Thursday, March 29, 2012

Gold & Oil Market Forecast Outlook


The past two months we have seen all the focus from traders and investors be on the equities market. And rightly so and stocks run higher and higher. But there are two commodities that look ready to explode being gold and oil (actually three if you count silver).

Below are the charts of gold futures and crude oil 4 hour charts. Each candle stick is 4 hours allows us to look back 1-2 months while still being able to see all the intraday price action (pivot highs, pivot lows, strong volume spikes and if they were buyers or sellers…).

The 4 hour chart is one time frame most traders overlook but from my experience I find it to be the best one for spotting day trades, momentum trades and swing trades which pack a powerful yes quick punch.

As you can see below with the annotated charts both gold and silver are setting up for higher prices in the next 1-2 weeks from a technical point of view. That being said we may see a couple days of weakness first before they start moving up again.

Wednesday, March 28, 2012

Trading Volatility Automatically and Profitably


An year ago, Volatility Factor’s Team launched WallStreet Forex Robot and it proved to be one of the Most Successful and Profitable Forex robots on the market.

I believe Volatility Factor will deliver the same good results and justify the expectations of all its customers.

For the last few weeks I’ve been using the Volatility Factor EA.

I started it off with a demo account and quickly moved it to Real-Money trading.

I’ve got to tell you – Volatility Factor EA just flat out works.

It’s has a special algorithm that exploits the general market trend. It initiates your trades based on market volatility and rides the trend for all it’s worth.

I’ve NEVER seen an EA extract so many pips out of a single trade.

I urge you to go to the Volatility Factor’s website and take a look for yourself.
It wins +3000 pips in just 3 Months Real-Money Live Trading:

Unlike other EA’s, I didn’t have to baby sit this one during the trading session. I just set my risk parameters and went about my business.

This is the EXACT tool that I’ve been waiting for.

The best part is that my results aren’t a fluke.

The Volatility Factor's team took the time to put the tool through years of torture testing to make sure it was ready for prime time.

I love it when a team actually trades with their own tool!

Like I said, Volatility Factor EA is the REAL deal and here is the verified Live Real-Money data trading results:

Please don’t take this recommendation lightly. I’m famous for publicly humiliating Fx tool makers that don’t measure up to my high standards.

I’m happy to say that Volatility Factor EA exceeded my expectations.

Take a look at it now by clicking the Volatility Factor EA link above.

Volatility Factor EA is not a bargain basement throw away robot. It’s a premium trading tool used by serious traders. Keep that in mind when you investigate it for yourself.

Click here to review more forex resources and information.

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Tuesday, March 27, 2012

Bullet Proof Scientific Forex Trading


Trading the right system can give you up to 100 times more profit than an average system, and that's assuming you have a system that works in the first place. I'm going to give you valuable information about just such a system in a minute.

Today is finally here. Scientific Forex just opened the doors again. Yip, you can get a copy right now depending on when you are reading this email. This is the exact system that broke every Forex record by selling out twice, once in 1 minute and 35 seconds and the second time in one day. If you want to stand any chance of getting wealthy through trading, drop what you are doing and click the Scientific Forex link above.

Scientific Forex is the only realistic way to make 161.12% per month, in a consistent and safe way.

During the toughest trading conditions in living memory, Cristina Ciurea's Scientific Forex has consistently pulled cash from the market almost at will. She taught a small group of traders her system almost a month ago to the day, and they are now the new big dogs in Forex. They are building their accounts like a kid with Lego - basically they have become unstoppable.

Here are some facts you should know, because everyone is wondering just how long the doors will stay open this time.

Fact #1 - Her system is based on scientifically proven combinations of indicators that when tested and analysed, produced results that stunned our community.

If you read her declassified indicator report, you could probably work out that her system is based on the results of pure provable science - not hunches or gut feel.

It might have taken a mathematical genius to work out the correct formulas, but as she has said time and time again . . . anyone can learn this quickly and easily, and it is perfect for people with a full-time job.

So the first fact is, that she mathematically tested specific indicators to find the perfect combination to produce results that won her one of the biggest trading competitions, with 161.12% in one month.

Fact #2 - She discovered a secret code in the market that allows her to pin point, with scary accuracy, when to enter and exit the market. Again, this was no random observation, this was the result of testing all the available data and proving, that there were indeed profit points in the market just waiting to be tapped.

Fact number two is, that there's really no need to stare at the computer all day, because you will know in advance when the market is ready to give up the wealth other less informed traders have lost to it.

Fact #3 - The Scientific Forex system can spot the exact perfect point to enter every trade with the minimum risk and highest probability for profit. You would have to be able to time travel to be more accurate. When people see her track record, they marvel at the accuracy she can get in and out of trades.

The fact is, she is probably the greatest trader of our time because of her system, not anything else. Others have had similar results using her exact same system. This proves her system is duplicatable. The good news is you can have that system today.

You Are Just Minutes Away From Getting Everything You Want In 2012 . . . Your Only Problem Is Getting A Copy Of The Blockbuster Scientific Forex System Before It Sells Out

Surprisingly Easy To Follow

The reason Cristina's has reached almost icon like status with her system, is because the privileged few who have her system, can't stop raving about it. It has transformed their trading, and in many cases, their lives. Most traders make a gigantic leap in profit from day one. That's why word has spread so quickly, and also why every time Cristina agrees to release a few copies, they sell out in hours.

The real secret was hidden in the code of the market that only a math genius could spot.

By now, most traders know, or have heard how Cristina cracked one of the hardest codes in the world - it's almost become folklore. But, what not many people know is that Cristina is committed to sharing what she knows with anyone who is serious about learning to trade. Until this day, she is the only trader I know who can call the big trends with such precision, you wonder if she will ever be wrong, and it's all in her Scientific Forex system out right now.

Get 3 Bonuses Worth $1,500!

Crossfire Signal Locator (Value $500)- It will show you how far the market will go in any direction. It will show you where the market will be at a certain point in the future. It will place buy and sell arrows on the chart, so there is no misunderstanding of exactly where you should enter a trade. It can be used on any time frame. It can be used on any currency pair.

CandleForce Trader (Value $500)- Candlestick trading has been used for years with good reason, it works. The only problem is that most traders have a hard time identifying when there is a pattern, or they just miss them.

This can mean the difference between success and failure. To overcome this, the CandleForce Trader identifies the main patterns for you, so that you never need to worry about missing the next big trade.

CCFX Trade Finder (Value $500) - There's only so much I can say about this cause . . . ONLY . . . the Scientific Forex elite will ever see it.

This is the result of one of the best living traders collaborating with one of the best living programmers. To say this is the most sophisticated trading tool in Forex right now, is probably an understatement.

The CCFX Trade Finder is so powerful, that it comes with a warning. That's right, as soon as you get it, the first thing you will want to do is start using it. The accuracy is unbelievable, the information unparalleled, and the alerts mean you can be doing other things as the CCFX Trade Finder does its job.

Here's What You Need to Do Immediately

As you read this, people are grabbing the last few remaining copies of Scientific Forex. We both know this won't last long - that's if it hasn't sold out already, so just get there ASAP and see if you get a copy by clicking the Scientific Forex link above.

If you still have doubts, let me put your mind at rest by drawing your attention to a few things:

Cristina shares signals from her Scientific Forex system with over 4,000 fans on Facebook

500 Twitter followers follow her every move.

Over 1700 blog followers left rave reviews of her work.

She won the biggest independent trading competition in the world. No one else can claim that.

The Scientific Forex system is simple to learn, and can have you up and running the same day.

