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Bonds & Interest Rates

Man the pumps - World Recession? Current Central Bank Actions


Posted by Richard Russell - Dow Theory Letters

on Monday, 09 July 2012 08:03

"As the entire world sinks slowly into recession, four central banks have moved in an effort to jazz up or shake their respective economies out of recession. The actions were taken separately with each on his own.

China's central bank unexpectedly cut bank lending rates for the second time in four weeks.

The European Central Bank cut its benchmark interest rate to .75%, the lowest rate in its 14 year history. 

The Bank of England announced that it would expand its holdings of government bonds by about 15%.

The Federal Reserve announced two weeks ago that it would extend its own buying program until the end of the year.

Europe is suffering from a political crisis and an economic slowdown. 

The US is faring a bit better, but it is in a mild recession and also dealing with intractable unemployment."

"China is suffering from what its government describes as a sharp economic slowdown (see chart of China) China is now considered to be the "economic engine" of the world. Great, and I'm not arguing with that thesis. But I have a strange feeling that China may surprise us. I think China could sink into a slump or a recession. The chart below shows the Chinese stock market in what I consider to be showing a lot of distribution and selling. I see declining tops and most recently a head & shoulders formation with a breakdown. So I think if there's an overseas surprise coming up, it could easily be bad news and a recession in China. Remember, 40% of China's exports go to Europe, and Europe is already in a recession, and they're going to be cutting down on imports".- both comments from Richard Russell- Dow Theory Letters

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Stocks & Equities

Most Accurate Stock Market Predictions – Next Major Move


Posted by Chris Vermulen - GoldandOilGuy.com

on Monday, 09 July 2012 07:26

The term Stock market predictions is a very controversial topic and does seem to give off a negative/non-credible overtone to most traders, investors and the general public. We all know you cannot predict the market with 100% certainty, but knowing that you can still predict the market more times than not if done correctly. Keep in mind that the term “market prediction” is also known as a market forecast or technical analysis outlook and is nothing more than a estimated guess of where the price for a specific investment is likely to move in the coming minutes, hours, days, weeks and even months.

Getting back on topic, this report clearly shows how the US dollar plays a dominant role in the price of other investments. Understanding how to read the Dollar Index will make you a better trader all around when trading stocks, ETF’s, options or futures.

SP500 Stock Market predictions – 10 Minute Chart:
These charts clearly show the inverse relationship between the stock market and the dollar index. Knowing how to read charts (candle sticks, chart patterns, volume etc…) is not enough to give you a winning edge. You must also understand inter-market analysis as all markets are linked together in some way and the dollar plays a major role in where stock prices will move next. Review the charts and comments below on how I came up with my stock market prediction and trade idea.

MarketForecastProjections

Gold Market Prediction – 10 Minute Charts
Gold is another investment which is directly affected by the price of the dollar. Review charts for more details.

GoldMarketForecastProcetions

Long Term Stock Market Forecast:
The weekly dollar chart is VERY IMPORTANT to watch as a short term trader and long term investor because trend changes in the dollar means you open positions will also likely change direction.

So, if we apply technical analysis to the dollar chart as seen below. You will notice we are able to create a market forecast and predict roughly where price is likely to move and how long it should take to get there. If the dollar can break above the red resistance level then we can expect a rally for 4 – 8 weeks and a price target around the 87-88 level.

If this is the case then stocks and commodities would likely do the inverse price action and move lower, sharply lower…

WeeklyDollarMarketForecastProdictions

Stock Market Predictions & Gold Market Forecast Conclusion:

In short, the next weekly candle stick on the dollar chart could be a game changer for those who are long the overall stock market.

I will admit that the current market conditions are not easy to trade because of all the headline news rolling out of Europe each week along with economic data. And I feel as though we have been tip toeing through a mine field for the past 12+ months waiting for extremely negative news are extremely positive news to trigging a wave of buying or selling that will make our jaw drop, but it has yet to happen. Remember always use stops and don’t get over committed in a headline driven market.

If you would like to receive my free weekly analysis like this, be sure to opt-in to my list:www.GoldAndOilGuy.com

Chris Vermeulen

 

 



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Timing & trends

Trading is War


Posted by Tyler Bollhorn of StockScores

on Monday, 09 July 2012 00:00

The stock market is a forum for debate between buyers and sellers on the values of companies. That is the nice explanation. The reality is that the stock market is a war between buyers and sellers, who each want to take the others money. The stock market is rough, and if you don't approach it with the disposition of an irritated general, you will lose. In the stock market, nice guys finish last.
Sun Tzu's, The Art of War serves to highlight many aspects of trading, since trading the market is much like warfare. Here are some quotes from the book, and their application in trading:
"All warfare is based on deception." 
Suppose you are a large hedge fund, and you want to accumulate a stock. You know that taking a sizeable position will move the stock higher, and you will end up paying higher prices as day traders jump in to the frenzy. With shares on the books already, you can afford to sell a little bit and paint the chart with a negative technical set up that should entice some selling pressure from nervous retail investors and overzealous short sellers. That selling pressure will help you fill your larger buy order.
You may also bring your buying in phases. Let the stock fall back and trigger stops, shake out nervous investors and free up stock to build the position. You may post fake orders in the Level 2 screen to make traders believe that there are large sellers and add further worry among the uncommitted buyers.
As a trader, you have to be able to differentiate between deception and the true intention of large investors.
Further words from Sun Tzu:
"Therefore, in your deliberations, when seeking to determine the military conditions, let them be made the basis of a comparison, in this wise:
(1) Which of the two sovereigns is imbued with the Moral law?
(2) Which of the two generals has most ability?
(3) With whom lie the advantages derived from Heaven and Earth?
(4) On which side is discipline most rigorously enforced?
(5) Which army is stronger?
(6) On which side are officers and men more highly trained?
(7) In which army is there the greater constancy both in reward and punishment?"

