Thursday, July 29, 2010
How long have you been with your current forex broker? How many times have you changed forex brokers? What's your general feeling about forex brokers?
Forex Brokers Complaints and Solutions
Lets face it, every forex trader I believe has had a complaint or complaints of some kind with their forex broker. I suggest that many complaints are valid, and some not. For the beginner forex traders, the risk information from your forex broker is not up front most times, but spelled out in the fine print when you open the account that you may fail to review and take caution from. It takes two to dance so don't totally blame your broker for burning your account, but the bad forex brokers will help you burn it exponentially faster than the good ones. There are good forex brokers out there but there are a huge amounts of bad ones that give the good ones and the whole industry a bad name.
Forex Leverage Caution Warning
Your forex broker may tell you and may not tell you, but this is the most important. In my 8 years of trading forex, all the brokers I've traded with, which are many, did not tell me the amount of leverage on my account in the beginning of the account opening. The first crucial thing to know is the amount of leverage on your new account. The higher the leverage the more exponential the gains and losses. Beginner traders should start with the lowest leverage allowed. Usually forex accounts provide 1:100 to 1:500 leverage. Start with 1:100. Some even offer as low as 1:20, and if they do, new forex traders should start with this amount first before turning up the leverage to 1:200 or higher. 1:500 leverage is totally stupid in my opinion for new and small capitalized fx traders, but if you've got money to burn, its your money and your choice.
Forex Lot Size Caution Warning
Another way to adjust your leverage is with the trade lot size. The trading platforms have default lot sizes that may be more than what you should be trading. Make sure you know and set your lot size in the trading platform before placing trades. Typical forex lots sizes are 1, 0.1, and and 0.01. To keep your leverage as low as possible in the beginning, and trade the smaller 0.01 lots sizes. You can increase the lot size incrementally later to increase total leverage of your account at any time. The whole idea is to keep your leverage at 1% to 2% per position and or total account equity. Anything above that is exponential and your asking for financial trouble if you don't have a trading plan that keeps your losers small and your winners big over time.
Spreads and Volatility
Most forex brokers make their money through the spread. The industry average on spread for the forex industry is 3 pips on the major currencies. Anything above that and your paying to much, and anything below that they may be tacking on other charges you forgot to read in the fine print at account opening. If your broker provides 3 pips on the majors then thats fine. The ECN brokers don't have any spreads but charge in a different way to get their broker money. Remember, during Europe USA market hours especially during forex news reports and events, the spread can and will increase. I suggest to keep risk as low as possible, don't take new position on the news, but let the news happen, and after the price and spread have settled down, then decide whether your buying long or selling short.
One of the most common complaints is slippage, especially during forex news when volatility increses. Angry traders make more complaints with the slippage issue against forex brokers, who see potential winning trades turn into losers and small losers turn into larger losers. Slippage is the difference between the price you set your order for execution, in the case of a stop order, or the price you attempt to have an order executed, in the case of a market order, and the price at which you are actually filled. Stop-loss or stop entry orders become market orders once active. Once the specified pre-order price is hit you should not experience any slippage. Slippage is a part of the game, and you can deal with it by being patient to get the price you want. Remember, there's lot of deals out there in the world. Some good, and some bad. Knowing which one to accept is key to being successful.
When the market is moving fast, your market order may not get filled and requotes will happen often, along with the spread increasing possibly. Some fx traders hate requotes and change brokers but I just accept them after changing so many brokers I can't keep count anymore. If your market order is not accepted, don't automatically accept the auto requote flashing on the screen to fill your order. Click to cancel the auto requote, and hit the requote button to start again with the market price. A matter of a 1 to 3 ticks matter big time in the highly leverage forex markets.
What Time of the Day Are You Trading?
When, during the trading day are you trading? If you are not a news trader then be extra careful around news releases. News releases are times of big to huge volatility and chances of slippage are greatly increased. If you do like to trade the news see the caution steps below.
Forex Trading News Releases
Enter the market with limit orders. A limit order would only be executed at your specified price or better eliminating slippage. This is a more advanced trading method for beginner traders and is more common for pro-traders. On exiting your position with a market order you may experience slippage. If you have a preset fixed take profit target set, and the position is closed, you should not experience any slippage. If you do, this is a real complaint to be made to your broker so check completed trades in detail to make sure your broker is doing what they say they are supposed to do.
Enter a new position after the initial price spike up or down. The initial price move after a forex data news release is many times very strong creating what is known as a 'spike' in prices. Give some time for the price move to play out and digest the news and you will be avoiding most of the big volatility. In doing so, this gives you enough time to plan your trade, and grab a retracement limit order entry.
Dealing Desk or ECN Forex Broker?
There's different forex brokers. Normal forex brokers have a dealing desk with a person executing your trade from your terminal, can cause added delays, especially at busy times, and slippage is more likely to happen with them.
ECN brokers are totally electronic with no dealing desk and that fraction of a second saved can make a huge difference in your trading results. If you are actively full-time trading at busy times then an ECN broker is the best choice. On the other hand if you trade infrequently or you have a small account and cannot afford the commission fees that ECN brokers charge then a broker with a dealing desk may be adequate.
Do You Think You Broker May Be Trading Against You?
This very common complaint has lead to the forex traders thinking that a conspiracy theory of the broker is happening and they want you to lose your money because they are on the other side of your trades. The fact is most times you'll never know and it doesn't matter anyway because someone is always on the other side of your trades no matter who it is. If you short then someone else has buy long and vice versa so someone is always there wanting you to lose. Some fx brokers say they match their client orders at their dealing desk while other brokers have their dealing desk offset their clients trades with their own overall position in the market, which is called hedging. If a forex broker is hedged as best they can, then they simply collect the spread, which is more than the spread they pay in the interbank market to their clearing bank, which is their profit margin. The conspiracy theory is from the idea that most fx traders lose and it would be best for brokers to trade in the against their clients positions instead of trading in the same direction and hedge themselves. Complaints of delayed orders, slippage and "stop-loss hunting" have added more bad raps on brokers because they can possibly be easily explained as fx brokers stealing your money instead of real legitimate trading issues happening at busy trading times.
Win Lose Breakeven
On average, you'll find your forex trades winning one-third of the time, losing one-third of the time, and breakeven one-third of the time. So to profit in the long-term, you need a trading system that wins you more than you lose. As a general rule, if you can have one big winning trades and 3 smaller losing and or breakeven trades you have good chance winning in the forex market. Base on this, your winners have to be big, so you want to learn how to ride winners to their fullest using a variety of methods with a trailing stop-loss either automatic of manual to lock in profits.
Trading Forex To Win
These things above are things you can do to minimize and deal with real or not fx broker malpractice. If you think your broker is trading against you, then change brokers. The fact is you'll never really be able to find out in most cases, and trying to is futile. What's most important for your forex trading success is identifying your trading problems, and finding non-broker related solutions. I'm talking about your trading psychology and your trading strategy weakness's.
