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Stocks, ETFs, Options, Commodities & Currencies
This past week we received the final 4th Quarter GDP number which came in at 0.39%. The total 4th Quarter growth was terrible, plain and simple. Based on the performance in the equity markets that we have seen thus far in the 1st Quarter of 2013 investors would expect strong GDP growth. However, the only thing spurring stock market growth is the constant humming of Ben Bernanke’s printing press.
The real economy and the stock market are no longer strongly correlated. Essentially, they are meaningless. How do you evaluate risk when Treasury linked interest rates are artificially being held down by the Federal Reserve? How do you evaluate earnings growth estimates when most government based statistics are manipulated or “smoothed” to perfection?
My final argument to anyone who is a true believer that the stock market is representative of the economy is a very simple premise. If the stock market is the economy, how does the stock market evaluate small business earnings growth when most small businesses are not publicly traded? It is a simple question, but I have yet to find a sell side analyst that can work around it with facts.
To back up this information, here is a chart courtesy of www.zerohedge.com that demonstrates the S&P 500’s price action compared to economic data and overall macro risk.
http://www.optionstradingsignals.com.../03/Chart1.jpg
The chart above clearly depicts the divergence between the macroeconomic data and the performance of the S&P 500 Index. Yet the sell side continues to scream that stocks are cheap, earnings are going to ramp up later this year on insane S&P 500 earnings growth expectations, and the consumer is going to remain strong even though payroll taxes have increased and the “wealthy” are paying more in taxes.
Even amid those concerns, no one knows for sure what the impact that Obamacare and the various new taxes associated with it will have on the business community. Again, the only thing driving growth is directly linked to the Federal Reserve’s balance sheet expansion. The chart below is courtesy of the Federal Reserve’s website.
*http://www.optionstradingsignals.com.../03/Chart2.jpg
On August 8, 2007 the Federal Reserve’s total assets were $869 billion dollars. As can clearly be seen today, according to the Federal Reserve the central bank’s total balance sheet has grown to over $3.2 trillion dollars. The increase is on the verge of rising exponentially. With QE, QE2, QE3, Operation Twist, Extended Operation Twist, and now with QE 4 in Perpetuity this trend is certainly unlikely to shift.
At this point in time the Federal Reserve is printing roughly $85 billion dollars each month to purchase Treasury securities with a focus on the long end of the maturity curve. As primary dealers of Treasury securities process these flows the money eventually finds its way into riskier assets that offer higher rates of returns through balance sheet machinations at large money center banks.
It has proven that the flow of the Federal Reserve’s printed monies are more important than the total money stock for a variety of reasons and inflation according to the government’s data is under control ex food and energy.
However, how are people supposed to survive without food and energy in today’s world? The last time I went to fill up my gas tank or to purchase food prices have gone up significantly. According to the 1990 version of consumer price reporting, real consumer inflation is running around 6% currently and shadowstats.com has the following comparison.
http://www.optionstradingsignals.com.../03/Chart3.jpg
Unfortunately the 1980 based inflation numbers are even uglier, which based on Shadowstats’ data chart would place consumer inflation at nearly 10%. The calculations being used by Shadowstats.com are based on the government’s OLD ways of calculating inflation. The calculations were adjusted over time and today the data is completely manipulated by not including items that typically experience the largest levels of inflation.
Normally I talk about price action, probability based option trading, and technical information. However, before investors consider buying stocks near the all-time NOMINAL (non-inflation adjusted) highs, why not simply consider the backdrop of the total economic situation.
Central banks around the world are printing money at an alarming rate and their balance sheets are growing to levels not seen in human history. Interest rates are being manipulated to levels that are historically at record lows or near record lows based on real inflation data.
Macroeconomic indicators are issuing a cautionary tone with significant divergences showing up in many areas. Earnings expectations for the S&P 500 in the 3rd and 4th Quarter of 2013 are extreme and borderline ridiculous.
So before jumping headlong into equities based on some sell side analysts recommendation or even worse, a financial advisor who is more interested in his/her commission than they are about producing gains consider the following comparisons.
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S&P 500 Index (SPX) Price Chart – 1 Year Price History
http://www.optionstradingsignals.com.../03/Chart4.jpg
Gold Futures Spot Price Chart – 1 Year Price History
*http://www.optionstradingsignals.com.../03/Chart5.jpg
Clearly paper gold represented by gold futures is no substitute for physical ownership, but when one considers the fundamental backdrop for gold versus the S&P 500 Index, it should be clear which asset is offering the most value at current price levels. It does not require any inserted trendlines or oscillators, it should be clear which asset is expensive and which asset is cheap based on the real long-term economic fundamentals.
I will give you a hint regarding which asset is offering the most value. It can’t be printed, it has represented the store of value since the advent of modern civilization, and it is senior to all paper currencies.
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Why 1591-1620 ranges look likely for SP 500
Our wave count has continued to look for higher levels on the SP 500 for some time now.
We are in a Major wave 3 of Primary wave 3, what they call “3 of 3
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Mar 26th- Market and Precious Metals Quarter 2 Rotation?
SP 500- The market continues to consolidate in a minor wave 4 corrective pattern it seems, with 1541 the lows and 23% the retracement of the most recent minor wave 3 leg. Its also the end of the quarter and Wall Street will make sure they get paid and hold this tape up into the close this week I’m sure.
We are looking for 1591-1620 now as the next likely topping range for a wave 5 pattern completing Major 3 of Primary 3. Once that completes, then a MAJOR 4 pattern will begin, likely correcting all of Major wave 3’s pattern to the tune of 23-38% of the duration of Major 3 (1343-the highs)
Either way, we expect the participants to rotate out of the winners of this 1st quarter and into the laggards like Coal, Steel, Natty Gas, Shipping, Gold Stocks etc. We have already seen early stages of frantic buying off the bottom in the Natty Gas sector, and Shipping…. we expect to see a pick up in Gold stock buying but selective stocks will be in favor. Since it’s the end of the quarter, your seeing some likely end of quarter Gold stock dumping and Coal stock dumping to remove from said portfolios so as to look pretty for their investors. Insider buying in the Gold Stock sector is running 7 to 1 over sellers, and the last time we saw this was the 2008 Gold troughs…. so do what you will with that info.
GOLD- Again, 1617 is the wall and we expect Gold should break over it towards 1650 in April
http://feeds.feedburner.com/~r/TheMa...~4/bziVIxURvMQ
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The Long and Winding Gold- (Bull Cycle about to Begin)
David Banister – www.TheMarketTrendForecast.com
The dramatic 2-3 day take down in Gold Spot pricing action smells and looks** like capitulation to us at The Market Trend Forecast. We have been calling this entire 19-20 month consolidation period as a Primary wave 4 correction pattern, though complicated for sure.* It has had multiple false rallies and buy and sell signals the entire time. With that said, the pattern is set up for final 5th wave decline which we are seeing now at the beginning of April.
Traditionally, Gold tends to meander or be weak in April anyways on a seasonal basis. This sets Gold up to rally in May into July with another soft patch, followed by a fall rally.* However, our technical analysis is predicated on our Elliott Wave analysis, which says this entire 20 month correction is a “Double Three” correction pattern. Essentially its two ABC patterns with an “X” Wave rally in the middle to really confuse everyone.
The X wave took Gold to 1800 last fall before dumping all the Bulls off and eventually working its way down to the 1540’s levels we see today.* This last leg down is a 5 wave decline and you know you’re at the bottom of wave 5 when everyone throws in the towel, the Gold stocks trade at multi year lows and relative valuation extremes.* We also have insiders buying 7 to 1 over sellers according to Ink Research in the Gold stock sector. Stocks are valued at $923 per ounce equivalent even though Gold is trading north of $1,500 per ounce still.
We say bring it on and are actively accumulating selected Gold stocks with production profiles and growth metrics that are attractive.
See the Gold Elliott Wave analysis chart we sent to our paying subscribers a few days ago to forewarn of one more leg down.* The next rally should be a doozy and have very few people on board. We would simply caution that a drop below $1523 spot pricing could lead to a blast down to the 1440-1460 areas, but its unlikely in our current views.
http://www.themarkettrendforecast.co.../TMTFGold2.jpg
http://feeds.feedburner.com/~r/TheMa...~4/PKwz20IMraY
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Friday’s Precious Metals Melt-Down…. How to Manage It!
“WOW” Friday’s Precious Metals Meltdown is an understatement…. I love seeing all this fear in the market and panic selling volume jump through the roof. This is or is the “start” of the washout bottom in metals I have been talking about for a few months. Critical support levels have been broken on gold, silver and miner stocks today. This is running the stops juicing up the sell side volume.
This size of a move WILL trigger a wave of margin calls come the end of the session and it could start another strong wave of selling into the closing bell. While I like this prices for both gold and silver, I know this could be just the start of more selling. I sound like a broken record but I am not trying to catch a falling knife unless it looks like a perfect setup. I still feel we could get another 1-3 days of selling or chop down here before things go higher so I will just watch the gold and bugs get stepped on again.
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Where is the Larger Bubble: the S&P 500 Index or U.S. Treasuries?
Today we have a plethora of companies reporting earnings and are moving through the 1st Quarter earnings season at a rapid pace. Thus far, earnings have been far from exciting and have made the previous 2013 forward earnings estimates laughable.
The only way we get to the proposed valuations is through multiple expansion which is simply going to require the Federal Reserve to continue to pump $85 billion into Treasury’s and MBS securities each month. I am confident they will comply.
There are a few analysts out there who are discussing the potential bubble forming in equities and other risk assets as Bernanke’s plan is working to the extent that asset prices are rising. However, even fewer analysts are pointing out that both retail and institutional money is constantly chasing yield at this point.
Simply take a look at the 2013 price action in high yield dividend paying stocks, high yield bonds, preferred stocks, and master limited partnerships. It is safe to say that a bubble has formed not just in equities, but in various fixed investments as well. Consider the following chart of the S&P 500 Index (SPX) shown as the dotted trendline and Johnson & Johnson (JNJ) shown as the solid black line.
http://www.optionstradingsignals.com.../04/Chart1.jpg
Obviously from looking at the chart above, JNJ has outperformed the S&P 500 Index year to date. Has JNJ suddenly become a growth giant? Is it all about earnings growth and/or forward earnings potential or anticipated growth?
