Futures and futures options trading involve substantial risk, and therefore are not suitable for all investors.

Good Morning

Tell me if you've heard this one before ... equity futures are trading lower on concerns over European weakness. However, this time it's the Bank of England stating that if the EU officials don't get a handle on their debt crisis, it could cause a global slowdown. Hey, Thanks Sherlock! How much does it pay to state the obvious?

In addition to the astute analysis coming from England, traders/investors are focusing on disappointing earnings from DELL and ANF. ANF represents consumer spending mainly for kids/teens/young adults - you know things parents can't say no to. I have to look at the numbers but weakness with this company's performance isn't a good sign for the consumer ahead of the holiday spending season. But from what I hear, it's a margin issue which makes sense. America's economy is stronger than most will let you believe. Open your eyes and take notice.

Speaking of spending, PPI reported this morning with mixed results. The headline number was down 0.1% vs +0.3%, core PPI was up 0.1%. Equity index futures are trading lower following the report. This could add to the deflation talk we've been hearing. Although justified, remember deflationary economies are rare.

Trading Level

Remember this week is options expiration for equities and equity indexes. Volatility should be higher through Thursday.

If you got long ES Z1 following my October 17th article "Is the S&P ready to Pop?", this week looks to be a good week to take your profits. Based on my work, ES Z1 is looking weaker and weaker on a week to week basis. It is still bullish however I believe there is a good chance it will fade to the 1200 range, which if it holds, will create a great buying opportunity. But we'll visit that if and when we get there.

For TF Z1, today's important level will be 734/736 level will be critical. The range I mention comes from my numbers - Daily Pivot 735.8, Weekly Pivot 734.1. We're trading 733/732 as I i write this. For a day trade, I see a long trade setting up. Look to BUY TF Z1 at 736.00 on a STOP. If we trade above the weekly pivot and take out the daily, this market should go higher.

For ES Z1, this market is slightly weaker than TF Z1 however that's a short bullish indicator for me. Although trading below its Daily and Weekly Pivot (see below), I can see a pop this morning. If this is to happen, BUY ES Z1 at 1243.00 on a STOP.

If you have questions, please call me - 866.312.4965 - Rob

Futures and futures options trading involve substantial risk, and therefore are not suitable for all investors.

It's going to be a quiet week economical speaking. There isn't much as far as news. However, markets will still be focused on Europe. Supposedly Italian PM Silvio Berlusconi is on his way out following today's parliamentary vote. I'll believe it when i see it. This guy is the Teflon Don of Rome. But bottom line is Europe is still a day to day situation. That said, following the rumors that Greek and Italian PM's were on their way out, equity index futures finished with a nice rally by day's end yesterday.

Trading Levels

It looks like with not much economic news due out this week and European news being fairly tame, investors are starting to focus on American companies again. As I mentioned yesterday, the backdrop to the equity market is still bullish and big cap stocks are cheap. Don't be surprised if equity futures rally to the end of the year.

Since I wrote my article titled "Is the S&P ready to Pop?", ES Z1 is up 5.9%. Hopefully you were able to use my information and capitalize on it.

Today's Strategy ...

Today could be a very flat trading day while markets look for directions so be cautious and nimble if you're going to trade the ideas below.

ES Z1 AND TF Z1 are trading higher this morning. On a week where there is not much on the economic new front, I don't see why this shouldn't continue. However, remember we have votes going on in Europe.

For ES Z1, today's R1 is 1265.00. If this market is to continue higher, it'll be once it trades above 1265.25. With strength behind this move, you could see ES Z1 trade back to the 1280.00 level we saw recently.

For TF Z1, today's R1 is 751.3. Again, if this will continue higher, it'll have to trade above 751.5 and could continue to 770. Again the most recent highs.

As always, if you have questions or comments, feel free to contact me directly - 866.312.4965 - Rob

Futures and futures options trading involve substantial risk, and therefore are not suitable for all investors.

I was in Lake Geneva, WI over the weekend for a friend's wedding. It was a great time. However, I couldn't help to notice how crowded this little mid-western resort town was. For those of you who don't know, Lake Geneva has been and still is a destination for the wealthy, sometimes referred to as the Hamptons of the Midwest. Anyway, I'm not looking to promote the area but based on how many people were out shopping and dining at not so inexpensive locations, I have to ask what recession? Unless of course this is where all the 1%ers have been hanging out.

