Wednesday, August 31, 2011

EURUSD Triangle Breakout Opportunity

You don't have to squint hard to see them. Watch any forex market charts long enough and you'll see them everywhere: Those moments when the price first swings wide, then less so, then the swings narrow even more… Then for a while it seems the market is stuck, going only sideways, until -- boom! -- it launches into a wild spike that takes it far and away.

Triangles. That's what Elliotticians call those contracting swings in price charts.

One of the triangle patterns in Elliott wave analysis is called just that: "contracting triangle." It's a sideways move labeled A-B-C-D-E. They appear in all time frames. "Triangles appear to reflect a balance of forces," says Prechter and Frost's Elliott Wave Principle -- Key to Market Behavior. "When a triangle occurs in the fourth wave position, wave five is sometimes swift and travels approximately the distance of the widest part of the triangle."

You often see contracting triangles around the time when economic numbers are released. The media always attributes post-news breakouts to the news itself, but that's not the real reason. A triangle that precedes a news release "reflects a balance of forces," and this tug-of-war between the bulls and bears simply has no other choice but to resolve, eventually, in a violent price spike.

You'll find triangles both exciting and frustrating. The exciting part is obvious: After a market has contracted, it "expands" -- i.e., presents an opportunity for traders. But when you find yourself in the throes of a contracting triangle, they can go through all kinds of gyrations for a long time before finally ending in that strong "post-triangle thrust," in Elliott wave lingo.

Which brings us to the EUR/USD, the euro-dollar exchange rate and the most actively-traded forex pair.

Now that you know more about contracting triangles, you can see that the euro-dollar has been mired in one since the early summer. It's a big triangle, too -- so the following price breakout should be commensurate.

Contracting triangles often do a great job of warning you of impending market breakouts. You can find out what the EUR/USD's triangle means for its trend now -- with EWI's instant-access Currency Specialty Service subscription.

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Tuesday, August 30, 2011

When the Fed Is Blind to Stock Price Bubbles

Aug. 26 brought another round of disappointing news for real estate. Home prices dropped 5.9% in the first quarter of 2011, and the number of new homes on the market in July was the lowest on record.

The housing market's stagnation has prompted some to suggest that it's time the Fed intervened. Lest we forget, the government did buy $80 billion worth of toxic assets and issue first-time homebuyer tax credits -- both of which failed to change the long-term trend.

But what's most ironic is that the Fed denied the housing bubble's existence in the first place.

This excerpt from the Oct. 28, 2005 Elliott Wave Financial Forecast shows you how both Greenspan and Bernanke were completely oblivious to the coming calamity (emphasis added).

According to the outgoing Federal Reserve Board chairman there's "no national bubble in home prices, but rather 'froth' in some local markets." With years of central bank leadership under his belt, Alan Greenspan knows how to hedge his bet by acknowledging a measure of ebullience. The headline in today's Washington Post credits Ben Bernanke, the incoming Fed chairman, with a categorical denial: " There's No Housing Bubble to Go Burst"

Right around the time when these "no-bubble" quotes appeared in the press, real estate began a swift and steady decline. See the drop for yourself in this chart from the special, August video issue of Robert Prechter's Elliott Wave Theorist.

To be fair, Bernanke and Greenspan weren't the only analysts fooled by the real estate bubble. Time Magazine published an issue with "Home $weet Home" on the cover right before the peak.

Yet not everyone was surprised.

EWI's Elliott Wave Financial Forecast called the housing bubble for what it was and sounded the warning bells long and loudly. The July 2005 Financial Forecast told subscribers that housing was in its "home stretch," and the September 2005 issue declared that a " bear market in real estate has just begun."

At the time, those who listened to the Fed, Time Magazine and other mainstream voices were caught off guard. Financial Forecast Service subscribers, on the other hand, were prepared.

Click here so you can be too.

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Monday, August 29, 2011

S&P 500 & Gold Forecast Analysis

Editors Note: I don't have a stock pick this week because the market is extremely oversold right now to place new short-sells, and I wouldn't buy any stock long unless it was a large global dividend paying stock, and even at that I'm not interested in buying long just yet. Instead I've got some market forecast analysis by Chris Vermeulen below. I am looking for a dead cat bounce up in stocks this week, then looking to sell-short again on the oversold bounce into resistance later on. The sell-off downtrend is not over with in my opinion, and going long right now against what I consider a major downtrend would be very stupid in my opinion. I am buyer of selected China stocks right now though. I like buying copper with its recent upside breakout, and material commodity companies involved with copper and other metals need in building nations. I am not a buyer of gold or silver right now.

What Could Lie Ahead for the S&P 500 & Gold

JW Jones & Chris Vermeulen of Options Trading Signals

Now that Mr. Bernanke’s speech is old news, what was the financial media thinking exactly? A significant number of financial writers have been anticipating discussion of QE III or QE III Lite which clearly were never even on the Fed Chief’s radar this week. The focus of the Jackson Hole Summit was how to achieve long-run growth, not conduct discussion of monetary policy.

QE III will not be discussed openly until the next FOMC meeting in September, which noticeably was extended to two days. Besides the extension and the Fed Chairman’s prediction of growth in the back half of the year, the remainder of Mr. Bernanke’s speech was nothing more than a brief synopsis of what he has already said in the recent past.

While Chairman Bernanke focuses on the U.S. economy, I have been more inclined to monitor the action across the pond. Price action in Europe is having a major impact on financial markets here in the United States. Traders are monitoring credit default swap (CDS) spreads on European sovereign debt as well as on domestic and European banks.

