Commodities Love Bailouts!

Friday, April 30th, 2010

The commodity markets seem to love bailouts. This is a little known fact and not written in any book . With the Greece bailout getting bigger by the day I think commodities are about to explode higher. Go back in history and look at every major bailout and look how commodities performed after it happened. More money sloshing around in the system is great for them and devaluing currencies helps too. Gold in Euros is going through the roof right now and many commodities are on the brink of a major breakouts to the upside. I would look to energy and metals to lead this party higher. My favorites are heating oil, Rbob gasoline, gold, and silver. Check out the charts:

Heating Oil:

RBOB Gasoline

Gold:

Silver:

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PIIGS Redux…Trigger For A 2010 Collapse?

Thursday, April 29th, 2010

While the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) seem to be dominating the headlines right now I warned about this months ago: PIIGS, the Trigger Point For A 2010 Collapse?

I do think this is going to be a huge problem in 3-6 months, but for now I see it as just a shot across the bow. I also think that we should pay particularly close attention to how this plays out and everything that is going on over in Europe because we have the same problems here in the US. It is only a matter of time before we are going to have to implement austerity measures, (cuts in gov’t spending) which should cause quite the uprising with unemployment continuing to stay high and housing continuing to stay weak. While the Fed has done a masterful job of putting a band-aid on this problem they haven’t cured it by any means. Long term I am extremely bearish and think that there is a better than 50% chance that the broad market indices see new lows. I know it sounds crazy but that’s what I see happening.

Those of you that know me well also know that I warned of the 2000 dot.com crash and the 2008 economic collapse. I profited handsomely from both events and I plan to again when the next collapse happens. While I was 3-6 months early in calling the 2008 financial collapse I nailed it when it happened, big time!

I also did some research on years that end in zero in another blog post that points to at least a -13% correction sometime this year and most likely at -25% or greater correction: The Decentennial Pattern – Years That End In 0, Watch Out Below

This is exactly the same kind of research that I did to call the top of the market in 2007, as well. My point is that you should enjoy this rally while it lasts because this isn’t going to end well when the music stops. Until then I have no problem playing the long side and for those that have been following my newsletter know that I have been doing exactly that.

The close this week in the S&P 500 is extremely important for the short term price action. A weak weekly close is going to usher in more selling next week and a strong close should give us another run at new highs…

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Perma-Bear Peter Schiff Speaks

Wednesday, April 28th, 2010

Perma-bear Peter Schiff interview:

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Playing With Fire

Monday, April 26th, 2010

This is Jeremy Grantham’s Quarterly Letter and its worth a read!

GMO Quarterly Letter April 2010

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Energy Leading, Metals Not Far Behind

Sunday, April 25th, 2010

I have been talking about energy and metals taking the lead for the past few weeks. Energy had a nice breakout today. Metals are beginning to perk up as well.

Here is a chart of the XLE

Also, take a look at the OIH:

I think Gold is the next market to breakout and challenge its recent highs:

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7 Keys To Making Money Consistently

Friday, April 23rd, 2010

Here is great article I found that I thought everyone would enjoy:

7 Keys to Making Money Consistently

One of the things that I am hearing more and more these days is that traders are not making money consistently.

Do you know anyone with this challenge? Do you know them intimately?

So, what can you do to make money consistently?

1. Deal with your trading as a business

If you think of your trading as a hobby, then you produce the results of the hobby and making money becomes secondary. For your trading to be successful, it is imperative to create a proven process to make it a success.

2. Have a written plan that matches who you are

This is a very important step. We want to have a proven plan that succeeds. However, if it does not match who you are, you are setting yourself up for failure. It will work for a while, but because it goes against who you are, after awhile you find reasons not to follow it.

3. Have a money management system in place

When you have a system in place, it enables you to manage your risk better thus allowing you to preserve and grow your capital on a more consistent basis.

4. Create your own daily routine

Everything we do is a routine. If you think about it, when you get up, you follow certain routines. However, most of us are not conscious of our routines. So, create one that serves you and sets you up to make money consistently.

5. Be patient

I know that some traders love the excitement of trading and once the excitement is gone, they get bored and start sabotaging themselves. Does this sound familiar? If you are looking for excitement, find a hobby that can provide you the excitement. This is one of the most important skills of your trading success.

6. Don’t focus on the money

By focusing on the money, you get hooked on the trade that you have placed in. Therefore, you are less likely to be in the zone and really noticing what is happening in the market.

You need to detach yourself from the result of your trade. This does not mean that you don’t care. Of course you do, and that is why you have placed your trade. It means that you are not married to your position. You are free to be in the zone and really notice what is happening versus what you hope and wish to happen.

7. Develop your Mental Edge

This is a crucial step. Stephen Covey has a 90-10 principle. He mentions that 10% of your life is determined by what happens to you. 90% of life is decided by how you react. Events happen to us. What differentiates the super stars is how they react!!!

“Any fact facing us is not as important as our attitude toward it, for that determines our success or failure.”
- Norman Vincent Peale

Remember, this is a process. Any step in the right direction moves you closer to your goal.

“Continuous improvement is better than delayed perfection.”
- Mark Twain

Here is to making trading success your habit!

Source: Trading Markets.com

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Goldman Sachs Bull Market Succes and Bear Market Failures

Wednesday, April 21st, 2010

Source: Elliottwave International

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Consumer Stocks Are Weaking…Pointing To A Correction

Monday, April 19th, 2010

The consumer staples, consumer discretionary, and retail have been leading the market higher since the February lows. Now they are all under performing the broad market averages. I take this as a sign that a correction is upon us. How big is correction going to be? I would guess in the 4-6% range but I don’t really know for sure. I think the best way to protect your long positions is to buy May puts which are cheap and will protect you during a correction of any magnitude. Check out the consumer etf charts:

XRT – Retail

XLP – Consumer Staples

XLY – Consumer Discretionary

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Forget Stocks For Now And Consider Buying Soybeans

Monday, April 19th, 2010

The stock market has had a great run and waters are becoming crowded and muddy. At this juncture I favor soybeans and soybean meal as the best trades to look consider. There are easy trades and hard trades. I consider soybeans one of the easier trade set-ups at the moment. That doesn’t mean that it will result in a profit or do what I think it is going to do. It just means that I have a clearly defined set-up.

Here are the charts of each:

Soybeans:

Soybean Meal:

Posted in Trading | 2 Comments »

Magazine Cover Indicator

Saturday, April 17th, 2010

A host of magazine covers lately are filled with hope and glee. Typically, when this happens it signals a top in the market. These types of magazine covers tend to show up after a trend has long been in place and the odds are its nearing exhaustion. While its not an exact science it is a useful indicator to pay attention to…

Here are a few of the covers:

The broad market indices are up more than 75% from their lows and only in the last two weeks have these covers showed up.

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