Trade and prosper

Learn to trade

2012-01-28T21:54:00.000-08:00

I recommend that serious investors take my full one on one, real time training course. I give you the keys to the big market mover's (Fat Boys) trading algorithms. They work on every time frame and market. It is not just for short term traders. It will take you to a new level of expertise and confidence. You will never wonder what is happening or have to ask for advice again. I guarantee that what I teach works. I have never had a dissatisfied student. Email me for all the details.

There is no limit on how much time we work together. The course is finished when your are trading profitably and feel safe on your own.

Happy Holidays

2011-12-23T14:12:00.000-08:00

Latest Investor Intelligence chart

2011-10-09T17:16:00.000-07:00

The latest Investor Intelligence shows the letter writing gurus are getting very bearish. So far the number of bullish advisors are still a little too high.

Learn the secrets of the Fat Boys

2011-10-03T23:13:00.000-07:00

For the first time I am offering a 1 day, 8 hour, intensive one on one course, where you learn how to use the Fat boy's algorithms to trade profitably and stay safe.

The last stock market crash shows how necessary it is to know how and where to enter a trade. Properly placed tight stop loss orders to protect yourself from the predatory practices of Wall St trading houses like Goldman Sachs are a must.

I have been a professional trader for 25+ years. If I do not make low risk, profitable trades for my own account, I lose my capital. No capital, no living.
This is my method. I live by it.

I have trained over one hundred traders to use these algorithms and trigger points and have never had a failed student.

You will learn

Deadly accurate trigger points
Safe, tight stop loss locations (.10 cents on SLV for example)
How to set Profit targets
Recognizing market structure (the footprints of the Fat Boys)

Learn the trading secrets and tricks that have worked successfully for 20 years.

What you will not learn is moving averages and indicators, they do not work.

Take the one day course or just get the course teaching materials.
Email me for more information linesbot@gmail.com

If you go back and look at my posts from the summer of last year you can see some of my trades, posted in real time

Silver fractals

2011-10-01T10:31:00.000-07:00

Here is the factal chart from my silver article on Market Oracle. http://www.marketoracle.co.uk/Article30640.html
click image to enlarge

Latest Investors Intelligence chart,Latest S&P put call ratio chart

2011-09-10T21:11:00.000-07:00

We see an increase in the number of bearish advisors to levels where past trend changes have occurred. The trouble is the bullishness is still a little too high.

Now look at the put call ratio. The bulls are back. Notice what happened to prices when we got this high last summer. There were retests of the lows. It tells us not to get too complacent if we are long.

Latest Investors Intelligence chart, latest put call ratio chart

2011-08-29T11:57:00.000-07:00

The letter writing gurus are starting to panic. We are still not at a level that screams buy but it is getting closer to a bully reading.

The put call ratio says the bottom is in. We can still fall to a new low but the thick end of the move has been seen. Notice that until we get to a much lower level the the market has gone higher.

Latest Investors Intelligence chart and Latest put call ratio at bullish extreme

2011-08-19T13:56:00.000-07:00

The latest Investors Intelligence chart tells us that although the media is skewed to the bearish side. With every analyst warning of a melt down. Notice the put/call ratio is skewed to the put (bearish) side as well. That is ultimately bullish.
We see that the investment letter gurus are not nearly bearish enough. Knowing they are always wrong at the key turning points suggest we be careful not to enter the stock market prematurely.

Latest gold and silver commitment of traders charts, Latest investors intelligence chart

2011-06-05T21:02:00.001-07:00

The silver market is showing heavy short covering. Gold looks like the Fat Boys are selling again.
There is still not much fear in the stock market but remember, the data is a week old. The latest clunk should spook the bullish letter writers.

click image to enlarge

Latest investors intelligence chart, latest gold and silver commitment of trades charts.

2011-04-14T13:14:00.001-07:00

The letter writing gurus are still way over on one side of the boat.
Even the clunk we just had didn't phase them. It is the highest reading in many years.
Not much help for the metals in the commitment of traders data.
Click image to enlarge

Learn to trade and invest videos

2011-04-01T13:40:00.000-07:00

Others know us by what we have done. We know ourselves by what we will do.

I have created 5 videos of approx 2 hours each, so I can transfer my lifetime of trading knowledge and skills to you. You will never again feel lost and confused about investment decisions.

The 5 videos will take you from novice to professional trader. Each time you watch them your knowledge will grow and as you learn your confidence will soar.

I show you how to use trigger points, risk management, market structure and profit projection on every time frame.
You will know what will happen next. You will control the risk. You will control the reward.
Whether you are a buy and hold investor or a day trader, you will learn what you need to know to be profitable. That is a promise.

Video index:
Components (this gives you the tools)
Strutural modeling (this shows you the future)
Trading techniques (this puts it into practice)
Professional short term trading (2 videos ) (this gives you a living)

Get the videos, change your life.

An indicator that really works

2011-03-31T09:39:00.000-07:00

After ranting about how indicators don't work and how they become targets for the Fat Boy's. I have to admit there is one that does work with incredible accuracy. At least it has for more than 15 years. There may be others but this is the only one I have ever found that works consistently..
It tells us what the primary trend is in the U.S. stock markets and it generates very low risk entry points.
It is the perfect tool for investors that don't use or trust an advisor, but at the same time do not have the time or inclination to intensely manage their own IRAs and 401Ks.

It makes life easy for investors that want a hands off approach. It is simple, easy to use and very profitable
It has been used by successful fund managers for years.

It is simple and available to anyone if you want to search for it yourself, but if you can't be bothered, I will send it to you with instructions on it's use for a small 19.95 donation below.
It works great, I promise.

latest gold and silver Commitment of traders charts

2011-03-24T15:14:00.000-07:00

The COT are showing the Fat Boys covering some of their gold future shorts. We are headed in the right direction but we are far from at a buy signal. Silver is neutral.
The letter writing Gurus are still still leaning heavily to the bull side of the boat. Whether the recent clunk failed to unsettle them or whether it is because they only write their letters once a month is unknowable at this point.

It works!

2011-02-25T09:16:00.000-08:00

Here is an Email I received from Gary this morning.

Hello Bob

I haven't talked to you in awhile and wanted to touch base with you. I
started with you in August trading an IRA that was worth about $71K. I
had lost about $20K in it the previous 2 years trading a break out
system. Today, that account went above $100K using what I learned
from you. Of course, I could have done better on a couple of trades
but stayed too long. I also tend to be a little impatient. But I do
not let a loss go for long without getting out. I am getting better
and will keep getting better because of the experience from trading as
well as your tapes. I found that having my Ninja charts while going
over your tapes to be the most beneficial. That way I can see what is
going on now in the markets I follow, mainly the financials.

I had hoped to do more day trading than I have been doing. My work has
put me on M-F dayshift and I usually can't follow what is going on. I
have managed to make about $4500 on a $30K account since November in
what little I have traded. I may need to contact you around June when
I am about to do more day trading. Thanks for your past help and
sharing your knowledge of the markets. I was about to give up on
trading altogether.

Latest Commitment of traders charts for gold and silver. Latest Investors Intelligence chart

2011-02-17T11:52:00.000-08:00

The Fat boys were covering their gold and silver shorts over the last few weeks. The lows we made in the metals were important 6 month lows. Now we are starting to see inflation everywhere in the world. The UK, China, India and the Latin countries. Today and yesterday we saw it in the US inflation data.
It means starvation in the poorer countries and it will lead to world wide unrest. The dictators have seen what happens if they let the thin edge of the wedge find a crack. Brutal violence is what protester will be met with as time goes by.