Monday, March 26, 2012

Short Selling Diversification on Weak Earnings


After reviewing the DJIA, SP500 and Nasdaq indicies as well as many other major global indicies this week the chances for reversal to the downside of this slow grind up on low volume is building greater every week it continues up. This week looks like it’s the ripest time for a sell-off to hit and I’m betting more bears will be coming out and into the equities market this week. Then again the dovish tone from the Fed just might keep stocks moving up.

Zacks Investment Research reports they have downgraded Loews Corporation to Underperform from Neutral on the back of weak fourth quarter results. Operating earnings in the fourth quarter lagged the Zacks Consensus Estimate owing to lower investment income from limited partnership, increase in insurance reserves for its payout annuity business, lower earnings at Diamond Offshore and weak performance of equity investments.

Results at HighMount remained soft due to lower sales volume stemming from lower drilling activity and lower natural gas prices. CNA has substantial exposure to catastrophe losses. Losses in the fourth quarter totaled $208 million, a substantial deterioration from $113 million a year ago.

Zacks six-month target price of $35.00 per share equates to about 12.1x 2012 earnings estimate. This price target along with the annual dividend of $0.25 per share implies an expected negative total return of 9.6% over that period.

Technically Lowes stock chart is showing a low-risk high reward short-sell trade setup this Monday. With the stock market over-bought with a sell-off that could easily happen anytime now I’ve got a low-risk high-reward short-sell on Lowes this week.

Sell Lowes Corp – Ticker L

Sell Entry: 40.55 to 39.17

Stop-Loss: 43.79

Take Profit Areas: 35.68 to 35.09, 34.52 to 33.95, 31.00 to 30.44, 24.22 to 23.83, 19.34 to 18.99

Company Profile

Loews Corporation, through its subsidiaries, operates primarily as a commercial property and casualty insurance company. It provides risk management, information, warranty, and claims administration services; professional liability and other coverages through property and casualty products and services; and surety and fidelity bonds, and vehicle warranty services. The company also offers standard and excess property coverage, marine coverage, and boiler and machinery coverages; workers’ compensation coverage; general and product liability; commercial auto and umbrella coverages; and long term care, group reinsurance, and life settlement contracts. In addition, Loews Corporation owns and operates drilling rigs that are used in the drilling of offshore oil and gas wells on a contract basis for companies engaged in exploration and production of hydrocarbons. It owns 46 offshore drilling rigs. Further, the company involves in exploring, producing, and marketing natural gas, natural gas liquids, and oil in Permian Basin in Texas. As of December 31, 2010, Loews Corporation had 1.3 trillion cubic feet of natural gas equivalent of net proved reserves. Additionally, it engages in the interstate transportation and storage of natural gas. The company owns and operates 3 interstate natural gas pipelines covering approximately 14,200 miles of interconnected pipelines transporting approximately 2.5 trillion cubic feet of gas to customers; and underground storage fields with aggregate working gas capacity of approximately 167.0 billion cubic feet of natural gas. Loews Corporation serves producers, local distribution companies, marketers, intrastate and interstate pipelines, electric power generators, and direct industrial users in the Gulf Coast, the Midwest, and northeast regions of the United States. It also owns and/or operates 18 hotels, including 16 in the United States and 2 in Canada. The company was founded in 1954 and is headquartered in New York, New York.

Click the Loews Corp stock chart for a larger view.

Friday, March 23, 2012

Market Mentor Trading Course March 25


Kick Off a Trading Mentorship with a Trading Legend – the Man Whose Trading Practices Set an Example for Bob Prechter, Who Won the U.S. Trading Championship with a 444% Return in Four Months

Learn from and make real-money trades LIVE with Dick Diamond. Your 4-day immersion into Diamond's Market Mentor Trading Course is just the beginning of your education and mentorship with this legendary trader. Now is your chance to learn Diamond's famous trading program -- including his time-tested methodology and powerful tools.

Students will:

Learn to identify and execute Diamond's high-confidence 80/20 trade setups

Develop the military-like discipline and technical precision necessary to succeed in the cruel world of trading (where only 5% of traders survive)

Make 45-year market veteran Dick Diamond your personal mentor and trading coach during and after the live event.

Did you know that 95% of all traders fail?

Sure, many traders make a picks that wins here and there. But the overwhelming majority never realize their dream and become a career trader.

The rare few who do almost always adhere to strict rules and indicators.

Yet where does those "rules" come from? Which ones are good... and which are downright dangerous?

More specifically, what do they mean? Many traders are wise enough to know they need a mentor, but that's where so many seem to go wrong. After all, one trader's rules won't work for another trader, especially in all markets and all environments. So choosing the right mentor is one of the most important decisions you'll make as a trader.

"Choosing the right mentor is one of the most important decisions you'll ever make as a trader."

The obvious question is: Who will YOU trust to teach you to trade your own account? Someone with fast-money promises and a fly-by-night record? Or, someone with a proven record of success in up, down and sideways markets – for the past 45 years?

Please know that if visions of exotic cars, mega yachts and multimillion dollar mansions are flashing through your head, then this course is probably not for you. But: if you're committed to a rational, disciplined, hard-working approach to trading – one that truly works and has survived the test of time – then do keep reading …

Learn Why Dick Diamond Sets Aside a Few Days a Year From Trading to Teach People Like You

Dick Diamond, once called "the Man in the Black" for his comfortable trading record, has been a full-time day trader since 1965. After Diamond helped technical analyst Robert Prechter master the important nuances of options trading, which in turn led him to win the U.S. trading championship. Since then Prechter has encouraged Diamond to share his winning method with others.

Though fiercely confident that others would benefit from his approach, Diamond was reluctant to take time away from full-time trading. So he agreed to give it a shot – with one unheard-of condition: He wanted to include real, live trading. "How do you teach trading without demonstrating real-money risk?" Dick thought. "Risk and discipline are crucial parts of the game; they're the most important lessons a trader can learn."

Soon after his first teaching few sessions, students began sending in their success stories. Dick soon realized that the fulfillment he gained from teaching his method to others more than compensated for the time he took from his personal trading.

It was obvious that he didn't need to stop trading just because students are watching. Instead Dick makes real-money trades an integral part of his lessons. Win or lose, Dick realized that students learn more from real trades, in real time, using real money.

Now, nearly 30 years after his first Market Mentor Trading Course, Dick has taught his time-tested method to over 1,000 traders. And while little has changed about Diamond's disciplined and technical approach, what has changed dramatically since those early sessions is technology.

With help from a few colleagues and former students, Diamond uses several powerful technologies to enhance his analysis methods and speed up the homework process. The tools he's come up with are incredible in their insight, depth, and ease of use.

"Dick Diamond has found that students learn more from real trades, in real time, using real money, so that's what you get to do in his course."

Wednesday, March 21, 2012

Forex Profit Multiplier Trade Alert Software


Last week, I alerted you to the release of the step-by-step Forex Profit Multiplier program that's totally taken the Forex trading community by storm.

Well, its developer, Bill Poulos, just announced that:

* He's pulling it OFF THE MARKET on Thursday (TOMORROW) at 11:59pm Eastern (New York time).

That gives you just over 24 hours to secure your copy and download his custom, intelligent Trade Alert Software before the doors SLAM SHUT.

He also put up an inventory counter that shows the remaining number of programs he's planning on releasing . . . as of this writing, it shows "49 copies left" here.

Click the link above to see the latest inventory count:

Why it makes complete sense.

If you're still struggling with the Forex markets, or are just sick and tired of all the confusing, conflicting, and needlessly complex information out there about Forex . . .

