Market Action, Trade Alerts And Proprietary Intra Day Commentary

January 31, 2013

Pattern: Head and Shoulder At Trigger Point On Dollar

January 31, 2013

The Dollar continues to fall, day after day. There is a head and shoulder pattern on the daily chart that is on the verge of triggering. A head and shoulder pattern is a bearish pattern that usually leads to further downside. The trigger (when the pattern is in play) occurs when the neck-line breaks. Please note the chart below. The tracking ETF used to view this is the PowerShares DB US Dollar Index Bullish (NYSEARCA:UUP). It is trading at $21.61, -0.03 (-0.14%).

While this pattern has been recognized by countless market technicians, once it triggers it may fail. According to the proprietary PPT Strategies, there is a  60% chance of pattern failure in the near term. Should the pattern fail, a sharp spike up would be expected on the Dollar which would result in a down move in the markets.

Gareth Soloway

Feng Shui Trading

January 31, 2013

Almost everyone has heard of or perhaps even used feng shui when decorating their homes. This is a way to allow positive energy flow effortlessly throughout the rooms of the home or apartment. Many new buildings in New York City are now being designed using feng shui architecture. Feng Shui is an ancient art and science developed over 3,000 years ago in China. It is used to balance the energies of any given space to assure good fortune for the people using it. Well, traders and investors should invite feng shui techniques when playing the stock market.

You see, a technical trader does not care if the Dow Jones Industrial Average (DJIA) goes up to 15,000 or 20,000. The technical trader does not care if the DJIA goes down to 5,000 or 500. All a technical trader should care about is being on the correct side of the trade. The charts will usually tell us when the turning points are going to occur in the stock market. It is then the trader’s job to simply go with that energy whether it is to the upside or to the downside. Believe me, after every bull market there will be a bear market. On the flip side, after every bear market there will be another bull market.

Another rule that traders should follow from feng shui is to not take stocks personally. Often, many traders will lose money on a trade and then try to get even or get revenge on the stock. Remember, the stock does not care if we make money trading it or not. I once saw a trader continue to try and get revenge on a stock that he lost money on. In fact, the stock was Skyworks Solutions Inc (NASDAQ:SWKS), but it can really be any stock. To my amazement, he day traded that stock all week long losing money everyday. He kicked his desk, tossed his computer mouse and slammed his keyboard on his desk in frustration, taking lose after lose. Finally, I said to him, you are a good trader, why don’t you just leave that stock alone and trade something else. He replied, that he must get even with the stock and he was not going to allow that stock to beat him. Soon, he was no longer trading in the office with us. I suspect that he lost a lot of money. We should all remember what Sun Tzu said, “What the ancients called a clever fighter is one who not only wins, but excels in winning with ease.”

Many popular stocks in the media will receive the bulk of attention by traders, but it is the consistently active stocks that traders should focus on. Leading stocks such as Exxon Mobil Corp (NYSE:FCX), Toll Brothers Inc (NYSE:TOL), and J.P. Morgan Chase & Co (NYSE:JPM) present countless opportunities everyday without much stress. These types of stocks usually have easy fluent moves in the market both up and down. Simply put, buy the support and sell the resistance levels.

Feng Shui trading may become popular one day. As traders, we simply must go with the flow and not force our opinions on the market. The charts will tell us everything that you need to know. Forget the news and the noise as that is simply the enemy for traders.

Earnings Galore, Watch These Levels

January 31, 2013

Federal Reserve Action: Market Setups, Past Call Analysis And Profits

January 30, 2013

GDP Shows Federal Reserve Just Screwing The Average American

January 30, 2013

Today, U.S. GDP was reported for the fourth quarter 2012. The number shocked analysts and investors as it showed a contraction of 0.1%. Most had expected a modest expansion. The big question must be raised, with the Federal Reserve printing trillions of Dollars over the last few years, is this all the economy can muster? Is this as good as it gets?