We are seeing the Gurus starting to lower their bullishness a little in the stock markets. We are still high however. The late translation we are seeing relative to the trading cycle low, suggests that the coming 4 month low will be mild and then we will see a strong market into the spring.

Click image to enlarge

latest Commitment of traders and Investors Intelligence charts

2011-01-26T14:07:00.000-08:00

I have posted the latest commitment of traders charts for gold and silver. They are showing the Fat Boys are covering some of their shorts in the futures markets.
I included the Investors intelligence chart as well. It shows the extreme bullish bias is not deminishing.
Click image to enlarge

Latest Commitment of traders chart for gold and silver

2011-01-18T09:29:00.000-08:00

The Fat Boys are starting to cover some of their shorts in the precious metals futures. With this drop in prices they should be. If they were not, we would be worried. We are not at extremes but we are quite high on the silver chart on a relative basis.
Notice also, that if we re frame the bullish level in gold to what has triggered trend changes in the past 1 and 1/2 years. We see that we are getting into a zone of support (blue line).
Also remember that this data is always one week late. This week's plunge probably saw some big increases in short covering. So next week should be very interesting

Latest Investor's Intelligents

2011-01-12T21:06:00.000-08:00

The latest data shows the letter writing gurus are getting more bully. I guess I fall into that camp. I have been bullish through this whole rally, but it is getting harder to stay on the bull side when I see the most bullish sentiment in years. If you go back in the blog posts to when I first started posting the II data, you will see what I mean. I think it was Dec 1 o9
Be careful, reality is out there waiting. Somewhere.

Always follow your plan

2010-12-14T21:15:00.000-08:00

This is a copy of an email from a student, that shows the importance of sticking to you risk management strategy.
Hi Bob,
Thanks for your thoughts. You have no idea how much I have learned from you. I had a huge belly laugh at the image of Santa bumping and grinding his way up a wall after reading tonight's newsletter. It is amazing to me how much deception and manipulation is a core principle of market behavior. I let myself get totally bitch slapped by that squeeze that started last night. I have made a ton of money over the months using your teaching. Then given much of it back through my own greed and stupidity - but I'm getting much better at this.
Most sincerely,
John

Here is a great letter I got from Ben tonight after he read the article, "God hates a coward". In it, I include his inspirational story. The sites I published it on changed the name and if you have not read it, here is the link. http://docs.google.com/View?id=dcvcqgqf_1773fj256jgz

Hi Bob – yes was thinking a position in either an april or may VIX option to keep a hedge but also to bet on some volatility between now and then……..leaving half the time to exit if nothing much happens. I guess it is more a contrarian play…………I don’t expect the stock market to tank through xmas – or much at all given the effort gone to to keep it up, so may even leave it go into the new year before I take a position.
By the way – had a look on the FSN site and found that article. Good to see that story get mentioned………..it should appeal to other fundamentalists with that gambling/no stop loss streak in them. I have definitely been lucky to find you when I did – I had $30k on the line betting the market short when I first talked to you (plus the large $120k gold share position on margin which could have blown up) – so it was a risky trading style – a style that reminds me of that “wishin and hopin” song!
You were right –when I first came to you, my account had stooped down from over $130k to $92k…………….now it is approx $270k………….so I am very satisfied with my current position. Much of that has come from your guidance – but as you said much of it has been from the determination to hold my gold and silver positions with a longer term faith. I had still better credit luck here too, in that I have avoided the collapse scenario that scars some traders.
I have yet to go over your downloaded movies……………that is my next step soon before my bad habits creep back in again.
Thanks for always taking the time to respond to my questions by the way – appreciate it. Might give you a call tomorrow to discuss my progress and show you my portfolio. Only if you have time.

The latest Investor's Intelligence chart

2010-12-02T13:07:00.000-08:00

As you see in the Investor's Intelligence chart below, the letter writing gurus remain bullish although they did back up a little. It makes me nervous when I am leaning the same way as most or them but so far so good. The chart tells us that the boat is listing to starboard, so we have to keep our life jackets on. This is going to be one of the more interesting Decembers.
Click to image to enlarge

Charts for Baltic dry index, put/call ratio and the Commitment of traders for gold and silver

2010-11-24T11:42:00.000-08:00

Below are a few relevant graphics. The Baltic dry index relative to the S&P 500.
The current equity put/call ratio and the latest Commitment of traders charts for gold and silver.
If you click them you get a larger image.

There is a tide in the affairs of men

2010-11-10T09:05:00.000-08:00

Here is the link to my daily Evisory published on Oct 20th in which I recommended buying ECU...http://docs.google.com/View?id=dcvcqgqf_1514gcv6cqdp

Picking at lows in silver

2010-10-27T15:00:00.000-07:00

Here is the link to my nightly email for oct 25 in which I recommend buying silver the next day. I also attached the mid day update from oct 26, it is lower on the page and it shows follow up on the silver trade.
Link to nightly Email

I use proprietary trigger techniques to enter and exit these trades. If you have any questions, please contact me.

Baltic dry index vs the CRB index

2010-10-25T22:01:00.000-07:00

This is an interesting chart of the commodity research bureau's index of commodity prices, with the Baltic dry index of shipping costs overlaid on top. You will notice that the CRB index is making new crash recovery highs but the cost to rent ships to transport the raw materials is not. That suggests that the increase in the price of everything is more speculative than demand based. I wonder if the higher prices will lead to even lower demand.
It suggest that it will be hard to pass the increased cost of raw goods on to the end consumer.
click to enlarge

Latest commitment of traders charts for gold and silver

2010-09-21T13:13:00.000-07:00

The latest Commitment of traders data for gold and silver show the Fat Boys are getting shorter the metals each week. Silver has reached levels that have triggered sell offs in the past but we are not as over done as at other times, "08" for example.

Help for professional traders

2010-09-16T11:18:00.000-07:00

If you are a floor trader trying to switch to computerized trading and finding out that conventional technical analysis does not work, you are not alone.
The reason is simple. Everyone is using the well know methods such as moving averages, Bollinger bands, Fibonacci lines and macd. They use them because they are easy to understand and easy to apply.

When one side of the trade (Goldman) has all the money and the other side are all doing the same thing, the results become random at best. Eventually the house takes all the money.

Everyone triggers around the world at the same time and that gives the Fat Boys the other side of the trade. If you are trying to use the same triggers, you have no edge. You are a victim with the rest of the suckers. The Fat Boys like Goldman and Morgan have programmed their algorithms to trap and kill the traders using conventional technical techniques.

I offer a short course that will show you how to make the transition and beat the computer.

I have never had a failed student.

Latest Investor's Intelligence chart

2010-09-15T15:28:00.000-07:00

The latest Investor's Intelligence data shows that the letter writing Gurus are slow to embrace this rally, suggesting it may have more to go.

Latest Investors intelligence chart

2010-09-01T14:08:00.000-07:00

I have posted a chart of the latest Investor's Intelligence data. It is confirming the negative outlook of the AAII data we saw last week. So basically the public is bearish and the letter writers are telling them what they want to hear. We have gotten close to the level where big bounces have started in the past.

Latest Investors Intelligence chart

2010-08-11T15:17:00.000-07:00

The financial letter writers have gotten a little more bully lately, just in time to get whacked again. We are at levels that have stopped advances in the past but only during bear phases.