. . . then I really encourage you to take 35+ year market veteran Bill Poulos's Forex Profit Multiplier for a test drive.

Why? Well, I was thinking about what specifically it is that I like the best about this program and what sets it above most of the other methods and courses I've seen. Here's what I came up with:

** COMPLETE -- This is one of the most complete Forex trading programs I've ever seen. Period. There's material to get beginners going quickly, and it's structured in such a way that more experienced traders can jump right into the "meat" of the
methods.

Further, it's a multimedia powerhouse -- on top of the amazing Trade Alert Software that has everyone excited, it's also packed with screen capture CD-ROM videos to full color reference manuals to detailed "trading blueprints". It's designed to make
sure you really understand all the concepts quickly and effectively.

** CLEAR -- Bill's teaching style is among the best I've ever seen. He speaks in a clear, nurturing way that steps you through all the material. It's very apparent why so many traders keep coming back to Bill's courses.

** CONSTANT -- I think of this as the "surprise" of the program. Bill constantly follows-up with his students after they get his course. He mentions this on his video presentation, but I really believe this is the true value of his program. His students receive regular new bonus video lessons, and Bill is fanatical about offering concise, thoughtful answers to his students' questions.

(He's even throwing in a complete 8 week group coaching package at no extra cost - that's plain CRAZY high value that you'd have to spend a LOT of money on if you were to buy it separately - and you get it for NOTHING extra . . . )

So that's what stands out for me about the Forex Profit Multiplier. And frankly, I'll even go out on a limb and say that if you can't succeed in the Forex markets with Bill's course, then you probably never will. That's how powerful his
program is.

Fair Warning

I cannot promise that copies of the Forex Profit Multiplier will be available when you visit the web page - it may already be completely sold out.

If that's the case, please put your name on the waiting list. Bill may release more copies in the future, after the initial "spurt" of student support inquiries slows down, but I can't say when that may be.

If any copies are left, you can claim one by clicking the link above:

I just checked Bill's real-time inventory counter before sending this email to you and it now reads 43 copies available. Time is running out. You can check it here:

One final thing . . . I've seen just about everything available on the market to help you succeed with Forex, and the Forex Profit Multiplier is the most affordable way to get an immediate edge - hands down. I don't think you'll find this much
value ANYWHERE else right now . . .

Tuesday, March 20, 2012

Gold, Silver, Oil and the Fear Index Trends

This week may provide some trading opportunities for us if all goes well now that most traders are investors are all giddy about stocks again. Last week we saw money move out of bonds and into stocks and the bullishness vibe in the air reminds of many market peaks just before a 5%+ correction in stocks.

Depending how the SP500 unfolds we may be going long or short equities, long precious metals, long bonds, and our VXX trade may spike in our favor.


Bonds: After last week’s strong move down in bonds as the HERD moved out of bonds and into stocks it may be providing us an opportunity to catch a dip or bounce in the price of bonds. If the stock market sees strong selling this week money will run back into bonds.


Looking at precious metals it looks as though gold, gold miners and silver may still head lower this week. The charts are still bearish and pointing to another multi percent drop in value. Gold will look bullish around $1600, Gold miners (GDX) around $48, and Silver around $30 but we need to see one more wave of strong distribution selling for that to take place.


Crude Oil has recovered nicely from its 5 wave correction which shook us out of the trade for a profit. I still like the chart for higher prices but with it trading at resistance and a high possibility of sellers stepping back in at this level I am not getting involved here.


The SP500 made a new high but has run into sellers taking prices straight back down. The chart in pre-market looks as though we will see lower stock prices later today and with any luck the fear index (VIX) will continue to rise in our favor.

Monday, March 19, 2012

Finding Cinderella Stocks


I don't have a stock pick this week. I don't see any low-risk high-reward buy or sell stock picks this week. I'm still waiting for the market to sell off but in the mean time its seems to be still grinding slowly higher.

Have you filled out your NCAA tournament brackets yet? Every year the tournament has its upsets with a #13 seed unexpectedly beating a #4 seed or that team that was on the bubble, but which still got in, going to the Sweet Sixteen.

The problem with filling out the brackets is: how do you know who is going to be the Cinderella team this year? There's always one team that no one really foresaw getting it together just in time for the Big Dance. Trying to guess who it will be is part of the fun of watching.

Stock picking can be a lot like filling out the NCAA bracket. There are plenty of #1 seeds and everyone knows who they are. Those big guns are companies like Apple and Caterpillar. If you invest in one of them, odds are on your side. After all, in the NCAAs, no #16 seed team has ever beaten a #1 seed.

But how do you find the Cinderella stocks that are the #9 seed that goes to the semifinals? These are stocks that are flying under the radar. They may be turning around their business but investors aren't paying attention yet.

All the #9 seeds, and many companies, may look similar on paper, but which ones will have the special magic to break out of the pack and surprise people?

3 Ways to Find Cinderella Stocks

#1: Look for Winners

To be a Cinderella story in the NCAA tournament you have to win. (Obviously!)

For companies, though, the winning begins when its earnings history starts to turn around. Many times, the analysts are slow to recognize that there is a change in the trajectory in the company, so the company starts easily surprising on the estimate every quarter.

Winning, then, is a company putting up big earnings surprises or a streak of them. When this happens, the analysts will then usually start raising their own estimates in expectation of better things still to come. This good news leads to rising estimates and, hopefully, earnings growth.

Choose stocks that have rising estimates.

#2: Buy Growth Stocks

Companies that are turning it around can be found in any sector. They can be big or small. But the best returns come from buying the stocks that have the highest growth rates. That is because once the turnaround takes place the PE will start to rise from abnormally low levels. The higher the growth rate of the company, the more the multiple will expand and the greater your final return.

Focus on growth stocks for the best turnaround profits.

#3: Value Is Still King

Not every cheap stock is a bargain. Fundamentals, such as rising earnings, still matter. A company may trade for a $1 but if it's just days away from bankruptcy then it's likely not going to be a good turnaround possibility.

In the NCAA, the bracket busters almost always come from a Cinderella team. It's not risky to pick all four #1 seeds to make it to the finals. But betting on a #9 seed to make it there? That takes a lot of guts.

It also takes guts to buy a turnaround stock. You can cut down on the risk by buying one that is trading at a discount to its peers. I use low PE, PEG and Price-to-Book ratios as a way to find value.

Where to Find Cinderella Stocks Right Now

Turnarounds can easily be detected when a company's earnings estimates suddenly reverse from downward to upward. So the proof of the turnaround occurs when a stock makes a sudden leapfrog from a lowly Zacks #5 Rank (Strong Sell) or Zacks #4 Rank (Sell) all the way to a Zacks #1 Rank (Strong Buy).

But that one indicator is not enough. It's important to add key measures of earnings growth and reasonable valuation to the mix. That's the basis for my alert service, the Zacks Turnaround Trader. During a 10-year test period, through bulls and bears, the strategy's sudden #1 Rank stocks outperformed the full list of #1s by more than 2.5 times.

Click the link above to learn more about Zacks Investment Research Turnaround Trader.

Thursday, March 15, 2012

Largest-Ever U.S. City Bankruptcy Is Coming


If the Economy's "Recovering," Why is the Largest-Ever U.S. City Bankruptcy on the Horizon?

As pundits chatter about an economic recovery, 80 miles east of San Francisco you'll find a city (pop. 292,000) facing bankruptcy:

Stockton is on the verge of becoming the largest city in the United States to declare bankruptcy . . .

