This past Thursday, I held a webinar, "Futures Trading: An Insider's Guide to E-Minis,"  for several hundred Tycoon Report readers.  I want to thank Tycoon Research for hosting the event and those of you who attended. 

Does Bernie Madoff Want to Trade Futures?

There were literally thousands of questions asked -- far too many for me to answer within the allotted time.  If I didn't get to your question, I apologize.  The questions were running by so fast, it was hard to focus on any one. 

This week I wanted to tackle some of your top questions on trading futures. But first, I have to say that, by far and away, the question asked that received top honors was, "Can I trade if I am in prison?"  (It was unclear whether the person was on the way to prison or already there.)

It just goes to show that word is getting around about how easy and potentially profitable it can be to daytrade futures!

Is the Market in Control, or is it Controlled?

There was one thing I learned last week that I found most interesting.  I have been writing for The Tycoon Report for months.  Except for some great comments on the Web site, I had no idea whether or not anyone was reading the articles.  Well ... I found out in the webinar, when attendees were quoting from articles I had written and asking specific questions.

One point that I think left most attendees spellbound was when I discussed just how controlled the market really is.  During the webinar, I showed a chart for Tuesday and Wednesday, when the market went up and went down and ended up exactly at the same place. 

This is powerful information, so I want to be sure to share it with everyone today. So, let's expand on that chart.

Here's a chart for the entire past trading week, Monday through Friday. 

                        


The S&P 500 started at 1,006.50 and ended at 1,006.50.  How is that possible?  We went down considerably; we went up considerably.  We ended exactly where we started.  Can you spell range-bound? (Am I the only one who happens to notice these things?)

If you think that this a coincidence, I have a Brooklyn Bridge to sell you.  (Sorry ... I already sold the San Francisco Golden Gate Bridge.)

You Can Start Trading Futures Today

Clearly, trading stocks in a range-bound period is not lucrative.  But with intraday volatility, day-trading E-Mini futures can be very rewarding.

The other point that I made in the webinar, and I want to stress here again, is that trading E-Mini futures does not require your entire portfolio.  In fact, you can open an account with a small amount, say $2,500.  Just get your feet wet.  After becoming consistent on a trading simulator (before you start putting real money to work), you can start trading live with one contract for $400. 

Many of you did not believe that you could start trading with $400.  Perhaps you are at a brokerage that requires more than $400 a contract.  Then find a new brokerage.  Don't be shy about finding the right place to trade.

It is your right -- and your duty -- to contact potential brokerages. Call each and every one.  Talk with them.  Find one that you will get a warm-and-fuzzy feeling about. 

Ask them about their margin rates, their commissions and, most important, their support.  Come the day when your Internet connection goes down and you want to get out of a trade, you want to know that there is someone on the other end of the telephone to let you out of your trade.

In the webinar,  I heard mention of various data-feed / charting expenses being paid monthly.  For the futures market, you can get this data for free.  That can translate into a $150-to-$200-per-month savings all by itself.  Yet another reason to day trade E-Mini futures and get out of the world of stocks.

Why Trade Futures Now

Perhaps the best reason I know for taking a small amount of money, opening a futures account and trading E-Mini futures is because, right now, it is unclear how soon the economy is going to recover.  That includes the job market and the housing market. 

Yes, the stock market is recovering quickly, but the reality is that the smaller investor was butchered last year. So far this year,  the smaller investor hasn't really participated in the run back up, due to lack of resources and overall lingering fear.

Last week, we saw retail sales and consumer sentiment both take a hit.  Core retail sales, especially as it is "back to school" time, were expected to rise to 0.2 but came in at -0.6.  Consumer sentiment was expected in at 69, having risen to 66 last month.  Unfortunately, it came in at 63.

Both figures show a major setback in the consumer's participation in the economic recovery.

And unemployment claims this week also were a setback for the economy.  Analysts had expected unemployment to creep down to 545,000 but instead the figure shot up to 558,000.

This past week, we saw also some other economic data that does not bode well for a quick economic turnaround.  Both wholesale and business inventories are way down.  Why? Because no one is buying anything, so businesses are not building anything.  Nor are businesses stockpiling materials to make anything. 

This does not help the job situation.

And productivity was up.  Good for business ... bad for employment. 

Companies are finding they can do just as well without additional labor and still make their targets.  In manufacturing, productivity was up 5.3% (3.9% durable goods and 2.0% non-durable goods).  Yet, hours worked in both durable and non-durable sectors were down.  That means, going forward, no new jobs being created.

For this reason, learning to trade the E-Mini futures market gives you a chance to make some cash.  Create your own business -- a business where you cannot be outsourced, you cannot be fired, you won't need employees, you won't need a storefront, you won't need to spend thousands on advertising, and your startup costs can be $2,500 in trading capital and a $500 computer.

With all these great reasons to start trading futures, if you haven't yet taken the plunge, what's stopping you?





Barbara Cohen
Chief Investment Officer
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TUESDAY, AUG. 18

8:30 a.m. Housing Starts and Building Permits

    * Importance (A-F): This release merits a B-.
    * Source: The Census Bureau of the Department of Commerce
    * Release Time: 8:30 a.m. Eastern around the 16th of the month (data for one month prior).
    * Raw Data Available At: http://www.census.gov/const/www/newresconstindex.html

Housing Starts are a measure of the number of residential units on which construction is begun each month. A start in construction is defined as the beginning of excavation of the foundation for the building and is comprised primarily of residential housing.