Stock names

2010-08-03T09:36:00.000-07:00

The junior stocks mentioned in my article are Tyhee resources (TDC) on the venture and Kimber (KBR) on the TSX both in Canada. Neither stock is anything special and both are marginal at best and I am not recommending them, except to say they will fluctuate. I and or my clients own both stocks.

Latest C.O.T. charts for Gold and Silver

2010-07-26T09:10:00.000-07:00

The Commitment of traders report changed quite a bit this week. Is it bullish yet? We can see that we are in the middle of the range in both gold and silver. Although it is not near previous extreme bullish levels, Gold has rallied from this level before. It's interesting that silver is a bit of a laggard here. That could be because there are spreads (short silver, long gold) being unwound. That would explain why silver did not make new highs and has underperformed on price, although not on percentage return.

latest Investors Intelligence

2010-07-21T13:21:00.000-07:00

Here is the latest Investors intelligence, we are still at low levels as the advisors continue to lean toward the bear side. It is not at extremes though and it is hard to say what will cause them to swing too far to the bullish camp other than higher prices. Notice that we are not that far from where we were even at the most bullish bias in late 08 early 09..In other words we can still get more negative and we are not at an extreme yet.

2010-07-08T12:14:00.000-07:00

Due to time constraints I have not posted much here recently. My time is taken up in teaching traders and investors how to be profitable in this volatile economic environment.
Writing a daily trading email also takes a lot of time.
If you are looking for trading tactics and ideas you might get some benefit buy looking back at earlier posts when I had more time and could post my real time trades.
If you have questions please email me at linesbot@gmail.com

Latest Commitment of traders charts for gold and silver

2010-06-21T13:49:00.000-07:00

Not much change in many weeks, the Fat Boys remain very short.

Click image to enlarge

Well produced video on current economics

2010-05-17T09:05:00.001-07:00

This video is well worth watching, it is very well done. Long though.

Latest Commitment of traders charts for gold and silver

2010-05-08T22:54:00.000-07:00

Here is the latest Commitment of traders report for gold and silver. I have not posted them recently because there has been little change.
Click image to enlarge

Latest Commitment of traders charts for gold and silver

2010-04-17T09:57:00.000-07:00

The latest Commitment of traders charts of gold and silver show the Fat Boys have increased their selling of the metals, taking advantage of the higher prices.

Click to enlarge

Latest Commitment of traders charts for gold and silver

2010-04-11T11:00:00.000-07:00

Here are the latest Commitment of traders charts for gold and silver. The higher prices have found sellers in both metals. Silver was right at a long trigger a while ago which we bought (25 % profit so far). As you can see the COT data can help fine tune your trading.

Click image to enlarge

Latest Investor's intelligence chart

2010-04-07T21:50:00.000-07:00

Here is the latest Investor's intelligence chart. Not much change. Most sentiment indicators are showing very few bears left standing.

Latest Investor's Intelligence chart

2010-04-01T09:10:00.000-07:00

Here is the latest Investor's Intelligence Chart. We are starting to see the financial letter writer's become more bully but we have still not reached full acceptance of the bull move yet. Notice that we did not reach the same pessimistic level on the drop in January that we did in July of last year although there was a fairly bearish tone in the media at that time.

Here is a link to last night's Email http://docs.google.com/View?id=dcvcqgqf_481hnskjfdq

Not much happens on this blog, I call the markets every day in my nightly email advisory. If you want to see my trading strategy and some examples of my past trades go back into last year's posts, July, August or Email me to get a trial of my nightly Email. linesbot@gmail.com I don't sell or distribute email addresses or any information

Latest Commitment of traders data for gold and silver

2010-03-27T22:42:00.000-07:00

Here are the latest Commitment of traders reports for gold and silver, both Gold and Silver saw some short covering.
Click image to enlarge

Learn to trade

2010-03-21T12:52:00.000-07:00

I recommend that serious investors take my one on one, real time training course. I give you the keys to the big market movers (Fat Boys) trading algorithms. They work on every time frame and market. It is not just for short term traders. It will take you to a new level of expertise and confidence. You will never wonder what is happening or have to ask for advice again. I guarantee that what I teach works. I have never had a dissatisfied student. Email me for all the details

Latest Commitment of Traders charts

2010-03-07T21:34:00.000-08:00

Not much happens on this blog, I call the markets every day in my nightly email advisory. If you want to see my trading strategy and some examples of my past trades go back into last year's posts, July, August or Email me to get a trial of my nightly Email. linesbot@gmail.com I don't sell or distribute email addresses or any information.

The latest Commitment of traders data shows some commercial selling of gold as we rally. We remain at record short positions for Goldman and Co. Silver on the other hand is very close to the bullish level that kick starts nice rallies.
The lower chart is the US$ futures, it shows a huge short position as well. Also notice that the signals given on the US$ quite often don't work.

Click to enlarge

Latest investor's intelligence chart

2010-02-25T18:51:00.000-08:00

The bulls are returning to the arena, sort of. At least that is what the following chart is suggesting. It is a survey of financial letter writers. We are not near the highs we made at the top but we never got way over done on the bearish side either

Email excerpt

2010-02-22T15:13:00.000-08:00

Here is an excerpt from last nights Email

"The reason expectations have taken over as price movers is because current price levels make fundamental analysis essentially useless. Normal doesn't exist anymore. Traders chase momentum and Goldman pounces, if this game goes on long enough Goldman will take everybody's money. The pension funds are not set up for volatile markets, their portfolio managers are P.H.D.s in business and economics. Most are not good traders, they look at fundamental data which the govt provides and they tend to under perform the indexes themselves. When they try to trade, the result is what happened over the last two weeks and what happened in February and March of last year. That is why they go after yield and dividends and why they were such easy marks for the CDO salesmen. It is one of the reasons so many funds are in trouble now. If Goldman doesn't run a linear game, think steady, tight uptrends, then many pension funds will blow up."

Latest Investor's Intelligence chart

2010-02-18T21:49:00.000-08:00

Here is the latest Investor's intelligence chart, it shows a neutral reading. The bulls are back down to the level they were at in July, that's kind of bully. The bears are still not believers. Not much predictive power right now.

Latest Commitment of traders gold chart

2010-02-13T22:38:00.000-08:00

We bought silver a few days ago at $14.45. Notice we are close to where we were four years ago (orange dots). Where is the bull market there?
Also notice we are getting close to where previous bull moves have started, relative to positions of large commercial traders.
The Fat Boys have covered over 100k contracts in the gold futures and their short position is still near record highs, amazing.

Click to enlarge

lastest Investor's intelligence chart

2010-02-08T14:43:00.000-08:00

The Investor's intelligence chart shows there is still too much complacency.

Gold and silver commitment of traders charts

2010-02-07T23:00:00.000-08:00

Here are the latest gold and silver Commitment of traders charts.
Notice silver is getting back to a bullish level.
The US$ is at record levels of commercial shorting

Click to enlarge

Latest Commitment of traders gold chart

2010-01-31T10:24:00.000-08:00

The article you just read that brought you to this site is a version of my nightly email advisory...sign up today.

If you have been following this blog for a while you may have noticed how the indicators I post, such as the C.O.T. and Investor's intelligence, eventually have an effect on the underlying markets.

You can't trade on them but it is good to keep them in mind.

The Fat boys are starting to cover their gold futures shorts more aggressively now, before they have to compete with the Chinese.

