Tuesday, February 28, 2012

Short-Selling Penny Stocks for Maximum Profits


If you like the idea of trading stock promotions (those marketing campaigns that Tim Sykes showed recently that drove stocks up 280% gain in 14 days… 642% in 42 days…and even 1,540% in 21-days in 2011) . . . then Tim’s new video is going to rock your world, because he says another trade is lining up.

The Best Part: Tim—who spent 3 years as a #1 rated hedge fund trader—is going to take you step-by-step through trading one of these promotions LIVE and with REAL MONEY, so you know exactly how to play these promotions.

Click the link above to review Tim’s latest video.

Just the other week, one of Tim’s students, a college kid, used one of Tim’s alerts on a stock promotion to make 108% in 1 day, without leverage, from his smartphone while waiting in line at the Department of Motor Vehicles.

Remember, Tim has a long history of major successes as a trader, including:
In 2007, he was named one of Trader Monthly’s top 30 traders under 30.

He turned $12,415 of Bar Mitzvah money into $1.65 million in four years before he graduated from college, and then grew it into $2,730,000# Yes, you read that right, he published his broker statements online to prove it.

Barclay Rankings, the hedge fund ranking company, rated Tim the #1 short-bias hedge fund for three years running, 2003-2006, while he still ran his hedge fund.

Plus

Tim’s been ranked the #1 trader out of 60,000 traders on Covestor — a website that verifies trades and performance—over the last four years.

When the market crashed in 2008, he still ended his year with a 197% GAIN.

Since 2008, he has helped members in one of his trading services generate a verified $1.7 MILLION in profits. In a second service, he has helped regular investors generate $1.5 MILLION in profits.

So Tim’s not only a great trader, he’s a great trading teacher as well.

If anyone can help you take your trading to the next level, Tim can.

Now he’s offering to take you, step-by-step, through trading a real, live, stock promotion as it unfolds. Just click here to get all the details.

I wouldn’t put this off because you don’t want to miss out on the trades when they come through.

Click the link above to check out the video now.

Monday, February 27, 2012

Investing in Innovative Human Therapeutics Called Biotech


I’ve got a low-risk high-reward buy long stock pick this week on biotech giant Amgen. I’m still thinking the market needs a much needed correction but it seems is not full-on short sell time just yet. Then again, maybe it happens this week. In any event there’s always some quality stocks with potential upside appreciation to trade and or invest in any market. Lets hope Amgen is one of those this week going forward. As a possible consolation, billionaire hedge fund manager George Soros bought into AMGN during the last quarter. In case Amgen or the market does reverse significantly, use the best risk tool available to you called stop-loss. You can always buy it back at lower prices if it does head lower.

Zacks Investment Research reports that Amgen is a step closer to acquiring Micromet, Inc. with the companies announcing the early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act of 1976. Amgen and Micromet said that the waiting period was terminated on February 14, a few days before the scheduled date of Feb 17.

Amgen had announced its intention to acquire biotech company, Micromet, at the time of releasing its fourth quarter results in January 2012. The companies signed a definitive merger agreement under which Amgen will acquire Micromet for $11 per share in cash or approximately $1.16 billion. The deal has been approved by the Boards of both companies and is scheduled to close later this quarter. The tender offer will remain open until midnight at the end of March 1, 2012, unless the offer is extended.

With this acquisition, Amgen is looking to expand its oncology portfolio. The company will not only gain access to Micromet’s pipeline, it will also acquire Micromet’s proprietary BiTE (Bispecific T cell Engager) antibody technology. The lead candidate at Micromet is blinatumomab, a BiTE antibody, currently in phase II development for acute lymphoblastic leukemia. The candidate is also being developed for the treatment of non-Hodgkin's lymphoma and has the potential to be developed for other hematologic malignancies. Solitomab, another candidate in Micromet’s pipeline, is in phase I studies for patients with advanced solid tumors.

Zacks Investment Research Has an Outperform on Amgen

Zacks currently has an Outperform recommendation on Amgen, which carries a Zacks #2 Rank (short-term “Buy” rating). The company’s guidance for 2012 was better-than-expected. Amgen is guiding towards earnings in the range of $5.90 - $6.15 per share on revenues of $16.1 - $16.5 billion. We are bullish on Prolia/Xgeva and we expect the company to utilize its cash towards share buybacks and acquisitions/deals that will help boost its pipeline and drive long-term growth.

Invest2Success Has a Buy Long Recommendation on Amgen

Buy Long Amgen – Ticker AMGN

Buy Entry: 65.78 to 68.12

Stop-Loss: 60.51

Take Profit Areas: 74.49 to 76.18, 78.89 to 80.69, 82.90 to 85.01
Or Hold Long-Term - 2.10% Dividend Yield

Company Profile

Amgen Inc., a biotechnology medicines company, discovers, develops, manufactures, and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses primarily in the United States, Europe, and Canada. The company markets recombinant protein therapeutics in supportive cancer care, nephrology, and inflammation. Its principal products include Aranesp and EPOGEN erythropoietic-stimulating agents that stimulate the production of red blood cells; Neulasta and NEUPOGEN to stimulate the production of neutrophils, which is a type of white blood cell that helps the body to fight infections; and Enbrel, an inhibitor of tumor necrosis factor that plays a role in the body’s response to inflammatory diseases. The company also markets other products comprising Sensipar/Mimpara, a small molecule calcimimetic that lowers serum calcium levels; Vectibix, a monoclonal antibody that binds specifically to the epidermal growth factor receptor; and Nplate, a thrombopoietin (TPO) receptor agonist that mimics endogenous TPO, the primary driver of platelet production. In addition, it provides Denosumab, a human monoclonal antibody that targets RANKL, an essential regulator of osteoclasts. Further, the company offers product candidates in mid-to-late stage development in a variety of therapeutic areas, including oncology, hematology, inflammation, bone, nephrology, cardiovascular, and general medicine consisting of neurology. It markets its products to healthcare providers, including physicians or their clinics, dialysis centers, hospitals, and pharmacies; consumers; and wholesale distributors of pharmaceutical products. The company has various collaborative arrangements with Pfizer Inc.; GlaxoSmithKline plc; Takeda Pharmaceutical Company Limited; Daiichi Sankyo Company, Limited; Array BioPharma Inc.; Kyowa Hakko Kirin Co. Ltd.; and Cytokinetics, Inc. Amgen Inc. was founded in 1980 and is headquartered in Thousand Oaks, California.

Click the Amgen stock chart below for a larger view.

Thursday, February 23, 2012

Free Elliott Wave Forex Forecasts for 1 Week


Our friends at Elliott Wave International have just announced the beginning of their popular FreeWeek event, where they throw open the doors for you to test-drive some of their most popular premium services -- at ZERO cost to you.

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It's an exciting time in the Forex world. Since the mid-January low, the euro has rallied strongly against the U.S. dollar. Is this just a temporary setback in the EURUSD decline that began in May 2011, or is there more to this euro rally? Find out during EWI's Forex FreeWeek -- on right now!

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Wednesday, February 22, 2012

The Most Oddest Missed Trading Opportunity


Do you know what the #1 most-missed trading opportunity is today?

If you don’t, then you’re missing out on some of the most exciting returns available to individual traders today.