Recently U.S. banks have seen the CDS swaps on their debt rising indicating that the marketplace believes their debt is a greater risk to investors. While the price action is nowhere near the 2008 & 2009 levels, current prices are relatively consistent with what was seen during the correction in the late spring of 2010. While there is no reason to panic at this point, this is a trend that I will be monitoring closely going forward.

For now, I continue to believe that equity markets will rally in coming weeks as conditions are extremely oversold. The price action so far today makes sense as the wild price swings helped flush out weak hands that were long. Consequently, the snap back rally pushed shorts into stop levels as well.

A significant move lower does not seem likely at this point, but a retest of the recent lows is possible, if not probable. I would remind readers that stock market crashes generally happen within the context of an oversold market. While the likelihood of a crash is remote, it is still possible and tight risk definition in this environment is warranted regardless of which side of the tape a trader is playing.

One price chart that I have been watching closely is the German DAX. The German DAX is presently a thermometer for traders to monitor the situation in Europe. The reason the German stock market index is so important is due to the financial strength of Germany within the Eurozone. Without Germany, the Eurozone would crumble in on itself and the Euro currency would be in trouble. Recently Germany’s equity markets have been crushed and the daily chart below illustrates the recent carnage:

Another metric I monitor regularly is market momentum. The chart below illustrates the number of domestic stocks trading above their 200 period moving averages. As can be seen below, the U.S. equity market has not been this “oversold” since back in 2009. Chart courtesy of Barchart.

In my previous article posted back on August 18th, I discussed the likelihood for stocks to pullback and put in some form of a basing pattern. I wrote the following statement in that article:

“It is entirely plausible that Mr. Market thrusts lower from here to shake out longs. If that scenario plays out it could potentially carve out a double bottom or another basing pattern which would give active traders another entry point to get long.”

Since August 18th, we have seen the S&P 500 push lower and there is a double bottom on the daily chart which is capturing quite a bit of attention in the trading community. I would also draw your attention to the wedge pattern that is also present. A breakout higher or lower out of this wedge pattern will be the clue that will indicate Mr. Market’s short term price direction. I continue to believe we will see a breakout higher, but a retest of the lows is always a possibility. The daily chart of the S&P 500 Index is shown below:

In the short to intermediate term, I believe we will see higher prices and a test of the key S&P 1,220 area or possibly a re-test of the key S&P 1,250 price level which corresponds with the March 2011 pivot lows. Additional resistance would come in around the 1,260 – 1.270 area which marks the neckline of the recent head and shoulders pattern which triggered the selloff in the S&P 500. The daily chart of the SPX below illustrates the key resistance areas:

Gold Analysis

My most recent article argued that gold prices were going parabolic and that a pullback was likely. We have seen a major pullback in gold prices. Admittedly, I was about $200 an ounce early on my call, but members of my service were able to capitalize on an option trade that captured 32% based on maximum risk through the use of a double calendar spread. While my timing was not precise, the juiced volatility in the GLD options allowed me to roll contracts forward and make additional adjustments to produce a strong gain for the service.

Some traders argue that gold prices are going to rally back sharply in short order, which I find hard to believe. Instead, I am of the opinion that we could see additional downside in the weeks/months ahead in gold prices. There is an ominous pattern starting to form on the gold daily chart which if it is carved out and triggered, it could produce the next leg of this selloff. The daily chart of gold is shown below:

While it is far too early to determine if a head and shoulders pattern will be carved out or if lower prices take place, I am of the opinion that this selloff will offer an attractive entry point for longer term investors. At this point it is a bit too early to get involved, but if my analysis is accurate the next leg of the gold bull market will be potentially extreme.

While I believe stocks will rally in the short to intermediate term, I am of the opinion that we have officially entered the next phase of the bear market. The next wave lower in stocks is going to be just as severe as the likely rally in gold.

The reason I believe gold will rally is primarily due to future weakness in Europe. If European banks have a credit crisis, a sovereign nation unexpectedly defaults, Germany leaves the Eurozone, or a currency crisis transpires gold prices should soar while U.S. equity prices tank.

While it is far too early to make that determination, if the S&P 500 puts in a lower high on this next advance higher and consequently takes out the recent lows on a selloff, the bear will be in full swing and gold prices should take off. The chart below illustrates my expectations for the S&P 500 in the future:

The next few weeks are going to be very telling about the future in domestic markets. Is this just a correction that pushes stocks higher by the end of the year, or is this the beginning of something far worse?

For now I am going with the latter, but price action in coming weeks will offer clues about what lies ahead for U.S. equity markets. Right now this is nothing more than speculation, but the next few months should be very interesting. Risk remains exceedingly high.

Friday, August 26, 2011

The Risk-On Trades Are Back

The past month investors have been hit hard from the falling stock market. Those who owned gold and bonds have been rewarded. During times of economic fear which leads to selling of stock shares investors and traders find safety in gold and bonds. It was this surge of money coming out of stocks that propelled the price of gold and bonds sharply higher through-out this selloff.

On Sunday I warned subscribers that any day now gold should start to correct and there is potential for it to drop all the way back down to the $1640 – $1670 area depending how much of the recent buying volume was investment versus speculative money which will quickly sell out if prices began to fall.

Take a look at the intraday charts below to get a visual of how money is moving around the market and how economic fear plays a roll on investment decisions:

Seven Day 10 Minute Chart Pre-Market Selloff This Past July

Here you can see investors became fearful of the stock market/economic environment. Money started to get pulled out of the high risk (Risk On Trade) equities market and put to work in the Low risk (Risk Off Trade) to earn small but steady income and to help fight inflation (Gold & Bonds).

After this shift the stock market sold off very strong for a couple weeks before finding a bottom.

