Monday, February 28, 2011

Selling Into Last Weeks Selloff

Middle East
Middle East Current Chaos

With increasing destabilization going on the Middle East currently, oil prices pushing higher, I see a possible global slowdown in growth near-term and continued stock selloff from last week’s market action. If the oil price stays high it could lead to demand destruction which can be another cause for lower growth longer-term. The market last week was worried for whatever reasons with its biggest weekly drop in 3 months. With the way the market is currently, I’ve got what I consider to be a low-risk high-reward short sell on a Healthcare Real Estate Investment Trust listed below.

What If Higher Oil Prices Stay High?

To start with consumer spending could decrease, and new job creation which is slow already, slows even more leading to slower growth. The USA residential home market would remain extremely weak to almost dead. The European sovereign debt crisis gets worse and spreads beyond Europe. Higher fuel prices would very likely squeeze tourism and travel. Global trade would slowdown with increased fuel transportation costs. All of these would affect confidence that a real economic recovery is possible helping manifest a continued slowdown. The Federal Reserve may be forced to raise interest rates to fight off inflation slowing down the economy even more, and putting further pressure on growth and stock prices. Budget deficits could stay high, and USA borrowing costs could increase because of lower tax collections. Then again the current high oil prices may not sustain, and these negative scenarios may not happen, but it would be prudent to watch for and get ready for them if they do.

US State Governments Going Bankrupt?

Many Governors are begging the Federal Government to not do anything that would put more stress on their already highly stressed local economies. President Obama is hoping that the economic recovery won’t stall if Congress cannot agree on spending cuts to avoid a government shutdown. This situation is a real strong indicator of the current health of at least the USA, and if not fixed soon, causing more pain and slowdown in growth for the time being. I currently see global growth slowdown an inevitable situation that is already playing out. The real question is which countries survive it the best? I suggest China, India and Asia survive the best with their current positive and real organic growth, but even their stock prices have been decreasing lately suggesting a very possible continued global growth slowdown is still in the works.

Healthcare Realty Trust

HR’s price performance has been a little lackluster with -11% 3 year return, 7% one year return, and 6% three month return. It’s paying a 5% dividend, and its price to earnings ratio is in triple digits. Maybe that’s the reason for its low price performance. With the broad market looking to sell off more, I find Healthcare Realty Trust an excellent candidate for a low-risk high-reward short sale currently.

Sell Short Healthcare Realty Trust – Ticker HR

Sell Entry: 22.41 to 21.57

Stop-Loss: 24.20

Take Profit Areas: 19.27 to 18.83, 17.44 to 17.06, 14.97 to 14.58

Healthcare Realty Trust Company Profile

Healthcare Realty Trust Incorporated, a real estate investment trust, engages in the ownership, acquisition, management, and development of real estate properties associated with the delivery of healthcare services in the United States. It also provides mortgage financing on healthcare facilities. As of December 31, 2005, the company had invested in real estate properties, including medical office/outpatient facilities, assisted living facilities, skilled nursing facilities, inpatient rehab facilities, independent living facilities, and other inpatient facilities. As of the above date, it owned 237 properties. As of the same date, the company provided property management services for 138 healthcare-related properties. Healthcare Realty Trust qualifies as a real estate investment trust for federal income tax purposes. The trust would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded by David R. Emery in 1992. The company is headquartered in Nashville, Tennessee.

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Healthcare Realty Trust Stock Chart

Friday, February 25, 2011

Middle East Explodes & Precious Metals

Libya Revolution
Time to Watch Precious Metals as the Middle East Explodes - By AVAFX

Is it time to watch and buy precious metals? Maybe… just maybe.

Silver continued its rally to a 30 year high, and gold climbed to a one month high as increasing unrest in the Middle East encouraged demand for precious metals as a safe haven.

Also, this past week, Egypt approved a request from Iran to send two naval ships through the Suez Canal. Meanwhile, in Bahrain, security forces attacked protesters for a second day. Gunfire broke out in Yemen's capital, Sanaa, as pro democracy demonstrations spread to Libya and Iran.

History shows, that when you see major world strive or turbulent markets, investors always flock to safe havens like gold and silver.

Silver futures for March delivery rose US72.6¢, or 2.3%, to settle at $32.296 an ounce on Friday, Feb. 18. Earlier that trading session, the price reached $32.87, the highest price for a silver contract since March 1980. For the week ending Feb. 18, the silver gained 7.7%, the most since early December. Silver traded as low as US$26.30 on Jan. 28.

Turning our attention to gold futures, for April delivery, the precious metal gained $3.50, or 0.3%, to $1,388.60 an ounce. Earlier, the gold reached $1,392.60, the highest since Jan. 13. The metal climbed 2% this week. Click here to read more about how silver and gold traded.

According to the World Gold Council, demand for gold bars and coins in the Middle East jumped 39% in the fourth quarter from a year earlier.

Over the past year, and especially since the Middle East turmoil has begun, silver has doubled, gold is up 24%, and platinum has gained 21%.

So, with the Middle East in turmoil, it might be a good idea to pay close attention to precious metals in the weeks ahead.

AVAFX Arabic Gold

Click here for gold, silver, copper daily forecast outlook.

Thursday, February 24, 2011

Twitter Tweets & Blogs Predicting the Markets?

Socionomics: Moody Blogs and Tweets Give Hints about Financial Markets

Click here to reserve your seat for the first-ever Socionomics Summit April 16, 2011 in Atlanta, Georgia.

How would you like to analyze 10 million tweets posted on Twitter or more than 20 million blog posts on LiveJournal? Three of the speakers at the upcoming Socionomics Summit did. And what they learned tracking social media surprised them. As an interviewer on NPR put it, "It wasn't that the Dow Jones could be used to predict the mood on Twitter -- it was that Twitter could be used to predict the Dow Jones."

That's the new science of socionomics in a nutshell: Changes in social mood are precursors to both social events and to the ups and downs of the Dow Jones Industrial Average. Here's a quick look at four topics that speakers will explore at the 2011 Socionomics Summit: New Horizons in the Study of Social Mood that will be held on April 16, 2011, in Atlanta.

