It was a pretty boring morning, news-wise.  Can’t have everything, right?

from Tiernan Ray at barrons.com:

Deflation strikes again.

Following on a surprise dip in producer prices yesterday, the prices people are paying at the cash register fell in February, on average, it turns out this morning, based on data from the Bureau of Labor Statistics.

The Consumer Price Index was unchanged in February from January, the Bureau reported, whereas economists had been expecting a 0.1% increase across the board.

With food prices rising “slightly” and energy prices dropping. Energy dropped half a percent, food rose 0.1%, and all other items rose 0.1%. Specifically, used cars rose 0.7%, medical care rose 0.4%, while apparel was off 0.7%.

Somewhat less concerting, initial claims for jobless insurance for the week ending last Friday fell by 5,000, to 457,000, though that was slightly higher than the 455,000 observers had been expecting, the Bureau reported this morning.

S&P 500 futures were up 1.3 points for the March contract, at 1,162.30.

The dollar’s strengthening this morning, rising to $1.3672 per Euro from last night’s closing cross of $1.3741.

And commodities have weakened, with futures on light sweet crude oil for delivery in May down 43 cents at $82.78 per barrel, and April futures on gold up $1.40 at $1,125.60 per ounce.

This setup is truly amazing!

By Chris Isidore, senior writer March 16, 2010: 2:39 PM ET

NEW YORK (CNNMoney.com) — The Federal Reserve left its key interest rate near 0% once again Tuesday and said rates should stay this low for the foreseeable future.

Fed policymakers repeated their prediction that economic conditions are likely to result in “exceptionally low levels of the federal funds rate for an extended period.” That promise of an easy-money policy has been in place since March 2009.

Some economists, including Kansas City Fed President Thomas Hoenig believe the Fed needs to drop that promise. Hoenig voted against keeping this language in place for the second straight meeting. He and some Fed critics worry that the central bank could be creating new bubbles in financial markets by keeping rates so low for such a long time.

The so-called fed funds rate, a benchmark that determines the interest paid by consumers and businesses on a wide variety of loans, has been near 0% since December 2008, as the central bank worked to spur greater lending and economic activity.

Besides low interest rates, the Fed has pumped trillions of dollars into the U.S. economy over the last two years through the purchases of mortgage-backed securities, long-term Treasuries and special lending programs.

Most of those programs are at or near an end. The Fed said it is close to completing its planned purchases of $1.25 trillion in mortgage-backed securities which it started in November 2008. It has long targeted the end of the first quarter for the completion of this program.

Some economists are worried that mortgage rates will start to rise once the Fed is no longer buying mortgages. The Fed did note that despite some signs of a recovery in the U.S. economy, “investment in nonresidential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls.”

The Fed also warned any improvement in the economy is “likely to be moderate for a time.” It also said there is no threat of inflation in the near-term.

The central bank has a dual mandate to promote economic growth and keep prices pressures in check. If the Fed was worried about inflation returning, it could be forced to raise rates or withdraw some of the cash it has pumped into the economy sooner rather than later. To top of page

via Fed: Low rates will continue – Mar. 16, 2010.

Lots of people ask me this when I tell them we trade futures contracts.  They assume they might be like stocks.  However, they are pretty different. A futures contract is a standardized contract to buy or sell a specified commodity of standardized quality at a certain date in the future and at a market-determined price (the futures price). The contracts are traded on a futures exchange. Futures contracts are not “direct” securities like stocks, bonds, rights or warrants. They are still securities, however, though they are a type of derivative contract. Understanding  the origin of futures contracts certainly helps to explain what they are:

The Dojima Rice Exchange in Osaka, Japan c. 1914

Aristotle described the story of Thales, a poor philosopher from Miletus who developed a “financial device, which involves a principle of universal application.” Thales used his skill in forecasting and predicted that the olive harvest would be exceptionally good the next autumn. Confident in his prediction, he made agreements with local olive-press owners to deposit his money with them to guarantee him exclusive use of their olive presses when the harvest was ready. Thales successfully negotiated low prices because the harvest was in the future and no one knew whether the harvest would be plentiful or poor and because the olive-press owners were willing to hedge against the possibility of a poor yield. When the harvest-time came, and many presses were wanted all at once and of a sudden, he let them out at any rate he pleased, and made a large quantity of money.