San Francisco Chronicle (3/4)

Bloomberg reports (2/25) that it costs the city $175,000 just to get a consulting firm's fiscal evaluation. Management Partners issued a report which said:

. . . the city took on a large amount of debt in anticipation of ongoing growth that now exceeds the city's ability to pay.

Compensation packages exceeded sustainable levels and the city assumed a significant liability for improved retiree health coverage without sufficient recurring revenues to cover growing costs...

Stockton also has one of the nation's highest home foreclosure rates and has been called "Foreclosureville USA."

And Moody's just downgraded Stockton's rating to Ba2, which is two levels below investment grade.

In the same Bloomberg article, the California State Treasurer said "The reputational stain can bleed onto other local issuers and the state, and that can hurt taxpayers in the bond market."

Yet in recent months investors have been enamored with municipal bonds. Our December Financial Forecast said:

No matter how thick the storm clouds over state and city finances become, the belief in a bullet-proof municipal bond market just seems to grow. As the [chart below] shows, the ratio of AAA municipal bond yields to comparably-dated U.S. Treasury yields rose . . . in August.


. . . investors still believe munis are safe, but we'll stick with our bearish forecast . . . the evidence continues to mount that a change for the worse is underway. Deflation will only accentuate the impact of waning revenue streams, underfunded pension liabilities and bloated labor costs.

Financial Forecast, Dec. 2011

Other municipalities facing recent bankruptcy include:

Jefferson County, Alabama (home of Birmingham)
Central Falls, Rhode Island
Boise County, Idaho

Jefferson County, Alabama is the biggest U.S. municipality to face bankruptcy; Stockton is the biggest city.

In fact, as of December there were eleven municipal bankruptcies in 2011. Many other cities face extreme financial woes.

Economic recovery?

Look under the hood so you can see what kind of condition our economic engine is really in. Prepare for what's ahead.

EWI's NEW free report, The Economic Rot Beneath, reveals important economic numbers that you are not currently reading in the mainstream headlines but you should be.

For instance, did you know stocks priced in real money (gold) are down 87%? Or that U.S. manufacturing jobs are half of what they were in 1979? Or that housing starts per capita are back to 1922 levels?

Learn what's really going on in the U.S. economy. Download your free report now by clicking the link above.

Tuesday, March 13, 2012

Multiplying Your Forex Profits with Less Risk


A few years ago, one of the Forex trading community's most seasoned trading "veterans" solved the #1 request his Forex trading students from all around the world had been asking him for:

* "How can I make MORE money in LESS time, even if I'm not a technical Forex 'geek'?"

To do this properly, he had 2 big challenges:

1. How to shorten the time needed to actively find & manage the highest probability, lowest risk trades . . .

2. How to give you total control to manage these trades to completion, so your portfolio is protected at all times . . .

After a LOT of research and testing, he ended up training THOUSANDS of students from all around the world how to MULTIPLY their profit potential in these highly lucrative markets in 60 seconds or less of active trading using a pretty unusual
technique.

The trading results from his approach have been SHOCKING, especially in the past 2 months - as you're about to see.

Now, he's finally ready to reveal the ENHANCED version of his Forex trading approach, and it all starts in the presentation by clicking the link above.

The $20,000 Secret Weapon

The "secret weapon" behind his discovery is a custom piece of intelligent software that he paid over $20,000 to develop that can predict with a high level of accuracy which way any of the 6 major Forex pairs are headed in the next 8 hours . . .

It does all the "hard work" of finding the best trade setups, saving you hours of analysis, but then gives you total control to place and manage the trades yourself so your portfolio is always shielded from risk.

And from what I've seen, no one is trading like this (yet) . . .

No, it's NOT a "robot"... it's NOT an "expert advisor" . . . it's NOT even a "plug-in"...

It's a complete, step-by-step approach to trading that's probably unlike anything you've seen before.

He reveals it all in his new trading lab discovery presentation by clicking the link above.

It's awesome, and it's something anyone can do, regardless of your experience. Plus, it easily fits into your busy schedule because you really only need 60 seconds here and there throughout the day to place and manage your trades.

This presentation will probably only be online for a short time in order to get your feedback on this discovery, so if any of this interests you, click the link above so you can watch it ASAP.

Monday, March 12, 2012

MedTech Industry Stock Outlook


I’ve got a low-risk high-reward short-sell this week on Varian Medical Systems. The markets slowly starting to rollover here, and its correction time to the downside in my opinion. Below is an extensive forecast outlook analysis on the medical sector. My sell entry, stop-loss, and take profit areas on Varian are at the bottom of this med sector analysis.

Zacks Investment Research report that last year proved to be challenging for medical technology (“MedTech”) stocks given the exigent economic conditions and the precarious healthcare environment. The performance of incumbent players was hamstrung by several macro issues, including sustained price and procedure volume pressures.

The difficult macroeconomic backdrop, pricing headwinds, austerity measures, reimbursement pressure, a still unstable job market and the impact of health care reform continue to weigh on the medical devices industry, exacerbated by Europe's sovereign debt plight.

With fewer patients going under the knife accompanied by concerns of overuse of devices, companies in the cardiovascular and orthopedic domain continue to grapple with tepid utilization. After having a buoyant first half, the MedTech sector went through a rough patch in the back half of 2011 given the weakened sector fundamentals, sluggish key end-markets and macro pressures. Many of the MedTech stocks lost a third of their values last year.

Although the industry is still saddled with the unfavorable macro environment, it is expected to fare relatively better in 2012 thanks to several attractive growth opportunities and healthy tailwinds including improving hospital spending, emerging markets and pent-up demand.

Industry Dynamics

The global medical devices industry is fairly large, intensely competitive and highly innovative, with estimated worldwide sales of more than $300 billion in 2011. The U.S. is the largest market, with estimated annual revenues in excess of $100 billion.

Innovation is the quintessence in the MedTech industry, leading to continuous advancement in treatment and delivery of health care while driving competitiveness through differentiated and improved product offerings.

The highly regulated medical devices industry is divided into different segments including Cardiology, Oncology, Neuro, Orthopedic and Aesthetic Devices. The U.S. medical devices industry continues to grow at a brisk pace, backed by an aging Baby Boomer population, high unmet medical needs and increased incidence of lifestyle diseases (including cardiovascular diseases, diabetes, hypertension and obesity). Neuro, orthopedic and aesthetic represent the fastest growing categories.

The MedTech industry is plagued by several issues, including pricing concerns, hospital admission and procedural volume pressures, uncertainty surrounding health care reform, Medicare reimbursement issues and regulatory overhang, which have left many investors scratching their heads.

The beleaguered U.S. implantable defibrillator market continues to bother cardiac devices makers, as reflected by sustained implant volume pressures. On the other hand, companies in the orthopedic domain remain affected by a still choppy reconstructive implant market as they face sustained pressure across hip, knee and spine businesses.

While several catalysts for growth in 2012 exist -- such as new product cycles, an aging population, geographic expansion, ongoing transition towards minimally-invasive techniques and emerging markets -- lingering issues from last year remain an overhang.

Adding to the pain is the foreign exchange headwind (stemming from the recent strengthening of the U.S. dollar) as medical devices companies derive a chunk of revenues from overseas markets. Factoring in the negative currency impact, several companies have already dialed back their forecasts for 2012. Medical devices makers are also expected to contend with margin pressure in 2012 given the sustained pricing headwind.

The aging population nevertheless represents a major demand catalyst for medical devices. The elderly population (65 years and above) base in the U.S. is roughly 40 million, representing around 13% of the nation’s population and accounting for a third of health care consumption. Federal government estimates indicate that the elderly population will catapult to 72 million by 2030, ensuring a major boost for medical devices utilization.

