The DOL reports on weekly unemployment insurance claims:
In the week ending Feb. 27, the advance figure for seasonally adjusted initial claims was 469,000, a decrease of 29,000 from the previous week’s revised figure of 498,000. The 4-week moving average was 470,750, a decrease of 3,500 from the previous week’s revised average of 474,250.
…
The advance number for seasonally adjusted insured unemployment during the week ending Feb. 20 was 4,500,000, a decrease of 134,000 from the preceding week’s revised level of 4,634,000.
Click on graph for larger image in new window.
This graph shows the 4-week moving average of weekly claims since 1971.
The four-week average of weekly unemployment claims decreased this week by 3,500 to 470,750.
The current level of 469,000 (and 4-week average of 470,750) are very high and suggest continuing job losses in February.
By Doug Hornig, Casey Research
Since the stunning result of the Massachusetts senatorial race, President Obama has softened his tone quite a bit, essentially saying to Republicans that if they have any good ideas, “Bring ’em on.”
Whether he’s sincere or not remains to be seen, but the implication is that he’s unworried, because in his opinion the opposition party only knows how to criticize and doesn’t have anything constructive to say.
He needs to call Wisconsin Congressman Paul Ryan, ranking member of the Committee on the Budget, and have him over for tea.
Ryan is a representative who appears to take his job – overseeing the federal budget – seriously. In 2008, he introduced legislation called “A Roadmap for America’s Future.” It died, so he’s reintroducing it this year. It won’t pass, unless the Democrats somehow manage to lose control of the House. It’s just too simple.
It’s also breathtakingly visionary. In one fell swoop, Ryan takes on taxes, health care, Social Security, and the federal deficit, and fixes them all. He puts the government back on the road to solvency, something no other plan comes close to achieving. Most important, he wants to shift our mindset, so we finally recognize that the cure for debt problems is not to pile up more debt.
Income and Other Taxes
Ryan has a nicely targeted sense of humor. For those who can’t bear to part with today’s elephantine tax code, he leaves it in place, and anyone who loves it can still use it. For the rest of us: Single filers would pay 10% on income up to $50,000 ($100,000 for joint filers) and 25% thereafter, with a generous standard deduction and personal exemption ($39,000 for a family of four). That’s it. No loopholes, deductions, credits or exclusions. Fill out the postcard and mail it in.
Additionally, the plan promotes saving by eliminating a whole bunch of other taxes — on interest, dividends and capital gains. It scraps the alternative minimum tax and abolishes the death tax. It replaces the corporate income tax – currently the second highest in the industrialized world – with a business consumption tax of 8.5%, about half the world average, putting American companies and workers in a stronger position to compete in the global economy. And it allows for immediate expensing of new business investment.
Health Care
A refundable tax credit – $2,300 for individuals and $5,700 for families – to purchase coverage (from another state if they so choose) and keep it with them if they move or change jobs. State-based high-risk pools. Supplemental payments to low-income recipients, who can choose their care rather than be consigned to Medicaid.
Medicare
Large-scale, common-sense reforms involving vouchers and medical savings accounts, along with a very gradual rise in eligibility age, designed to preserve the best parts of Medicare while securing its solvency for generations to come.
Social Security
Maintains benefits for current recipients, while making the program permanently solvent by combining a modest adjustment in the growth of initial Social Security benefits for higher income individuals with a gradual, modest increase in the retirement age. Includes a property right, so that your vested Social Security interest does not die with you. Those who own these accounts can pass on assets to their heirs.
Making all this work would require some adjustments, though. Nondefense discretionary spending, for example, would be frozen for ten years at 2009 levels in nominal terms and allowed to grow thereafter by an amount linked to CPI.
There has been immediate criticism from Democrats, mainly centered around cuts to Medicare. And some of the objections could be valid; maybe the plan could be tweaked a little to bring more of the opposition on board. Or maybe they’ll just continue to complain because reducing the size of government doesn’t sit well with them.