If you are unhappy with your fx broker because of too much slippage, re-quotes, poor customer service, possible stop hunting, trading platform freezing and holding orders then you should absolutely change brokers. Bad customer service secondary to the rest of these complaint issues. If after you've submitted your complaints to customer service and still unhappy with their response and action to it, change brokers, you may be trading with a "bucket shop".
Click here to review the forex brokers we recommend as the best and most fair.
Wednesday, July 28, 2010
The overall concept of support and resistance levels applies universally in the technical analysis world.
On a regular basis, folks want to discuss the interesting topic of why support and resistance levels seem to work. Two philosophical ends of the spectrum support the concept:
1. Underlying pattern or foundation of the markets.
Adherents to this school of thought would describe the market as following a set of rules that are much like “the laws of nature.” Many students of Elliott Wave theory and Gann theory would fall into camp. This type of analysis tends to be predictive and very adaptive or fluid. If the markets don’t fit the current model points, the model has built-in adjustments that allow updates (that wasn’t really wave 3, this is now wave 3).
2. Self-fulfilling prophesy.
From this perspective, those that see support and resistance levels believe in the “many eyeballs” theory—if enough people are watching a level or an indicator (and more importantly take action there), then the market has a good chance of turning or reacting at that point.
Personally, I don’t really care which reason is more “true” as long as using the idea of support/resistance provides an edge. I fall more in the self-fulfilling prophesy camp, even while I think some market philosophies have more than a grain of truth to them!
Why discuss this? Last week, I published an S&P 500 Index chart (created on Monday 7/12) that showed an area with a confluence of support and resistance indicators that had a high probability of containing the up move that was underway.
If we look at that same exact chart, six market days later, we see that the area inside the light blue ellipse actually held the price activity.
The trend line remains intact, the 50-day moving average held, and the index tested but did not breach the 0.382 Fibonacci retracement in a definitive way—more on the concept of precision later. In addition, the market failed to pierce the psychologically important whole number of 1100.
In the bigger picture, this small victory for the technical analysis (and the bears) has no earth-shattering significance and the bulls will test this area daily. Regardless, the bears indeed are winning as long as these levels hold and the downtrend that started in late April remains intact with lower highs and lower lows.
Click here to learn more about successfully investing trading support and resistance.
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Tuesday, July 27, 2010
Quadrillion Dollar Debt: 'Day of Reckoning' Looms - Free Report
What Will Happen as $1,000,000,000,000,000 in Global Debt Winds Down?
The biggest balloon in the world is deflating.
This balloon had been inflated with a quadrillion (1015) dollars, which is to say: This balloon was filled not with air but with debt from around the globe.
What will happen as this global debt winds down? In two words: Deflationary Depression -- the likes of which could be unprecedented in history.
A thousand trillion in debt can't be wished away or swept under the rug. No one can "forgive" the debt. The consequences of unwinding this debt could be as massive as the dollar figure itself.
We've heard plenty about the debt problems of Greece, Spain, Portugal and Italy.
But how about the world's second largest economy? Consider this fact reported in the Japan Times (July 8):
"Japan's government debts are the highest the world has ever seen, at 219 percent of gross domestic product, according to the International Monetary Fund."
Then there's the world's sixth largest national economy. In January 2009, Robert Prechter wrote this in the Elliott Wave Theorist:
British banks have amassed $4.4 trillion worth of foreign liabilities, twice Britain's annual GDP. ... England, moreover, 'has not defaulted since the Middle Ages.' The possibility that it may do so again is yet another indication that the bear market is of ... (larger) degree, exactly as Elliott wave analysts have predicted all along."
Remember, Japan and Great Britain are major world economies. Imagine what the debt totals would look like in a line-item analysis of other nations, regions, states, provinces and municipalities around the world, including the U.S.
De-leveraging will likely lead to a deflationary crash -- a "day of reckoning."
Want to Know How to Prosper in a Deflationary Depression Crash?
Click here to download the Free 60-Page Guide to Understanding Deflation here.
Monday, July 26, 2010
China Southern Airlines Sale Promo
Flying high with China Southern. Long term I'm bullish on this company. Short term I'm short selling it, and hopefully buy in at lower prices.
The Market This Week
Corporate earnings reports will be in the spotlight this week, and the European banks stress test is over. I see the market inching higher this week, but now grinding into a concrete wall of resistance at 1113 to 1154 on the S&P500. If there is a continued uptrend past 1154, possibly the uptrend can continue, but I will be watching closely for low-risk high-reward short sell trade setups at these levels, and am already this week with a short sell on China Southern Airlines Ticker ZNH
The European bank stress tests are done now, and trader’s investors will be looking at the new earnings reports coming out this week, and the weekly economic data reports that could put pressure on those positive earnings reports. On average this quarter S&P 500 profits are up about 40% from their estimates. I caution not to put a lot of weight on the increase from estimates as earnings estimates are very subjective analyst to analyst as they are adjusted up and down in different market conditions that put more skew into a company’s forward earnings than good information to make a low-risk high-reward forward bet on in my experience.
This week’s earnings reports of note are Aflac, Boeing, BP, Dupont, Exxon Mobil, and Visa. Even with the positive earnings reports so far, I’m suspicious of a resumption of an uptrend to any great degree with the earnings reports battling with the stream of economic data that could easily disappoint the market in the coming week. During my stock scans this week, I mostly saw low-risk high-reward sell setups than buys. Still, I see the market grinding higher this week, with the end of the week or next week more definitive on if it wants to continue higher or reverse back to the downside.
Gross Domestic Product
GDP forecasts range from the Fed at 3.5% to 2% by Goldman Sachs, and 1% by others. Unemployment is terrible and should continue to stay that way for the time being even though the positive employment spin doctors are doing their best to be upbeat, at least until the congress elections coming up. Maybe the new politicians have got a solution for the USA labor market woes, but I would bet against it right now.
My Stock Pick This Week
Is a sell short on China Southern Airlines. With China is slow down mode for them, but still huge growth for the rest of the world, I see possible continued pressure on the China economy. I think the big pressure on China stocks right now is because they depegged their Yuan from the US Dollar now. The Yuan should rise significantly in the long-term putting pressure on China stock price growth for time being. Of course, select China companies will keep growing strong and outperforming the market so watch them like a hawk for buy in opportunities.
China A Shares - Hong Kong H Shares Premium Differential
One significant thing about the China and Hong Kong markets is that there has been some talk recently about the decreasing premium in the prices of mainland China listed stocks compared to the Hong Kong listed shares of the same companies. The markets have been surprised that after years of China's "A shares" costing significantly more than the "H shares", actually more than twice as costly in the beginning of 2008, now suddenly stocks trading in Shanghai are cheaper in some cases and now most of the prices are now virtually even. This is not to say that China A shares are a solid buy just yet, as they could swing to the negative as much as they did to the positive in 2008 compared to the Hong Kong H shares. Pay attention to that correlation, as it speaks volumes about what the social mood is there, and risk appetite in the Asia region.