Given the maturing legacy markets, medical device companies are looking to expand into lucrative incipient markets. Expansion in the emerging markets, especially those with double-digit annual growth rates, represents one of the best potential avenues for growth in 2012 and beyond.

Healthcare Reform: Tax Fear Grips MedTech

The Government-mandated health care reform in the U.S. -- the Patient Protection & Affordable Care Act (labeled as "ObamaCare") -- has raised a degree of uncertainty for medical devices companies. The reform has led to a less flexible pricing environment for these companies and may pressure pricing across the board.

Moreover, the highly controversial proposed tax, representing a part of the Act, will be a drag on devices companies. When implemented, devices makers will have to pay 2.3% excise tax on sales of certain products beginning 2013.

The outlay is expected to throttle innovation as it will impact investment in R&D. Moreover, it will lead to job cuts and higher prices for customers. The federal government expects to raise $20 billion from the tax over a ten-year period. In response, devices makers have started to take up several initiatives including headcount haircut and other restructuring activities to counter costs associated with the implementation of the new tax.

Nevertheless, the Act places considerable emphasis on patient safety and aims to reduce the number of uninsured people (from 19% of all residents in 2010 to 8% by 2016). The new law is expected to eventually extend health insurance coverage to an estimated 32 million Americans currently not insured.

Reimbursement Scenario: Bumps Ahead

Medical device companies are susceptible to significant reimbursement risks as their products are reimbursed by the Center for Medicare and Medicaid (“CMS”) and commercial payers. Third-party reimbursement programs in the U.S. and abroad, both government-funded and commercially insured, continue to develop different means of controlling health care costs, including prospective reimbursement cuts with careful review of medical bills and stringent pre-approval requirements.

An increase in the publicly insured base (resulting from health care reform) is expected to lead to lower reimbursement obtained by physicians, hospitals and other health care providers as public insurance generally offers lower reimbursement vis-à-vis private payors. Moreover, private insurance companies are increasing their scrutiny of certain surgeries, which will continue to materially impact utilization in 2012.

Federal budgetary pressure (given a potential reduction in U.S. government’s health care spending) has also raised reimbursement risk as payors may more actively pursue their cost reduction initiatives.

In an effort to curtail costs, the CMS, in November 2011, announced a pilot program which directs Medicare recovery audit contractors to perform a pre-payment audit (by means of reviewing patient records, claims and other documents) for certain “big ticket” cardiology and orthopedic procedures in key states, including Florida, starting January 2012.

The goal of this move, which represents a shift from the conventional “pay-and-chase” method, is to avoid unnecessary/inappropriate payments and reduce Medicare payment error rate. The procedures include pacemaker and defibrillator implantations, joint replacements and spinal fusions which will go under the CMS scanner before payment. The measure, which will eventually delay payments, has goaded strong reactions from the medical community.

The 510(k) Reform – A Paradigm Shift

The U.S. Food and Drug Administration (:FDA) declared, in August 2010, a set of ambitious proposals for revamping the 510(k) device approval protocols. The 200-page report, consisting of 55 proposed changes, was designed to serve as a blueprint for the reform, representing FDA’s vision to streamline the device review process and make it more predictable and transparent.

As part of the listed proposals, the FDA intends to create the “Center Science Council,” which will oversee medical device science-based decision-making. Moreover, the regulator is seeking additional information regarding the safety and efficacy of devices in the 510(k) submissions. The FDA also aims to form a subset of moderately risky devices (to include devices such as infusion pumps) under the “Class IIb” moniker that would require submission of more clinical data and manufacturing information compared to the existing Class II devices.

In a major move, the FDA outlined a plan in January 2011, consisting of 25 proposals, designed to improve the regulatory approval pathway for medical devices. The proposals, announced by the FDA’s Center for Devices and Radiological Health (“CDRH”), are aimed at overhauling the three-and-a-half-decade-old 510(k) device approval program by which roughly 4,000 devices have been cleared annually.

The list includes streamlining the de novo review process for lower-risk devices, clarifying when devices companies should submit clinical data for a 510(k) application and establishing a new council of senior FDA experts. President Obama emphasized that the planned changes represent the government’s efforts to keep patients safer and accelerate the approval process of innovative and life-saving products.

The CDRH forwarded seven of the controversial proposals to the Institute of Medicine (“IOM”), which provides national advice on medical issues, for independent review. In a shocking move, in late July 2011, the IOM recommended the FDA scrap the 510(k) process and replace it with a new regulatory framework that integrates pre-market clearance and better post-market surveillance. The IOM review concluded that the 510(k) process fails to evaluate the safety and effectiveness of Class II devices before they enter the market. The recommendation was met with immediate industry-wide criticism.

However, the FDA noted that the IOM’s recommendation is not binding and the 510(k) process should not be eliminated. As such, the agency continues to move ahead with its reform plans.

Among the latest developments, the FDA, on December 27, 2011, issued a draft guidance which aims to provide detailed information about the current review practices for 510(k) submissions. The guidance offers greater clarity and transparency on the regulatory framework, policies and practices underlying the agency’s 510(k) review process.

The primary aim of the guidance is to elucidate certain key points (outlined in a decision-making flowchart) in the decision-making process for determining substantial equivalence of devices reviewed under the 510(k) program. Devices makers must prove that their devices are substantially equivalent to a predicate device already marketed to secure the FDA green signal. The FDA is currently seeking public comments on the draft guidance and, if finalized, it will replace the old documents which have long defined the approval pathway.

While the 510(k) overhaul is still in process, it may eventually make device approval more complex, lengthy and burdensome. Moreover, with the expected rise in the regulatory bar for approvals, medical devices companies may be required to shell out more for R&D.

Our Thesis

For 2012, we advocate companies providing life-sustaining products and procedures, given their healthy recurring revenue streams. Further, investors should look for stocks with strong earnings quality, healthy growth trajectory, and liquidity profiles as they appear attractive considering their ability to leverage strong balance sheet and cash flows in maximizing shareholder value in the form of dividends and share repurchases or use them for value acquisitions. Stocks with healthy dividend yields offer a cushion against market volatility.

MedTech companies with vast product range/healthy pipeline and strong infrastructure are also better poised for improved returns. Moreover, companies focusing on more judicious R&D investment, expansion into new markets and cost-saving through restructuring are better placed for 2012. These companies have greater capability of withstanding the sustained macro-level issues and increasing regulatory pressure.

Pressed by a still-soft economy, top-tier devices makers are expected to continue their merger/acquisition binge in 2012, especially as a means to enter new markets and diversify their portfolio. Although this represents an important avenue for growth, we continue to advise investors to shun companies that have grown historically through extensive acquisitions only. These companies face increasing challenges in integrating acquired businesses and delivering operational synergies from them, which are considered to be the prime reason for failures of mergers and acquisitions. We are also cautious of dilution associated with these transactions.

At the end, we still recommend investors to eschew companies making non-life-sustaining products and procedures (including elective procedures such as hip and knee replacement), as they are still engulfed by softened patient demand.

Opportunities

In our universe, we see growth potential in companies dealing with cardiovascular devices, neuro and radiation oncology products. Names include Medtronic Inc., Boston Scientific Corporation, St. Jude Medical, Edwards Lifesciences, ZOLL Medical, Abiomed Inc. and Varian Medical.

The above-listed companies make life-sustaining products and are less affected by economic instability. These companies are all leading players in their respective fields and are potential winners in the long run. Some of these players have been successful in weathering the storm (pricing, currency and volume headwinds) in the cardiovascular space.

