by ilene - September 17th, 2009 1:27 pm
Note: Our friends at Elliott Wave International have announced the beginning of their "FreeWeek event, where they throw open the doors to some of their most popular paid services to non-subscribers for one week." This time, they’re offering complete access to The Asian-Pacific Short Term Update and The European Short Term Update. - Ilene
FreeWeek Kicks Off With Germany: Click HERE to sign on and get invaluable insight into Europe’s #1 market.
Courtesy of Elliott Wave International
It’s one of the first rules in the book of mainstream economic wisdom: a country’s economy is the thermometer which "reads" its stock market’s temperature. If financial conditions are heating up, stocks rise; if they are cooling down, stocks fall. Were it so simple — millionaires wouldn’t make up a measly .15% of the global population.
Obviously, there’s a major flaw with this logic; namely, it isn’t true. Time and again, stock prices smolder to near boiling even as economic growth chills to the bone. (The opposite also holds: Stock prices cool down even as the economy is on fire.)
Take, for instance, Germany’s main stock index, the DAX 30. On August 13, Europe’s number one economy reported a .3% rise in gross domestic product (GDP) — Germany’s first quarter of growth since January 2008. Soon after, the DAX began to rally and finished the day at a fresh, ten-month high.
In no time at all, every financial media outlet from Wall Street to la-la land had their story: "Germany’s DAX rose nearly 1% on the GDP data. The big picture will be one of ongoing gradual recovery through 2010." (LA Times)
One problem: the DAX’s bullish flame has been burning since the index landed at a two-year low on March 9, 2009. YET — the economic data over those six months has been about as "hot" as the Arctic Circle. Here, the following news stories from the time say plenty:
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
Facebook
Twitter
by Chart School - September 4th, 2009 2:31 pm
Courtesy of Damien Hoffman at Wall St. Cheat Sheet
“The Professor” Corey Rosenbloom at Afraid to Trade offers us a longer term look at Gold. Although it’s breaking out on the shorter-term charts, the chart above clearly indicates there exists resistance above which must be cleared for the next bull rally to run. (Source: Afraid to Trade)
Gold Priced in Multiple Currencies
Precision Capital Management offers a very interesting look at Gold priced in multiple currencies. They state: “Gold is one of the leading indicators we follow at our website. Everyone seems to have noticed the spike up this week in gold, but how do we determine if the move is real, or merely a fakeout? To confirm that gold is advancing on its own merits as part of a longer term move, which is not the result solely of US Dollar weakness, we want to see confirmation of an up move in gold priced in other currencies. Above shows gold priced in the Canadian Dollar (CAD), Australian Dollar (AUD), Japanese Yen (JPY), and the Euro (EUR). When gold began its last advance in November 2008, the move was confirmed by higher lows in the commodity currencies of the CAD and AUD, as well as the EUR (even though there were lower lows in the JPY and USD gold). Eventually, there were higher lows in the JPY and USD gold at the beginning of December 2008. Accordingly, for the gold bull case, early confirmation would be to see current lows in AUD, CAD and EUR gold respected on the first pullback (especially in the former two as they are commodity currencies), preferably accompanied with a break through overhead resistance.” (Source: Precision Capital Management)
Gold with Fibonacci Indicators
Our partners over at RatioTrading bring us yet our third and final perspective on Gold: “As demonstrated in this chart, Gold has historically respected key Fibonacci Ratio levels and with Gold retesting all time highs, where could it be headed? Well as we look historically over the past year or so we see that in many instances when the GLD broke out and made a new low, it went right to either a 1.272 Fibonacci extension ($73) or a 1.618 ($65). Now , as we are approaching a serious line of resistance, the big question is where are we going? The expectation we have is that IF GLD can break out at the very least…
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
Facebook
Twitter
by ilene - August 15th, 2009 7:00 pm
Click here for a FREE, 90-day trial subscription to our PSW Report!
Courtesy of Damien Hoffman at Wall St. Cheat Sheet
The markets are both fundamental and psychological. On the fundamental front, the economy is in horrible shape but the Fed may have printed enough money to avoid The Great Depression 2. However, on the psychological side I smell fear in the bear camp as markets keep moving higher.
