InTheMoneyStocks Market Analysis

[InTheMoneyStocks]

Financial Stocks Mixed With Key Moves Discussed

The financial stocks continue to be under pressure over the last couple weeks. Stocks like Goldman Sachs Group, Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Company (NYSE:WFC) are all sharply off their recent daily highs. Goldman Sachs has faired the best, falling to from $157.25 to its current level of $148.38. JPMorgan Chase and Wells Fargo have dropped much more sharply. JPMorgan ran into the 200 moving average August 2nd, 2010 at $41.70. It currently is forming an in spirit of bear flag pattern on the daily chart and is trading at $37.75, fractionally higher today. Wells Fargo has shown even less strength in recent days. While other financial stocks have held flat or bounced, Wells Fargo just today finally ran into some solid support. On July 27th, Wells Fargo kissed the 200 moving average on the daily chart. Since then it has fallen to $25.28, slightly lower on the day. Wells Fargo has finally come into some daily support at $25.25. The stock also has more support at $24.75. This lower level is a major support point for the stock. Note the chart below of Wells Fargo.

Intra day, Goldman Sachs played a picture perfect gap fill as it fell into the closing price from yesterday, after gapping up. Note the chart below. This is a perfect example of a bullish long intra day scalp play that is taken advantage of every day by pro traders. Note the chart below. Also, while the intra day was a great bounce scalp to the long side, the daily Goldman Sachs chart is bearish and should have more downside in the coming weeks.

RealTick graphics used with permission of Townsend Analytics, Ltd. ©1986-2010 Townsend Analytics, Ltd. All Rights Reserved. RealTick is a registered trademark of Townsend Analytics, Ltd


Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com

 

[InTheMoneyStocks]

Financial X Games

One must really get a good laugh when looking at all the shenanigans played during options expiration week. Yesterday the Dow Jones Industrial Average rallied higher by more than 170.00 points only close the session higher by 103.00 points. This tells us that the large institutions took care of business when it came to shaking out the small retail options trader.

Yesterday Potash Inc (NYSE😛OT) turned down a buyout bid from BHP Billiton Ltd (NYSE:BHP) for $39.5 billion. As we all know Potash Inc stock has soared higher and now has a floor underneath it. Today buyout rumors are everywhere. United States Steel Corp (NYSE:X) is rumored to be bought out by another company. This is one of the oldest stocks on the New York Stock Exchange. Is someone really looking to buy this company? Perhaps someone or some institution needs that stock at a certain level before Friday's expiration. The stock is trading higher by $2.60 to $49.90 a share and was even higher intra-day.

What about American Eagle Outfitters (NYSE:AEO) today? This stock soared higher intra-day by nearly one point on a buyout rumor. Come on give me a break. How can these rumors just spread like wild fire without anyone questioning their legitimacy? These games get played all the time during the week of options expiration.

Please realize that the small retail options investor rarely ever exercises an option. They will usually close out the option position long before the Friday expiration for a gain or loss in the premium. Therefore, take this week with a grain of salt as it seems these are just institutional games that are getting played. This type of activity has happened from the beginning and will unfortunately happen until the end. I even remember Ben Bernanke cutting the discount rate just before the opening bell on an options expiration Friday. What a shame.

Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com

 

[InTheMoneyStocks]

Three Stocks That Must Be Followed

The major stock market indexes seem to follow one sector very closely. That sector is the large integrated energy stocks. Exxon Mobil Corp (NYSE:XOM), Chevron Corp (NYSE:CVX), and ConocoPhillips (NYSE:COP), are the big three stocks in this leading industry group. When these stocks rally the markets follow and will usually trade higher. The opposite is very true when these stocks decline, the major stock market indexes will often sell off. Therefore, these stocks are extremely important when tracking the major stock market indexes.

Exxon Mobil Corp. is the most important stock of the large integrated energy stocks. This company has the largest market capitalization in the stock market at $304 billion. This stock is also a major component of the Dow Jones Industrial Average. Therefore, it can often single handedly move that index. Currently the pattern on the daily chart for Exxon Mobil Corp. is somewhat weak. The stock is trading below the major daily moving averages and this is a sign of weakness. The stock should have strong daily chart support around the $57.00 area. This is where it would become attractive to traders for a bounce.