With a slew of new products, the Big Three players (Medtronic, Boston Scientific and St. Jude) in the $6.5 billion implantable cardioverter defibrillator (“ICD”) market are well-positioned to gain market share, despite the challenging business environment and several other barriers to growth. These companies have a number of levers to pull and represent a good bet for long-term investors.

Among the names above, Medtronic, the undisputed leader in the MedTech space, has a diversified presence in cardiovascular, neuro, spinal, diabetes and ENT and boasts of an attractive pipeline. Despite sustained weaknesses in its key ICD and spinal implants businesses, we like the company’s efforts to augment/diversify its product range, expand into emerging markets for growth, and generate strong cash and healthy dividend yield. Besides, the new MRI SureScan pacemaker and Protects ICDs should offer support to its core CRM business.

Boston Scientific has maintained its leadership in the drug eluting stent (“DES”) market. The earlier-than-expected approval of the next-generation DES product Promus Element coupled with a new line of ICDs better places the company for 2012. Although Boston Scientific’s December quarter results were disappointing and its CRM segment remains challenging, we believe that the company’s continuous focus on strategic initiatives (including new products and cost cutting measures) to drive growth and profitability should yield steady results moving ahead.

Boston Scientific is leaving no stone unturned to stay on course for growth. It has undertaken a series of management changes and restructuring initiatives that are expected to contribute to the bottom line and margins. The company is also expanding its footprint in the emerging markets by reinvesting the savings from restructuring efforts.

We remain intrigued by St. Jude’s ability to consistently produce positive earnings surprises and revenue growth. The company is gaining ICD market share despite a sluggish market condition. St. Jude is poised for incremental opportunities in CRM on the back of strong product momentum. A surfeit of new growth drivers are expected to offer opportunities for accelerated sales growth over the next few years.

St. Jude recently won the U.S. approval for its Unify quadripolar CRT-D system. The device is expected to help the company win ground in the highly competitive U.S. defibrillator space in 2012. St. Jude is currently the only company to offer this technology globally. Moreover, St. Jude is well placed to leverage the solid growth momentum in the atrial fibrillation market.

Beyond the MedTech majors, we are also optimistic about scientific instrument maker Thermo Fisher Scientific (NYSE:TMO - News). The leading, diversified scientific instrument maker has been successful in expanding operating margins over the past few quarters on the back of operational efficiency and cost discipline. It has strong international exposure and is focusing on acquisitions and the emerging markets for growth.

Robotic surgery is another area which appears to be better placed for growth in 2012 and Intuitive Surgical (NasdaqGS:ISRG - News) clearly leads the pack with its state-of-the-art technology. Intuitive enjoys a virtual monopoly in robotic surgery and continues to deliver forecast-topping earnings. Its sales are growing at a torrid pace buoyed by the da Vinci surgical system.

Another good pick is Varian, the world’s leading manufacturer of integrated radiotherapy systems for treating cancer. The company is poised to increase its market share in the radiation oncology market. Varian is currently enjoying a healthy demand for its RapidArc radiotherapy technology, which is meaningfully contributing to its oncology net order growth.

Edwards Lifesciences represents another value proposition. The company received, in November 2011, the U.S. approval for the highly-anticipated Sapien transcatheter aortic heart valve (for inoperable patients). With this approval, it became the first company in the U.S. to receive approval for a transcatheter device which allows surgeons to replace a patient's ailing aortic valve without resorting to open-heart surgery. Banking on the launch of the Sapien valve in U.S. and other product developments, Edwards expects to record robust sales growth in 2012.

We also believe that cardiac assist devices maker Abiomed represents another attractive opportunity for investors. The company possesses a broad portfolio of products that are life-sustaining in nature and has been able to deliver sustainable growth in a challenging economy. Abiomed enjoys strong demand for its Impella cardiac pumps.

We are also upbeat about the prospects of resuscitation devices-maker ZOLL Medical. ZOLL is a leading player in the global market for external defibrillators, which is worth more than $1 billion. The company’s LifeVest wearable defibrillator business continues to grow at a healthy quarterly run rate, benefiting from increased awareness of the product and associated sales force enhancements. Moreover, its significant international presence should also push growth.

Emerging Markets: A Big Role to Play

The leading U.S. cardiovascular devices companies such as Medtronic, Boston Scientific and St. Jude are exploring new avenues of growth beyond the mature pacemaker and ICD markets. These companies are increasingly seeking opportunities to expand into fast-growing new therapy areas within or outside the cardiology space, including markets such as atrial fibrillation and neuromodulation.

Among the emerging cardiology markets, an encouraging prospect represents the structural heart market with its major categories including Patent Foramen Ovale (:PFO) and Left Atrial Appendage (:LAA) occlusion. The AGA acquisition has provided St. Jude with devices targeted at PFO and LAA markets.

Moreover, the Transcatheter Aortic Valves (:TAVI) market, an opportunity estimated in the ballpark of $2 billion, is emerging as a substantial new growth prospect for the top-tier MedTech companies. St. Jude has registered the first human implant of its next-generation TAVI product dubbed Portico. The company is optimistic to enter the European TAVI market with its Portico valve before end-2012.

Medtronic’s TAVI offering, CoreValve, is already approved in Europe and is currently undergoing evaluation in a pivotal trial in the U.S. Boston Scientific is planning to launch its Lotus valve in EMEA in the second half of 2013. Edwards has the first-mover advantage in the U.S. in TAVI with its Sapien valve.

Intravascular ultrasound imaging (:IVUS), Optical Coherence Tomography (:OCT) and other next-generation imaging technologies are expected to offer incremental opportunity for companies such as Volcano Corp. (NasdaqGS:VOLC - News), Boston Scientific and St. Jude. The OCT market has been projected to grow at a double-digit clip over the next five years.

Another emerging prospect is renal denervation for treating resistant hypertension. We believe that emerging markets represent a key catalyst for growth in 2012 and beyond.

Favorable Hospital Spending Cycle

A soft hospital capital spending backdrop was challenging for MedTech stocks in 2010. The North American and European markets were affected by shrinking budgets for equipment purchases at the height of the recession.

However, results in 2011 indicate a silver lining stemming from continued recovery in hospital spending in the U.S. Spending levels are improving as hospitals appear to have started replacing their worn-out equipment. A healthy replacement/upgrade cycle is expected to favorably impact results in 2012.

Weaknesses

A Still-Clouded Orthopedic Space

We continue to advise investors to spurn companies in the orthopedic domain. Companies in this roughly $37 billion market continue to struggle as patients defer their elective procedures given the lingering economic softness, exacerbated by sustained pricing pressure.

The reconstructive market fundamentals (pricing and volume) remain challenging with little or no clear visibility for a material turnaround in the near future. The joint replacement market has been hit by patient deferral of elective procedures, leading to weak demand for hip and knee implants.

Companies that fit the bill include Stryker, Zimmer Holdings, CONMED Corporation, Wright Medical Group and Symmetry Medical. We remain cynical about these stocks given the sustained price/volume pressure.

However, we acknowledge that companies such as Stryker and Zimmer, with less exposure to metal-on-metal (MoM) hip products, are better placed to gain share than their highly-exposed counterparts such as Johnson & Johnson’s (:JNJ) Depuy and Wright Medical. The ongoing transition from MoM implants to next-generation hip systems represents a tailwind for these players.

Pricing: A Lingering Issue

Pricing compressions on hips, knees and spine products, which impaired the performances of most of the orthopedic companies in 2011, remain a key concern, at the macro-level. The effect of government health care cost containment efforts and continuing pressure from local hospitals and health systems as potential Medicare reimbursement cuts create additional reasons for hospitals to push back pricing. This is expected to continue hurt selling prices on a global basis.

