RF's Financial News

RF's Financial News

Sunday, February 22, 2015

This Week in Barrons - 2-22-2015

This Week in Barrons – 2-22-2015:













"In Greece, Wise men speak – Fools decide" … George Santayana


Thoughts:

Dear Ms. Yellen:

As the story goes, Bobby Fisher (the chess grandmaster pictured above in his match with Boris Spassky) could think 12 moves ahead of his opponent.  As of this moment, I think Greece is having trouble thinking one move ahead of the ECB.  My attempt to simplify the negotiations:
-       GR Move #1 = The Syriza Party (a far-left Socialist group) recently gained control of Greece, and (up until last week) threatened to exit the Euro (which amounts to a full default on their loan obligations) in exchange for more bailout money.
-       ECB Move #1 = The ECB reacted by eliminating Greece’s ability to use their own Greek bonds as collateral for any loans.  This forced a temporary stalemate between Greece and Europe.
-       GR Move #2  = Then Greece offered some concessions to its previous stance, and pledged to work with the ECB as long as Greece was paid an ‘additional’ $270 billion dollar in bailout funds.
-       ECB Move #2 = Germany (being nobody’s fool) rejected Greece’s application out of hand and issued a statement: “The Syriza Party threatens to leave the Eurozone, default on all of its debts, end austerity in Greece – AND expects Europe to give them $100’s of billions to do so?” They went on further to explain that Greece was never serious about fiscal responsibility, and blames everyone else for all of the debt that they have created.
-       GR Move #3  = The Greek people have elected Socialism.  Unfortunately Socialism requires money to survive, and the only one giving Greece money is Europe.  Therefore, on Friday the Greeks accepted a 4-month extension of their existing loan agreement with NO NEW terms, and conceded some important elements.
-       ECB Move #3 = You don’t have to be a chess grandmaster to see how this game plays out.

None of the above changes the fact that the world is dead broke, and in debt all the way up to our receding hairlines.  There is no mathematical way out of our collective economic condition.  Ms. Yellen, you either have to continue creating new money and debt out of thin air forever, or there has to be a gigantic ‘reset’ button.  History shows us that there are only two solutions out of hopeless debt.  The first is massive default, and the second is war.  Ms. Yellen, if you’re thinking 12 moves ahead, which move do you see coming first?


The Market:

Factually:
-       The ceasefire in the Ukraine is not holding, but no one wants to admit it.
-       This week’s oil inventory report showed an incredible oil surplus.  With nobody cutting production, what happens in a month or two when we fill up all of the oil storage containers?
-       Global shipping is at a standstill, as the Baltic Dry Index is close to historical lows.
-       The Philly FED’s February Manufacturing survey fell for the 3rd consecutive month.
-       Baker Hughes reported that the number of rigs actively drilling for oil and natural gas in the U.S. is down by 30% (406 rigs) from a year ago.
-       Mortgage applications were down 13%.

Several weeks back, I wrote of the lack of ‘skilled’ workers in the U.S.  This week Georgetown University’s Center on Education and the Workforce came out with a study showing that not all college majors are ‘created equal’.  The unemployment rate for recent college graduates varies wildly, depending upon the bachelor’s degree.  The lowest bachelor’s degree unemployment rates are for: education (2.4%), then biology and life sciences (2.6%), followed by healthcare (2.7%), engineering (2.8%) and then computers, statistics and mathematics (3.5%).  The highest unemployment rates are for architecture (10.3%), social sciences (10.1%), psychology and social work (9%), law and public policy (8.6%), humanities and liberal arts (8.4%), and followed by communication and journalism (8.2%).  The report is also quick to point out that it’s really what you GET for your money.  After all, college graduates are carrying over $1.2 trillion in debt.  The good news is that recent college graduates have an average starting wage premium of 140% over those with only a high school diploma.  But that’s not the same for every major.  Recent college graduates who major in the arts, psychology, and social work earn an average of $31,000 a year – only $1,000 more than the average high school-educated worker.  However, those majoring in engineering earn (on average) $57,000 a year, almost twice as much as high school graduates.