Chevron Corp. is the next most important integrated energy stock. The reason for its importance is that that the market capitalization for this company is $154 billion. This company is basically half the size of Exxon Mobil Corp. The pattern on the daily chart for Chevron is short term bearish, however, the stock is trading above its daily 50 and 200 moving averages. This stock will have near term support around the $74.50 area. Should that area fail to hold then Chevron Corp could test the $71.50 support level next.

ConocoPhillips has a market capitalization of $81 billion. Therefore, it will not carry the same weight as Exxon Mobil Corp. or Chevron Corp. However, it is still very important and one of the integrated energy leaders. The ConocoPhillips chart looks very similar to the Chevron chart. This stock also has a short term bearish chart formation in place. The near term support level for the stock is around $53.00. Should that level fail to hold as support the stock could test the $51.50 area. This would be a possible bounce area for the stock.

The large integrated energy stocks have been leaders for the stock market over the past nine years. Exxon Mobil Corp. is the most important of the three major energy companies. At this time all of these stocks look weak on the charts and could see further downside pressure.
Learn how to allocate the most optimal levels, gain never before offered insight into the proprietary time counts and cycle techniques of InTheMoneyStocks Pros, understand how the Pros read and chart anything in a truly scientific yet simple way, identify tops/bottoms in any market, calculate pattern like the Pro's, and much, much more in our world renowned webinar "Methodolgy Revealed" this Saturday, August 21st. Also as a bonus, refer a friend and each of you will receive a $50.00 discount! Click here for details. Sign up NOW as space is limited. Do not waste any more time, advance your abilities, and begin to profit like never before.



Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com

 

[InTheMoneyStocks]

My Two Cents

Every week I take a few minutes and vent my frustrations to our readers. This week is strictly about out politicians. Is there really any difference between a Republican or a Democrat? These parties seem to be one in the same. They are spending addicts and unfortunately spending other peoples money such as the U.S. taxpayers. Many will argue that this current administration is on a spending spree and really does not know any other way. While this certainly seems to be true this current administration just seems to have taken over from where the last one left off. Has anyone looked at the U.S. debt clock lately? The U.S. debt is now $13.35 trillion. Yes, that is a trillion with a 'T'. The United States gross domestic product is only $14.48 trillion and seventy percent of that is consumer spending. Are you kidding me?

Personally, I could not run my household on my credit cards. Eventually, the banks would shut my credit limits off once I could no longer pay my bills on time. When does this blank check by the U.S. government stop. These politicians on both sides of the aisle are absolutely reckless when it comes to spending. The only politician that has voiced a true concern about spending is Ron Paul the Texas Republican. I really don't even think that his own party even likes him. Honestly, he is really the only politician that seems to make any sense. These other politicians talk about capitalism and then they are voting in favor of bailing out another failing business or institution. Has anyone looked looked at Fannie Mae or Freddie Mac lately? These failing institutions are killing America. However, the politicians will vote in the evening on a Christmas Eve to lift the debt ceilings on these financial institutions. Come on give me a break.

Often during the Intra-day Stock chat I will talk about things that I have observed or noticed during the week. Recently I was in a book store looking around and noticed a section in the book store entirely devoted to serial killers. I was shocked that they had a huge section of books written about these criminals and decided to walk through the area. As I walked through the aisle the serial killer section ended and the politician section began. I could not believe my eyes that these two groups shared the same aisle in the book store. That is scary.

Come on politicians get it together. Use your heads and stop enjoying all the perks you get from the lobbyists and special interest groups. Our country is falling apart at the seams. America can still be a great nation. However, due to the politicians we are just piling the debt and getting deeper in the hole. Don't you know the U.S. is in debt up to our necks? The people have had enough. That is my two cents.

 

[InTheMoneyStocks]

Markets Slammed Into Master Level On Recovery Worries

The markets gapped sharply lower on the back of continued global concerns over growth and specifically the U.S. recovery. More and more data points to another double dip recession in the United States. After the initial gap down at the open, the markets traded at a major daily technical support level on the SPDR S&P 500 ETF (NYSE:SPY) at $105.80. This happens to be the pivot low going back to the July 20th, 2010 shown on the chart below. The markets traded in this range into the 10am ET economic data release of the Existing Home Sales. Existing Home Sales fell by a stunning 27.2%. This rocked the market causing a collapse down to the even number of $105.00. The markets quickly bounced back over the next 30 minutes to the $105.80 level and are currently trading slightly above that master level. This level continues to be one to watch. If the markets were to close below, look for further downside to $101.00 - $102.00. As long as the SPY stays above that $105.80, the markets could trade flat to higher.

