InTheMoneyStocks Market Analysis

[InTheMoneyStocks]

Markets Weak As Eyes Look For Next Catalyst

Today's trading session is simply a repeat of the trading action that we all saw this past Friday. On January 7, 2011 the major stock indexes such as the SPDR S&P 500 Index Trust(NYSE:SPY), and the SPDR Dow Jones Industrial Average(NYSE😀IA) all sold off during the first half of the trading day only to rally back on extremely light volume throughout the rest of the session.

This morning the Dow Jones Industrial Average was trading lower by nearly 100.00 points in the first twenty minutes after the opening bell. However, since that time the volume has faded and the major stock indexes floated higher as if they were a helium balloon. This type of action occurs nearly everyday. The Federal Reserve Bank completed another $7.9 billion in U.S. Treasury purchases today by 11:00 am EST and many traders and investors will simply front run the Federal Reserve Bank's POMO operation. That can be the only explanation for the repeating action that we see day after day in the major stock indexes.

The U.S. Dollar Index is also pulling back today which can and often helps the major stock averages inflate and trade higher. However, lately the light volume trading has been the catalyst for the move higher in these markets especially when the major stock market indexes start the session lower. Unlike a Friday where we usually look for a flat close, today is simply anyones guess. All I know is when the markets are this light it certainly makes for a dull market. We should all know by now the old market adage that states, 'never short a dull market'. Despite the light volume rise throughout the trading day this is one dull day.

Nicholas Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

Agriculture Stocks Stay Hot But Remain Over Bought

Fear that food is becoming a rare luxury is sweeping the globe. Between floods, droughts, and overpopulation, agriculture stocks are the hottest thing since the Dot.com bubble. There are so many factors involved here. First, you have inflationary concerns as the Federal Reserve and most countries are printing massive amounts of money. This naturally drives up the price of food. Then you have floods, fires, droughts and over population. Emerging countries like China and India are having to squeeze every last bit of grain from each acre. This seems like an amazing bullish case for stocks like Potash Corp./Saskatchewan (NYSE😛OT), Monsanto Company (NYSE:MON) and The Mosaic Company (NYSE:MOS) and in the long term it probably is. However, these stocks have soared to insane levels in the short term. In addition, grain prices have moved sharply higher causing farmers to plant more. This increases supply and in the short/mid term should bring prices back in check slightly. A smart investor would not go near these stocks until they have a solid pull back and correction. A good example would be Monsanto. In October, Monsanto was trading at $47.07. As of today, it hit a high of $75.09. That is a surge of 60% in just three months. A pull back will come in the next month, be patient and be ready to pounce. A retrace to $63.00 would begin to look attractive. Always remember, the disciplined trader and investor make money. The wild, chasing trader and investor, becomes the bag holder.

Gareth Soloway
InTheMoneyStocks

 

[InTheMoneyStocks]

Trade Lesson: McDonald's Shakes The Weak, Profits To The Smart

McDonald's Corporation (NYSE:MCD) saw a dramatic fall in recent weeks. The stock has been pounded over sales fears. Yesterday, I discussed the 200 moving average long play and the probability of a bounce on my Rant and Rave blog. Today, the stock opened lower, shaking out the weak amateurs only to roar back to the upside, now trading at $73.73 +1.06 (+1.46%). This is a huge reversal and an engulfing handle on the daily chart. The daily chart has now recaptured the 200 moving average and the bullish call from yesterday is paying off handsomely.