Click to enlarge

In cash for now

2010-01-22T07:11:00.000-08:00

We have been out of everything for a few days see link to the nightly advisory.http://docs.google.com/View?id=dcvcqgqf_254cpqh68cr

The fact that the American people are starting to get their voices heard as they pull down the Kennedy dynasty, a sacred cow to the Democratic party and demand a little fiscal responsibility. May be like poking a bull with a cattle prod . The Fat boys may be saying to the American people "you want fiscal responsibility " we'll give you a little taste of what tighter money will feel like.
Clunk!

Email me to sign up for a trial of my nightly email advisory, there is more information there linesbot@gmail.com

latest Investor's intelligence chart

2010-01-19T21:28:00.000-08:00

Here is the latest Investor's intelligence chart, it is more over bought than ever

Gold and silver strong, we are long

2010-01-11T12:20:00.000-08:00

Thank you for visiting the site, sorry but I have been too busy to update things here.
We are currently long SPY, XIU [the Canadian stock ETF], GLD and SLV
We bought back into gold and silver right on the low, here is the email link to that day. It is too big to paste in the blog.
http://docs.google.com/View?id=dcvcqgqf_205cc7v9bht

If you go down the blog you will see we sold the metals on the highs last month, there should be a link there as well. See Dec 7 post.

Latest commitment of traders

2010-01-05T15:59:00.000-08:00

Here are the latest commitment of traders charts. The Fat Boys covered a few thousand contracts in both gold and silver but not nearly enough. China could be competing with them on the buy side. I have added the U.S.$ report because we are at a new multi year high of commercial selling [low red line]. Please note the area marked in blue, where a high level of commercial selling had no effect for many months! The C.O.T.s work better on the metals than most other markets.

CLICK TO ENLARGE

Latest Investor's intelligence

2009-12-30T18:27:00.000-08:00

Here is the latest Investor's intelligence data in chart form. The financial letter writers are getting margially less bearish and less bullish.

C.O.T. charts

2009-12-28T21:57:00.000-08:00

Here is the latest Commitment of traders report in chart form. The Fat Boys covered approx 18 thousand contracts in gold and remain very short both silver and gold.
Click image to enlarge

January effect

2009-12-28T10:38:00.000-08:00

This chart shows the junior gold companies are continuing to outperform the majors.
Notice the yellow spread is widening.

I haven't posted the latest Investor's Intelligence chart because there was no change from last week

The C.O.T. data for last week is not out yet.
Click to enlarge

Latest Commitment of traders data

2009-12-19T20:33:00.000-08:00

Here are the latest Commitment of traders numbers. The big commercials (of which Goldman and Morgan are the biggest) increased their short positions in the Gold futures market. They covered a small amount of a large short position in silver.
The increase in the gold short position was not big but it was surprising, it shows two possibilities.

The Fat boys are not covering, which means they plan to put gold price down further or they have been instructed by their boss, the U.S. treasury, to keep selling gold at any price.

The large gold miners are hedging large amounts of gold at the same time Goldman et al are covering.

Anyway, as you see from the chart the spread which I have highlighted in yellow is not normally where a good low in gold happens. So be careful.

We sold our trading positions in gold on the highs and are in cash now

I warned of the dollar rally in articles I wrote several weeks ago, when I was one of the 3% of bullish traders.

CLICK TO ENLARGE

higher rates may be coming soon

2009-12-15T21:51:00.000-08:00

I do not usually post copies of my email advisory for at least a few days after they are written but the Data on foreign investment today was so bad and the implications so important. I thought I would give my readers a heads up on what is coming. Here is the link to the email http://docs.google.com/View?id=dcvcqgqf_161f8s8mtg2

Here is the latest investors intelligence chart

Commitment of traders

2009-12-13T14:46:00.000-08:00

Here is the latest commitment of traders report.
They are covering but at a snails pace.
Click to enlarge

Gold sees margin calls

2009-12-07T19:08:00.000-08:00

We sold the last of our GLD trading position on Thursday's open here is a link to Wednesday's email
I warned of a year end rally in the dollar last week as well here is the link

Email me and I'll send you my emails advisories for a while so you can see how I work.

Here is an excerpt from tonight's email advisory

you need to know $104.00 is a possibility in GLD.(see the C.O.T. charts below) The Fat Boys sold even more contracts last week and are now short 308k contracts. It may be the biggest short position ever. They also have a large silver short position. If my math is right that is 37 billion dollars worth of gold alone! Here is one thing that worries me. At any time the govt can change the margin requirement on gold. Raise them to 100% for example. Imagine what that would do to gold prices. Bernanke has been saying lately that he should be doing more to prevent bubbles from getting to big. I look around and where do I see a bubble the Fed would like to pop. GOLD.
The thing that argues against it is that China would like to see lower prices to add to their holding and they don't need margin.
Bob
Click on image to enlarge

links

2009-12-02T07:33:00.000-08:00

Here is a link to last nights email update http://docs.google.com/View?id=dcvcqgqf_107crp56ghn

Where are the bears?

2009-12-01T10:27:00.000-08:00

Interesting chart of the investor's Intelligence index with shows what letter writers are telling their clients. There are fewer bears now than when we made the top !!! Keep it in mind.

we took profits today

2009-11-26T21:27:00.000-08:00

We covered our long position on XIU today at 17.25. We originally bought our position at 16.08. Profit was 8 1/2%. in 18 days. If you look down the blog you can see the trade unfold.
I have posted tuesday and wednesday's nightly updates as web pages. Click on the links http://docs.google.com/View?id=dcvcqgqf_85c4ng4dcp
http://docs.google.com/View?id=dcvcqgqf_89fxs4d3ft
In them I call for a top, with the drop to begin as early as Friday. Check it out, then sign up for a trial of the emails.
Click to enlarge

Winter sale

2009-11-23T13:55:00.000-08:00

Ask about our December thru January 1/2 price deal on learning to trade professionally.

We teach traders and investors a logical, low risk trading model. I pass on my own personal techniques plus what I have learned from the world's best traders. Clients can subscribe to my daily email advisory. Learning some of my methods and making money while they learn. They can also learn one on one with me on line, as we trade real time, real money. The beauty of the intense real time program is, number 1) I stay with the client until they understand every aspect required to be a successful trader, number 2) I guarantee what I teach works, or it is free.
I wish there was something like this when I started in the business, I paid a huge tuition learning my craft. My clients are profitable immediately.

Check it out

2009-11-19T11:30:00.000-08:00

If you are new to this site, let me say not much happens here. Most of my energy goes into my daily trading, teaching, and email advisory.
If you contact me by email, I would be happy to put first time readers on my email list, so you can get a feel for how I work. No charge
Here are links to recent evening updates 11/17/09 and 11/18/09 they are different than the morning update below. They are too big to show here.