Sell Short China Southern Airlines – Ticker ZNH
Sell Entry: 24.58 to 22.74
Stop-Loss: 8% from your entry price
Take Profit Areas: 20.05 to 19.71, 19.21 to 18.86, 16.50 to 16.19
China Southern Airlines Company Profile
China Southern Airlines Company Limited operates an airline in China. The company principally engaged in the provision passenger, cargo, and mail airline services. It also provides logistics services; air catering services; pilot training services; property management services; aircraft and engine repair and maintenance services; flight simulation services; and airport ground services, as well as sells duty free goods in the flight. As of December 31, 2009, the company had a fleet of 378 aircrafts; and a network reaching 905 destinations connecting 169 countries and regions, and cities worldwide. It has operations the People's Republic of China, Hong Kong, Macau, Taiwan, and internationally. The company was founded in 1995 and is headquartered in Guangzhou, the People’s Republic of China. China Southern Airlines Company Limited operates as a subsidiary of China Southern Air Holding Company.
Click here to review different investing trading software that scans analyzes stocks for different technical criteria, and trade pattern setups.
Click the China Southern Airlines stock chart below for a larger view.
Thursday, July 22, 2010
It's FreeWeek at EWI: Get charts, analysis and forecasts for Crude, Nat Gas, Energy ETFs
Our friends at Elliott Wave International have just announced the beginning of their wildly popular FreeWeek event, where they throw open the doors for you to test-drive some of their most popular premium services -- at ZERO cost to you.
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Daily Sentiment Index (DSI)
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Wednesday, July 21, 2010
The Most Potent Zacks Rank Stocks
It's been clear from day one. The best Zacks #1 Ranked stocks are small caps. In fact, the smaller the stocks, the better the returns.
Granted, these stocks have always been available on our website by sifting through the Zacks #1 Rank list. Unfortunately it's been difficult to provide these recommendations in any of our subscription services because each one had too many members on board. If they all bought or sold the same stock at the same time, then the price would move too much and the potential for great returns would be eroded. So for years we stewed over this problem, wondering what to do with all of these profitable picks.
The "Ah Ha!" Moment
Sometimes the answer is right in front of your face. Such was the case here. In fact the answer is so simple that it's almost embarrassing to mention it now.
If the problem is that these small cap picks can't be shared with too many investors at the same time, then the solution is to have an exclusive service with fewer subscribers on board. This solution got the wheels turning on what has become our most profitable service yet, the Zacks Small Cap Trader.
Below I will share with you some of the findings from the research study that went into the creation of this exclusive service. This information will help you pick more profitable stocks even if you never subscribe to the Small Cap Trader.
4 Factors All in Your Favor
Hopefully by now you know that our Zacks Rank stock picking system is based upon 4 factors. Let's quickly run down the 4 factors and explain how small caps garner the lion's share of the benefit.
1. Agreement: This is about the percentage of analysts who are in "agreement" that the earnings outlook for the company has improved. The greater the agreement of the analysts that future earnings will be moving higher, the more comfortable investors feel about getting on board. Small caps have fewer analysts covering the stocks. Thus, it's much easier to get 100% agreement from 2 to 4 analysts than 10+ analysts who would normally cover larger stocks. This leads to more investors buying up shares pushing prices higher.
2. Magnitude: Here we are talking about the size of the percentage change in earnings estimates. If estimates increase from $1.00 to $1.02, that's nice. If they increase to $1.20, that is a whole lot better and will attract more investor attention. As you might imagine small cap stocks can grow much faster than their larger counter parts. Thus, much more likely to have significant changes in their earnings outlook, which is a sirens song that attracts growth investors to the shares.
3. Upside: This factor concentrates on the most accurate estimates versus the consensus, which shows the upside potential going into the next earnings announcement. Meaning it's a leading indicator of potential earnings surprises. Small caps quite often have the biggest potential for earnings surprises. And this factor allows you to get on board these stocks BEFORE the announcement and before the stock jumps on the news.
4. Surprise: Stocks that had a positive surprise in the past are more likely to do it again in the future. Further, the bigger the surprise in the past, the bigger the potential surprise the next time around. By now it's getting kind of obvious. If you guessed that small caps generate the biggest earnings surprises and subsequent gains.then you are correct.
The data for each of these 4 factors is available for free on Zacks.com. Just go to the Estimates page for your stocks and you will discover the information there. Note that each of these factors individually helps investors pick better stocks. But when you blend them together in the Zacks Rank it puts an almost unfair advantage in the hands of investors...apply it to small cap stocks and the advantage could be called "obscene".
Good Better Best
Our research study covers the period from January 2000 through end of September 2009. That means we have two bear markets and only one bull market in that time frame. Certainly not the most lucrative time for stock investors as the S&P 500 actually fell on average of -2.8% per year over that stretch.
Things got going in the right direction when we narrowed our focus to just Zacks #1 Ranked stocks, which rose +17.6% per year during that same time. When we turned our gaze to just the small cap #1 Ranked stocks the returns came up a bit more. Then with more fine tuning on parameters we ended up with a group of #1 Ranked small caps with a +32.7% average annual return.
To be honest, the above paragraph does not do justice to the outperformance in play here. If you put $100,000 into these prime stocks then, you'd now be sitting on a portfolio worth $1,473,400. Compare that to the losses most everyone endured in those trying years.
It's important to note that not all small caps are created equal. However, through our rigorous testing, we've come up with the right blend of metrics to help us pick the best of the best from the small cap universe.
How to Find the Best Small Cap Stocks
I highly recommend that you explore this opportunity to get the best Zacks Rank stock picks.
Especially now with the market so rocky.
Especially now with our special discount offer.
Especially now with our best ever guarantee.
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Tuesday, July 20, 2010
Original Turtle Trader Forex Trading Software
The Turtle Story
The Turtle Traders’ legend began with a bet between American multi-millionaire commodities trader, Richard Dennis and his business partner, William Eckhardt. Dennis believed that traders could be taught to be great; Eckhardt disagreed asserting that genetics were the determining factor and that skilled traders were born with an innate sense of timing and a gift for reading market trends.
What transpired in 1983-1984 became one of the most famous experiments (nature versus nurture) in trading history. Averaging 80% per year, the program was a success, showing that anyone with a good set of rules and sufficient funds could be a successful trader.
In mid-1983, Richard Dennis put an advertisement in the Wall Street Journal stating that he was seeking applicants to train in his proprietary trading concepts and that experience was unnecessary. A thousand people replied. The following year he repeated the advertisement and 15,000 people responded.
