Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your mid-day market update for Friday the 7th of October.
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It's Friday, the end of the week, and the markets have made some remarkable recoveries in the last several days. As we discussed yesterday, has this market put in a bottom? Unless it's a complete breakdown this afternoon, it would appear the markets are going to close higher for the week.
Cyclically if we close lower today in the equity markets and in crude oil, it would appear we have put in an interim top in both those markets.
Let's do a reality check... Have any of the problems in Europe gone away? Has all the uncertainty and doubt surrounding the banks in this country with the foreclosure and mortgage problems gone away? No, they all still exist and that is why the longer-term trends in these markets continue to be negative.
I would say if the markets close lower today, you will want to maintain any short positions you have, and possibly add to those positions. We will be looking at the charts to get a clear picture to see exactly what is going on.
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2 STOCKS THAT ARE MAKING 52 WEEK HIGHS:
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CEPHALON (Symbol CEPH) - Trade Triangle (Monthly) Long from $80.80 on 9/08/11.
SEATTLE GENETICS (Symbol SGEN) - Trade Triangle (Monthly) short from $21.15 on 10/05/11.
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2 STOCKS THAT ARE MAKING 52 WEEK LOWS:
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UNITED STATES NATURAL GAS (Symbol UNG) - Trade Triangle (Monthly) Long from $80.80 on 9/08/11.
ILLUMINA (Symbol ILMN) - Trade Triangle (Monthly) short from $65.41 on 7/27/11.
HOW TO TRADE THE 52 WEEK FRIDAY RULE:
Here are the three rules you need to trade "The 52-week new highs on Friday rule"
These are the exact rules that Bill used to make millions
Rule number 1: On a new 52-week high, when the market closes at or close to its high on a Friday, buy long and go home long for the weekend.
Rule number 2: Exit the long position on the opening the following Tuesday.
Rule number 3: If the market opens sharply lower on Monday, exit the position immediately.
There you have it. These are the only three rules you need to trade with "The 52-week new highs on a Friday rule" successfully.
"The 52-week new highs on a Friday rule" works extremely well in futures and in the Forex markets. This rule can be reversed for "The 52-week new lows on a Friday rule" if you are so inclined to trade the short side of the market. The same rules apply.
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
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We believe that if the S&P 500 index closes lower today, we will put in a interim cyclic top. Last week the S&P 500 index closed at 1131.42. What we need to see is a weekly close below the 1120 area if this market's going to go down and test the zone of 1000. We still believe that is going to happen based on our long term Trade Triangles that remain negative on this index. We would not rule out our ultimate target zone for this index which is the 1000 to 950 area. Intermediate and Long-term traders should continue to hold short positions in this index.
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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 = Positive
Combined Strength of Trend Score = - 55
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Suggested S&P 500 Trading Instruments:
Non Leveraged ETF's: (Long SPY) (Short SH)
2 x Leveraged ETF's: (Long SSO)(Short SDS)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.
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SILVER (SPOT)
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At the moment, we cannot get excited about the silver market as it continues to move sideways. Next week should offer more clues as to the next big swing in this market. The silver market is higher for the week and possibly putting in a bullish engulfing line on the previous week's market action. Should this happen, it would indicate that we have seen a low in the price of spot silver. Our Chart Analysis Score is -75 indicating some of the downside pressure has been relieved from the market. As always we will rely on our Trade Triangle technology to keep us on the right side of the trends. Traders who are following our Trade Triangle Technology should be short this market with appropriate stops.
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Monthly Trade Triangles for Long-Term Trends = Negative
Weekly Trade Triangles for Intermediate Term Trend = Negative
Daily Trade Triangles for Short-Term Trends = Positive
Combined Strength of Trend Score = - 75
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Suggested SILVER Trading Instruments:
Non Leveraged ETF's: (Long SLV) (Short the ETF SLV)
Leveraged ETF's: (Long AGQ) (Short ZSL)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.
