Wednesday, December 29, 2010

Forex Multiplication

Multiplication
Click Here for Forex Multiplication Profits


A few weeks ago, I let you in on what has turned out to be one the biggest Forex surprises of the year: - The Forex Profit Multiplier

This step-by-step trading program & companion Trade Alert Software from 35+ year trader Bill Poulos is a multi-media powerhouse that reveals the quickest & most flexible way to achieve INDEPENDENCE in the Forex markets & shield yourself from
risk . . . - ESPECIALLY if you're inexperienced & have little time.

In just about 4 days, the initial # of programs Bill set aside for his new students quickly sold out, and for good reason:

* Those lucky individuals who claimed their copy before it expired figured out that NOW is one of the best times ever to trade Forex because of the huge volatility being created by the instability of the global markets.

The profit potential right now is awesome & EXTRA lucrative.

YOUR SECOND CHANCE

Now that the initial wave of new student inquiries has settled down a bit, Bill has decided to take on a few more new students - but only through Tuesday, January 4th, 2011, at 11:59pm Eastern (New York time).

He's not saying how many more he'll take on, but I know this for a fact:

* He's only letting in a small, limited number . . .

* The doors close next TUESDAY . . .

And, it would not surprise me if he pulled his 'second chance' offer down early, especially if he gets more students than he can handle.

So, if you have ANY interest in getting in on what I think many traders will end up calling THE Forex event of 2010, go here to see if any copies are still available:

If you missed Bill's awesome complimentary Forex training website where he revealed the Forex Profit Multiplier, you can still see the training videos here:

Tuesday, December 28, 2010

Making Money from ObamaCare

Obama Care
ObamaCare Health Plan


This week I have a buy recommendation on Humana. Ticker HUM. I have no idea if the newly passed Obamacare healthcare bill will help Humana or not, but it seems its possibly a major factor to consider with all the US healthcare stocks now. In any event, if it works out, I believe Humana may provide a 15% to 20% return in the following year. Not spectacular returns but hopefully and possibly safe steady returns with the potential for higher returns after a year’s time, making it a potential good long-term hold. Humana has a healthy balance sheet with about 50% debt to equity, and its current PE ratio at about 9.

Zacks Investment Research reported on December 23, 2010 that with the closure of the acquisition of Concentra, Inc., Humana has raised its earnings per share guidance for fiscal 2011.

Humana now expects its earnings per share in the range of $5.45 - $5.65, up from the previous outlook of $5.35 - $5.55.

Humana completed its acquisition of Concentra on December 21 for approximately $790 million in cash, and now expects its consolidated revenues for 2011 to increase in connection with this transaction. Concentra produces approximately $800 million of revenues annually from 240 workplace health-care facilities and more than 300 medical centers in 42 states.

Moreover, the acquisition of Concentra will help in increasing Humana’s focus on its core businesses as a health care provider, besides providing revenue diversification and opportunities for strategic expansion over the longer term. Additionally, Concentra will provide access to Humana’s medical members in certain regions.

The revenue diversification enjoyed by Humana will also help reduce its exposure to health care overhaul regulations, as the health law seeks to compress an insurer’s profits from selling benefits.

Humana will also benefit from Concentra’s focus on evidence-based, cost-effective medical care and a service-driven culture.

Apart from Humana, its competitor Cigna Corporation, Ticker CI remains on track to grow its international business, and UnitedHealth Group Inc. Ticker UNHis focused on earning revenues from several segments outside health insurance coverage.

In the past five years, Humana has announced 11 pending or completed acquisitions. With the acquisition of Concentra, Humana will gain new opportunities in the growing area of health care. In addition, the deal will enhance Humana's business, diversify its revenue stream and will provide opportunities for expansion.

Humana will be at the JP Morgan Healthcare Conference in San Francisco Tuesday January 11, 2011, and be reporting its 4th quarter 2010 earnings in a conference call Monday February 7, 2011

Buy Long Humana - Ticker HUM

Buy Entry: 51.46 to 53.94

Stop-Loss: 49.50

Take Profit Areas: 61.01 to 61.79, 62.62 to 63.53, 67.84 to 68.75

Humana Company Profile

Humana Inc. offers various health and supplemental benefit plans in the United States. Its Government segment comprises beneficiaries of government benefit programs and operates in three lines of businesses: Medicare, Military, and Medicaid. The Medicare program offers hospital and medical insurance benefits to persons of age 65 and over and some disabled persons under the age of 65. The Military program provides health insurance coverage to the dependents of active duty military personnel and to retired military personnel and their dependents. The Medicaid program is a federal program that is state-operated to facilitate the delivery of health care services primarily to low-income residents. The Commercial segment consists of members enrolled in its medical and specialty products marketed to employer groups and individuals. This segment provides health maintenance organization products that provide prepaid health insurance coverage to its members through a network of independent primary care physicians, specialty physicians, and other health care providers; preferred provider organization products, which are offered primarily to employer groups and individuals; and administrative services only products that are offered to employers who self-insure their employee health plans. It also offers various specialty products, including dental, vision, and other supplemental products, as well as disease management services. As of December 31, 2009, Humana Inc. had approximately 10.3 million members enrolled in medical benefit plans and approximately 7.2 million members enrolled in specialty products programs. The company markets its products through various channels, including television, radio, the Internet, telemarketing, and direct mailings. In addition, Humana Inc. has strategic alliances with Wal-Mart Stores, Inc., State Farm, and United Services Automobile Association to market its products. The company was founded in 1964 and is headquartered in Louisville, Kentucky.

Click here to review and trial the Trading Software we used in determining our buy long position on Humana.

Click the Humana Stock Stock Chart for a larger view.

Humana Stock Chart

Friday, December 17, 2010

One Amazing Reason To Own Gold & Silver

Gold Silver Bullion Coins
The One Reason You Have to Own Gold & Silver


Analysts and pundits provide various reasons for the bull market in Gold. This includes emerging market demand, low interest rates, money printing, central bank accumulation, central bank policies and falling gold production.

These are all good reason but there is one reason which stands apart and will drive precious metals to amazing heights. It is the impending sovereign debt default of the west, led by the great USA.

Government finances have reached a point where default and/or bankruptcy is unavoidable. After all, we’ve already started to monetize the debt. The inflection point is when total debt reaches a point where the interest on the debt accumulates in an exponential fashion, engulfing the government’s budget.

When this occurs at a time when the economy is already weak and running deficits, there essentially is no way out.

Significant runaway inflation and currency depreciation result from a government that essentially can no longer fund itself. It starts when the market sees the problem and moves rates higher.

The government then has to monetize its debts to prevent interest rates from rising. Let me explain where we are and why severe inflation is unavoidable and likely coming in the next two to three years.

