Archive for 2010

How To Profit In A Market Correction

How To Profit In A Market Correction

Courtesy of David at All About Trends

Last week’s action should not come as any surprise to those who follow us closely. Since the beginning of the month we talked about being overbought, we talked about not chasing the market or stocks, we talked about not reacting when the drive by media was saying WOW the market is up it’s time to buy. We talked about follow the leaders and how for weeks leading stocks were selling off and why that was important as it always forecasts how the rest of the market isn’t far behind. We talked about listening to the market and what it was saying. Now you know why we say what we say all the time. And sure enough here we are!

We even showed you how to use short term support and resistance levels and how they act real time.

Now you know why we hit and ran early in the month and went to cash. We’re up for the month nicely while the market hasn’t gone anywhere since the beginning of October.

 

The chart above shows that of being in the zone for a potential turn higher in the coming days. It’s the quality of that bounce when we get one that we are most concerned with.

 

You can see the lower blue line support level is very near. It would not surprise us to see us open down there on Monday. Why? Because when you go into a weekend like we have, emotional money has the tendency to listen to fear without doing their homework like we are so they hit the sell button on their online accounts to sell at the open at the market. And you know what? All those orders are sitting on the books for when the market makers and specialists come in Monday morning.

They know there are sell orders on the books from the weekend so do you really think they are going to be nice to that emotional money and let them out? Chances are not. This is what’s called trap door opens. It’s where they gap down and fill all that emotional money then run the market without them. We’re not saying this is the way it’s going to be, we’re just saying we’ve seen it before and don’t be surprised if the open…
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New Year: New Economic Boom? Why 2010 Should Be One to Remember

Elliott Wave International’s report puts 2010 into Elliott Wave perspective. The 13-page report is available for free download now. Learn more here. – Ilene

New Year: New Economic Boom? Why 2010 Should Be One to Remember

By Nico Isaac

Close-up of a stack of gifts

In the realm of market psychology, there’s a big difference between optimism and extreme optimism. The first is seeing the glass half full. The second is seeing the glass half full deep in the heart of a bone-dry desert. In finance, it’s what we call "Buying the Dip" mentality — when all outcomes, even losses, are cause for celebration.

We are there now.

To wit: With a new year upon us, the mainstream has already come up with a fresh tagline to define the next 360-or so days. It even rhymes: The Bull Runs Again In 2010. This projection is in no way "in spite of" the fact that the U.S. stock market just finished its first decade of negative returns since the Great Depression; it’s because of that fact. 

See, according to the mainstream experts, this "Lost Decade" of abysmal stock performance (in which the Dow ended 9% in the red, the S&P 500 – 24%, and the NASDAQ Composite – 44%) is the very foundation on which a new bull market will apparently be born. One economic scholar recently coined the phenomenon the "Slingshot Effect" — the more severe the downturn, the faster the recovery. (Associated Press)

Adding to the upbeat chorus are these recent news items:

"The horrible decade has wiped out all the excesses of the previous two decades and put us back on track for more normal returns." (USA Today) — AND — "It may be the best of all possible worlds." (Business News)

Back in the late 1990s, when the "unstoppable" NASDAQ began to experience regular days of double-digit drops, it was "Buy-the-Dip." Now, it’s "buy the entire lost decade." And, as the Dec.31, 2009 Elliott Wave Financial Forecast Short Term Update reveals — current sentiment readings "continue to show that stock market bears have packed up and moved to Florida for the winter."

The Dec. 31 Short Term Update also reveals two mind-blowing charts of the S&P 500 versus Investor Intelligence Advisors Survey Percentage of Bears — AND, the S&P 500 versus the percentage of "Fully Committed" bullish advisors since 2000. The current reading
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The Volcker Rule = Job Creation.. NOT!

Courtesy of asiablues

By Economic Forecasts & Opinions

Last Thursday, President Obama unveiled the toughest new restrictions yet on the nation’s largest banks in the aftermath of the financial crisis. The proposal is called the “Volcker Rule”, in recognition of the former Federal Reserve chairman, Paul A. Volcker, who has been pushing the proposal for months.

Under the still sketchy Volcker Rule, referred to as “Glass-Steagall in spirit,” banks that take federally insured deposits or have the right to borrow from the Fed would be required to minimize the trading they do on their own account and give up their stakes in hedge funds and private equity firms.

In other words, banks can choose to engage in proprietary trading (prop trading), or be a traditional bank, but can’t do both.

The plan has plenty of skeptics and it’s too early to know whether it will win congressional approval. But the specter of new profit-crimping regulation was enough to batter the bank stocks sending the Dow Jones Industrial Average down 213.27 points, or 2%, to 10389.88, the biggest decline since last fall.