What caused the bounce back higher? The horrible economic news caused a collapse in the dollar. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) dropped from $24.22 to $24.05, allowing the markets to bounce back up. The inverse relationship between the dollar and the markets lives! As the dollar helped get the markets back above the master $105.80 level, light volume has now taken over and they are floating neutral to higher. Truly a wild ride today in the markets. To gain more insight, guidance, analysis and receive swing trades, join the Research Center.

Gareth Soloway
Chief Market Strategist

 

[Pento]

Re: Markets Slammed Into Master Level On Recovery Worries

Informative and easy to understand. Thanks for that.

 

[InTheMoneyStocks]

Markets Reverse As Many Key Stocks Nailing Major Supports

The markets gapped lower today after Durable Goods orders disappointed. The markets continued lower into the 10:00am ET release of New Home Sales. Yesterday, Existing Home Sales cause the market to sell sharply yesterday, today, New Home Sales faired no better. New Home Sales were reported down 12.4% from last month. This slammed the markets quickly. Ultimately the markets bounced back quickly as this report was already factored in from yesterdays negative Existing Home Sales report. The markets may have made a short term bottom. Very short term.

There are certain things that need to be noted in this market today. It is obvious the market has been weak of late but many major stocks are into key support areas. The market may be due for a small short term bounce. Look at charts like Financial Select Sector SPDR (ETF) (NYSE:XLF), Cisco Systems, Inc. (NASDAQ:CSCO) or even the United States Oil Fund LP (ETF) (NYSE:USO). These are random ETF's and one technology stock yet they all have something big in common. They all are into major support levels. The financial ETF (XLF) hit a beautiful double bottom on the daily chart. Cisco has hit a major triple bottom area and the USO has nailed a gap fill level around $31.85. This is just a small example of what is being seen on the charts. This shows a likely very short term bounce in the market. After that, the selling will resume and lower the markets will go. In the mean time, look for that small bounce in the next few days to one week.

Gareth Soloway
Chief Market Strategist

 

[InTheMoneyStocks]

After Early Weakness, Markets Fly Higher

The markets gapped higher and sold sharply into key comments by Ben Bernanke. Within minutes of those comments, the market started to rip higher and was off to the races. I will explain why.

The market had sold into the close yesterday on worries that the GDP revisions would come in well below the estimates of 1.4%. That would be a revision lower from the 2.4% originally reported. In addition, the market continued to be very fearful of what Federal Reserve Chairman Ben Bernanke would say at 10am ET. With the futures trading flat this morning, GDP came in at 1.6%, a revision down from the first estimate but still higher than the expectations. The futures ripped higher.

At 9:30am ET, the markets opened with a gap higher yet quickly sold again. Worries over the Ben Bernanke comments still haunting the markets. At 9:55am, University of Michigan Sentiment was reported at 68.9, fractionally lower than expectations. This however, was a non event as Ben Bernanke was just five minutes away. Within 3 minutes of Ben Bernanke, the markets got a curve ball. Intel Corporation (NASDAQ:INTC) warned that the third quarter would miss expectations. The SPDR S&P 500 ETF (NYSE:SPY) dropped hard, flushing out towards the key $105.00 level.

Then the comments from Ben Bernanke were released. While not good, they were not as bad as the market had feared. Initially, with the INTC news included the markets dropped hitting the double bottom from August 25th to the penny. No sooner had it touched that double bottom, it reversed and headed higher. At the highs of the day it stalled, consolidated, then rallied higher again to the 200ma on the ten minute chart at $106.40.

The markets are no pausing again as volume is getting lighted. Truly a wild morning though the markets are not starting to trade in the normal Friday in late August fashion. It is expected that the markets will remain sideways in this range the rest of the day. Note the SPY chart below. If you are interested in hardcore analysis, guidance, swing trades and education, join the Research Center.