In FY2010, the government paid $414 Billion in interest expenses which equates to 17% of revenue. When you account for the $14 Trillion in total debt, that works out to be 2.96% in interest.

In FY2007, total debt was $8.95 Trillion, but the interest expense was $430 Billion and 17% of revenue. That accounts for an interest rate of 4.80%. Luckily, rates have stayed low for the past two years.

However, in the next 24 months the situation could grow dire. At least $2 Trillion will be added to the national debt. At an interest rate of only 4.0%, the interest expense would be $600 Billion. Even if we assume 7% growth in tax revenue, the interest expense would total 22% of the budget. An interest rate of 4.5% would equate to 26% of the budget.

As far as what level of interest expense is the threshold for pain, Russ Winter writes:

Once interest payments take 30% of tax revenues, a country has an out of control debt trap issue. When you think clearly about it, this just makes sense, as the ability to dodge, weave and defer is pretty much removed, as is the logic that it will be repaid in a low-risk manner. The world is going to be a different place when the US is perceived to be in a debt trap.

Is there anyway out of this?

Either the economy needs to start growing very fast or interest rates need to stay below 3% until the economy can recover. Clearly, neither is likely.

As you can tell from the calculations, interest rates are now the most important variable. If rates stay above 4% or 4.5% for an extended period of time, then there is no turning back.

Judging from market charts, the secular decline in interest rates is likely over. It is hard to argue with a double bottom, one of the most reliable reversal patterns.

In 2011 and 2012, the Fed will have two new problems on its hands. First, the Federal Reserve will be fighting a new bear market in bonds. They will be fighting the trend. They didn’t have that problem in 2008-2010.

Furthermore, the interest on the debt will exceed 20% of revenue, so the Fed will have to monetize more as it is. Ironically, the greater monetization will only put more upward pressure on interest rates, the very thing Captain Ben and company will be fighting against.

As you can see, there is really no way out of this mess, which also includes the states, Europe and Japan. This is why Gold and Silver are acting stronger than at any other point in this bull market.

They’ve performed great when rates were low but are likely to perform even better when rates start to rise. This is why we implore you to at least consider Gold and Silver.

Courtesy: The Daily Gold


Invest Trade Gold and Silver with FXDD

50 Pip Gold Spread Compared to 100 with Other Brokers

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Gold Silver Metatrader Expert Advisor
Gold Silver Metatrader Expert Advisor

Version 2 Released December 15, 2010. Version 2 includes Smart Drawdown Reducer, Smart Money Management, Dynamic Stop Loss, and Support for Silver currency. Trade gold and silver 24/5 hands free.

Wednesday, December 15, 2010

Gold Silver Copper Daily Update

Gold Silver Metatrader Expert Advisor
Gold Silver Metatrader Expert Advisor


Gold Silver Copper Forecast Outlook 12/15/10

February Gold closed lower due to profit taking on Tuesday as it consolidates some of Monday's rally. The low-range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI remain neutral to bearish signaling that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 1379.30 are needed to confirm that a short-term top has been posted. If February renews the rally off November's low, upside targets will now be hard to project with the market trading into uncharted territory. First resistance is last Tuesday's high crossing at 1432.50. First support is the 20-day moving average crossing at 1379.30. Second support is the reaction low crossing at 1352.00.

March Silver closed higher on Tuesday as it consolidates some of last week's decline. The high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI remain neutral to bearish hinting that a short-term top might be in or is near. Closes below the 20-day moving average crossing at 28.033 are needed to confirm that a short-term top has been posted. If March renews this year's rally, weekly resistance crossing at 31.987 is the next upside target. First resistance is last Tuesday's high crossing at 30.750. Second resistance is weekly resistance crossing at 31.987. First support is the 20-day moving average crossing at 28.033. Second support is the reaction low crossing at 26.525.

March Copper closed slightly lower due to profit taking on Tuesday. The low-range close sets the stage for a steady to lower opening on Wednesday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term. If March extends this week's rally, weekly resistance crossing at 427.00 is the next upside target. Closes below the 20-day moving average crossing near 392.13 would temper the near-term friendly outlook. First resistance is today's high crossing at 422.90. Second resistance is weekly resistance crossing at 427.00. First support is the 10-day moving average crossing at 406.86. Second support is the 20-day moving average crossing at 392.13.

Click the link below for more gold silver and copper information and resources.

Tuesday, December 14, 2010

Macro Millionaire Trading


Worlds Greatest Ground Floor Trading Opportunity


This is impressive. Over the last few weeks, John Thomas, The Mad Hedge Fund Trader, offered to coach and mentor “do-it-yourself” traders into world class traders.

While the market has basically been doing nothing, the folks who took him up on his offer have been making money hand over fist.

Up 21% in about a WEEK in their first position

Up 10% in a WEEK in their second position

And up 100% in a DAY on their latest position

Not a bad week! If you haven’t checked out his trading strategy video, I highly suggest you watch it now.

Click here to see one of the most eye-popping presentations on trading I’ve ever come across. It clearly explains how they’re getting these returns.

I’ve told you before about John Thomas, the founding father of the international hedge fund industry and one of 2010’s top performing hedge fund managers. In this video, he explains a trading strategy that turned $1,000 into $1.3 million in 3 easy trades.

If that sounds impossible, then you really need to watch the video to see the true story of how one very well known hedge fund used it to turn every $100,000 invested into it into $420,000,000. Click here to watch John’s video.

The whole thing is about what it REALLY takes to be a world class trader. This is NOT the musings of some guru, author or pundit. John is near the top of the totem pole for hedge fund managers in the world based on his performance in the market
right now.

What he says will offend some traders and more than a few gurus, because he lays out some cold, hard truths about what you must do if you want to make money in every kind of market.

This guy really knows what he’s talking about. Just take a look at some of his experience:

Paul Tudor Jones and George Soros PAID to have him consult on their hedge funds (he even made $75 million trading against Soros in a single month).

He spent 10 years working for and being mentored by the legendary Barton Biggs. Widely considered the #1 global trading strategist in the world, Biggs is the multi-billion hedge fund manager and former Chief Global Strategist for Morgan Stanley.

John has recommended 48 winners out of 49 trades that generated up to 76% in a single month and 400% in four months - WITHOUT OPTIONS or leverage of any kind.

In 2010, he is one of the top-performing hedge fund managers and traders in the world, a position he’s held for several years.

He founded Wall Street’s massively successful ORIGINAL dedicated international hedge fund.

This is a killer presentation. I highly, HIGHLY suggest you watch it right now – click here to view it.

I seriously believe that if you watch this video, it will have an immediate and positive impact on your trading and your profits.

Monday, December 13, 2010

Apple iPad Stock Price Boost?

Apple iPad Steve Jobs
Will Apple's Stock Get iPad Bounce?