But the thing is, even the critics have been forced to admit that the plan would probably work. How do we know? Ryan had the confidence to submit it to the Congressional Budget Office for analysis. As you probably know, the CBO has stated frankly that continuing along the current path leads to unsustainable deficit levels and bankruptcy for the country.
According to CBO projections, debt will spike sharply upward in 2015, rising – relentlessly and unstoppably – to over 700% of GDP in 2080. Of course, the economy will be destroyed and government forced to default long before then.
If Ryan’s Roadmap were adopted, however, the CBO estimates that debt/GDP would peak at 100% in 2043 and “decline thereafter, reaching zero by 2080,” then move into surplus. (For the complete CBO report, go here.)
Yes, all predictions are bound to be flawed. Yes, we must remain skeptical of anything that comes from a politician. And yes, it’d be better for government to shrink more than this proposal envisions. But, especially concerning taxes, it’s a big step in the right direction.
The president is wrong. There is another idea out there, and according to the government’s own budgetary watchdogs, it’s a good one. It “just” necessitates adopting a 75-year time line.
Of course, the odds of Congress looking that far ahead are slim to none, and you know where Slim is. But who knows, if enough Americans beat the drum for Paul Ryan, this country may actually have a future.
Doug Casey and his team keep saying that in this day and age, politics is inseparable from the economy and the markets. In The Casey Report, we closely follow the actions of Washington’s movers and shakers, which help us, stake out the best action plan for our portfolio. Learn how to make the best of any crisis – and profit while others lose their shirts. Click here for more.
Vincent Fernando of Money Game
ADP’s employment report showed 20,000 jobs lost in February, which was in-line with analyst expectations. Thing is, they revised down their January number by a huge margin — to -60,000 from -22,000.
Nonfarm private employment decreased 20,000 from January to February 2010 on a seasonally adjusted basis, according to the ADP National Employment Report®. The estimated change of employment from December 2009 to January 2010 was revised down, from a decline of 22,000 to a decline of 60,000. The February employment decline was the smallest since employment began falling in February of 2008.
Apparently, weather doesn’t mess up ADP’s data the way it does for the government’s:
Two large blizzards smothered parts of the east coast during the reference period for the BLS establishment survey. The adverse weather had only a very small effect on today’s ADP Report due to the methodology used to construct it. However, the adverse weather is widely expected to depress the BLS estimate of the monthly change in employment for February, but boost it for March. Therefore, it would not be unreasonable to expect the BLS estimate for February (due out this Friday) to be less than today’s ADP Report even though the BLS estimate will include the hiring of temporary Census workers not captured in the ADP Report.
by Tyler Durden
John Thain is already working his interior management magic. The word “out there” is that all non top level CIT employees (who will at best get a little restricted stock with 3 year vesting) will get exactly zero bonus for 2009. Probably to be expected for a firm that was only not bailed out but also went bankrupt, yet pulled a Detroit UAW and emerged in about a month. It remains to be seen if the money thus retained will go toward the purchase of arcane $100,000 toilet and lounging paraphernalia for Thain’s office, or changing that idiotic night club lighting at CIT’s 5th Avenue lobby. It is also unknown if under Thain’s recent guidance, CIT has managed to invest (and lose) several billion in blown up basis and HVOL trades. It is certainly unknown when and if Bank of America will acquire CIT, under the stern “guidance” of Ben Bernanke.
Larry Summers on CNBC: “Very important to look past the next [employment] figures.” (27 second long after ad)
Last week I spoke to a BLS representative, and although they will not comment on upcoming releases, he told me the BLS would prominently disclose any possible impact of the recent snow storms on the employment report – similar to the disclosure after Hurricane Katrina. It is possible that the response rates will be lower than usual in certain areas (like Washington D.C.) and this will be disclosed and adjustments will be made.
Although we should be extra cautious with the February report, I think we should read the BLS disclosure before dismissing the report. In January 1996, the BLS included a short disclosure:
Nonfarm payroll employment declined by 201,000 in January and the unemployment rate edged up to 5.8 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Unusually severe weather in the eastern part of the country affected the number of payroll jobs in January and also caused a particularly large drop in the average workweek.