Twittery Moods -- Johan Bollen

If you want to know where the Dow is headed, simply read millions of tweets every day and pick out words and phrases that show calm, alert, and happy moods. Or do what Johan Bollen, associate professor of informatics at Indiana University and his colleagues did: Use computers to do the heavy lifting.

Bollen and Huina Mao will explain how they started their research into collective moods by asking this question: If emotions can profoundly affect individual behavior and decision-making, does this also apply to societies at large? That is, can societies experience mood states that affect their collective decision-making?

They analyzed how people reacted to the presidential election and Thanksgiving Day in 2008 via their Twitter posts. What Bollen, Mao and their associate, Xiao-Jun Zeng, learned is that public mood states can predict changes in the DJIA closing values two to six days in advance.

Blogger World - Eric Gilbert

Tweets are short and sweet; blog posts are longer and more detailed. Since holding the Google Fellowship in Social Computing at the University of Illinois, Dr. Eric Gilbert has been studying what makes social media tick and how people can use it to predict things such as relationship strength and stock prices. However, he could see that lab work didn't quite get to the heart of the matter. His research took off when he found that weblogs could provide a novel way to figure out what kind of moods people experience.

Gilbert, who is now on the faculty of the School of Interactive Computing at Georgia Tech, will discuss how he used LiveJournal to track more than 20 million blog posts. That research shows how increases in expressions of anxiety, worry and fear predicted downward pressure on the S&P 500 index. He will make the case that you can take information from social media -- just people discussing ordinary daily life -- to anticipate changes in seemingly unrelated systems: in this case, the stock market.

Hedge Fund Outside the Herd -- Scott Reamer

Once you notice that people succumb to herding when they invest in and trade stocks, wouldn't you want to put that knowledge to your advantage -- particularly if you were about to start a hedge fund? That's what Scott Reamer and his partners did in 2010 when they founded Chora Capital, based on quantitatively exploiting the propensity of investors to engage in herding across asset markets, geographies, and time.

Reamer will talk about how he sees socionomics as an investment philosophy that unifies economics, physics and sociology. He will explain how he and his partners started their venture by shooing away the "sacred cows of neoclassical theories,” then setting up a framework to understand how collective behaviors govern asset prices. As he puts it, “I think the socionomic principle allows you to at least go down a path [where] you can hopefully find tools or methodologies that allow you to take the reality that people herd, and apply it in a beneficial way for the industry and for your clients.”

Extreme Events - John Casti

People are getting used to extreme sports and the adrenaline rush they bring to participants -- and sometimes to spectators. Now get ready for extreme events in human society. John Casti, who recently wrote the book, "Mood Matters," calls them Xevents. He will argue that so-called Black Swans, rare and unexpected events, are not so impossible to predict. Casti, a research scholar at the International Institute for Applied Systems Analysis in Austria, believes that by using socionomics to predict social events it is possible to portray the topography of the ever-changing environment and to forecast the events that accompany it.

He will explain why the social mood of a population is a leading indicator of matters as amusing as trends in popular culture and matters as disruptive as the rise and collapse of world powers. If you want to be ahead of the crowd, it's time to find out how Casti proposes to use socionomics to create tools that anticipate such Xevents.

Click here to reserve your seat for the first-ever Socionomics Summit April 16, 2011 in Atlanta, Georgia.

The 14 speakers are a mix of academics and non-academics, so you'll not only learn about the latest developments in socionomic theory and research; you'll also see how expert socionomists are already applying socionomic insight to the fields of business and finance. It's certain to be the most thought-provoking meeting of the minds you've been to in the past decade or more. Learn more and reserve your seat today.

Wednesday, February 23, 2011

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Tuesday, February 22, 2011

Achieve Balance in Your Trading

Balanced Scale
By Dr. Van K. Tharp International Institute of Trading Mastery

Click here for Dr. Tharp's Trading Workshop Schedule

This certainly would rank as one of my top ten tips to you. I know some of you have read this one before, but it's worth repeating.

We live in a world of polarities: good vs. bad, up vs. down, young vs. old, happy vs. sad. The "win and loss" polarity is just one example of many. In most cases, we tend to judge the polarity in that we prefer one side and dislike the other side. However, one of the secrets to life is to make both sides of the polarity okay. But, what does that mean?

That’s a hard one for most people to understand, but perhaps it will be easier when I explain it in terms of profits and losses. You cannot be a successful trader if you are not willing to have both profits and losses. As the mechanical trader in book 5 of the Peak Performance Course says, "It’s like only wanting to breathe in and not wanting to breathe out." Both are a significant part of the trading process.

Most people don’t understand this concept at all. They want to be right all the time. They want to make money on every trade. Yet that will not happen because losses are a part of the trading process. When you understand the relationship, however, you can come to terms with losses and make them okay.

A natural part of the trading process is to have a point at which you must unload a position or trade at a loss in order to preserve your capital. Those losses will happen to most people about half of the time or more. And you must make them okay or neutral.

If a loss is not okay, you will not take it. When you’re not willing to take a loss, it usually gets a little bigger. When it rains, it pours. As a result, it becomes even harder to take—much more painful. If you didn’t take it the first time, as it becomes bigger you will be even less likely to take it. What’s likely to happen? It probably will become even bigger. The cycle typically continues until the loss becomes so big that you have to take it. This typically occurs when you get a margin call from your broker.

However, investors might never get a margin call if they are not margined. Instead, they tie up valuable capital in a falling investment that might last forever. There are probably millions of investors right now who are hanging on to losing investments, just because they are waiting for it to come back. Consequently, you must make it okay to take losses.

The other half of the equation is also important (and equally puzzling). You can’t put too much importance in gains. People who value profits too highly, tend to take them quickly. Why? Because if they don’t take them, they are afraid they will get away.

An example of this was once pointed out to me through real estate investors. A group of investors got into a real estate deal that started to lose money. Instead of getting out and taking their loss, they elected to stay in and ride it way down. When asked why they didn’t get out of a bad investment, their comment was, "We haven’t gotten our money back yet."

These same investors subsequently got into another real estate deal. It started to become profitable very quickly. In fact, it rose to 100% profit and more. But the investors who were holding onto the bad investment, sold out quickly at a small profit. When they were asked why they sold, the reason was, "We lost money on the other deal, so we wanted to make sure we got our money back on this one."