Gareth Soloway
Chief Market Strategist

 

[InTheMoneyStocks]

Apple Stalls As Gap Fill And Double Top Tagged, Markets Weak

The markets are taking a break after the monster rally on Friday that sent the Dow, S&P 500 and the Nasdaq higher by 1.65%. The overall markets are slightly lower today and volume is anemic. This is the week prior to the Labor Day holiday weekend and the Unemployment and Non Farm Payrolls data is due out Friday. Needless to say, the markets are on pause for these reasons volume wise.

Apple Inc. (NASDAQ:AAPL) has been one of the stand out stocks today, surging higher by $3.01 to $244.63 (1.25%). While strong, Apple was no match for the massive resistance area at $245.75. This level coincided with the high last Thursday and more importantly the gap fill resistance point from August 23rd, 2010. Apple ran right up into this level and was halted in its tracks. The stock has since pulled back slightly but remains very strong on the day. This will be the key level that must be broken if this stock is going to make any significant move higher. Note the chart below. To get more insight, analysis, guidance, swing trades and education, join the Research Center.

Gareth Soloway
Chief Market Strategist

 

[InTheMoneyStocks]

Markets Soar As Shorts Get Whipped Hard

Over the past few days, I wrote many articles discussing major levels hit by key stocks as well as far too much bearish sentiment in the market. Prior to a holiday weekend, I thought it was highly unlikely we would see a major break down and would even possibly see a rally. With a huge rally today, this turned out to be dead on. Understanding market psychology has become more and more important in these markets.

The SPDR S&P 500 ETF (NYSE:SPY) is soaring at the highs of the day higher by $3.03 to $108.34. This is truly a move for the ages off of the China PMI numbers ADP Employment data and the ISM economic data. China PMI and ADP Employment data were not great but at this stage the market breathed a sigh of relief that they were not worse. Then, the ISM data was posted at 10:00am ET and causes a major squeeze as it came in far better than expected.

The massive surge today can be due to a few different factors. Partly the good economic data from all over the world. The other portion is due to shorts getting caught with their pants down. As I mentioned in the opening paragraph, the average trader and investor, even the media and analysts were so bearish. I gave my opinion many times and my subscribers and bought long trades like the Financial Select Sector SPDR (ETF) (NYSE:XLF). Profits galore folks.

Gareth Soloway
Chief Market Strategist

 

[InTheMoneyStocks]

All Eyes On The Government Payroll Report Tomorrow

Yesterday the major stock market indexes surged higher on the back of positive Chinese data, a positive ISM Index in the U.S., and a severe decline in the U.S. Dollar Index. This sharp reaction higher in the stock market obviously caught many short traders and investors off guard in the short term. Recently many talking heads in the media had been talking about the bearish Hindenberg Omen. This bearish technical and fundamental setup was actually featured on the Yahoo homepage and also on many local news channels that never feature the stock markets. While the markets could still decline it will rarely do so when the public knows about it. The stock market is just not that easy. Remember if it was everyone would do it. Don't you all remember the 1920's or the so called 'roaring twenty's. What about the more recent 1990's? The tech bubble or the dot com bubble are historic events that will be read by many generations of people to come. This is now a traders market and not meant for the buy and hold investor any longer. The easy money that comes along once or twice in a century has been made already.

Normally after a large point move in the market the next trading session is usually a flat type of trading day. It is natural for markets to often pause or consolidate the gains after a major advance or decline. Tomorrow is also the highly anticipated government non-farm payroll employment report for the month of August. Therefore, today the market indexes could experience very light volume after the first couple of hours of the trading session.

This morning most retail stocks are trading higher helping to keep the markets positive. The Retail Holders Trust (NYSE:RTH) is trading higher by 0.92 cents to $90.60. This ETF surged higher yesterday and remains strong today. Costco Wholesale Corp (NASDAQ:COST) is another leading retail stock that is trading sharply higher today. Costco Wholesale Corp is trading higher by 0.91 cents to $58.70. Other leading retail stocks that are moving higher are Nordstrom Inc (NYSE:JWN), and J.C. Penney Inc (NYSE:JCP). When retail stocks rise it is often an indication that the consumer is spending money. This is a positive for the economy because consumer spending accounts for more than 70.0 percent of the gross domestic product in the United States. Should the retail stocks begin to decline then traders and investors must be careful as this would be a sign of contraction in the economy.