This morning, I told my Intra Day Stock Chat Room to buy McDonald's within the first few minutes of the trading day. The entry alerted was $72.23. The reasoning is key here and I will do my best to explain it for those of you that wish to learn. First, we know the chart slammed into the 200 moving average yesterday and is solidly over sold. Secondly, charts will often move below their 200 moving averages to shake out the weak traders and investors and coax on amateur shorts. This allows the institutions to maximize profit as they take the money from the weak on the move back up. In addition, the key confirmation signal would ONLY be triggered today to the downside IF we closed below yesterdays low. The confirmation signal is proprietary technique I teach our members. Per the entry, we were trading below that low. My thought process was this. Buying it on the gap down meant, if it did not rally back up today, I would sell and take the loss by the time the market closed today. However, downside risk on an already oversold stock with another gap down was minor. Maybe $0.25 or so. On the other hand, he upside was huge. Should MCD rally back and close above yesterdays low, it would likely continue higher and move back above the 200 moving average. This meant that the upside reward was in the range of $1.00 to $2.00 while downside risk was only $0.25. With all these factors, it was an obvious long play. The signal to buy went out at $72.23. The home run was hit. The stock is now trading at $73.72 and those that took the trade are in the money by a whopping $1.50. Congrats to those in the Chat Room that took it.

Gareth Soloway
InTheMoneyStocks

 

[InTheMoneyStocks]

Our Wallets Just Got Lighter This Morning

The wallet of all that use the U.S. Dollar to purchase goods just got a bit lighter this morning. The U.S. Dollar Index is now trading lower by 0.52 cents to $78.43. The U.S. Dollar Index has declined by $2.87 cents in just the last eight trading sessions. This is a very sharp decline in such a short period of time.

The decline in the U.S. Dollar comes as food riots are breaking out around the world due to inflated food prices. The Chinese President, Hu Jintao, is in town visiting the White House this morning. He has been very critical of the weak U.S. Dollar as of late. He has also stated that he would like his currency called the Yuan to be the reserve currency of the world. Many American politicians including U.S. Treasury Secretary Tim Geithner have asked the Chinese to allow their currency to float and trade in the open market. At this time only a small percentage of the Chinese currency is allowed to be traded in the open market. Everyone knows that the Chinese move on Chinese time and will not be pushed by what the American politicians want. After all, the Chinese do own nearly $1 trillion in U.S. debt.

The decline in the U.S. Dollar Index this morning just gives more evidence that the Chinese might be correct in keeping their currency pegged to the U.S. Dollar. Why would the Chinese allow their currency to float higher when the Federal Reserve Bank manipulates the U.S. Dollar via it's quantitative easing program? Nearly everyday the Federal Reserve Bank buys billions of dollars worth of U.S. Treasuries creating huge cash reserves and causing inflation around the world.

Goods for all that use the U.S. Dollar have become more expensive today. U.S. Consumers are now paying over $3.00 for a gallon of gasoline. All commodities have soared around the world due to the fact that all commodities trade in U.S. Dollars. However, the retirees in the U.S. are feeling the weak dollar the most as inflation increases and the value of the currency they use to buy goods declines. Everyone who uses the U.S. Dollar just lost a little more purchasing power this morning.

Nicholas Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

Markets Sell Again, What You Must Know

The markets sold for the second straight day, dropping sharply as commodities took the brunt of the sell off. The SPDR S&P 500 ETF (NYSE:SPY) opened slightly lower on the day and then collapsed, much like yesterday. The SPY is trading at $127.40, -0.85 (-0.66%). The key to the drop today was continued fear from China. The Shanghai Index has dropped approximately 7% this week amid fears that China will continue to raise interest rates. Just last night, China reported stronger than expected GDP. This continues to fuel the fears that they will continue to cool off their economy. Oil, Gold and all other commodities are getting smacked today. The Dollar is higher as well.

Commodity stocks are taking the brunt of the sell off. The Mosaic Company (NYSE:MOS) is down another 5% on the day after dropping over 10% yesterday. On Tuesday, the stock traded to a high of $85.45. Today, the low is $72.19. While it has been hit hard, there is a possible swing trade bounce play at the 50 moving average on the daily at just under $72.00. Other stocks are dropping sharply as well. The strongest stocks for the last couple months have been Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX). These two stocks have propped up the indexes by themselves. Today, they are dropping sharply. XOM is trading at $77.12, -1.12 (-1.43%) while CVX is trading at $91.88, -1.09 (-1.17%).

