By Nicholas Santiago on August 20th, 2010 3:59pm Eastern Time
Every week I take a few minutes and vent my frustrations to our readers. This week is strictly about out politicians. Is there really any difference between a Republican or a Democrat? These parties seem to be one in the same. They are spending addicts and unfortunately spending other peoples money such as the U.S. taxpayers. Many will argue that this current administration is on a spending spree and really does not know any other way. While this certainly seems to be true this current administration seems to have taken over from where the last one left off. Has anyone looked at the U.S. debt clock lately? The U.S. debt is now $13.35 trillion. Yes, that is a trillion with a 'T'. The United States gross domestic product is only $14.48 trillion and seventy percent of that is consumer spending. Are you kidding me?
Personally, I could not run my household on my credit cards. Eventually, the banks would shut my credit limits off once I could no longer pay my bills on time. When does this blank check by the U.S. government stop. These politicians on both sides of the aisle are absolutely reckless when it comes to spending. The only politician that has voiced a true concern about spending is Ron Paul the Texas Republican. I really don't think that his own party even likes him. Honestly, he is really the only politician that seems to make any sense. These other politicians talk about capitalism, then vote in favor of bailing out another failing business or institution. Has anyone looked looked at Fannie Mae or Freddie Mac lately? These failing institutions are killing America. However, the politicians will vote in the evening on a Christmas Eve to lift the debt ceilings on these financial institutions. Come on give me a break.
Often during the Intra-day Stock chat I will talk about things that I have observed or noticed during the week. Recently I was in a book store looking around and noticed a section in the book store entirely devoted to serial killers. I was shocked that they had a huge section of books written about these criminals and decided to walk through the area. As I walked through the aisle the serial killer section ended and the politician section began. I could not believe my eyes that these two groups shared the same aisle in the book store. That is scary.
Come on politicians get it together. Use your heads and stop enjoying all the perks you get from the lobbyists and special interest groups. Our country is falling apart at the seams. America can still be a great nation. However, due to the politicians we are just piling the debt and getting deeper in the hole. Don't you know the U.S. is in debt up to our necks? The people have had enough. That is my two cents.
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Live one i am in here.Bullish pin bar yeaterday, mostly sideways then todat we have a move down, it runs out of puff (second bar indicated) to close as a BUOB (Bullish Outside Bar) It takes out both the high and low of the previous bar. A good entry is on retrace to the high of the previous bar. I only ecpect this to get to 1036-70 level
The weekly chart gives us good indication of EURUSD support level. 12750 approx is where the sell off found support and continues to be all week.You can also see that the 12730-50 Level has been good support previously.This is a key level to watch, it looks like this week we will put in an inside bar as i cannot see it going lower. On the smaller time frames we can look for interaction at this level. Possible bounce trades etc.A break of this level could lead us down to 12500 (big round number) and some support.
By Gareth Soloway on August 19th, 2010 11:24am Eastern Time
The markets are forming a classic “M” pattern on the intra day. This can be seen clearly by looking at the chart below of the SPDR S&P 500 ETF (NYSE:SPY). According to the M-A pattern formation, the markets may be now due for a small up move, prior to the next down leg. This portion would be known as the “A” pattern after the “M” seen below.
The markets drop today is due to ugly economic data. Jobless Claims came in at 500,000, the worst in 9 months and Leading Indicators and Philly Fed were both extremely bad. The markets collapsed each time the the data was released, at 8:30am ET and again at 10:00am ET. Gold is slightly higher on fear while oil is dropping on the perception that demand will fall.
The weakest stocks today seem to be commodity based. Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) are both dropping over 1.5% as oil tumbles. United States Steel Corporation (NYSE:X) had been strong over the last week on rumors of a buyout. After gapping higher today, it has now reversed and turned negative as well. Bottom line is this, the weaker the economic numbers, the weaker the perceived demand will be for oil, steel and all other commodities but gold.
Gareth Soloway
Chief Market Strategist
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By Gareth Soloway on August 19th, 2010 11:54am Eastern Time
As much as everyone would like to think that the markets will go higher, we can eat gum drops and candy canes and live happily ever after, it appears the charts are telling a different tale. Major leaders in the financial industry, namely Goldman Sachs Group, Inc. (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM) are making one of the ugliest daily patterns a technical trader will ever see. This is called a classic bear flag. The bear flag is essentially consolidation off of a significant move which usually leads to more of the same. In this case selling. Note on the two charts below how Goldman Sachs and JPMorgan Chase had sold sharply weeks ago and now gone into a consolidation pattern which is noted by trading sideways. Technical gurus understand what this means and it can send shivers down the spine of any bull. The odds are favoring further downside on these market leading financial stocks. That means further downside in the markets as these stocks break lower and complete the pattern. To get more analysis, guidance, swing trades and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
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DATA DOUBLE PUNCH HITS MARKETS as US jobless claims jump by 500K (highest since Nov), Aug Philly Fed -7.7 (lowest since Jul 2009) put life back in the yen as risk aversion intensifies (S&P500 -1.6% testing 1075). USDJPY testing 84.80, AUDJPY eyes 75.50, EURCHF loses 200 pips now testing 1.3180 (see previous tweets warning about CHF benefiting from risk aversion as JPY fears intervention and USD fears QE). USDCAD did not reach my projected 1.0220, now facing key resistance at 1.0370 (previous TL support now resistance). Cable seen capped at 1.5680 and is expected to retest 1.5580. Again, EURUSD and GBPUSD are not losing as much ground as they usually do due to the fact that bad US data could push the Fed into fresh QE.