Or is the rally in JNJ really about the fact that Johnson & Johnson has a long history of paying strong, rising dividends. I am sure there are plenty of sell side analysts who will tell you that JNJ is going to $100 / share in the future for a variety of macro or quantitative reasons.
The sell-side analysts will tell you the economy is strengthening or that large cap multinational companies are seeing strengthening fundamentals and earnings growth. They are called the sell-side for a reason; they want to sell you stock.
Furthermore, my favorite recent discussion is about future earnings projections and the new strength that we are going to see in earnings. The following chart was posted at www.zerohedge.com and originally came from Standard & Poors. The chart below illustrates the trailing 12 month operating earnings per share of S&P 500 companies.
http://www.optionstradingsignals.com.../04/Chart2.jpg
Based on the above data, how is the stock market fundamentally sound when earnings are collapsing? I guess the Federal Reserve is going to print profits for the S&P 500 companies. Actually earnings are irrelevant when central banks all over the world including the Federal Reserve are juicing the markets with a sea of liquidity and where multiple expansion trumps real earnings or value.
Furthermore, these same central banks are openly purchasing equities and allocating sizable portions of their balance sheets to stocks. Several central banks around the world have more than 10% of their reserves allocated to stocks at this point in time. The world is long risk and money is still flowing into bonds at the same time. Simply look at the recent price action in Treasury’s for the past few weeks or note the strength in municipal bonds in aggregate since mid-March.
This brings me to my final point. For the past several years, bonds and stocks in the United States have rallied together. U.S. treasuries and domestic equities have been trending higher for more than three years as shown below. The S&P 500 is shown as the dotted line and the 30 Year Treasury Bond Price Index is the black solid line.
http://www.optionstradingsignals.com.../04/Chart3.jpg
It is without question that both the S&P 500 Index and the 30 Year Treasury Bond have been trending higher for the past 3 years overall. Both underlying assets have produced strong gains during the same period of time. Now this brings me to my final question for readers to ponder. If both the S&P 500 Index and the 30 Year Treasury Bond can rally together, what happens if they selloff together?
The answer to that question is the real problem. Many sell-side analysts and economists ignore the bubble that the Federal Reserve has created in equity valuations. The bubble continues to be fueled by the monstrous liquidity injections that they have conducted beginning with the original quantitative easing. However, what is even less acknowledged by the sell-side is the massive artificial bullish valuations that have been created in the bond market.
Long dated treasuries are being purchased by the Federal Reserve to artificially hold down interest rates. This ongoing practice is causing a separate bubble to form in fixed income investments. So now we have a bubble in equities and long-dated treasuries forming and the sell-side continues to trumpet that higher prices are likely. Ultimately the sell-side may be right in short to intermediate time frame, but the end game has a finality that few want to consider.
When these bubbles finally pop as all excessively valued assets do, the result is going to devastate financial markets. It may be in 6 months or it may be in 10 years, but history will not be thwarted. The central banks can try to outsmart history, but they will ultimately fail.
This material should not be considered investment advice. J.W. Jones is not a registered investment advisor. Under no circumstances should any content from this article or the OptionsTradingSignals.com website be used or interpreted as a recommendation to buy or sell any type of security or commodity contract. This material is not a solicitation for a trading approach to financial markets. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This information is for educational purposes only.
See morehere.
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Gold Traders and Investors Get Ready To Rumble!
On April 12th I wrote a blog post titled Precious Metals Melt-Down, and How To Manage It. I talked about how gold, silver and gold mining stocks have been flying under the media radar for over a year and that they were not catching the attention of traders, investors and the public anymore. I also said it would take some sharp price action (breakdown or rally) for it to be front and center again on TV, Radio and Newspapers.
But since gold has plummeted 17.5% dropping from $1600 down to $1320 per ounce with silver and gold stocks falling also they are now headline news once again. This move has caused some serious damage to the charts when looking at it from a technical analysis point of view. Below are some basic analysis points that show a new swing trading entry point.
The Technical Traders Chart Analysis:
Broken Support – Once a support level has been broken it becomes resistance. Gold is trading under a major resistance level.
Momentum Bursts - Since the April 15th low, gold has been setting up for another short selling entry point. Remember the market tends to move in bursts of three, seven or ten days then price reverses direction or pauses. It has now been 10 days.
Moving Average Resistance – Gold has worked its way up to the 20 day moving average which can act as resistance.
Bearish Inside Bars – This type of chart pattern points to lower prices. When there is a big down day followed by 3, 7 or 10 up days inside the price action of the down bar we can typically expect another sharp drop which tests the recent lows as shown with the arrow on the chart.
http://www.thegoldandoilguy.com/arti...4/GoldBear.jpg
Gold Short Selling Conclusion:
In short, gold is setting up for a low risk entry point that should allow us to profit from lower gold prices. Using an inverse ETF like DZZ or even the gold mining stock inverse ETF DUST could be played. These funds go up in value as the price of gold falls.
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Stock Preparing for Pullback, Buy Bad News, Sell the Good
The SP500 remains in a strong uptrend, but the index has posted a sizable gains for 2013 thus far so it’s only logical that a pullback within this bull market takes place sooner than later.
With May now upon us and historically prices fall more times than not I feel a 3-4 weeks correction is on the verge of starting. This Friday we just had very strong economic numbers confirming the economy is recovering. This news has sent stocks sharply higher as shorts cover their positions and investors who are not yet long get into position to profit from higher prices. But the herd psychology and their trades are typically incorrect as they invest based on fear and greed. The old saying is buy on negative news and sell on positive news will typically get you on the correct side of the market more times than not if used with price, volume and cycles.
The Technical Traders – SP500 Index Weekly Chart
If we look at the price of the SP500 we need it to breakdown below the recent pivot low before I become bearish.
Volume which is not shown on this chart is below average as price moves higher and this is a bearish sign also.
Looking at a basic cycle using the stochastics indicator we can see that the current cycle is starting to turn down. Cycles tend to lead price during an uptrend so we could still have stocks move higher for another week or so but be aware that when price starts to drop its likely a market top. But until then you must respect the uptrend. Stocks can remain overbought and toppy looking for months… so done be gambling and trying to pick a top until we see breakdown start.
http://www.thegoldandoilguy.com/arti...13/05/spy2.png
SP500 Stocks Trading Above 200 Moving Average – The Technical Traders View
Stocks trading above the 200 day moving average is a great indicator for helping spot broad market underlying strength/weakness. It does lag the market but is still very powerful. The chart below shows this info and my thinking of what is likely to unfold sooner than later though price may still rise for several days yet.
I also use a similar chart for timing swing trades and market tops which are based on stocks trading above the 20 day moving average. This chart is not shown here but is now trading at a level which generally triggers selling/market top.
http://www.thegoldandoilguy.com/arti...13/05/spy1.png[/URL]
Stock Market and SP500 Trading and Investing Conclusion:In short, I am still bullish on the market as I focus on trading with the trend. I do not pick market tops and I do not pick market bottoms. Knowing that stocks make their biggest moves at the end of their uptrend and at the end of a down trend it’s only common sense that risk is extremely high if you are betting against the current trend.
The best thing to do is wait for a technical breakdown and reversal which puts the odds more in your favor with much less risk and typically a clear line in the sand to exit the position if you are incorrect.
The last major stock market top which formed in September of last year had a series of strong news and strong price action persuading the herd to buy stocks.* Instead it was the last impulse wave up just before a strong correction took place. That is much like what we see now with the economic news.
Join my free newsletter and stay on right side of the market while reducing your trading/investing stress. My simple yet effective analysis walks you through the market each week without bias. Remember Price and Volume is what makes you money trading NOT news or forecasts.
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How to Trade Gold, Silver & Precious Metal Miners
How to trade Gold and other precious metals related investments is not that complex. But you must be willing to wait for price to provide low risk entry points before getting involved. Precious metals are like any other investment in respect to trading and investing in them. There are times when you should be long, times to be in cash and times to be short (benefit from falling prices).
Since 2011 when gold and silver started another major bull market correction the best position has been to move to cash or sell/write options against your positions to protect your investment until the next trend resumes.
If you take a look at the chart below of gold you will notice that in 2008 we had a similar breakdown in price which purged the market of investors who where long gold. And if you compare the last two breakdowns they look very much the same. If price holds true then much higher prices are likely to unfold at the end of 2013.
The key here is for the price to move and hold above the major resistance line. If it can do that then we are looking at a possible breakout to $2600 – $3500 gold. With that being said gold and silver may just be starting a bear market. Depending what the price of gold does when my resistance level is touched, my outlook may change from bullish to bearish.
Also with last weeks economic numbers getting better in the USA I do have concerns that gold may be starting a bear market but we will not know for several more months yet.
http://www.thegoldandoilguy.com/arti...WeeklyGold.jpg
How to Trade Gold Daily Technical Chart:
Major technical damage has been done to the chart of gold. This can be seen as bullish or bearish price action but until price and volume pattern unfolds which puts the odds on the bullish or bearish side I remain neutral.
http://www.thegoldandoilguy.com/arti...ngTermGold.png
How to Trade Silver Daily Technical Chart:
Silver is in the same position as gold. The question is if this is a shakeout or breakdown…
http://www.thegoldandoilguy.com/arti...TermSilver.png
How to Trade Gold Mining Stocks Monthly Chart:
Gold mining
stocks broke down a couple months ago and continue to sell off. If precious metals continue to move lower then mining stocks will continue their journey down. The chart below made in February and it has in most part played out as expected. While I do not try to pick bottoms (catch falling knives) I do like to watch for them so I am prepared for a new position when the time and chart become bullish.
http://www.thegoldandoilguy.com/arti...TermMiners.png
How to Trade Gold, Silver and Mining Stocks Conclusion:
In short, precious metals continue to be in a down trend. While they look to be trying to bottom it is important to remember that the largest moves take place in the last 10% of a trend. So we may be close to a bottom but there could be sharply lower prices yet.
The time will come when another major buy or short signal forms and when it does we will be getting involved. The exciting part is that it could be just around the corner. If you want to keep current and take advantage of the next major move be sure to join me free newsletter here: http://www.goldandoilguy.com/
Chris Vermeulen
See more here.
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Top 3 Trading Indicators for Profitable & Simple Trading
Many investors and traders make the same mistakes assuming that one needs a complex trading system to consistently profit from the stock market. On the contrary, some of the top performing strategies are the ones with the least amount of moving parts and are simple. Because their simplicity they can be easily and consistently followed.