This concept of balance is very important and it applies to any polarity you can think of—not just profits and losses. It's equally important for traders to find balance in their emotions. If you want to dig into this topic, it's covered thoroughly in my Peak Performance Home Study Course.

About the Author: Trading coach, and author, Dr. Van K. Tharp is widely recognized for his best-selling books and his outstanding Peak Performance Home Study Program, a highly regarded classic that is suitable for all levels of traders and investors.

Click here to learn more about Van Tharp at the International Institute of Trading Mastery.

Monday, February 21, 2011

Sterlite Industries India Buy Recommendation

Sterlite Industries India
India Basic Materials Mining Buy Recommendation

This Monday I’ve got a long-term buy recommendation on Sterlite Industries India ticker SLT traded on the NYSE as an ADR. Sterlite is an Indian industrial giant involved in the basic materials space, specifically copper, zinc, aluminum, lead production for India and the world. With China now becoming a larger importer of basic materials the prospects for Sterlite become potentially even better.

Cautionary Note

I suggest caution right now as I see a very possible broad market sell-off coming this week or in the coming weeks in stocks. This not only pertains to the India market, but also, USA and global. I may be completely wrong. In any event, I think paying close attention right now is the prudent thing to do.

India Stock Market Ups and Downs

India’s benchmark Bombay Stock Exchange Sensitive Index, or Sensex was sitting at 18,211.52 as of Friday February 18, 2011, and has been under selling pressure since November 05, 2010. Is the selling over with or will it continue? If it continues, next major supports for the Sensex are 17,000 and 16,000. I do see more selling pressure near term, but selective India stocks that are very oversold now are starting to look more attractive again. Back starting in May 2003 at about 3,000 the Sensex went on a supernova uptrend peaking out at 20,000 at the end of 2008. Will this long-term uptrend continue? I say yes it will, but when I won’t say. What I can say is chance favors the prepared mind, so buying in now on weakness for some long-term gains could be extremely profitable at this point with some of these Indian stocks.

International Monetary Fund India Forecast

The IMF forecasts India’s gross domestic product expansion will slow down to 8.4% for 2011, compared with 9.7% in 2010. That’s still a major wow factor with growth rates forecasts in the more developed countries at 3% or below. With India stock prices under pressure, now could be a good time to buy in to some large growth potential long-term. At least there seems to be less risk now with the lower prices than trying to buy the stock when the prices are flying high with strong momentum.

India’s Current Inflation Issues

India’s inflation pressures have caused the Indian Central Bank to raise interest rates last year, with food inflation still holding above 10% currently. The inflation issue is a cause for concern right now for Indian company’s forward earnings, and foreign investment fund inflows to help provide more liquidity.

Sensex Current Earnings Estimates Multiple

Companies on India’s Sensex are currently trading at about 17 times estimated earnings which is down from about 21 times a year ago. I suggest now might be a good time to buy into the current weakness into select India industrial and financial stocks for a possible recovery later in the year.

Sterlite India Basic Fundamental Valuation

Sterlite Industries 3rd quarter 2010 net revenue increased about 25%, and net income increased about 60% from the previous year. Sterlite is well positioned to capitalize on the strong forward global demand for basic materials. Sterlite is currently trading at about 8 times estimated 2011 earnings making it a very attractive buy candidate right now for the long-term.

Sterlite India Basic Technical Analysis

The 52 week high of 19, and low of 13 makes Sterlite a very compelling low-risk high-reward buy in many ways right now. Long-term this trade investment has the potential for multi-bagger returns. We shall see if Sterlite and India can keep their strong growth going forward. Just in case they don’t in the near-term implement stop-loss and re-analyze later on. If your a long-term investor, Sterlite could be a good holding for your portfolio.

Buy Long Sterlite Industries India – Ticker SLT

Buy Entry: 13.26 to 14.21

Stop-Loss: 12.18

Take Profit Areas: 17.13 to 17.76, 18.20 to 18.71, 20.93 to 21.54, 26.26 to 26.95, 29.95 to 30.86

Sterlite Industries India Company Profile

Sterlite Industries (India) Limited operates as a non-ferrous metals and mining company in India and internationally. The company engages in mining, smelting, and processing of copper, and production of copper byproducts. It offers copper cathodes for use as starting material for copper rods, as well as used in making alloys like brass, bronze, and alloy steel with applications in defense and construction; copper continuous cast rods used primarily for power and communication cables, transformers, and magnet wires; sulphuric acid and phosphoric acid for fertilizer manufacturers and other industries; and other by-products of copper smelting operations, such as hydrofluoro silicic acid, ferro sand, gypsum, anode slimes, and DORE. The company also produces and sells zinc ingots to steel producers for galvanizing steel, as well as to alloy, dry cell battery, die casting, and chemical manufacturers; lead ingots primarily to battery and chemical manufacturers; and silver ingots primarily to industrial users of silver. In addition, Sterlite Industries produces primary aluminum in the form of ingots and wire rods that are used for aluminum castings and the fabrication in the construction and transportation industries, as well as in various electrical applications; rolled products, including coils and sheets for the aluminum foil manufacturing, printing, transportation, consumer durables, building and architecture, electrical and communications, packaging, and general engineering industries; and Vanadium sludge, a by-product of the alumina refining process and is primarily used in the manufacture of vanadium-based ferro alloys. Further, the company, through its subsidiaries, engages in the generation of wind power. It operates wind power plants with 123.2 MW generation capacity. The company was founded in 1975 and is based in Mumbai, India. Sterlite Industries (India) Limited is a subsidiary of Vedanta Resources plc.

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Stock Chart Sterlite Industries India

Thursday, February 17, 2011

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Wednesday, February 16, 2011

Vacation Rental Income

TripAdvisor Got A Vacation Rental
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The financial markets are not the only place to earn investment income. Renting out your house, condo, on a vacation rental short-term basis has many benefits and monetary rewards. Earn more money by renting out your house or condo no matter where it is located instead of renting it out long-term with a yearly contract.

Benefits Rewards of Renting on a Vacation Rental Short-Term Basis

Make more money with just a little additional management.

Have a chance to meet interesting people from all over the world who book your vacation rental.