Right Direction, But…

In recent years, banks have bulked up their profits in areas way beyond the traditional banking. The far more profitable and risky investing banking units have grown dramatically and were at the heart of the financial crisis.

While a renewed focus on financial reform by the Obama administration is certainly a welcoming sign and in the right direction, it certainly does not address the more dire issue of the Middle America – jobs.

Moreover, the timing and haste of the proposal has drawn criticism that this is simply a transparent attempt at populism, as it came two days after voters in Massachusetts sent a Republican to the Senate depriving Democrats of the 60 votes often needed to prevent a Republican filibuster in the Senate.

Missing the Point

The Massachusetts defeat of the Democrat essentially signed, sealed and delivered the one-year report card of the Obama Administration.

While the nation was suffering through the worst economy since the Depression, the Democrats wasted a year on mis-directed priorities such as overhauling health care, expanding college aid, and reducing climate change, etc., while forestalling a much needed legitimate mass job creation strategy.

Poverty Expanded to Suburbs

A new study from the Brookings Institution found that in 2008,…
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It’s Time for a Shareholder Protection Act

It’s Time for a Shareholder Protection Act

Courtesy of Robert Reich at Robert Reich’s Blog

Five members of the Supreme Court have defied logic by assuming that corporations are people. They are not. They are legal fictions, nothing more than bundles of contractual agreements. They are owned by their shareholders.

So what do we do now, other than wait for another Supreme Court opening, and for the President to appoint another Justice who understands this?

Push Congress to enact the “Shareholder Protection Act.”

For many years, anti-union lobbyists have pushed what they call “pay-check protection” laws, supposedly designed to protect union members from being forced, through their dues, to support union political activities they oppose. Under such laws — already in effect in several states — no union dues can be spent for any political purpose unless union members agree.

The same principle should protect shareholders from being forced to spend their share of corporate earnings in favor of or against a particular candidate. Surely a First Amendment that protects corporate free speech protects individuals no less.

Under a shareholder protection law, shareholders would not have to spend their share of corporate earnings on candidates who they personally oppose. If a company dedicates, say, $100,000 to a particular campaign in a given year — directly, or indirectly through a front organization — shareholders who don’t want their money used this way would get a special dividend or additional shares representing their pro rata share of that campaign expenditure. (Mutual funds and pension plans would have to notify their shareholders of any such political activity among the companies they’ve invested on their shareholders’ behalf, and seek their shareholders’ permission.) This way, corporate money for or against a particular candidate would be paid for only by shareholders who wanted to spend their portion of company earnings on it.

The Shareholder Protection Act is something even Scott Brown should be able to get behind. As should a Supreme Court supremely sensitive to First Amendment rights.

 





What the “I’m Mad-As-Hell” Party Could Do

Need a political party change? — the latest: the IMAHers. – Ilene

What the "I’m Mad-As-Hell" Party Could Do

Courtesy of Robert Reich at Robert Reich’s Blog

A third political party is emerging in America. Call it the I’m-Mad-As-Hell party.

It’s a mistake to see the Mad-As-Hell party as just a right-wing phenomenon – the so-called Tea Partiers now storming the gates of the Republican Party. There are plenty of mad-as-hellers on the left as well – furious at Wall Street, health insurers, pharmaceutical manufacturers, and establishment Democrats.

Mad-as-hellers don’t trust big government. But they don’t trust big business and Wall Street, either. They especially hate it when big government gets together with big business and Wall Street – while at the same time Main Street is in shambles and millions of people are losing their jobs and homes. 

First it was TARP, the giant bank bailout that seems to have made Wall Street flush again — so flush the Street is now distributing giant bonuses as if the crash it brought on never happened.

Then came the stimulus package, replete with earmarked goodies for every corporation big enough to hire a team of Washington lobbyists.

And then it was health care, which to some people looked like a sweetheart deal between government and Big Pharma and big health insurers.

To the Mad-As-Hell party, the biggest event last week wasn’t Scott Brown’s upset victory in Massachusetts. It was the Supreme Court’s decision in Citizen’s United vs. the Federal Election Commission, allowing corporations to spend however much they want on political campaigns. True mad-as-hellers see this as inviting even more collusion between big business, Wall Street, and big government – and against the rest of us.

With the mid-term elections months away, both Republicans and Democrats are scrambling to embrace the Mad-As-Hell Party as their own. Republicans are hoping the mad-as-hellers forget the gushing corporate welfare of the Bush administration and the last Republican congress. And Democrats have become born-again economic populists, blaming the nation’s problems on the same “fat cat” bankers and corporate lobbyists they’ve been cozying up to for years.

If the Mad-as-hell Party helps get money out of politics it will do a world of good. I might even join up. But if it just fulminates against the establishment, forget it. Wrecking balls are easy to wield. Rescuing our democracy is hard work.