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GOLD (SPOT)
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Not much change in the spot gold market from yesterday. Spot gold continues to consolidate around the levels mentioned in our previous blog posting. However, the Chart Analysis Score remains at +55 indicating that a trading range in the short term is very much intact. We would not be surprised to see this sideways action continue for another week or so. For the week, gold is slightly higher by about $16 an ounce. I think most traders would be better off just watching from the sidelines until the volatility subsides. Only long-term traders should maintain long positions with the appropriate money management stops in place.
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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 = Positive
Combined Strength of Trend Score = - 55
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Suggested GOLD Trading Instruments:
Non Leveraged ETF's: (Long GLD) (Short the ETF GLD)
Leveraged ETF's:(Long UGL) (Short GLL)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.
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CRUDE OIL (NOVEMBER)
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The market action in crude oil is similar to what we witnessed ten days ago as the crude oil market moved over the middle average of the Donchian trading channel. A close today below $82 a barrel we would view as very negative and that this market has put in the top. We would then look for this market to move down to challenge the $75 a barrel range again. As you know, this market has been closely tied in to the movements of the S&P 500. Overall we still view the trend in this market as negative. We would not be surprised to see a move down to the $70 a barrel level. Intermediate and Long-term traders should continue to be short the crude oil market.
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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 = Positive
Combined Strength of Trend Score = - 55
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Suggested Trading Instruments:
Non Leveraged ETF's: (Long USO) (Short the ETF USO)
Leveraged ETF's: (Long UCO) (Short DTO)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.
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DOLLAR INDEX
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Today's pullback in the dollar index reached 78.26 which is a 61.8% Fibonacci retracement. Overall the positive trend for this index remains intact and we expect to see some consolidation around current levels before resuming its upward path. We continue to be friendly to this market and want to hold positions with money management stops. This index is coming from a large energy field that is capable of carrying it much higher. Intermediate and Long-Term traders should maintain long positions with the appropriate money management stops in place.
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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 = + 75
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Suggested DOLLAR INDEX Trading Instruments:
Non Leveraged ETF's: (Long UUP) (Short UDN)
Leveraged ETF's: (Long) (Short)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.
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REUTERS/JEFFERIES CRB COMMODITY INDEX
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The REUTERS/JEFFERIES CRB COMMODITY INDEX rallied a little further than we expected, however it is in the resistance zone and we expect to see it move down next week. We would not rule out a retest of the recent lows. We expect the trend to continue until our Trade Triangles inform us that the trend has changed. Short, Intermediate and Long-Term traders should maintain short positions with the appropriate money management stops in place.
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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
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Suggested REUTERS/JEFFERIES CRB COMMODITY INDEX Trading Instruments:
Non Leveraged ETF's: (Long CRBQ) (Short the ETF CRBQ)
Leveraged ETF's: (Long) (Short CMD)
Futures: Contracts are available to trade this market. Contact your broker
Options: Options Contracts are available to trade this market.Contact your broker
WARNING: Liquidity is some ETFs is very thin. Contact your broker for more information.
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This is Adam Hewison for MarketClub and I'll see you this weekend with my weekend wrap. Don't forget to enter for a free 1 year subscription to MarketClub on a HP WiFi Tablet.
All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub
Does anybody care that people are buying cars like crazy? That's not usually the sign of an incipient recession. I would suggest that as long as corporate profits, not just the automakers, are doing well, stocks can go up - even if there is only a very weak recovery and no job growth. Next year is another matter. But right now? Freight on rails is up, as Buffet notes and this is goods going to retail stores for Christmas. Fedex is busy, too. Trend lines are beginning to break. There is nothing except sentiment to prevent markets from rising.
We need a new sub set of trade triangles that factor in actions of the Three Stooges, Bernanke, Merkle, and Trichet.
This question is for Jerermy or Market Club member. Trade Triangles....with equites we use the last triangle on the MONTHLY chart and with indices we use the WEEKLY chart. Why the difference?
Thank You
' What we need to see is a weekly close below the 1120 area if this market’s going to go down and test the zone of 1000' ..... it's 1158 as I type,that would be quite a meltdown from here!!