Receive word of mouth recommendations and referrals from people who stay in your vacation rental.

Have the use of your vacation rental for family and friends when your unit is not booked.

With more and more travelers wishing to stay in weekly to monthly vacation rentals instead of a traditional hotels or resorts, individual homeowners investors, as well as travel companies offering hotels and resorts can affordably access this very large and growing global rental market.

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Travelers can search our rental property listings and connect directly with rental property managers and owners for free. Travelers can also review property details including photos, rates and guest reviews to identify the best rental property for their next vacation.

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Tuesday, February 15, 2011

Major Currency Trends For 2011

Major Currency Trends For Major Gain – YEN and Dollar

Over the past few years Forex traders have really had to step up their game in order to continue making money in the currency market. Back in the day before currency trading was main stream, currencies used to trend in a direction for a long period of time with a low level of volatility. But with so many individuals now involved speculating on price action coupled with international concerns in most countries, the once slow and steady currency market now moves like the stock market with large price swings on a weekly and even daily basis.

With currency trading growing at an incredibly fast rate, stock traders have been giving tools to trade currencies using ETFs. If you are familiar with leveraged ETFS then you have most likely seen the huge opportunities (100,200 even 400% gains) which they can provide during major trends. Below are a couple major trends that both Forex and ETF traders should be keeping their eye on.

Japanese Yen – 30 year Monthly Chart

Over the last couple years China has taken most of Japan’s manufacturing, creating some terrible fundamentals overall for the Yen. With a weakening economy and the Yen making a major top in 1995, I feel we could be seeing a 16 year double top forming. This means shorting the Yen for a multiyear correction (bear market). This could generate some serious gains in the coming 2-5 years with very little work.

Japanese Yen Long Term

YCS 200% Short Yen Exchange Traded Fund – Daily Chart Setup

This fund allows stock/ETF traders to play the currency market within a regular trading account. The YCS fund is a 200% leveraged inverse fund, meaning this fund goes up in value as the Yen declines. For example, if the Yen drops 10% in value YCS will rise 20%.

Everyone has seen that infomercial to cook food with the saying “Set-It-And-Forget-It!” Well that’s more or less what this position will be like if we get a setup to buy this fund. This trade could easily last 5+ years with the potential to generate 150% – 400% gain.

YCS ProShares UltraShort Yen

US Dollar Weekly Chart Setup

Taking a look at the more common currency “The Dollar”. It has been forming a similar price pattern and is trying to form a base and bottom. The dollar does have one major issue which will most likely cause a breakdown thus an even lower value in the coming year. The problem is that the fed reserve constantly prints money increasing the money supply and devaluing the dollar (quantitative easing).

Currently, the dollar is trading within a large range and is poised for a short term bounce. There will not be any major trends until a breakout of this trading range to either the up or down side.

US Dollar Index

Major Currency Trends for Major Gains

In short, while playing shorter term trends is exciting and rewarding and keeps us busy on a daily/weekly basis, it is nice to have some long term positions at work which slowly mature into large percentage gains which boost you’re overall portfolio value each year with little work. Both the Yen and Dollar look like there is big potential just around the corner using the buy and hold mentality.

Each year I find 3-5 major opportunities where I can put some money to work, not tie up much capital and if they move 150% or more in my favor then those small investments boost my overall yearly portfolio gains substantially.

I do have another major trend setup forming which I’m calling the “Holy Cow” setup… which could be a real money maker this year. The exciting thing about it is that I have not seen ANYONE talk about this investment in years…

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Monday, February 14, 2011

Investing In China Travel Stocks

eLong USA China Promo
Kung Hei Fat Choi! Millions Go Traveling!

China holds the record for the world’s largest mass migration of people during a national holiday. Last week they celebrated Chinese New Year of the Rabbit by traveling back to their hometowns to visit with Family which most only get to do once a year. As I read, the Year of the Rabbit should be a good year for many. I wish you a happy, healthy and prosperous Chinese New Year of the Rabbit.

Egypt & Middle East Markets Stabilizing

With Mubarak gone, the Egyptians more happy, and Egypt now a bit more stable on all fronts, but with much work to do still, Middle East markets have showed a modest gain this Monday. This week I recommend gong long on ticker LONG, eLong China Online Travel Booking Service

eLongs Sky High Fundamental Valuation

Going long on eLong China Travel Service, which is traded on the Nasdaq, and is a subsidiary of Expedia. eLong has a high flying PE ratio of about 130 right now. Will this high altitude valuation hold or descend? Short term yes it could with China authorities working to slow down its world highest growth rates by increasing interest rates and loan requirements. Long-term, it should fly high with many China travelers now, and the potential of multi-millions in the future. See below for its company profile and its offering for online bookings for thousands of hotels in cities across China, and now access to the world like USA with its China-USA Travel offer image above.

Overvalued and or Oversold?

eLong has been in a downtrend since November 11, 2010 at 21.97 to looking very oversold now at 14.25. If eLong’s long-term growth can hold, and they can expand their revenues and EPS, the potential for a sustainable strong PE ratio and stock price growth is showing a possibly very low-risk high-reward trade and investment right now. I do think long-term we are looking at a good buy opportunity on eLong, but there are many other factors to consider also. The problem with conventional market analysis wisdom of going long on eLong here is the high PE ratio issue. On a positive note, long-term big player investors have been increasing the global institutional ownership to 16% plus now on eLong. It’s 52 week low was 9.10. eLong could possibly go lower here and test a lower valuation multiple, and then again, it could hold here and head higher based on its potential millions of subscribers and growth from people in the world’s country which is booming economically now.

eLong Earnings Report February 17

eLong will be announcing its 2010 4th quarter financial results February 17. eLong's management team will be on the call to discuss results and highlights and to answer questions. The toll-free number for U.S. participants is +1 866 844 9413. The dial-in number for Hong Kong participants is +852 3001 3802. The toll number for international participants is +1 210 795 0512. The pass code for all participants is ELONG.