Apple (AAPL) has been a strong market leader in recent years, releasing a string of innovative, game-changing products like the iPod, iPhone, and, most recently, the iPad.

As a November 29 article in IBD noted, the iPad is becoming popular with investors who like how it lets them do stock research and make trades from virtually anywhere.

Apple's sales growth has accelerated during the past four quarters, hitting 67% in the latest report.

Over the same period, earnings growth has ranged from 47% to 86%.

For fiscal 2011, which ends next September, analysts see earnings rising 26%, but they see earnings cooling to 16% in fiscal 2012.

Return on equity is 35%, which is well above the 17% minimum historically seen in leading growth stocks.

Mutual funds and hedge funds own about 39% of the company's shares. But the number of funds owning the stock fell last quarter. Ideally, you'd like to see that number rising.

Apple Chart Analysis

Apple Stock Chart

Apple's had a great run in recent years. It shot out of long cup-with-handle base in July 2009 (Point 1).

It ran up, then took a break and formed a base-on-base pattern (Point 2).

After breaking out and climbing up some more, it formed another base-on-base (Point 3).

Apple broke out of that pattern and moved up again. In recent weeks, it's paused and pulled back to its 10-week moving average line (Point 4).

Apple has started to climb up from that benchmark line, but so far, volume has been below average.

If volume kicks in, it could present a buying opportunity. In that case, the buying range would be between the 10-week moving average line and 5% above the peak in the pullback.

Watch to see if this pullback lasts long enough to become a base pattern. If that happens, it would be base #4. Late-stage bases can have a bigger risk of failing, so that's also something to keep in mind.

Apple Stock Checkup

At 96, Apple's Composite Rating is #1 within its 21-member Computer — Hardware/Peripherals group.

Its EPS Rating of 99 and its SMR Rating of A are also #1.

Its Relative Strength Rating of 84 ranks 2nd among its peers.

The stock's Acc/Dist Rating of B- comes in at #14 within the group.

Click here to learn more about the Investors Business Daily Can Slim Investing Method

Friday, December 10, 2010

Multiplying Forex Profits

Forex Profit Multiplier
Top Forex Profit Multiplier Questions


Ever since Bill Poulos's new Forex Profit Multiplier training videos earlier this week, there has been a LOT of interest and flat-out EXCITEMENT . . . but there's also been a LOT of questions.

If you've been to his training website lately, then you've probably noticed there have been well over 400 comments and questions posted from traders hungry to get their hands on Bill's new software & training program.

He's been answering as many questions as he can directly on the website, but he just recorded a special short video that addresses the top 3:

* How is the Forex Profit Multiplier different from a trading robot?

* What exactly will I get when I order the Forex Profit Multiplier?

* How much will it cost?

Click here to see this short video:

I hope this addresses some of the questions you have about Bill's new "predictive" Forex software.

Underneath this video, you'll see a form that will let you get on Bill's "Cut In Line" list which will let you get his software a full HOUR before everybody else. I suggest you add your email to this list because it looks like he's going to sell
out pretty quickly when it opens next Monday.

Click here for more information on the Profits Run Trading stock and forex trading systems.

Thursday, December 09, 2010

Bear Market Trading Workshop Atlanta Dec 10

Bull Bear Market
How to Trade in a Fast-Moving Bear Market

Atlanta Georgia December 10 & 11 2010


It's one thing to know how something works but quite another to make it work for you.

The Wave Principle is no exception. Yet learning how to put it to work in your own trading can really separate you from the herd – because "with the herd" is no place to be in this market. Here's your opportunity.

The response to our intensive, small-group trading course has been so overwhelmingly positive and the demand so strong that our instructors have decided to take the course on a world tour. At each stop, our most experienced Elliotticians and career traders will teach you how to use the Wave Principle and supporting technical tools to capitalize on the unique opportunities – and avoid the dangerous pitfalls – you’ll encounter in this bear market.

You'll spend two days with EWI's top trading instructors, and you can even ask them questions after you leave – get ready to go back home and kick your trading into high gear.

Drawing on more than 40 years of combined experience analyzing and trading the markets, Senior Tutorial Instructor Wayne Gorman and “Trader’s Classroom” instructor Jeffrey Kennedy team up to share with you the best techniques, tips and tools they have to offer.

In an intimate classroom setting, Wayne and Jeffrey walk you through carefully selected lessons and hands-on exercises that will send you home with the understanding and confidence you need to begin applying these techniques in your own trading.

Plus your education continues even after you leave. Once the course is over, your trading mentors Wayne and Jeffrey are available to clarify a critical lesson or answer that forgotten question that popped up on your way home.

Here's what you'll learn:

* Elliott Trading Fundamentals

* Risk/Reward Assessment

* Discipline Guidelines

* Psychology of Trading and the Markets

* Technical Tools that Complement Elliott

* Developing a Trading Strategy

* Determining Support and Resistance Levels

* Fibonacci Applications

* Entry and Exit Strategies

* Placing and Adjusting Stops

* Trend Reversals and Pattern Recognition

* And More!

We provide everything you need to become a winning Elliott wave trader. You can even take all the course materials home with you so you can reference the lessons after you leave.

Besides your increased confidence and expanded Elliott wave trading knowledge, you'll also take home a valuable course packet, which you'll receive upon arrival.

Use the workbook and other resources during the course to follow along with each lesson, make notes, complete training exercises on your own – and most important – review the materials as often as you like after you leave.

Here's what's inside your course packet:

(Laptops are not required for this course.)

* EWI's one-of-a-kind Bear Market Tutorial workbook, which includes all of the most important lessons and exercises, handpicked by your instructors

* Sleek, durable USB thumb drive, filled with digital copies of all of Wayne's and Jeff's presentation slides and materials covered during the 2-day course

* The Basics of the Wave Principle, a condensed, "Cliff Notes" style reference book originally created exclusively for EWI analysts

* Personalized name badge and EWI-embossed note-taking tools

Click here for more Elliott Wave information and resources.

Wednesday, December 08, 2010

2011 World Cup Trading Championships

2011 World Cup Trading Championships
2011 World Cup Trading Championships

Sign Up To Compete or Register To AutoTrade


Seize the ultimate career changing opportunity!

Secure a position on the World Cup Advisor staff

Top 5 finishers will each be authorized to trade a $50,000 Award Account*

Previous Winners

Larry Williams

Andrea Unger

Rob Mitchell

Michael Cook

Kevin Davey

Click Here to See Full List »

The World Cup Trading Championships® are the competitive arena for futures, forex and stock traders alike. World Cup events are real-time, real-money competition. At stake are great prizes, coveted World Cup Bull and Bear trophies, and a possible spot on the advisory team at WorldCupAdvisor.com.

The highest percentage increases win the cash and top prizes, but it's fair to say that every entrant wins, because every participant qualifies for free trading tools and discounts. Since 1983, traders have turned to World Cup competition as the ultimate trading challenge.

