The News / Hottest

For the second day in a row, Merlin is alone in studio and takes the time to answer several listener questions. Using visual examples, he takes a look at how yesterday’s short bearish harami setup on the QQQs panned out, and the logic behind the setup. He also continues his discussion of using scanners on currency pairs, not just equities. Finally, he reviews the performance of the automated trading system account he opened up last month.



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Most people incorrectly assume that trading is all about understanding the fundamentals of the market or knowing the balance sheet of a company. It doesn’t have as much to do with that as it does with understanding people. People’s perceptions or expectations of a company or even the entire economy are what drive prices of securities. Prices of equities, commodities, and currencies are all subject to the same laws of supply and demand as is any other product. In fact, this is why you will often see prices drop after a company meets expectations for an announcement. The demand for the shares prior to the release overwhelmed the supply. Sellers realized this and raised their prices they were asking for shares. Buyers, in a desperate attempt to own shares, will raise the amount they are willing to pay for them.

For instance, if Tata Motors sells a larger amount of cars than expected, but traders have already anticipated this, then the price will not move up as you might expect. The traders who were expecting positive sales results have already bought their shares prior to the announcement. This should have caused a rise in price for the reasons I stated above. Once the data is known by everyone and there is no surprise, some buying may come in. However, the traders who already own shares are disappointed that the price isn’t rising more or they are satisfied with their profits and begin to sell. Without increased buying pressure from interested parties, these sellers must drop their price to attract buyers to take their shares.

So you see how human emotion, basically fear and greed, will motivate traders to act in the market. This is what causes price movement. So to be successful in trading, you need to know how to read this emotion and the strength of it. That is what technical analysis does. The charts show us the actions of the traders who are involved in that security. In looking at candlesticks and technical tools, we can read the strength of the emotion of those who will move the markets. We can see when this emotion is shifting and leading market turns.bullish candles

We can read the price candles for much of this information. If you are in a bullish trend that you expect to continue, you would expect the share price to close at or near to the high of the day or the high from several days. You would be seeing green candles on your chart with very few or small topping tails.

If price closes away from the highs, then the buying pressure has weakened, or selling pressure has gained. Either way, it is not good for the people holding the stock long. If there is a close that occurs significantly far from the highs, it could signal a possible change in trend.



The same applies to when selling pressure is gaining or weakening. You would expect a very weak stock to be closing at or near the lows. If it doesn’t, then buyers are strengthening or sellers are weakening or both are occurring. So by viewing traders’ actions in a graphical format, we can make assumptions about the strength of the movement of the stock price. These observations are part of our decision making process to time proper entries and exits in the market. That is what technical analysis can offer you as a trader or investor.


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Retail sales in the U.S. rose by much less than expected in the month of June, according to a report released by the Commerce Department on Tuesday, although the report also showed upward revisions to the sales growth in the two previous months.

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The Commerce Department said retail sales edged up by 0.2 percent in June compared to economist estimates for an increase of about 0.6 percent.

While the sale growth came in well below estimates, the report also showed that retail sales rose by an upwardly revised 0.5 percent and 0.6 percent in May and April, respectively.

The weaker than expected sales growth in June was partly due to a drop in auto sales, which fell by 0.3 percent after climbing by 0.8 percent in the previous month.

Excluding the drop in auto sales, retail sales rose by 0.4 percent in June, matching the revised increase seen in the previous month. Ex-auto sales had been expected to increase by 0.5 percent.

The report also showed that sales by building materials and supplies dealers pulled back by 1.0 percent in June after rising by 0.6 percent in May.

On the other hand, sales by general merchandise stores jumped by 1.1 percent in June after edging down by 0.1 percent in the previous month.

Notable sales growth was also shown by health and personal care stores, clothing and accessories stores, and non-store retailers.

Closely watched core retail sales, which exclude autos, gasoline, and building materials, increased by a solid 0.6 percent in June after inching up by 0.2 percent in May.

Christoph Balz, an economist at Commerzbank, said, "Don't be misguided by the weak 0.2% increase in U.S. retail sales in June. The offsetting good news is that sales in April and in May rose stronger than previously reported."

"Moreover, even the June figures are more encouraging than they appeared to be at first sight as sales rose by a solid 0.6% in the core business," he added. "All in all, the steady recovery in the labor market increases consumers' willingness and power to spend."