The methodologies we use for timing the market, picking stocks and option trades are very simple because we focus mainly on price, volume and momentum. These three indicators are the key to success. When these are used together you are able time your entries and exits during key turning points, clearly define risk and reward levels while maintaining a clear unbiased state of mind which allows one to trade almost emotionless.
As my Trading System Mastery coach (Brian McAboy) taught me, if you do not have a detailed trading plan which a five year old could trade, then you do not have a solid strategy and will have unnecessary losses and emotional stress.
So here are a couple tips to keep things simple and emotionless:
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http://www.thegoldandoilguy.com/arti.../05/sLide2.png
Our recent trade in Infoblox Inc. (BLOX) with our ActiveTradingPartners Newsletter:
This stock was flashing several signals (price, volume and momentum) that a bounce or rally was likely going to happen within a few weeks. This is a good example of a swing trade based purely on our main indicators.
http://www.thegoldandoilguy.com/arti...13/05/BLOX.jpg
Our Broad Market Outlook:
Current stock market prices are starting to warn us that a market correction is near. You can read more about this in detail in our last report “Stocks Preparing for a Pullback, Buy Bas News, Sell the Good”.
We all know the market works with the saying:
“If the market doesn’t shake you out, it will wait you out”.
How does this work? Simple really, during down trends and just before a market bottom we tend to see capitulation spikes in selling. These scare the last of the long positions out of the market and suck in the greedy shorts after the move has already been made.
During an uptrend which is what we are in now the market makes spike highs designed to scare out the shorts and get greedy long traders to buy more. Once again after the move has already been made and likely near the market top.
If you are the type of trader who always tries to pick tops and bottoms against the current trend then you may like to know this little tip… The largest percent moves typically happen during the last 75% of the trend. What does this mean? It means when you take your position against the trend trying to pick the dead top or bottom you are most likely going to get be caught on the wrong side of the market in a big way.
Most traders I know based on recent emails have been short the market for 1-3 weeks and many keep emailing me that they are adding more shorts each day because they feel the market is going to top. So me being a contrarian by nature in terms of what the masses are doing, if everyone is still holding on to their shorts we likely have not seen the top just yet. Another 1-2% jump from here should be enough to shake them out though…
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Chris Vermeulen Tell You How To Become a Full Time Trader – Interview by: FuturesPortal.com
Drawdowns are simple really… Depending on the type of investment you are trading the percentage amount will vary. But the same rule should apply. You should have a maximum loss per trade set so that you never blow your account up. Hopefully your protective stop is set way before that level is ever reached but sometimes price moves beyond normal volatility levels.
My general rule is to never lose more than 1% of my account in a trade. So once I spot a setup and then calculate where my stop should be and figure out how much capital to put to work so that if my stop is hit I do not lose more than 1% of my trading account. Because I focus on the SP500 the volatility is low compared to trading individual stocks so moves in price as easy to digest and reduces fear/stress when in a position.
Chris, thank you very much for sharing your experience with us and our readers.
Best of luck on everything.
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Hi Technician,
Thanks a lot for this post and this Interview.
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Correction Coming, but Long Waves to Go in Bull Cycle
Correction near but Bull Market has LONG waves to Go!
David Banister- www.markettrendforecast.com
The SP 500 has been on a tear as we all know especially since the SP 500 bottomed at 1343 several months ago.* My work centers around forecasting using Elliott Wave Theory along with other technical indicators. This helps with projecting the short, intermediate, and longer term paths in the stock market and also precious metals. This larger picture Bull Cycle started in March of 2009 interestingly after an exact 61.8% Fibonacci retracement of the entire move from 1974 to 2000 lows to highs.* At 666, we had completed a major cycle bottom with about 9 years of movement to retrace 26 years of overall bull cycle. That was a major set of 3 waves (Corrective patterns in Elliott Wave Theory) from the 2000 highs to 2002-3 lows, then 2007 highs to 2009 lows.* Once that completed its work, we were free to have a huge new bull market cycle off extreme sentiment and generational lows.
It’s important to understand where we were at in March of 2009 just as much as it is today with the market at all-time highs. Is this the time to bail out of stocks or do we have a lot more upside yet to go? Our short answer is there is quite a bit more upside left in the indexes, but there are multiple patterns that must take place along the way. We will try to lay those out for you here as best we can.
Elliott Wave theory in general calls for 5 full wave cycles in a Bull pattern, with 1, 3, and 5 bullish and 2 and 4 corrective. We are currently in what is often the most bullish of all the patterns, a 3rd of a 3rd of a 3rd. In English, we are in Primary wave 3 of this bull cycle which will be 5 total primary waves.* We are in Major wave 3 of that Primary 3, and in the Intermediate wave 3 of Major wave 3.* That is why the market continues its relentless climb. This primary wave 3 still has lots of work to do because Major wave 3 still has a 4th wave down and a 5th wave up to finish, then we need a major 4, then a major 5.* That will complete primary wave 3.* This will then be followed by a Primary wave 4 cycle correction that probably lasts several months, and then a Primary wave 5 cycle to finish this part of the bull market from March 2009 generational lows… and all of that work is going to take time.* Once that entire process from March 2009 has completed, then we should see a much deeper and uglier correction pattern, but we think that is at least 12 months or more away.
What everyone wants to know then is where are we at right now and what are some likely areas for pivot highs and lows ahead?* We should complete this 3rd of a 3rd of a 3rd here shortly and have a wave 4 correction working off what will likely be almost 300 points of upside from* SP 500 1343. We could see as much as 90-120 points of correction in the major index once this wave completes.* Loosely we see 1528-1534 as a possible top and if not then maybe another 30 or so points above that maximum into early June.* This should then trigger that 90-120 point correction, and then be followed by yet another run to highs.
We could go on but then we will lose our readers here for sure, and as it is… this is all projections and postulations, so it’s best to keep the forecast to the next many weeks or few months. Below is a chart we have put together showing the structure of Major wave 3 of Primary 3 since the 1343 lows. Once that Major wave 3 tops out (see the blue 3) then we will have Major 4, then Major 5 to complete Primary wave 3 since the 1074 SP 500 lows.* Whew!
http://www.themarkettrendforecast.co...mtf-sp-500.jpg
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Correction near but Bull Market has LONG waves to Go!
David Banister- www.MarketTrendForecast.com
The SP 500 has been on a tear as we all know especially since the SP 500 bottomed at 1343 several months ago.* My work centers around forecasting using Elliott Wave Theory along with other technical indicators. This helps with projecting the short, intermediate, and longer term paths in the stock market and also precious metals. This larger picture Bull Cycle started in March of 2009 interestingly after an exact 61.8% Fibonacci retracement of the entire move from 1974 to 2000 lows to highs.* At 666, we had completed a major cycle bottom with about 9 years of movement to retrace 26 years of overall bull cycle. That was a major set of 3 waves (Corrective patterns in Elliott Wave Theory) from the 2000 highs to 2002-3 lows, then 2007 highs to 2009 lows.* Once that completed its work, we were free to have a huge new bull market cycle off extreme sentiment and generational lows.
It’s important to understand where we were at in March of 2009 just as much as it is today with the market at all-time highs. Is this the time to bail out of stocks or do we have a lot more upside yet to go? Our short answer is there is quite a bit more upside left in the indexes, but there are multiple patterns that must take place along the way. We will try to lay those out for you here as best we can.
Elliott Wave theory in general calls for 5 full wave cycles in a Bull pattern, with 1, 3, and 5 bullish and 2 and 4 corrective. We are currently in what is often the most bullish of all the patterns, a 3rd of a 3rd of a 3rd. In English, we are in Primary wave 3 of this bull cycle which will be 5 total primary waves.* We are in Major wave 3 of that Primary 3, and in the Intermediate wave 3 of Major wave 3.* That is why the market continues its relentless climb. This primary wave 3 still has lots of work to do because Major wave 3 still has a 4th wave down and a 5th wave up to finish, then we need a major 4, then a major 5.* That will complete primary wave 3.* This will then be followed by a Primary wave 4 cycle correction that probably lasts several months, and then a Primary wave 5 cycle to finish this part of the bull market from March 2009 generational lows… and all of that work is going to take time.* Once that entire process from March 2009 has completed, then we should see a much deeper and uglier correction pattern, but we think that is at least 12 months or more away.
What everyone wants to know then is where are we at right now and what are some likely areas for pivot highs and lows ahead?* We should complete this 3rd of a 3rd of a 3rd here shortly and have a wave 4 correction working off what will likely be almost 300 points of upside from* SP 500 1343. We could see as much as 90-120 points of correction in the major index once this wave completes.* Loosely we see 1528-1534 as a possible top and if not then maybe another 30 or so points above that maximum into early June.* This should then trigger that 90-120 point correction, and then be followed by yet another run to highs.
We could go on but then we will lose our readers here for sure, and as it is… this is all projections and postulations, so it’s best to keep the forecast to the next many weeks or few months. Below is a chart we have put together showing the structure of Major wave 3 of Primary 3 since the 1343 lows. Once that Major wave 3 tops out (see the blue 3) then we will have Major 4, then Major 5 to complete Primary wave 3 since the 1074 SP 500 lows.* Whew!
http://www.themarkettrendforecast.co...13/05/TMTF.jpg
http://feeds.feedburner.com/~r/TheMa...~4/jftK4w78lEo
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Will Oil Futures Stop the Fed’s QE Program?
The sell-side analysts and economists are reminding retail investors that risk assets in the United States have been on quite a tear to the upside recently. A correction now lasts a matter of days, if not hours before the bulls push equity prices even higher.
The Federal Reserve is winning the reflation war using cheap money and massive levels of liquidity to help drive risk assets higher and interest rates artificially lower. Unfortunately for domestic investors searching for yield, they find that they are forced to incur higher levels of risk in order to satisfy their growth and income needs. There are significant risks associated with higher than average fixed income returns and the cost will be felt should we see any correction in the future.
However, the Federal Reserve has a history that is littered with dismal results. The purchasing power of the U.S. Dollar has been reduced by more than 90% since the Fed’s inception in late December of 1913. Since that time, the Federal Reserve has stolen more “real” wealth from the American people than any other institution in the history of mankind.