Building permits are permits taken out in order to allow excavation. An increase in building permits and starts usually occurs a few months after a reduction in mortgage rates. Permits lead starts, but permits are not required in all regions of the country, and the level of permits therefore tends to be less than the level of starts over time.

Highlights

    * Starts for the June period rose 3.6% from May to an annualized rate of 582,000 (consensus 530,000) while permits increased 3.0% to an annualized rate of 563,000 (consensus 524,000).  Housing starts for May were also revised up to 562,000 from an originally reported 532,000.

    * The June number brought the Q2 average to 541,000 versus the first quarter average of 528,000, so this report can be construed as a positive factor when contemplating Q2 GDP estimates.

Key Factors

    * It's a real stretch to call the June report a strong report when you stop to consider that starts were running at nearly a 1.08 million annualized rate in the year-ago period.

    * An increased level of starts isn't exactly what the housing market needs given the excess supply of existing homes for sale.  That consideration is perhaps why the market had a fairly muted initial response to this better-than-expected economic news.

Big Picture

    * Housing starts are at extremely low levels and the outlook is not likely to improve anytime soon due to high levels of inventories of unsold new homes.  An uptrend in construction will require an improvement in employment and income, and then take some time as inventories need to be reduced.  Government action to boost mortgage lending may also help, and starts might stabilize in the second half of the year.


8:30 a.m. PPI: Producer Price Index

    * Importance (A-F): This release merits a B-.
    * Source: Bureau of Labor statistics, U.S. Department of Labor.
    * Release Time: Around the 11th of each month at 8:30 a.m. Eastern for the prior month.
    * Raw Data Available At: http://stats.bls.gov/news.release/ppi.toc.htm

The Producer Price Index measures prices of goods at the wholesale level. There are three broad subcategories within PPI: crude, intermediate and finished.

The market tracks the finished goods index most closely, as it represents prices for goods that are ready for sale to the end user. Goods prices at the crude and intermediate stages of production often provide an indication of coming (dis)inflationary pressures, but the closer you get to crude goods, the more that these prices track commodity prices which are already available in traded indexes such as the CRB (Commodity Research Bureau).

At all stages of production, the market places more emphasis on the index excluding food and energy, referred to as the core rate. Food and energy prices tend to be quite volatile and obscure trends in the underlying inflation rate.

Highlights

    * Total PPI increased 1.8% in June (consensus 0.9%), driven by a 1.1% increase in food prices and a 6.6% jump in energy prices.

    * Core PPI, which excludes food and energy, was up 0.5%.  That was higher than an expected 0.1% increase.

Key Factors

    * This PPI report won't sit well for inflation hawks, who will take added notice of the 1.9% increase and the 4.6% increase in the indexes for intermediate goods and crude goods, respectively, that will create concerns about pipeline pressures.

    * Some of that concern about pipeline pricing pressures should be mitigated by the recent pullback in oil prices and the prevalent understanding that pricing power is still weak on account of generally weak end demand.

Big Picture

    * PPI trends were highly volatile in 2008, mirroring the trends in global oil prices.  Falling global commodity prices and weak economic demand will keep inflation in check at the producer level.  If global economies remain weak in 2009, as is widely expected, inflation at the producer level will be insignificant.  There may even be concerns about global deflation.


THURSDAY, AUG. 20

10 a.m. Philadelphia Fed Index

    * Importance (A-F): The Philadelphia Fed Index merits a B.
    * Source: The Philadelphia Federal Reserve bank.
    * Release Time: Third Thursday of the month at 10 a.m. Eastern for the current month.
    * Raw Data Available At: http://www.phil.frb.org

There are many regional manufacturing surveys, and they tend to be ranked in order of timeliness and the importance of the region. The Philadelphia Fed's survey is first each month, actually coming out during the third week of the month for which it is reporting. Several smaller surveys are then released before the Chicago purchasing managers' report on the last day of each month.

These surveys can be of some help in forecasting the National Association of Purchasing Managers data -- particularly the Philadelphia and Chicago surveys, which are more closely watched due to their timeliness and the fact that these regions represent a reasonable cross-section of national manufacturing activities.

Highlights

    * The Philadelphia Fed Index didn't live up to expectations.  A reading of -7.5 was worse than the consensus estimate of -4.8 and down from the June reading of -2.2.  The dividing line for this report between expansion and contraction is zero.

    * Strikingly, the six-month outlook for general business activity dipped to 51.9 from 60.1 in June.

    * New orders (-2.2) edged in the right direction from a -4.8 reading for June, yet they still haven't tipped into an expansion phase.  Shipments, meanwhile, titled back to a contraction reading at -9.5 versus 2.1 in June.

    * The remaining component indexes for July broke down as follows, with the June reading in parentheses: prices paid -3.5 (-13.0); prices received -21.5 (-16.6); unfilled orders -14.6 (-19.6); delivery time -10.3 (-18.9); inventories -15.4 (-15.3); number of employees -25.3 (-21.8); and average workweek -15.5 (-26.6).

Key Factors

    * The July reading for the six-month outlook is still comfortably above the 37.7 six-month average, yet the pullback speaks to the increasing reservations about the pace of recovery in the face of a continued rise in unemployment.

    * Although there was some improvement in some of the component indexes within the report, the one thing that sticks out is that there wasn't a single, positive number among the components.


Source: Briefing.com