Monday, August 26, 2013, 02:46PM ET
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Watch this video as our Chief Market Strategist analyzes the current market environment and what the Pros are trading now. Join the Elite InTheMoneyStocks services; the Research Center,where swing traders & investors profit from the multiple day moves in the markets. Or our live trading room, the Intra Day Stock Chat, where the Pros trade the markets live everyday... get their expert market calls and analysis now, start with both services for 7 FREE DAYS here
Monday, August 26, 2013, 02:45PM ET
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Yesterday, I alerted everyone of a major level on Chevron Corporation (NYSE:CVX). This level dictated a bounce higher and was a near term long. Sure enough, the stock is trading up over a Dollar from that alert and more is coming. See the article HERE. If you bought yesterday on the posted article, you are enjoying great gains today. Cheers!
The stock should continue to bounce higher to a near term target of $122.00. Enjoy the profits folks. This is what it is all about. I am neither a long term bull or bear, just a swing trader who hops on the short side and long side when the charts alert it. Take the seven day free trial to the Research Center today and profit for life.
Monday, August 26, 2013, 02:44PM ET
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Yesterday, I alerted everyone to a monster 7 million share block buy on DryShips Inc. (NASDAQ:DRYS). You can read the article HERE. Today, the stock was started at outperform with a $2.75 target by Imperial Capital. First, you have to wonder who got the news yesterday and loaded the boat. Wall Street continues to be very shady. However, putting that aside, we saw the block buy and were able to alert everyone.
The stock has knocked on a major breakout trend line on the daily chart at 2.20. Should this break, there is significant upside to well above $3.00. Momentum would most likely trigger a short squeeze. Watch for a close above $2.20. Cheers to another great alert.
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Thursday, August 22, 2013, 10:22AM ET
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Almost every major stock market advance in the past 100 years has led to some type of stock market bubble. The last great bubble was in 2007, this bubble formed primarily in the credit and housing sectors. At that time, people were flipping homes, borrowing from banks without showing documentation of income, and tapping the equity out of their house like an ATM giving out free money. What was the cause of this latest and greatest bubble? Greed was the real cause. However, the easy money policy by the Federal Reserve and almost every bank on the planet that was the root of the problem.
It is important to understand why the Federal Reserve implemented an easy money policy in the first place. Well, in 2000 there was another market bubble that burst in the technology sector. Do you remember in the late 1990's when every company in the world was adding a dot com to the end of their name to try and boost their share price? There where companies that made no money at all with stocks that soared to new heights. Does anyone remember the Globe.com, CMGI, and countless others that traded to explosive price levels? The Globe.com stock traded from $9.00 to $90.00 on the day of its IPO. That bubble lasted longer than most people expected, but it did end very ugly. In fact, the NASDAQ Composite is the only major stock average that has still not made new highs from its 2000 peak of $5132.52. Today, the NASDAQ Composite trades at a $3691.50.
These days there are many unconventional methods being used by the Federal Reserve in order to try and stimulate the economy. In the past, the central bank would just lower interest rates and that would make money more available. Remember, the former head of the Federal Reserve lowered the fed funds rate to simply 1.0 percent in 2001. This was certainly one of the catalysts for the great housing and credit bubble once interest rates started to rise. Today, the current Federal Chairman Ben Bernanke has moved interest rates to basically zero percent. He made this move to lower the fed funds rate in December 2008 and it is still there to this day. In September 2012, Chairman Bernanke also decided to purchase $85 billion a month worth of U.S. Treasuries and mortgage backed securities. This is a lot of money printing or liquidity being thrown at the stock market, hence the effect has been new all-time highs in the Dow Jones Industrial Average and most other major stock indexes. Is this move higher in stocks another bubble in the making? Well, as long as the central bank does not cut QE-3 or raise interest rates everything looks great for the stock market at this time.
Currently, the Federal Reserve has about $4 trillion on its balance sheet. This is money that the central bank has printed to buy these securities. Eventually, the central bank will need to unwind there balance sheet and that $4 trillion at the central bank will need to be put back in the system. Theoretically, the central bank just creates this money out of this air. Could the great unwind of $4 trillion cause dramatic inflation? Perhaps it will, or perhaps the central bank will simply never unwind it and just continue to print more money to support asset prices. Can the stock market reap what it hasn't sown, or could the Fed's balance sheet of $4 trillion and counting be the mother of all bubbles? That is the great question that most economists should be asking themselves.
The irony here is that very few people if any at the central bank actually predicted the 2000, and 2008 stock market bubbles. These powerful people at the central bank have MBA's, mathematicians, statisticians, PhD’s and other prominent title holders at their disposal. Maybe this time is different, but everything happens in threes from what we have seen in life. Could the third bubble actually be the Federal Reserve itself this time around? We shall see soon enough. For now, the market is presenting opportunities for the trader and investor to take advantage of.Read the charts and take advantage of it while it is here.
Thursday, August 22, 2013, 10:18AM ET
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It was the legendary trader Jesse Livermore who said, "there is only one side of the market and it is not the bull side or the bear side, but the right side." In other words, Mr. Livermore was not picking sides or teams when it came to trading. Too often traders and investors have this bias about the stock market and fail to capitalize on the opportunities that the stock market gives us every trading day.
A couple of years ago I read an article about Micheal Burry. He was a hedge fund manager from 2000 – 2008. He made his fame and fortune by betting against sub-prime mortgages. What I found so interesting was that he said he rarely shorted stocks and most other equities, he usually bought stocks most of the time. But when he saw the opportunity to bet against sub-prime mortgages, he took the bet. You see, he took what the market was offering, he didn't force his will on the stock market. When the stock market told him that it was ready to break or fall he simply started to load up on the short side trades.
Something else I find traders and investors doing wrong is that they often look to get even with a stock after taking a loss in the equity. In other words, if they have lost money in a particular trade they try and get revenge on that stock. If there is any lesson to take from this article, it is to not take trading personally. The market is always right, until it isn’t. Remember, the CEO of a company does not know who is trading in their equity. Do not take stocks personal. Just trade every stock the in same manner by using charts and patterns.
Another mistake that many traders make is that they fall in love with particular stocks. In 2012, many traders were in love with Apple Inc (NASDAQ:AAPL). The stock was being upgraded everyday by countless major firms. Individual traders and investors would talk about the next great iphone release like it was curing cancer. The truth is, at that time there was smart phone saturation taking place in the market and the stock was under slow institutional distribution. As you all know, Apple Inc stock topped out just above $700.00 a share and dropped by more than 200 points in four months - a call which we traded for profit. The current Apple chart looks more like Cisco Systems (NASDAQ:CSCO), and Intel Corp (NASDAQ:INTC) from the 2000 top these days. In other words, the stock market knows that the company can no longer achieve the growth it once had. Every stock goes through this cycle, it is not just Apple Inc. The point here is to not fall in love with a stock or company, stocks are for trading not marrying.
The moral of the story is to not force your will on the market, just take what it gives you. Every trading day the stock market will give us opportunities. If the charts tell us the level looks good for a trade we take it. If the chart does not tell us that the level is solid then we leave it alone. Trading is all about buying major support and selling major resistance. The minor support/resistance levels should be left for the amateurs. This does not mean that we will win on every trade, but it does allow us to have the odds in favor and that is really all a trader can ask for.
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