 





Market Snapshot + Bull Flag Chart Pattern

Courtesy of Market Tamer

Market Snapshot

Well, it appears we are getting our pullback as we had expected would happen.  We are certainly grateful that we were generously hedged as indicated in last week’s newsletter.  This decline may have taken others by surprise but we were ready for it.  Our positions are now biased bearish and delta negative.  The task is now to determine likely targets for the down move.  It is difficult to accurately determine the magnitude and duration of a move such as this one.  The place to begin is to identify where a confluence of indicators exists.  These are areas where several data points line up to tell us a similar story.  While this does not mean that the market is going to cooperate, having a system is important in order to remain disciplined in your decision-making. 

It is healthy that the stock market has a pullback.  We are long-term bullish, and retracements such as these are crucial to long-term strength.  We will simply follow the correction and look to profit from it with bearish strategies, such as bear calls, long puts as well more advanced strategies which we teach at MarketTamer.com.  I am reminded of the analogy that the market goes up like an escalator and down like an elevator.  The last three trading days certainly support that truism.  

As the market approaches target levels noted in the charts, we will begin to take close note of how it reacts at those key levels.   Typically, you will see the indexes put in narrower range trading days with less volume at support.  Don’t be fooled!  The market can do this several times on the way down.  If the market begins to stall and trade sideways, it is tempting to remove hedging, only to be surprised by subsequent whipsaws.  The safest approach is to wait for upside confirmation before determining that the market has found a bottom.  You may miss the exact turn, but don’t let that bother you – safety first is the rule!  Do not underestimate the market’s ability to follow through to the downside.  Momentum can be a freight train and you don’t want to step in front of it.  Just hop on board and ride it to the end of the line. 
 

ECONOMIC REPORTS

MONDAY 1/25

Existing Home Sales

TUESDAY 1/26

Case–Shiller 20 City Index, Consumer Confidence, FHFA Home Price Index

WEDNESDAY 1/27

New Home Sales, Crude Inventories, FOMC Rate Decision

THURSDAY 1/28

Initial Claims, Continuing Claims, Durable Orders

FRIDAY…
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Week-end outlook!!!

Week-end outlook!!!

Courtesy of Michael at EW trends and charts

This is the SPX, and I went through looking for areas of support where a reversal might happen, and I purposely did it without any Elliott wave influence, just to see what traditional Technical analysis would say.

I found heavy areas of support between 1083.75-1085.89 -- a series of important lows made over a period of about one month; below that, there is an open gap at around 1070. These are areas where reversal is likely. Gaps are wonderful calling cards, and with the price action heading in their direction, they often get filled before the reversal.

The last major support on the chart is at 1029.38, a low made back on November 2nd.

I then put on a set of Fibonacci fans, where you can combine the price and times of common Fib levels. (See also Fibonacci Fans.)

Summing up my data, there are three areas where I think a reversal might happen (red dash lines). On this 60 minute chart, there are no divergences developing yet on the indicators. We normally see negative divergences before a trend change takes place, they are one of the first warning signals that the price action is showing signs of weakness. 

This is what I have for the Elliott wave count, a series of 1-2′s, with no confirmed signs of a finished 3rd wave. For speculation purposes, I set the count up, as if we have just completed the first (and the smallest degree) 3rd wave (iii) at 1090.18, the low on Friday so I could try and get some idea where the over-all wave (1?) could finish up.

I was amazed after I set the 50% Fib retracement level right in the middle of the smallest degree 3rd wave to see where the 38.2% and 61.8% levels ended up, encasing the whole 3rd wave (iii).

The conclusion, is that ending at 1055.10, would make the perfect size wave, if there where no extended or truncated waves along the way to mess things up. So, considering everything , I am looking for a reversal around 1045-1060, by using the support of the Fib fan, the Fib retracement levels of both charts, and the Elliott wave theory to base it on.

Warning!

We currently have seven completed waves, and that number counts out as a correction, that is, the sell-off as of now can be counted as an…
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Debtwatch No. 42: The economic case against Bernanke

Debtwatch No. 42: The economic case against Bernanke 

Courtesy of Steve Keen’s Debtwatch 

Business people looking down at man lying on pavement, elevated view

The US Senate should not reappoint Ben Bernanke. As Obama’s reaction to the loss of Ted Kennedy’s seat showed, real change in policy only occurs after political scalps have been taken. An economic scalp of this scale might finally shake America from the unsustainable path that reckless and feckless Federal Reserve behavior set it on over 20 years ago.

Some may think this would be an unfair outcome for Bernanke. It is not. There are solid economic reasons why Bernanke should pay the ultimate political price.

