Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your mid-day market update for Wednesday, the 21st of September.
All eyes are on the Fed – Will they twist again like last summer?
It would seem as though the world and the markets are waiting to see what the Fed is going to do today at 2:15 PM. They are supposed to make an announcement. This is always the technician's dilemma... Do I leave my positions intact with stops? Or do I take them off before this major announcement?
Let me share with you a quick story about one of the most successful traders I've ever known. Here was a gentleman who traded all the markets, strictly on the charts. He didn't listen to the news, didn't care about the news, and certainly didn't care about what Ben Bernanke was about to say. He simply went with the big trends. Based on that thesis, one should remain short the equity markets and remain long in the gold market with the appropriate money management stops.
As traders, we are bombarded with news. Some of it is useful, but a lot of it is just fluff to fill up airspace time. One piece that caught my eye this morning, which I haven't seen reported in the main media, concerns the venerable Lloyds of London insurance company. This company was founded in 1688 in a London coffeehouse and has gone through wars, boom and bust cycles, every money mania known to man and has always managed to survive. The article claimed that Lloyds of London is taking their cash out of the European banks this morning:
Quite frankly this is shocking, but not surprising given Lloyds' survival instincts. Lloyds of London is one of the most conservative companies, run by some of the smartest people on the planet. Perhaps it's an early warning sign about what could potentially happen in Europe.
It is something to think about.
Now let's go to the 6 major markets we track and update every trading day and see how we can create and maintain your wealth in 2011.
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S&P 500 INDEX
Trading Instruments:
Non Leveraged ETF's: (Long SPY) (Short SH)
2 x Leveraged ETF's: (Long SSO)(Short SDS)
Futures: Contact your broker
Options: Contact your broker
WARNING: Liquidity in some ETFs is very thin. Contact your broker for more information.
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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = + 60
For the past six weeks, the S&P 500 index has been moving sideways with resistance around the 1220 area and support coming in around 1120. It would also appear that approximately every 11 or 12 days the market will make a high and then pull back for the next 5 or 6 days. If the same pattern repeats, the next swing in the S&P 500 could be on the downside. This would be in line with the major trend for this market. Of course, everything is going to hinge on what the Fed announces at 2:15 today. With a Chart Analysis Score of + 60, we would recommend trading this market using the Williams % R indicator and the Donchian Trading Channels. Long-term traders should continue to be short or be out of the market completely, and in a cash position. Intermediate term traders should be on the sidelines waiting for either a buy or sell signal based on our Trade Triangle technology.
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SILVER (SPOT)
Trading Instruments:
Non Leveraged ETF's: (Long SLV) (Short the ETF SLV)
Leveraged ETF's: (Long AQG) (Short ZSL)
Futures: Contact your broker
Options: Contact your broker
WARNING: Liquidity in some ETFs is very thin. Contact your broker for more information.
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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 = - 60
It would appear that the spot silver market is beginning to consolidate over the $39 an ounce level. The spot silver market is very oversold and right for a bounce. With a Chart Analysis Score of -60 this market is in a trading range and we are currently at the lower levels of the Donchian trading channel. It may take a few days to consolidate, but we expect this market will move up from current levels. Cyclically, we are close to a cyclic low. We want to continue to monitor this market looking for an area to add to long positions. Long term traders should maintain long positions in this market with appropriate stops. Intermediate term traders should now be on the sidelines waiting for either a buy, or sell signal based on our Trade Triangle technology.
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GOLD (SPOT)
Trading Instruments:
Non Leveraged ETF's: (Long GLD) (Short the ETF GLD)
Leveraged ETF's:(Long UGL) (Short GLL)
Futures: Contact your broker
Options: Contact your broker
WARNING: Liquidity in some ETFs is very thin. Contact your broker for more information.
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Monthly Trade Triangles for Long-Term Trends = Positive
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = + 55
The gold market continues to bounce along with support coming in to the spot market at $1760 an ounce. We want to pay close attention to the gold market this week, as we feel it is very close to a cyclic low. Here are the reasons why: (1) we are at the lower range of the Donchian trading channel (2) the market is oversold, with a possible bullish divergence on the Williams % R indicator (3) the MACD indicator is also towards the lower end of its range and could possibly turn up and give a buy signal in the next several days. We want to be patient and wait for this to happen. Providing that our monthly and weekly Trade Triangles remain intact, we want to approach this market from the long side. Support comes in around the $1,775 and extends all the way down to $1,750. Intermediate and long-term traders should maintain long positions with the appropriate money management stops in place.