The first futures exchange market was the Dōjima Rice Exchange in Japan in the 1730s, to meet the needs of samurai who – being paid in rice, and after a series of bad harvests – needed a stable conversion to coin.

Hopefully, this helps to explain what we trade.  For more information, attend a live seminar near you, a Thursday evening 7 pm MDT webinar or check with us.  We can email you links to videos or send you a DVD.  Remember, Market Mover Trading only exudes pressure on the market; never pressure on you!

The S&P futures are tacking onto yesterday’s encouraging performance despite sluggish econ data from the EU and UK.  The S&P futures are also ignoring strength in the Dollar and appear to be on a trajectory of their own these days.  Meanwhile, the futures are creating further separation from their highly psychological 1100 level.  Confidence is gaining in America’s economic recovery, particularly in comparison to the EU and UK.  However, uncertainties are still hanging around the globe, particularly in Europe.  On a positive note, the RBA decided to raise rates again today, a show of confidence in the global economic recovery.  On the other hand, China’s banks made a large cut in lending during the month of February, and it remains to be seen whether tightening in China will dampen recoveries around the globe.  Market volatility could pick up tomorrow with the U.S. releasing its Services PMI and ADP Non-Farm Employment Change data.  Investors are already trying to soften the blow from a potential letdown in employment data because of adverse winter weather conditions.  However, tomorrow’s data points could have considerable influence nonetheless.  The UK will also release its Services PMI data along with an HPI figure, preceded by Australian GDP during the Asia trading session.  Hence, there will be more than enough data to move markets tomorrow, not to mention ECB and BoE policy meetings on Thursday.  That being said, market activity could increase as the week progresses.  Meanwhile, the S&P futures have taken down some key barriers, although they still face our 3rd tier downtrend line.  Our 3rd tier downtrend line nearly runs through 2010 highs, meaning a more significant breakout could be on the horizon should fundamental and psychological developments create favorable environment for U.S. equities.

Thanks to Fast Brokers News.  Tomorrow should be a fun trading day!

Every Friday, during the Market Mover Trading Training Call at 10 am MST, we get together at the Holiday Inn Express in Castle Rock.  Today, we came in early to watch an Infinity AT trading platform demo.  Then, MMT training class, where Sean and Jason taught us the newest MMT Strategies and Tools.  To round out, Zach Huyge gave MMT Traders a presentation on Social Media.

Are those some good looking heads, or what?

So, on top of a morning that brought us Initial Unemployment Claims that were 31,000 higher than expected (496,000 vs. 465,000), we then received more great (lol) news on MMT’s proprietary News Server.  This News Server is incredible; we get new news instantly.  Sandra Pianalto, the chief executive of the Cleveland Reserve Bank, stated that the “mortgage modification process has been more difficult than anticipated.”  After we recovered from peals of laughter, since any mortgage professional worth his or her salt could have told anyone who was listening two years ago that modifications were not going to get done at the level for which the Fed was pushing, we saw the futures market immediately take a 5 point plunge on that news.  We sold short.  Again, news doesn’t need to be happy for it to benefit Market Mover Traders!  The MMT News Server is a fabulous tool and my favorite in our MMT arsenal.

FEBRUARY CONSUMER CONFIDENCE SLIPS TO 46.0 FROM 56.5, PRESENT SITUATION INDEX FALLS TO 27YR LOW

The Conference Board Consumer Confidence Index dropped almost 11 points to 46.0 for the month of February from 56.5 in January. The February decline reflects the first monthly decline in three months. The February Present Situation Index fell to 19.4 from 25.3 in January. The Present Situation Index fell plunged to 63.8 from 77.3 in January.

The graph to the left shows the initial drop in futures on the e-mini S & P.  I was able to sell short and snag 6 points (60% return) on this drop.  The futures market then dropped furtherwithin 33 minutes of the news release.  Any news is good news for Market Mover Traders!!

Conference Board Consumer Research Center Director Lynn Franco says:

“ Concerns about current business conditions and the job market pushed the Present Situation Index down to its lowest level in 27 years. Consumers’ short-term outlook also took a turn for the worse, with fewer consumers anticipating an improvement in business conditions and the job market over the next six months. Consumers also remain extremely pessimistic about their income prospects. This combination of earnings and job anxieties is likely to continue to curb spending.”