The Federal Reserve has two primary functions. One function is to maintain price stability or in other words to moderate inflation. Clearly over the past 100 years their inflation track record has been horrific. However, the Fed’s recent track record regarding the value of the U.S. Dollar Index has been dismal the past 15 years as shown below.
http://www.optionstradingsignals.com...05/Chart11.jpg
As can be seen clearly above in the Dollar Index Futures monthly chart, at present levels the Dollar’s overall value has diminished well over 31% since late 2001. I would also draw readers’ attention to the selloff that occurred from late 2005 until the early part of 2008. The selloff during that period of time is important to reinforce my next consideration.
Recently the flow of liquidity has primarily been seen in record low interest rates and a surging U.S. equity market. Nearly every day the Dow Jones Industrial Average or the S&P 500 Indexes make a new all-time high. The question that I would like to posit for readers is how long will it be before the so-called smart money starts looking at the attractiveness of commodities relative to equities?
If the Federal Reserve continues to print money at this pace, what will ultimately stop them dead in their tracks? The short answer is energy prices. The easiest way to stop the Fed’s printing press is to see a massive spike in energy prices. While we often hear that history does not repeat but it often rhymes, consider the price action in oil futures during the same 2006 – 2008 selloff in the U.S. Dollar Index.
http://www.optionstradingsignals.com...05/Chart21.jpg
It is readily apparent that once oil futures were able to push above the $78 / barrel highs in mid-2006, prices exploded while the U.S. Dollar came under strong selling pressure. The timing could not be more impeccable for the explosive nature in the move higher in oil.
Furthermore, if we move forward to present day price action in oil futures we have a large triangle pattern on the long-term charts. The pattern offers the inflation versus deflation argument that so many economists and strategists are plagued by presently in their analysis.
My suggestion is that watching the price of oil futures is likely going to tell us the intermediate expectation by the market of what lies ahead in the inflation versus deflation debate. The movement of oil futures prices in the intermediate term is likely to be based on which direction the triangle pattern ultimately breaks.
http://www.optionstradingsignals.com...05/Chart31.jpg
What is obvious about this pattern is that a move that could hurdle $100 / barrel will open up a strong move toward $112 – $120 / barrel. If we were to see a move higher in oil futures that could push above the $120 / barrel price level set back in early 2011 a fierce rally in oil futures could play out.
A strong rally in oil futures will ultimately put the final nail in the coffin for U.S. equity markets and the U.S. economy. Gasoline prices would obviously rocket higher and the U.S. economy would quickly be brought to its knees. The Federal Reserve would be forced to either print more money and run the risk of higher oil prices, or do nothing and run the risk that the equity selloff could intensify.
I want to be clear that I am not calling for a rally in oil futures. Price action could go either way depending on market conditions, but the real question is regardless of which way price breaks in the future, how does it help equity markets? Those evil oil speculators run down by politicians seeking air time on television and radio could be the final straw for Ben Bernanke and the Federal Reserve.
Whether the future is full of inflation, deflation, or stagflation I am confident that energy prices will play a critical role in price discovery for not just oil and oil distillates, but for the overall domestic economy.
If the Fed does not show constraint at the appropriate time, oil and other commodity prices are likely to remind Chairman Bernanke that the Federal Reserve’s future track record is likely to be as dire as its historical performance.
This material should not be considered investment advice. J.W. Jones is not a registered investment advisor. Under no circumstances should any content from this article or the OptionsTradingSignals.com website be used or interpreted as a recommendation to buy or sell any type of security or commodity contract. This material is not a solicitation for a trading approach to financial markets. Any investment decisions must in all cases be made by the reader or by his or her registered investment advisor. This information is for educational purposes only.
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How to Spot & Time Stock Market Tops
Since the middle of April everyone and including their grandmother seems to have been building a short position in the equities market and we know picking tops or bottoms fighting the major underlying trend is risky business but most individuals cannot resist.
The rush one gets trying to pick a major top or bottom is flat out exciting and that is what makes it so darn addicting and irresistible. If you have ever nailed a market top or bottom then you know just how much money can be made. That one big win naturally draws you back to keep doing it much like how a casino works. The chemicals released in the brain during these extremely exciting times are strong enough that even the most focused traders fall victim to breaking rules and trying these type of bets/trades.
So if are going to try to pick a top you better be sure the charts and odds are leaning in your favor as much as possible before starting to build a position.
Below are a few charts with my analysis and thoughts overlaid showing you some of the things I look at when thinking about a counter trend trade like picking a top within a bull market.
Utility Stocks vs SP500 Index Daily Performance Chart:
The SPY and XLU performance chart below clearly shows how the majority of traders move out of the slow moving defensive stocks (utilities – XLU) and starts to put their money into more risky stocks. This helps boost the broad market. I see the same thing in bonds and gold this month which is a sign that a market top is nearing.
That being said when a market tops it is generally a process which takes time. Most traders think tops area* one day event but most of the times it takes weeks to unfold as the upward momentum slows and the big smart money players slowly hand off their long positions to the greedy emotion drove traders.
Look at the chart below and notice the first red box during September and October. As you can see it took nearly 6 weeks for that top to form before actually falling off. That same thing could easily happen again this time, though I do feel it will be more violent this time around.
http://www.thegoldandoilguy.com/arti.../05/SPYXLU.jpg
SPY ETF Trading Chart Shows Instability and Resistance:
Using simple trend line analysis we see the equities market is trading at resistance and sideways or lower prices are more likely in the next week or two.
http://www.thegoldandoilguy.com/arti...Resistance.jpg
Stocks Trading Above 150 Day Moving Average Chart:
This chart because it’s based on a very long term moving average (150sma) is a slow mover and does not work well for timing traded. But with that said it does clearly warn you when stocks are getting a little overpriced and sellers could start at any time.
General rule is not to invest money on the long side when this chart is above the 75% level. Rather wait for a pullback below it.
http://www.thegoldandoilguy.com/arti...05/BarC150.jpg
Stocks Trading Above 20 Day Moving Average Chart:
This chart is based on the 20 day moving average which moves quickly. Because it reacts quicker to recent price action it can be a great help in timing an entry point for a market top or bottom. It does not pin point the day/top it does give you a one or two week window of when price should start to correct.
http://www.thegoldandoilguy.com/arti.../05/BarC20.jpg
How to Spot and Time Stock Market Tops Conclusion:
As we all know or will soon find out, trading is one of the toughest businesses or and one of the most expensive hobbies that one will try to master. Hence the 95-99% failure rate of individuals who try to understand how the market functions, position management, how to control their own emotions and to create/follow a winning strategy.
With over 8000 public traded stocks, exchange traded funds, options, bonds, commodities, futures, forex, currencies etc… to pick from its easy to get overwhelmed and just start doing more or less random trades without a proven, documented rule based strategy. This type of trading results in frustration, loss of money and the eventual closure of a trading account. During this process most individuals will also lose friends, family and in many cased self-confidence.
So the next time you think about betting against the trend to pick a top or a bottom you better make darn sure you have waited well beyond the first day you feel like the market is topping out. Stocks trading over the 150 and 20 day moving averages should be in the upper reversal zones and money should be flowing out of bonds and other safe haven/defensive stocks to fuel the last rally/surge higher in the broad market.
Also I would like to note that I do follow the index futures and volume very closely on both the intraday and daily charts. This is where the big money does a lot of trading. Knowing when futures contracts are being sold or bought with heavy volume is very important data in helping time tops and bottoms more accurately. And the more experience you have in trading also plays a large part in your success in trading tops and bottoms.
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May 15th- A review of our SRPT Trade- up 17%
SRPT- *Sarepta is a Biotech that we alerted after a $13 pullback from $43 to $30 per share ranges. *At ATP we like to look for certain set ups that have fibonacci relationships and chart patterns , coupled with fundamentals and catalysts.
Here is our April 24th commentary while we Alerted to go long SRPT near $30:
SRPT- Sarepta- 29.90 time of alert A biotech with an advanced stage drug candidate for a form of Muscular Dystrophy, mostly that attacks children. The stock has had a huge run in the past year or so, but now a $13 almost pullback in 7-10 days allows a strong entry for aggressive partners only.
We sold 1/2 on May 9th up 9.8% and held 1/2 with a $29 stop on close. *As of May 14th we are up 17% on that remainder 1/2.
http://www.thetechnicaltraders.com/w...5/515-srpt.jpg
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May 15th- 11% Gains for Pandora Trade
Active Trading Partners alerted our subscribers to buy Pandora Media on May 9th at 14.75 or lower. *We are closing out the trade this morning with 11% gains in under 5 trading days. *Some of our recent closed out trades include BLOX *up 9.8%, BYD up 30% in only 3 days, Pandora up 11% in only 4 trading days, and SRPT currently up 17% in 3 weeks and holding.
Join us for profitable swing trade entries and exits that are updated daily and alerted in real time with full advice.
http://www.activetradingpartners.com...15-p-trade.jpg
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Gold Stocks: Its Time To Be BRAVE!
I used to half joke with some of my investing friends that the best time to buy stocks is during or right after a crash.* Think 1987, 2000-2002, 2008-09, and now perhaps Gold Miners?? Well, before we get too far ahead of ourselves, lets examine evidence of a “Crash”: I like to use crowd behavioral, empirical, and technical evidence in combination.
1.* In a recent money managers poll, virtually nobody was bullish on Gold or Gold stocks, and over 80% of those polled were bullish on the SP 500 and US stocks.
2.* The percentage of Dumb Money traders (non-reportable traders) in the futures markets with short positions on Gold is at all time highs, they tend to be very long at the highs and very short at the lows.
3.* The insider buying ratio of Gold Mining stocks to sellers is running over 10 to 1, the highest since October 2008 when Gold bottomed out at $685 per ounce from $1030 highs. *Quoting Ted Dixon, CEO of Ink Research, “such a high level of buying interest among officers and directors within their own businesses in the resource sector has correctly foreshadowed a recovery in share prices in the past: That high point of nearly five years ago came about six weeks before the Venture market bottomed on Dec. 5, 2008…While the excitement that surrounded mining stocks as recently as two years ago has waned, experienced value investors recognize that such periods of investor neglect often give rise to the best deals” Source: Theglobeandmail.com
4. The ratio of the HUI Gold Bugs Index to the SP 500 is at multi year lows and in near crash mode on the charts. The RSI Index (Relative strength) on the weekly charts is at 10 year lows at -13.71, which is off the charts low!!