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CRUDE OIL (OCTOBER)
Trading Instruments:
Non Leveraged ETF's: (Long USO) (Short the ETF USO)
Leveraged ETF's: (Long UCO) (Short DTO)
Futures: Call your broker
Options: Call your broker
WARNING: Liquidity in some ETFs is very thin. Contact your broker for more information.
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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trends = Positive
Daily Trade Triangles for Short-Term Trends = Negative
Combined Strength of Trend Score = - 75
There is not much going on in the crude oil market, as it continues to remain in a fairly broad trading range with resistance very evident at the $90 a barrel level. Support comes into this market between $84 and 84.50 a barrel. The crude oil market is presenting a mixed picture at the moment with our longer-term monthly Trade Triangle negative and our intermediate term weekly Trade Triangle positive. This has created a trading range at the moment. The crude oil market remains in a sort of sideways motion, but with a bias to testing the lower range of the Donchian trading channel. The Williams % R indicator is stuck in the middle giving no real clue as to direction. Also pay attention to the MACD since it is beginning to lose momentum and could be rolling over to the downside if we have any more negative closes. We do not think that the crude oil market is ready to go higher, based on our long-term monthly Trade Triangle which remains negative. The $90 a barrel resistance continues to stop this market on the upside. Look for crude oil to continue to move in a sideways to lower manner.
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DOLLAR INDEX
Trading Instruments:
Non Leveraged ETF's: (Long UUP) (Short UDN)
Leveraged ETF's: (Long UCO) (Short DTO)
Futures: Contact your broker
Options: Contact your broker
WARNING: Liquidity in some ETFs is very thin. Contact your broker for more information.
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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 = + 90
Our comments for the dollar index remain pretty much the same as yesterday. The dollar index continues to consolidate above its original breakout point of 76.10. We are positive on this market and expect to see it move higher. We would like to see a close over 77.60 as that would indicate a new high close for this index and set it up to move to our initial target zone of 80.00. On any type of pullback we would not be happy to see this market closed below the 76 level. Longer-term this market looks poised to move much higher. This index is coming from a large energy field that is capable of carrying it much higher, possibly up to the 80.00 - 81.00 area. Short, Intermediate and Long-Term traders should maintain long positions with the appropriate money management stops in place.
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REUTERS/JEFFERIES CRB COMMODITY INDEX
Trading Instruments:
Non Leveraged ETF's: (Long CRBQ) (Short the ETF CRBQ)
Leveraged ETF's: (Long UCO) (Short CMD)
Futures: Contact your broker
Options: Contact your broker
WARNING: Liquidity in some ETFs is very thin. Contact your broker for more information.
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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
This index is very close to making what we considered a fairly significant low and we would not be surprised to see a rally from current levels. Cyclically this market has come back to an area where it should begin to find support. We are at the lower levels of the Donchian trading channel and heavily oversold on the Williams % R indicator. I expect that given the next few days we will see this market consolidate for a recovery rally. Short, Intermediate and Long-Term traders should maintain short positions with the appropriate money management stops in place.
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As always, we rely on our market proven Trade Triangle technology for catching the big moves.
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HERE’S THE FASTEST, EASIEST WAY TO IMPROVE YOUR TRADING
I would like you to ask yourself this question, IS PERSONAL COACHING RIGHT FOR ME?
Give us a call today at 877–219–1482 for a free consultation and see if personal coaching is right for you.
But first, view my personal invitation to you about our one-on-one coaching:
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This is Adam Hewison for MarketClub and I’ll see you tomorrow, right here with my weekend wrap. Have a great trading day.
All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub
P.S.
Beware of the First Day of Fall, Friday Sept. 23rd.
http://www.almanac.com/content/first-day-fall-autumnal-equinox
Best of luck.