The 2010 World Cup Trading Championships include the World Cup Championship of Futures & Forex Trading® and the World Cup Championship of Stock Trading®*. The top three finishers in each event receive Bull & Bear trophies and great prizes. The top five finishers in the futures/forex competition will each be authorized to trade a $50,000 Awards Account. And each month, the top performer from the combined events will win a crystal Bull & Bear trophy.

Top placing contestants will be eligible for a spot on the advisory team at World Cup Advisor

Click here to sign up to compete or register to autotrade.

Tuesday, December 07, 2010

Europe's Credit Debt Crisis Ending In Collapse?


Crisis in Europe: How the Stability of an Entire Region is Teetering on the Edge of a Major Collapse Free Report


Crisis in Europe: Market moves around the world can impact your portfolio. So whether you know it or not, you probably have a stake in Europe's financial future. You must read this explosive new free report from our friends at Robert Prechter's Elliott Wave International. They've been anticipating and tracking the growing debt crisis in Europe, and they're giving away some of their most eye-opening forecasts and analysis for the region -- for free.

Click here to learn more and download your free 6-page report now >>

Europe's debt crisis began in Greece then leaked into Ireland -- but it won't stop there, warns a new report from Elliott Wave International's European analyst Brian Whitmer.

Whitmer first alerted his subscribers to the still-developing European crisis back in December 2009, when he warned that a set of troubling events across Europe were signaling the entire continent was on edge. Then in February, when the modern-day Greek tragedy appeared to be contained by all media accounts, our friends at EWI anticipated yet another wave of debt woes across Europe. Here's what Whitmer wrote on Feb. 26:

"Greece's woes aren't over, and neither are its neighbors, meaning that more surprises are sure to come."

Whitmer has been anticipating and tracking the growing debt crisis in Greece, Ireland Spain, Portugal and other European nations. His analysis is so valuable and so timely right now that EWI has decided to give you their latest paid analysis on Europe in a new free report, " Credit Crisis in Europe: How the Stability of an Entire Region is Teetering on the Edge of a Major Collapse."

Even if you don't invest in Europe, developments in these European countries can have a big impact on your portfolio. This explosive 6-page report helps you prepare for the crisis in Europe, and it's jam-packed with forecasts and analysis originally published for EWI's paying subscribers. For the REAL story on Europe -- independent from media assumptions and conjecture -- read this prescient new report from EWI.

Click here to download your free report, "Credit Crisis in Europe: How the Stability of an Entire Region is Teetering on the Edge of a Major Collapse."

Monday, December 06, 2010

Buy Sell or Hold on US Mortgages?

Mortgage Crisis
Is The US Mortgage Market Bottoming or Double Dipping?


Some are saying the markets are primed and ready for continued upside move. I’m not buying it. I’m selling it, with a tight stop-loss below on PHH Corp a $1B plus financial stock. A company that originates, purchases, services and sells mortgage loans. The USA mortgage mess that started the financial crisis in 2007 is far from over. Maybe the US mortgage mess and subsequent huge foreclosure inventory will get all fixed in another 5 to 6 years from now. Prices have to fall along with a lot of other things for the USA to be competitive in the global market now. That can happen, but it’s simply going to take time. A lot longer than some people think. The best thing the US fed can do is to put some real action behind their good times are here again spin. That hasn't happened yet.

Wall Street Journal Mortgage Loan Report

According to the Wall Street Journal, the banks have been increasing their 2010 jumbo loan volumes. The jumbo loans are mostly from more wealthy Americans with positive cashflow who are moving up to a larger property over about $500.000. Who’s holding, selling, and buying jumbo mortgage loans these days after 2007 - 2008? The US housing market got some artificial price support from the home buyer tax credit program. Housing prices are starting correct downward again, with the move-up market losing what little momentum it had with negative equity mortgages increasing again.

US High-End Home 2010 Summer Sales Up

Sales from the high end US real estate market were increasing over the summer of 2010. That’s real estate properties valued at $500,000 plus. In August 2010, the $500,000-750,000 home buyer was about seven percent of all home purchases. The $750,000 to $1 million home buyer was 2% of the market, and $1M plus was almost 2% of the market. The slight increase in sales during the 2010 summer in the high end home market may be over now with the abrupt 15% decrease in September sales in those high-end homes.

Last Friday’s Bad Unemployment Report and Real Estate Negative Equity

With the bad job’s report last Friday at a 7 month high, along with the huge inventory of foreclosed real estate mortgages still, and a variety of other problems that need long-term solutions to, a double dip in real estate prices is easy to possibly materialize. The rising number of homeowners with negative equity might stall the move-up market of the high end home buyers, making the troubled the standard and jumbo loan mortgage market increasingly more troubled as well.

PHH Diversified Business Model

PHH Corp also has a fleet management outsourcing business that might help their bottom line earnings, but I don’t think so right now. The risk reward ratio on PHH is leaning to much more risk than reward right now, and their dividend payout is only 1.5% giving no reason to buy it based on getting paid to wait. Too little for too long to wait.

Sell Short PHH Corp – Ticker PHH

Sell Entry: 22.38 to 21.40

Stop-Loss: 22.72 or up to 8% from purchase.

Take Profit Areas: 18.41 to 18.00, 17.67 to 17.26, 15.18 to 14.84

PHH Company Profile

PHH Corporation provides mortgage and fleet management outsourcing services in the United States and Canada. The company’s Mortgage Production segment originates, purchases, and sells mortgage loans, including PHH home loans; and offers private label mortgage services to financial institutions and real estate brokers, as well as provides appraisal, credit research, flood certification, and tax services. Its Mortgage Servicing segment involves in collecting loan payments; remitting principal and interest payments to investors; and managing escrow funds for payment of mortgage-related expenses, such as taxes and insurance. This segment also services mortgage loans, purchases mortgage servicing rights (MSRs), and acts as a subservicer for clients that own the underlying MSRs, as well as provides reinsurance services. The company’s Fleet Management Services segment provides commercial fleet management services to corporate clients and government agencies. Its fleet leasing and fleet management services include vehicle leasing, fleet policy analysis and recommendations, benchmarking, vehicle recommendations, ordering and purchasing vehicles, arranging for vehicle delivery, and administration of the title and registration process, as well as tax and insurance requirements, pursuing warranty claims, and remarketing used vehicles. This segment also provides vehicle maintenance service cards used to facilitate payment for repairs and maintenance; accident management services, such as immediate assistance; and fuel card services that facilitate the payment, monitoring, and control of fuel purchases. As of December 31, 2009, it had approximately 300,000 vehicles leased, including cars and light trucks, medium and heavy trucks, trailers, and equipment, as well as 245,000 additional vehicles serviced under fuel cards, maintenance cards, and accident management services arrangements. The company was founded in 1946 and is based in MT. Laurel, New Jersey.