The biggest question is, has this market topped? Right now, the markets are set to confirm a pivot turn to the downside in the short term. However, extreme caution must be used because this is options expiration week. During options expiration week, institutions will push the markets in the opposite direction from where they have been going to get options to expire worthless. The amateur, uneducated investors are usually the ones that buy the options from the institutions. Therefore, it is common to see the bigger, more powerful institutions manipulate the market to get those options to expire worthless, thus the institutions retains the full premium which is pure profit.

Assuming this market ends near the lows of the day, one must believe a short term top is in. However, my personal short positions are smaller in this down turn than usual because of the options expiration influence. This is called smart and disciplined trading. It is the key for any swing trader or investor.

Gareth Soloway
InTheMoneyStocks

 

[InTheMoneyStocks]

Stock Market Trouble As Weakness Shows

Earnings from the big name companies cannot seem to keep the markets floating any longer. By 10:00am ET, the SPDR S&P 500 ETF (NYSE:SPY) hit a high of $129.17. Since then, they have fallen all the way back to new lows of the day at $128.30. This is extremely unusual for a light volume market on a Friday and must peak ones interest. Over the last three months, the markets have floated non stop higher, especially on Fridays and even more so when the U.S. Dollar is weaker, like it is today. So what gives?

Other signals that the market is near a top are amazing earnings, being released by such companies as Apple Inc. (NASDAQ:AAPL), International Business Machines Corp. (NYSE:IBM) and Google Inc. (NASDAQ:GOOG). All three of these mega market movers reported stellar results, all of them gapped higher but only IBM held the gains for the entire day. In addition, even IBM could not push the markets higher as we have seen a stall out.

The problem here is simple. The markets are up over 20% in the last few months. Even the best earnings, perfection on all levels cannot justify the recent gains. Institutions are looking to sell for now, take profits and evaluate their positions. This is creating a market that looks much different than what was seen just a week ago. In addition, let's not forget options expiration and the sneaky institutions wanting to push some key stocks lower, to have the plethora of calls they sold expire worthless. When options expire worthless, the institution enjoys the entire premium as a pure profit.

Bottom line is, this market is acting differently these last few days. This must be watched as a top could be near.

Gareth Soloway
InTheMoneyStocks

 

[Dentalfloss]

Re: Stock Market Trouble As Weakness Shows

many thanks for this posting
i shall be watching for any upside failures

 

[InTheMoneyStocks]

Alert: Gold Setting Up For A Three Day Bounce

Gold has been hammered over the last couple weeks, after making all time highs. The SPDR Gold Trust (NYSE:GLD) has fallen from an all time high of $139.54 to a low today of $129.07. This fall has been categorized by bearish flag pattern after bearish flag pattern playing out to the downside. It has been classic. While gold has fallen sharply, it now is entering a level where it may find some solid support. In addition, many gold stocks have fallen to their 200 moving averages on the daily charts. This also tells us there may be a bounce in the short run. Just to make it clear, this is not a long term bounce, just a bounce over a few days that may start today or tomorrow.

As discussed above, some gold stocks are hammering into major support on the daily charts. Not the charts of Yamana Gold Inc. (NYSE:AUY) and Barrick Gold Corporation (NYSE:ABX). Both have fallen dramatically in recent weeks but now sit on the 200 moving averages. In addition, the fact that gold now sits on solid support, things seem to be in order for a bounce. The GLD has major support at the $129.00 level, hit today.

Gold is a tricky commodity to figure out. It relies on two major factors for its pricing. The first is the easy one, the U.S. Dollar. When the Dollar moves up, gold usually drops. The second factor is bearish sentiment. When investors and traders get extremely bearish on the markets, money runs into gold for safety. This recent drop has been headed by market optimism, rather than a move higher in the U.S Dollar.

