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Wealth Building Strategies

The Unprecedented Moneymaking Potential of This New Technical Pattern


Posted by Money Morning

on Wednesday, 06 December 2017 07:19

While everyone's been talking about the Dow's third major milestone this year – breaking the 24,000 mark – I'm focusing on something else…

You see, there's a new technical pattern forming in a couple of department store stocks. If it's true and you catch it at the right time, you can make a lot of money.

But timing is everything because this pattern is a tricky one.

Make sure your kids aren't looking over your shoulder trying to read this educational piece. If you are the squeamish type, you may not be able to get through this article in one reading. I'm going to teach you a new technical pattern with a not-so-happy name.

Let's examine the profit potential of this macabre-sounding pattern that may be taking place on a couple of department store stocks…

The Dead Cat Bounce

The pattern gets its name from an old saying among traders that "even a dead cat will bounce if dropped from a high enough level."

And the same for goes for stocks. Well, it goes for stocks when you're interested in a short-term recovery-type trade, which is great for a quick profit.

A dead cat bounce (DCB) is the type of pattern that usually forms after a sustained drop in share price, let's say six months to a year. At that point, the stock may become a turnaround candidate with the potential to be a nice performer over the long haul. But that's just potential…

The stock being observed is still one that had a significant drop in share price over a long period of time.

These stocks are generally trading at or near a year's low in price, so to expect them to just bounce back to previous all-time highs or start making new highs is actually not that realistic.

The term "bounce" in the name of the strategy signifies to me this will be a somewhat sharp or quick upward move. After a stock soars again, it's not uncommon for it to fall back to Earth. In fact, it's generally likely.

It may bounce a few times at this low and start hammering a lengthier bottoming-type technical setup like a double or triple bottom, a rounding bottom, or a cup-and-handle pattern.

But it first has to bounce, and the dead cat bounce is the first pattern to watch for when stocks are at significant lows. We use it to profit from the short-term recovery of a falling stock.

A Look at Macy's

Macys


The "E" I circled indicates Macy's Inc.'s (NYSE: M) most recent earnings report.



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Asset protection

Technically Speaking: This Is Nuts


Posted by Lance Roberts - Real Investment Advice

on Wednesday, 06 December 2017 07:11

Since the election, markets have accelerated the pace of the advance, as shown in the chart below.

saupload SP500-Weekly-Price-2016-Present

The advance has had two main story lines to support the bullish narrative.

 

  • It's an earnings recovery story, and;
  • It's all about tax cuts.

 

There is much to debate about the earnings recovery story, but as I showed previously, and to steal a line from my friend Doug Kass, this "new meme increasingly resembles 'Group Stink.'" To wit:

"Despite many who are suggesting this has been a 'rational rise' due to strong earnings growth, that is simply not the case as shown below. (I only use 'reported earnings' which includes all the 'bad stuff.' Any analysis using "operating earnings" is misleading.)"



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Gold & Precious Metals

Golden Skin In The Game


Posted by Stewart Thomson - Graceland Updates

on Wednesday, 06 December 2017 06:47

Dec 5, 2017

  1. For the past few weeks I’ve suggested that a modest US dollar rally against the yen (and thus gold) was due, and now it’s here.
  2. Please double click chart below.Double-click to enlarge.The dollar’s right shoulder rally fits with the US senate’s decision to finally pass some corporate tax cuts. That’s modestly good news for “risk-on” investors.2017dec5usd1
  3. It’s modest because it comes at a late stage in the business cycle.Many institutional money managers are trimming US stock market holdings. They are investing the proceeds into key Asian markets where corporate profits are rising but P/E ratios are lower.
  4. Please  click here now. This is typical market action in the late stages of the US business cycle; the Dow stocks keep rallying, and the growth stocks stumble.
  5. Please  click here now. I’m pretty comfortable with my Chinese stock market holdings. If there is a crash, I’ll simply buy more and urge savvy investors to do so too.
  6. Please  click here now. In the big picture, American citizens are outnumbered by Asians. There are about eight Chindians for every American. 


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Timing & trends

Beware Of Fake Expectations


Posted by Avi Gilburt - ElliottwaveTrader.net

on Wednesday, 06 December 2017 06:31

elliott-wave-theory-696x449When you read the title of this article, I am sure you assumed this article would be all about the latest event of fake news which supposedly rocked the market this past Friday. Well, I am sorry to disappoint you.

You see, many investors have been following fake news for much longer than you realize. Well, more accurately, the news has been real, but the expectations held by analysts and investors has been fake.

As I have been presenting for quite some time now, we have seen many expectations of negative reactions to news being presented by analysts over the last two years. They have pointed to news events like Brexit, Frexit, terrorist attacks, rise in interest rates, cessation of QE, the Trump election, and many other reasons as to why the stock market will start heading south in a big way. So, while they have all pointed to real news events, their expectations have been fake.

So, maybe its time to consider that fake news and fake expectations have potentially been hurting investors these last few years!?

And, rather than maintaining fake expectations about how the next news event is going to “cause” a move in the market, at some point, investors may have to accept that the substance of these news events do not cause anything. Rather, it is the investor reaction to the news events which cause movements in the market. And, investor reactions are driven by investor sentiment.

When investor sentiment is positive, seemingly negative news events are discounted (terrorist attacks, North Korea, rising interest rates, cessation of QE, etc.) as the market continues on its northern trajectory. However, as the market completes its natural path of progression, we reach a point at which it is time we can begin to expect that investor sentiment has reached a pinnacle, and will likely turn south for a time.

If you are being an honest observer of the stock market for these last two years, then you can admit that this is the simplest and most accurate explanation for what you have seen with your own eyes. There is no other reasonable explanation as to why the market has shrugged off news that most have expected to not only stop the market in its tracks, but also potentially cause a huge sell off in the market.

Now, the question you must ask yourself is if you have the tools to be able to identify when investor sentiment is positive, when it is negative, and when we are approaching a potential turn in sentiment?

Price pattern sentiment indications and upcoming expectations



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Stocks & Equities

GDX And GDXJ Targets


Posted by Rambus Chartology

on Wednesday, 06 December 2017 05:35

I’m going to use the GDX and GDXJ as a proxy for the rest of the PM stock indexes which are very similar to these two. Last Wednesday we looked at the short term daily charts to the longer term weekly charts to see how things were setting in the PM complex.

We first looked at the short term daily chart which was showing the H&S top and the smaller blue consolidation pattern that was building out below the neckline. The smaller blue patterns were kind of morphing, but were giving us a hint of what they would eventually look like when they competed.

Below is the short term daily chart for the GDX which shows the H&S top with the completed bearish rising flag. The breakout was a little sloppy, but today we are getting some follow through to the downside.

gdx-dayshor

This short term daily chart for the GDXJ shows it broke out below the bottom rail of its bearish falling wedge this morning with a breakout gap.



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