NP, like I said gold is practically useless and besides the price of money (debt) is at a 100-year high and rising. It makes no sense at all to hoard anything that money can buy since obviously the rising price of money has been signaling falling prices ahead, of what it buys. As for silver, it does have some industrial applications but nothing to justify the current market price. These metals are being sold at 3-4X extraction costs, a bubble that is doomed to crash due to oversupply and overbought conditions.
James, the triangles are based on mathematical probabilities of past data. No program will predict the future. It's the repetition of market patterns that make money for wise traders. I have a program I designed for my own daily hexagon, its a little more sophisticated because it analyzes 3 month past data with each new trading day up to 1/2hr before close and then it executes fresh market orders buy/sell short in the last 20min before close on the best six equities out of the 24 it tracks, and then after market close my program computes an exit strategy with precision sell/cover and stop loss % probabilities of reward and risk allowance. The probabilities of past data repeating itself is about as reliable as you will have sex more than once. What I love about it is it takes the emotion out of trading even more than Adam's trading triangles because it engages you into a more comprehensive study of probabilities....pure science!
This is why I cancelled my subscription. The triangles do not predict the outcome or direction of the markets. It only gives information of what has already happened. Gold and Silver in my opininon is a SELL!
Gold is about 1% above the channel top two year trend that it broke though in early August: currently just below 1700.
Question.
Time for it to behave and go and stay back in that medium term channel or use the top of the channel it as a trampoline?
The biggest difference today compared to 83 years ago is the higher levels and sophistication of leverage. The gold market is neck deep in leveraged debt instruments, contagion is like gravity, you can't defy it.
Out of town yesterday, carrying my new smart phone. Placed my first trade on the phone.....sold my GLD position. Someone is watching out for me.
Now that the Fed has tossed the hot potato to Congress, watch for some dramatic moves from the political geniuses that created the mess. When the dust settles I fully expect all four major U.S. banks will be nationalized along with assets held in IRAs and 401Ks. Forget about taking money or profits out of the country, that door will be closed as well.
Why are you so down on precious metals??? In the Great Depression those that survived the best owned GOLD. Paper money and stocks will become worthless if we have another large turndown that seems to be looming just around the corner.
Silver is used in the manufacture of all sorts of our latest inventions and actually there will be a world shortage in the very near future because the silver mines are becoming depleted.
I don't know who you are but perhaps you should do some research on these things before you open your mouth and make such ridiculous comments.
Gold is almost totally useless and in extreme oversupply. When you see this stuff being peddled about everywhere, it almost certainly indicates that a bubble is about to burst. Mr. Donald Trump probably called the top in gold by accepting it as rent for his property from a gold trader - while lamenting the falling dollar, which understandably rocketed to the upside. Those celebrity counter-indicators tend to be very reliable.
It costs maybe $500 on average to extract an ounce of gold. In view of the extreme oversupply I think the market should take the price down to $300-400 and then try to hold it above extraction cost.
As for silver, that´s semi-useless and in extreme oversupply too. Extracting an ounce costs maybe $10, which would seem to be a generous market price for it.
'Support comes in around the $1,775 and extends all the way down to $1,750. Intermediate and long-term traders should maintain long positions with the appropriate money management stops in place.'
Really interesting , it used those supports over night.....
but it is below a trend floor from Aug 25th and despite the markets blanching at the Fed's outlook, the dollar rose!!! That can't be a bullish sign for gold priced in dollars.
It all goes back to 1980 when the Republican Revolution began... In my opinion, since then they have sold their souls to the Ultra Wealthy Conservatives. And in my opinion, they have won, just as they did in 1925-1929, and, in my opinion, the results are are about to be the same...
The biggest rip-off is Insurance premiums, which seem only destined to rise along with realty taxes, gasoline and utilities; where I pay $2068.77/month for my family. The only place I can substantially reduce my monthly burn other than not drive anywhere, is to pay down the debt saving interest dollars (currently $1384.38/month for me). Living without insurance is NEXT in this twisted world of rent seeking economics..........Oh how the dominoes of liquidity are getting top heavy. Very, very few people really have a grasp or perception how fragile our system is becoming, and the more it chokes you, the less flexible your options become. I think my unincorporated property of 160 acres is looking better every day with a realty tax bill of $6/year. Put on confident face when earning money, and put on a apocalyptic face when spending it........because soon enough it will come full circle!!