Gareth Soloway
InTheMoneyStocks

 

[Naz]

Re: Alert: Gold Setting Up For A Three Day Bounce

I noticed that Gold topped out when it hit its Fib extension.

 

[intradaybill]

Re: Alert: Gold Setting Up For A Three Day Bounce

When the Dollar moves up, gold usually drops.

The 60-day correlation of gold to dollar index for the last two years has a max value of 0.37, min value of -0.75 (!!!!!!) and average value of -0.27. 🙂

So, whoever said that, he is flat wrong in the last two years. We have seen the dollar going up and gold going up at the same time.

 

[advfntrader]

Re: Alert: Gold Setting Up For A Three Day Bounce

small bounce but selling off again, I think sub $1300 is needed

 

[InTheMoneyStocks]

Best Setups For A Toppy Market

The market has been on a one way path for months now, each sell off being negated by another move higher a day later. Yesterday, the markets were selling sharply into the 3:00pm ET time frame, only to have massive buy programs hit to push the markets back higher into the State of the Union address. Today, the markets have inched higher ahead of the Federal Reserve policy announcement on interest rates at 2:15pm ET. While the market seems so resilient, there are cracks in the ice beginning. From yesterdays activity, it was clear the markets wanted to sell off, however, instead the markets were propped up into the close. The SPDR S&P 500 ETF (NYSE:SPY) are currently trading at $129.64, +0.47 (+0.36%).

When this market finally does pull back, it is important to be on board with the correct plays. In addition, it is even more important to find the perfect levels that will maximize your profits on any drop. Apple Inc. (NASDAQ:AAPL) has been one of the hottest stocks in recent years. Their products are number one and spreading throughout the world. However, Steve Jobs has now left the company and people fear competitors will take market share away. The stock level to watch for a pull back at is $350.00. This would be a meager cross of the previous high made just weeks ago. It also represents an even number that will be monumental based on technical analysis. If AAPL should reach $350.00, reward to the short side is at its highest.

Oil has stalled out in the last week, pulling back off recent highs. However, two market leading stocks have continued to push higher. Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) have almost propped this market up all by themselves. They have moved higher relentlessly. These are now both high velocity trades in terms of being extended and ready to short. For XOM, anything around $80.00 looks primed for a $2.00-$3.00 pull back and for CVX, $95.00 is the pull back level. This could be good for up to $5.00 on a retrace. In addition, CVX will report earnings this Friday morning before the market opens while XOM will report Monday, before the market opens. At current levels, it is hard to imagine earnings being able to support the price of these stocks much higher.

Watch the Federal Reserve today at 2:15pm ET. My personal guess is the markets close over 12,000 on the Dow Jones Industrial Average. Then look for a pull back starting late this week or next week.

Gareth Soloway
InTheMoneyStocks

 

[jini]

Re: Alert: Gold Setting Up For A Three Day Bounce

Thanks for the AUY tip at 200 ma, took a look, it made perfect sense. Jumped on at 11.04 and out at 11.34 🙂 Took my quick gain but think it can go back up to 12 soon.

 

[Pazienza]

Re: Alert: Gold Setting Up For A Three Day Bounce

Thanks for the AUY tip at 200 ma, took a look, it made perfect sense. Jumped on at 11.04 and out at 11.34 🙂 Took my quick gain but think it can go back up to 12 soon.

🙄😆

Christ Almighty, is this what it has come to? "Thanks for the tip..." 😱.

 

[jini]

Re: Alert: Gold Setting Up For A Three Day Bounce

Its always been this way 😉

 

[Pazienza]

Re: Alert: Gold Setting Up For A Three Day Bounce

Its always been this way 😉

LOL 😆

 

[InTheMoneyStocks]

Markets Stall At Dow 12000, Here Is Why

The markets have been hammering at Dow 12,000 now for three straight days. This is getting exciting and interesting at the same time. In the past three months, since this up leg has gone into motion, the market has never hammered on a level for so long and not broken though. The SPDR S&P 500 ETF (NYSE:SPY) are trading at $129.55, -0.12. They have fallen over the last thirty minutes as the U.S. Dollar caught a bid, the Dow Jones Industrial Average again retreating from the 12,000 level.