Moreover, the advent of group purchasing organizations (GPOs), which act as agents that negotiate vendor contracts on behalf of their members, has also put pressure on pricing. The prevailing economic climate has bolstered the bargaining power of GPOs. The scenario in 2012 is expected remain challenging as hospitals continue to push back pricing.

Spine Still Hurts

The spinal market has been worst hit by pricing/volume headwinds and payor push back as manifested by a moribund quarterly growth trend. Leading companies in the orthopedic space such as Stryker and Zimmer continue to experience price and volume pressure, evident in 2011 results.

Pricing pressure and reimbursement uncertainties coupled with austerity measures in Europe are expected continue to weigh on this market in 2012. Moreover, private payors are delaying spine surgeries by requiring more documentation before approving such procedures, thereby contributing to the slowdown in this market.

Volume: Still a Headwind

The $12 billion replacement hips and knees markets have been affected by lingering economic softness, as reflected in procedure volume pressure. Cash-strapped patients continue to defer surgeries given the weak economy and reimbursement-related pushback.

Procedural volumes in the U.S. have been negatively impacted as a result of a high unemployment rate, which has resulted in the expiry of health insurance as well as a decline in enrollment in private health plans.

As per the demographic analysis, these trends had a significant impact on the potential patient base for joint replacement procedures, those between 45 and 65 years of age and without any Medicare coverage. On the other hand, austerity measures are contributing to the reduction in procedure volumes in Europe. Governments across several European countries have taken up measures to curb spending on drug and devices, which is expected to thwart utilization this year.

The hip/knee market in Europe is expected to remain challenged in 2012. Volume headwind is likely to sustain this year as unemployment continues to influence procedure deferrals.

Companies such as Stryker and Zimmer derive a chunk of their revenues from replacement hips and knees. Most of the leading players in the orthopedic space reported weak knee sales in the most recent quarter, echoing a general softness in the market.

December quarter trends indicate sustained lumpiness in procedure volume growth across hip and knee markets (although manifesting signs of stabilization) and a substantial recovery is not likely, at least in the near term. In fact, it is still hard to pin down the timing of the rebound in procedure volume to pre-recession level. As such, we continue to recommend investors to steer clear of the above-mentioned orthopedic stocks until the pricing/volume pressure unwinds.

Sell Short Varian Medical Systems – Ticker VAR

Sell Entry: 69.63 to 67.15

Stop-Loss: 75.20

Take Profit Areas: 63.73 to 63.02, 60.66 to 60.07, 57.00 to 56.41, 50.98 to 50.51

Company Profile

Varian Medical Systems, Inc. designs, manufactures, sells, and services equipment and software products for treating cancer with radiotherapy, stereotactic radiotherapy, stereotactic body radiotherapy, stereotactic radiosurgery, and brachytherapy worldwide. Its Oncology Systems segment offers products, such as linear accelerators, brachytherapy afterloaders, treatment simulation and verification equipment, and accessories; and information management, treatment planning, and image processing software. This segment serves university research and community hospitals, private and governmental institutions, healthcare agencies, doctors’ offices, and cancer care clinics. The company’s X-ray Products segment provides x-ray tubes for use in a range of applications, including computed tomography scanning, radiographic or fluoroscopic imaging, mammography, special procedures, and industrial applications; and flat panel digital image detectors for filmless x-ray imaging. It sells these products to imaging systems original equipment manufacturers that incorporate them into their medical diagnostic, dental, veterinary, and industrial imaging systems; independent service companies; and directly to end-users. The company also designs, manufactures, sells, and services Linatron x-ray accelerators, imaging processing software, and image detection products for security and inspection purposes, such as cargo screening at ports and borders, and nondestructive examination in various applications. In addition, it develops products and systems for delivering proton therapy; and technologies in the areas of digital X-ray imaging technology, volumetric and functional imaging, improved X-ray sources, and technology for security and cargo screening applications. The company was formerly known as Varian Associates, Inc. and changed its name to Varian Medical Systems, Inc. in April 1999. Varian Medical Systems, Inc. was founded in 1948 and is headquartered in Palo Alto, California.

Click the Varian Medical Systems stock chart below for a larger view.

Friday, March 09, 2012

Is The Dollar Turning the Corner?


The next couple of weeks should see a number of new events both out of the US and Europe which could make for interesting times for the US Dollar. Two weeks ago, we saw a late week rally of the US Dollar. Is this a beginning of a larger reversal?

Today, US Non Farm Payrolls (NFP) will be widely watched by Forex investors. As a rule of thumb, the first 7 days of a new month usually signal the direction of a Forex currency pair and during this time period a trend is usually picked up and the pace of the price action is set.

What can cause the Buck to strengthen or weaken?

Let us look at two examples:

Germany's Finance Minister, Wolfgang Schaeuble compared Greece to a "bottomless pit." His claims that Greece will go bankrupt inflamed the Greek people. Greece's President, Mr. Karolos Papoulias, openly attacked the core of the Euro zone. "Who is Mr. Schaeuble to insult Greece? Who are the Dutch? Who are the Finnish?"

When risky assets such as stocks and commodities decrease in value, this will generally lead to the strengthening of a safe haven asset, like the US Dollar.

Alternatively, should these same risk classes move higher, a safe haven like the Dollar will lose value as investors flock to the higher yielding and riskier assets, like equities.

In closing, the NFP report will be key. Market expectations are being fueled as investors are following this closely watched report. Recent numbers have shown unemployment to be on a downtrend as job growth has been modestly growing. This is indicating an improvement in the US economy. Any surprises, as in the NFP misses expectations, might cause an unwanted market shock.

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Wednesday, March 07, 2012

The Great Depression's Most Unlearned Lesson


If the name Irving Fisher rings a bell, chances are you saw it attached to his quote from October 1929: He was on the record saying stocks had reached "a permanently high plateau."

Of course, the epic market crash came two weeks later. Fisher's reputation never recovered; the quote remains in circulation today.

Shame of it is, before that time the man's reputation as an economist had been well-earned and honorable. He was a successful inventor, health advocate, and prolific writer who made lasting theoretical contributions to the economic school of thought eventually know as monetarism. Milton Friedman said Fisher was "the greatest economist the United States has ever produced."

What's more, Fisher put his money where his mouth is -- which, in October 1929, meant that his considerable fortune was in the stock market. He lost everything in the crash and depression, including his own home.

For a time Fisher thought a fast recovery would follow, but soon enough he realized this was a grave misreading. He went back to the drawing board and undertook a study of the economic depressions of 1837 and 1873.

He published his conclusions in 1933, saying he had developed "what may be called a debt-deflation theory of great depressions." In brief, Fisher argued that great booms/depressions come with two "big bad actors" -- excessive debt, and a deflation afterward.

This analysis was spot on. But by the time he had it figured out, no one cared to hear anything from Irving Fisher about economics.

So in our day, the appalling irony is this: The conventional wisdom embraces Fisher's "permanent plateau" mistake, but is oblivious to the great lesson in economic reality he eventually learned.

That's why the new March issue of The Elliott Wave Financial Forecast begins with a Special Section titled An Impermanently High Plateau, which observes:

"If the economy is going to experience a depression... we should find evidence of Fisher's 'big bad actors.'"

Suffice it to say, the search for evidence is what this Special Section is all about. You can't afford not to know what that search uncovers.

You can read this Special Section -- and the rest of the analysis, forecasts, and unique charts in the March Financial Forecast -- risk free, on your computer screen in moments.