Here's a sample from the morning of Nov 17th

Hi All

The US$ is being bid up again, possibly keeping a lid on things. Mortgage delinquencies are up, at the same time Saks, the purveyor of luxury, said profits were up, that about says it all.
US$...is becoming a bit of a concern, there are buyers on the dips now...a red flag for metals and indexes...
XIU....They are trying to get out of the 17.40 level..it is touch and go here..I will allow it one swing down but my patients is running thin....keep stop at 17 area
SPY...the futures sold off over night bringing us back the the top of the gap I spoke of yesterday..we should get buying on every dip...it is worth trading them
GLD...we are seeing some selling, I will keep a close eye on it here...traders can move stops up to 110.30..if you are on for the big ride put stops at 109.40..as I said I expect 1-2 days of weakness
SLV...nice to see slv leading for a change...we can test back down into the gap, but there we should find buyers...as I said the US$ is the cloud on the horizon..buy and holders keep stops as per yesterday, traders move stop up to..I was going to say 17.88, but it is a little early to be tightening stops that close..it is your call, there is a chance that level gets hit on the open tomorrow, then reverses back up..we should get to my 19 level before anything major... but keep in mind we have a 12% profit since our last purchase, all in a couple of weeks, we don't want to give that back!!
GDX...we are should hold in the middle of is recent gap and really moon launch up here, if not I will turn cautious

Cheers
Bob

The content of this email is provided as general information only and should not be taken as investment advice. All this email content, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The ideas expressed in this email are solely the opinions and actions of the author. The author may or may not have a position in any company or ETF referenced above. Any action that you take as a result of information or analysis, in this email is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

steady as she goes

2009-11-16T11:41:00.000-08:00

We are still in XIU and have moved our stop loss order to 16.90 we need to get over 17.40 to play catch up with the S&P and the Dow.
We are still in SLV and we re entered GLD on Fridays dip. We have already moved stop loss protection to break even.
The AAII investor sentiment index I posted in one of last weeks emails, was the tip off that this market had higher to go, we were seeing readings last seen in march
CLICK TO ENLARGE

How and why it works

2009-11-16T11:00:00.000-08:00

This is a brief explanation of how we work. Plus a very brief track record, that can be confirmed by going back in this blog and reading my posts. The theme of this blog originally was not to focus on our trades, which I send via email. However, lately I have posted some of our real time trades, to give an overview of results.
My investing strategy focuses on risk management. It is based on the premise that most of the time, trends in motion stay in motion until they reach their objectives.
I use proprietary components to identify the extreme of a counter trend move. Then using very tight risk management techniques. I essentially buy or sell, by "picking away" at the extreme of that counter trend move. You see, when we move away from a counter trend extreme, we don't come back.
I have reloaded the 10 year S&P 500 chart from thin spots and head & shoulders. On it I have pointed out the counter trend moves. Please read the original article.
The resulting risk-reward profile is extremely profitable in it's own right. Even more important, we avoid the huge draw downs that occur when the dominant trend changes direction, as it did in 2007!
I bring over 20 years of practice at "picking away". I am watching for the key points every day, so you don't have to. I keep you updated via email in the evening, so you can place your order before markets open. I also send timely emails during the day for even tighter risk control.
It sounds confusing at first, but after I work with you it becomes a simple, logical approach to managing investments.
Keep in mind we have not missed any of this rally, in fact our "picking away" has caused us to out perform it. We never took large capital risk.

Looking at the big picture, for now the trend is up but we could be in a big counter trend rally. If we are, then when it ends we won't come back. See road to recovery chart below. What are you doing to protect yourself?
Click to enlarge

half out

2009-11-04T12:54:00.000-08:00

We sold half our position in XIU today, I am having trouble trusting this market,
we have moved our loss protection up to 16.20 on the other half.
The fed says the economy is recovering, promises to keep rates low, after a 2 day meeting. We remain long silver.
Click to enlarge

buy or bye

2009-11-02T13:11:00.000-08:00

I bought XIU today at 16.08, it is a risky venture, there is not enough fear to cause an important low, I am thinking we get a bounce here, so this a "just in case" trade, but the markets are volatility and whipsaw constantly, so anything can happen, the picture says this rally, if it develops, won't amount to much, so risk control is in place at 16.02
The XIU is giving me a projection down to $15 ultimately there is lots of economic data all this week, plus a Federal reserve meeting, which will give an excuse for any whips saws.
The low hanging fruit has definitely been picked for now.
Click to enlarge

Does trading pay...I'll say

2009-11-01T22:42:00.000-08:00

If you are a potential subscriber check out the chart I have posted below, in it I compare my performance to the XIU (Toronto stock index) since June 1 09.
All the trades were sent to clients via email and also documented on this site.
Results are closed out positions and do not include the buy we made in April.

Here's the best part, if we head south from these levels, we'll still have the 23% in our vault!!! if we go higher we will be in for it.
The green bar is my gain, the red bar is the market loss, you really should look at the chart enlarged.
Why wait, sign up today
CICK TO ENLARGE

29 market crash, then and now

2009-10-30T22:44:00.000-07:00

Yesterday was the 80th anniversary of the 1929 crash, so I thought a comparison of then and now would be fun, the parallels are eerie.
CLICK IMAGE TO ENLARGE

Also notice that so far, there is no panic in the options market, where we remain at the highest amount of call buying (bets that the up move will continue)in over 3 yrs. in fact it looks like traders are increasing their bets as we sell off, not a positive sign

Canada weak

2009-10-21T12:52:00.000-07:00

Follow up on the XIU reentry trade see below...we have been out for over a week, we took a 4% profit. The market in Canada has been hamstrung by the strong Canadian $, as a result we have underperformed the Dow and S&P..sorry for the lack of updates on this site lately but my email clients and the mkts have and continue to demand my full attention. Volatility has increased and the tone is changing, it isn't reacting well to bad news anymore..I believe it is a precursor to a correction, we are in cash except for core positions in the metals, plus we entered SLV (silver ETF) today for a trade but have already moved protective stops to break even.
CLICK TO ENLARGE

I have attached a chart that shows why stocks have been so strong even though the main economy struggles, the fed has pumped money into the banking system (large increase in the monetary base) but they are not lending..they are speculating in the markets, and buying bonds which is helping the U.S. govt finance its burgeoning debt.
I have posted these before, but it appears to be worsening as fresh data comes in.

re-entry

2009-10-05T07:09:00.000-07:00

We enter XIU today at 16.40 with a tight risk control stop of 16.25
We look for a rally to 16.85 ish... we are not totally comfortable with this buy so we will move stops up quickly to break even
SPY was too high to enter safely... more later
CLICK IMAGE TO ENLARGE

Win $100

2009-10-04T12:09:00.000-07:00

I thought I would follow up on our positions, we are still out of stocks, the sentiment indicators are still very over bought, on a short term basis we are due for a bump up, but I don't think we go to new highs, the economic landscape is blanketed in fog, my money following models show that the U.S.A. has expanded its monetary base to record levels, at the same time the broad monetary measures (M2-M3) are contracting and the yield curve is flattening (never a good omen) suggesting a new crisis on the horizon.
Complacency and a sense of entitlement among boomers, seems to be the mood, a belief the govts will restore and maintain our socio-economic structure in which debt creation and asset speculation are the main sources of wealth, why not, it has worked up till now. I believe the system fractured a long time ago, all the dead ponzi schemes floating to the surface, are canaries in the coal mine.
I may be right or wrong but the truth is, my opinions have no effect on what the mkts do. As the saying goes "yes but what have you done for me lately"
Well for starters in the last couple of weeks, I helped you make 9% in XIU and another 7% by getting you out on the highs, you can make money by being in cash too.
Goldman remains heavily short gold stocks and gold futures, I look for gold to pull back.