In any case we are really not expecting fireworks today before the government employment report. It is also important to remember that the next trading day after a major rally or decline is usually a pause or small consolidation session for the major stock indexes.

Nicholas Santiago
Chief Market Strategist

 

[InTheMoneyStocks]

Pegging A Pull Back: Profit In Any Market

After a monstrous three day surge higher late last week, the markets are pulling back today. How does one realize the markets are due for a pullback? How does a swing trader position themselves to profit from it? Simply put, use the technical levels of leading stocks to confirm the oversold market.

First, it was obvious to most on Wall Street that the markets may have needed a small pullback after such a rally into the Labor Day holiday weekend. However, it is prudent to always confirm this thought process by analyzing the charts of leading stocks. These leading stocks are Goldman Sachs Group, Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM), Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX).

Choosing two of these leaders, let's isolate if their charts gave us a heads up that a pull back may be in order. When looking at the JPMorgan Chase's chart it is an easy spot. Almost like Waldo without anyone else in the picture. Note the chart below shows a clear and simple gap fill after a three bar surge to the upside. Not only is the chart short term extended, but the gap fill will be a major resistance level.

Next, take a look at the Chevron chart. CVX ran higher into a short term pivot top after a monster move. See the chart below. This pivot top can also be an indicator of a market pullback as Chevron is a market leader. If Chevron pulls back, then the markets should as well.

Overall, the market was extended but that does not always mean a pull back in imminent. The key is to look closely at leading stocks and see if they are into major resistance levels. If they are, then look for a pullback and profit.

Gareth Soloway
Chief Market Strategist

 

[InTheMoneyStocks]

Shanghai Data Moves The Markets

The commodity stocks have been on the weak side over the past two trading days. The pullback in the leading commodity stocks comes as the Shanghai Index(China) sold off by 1.45 percent the other night. There has also been a lot of talk from the leading politicians and the U.S. Treasury Secretary Tim Geithner for China to let there currency float and trade in the open market. Currently the Chinese Yuan is basically fixed and pegged to the U.S. Dollar. Many other politicians in the U.S. will argue that a free floating Chinese Yuan would hurt many of the retail companies such as Walmart Stores Inc.(NYSE:WMT), and Target Corp.(NYSE:TGT. Most of the goods that retailers sell comes from China and higher prices at the retail chains would hurt the U.S. consumer further.

The leading commodity stocks are trading slightly lower this morning as the U.S. Dollar Index trades slightly higher on the trading session. Stocks such as Cliffs Natural Resources Inc.(NYSE:CLF), and United States Steel Corp.(NYSE:X) reversed lower yesterday after the declining Shanghai stock index and are trading down again this morning. Please remember that these leading commodity stocks will usually trade higher if the U.S. Dollar Index starts to decline and trade lower. The action in the U.S. Dollar Index and now the Shanghai Index(Chinese stock market) is the driving force behind this stock market in the Unites States and the rest of the world.

Nicholas Santiago
Chief Market Strategist

 

[InTheMoneyStocks]

Can The Small Investor Survive In This Market?

Let's face some basic facts when it comes to investing or trading. The markets are an avenue to transfer wealth. Small weak money gets bullied by smart advanced money. In essence, institutions using technology and expert traders take money from weak, individual traders and investors. This has been how things have been throughout history but in the markets of today, it seems to be much more rampant. We must analyze why and discover the true ways to avoid these pitfalls if you are a retail investor or trader without the resources of a monster hedge fund or institution.

Years ago, the markets were a great place to put money for the long term. Investing for retirement was the name of the game and this is how many baby boomers built their nest eggs. However, over the last ten to fifteen years, the markets have gone sharply higher, fell hard, gone sharply higher and fallen again. If you had invested money in 2000 or 2001, ten years later you would be lucky if you had made a dime. Look at the chart below showing the SPDR S&P 500 ETF (NYSE:SPY) monthly. Notice where the markets were ten years ago. In addition, note the M-A pattern which is scary and will be discussed at a future point in time.