China Travel Statistics from

China's tourism income reached 1,095.7 billion yuan (160.328 billion U.S. dollars) in 2007, up 22.6 percent year-on-year, said China National Tourism Administration on Thursday. The country hosted 131.87 million inbound tourists last year. Domestic and outbound travelers surpassed 1.6 billion and 40.95 million respectively. The international tourism income reached 41.91 billion US dollars, up 23.5 percent. Domestic tourism income reached 777.06 billion yuan, up 24.7 percent. The international inbound market maintained fast momentum last year. Tourists from other Asian countries took up 61.5 percent of all international tourists. Republic of Korea continued to be the first on the list of nations. By the end of 2007, the country had 13,583 star hotels, up 6.5 percent, while the number of travel agencies increased to 18,943 from 17,957 in previous year.

Buy Long eLong – Ticker LONG

Buy Entry: 13.80 to 16.14

Stop-Loss: 12.12

Take Profit Areas: 21.65 to 22.65, 23.52 to 24.61, 29.47 to 30.86, 40.85 to 42.86, 49.00 to 51.08

eLong Company Profile

eLong, Inc. operates as an online travel service provider in the People’s Republic of China. The company provides its customers with travel information and the ability to book rooms, air tickets, vacation packages, and other travel related services utilizing call center and Web-based distribution technologies. It facilitates the customers to book rooms in approximately 10,000 hotels in 450 cities across China, and fulfills air ticket reservations in approximately 80 cities across China. In addition, the company offers the ability to book rooms at approximately 100,000 hotels outside of China; and provides the customers informative content relevant to hotel and air travel decisions, including tourist and event site destination information, hotel facility information, and photos. eLong markets its services through online marketing, traditional media advertising, co-marketing with established brands of other companies, and direct marketing. The company was founded in 1999 and is headquartered in Beijing, the People’s Republic of China. eLong, Inc. operates as a subsidiary of Expedia Inc.

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eLong China Travel Stock Chart

Friday, February 11, 2011

Can the US Dollar Expand its Bullishness?

FX Insights AVAFX
FX Insights Forex News Intraday Daily Weekly Special Reports

The USD has come a long way in just a week's time. This week has shown the USD in a tentative recovery.

Still, we should have some serious doubts that this is a true bullish reversal. We saw a similar reversal broken up a couple of weeks back when a sharp rally for the dollar and the anticipated increase from the S&P 500 were reversed after the weekend.

What led the US Dollar to gain this past week? Strong fundamentals could have lent some support to the gain, but we did not see that, it appears that a true and technical bullish phase was in effect. With that said, without a solid foundation, the US currency could be looking at another swift fall in the coming weeks ahead.

Let's look at some fundamentals. A view of the consumer and business health offered a direct look into whether the US was on a fast track to surpass its global counterparts for growth and returns. We saw personal spending, manufacturing activity and service sector activity all carving out gains. However, a vigilant fundamental trader would really hone in on the extremely disappointing employment breakdown and the PCE inflation figures.

The net payrolls were a huge disappointment for missing their mark. We saw a jobless rate only improving with a record number of frustrated Americans leaving the labor force and the participation rate tumbling to its lowest level in 26 years. This puts growth or a lack of growth back into perspective. Without employment and wages improving, the economy will not expand, especially at its current clip. As for the FED's favored inflation indicator, a record low sets a very poor precedence for interest rate speculation.

Data, released two weeks ago, is not very encouraging. Going forward, it will be exceptionally difficult for the dollar to sustain its current rally if sentiment begins to deteriorate market wide.

There are just a few catalysts that can encourage the USD higher over the next couple of weeks. An ideal situation for the USD would be an aggressive and correlated fall of the equity markets, corporate debt along with a subsequent rally in gold. One or two of these could present some support.

As for the upcoming macro data next week, do not expect too much volatility to follow the releases. Consumer credit will indicate measure of lending conditions, the NFIB small business optimism will gauge hiring expectations for the largest employer group, the monthly budget will track the push to the deficit cap and the University of Michigan sentiment survey will gauge consumers' willingness to spend. None of this data traditionally alters the US's relative pace of growth, risk appetite trends or the timing for rate hikes.

Still the question begs. With the overall weekly macro data coming out of the US, will the dollar continue its current rise? Read Fx-Insights to keep up to date.

David Frank, Financial Analyst, Ava FX

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Thursday, February 10, 2011

United States Oil Fund High Probability Trade

United States Oil Fund
High Altitude Bombing in Oil

At the risk of stating the obvious, the recent market action in the commodities has been manic with wild gyrations of price in a wide variety of basic materials, metals, and energy. Given these wild fluctuations in price, I thought we could look at an options trade in USO that gives a high probability of success.

In order to give a bit of a conceptual framework for this sort of trade, let me share the way I look at these. Development of precision high altitude bombing during World War II resulted in a dramatic reduction in casualties while inflicting devastating consequences to enemy forces. I view the sort of option strategy described below as the equivalent of high altitude precision bombing. We will extract substantial profit without putting ourselves at high risk of damaging anti-aircraft fire.

As is shown on the daily price chart below, there is substantial support in the region of 35.60-36 provided by a recent swing low and the 200 period moving average.

Oil Chart

In selecting the structure of option trades, I usually like to consider the volatility environment in which we currently operate. This is important because a very strong tendency of implied volatility is reversion to its mean. The knowledgeable trader factors this into his trades in order to put the wind at his back as much as possible. Trades can be selected and constructed to benefit (positive vega trades) or suffer (negative vega trades) from increases in implied volatility. As you can see in the chart below, implied volatility is currently in the lower quartile of its historic value for this specific underlying:

Oil Chart

Given the current low volatility, let us look at a strategy that gives us substantial profit from an altitude of 50,000 feet and the ability to roll the trade forward for additional substantial profit. This trade is structured as a “ratio calendar spread”. Now don’t go getting hung up on the name, it is simply a two legged trade in which we buy a longer dated in-the-money call and sell a smaller number of out-of-the-money calls. The trade is diagrammed below:

Oil Options Chart

For those getting used to these sorts of trades and trying to form an organizational framework, the trade can be thought of as a basic calendar spread where an additional contract of the long options is purchased. The addition of this extra contract removes the upside limit on our profitability which would exist in an ordinary calendar spread. As is often the case in option trading, this trade can also be thought of as a “first cousin” to a covered call structure where the long in-the-money contracts serve as a surrogate for long stock. I find it helpful to think of the various option constructions as individual members of several different families. Each family has a number of “family traits” that help make sense of the large number of potential constructions available to the options trader.