In all he took on around 21 men and two women from diverse backgrounds. The group of traders were shoved into a large sparsely furnished room in downtown Chicago and for two weeks Dennis taught them the rudiments of futures trading.
Richard Dennis nicknamed his protégés Turtles after visiting a turtle farm in Asia. Dennis proclaimed that he could grow traders in the same way that farm-grown turtles were raised.
At the time, Dennis’s practice of how to trade financial markets were in startling contrast to the long-held views of academics and practitioners around the country. There was no buying and holding, or even buying low and selling high.
Rather, traders were taught by Dennis to spot share prices that are trending, and buy and sell into the trend. By following the trend, traders were optimising their chances of making a fast buck.
After the two-week training was complete the Turtles were given accounts (around $US1 million each) and left to their own devices. Loaded up with reams of paper and pens – unlike the emphasis today, Turtle traders did not use sophisticated software.
The Turtle Trader rule was to place no more than 2% on a single trade - a rule rooted in risk management – within a correlated group.
During the first year Turtles received a base salary plus 20% of the profits.
Former Turtle, Michael Shannon, who now lives in Sydney was taken on board by Dennis in 1984. His first year grossed him $US384,000.
Shannon describes; “an office full of guys wearing shorts and playing ping pong most of the time.” Clearly, when it came to trading Turtle-style there were long periods of downtime.
Interestingly, Shannon didn’t come from a strong ‘trading background.’ Before he met up with Dennis to learn the arts of Turtle trading, he says that he was the world’s worst futures broker. In fact, according to Shannon, his lack of skills in futures trading was what landed him the gig. Dennis didn’t want trainees to have to “unlearn” bad habits.
The vetting process for applicants was extensive. Shannon tells that the bottom line was an assessment of applicants’ “psychological makeup for trading”. The one common factor being that all trainees enjoyed games of chance.
“Essentially Dennis was looking for people who would follow his methodology and pull the trigger on a trade,” says Shannon.
Dennis’ trading rules were based on observable, empirical, measurable evidence and subject to laws of reasoning: * Define the question. * Gather information and resources. * Form hypotheses. * Perform experiment and collect data. * Analyse data. * Interpret data and draw conclusions. * Publish results.
Dennis taught a ‘trend following’ trading methodology and consistently scoffed at fundamental analysis stating that once information gets into the market it is inherently flawed.
Trend followers maintain that market trends are unpredictable. Once you recognise that market moves are random you simply need to put yourself in a position where you can capitalise on a move when it happens.
The Turtles traded futures contracts - anything from gold to oil to stocks - and were taught that analysing price movement was the be and end all of trading. “We’re purely technicians,” says Shannon. “Dennis taught us to be consistent, disciplined and execute the signals that come up and he was right.
“There are days when you take a significant hit and there are days when you make lots of money and of those the days when you make lots of money is probably the most psychologically damaging because suddenly you become fearless.”
Shannon went on to work as a proprietary trader and retired due to family reasons at the end of 2006. Today, Shannon says that he’s missing the stimulation and is keen to return to the trading world.
At the end of the day, the Turtle Trading experiment was pretty worthwhile for Shannon personally. He walked away from the four years he spent with Dennis with roughly $US2.5-3 million.
It has been reported that former Turtle Jerry Parker made over $US 500 million.
Interestingly the Turtles all made big money while they were working for Richard Dennis. However in 1988 when they went out on their own things it was another story for some of them.
“Many didn’t stick with it and fell apart. So even though there was a mechanical system that they all knew worked, at the end of the day other factors such as character issues became their downfall.”
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Monday, July 19, 2010
Is The Market Doing A Dead Cat Bounce?
Dead cat bounce is a Wall Street term that refers to a small, brief recovery in the price of a declining stock.
History of Dead Cat Bounce
The term "dead cat bounce" is derived from the idea that "even a dead cat will bounce if it falls from a great height". The phrase has been used on Wall Street for many years. The earliest use of the phrase dates from 1985 when the Singaporean and Malaysian stock markets bounced back after a hard fall during the recession of that year. Journalist Christopher Sherwell of the Financial Times reported a stock broker as saying the market rise was a "dead cat bounce".
 Variations and usage
A short rise in price followed by a price decline of a stock is the standard usage of the term. In other instances the term is used exclusively to refer to securities or stocks that are considered to be of low value. First, the securities have poor past performance. Second, there is no indication of an impending rise in price. Lastly, there is no indication that sustained growth is imminent should a major upward shift occur in the market.
Some variations on the Dead Cat Bounce definition of the term include:
A stock in a severe decline has a sharp bounce off the lows.
A small upward price movement in a bear market after which the market continues to fall.
Technical Analysis of the Dead Cat Bounce
A "dead cat bounce" price pattern may be considered part of the technical analysis method of stock trading. Price patterns such as the dead cat bounce are recognized only in hindsight. Technical analysis describes a dead cat bounce as a continuation pattern that looks in the beginning like a reversal pattern. It begins with a downward move followed by a significant price retracement. The price fails to continue upward and instead falls again downwards, and exceeds the prior low.
Alternate Meanings for Dead Cat Bounce
The Dead Cat Bounce term has also been used in reference to political polling numbers.
My Stock Picks This Week
Are short-sells on two companies involved in oil, real estate, and the gulf oil spill. Anadarko Petroleum and St. Joe Florida real estate company. There's a lot of news on both of these right now. Anadarko was involved with BP on the Gulf Oil Spill and St Joe is one of Florida's largest real estate developers and landowners in which oil may or may not be affecting its resorts. Enough said there. Check the news on these companies. Lots of bull and bear commentary on them. I'm selling them, and the stop-loss is tight enough to keep the loss low if they head higher. The best low-risk high-reward swing trades I see this week.
Sell Short Anadarko Petroleum - Ticker APC
Sell Entry: 49.94 to 47.01
Stop-Loss: 52.50 or higher or 8% from your entry price.
Take Profit Areas: 33.62 to 31.36, 25.94 to 24.21
Sell Short St. Joe - Ticker JOE
Sell Entry: 27.04 to 25.13
Stop-Loss: 28 or higher or 8% from your entry price.
Take Profit Areas: 17.58 to 16.33, 11.52 to 10.77
Click here to review different investing trading software that scans analyzes stocks for different technical criteria, and trade pattern setups.
Click the Anadarko and St. Joes stock charts above for a larger view.
Friday, July 16, 2010
To Andrea Unger, trends are good but "clean trends" are better.
That's how Unger characterizes foreign currency activity over the last few days, with the Euro and British Pound making a recovery from their prolonged slide against the dollar. Andrea scalped a $1,279 EUR/USD winner from the long side today in his Cross-Current forex account, and is holding a $2,089 open trade profit in the GBP/USD.
"The main currencies are recovering from recent drops and doing it with some clean trends," Andrea says. "This is a big edge for the Cross-Current strategies, which try to take advantage of trends lasting several days."