Fear is an interesting emotion because it works both sides of the market. Obviously, on the downside fear leads to panic selling and oversold markets. However, on the upside, fear causes chasing by those who feel they are being left behind. I worry that if the markets continue to hold support and subsequently expand higher, a mini-frenzy may ensue to blow a mini-bubble.
The mechanics of such an event look like the following:
1) The market increases in value.
2) Money managers are forced to overrule their fundamental analysis and buy equities because managers are judged against the (rising) indices. This is commonly referred to as “performance anxiety.”
3) Individual investors are forced to overrule what they see economically in their community because they must make some money back (especially the Boomers and retirees) like the charlatans on TV claim they have been doing.
Therefore, you have two strong waves of future buyers slowly giving in to fear. Just like on the way down, as fear spreads the feedback loop simply feeds on itself to perpetuate rising markets.
Market psychology expert Denise Shull at Trader Psyches explains, “Brain and behavioral research, as well as our first-hand coaching experience, shows that the fear of ‘missing out’ is more compelling that the possibility of reward. In reality, this tendency drives all bubbles.”
Although the variables above have already been pushing the market higher, there are still a lot of burned investors missing the ride (a roughly 50% ride off the S&P 500 bottom, I might add). In the current market I have seen sentiments shift from hating stocks because they are down, to hating stocks because the move up was missed. On a weekly basis, I’m getting more fear-based emails and inquiries about whether it’s time to “jump in.”
If, and that’s a big if, the fear spreads to pandemic proportions, we could watch the markets go vertical as the great chase begins. Although I don’t recommend chasing stocks, I do recommend getting involved with tight stop-losses based on major areas of…
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
Facebook
Twitter
by Chart School - August 15th, 2009 6:17 pm
Click here for a FREE, 90-day trail subscription to our PSW Report!
The Onion on Technical AnalysisTraderMark at Fund My Mutual Fund
I often say to people that technical analysis (aka squiggly line analysis) is a bunch of hooey but something that must be respected. It only works because so many people believe in the hooey - I mean why is the 200 day moving average so important? Why does the 142 day or 277 day get no love? My parallel is, if you sold sweaters in Miami and you noticed a trend that each time the temperature went over 90 degrees sweater sales shot through the roof, you’d say people were crazy. But if it happened, and you were a sweater salesman you’d respect it and stock up on sweaters ahead of the heat wave. So it is with technical analysis …
Further, my belief as high frequency trading (HAL9000 aka algorithims) and the like take over more and more of the market (now people are saying >50% of all daily volume is HFT!) technical analysis is only growing more in importance. Computers don’t buy fundamentals. While I still like buying fundamentally good stories, you can see many times stocks go up or down based on the chart - bad or good fundamental stories mean little. While I find it sad from a "historical basis of what the stock market used to be about" it is what it is, and I adjust to the market to make money.
So with all that said, someone forwarded me a post (again hat tip Clusterstock for this one) from the Onion that showed as we were coming off the last major stock market bubble that technical analysis was blossoming… what I love is however insane it reads, there is a lot of truth in the phrasing in how we interpret the market today!
***********************
The Onion: Blue Line Jumps 11 Percent
NEW YORK–Excitement swept the financial world Monday, when a blue line jumped more than 11 percent, passing four black horizontal lines as it rose from 367.22 to 408.85.
It was the biggest single-day gain for a blue line since 1994.
"Even if you extend the blue line’s big white box back many vertical lines, you won’t find a comparably large jump," said Milton Vogel, a senior analyst with Merrill Lynch. "That line just kept going up, up, up."
The blue line, which had been sluggish ever since the red line started…
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
Facebook
Twitter
by Chart School - August 7th, 2009 1:56 am
Courtesy of Damien Hoffman at Wall St. Cheat Sheet
Master Quant Trader Fari Hamzei was scheduled to contribute a chart to this week’s installment of Chart Junkie, however he offered us a special proprietary treat we had to bring to you all alone:
This is our coveted SP1-MoMo Chart. We have THREE components in an extremely overbought condition screaming a SELL to us all at once.