In recent months, the markets have started to become even more volatile and choppy. Six to ten percent swings in the market are occurring every few weeks. Swing traders and day traders are getting whipped in a market and the average investor believes the markets are fully rigged. Are they mistaken? Not necessarily! In all fairness, the way they are run are not that much different from how they were in the early 1900's. Institutions and big money still control the markets like they did back then. However, there is one major difference. The speed at which the markets moved was slower due to lack of technology.

In the market of today, the swings are violent and wild as computer programs have taken over. Black box trading programs run by institutions are ruling the markets as well as mega money hedge funds. The media is often utilized to also transfer wealth by blasting the overly bullish or bearish sentiment to the average trader and investor.

If you have not figured it out yet, the markets are being whipped to maximize profits to the big players through psychology. Get the common investor and trader to be overly bearish and smack the market higher, taking their money. Just as things seem perfect once again, the economy ready to recover and the average investor has invested on the long side once again, slam the markets down, taking their money. Technology has created a perfect environment for this to occur almost weekly. Black box trading programs, mega money flow from institutions and the media pushing the rhetoric causes the small investor to get lost in a sea of whipsaw. The average investor and trader has no shot. If you have no help, it is wise to not even risk your hard earned money and step aside.

Will the small investor vanish forever? Much like those from the Great Depression who would keep money under their mattress, many retail investors will be very gun shy for years and decades to come. However, greed will prevail, they will be back and trying again at the first sign of stability. Unfortunately, the stability will not last long as this game will be repeated again and again. In addition, with the emergence of new markets like China and India, there will be new money flowing all the time to keep the hungry institutions fat.

Do I swing trade and trade? Yes, of course. I spent years studying the markets, learning methods and creating proprietary methods that I teach to my members. Through these methods we can avoid many of the pitfalls most retail investors and traders fall into. Learn and profit.

Gareth Soloway
Chief Market Strategist

 

[InTheMoneyStocks]

Key Leaders Weak Signals Market Neutral To Negative

As an avid trader and Chief Market Strategist, I have learned to follow signals in the market leading to profits. Over the past few years, key stocks have emerged as a major market barometer. These stocks tell me where the market is headed with high probability. First we will talk about the financial components. Goldman Sachs Group, Inc. (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM) are two major players in the financial sector and these will generally dictate where the market will head. When both stocks are weak, one must be wary of the market if it is positive. If they are strong, the market should see a rally coming down the pipe. The same thing goes for these two major commodity players and Dow Jones Industrial Average components. Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) are amazing leading indicators for the market direction. When these four indicators are combined, they will give an extremely accurate picture of where the markets are headed.

Today, GS, JPM, XOM and CVX are all negative on the day. The markets have been fighting to get back to the positive side all day long. As long as these four stocks are negative, as leading indicators one must expect the markets to remain weak or get weaker. As of now the markets are being held in check by the light volume and options expiration. Even if the market just hovers slightly lower for the day, these stocks may signal a fall coming in the next week. Learn the tools to profit.

Gareth Soloway
Chief Market Strategist

 

[InTheMoneyStocks]

Everywhere You Turn, Bulls Galore

From the President, down to the retail investor, the bulls are back in full force. Just three weeks ago, many were ready to jump out the window claiming the double dip recession was in play, things were as bad as they could be and there was no end in sight. Truly amazing, the switch that has ocurred.

The markets are trading flat to slightly lower after a 10% rally in September so far. The SPDR S&P 500 ETF (NYSE:SPY) is lower by $0.30 to $113.90 (-0.26%). The market is unlikely to make any major moves prior to the Federal Reserve announcement on interest rates at 2:15pm ET. Volume has remained light as well prior. The dollar is weaker again today, inching lower. With the economy looking stronger, it is unlikely the Federal Reserve will do anything but continue to ease using quantitative easing methods. They will not tighten. Knowing that, the dollar should continue to remain weak as we are seeing it. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) sits at $23.47, -0.10 (-0.42%).

As bullish sentiment increases, retail money starts flowing back in the markets. With the S&P 500 up 10% for the month, is this a fake rally or one that will continue for months to come.

Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com

 

[Liquid validity]

Re: Everywhere You Turn, Bulls Galore

Tough call (maybe a suckers call too...), for me 11250 on the DOW is the next key point, can a new 2010 high be set?