What is it? I’ll give you three hints:

Hint #1: It’s delivering some of the biggest, fastest gains anywhere. I’m talking about 280% in 14 days . . . 642% in 42 days . . . 828% in 22 days and more.

Those are real gains from last year.

Hint #2: It is NOT options, or futures, currencies or anything like that. In fact, these gains are produced by regular stocks using NO LEVERAGE whatsoever.

Hint #3: Multi-billion dollar hedge funds can’t take advantage of it because they need to trade too much money... but if you’re putting anywhere between $200 to $100K into a single trade, then you’re perfectly situated to play this.

Can you guess what it is? Click the link above to review it.

This trading presentation is by Tim Sykes, who, when he ran his hedge fund, was rated #1 in his specialty out of ALL hedge funds by Barclays Ratings.

I can almost guarantee you won’t be able to guess what this trading opportunity is. This presentation is an eye-opener . . .click the link above to watch it now.

Take a few minutes to watch it. I think you’ll love what Tim shares.

Monday, February 20, 2012

The Trend Is Your Friend Stock Pick


This week I’ve got a low-risk high-reward short-sell on a small cap stock that’s in the USA retail apparel business call Citi Trends that’s been in an overall downtrend for some time now. I was looking for a SP500 stock pick but I didn’t find any that were low-risk high-reward either short or long at this time.

With global markets hitting over-bought major resistance points now, I suggest extreme caution on chasing prices on the buy long side, even if the market moves a little bit higher this week. If you want to trade, I suggest looking for short-sell candidates, or the forex, gold and oil markets always have plenty of liquidity and market moving events to profit from. I would be very aware of possible minor to major reversals in all markets at this point.

Zacks Investment Research reports that Citi Trends Inc. retailer of fashion apparel and accessories in U.S., continued its sluggish performance as it recently posted weak fourth-quarter comparable store sales.

Citi Trends witnessed a decrease of 6.2% in comparable store sales in the fourth quarter of 2011. Month wise, comparable store sales decreased 10.7% in November, 2.3% in December and 11.2% in January.

However, amid this gloom, total sales increased 3.7% year over year to $178.4 million during the reported period compared with $172 million in the prior-year period. The analysts’ considered by Zacks expected the company to report total sales of $181 million in fourth-quarter 2011.

For the fiscal, total sales marked an increase of 2.9% to $640.8 million compared with $622.5 million in last fiscal. Moreover, comparable store sales also decreased 8.3% for fiscal 2011.

Battered by the sluggish fourth-quarter sales results, the company now expects to report adjusted net loss of approximately 20 cents per share in the fourth quarter, in line with the current Zacks Consensus Estimate.

However, on a reported basis, including one time items, the company expects to report a loss of 40 cents per share.

Moreover, the company expects gross margins to be significantly down compared with the last year quarter, reflecting higher markdowns to reduce excess quantities of branded merchandise and competitive pressures.

The company operates in a highly fragmented specialty retail sector and faces intense competition from larger off-price rivals, such as The TJX Companies Inc. and Ross Stores Inc., mass merchants including Wal-Mart Stores Inc. as well as smaller specialty retailers, such as Rainbow and Dots.

Moreover, Citi Trends' business is seasonal in nature, characterized by the spring and holiday seasons. Therefore, the company is exposed to significant risks if the seasons fail to deliver expected operating performance.

Consequently, Citi Trends currently has a Zacks #5 Rank, implying a short-term Strong Sell rating on the stock.

Sell-Short Citi Trends – Ticker CTRN

Sell Entry: 11.36 to 10.34

Stop-Loss: 12.26

Take Profit Areas: 7.56 to 7.05, 5.93 to 5.56

Company Profile

Citi Trends, Inc. operates as a retailer of urban fashion apparel and accessories in the United States. Its merchandise includes sportswear, dresses, outerwear, footwear, and intimate apparel and accessories, as well as an assortment of home decor items. The company provides fashion sportswear for men, women, and children comprising various offerings for newborns, infants, toddlers, boys, and girls; and accessories, such as handbags, jewelry, belts, and sleepwear. Citi Trends offers its products primarily to African-Americans in the United States. As of July 20, 2011, it operated 481 stores located in 27 states. The company was founded in 1946 and is headquartered in Savannah, Georgia.

Click here to review different investing trading software that scans analyzes stocks for different technical fundamental criteria, and low-risk high-reward trade pattern setups.

Click the Citi Trends stock chart below for a larger view.

Wednesday, February 15, 2012

Your IRA Retirement Account and Taxes


Individual Retirement Accounts (IRAs) function as personal, tax-qualified retirement savings plans. The earnings on these investments grow, tax-deferred, until the eventual date of distribution. Moreover, certain individuals are permitted to deduct all or part of their contributions to the IRA.

IRAs are set up as trusts or custodial accounts for the exclusive benefit of an individual and his or her beneficiaries. You can set up an IRA simply by choosing a bank, mutual fund company, brokerage house or other financial institution to act as trustee or custodian. The institution will give you the necessary forms to complete. A lesser-known alternative is to purchase an individual retirement annuity contract from a life insurance company. An individual cannot be his own trustee.

As an alternative option, you may be able to set up a "Roth IRA," contributions to which are not deductible, but from which withdrawals at retirement won't be taxed.

Contributing to Your IRA

The most that you can contribute to your retirement IRA in 2011 is the smaller of $5,000 or an amount equal to your compensation includible in income for the year. Also, if you are at least age 50 during the year you can make an additional $1,000 "catch-up" contribution, increasing your allowable contribution limits to $6,000 in 2011.

The same general contribution limits apply if you have more than one IRA, or more than one type of IRA. The contribution must be from "compensation," which means wages, salaries, commissions, net self-employment income, and other sources of earned income. It does not include deferred compensation, retirement payments, or portfolio income such as interest or dividends. When both a husband and wife have compensation, the limit applies separately to each, so that in 2011 as much as $10,000 can be contributed ($12,000 if they are both at least 50 years of age).

If one spouse does not work or has very little income, a married couple filing jointly may still contribute up to $5,000 for each spouse's account (or $6,000 if at least age 50), as long as the couple's joint earned income exceeds their joint IRA contributions. Separate accounts must be used for each spouse.

Work Smart

An IRA can be established, and/or a contribution made, after year-end. It must be made no later than the due date for filing the income tax return for that year, not including extensions. This generally means that you have until April 15th of the following year to make the contribution, and to deduct it on your tax return if you qualify for the deduction.

You don't have to contribute the full amount every year. You may skip a year or even several years. You may resume making contributions in a later year, but you cannot "catch up" for years no contribution was made.

If you contribute more than the allowable amount, a 6 percent excise tax penalty will be assessed. This penalty is due for the year of the excess contribution and for each year thereafter until corrected. However, you can generally avoid this tax by removing any excess contributions by the due date of the return for the tax year for which they were made.

No contributions may be made to: (1) an inherited IRA, (2) in a form other than cash, or (3) during or after the year in which the individual reaches age 70-1/2.

IRA Transfers and Rollovers

The shifting of funds from one IRA trustee/custodian directly to another trustee/custodian is called a transfer. It is not considered a rollover because nothing was paid over to you. You can have as many transfers as you like each year; transfers are tax-free, and there are no waiting periods between transfers. They don't have to be reported on your tax return.