One of the characteristics of this family under discussion is the “Sham Wow” factor- “but wait-there’s more”. The “more” in this trade is the ability to “roll” the short calls forward as they expire or, more prudently, as they reach inconsequential value. For example, this trade would have been initiated by selling the February 37 calls at a value of around 57¢. When these calls reach minimal value, let us say 10¢ for discussion, they could be bought back, and the March calls sold to capture substantial additional premium. This process can continue for April, May, June, and July. These additional sales give the opportunity to reap additional profit for the trade.

The risks in the trade are:

1.USO breaks support and continues to sell off

2. Volatility collapses on the long leg of the trade

I have discussed both of these factors in the price chart and volatility chart above when I was developing the logic of the trade. While no guarantees exist for the behavior of either price or volatility, the current trade represents a reasonable balance between risk and probability in my opinion.

As with all our discussions, these considerations are presented for educational purposes and do not represent a recommendation. This is not a solicitation nor should it be considered financial advice. I am simply trying to demonstrate how to use the knowledge of option behavior to construct trades that benefit from high probability events. Bombs away!

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Wednesday, February 09, 2011

Systems That Outperform Global Markets

Global Markets
Systems That Outperform the Global Markets Long Term Workshop February 9 - 10, 2011

By by Ken Long of the Dr Van Tharp International Institute of Trading Mastery

Can't attend the workshop? Click here for the Dr Van Tharp Home Study Programs

Learn to Spot the Flow of Big Money Quickly! Earn Extra $1,000s Each Day in Your Free Time!

Most people tend do the exact opposite of what big funds do and they pay a price for trading this way. For example, some people will buy a stock after hearing that a fund manager really likes it. However, by the time the retail investors buy it, the fund manager is about ready to sell.

But what if you could detect what the big mutual funds are doing with their money well before they complete their big transactions and jump in ahead of them? If mutual fund managers are buying retail stocks, you’d be able to get into those stocks as they are getting in and profit greatly as their significant purchasing activity drives prices up

Wouldn’t that be a huge advantage over other investors? We’re going to show you exactly how to do that. How? First, by understanding how and where big money flows.

"Very helpful information that gave me a good foundation for putting ETFs into perspective compared to stocks and mutual funds." — M.L.

"Excellent course. It's a pleasure and a luxury to spend six days with Ken and learn from him. Infinite value. — Jan Steensma [referring to two three-day workshops]

Suppose you manage a fund, and you need to move a billion dollars out of retail stocks and into utility stocks. For billion dollar orders, you don’t just click a mouse button. Instead, you work with a large brokerage firm and instruct them with an order that basically says, "You have three days to get rid of this stock. We want at least $998 million for it. If you can get more than that, keep the extra cash as commission." The market then sees a slow movement out of retail stocks. And as that one fund moves out of retail, others may see that action, which then might confirm their beliefs about retail sector weakness, causing them to move out as well. Subsequent flows make the underlying movement even stronger.

The same fund manager may give instructions to use the proceeds of the retail stocks sale to then buy a billion dollar basket of utility stocks over the next five days. As retail stocks were moving down, you might also see utility stocks moving up.

While the major averages may not move that much, big money moves its funds around and shifts the internals of the markets. Now expand your focus beyond domestic equities. Say the Latin American markets are zooming up, oil is building a base or the dollar is in a nice steady trend. There are now clear cut ways for the individual trader to see this happening and to take advantage of it.

You can learn to detect when and where the big money moves. In fact, spotting it quickly can be an important (and highly profitable!) edge for you. Big money tends to move slowly, but you can move quickly. In fact, when you get good at observing the flows of funds, you can start making thousands of dollars each day at your convenience. It’s not that hard. Ken Long, a retired US Army LTC, does it regularly.

And Ken will show you just how he does it in this revamped, exciting workshop that teaches you how to jump in front of the big money (formerly titled ETF 101 Workshop).

Introducing Ken Long, Your Instructor

When Ken Long first attended my Systems Development workshop in the mid 1990s and submitted his objectives to me, I thought to myself, "Someone from the Army is going to apply this material?" Little did I know that Ken Long would not only apply it but he’d become a master of it and one of the best traders I know.

Ken is one of the few people I have met who has a graduate degree in systems design. Because of his training, Ken spots ideas that most people would never think of. For example, when Ken attended our systems workshop and learned about the complex training game we were playing, he developed a procedure for strategizing about the game that I now teach in that workshop. He’s that good!

"Extremely comprehensive ‘top down’ approach to trading. Superbly presented by Ken Long in a very understandable format. I give this course a 10 out of 10. Good job! Ken is clearly a man of great integrity and because of this, he had my trust in the material he was presenting immediately." — T.R.

Ken’s business plan is one that I use as a template for teaching business planning to traders. Again, his work is exemplary.

"It’s been exhilarating! I found Ken to be extremely clear and structured in his explanation and presentation of his systems, beliefs and techniques. Awesome information for traders of any level of expertise." — J.L.S.

Ken is one of our best instructors in part because he treats his trading and teaching as he treats his martial arts, his coaching, and life in general: he pursues excellence to the point of mastery. He’s even working on a management PhD now and has been able to integrate his research into his teaching position at the US Army Staff College and into his trading. Ken is a thinker, philosopher, a tinkerer, and a leader. He applies what he learns faster and gets more done every day than anyone else I know.

He started with mutual funds in the 1990s but has grown over the last ten years into an outstanding big picture thinker, and long term and tactical trader. He has also evolved his strategies over the years and teaches his latest advancements in this workshop. What Ken does today is not that hard. He says that if he learned how to do it, anyone can! Register Now

What Can You Expect To Learn? Ken’s New Course Model

Here’s one example of how Ken has taken my material and applied it (in this case) to help you trade better. In our Blueprint Workshop, we have a few areas of key focus for becoming a great trader: knowing yourself, understanding markets, and using systems. Ken used this Blueprint model to rebuild his previous ETF 101 material into this new workshop. These are the areas he has built the new course around:


• Understand how to use your learning style profile to improve your trading.