Three Day 10 Minute Chart Post-Market Selloff

If you compare these two charts you will notice they are both opposites to each other…

Meaning money is now getting pulled out of the risk off (gold & bonds) and put to work in the potentially high yielding stocks (risk on).This could be the start of a big upside move starting to unfold and I will be keeping my eye on some charts for possible entry points like SPY and TBT.

Trading Conclusion:

In short, the overall market seems to be entering another pivot point. It is likely that another big move is brewing… After this type of technical damage on the charts and heightened fear/emotions out there, it may cause prices to trade sideways in a large trading rage for a few weeks still so I’m not getting overly excited just yet.

Consider joining us at TheGoldAndOilGuy for ETF trade ideas on the SP500, Oil, Gold, and Silver with great accuracy.

Click here to check us out at the GoldandOilGuy

Click here to review more information, resources and forecasts on gold, silver, and copper.

Thursday, August 25, 2011

Debunking the Death Cross Chart Pattern

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One of the better-known technical indicators was triggered in July last year and you probably heard about it somewhere. When the 50-day simple moving average of the S&P 500 cash index crosses below the 200-day simple moving average of the same index, market pundits call this the Death Cross or Black Cross signal. Here’s what that looked like 13 months ago.

The most interesting thing about this signal was the amount of interest it generated last July: talking heads on TV, pundits throughout the media and every Tom, Dick or Jane who had a blog seemed to be blathering on about the Death Cross. To be fair, we had been in a two and a half month drop in index prices, and market sentiment was extremely negative. Aside from all of this, however, there was still an inordinately high level of interest in the Death Cross last year.

Did you know another Death Cross happened this past August 12th? Maybe not—there was much less fanfare about it this time. I still heard it bantered about in the technical analysis outlets, but the broader press barely mentioned it. Why?

The reason for the more subdued reception of Friday’s signal is simple: the Death Cross last year didn’t work. The implications of this drastically different reaction for all traders and investors are important, and today, we’ll focus on the psychology behind it.

The Last Event Bias

You have to forgive the pundits for all of the fanfare they gave the Death Cross in July 2010—they readily remembered the last time it triggered in December 2007. The Death Cross that preceded the market collapse of 2008 was excellent in its timing, and those who got into cash or shorted the market based on the signal were richly rewarded. Let’s look at how the 2008 Death Cross worked out.

In stark contrast, the Death Cross from July 2010 didn’t work at all. So on Friday if some technical analysis geek had told the newsroom producer that a Death Cross has just triggered, he or she probably would have said, “Show me the last one.” This chart is what they would have seen.

Looking for something newsworthy, the producer would have said instantly, “Didn’t work. Not interesting.”

Even though our rational thought process tells us to evaluate how something worked over many trials, traders often fall into this same powerful psychological trap: “It didn’t work last time.”

To understand why we fall into this trap, let’s review the peak-end rule popularized by Nobel laureate Daniel Kahneman. We talked about Kahneman’s work extensively in an article series after the Flash Crash in 2010, so I’ll just summarize here:

Kahneman and his colleagues found that people remember and quantify past experiences (whether pleasing or painful) based only on two points: the peak level and the last or end event.

This means that we base decisions on emotional recollections that are either the extreme or the most recent, not an average for all of them.

Kahneman makes it easier for us to understand that last July’s Death Cross had a lot of attention because the previous occurrence had been so massively successful. The psychological effect of the peak-end rule made people very curious as to what would happen, so it was big news.

The market went on to move more than 20% to the upside, however, after last July’s Death Cross. Since folks remember that the last one didn’t’ work, the recent bias caused few news outlets to run the Death Cross story this past Friday when it triggered.

Great Trading, D. R.

About the Author: A passion for the systematic approach to the markets and lifelong love of teaching and learning have propelled D.R. Barton, Jr. to the top of the investment and trading arena. He is a regularly featured guest on both Report on Business TV, and WTOP News Radio in Washington, D.C., and has been a guest on Bloomberg Radio. His articles have appeared on and Financial Advisor magazine. You may contact D.R. the International Institute of Trading Mastery.

Wednesday, August 24, 2011

Following The Money In Volatile Markets

Volatile Markets and Increasing Conflicts: Learn How to Expect What Takes Others by Surprise

Volatile markets seem to come out of the blue: Just like no one expected the last two weeks of sharp drops and jumps in the stock markets. Or the 400-plus point drop on August 18. In a similar vein, hardly anyone expected the debt-ceiling debate in the United States to become such a fiasco either.

Unless, that is, you know something about social mood: When social mood begins to turn negative, a divisive feeling grows among people toward their representatives in government.

As Steve Hochberg and Pete Kendall write in the August 2011 issue of The Elliott Wave Financial Forecast (emphasis added):

"The sudden emergence of a vigorous opposition to the latest debt ceiling boost is a consequence of the turning tide of social mood. As one article notes, 'George Bush raised the debt ceiling seven times and did it pretty much without a whimper.' In mid-July, by contrast, a Gallup poll found that 42% of Americans wanted their congressman to vote against raising the debt ceiling, while just 22% were in favor of the vote."

"The turning tide of social mood" means that as optimism turns to pessimism, stock markets reflect that mood in more bearish trends. And there are other telltale signs that people and their leaders are less willing to tolerate one another. For instance:

People begin to lose faith in their leaders: Notice President Obama's popularity numbers dropping.

They also lose faith in their economic leaders. For example, the Fed is less revered than it used to be, something that Bob Prechter has predicted in his Elliott Wave Theorist. Think of Texas Governor Rick Perry telling supporters that Fed Chairman Ben Bernanke's actions could be treasonous. You wouldn't hear those words if social mood was positive and the markets were bullish.