Click here to review and trial the Trading Software we used in determining our short position on PHH.

Click the PHH Stock Stock Chart for a larger view.

Friday, December 03, 2010

Steve Nison Candlestick Live Seminar Dec 4


Steve Nison Candlestick Charting Day Trading Seminars

December 4 - 5, 2010, New Jersey


As you know, I only teach one or two live seminars per year. I wish my schedule would allow more, because I love meeting face-to-face with students... some whom I have communicated with for years by email and phone.

These traders tell me over and over again that attending these live seminars is by far the best way to truly master the power of candlesticks. And many of them also study from my DVD Training Programs!

That's why I'm thrilled to announce an exciting seminar in New Jersey!

Now There Are TWO Ways To Attend This Seminar:

1. Join us LIVE at the seminar in New Jersey

2. Participate AT-HOME via our brand new "Live Web Simulcast" technology

Click here for more information and registration.

Here's The Knowledge I Will Give You When You Join Me At "The Candlestick Success Formula"

The Framework

* Introduction to Steve Nison's Trading Triad Success System™

* Practical guide to drawing the basic candle lines - real bodies and shadows

* Why candles give DOUBLE the information of a bar chart

* Tactics on using real bodies to gauge market momentum

* Adding the insights of upper and lower shadows

* Identifying false breakouts using candle charts

Single Candle Lines

* How to use individual candle lines to get early clues of market turns

* Uses and misuses of Doji

* How doji can be used as a stop

* Gravestone doji

* Dragonfly doji

* Spinning Tops

* Hammer

* Shooting star

* High Wave

Double Candle Line Patterns

* Dark Cloud Cover

* The bull and bear engulfing patterns

* Bull and Bear Harami

* Bull separating line

* Piercing Pattern

* Bull and Bear Separating Lines

* Bull and Bear Sash Patterns

Triple (or more) Candle Line Patterns

* Morning Star

* Evening Star

* Rising and Falling Windows

* Breakaway gaps and windows

Going to the Next Level: Merging Candlesticks with Classic Western indicators

Do you when to start a new trade- or when to end a trade? The answer is completely dependent with Western technical indicators. This fusion of candlesticks with Western technical indicators, at critical junctures, is one of the most important strategies you need to know to generate entry and exit points.

* Using these two simple questions you will instantly know when to buy at support or when to sell at resistance

* Getting Price Targets

* Steve's favorite measured move

* How and why prior support can be converted into new resistance

* How and why prior resistance can become new support

* The Bullish "Crack and Snap" strategy

* The Bearish "Falling Off The Roof" tactic

* How to recognize and take advantage of False Breakouts

* Candles and Volume

* Candles and Bollinger Bands

* Candles and Retracements including Fibonacci

* Candles and Moving Averages

Reaching the Upper Levels: Trade Management

* The one rule every trader ignores at their own peril

* The importance of short-term trend

* What to do after the trade is made

* How to place trades in the direction of the longer-term trend

* Using Candles to place stops

* Effective money management concepts to maximize the effectiveness of candle charts

* How and why some traders get "burned" with candles

* How NOT to use candles!

* “Nison Trading Principles” — Critical Refinements and Enhancements for High Success Trading with Candlestick Charts

Using A Trading Journal

* Importance of using a trading journal

* Setting up a trading journal

* How to use a trading journal before the trade

* Using a trading journal after the trade is closed

* See how Steve personally uses a trading journal

BONUS: Secrets of Intraday Candle Charts for Day and Swing Traders

* Discover why and how candle patterns should be traded differently on intraday charts

* How to combine intraday signals with longer time frame support and resistance

* Using intraday candle charts to find "hidden" support/resistance

* How to get earlier clues of reversals than you can with daily charts

* Easy method to determine if the market is really overbought or oversold

* When to pull the trigger on an intraday trade

BONUS: Trading Options With Candles

* Benefits of options

* Review of option basics

* Candlesticks and trend

* Candlesticks and timing

* Candlesticks for exits

* Candlesticks for protection

* Strategies to help lessen time decay risk

* Getting price targets

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Thursday, December 02, 2010

Arabian GCC Stock Markets

Arabian Stock Markets
Arabian GCC Stock Markets: Aladdin's Lamps or Handfuls of Hot Sand?


Arabian lands have a long history, but the history of their stock market data is downright brief. Even so, the good news is that we have enough data to make intermediate Elliott Wave forecasts.

Elliott Wave International uses Jordan's Amman General Index as a proxy for the region. As the November Asian-Pacific Financial Forecast explains, there's a two-fold reason for this:

"Jordan (a) is located at a crossroads of the Middle East; and (b) is the oldest market in the region with a continually traded price history. (Kuwait’s is older, but it stopped trading from 1990 to 1992 due to the Iraqi invasion)."

Of course, EWI looks at individual Arabian markets too.

But let's back up a step as we take you to the banks of the Nile River, and the home of the Great Pyramid of Giza -- the last of the seven ancient wonders still standing.

EWI analyst Mark Galasiewski recently traveled to Cairo, Egypt, and got an up-close sense of the investment mood there. Mark spoke to an audience at the Money Experts International Forum, and learned that Egyptian stock market bears outnumbered the bulls by 4 to 1.

He wasn't surprised by this bearish "show of hands." In fact, Mark expected more investors to be "down" on the Egyptian market because prices there have been in a correction.

During his "give and take" with the audience, Mark learned several specific reasons for their bearish sentiment. Among them was the uncertainty over Egypt's coming 2011 presidential election.

In the latest Asian-Pacific Financial Forecast, Mark spoke directly to this concern:

"Elliott waves don’t care about politics — or any other news event for that matter. This may sound extraordinary, but even if there were no upcoming elections in Egypt, most Arabian stocks would still have fallen [referencing the correction from which the Egyptian market is emerging.]"

Ten national stock indexes are highlighted in a Special Section of the November Asian-Pacific Financial Forecast -- including Dubai. As you may recall, news about the emirate's debt crisis began to surface a year ago.

As Mark Galasiewski reports, Dubai real estate has lost some 50 percent of its value from peak prices. Does this fact relate to Dubai's stock market going forward? Well, Asian-Pacific Financial Forecast presents a revealing price chart of the Dubai market going back at least five years, and that chart is labeled with three key financial developments. Look at the chart and read Mark's analysis -- you'll likely reach your own conclusion about the probable direction of the Dubai market in the weeks and months ahead.

Moreover, you can read about 3 exchange-traded funds in Arabian markets.

Arabian merchants of old traveled with long caravans of goods-laden camels across open desert. Modern merchants trade shares on stock exchanges. We examine if a bull market is about to be awakened in specific Arabian markets -- or if some investors will only be rewarded with handfuls of hot sand.

