The Day Frequency Traders, Institutional Traders, Mayan Calendar, and Day Traders Were All in Sync

It was a Friday, December 21, 2012 and it was a day that changed the world, which happened to coincide with the last day of the Mayan Calendar, traditionally understood by the ancient Mayans as a transitional period, to what, no one in the present period really knew, just that it was to be profound. And, not to burst anyone’s bubble it certainly was all of that and more for the US Stock Market. Did that make it any easier for anyone who lost their life’s saving that day as nearly 8 trillion dollars evaporated from the market? Certainly not, agreed the guest commentary on CNBC at the Closing Bell with Maria Bartiromo.Well, hindsight is 20/20 as they say, and this day was coming, and nearly 25% of Americans thought that it might be the end of days, apocalypse, or Armageddon. The number of short-sellers had the Dow opening down -303 points, which was bad enough, to make matters worse, most short-term traders were not leaving any money in the market over the Christmas Holidays, things were just too choppy, the volatility index was already at its highest point since the Debt Deal Impasse, S&P Downgrade, and the near collapse of the EU banking system in summer of 2011. With Quadruple-Witching, and end of year tax loss selling, the market was already getting hammered all week.On what many hoped would be a light trading day due to the holiday weekend, it was rather odd all the short-sellers coming out of the wood-work as they did. After all what’s that old Wall Street quote; “Never Short a Dull Market!” Well, it may have been assumed to be a dull-day, however it was anything but. After all, this was the end of the world, the Mayan Calendar had run out, and to make matters worse, there were four X-Flares of extremely high power the weeks prior; 2 of which hit Earth directly, one in November and one just the week before the catastrophic sell-off.The November solar flare took out the North Eastern US Power Grid, half of AT&Ts network, and many communication satellites used for credit card transactions at C-Store Gas Stations, Restaurants, and even Wal-Mart on Black Friday, which happened to be the biggest shopping day of the year. Online Retailers were zapped too, data centers, cloud computing, all challenged. About half of all the systems were up by the end of the day, but consumer sales for America’s largest corporations were now a day late and a dollar short.With these solar disruptions there was damage to the Space Telescope, ISS, and even military satellites, although the US Military, actually militaries from around the world denied anything had been taken down, pure posturing, but that’s to be expected. Folks were on edge, and many had wondered what the Mayans knew, and why now. For all these reasons everyone was shorting the market, and the institutional investors were betting down the market big time, and when the trading started so too did the high-frequency trading or algorithmic computational trading systems.Europe had banned short selling of their bond markets, currency markets, and just recently; “No High Frequency Computer Trading!” Europe and Asia got hit pretty hard and the US markets hadn’t opened yet, but when they did, holy hell, the volume of trading in the US hit a one-day record amount within the first hour, it was all over the place. The market hit the stops, one after another all day long. Wouldn’t you know it, Mexico City had a 7.5 Earthquake just 35-miles away at 10 AM their time the same day. Was this really the end? Or was it all an excuse for the computer trading systems to make trillions slamming the market into oblivion?There had been talk in the US about regulating or banning high-frequency trading all together in the US, and the Franks-Dodds Bill which had passed actually protected the “too big to fail banks,” all of which were making money on algorithmic trading, rather than loaning money to small businesses. The President got on TV to tell everyone that it was going to be okay, the world wasn’t coming to an end, and to hopefully calm markets, it didn’t work, in fact, it may have done just the opposite. Then the new Treasury Secretary got on CNBC, no changes either the market was falling like a rock still.The Federal Reserve Chairman was in-route back from G-8 Summit, unable to be interviewed, as soon as he landed he gave a question and answer meeting. All the financial media pundits said he was in full-combat crisis mode. That just made things worse, when regular investors heard that. Gold hit a new all-time high. Yes, it was the day from hell on Wall Street one which will go down in the record books, but the world didn’t end, and the market gained back a third of what it lost that day during the next two-trading days after the holidays. By the last day of the year, the market had recovered all but 800 points on the Dow, and then the January barometer recovered all that and more.The US Congress came back from holiday recess, vowing to fix this flash-crash, high-frequency challenge once and for all, but the banking lobby had made 100s of billions by then on both the downside and the upside of all that volatility. Was there a solution to prevent this from ever happening again? Apparently so, and there was a think tank which had a concept of viewing every single global transaction in real-time, using holographic imagery, supercomputers, and the new Intel chip running Oracle software, and IBM’s new spectral imaging.Basically how the system worked is that it was the size of a ping-pong table, and it showed the money flows in different colors transversing the map of the United States. The operator could click on different countries or all the countries at once, or isolate the system for currency trades in any of the major currency and view it in real time. Some of the same high-frequency trading software engineers would help build the system, and it could be controlled just as the Federal Aviation Administration could control the flow of airline traffic, viewing every single individual flight as it occurred.The system was brilliant, and it worked, not only could it be used for tracking money flows, but it could also be used for watching and predicting the weather, observing the spread of influenza during flu season, and even monitoring our power grid. It was a system to monitor all the flows of civilization using net-centric warfare computational theory X’s ten to the tenth power.Only one problem, the system, plus terminals was going to run in the neighborhood of $30 million. The terminals and systems would have redundancy, and when the markets were not running, the supercomputers would be used for something else, including controlling all the Internet traffic from the major data centers coming into the US to prevent cyber attacks from foreign rogue nations.The Senate passed the bill unanimously, and there was only one no-vote in the House of Representatives. The president signed the bill within 15 minutes of it reaching his desk, with the promise that Intel, IBM, Oracle, and several other vendors would have the system up and running in less than four months, and that they could only hire Americans to build the system. Apparently, this just proves there is opportunity in crisis, if only the Mayans would’ve known.