Click the Link Above to Get the Forecast for the Likely Intermediate-Term Direction of the Markets

The Elliott Wave Financial Forecast (EWFF) uses the Wave Principle to prepare subscribers for likely intermediate-term market moves before they happen. Co-edited by Steven Hochberg and Pete Kendall, EWFF is a monthly newsletter packed with wave analysis and commentary concerning important social and economic trends. With EWFF by your side, you can identify when it's best to invest in a market, and when it's best to step aside. That way you can minimize risk and maximize opportunity. See what's in the March issue now by click the link above.

Tuesday, March 06, 2012

The VIX Is Low So It's Time to Sell & Go!


Volatility Bounces Bottom Awaiting Bad News or Selling to Strike!

Over the past 5 months we have seen volatility steadily decline as stocks and commodities rise in value. The 65% drop in the volatility index is now trading at a level which has triggered many selloffs in the stock market over the years as investors become more and more comfortable and greedy with rising stock prices.

Looking at the market from a HERD mentality and seeing everyone run to buy more stocks for their portfolio has me on edge. We could see a strong wave of fear/selling hit the S&P 500 Index over the next two weeks catching the masses with their hand in the cookie jar . . . again.

If you don’t know what the volatility index (VIX) is, then think of it as the fear index. It tells us how fearful/uncertain investors are or how complacent they are with rising stock prices. Additionally a rising VIX also demonstrates how certain the herd is that higher prices should continue.

The chart below shows this fear index on top with the SP500 index below and the correlation between the two underlying assets.

Just remember the phrases “When the VIX is low it’s time to GO, When the VIX is high it’s time to BUY”.

Additionally the Volatility Index prices in fear for the next 30 days so do not be looking at this for big picture analysis. Fear happens very quickly and turns on a dime so it should only be used for short term trading, generally 3-15 days.

Volatility Index and SP500 Correlation & Forecast Daily Chart:


Global Issues Continue To Grow But What Will Spark Global Fear?

Everyone has to admit the stock market has been on fire since the October lows of last year with the S&P 500 Index trading up over 26%. It has been a great run, but is it about to end? Where should investors focus on putting their money? Dividend stocks, bonds, gold, or just sit in cash for the time being??

I may be able to help you figure that out.

Below is a chart of the Volatility index and the gold exchange traded fund which tracks the price of gold bullion. Notice how when fear is just starting to ramp up gold tends to be a neutral or a little weak but not long after investors start selling their shares of securities we see money flow into the shiny yellow safe haven.

Gold & Fear Go Hand-In-Hand: Daily Chart

Looking at the relationship between investor fear/uncertainty and gold you will notice scared money has a tendency to move out of stocks and into safe havens.


Trading Conclusion Looking Forward 3 months . . .

In short, I feel the financial markets overall (stocks, commodities, and currencies) are going to start seeing a rise in volatility meaning larger daily swings which inherently increased overall downside risk to portfolios and all open positions.

To give you a really basic example of how risk increases, look at the daily potential risk the SP500 can have during different VIX price levels:

Volatility index under 20.00 Low Risk: Expect up to 1% price gaps at 9:30am ET, and up to 5% corrections from a previous high.

Volatility index between 20 – 30 Medium Risk: Expect up to 2% price gaps at 9:30am ET, and up to 15% corrections from recent market tops or bottoms.

Volatility index over 30 High Risk: Expect 3+% price gaps at 9:30am ET, and possibly another 5-15% correction from the previous VIX reading at Medium Risk

Note on price gaps: If you don’t know what I am talking about a price gap is simply the difference between the previous day’s close at 4:00pm ET and the opening price at 9:30am ET.

To continue on my market outlook, I feel the stock market will trade sideways or possibly grind higher for the next 1-2 weeks, during this time volatility should trade flat or slightly higher because it is already trading at a historically low level. It is just a matter of time before some bad news hits the market or sellers start to apply pressure and either of these will send the fear index higher.

Click the CBOE VIX Volatility Risk Tool above for more Market Trend Forecasts

Monday, March 05, 2012

Weekly Stock Pick


Bearish Bias

Monday is when I always post a stock buy or sell stock pick each week. I don't have a stock pick this week, because I wouldn't be buying long at this point, and its a bit early to sell short just yet I think. I just don't see any low-risk high-reward longs or shorts this Monday. Maybe later in the week the markets show's us all some more clear direction. For me I'm getting ready to sell short.

DJIA Heading Lower

I see the market heading lower starting this week. We could see a test of resistance at 13,050 on the Dow Jones Industrials first before the reversal sets in, but I doubt that will happen and we will just head lower all this week.

Same for the SP500 and Nasdaq

I see the DJIA hitting major support at 12,550 later in the month. After that getting an oversold bounce up to about 12,700 then back down into lower lows. The same goes for the SP500 and the Nasdaq.

Bulls and Bears Fighting It Out

If you're bullish still, you probably stopped reading this possibly. If you're bearish, I would go on to say, if you want to initiate a new short-sell position this Monday or week, put it on Citibank - Ticker C. Make sure you place a stop-loss in case the market does head higher for some crazy reason.

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Thursday, March 01, 2012

Timing the Markets: Why 2012 is a Key Year


Fibonacci numbers follow a sequence that begins with 0 and 1, and each subsequent number is the sum of the previous two (0,1,1,2,3,5,8,13,21,34,55,89,144 and so on).

This famous sequence reflects the Golden Ratio 1.618 (or .618), a proportion one can observe in the shape of galaxies, ocean waves, the human body and face, molecules, and throughout the natural world.

Among the many examples of Fibonacci in nature is the world's fastest animal, the Peregrine Falcon.

This bird does not comprehend the Fibonacci sequence, but it instinctively applies the Golden Ratio as it approaches its prey at over 200 miles per hour.

You see, the Peregrine Falcon doesn't dive straight down when aiming for prey. It approaches its meal in a logarithmic spiral.

You might think that descending in a spiral would take longer than plummeting straight down. Not so, because a straight-diving Peregrine would have to shift its head to the side to constantly keep the prey in its field of vision. Duke University's Professor Vance A. Tucker observed:

Although the spiral path is longer than the straight path, a mathematical model...shows that the falcon could reach the prey more quickly along the spiral path because the speed advantage of a straight head more than compensates for the longer path.

The Peregrine Falcon descends in a logarithmic spiral that is similar to the one imposed over this idealized stock market price pattern below (note how the spiral demarcates the market's trend changes):


Can we both theorize and observe that the stock market operates on the same mathematical basis as so many natural phenomena? The answer is yes...The Fibonacci sequence governs the numbers of waves that form in the movement of aggregate stock prices . . .

. . . Does the Fibonacci-based behavior of the stock market reflect spiral growth? Once again, the answer is yes. The idealized Elliott concept of the progression of the stock market, as presented in [the figure above], is an excellent base from which to construct a logarithmic spiral...In this construction, the top of each successive wave of higher degree is the touch point of the exponential expansion...
Elliott Wave Principle, pp. 122 and 125

Co-authors A.J. Frost and Robert Prechter continue this line of thought a few pages later:

. . . market action is governed by the Golden Ratio. Even Fibonacci numbers appear in market statistics more often than mere chance would allow.

. . . the Wave Principle suggests the idea that the same law that shapes living creatures and galaxies is inherent in the spirit and activities of men en masse.
Elliott Wave Principle, pp. 127-129

Yes, Fibonacci-based patterns appear in market prices time and again -- and even in the time spans between major market junctures. In other words, Fibonacci math can be useful in stock market timing.

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