Discover what Mark Galasiewski learned in Cairo, and how he reconciles "investor mood" with what Elliott waves are showing him.

Click here to start your risk-free read of the latest Asian-Pacific Financial Forecast.

Click here for more information resources on the Arabian Stock Markets.

Wednesday, December 01, 2010

Can Metatrader Indicators Really Help?

Metatrader Indicators
Can Metatrader Indicators Really Help?


With the rise of popularity of the forex market, many people want to get involved with this kind of business. However, not all people can be professional traders especially those who are not careful. Trading needs to be analyzed and to be able to do so, you have to watch out for the trends in the market that will affect the rise and fall of a currency pair. That is a tiresome job to do and this is one of the reasons why developers have chosen to create forex robots. Now the Metatrader indicators are available also so that you will be able to strategize your plans well.

Metatrader indicators are predefined to create the signals when there is a need for you to buy and sell. They also help in determining the levels of resistance as well as the market support and the trends that will affect your trading. There are a great number of indicators that works well if you use them with your daily charts every week. Indicators have different characteristics and aspects you just need to pick the ones that are vital to your trading style. There are some that displays the value of a currency for a certain period of time. The moving average is known as the average of the price value of the currencies over a period of time.

These averages come in four types: the simple or arithmetic, the exponential, smoothed and linear weighted. MA's can be calculated through a set of sequential information. Examples of these are the staring and ending prices, peak and the bottom prices as well as the volume of trading. With single MA's, the prices often have an equivalent value. When it comes to Exponential and the Linear Weighted MA's, they are more concentrated on the current prices of the currencies.

Metatrader Expert Advisors carry the trading operations for the trader in automated mode. These EA's are very effective when you use them together with Metatrader Indicators. For the best indicators, you can go to http://iticsoftware.com where you will be able to find more information regarding the latest in the world of forex. There are examples of indicators that a trader can use along with the details of the tool you may choose to use.

Metatrader Indicators are a classic way for traders. They have visual constituents and internal buffers. These features make them work well with the Metatrader platform you have been using. Now you do not have to buy a new system just so you can use the indicator.

Metatrader Indicators

Divergence Metatrader Indicators

Before you get to know more about divergence indicators, you should first understand the meaning of a forex Metatrader indicator. This is a sequence of data points that are used by every knowledgeable trader to predict and even examine the movements of the currencies in the forex market. There are now a lot of popular technical indicators today and they grow in number each day because a trader is allowed to develop his own indicator.

With the divergence indicator, this is believed to be the most well known indicator that is being used by the traders today. When we speak of divergence, we are pertaining to the signal that a contraction or a rally is dropping steam. These indicators are even considered as the strongest signals especially when they are used together with stochastic divergence indicators. What happens here is that there are buyers during the last periods of the trades who are pushing the prices of the currencies into a certain direction while a greater number of traders have stopped transacting. This is because they are cautious of the retraction or the correction.

There are certain types of divergence indicators that are extremely popular today. Two of them are the stochastic oscillator and the Moving Average Convergence Divergence or MACD. The former is used to indicate whether the currency is being oversold or overbought and is presented on a scale of zero to one hundred per cent. This is based upon the observations that the indicator has obtained during a specific amount of time particularly on the closing prices. Stochastic is calculated once there are two lines that appear on the chart. They represent if a certain currency value is overbought or reversed. Divergence between the lines of the outcome of the stochastic oscillator as well as the action of the prices is actually a very powerful signal in forex trading.

On the other hand, MACD is an indicator that involves the setting of two lines that are related to the momentum of the currency value. The single line from the MACD chart is the difference between the two exponentials which are moving averages. Another line called the trigger or the signal line is the result of the exponential of the moving average from the difference of the first single line. Whenever the MACD and the lines that are known as the trigger cross each other, a trader can predict that there is a change in trend that will come in the not too distant future.

MACD divergence and stochastic divergence can be combined and this is actually a powerful method that a trader should try. It will also be much more effective if you try different custom indicator combinations using the stochastic and the RSI or the Relative Strength Index. Since stochastic is often used to determine whether it is time for a trader to buy a currency pair, having the MACD on check may lead to potential gains. What you will do here is to examine whether the value of MACD has a high fractal formation. If this turns out to be the case, you should definitely make the purchase as soon as possible. It is inevitable that traders like you will find other ways on how they can make their job easier and with the Metatrader indicators, you will surely discover them one way or the other.

Whatever divergence indicators that you choose to work on simultaneously, you should have a great understanding about their main elements. Since these types of indicators are really powerful, your trading opportunities will increase and in line with this, your gains will mount higher.

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Metatrader Indicator Building Essentials

Knowing all of the essentials for building a forex indicator is important, especially if you really want as much use out of it as possible. There are many people who have built these indicators to help with the everyday tasks involved in trading in the foreign exchange market. When you have a Metatrader indicator, you will be able to take into consideration all of the different environmental and fundamental factors that can affect your trades, and therefore how much risk you are taking. The charts involved in this type of building will give you vital information, which can ultimately be used to analyze certain market trends, and give you valuable information that you would otherwise not have.

The basic idea behind these types of indicators is that with the right one, you will be able to see future directions that price movements will take. This in turn will give you a nice edge on everyone else who is not able to predict such things, and make decisions on trades accordingly. However, prices can only be predicted within a certain period of time, and it depends on a number of factors which can easily change the course of things. There are a few key things that traders try to predict when it comes to prices. One of these things is the support and resistance levels.

One of the reasons that support and resistance levels are so important is because they are the areas which determine whether or not a certain price changes direction. Time is something else that traders attempt to predict, and not always successfully. Your whole goal of building such an indicator is to predict the general direction a price is headed under certain conditions. There are all of the different kinds of indicators, each of them different in their own way. There is almost always an indicator present which represents momentum levels that are crucial for you to examine when trying to make predictions on where prices are headed.

When it comes to making accurate predictions, you have two different choices with regards to indicators. There are hybrid and unique indicators, each serving their own unique purpose. If you want to develop a unique indicator, you will need to know that they can only be created with core element chart analysis. If you want a hybrid indicator, then you will want to keep in mind that you will be able to use both existing indicators and certain core elements.

Those who want to build a unique indicator will want to consider all of the different components involved, starting with the patterns. The purpose of these is to repeat price sequences of a certain period of time. You will find that most Metatrader indicators use patterns as a way of showing where future prices are going. Another component of these indicators is mathematical functions. They have a very important role in averaging prices and also doing more complex things. It's important to consider all of these things, so you will have a good idea as to how to go about building your indicator.

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Tuesday, November 30, 2010

How to Play the Commodities Boom

Commodities Boom
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Monday, November 29, 2010

Trace Your Profits To Ancestry.com?