Poll...email me your opinion on these 2 statements agree or disagree and be entered for a $100 draw at the end of the month
How does the average investment advisor make a living, how do they get paid?...I say.. They sell you something, and earn a commission for doing so, 5-6% of your money, and when you have saved a little more money, they sell you something else?
Do they make you money?..... I say.... no, it is the vagaries of the markets making you money?
CLICK TO ENLARGE

No explaination

2009-09-24T19:15:00.000-07:00

We have stepped off the crazy train for now, we know that the bubble is still in effect, and will be for the foreseeable future.
Valuations (price earnings ratios etc.) are at an extreme, but the thing that bothers me is that sentiment is very high which means the stupid people are panic buying on the highs and someone is selling to them.
That someone, seems to be short big time in the gold futures market as well, so we are out for now.
Maybe I will be the stupid one for stepping off, but if I don't and we cave in, how do I explain that.

weekly update

2009-09-21T13:40:00.000-07:00

We have taken profits on our trading positions locking in an 8% gain in the SPY in 2 weeks, 9% on XIU. We are at a cross roads now, with the possibility of 10% more left to the upside. The end of the quarter is fast approaching, portfolio managers who are not yet fully invested could be forced off the fence by a final surge higher.
We have to remember the govt wants asset prices to rise and gold and silver to languish, so even though valuations are overly optimistic, they can still go up from here.
We have to keep in mind that the counter trend low, formed in early September is still holding as well.
I am being cautious, we are up more than 25% from July alone, putting some money in the vault seems prudent.
Please note the key to success is the risk-reward profile , see chart, when you enter the market with no protection, no plan, your risk is ???, we know from the crash, it is at least half of your money,yikes!!!

CLICK TO ENLARGE

Christmas rush?

2009-09-14T12:46:00.000-07:00

With the stock market bubble rally in full force, here is a photo and chart that makes you wonder how the Christmas shopping season will perform, after all consumption is 70% of the economy.
It is a photo of what the Chinese fishermen call the "ghost fleet" . An armada of freighters, close to 500, with no cargo, no crew, and without a destination between them, sitting off Singapore. Approx 12% of the worlds freighters are idle when they should be at their busiest and the cost of shipping confirms it. One thing to keep in mind however, they have been building container ships, like they have been building houses, hi-rises and malls, so there are more than enough and that will keep the costs to ship goods down.
Click to enlarge

Rally

2009-09-10T13:59:00.000-07:00

We continue to see strength, as buyers jump in on any sign of an improving economy, this is a quick update to follow up on Freaky Fridays post, see below. The indexes closed at new highs for the recovery today in the U.S.A, Toronto made a marginal new high a few days ago.. The US$ has broken below it's recent support which is lending support to stocks. We will ratchet up our risk management stops tonight via email, to lock in some of our 5 % gains, for the second time in 17 days. Click to enlarge

Freaky friday

2009-09-04T17:20:00.000-07:00

The unemployment numbers in the U.S.A. were released today, -218,000 lost jobs, the unemployment rate moved up a notch to 9.7%.
We have rebounded strongly from my buy triggers on Wednesday and are already up 2% on the S&P 500 and 3% on the XIU. I said in yesterdays email we should see a strong close today and so here we sit, with a close on the highs, thinking about next week.
Also thinking about the negative statistics, and how they are being countered by the money being thrown in, and how it is distorting the P/E ratios etc. I saw a chart today which shows the P/E ratio to be 130ish, I won't post it because I haven't confirmed the numbers but here is the link. Let me know what you think.
I think the 3 month sideways drift, is nearing an end, so we have to be on our toes, many of us have been given a gift, a return of half our money, we must make sure it stays home this time. Complacency can be a dangerous thing sometimes. Here is a follow up chart of how my wednesday buy has panned out so far. click for bigger image

coiling spring

2009-09-03T19:41:00.000-07:00

We are about to get back to reality next week as summer holidays wind down, tomorrow will start with a bang but get quiet as many market participant's will leave early.
I am uploading a few charts to show the knife edge we are on, I have drawn in a line from June, nothing has gone anywhere in 3 months, except the spx, we are wound tighter then a fake Rolex.
The trend remains up on most things but we are limping along.
The huge divergence between nat gas and oil is a function of China hoarding commodities, gas being difficult to transport and store, is more a N. American product. click to enlarge

late drop coming

2009-09-02T12:42:00.000-07:00

I see lots of selling look for collapse into close of trading,

Follow up

2009-09-02T10:00:00.000-07:00

Short sellers should come in right here. I have set my stop to a small profit
I am looking for an important low in this area but not without some chopping around. As I said this is aggressive and what ever you do don't chase these higher prices,
in fact taking off 1/2 here is a good plan. click to enlarge

Early buy

2009-09-02T08:41:00.000-07:00

See above for follow up.......^

I have bought at 991.75 ...This is an early, aggressive buy, with high probability of failure, I will move my sell stop up quickly on any strength.
the risk here is small but probability of success is 30%ish.
Cautious traders should wait for a day or 2

Thin spots and head and shoulders

2009-09-01T16:45:00.000-07:00

I have been asked why I am trading so actively over the last couple of weeks, I know you prefer a slower pace, I do as well. My job is to protect you from large losses and help you profit and grow, I also realize that some people are still trying to recover from the crash and are afraid not to be "in," in case they get left behind. I am trying to be all things to all people, sometimes it is tough, those of you that know me, know how seriously I take this responsibility. At certain levels, more trades are required to establish better positioning to reduce risk.
Right now we are dealing with an over extended rally that has set some very lofty goals which have not been reached.
There are 2 things in play right now, that many, if not all, analysts and market participants are aware of because they have predictive power, they are head & shoulder patterns (h&s) double the distance between head and neckline to get objective, and gaps or thin spots on a chart.
There is a problem with them however because they are so well used, the "fat boys" will sometime dangle them like bait, then take the other side of all the buying they create and then push prices back down. I am cautious we are at one of those places now, so I Jockey for position to keep risk small but I still want to be in if we go.
On the 10 year chart of the s&p 500 below I have drawn in some of these , both successful and failed examples.
So as you see we are currently going back into a thin area with targets that are still a minimum of 1054 ish plus we have an inverted head and shoulders pattern that everyone has their eye on that projects to 1250.
I am just cautious of a failure, I mean a trap, because it is so obvious, I hope I haven't added to the confusion.
I also hope that potential new clients can see the way I work will be very beneficial to their financial security. click to enlarge

Cracks in China

2009-09-01T16:29:00.000-07:00

We are getting the pullback I mentioned last Friday at that time I suggested we would see a low today. We sold our XIU position yesterday locking in a small gain, today we are back down to where we were 2 weeks ago I think the bad numbers out of China are sprinkling some caution into the markets. The baltic dry index (see insert) (which measures the cost to ship dry bulk goods) I watch is weakening suggesting slowing commodity shipments to and from China.
The US dollar continues to hold the buy trigger as well, so far it looks like taking the 5 % gain was the right move and keep in mind we have gained 20% from the July low. This is a key area we should see some choppy trade here.
Click to enlarge

Past rebounds

2009-08-30T11:04:00.000-07:00

Here is an interesting chart of the 29 crash and the aftermath, compared to other dislocations, just food for thought, I am not making any points or comparisons. It helps keep our feet on the ground
click to enlarge

banks holding back

2009-08-29T22:40:00.000-07:00

Here is a chart that explains what I have been saying, the banks aren't lending,they are hoarding money to cover up coming losses and buying equities to capture dividends. Click to enlarge

I have included a link to a number of the American July economic statistics in chart format

Sloppy activity

2009-08-28T21:32:00.000-07:00

We got another sloppy friday close, I am looking for a low on tuesday, but the picture says this could be the top for this swing. This is where the short sellers will try placing sell orders, because their risk reward is good. So I am thinking maybe a sharp down to 1005 early next week to pull in some sellers. I will look for a buy there. This is a very tricky place to trade!!
We are still in the Toronto index (XIU) but the fact that it is lagging is a worry, so we tighten our sell order to 16.38 to lock in a small profit, being out is ok at these levels.
Click to enlarge

5% gain in 5 days

2009-08-25T09:55:00.000-07:00

See above for follow up---^

We sold a few moments ago at 1035 locking 49 points that is a 5% gain in 5 days. A nice 10-1 risk reward ratio. We remain in the xiu which is still lagging slightly.
click here to see previous update
There could still be more upside this week as fence sitting pension fund managers are forced to enter the market by month end.
I couldn't resist the 5% . I will follow up later

The climbing wall

2009-08-23T10:10:00.000-07:00

I have posted charts in the past that I think clearly show the current flow of money is into stocks. I have some more fundamental statistics for you. These represent a small part of the wall of worry, that the markets are climbing. The thing that worries me is the change in peoples attitudes, from spending to saving, frugality and debt reduction in a system based on consumption? It could mean trouble in the short run, the fed is probably leery of another money stimulus plan, the last one was used to pay down debt and the last thing bankers want, is for debt to be paid off.
The fundamentals listed below won't matter until they matter, of course at that point, they will matter a lot. I focus on the money trail and the key technical components.