5.* Most trading message boards I view at Stocktwits and others are universally bearish on Gold and Gold stocks.
6.* Gold is in a wave B or Wave 5 down re-testing the 1322 lows which we have discussed here for weeks as very likely if 1470 was not taken out on the upside… this is a normal sentiment pattern and re-test.
7.* Gold has been in a 21 Fibonacci month correction pattern off a 34 Fibonacci month rally from 686-1923. In August of 2011 I penned articles from 1805 right up to 1900 warning of a massive wave 3 top forming.* Everyone was bullish, now it’s the complete opposite.
8. Currency debasement continues around the world with negative real interest rates. This is bullish for Gold once this correction has run its course.
9. Hulbert Digest Gold Sentiment index is at an all time low (gold newsletters at -35 sentiment readings!!)
10.* Gold -Silver put to call ratios are at all time highs
I could go on and on with headlines and such, but you get the idea.* This is the same type of sentiment I wrote about on the stock market on Feb 25th 2009 .. Below is a chart showing the Bullish % index for Gold Miners, as you can see the last time we were at 0% was late 2008 when Gold had bottomed out and insiders were also buying like crazy like now:
http://www.themarkettrendforecast.co...13/05/bll-.jpg
The GLD ETF chart also shows a likely re-test or slightly lower of the 1322 futures lows of April, when Insider buying hit 10 year record levels:
http://www.themarkettrendforecast.co...013/05/gld.jpg
Obviously Gold could end up going a lot lower than we think, and the Gold Mining stocks could sink further yet. But for those with a 3-6 month horizon, we expect the 21-24 month Gold correction to complete by no later than October 2013.* During the next several months the opportunities to buy some miners on the cheap will potentially make some investors a lot of money in the coming few years.
See morehere.
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May 20th- How we hit for 17% intra-day gains in MUX
Most recently it became obvious to us that the Gold Mining stocks were forming massive sentiment, fundamental, and technical bottoms all at the same time.
Read our May 17th article here, which we wrote on a Friday one day prior to our 17% trade move today in MUX (McEwen Mining)
Assuming we were right about a coming massive reversal in Gold Miners, we looked for the one that had the best combination of fundamentals, technicals and management.
We selected MUX and alerted the trade at $2.00 this morning: Below was the chart we sent with the post/alert
http://www.activetradingpartners.com...5/520-mux-.jpg
And hours later, here is the same MUX chart showing the 17% move from our morning alert:
http://www.activetradingpartners.com...mux-result.jpg
A crazy gain yes, but using our 10 day charts and combination of all other factors… it happened. We often see 7-9% gains within 1-3 days on our swings for this reason, and once in awhile a big one like MUX.
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Precious Metals & Miners Start Bottoming Process
Precious metals and their related mining stocks continue to underperform the broad market. This year’s heavy volume breakdown below key support has many investors and trader’s spooked creating to a steady stream of selling pressure for gold and silver bullion and mining stocks.
While the technical charts are telling me prices are trying to bottom we must be willing to wait for price to provide low risk entry points before getting involved. Precious metals are like any other investment in respect to trading and investing in them. There are times when you should be long, times to be in cash and times to be short (benefit from falling prices). Right now and for the last twelve months when looking at precious metals cash has been king.
Since 2011 when gold and silver started to correct the best position has been to move to cash or to sell/write options until the next trend resumes. This is something I have been doing with my trading partner who focuses solely on Options Trading who closed three winning positions last week for big gains.
In 2008 we had a similar breakdown in price washing the market clean of investors who were long precious metals. If you compare the last two breakdowns they look very similar. If price holds true then we will see higher prices unfold at the end of 2013.
The key here is for the price to move and hold above the major resistance line. A breakout would trigger a rally in gold to $2600 – $3500 per ounce. With that being said gold and silver may be starting a bear market. Depending what the price does when the major resistance zone is touched, my outlook may change from bullish to bearish. Remember, no one can predict the market with 100% accuracy and each day, week and month that passes changes the outlook going forward.
The chart below is on I drew up on May 3rd.* I was going to get a fresh chart and put my analysis on it but to be honest my price forecast/analysis has been spot on thus far and there is no need to update.
http://www.thegoldandoilguy.com/arti...WeeklyGold.jpg
Gold Daily Technical Chart Showing Bottoming Process:
Major technical damage has been done to the chart of gold. Gold is trying to put in a bottom but still needs more time. I feel gold will make a new low in the coming month then bottom as drawn on the chart below.
http://www.thegoldandoilguy.com/arti.../05/Gold27.png
Silver Daily Technical Chart Showing Bottoming Process:
Silver is in a similar as gold. The major difference between gold and silver is that silver dropped 10% early one morning this month which had very light volume. The fact that silver hit my $20 per ounce level and it was on light volume has me thinking silver has now bottomed.
But, silver may flounder at these prices or near the recent lows until its big sister (gold) puts in a bottom.
http://www.thegoldandoilguy.com/arti...5/SIlver27.png
Gold Mining Stocks Monthly Investing Zone Chart:
Gold mining stocks broke down a couple months ago and continue to sell off on strong volume. If precious metals continue to move lower then mining stocks will continue their journey lower.
This updated chart which I originally drew in February warning of a breakdown below the green support trend lines would signal a collapse in stock prices, which is exactly what has/is taking place. While I do not try to pick bottoms (catch falling knives) I do like to watch for them so I am prepared for new positions when the time and chart turn bullish or provide a low risk probing entry point.
http://www.thegoldandoilguy.com/arti...3/05/GDX27.png
Gold, Silver and Mining Stocks Conclusion:
Precious metals continue to be trending down and while they look to be trying to bottom it is important to remember that some of the biggest percent moves take place in the last 10% of a trend. So we may be close to a bottom on the time scale but there could be sharply lower prices yet.
Chris Vermeulen
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May 29th- How We Hit for 12.8% in 1 day on NUGT ETF
This week on Tuesday morning as the US market opened, we already knew that Gold Miners were in the dumps. We had just written an article about it being “Time To Be Brave” and buy some gold stocks just a week ago. *We hit MUX (McEwen Mining for 16% combined in a few days after that piece came out)
Well, this week we had been watching NUGT ETF for days waiting for the right pullback. Besides all the contrarian elements of the hated Gold Stock sector, we liked the On Balance Volume bullish divergence on the chart. *So we sent the chart below to our subscribers and told them to buy from 8.80-9.30 roughly, and the ETF opened at 9.15.
We had opportunity to scale from 8.80-9.15 most of the morning, then just 1 full day later we are at $10.12, up 12.8% already and still long as of this post anyways. (We alert our subs when to sell as well). Using 8.80-9.15 average we get a scale entry of 8.97 per share on NUGT. *We often take profits quickly, but in this case we think there could be a good run, so we will monitor and hold for max returns as market dictates.
http://www.activetradingpartners.com...5/528-nugt.jpg
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May 31st- Sold our IOC for 10-11% gains 88.80
IOC- We entered at 79.50-80.00 this week after the pullback from 106 spike highs last week.
We exited today with an alert sent out at 88.80 per share, up 10-11%.
The stock now trades at 83.50.
We were concerned about the market having a further correction and we like to take profits.
http://www.activetradingpartners.com...05/531-ioc.jpg
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Seven Keys in Timing Stock Market Tops – Part II
Timing stock market tops and bottoms is risky business and we all know the more the more risk we take the more potential gain would could also made. Correctly timing a top or bottom for any investment is flat out exciting not to mention financially rewarding. But this high risk trading tactic does come with some major issues which you must FULLY understand so that you can protect your capital and self-confidence.
On May 13th I wrote a special report on how to spot market tops just before they happen and how to do it with a very high probability of success. I also explain the major pit falls to be aware of so you stay on the right side of the market.
I recommend you read this special report now: http://www.thegoldandoilguy.com/arti...k-market-tops/
That special report truly showed you what was going to happen a few weeks before it did. Much like how this report shows you what is likely to happen in June.
Looking at the market with my YOU ARE HERE type of using cycles, volume, price patterns and momentum to forecast what is likely to unfold in the coming weeks. Depending on the time frame used for my analysis I can figure out with a high probability where price will be in a few minutes, hours or days also.
Mall Market Directory – You Are Here
Stock market tops are tough to trade and time. That is because there are so many things happening in the media and emotions running wild that it’s tough to get a grasp on what you should really be focusing on to keep a level head trade around it.
Market tops are typically not an event but rather a progression that takes much longer than most individuals expect. I still find myself jumping the gun at times and I know this and have been through this process hundreds of times in various investments. The human brain is a powerful tool but emotions can force you to override your rules/strategy still.
http://www.thegoldandoilguy.com/arti...6/U-R-Hear.jpg
Stop Fighting! – Bulls & Bears are BOTH Correct at this Stage
It does not matter where you go to get your stock market news and reports… Everyone is arguing their bullish or bearish case more than EVERY. There is a reason for this and it’s because the SP500, DJIA, RUT and NASDAQ appear to be entering a cycle top. What does this mean? It means the uptrend is almost over from a technical analyst point of view, and those who are have been bearish for a long time feel the market topping out more now than ever in their gut that this is the top.
Keeping it simple removing news, economic data, emotions and biases we are left with one thing which is technical analysis. This is based on price alone and that is important to remember because the only thing that pays you money for an investment is when price moves in your favor. Believe it or not price only has blips on the charts here and there which is based off news, economic data etc… In the big picture stock prices tend to lead economic data by several months and in some cases years.
So the big question is this… If price action is the only thing that pays you when trading why bother worrying about all the other opinions, news out there. That stuff only adds to the confusion and in most cases gets you on the wrong side of the market.
Timing the Market Top Conclusion:
In short, from a technical point of view the SP500 remains in an uptrend. But according to technical analysis the upside momentum is starting to slow. If we get a few more down days then the trend will flip and be down but it has not yet happened.
When the trend does reverse down you must remember that 80% of the time price will bounce back up to test near the recent highs before truly rolling over and collapsing. Think of it like a zombie movie. Just when you think you killed one it comes back to life for one last scare before its dead.
Just to touch on stock market bottoms so you do not get confused. Stock market bottoms are little different than tops so they are traded differently. I will cover them when the time comes.