My view is that we may well face strong resistance at 11250 but as ever, forget what you think, hope for or plan on, the market will do what it wants, irrational or not. Right now the current state of play on the DOW is reminiscent of the Aug 2 spurt followed by consolidation (same level too - mid 10700's). A few flat days like today will start looking like confirmation of that.

Long term, same applies, trade what is actually happening, my worthless instinct call is a continuation of sideways volatility for 2010-11 at least. Economically, conditions right now are still most similar to the 1970's with Govt debt etc. For that reason I think it will be a couple more years at least until we break out of the 2000-current ranging market conditions.

If the dow does punch through 11250 with ease, anything is possible after that, logical or not...

Apologies for commenting on the DOW and not the S&P specifically.
Ultimately, just trade what you see and price's reaction to the key S&R's, that all any of us can do.

 

[Liquid validity]

Re: Everywhere You Turn, Bulls Galore

Well that caused a stir on most USD pairs : D 11250 here we come?

 

[InTheMoneyStocks]

What is the New High In Gold Telling Us?

Since the August 25th stock market pivot low the major stock indexes have rallied higher by 10.0 percent. This is a major point move in less than four weeks. In the past the stock market would rarely move 10.0 percent in a year. These days we are seeing these 10.0 percent type of moves during rallies and corrections. The talking heads in the media are now getting very bullish pointing to the actions of the Federal Reserve Bank as one of the catalysts.

If you look at a chart of the SPDR Gold Shares(NYSE:GLD) you will notice that the popular ETF made a pivot low on July 28th, 2010 at $113.08. This morning the GLD is trading over $126.00 a share. That is nearly a 12.0 percent jump in the GLD in just 39 trading days. The point that I'm trying to make here is that gold is the way to tell when money is being created or printed. The U.S. Dollar Index topped out on June 7th, 2010 at $88.70. this morning the U.S. Dollar Index is trading around $79.70. This is nearly a 10.0 percent decline in the dollar since that June high. We all know by now if you want to get the stock market higher the dollar must decline.

Simply put when gold increases it is telling us that the Federal Reserve Bank is continually providing liquidity to the markets. Yesterday the Federal Reserve Bank kept the fed funds rate at zero percent. This rate is what the Federal Reserve Bank charges the large major banks such as J.P. Morgan Chase & Co.(NYSE:JPM), Bank of America Corp.(NYSE:BAC), and Wells Fargo & Co.(NYSE:WFC) for overnight borrowing. Therefore, these banks can borrow money for nothing and simply buy U.S. Treasury notes and make money. When you include the banks credit card business in which they sometimes charge very high interest rates they actually have a sweetheart deal. When you think about it the banks do not have to make any traditional loans in order to make money.

Now that we know gold is telling us that the money supply is extremely loose when does this artificial dilution of the U.S. Dollar stop? What are the repercussions of all this money creation and liquidity? Since 2006, M3 money supply is no longer published or revealed to the public by the Federal Reserve Bank(US central bank). The Federal Reserve Bank stated that it was simply not in the budget to keep revealing the M3 money supply data to the public. These are the same people that print money for a living. How can it not be in the budget? In any case this is where gold comes in. Gold is now telling us that the printing presses by the Fed have been running on overtime. At this time the stock markets seem to love it. However, at some point this flood of liquidity will become a negative for the stock markets.

Nicholas Santiago
Chief Market Strategist

 

[Pat494]

Re: What is the New High In Gold Telling Us?

Gold is the traditional safe haven when the market is about to go "tits up ".

It may have just dawned on Bernanke and the others that the US economy needs more than financial stimulus or even Obama's new public projects. The situation at the moment is not at all like the Great Depression.

The US and the West are beginning to feel the harsh realities of competion. Up until now it was always the other guys that were bleating about their industries being demolished. Now that the West is faced with this problem it will be interesting to see how they respond.

The USA is complaining to the WTO that China is cheating with a cheap yuan. Printing ever more money has never worked in the past, but it does devalue the dollar I suppose.

Obama is trying to save jobs by putting up trade barriers etc. What happened to all that free trade rhetoric ? The boot is on the other foot and it's beginning to hurt.

The flow of jobs to the BRICs is more likely to quicken. Anyone left behind faces a bleak future.

The era of greedy bosses and Unions "feather bedding" their positions is well and truly over but they just can't see it yet !!