Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your 1 p.m. market update for Tuesday, the 9th of August.
Will the Fed come to the rescue of the market?
Everything is possible, it just depends on how stupid the Fed wants to be. In the study of economic history and capitalism in America there are periods of maximum euphoria and maximum depression. You almost can't have one without the other, that is one of the ways capitalism works. We've gone through a period of time that we've seen unprecedented euphoria and debt put on America's chalkboard. And we have witnessed millions of Americans faking their way to happiness using credit cards.
As hard as it is for everyone to accept that the good times are over, it is now time for what everyone doesn't want... Economic pain. You may want to look at an earlier posting, that I posted in 2008 on cycles in American capitalism. It holds true now just as it held true 100 years ago.
The next shoe to drop will be interest rates. Interest rates have only one direction to go, and that is to the upside. This a fact of the marketplace and probably more pain than most people want to endure.
The potential for the equity markets to continue to erode and drift lower is very high, in my opinion. To temper that thought I'm going to say up front that I'm a trader, not an investor. Right now, the days of buy and hold are over and will not resume for many years to come.(See 100 years of capitalism). If I am right, the equity trends will remain negative with minor counter trend rallies. We could see the equity markets on the defensive until right before the 2012 elections. Only time will tell...
When I was a member of the Chicago Mercantile Exchange and trading in the pits, I first heard the expression, "they slide faster than they provide.” That was never more true than in the world markets yesterday.
Is the move to the downside in equities over? I don't think so, as I believe this is a replay of what happened in 2007 and 2008. There are several negatives for the current market climate. I'm not going to list the fundamentals, as they are well known to everyone.
Instead I am going to focus on all the technical... One of the oldest and perhaps, best tools that any technician has in their toolkit is a simple trendline. If one were to draw a line from 666.79 in Q1 of 2009 and extend that line through 1010.91 in June of 2010, it gives you an intersection point on the current chart exactly where our Trade Triangle kicked in last week. Breaking a trend line that is 30 months in duration is a major change event and change in sentiment for the market.
Another big negative is that the S&P 500 index was in an overbought position on the monthly charts. The market has subsequently taken some of the pressure away and appears to be heading to an oversold area. The daily and weekly charts are very oversold and we would expect to see a reflex rally from yesterday's lows. However, on the monthly charts this is certainly not the case. Any short-term rallies in this market will more than likely fail, as the predominant monthly trend for this index remains negative. We still believe there is more to come on the downside.
So let's go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011.
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S&P 500
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 90
Chances are that we reached an interim low point yesterday.The Fibonacci retracement zone has been satisfied and this market is in a heavily oversold condition. We would not rule out a reflex rally.
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SILVER (SPOT)
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 70
Silver is proving to be a negative for many precious metals enthusiasts as it is lagged quite dramatically behind the price of gold. Our -70 reading indicates more two-way market.
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GOLD (SPOT)
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 100
Yesterday, had all the earmarks of chaos, and potential mini top in gold. We would use our trade triangle as a timing tool.
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CRUDE OIL (SEPTEMBER)
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 100
The massive liquidation in the crude oil market yesterday looked to us like we have put in the bottom for the time being. We would not be surprised to see further two-way action and a further reflects rally.
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DOLLAR INDEX
Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 75
The dollar index presents a mixed picture at this time. It remains below its 200 day moving average while our longer-term trade Triangle remains positive.
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REUTERS/JEFFERIES CRB COMMODITY INDEX
Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Negative
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 90
The trend for the REUTERS/JEFFERIES CRB COMMODITY INDEX remains negative We would not be surprised to see this index have a reflex rally from current levels
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As always, we rely on our market proven Trade Triangle technology for catching the big moves.
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This is Adam Hewison for MarketClub, I'll see you tomorrow, right here same time, have a great trading day.
FRIENDS,
Actually DOWN CYCLE is just started from 2007, and it is very very long term paterned, and will last for 5 to 7 years or even more.We may find in-between Ups and Downs, but ultimately, it will be towards DOWN.........DOWN...........AND DOWN........
All major economies as specialy of developed countries allready reached at their pick lavels, and now it required some rest.Forever growth achivement is not possible, and some gap is essential meanwhile.
Rasesh Shukla
India
Today's trading session will be interesting to see. Was yesterday's big jump just one day euphoria....an over reaction to Fed's statement or are we going to see the resumption of the negative sentiments. I think we'll see a couple of volatile days with little direction and then resume the downward move. Next major stop around 1000 level.
dear friends to day's market upside is dead cat bounce,i said in the past market will plunge after 3-rd Q,be very careful.good luck to every one,and remember when market goes down you are not going to find any place to hide,even in gold or silver...
“they slide faster than they provide.” Ha, yeah and they take the stairs up and the escalator down, right? Today at the end of the day, though, it looked like they provided pretty darn fast at the end of the day. They must've found the up escalator:-)
Go to Icemans site called Stocks that move. It is a blog and he has over forty years experience with stocks. He would be the one to know of the information that you are seeking.
It's always nice to listen or like today, read Adam's point of view on a daily basis.
I'm fully loaded in the Silver 2X ETF and the triangle technology had been really helpful. Holding long and day trading the precious metal mostly.
Yes, everything this is possible. The stock market is looking excellent for buying and the bond market is looking down right juicy for a short position. That's the possibilities out there right now.
you will probably lose money in a pennystock, but gmcr make more
BZRT I'm guessing is in someones pocket for distribution to anyone who asks for it
This company only has 3 employees. The Stock only moves up when someone is pumping it.
Be careful - will be tough to get out of once you get in
Adam,
It is not going to be over until the Glass-Steagall Act is reinstated. When it was enacted in 1934, after the Pecora hearings made clear what had caused the Crash and the Depression, the market responded within four months and never looked back...... Problem is that many of the politicians that voted to remove in 1999 are still in office and they are loath to admit that they made such a huge error in judgement.....
Mike
Does anyone have some feedback to share on Stock BZRT ?
There is a penny stock (BZRT) that is in the news a lot as a Facebook like website for kids up to the age of 13. Does anyone have any information on this stock potential or would care to share any comments about the stock?