Governments become more restrictive. For example, they ban short selling, as they recently have in France, Belgium, Italy and Spain.

These words and deeds might seem out of sync with business as usual. But if you study how waves of social mood turn from positive to negative and back again, then current events that seem unexpected to others can seem right on target to you.

For more background, here's a description of what signs to look for that social mood is turning more negative and pessimistic. It's taken from Prechter's Perspective, a book that includes interviews Bob Prechter has done with financial writers over the years.

This alternating current of ebullience and conservatism goes back to the most basic Elliott wave idea: Bull markets give way to bear markets, and vice versa. What are the essential ways in which bear market moods differ from those of bull markets?

In bull markets, people focus on progress and production; in bear markets, they focus on limits and conservation.

OK, I can see that. What else?

Bull markets result in increased harmony in every aspect of society, including the moral, religious, racial, national, regional, social, financial, political and otherwise. Bear markets bring polarization. With that realization, you can predict increasing cooperation in all those areas in bull markets, and increasing conflict in bear markets.

It’s hard to imagine turning bearish when peace is breaking out all over or turning bullish on society in the depths of scary times.

A scary world is perfect for stocks and a perfect world is scary for stocks. When the world appears perfect, most investors have their money in the market, and there is little or no buying power left to fuel the uptrend and nowhere to go but down. When it appears scary, stocks are cheap and hold huge upside potential.

So people get it backwards.

Exactly, people consider these to be the events that shape their futures, but they only reflect the past trend of social mood.

What is it that people are unprepared for now?

The bear market will bring back nationalism, racial exclusion and perhaps even religious conflict. Thinking technically about events, that is, observing what they reveal about social psychology, prepares you for those changes, whereas trying to predict the future from the events themselves leads you to the opposite, and wrong, conclusion. It cannot be stressed enough, because life-or-death decisions can depend upon your assessment. Notice what marks the major bear market lows of just the last 200 years — the Revolutionary War, the Civil War and World War II. Those were buying opportunities.

Get Ahead of the Curve -- Be the One Who Expects the Unexpected to Happen at a 57% Discount

You can begin to see the future social, financial and economic trends with a subscription to EWI's Financial Forecast Service. It includes the Elliott Wave Financial Forecast, the Elliott Wave Theorist (new issue publishes on August 19), and the Short-Term Update. And you also get your own copy of Bob Prechter's Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression.

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Tuesday, August 23, 2011

Crowded Houses As The Downturn Returns

Raise your hand if you have an adult child living with you . . . or your elderly parents . . . or your grandchildren. How does it feel to be part of the new wave of extended families living in one home? With the current low interest rates, buy to let mortgages have become much more affordable now and the strong rental market has made this type of investment very attractive compared to more conventional types of investments.

The Washington Post on August 18 reports that the "recession pushed more people in the Washington area into living with relatives and friends, according to new census figures," leading to a 33% rise over the past 10 years in extended-family housing in the D.C. metro area.

Reasons abound for more crowded houses across the nation, including divorce, bankruptcy, illness and unemployment. The Washington Post article points out two other reasons: immigrants who live together in family groups and baby boomers who take care of their parents.

But Elliott Wave International sees an underlying reason that has more to do with the bear market environment. Practically everyone who has bought a home knows what a bear market in real estate looks like, particularly if their mortgage is underwater or the bank has foreclosed on their house. Robert Prechter describes the steps toward more crowded living situations in Conquer the Crash, Chapter 16, "Should You Invest in Real Estate?" which was originally published in 2002.

The worst thing about real estate is its lack of liquidity during a bear market. At least in the stock market, when your stock is down 60% and you realize you've made a horrendous mistake, you can call your broker and get out (unless you're a mutual fund, insurance company or other institution with millions of shares, in which case, you're stuck). With real estate, you can't pick up the phone and sell. You need to find a buyer for your house in order to sell it. In a depression, buyers just go away. Mom and Pop move in with the kids, or the kids move in with Mom and Pop. People start living in their offices or moving their offices into their living quarters. Businesses close down. In time, there is a massive glut of real estate.

We are now all living with this massive glut of real estate that Prechter describes, which keeps housing prices low. But now either no one wants to buy or they can't afford to buy.

Add to that the latest statistics on new home sales and a few other areas, such as consumer sentiment and auto sales, and you can see that the economic downturn has returned. Here's a chart with part of the commentary from the August 2011 issue of The Elliott Wave Financial Forecast:

It's the Stupid Economy

As stocks and commodities topped out in April and early May, The Elliott Wave Financial Forecast made the case for a coincident downturn in the economy:

Contraction dead ahead. It should last longer and dig deeper than the “Great Recession” of 2007-2009. -- May 2011, Elliott Wave Financial Forecast

At this point, “unexpectedly” steep declines are accumulating in one economic time series after another. Consider the four key measures shown on this chart.... As one stock index and asset class after another ended its respective bull market, these fundamental reflections of a reversal in social mood also tipped to the downside. Now, after a relatively weak rally from the late 2008/early 2009 lows, each measure is rolling over and beginning a renewed decline from much lower levels.

The bottom two lines on the chart show two more economic engines: sales of new homes and cars. Neither one managed to make a serious run for its former bull market highs. Both measures appear to have rolled over after weak countertrend bounces.

On top of the downtrodden real estate market, financial markets have recently turned volatile and bearish. To read the most trenchant information on how to prepare for this kind of environment, now would be a great time to order a copy of Prechter's Conquer the Crash. Better yet, you can get it free with a subscription to EWI's Financial Forecast Service -- which includes Bob Prechter's Elliott Wave Theorist. (The new, video Theorist has just been published -- Ed.)