A rollover, in contrast, is a tax-free distribution to you of assets from one IRA or retirement plan that you then contribute to a different IRA or retirement plan. Under certain circumstances, you may either roll over assets withdrawn from one IRA into another, or roll over a distribution from a qualified retirement plan into an IRA. Distributions of pre-tax assets from certain qualified plans that were rolled into an IRA can generally be rolled backed to that qualified plan.

Work Smart

If the distribution from a qualified plan is made directly to you, the payer must withhold 20 percent of it for taxes. You can avoid the withholding by having the payer transfer the funds directly to the trustee/custodian of your IRA, or having the check made out to the trustee/custodian of your IRA or other qualified plan.

To avoid tax, a distribution paid to you (including the 20% withheld) must be rolled over within 60 days of receipt of the distribution. Any portion not timely rolled over, including the 20% withheld will be subject to income taxes. Rollovers, whether taxable or not, must be reported on your tax return, as follows: Enter the total amount of the distribution on Line 15a of Form 1040 or Line 11a of Form 1040A; then enter the taxable amount, if any (for example, any amount that was not rolled over) on Line 15b or Line 11b. If you are rolling over a distribution from an employer's plan to an IRA, the distribution and the taxable portion (if any) are reported on Lines 16a and 16b of Form 1040, or Line 12a and 12b of Form 1040A.

Warning

Rollovers not completed within 60 days can have horrible tax consequences. First of all, they are treated as taxable distributions. On top of the regular income tax on the entire amount, you may also have to pay a 10 percent excise tax penalty if the distribution was considered premature. If you place the amount into another IRA account, you must treat it as a brand-new IRA contribution for the tax year in which it is made, and another 15 percent excise tax penalty will apply to any portion of the amount that exceeds $5,000 ($6,000 for those age 50 and above) in 2011. These defective rollovers must be reported on Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.

A rollover from one IRA to another IRA enables you to change your investment strategy and may enhance your rate of return. It can also be used to obtain a short "bridge loan" from yourself, since you'll have the use of the funds for any purpose you want, for up to 60 days. This type of rollover may be made only once a year, but the once-a-year rule applies separately to each IRA you own. If property other than cash is received, that same property must be rolled over. Except for an IRA received by a surviving spouse, an inherited IRA cannot be rolled over into, or receive a rollover from, another IRA.

Distributions from an eligible retirement plan of a deceased participant/owner can be rolled over by a nonspouse beneficiary. If a direct trustee-to-trustee transfer is made to an IRA that has been established to receive the distribution on behalf of a beneficiary who is not the participant/owner's surviving spouse, the following treatment applies:

The transfer is treated as an eligible rollover distribution;

The transferee IRA is treated as an inherited account; and

The required minimum distribution rules applicable where the participant/owner dies before the entire interest is distributed apply to the transferee IRA; the special rules for surviving spouse beneficiaries do not apply.

Withdrawals/Distributions from an IRA

In general, all withdrawals from a regular, deductible IRA account are fully taxable and reported on Line 15b of Form 1040, or Line 11b of Line 1040A.

However, if you made any nondeductible contributions to IRAs over the years, a portion of your withdrawal will be treated as a withdrawal of the nontaxable cost basis of your IRAs, and no tax or penalties will apply to this portion.

You must compute the taxable and nontaxable portions of the withdrawals by completing IRS Form 8606, Nondeductible IRAs, and attaching it to your tax return. This can be a complicated process, so make sure that you follow the instructions to the form very closely.

A 10 percent penalty applies to withdrawals considered premature, but there are a large number of exceptions that avoid the penalty.

Withdrawals from Roth IRAs are subject to another set of rules.

If taxable contributions were made to any of the IRAs, more complications exist.

Mandatory withdrawals must be made after you turn 70-1/2.

Tuesday, February 14, 2012

Mining the Market for Profitable Trades


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The software finds historically accurate trends that have been profitable 80%, 90% or even 100% of the time over the past 5,10,20, or even 30 years.

This is all done through a proprietary, artificial intelligent, data cube that allows the computer to calculate and find (mine) millions and millions of trades in seconds.

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Monday, February 13, 2012

Bear Market Trading For Maximum Profit


I've got a new low-risk high-reward short-sell stock pick this week on Citrix Systems hi-tech company. With the major indicies hitting major resistance at this point, a big sharp sell-off could easily hit the market. As the markets are now facing some stiff resistance, today is the beginning of the "How to Trade in a Fast-Moving Bear Market, A Live Intensive Online Trading Course". Click the link above to check it out. It may just be something very profitable in the weeks, months, and years to come for you.

Zacks Investment Research reports Citrix Systems Inc. declared financial results for the fourth quarter of 2011, which managed to beat the Zacks Consensus Estimates. Global trends toward virtualization and cloud computing are facilitating the company to post solid results. However, management provided a weak financial outlook for fiscal 2012, primarily due to the company’s decision for more acquisition and its sales force reorganization. Just a couple of days ago Citrix’s major competitor, VMware Inc., provided a rosy outlook for fiscal 2012.

Quarterly net revenue was $619.4 million, up 17% year over year and was in line with the Zacks Consensus Estimate of $619 million. GAAP net income was $108.7 million or 58 cents per share compared with a net income of $94.4 million or 49 cents per share in the prior-year quarter. Quarterly adjusted EPS of 66 cents slivered past the Zacks Consensus Estimate by a penny.

Gross margin in the fourth quarter of 2011 was 87.2% compared with 88% in the year-ago quarter. Operating expenses in the reported quarter were around $404.4 million compared with $353 million in the prior-year quarter. However, quarterly operating margin was 21.9% compared with 21.4% in the prior-year quarter.

During the fourth quarter of 2011, Citrix repurchased 1.4 million of its common outstanding shares for around $99.2 million. At the end of fiscal 2011, deferred revenue was $960 million, up 23.2% year over year.

During the fourth quarter of 2011, Citrix generated over $169.6 million of cash from operations and free cash flow (cash flow from operations less capital expenditures) during the reported quarter was approximately $146.5 million. At the end of fiscal 2011, the company had nearly $1,477.6 million of cash and marketable securities compared with $1,685.6 billion at the end of fiscal 2010. Balance sheet remains free of any debt obligations.

Revenue by Product Mix

Product Licenses revenue was $229.1 million, up 20% year over year. License updates revenue was $192.9 million, up 9% year over year. Software Services revenue was $114.4 million, an increase of 19% over the prior-year quarter, and Technical Services revenue was $83 million, up 36% year over year.

Revenue by Product Grouping

Desktop solutions revenue in fiscal 2011 was $1,278.8 million, up 12.5% year over year. Data Center and Cloud Solutions revenue was $385.5 million, up 29.1% year over year. Online Services revenue was $427.7 million, up 18.6% year over year. Revenue from Other Products was $114.3 million, up 46.4% year over year.

Revenue by Geography

Revenue in the Americas (North & Latin America) region was $278 million. Revenue in Europe, Africa, and the Middle East region was $170.8 million. Revenue in the Asia Pacific region was $58.6 million.