Most average investors have no clue what I am eluding to. Let’s take a closer look. Understand that the Federal Reserve’s balance sheet has expanded by more than four trillion Dollars in the last few years. Also, understand that this expansion is from them printing money for their “quantitative easing”. Lastly, understand  that there are repercussions to printing trillions of Dollars. Mainly, dilution of the Dollar means higher food and energy prices (yet to come). Do you remember when one working average American father could support his whole family, save for retirement, buy a house and live well? Where did those days go? Now two parents must work to support their family and they are lucky if they can afford a house and have some savings left over to put towards retirement.

The scary thing about this is, the Federal Reserve printing policy over the last four years has not even hit food and energy prices in any major way.  This will start in 2014 and be catastrophic. Food and energy will soar another 50% higher in price, possibly more. The sad aspect of this is that the average, hard working Americans spend a majority of their income on food and energy. The middle class will shrink further.

If the Federal Reserve policy of printing money to get us back into growth was working, trillions should have bought us the biggest expansion in history. Instead it bought us minor growth and 8% unemployment. At what point does the Federal Reserve admit they are wrong? Can they ever admit it? Most likely not.

To summarize, while I think the printing of trillions of new Dollars was and is idiotic, I would have still been semi  alright with it if it bought us a great expansion. The fact that it has failed to generate any meaningful economic activity should shock and anger the masses. Not only is there no major economic recovery, but the coming future problems from this reckless printing of money will cause yet another economic collapse. Cheers!

Gareth Soloway

Money Printing Gone Wild

January 30, 2013

As everyone can see, the stock markets around the world have exploded higher. It really does not matter if you look at the London FTSE 100, German DAX, Shanghai Index, Nikkei 225 Index, Dow Jones Industrial Average, or even the Athens Stock Exchange (ASE), they are all surging higher. What is the one factor that all of these economies have in common? It is simply money printing. All of the central banks that control the currencies of these nations are printing money like never before.

The Federal Reserve made this popular many years ago, however, they took money printing to new all-time levels since the credit crisis began in 2007. Since that time, the Bank of London, People’s Bank of China, Bank of Japan, Swiss National Bank, European Central Bank, and others have continued to inflate their equity markets by implementing easy money policies (essentially money printing). Can central bankers simply print money forever? The answer to this question is no, but at this time it seems that they will continue to print money into the foreseeable future.

Obviously, we all know that there is a price to pay when a currency is artificially deflated. The usual and most common effect will be inflation. Inflation will help to lift the value of asset prices, so many investors may think that is good. The downside is that it will make the price of goods that people need to survive more expensive. Food, oil, gasoline, heating oil, jet fuel, and other energy products will increase. Commodities such as copper, iron ore, and building materials will also inflate in price making products more expensive for everyone.

The other negative that will occur when there is this much monetary easing taking place around the world is another global stock bubble. Generally, the bigger the bubble is when it is being created the bigger the decline will be when the bubble pops. For example, just look at the bubble that was created in the late 1980’s in Japan. In January 1990, the Nikkei 225 Index traded as high as 39,922.00. Today, the Nikkei 225 Index trades around the 11,100.00 level. It is safe to say that the Japanese markets have faced deflationary pressures for over 20 years. Now, the Japanese are trying to inflate their stock markets on a daily basis. They are doing this to try and boost their exports as goods become cheaper outside of their own country. Almost every country on the Earth that has a central bank is trying that same method right now. In the short term, it will boost the markets, but in the long term there will always be a price to pay. Unfortunately, the price could be a long twenty plus year sluggish economy.

Another negative for all of this money printing could just be a lack of faith in a nation’s currency. Once that happens hyper-inflation can occur and that is when goods and products will explode higher in price. According to Wikipedia, hyperinflation occurs when a country experiences very high, accelerating, and perceptibly “unstoppable” rates of inflation. Many countries have experienced this in the past. Some notable countries that have experienced hyper-inflation are Germany, Argentina, and recently Zimbabwe. It is not fun when you need a month’s worth of wages to buy a loaf of bread.