Monday, August 22, 2011

The Stock Markets Free Fall Zone

No stock pick this week. I don't see any low-risk high-reward buys or sells this week. Instead I've got a timely article from Robert Prechter on the recent stock market sell-off that he saw coming long before it happened.

In the May 2008 issue of his monthly Elliott Wave Theorist, Robert Prechter showed this chart of the Dow Jones Industrials. As you can see, prices go back to the 1970s.

Please note that on the day this chart published (May 16), the Dow closed at 12,987 -- barely eight percent below the Dow's all-time high of the previous October.

Yet, as you can also clearly see, Prechter labeled the white space below the May 2008 price level as "Free Fall Territory."

At the time, no one else dared to publish such a bearish forecast. This was before the Lehman bankruptcy, the bailout binge, the home foreclosure crisis, and certainly before the worst of the stock market collapse.

In his June 2011 Theorist, Prechter published an update to the chart above, and here's the major difference: The updated chart "telescopes out" by one full degree of trend. Prices go back to the 1930s. The scale of the white space surrounding this chart's "free fall territory" label will show you what Prechter truly means.

His commentary in that issue also observed that

"the March-April [2011] rally was one of the most passionate bouts of stock buying I have ever witnessed."

Bob Prechter made this observation not in admiration, but as a warning.

In the past three weeks, the Dow Industrials have plummeted nearly 2,000 points. Most investors are confused and scared. How far down will the decline travel? Will it end tomorrow or go on for years?

The answers to these questions are crucial to your financial health. You can still get ahead of the trend, but only if you prepare now. Read EWI's long and near-term forecast. Get it in one comprehensive package -- and stay ahead of the crowd.

And -- get Bob Prechter's August Elliott Wave Theorist. It includes "many dozens" of charts. Bob will also record this Theorist as a rare "video issue" -- you'll be able to watch and listen as Prechter himself presents all the content.

Also -- as part of the same package, you get the August issue of our Elliott Wave Financial Forecast -- you'll see and read about the latest big picture in stocks, dollar, gold and more.


Click here to see what we see next for the markets now via this instant-access discount subscription offer.

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Friday, August 19, 2011

Stock Market Crash Cashflow Profits

Many experts believe the global economy is in SERIOUS trouble.

The question is: Should that change the way you trade, or not?

Chuck Hughes has a great take on it:

“I suspect that they’re right, but, as a trader, I don’t need to know if they’re right,” he says. “Why? Because I don’t rely upon economic analysis to make my trades!”

He became a seven-time international trading champion by remaining agnostic on a host of issues: Whether the market is going to go up or down. Whether gold is overpriced or underpriced. Whether the dollar is in trouble or is going to recover.

This allows Chuck to ignore 99% of what is being written about the markets by analysts and so-called experts. Instead, he focuses on the ONLY thing that matters, and what matters is…

CASH FLOW – where the money is going!

Click here to see his latest trading video on how to follow the money.

In this new video, Chuck shows you how he uses the same little-understood but publicly accessible DAILY CASH FLOW SIGNAL to collect $5,776,807.63 in actual cash income over the past three years, alone. It’s also how …

He generated $1,023,174 in actual profits in just 26 days of trading.

His advisory service recommendations produced “only” $402,563 in trading profits in 2008 when the stock market crashed… and $1,244,575.20 during the 2000-2002 “tech wreck,” when the S&P 500 plummeted from 1500 to 800.

He started out with just a $4,600 trading account, and within his first two years of trading, made over $460,000.

If you think there’s a secret twist to his trading strategy, you’re right.

Click here to get Chuck’s $5 million secret trading strategy.

Again, there is NOTHING hypothetical about any of this.

In the video and downloads, Chuck shows you his actual brokerage statements… tax returns… order confirmations… fills… the whole shebang.

He even has audited profit results showing he won SEVEN international trading championships – the most recent in 2009, with a documented, one-year return of 122%. Two years earlier, he won with a one-year gain of 225%!

Once again, you won’t believe your eyes when you check out his newest video.

One more cool thing: In this video, Chuck reveals option trading strategies he uses in his advisory service that generated $111,380.50 in profits in January 2011… $13,220.30 in February… $22,841.40 in March… $26,104.20 in April… $8,451.96 in May and $31,521.20 in June.

Click here to check it out now.

Thursday, August 18, 2011

Hyped Out Fake Trading Results

You and I both know there are a lot of FAKES in the trading biz, especially online. Bernie Madoff is the largest fake investing trading results of all time with multi-billions dollars of fake trading results.

I, for one, am sick and tired of hypothetical, pie-in-the-sky trading results for systems and strategies that do nothing but lose you money in the real world.

Fortunately, some things CAN’T be faked.

For instance, in 2009, Chuck Hughes won the most prestigious trading championship in the world with a one-year gain of 122%. In 2007, he won it with an annual gain of 227%. In fact, he’s won the same competition SEVEN times, more than anyone
else in the world.

From 2007 to 2010, during the worst economy since the Great Depression, he collected $5,776,807.63 in cash income, just from selling option premium.

How does he do it? Incredibly enough, he relies upon a super-accurate but little-used trading signal that lets him instantly gauge if the market is most likely poised to skyrocket… or plummet to record-breaking lows.

Click here to review how he does it.

By the way, this is NOT a sales video. You couldn’t buy anything on this page even if you wanted to. Even if you’re sick to death of watching videos, you should check this one out.

In times like these, you simply have to know how to trade volatile markets. This video reveals how Chuck does everything. It’s a practical trading demonstration.

Plus, Chuck lets you see copies of his brokerage account statements and tax returns so you can see how his strategy has performed in real-money trading.