As for the markets, Friday had every chance to be a long boring grinding session.  After the 100 point morning decline, the news hit about a potential ECB / Greek deal.  And (on the surface) the ECB and the Greeks had agreed to a 4-month loan extension in exchange for Greece giving up many ‘non-negotiable rights’.  So what happens now?  The Greeks have until early this week to ‘make it official’.  If the agreement is signed, realize we will have to go through this same nightmare again in 4 months.

With that news event as a driver, the DOW joined the S&P on Friday in making all-time new highs.  This week (along with the Greek decision) we have a two-day Fed meeting that will culminate in a Ms. Yellen press conference.  Due to both of these events occurring in the same week, I am safe in predicting that this market could go ‘big’ in either direction.  For example:
-       If the Greek deal is off and its citizens are rioting – then we will lose those new market highs quickly.
-       If the Greeks ratify the deal, and the FED stays dovish about not raising rates too quickly – then the market could add a few hundred points in short order. 
-       And if the Greeks ratify the deal, but Ms. Yellen talks a little tougher about raising rates – then we could trade sideways and choppy.

So for this week we are trading day-to-day.  The market has made new highs; let’s see if the market can hold onto them.


TIPS:

J.P. Morgan (JPM) and Facebook (FB) both pinned for us on Friday – creating quite a windfall.  This means that based upon the market direction, option buying volume, etc. – that JPM and FB both ended the day exactly on the share prices that I had predicted.  Congrats to all of you who were with me on those two trades.

Below is a chart of the ‘technicals’ for the up-coming week:


A couple thoughts for next week:
-       Dominion Resources (D) – looking at buying the MAR +72.5/-77.5 Call Debit Spread,  
-       3-D Printing (DDD) – looking at buying the MAR +30/-28 Put Debit Spread,
-       Dr. Pepper (DPS) – looking at buying the MAR +75/-80 Call Debit Spread, 
-       Amgen (AMGN) – looking at selling the MAR -145/+140 Put Credit Spread
-       Nike (NKE) – as earnings are coming up in March, I’m looking for a move higher,
-       Devon Energy (DVN) and Marathon Oil (MRO) – as energy finds a bottom, a move higher could be in the cards, and 
-       FDX (FDX) – as this stock lies dormant – the idea of selling an Iron Condor is intriguing.

I’m still using the market volatility to sell into, and I wouldn’t be surprised to see a market pull back early in the week due to the market’s irrational exuberance surrounding the Greek situation on Friday.  Some of my holdings going into the week are as follows:
-       CF – MAR – BUY the +310/-315/+325 Call Butterfly, along with the +280/-290/+295 Put Butterfly – both for Credits.  That’s right – you will ‘get paid’ for buying this pair,
-       IBB – MAR – BUY the +345/-350/+360 Call Butterfly, along with the +300/-310/+315 Put Butterfly – again both for Credits.  Again getting paid for buying this pair,
-       KR – MAR – BUY the +72.5/-75/+80 Call Butterfly,
-       CP – MAR – SELL the +170/-175 to -200/+210 Iron Condor,  
-       RUT – MAR – SELL the +1040/-1050 to -1270/+1280 Iron Condor,
-       RUT – MAR – BUY the +1130 / -1200 / +1260 Call Butterfly,
-       SPX – MAR – SELL the +2050/-2055 to -2125/+2130 Iron Condor

To follow me on Twitter.com and on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there!

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, R.F. Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual stock trades - and see more of his thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is the handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0


To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/> 
Until next week – be safe.