Trading the market is not easy during this type of condition, which is why members and myself got long SSO on the 23rd and two days later sold out for a 3.5% gain. I am now looking to reload this week for another bounce/rally play but only time will tell if we get another setup.
Chris Vermeulen
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Live Video Forecast & 7 Must Read Articles for ETF Traders
After a long holiday weekend, Wall Street got off to a relatively good start this week, with the Dow Jones Industrial Average finishing higher for the 20th straight Tuesday. In economic news, investors welcomed better-than-expected housing and consumer confidence data;*the S&P Case-Shiller 20-City home price index rose 10.39% for March, while*the Conference Board’s Consumer Confidence Index for May also topped analysts’ expectations, jumping to a five-year high of 76.2. Meanwhile, investors shifted their attention to the high-yielding corners of the market, which have recently suffered as Treasury yields skyrocket to levels not seen in over 13 months.
Below, we outline seven insightful articles circulating around the financial space this week:
- Stocks As Bonds And Modern Portfolio Theory at The Blog of Horan Capital Advisors
In this article, David Templeton takes a close look at the relationship between stocks, bonds and the central bank’s stimulus measures, highlighting how modern portfolio theory has played out in the current market environment. - Precious Metals & Miners Start Bottoming Process at TheGoldAndOilGuy.com
Though precious metals have taken a beating so far this year, Chris Vermeulen thinks both precious metals and miners may be finally bottoming out. In this article, Vermeulen gives us his technical analysis of gold, silver and the Market Vectors Gold Miners ETF* (GDX, B). - As US House Prices Explode Higher, We’re Still Quite A Way From Bubble Levels at Quartz
In this short and insightful piece, Matt Phillips discusses the key housing trends seen in recent years, highlighting several charts that investors should be paying close attention to. - Treasury Yield Snapshot: 10-Year Yield Highest Since Early April of 2012*at Advisor Perspectives
On Tuesday, yields on the 10-year note rose to their highest level in more than 13 months. This article, written by Doug Short, discusses U.S. Treasuries’ recent price movements as well as a historical look at yields over the years the Fed implemented QE. - Is Tesla The Next Google Or DoubleClick? at UpsideTrader
In recent sessions, investors have witnessed Tesla’s (TSLA) meteoric rise, making many understandbly leery of the share’s recent rally. In this piece, Joe from UpsideTrader discusses his take on the stock, highlighting where he thinks Tesla may be headed next. - Inflation, Deflation, and QE at Coppola Comment
In this article, Frances Coppola highlights a key topic that has gotten significant attention since the Fed started its stimulus measures: inflation. - Utilities And Staples: One Of These Defensive Sectors Is Not Like The Other at Afraid To Trade
In this insightful piece, Corey Rosenbloom gives us his analysis of the utilities and consumer staples sectors, highlighting recent trends seen in the Utilities Select Sector SPDR ETF* (XLU, A) and the Consumer Staples Select Sector SPDR ETF (XLP, A+).
See more here.
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How We Booked 7.5% gains in 24 hours on SEAS- June 4th
Yet again, our ATP reversal method nailed 7.5% gains in 24 hours this week during a choppy market. *Just in the past few weeks we have consistently hit at least one stock a week for 7.2-9% gains inside of 48 hours.
Our latest was alerted on June 3rd in the morning to buy SEAS on the pullback. We specifically instructed our traders to buy from 34.15-34.60 only and wait for the pullback to buy.
The stock pulled back to 34.17 and we again sent an E-mail alert reminding our traders to position long.
The stock had pulled back from near 39 and we watched and then pounced. Well timed aggression is what we do.
The stock had filled a few gaps in the chart and then we entered over a few hours.
Using a high average of 34.52 per share, we booked 7.5% gains today by sending an alert to sell at 37.20 per share.
24 hours, 7.5%…. on to the next one.
http://www.activetradingpartners.com...eas-sample.jpg
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US Stock Market Foreshadows Another Rally – True Story!
Over the past couple week’s investors and traders have been growing increasingly bearish for the US stock market. While I too also feel this rally is getting long in the teeth there is no reason to exit long positions and start shorting.
My followers know I do not pick tops and I do not pick bottoms. This I explained in great detail in my previous report. There are more cons to that tactic and on several different levels (timing, volatility, emotions, lack of experience, addiction) than there are pro’s.
Keeping things simple, short and to the point here is my thinking for today and this week on the broad market. Remember my analysis is 100% technical based using price, volume, cycles, volatility, momentum and sentiment. I try not to let any emotions, gut feel, or bias flow into my projections. I say “TRY” because I am only human and at times when the market and emotions are flying high they still take control of me but that is few and far between.
So let’s get to the charts shall we!
SP500 Index Trading Daily Chart – SPY Exchange Traded Fund
The SP500 index continues to hold up within its rising trend channel and the recent pullback is bullish. Remember the trend is your friend and it can continue for very long periods of times ranging from days, weeks, and even months…
http://www.thegoldandoilguy.com/arti...500Uptrend.png
The US Stock Market MUSCLE Indexes
The charts below show and explain my thinking… But in short we need these two indexes to be strong if we want to see another major leg higher in the SPY, or to at least test the recent highs.
Today the market opened slightly higher and push up in the first 30 minutes with strong volume. Overall the market looks as though it needs a day pause/pullback before taking another run higher.
Small cap stocks are the ULTIMATE Risk On play and generate ridiculous gains in very short periods of time. I focus on these with my trading partner exclusively at ActiveTradingPartners.com where we have been making a killing on trades like: NUGT up 21% in 1 day and IOC up 11% in 2 days
http://www.thegoldandoilguy.com/arti.../USLeaders.jpg
Bullish Index Price, Volume & Candles
The SP500 has been very predictable the past couple weeks for both intraday trading during key reversal times in the market when price has pullback to a support zone, and also for swing trading. Last week we myself and followers bought SSO ETF when the market pulled back and we exited the next day for a 3.5% profit.
Yesterday was a perfect intraday example with the SP500 bottoming out at my 11:30am morning reversal time zone with price trading at support. Price then rallied into the close posting a 12 point gain on the SP500 futures for a simple momentum play pocketing $600.
http://www.thegoldandoilguy.com/arti...13/06/1130.jpg
US Stock Market Mid-Week Conclusion:
In short, I still like stocks as the place to be and will not get bearish until proven wrong. Once price reverses and the technical clearly paint a bearish picture with price, volume, momentum, cycles and sentiment will I start shorting the bounces.
This week is a pivotal one for the stock market so expect increased volatility and possibly lower lows still until the counter-trend flushes the weak position out before moving higher.
See morehere.
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Gold, Silver & Precious Metal Miners Signals
It has been a very long couple of years for the precious metal bugs. The price of gold, silver and their related mining stocks have bucked the broad market up trend and instead have been sinking to the bottom in terms of performance.
Earlier this week I posted a detailed report on the broad stock market and how it looks as though it‘s uptrend will be coming to an end sooner than later. The good news is that precious metals have the exact flip side of that outlook. They appear to be bottoming as they churn at support zones.
While metals and miners remain in a down trend it is important to recognize and prepare for a reversal in the coming weeks or months. Let’s take a look at the charts for a visual of where price is currently trading along with my analysis overlaid.
Weekly Price of Gold Futures:
Gold has been under heavy selling pressure this year and it still may not be over. The technical patterns on the chart show continued weakness down to the $1300USD per once which would cleanse the market of remaining long positions before price rockets towards $1600+ per ounce.
There is a second major support zone drawn on the chart which is a worst case scenario. But this would likely on happen if US equities start another major leg higher and rally through the summer.
http://www.thegoldandoilguy.com/arti...riceOfGold.png
Weekly Price of Silver Futures:
Silver is a little different than gold in terms of where it stands from a technical analysis point of view. The recent 10% dip in price which shows on the chart as a long lower candle stick wick took place on very light volume. This to me shows the majority of weak positions have been shaken out of silver. Gold has not done this yet and it typically happens before a bottom is put in.
While I figure gold will make one more minor new low, silver I feel will drift sideways to lower during until gold works the bugs out of the chart.
http://www.thegoldandoilguy.com/arti...ceOfSilver.png
Silver Mining Stock ETF – Weekly Chart:
Silver miners are oversold and trading at both horizontal support and its down support trendline. Volume remains light meaning traders and investors are not that interested in them down where and it should just be a matter of time (weeks/months) before they build a basing pattern and start to rally.
http://www.thegoldandoilguy.com/arti...gStocksETF.jpg
Gold Mining Stock ETF – Weekly Chart:
Gold mining stocks continue to be sold by investors with volume rising and price falls. Fear remains in control but that may not last much longer.
http://www.thegoldandoilguy.com/arti...gStocksETF.png
Gold Junior Mining Stock ETF – Weekly Chart:
Gold junior miners are in the same boat with the big boys. Overall gold and gold miners are still being sold while silver and silver stocks are firming up.
http://www.thegoldandoilguy.com/arti...gStocksETF.png
Precious Metals Trading Conclusion:
In the coming weeks we should see the broad stock market top out and for gold miners along with precious metals bottom. There are some decent gains to be had in this sector for the second half of the year but it will remain very dicey at best.
If selling in the broad market becomes intense and triggers a full blown bear market money will be pulled out of most investments as cash is king. Gold is likely to hold up the best in terms of percentage points but mining stocks will get sucked down along with all other stocks for a period of time. This scenario is not likely to be of any issue for a few months yet but it’s something to remember.
Chris Vermeulen
See morehere.
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June 6th- How We Nailed The Market Low for 4.6% in 24 hours
Over a week ago we hit NUGT (Gold Stock 3x ETF) for 24% blended return in 48 hours doing the same, and the week prior UGAZ (Natural Gas 3x ETF) for 7.4% in 48 hours as well.
We try to find about 1 per week, sometimes more. This week we entered the TNA ETF (3x Long Small Caps) on June 5th as the market had continued its 2 week dive. We knew there was a 38% fibonacci pivot being hit from the recent market highs, and we thought that as a wave 4 pattern (Elliott Waves) we should go to the long side of the market as everyone was selling out.
We closed out TNA for 4.6% plus gains today and some ATP traders close to 6% if their entry was lower than the high average we are using (46.70). Our alert was to buy from 46-47 on the TNA ETF, and it traded after our alert between 45.70 and 47. If you picked it up with an average closer to 46 your gains were that much better.