Just TWO of his trading accounts have generated $528,499.68 in actual profits so far in 2011, which averages out to $88,083.28 per month in profits.

Check it out. Click here to discover Chuck’s simple cash flow indicator and strategy.

Good day, good trading and investing.

Wednesday, August 17, 2011

Profiting From the Worst Economy In 80 Years

If the recent huge stock sell-off and 500-point swings in the Dow have you scared or chomping at the bit, there is something you have to see ASAP.

It’s a trading system that hasn’t had a losing year in the last 12 years of live trading.

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Tuesday, August 16, 2011

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Monday, August 15, 2011

What to Buy or Sell This Week?

I don’t have a stock pick this week because I simply don’t see any low-risk high-reward buy-long or sell-short trade setups this week. Short term if the volatility stays high, there’s should be some profitable day trades I imagine. I’m in the bear market camp now for awhile after this technical damaging huge sell-off. It’s not a recession thing. It’s a everyone was one the long side of the stock trade thing, and now I think it will be moving the short side for awhile again in USA and Europe stocks. In summary, I would be looking for a rebound to enter new short positions. Asia on the other hand, I would be looking for buy long opportunities especially in dividend paying China and Hong Kong stocks.

DJIA SP500 Nasdaq Resistance Support Levels

Dow Jones Industrials

Resistance 11692.03 to 12314.91

Support 10122.65 to 10036.39 and 8742.57 to 8656.31


Resistance 1195.97 to 1252.73

Support 1085.36 to 1077.03

Support 946.39 to 938.05


Resistance 2534.94 to 2660.70

Support 2153.64 to 2129.81

Support 1780.38 to 1756.55

Any Growth to Be Had Anywhere Around the Globe?

The economic data reports last week where discouraging to say the least, as it was the wildest week in the stock market roller coaster ups and downs of all-time. The crisis continued last week in Europe also with the France GDP, and Eurozone industrial production reports coming in negative and raising the potential of a downgrade of Frances AAA credit rating, and slower growth in the Eurozone. In the USA last week the bad news was the August consumer sentiment economic report coming in at 54.9 which is the lowest since 1980. If the consumer sentiment keeps heading south, this doesn’t look good for USA GDP growth. Bernanke came out last week showing his entire hand saying that he would keep interest rates low until 2013. Either he is lying and he changes his mind later on, or Quantitative Easing III is here no matter what you call it. With all this, the huge sell-off the last two weeks, do you see positive growth to buy long on stocks, or is a double dip recession confirmed? Any which way you slice it, it looks like lower stock prices regardless of what kind of economic data reports or even positive fundamental data there may be in the short term. If there’s any growth to be had anywhere around the world, Asia looks best with dividend paying China and Hong Kong stocks the best bet in my opinion.

This Week’s Important USA Economic Data Reports

Monday: August Empire State Index, August Home Builders

Tuesday: July Single Family Building Permits, July Housing Starts, July Industrial Production

Wednesday: July Producer Price Index, July Consumer Price Index

Thursday: Initial Unemployment Claims, Continuing Claims

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Friday, August 12, 2011

Gold's Bull Run Is About To End

Gold hit $1805 tonight in trading, a Fibonacci Fractal figure I gave out a few weeks ago as a possible top. We are close to a near term high in Gold and Investors should be trimming back positions on this run. Back as recently as $1600 an ounce I forecasted a run to $1805 for Gold using fractal and wave analysis and behavioral patterns, now that we hit that figure it’s time to update the cycle and where we are.

Here is the Chart I did at 1599 gold on July 22nd:

I have been a Gold Bull since November 2001, having conducted seminars for public employees on investing back then and advising gold mutual funds and gold stocks very early. I have talked in the past about a 13 fibonacci year Gold Bull cycle that will end around 2014, so there are still three years left in my opinion. However, gold does have peaks and valleys and has moved in very clear Wave and Fibonacci fractal patterns for years.

Given the history of how I have forecasted Gold, I am going to share my short term and moderately long term views on where we are in the up cycle which I expect to last 13 fibonacci years to 2014. Right now it is my opinion that we are completing a MAJOR WAVE 3 up in Gold from the 2001 lows from $300 an ounce. We have had a 34 fibonacci month rally since the October 2008 lows of $681 per ounce. Every Taxi driver, CNBC guest or analyst, and 200 Radio and TV commercials a day are blaring to buy Gold. This is how intermediate tops form.

The rough wave count is below:

Wave 1 - 300 to 1030

Wave 2 - 1030 to 681 (October 2008 lows)

Wave 3 - 618- 1805 currently, 34 Fibonacci month cycle. *Likely high is 1862-1900*

Wave 4 - Due up next… a multi month consolidation

It is my opinion that at the top of a Major wave 3 in Gold, that everyone should be univerally bullish, that gold radio and TV commercials would be all over the place, and that everyone on CNBC would be talking about and recommending Gold.

Sound familiar?

So the likely conclusion to this massive parabolic blow off top of Wave 3 is nigh. Most recently I upped my estimates to as high as $1900 per ounce with $1805 already here as of tonight, which was one of my figures by the way many weeks ago. Gold should under normal circumstances top between 1862 and 1900 per ounce fairly soon should the 1805 level not hold as a high. At that level we will be dramatically overbought. We are already running 15.7% above the 20 week moving average line which historically is about as high as Gold will get before correcting hard and consolidating. A final lift to the 1862-1900 ranges should lead to a fairly good sized correction to the downside designed to kick all the late comer Taxi Cab driving buyers off the bull’s back. With that said, at $1805 I would be trimming my position and or hedging my long positions aggressively.