First Quarter of 2012 Financial Outlook

Management forecasted that the company’s first-quarter 2012 revenue will be within the range of $555 million - $565 million. GAAP EPS will be within the range of 30 cents - 31 cents and non-GAAP EPS will be between 49 cents – 51 cents. Stock-based compensation expenses will be 16 cents per share.

Full Fiscal 2012 Financial Outlook

Management forecasted that the company’s fiscal 2012 revenue will be within the range of $2.49 billion - $2.51 billion. GAAP EPS will be within the range of $1.88 - $1.97 and non-GAAP EPS will be within the range of $2.70 - $2.74. Stock-based compensation expenses will be 71 cents per share.

Zacks Recommendation

We believe the virtualization market will continue to flourish with desktop virtualization as its core theme. This trend is expected to sustain future growth of both Citrix Systems. We maintain our long-term Neutral recommendation on Citrix Systems. Currently, it holds a short-term Zacks #3 Rank (Hold) on the stock.

Invest2Success Recommendation

Sell Short Citrix Systems – Ticker CTRX

Sell Entry: 71.68 to 78.77

Stop-Loss: 85.07

Take Profit Areas: 57.81 to 56.12, 54.44 to 52.66, 43.09 to 41.74, 29.23 to 28.30

Company Profile

Citrix Systems, Inc. designs, develops, and markets technology solutions that deliver information technology services on-demand worldwide. It offers desktop solutions, including Citrix XenDesktop, an integrated desktop virtualization system; Citrix XenApp, an application virtualization solution; and Citrix XenClient, a bare-metal hypervisor, which runs directly on the client device hardware. The company also provides online services, comprising GoToMeeting for online meetings, sales demonstrations, and collaborative gatherings; GoToWebinar, which allows users to host, attend, or participate in a Webinar session; GoToTraining, a training tool that allows trainers to deliver content to various trainees; Integrated HiDef Audio, which provides a audio and Web experience; HiDef Audio that offers audio options with reservationless audio conferencing; GoToAssist, a remote technical-support solution; GoToManage solution for IT management; and GoToMyPC, which offers remote access to PC and Mac from an Internet-connected computer. In addition, it provides datacenter and cloud solutions, such as Citrix NetScaler, a Web application delivery controller; Citrix Access Gateway, a SSL/VPN that delivers applications with policy-based SmartAccess control; Citrix Repeater Solutions that provide application delivery to branch office users; Citrix XenServer, a platform for managing server virtualization in the datacenter; and Citrix Essentials for XenServer and Hyper-V solution for lab automation, high availability, provisioning, workflow orchestration, and integration with storage systems. Further, the company provides consulting, technical support, and product training and certification services. It markets and licenses its products to enterprise customers through systems integrators, value-added resellers, value-added distributors, and original equipment manufacturers, as well as through the Web. The company was founded in 1989 and is headquartered in Fort Lauderdale, Florida.

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Click the Citrix Systems stock chart below for a larger view.

Thursday, February 09, 2012

Inflation or Deflation? Which One Is It?


Inflation vs. Deflation: See the Chart That Settles the Debate

I once heard a legendary radio broadcaster and producer describe what he believed is the biggest sin a public speaker can commit.

It's not verbal stumbling, going overboard with warm-up jokes or speaking too long. The greatest sin a public speaker can commit is to be uninteresting. What's more, the failure is related much more to the speaker's lack of preparation than to the topic.

This broadcaster argued that even the history of the fork could become an interesting talk.

We believe our financial and economic analysis is made even more interesting and insightful by using handcrafted charts. They're different than what you find in other financial publications -- they reflect our uniquely independent analysis.

The chart below from the December Financial Forecast is a good example. It addresses the inflation vs. deflation debate. (Below the chart, you'll find the edited accompanying text):


. . . the annual rate of change in the Consumer Price Index shows how deflation is slowly assuming control over the economy...The stock market decline of 2000-2002, the first Cycle-degree decline since the 1970s low, failed to generate outright deflation, but it did produce a steady reduction in the rate of growth of inflation. As Cycle wave c down grabbed hold in 2008, [the Financial Forecast] warned of outright deflation, which would be the first year-over-year consumer price decline in 53 years. One key tip-off was a clear uptick in concern about inflation. In March 2008...the spike to the most recent high on the chart formed and a commodity blow-off “sparked economists’ talk of inflation.” [The Financial Forecast] held instead that a “powerful deflation will carry the day.” The chart [above] shows the result.

The arrow marks the CPI’s drop in 2008 as just the beginning of a new deflationary era. Importantly, the inflationary concerns cited in 2008 have yet to abate. The bottom line on the chart shows the median expectation for consumer prices over the next year. Despite the relentless decrease in the rate of inflation from 1980, and especially since 2008, rising consumer prices remain the chief worry...A “fighting the last war” mentality explains much about the persistence of inflationary expectations...the Cycle wave IV bear market (first grey area on the chart) from 1966 to 1982 (in inflation-adjusted terms) mostly featured intensifying inflation. As CPI growth surged to a peak of 14.8% in March 1980, inflation expectations also peaked, at 10.4% in January 1980. At this point, the relentless slowing of rising prices has yet to generate any aggregate fear of falling prices...Deflation will be the pre-eminent feature of the bear market; it won’t go away until it generates expectations that are at least commensurate, inversely, with the 1980 peak in inflation fear.

In the latest Financial Forecast, you'll find more charts and analysis. The topics include:

A Dow Jones Industrials' trendline stretching back to 1932, and the immediate relevance that trendline has today.

European financial developments and how they're dove-tailing with the market's "peaking process".

An extreme in investor sentiment and what that may mean for the market just ahead.

And much more!

Wednesday, February 08, 2012

Finding The Most Profitable Asia Stocks


Asian-Pacific Stocks: Which Country Is a Bull for 2012, and Which Is a Bear?

You may have noticed that many investors tend to think that "Stocks in the same region of the world move together."

This assumption seems to make sense, because regions often do share trading ties, natural resources, labor pools, etc. And yet . . . it's not the reality.

The reality is that every market develops its own Elliott wave pattern. How else do you explain that, for example, India's S&P CNX Nifty Index declined 25% in 2011, while Australia’s ASX All Ordinaries lost only 15%?

It's these differences -- and their implications for stock market trends in 2012 -- that you'll find discussed in the February 2012 Asian-Pacific Financial Forecast.

In the February issue:

THE FACT OF THE EXPERIENTIAL MARKETING MATTER IS, some Asian-Pacific stocks are in a long-term bull trend, and some are in long-term bearish trends. The February 2012 Asian-Pacific Financial Forecast tells you which ones are which.

CHINA & VIETNAM: Vietnam’s Ho Chi Minh Index and China's Shanghai Composite both appear to be following the same Elliott wave pattern. In another similarity, protests over land disputes have erupted within both China and Vietnam recently. Find out what these and other Elliott wave and market sentiment indicators mean for the trend from here.

AUSTRALIA: You can see a long-term chart of the ASX which shows that 137 years of price action in Aussie stocks fit neatly inside a trend channel. The February 2012 Asian-Pacific Financial Forecast also gives you a insightful look at the Aboriginal rights protests as compared to the historic highs and lows in the ASX.