We always try to scale into our trades on pullbacks in the first 24 hour window.
Either way, a 4.6% swing gain in 24 hours works for us and we don’t try to pretend we will hit the exact high, we just take the meat off the bone and leave the scraps for the vultures.
http://www.activetradingpartners.com.../06/66-tna.jpg
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June 10th- 5% gains in 30 minutes, how it’s done
Being a “Contrarian Trader” doesnt meant you are projecting 12 months out from now that a sector may turn around. You can actually identify shorter term intermediate bottoms in sectors, commodities like Coal, Natty Gas, Gold etc and then play off of those patterns.
At ATP we look for crowd behavioral patterns that are common and repeated throughout history and all market cycles, and then we exploit them with well timed aggression.
This morning on Stocktwits.com our followed saw our tweet that UNG (Natty Gas ETF) was bottoming in an ABC pattern, and therefore the contrarian trades were WLT, ANR and so forth.
At the time of our tweet it was 10 am EST. *WLT was at $14.80 and falling.
30 minutes later as Natty Gas turned up from the ABC bottom we identified (Over few weeks of pattern time) , WLT was up 5% in 1/2 hour.
Although this could be called a “Day Trade”, it still gives you an idea of how we think for swing trades as well. *About two weeks ago we identified a pattern bottom in GDX ETF, so we went long NUGT and pocketed 24% blended gains in 48 hours.
http://www.activetradingpartners.com...06/610-wlt.jpg
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Tech Giants Build Major Basing Pattern Again – AAPL, GOOG, YHOO, BBRY, XLK
How to trade technology stocks or the technology sector moving forward may not be that complicated. This report shows you where the big technology stocks are likely to go in the coming week or two. This is based strictly on technical analysis not fundamentals as fundamentals typically lag the market drastically.
If you have been following my analysis for some time you will recall the detailed report on AAPL and RIMM shares last year when I called the top in Apple shares and the bottom for RIMM (BBRY). In that report I walked you through the stages which stocks go through and where each of these stocks were trading at then. Be sure to review the charts quickly here: http://www.thegoldandoilguy.com/arti...-market-cycle/
In this week’s report I talk about the technology sector in more detail using the tech giants like Apple, Google, Yahoo, BBRY, and the XLK tech sector exchange traded fund. A picture says a thousand words so here are a few thousand words in picture format with my analysis and thinking as of this week.
Keep in mind that the market changes each day so forecasts and outlooks can flip within a couple days so nothing is set in stone and subject to change.
YAHOO – Daily Chart
Yahoo is in an uptrend with strong share accumulation. It continues to form bullish price patterns and points to higher prices in the coming week.
http://www.thegoldandoilguy.com/arti...3/06/yhoo1.png
Research In-Motion/Back Berry WEEKLY Chart:
This is a weekly chart so things move much slower. But overall the pattern on BBRY is very bullish and if the broad market does not start a correction this stock price should test $30 per share this summer.
http://www.thegoldandoilguy.com/arti...3/06/BBRY1.png
Apple Daily Chart:
Apple topped out months ago but is now starting to look ready for a bounce. It is forming a possible stage 1 base, and an inverse head & Shoulders pattern. Both point to higher prices and a gap window fill which is the next higher volume resistance zone.
http://www.thegoldandoilguy.com/arti...3/06/aapl1.png
XLK – Technology Sector Exchange Traded Fund
While I like the potential of individual stocks you are subject to individual news etc… which is a little to risky for my blood but my trading partner specializes in this type of trading and has been making a killing this year with his subscribers. The more conservative trader can focus on a basket of technology stocks using the XLK ETF which shows higher prices in the next week or two also.
Another way to play this is through options which is technically the least risky trading strategy there is when done correctly. You can see from these results options are VERY powerful – Options Trading
http://www.thegoldandoilguy.com/arti...13/06/xlk1.png
Technology Trading Conclusion:
In short, I like how the technology sector is looking for a continued move higher. Keep in mind the report I did a week ago talking about the intermediate cycle topping out for the SP500 soon. Stocks may just reach their recent highs then roll over in a big way. So any gains should be protected with partial profit taking and a protective stop.
Chris Vermeulen
See more here.
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Tis the Season to Look At Gold & Oil Prices!
The two most popular investments a few years ago have been dormant and out of the spot light. But from looking at the price of both gold and oil charts their time to shine may be closer than one may thing.
Seasonal charts allow us to look at what the average price for an investment does during a specific time of the year. The gold and oil seasonal charts below clearly show that we are entering a time which price tends to drift higher.
While these chart help with the overall bias of the market keep in mind they are not great at timing moves and should always be coupled with the daily and weekly underlying commodity charts.
Now, let’s take a quick look at what the god father of technical/market analysis shows in terms of market cycles and where I feel we are trading… As I mentioned last week, a picture says a thousand words so why write when I can show it visually.
John Murphy’s Business Cycle:
http://www.thegoldandoilguy.com/arti...06/JMCycle.png
Mature Stock Market:
http://www.thegoldandoilguy.com/arti...6/cycletop.png
Commodity Index Looks Bullish and Should Rise:
http://www.thegoldandoilguy.com/arti...013/06/GCC.png
Gold & Silver Seasonality, Price Charts w/ Analysis:
Precious Metals like gold and silver are nearing a bounce and possible major rally in the second half of this year.
http://www.thegoldandoilguy.com/arti...GoldSeason.jpg
Crude Oil Seasonality, Price Chart w/ Analysis:
Crude oil has been a tough one to trade in the last year. The recent 15 candles have formed a bullish pattern and with the next few months on the seasonal chart favoring higher prices it has been leaning towards the bullish side.
http://www.thegoldandoilguy.com/arti.../OilSeason.jpg
Chris Vermeulen
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While the Fed Parties, Gold & Oil Have Left the Building
Risk assets and financial markets around the world have been supported by central bank action for several years. Performing financial alchemy on a scale larger than has been seen in the history of mankind, central banks have hijacked global financial markets. Mountains of liquidity, artificially low interest rates, and the creation of future asset bubbles has been their calling card for the past few years.
Unfortunately, time is starting to run out and these great Keynesian minds are on the verge of encountering a series of problems. While central banks can create fiat currency out of thin air, they cannot create real wealth. In fact, central banks cannot print jobs, earnings growth, or an increase in wages.
Furthermore, in a paper put out by the New York Federal Reserve in 2012 and covered by zerohedge.com (“Fed Confused Reality Doesn’t Conform to Its Economic Models, Shocked Its Models Predict Explosive Inflation”) the Fed openly admits that forward outcomes cannot be predicted with accuracy by their economic models. Furthermore, one of the models known as the Smets and Wouters Model has predicted significant inflation if interest rates were held near zero for more than 8 quarters.
For inquiring minds, I would forward readers to the zerohedge.com article for a more in depth explanation. Ultimately the Federal Reserve is performing a gigantic experiment in real time while admitting their economic models do not accurately portray outcomes in the future. Nowhere can this be seen more than in recent price action in U.S. Treasury prices.
Since mid-November of 2012, the 30 Year Treasury Bond has seen prices go down by roughly 9% in value. When Treasury prices are falling, interest rates are rising as there is an inverse relationship between bond prices and yields. When longer term Treasury bonds are demonstrating rising interest rates it is a signal that the bond market is expecting higher inflation levels out into the future. The weekly chart of the 30 Year Treasury Bond is shown below.
http://www.optionstradingsignals.com...06/Chart11.jpg
As can clearly be seen above, prices have been coming down for several months and we have initiated a price pattern with lower highs and lower lows. This is not a bullish pattern by any means and should the 30 Year Treasury bond take out key support around the 135 price level the Federal Reserve will be in an awkward position.
The Fed’s problem lies in the fact that the Federal Reserve is printing nearly $85 billion dollars of fiat currency to purchase U.S. Treasury and agency bonds and rates have still risen. It would only make sense that at some point, the Federal Reserve will have to ratchet up their program to defend Treasury prices.
If the printing presses fire up fast and furiously to help put a floor under Treasury bonds (cap rates), what is going to happen to commodity prices such as oil? As shown below, the oil futures daily chart illustrates a coiled price pattern that ultimately will lead to a strong move in price.
http://www.optionstradingsignals.com...06/Chart21.jpg
A move in oil prices above the $96 – $98 / barrel level will likely lead to a powerful move higher in oil prices toward the $100 – $112 / barrel range. Obviously a big move is coming and we could see a move lower just as easily. I have no idea where price is going, but what I do know is that oil prices are staged up for a fast, large move in price.
Interestingly enough, gold futures are also in a basing pattern after selling off sharply earlier this year. Similar to oil futures, gold futures prices are coiling up as well and could go either direction as shown below:
http://www.optionstradingsignals.com...06/Chart31.jpg
As can be seen above, gold futures are trading in a consolidation pattern which could lead to a strong breakout in either direction. While the upside seems more likely, it goes without saying that lower prices are always a possibility. However, the point I would make to readers is that a large move in the near future seems likely in both gold and oil futures.
Gold is simply a hedge for inflation and acts as a senior currency, however if inflation increases gold will protect owners from a reduction in purchasing power. From an economic standpoint, oil and energy prices are far more important than gold prices. If the Federal Reserve’s Smets and Wouters Model is accurate in its expectation of strong inflation pressure in the future, I would anticipate seeing a strong move higher in both oil and gold prices.
However, the real point is that the Federal Reserve will likely find itself in a precarious position in the future. On one hand, they have to print money to backstop Treasury bonds through additional quantitative easing machinations.
On the other hand, the additional liquidity may start pouring into commodities if inflationary pressures begin to mount.
Ultimately the Federal Reserve may attempt to hold down interest rates to help the economy but if their activities cause energy prices to spike the U.S. economy will begin to move toward recession quickly. In addition to that scenario, it should leave many readers unsettled that it would appear Treasury rates are rising while the Federal Reserve continues to print vast sums of fiat currency to buy more government debt.
Ultimately, the Federal Reserve does not have a great answer about the future since they publicly admit many of their models do a poor job of predicting future economic conditions based on actions that they are taking. At the end of the day, this is just one gigantic Keynesian experiment worldwide and the outcome will follow historical trends.