Most of the decline in January 1996 was eventually revised away.
However the disclosure after Hurricane was more extensive – and the eventual revision much smaller.
Take the February report with a shovel of rock salt, but lets see the disclosure (if any) before dismissing the report completely.
Yes, I said CRASH, and I meant it.
Why?
SINGAPORE/CAIRO, March 1 (Reuters) – Copper is likely to
climb when trading starts on Monday, lifted by uncertainty over
supply after the world’s top copper producer Chile was pounded
by a massive earthquake, analysts said over the weekend.
The front-month contract opened up more than 8%.
This, despite the fact that the earthquake was hundreds of miles away from the mines in Chile and there was zero damage to them. Some were offline for a few hours due to power failures, but none suffered any physical or structural damage, nor did their export points and the transportation network between the two.
So why did price spike more than 8% even though all this was known by the market before it re-opened for trading?
No part of the markets are trading on fundamental values, nor on forward business expectations. They are instead trading as “hot money” repositories where speculators rotate in and out of various instruments literally on a minute-by-minute basis.
This is how crashes happen.
When there is no fundamental value underlying a market there is no floor on price. Price then becomes one thing and one thing only – the number at which you can find another sucker to take your position from you.
This is how tulip bulbs went nuts in Holland, it is how houses went nuts in California in 2005, it is how tech stocks went nuts in 1999 and it is how oil went nuts in 2008.
But now literally everything has gone this way.
Take European national debt. We now know that Italy, for example, was cooking their books as early as 1995. This means that bond buyers overpaid for their bonds and took less coupon than they should have. This should have resulted in an immediate destruction in the value of those bonds when discovered, but it did not.
Why?
Because there was still a bigger fool.
Tech stocks were the same thing in 1999. These “companies” claimed the global GDP some 100 times over between the IPO-issuers in 1998 and 1999. This, of course, is impossible. Yet people kept buying even though mathematically 99% of them had to lose all their money. Ultimately, they did exactly that.
Oil went to $150 in 2008 even though demand was cratering. It then collapsed to under $40. It is now double that, even though we have a record supply on hand, to the point that tankers are sitting around full of crude with nowhere to unload it to, and nobody to buy at the price paid. Yet the price continues to go higher.
These conditions, historically, always produce crashes. Each and every time. Go ahead and look back through history with a dispassionate eye. Find me a market that displayed a complete disconnect with fundamentals such as this and did not crash.
You can’t.
The issue for investors, of course, is that it is almost impossible to determine who will finally stand up and blow a whistle that others listen to. These manias go on longer than anyone would think possible. Always. I was stunned in 1999 as the Nasdaq doubled. Likewise in 2009 I was stunned as prices went straight up on companies that based on any dispassionate analysis are worth zero – for example, every large bank with undisclosed off-balance-sheet exposures (that would be most of them.)
The overnight move in Copper is yet another confirmation point. Big banks leasing oil tankers to fill up and moor somewhere “waiting for price to go up” was the first indication that this mentality had taken hold last year. Stocks were the next, of course, and now we have it in copper.
That the “animal idiocy” came just months after the 2008 crash tells me that we’ve learned exactly nothing. That the idiots in places like CNBS, including most especially people like Kudlow and LIESman, who have seen enough dances to both know and be able to identify this pattern, refuse to discuss what’s going on borders on criminal journalistic misconduct.
If we had indications in the real economy – that is, other than government borrow-and-spend – that we were turning the corner, I’d be a bit more sanguine. Unfortunately no such indication has appeared, despite literally six months of claims from the media that it’s “just around the corner.”
No it’s not folks. What’s around the corner is another collapse, worse than the 2008 one, because the bad debt has been stinking up the joint even more as it decays into a putrid mess.