SALMAN RUSHDIE AND THE SENSEX: When the India-born author appeared at the Jaipur Literature Festival in 2007, it went without a hitch. But at the 2011 festival authorities canceled Rushdie's video appearance, fearing riots. What's so different since 2007? The February 2012 Asian-Pacific Financial Forecast gives you a unique, socionomic answer -- as well as a forecast for the SENSEX in the weeks ahead.

PAKISTAN: YES, WE KHAN? The year-long downtrend in Pakistan has been good for opposition party candidates. Find out our take on the future of a rising star named Imran Khan -- whose future is closely tied in with the trend in the KSE 100.

HONG KONG & SINGAPORE: The Hang Seng and Straits Times indexes are both in wave C's of their larger Elliott wave patterns. Expect similar moves in one direction soon.

JAPAN: The TOPIX Machinery Index has led the rally since the 2009 low and has continued to outperform the NIKKEI. Find out if it's just an outlier -- or a trendsetter.

SPECIAL SECTION: Anwar Ibrahim and The Politics of Social Mood. A socionomic look at the political life of Malaysia’s opposition coalition leader.

Tap into these insights now via a RISK-FREE subscription to The Asian-Pacific Financial Forecast Service. You also get instant access to the still-valuable January 2012 issue.

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Timely analysis and forecasts for the major stock indexes in Japan, China, India, Australia, Singapore and Hong Kong, plus occasional updates for Taiwan, Korea and other Asian-Pacific nations. Editor and award-winning market technician Chris Carolan keeps you abreast of market moves between the monthly Asian-Pacific Financial Forecast issues, while also providing valuable commentary on debt and forex markets.

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Editor Mark Galasiewski's insightful and useful commentary on the major stock indexes in Japan, China, India, Australia, Singapore, Hong Kong, Taiwan, Korea and more, plus on the region's financial and social trends has prompted one subscriber to write that Mark clearly has his "finger on the pulse of the local scene here."

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Tuesday, February 07, 2012

Boosting Long-Term Mutual Fund Returns


With some intelligent new-year planning, you can make your mutual fund investments even more rewarding. Here's how.

Step One: Rebalance Your Portfolio.

This is perhaps the most important step to take as the new-year kicks off--especially if you're concerned about the long-term performance of your mutual funds.

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When you rebalance your portfolio and decide to sell a fund, then sell before the dividend. You'll pay a lower tax on your entire gain. Sell after the dividend, and a portion of your gain will be taxed as ordinary income, not capital gains. In other words, you'll pay more.

Buying a fund that did well? Wait until after the dividend. Otherwise, you'll get a check back for part of your purchase price--and be taxed on the proceeds.

Step Three: Sell and Save.

The market definitely has its ups and downs over the course of a year. This is not necessarily a bad thing--if you take advantage of it.

If you suffer losses at year's end in any mutual funds--funds you don't necessarily want to keep for the long term--then use your losses to offset capital gains (and the accompanying taxes) in your other, more profitable investments.

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Monday, February 06, 2012

SP500 Topping Out?


I don't have a stock pick this week as I don't see any low-risk high-reward long or short positions to take right now. If I had to take new positions I would be in general shorting USA and Europe and going long in the Asia markets with the very good values in those low-debt growing economies. The USA markets keep heading up when they should be taking a correction and or consolidation of some kind. The declining volume on these recent rallies is a troubling indicator for sure so lets see how this plays out this week before committing new money long or short to the DJIA, SP500, and Nasdaq markets.

Was Friday’s Price Action in Gold Signaling a Top in the S&P 500?

“You can’t feel the heat until you hold your hand over the flame. You have to cross the line just to remember where it lays.” ~ Rise Against. “Satellite” Lyrics ~

Last Friday morning traders and market participants awaited the key January employment report from the U.S. Bureau of Labor Statistics. The reaction to the supposedly wonderful report was a surge in the S&P 500 E-Mini futures contracts as well as several other key equity index futures.

The overall tenor among the financial punditry was predictable as wildly bullish predictions permeated the morning session on CNBC and in the financial blogosphere. However, after the report had been out for several hours notable independent voices such as Lee Adler of the Wall Street Examiner came out with information that suggested the numbers were an apparition of manipulated statistics.

I am not going to spend a great deal of time discussing the report, but the reaction to the news was decisively bullish on Friday. The question I want to know is whether Friday was a blow off top? In the recent past the S&P 500 has seen several key inflection points and intermediate-term tops form on non-farm payroll monthly announcements.

I follow a variety of indicators to help me decipher more accurately when the market is getting overbought or oversold. For nearly two weeks the market has been extremely overbought, but now we are reaching truly astonishing levels. The following charts represent just a few signals that the market is due for a pullback and a top is likely approaching.

Percentage of NYSE Stocks Trading Above Their 50 Period Moving Average


The chart above clearly illustrates that as of Friday’s closing bell (02/03) over 89% of stocks were trading above their 50 period moving averages. Consequently that reading is one of the highest levels that we have seen in the past 3 years. In addition, over 73% of stocks that trade on the NYSE are currently priced above their longer-term 200 period moving averages. Another extremely overbought signal.


The S&P 500 Bullish Percent Index is another great tool for measuring the overall position of the S&P 500. It is without question that the longer term time frame is reaching the highest level of overbought conditions in the past 3 years.

McClellan Oscillator Divergence with S&P 500 Price Action



The two charts shown above present an interesting situation regarding the divergence in the McClellan Oscillator and the price action in the S&P 500. The most recent example of this type of divergence occurred in October of 2011 and prices immediately reversed to the upside after several months of selling pressure. In fact, this correlation between reversals in the S&P 500 and divergences in the McClellan Oscillator works relatively well historically.

Clearly there are bullish voices arguing for the 2011 S&P 500 Index high of 1,370.58 to be taken out to the upside in the near future. Additionally, several market technicians in the blogospere have been pointing to the key resistance range between 1,350 and 1,370 on the S&P 500 as a likely price target. Obviously if those price levels are met strong resistance is likely to present itself. However, as a contrarian trader I have found that the more obvious price levels are the more likely it is that they either will not be tested or they will not offer significant resistance.

It is obvious that Chairman Bernanke and the Federal Reserve have embarked on a massive fiat currency printing campaign which has helped buoy risk assets to the upside. Through a combination of reducing interest rates on safety haven investments like Treasury’s and CD’s, the Federal Reserve has forced conservative investors and those living on a fixed income into riskier assets in search of yield.

This process helps elevate stock prices and creates the desired outcome for the Federal Reserve which involves the perception by average individuals that they are wealthier. The Fed calls this the “wealth effect” and they seem poised to insure that U.S. financial markets continue to ride upon a see of cheap money and liquidity.

Ultimately the Federal Reserve’s most recent announcements have served to help flatten the short end of the yield curve further while providing a launching pad for equities and precious metals. However, issues persisting in Europe could have an adverse impact on the short to intermediate term price action of the U.S. Dollar.

Right now everywhere I look I hear market prognosticators commenting on how hated the U.S. Dollar is and how Chairman Bernanke will not allow the Dollar to appreciate markedly in order to protect U.S. exports and financial markets. I think that the Dollar has the potential to rally in the short to intermediate term. Right now the U.S. Dollar Index appears to be trying to form a bottom.