6.2% described conditions as ‘good’ in February from 8.5% prior
46.3% described conditions as ‘bad’ in February from 44.7% prior
47.7% described jobs as ‘hard to get’ from 46.5% prior
16.7% expect conditions to improve over next 6months from 20.7% prior
15.3% expect conditions to worsen over the next 6months from 12.7% prior
24.6% see fewer jobs available from 18.9% prior

Thanks to Craig Ross with Infinity Futures Brokerage, who wrote the following article.  I use and recommend the Infinity AT platform.  With Infinity Futures, your orders always rest *on* the CME.  If you would like to give Infinity AT a try, contact Craig (his contact information is at the end of this article) for a free 4 week demo.

You have been using our Infinity AT platform in the simulated trading mode for the past couple of weeks which has hopefully given you a good idea of all of the great features our platform has to offer as well as how well you might expect to do in real live trading. In order to replicate real world trading as best as possible treat your simulated trades like they were in your real account: use realistic stops, trade the same number of contracts you will be trading in your real account, use the same strategies you plan on using in the real market, etc. Of course you can use the a simulator to experiment with, but once your experimenting is out of the way and you have your strategy down, stick to it over an extended period of time to see how it works.

While this practice is essential, the major difference is that you do not have the true psychological component of trading taking effect, which is the fear and greed associated with trading when you are risking real money. Many traders tend to gloss over this seemingly unimportant aspect of trading, but after you have your trading methodology down, I recommend you read (and follow) a book on the psychology of trading to get your mental state in order, also. Taking a loss when your stop order is hit doesn’t hurt as bad when it is just play money, but will you be able to place that stop loss order and let it get hit when real money is at stake? Likewise, letting a winning trade run isn’t too hard in simulation mode, but will you have the tendency to get out too early and book a small profit when it is the real deal? Make sure you are psychologically prepared to stick to your strategy and trading plan when your human emotions try to take over.

Once you think you have your trading methodology down and are mentally prepared to trade your hard earned risk capital it makes sense to start out small. Just like a pilot will train on a computer simulator for hours and then take the wheel of a real plane, they still need to solo practice in the air without passengers before they become reliable enough to be trusted with the lives of others. In other words, in the beginning you don’t need to trade as many contracts, as you might eventually do once you are confident with how your real trading has been progressing. When you decide to enter the real world of trading with a live account start out slow as you may find there are some additional emotional obstacles and trading mistakes that you need to get over or make adjustments for.

Beware – Some simulated trading platforms are designed to be easier than real life trading especially when it comes to limit orders, which will give you a false sense of security. For example, these platforms fill your limit orders even if the limit price is hit just once, which is not indicative of what you will experience in real trading. In electronic futures trading, limit orders are filled on a “first come, first served” basis, meaning if there are currently 600 contracts trying to sell at 855.50 and you place an order to sell 5 at 855.50, 600 contracts need to get filled before you start to get filled. So depending on how many contracts trade at each 855.50 tick you may need to see several ticks at that price before your order is filled, in fact 605 contracts have to trade at 855.50 before all 5 of your contracts are filled.  Our Infinity AT platform actually waits until the market trades through your limit order, in this case 855.75, before it will report a fill to you therefore, making it harder than real life trading in this regard. We would rather make this filling of your simulated limit orders harder, so you are prepared for the worst case scenario that will occur sometimes in the real trading environment.

Please feel free to call or email me if you have any additional questions on this subject.

Craig S. Ross
InfinityFutures.com
111 W Jackson BL, #2010
Chicago, IL 60604
800-322-8570
312-373-6250
Fax: 312-373-6256
ross [at] infinityfutures.com

Join us tonight for a informational webinar.  It’s short; just about 30 minutes, and everyone is muted except for the presenters to keep things on track.  You can submit your questions to Jason and Sean with a built-in IM feature.

Jody traded the news this morning.  Jason and Sean marked this as a High Impact trade and boy was it ever!  We had a friend over to watch the trade and Jody took just 1 point (10% return) because he was explaining a lot to our guest.  Took about a minute and a half.  We ate breakfast, had more coffee, and then he traded the next announcements, both Medium Impact  news and took another 1.25 points (12.5%).  This was a few hundred dollars profit for about 20 minutes of total work.  No charts, no studying, just the best trading system in the world (bragging on Jason and Sean here)!

If you would like to attend the webinar tonight in the comfort of your own home, please email us for the link.  No pressure, no hype…it is all that we have said it is and more.