On the DAILY S&P-500 Cash Index (SPX) Chart (above), we see:
1) CI Diff, in the lowest subgraph, is now RED (crossed below 0);
2) CI reading is 27.5 !! This is an extremely high reading. This is due to a very high ramp-up rate the market has traded at since Meredith Whitney woke us on that faithful Monday (July 13th) to remind us all that “in GS she trusts” — at least for this quarter; and,
3) Divergence between long-term [modified] Advance-Decline Line on the subgraph SP1 (above) and its short-term sister MoMo. THESE DIVERGENCES always work out. Note the previous three divergences: two bullish and one bearish, in mid-June, early March, and late November.
Bottom line: A pause is in order. In our humble opinion, at minimum to 954 (38% retracement) or down to the 937 area (50% retracement).
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
Facebook
Twitter
by ilene - August 5th, 2009 1:01 pm
Courtesy of Damien Hoffman at Wall St. Cheat Sheet
The media recently flipped the floodlights on the new black box de jour: High Frequency Trading (HFT). Only a handful of people who work closely with the exchanges truly understand HFT, so I asked for some color from my friend and top pro quant trader Fari Hamzei from Hamzei Analytics.
Damien: Fari, why is High Frequency Trading one of the hottest new topics in the financial media?
Fari: HFT firms deploy co-located servers at the exchanges/ECNs and Dark Pools. As a result, they take advantage of seeing some of the order flow using very high speed computers with very low latency. The computers execute trades ahead of both retail and institutional orders. The execution times are in milliseconds due to co-location.
HFT is an extremely profitable business — over a $20 billion run rate now. These days, HFT can account for up to 60% of the volume in certain equity names. HFT firms also get liquidity rebates from exchanges/ECNs for their order flow they provide to the exchange — about $0.005/share.
However, this is not market making. Rather, this is artificial volume creation. As evidence for this fact, please look at share trading volumes in Citigroup (C), Bank of American (BAC), and CIT Group (CIT). On some days their combined volume is 10% of all US equities! That’s unbelievable! We have three stocks out of over 5000 names with a constant bid/ask present in the three to five cents range!In addition to seeing the order flow mentioned above, HFT computers can see institutional flash orders.
The Associated Press reported that, “So-called flash orders allow certain members of Direct Edge, Nasdaq and BATS exchanges access (for a fee) to buy and sell order information for milliseconds prior to that information being made available to the public. High-speed computer software can take advantage of that brief period to allow those members to trade ahead of those orders — at better prices — and therefore profit from advanced knowledge of buying and selling activity.” Sen. Charles Schumer is fuming about this issue.
Damien: Is HFT the mystical black box de jour, or a fundamental change in the auction process?
Fari: HFT is a trading strategy, not a necessary component of the auction process. HFT is all high-speed algorithmically driven arbitrage — for example, pairs trading, cross-asset arbitrage, etc. HFT uses predictive models borrowed from the advanced artificial intelligence world. Examples include parallel…
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
Facebook
Twitter
by David Fry - July 7th, 2009 6:59 pm
Dave’s ETF Digest, July 7, 2009
I guess HAL has been deactivated and GS has lost this little memory unit. If you see it lying around, well hell, they’ll buy it from you no doubt. Or, worse, you might get thrown in the slammer since nobody, but nobody messes with the Da Boyz.
The green shoots have turned to pond scum as investors, currently sans HAL, don’t up from down. Volume is heavier on sell-offs while light on bullish days. In the meantime breadth data remains terrible.
The McClellan Summation Index continues to fall from high levels indicating the bull trend is over for awhile probably.
Okay, tomorrow we start earnings season off with Alcoa being first up as usual. Nothing much good is expected and the company always has a lot of unique items in their reports. But, it will give us an indication of economic conditions revealed in their statements excluding Wall Street spin.
Biden was shooting his mouth off the past few days regarding Israel’s right to attack Iran and how the administration underestimated the depth of the current recession. So he argued for another stimulus package—yeah, more spending, that’s what we need! He’s no doubt in Cheney’s old secret hideout but bound and gagged. The longer this administration rolls out nonsensical programs the less the American people like it. Don’t get me wrong, the Bush administration got a lot of things wrong domestically but these guys seem way over their heads.