U.S. Dollar Index Daily Chart


Obviously there is good reason to believe that the U.S. Dollar Index could reverse to the upside here. Whether it would have the strength to take out recent highs is unclear, but a correction to the upside not only seems unexpected by most market participants, but it seems plausible based on the weekend news coming out of Greece.

Monday morning the Greek government is set to determine if they will agree to the demands of the Troika in exchange for the next tranche of bailout funds. If the Greek government and the Troika do not come to an agreement, the Euro could sell-off violently.

Additionally there are already concerns about the next LTRO offering from the European Central Bank. The measure is to help provide European banks with additional liquidity, but there are growing concerns that the size and scope of the LTRO could have a dramatic impact on the Euro’s valuation against other currencies. Time will tell, but there are certainly catalysts which could help drive the U.S. Dollar higher.

Another potential indicator that the Dollar could see higher prices in coming days was the largely unnoticed bearish price action on Friday of precious metals. Both gold and silver have been on a tear higher over the past several weeks. Both precious metals have surged since the Federal Reserve announced that interest rates would remain near zero on the short end of the curve through 2014.

However, on Friday gold and silver were both under extreme selling pressure. The move did not get much attention by the financial media. The price action in gold and silver on Friday could be another indication that the U.S. Dollar is set to rally. The daily chart of gold is shown below.

Gold Futures Daily Chart


Obviously the reversal on Friday in gold futures was sharp. The move represented nearly a 2% decline for the session on the price of gold. However, as long term readers know I am a gold bull. I just do not see how gold and silver do not rally in the intermediate to longer term based on the insane levels of fiat currency printing going on at all of the major central banks around the world. The macro case for gold is very strong, but the short term time frame could reveal a brief pullback.

At this point, I suspect a pullback will present a good buying opportunity for those that are patient. However, I think it is critical to point out that this move in gold on Friday could be a signal that the U.S. Dollar is going to find some short to intermediate term strength. If the Dollar does start to push higher, it will likely put downward pressure on risk assets like equities and oil

While Friday’s price action may not mark a top, nearly every indicator that I follow is screaming that stocks are overbought across all time frames. Pair that with the Greece uncertainty and LTRO considerations and suddenly the Dollar starts to look a bit more attractive. Ultimately I am not going to try to pick a top, but the evidence suggests that it might not be too many days/weeks away.

By Chris Vermeulen – Free Weekly Gold Oil ETF Reports & Analysis

Friday, February 03, 2012

Why Forex is Better Than Stock Trading


You’ve likely heard the term “Forex” lately — it is becoming the hottest market today, attracting more and more traders around the world. As the stock markets continue to meander, I believe that the strong trends in the forex market will continue, which means this is one of the best times to engage the foreign currency markets as an added investment vehicle to your portfolio.

Over the past few years, I’ve had the opportunity to teach thousands of new and experienced traders the pitfalls of trading foreign currencies and to help them discover the right way to attack these markets.

Today, however, I want to share with you the key reasons you should take advantage of the potential that exists in trading foreign currencies and going forward, I’m going to share more detailed strategies with you.

What is Forex?

Forex stands for Foreign Exchange and is the trading of one currency against another.

At its simplest, trading foreign currency involves two currencies that are traded simultaneously, called a ‘pair’. For example, the EUR/USD pair, trades the Euro against the US Dollar. In this example, a buyer of this pair would ‘buy’ the Euro and simultaneously ’sell’ the US Dollar.

Forex trading takes place through major banks, market makers, and brokerage houses around the world, who together create a marketplace for trading currencies on a near 24/7 basis.

The Forex market is almost always “open”; it is the 7-Eleven of the trading world. It is the largest financial network in the world with a daily average turnover totaling trillions of dollars.

Until recently, the foreign exchange markets were dominated by the big brokers and major banks around the world. Today, the ‘little guys’ have gotten in on the action — and the growth in currency trading has increased from $1.9 trillion to nearly $3 trillion in that short space of time (that’s the average daily turnover in the markets – a 50% growth in turnover).

Why Should You Trade Forex?

First, the Forex markets are highly liquid (in the major pairs) and have a strong tendency to ‘trend’ regardless of what is happening in other markets (stocks, commodities, bonds).

That liquidity also creates constant volatility — and the volatility is where the ability to profit from those trends happens. The greater the volatility, the greater the profit potential (be advised, however, the greater the risk, too).

Second, the stock markets have been beaten down, rallied, fallen, rallied again — and there are strong indications that another ‘fall’ is coming. The uncertainty in these markets is unnerving for buy and hold investors and traders alike.

In the Forex markets, however, traders don’t have to worry about “bull” or “bear” markets — the currencies are always in a trend (whether up, down or sideways) and frequently, when one set of pairs is trending one way, another set of pairs can be trending the opposite way. In addition, there are no restrictions to selling short a pair like there are for selling short stocks.

Furthermore, the financial upheaval driven by the credit crisis and the massive government responses I believe means investing or trading in the stock markets will never be the same – but these same events are helping to create even greater opportunities in the Forex markets.

As interest rates are cut or raised, economies grow or slow, jobs are gained or lost — each of these factors impacts the future value of a currency pair; and as these and other economic factors change, they affect the swings in volatility.

Forex trading is not without risk – and frankly, most people approach the Forex markets completely wrong. I believe the current economic and financial conditions make this one of the best times to take on Forex trading, but only if done correctly.

How Most Traders Incorrectly Approach Forex Trading

While doing research on the current state of the Forex trading landscape, I discovered something surprising:

Losing Forex traders appear to be enamored with ‘winning percentages’ when selecting a forex trading method.

The irony in that statement should be obvious — if the ‘winning percentage’ of the forex method is so important, how can these traders still be net losers?

Because, I believe, winning percentage is the wrong concept to focus on. In fact, I find winning forex traders look for methods that have winning percentages closer to 50-60%. And, they also have one more ’secret’ that losing traders DON’T have.

The difference will probably surprise you – and it’s a big difference, too. The answer should have been obvious, but it isn’t for most traders.

Ask yourself this question: How is it possible that a forex trading system that wins 90% or more of the time can end up a net loser?

The answer?

Losing trades. BIG losing trades. Here’s what I’ve discovered many of those systems (or robots) that claim 90% winning trades aren’t telling forex traders:

When their systems ‘win’, they are making a high number of very small gains.

But when their systems ‘lose’? They wipe out all of the gains and a good percentage of the trader’s account balance, too.

Still, traders flock to these automated systems because, after all, something winning ‘almost’ 100% of the time must be good, right? Not really, no.

See, what most traders don’t get is that the reward to risk ratio in those high win percentage systems is upside down. Traders risk too much capital for too little profit potential.

That’s poor risk management and leads to one becoming a ‘losing’ trader.

Let me illustrate an example, using a ‘typical’ Robot (or automated) trading system, making 5 trades:

Trade 1 – gains 8 pips on 20 mini lots (+ $160)
Trade 2 – gains 8 pips on 20 mini lots (+ $160)
Trade 3 – gains 8 pips on 20 mini lots (+ $160)
Trade 4 – loses 80 pips on 20 mini lots (- $1,600)
Trade 5 – gains 8 pips on 20 mini lots (+ $160)

This is standard practice for automated systems out there that don’t employ risk management. They set stop losses that are far too wide given the reward ratio. Here it’s 10:1 (risking $10 to win $1 – does that make sense?)