Cross-Current's net return stands at 31.2% on profits of $7,815 in 2.8 months. AutoTrade™ subscribers can automatically make the same trades that Andrea makes -- learn more now.
Andrea is the winner of the last two World Cup Championship of Futures Trading® titles with net returns of 672% in '08 and 115% in '09. Click here to learn more about his background and trading style.
Click here to learn more about World Cup Advisors
Thursday, July 15, 2010
The Kick the Can Game
A hot summer evening, an old can and a bunch of kids—that’s everything you needed for a good ol’ fashioned game of Kick the Can.
Kick the Can evolved out of the game Hide and Seek. A group of kids would gather and pick someone to be “It.” Whoever was “It” had to sit down and cover their eyes with their hands. The rest of the kids then chose somebody else to kick a can away from the person who was “It.” This honor usually fell to the most talented kicker of the group who could send the can farthest down the road.
Once the can was kicked, the rest of the kids would scatter to find hiding places while the person who was “It” would count to 100. Reaching 100, he or she would try to remember in which direction the can was kicked and go retrieve it.
Only after the can was retrieved and returned to home base (usually in the center of the cul-de-sac, parking lot or other wide open space) could the person who was “It” seek out the hiders. Kids would play this game until dark or until Mom called for dinner, whichever came first.
From this children’s game, pundits created a memorable phrase for a common occurrence in politics. “Kicking the can down the road” has become a metaphor for anyone employing a delay tactic in order to deal with a problem at a later date (and often by someone else).
Did Europe Kick Their Can Down the Road?
Across the globe, most equities markets are down for the year. Many analysts have pointed to the strong potential of several European countries’ sovereign debt default as a primary factor for the downward pressure on the markets.
With the recent compelling lift off of the early July lows, however, it’s fair to ask if the markets have simply discounted this issue for the moment or if Europe truly did what was required to mitigate the markets’ fears. While it would be extremely short-sighted to think that the sovereign debt crisis is over, there is a strong possibility that the European Central Bank (ECB) has appeased the nay-sayers in the near term and successfully delayed a true reckoning of the problems.
Some compelling factors support the view that Europe successfully kicked the sovereign debt default can down the road:
* The Euro has had a decent rally from its lows in early June.
* Both Spain and Portugal have had very successful bond sales.
* Greece has managed to keep from going into a debt death spiral. (This is in large part thanks to the ECB buying massive amounts of Greek debt on the secondary market to provide liquidity.)
In addition to these factors, my friend and hedge fund manager Marshall Auerback made the call almost two weeks back that Euro denominated assets would outperform U.S. dollar based assets. The charts certainly support his point of view at the moment.
The red line shows the iShares S&P Europe 350 Index Fund had a return of 9.89% in the last month while the S&P 500 (blue line) has lagged significantly behind with a 2.35% return.
Though not definitive, the chart certainly indicates that a significant recovery could be starting in European equities.
Last week I saw some extreme oversold measures in the markets that suggested a near term snapback rally, which we got with a vengeance. Early indications are that the equity and fixed income markets may be shrugging off European debt default fears. If so, this could further solidify the notion that we hit an intermediate bottom early this month.
Where can we go from here? The following chart of the S&P 500 provides some targets to consider.
The light blue highlighted area shows a convergence zone of three important indicators: the 50 day simple moving average, a trendline drawn off of the April highs and a Fibonacci retracement of 0.382 drawn from that same high to the July 1st low.
If the bears are going to maintain control for the rest of the summer, this area has to hold and repel the current move up. If the bulls can breach this zone, however, more upside should follow.
By D.R. at D.R. Barton of International Institute of Trading Mastery
Click here for Dr Van Tharp's 2010 Trading Workshop Schedule
Wednesday, July 14, 2010
The Bear Market and Depression: How Close to the Bottom?
While many people spend time yearning for the financial markets to turn back up, a rare few have looked back in time to compare historical markets with the current situation -- and then delivered a clear-eyed view of the future informed by knowledge of the past. One who has is Robert Prechter. When he thinks about markets and wave patterns, he goes back to the 1700s, the 1800s, and -- most tellingly for our time now -- the early 1900s when the Great Depression weighed down the United States in the late 1920s and early 1930s. With this large wash of history in mind, he is able to explain why he thinks we have a long way to go to get to the bottom of this bear market.
Here is an excerpt from the EWI Independent Investor eBook, which answers the question: How close to the bottom are we? Originally written by Robert Prechter for The Elliott Wave Theorist, January 2009
Some people contact us and say, “People are more bearish than I have ever seen them. This has to be a bottom.” The first half of this statement may well be true for many market observers. If one has been in the market for less than 14 years, one has never seen people this bearish. But market sentiment over those years was a historical anomaly. The annual dividend payout from stocks reached its lowest level ever: less than half the previous record. The P/E ratio reached its highest level ever: double the previous record. The price-to-book value ratio went into the stratosphere, as did the ratio between corporate bond yields and the same corporations’ stock dividend yields.
During nine and a half of those years, from October 1998 to March 2008, optimism dominated so consistently that bulls outnumbered bears among advisors (per the Investors Intelligence polls) for 481 out of 490 weeks. Investors got so used to this period of euphoria and financial excess that they have taken it as the norm.
With that period as a benchmark, the moderate slippage in optimism since 2007 does appear as a severe change. But observe a subtle irony: When commentators agree that investors are too bearish, they say so to justify being bullish. Thus, as part of the crowd, they are still seeking rationalizations for their continued optimism, and one of their best excuses is that everyone else is bearish. This would be reasoning, not rationalization, if it were true.
But is the net reduction in optimism since 2000/2007 in fact enough to indicate a market bottom? For the rest of this issue, we will update the key indicators from Conquer the Crash that so powerfully signaled a historic top in the making. When we are finished, you will know whether or not the market is at bottom.
Economic Results of Major Mood Trends
Figure 1 updates our picture of Supercycle and Grand Supercycle-degree periods of prosperity and depression. The top formed in the past decade is the biggest since 1720, yet, as you can see, the decline so far is small compared to the three that preceded it. There is a lot more room to go on the downside.
Stock Market vs. Divident Yield
Figure 2 updates the Dow’s dividend yield. Over the past nine years, it has improved nicely, from 1.3 percent to 3.7 percent, near its level at previous market tops. If companies’ dividends were to stay the same, a 50 percent drop in stock prices from here would bring the Dow’s yield back into the area where it was at the stock market bottoms of 1942, 1949, 1974 and 1982. But of course, dividends will not stay the same.
Companies are cutting dividends and will cut more as the depression deepens. So, the falling stock market is chasing an elusive quarry in the form of an attractive dividend yield. This is a downward spiral that will not end until prices get ahead of dividend cuts and the Dow’s dividend yield goes above that of 1932, which was 17 percent (or until dividends fall so close to zero that the yield is meaningless).
