid and fearful, along with becoming less aggressive. Typically, during such times investors seek to find a safe haven investment. Throughout recorded history gold has been often considered and used as such an investment. Then why are we not seeing precious metal prices respond in such fashion? What forces are at work? Don’t forget – this is also a holiday-shortened week, which should also be taken into consideration.

Recent inflation statistics have been lower than expected in October and a steady dollar has appeared to slow demand for the precious metal as a group. U.S. Labor Department data this past Wednesday showed the cost of living in the U.S. declined in October. This slow down of economic activity and relative stability of the dollar may have dampened gold as a currency alternative. Gold is priced in dollars and appears more expensive to buyers who use other currencies when the dollar rises. With a daily trading range of around $40-50, or 2%, now common in the gold market in recent weeks (even larger for silver) cautious investors are staying away. The markets are thin and therefore every price reaction gets exaggerated.

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