The reasons behind this resistance comes in multiple parts. First, the markets are overbought and have not had even a minor pull back in three months. Around Thanksgiving, the SPY sat at $117.75. That would mean an approximate 10.5% move straight up. In addition, from the 2010 lows, the SPY is up 28%. That is truly an amazing move. While the markets seem tired, the Federal Reserve is tirelessly pumping liquidity into the system. There now seems to be an epic battle between the reality of a correction needed and the Federal Reserve propping.

Some of the biggest movers today are stocks that reported earnings. Caterpillar Inc. (NYSE:CAT) reported stellar growth and earnings numbers and is trading higher at $96.03, +0.28 (+0.29%). The stock made a new 52 week high today at $97.79. However, the weakness now hitting the markets has brought it in. Amazon.com, Inc. (NASDAQ:AMZN) is also surging higher ahead of earnings today, after the market closes. They are expected to report earnings between $0.88 and $0.95 per share.

As the market drops, the driver is the Dollar as it pushes up. As the Dollar pushes up, commodities and commodity stocks are pulling back. Gold and oil are both nicely lower on the day.

Gareth Soloway
InTheMoneyStocks

 

[InTheMoneyStocks]

Sucking : Life Pulled Out Of The Markets

After a wild, huge volume day on Friday, the markets returned to "normal". The volatility of Friday has been sucked out, volume dry and the drama ancient history. The Middle East and Northern Africa continues to be caught up in riots and protests but the U.S. markets seem to be shrugging it off as key stocks lead the market higher and the Dollar drops. Currently, the SPDR S&P 500 ETF (NYSE:SPY) is trading at $128.25, +0.53 (+0.41%).

It continues to be amazing to watch this market be controlled. So quickly the sellers vanish and the light volume allows for the market to float higher. Earnings from Exxon Mobil Corporation (NYSE:XOM) helped as they beat on revenue and earnings per share. The one small hiccup was their tax rate, which came in much lower than expected, increasing earnings per share. However, the stock is trading nicely higher today at $79.77, +0.78 (+0.99%).

After a strong Dollar move on Friday, it has fallen back sharply. The Dollar was up on Friday as scared investors ran to it because of the problems in Egypt. As said earlier, that is a distant memory and as the Dollar drops, the markets float higher. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $22.36, -0.13 (-0.58%).

The markets await major news later this week on jobs. The Unemployment Rate and Non Farm Payrolls will be reported on Friday, February 4th, 2011 at 8:30am ET. This will be something the markets will look to for direction.

While things are quiet today, smart investors and traders must be constantly watching Egypt and the whole region. Egypt is key because they control the Suez Canal. This is a major shipping route for the whole region and much of the world. Should things get dramatically worse, fear would boil over again and cause the Dollar to spike, sending the markets down again. Longs or shorts are available in this market. However, to do this right, each trader or investor must truly understand the chart dynamics.

Gareth Soloway
InTheMoneyStocks

 

[InTheMoneyStocks]

Over $14 Trillion In Debt And The Market Loves It

Many investors will often say that the stock market leads the economy. While in the past this has appeared to be the case on many different occasions, is it really true? That question is open for debate. The current situation for the economy looks to be slightly different. Throughout the past 97 years every time the Federal Reserve Bank(which is the central bank to the United States) has lowered interest rates to extremely low levels the stock market has inflated higher and recovered. Currently, the Federal Reserve has the benchmark fed funds rate at zero to a quarter percent since December 2008. The central bank has also purchased over $1 trillion in U.S. Treasury bonds. At this time the Federal Reserve is in the middle of it's $600 billion quantitative easing part two program which is meant to help inflate asset prices. This is an unprecedented amount of money being thrown at these markets in order to create inflation and higher stock prices.