Trading Levels and Commentary

This morning equity index futures are pointing lower however recovering off of overnight lows. ES Z1 and TF Z1 are trading 1244.50 and 741.20 respectively. Energies are lower, grains are mixed while metals are higher.

Much of the overnight and this morning's action is directly related to Europe. Greece's PM is stepping down following the deal to accept a bailout. However, Greece has been garnering more attention than is being paid to the financial problems brewing in Italy. As the 3rd largest economy in the Euro Zone, Italy is a real concern. If Italy falls, it will spread to France and Germany and ultimately the United States. Needless to say, stock and futures market volatility should remain high for months to come.

For our purposes, trading the big picture one day at a time, the volatility is great! For the long term investor, not so much assuming you're not comfortable with you're long term investment goals and method of asset allocation. If this is you, I strongly suggest you contact me. I can refer you to someone who can help. If this volatility is giving you fits, it's probably b/c you're not invested properly and have been getting bad advice.

As far as today's strategy ...

The backdrop of the SP and R2K indices is still bullish week to week however, as I mention last week, these markets rallied to my short term targets of 1280ish on ES Z1 and 770ish on TF Z1 and look to be taking a breather.

So what now? Good question. I'm not going to try to predict direction. For one, American companies and their stocks, even at discounted forward earnings, are still very cheap (bullish). However, those controlling the money will react negatively or positively based on what's happening in Europe (neutral/bearish). As I said earlier, this will be with us until all of Europe is cleaned.

Today I'll be leaning to the short side when trading equity futures. For ES Z1, I'll be hoping for a morning rally to sell at better levels. However, today's S1 is 1239.08 and the weekly Pivot is 1240.13 (see below) which leads me to believe we may see more weakness than strength. If ES Z1 falls to this level, I'll be looking to sell short at 1239.00.

For TF Z1, the set up is similar however with a more significant twist. Today's Pivot is 741.8 and the weekly R1 is 743.7. I expect this market to rally above the weekly R1 of 743.7 but not by much. If this happens, I'll be looking to sell 2 units at 743.5 and then adding 1 unit at 741.6.

If you have questions or comments, feel free to contact me directly at 866.312.4965 - Rob

Futures and futures options trading involve substantial risk, and therefore are not suitable for all investors.

Happy Halloween!

In my notes that I published on Thursday, I provided a week-to-week snapshot opinion of what was I felt was happening in the markets that I track with my numbers. I mention how the strength in TF Z1 had enough to carry itself higher to the 770/780 while lifting ES Z1 to the 1270/80 level. Well we reached those levels Thursday following what I feel was an effort to clear out the shorts with accelerated end of month buying following some really flimsy EU Bailout news.

Today that doubt is being realized in equity markets around the world as many question whether or not EU leaders and bailout recipients have done enough. Another factor that may be leading to early week selling could be the slew of economic reports out this week.

It's my opinion, and has been for most of this recovery, that things in America are going better than many realize. Whether it's  President Obama's efforts or real demand showing up in the marketplace, our economy is growing at a fair pace and far better than anti-Obama supporters will ever admit.

Granted this isn't translating into jobs however, it doesn't have to create jobs. Think the economic concept of Full Employment. That being said, here's something to ponder ... What if we're at full employment and all those unemployed just aren't needed because of their skills aren't needed?

While I felt the excitement over Thursday's EU decision was overdone, I do believe equity index futures markets are in a short term rally. For ES Z1 and TF Z1, it would be healthy to see both these indexes trade lower to 1215/20 and 690/710 range. This would validate those previous resistance levels as new support levels from which equity futures could rally into the end of the year. We'll see if that happens this week.

My trading levels are posted below. If you have questions, feel free to contact me directly - 866.312.4965.

Trading Levels

Futures and futures options trading involve substantial risk, and therefore are not suitable for all investors.