Get the whole story about how much farther we have to go to a bear-market bottom by reading the rest of this article from EWI's Independent Investor eBook. The fastest way to read it AND the six new chapters in EWI's Independent Investor eBook is to become a member of Club EWI.
Click here to get the Independent Investor eBook Free
Tuesday, July 13, 2010
Some Reasons to Invest In Dividends
One way to profit from owning stocks in a market downturn is to buy and own stocks paying high dividend yields. If you can't be active in the markets, then you can buy and hold dividend stocks paying a high yield. Hopefully a yield that is paying as much or more than inflation. So a yield of 5% plus would be attractive.
Investing is rarely easy, but it's unusually difficult these days. Cash, T-bills and money-market funds offer microscopic yields. Long-term Treasuries pay more, but they're exposed to the threat of higher inflation. Stocks were legitimately cheap a year ago, but stocks are hard to buy in a crisis. As the crisis passed, prices shot up, and bargains quickly vanished. Yet one fact remains crystal clear: Investors cannot count on capital gains alone.
This basic menu for your money may not sound appetizing, but it could be worse. On any given day, we might hear of market-timing strategies, technical analysts and their squiggly charts, gold and other commodities, options, futures, private partnerships and so on. These strategies may have merit if you can make investing a full-time job and you have a glass-lined stomach for the risk, stress, and inevitable losses involved.
What I'd like to do is cut through all this clutter with a simple proposition: Let's make investing simpler, more practical, and more likely to yield good rewards. Collecting healthy cash dividends may not be the only way to make money, but after considering the alternatives, dividends may be the best.
What's the strategy, in a nutshell? Seek to invest in good businesses that pay large dividends that grow over time, for long-term rewards. To do this, think less like a trader, and more like a businessman. Let's take a look at a few key points.
It's Just Good Business
A good business is not simply one whose stock happens to be going up. A good business has characteristics that we would seek if we were looking to buy the entire thing, even if when only looking at a small, publicly traded slice. Such as: 1. Steady cash flow through good times and bad, 2. Sound financial footings with no Wall Street hocus-pocus, 3. Enduring advantages over their rivals, 4. Management that is both competent and committed to treating shareholders like owners and partners, not just anonymous donors.
Pay Me Now and Later
Many large businesses score well on the criteria listed above, but what of my last point? How can we know that CEOs and directors are treating shareholders well? Dividends, of course, meaningful and sustainable payments of cash that reward our investment directly.
Lots of companies pay dividends, but most are far too small. A yield of 1% does nothing for you, even if short-term interest rates are near zero. What you want to see are yields well above the market's average of 2%. Not only do yields of 3%, 5% or 7% demonstrate that a business is run on a paying basis for its shareholders, but they provide income that investors can use to fund their retirement or reinvest to earn even more income down the road.
Not Just Income but Income Growth
Even so, the dividends you receive today are only part of the story. Investment recommendations must also provide increasing dividends over time. Think of it this way: A 5% dividend yield from, say, Consolidated Edison ED looks good at first glance. Yet if that dividend doesn't grow at least as fast as inflation over time and Con Ed's hasn't, the stock isn't going to have much reason to go up. You might as well own a bond. But when you can combine a good dividend yield with reasonable, sustainable growth, you'll have an investment machine firing on all cylinders.
In It for the Long Haul
Finally, with dividend investing you want to take a long-term view. I know this is not a popular perspective these days; most of Wall Street and its media hounds are all about action, action, action. But this isn't how a good entrepreneur invests; enduring rewards take time to build. Dividends in particular have virtually no use for speculators and market timers. They take months and even years to accumulate. But as they accumulate, dividends reduce your risk and build lasting returns.
You might be thinking, "If only investing could be this simple!" But why make investing more complicated than it needs to be?
Simple, of course, does not necessarily mean easy. Like all investors, you've had to deal with a bubble and bust economy, uncomfortable volatility in stock prices, companies that fail to hold up their end of the bargain and, at times, your own mistakes. But the bottom line is this: Through a terrible period for the stock market, this process has enabled investors to generate higher returns than the market in general and a lot higher than dividend paying stocks as a group. The good dividends that accumulate, grow and compound have kept your portfolio on the right track.
Recognize that these are difficult times we live in. It's tough for savers and investors to get a fair shake. The markets are not always kind, even to investors who stick with a sound, long-term, income-rich strategy.
Yet dividends provide a way to put your money hard at work through income and income growth. Better yet, a dedicated approach based as it is entirely on dividend prospects has demonstrated that it can make your dividends work even harder.
My "pitch" holds no mystery: If Dividend investing sounds like a method that might help you meet your family's financial goals, then give it a try.
Click here for more dividend investing information and services from Morningstar Investment Research
Monday, July 12, 2010
Opportunity from Disaster? Hopefully This Won't Be the Norm
Want to buy the shirt off my back? It's for sale somewhat cheap right now, and could get cheaper. It’s the summer doldrums in the markets it seems right now with the on average light volume. The wall street pros that still have their jobs might be taking the summer off, and or waiting for what the market is going to do now to initiate any new positions in the markets. This week Halliburton and Baker Hughes popped up on my technical radar screens as some nice low-risk high-reward short to intermediate term short sell swing trades. Long term they are good companies well positioned in the oil field services market and would be nice to buy into at lower prices.
USA Market Indices Outlook for This Week
First I want to share with you where I think the US Stock market indices are heading this week. I currently see major resistance on the Dow Jones Industrials at 10,112.37 to 10,406.96, the S&P500 at 1,071.29 to 1,105.50, and the Nasdaq at 2,201.55 to 2,281.26. I see current index prices hitting strong resistance now or possibly moving up to these upper price levels, whether it’s real buying and or short-covering.
Up Volume Light Down Volume Strong
Lately, on balance the volume in the markets has been pretty light on the up moves, then hit by stronger volume on the down moves. These major resistance price levels above now would be a good spot to sell short for a continuation what looks to me as a downtrend for another round low-risk high-reward selling and lower stock prices. The markets are trading on fear now about the future, and some of the low valuations don’t seem to matter for now. It’s more about the idea of things getting much worse that’s price into the markets right now it seems.
Sell Equities Short, Buy A Little Gold, Trade Currencies
I would like to be upbeat on the equity markets, but I don’t see it yet. Not even for high paying dividend stocks yet. The best investments and or trades I see currently is to selectively sell short equities, buy a little gold, silver for the long-term, and or trade currencies commodity futures short term, and what I highly suggest, to build a business of any kind of any size to contribute to your countries much needed gross domestic product. The GDP idea goes for everyone around the world now. Help create GDP and we help keeping the global economy from heading in to deeper recession and or depression.