R.F. Culbertson
<http://rfcfinancialnews.blogspot.com>



Sunday, February 15, 2015

This Week in Barrons - 2-15-2015

This Week in Barrons – 2-15-2015:

















"Me? I don't have a money problem. Now my creditors, THEY have a money problem" … Willie Nelson


Thoughts:

Dear Ms. Yellen:

This picture reminds me of the old adage, "If you owe the bank $1,000, YOU have a problem.  If you owe the bank $1 million, THEY have a problem."  
Willie Nelson was known to have enormous debts, and one day (when a reporter asked about them) he replied: "Me? I don't have a money problem. Now my creditors, yeah – they have a money problem."  Along the same lines, I’m concerned: Does anybody really pay their bills anymore?

For example: The IMF (International Monetary Fund), after being worried about the situation in the Ukraine, has decided to grant them yet ‘another’ bail out loan.  Ironically most of the money will go to paying back much of what the Ukraine owes to Russia.  But when will the Ukraine ‘ever’ pay back the IMF?  Greece is still in talks where they are asking the EU to forgive ALL of their debts.  And if the EU does that, who pays back all of Greece’s creditors?  The size of the Greek debt is really unimportant.  What really matters is WHO they owe the money to.  This could be another ‘Lehman’ moment where Greece folds, and the ripples go throughout the banking community and ‘blow up’ (and declare worthless) all of the derivative contracts based upon Greek debts throughout the world.

The more I think about this, it was just last week when the EU told Greece: (a) “We don’t do bridge loans”, and (b) “You have 10 days to tow the line or leave the EU.”  So if the EU does offer a 70-year ‘bridge loan’ to Greece, that means that Greece (a country broken beyond repair) will have shown the EU who is boss. 

I find that paying your bills goes hand-in-hand with telling the truth.  This week the world was notified that Brian Williams (of NBC News) had been placed on an un-paid suspension for 6 months – for various ‘non-truthful’ indiscretions.  The ties between politics and media have become so convoluted that it’s virtually impossible not to touch on a ‘conflict of interest’ wherever you step: For example:
-       Elizabeth Sherwood is the White House Special Advisor.  Ben Sherwood (the President of ABC) just happens to be Elizabeth’s brother.
-       Hillary Clinton’s Deputy Secretary was Tom Nides.  Virginia Mosely (the President of CNN) is Tom’s wife.
-       Susan Rice is the National Security Advisor.  Cameron Rice (the Executive Producer of ABC News) is Susan’s husband.
-       And Ben Rhodes is the White House Security Advisor for Strategic communications.  David Rhodes (the President of CBS) is Ben’s brother.

I’ll stop here, because with these types of connections, dependencies and implications – it’s impossible for any news anchor (Brian Williams included) to deliver you the truth 100% of the time.

Ms. Yellen, with you being a staunch Keynesian (along with the entire Federal Reserve Board of Governors) I realize you view deflation as the greatest threat to our economy.  In fact, your current policies are focused on creating a 2 to 2.5% ‘inflationary’ environment.  You must be frustrated by having to continue: (a) a Zero Interest Rate Policy (ZIRP), (b) buying treasuries and mortgage backed securities, (c) watching the dollar move higher, (d) view our ever-widening trade gap, (e) see our capital inflows weaken, and (f) watch our Consumer Price Index (CPI) contract.  The consumer weapons used to fight inflation are ‘credit’ related; however, the consumer weapons used to fight deflation are ‘cash’ related.  As every nation continues to ‘pass-the-buck’ to every other nation, I’m curious – when are you going to press the ‘re-set’ button?  The reason I asked is that the next time I hear Willie sing: “If you’ve got the money, I’ve got the time” I’d like to know that somebody actually had the money to ‘pay their bill’ and that anybody is consistently telling me the truth.


The Market:

This market is moving based upon three elements: (a) the price of oil, (b) the strength of the U.S. dollar, and (c) the availability of ‘easy’ money.  Historically, no bull market ends without a ‘speculative’ phase.  If 2014 was the bull market that everyone loved to hate, then 2015 will be the ‘speculative’ phase that precedes the ending of the bull market.  This next phase could be very powerful and easily take us from 4,400 to 6,000 on the NASDAQ.  Some signs that I’m seeing for that are: (a) Bonds (TLT) are quickly falling, (b) the U.S. dollar is going sideways to higher, (c) the Yen broke support and is falling, (d) Oil prices are stabilizing and remaining low, and (e) Gold prices are falling.