On Monday October 17th, I wrote a piece titled "Is the SP ready to Pop?" where I told you that the Value Line Index moved 4% higher the previous week triggering a longer term buy signal to be executed that Monday morning. I also mentioned that my work confirmed a buy signal on October 13th.

Hopefully, you're following along and maybe confirmed my information with yours allowing you to position yourself to take advantage of the monster move in equity index futures that we're seeing.

As an example, on Monday October 17th, ES Z1 opened near 1215 and traded as low as 1193.5 intraday. TF Z1 opened near 704.0 with an intraday low of 684.4. Even if you bought the open, as you're supposed to, you're roughly looking at a 50 pts  or $2500 gain on 1 ES Z1 contract. For TF Z1, the gain is roughly 40 pts or $4000 on 1 contract.

In full disclosure, you need to realize that on Monday Oct 17th, equity index futures collapsed. Had you bought ES Z1 and TF Z1 at the open, you would have experienced a 1.7% and 2.8% drawdown respectively by Monday's close.  But the unrealized gains as of this morning, would be roughly 4.1% and 5.6% respectively. Stay tuned to see what the 4% Indicator will do next.

Trading Levels

Here are my weekly notes that may help you position yourself for some longer term trades. I wrote these last night before this morning's pop so please keep that in mind. I'm a little behind this morning so if you're interested in day trading ideas or have questions, please call - 866.312.4965.

Es – continuing higher but losing steam – 1260/65 potential ceiling

Tf – ditto but looking a but stronger and could lead ES higher to 1275/80 range

Qm – ditto and forming support in near $88 but could be at the early stage of move back to $102/104

Qg – horrible but may be heading to 3.50

Zx -  still weak potential buy opportunity on the next dip

Zc – ditto but could be making a move back to 680

Zw – weak but forming base at oversold conditions, could drop to 580-600 range, look to buy there

Yg – turned bullish on numbers and longer term buy needs to be confirmed next week, 1800-1830 range target

Yi – ditto, could make move to $37

Futures and futures options trading involve substantial risk, and therefore are not suitable for all investors.

Last week I started with the longer term buy signal that was generated by the 4% Indicator as well as the signal I observed on my own work. I mentioned that according to the 4% strategy, you should've gone long last Monday on the open.

If you recall, the strategy uses the Russell 2000 Index as a proxy for equities. Last Monday, there was plenty of weakness in the morning and only got weaker throughout the day, giving anyone following this strategy and excellent entry point. If you went in on the open, using TF Z1, your entry price would be 703.5 worst case.

By week's end, TF Z1 closed at 710.9 yielding a little more than a 1% return for the week. Equity index future were also up about 1% across the board. Equity futures exploded towards the end of the week mainly on hopes that EU leaders are coming closer to a solution to their financial mess and the slumping Dollar Index.

As a result, my numbers, daily and weekly, have wide ranges entering this week.Ideally, we consolidate a bit this week. If that happens, perhaps equity futures can continue to form a base before making a modest rally into the end of the year.

Trading Levels

This week's focus will be on what happens in Europe and the tail end of earnings reports. As I mentioned before, last week's action in equities created big ranges to trade this week. I'll be looking for my entries as the day goes on. I think you can sell some rallies but based on this morning's action, I don't see much.

If you have questions or ideas you'd like to discuss with me, feel free to call - 866.312.4965

Futures and futures options trading involve substantial risk, and therefore are not suitable for all investors.

What a crazy week for equity index futures huh? Monday they get hit by European fears. Tuesday they rally big because Bank of America beat estimates. Seriously Bank of America?! That's what's going to save the American economy. That's laughable considering the mortgage liability they took on when bailing out Mozilo and his Countrywide. Why isn't Angelo Mozilo in jail?!

Wednesday and Thursday, both choppy but still leaving us with a sense that equity futures may being forming a base.

This is good news considering I started the week talking about how the 4% Indicator triggered a long term buy signal last Friday as well as my own working giving a signal last Thursday. I'll confirm later about the 4% but it looks like this signal will remain in tact as equity index futures are trading higher this morning following better than expected earnings reports.

That being said, traders are still focused on what will be the solution to Europe's problems. That decision will come over the weekend or early next week while EU leaders confer.