Watch for a Maximum Gold top at 1862 -1900 per ounce and keep in mind 1805 is being hit tonight and that is a qualifying fibonacci fractal top as well. Investors should be trimming back positions and looking to re-deploy back into Gold at better prices. We could get a huge blow off top over 1900, but it would be very very rare if it happens.

If you’d like to stay ahead of the peaks and valleys in Gold, Silver, and the SP 500 which recently called a tradable bottom at 1101, click here to review the Market Trend Forecast.

Click here to review more Gold Silver Copper information, resources, and forecasts.

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Thursday, August 11, 2011

Stock Market Critical Juncture Reality Check

If the extreme market volatility has you confused and scared, studying history can help you put today's market in perspective.

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Wednesday, August 10, 2011

Updated Market Condition: Strong Bear Volatile

I usually run my Market SQN® Report at the end of the month, but I wanted to show you how how August 4th affected the market type. The drop was enough to produce a major change and move the Market SQN score into Strong Bear Volatile.

In only one day, the market moved from bear to strong bear and from normal to volatile. That’s both dramatic and ominous for anyone who is still holding long positions. Tighten your stops and get ready for more bear activity and more volatility.

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. You can learn more about Van Tharp at International Institute of Trading Mastery.

Tuesday, August 09, 2011

Dr. Bernanke Must Have A Migraine

Yesterday's stock market action returned the S&P 500 to 1119 which is where it was on September 14, 2010, roughly two weeks after Dr. Bernanke's Jackson Hole speech on August 27, 2010, in which he hinted at the launch of "QE2," the Fed's $600 Billion bond buying program.

So, nearly a year and $600 Billion later, it appears, sadly, that precious little of the "wealth effect" generated by QE2 now remains.

Wall Street Sector Selector remains defensively positioned with put options, inverse ETFs and cash and we continue to expect lower prices ahead.

We had a great day with our defensive positions rising sharply.

ETF Master positions were up +4 to 6% for the day, 2X were up double digits, and the Option Master positions gained between 20 and50% on the day due to the spiking volatility.

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Yesterday was quite a day by any standard, as the Dow lost 635 points, its sixth worst drop in history, and nearly equal to the 698 it lost over the course of last week.

Clearly, the downgrade of the U.S. credit rating didn't go down well as investors around the world had their first chance to respond with heavy selling in every region and index.

Bank of America appears on the way to being "not to big to fail," as it dropped some 20% to lead the financials way lower and now trades at microcap levels of $6 and change.

President Obama made a weak attempt to quell the panic and fear with an appearance that did little to quell either as he said, "No matter what some agency may say, we've always been and always will be a Triple-A country."

Yesterday saw the highest volume since the "Flash Crash" of last May and set a new one day trading record for options volume.

VIX, the "fear indicator," spiked to 48, a level last seen in March, 2009, and oil dropped approximately 6% while gold climbed 3%.

Meanwhile, in Europe the European Central Bank intervened in the Italian and Spanish bond markets to prop them up and stop contagion in Europe and S&P continued on its rampage by downgrading Fannie Mae and Freddie Mac and other government bodies tied to the downgraded federal debt.

So all in all it was an exciting day.

Global Market Summary:

Dow Jones Industrials (DIA): -634; -5.6%

S&P 500 (SPY): -80; -6.7%

NASDAQ (QQQ) -174; -6.9%

Russell 2000 (IWM): -64; -8.9%

Today's Action:

Today brings the July NIFB Small Business Index, Second Quarter Productivity and Labor Costs, but, most importantly, at 2:15 p.m. Eastern time, the Federal Reserve Open Market Committee Statement after their August meeting.

World markets are hoping desperately that Dr. Bernanke and his colleagues can pull yet another rabbit out of their collective hat. However, I think their rabbit supply is limited and the first bunny of any significance won't be seen until their September meeting because Dr. Bernanke has a history of very carefully telegraphing future Fed moves. Of course, he could always shock us, as market action has shocked many investors over the last few weeks, and so we'll just have to wait and see.

Recent stock market action has undone much of Dr. Bernanke's work over the last year or so and it's looking more and more like the notion of a "soft patch" in the economy is becoming a major migraine for him and the global economy.

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Monday, August 08, 2011

US Credit Downgrade New Profit Opportunities

I don't have a buy or sell stock pick this week after the last two weeks price action and now that the USA has lost its AAA credit rating. I suggest continued caution to the long side on all global stocks. With the extreme sell-off in the last two weeks, I would be looking for an upside rebound short squeeze short-term then looking again to sell-short after that. The market has been ripe for a sell-off for quite some time. Last week it supposedly found a trigger to sell-off big. Who knows and who cares. What matters is how to make money out of it all is the bottom line now and going forward with all the new portfolio rebalancing going on.

With what has happened in the markets in the last two weeks, I would be looking for a possible US dollar rebound, and a continued stock and commodity sell-off. The real reality for the world is for slower growth, and deflation which would suggest lower earnings and lower stock prices. For buying long on stocks, I would be putting it in China and Hong Kong dividend and growth stocks, along with parking it in Chinese Yuan.

According to Steve Reitmeister Executive VP of Zacks Investment Research, a basically breakeven finish for stocks on Friday was a fitting end to the week. With the market down about 12% from its peak, the valuations are very tempting to some. But others are looking at the same set of information and cannot sell stocks fast enough. Here are a couple great examples of this bi-polar scenario from Friday.

Government Employment Situation shows 117,000 jobs added versus expectations of 75,000. The glass is half full view believes that beating estimates is a reason for stocks to rise. And they did for a while. The glass is half empty view notes that you need 150,000+ jobs added each month to just keep up with population growth. So we are only slipping further behind and a reason to sell stocks.