My Stock Pick This Week Is Short Sell On Halliburton
Halliburton is a great company but not without its past controversies of its own and now involved with BP, and Anadarko on the Gulf oil spill as Halliburton was the company doing the deepwater oil well work when the blowout happened. Regardless of what and who is to blame, this has helped caused Halliburton and BP to sell off big. I see the selloff at least for Halliburton and I’ll throw in Baker Hughes too continuing for a little longer. If I’m wrong, implement the stop loss target and move on to another long or short stock idea. I see oil and energy prices heading a little lower short-term with the big question mark of global gross domestic product in the spotlight now with slowing economies around the world. If this idea works, we can easily see lower prices on Halliburton even if they are saying the leak has been fixed. There is the collateral damage that will then be addressed, and who pays what and how much for the disaster.
Sell Short Halliburton - Ticker HAL
Sell Entry: 28.00 to 31.56
Stop-Loss: 32.00 or 8% plus from your entry price.
Take Profit Areas: 20.21 to 18.91, 14.57 to 13.64, 7.59 to 7.09
Halliburton Company Profile
Halliburton Company provides various products and services to the energy industry for the exploration, development, and production of oil and natural gas worldwide. It operates in two segments, Completion and Production, and Drilling and Evaluation. The Completion and Production segment provides production enhancement services, completion tools and services, and cementing services. Its production enhancement services include stimulation, pipeline process, sand control, and well intervention services; completion tools and services comprise subsurface safety valves and flow control equipment, surface safety systems, packers and specialty completion equipment, intelligent completion systems, expandable liner hanger systems, sand control systems, well servicing tools, and reservoir performance services; and cementing services consist of bonding the well and well casing, while isolating fluid zones and maximizing wellbore stability, and casing equipment. The Drilling and Evaluation segment provides field and reservoir modeling, drilling, evaluation, and well construction solutions that enable customers to model, measure, and optimize their well placement and reservoir evaluation activities. Its services include fluid services, drilling services, drill bits, wireline and perforating services, testing and subsea services, software and asset solutions, and consulting and data management services. The company serves national, integrated, and independent oil and gas companies. Halliburton Company was founded in 1919 and is headquartered in Houston, Texas.
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Friday, July 09, 2010
Transform Your Trading Ideas Into An Organized Sequential and Actionable Plan for Trading Success
Click here for Dr Van Tharp's 2010 Trading Workshop Schedule
Through his modeling work with top traders, Van Tharp has discovered the blueprint for trading success that will ensure you consistent prosperity as a trader.
Do you want to trade more profitably and more consistently but don’t know where to start?
Van Tharp's Blueprint for Trading Success Workshop can help you transform your trading dreams, goals, and ideas into an organized, sequential, and actionable plan for trading success. In the workshop, Dr. Tharp will guide you through a process in which you’ll create your own personal trading blueprint. That blueprint will provide you the strategic steps you need for successful trading, or even a trading career.
Van has always taught that successful traders have mastered four main areas: 1) trading systems, 2) position sizing, 3) personal psychology, and 4) business planning.
In just three days you’ll see how you can integrate the requirements for each of these areas into a seamless plan so you can generate more predictable trading results. Whether you intend to trade for a living or just want better results than you currently get, your trading will never be the same after this workshop.
This course illustrates the relationships among the strategic areas and between various steps to take. Both the process and the outcomes are reasonable after many years of refinement by Dr. Tharp. Moreover, Van Tharp will show you how to take steps experientially so you really get it. Dr. Tharp is an expert in asking rich elicitation questions that bring forth your most important issues. Because your answers are unique to you, your blueprint will fit you like a custom suit unique for your strengths, challenges, resources, and capabilities.
Would you like to get a better idea of what this workshop is about? Download a no-cost Van Tharp teleconference recording to listen to some of the steps now. As a bonus, there’s a second no-cost recording with Van Tharp and Ken Long discussing what it takes to become a great trader.
To listen to these teleconference click here.
Our next Blueprint for Trading Success Workshop is August 13-15 (Friday-Sunday). You get a $700 discount by registering early and an additional $100 discount if you also attend Van's Peak Performance 101 Workshop, scheduled August 17-19.
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Wednesday, July 07, 2010
Devaluation Won't Work Free Report
The following article is an excerpt from Elliott Wave International’s free report, 20 Questions With Deflationist Robert Prechter. It has been adapted from Prechter’s June 19 appearance on Jim Puplava’s Financial Sense Newshour.
Jim Puplava: In 1933 at the bottom of the crisis, the Roosevelt administration comes in. In its first week they declare a bank holiday, they reopen the banks with the FDIC, they sever gold, they come in with massive fiscal stimulus and they devalue the dollar substantially. The result was from 1933 to 1937 we have positive CPI, economic growth, a robust stock market. If fiscal and monetary measures fail to revive the economy and the market, could the government try devaluation to change the deflationary outcome the way they did 1933?
Robert Prechter: Well, you have to have a benchmark in order to devalue a currency. Our currency isn't pegged to anything, so I don't understand even what the term devaluation would mean. What would they do to do create a devaluation?
JP: Maybe they come out with a formal saying: the dollar is now worth a half a euro, X amount of yen or it’s a formal statement. They just declare it formally.
RP: Yeah, but everybody already knows what it's worth, because it's floating freely against these other currencies. And they certainly couldn't fix it to a lesser currency like the euro. And then the managers of this other currency would simply make another decree and negate it. That’s not going to work.
Let's take your example, because it's very important. The whole idea of the government being ahead of the curve is bogus. You know the collapse was from September 1929 down to July 1932, right? The government did not act until it was over. They waited for the bottom of the collapse of course and then they finally decided they're going to do something about it. So, months after the low in 1932, they finally shut the banks and pass laws such as Glass-Steagall, which created the FDIC, and the Securities and Exchange Act, and that sort of thing, to bring confidence back into the banking system. I think the same thing is going to happen here. They're going to try the same old stuff, more and more lending, more and more borrowing—which is the problem, not the solution—until everything collapses, and then they'll go, “Oh maybe we should try something else,” and by that time we'll already be at the deflationary nadir, and it'll be time to look for an inflationary outcome.
My whole thesis is exactly along those lines. We want to stay prepared for a deflationary crash, and when it’s over, we're going to convert whatever money we have to stocks, and raw land, and gold, and whatever else we want to buy. That's when—if the government makes a political decision to inflate through currency printing—it would make the decision. They're not going to make it before the bottom. The government has never acted before the bottom, never acted in a new way. Right now these bailouts and other schemes are simply pressing the accelerator harder on what we've been doing since 1913.
Click here for a free deflation report and how to protect yourself from the worst.
Monday, July 05, 2010
Happy Independence Day USA!
As an American are you wishing you were celebrating financial independence from the economic mess the USA is in currently? The first step to meaningful successful change is to not live in denial, accept the mistakes, and make the necessary corrections and adjustments to prosper sooner than later. It’s time for austerity for everyone around the world now, whether you are a person from main street to wall street to corporate America, and especially the US and Europe Federal governments. But because of old ideas like the “too big to fail” mentality and other old school old age habits, more financial pain and suffering may be on the way before the light of financial freedom shines bright again for the majority of the world again.