34 percent of all homes with mortgages in the U.S.A. are worth less than their loans.
Foreclosures are about to lurch higher as the there is a build up in the pipeline.
13% of all mortgages in the U.S.A. are in delinquency or fore closure, that's 1 in 8.
The $8000 stimulus has triggered even more house building, that runs out in the fall.
Unemployment including those that have run out of benefits, is at 16% and rising.

Corporate insiders are dumping huge amounts of stock, in the five weeks ending August 12 as reported by the WSJ’s Market Data Center, insiders sold a whopping $2.2 billion and purchased only $62.2 million in their companies for a huge sell-to-buy ratio of 36:1, or 17 times normal, tech is being sold as well.

Finally the S&P 500 price earnings ratio based on operating earnings, which are the sanitized version of reported earnings, are very high, as high as during the boom! with no boom in sight, in fact companies are holding up falling earnings with layoffs and cost cutting, not increased sales. Remember Goldman and Morgan have knowledge of the plans of their clients which include big pension funds and also the U.S.A. Treasury, their tracks can be observed in prices action.

Toronoto vs China

2009-08-22T21:58:00.000-07:00

I haven't talked about the XIU or gold or oil etc. much on here because of time constraints, I am attempting to show how I work and so I concentrate on one theme, I do cover them in my trade recommendation emails.
The xiu hasn't been performing well of late, nor has China, down 20% after being up 100 % in july, Toronto tends to follow New York, but it is also perceived as a petro/commodity market, and now that China has filled every holding tank and warehouse in an attempt to dump U.S. dollars and buy things, to the point where ships can't unload because there is no space to store it. There is a rumor that Chinese bank regulators are threatening to tighten lending standards.
Profits objectives on XIU are 17.40 and 18.80 the 16.50 level is a low risk short trigger based on longer term, it may fail but I am cautious here. So I have moved my stop to break even. click for big

Week in review

2009-08-22T19:19:00.000-07:00

OK, I am back,I will post a chart with the trade points marked in, I moved data points forward from the last posting, so you can orient yourself. There is no doubt now that the important low is in, now it can do one of two things, this can be a trap to get the last holdouts sitting on the fence wondering if they should buy or not, then a sudden reversal down, which ends the bull run from march. If the breakout is real, then the 1st target is 1034, then 1060, then on to 1080. Either result will be telling, I have moved my stop up to 1001.25 locking in 15 points profit, I am trading tighter then usual because of the over bought environment, we have a 40 point profit at Friday's close, that's 4% in 2 days. I don't want the market taking my gains.
Notice how Friday closed strong again, you can set your watch by it.
I will post a separate discussion of XIU it was leading, it is lagging now.
There is a pattern I am watching for which will signal the move is over, so watch you emails. click to enlarge

Test coming

2009-08-20T12:19:00.001-07:00

It looks more like we made the important low, early this week, not 10 days ago! We are at the make or break point here on the s&p, any higher and the highs will be taken out, one thing that bothers me is the Toronto market is lagging over the last couple of days and over the longer term as well, we are still around June's highs, it could be because China fell so hard and Canada is perceived as a commodity country, so the XIU is making me nervous, I entered at 16.08 and we are only at 16.24now so it's acting poorly compared to the S&P500, which is up 20 point or 2%, but I have moved stops to break even so we will see. GLD gave a short term trigger to buy today as well.
Remember tomorrow is Friday so I expect the usual strong Friday close, maybe XIU can catch up a little. Sorry about the graphics makes you realize a picture is worth a thousand words. I will get back on track on the weekend.

The uptrend lives, maybe

2009-08-19T11:16:00.001-07:00

We bought this morning, 16.08 on XIU and 986.25 on S&P 500, I think the low I was looking for has come late, it is also still possible that we made an important top last week, we are at high valuations here and it is a key level so it becomes study in risk control, it is a gamble with a small risk and big reward, that is the beauty of how I trade, if I am wrong I lose a small amount plus $10 in commissions, if I am right we rocket to new highs squeezing the shorts, and maybe even leaving this area and continuing the run, I will move my stop up to break even if we close strong today. I am on a bit of a holiday, I am using a friends computer, so I don't have graphics to show you. I will up date them on the week end.

Following the money

2009-08-16T14:47:00.001-07:00

The stock market rally caught many by surprise, after all unemployment it still rising, foreclosures are increasing, banks are not lending, corporate earnings are falling, price earnings ratios are crazy, how can prices rise 50%?
The fed and the treasury have put trillions of dollars into the banks, supposedly to buoy the housing market and help small business, at the same time, short term interest rates are nearly zero, the problem is, the banks didn't lend to those that needed it, but speculated in stocks instead, this has created a new carry trade, borrow at extremely low, taxpayer subsidised rates, then buy dividend paying stocks and capture the spread. I caught wind of this back in April when I started noticing that stock options were acting odd during expiration.Corporate treasurers fight to keep dividends high, even as earnings shrink, remember, dividends come out of the bottom line, they even borrow the money to pay them, eventually they will try to issue more stock if prices stay high. This is happening around the globe, China has just seen a 100% rally in key indexes after their central bank pumped in 4 trillion yuan and then recently a panic as available supplies of money tightened.
So far the result is that the real economy is still contracting, money is tight, consumers are not spending and they are the key to any recovery.
The dollar is falling as the fractional reserve system multiplies dollars and they are sold or traded for assets. From time to time the dollar has to be defended, least the holders of the debt, the Chinese etc. become alarmed at the depreciating value of their foreign reserves.
The debt to GDP ratio is approaching 400%, the public debt to income level is still at 130%, they are paying it down but income levels are falling as well.
This debt ponzi scheme will continue to blow bubbles, real estate is too bloated, so stocks are the target for now, although I believe they are over priced by 50% right now, they can go higher still.
Eventually their price earnings ratios will reach such extreme levels, that prices will level out and over time, if the economy recovers, the "fat boys" will continue to collect their spread until interest rates increase, that could take years,or we could fall again and price catches up with value.
Either way, one thing is certain, when the market gets too one sided, there will be bear raids, when the fed unleashes Goldman et al, to panic the herd, to defend the dollar and knock assets down a little, because too high, too fast, kills the carry trade "goose".
The way prices performed on friday makes me think we break the 990 level next week, but the more I think about it the more I believe that the important low may not have been made yet, this is where it gets tricky. Notice how a key level like this causes volatility, have we topped? Should I take profits? should I hang in? where should I get out if we start falling? all valid concerns. That is why my method works so well, I get out high and let the volatility work for me. Next week will be very instructive. Not the best time to be out of town, oh well.
telling charts. click to enlarge