But the goofiness doesn’t stop with Biden. The new CFTC chairman ruined commodity markets today with a trial balloon arguing for position limits on commodity positions. You know, get the evil speculators! What will they meddle with next? This dumb idea is in part what put commodity markets on its okole (OH-Koh-Lay: Hawaiian for your posterior) today.
For us, we have small positions and roughly 80% cash in portfolios. Which way next should prove interesting and earnings should tell the tale in that regard.
Now let’s hope Goldman finds its trading software so markets can return to their previous manipulative ways. The guy doing the best job with Goldman is Tyler Durden and his Zero Hedge blog. Goldman made the mistake of engaging with him which makes it even more fun.
Disclaimer: Among other issues the ETF Digest maintains positions in: MDY, IWM, QQQQ, GLD, DBC, USL, DBB, EFA, EEM and FXI.
The charts and comments are…
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
Facebook
Twitter
by ilene - July 6th, 2009 10:37 am
Sign up for a free subscription to Phil’s Stock World Report, click here!
Helpful lecture, about letting go of ego and paying attention to the charts when trading; Allan uses Gold (DGP) as an example.
Courtesy of Allan
Here are a couple of ways to trade Gold. First, a methodology that most of us are well versed in, reading about Gold and being mislead by the most persuasive arguments:
From Seeking Alpha [click on table for sharper view]:
Here is another way:
In the past nine months, DGP (double beta ETF for Gold) has risen from $15.28 to $19.74, a gain of about 30%. This represents a Buy & Hold return, with the leverage inherent in the double beta construction of this instrument.
Or, DGP can be traded with a rule-based trend following system. The system represented in the chart below traded DGP long and short during the same time period, September 2008 to July 2009. There were 12 trades, 10 winners and 2 losers. The total cumulative gain was $25.82, or about 170%. The average trade gained about 13%.
This is a Daily chart, more trades and a greater cumulative total can be seen in intraday time frames, but for comparison sake, I want to compare Daily returns.
We are talking about a system that trades about twice a month and yields about 5-6X the return of Buy and Hold.
By now you should recognize the 3-line point break chart, embedded with the Blue Wave Trend Model, Precision CCI and Precision Moving Average.
If you click on the Seeking Alpha link, you will find 47 articles written about Gold during the time frame charted above. That’s one site. Multiply that by 100 other sites writing about Gold. Ask yourself, how in the hell are you going to figure all that out and have any expectation of getting Gold’s investment story right?
This is the trading phenomenon. It is about taking calculated risks. The results shown for DGP can be and are similar for equity and bond markets as well as individual securities.
Technical analysis in general and rule-based trend following in particular concerns itself only with price movement. There are reasons behind all price movements, but they don’t play any role in the way I trade. As you know, I have forecast a rough period for equity prices in the second half of 2009. Even that forecast doesn’t materially effect the way I trade. It took me 20 years to figure this out. I hope somehow your collective learning curves are reduced by my sharing…
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
Facebook
Twitter
by ilene - May 26th, 2009 11:36 am
Courtesy of Adam Hewison at Market Club.
Adam presents a video with some interesting observations and predictions based on a 17-week cycle he identified in the S&P chart. We are now in week 12 of the cycle, which ranges from 16 to 19 weeks, and began in the summer of 2007. Click here for the short video.
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
Facebook
Twitter
by ilene - May 24th, 2009 4:56 pm
Click here to sign up for a free subscription to the PSW Report. It’s easy! - Ilene
Here’s another one by Allan. Allan’s getting ready to pull the trigger on his long awaited Sell signal.
The bars remain blue going into next week. But the False Bar Stochastic, channels and wave count are all warning that the end of a multi-month corrective Wave 4 is upon us. Still unconfirmed, but running out of room and running on fumes.
Bottom line is that the resumption of the Bear Market in a big, big way is upon us. If it hasn’t started yet, it will soon enough. Significant weakness next week will seal the deal. Absent that, another week, maybe two will be needed for an almost perfect set-up for an almost perfect storm.
Email This Post
del.icio.us
Digg
Reddit
Stumble
Yahoo
Facebook
Twitter
March 10th, 2010 10:50 am
The Gold BubbleCourtesy of RICK BOOKSTABER
This represents my personal opinion, not the views of the SEC or its staff.