Haste is necessary, since Senator Reid’s proposal to hold a cloture vote could result in a decision as early as this Wednesday, and with only 51 votes being needed for his reappointment rather than 60 as at present. This document will therefore consider only the most fundamental reason not to reappoint him, and leave additional reasons for a later update.

Misunderstanding the Great Depression

Bernanke is popularly portrayed as an expert on the Great Depression—the person whose intimate knowledge of what went wrong in the 1930s saved us from a similar fate in 2009.

In fact, his ignorance of the factors that really caused the Great Depression is a major reason why the Global Financial Crisis occurred in the first place.

The best contemporary explanation of the Great Depression was given by the US economist Irving Fisher in his 1933 paper “The Debt-Deflation Theory of Great Depressions”. Fisher had previously been a cheerleader for the Stock Market bubble of the 1930s, and he is unfortunately famous for the prediction, right in the middle of the 1929 Crash, that it was merely a blip that would soon pass:

“ Stock prices have reached what looks like a permanently high plateau. I do not feel that there will soon, if ever, be a fifty or sixty point break below present levels, such as Mr. Babson has predicted. I expect to see the stock market a good deal higher than it is today within a few months.”  (Irving Fisher, New York Times, October 15 1929)

When events proved this prediction to be spectacularly wrong, Fisher to his credit tried to find an explanaton. The analysis he developed completely inverted the economic model on which he had previously relied.

His pre-Great Depression model treated  finance…
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ROACH: HIGH PROBABILITY OF DOUBLE DIP RECESSION

ROACH: HIGH PROBABILITY OF DOUBLE DIP RECESSION

Courtesy of The Pragmatic Capitalist

“I think global growth is going to be anemic and I’d put a 40 percent chance on a double dip at some point in the next couple of years,” Stephen Roach, chairman, Asia of Morgan Stanley, told CNBC Friday. Marc Faber, author of the “Gloom, Doom and Boom Report” joined the discussion.

 





THE GREAT 18 YEAR HOUSING CYCLE

THE GREAT 18 YEAR HOUSING CYCLE

Courtesy of The Pragmatic Capitalist

Good read here from Globe Asia: 

The Great 18-Year Real Estate Cycle_ February 2010

 





 
 
 

Zero Hedge

Enemy Of The People?

Courtesy of ZeroHedge. View original post here.

Via The Zman blog,

There has never been a time when normal people did not know the media was biased and biased in a predictable direction. For every non-liberal in the media, there were at least ten liberals. The ratio was probably higher, but then, as now, some lefties liked to pretend they were independents or some third option.

The media used to invest a lot of time denying they had a bias and an agenda, but the only people who believed them were on the Left, which had the odd effect of confirming they had a bias and an agenda.

...



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Phil's Favorites

A 2019 Earnings Recession?

 

A 2019 Earnings Recession?

Courtesy of 

Shout to Leigh!

On the new Talk Your Book – Josh Brown is joined by Leigh Drogen of Estimize, one of the leading providers of crowdsourced financial and economic data to talk about the trend in corporate profits that could potentially lead to an earnings recession later this year.

What is the thing that Leigh is seeing in the data that Wall Street isn’t yet picking up on? What segment of the stock market is most at risk? Why is the crowd smarter than the narrow consensus of Wall Street analysts?

Check out Estimize ...



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ValueWalk

D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...



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Kimble Charting Solutions

Gold & Silver Testing Important Breakout Levels!

Courtesy of Chris Kimble.

Gold and Silver from a long-term perspective have created a series of lower highs over the past 8-years. Will 2019 bring a change to this trend? A big test is in play!

Gold since the lows in 2016 has created a series of higher lows, while Silver may have created a double bottom.

Gold & Silver are currently facing break attempts a (1) and (2). These falling resistance lines have disappointed metals bulls for the past few years.

The direction of Gold and Silver weeks and months from now should be highly influenced by what each does as they are attempting to break above important resistance levels.

To become a member of Kimbl...



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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ...

http://www.insidercow.com/ more from Insider

Digital Currencies

Russia Prepares To Buy Up To $10 Billion In Bitcoin To Evade US Sanctions

Courtesy of Zero Hedge

While the market has been increasingly focused on the rising headwinds in the global economy in general, and China's economic slowdown in particular, while the media is obsessing over daily revelations that Trump may or may not have colluded with Russia to get elected, a far more critical, if underreported, shift has been taking place over the past year.

As we reported in June, whether due to concerns over draconian western sanctions and asset confiscations following the poisoning of former Russian military officer Sergei Skripal, or simply because it wanted to diversify away from the dollar, Russia liquidated virtually all of its Treasury holdings in the late spri...



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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's failure based on his personality, which was evident years ago. This article, written in 2017, references a prescient article Bill wrote before Trump became president, in July, 2016, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

Reminder: We are available to chat with Members, comments are found below each post.

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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