A dead fish doesn’t get more palatable the longer you leave it out on the kitchen counter. We’ve learned nothing collectively or in the government regulatory apparatus from the last three years – indeed, government has become drunk on the premise that it can borrow and spend over $1.5 trillion annually to present a false veneer of prosperity and economic improvement.
But borrowing money doesn’t make your economy more prosperous. It indeed makes it less so, because you not only have to pay that money back some day, but for the duration of the time you have it outstanding you must also pay interest.
When I see a nation rocked by a massive earthquake and one of its major exports spikes upward by 8% in price when it is known to the market that disruption to that nation’s production of that commodity from the event was zero, that’s the bell being rung to tell you to be damn careful if you think “happy days are here again” – right here, right now.
First from Paul Krugman: Financial Reform Endgame
A weak financial reform … wouldn’t be tested until the next big crisis. All it would do is create a false sense of security and a fig leaf for politicians opposed to any serious action — then fail in the clinch.
And from Sewell Chan at the NY Times: In Senate, a Renewed Effort to Reach a Consensus on Financial Regulation
As part of a regulatory overhaul adopted in December, the House voted to create a freestanding Consumer Financial Protection Agency. Since then, the financial services industry has been largely unified in trying to reduce the proposed agency’s independence, as well as the scope of its powers.
…
Rather than a stand-alone agency, Mr. Dodd proposed [documented in a two-page summary ... which was provided to reporters on Friday without Mr. Dodd’s permission] creating a Bureau of Financial Protection within the Treasury Department.
…
Lauren K. Saunders, a lawyer at the National Consumer Law Center, said advocates feared that in the effort to reach a compromise, the agency’s power would be so watered down as to be ineffectual. “We’re completely outgunned,” she said.
Senator Dodd’s new proposal sounds like one that “would fail in the clinch”.
Submitted by Tyler Durden
TCW, which incidentally is facing some pretty serious problems of its own lately, chimes in on Greece. Komal Sri-Kumar, Chief Global Strategist, is painfully realistic in believing that Europe should be much more worried about keeping the strength of the eurozone intact, and if that means jettisoning Greece, and devastating the euro, so be it. In fact, for an export-heavy Germany, this is precisely, as Zero Hedge has long been claiming, the end goal.
Kenneth Rogoff spoke with CNBC today about the threat of sovereign debt crises today.
The Key Points:
- When countries hit gross government debt as 90-100% of GDP, problems are bound to arise.
- If countries go too long with stimulus it can leave them in a debt trap and with prolonged slow growth.
- The U.S. has been in ‘default’ before — when it went off the gold standard — and there is no reason why it won’t have problems again.
- Banking crises inevitably lead to sovereign debt crises as governments take on the debt.
A couple months ago I started providing more of my intraday charts in hopes to educate traders on current market conditions so they feel like they are “in the zone” for trading. It’s crucial to understand the intraday moves and volume levels if you want to be consistently profitable trader. It doesn’t matter whether you are day trading or swing trading, you must be following daily and intraday charts.
I have been getting a few subscribers asking me: “Why I jump around from time frame to time frame so much?”
It’s a great question as some days I’m using the 60 minute charts, another day the 2 hour chart, and another the daily chart etc… well I hope to answer this question within this education report.
Trading Time Frames & Their Characteristics
Length of Trades – The longer the time frame you are trading the longer the trade will last on average. For example, if you are swing trading using the daily chart most trades will last 2-20 days, but if you are trading the 60 minute chart, then a trade may only last a few hours. Knowing this allows you to be more or less active depending on the market conditions or the amount of time you are available to trade.
Risk Levels/Draw Downs – The longer the time frame the more potential risk/draw down you will have. For example, when trading the daily chart you may set your protective stop below the previous days low. Depending on the investment, that could be $1-$50 per share or contract. Now compare this to someone trading the 5 minute intraday chart playing volume breakouts to generate quick gains. This person’s risk/draw down may only be 5-50 cents per share or contract.
This is the main reason why short term intraday traders play with larger amounts of money. Simply because their risk is so much lower, they can put more on the line for quick profits. On the flip side, swing traders should be trading much smaller positions to compensate for the increased risk.