• Leverage your trading strengths and minimize your trading challenges.

• Define realistic expectations and learning strategies to help you grow as a trader.

• Learn how to find a Mastermind group and how to benefit from their power.

• Build a business-like operations plan as a commitment to your trading results.

• Develop discipline and consistency through the use of checklists, rehearsals, and debriefings.


• Design an annual passive asset allocation strategy for a hands-off approach using part of your equity.

• Adapt the Elder Triple Screen for a highly reliable system.

• Learn how to place macro-economic trades in a systematic manner.

• Understand an effective weekly trend following strategy that rises faster than the market but gets safely in cash during periods of market risk or declines.

• Take advantage of opportunistic trades with a reliable, mechanical systems approach.


• Learn a market classification model for all market types so you know when to trade—and when to be out of the market.

• Understand a world market model to evaluate the relative performance of different markets because some market somewhere is always doing well.

• Appreciate longer term technical indicators for their help in identifying market trends outside of the noise.

• Learn to spot and profit from currency imbalances—without the risks and learning curve of becoming a currency trader.

• Discover the broad choices available in ETF types and how to use them profitably in trading systems.

Here’s What’s Waiting For You!

Building Your Toolbox

You’ll focus on gathering the information and identifying the tools you need to design and operate your ETF trading strategy. You’ll learn about ETFs, how they are constructed, and how they trade, and why they are so useful to traders. You’ll look at large cap stocks and find out how their similar behavior to ETFs offers you trading opportunities. You’ll also cover the parts of a trading system and how your beliefs and objectives form the basis of effective system design. You’ll identify ETF price actions that indicate where the big money is flowing. This is a core part of most of Ken’s strategies. You’ll also learn essential skills to enhance your trading with concepts like position sizing strategies and portfolio heat. And lastly, you’ll study useful indicators that measure strength of trend and volatility and learn to identify common reversal signals.

Strategies and Tools

Ken reviews a number of trading systems over various time frames. Learn in detail how an ETF system can be traded in a stand-alone mode or be traded as part of a broader portfolio. You’ll examine the specific rules for entry and how to base your decisions off of simple yet robust indicators. Ken goes in depth on the critical yet often overlooked topics of position sizing methods and exit management. Learn the power of position sizing strategies as a risk management tool and how your profits come from your exits. Ken uses case studies to teach the fine points of each strategy. You get to develop your personal ETF strategy using the tools and techniques that fit your objectives and beliefs by working in a small group of like-minded traders.

Putting Your Tools in to Practice

Finally, we put it all together and practice applying the trading strategies. You’ll learn to pick the right strategy and apply it effectively in real world situations through the use of case studies and group work. You’ll learn how to develop your trading and support systems to make your trading decisions much more efficient and save you a lot of time. In addition, you’ll receive group insights on the specifics of your personal ETF strategy.

"Very impressed. Ken over delivered on the course objectives and with a lot of his own real-world experiences, all with a good delivery and sense of humor. I leave feeling I can grow my account better than a market benchmark using a disciplined approach without a lot of weekly time and make a little extra using multiple strategies on ETFs." — D.H.

What Else?

In addition to the money making benefits listed above, there’s another valuable element to this course. You’ll be meeting and networking with like-minded traders and investors from around the world! After the workshop, Ken also provides the means for you to keep up with his ongoing systems development process.

"I gained a sense of how a true professional approaches his craft...I never thought I'd go home with four systems I feel confident about trading right away. But I did!" — Neil Abrams

Ken has developed some of the best trading systems for which I have personally seen trade results. He has developed himself into an outstanding trader and teacher—feedback forms from his workshops continuously have the highest marks. Attend this workshop and study with a true master.

"I really appreciated Ken's honesty, openess and willingness to share. I look forward to communicating with him in the future. His commitment to the craft of trading is amazing." — Jeff Blaser

And as always, you’ll be networking and meeting like-minded traders and investors!

Click here for Dr Van Tharp's International Institute of Trading Mastery Workshop Schedule

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Tuesday, February 08, 2011

Free Forex Trading Webinar

Free Forex Trading Webinar
Click Here for the AVAFX Webinar Registration

AvaFX webinars are conducted by some of the leading industry experts.

Registration is free and takes less than a minute.

Ready to get started in the Forex market?

Join us for an introduction to forex trading and discover the opportunities that exist in the world's most traded financial markets.

Getting Started in Forex Webinar offers an overview of currency trading, including key concepts, ideas, and market terminology. In this webinar you'll learn:

About the major currencies and how to interpret currency quotes, and CFD prices.

How to place trades and understand order types, as well as managing positions.

How to read charts and perform basic technical analysis using AvaTrader trading platform.

How to trade forex as well as other instruments we offer, such as as oil, gold, etc.

This webinar will conclude with a 10-minute Q&A session.

The session is recommended for beginners in forex trading.

We look forward to you joining us

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Monday, February 07, 2011

Global Tire Company Buy Opportunity

Cooper Tires
Where The Rubber Meets the Road

This Monday I've got a buy long recommendation on Cooper Tire & Rubber. Cooper has a PE Ratio of 10 with a 1.8% dividend making it a decent long term buy with the steady demand for tires worldwide.

Cooper Tire & Rubber 4th quarter earnings conference call is scheduled for Friday, Feb 25, 2011, 11:00 am eastern time.

Zacks Equity Investment Research reported December, 2010 that Cooper will increase its ownership in two of its affiliated Mexico operations.

Firstly, Cooper Tire will raise its ownership stake in Corporacion de Occidente SA de CV., to 58% from 38%. Upon completion of the deal in January 1, 2011, the Mexican entity will be fully consolidated in the company's financial results starting in 2011.

Secondly, Cooper Tire will fully acquire Cooper Tire & Rubber Company de Mexico SA de CV by purchasing the remaining 50% stake in the entity. This entity conducts sales and marketing in Mexico and will also be fully consolidated in the company’s results.

Cooper Tire is constantly working to increase its capacity in order to meet the rising demand for replacement tires in the high performance and ultra-high performance categories. To meet this purpose, the company has outsourced the production of economy tires (medium truck and certain light vehicle tire products) to low-cost manufacturers of the Asian countries such as China, India as well as Mexico.