It does not take an economic genius to understand that the vast amounts of fiat currency created by the unprecedented recent actions of the Federal Reserve will have to find a home somewhere. This process will likely manifest as dramatically higher prices for a host of necessities in the future. In fact, the recent parabolic rise in stock market prices can be viewed not as higher prices for equities, but simply lower valued U.S. dollars.
Perhaps instead of concocting models with large names which simply do not work, why doesn’t the Federal Reserve open a few history books. Regardless of what central bankers believe or what their models produce, history’s version of the outcome is simply unpleasant. Ultimately the Federal Reserve should focus on the old adage that those who ignore history are doomed to repeat it.
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The Pomo Push Saved the Uptrend Again!
I have previously written Fed/POMO and I have to do mention it again. *Yesterday morning I mentioned that if this trend is to remain up big money needs to be stepping into the market to lift stocks and save the trend. Luckily for the market and Ben Bernanke, there was a huge POMO day scheduled for yesterday where the Fed could buy up to $3,500,000,000 of securities.
http://www.thegoldandoilguy.com/arti...13/06/POMO.png
That massive QE buying pressure (POMO – Permanent Open Market Operations) I’m sure helped lift the market. Look at my simple yet effective technical traders analysis chart of SP500 Futures below.
http://www.thegoldandoilguy.com/arti.../06/Friday.png
The Fed’s massive securities purchases likely helped to trigger a strong short-covering push into the closing bell. *Remember, the prior day the indices had been hammered as short sellers drove the markets lower. When the shorts are forced to cover their positions, they do so by buying. *When strong enough, this produces strong waves of buying.
Remember not to be bias in your outlook on the market, but follow the trend, money and momentum and you should be on the correct side of the market more times than not.
Chris Vermeulen
See more here.
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Did anyone get the license plate on that Robot Trader?
Taking a look at the intra-day swings that the Robots use to whack you out of your trades with a loss
Most active traders should be aware by now that some 80% of the daily volume in the various trading exchanges is by what is called “programmed” trading. Some call it Bot’s, Robots, Algo programs, or other not so nice names. They are here to stay and you need to learn what a Robot type move looks like both up or down. If you can learn to spot some of the typical moves up or down, you can profit both on the selling and the buying and better time your entries.
I am sure we have all experienced a feeling of dis-belief when you watch one of your swing trade stocks suddenly turn about face on massive volume and seemingly plummet in the course of minutes or 20-30 minutes right? This is classic Algo trading programs and once you can spot them you are less likely to panic, and more likely to add to your position and grab the reversal back to the upside.
For sure, it helps to fully understand the fundamentals behind the company/stock that you are trading if at all possible, as that will also tend to prevent you from over reacting on the downside.
I use a 10 minute chart in real time, and certain technical indicators to help me follow the intra-day swings and try to better time my entries and exits.
Lets take a look at a few *stocks that today broke out at the open, gapped up, ran hard… then seemingly turned down without notice and with no news… a typical BOT trade pattern:
In this 10 minute chart, you can see the extreme high at 56.20, and about 1 hour and 20 minute later back down to 54.60 from 56.20. *At these extremes a day swing trader is taking those profits, and then waiting for the robots to complete the sell off and stop loss runs, and then SLOWLY entering or what we call “SCALING IN” as the stock bases a bit. (see the light blue line at bottom of chart around 54.50)
http://www.activetradingpartners.com...13/06/deck.jpg
Here is another one.. broke out at the open ran to 4.12 ranges, and then in 30 minutes with massive volume dumped to 3.93 for a 5% drop. Again, you could have exited out at the extreme indicator then looked to re-enter at the oversold indicator and Robot dumping ground:
http://www.activetradingpartners.com...13/06/snta.jpg
So the key here is be aware of those Robots coming at you with the Hummer vehicle ready to run your position over. *Be aware of “gaps” in the chart and when you see an extreme overbought condition on the daily chart, wait for that Robot truck to show up and run the stock back down towards those gaps before you get caught chasing.
See more here.
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June 18th – 13% gains in 48 hours in TNA Naked Puts
The OTS trading strategy focuses on selling premium in situations where implied volatility is higher than its historical average, bases entries on probabilities of success around 1 standard deviation or greater than 68% probability of success, and where the passage of time serves as a profit engine.
Since the beginning of April, the OTS Premium Option Trading Service produced the following returns.
http://www.optionstradingsignals.com...06/otsperf.png
The table above illustrates all of the trades that have been closed since April 1, 2013. As can be seen above, on 06/17 the OTS Portfolio sold TNA June Monthly 46.50 Puts naked. The position was closed in the final hour of trading on 06/18.
The trade capitalized on higher prices, time decay, and a reduction in implied volatility while producing a total gain on maximum margin incurred of around 13%. The price chart of TNA is shown below which illustrates where the OTS Portfolio sold TNA naked puts which is a synthetic long position in TNA.
http://www.optionstradingsignals.com...013/06/tna.png
Ultimately the trade was a success and adds to a string of solid trading performance as of late.
See morehere.
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June 23rd- How we scored 7.7-8% gains in a few days in DXM
We alerted our stock swing traders to an opportunity in DXM on Friday, June 14th. We felt the stock was poised to move to the upside near term and it was time to enter. This was after watching the stock on our watch list for many days and following the behavior of the stock and how it trades.
Armed with this information, we advised our traders to buy from 17.40-17.90 per share if possible that day.
2-3 trading days later we we booked gains at 8% and 7.7% gains respectively taking 1/2 off the table on each sell alert sent to our traders.
June 18th- 10am EST
“DXM- 19.07*Time to punch out final 1/2 and take 7.7% or so gains”
http://www.activetradingpartners.com...e-1024x450.jpg
See more here.
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Big Money Making Trades for July – Gold Miners, Nat Gas, SP500
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Precious Metals Life Cycle Nears an End – Final Stage of Denial
The life cycle of most things not matter what it is (living, product, service, ideas etc…) go through four stages and the stock market is no different. Those who recently gave in and bought gold, silver, mining stocks, coins will be enter this stage of the market in complete denial. They still think this is a pullback and a recover should be just around the corner.
Well the good news is a recovery bounce should be nearing, but if technical analysis, market sentiment and the stages theory are correct then a bounce is all it will be followed by years of lower prices and dormancy.
I really do hate to be a mega bear or mega bull on anything long term but the charts have painted a clear picture this year for precious metals and I want to share what I see. Take a look at the chart below which shows a typical investment life cycle using the four stage theory.
The Four Stages Theory
Classic economic theory dissects the economic cycle into four distinct stages: Accumulation, Markup, Distribution, and Decline. Stock, index or commodities are no different, and proceeds through the following cycle:
- Stage 1 – Accumulation: After a period of decline a stock consolidates at a contracted price range as buyers step into the market and fight for control over the exhausted sellers.* Price action is neutral as sellers exit their positions and buyers begin to accumulate.
- Stage 2 – Markup: Upon gaining control of price movement buyers overwhelm sellers and a stock enters a period of higher highs and higher lows.* A bull market begins and the path of least resistance is higher.* Traders should aggressively trade the long side, taking advantage of any pullback or dips in stock price.
- Stage 3 – Distribution: After a prolonged increase in share price the buyers now become exhausted and the sellers again move in.* This period of consolidation and distribution produces neutral price action and precedes a decline in stock price.
- Stage 4 – Decline: When the lows of Stage 3 are breached a stock enters a decline as sellers overwhelm buyers.* A pattern of lower highs and lower lows emerges as a stock enters a bear market.* A well-positioned trader would be aggressively trading the short side, taking advantage of the often quick decline in share price.
http://www.thegoldandoilguy.com/arti...06/Stages1.png
Gold Price Weekly Chart – Stages Overlaid
http://www.thegoldandoilguy.com/arti.../06/gold11.png
Silver Price Weekly Chart – Stages Overlaid
http://www.thegoldandoilguy.com/arti...6/silver11.png
Gold Mining Stocks – Monthly Chart
This chart is a longer term picture using the monthly chart. I wanted to show you the 2008 panic selling washout bottom in miners which I think is about to happen again. While physical gold and silver are in a bear market and should be some a long time, gold mining stocks will likely find support and possibly have a strong rally in the coming months.
Many gold stocks pay high dividends and are wanted by large institutions and funds. The lower prices go the higher the yield is making them more attractive. So I figure gold miners will bottom before physical metals do. A bounce is nearing but at this point selling pressure and momentum continue to plague the entire PM sector.
http://www.thegoldandoilguy.com/arti...3/06/gdx11.png
Precious Metals Investing Conclusion:
In short, I feel with Quantitative Easing (QE) likely to be trimmed back later this year, and with economic numbers slowly improving along with solid corporate earnings the need or panic to buy gold or silver is diminishing around the globe.
While there are still major issues and concerns internationally they do not seem to have any affect on precious metals this year. Long terms trends like the weekly and monthly charts shown in this report tends to lead news/growth/lack of growth by several months. So lower precious metals prices may be telling us something very positive.
The precious metals sector is likely to put in a strong bounce this summer but after sellers will likely regain control to pull prices much lower yet.
Chris Vermeulen
See morehere.
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June 27th- Back to the Highs for SP 500?
Back on June 7th for our TMTF Subscribers we did a chart and outlined a probable ABC pattern showing a likely B wave rally, then a drop to 1560 or 1584. *When the B wave snuck over the 61% fibonacci retracement of wave A, we though maybe it was a shallow 23% Wave 4 (1606). So perhaps the market was done with the correction we wondered…
Below is the June 7th forecast we sent to subcribers in Chart format:
http://www.themarkettrendforecast.co...tmtf-sp500.jpg
However, we got snookered by the Fed notes and the market continued lower in a C wave to 1560 as it turned out. Our original hunch was right…we should have stuck with that call as we found out… but… the bottom line is we had 1584 and 1560 in our original June 7th views and they both hit on the nose…
So now what?
The SP 500 hit 1560 the 38% retracement of the Wave 3 rally from 1343-1687 on the nose and reversed.
So far 60 points to the upside. *Near term we would expect a minor 2 pullback and then a minor 3 rally to the upside towards the 1680 areas… prior highs.
This wave 5 up from 1560 may be complex and hard to forecast, but we should assume at least a likely re-test of the 1687 highs in the coming weeks, and then go from there.
Here is a 2 month chart-
http://www.themarkettrendforecast.co...mtf-sp-500.jpg
See more here.