I am not going to spend time here talking about how the price of gold is off-the-wall, that it is not just a bubble in the making, but a bubble waiting to burst. I don’t want to waste your time on that point.We all know it is a bubble.
George Soros has said “The ultimate asset bubble is gold”. Many of the top asset managers, such as Tudor and Paulson, are piling on; Paul Tudor Jones recently said gold “has its time and place, and now is that time.” The banks are echoing this view with their research. Goldman has a research piece that looks f...
November 17th, 2009 10:53 am
Courtesy of Tyler Durden
Dear FINRA,
We know you are busy, we also know you are hell bent on intercepting IOI manipulation as per Mr. Jon Kroeper's recent media appearances. Which is why we kindly request that you get back to us at your earliest convenience with information on how many of the IOIs disclosed below are, in fact, "natural." We will make this a recurring topic on Zero Hedge until such time as you respond to our information request. You can contact us at outsourcefinra@zerohedge.com
We appreciate your prompt attention to the matter
Zero Hedge staff.
March 11th, 2010 10:49 am
Stock Market Commentary: New Highs for Tech and Small CapsCourtesy of Fallond Stock Picks
Small Caps and Tech continued their good form. Technicals continue to support the move higher for Small Caps (Russell 2000) with new highs for the MACD and +DI line. The Russell 2000 would have to give up 25 points (or 4%) just to test breakout support at 650.
The prior underperformance of the semiconductors was undone with today's 2% gain.
more from Chart School
March 18th, 2010 11:50pm
You can now have the Support and Resistance levels emailed to you via our Newsletter every morning please sign up at pivotfarm.com
All information on this website is for educational purposes only and is not intended to provide financial advise. Any sta...
September 16th, 2009 8:19 am
Tuesday was good and bad for the Oxen Report. Our short sale of the day worked very well for us. I chose Ultrashort Proshares Oil and Gas for our short sale of the day due to my expectation...
September 16th, 2009 9:25 pm
Today’s tickers: BPOP, LNCR, EEM, XLK, XL, PALM, LIZ & MI
BPOP - The ‘popular’ bank popped up on our screens this afternoon after a large-volume risk reversal was established on the stock. The massive trade was likely the work of an investor with knowledge of commercial banks as approximately 60,000 contracts were exchanged on BPOP amid a more than 12% rally in shares of the underlying to $2.60. It appears the trader purchased 30,000 now in-the-money October 2.5 strike calls for an average premium of 33 cents apiece. He funded the purchase of the calls by selling 30,000 puts at the January 2.5 strike for 43 cents each. The investor received a net credit on the transaction of 10 pennies per contract. The motivation is perhaps that this individual is swimming with the rising tide of financial names today and expects a far larger...
more from Andrew
March 16th, 2010 9:28 am
By Ilene
Let's take a look at Insider Buying and Selling over the last week or so. These are screen shots from Finviz - the significant buys against a green background first and significant sells against the pink background second. All the buys fit into my screen shot but the sells did not. Click here to see all the sells.
Note that the largest buy in the group, for KITD was at a price of 9.73 (KITD is currently at 11.54). The buy was part of an Equity Offering rather than an open market purchase. Tuzman Kaleil Isaza's (KITD's Chairman and Chief Exec. Officer) history of buys is http://www.insidercow.com/ more from Insider
September 13th, 2009 11:08 pm
This post is for live trades and daily comments.
To learn more about the swing trading portfolio (strategy, membership etc.), please click here
- Optrader
...
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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(blogroll, archives,
more).
Contact Ilene to learn about our affiliate and
content sharing
programs.
|
|
|
Note: The material presented in this commentary is provided for
informational purposes only and is based upon information that is
considered to be reliable. However, neither Philstockworld, LLC (PSW)
nor its affiliates warrant its completeness, accuracy or adequacy and it
should not be relied upon as such. Neither PSW nor its affiliates are
responsible for any errors or omissions or for results obtained from the
use of this information. Past performance is not necessarily indicative
of future results. Neither Phil, Optrader or anyone related to PSW is a
registered financial adviser and they may hold positions in the stocks
mentioned, which may change at any time without notice. Do not buy or
sell based on anything that is written here, the risk of loss in trading
is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice. |
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese