Category: MarketClub Techniques, Tips & Talk

First posted on June 25th, 2007

There used to be a time when investing was simple.

You know what I mean? You buy at 10 and sell at 15 and make 50% on your money. I can understand that, and so can most investors.

I have to admit that some of these off book derivatives that banks and hedge funds are creating and trading are just not that simple to understand.

When the time comes and it will, you will see the you know what hit the fan. Some of these hedge fund managers will see that a lot of stuff that looked good in computer simulations, may not look or work as well in the real world (see the sub-prime melt down).

Just look at what happened to this hedge fund, Amarath Advisors who lost 6 BILLION and how they thought they where more smart that the markets.

And now the Blackstone Group has gone public with great fanfare. Now that's going to be an interesting one to watch. I am going to be watching this one closely, if it drops below its initial public offering at price of $31.00, it could spell problems for the whole market. If this stock trades below 30 you are going to see a lot of press, finger pointing and speculating that we are seeing a top in the markets.

The only way to consistently be successful in the market is to learn how the market works, have a game plan and have two other key elements necessary for success.

Here they are:

* Discipline

* Diversification

Once you understand how the markets work, have a game plan and master discipline and diversification, you are on your way to success.

Every success in the future,

What an incredible week!!

It seems like if you don't like the price one day in the stock market, just wait a day and the market comes back. This will not continue forever. Sooner or later the downward trend in the stock market will reverse and go higher. But for now, the trend according to our market indicators is pointing lower.

Vote in this weeks poll: Do you think that stocks have bottomed out?

In the world of commodities, a bubble burst last week when we witnessed a dramatic drop in gold.

After trading as high as $1,030, gold hit an air-pocket as all the hedge funds bolted for the exit door at the same time. This mass exodus pushed gold dramatically lower and close to the $900 level in just a few days.

Has the commodities bubble finally burst?

Yes, we believe the bubble has burst. We expect commodity prices will continue to be volatile and more on the defensive in the weeks ahead.

This may not be good news for the hedge funds who have seen many of their profits evaporate in past few weeks. As we are coming to the end of the Q1, how many of these funds are going to show a negative or a flat return for the entire year?

You don't have to hold any fund-raisers for hedge fund managers, as they have done pretty well over the past few years. Now there are just too many inexperienced hedge fund managers doing the same thing. They are all chasing too few opportunities in too few illiquid markets. Maybe they all read the same book on how to start a hedge fund.

We expect that 2008 will be remembered for its volatility and the fact that many hedge funds closed up shop because of disappointing returns.

A few days after the end of Q1, we will be publishing our first quarter results. You may like to take a look at our Q3, Q3ag and our Q4 results.

I think you'll agree, that we have done very well in some difficult and volatile market conditions.

Take a look at how we approach and analyze the gold market in this short video that we've just finished.

Then take a look at our other educational trading videos in our "Traders Whiteboard" series.

If it all makes logical sense to you, I invite you to join thousands of other smart traders who rely on MarketClub everyday to spot winners in the stock, futures, metals and forex markets.

Every success in the future.

Adam Hewison
President,INO.com

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As we used to say in the pits of Chicago, "This is going to get ugly."

Today, we confirmed that "Ugly" has arrived.

Trade update: We exited long gold positions on the 18th at 990.2 basis spot.

Today (the 19th) we also had a major sell signal in spot gold. Very unusual that this happend so quickly after our exit signal. Like I said "Ugly" has arrived.

Downside targets (Fibonacci Retracements) for gold are:

1. $855
2. $800
3. $750

Stand aside and give these guys a lot of room as every hedge fund and commodity fund is bolting for the exit doors in all the commodity markets, including gold.

You have read on this blog before that the markets slide faster than they glide. Just look at Bear Stearns slide and several other recent meltdowns.

With the end of the month and the quarter fast approaching these hedge funds have got to have something to show for the month and the quarter. This slide may wipe out all their profits.

It all reminds me of what Bette Davis said in her 1950 movie, "All About Eve."

"Fasten your seatbelts, it's going to be a bumpy night"

Look for more bumpy markets and more volatility as the hedgies continue to bolt for the exit door that just got a whole lot smaller today.

Trade smart and trade to win.

Adam Hewison
President INO.com

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