The United States is the world’s reserve currency. This means if you are Japan, China, Russia, or any other country that does not use U.S. Dollars for trade you will need to convert that capital into U.S. Dollars in order to buy oil, gold, copper, wheat, or any other commodity. If other nations ever lose faith in the U.S. Dollar there could be serious problems around the world. Already, there are countries such as China and Brazil initiating trade deals with each other, so there could always be a problem brewing in the future.

Gold and precious metals have exploded higher over the past thirteen years. In 1999, gold was trading around the $250.00 level. Today, gold trades around the $1600.00 level after reaching a high of $1923.70 an ounce on September 6, 2011. What is gold telling us? Gold is telling us that many smart people are losing faith in fiat currencies such as the U.S. Dollar and all other printed money. You see, you cannot print gold, it must be taken from the earth and it is very difficult to get. Recently, Germany has asked for some of its gold deposits back from the New York Federal Reserve. Could this be a sign of things to come? Perhaps, but in the meantime the central bankers are printing a lot of money.

Post by: Nick Santiago

Stock Analysis Ahead Of The Fed: Earnings Reports, Chart Setups

January 29, 2013

Trade Lesson: Calculation Signals Valero Is A Short

January 29, 2013

Calculating key levels is something only the best, elite traders and investors do accurately. Now it is available to the public. I have been teaching my members how to calculate master levels for years and they have become some of the most elite investors and traders in the world.

In this lesson, I will briefly go over the calculation for the Valero Energy Corporation (NYSE:VLO) chart. Before we get into that, VLO reported solid earnings today. As refining margins have soared, so have their profits. The stock is trading at $41.98, +3.17 (8.17%). The high of the day was $42.95. The high of the day is important, I will explain why shortly.

The way we will calculate the max move, master level on VLO is actually quite simple. First, if you are in the markets you must realize the markets have a natural symmetry to them. While the average investor looks at a chart and cannot make sense of it, a pro will always see a pattern emerge. A great example of the symmetry in the markets would be Fibonacci. Let’s analyze the past history on Valero to dictate the current move.

On June 4th, 2012 Valero was trading at $20.00 per share. It started to run higher, never having a significant pull back until reaching a high of $34.36 on September 14th, 2012. This run was a massive move of $14.36. Once it hit that high, a solid pull back took place, taking the stock back down to $28.07.

On November 2nd, 2012 the next run started. As it blasted higher, many tried to short, all failed. How high would it go? When do you know the top is in? Here is the secret the retail investor wishes they knew. Remember, symmetry is key.

The Key: Take the same $14.36 from the first move and add it to the low starting point of the second move. This will map out where the stock will top out. If you add $14.36 to $28.07 you get $42.43. That level was hit today perfectly. The stock has already started to pull back. The top is in.

Please note the chart below. This lays it out perfectly.

Gareth Soloway

JCP Is Popping, Where Is It Stopping?

January 29, 2013

This morning, leading retail stock J.C. Penney Company Inc (NYSE:JCP) is catching a strong bid higher on the trading session. The stock is moving on the news that the company is going back to its old ways of offering sales to shoppers. Last year, the company announced that it was done with promotional pricing, however we can obviously see that the results have not been very good for the stock price. Remember, J.C. Penney is not Nordstrom Inc (NYSE:JWN), they simply have two different consumers. Nordstrom has always catered to the more affluent consumer, while J.C. Penney has attracted more of the bargain shopper.

J.C. Penney could start to take some business away from other retail leaders such as Macy’s Inc (NYSE:M), Sears Holdings Corporation (NASDAQ:SHLD), and Kohl’s Corporation (NYSE:KSS). Short term traders following JCP stock should watch for intra-day resistance around the $20.60 level. The daily chart of JCP stock will have daily chart resistance around the $22.00 area.