Ancestry.com
Will Investors Be Able To Trace Their Profits to Ancestry.com? By Investors Business Daily Using the CanSlim Investing Method


First, after looking at the DJIA, S&P500 and Nasdaq index charts, technically I see the markets with some major upside resistance now, and looking to head lower. Now on a fundamental sentiment basis if the good news spin doctors can keep the good times music playing and the crowd dancing to the tunes, possibly the market could head higher here. On the other hand with the dollar gaining some strength lately, maybe stocks are headed lower? Chance favors the prepared mind, so pay attention so you can profit on the upside or downside, and so you don't be a pig and get slaughtered.

Today we're going to look at Ancestry.com (ACOM). You may have seen the firm's advertisements on TV.

The company runs the world's largest online family history resource site. It's digitized a huge number of historical documents over the years and also has other resources to help users research their family tree.

Earlier this year it worked with NBC on the TV show "Who Do You Think You Are?" The show traces the genealogy of various celebrities. And this summer NBC renewed the series for a second year.

Sales growth accelerated during the past four quarters.

Earnings growth also picked up, hitting 167% last quarter.

For the full year, analysts see earnings rising 50% in 2010 and 33% in 2011.

But its earnings have been up and down over the years. The Earnings Stability Factor rating gauges how consistent a company's earnings have been during the past three to five years. It runs from 1 to 99 and the lower the rating the more stable the company's earnings track record. Ancestry.com's Stability Factor Rating is 72, so its earnings have been rather volatile over the years.

Return on equity is a little light at 8%. Historically studies have shown that many winning stocks had ROEs of 17% or higher before they made their big price runs.

The number of mutual funds owning the stock has been climbing, so there is some interest from big investors.

Ancestry Chart Analysis

Ancestry.com

We can see on this weekly chart it just came public in late 2009, so it's a relatively young stock.

It formed a base between August and September (Point 1). That pattern was part of a larger base-on-base pattern (Point 2).

The stock broke out of that cup-shaped base (Point 3) and hit a series of new highs.

In recent weeks it's pulled back near its 10-week moving average line, where it seems to be finding support and has started to climb (Point 4).

Since Thursday is Thanksgiving, the next Daily Stock Analysis will be posted on Monday, November 29. So be sure to watch for it.

Ancestry.com Stock Checkup

Ancestry.com's 98 Composite Rating is the best among the 34 stocks in its Internet-Content industry group.

Its 94 EPS Rating is the fourth highest in the group.

Its 96 Relative Strength Rating is the group's second highest.

Click here for more information on Investors Business Daily and the Acclaimed Can Slim Investing Method

Friday, November 26, 2010

Gold Investing Trading Expert Advisors


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These days with economic uncertainty gold has become the most popular vehicle of investment and trading from George Soros to hedge funds to investment institutions to banks and individual investors traders.

Is Gold A Measurement of Money?

Gold investors traders normally purchase gold as a hedge or safe haven to economic, political, social, or fiat currency crises, including investment market declines, ballooning national debt, currency collapses, inflation, war and social unrest. Gold financial instruments are speculated and traded on just as other commodities are through the use of futures contracts and derivatives. Gold's history as a measure of hard currency, the responsibility of the central bank with its gold reserves, the low correlation of gold with other commodity prices, and its relation fiat currency pricing during the the recent financial crisis suggests that gold possibly has features of being money.

Gold's History as a Standard of Financial Measurement

Through history, gold has been used as money and a standard for global currency measurement. In the 19th century European countries adopted gold standards, and then they were removed during the financial crisis of World War I. Then after World War II, the Bretton Woods act pegged the US Dollar to gold at the rate of $35.00 per troy ounce. The Bretton Woods act existed until 1971 when President Nixon took the USA off the gold standard. The Swiss franc was the last currency to be taken off the gold standard in 2000.

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Gold has been the most stable currency for thousand of years. In economic good times, the price of gold remains pretty much unaffected, and in times of economic instability the price of gold seems to soar higher and higher.

Forex Gold Trend
What is the trend of Gold now?

See the 10 years gold trend above. The price of gold seems to soar higher and higher. It could possibly hit $1500 or $2000 per troy ounce in the future. The trend is your friend with this highly liquid financial instrument.

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Thursday, November 25, 2010

The Net Effect of Federal Reserve Monetization

Federal Reserve Monetization
Money, Credit and the Federal Reserve Banking System III

Conquer the Crash, Chapter 10 By Robert Prechter


How the Federal Reserve Has Encouraged the Growth of Credit

Congress authorized the Fed not only to create money for the government but also to “smooth out” the economy by manipulating credit (which also happens to be a re-election tool for incumbents). Politics being what they are, this manipulation has been almost exclusively in the direction of making credit easy to obtain. The Fed used to make more credit available to the banking system by monetizing federal debt, that is, by creating money. Under the structure of our “fractional reserve” system, banks were authorized to employ that new money as “reserves” against which they could make new loans. Thus, new money meant new credit.

It meant a lot of new credit because banks were allowed by regulation to lend out 90 percent of their deposits, which meant that banks had to keep 10 percent of deposits on hand (“in reserve”) to cover withdrawals. When the Fed increased a bank’s reserves, that bank could lend 90 percent of those new dollars. Those dollars, in turn, would make their way to other banks as new deposits. Those other banks could lend 90 percent of those deposits, and so on. The expansion of reserves and deposits throughout the banking system this way is called the “multiplier effect.” This process expanded the supply of credit well beyond the supply of money.

Because of competition from money market funds, banks began using fancy financial manipulation to get around reserve requirements. In the early 1990s, the Federal Reserve Board under Chairman Alan Greenspan took a controversial step and removed banks’ reserve requirements almost entirely. To do so, it first lowered to zero the reserve requirement on all accounts other than checking accounts. Then it let banks pretend that they have almost no checking account balances by allowing them to “sweep” those deposits into various savings accounts and money market funds at the end of each business day. Magically, when monitors check the banks’ balances at night, they find the value of checking accounts artificially understated by hundreds of billions of dollars. The net result is that banks today conveniently meet their nominally required reserves (currently about $45b.) with the cash in their vaults that they need to hold for everyday transactions anyway. [1st edition of Prechter's Conquer the Crash was published in 2002 -- Ed.]

By this change in regulation, the Fed essentially removed itself from the businesses of requiring banks to hold reserves and of manipulating the level of those reserves. This move took place during a recession and while S&P earnings per share were undergoing their biggest drop since the 1940s. The temporary cure for that economic contraction was the ultimate in “easy money.”

We still have a fractional reserve system on the books, but we do not have one in actuality. Now banks can lend out virtually all of their deposits. In fact, they can lend out more than all of their deposits, because banks’ parent companies can issue stock, bonds, commercial paper or any financial instrument and lend the proceeds to their subsidiary banks, upon which assets the banks can make new loans. In other words, to a limited degree, banks can arrange to create their own new money for lending purposes.