This week:
-       U.S. Initial jobless claims jumped to over 300k.  Why are 304K people on the ‘first time’ unemployment line – if jobs are so plentiful?
-       Retail sales FELL 0.8%.  Evidently all the money people are saving on gasoline isn't making it into the stores.
-       The Baltic Dry Index (the main ‘shipping’ measure) has hit record lows.
-       Home mortgage applications fell 9%. 
-       Russia was given permission by Cyprus to open a military base a mere 40 miles away from an existing NATO base.
-       Russia (after signing the world’s largest energy deal with China) is now talking with Turkey and Egypt to trade in ‘home currencies’, not U.S. dollars.
-       Germany came out publically against the U.S. saying: "We are NOT on board with sending arms to Ukraine, because arming them will NOT create peace".
-       Marine LePen (the leader of the third largest political party in France) came out and said: “As for the Ukraine, we should not behave like our American lackeys.  The aim of the Americans is to start a war in Europe by pushing NATO to the Russian border.”

Last week the S&P made a new high, with the DOW only a handful of points away from that lofty goal.  There is a possibility that the S&P breakout won't hold; however, the smart money is with the DOW making it over its old highs.  If the DOW manages to get up and over the December highs, that means the Russell 2000 index (IWM), the S&P and the DOW will all be at new highs with NO overhead resistances.  That could indeed cause a short squeeze, and the markets would move considerably higher in a short period of time.   

So watch for the DOW to close over 18,053.  If that happens, then anyone who was shorting that upper resistance area will get scared and buy into this market in a heartbeat – sending things even higher.  But, a single day of all-time highs does not a trend make.  So we need to consider that the S&P could be showing us a false breakout, and certainly any bad news out of the Ukraine or Greece could drop us like a rock.  After all, the world right now is a powder keg, and matches are lying around everywhere.


TIPS:

Google, Twitter, and some of the stocks that previously held the markets back are beginning to ramp-up fairly aggressively.  TLT (the bond indicator) is experiencing some serious selling, and has broken below its 55-day moving average.  I’m looking for TLT to stabilize, but the fact that TLT came down so aggressively is adding more fuel to this stock market rally.  

Below is a chart of the ‘technicals’ for the up-coming week:
  
A couple thoughts for next week:
-       FedEx (FDX) to the long side – ahead of earnings, 
-       Winnebago (WGO) and Nike (NKE) = looking to get long, 
-       Procter & Gamble (PG) has gotten crushed with the strength of the dollar – looking at selling a Put Credit Spread.
-       Apple (AAPL) is a little extended, and selling a weekly Call Credit Spread seems like the right move.
-       Gilead (GILD) is on the move again – and could be a great long candidate.  
-       Styker (STK) along with Merck (MRK) are also looking good to the upside.  

I’m still selling into this market volatility, and don’t be surprised if we see a pull back early in the week – prior to monthly options expiration this Friday:
-       TWTR – FEB – BUY the +46/-50 Call Debit Spread,
-       JPM – FEB – SOLD the +58/-60 to -60/+62 Iron Condor – looking for a pin around $60 this week and therefore also BUY the FEB +58 / -60 / +62 Butterfly, 
-       NFLX – FEB – SOLD the +450 / -455 Put Credit Spread,
-       AAPL – FEB – BUY the +128 / -130 / +132 Butterfly – looking for a pin around $130 this week, 
-       RUT – MAR – SELL the +1040/-1050 to -1270/+1280 Iron Condor,
-       RUT – MAR – BUY the +1130 / -1200 / +1260 Call Butterfly,
-       SPX – FEB – SELL the +1870 / -1875 to -2110 / +2115 Iron Condor

To follow me on Twitter.com and on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there!

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, R.F. Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual stock trades - and see more of his thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is the handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0


To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/> 
Until next week – be safe.

R.F. Culbertson
<http://rfcfinancialnews.blogspot.com>



Sunday, February 8, 2015

This Week in Barrons - 2-8-2015

This Week in Barrons – 2-8-2015:


        

Thoughts:

Dear Ms. Yellen:

On Friday the latest labor report showed that the U.S. created 257,000 jobs in January.  This number exceeded even the wildest expectations.  In fact, December’s job creation number was also increased by 80,000 more jobs, and November’s was increased by over 70,000 additional jobs.  The U3 unemployment rate moved up from 5.6% to 5.7%.  82% of the hiring was accomplished by small and medium-sized businesses, and 86% was in the service portions of our economy.  Those are impressive headline numbers, which would ‘normally’ reflect a roaring economy, but instead are being accompanied by decreased corporate revenue, reduced consumer spending, and lower earnings.

The report continued to show a decline in the labor force participation rate.  Year-over-year we’ve had over 1.1M people leave the U.S. labor force.  The ‘silver lining’ is that companies learned how to shed jobs and increase productivity during the 2008 collapse.  Companies learned that productivity depends upon ‘skilled labor’, and that 20% of your employees will generate 80% of your productivity.  Currently, we do NOT have the skilled labor necessary to fill our employment vacancies.  Obamacare has only amplified this problem as employers are reluctant to ‘take a chance’ on an un-skilled prospect due to the mandate of supplying them with healthcare.  In fact, the largest gain in the workforce (by far) has been in temporary and part-time workers residing below the 30-hour Obamacare threshold.  So although mathematically President Obama has created jobs, in reality companies have turned many full-time employees into part-time and then hired other part-timers to make-up the difference – all to avoid paying for healthcare.

Ms. Yellen, some people think that our nation has a problem with the minimum wage.  Honestly, only 2% of the entire U.S. work force is working for minimum wage.  In fact, the average hourly wage in the U.S. is $25/hour.  The real problem is building a skilled labor force.  The lack of ‘skilled labor’ has caused the real unemployment rate to spike above 9%, and the workforce participation rate to fall like a rock.  Skilled labor is NOT just about college degrees, but also about trades and crafts such as: plumbers, mechanics, and electricians.  Unfortunately, our colleges and our public schools have eliminated shop class, home economics, and other real-world skills – in order to focus on teaching to an SAT or GED test - rather than teaching to supply the economy with skilled labor.   Therefore, until we can increase our supply of skilled labor – we are indeed limited as a nation.


The Market:

Factually this week:
-       The U.S. productivity index fell another 1.8%, 
-       The Challenger Grey report showed layoffs rising 17% year-over-year,
-       The Ukrainian currency fell 30% as their government continued to implode,
-       Denmark cut its interest rate for the 3rd time in a month to -0.75%, and is close to introducing negative mortgages (the bank PAYS YOU to live in a house.)
-       NestlĂ©’s corporate bonds are paying a negative rate.  Which means you have to PAY THEM to loan THEM money.
-       The ISM manufacturing index tumbled to a one-year low as factory orders plunged for the 5th month in a row.
-       Over the past several weeks, more than 20K oil workers have lost their jobs as companies pare their workforces to deal with the drop in oil prices.
-       Markel (of Germany) and Hollande (of France) are going to Russia to talk about solutions to the Ukraine.  Otherwise, the NATO commander is saying that the military option is on the table.  And, the Russian Foreign Minister is speaking at a security conference in Munich – laying out exactly who was and still is responsible for what's happening in the Ukraine.
-       The ECB is playing a game of ‘liars poker’ with Greece.  On Friday, Mr. Dijsselbloem (the Head of the Euro-group) said: "The Greeks have 10 days to apply for a bail out, or leave the Euro".
-       If we calculated our unemployment rate as we did in 1994, the U.S. rate would be 22%.  In fact, the CEO of Gallup (the polling company) went on record as saying: “America's 5.6% unemployment rate is one big lie.”
-       Fundamentally, our financial institutions are exposed to $5.4T in loans and debt from the oil industry.  Remember, a mere 20% of this exposure ($1T in loans and debt from the housing industry) triggered the 2008 Financial Crisis.

Currency wars along with oil prices are providing the catalyst for significant market volatility.  I expect increased volatility as we continue to move deeper into the 1st quarter of 2015.  The Fed is not going to raise rates, and (if anything) will become more accommodative.  The ECB and BOJ will remain accommodative.  The market will move on what happens to the U.S. dollar and oil prices, not because of real economic fundamentals or earnings.  The price of oil has been rising for several days on the idea that the oversupply will end soon due to oil companies cutting back on exploration and drilling.  The thought is that as the supply dries up, the price will increase, and funds are buying oil stocks in anticipation of that event.  I think that a surge in oil related buying would help keep the market from closing below its December lows.

Speaking of a rebound, this week’s market bounce was nothing short of spectacular.  Last Monday we were on the edge of a cliff when the fake Greek headline hit the wires.  The headline stated that the Greek government was reversing its stance on NOT bowing to EU pressure, and ready to toe the line.  Our market gained 800 points in 4 days.

There is a combo platter of volatility out there, and none of it will be solved by Monday.  Trying to call a direction is tougher than usual.  I will revert back to the numbers that have worked in the past. Until we put in a close over 2,064 on the S&P, we still have to consider the idea that we are trapped between January’s low and 2,064.  I think that we will ‘try’ again to break over 2,064.  I also think that the EU will find a way to dismiss all of Greece’s debts in order to have it remain in the Euro-zone.

According to a note from the Goldman Sachs equity strategy team, we’re seeing the most depressing forward guidance in 34 quarters – since the summer of 2007 right before the financial crisis.  Couple that with the fact that markets have been down 12 out of the past 13 weeks following a Friday ‘jobs report’, and you get a nervous market.  On Friday the S&P closed at 2,055 and the DOW at 17,824.  In order for this market to go higher for a sustained period of time, I believe that the DOW needs to be over 17,840 and the S&P over 2,064.  Under those levels on either index simply puts us in no man's land, and makes me nervous about getting long this market in the week ahead.


TIPS:

Navigating the trading day:
-       Do NOT trade in the first 45 minutes of the day.
-       Markets often pop at 11:30am (EST) – when the European markets close.
-       Wall Streeters take their ‘Power Lunch’ between 12:45 and 1:30pm – so ‘the weekend crew’ is manning the desks at that point.  Here is where you can catch some ‘interesting’ reversals.
-       The 2:15pm ‘Bump’ is when the trades discussed over lunch begin to hit the tape.
-       3:30 to 4pm is the ‘Run for the Roses’ and it is truly where and when all the action is, but you must be nimble in order to trade here.

Below is a chart of the ‘technicals’ for the up-coming week:

















For next week I’m mainly selling into this increased volatility with:
-       AMGN – MAR – SELL the +140/-145 PCS,
-       CP – MAR – SOLD the +155/-160 to -200/+205 Iron Condor,
-       RH – FEB / MAR – BUY the Call Calendar FEB -90 / MAR +90,
-       RUT – MAR – SELL the +1040/-1050 to -1270/+1280 Iron Condor,
-       RUT – MAR – BUY the +1130 / -1200 / +1260 Call Butterfly,
-       SPX – FEB – SELL the +1870 / -1875 to -2110 / +2115 Iron Condor, and
-       TLT – MAR – BUY +131 / -138 Call Debit Spread.

To follow me on Twitter.com and on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there!

Disclaimer:
Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, R.F. Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

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Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

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Until next week – be safe.

R.F. Culbertson
<http://rfcfinancialnews.blogspot.com>