Trading Levels

Metals are up this morning however, Silver is the stronger of the two. Gold is riding Silver's coat tails. That being said, YI Z1 is trading near today's R1 of $31.26. If it doesn't trade much higher, look for a pullback. Selling at $31.26 or higher is the play here. If you're going to sell YI Z1, you might at well sell YG Z1 at the same time as it's been very weak of late.

Grains are trading higher this morning, mainly because the Dollar Index is fading slightly this morning. This could be giving a lift to most markets. Anyway, Beans, Corn and Wheat are all trading above their respective R1 for today. Those will be good areas to sell for a day trade.

Equity index futures are trading higher. As I mentioned, earnings beats are the reason and perhaps a little optimism that EU leaders will create the band-aid that will stabilize Europe's financial system. The financial system is much more important that Greece failing. Really if Greece defaults, which most believe they still will, who cares? Greece really doesn't matter in the greater scheme of things.

Although equity index futures are trading stronger this week, it doesn't mean that stocks and other markets won't be susceptible to headline based selling. So for today:

ES Z1 is trading (1222.00) above today's R1 of 1218.83 but not by much and looks a bit extended. I don't think equities are ready to breakout, at least not today. That said, I'd use this morning's early strength to enter sell stop at 1218.75.

TF Z1 is trading near 702.00. Today's R1 is 699.80. The weekly is 700.00. What do you think is going to happen when we trade down through 699.70 on TF Z1?  Sell stop of TF Z1 at 699.80 for a day trade.

If you have questions or comments, please contact me directly at 866.312.4965.

Have a Great Weekend. Go Bears!

Futures and futures options trading involve substantial risk, and therefore are not suitable for all investors.

I don't know if the 4% Indicator is taking into account the 'one day we're good, next day we're bad' news out of Europe. For those interested, European financial system has a lot of problems. They're not going away b/c unlike the United States, the EU doesn't want to pass a law that just makes all those mortgage liabilities disappear or ease. They actually want to attack the problem and fix it. Unfortunately, that's easier said than done where now, Geitner's and The Feds push to force quantitative easing on Europe may actually be their "solution". Thankfully, the European leaders have already seen what The Fed has done to the United States as well as how the Fed's efforts have done to the world commodities markets and the World's population's pocket book.

Morning News brings focus to the domestic financial industry. GS and BAC reported earnings this morning. GS missed and posted an 0.84 cent loss. BAC beat lowered estimates and lowered revenue expectations. It's a mixed bag but obviously the financial industry strength has faded.GS will be having an earnings conference call later this morning, I think 9:30 cst. Comments from that conference could move equity futures so be on your toes while the "God's Work" spin is going on.

Trading Levels

We bounced off my weekly Support 1 on ES Z1 at 1189.80 this morning following yesterday's sell off on European concerns. I'm using that as a buy point (1189.75) for ES Z1. I have nothing on TF Z1 at this point.

If you have questions, feel free to call - 866.312.4965 - Rob

Is the S&P Ready to Pop?

Futures and futures options trading involve substantial risk, and therefore are not suitable for all investors.

I started last week talking about an indicator the helps to spot potential trends in the equity markets called the 4% Indicator. It triggers buy and sell signals based on a 4% up or down change in the Value Line Index. Last week the index closed 7.2% higher, triggering a reversal of the short and initiating a long position until the next signal.

In addition to the 4% Indicator, my work is also giving me a longer term buy signal on ES Z1 and TF Z1. This signal is based on technical and momentum indicators that tries to pick bottoms. I'll try to post a chart later.

Equity index futures are opening lower. If you're a buy low and sell high investor/trader, this morning's weakness is giving you a nice opportunity to enter.