Today, U.S. banks have extended 25 percent more total credit than they have in total deposits ($5.4 trillion vs. $4.3 trillion). Since all banks do not engage in this practice, others must be quite aggressive at it. For more on this theme, see Chapter 19 [of Conquer the Crash].

Recall that when banks lend money, it gets deposited in other banks, which can lend it out again. Without a reserve requirement, the multiplier effect is no longer restricted to ten times deposits; it is virtually unlimited. Every new dollar deposited can be lent over and over throughout the system: A deposit becomes a loan becomes a deposit becomes a loan, and so on.

As you can see, the fiat money system has encouraged inflation via both money creation and the expansion of credit. This dual growth has been the monetary engine of the historic uptrend of stock prices in wave (V) from 1932. The stupendous growth in bank credit since 1975 (see graphs in Chapter 11) has provided the monetary fuel for its final advance, wave V. The effective elimination of reserve requirements a decade ago extended that trend to one of historic proportion.

The Net Effect of Monetization

Although the Fed has almost wholly withdrawn from the role of holding book-entry reserves for banks, it has not retired its holdings of Treasury bonds. Because the Fed is legally bound to back its notes (greenback currency) with government securities, today almost all of the Fed’s Treasury bond assets are held as reserves against a nearly equal dollar value of Federal Reserve notes in circulation around the world. Thus, the net result of the Fed’s 89 years of money inflating is that the Fed has turned $600 billion worth of U.S. Treasury and foreign obligations into Federal Reserve notes.

Today the Fed’s production of currency is passive, in response to orders from domestic and foreign banks, which in turn respond to demand from the public. Under current policy, banks must pay for that currency with any remaining reserve balances. If they don’t have any, they borrow to cover the cost and pay back that loan as they collect interest on their own loans. Thus, as things stand, the Fed no longer considers itself in the business of “printing money” for the government. Rather, it facilitates the expansion of credit to satisfy the lending policies of government and banks.

If banks and the Treasury were to become strapped for cash in a monetary crisis, policies could change. The unencumbered production of banknotes could become deliberate Fed or government policy, as we have seen happen in other countries throughout history. At this point, there is no indication that the Fed has entertained any such policy. Nevertheless, Chapters 13 and 22 address this possibility.

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Wednesday, November 24, 2010

How the Federal Reserve System Manufactures Money

US Dollar Stress
The Intangible Federal Reserve Banking System II

Money, Credit and the Federal Reserve Banking System

From Conquer the Crash, Chapter 10 By Robert Prechter


Let’s attempt to define what gives the dollar objective value. As we will see in the next section, the dollar is “backed” primarily by government bonds, which are promises to pay dollars. So today, the dollar is a promise backed by a promise to pay an identical promise. What is the nature of each promise? If the Treasury will not give you anything tangible for your dollar, then the dollar is a promise to pay nothing. The Treasury should have no trouble keeping this promise.

In Chapter 9 [of Conquer the Crash], I called the dollar “money.” By the definition given there, it is. I used that definition and explanation because it makes the whole picture comprehensible. But the truth is that since the dollar is backed by debt, it is actually a credit, not money. It is a credit against what the government owes, denoted in dollars and backed by nothing. So although we may use the term “money” in referring to dollars, there is no longer any real money in the U.S. financial system; there is nothing but credit and debt.

As you can see, defining the dollar, and therefore the terms money, credit, inflation and deflation, today is a challenge, to say the least. Despite that challenge, we can still use these terms because people’s minds have conferred meaning and value upon these ethereal concepts.

Understanding this fact, we will now proceed with a discussion of how money and credit expand in today’s financial system.

How the Federal Reserve System Manufactures Money

Over the years, the Federal Reserve Bank has transferred purchasing power from all other dollar holders primarily to the U.S. Treasury by a complex series of machinations. The U.S. Treasury borrows money by selling bonds in the open market. The Fed is said to “buy” the Treasury’s bonds from banks and other financial institutions, but in actuality, it is allowed by law simply to fabricate a new checking account for the seller in exchange for the bonds. It holds the Treasury’s bonds as assets against -- as “backing” for -- that new money. Now the seller is whole (he was just a middleman), the Fed has the bonds, and the Treasury has the new money.

This transactional train is a long route to a simple alchemy (called “monetizing” the debt) in which the Fed turns government bonds into money. The net result is as if the government had simply fabricated its own checking account, although it pays the Fed a portion of the bonds’ interest for providing the service surreptitiously. To date (1st edition of Prechter's Conquer the Crash was published in 2002 -- Ed.), the Fed has monetized about $600 billion worth of Treasury obligations. This process expands the supply of money.

In 1980, Congress gave the Fed the legal authority to monetize any agency’s debt. In other words, it can exchange the bonds of a government, bank or other institution for a checking account denominated in dollars. This mechanism gives the President, through the Treasury, a mechanism for “bailing out” debt-troubled governments, banks or other institutions that can no longer get financing anywhere else. Such decisions are made for political reasons, and the Fed can go along or refuse, at least as the relationship currently stands. Today, the Fed has about $36 billion worth of foreign debt on its books. The power to grant or refuse such largesse is unprecedented.

Each new Fed account denominated in dollars is new money, but contrary to common inference, it is not new value. The new account has value, but that value comes from a reduction in the value of all other outstanding accounts denominated in dollars. That reduction takes place as the favored institution spends the newly credited dollars, driving up the dollar-denominated demand for goods and thus their prices. All other dollar holders still hold the same number of dollars, but now there are more dollars in circulation, and each one purchases less in the way of goods and services. The old dollars lose value to the extent that the new account gains value.

The net result is a transfer of value to the receiver’s account from those of all other dollar holders. This fact is not readily obvious because the unit of account throughout the financial system does not change even though its value changes.

It is important to understand exactly what the Fed has the power to do in this context: It has legal permission to transfer wealth from dollar savers to certain debtors without the permission of the savers. The effect on the money supply is exactly the same as if the money had been counterfeited and slipped into circulation.

In the old days, governments would inflate the money supply by diluting their coins with base metal or printing notes directly. Now the same old game is much less obvious. On the other hand, there is also far more to it. This section has described the Fed’s secondary role. The Fed’s main occupation is not creating money but facilitating credit. This crucial difference will eventually bring us to why deflation is possible.

Next: Prechter explains "how the Federal Reserve has encouraged the growth of credit."

Come back later this week for Part III of the series "Robert Prechter Explains The Fed." Or, read more now in the free Club EWI report, "Understanding the Federal Reserve System."

Click Here for Understanding the Federal Reserve System | A FREE eBook the Federal Reserve Bank Doesn't Want You To Read

Click here for for more information resources on Robert Precther at Elliott Wave