What the Success (Or Failure) Of Black Friday Means For Stocks

As you know, the day after Thanksgiving is a short trading day in the market. For retailers all over the United States today is one of the longest days of the year. This day is affectionately known as “Black Friday.” It received this name because it represented the kick-off of the holiday shopping season, a time in which most retailers generated a significant portion of their profits.Other real estate statistics support these thoughts as well. Foreclosures are at multi-year highs, prices are falling, inventory is rising, and permits for new home construction are reaching new lows. Clearly the real estate market is suffering. Just take a look at the Dow Jones REIT index which is down almost 25% from its high earlier this year.This holiday season Americans are expected to spend upwards of $475 billion according to The National Retail Federation (NRF). More than $24.6 billion will be spent on-line with another $25 billion spent in the form of gift cards. With that much money trading hands in such a short period of time the importance of today and the rest of the holiday season becomes quite obvious.If retailers post poor results for Black Friday it signals a start of a weak holiday shopping season. The strength of the holiday shopping season is closely tied to the success of retail companies in the stock market. We need to watch the results for these retailers very closely.Wal-Mart (WMT), and J.C. Penny (JCP) have already warned about slowing sales growth this holiday season. Other retailers have followed suit. Terry Lundgren, Macy’s chairman, president and CEO, said they were in a “challenging economic environment.” He also suggested that their fourth quarter same store sales might show as much as a 2% negative growth rate.Obviously there is some fear in today’s retail market already. Look at the Retail HOLDRs ETF (RTH) which tracks the top 20 leading retail companies. In the last 6 months alone, the index has fallen almost 12% and is now near a new 52-week low.We will get confirmation of the success or failure of Black Friday in a few weeks. This will come when the large retailers start announcing same store sales for the month of November.Now here is what the newspapers and the press are glossing over.Within the retail group, there are a few who are bucking the general downtrend in the market. Retailers who focus on consumer electronics might have a more positive outlook. According to The National Retail Federation (NRF) more than 50% of consumers are asking for electronics related items like CDs, DVDs, videos, and video games. More than 36% are looking for consumer electronics or computer-related items under the Christmas tree.It is hard to argue with the success that some consumer electronics products are having. It seems like everyone wants the new iPhone, iPod, big screen HD-TV, HD-DVD player, or even game counsels like the Wii or the X-Box. I know I have almost all of those items on my own wish list.Healthcare REITs are more closely tied to the state of the healthcare industry than the real estate industry. They have very stable operations and a good long term outlook- yet have been rejected by the investing community.Here is a perfect example:In my opinion, the most likely retailer success story will be Best Buy (BBY). Their combination of leading edge consumer electronics, competitive prices, and strong customer service will no doubt pack the stores today and beyond.

Home Mortgage Refinancing 2010-2011: 5 Key Facts to Know Before You Refinance

To the average consumer, lower interest rates generally mean a reason to refinance. But not many people know that these rates are inversely correlated with the stock market. Hence, as long as the stock market is down, interest rates will continue to remain low. Accredited investors take advantage of an efficient market. Well, how do you take advantage of a down market? The following five facts are a must read for anyone looking to refinance their current home mortgage in 2010-2011.

The Home Appraisal Scenario: The number one reason I see nowadays of home refinance loans being rejected is that the appraisal of the clients home didn’t come back up to par. Basically, for lenders to refinance your home, your loan to value ratios must be 80% or better. This simply means that you must have at least 20% equity in your home. Otherwise, lenders will not refinance your current mortgage.
Choosing the Right Lenders: There are hundreds of lenders who would love to have your business. Make sure that you SHOP your loan scenario around. The most effective way to do this is to contact a mortgage broker who has contacts with hundreds of lenders, as they will be your best bet to attaining the best rate. These professionals will fight for your business and help you throughout the entire process
Digging up your Documents- Make sure you have all necessary documents before you shop around for our loan. This includes a copy of your current mortgage statement, HOA documents, your last two pay stubs, your last two years of tax forms, verification of employment forms, and a copy of your social security and ID cards. If you don’t have these items, it will be impossible to refinance your home loan
Choosing the Best Rates- The most sensible rates out there for “refi-ers” are for 30 year fixed programs. These rates are at all time lows and it makes sense to get locked before rates rise. Did you know that the rates for a 10 year fixed are the same for a 30 year? You should get yourself locked in and consider it a wise investment that will yield you dividends in the form of savings for many years to come
Paying No Closing Costs- Have you heard of a “no cost refinance.” Well, some mortgage brokers will charge you absolutely nothing if the rates are right. You can negotiate yourself into a no cost refinance but it will cost you the best possible rate. It is advised that you run the numbers with your friendly neighborhood mortgage broker and find a scenario that best suits your needs.So, before you consider refinancing, please check the value of your home. Make sure to choose the right mortgage broker who has contacts with various lenders. Also, make sure to dig up your past documents and opt for the best rate and terms available. And lastly, shop, shop, shop for a no-cost refinance. Paying $0 for a refinance is beautiful. We can make it a reality. Please see our website and we can walk you through the refinance process and help you with all five steps listed.