To the Federal Reserve Bank's credit it has worked as everything has inflated higher. The people that are employed and have jobs are also feeling better because their retirement accounts have bounced back up. When people feel better they will spend money. It is important to note that consumer spending accounts for 70.0 percent of the gross domestic product in the United States. Can quantitative easing actually work if people start feel better?

There are a few problems with inflating the markets higher by creating cash reserves. The first problem is the high inflation that it creates around the world. Every emerging market is now facing high inflation. People in the United States can see how much higher they are paying for food and energy. The other problem is that unemployment is still near 10.0 percent according to government standards. There are also a lot of people on food stamps or as we now say government assistance. It is estimated that over 43 million people are on food stamps. Food riots have also broken out around the world in various nations. Rice, wheat, cotton, coffee, and many other commodities are soaring higher on a daily basis. The iPath Dow Jones-UBS Commodity Index Total Return ETN(NYSE😀JP) is trading at a new two year high. The iPath Dow Jones-UBS Cotton Subindex Total Return ETN(NYSE:BAL) is trading at a new all time high. Can these high prices be beneficial for the economies in the United States and around the world?

This morning the U.S. Dollar Index has declined lower again by 0.34 cents to $77.38. The purchasing power of those that use dollars have diminished again. Well, just about every commodity in the world is traded in U.S. Dollars. Every person that lives in America has just about every asset that they own denominated in U.S. Dollars. How can a rising stock market and a falling dollar be viewed as a positive? Wouldn't one think that a strong currency and a strong stock market should be be viewed as real wealth creation? However, our political leaders and our banking leaders tell the public differently. It is important to note that President Obama never onced mentioned the condition of the U.S. Dollar last week in his State of the Union speech. We can only wonder why?

The stock market will continue to inflate until it realizes that it cannot inflate anymore. People should remember that very similar trading action took place throughout 2003 into 2007. Unfortunately, we all saw what happened when that rally came to an end. Right now the United States has over $14 trillion in debt and the market does not seem to care yet. We shall see how far this inflation rally can last.

Nicholas Santiago
InTheMoneyStocks

 

[InTheMoneyStocks]

Solar Stocks Surge, What To Do

Solar stocks continue to rocket higher on the back of positive press releases and high oil prices. MEMC Electronic Materials, Inc. (NYSE:WFR) reported earnings and raised their full year guidance. The stock soared on this news, jumping to a current price of $12.89, +1.26 (+10.83%). Recent positive news from First Solar, Inc. (NASDAQ:FSLR) has also kept the sector on fire.

In addition, as long as oil prices continue to hold above $90 per barrel, solar will be a solid alternative. The higher oil prices, the cheaper solar becomes as an alternative source of energy. The same thing applies to other forms of energy. These solar companies also continue to race towards making cheaper, more efficient solar cells. If they can lower costs plus have higher oil prices, sales should continue to be strong.

The one negative the solar market may have is competition. There are more and more solar companies each year. This may hurt pricing in the long term and cause a drop in margins. While this is a long term fear, it is not something these companies are seeing in a major way in the short run.

Currently, most solar companies are far too expensive to buy. First Solar for instance, has jumped from $130 to its current price of $165 in January. Buyers now, would be considered chasers and most likely be paying a premium on something they could buy cheaper on a pull back. The same thing applies for a majority of the solar stocks. There are a few that still look cheap, relative to their peers. JA Solar Holdings Co., Ltd. (NASDAQ:JASO) is a Chinese solar player that is just bouncing off its 200 moving average. In addition, Hoku Corporation (NASDAQ:HOKU) is a small cap that could have some major growth in the coming years.

As of now, it appears most solar stocks are too pricey to be serious buys at currently levels. There are a few that still look attractive as mentioned. Sharp pull backs may offer opportunities in stocks like FSLR but make sure to analyze the charts first.

Gareth Soloway
InTheMoneyStocks