S&P500 Still Under Pressure?
I see the S&P500 heading down to the 960.38 to 943.52 area for major support to be formed possibly providing a good possible low-risk high-reward tradable upswing. It’s at 1022.58 as Friday July 2nd. With equities in their current downtrend, dollar strength would be normal in this environment. But then again, the financial markets are not normal anymore it seems, it’s the “new normal” as Mohamed El-Erian of Pimco has stated. I agree with him. It’s the new age, new generations, new changes and the new ideas that need to take root to reverse the downturn, and that will simply take some years to do. So the bottom line is for now, be ready for anything, sell-short, or get out of the market completely, and trade risk cash in the currency futures and forex markets if you want to get a return better than stuffing it in your safe at .home
Buy Gold Now?
With the big selloff in gold last week, the gold investors might be seeing now that inflation is no were to be seen just yet, and maybe they need to remove some long precious metals positions from their portfolio for awhile until the economy shows some real inflation that it’s time to buy the yellow metal again. Or maybe gold will get the bid again when it looks like the financial world is actually going to default and collapse and gold will be the reserve currency of the world. I suggest, if it comes to that, then food and water should be worth more than gold. In the meantime, gold looks down short term to me. I see major support for gold in the 1195.78 to 1153.80 area, and possibly as low as 1110.00. At these support areas, I currently see a good low-risk high-reward buy point to move to possibly gold to move to new highs from there.
How To Make Money In Declining Stock Markets?
Raise cash, go to cash, hold cash, invest and trade cash in the forex or currency futures market, and or sell-short equities on upticks. With the global economy sitting on the edge of full blown deflation now in my opinion, I suggest not buying stocks yet, and possibly even ones that pay big dividends and selling them or short-selling them for the time being. Cash looks to be one of the best investments and trades right now in my opinion, so I suggest raising as much cash as possible, investing and trading currencies short, intermediate, and long-term for the best lowest-risk highest-reward returns, and the most important factor, for the liquidity that any market can provide right now. With the leverage in the forex and currency futures markets, I suggest keep your lot size light, and use stop-loss as you’re most important tools to profit long-term. It’s managing your losses in the markets that will make you profitable long-term. This is the most important in economic times like now.
My Stock Pick This Week Is a Short-Sell on Noble Corp Offshore Oil Driller
With the gulf oil spill, and now BP looking for some global white knight investors to help bail them out of their oil, it looks like there might be more downside pressure on oil prices, the industry and the drillers at least short term I think, and possibly longer than expected. I know oil is in demand long term, but the world is slowing down here, and I think should continue to slow down for better economic health longer-term. I think the downtrend that going on in the industry currently would end up being a very good thing long-term. The downtrend will end someday, but I don’t think it’s over just yet with forward global growth rates forecasted to be very low for awhile.
A possible positive for Noble Corp, is that it has agreed to buy privately held Frontier drilling for about $2 billion, adding seven new drilling vessels to its fleet. I suggest this purchase sounds very good in the long-term for them but it may not have any effect in the short-term with current things as they are right now. The acquisition is expected to be supportive to Nobel’s cash flow immediately and possibly add approximately $2 billion to Noble’s existing backlog of $7.5 billion in drilling contracts, but I’m betting it doesn’t happen that fast and or the market ignores it and their stock price keeps sliding short term. In case I’m wrong, stick to stop-loss and your investment portfolio will still be ok. In case it does, you can play it both ways, short now, and possibly buy it long later at lower prices.
Sell Short Nobel Corp – Ticker NE
Sell Entry: 34.82 to 32.12
Stop-Loss: 36.00 or 8% from your entry price.
Take Profit Areas: 22.55 to 21.09, 15.99 to 14.95
Noble Corp Company Profile
Noble Corporation provides offshore contract drilling services for the oil and gas industry worldwide. As of December 31, 2009, it operated a fleet of 62 mobile offshore drilling units, including 13 semisubmersibles, 4 dynamically positioned drillships, 43 jackups, and 2 submersibles. The company also offers labor contract drilling services, and engineering and consulting services. Noble Corporation was founded in 1921 and is based in Baar, Switzerland.
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Friday, July 02, 2010
Violence and Vandalism: Bear Market Psychology Made Manifest
As world leaders gathered for the G-20 meeting in Toronto on June 26-27, destructive protests broke out in the streets. Local businesses suffered millions in damage. Police cars were set afire.
". . .social mood trends are a two-way street. When the positive trend ends, a negative one takes over for a while. Those trends have social consequences, too: destructive ones, which affect finance, the economy, politics, and all kinds of social relationships." Bob Prechter, Conquer the Crash, 2nd ed. p. 229
You probably know that this gathering is all about the global economy. G-20 meetings started in 1999 in the wake of the Asian financial crisis. The theme for this year's get together: "Recovery and New Beginnings."
We see a "new beginning" eventually, but the "recovery" is not part of the immediate future. That's because the public mood is actually still in the early stage of a downtrend. We have yet to witness the true unwinding of the big credit bubble.
Imagine the number of destructive protests yet to come around the world if the "debt and default" trend persists, and the global economy clearly appears to be on that very course:
"The basic problem, which will be accentuated enormously by outright deflation, is this: The world does not have enough revenue to service the debt built up over the past 7 decades. The default, restructuring, and repricing of impaired debt is already well underway. Seemingly sound credit risks will turn out to be vulnerable, too, because distressed sales further depresses the value of the underlying collateral. Moreover, the spectre of rating downgrades during deflation is looming."
"Moody's said . . . it may cut Spain's AAA local and foreign currency government ratings after a three-month review. Moody's . . . said the possible downgrade reflects deteriorating short-term and long-term economic growth prospects, and the challenges Spain faces in achieving its fiscal targets." (Reuters)
The list of national and local governments now in financial trouble is long. One spark into the tinderbox may be all it takes to set the streets ablaze again, almost anywhere.
Are you prepared for an escalation of violence and vandalism?
Have you thought about authoritarianism, potentially resulting from emerging "leaders" who say they'll stop the mayhem and restore order, "leaders" who say they'll save the economy?
We've thought about it, and then some. Recently released back-to-back publications that explore the onset of authoritarianism.
The Socionomist is an eye-opening monthly publication from our colleagues at The Socionomics Institute, and both the April and May issues address why authoritarianism's emergence is far more likely than most people imagine.
Plus, you'll benefit greatly by reading the June issue of The Socionomist: it features an interview with Bob Prechter discussing the new science of Socionomics.
Click here to follow this link to start reading the Socionomist.
Click here for a Free Deflation Questions and Answers Report
Click here successfully investing trading the social mood of the markets.