The Commerce Department noted that total retail sales in the month of June were up by 4.3 percent compared to the same month a year ago.



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Every trader has to start somewhere! Sunil Mangwani shares, with Merlin, his rocky road from book learning, to understanding the fundamentals of Supply and Demand. Sunil also takes a look into how commodities influence currency action and can be used as an odds enhancer. The duo also look at a variety of yen pairs including AUDUSD, USDJPY and GBPJPY.



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As markets continue to power to new highs, Tillie Allison offers insights as to how to protect profits and reduce risk exposure. She also talks about how she has transitioned into other futures products like Oil to capitalize on volatility. Tillie also discusses her learning path and how she tries to give back by hosting special events at the Online Trading Academy centers when she is teaching.



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DR. Mark Thornton joins John O'Donnell and Merlin Rothfeld for a look at the resurgence of Detroit, and how many Austrian Economic principles are key in the resurrection. The trio also talks about drug policy and how political acceptance is impacting drug cartels around the world. This acceptance provides significant opportunities for entrepreneurs and investors alike! John also talks about his new weight loss challenge!



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I’m currently in the middle of a transaction where the question of representation and good representation has been an issue. It got me to thinking about the assumptions many people make when using a real estate agent/broker. It is often funny to me that so many people want to work with the “listing agent” in a “dual agency” situation, I feel most of the time this is not ideal, let me explain.

First, let me define what “dual agency” is: Agency refers to the relationship between a buyer/seller and the real estate agent/broker. Dual agencies can occur with two agents or a single agent. The first kind of dual agency occurs when the buyer and seller are using agents licensed under the same broker. With this kind of dual agency the buyer and seller are both represented, however legally they are represented by the same “Broker.” This must be disclosed by law. I found myself in this situation on a piece of commercial property and felt unrepresented. The agents were more concerned about getting the deal done than both mine and the seller’s interest. In meetings, it was often hard to tell which agent was representing me.

The second kind of “dual agency” is more common for a retail buyer. This is when there is one agent that represents both the seller and buyer. This can happen naturally, like when an agent is holding their own listing open and an unrepresented buyer walks in and falls in love with the property or when an agent gets a listing that is perfect for one of their clients. It can also happen where the buyer seeks out the listing agent (this one I truly don’t understand) thinking they will get a better deal by using the listing agent. In the bible it says “a man can’t serve two masters.” Now a real estate transaction doesn’t have to be a “win” or “lose” negotiation, however it is the listing agent’s responsibility to get “the best and highest offer.” The buying agent’s responsibility is to “represent their client in whatever is their desired outcome” i.e.; lowest price, acquire the property at any cost….

States handle dual agency differently, but I’ve found most do require there be full disclosure. In most states, the agent is also limited to the amount of information that can be shared with the seller and buyer – for example, in New Jersey, the agent cannot advise the buyer on how much to offer nor can the agent advise the seller to accept or reject an offer. In California, the law specifically prohibits someone acting as a dual agent from telling the buyer how low the seller will go, or from telling the seller how high the buyer will go. I appreciate the way the Dept. of Real Estate in New York advises consumers “…when a person enters into a dual agency relationship, they are forfeiting their right to that agent’s loyalty. The agent then cannot advance the interest of either party.”

All situations are different, but I would say that I feel it is healthier as a practice to have your own representation. I’ve even known some agents that have found themselves in a natural position of dual agency to bring an agent in for the buyer so that both parties have their own advocate. My advice to you is that you should always feel that whoever is representing you is moving your agenda forward with their guidance.

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Teaching on the road in NC, Scott Greer takes time out of his schedule to join Merlin for a look at the significant currency movers. Scott shares his thoughts on the US Dollar indexes and how they should be adding more thrust for future market moves, until ultimately hitting a wall! Scott and Merlin take listener questions as well, shedding some light on the current trajectory of the Cable, and Loonie.



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New home sales in the U.S. showed a notable decrease in the month of June, according to a report released by the Commerce Department on Thursday, with the steep drop offsetting the jump seen in the previous month.

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After several years, Dodd-Frank has fallen short of its intended goal, leaving big firms to continue to reap big rewards off the average investor. Master instructor Paul Orme, joins the show to look at the plans shortcomings and what investors should be doing to secure their financial future. The duo also take a look at 401k rollovers and what to look out for.


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