Morning Brief courtesy of MF Global Research

• October Empire was -8.48 [-4.00 expected]. The index showed a small change.  Details were stronger than the headline.
  • New orders were 0.16 v. -8.00. first positive since May
  • Shipments were 5.33 v. -12.88.
  • Employees were 3.37 v. -5.43. Still anemic
  • Workweek was -4.49 v. -2.17
  • Prices paid were 22.47 v. 32.61 – easing lower.
  • Prices received were 4.49 vs. 8.70 – softer to trend.
• The CEO of Cummins Engines said that the US and Europe were already in recession.  The statements seem to run against recent data points.
• The NY Times has a story highlighting a regulatory divide or the Volker rule. It suggests that a turf war could derail the rule.
• NY Times says that rent prices are rising substantially in NY City.  They reportedly exceed the prior peak of 2007.
• CFTC data shows the reporting non-commercial trader net short 183,570 contracts in the 10 year note. This is an extreme reading. Going back to 2005, the net short is in the 2.88% percentile.
• Friday’s bank data showed C&I and Loan and Leasing data increasing.  The bank data is inconsistent with recession.
• Citi reported EPS of $1.23 [$0.82 expected]. Ex-an accounting gain, profits are $.84/share.  It is reporting exposure to Europe.
  • Net funded current exposure to GIIPS $7.1 bln
  • Net funded current exposure to France/Belgium $2 bln.
  ·         WFC reported EPS in line at $.72.  

  Trading Levels

  My indicators are showing short term oversold conditions on ES Z1 and TF Z1. Based on my numbers below and strategy, I'll be looking to buy ES Z1 once it trade at or below 1210.50 down to 1207.00. Ideally we trade to the lower of the two so that we can initiate a long as it's moving higher.

  For TF Z1, you'll notice 700.00 is today's S1 and the weekly R1. Despite this morning's weakness, equity index futures are trading stronger. Ideally, TF Z1 breaks 700.00 down to about 696/97. If so, I'll be looking to go long TF Z1 at 700.60.

  If you have questions or care to discuss my ideas, feel free to contact me directly at 866.312.4965 - Rob

Morning News, Notes and Numbers

Futures and futures options trading involve substantial risk, and therefore are not suitable for all investors.

The following is a snapshot of this morning's news. This research is provided by Nick Kalivas at MF Global. This research is free to my clients in addition to all the research and news available to me.

• OPEC Secretary General El Badri said that the oil market is very comfortable and it is too early to talk about the next meeting.
  • OPEC cut its oil demand outlook for 2011 and 2012.  2011 was expected to rise 880,00 bd compared to 1.06 mbd, while 2012 demand was forecast to rise 1.19 mbd compared to a prior estimate of 1.27 mbd.
  • Said that the recovery is faster than expected in Libya – back to normal in 15 months
• ICSC sales fell 0.1% w/w and rose 2.8% y/y.  ICSC said October sales got off to a slow start on poor traffic and weather (it was very warm in the Midwest last week).
• NFIB Small Business Optimism rose 0.8 to 88.9 [88.8 expected].  The index remains depressed.  Hiring plans fell 1% to 4%, which compares to a six-month average of 3%. Higher selling prices were up 5% to 6% compared to a six-month average of 9%.  Capital spending and plans to increase inventory were in line with the six-month average.
• Major press has stories suggesting that the Obama jobs package will not make it through the Senate in one piece but will be broken up.  This suggests that certain parts of the idea will be passed – payroll tax cut extension is likely to be one.
• FOX says Banks are close to signing a foreclosure agreement with state AG.
• California state revenues fell $705 mln below forecast – this is a pretty big miss.  It is testimony to the idea that spending needs to be cut.

Trading Levels

Equity index futures finished yesterday on a strong late day rally. Granted it was Columbus Day and volume was light but the strength is a relief. That being said, the problems in Europe hasn't gone away and the risk of defaults is very much alive.

Today I'll be looking to sell rallies. If ES Z1 rallies, I don't expect it to go much higher than 1188/1190. If that's the case, look to short today's Pivot of 1184.83 or 1184.75. If we don't get a rally, the level I'll be looking to sell at will be today's Support 1 1177.42.

For TF Z1, similar to above. Today's Pivot is 677.97. We're currently trading under it so if we rally, I don't expect a rally more than 680.00. If that's the case, I'll be looking TF Z1 at 677.80. If equities begin to deteriorate, look to sell TF Z1 at today's Support 1, 671.00.

Keep in mind equity index futures may be very volatile today because of the votes in Europe that may or may not favor bank/country bailouts.

If you have questions, feel free to call me - 866.312.4965 - Rob