Or how about the "new and improved" solutions in Europe. Those seeing the half full glass pushed the market higher on the news. Those with a more pessimistic slant believe that Europe's problems are too large to be solved and this new plan does not stop the economic damage to come. Their trades brought the market back to breakeven by the finish.

Now throw in the S&P downgrade of US Government debt and clearly the glass is half empty crowd will have the upper hand in the near term. And that is why the risk remains to the downside. But that is the playbook for active traders. More patient, long term, investors may be able to snap up incredible values now and hold out for profits further down the road. Which strategy is right for you depends on your internal make up.

The only strategy I abhor right now is sitting in all cash. That is for cowards and I am glad that some banks are starting to charge fees to customers for their cash holdings (an emerging trend to keep your eye on). The market allows us to make a profit whether it goes up, down or sideways…but that is only if you get off the sidelines and get in the game. So pick a strategy and get going!

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Friday, August 05, 2011

Stocks Plummet What's Next?

This brief message is all about you. To start with, however, I have to say something "about me." I've been with Elliott Wave International since 1992: That's a good long time, long enough to have seen lots of days when our staff did all it could to deliver forecasts that prepared subscribers for what's next.

Yet today stands above virtually all those others. I can scarcely recall a day when we've been able to offer 1) So much, 2) So immediately, that is 3) So urgent.

Here is where it's all about you. Earlier this year, The Elliott Wave Financial Forecast (EWFF) specifically forecast the juncture we've arrived at now -- it said most people believe the markets and economy are recovered and growing. But there were TWO parts to that forecast; the time has come for the second part to unfold. You're a few keystrokes away from what EWFF is saying now for free (new issue posts tomorrow, Aug. 5).

What's more, you're a few keystrokes from reading Robert Prechter's current commentary in The Elliott Wave Theorist, again, for free. He provides you with a context to understand the events of the past week and month, which you simply cannot find elsewhere (you won't need to wonder why the blue chips are now down on the year for 2011 -- you'll know why).

Finally there's the forecast in The Short Term Update: Earlier this week we alerted subscribers to action in the S&P 500 and Dow Industrials which broke below critical price levels. Perhaps you've heard some of the chatter on news and financial websites in the past 48 hours about a "head and shoulders" pattern. Yet Short Term Update subscribers got THAT news two weeks ago, back on July 20 -- along with a specific price level that would confirm the forecast.

This is a wealth of forecasting; you can have it immediately; and the moment is indeed urgent. I've never seen a day quite like it.

My colleagues here at EWI have put together a two-week free trial to all three of the services I mention above. Together, they we call them the Financial Forecast Service and they deliver the most comprehensive coverage of the US markets available anywhere. Now, if you are already familiar with EWI, you know that we NEVER offer free trials to these services. But you must act now as this offer ends Wednesday, August 10.

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Thanks for reading,

Robert Folsom, Elliott Wave International

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Thursday, August 04, 2011

S&P500 & Precious Metals Technical Forecast Outlook

The following article is an update on the current technical position of the marketplace as I see it. Obviously the price action this week has been ugly as the situation in Europe has become front and center in the minds of traders and market prognosticators. The information below is an adaptation of what members of my service at received earlier today.

The S&P 500 sold off sharply earlier this morning and has since bounced higher. Price is drifting lower as I write this but on the shorter term time frame we may see a short / intermediate term bottom traced out during intraday trade today. It would make sense that prices would rebound after being so extremely oversold.

The 10 minute chart of the S&P 500 E-Mini futures chart below illustrates the intraday price action:

If the S&P 500 does carve out an intraday bottom, the daily chart of the S&P 500 below illustrates the key price levels that will come into play on a potential reflex rally:

The VIX is trading lower after popping higher this morning. The data coming out tomorrow and Friday may give traders an opportunity to get involved with a short side try on the VIX. However, I am going to wait patiently for the setup to present itself. Clearly any trade would be a shorter term type of trade as the VIX can behave wildly.

The usual suspects (IYT, XLF, EEM, IWM) are all trading to the downside again today. The financials (XLF) are showing relative weakness at this point in time. The rest of the usual suspects are all rolling over quite similarly to the S&P 500.

The daily chart of the XLF is shown below:

The U.S. Dollar Index futures are trading lower today and continue to base right at a key support level. If price breaks down we could see risk assets like the S&P 500 and oil push higher. For right now, the Dollar is trading well above key support.

Gold futures sold off sharply this morning but have since regained most of the intraday losses and are trading strongly to the upside from Tuesday’s close. Gold is starting to get a bit stretched to the upside and I am stalking a potential short trade on gold for the service. It would only be a short term trade, but I think a pullback is likely.

Silver futures have broken out and intraday price action has pushed silver above recent resistance levels. I’m not going to chase silver here as it could be the beginning of a failed breakout. However, if prices continue higher in coming days or price consolidates at this breakout level I will become interested in taking silver long.

For now, the precious metals are intriguing, but I like the price action in silver better than gold as we have more crisply defined risk levels as gold has runaway to all time highs.

The silver futures daily chart illustrates the key levels in silver:

Oil futures are trading sharply lower today and are coming into a key support level going back to late June. If those prices do not hold up, we could see oil trade down below the key $90/barrel price level. At this point in time, I am not interested in trading oil, but if price works down into the $85/barrel price level I will be interested in oil as a longer term trade for the service.

Lastly, Treasuries are really pushing higher recently. I am patiently stalking a long term entry on TBT for the service similar to the oil trade discussed above. For right now, I’m going to remain in cash and see how price action plays out. Members of my service have been sitting in cash for the past few weeks and we have sidestepped this entire selloff. While I’m sitting in cash for now, I have a growing list of names I am stalking for trades in the future.

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