Say you had a starting account balance of $10,000 — at the conclusion of these 5 trades, your account balance would be $9,040.

That’s a 9.6% loss even though you ‘won’ 80% of your trades!

We haven’t factored in lot or position size yet, either. I would expect it to be obvious that the trader above is taking on far too much risk. Keep in mind, too, that trading with an automated or robot method, you are unlikely to be able to stop that 80 pip loss unless you happen to be watching it unfold.

Of course, that robot is supposed to make you money ‘while you sleep’ – isn’t it? (That’s what they promise, anyway)

The bottom line is if you aren’t managing risk in every single trade, from determining the correct lot and position size to the right points for your stop losses and your exit strategies, you will NEVER join the elite 5% of successful Forex traders.

Here’s the Forex ‘Secret’

Let’s illustrate a ‘winning’ trader using a Forex trading method (not a robot), who only wins on 60% of their trades, and see if you note right away what their ’secret’ is:

Trade 1 – gains 43 pips on 10 mini lots (+ $430)
Trade 2 – loses 30 pips on 10 mini lots (- $300)
Trade 3 – gains 29 pips on 10 mini lots (+ $290)
Trade 4 – gains 19 pips on 10 mini lots (+ $190)
Trade 5 – gains zero pips on 10 mini lots (+$0)

Again with a starting account balance of $10,000 — this trader would have made a 6.1% gain ($610 net), as opposed to the first trader’s nearly 10% loss.

Yet, this trader only ‘won’ 60% of the time? What happened?

This trader ‘broke even’ on 1 of the 5 trades. No gain. No loss.

What the ‘winning’ trader does is eliminate risk as quickly as possible, thereby ensuring infinite reward (until they liquidate their position). To do this, these traders take aggressive action to move their initial stop losses up to the breakeven point from the outset of a trade, set an initial profit target and, once they are able to eliminate the risk side in the trade, they will manage the profit side of the trade by scaling out in stages at predetermined profit points.

In this way, once the trader has been able to ‘erase’ the risk side, they can focus solely on the profit side – with the worst case scenario being a ‘zero’ gain trade (or, break even).

Now you may not be able to eliminate risk in every single trade; but breaking even on just 1 in every 5 trades can have a significant and positive impact on your account balance.

So, don’t let yourself be fixated on the ‘winning’ percentage of a trading method. As you’ve just seen, that doesn’t guarantee you can be a net winner. Instead, put risk first and profit second. I think you’ll be surprised at the results.

Optimal Profit Strategy for Forex Traders

As we’ve just shown, when it comes to trading Forex, traders typically focus on when to enter the trade, but pay too little attention to protecting their initial position AND too little attention on how to manage and exit the trade.

This is a critical mistake, yet it is one of the simplest concepts in trading.

It should go without saying that as soon as you enter the market with a new position, an initial stop order should be entered to protect the position against an adverse move in the market or an exit strategy should be employed to cover the trade if the market closes adversely. If such a move occurs, as is often the case, you want your position liquidated and to be out of the market with a minimal loss.

The consequences of failing to do this are simple: you will not be successful at trading.

In fact, every trade you put on, you should plan to lose, so that you are sure to place your stop loss order or cover the trade on an adverse close. Otherwise, what would have been a small loss turns into a big loss, turning the entire risk/reward ratio against you.

That being said, where should you place your stop loss? The short answer is, “Where you don’t expect the market to go”; or, more specifically, where the assumption in putting on the trade is no longer valid.

For example, if a long position was entered into after an uptrend or breakout market traded back down to support, an initial stop could be entered below the recent low because if the market does go there, support (as defined by that low) would have failed, and there is no longer any reason to be long the market – so get out! Don’t wait around for it to come back in your favor because the odds are against it.

If the market goes in your favor once the initial stop is in place, then you need a set of rules that will allow you to exit the market profitably. This poses a real dilemma. If you exit too soon, you may secure a small profit, but miss out on all those big moves that occur (and the big profits that go with them). On the other hand, if you wait too long to exit, the market may reverse and take away all of your open profits and even put you into a loss position.

So what do you do? Well, the first thing is to realize that there is no method that can forecast whether or not a particular move will:

* Go against you immediately
* Go up only a little before going back down
* Go up a lot in your favor

For example, after you enter a long trade in an uptrend, there’s absolutely no way to predict what will happen next (contrary to what the so-called “gurus” tell you). Because of this, you absolutely need an exit strategy, because the risk of loss is significant no matter how carefully you plan your entries and exits.

The Optimal Profit Exit Strategy

The following is the very best exit strategy that I believe possible when trading the Forex markets. I call it the Optimal Profit Exit Strategy.

It’s a strategy that scales out of a trade in two steps. This strategy is first and foremost about taking an initial profit as soon as appropriate, thereby “taking some money off the table” and reducing the risk in the trade at the same time.

Here’s an example from two recent moves in the EUR/USD – in both cases, I applied my Forex Profit Accelerator method to identify the potential trade, and my Optimal Profit Exit Strategy to show how to manage the trade while its ongoing.
So, don’t let yourself be fixated on the ‘winning’ percentage of a trading method. As you’ve just seen, that doesn’t guarantee you can be a net winner. Instead, put risk first and profit second. I think you’ll be surprised at the results.

Optimal Profit Strategy for Forex Traders

As we’ve just shown, when it comes to trading Forex, traders typically focus on when to enter the trade, but pay too little attention to protecting their initial position AND too little attention on how to manage and exit the trade.

This is a critical mistake, yet it is one of the simplest concepts in trading.

It should go without saying that as soon as you enter the market with a new position, an initial stop order should be entered to protect the position against an adverse move in the market or an exit strategy should be employed to cover the trade if the market closes adversely. If such a move occurs, as is often the case, you want your position liquidated and to be out of the market with a minimal loss.

The consequences of failing to do this are simple: you will not be successful at trading.

In fact, every trade you put on, you should plan to lose, so that you are sure to place your stop loss order or cover the trade on an adverse close. Otherwise, what would have been a small loss turns into a big loss, turning the entire risk/reward ratio against you.

That being said, where should you place your stop loss? The short answer is, “Where you don’t expect the market to go”; or, more specifically, where the assumption in putting on the trade is no longer valid.

For example, if a long position was entered into after an uptrend or breakout market traded back down to support, an initial stop could be entered below the recent low because if the market does go there, support (as defined by that low) would have failed, and there is no longer any reason to be long the market – so get out! Don’t wait around for it to come back in your favor because the odds are against it.

If the market goes in your favor once the initial stop is in place, then you need a set of rules that will allow you to exit the market profitably. This poses a real dilemma. If you exit too soon, you may secure a small profit, but miss out on all those big moves that occur (and the big profits that go with them). On the other hand, if you wait too long to exit, the market may reverse and take away all of your open profits and even put you into a loss position.

So what do you do? Well, the first thing is to realize that there is no method that can forecast whether or not a particular move will:

* Go against you immediately
* Go up only a little before going back down
* Go up a lot in your favor

For example, after you enter a long trade in an uptrend, there’s absolutely no way to predict what will happen next (contrary to what the so-called “gurus” tell you). Because of this, you absolutely need an exit strategy, because the risk of loss is significant no matter how carefully you plan your entries and exits.