Ratcheting up profits

2009-08-14T10:44:00.001-07:00

My sell order was hit at 1003, (see yesterdays comment below) giving me a 12 point profit. Breaking back to 992 is very sloppy action, although we have not broken 990, I believe a break of 990 is immanent. There is a problem with trying to build a case for a big failure around the 990 level however. The problem is that the important low I wanted to see, wasn't very low. It may not have been made yet, there is another problem here, we probably won't vee top after such a strong run up, so at a minimum we should trade side ways for a while here.
It is Friday and the treasury seldom lets the market close low on a Friday. We have a perfect short term buy trigger here so I see a rally into the close, I have sent an email saying..use any rally to take short term profits

Rally still alive "bearly"

2009-08-13T15:11:00.000-07:00

Following the trend
I bought at 991 on Tuesday, when my order, placed Monday was filled, 990 is an extremely important low now. The price action feels like a top to me with all the slashing and thrashing,this move should be the final stop taking probe to shake out the short sellers, so I am raising my sell stop order to 1003, locking in a 12 point gain, however if we can launch clear of this area then 1080 is possible. I want to be on the elevator if we go. I will continue to watch the U.S. dollar see inverse correlation, also the bullish consensus came out for the dollar and it is 3% bulls 97% bears, so everyone is short, a short squeeze of epic proportions in the $ is possible. Remember the consensus on stocks took a big lurch toward too bullish last week, this has ramifications for gold as well, I will revisit my double top theory in gold, in a few days, so far it is still holding water. The C.O.T. charts on gold are very negative now, I will include one in next gold email.Click image to enlarge

Correlation..why modern portfolio theory failed

2009-08-10T17:26:00.000-07:00

Many portfolio managers, investment advisors and financial planners desperately cling to their discredited diversification dogmas. Hoping that investors may not have noticed the failure of their buy and hold mantras and planning models.
Modern portfolio theory, the cornerstone of the financial planner as a way to reduce risk, offers little true protection in correlated markets.
The correlation of markets is the direct result of debt, which is used to buy assets of all types, equities, real estate, precious metals and commodities. It is liquidity or cash chasing things. It doesn't matter which things you diversify into they all rise and fall together, making asset-allocation strategies fundamentally flawed.
Think of a telescopic flag pole with multiple flags around the top, with names like stocks, real estate, bonds, commodities etc. The pole moves up and down like a retractable car antenna as debt ebbs and flows, when it does the flags go with it. M.P.Theory focuses on being in the right flags. I focus on trading the pole.
Japan created a debt bubble decades ago,(270% of GDP) with the same asset price appreciation we just saw in the west. When it burst, they began trying to re inflate, cutting interest rates to zero and printing money. This led to to a world wide debt bubble, as money was borrowed in Japan at very low rates, where nobody wanted to invest and lent out in western countries at higher rates. This is called a carry trade. During this bank feeding frenzy, the world became awash in debt. Lending standards were lax or non existent, the asset flag pole rose higher and higher.
This also led to a distortion in world trade, which came to be known as globalization. China became the world's factory. Westerners borrowed money from Japan and used it to buy goods from China. China took the money that flowed in and lent it back to the west so they could buy more goods. China boomed, they had cheap labour and built modern factories. The U.S.A. had high labour costs and old factories, which eventually began closing. China became a creditor nation as the U.S.A. became the largest debtor nation in history.
Debt and in the extreme, debt bubbles feed on themselves, making assets less expensive as their prices rise. This sounds counter intuitive but I'll explain using homes as an example. You net $30k as a salary, you have a mortgage (debt) of $2k a month, so $24k a year, that is an expensive asset. However the banks are flush with money and lending freely. House prices are rising and equity is building. Each year your home is worth more and banks are happy to lend you $24k a year on a line of credit or a re finance. Yes your mortgage is getting bigger, yes your monthly payment is growing, but you are living free and have your full $30k to spend as you wish,life is good. Then the floe of easy money dries up, the bank turns down your next refi loan. In a heart beat, your home has become extremely expensive, your monthly payment exceeds your salary. You have to sell but everyone is selling and there are no buyers, prices fall, banks foreclose, it is forced deleveraging. It was all illusion, every asset class is effected in the same way, they all fall together as the flag pole retracts.

The big engine of world consumption, the U.S.A. currently has a debt to gross domestic product or put another way, debt to income ratio of 375%. This is bigger than in 1929 when it reached a peak of 200%. Like the home owner, they can't pay the interest on their debt. To make matters worse China has taken their jobs, as their income is collapsing. In a few short years they have gone from the worlds largest lender or creditor to the largest debtor nation. They are not alone, much of Europe, England etc. are in the same leaky boat. We see panicked central banks around the world desperately trying to jack the pole back up. Remember the boomers are wanting to cash in for their retirement. There are many obstacles in their path. It is hard to start a new bubble when you are at a debt load of 375% already!
Global investment tends to flow to creditor nations not debtors. As business tries for a piece of the pie, it flows away from debtors and their standard of living falls. Japan never did reinflate their economy or their stock market, even with all the money they printed. We are at higher debt levels than Japan was when their bubble burst. Keep in mind that they had a very high personal savings rate at the time, we had none. What if the same stagnation happens to our markets?
In 1960 it took $1.50 of new debt to grow the GDP $1. Today it takes $5.40 of new debt to grow it $1.00. Now consumer debt is 130% of income, the highest in history.
We see the flag pole rising again as the treasury has pumped in approx 2 trillion in new money but as the chart below shows, bank loans are collapsing. Obviously the investment houses are not lending, but are speculating with virtually free, taxpayer money. All the while consumer confidence is falling, unemployment is rising and the economy is stagnating.
The point is, to get ahead in this environment it is necessary to focus on the pole not the flags. The world economy has become a one trick pony, that means trading is the best way to protect capital and attain growth. Yes the banks are pitching saving right now but at 1% interest it's the banks that benefit. We had a 15% gain in stock prices in 1 month, and a 50% rally from the march lows you would have to save for many years to get that. Yes some advisors are starting to realizing trading is required but they are basically sales people, using primitive trading techniques such as price crossing the 200 day moving average. They are not experienced traders by any stretch of the imagination.
Exchange traded funds or ETFs are gaining favor quickly with the public. They offer diversity with very low management fees, when compared to mutual funds, where management expense ratios can be as high as 2 even 3% a year. Your advisor gets a piece of that every year, so ETFs are less popular with money managers. For them "buy and hold" was an easy sell and a sweet deal.
eye opening charts... click to enlarge

Low risk trading in high risk areas

2009-08-10T14:10:00.000-07:00

Following up on Fridays post
I have entered a buy order at 991.25, prices are high, this is an aggressive buy. When I sold a few days ago I was thinking we would pull back to 968- 970, so I am nervous here, but 990 is what we have to work with, risk control is our secret weapon.

The market is priced for 4.5 % growth next year,that would be a perfect v shaped recovery and I am not so sure it is in the cards, so we are priced for perfection. Also we are at a point of interest for a trend change using my long term matrix. Another problem is the U.S. dollars which is inversely correlated to stock prices is very over sold and can bounce strongly. However, I buy because I want to ride this to the end. I am using very tight risk management. As I said, I am posting this to help demonstrate graphically the power of my logical trading methodology, to ratchet gains and control risk, even in high risk areas, the market looks a little tired. See ending diagonal equals possible top Remember I have already locked in a 15% gain from the important July low. Click for bigger picture