Individual Personalities
Every trader sees the market in a completely different way because each of our brains process chart patterns and time frames differently. This is exactly what creates the market, everyone buy and selling at different times creating liquidity and the random chart movements.
The hardest part about trading in my opinion is figuring out what type of trading personality you have? It took me a few years to actually figure this out, but now I know exactly what type of trading strategies I’m good at and which time frames I prefer trading.
Myself, I like swing trading because it does not require a lot of time to follow the market, and trades last several days and sometimes weeks. But I also like to take advantage of the market when volatility rises and the market becomes choppy because this is when intraday trading becomes most profitable, in my opinion.
Personally I do not want to trade every day because it’s a ton of work and stressful. Rather, I prefer to sit back and cherry pick, only taking positions when I see a perfect setup. This way my win/loss ratio is very high, and I do not need to worry about finding trades every day or week.
Quick Note: When I am trading the intraday charts my focus is to find setups on the 60 minute, 2 hour, 4 hour an 8 hour charts. The reason behind this is that these longer intraday time frames provide very accurate trades and each trade lasts a few hours and sometimes a few days. Trading shorter time frames like the 5 minute chart is torture because you end up trading all day every day and to be honest that’s a lot of work and not fun at all.
So here are some charts showing you how different time frames show you different patterns, insight and setups:
SP500 Mini Futures contract – Daily Chart
Looking at the past 7-8 days we don’t really see anything exciting to trade as far as chart patterns go. So we sit and wait for something to unfold in a few days if we are lucky.
.
.
SP500 Mini Futures – 2 Hour Intraday Trading Chart
What do you see? WOW a big fat head and shoulders pattern which indicates we should see lower prices.
Traders should have been looking to go short when the price was trading at this resistance level and the 5 minute chart confirmed resistance with the long upper candle wicks (reversal candles) shown in the charts below.
Important Note: When entering this trade, we did not know for sure it was going to be a head & shoulders pattern, but there was a high probability of it happening because of the previous couple day’s price action.
Notice how the left shoulder rallied up and got slammed by sellers, then the next rally (the head) also got slammed by sellers. This price action is bearish as institutions, hedge funds etc… dump positions once they have attained their profit goals for certain investments.
The next rally (right shoulder) drifted up slowly to test the previous resistance level. But look at how the price moved higher…. It drifted higher, which is bearish.
So, if buyers were still in control then we would have seen the price shoot straight back to resistance on big volume then form a mini bull flag (drift sideways) as it digests the resistance level before moving higher. It’s this price action here that was screaming at me to go short.
.
.
SP500 Mini – 60 Minute Intraday Trading Chart
The 60 minute chart helps me to clearly measure how much potential there is for this trade. If you understand technical analysis you will know how to calculate a measured move. It’s simple really.
Take the previous move and add it to the where you think the price is headed. I’ve shown it in the chart below.
.
.
Trading Time Frames Conclusion:
Well there you have it. I hope this report answers some basic trading questions.
If you would like to learn and trade at the same time I will be launching a service where I provide all my personal trades and analysis for your to follow along in real-time. Members will receive all my intraday and swing trade alerts for stocks, indexes and commodities allowing you to trade which ever vehicle you want whether it’s a high beta stock, leveraged etf, futures contract or cfd. This way your timing is accurate and you can trade which ever investment you are comfortable trading with.
There will be a 24/7 chat-room allowing us to trade around the clock when setups arise. Also, members can swap ideas, ask me questions, make new trading buddies etc… There is even a squawk box feature! When I talk everyone logged into the site can hear me for important news or trades alerts.
All trade alerts are instantly posted in the members area, chat-room and sent via email making it one of the most powerful trading services I have seen available online.
If you are interested please fill out the form to be notified for this service. It will have limited availability:
Chris Vermeulen
http://www.TheTechnicalTraders.com/
Disclaimer: I currently do not have a position in the ES futures contract.