Let me translate this in to stock market terms:
Among buyers and sellers, the side who will gather the greatest profits will be determined by:
(1) Which side believes that the stock market is always right?
(2) Which side is led by the largest investors?
(3) Who is trading with the trend?
(4) On which side is discipline most rigorously enforced?
(5) Which side has more money?
(6) Which side has the best understanding of fear and greed, and how the crowd behaves when pressured by either?
(7) Which side lets profits run, and limits losses?
"According as circumstances are favorable, one should modify one's plans.
We should only add to winning positions and never average down on a loser. Profits are carried by momentum, and if you are on the right side of momentum, you can make a lot of money. When losing, stick to the plan and exercise stop losses. When winning, increase position size as new entry signals are confirmed.
"When you engage in actual fighting, if victory is long in coming, then men's weapons will grow dull and their ardor will be damped. If you lay siege to a town, you will exhaust your strength." 
If the expectation of your trade is not working out in a timely fashion, then you have read the market wrong and it is best to exit the position.
"It is only one who is thoroughly acquainted with the evils of war that can thoroughly understand the profitable way of carrying it on." 
If you think the stock market is fair, quit trading immediately.
"Hence the saying: If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb to every battle." 
If you know the market and know yourself, you will consistently profit. If you know the market but not yourself, your success will be random. If you do not know the market or yourself, you will consistently lose money. Success in the stock market is not just about the market, it is also about knowing how you react to fear and greed.
"The onset of troops is like the rush of a torrent which will even roll stones along in its course." 
The trend is your friend.
"The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an opportunity of defeating the enemy." 
Good traders know that they can consistently make money, and that confidence fuels them to consistently make good decisions.
"To lift an autumn hair is no sign of great strength; to see the sun and moon is no sign of sharp sight; to hear the noise of thunder is no sign of a quick ear." 
Great traders see more than the obvious.
"There are not more than five primary colors (blue, yellow, red, white, and black), yet in combination they produce more hues than can ever been seen." 
Keep stock trading simple. You need only understand support, resistance, optimism, pessimism, price volatility and abnormal behavior.

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Now that June is behind us, I expect that trading activity will improve. The last month of the quarter tends to be slow because there is not much to drive share price. Now that we are in July, the announcement of corporate earnings should be a catalyst for trading action. Alcoa is the first of the big companies to announce, their earnings are out tomorrow.
The run higher in stocks over the past week was a bounce back from oversold conditions and not a sign of optimism. The major market indexes are now at the point where they could turn from pessimism to optimism. Whether that happens or not will depend on earnings.
Fear is not a big factor in the market, although there are still big issues in Europe the market does not seem to be too concerned. The focus now will be on corporate earnings and whether the US will do another round of quantitative easing.
Comments out of the Fed on Friday opened the door for more stimulus. After another weak jobs number, the Fed has the incentive to act, it is just a question of whether they believe acting will make any difference. As Ben Bernanke has said, it is a question of cost and benefit.
No features this weekend, I would like to see what happens with the market indexes next week before I make any new commitments to stocks.

Tyler Bolhorn

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References

 

  • Get the Stockscore on any of over 20,000 North American stocks.
  • Background on the theories used by Stockscores.
  • Strategies that can help you find new opportunities.
  • Scan the market using extensive filter criteria.
  • Build a portfolio of stocks and view a slide show of their charts.
  • See which sectors are leading the market, and their components.

    Disclaimer
    This is not an investment advisory, and should not be used to make investment decisions. Information in Stockscores Perspectives is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The writers and editors of Perspectives may have positions in the stocks discussed above and may trade in the stocks mentioned. Don't consider buying or selling any stock without conducting your own due diligence.

 



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Gold & Precious Metals

Should you be buying gold or gold stocks?


Posted by Bloomberg

on Sunday, 08 July 2012 09:40

Some big gold producer stocks are down 20 per cent this year despite the gold price still up in spite recent sell-offs. If you are a gold bug this ought to be a buying opportunity. David Steinberg, managing partner at DLS Capital Management LLC, talks about investing in gold as a commodity versus investing in gold mining companies. He speaks with Carol Massar on Bloomberg Television's "Taking Stock." (Source: Bloomberg) ui[popOutButtonVisible]=FALSE">



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Currency

Interesting Charts from Don Vialoux, Michael's Guest on Money Talks Tomorrow


Posted by Don Vialoux - Timing the Market

on Friday, 06 July 2012 12:52

Editor’s Note: Mr. Vialoux is scheduled to appear on Michael Campbell’s radio show at approximately 12:05 PM Eastern (9:05 Pacific) tomorrow. Available on the net at http://www.cknw.com/

Interesting Charts


Currency was the driver for world equity markets yesterday. The Euro fell sharply following comments by European Central Bank President Draghi that European economies continue to weaken. Conversely the U.S. Dollar Index moved higher. Both remain in a six week trading range.

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Grain prices continue to shoot skyward with no signs of a peak yet.

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