The Optimal Profit Exit Strategy

The following is the very best exit strategy that I believe possible when trading the Forex markets. I call it the Optimal Profit Exit Strategy.

It’s a strategy that scales out of a trade in two steps. This strategy is first and foremost about taking an initial profit as soon as appropriate, thereby “taking some money off the table” and reducing the risk in the trade at the same time.

Here’s an example from two recent moves in the EUR/USD – in both cases, I applied my Forex Profit Accelerator method to identify the potential trade, and my Optimal Profit Exit Strategy to show how to manage the trade while its ongoing.


PT1 = Profit Target 1 (your first exit point)
PT2 = Profit Target 2 (your second exit point)

PT1 in the chart above exits ½ of your position at a pre-determined profit target. The profit target is modest, but enough to make the trade worthwhile and the specific level is also dependent on the overall method being used.

Once that initial profit target is hit, you should move the initial stop up for the remaining 1/2 of the position to the lowest low of the past 3 bars for an uptrend trade or the highest high of the past 3 bars for a downtrend trade.

As you can see, in the example above (from my Forex Profit Accelerator method), the first trade would have exited PT1 with a profit of 135 pips (or $1,350 on a standard lot trade) and the second trade would have exited PT1 with a profit of 130 pips (or $1,300 on a standard lot trade).

You’re now out of 1/2 of the trade (in each instance) with a very nice profit and at the same time you are prepared to ride the market as far as it wants to go in your favor for the remaining 1/2 of your position.

PT2 allows you to continue to ride an existing market trend with the remaining ½ of your original position, but you protect it by a trailing stop always based on the lowest low of the past 3 bars (for an uptrend trade).

As the market continues to move up, you would move the stop up with it. This locks in a significant portion of the remaining open profit but also gives the market enough room to trade down a bit without shaking you out of the trade if it moves higher.

As the example chart shows, this added profits of 243 and 191 pips, respectively to the winning trades – an additional $2,430 and $1,910.

With this strategy you should be prepared to take advantage of the market after entering a trade no matter what it does. And that’s a big deal.

Good Trading, Bill Poulos

For complimentary Forex strategies, visit Bill’s Forex 4-Pack, which includes his Optimal Profit Exit Strategy, a Forex Basics course, his Power Forex Profit Principles report and more:

Click here for more info.

PT1 = Profit Target 1 (your first exit point)
PT2 = Profit Target 2 (your second exit point)

PT1 in the chart above exits ½ of your position at a pre-determined profit target. The profit target is modest, but enough to make the trade worthwhile and the specific level is also dependent on the overall method being used.

Once that initial profit target is hit, you should move the initial stop up for the remaining 1/2 of the position to the lowest low of the past 3 bars for an uptrend trade or the highest high of the past 3 bars for a downtrend trade.

As you can see, in the example above (from my Forex Profit Accelerator method), the first trade would have exited PT1 with a profit of 135 pips (or $1,350 on a standard lot trade) and the second trade would have exited PT1 with a profit of 130 pips (or $1,300 on a standard lot trade).

You’re now out of 1/2 of the trade (in each instance) with a very nice profit and at the same time you are prepared to ride the market as far as it wants to go in your favor for the remaining 1/2 of your position.

PT2 allows you to continue to ride an existing market trend with the remaining ½ of your original position, but you protect it by a trailing stop always based on the lowest low of the past 3 bars (for an uptrend trade).

As the market continues to move up, you would move the stop up with it. This locks in a significant portion of the remaining open profit but also gives the market enough room to trade down a bit without shaking you out of the trade if it moves higher.

As the example chart shows, this added profits of 243 and 191 pips, respectively to the winning trades – an additional $2,430 and $1,910.

With this strategy you should be prepared to take advantage of the market after entering a trade no matter what it does. And that’s a big deal.

Good Trading, Bill Poulos

For complimentary Forex strategies, see my Forex 4-Pack, which includes my Optimal Profit Exit Strategy, a Forex Basics course, my Power Forex Profit Principles report and more. Click here to review it.

Thursday, February 02, 2012

Technical Indicators To Profit From


Trading using technical indicators -- such as the MACD, for example -- can do one of two things: help you or hurt you.

Elliott Wave International's Jeffrey Kennedy explains what he loves and hates about technical indicators and shows you how he uses them to his advantage in this excerpt from his FREE eBook, The Commodity Trader's Classroom.

I love a good love-hate relationship, and that's what I've got with technical indicators. Technical indicators are those fancy computerized studies that you frequently see at the bottom of price charts that are supposed to tell you what the market is going to do next (as if they really could). The most common studies include MACD, Stochastics, RSI, and ADX, just to name a few.

The No. 1 (and Only) Reason to Hate Technical Indicators

I often hate technical studies because they divert my attention from what's most important - PRICE.

Have you ever been to a magic show? Isn't amazing how magicians pull rabbits out of hats and make all those things disappear? Of course, the "amazing" is only possible because you're looking at one hand when you should be watching the other. Magicians succeed at performing their tricks to the extent that they succeed at diverting your attention.

That's why I hate technical indicators; they divert my attention the same way magicians do. Nevertheless, I have found a way to live with them, and I do use them. Here's how: Rather than using technical indicators as a means to gauge momentum or pick tops and bottoms, I use them to identify potential trade setups.

Three Reasons to Learn to Love Technical Indicators

Out of the hundreds of technical indicators I have worked with over the years, my favorite study is MACD (an acronym for Moving Average Convergence-Divergence). MACD, which was developed by Gerald Appel, uses two exponential moving averages (12-period and 26-period). The difference between these two moving averages is the MACD line. The trigger or Signal line is a 9-period exponential moving average of the MACD line (usually seen as 12/26/9 so don't misinterpret it as a date). Even though the standard settings for MACD are 12/26/9, I like to use 12/25/9 (it's just me being different). An example for MACD is shown in Figure 10-1 (Coffee).


The simplest trading rule for MACD is to buy when the MACD line (the thin line) crosses above the Signal line (the thick line), and sell when the MACD line crosses below the Signal line. Some charting systems (like Genesis or CQG) may refer to the MACD line as MACD and the Signal line as MACDA. Figure 10-2 (Coffee) highlights the buy-and-sell signals generated from this very basic interpretation.


Although many people use MACD this way, I choose not to, primarily because MACD is a trend-following or momentum indicator. An indicator that follows trends in a sideways market (which some say is the state of markets 80% of the time) will get you killed. For that reason, I like to focus on different information that I've observed and named: Hooks, Slingshots and Zero-Line Reversals. Once I explain these, you'll understand why I've learned to love technical indicators.

Keep reading about Hooks, Slingshots, and Zero Line Reversals in The Commodity Trader's Classroom. This free eBook is filled with 32 pages of actionable trading lessons, such as:

How to Make Yourself a Better Trader
How the Wave Principle Can Improve Your Trading
When to Place a Trade
How to Identify and Use Support and Resistance Levels
How to Apply Fibonacci Math to Real-World Trading
How to Integrate Technical Analysis into an Elliott Wave Forecast

Download your FREE Commodity Trader's Classroom eBook today!