In the third quarter of 2010, Cooper Tire showed an 18% fall in profit to $49.4 million from $60.2 million in the same quarter of prior year (all excluding the restructuring charges related to the closure of the Albany, Georgia facility).

On earnings per share basis, profits declined 20% to 79 cents from 99 cents in the third quarter of 2009. The lower profit was attributable to higher raw material prices, reflecting a 14% rise in cost of sales to $754.7 million. Despite this, it was higher than the Zacks Consensus Estimate of 62 cents per share.

Sales in the quarter grew 10% to $883 million. Operating profit declined to $67.1 million from $70.7 million in the year-ago quarter due to the above-explained factor.

Cooper Tire & Rubber Company, a Zacks #1 Rank (Strong Buy) stock, expects to enhance its production volume by 10% in 2011 compared with 2010. The company has implemented worldwide increase in prices as it anticipates raw material costs to continue to increase in the near term.

Buy Long Copper Tire & Rubber – Ticker CTB

Buy Entry: 21.40 to 22.14

Stop-Loss: 20.37

Take Profit Areas: 25.02 to 25.44, 25.86 to 26.31, 28.48 to 28.94, 33.44 to 34.07, 36.98 to 37.64

Cooper Tire & Rubber Company Profile

Cooper Tire & Rubber Company manufactures and markets replacement tires primarily in North America and internationally. The company produces passenger car and light truck tires for independent tire dealers, wholesale distributors, regional and national retail tire chains, and other large automotive product retail chains. It also produces passenger car, light truck, racing, and motorcycle tires, and markets these products to dealers in the replacement markets. In addition, the company produces bias, radial light and medium truck tires, and off-the-road tires. Cooper Tire & Rubber Company was founded in 1913 and is based in Findlay, Ohio.

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Click the Cooper Tire Rubber stock chart below for a larger view.

Cooper Tire Rubber Stock Chart

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Friday, February 04, 2011

Russell 2000 & Transporation Index Indicating a Selloff

Major Indicies
Do I See Lipstick On A Pig? Or Is The Stock Market and Gold Still Going Up?

As most sophisticated investors and traders are aware, the U.S. Federal government has run up significant deficits and the long term debt burden is becoming a drain on Gross Domestic Product. That being said, most economists are discussing the possibility of a major decline in the value of the U.S. Dollar going forward as inflationary monetary policy begins to strangle growth. While that view point may prove right over the long haul, in the short run most traders are not likely expecting the U.S. Dollar to rally.

The U.S. Dollar is expected to reach a multi-year cycle low in the near future. From the cyclical low, I expect the U.S. Dollar to regain a strong footing and work higher against the crowd. This is not to say that the U.S. Dollar will not eventually decline, but financial markets do not work that easily. Shorting the U.S. Dollar is a crowded trade and Mr. Market punishes crowded trades quite often by pushing prices the opposite of what the heard is expecting. Should the U.S. Dollar find a strong underlying bid, precious metals and domestic equities would feel the brunt force of such a move. While it remains to be seen if the U.S. Dollar rallies, if it does it will catch many traders and economists by surprise and the unwinding of the short dollar trade could unleash a wave of buying that we have not seen for quite some time.

Let’s take a look inside the market.

Major Index Price Action Over The Past 12 Trading Sessions – Bearish
Below is a table showing the main indexes used for tracking the market. The interesting thing about this data is that the indexes which typically lead the market have been deteriorating for the past 12 days and no one has noticed.

In short, the Nasdaq, Russell and Dow Transport indexes typically lead the market.

Every radio station and business channel covers the Dow and SP500 indexes therefor the general public hears the market performance based on the those indexes. The problem here is that the Dow only consists of 30 stocks and the SP500 only holds the top 500 companies which is not a full view of the overall market because there are thousands of stocks listed on the exchanges.

The analysis below can be taken two ways depending which boat you are in… which I will explain in just a minute. The way I see things is a bit of both, I’m not really in or boat or the other… rather I have one foot in each because I have seen the market do things which support both sides (manipulation and measured technical moves) during my 14 years trading.

Ok here are my thoughts/opinions/forecasts.

Idea #1: Dow and SP500 indexes which 99% of the public use to gauge the market are moving higher on light volume. I feel because these indexes hold the stocks which everyone knows and is comfortable buying that this is the reason why they keep going up while the rest of the market silently erodes. It’s the simple thought that big money is moving out of leveraged positions (small cap stocks, transports, technology) in anticipation of a market correction, and the Average Joe continue to buy into brand name stocks boosting the Dow and SP500 thinking things are peachy..

Idea #2: We all know there is market manipulation, the question is how much of the price action is manipulation and how much is real supply and demand? No one will ever really know and that’s just part of the market and trading we have to deal with as traders. But I know there are traders out there blaming the Feds, POMO, and PPT for pushing the market up month after month. So the question is if these invisible forces manipulating the top 30-500 stock prices by buying them up which naturally boosts the Dow and SP500 indexes to keep everyone bullish on the market?

My thinking is that it’s a bit of both and that a correction is just around the corner.

Market Indicies

Gold Miner Stocks Underperform Gold – Not a good sign

Gold stocks today (Wednesday) underperformed the price of gold and are also forming a bearish chart pattern. If this plays out then we can expect another sizable pullback in both gold stocks and the price of gold because this index typically leads the gold.

Gold Stocks

US Dollar Multi Year Support Trendline

The US Dollar is trading down at a key support level and if we get a bounce and possibly even a rally then we could see a sizable correction in stocks and commodities across the board. As we all know everyone is shorting the dollar, buying gold and buying food commodities…. So it makes sense that all these crowded plays are about to see a major shift. Now this is just my contrarian point of view and those of you who follow my work know I’m not bias in my trading. I just take the market one day or week at a time and play the setups. But you must step back and look at the larger picture and at least give it some thought…

US Dollar Index

Concluding Thoughts:

In short, the major indexes are moving higher on light volume which is not a strong sign, and other key indexes are pointing to lower prices. The question everyone wants to know is how low will this correction be? The answer to that is that you must play the trend as you never know if a trend will last 2 days or a year. I take the market one day at a time continually analyzing price action.

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