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By Nicholas Santiago on August 18th, 2010 3:37pm Eastern Time
One must really get a good laugh when looking at all the shenanigans played during options expiration week. Yesterday the Dow Jones Industrial Average rallied higher by more than 170.00 points only close the session higher by 103.00 points. This tells us that the large institutions took care of business when it came to shaking out the small retail options trader.
Yesterday Potash Inc (NYSE:POT) turned down a buyout bid from BHP Billiton Ltd (NYSE:BHP) for $39.5 billion. As we all know Potash Inc stock has soared higher and now has a floor underneath it. Today buyout rumors are everywhere. United States Steel Corp (NYSE:X) is rumored to be bought out by another company. This is one of the oldest stocks on the New York Stock Exchange. Is someone really looking to buy this company? Perhaps someone or some institution needs that stock at a certain level before Friday's expiration. The stock is trading higher by $2.60 to $49.90 a share and was even higher intra-day.
What about American Eagle Outfitters (NYSE:AEO) today? This stock soared higher intra-day by nearly one point on a buyout rumor. Come on give me a break. How can these rumors just spread like wild fire without anyone questioning their legitimacy? These games get played all the time during the week of options expiration.
Please realize that the small retail options investor rarely ever exercises an option. They will usually close out the option position long before the Friday expiration for a gain or loss in the premium. Therefore, take this week with a grain of salt as it seems these are just institutional games that are getting played. This type of activity has happened from the beginning and will unfortunately happen until the end. I even remember Ben Bernanke cutting the discount rate just before the opening bell on an options expiration Friday. What a shame.
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China has been "quietly" reducing its exposure to US sovereign debt over the last few months - or at least it was in May and June. China's holdings at the US treasury dropped from around $900 billion in April to $868 billion in May and $844 billion in June. At the same time, it has picked up purchases of Japanese debt and overnight announced that it would double its holdings of Korean sovereign debt (to the endless joy of the extremely export-dependent Koreans, no doubt). This is an interesting theme that bears watching, since it means that the US will have to turn inward for more financing if this continues (already happening to some degree with banks and private investors extensive buyers of US debt.) At the same time, China has largely halted the appreciation of its currency
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By Gareth Soloway on August 18th, 2010 11:51am Eastern Time
The markets opened flat on the day. Lack of economic news kept the volume low. Initially, the markets, seen in the chart below as the SPDR S&P 500 ETF (NYSE:SPY), sold a little in a continuation move from late yesterday. Technically, the master support was going to be gap window and the 200 moving average as they converged. This was at a price of $108.95. In addition, this is also a key even number play, a major discovery by InTheMoneyStocks. At this level, it was expected and called that the markets would bounce up. Sure enough, the markets did bounce. They bounced right back up to the opening price, flat line on the markets, then sold again, then bounced again. We find the markets at the high end of the range currently, trying to breakout to the upside. What favors a breakout? The light volume is the key here. A large breakout is not expected, but a small one is highly likely. If this key $109.60 level is taken out, look for yesterdays high at $110.35 as a major poing of resistance. On the downside, that gap window is still the major level. If that breaks, minor support is at $108.60 and then major support at gap fill at $108.35. To get more insight, analysis, guidance and swing trades, join the Research Center.
Gareth Soloway
Chief Market Strategist
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YENs TRADE-WEIGHTED INDEX http://chart.ly/4dt85t the chart in the link is Deutsche Banks JPY Traded-Weighted Index, showing the currency testing the highs of January 2009. Despite the similarity of the price pattern with Jan 2009, there are differences. GLOBAL BOND YIELDS TODAY are dragged by a more secular force than in early 2009 when the primary reason to falling yields back then was simply aggressive deleveraging from tumbling world markets. Today, the combination of slowing global growth and disinflationary pressures is weighing on bond yields, which discourages Japanese investors search for foreign yield. THE LAST YEN-SELLING INTERVENTION cycle from the Bank of Japan occurred between Jan 2002 and March 2004 (spent 35 trln yen), during which US fed funds rate hit a then 4-decade low of 1.00% and deflation was the Fed's main price fear. The Greenspan put of 2001-3 weighed on the US dollar, prompting Tokyo to act against excessive yen strength. The main reason to why Japans interventions ended in March 2004 was the Feds eventual signalling of higher interest rates, which materialized in June of that year. As long as markets expect the Fed to engage in a new round of asset purchases later this year, chances of operational (not verbal) FX intervention from Japan are minimal. The golden rule for any successful central bank intervention is for interest rate policies to be in line with the currency preferences of the central banks. And so as long as the Fed hints, signals or keeps the door open for new QE options, USD will remain pressured, particularly against the yen. I continue to expect 81 yen to appear in late Q3 and any intervention will be limited to verbal jawboning.
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