GE-US 10 YIELD SPREAD at 3-YR LOW. Compare these TWO CHARTS: On February 11, we bolstered our case for $1.32 EURUSD based on this chart http://chart.ly/eqbf3x highlighting our negative outlook for the German-US 10 yield differential, which stood at -0.50%, while EURUSD was at $1.38 at the time. Today, the GE-US spread has worsened to -0.73% http://chart.ly/faea8w and EURUSD dropped to $1.3270. Readers of this website were constantly reminded of our negative outlook for the German yield disadvantage being instrumental in guiding EURUSD towards $1.30 and $1.28. Looking ahead, we expect the spread to reach to -0.90s and help break EURUSD below $1.30.
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By Gareth Soloway on March 25th, 2010 4:47pm Eastern Time
The markets gapped higher today, surging like the usual fluffy, happy market we have seen since the February 5th, 2010 bottom. Volume was extremely light but a Master Level was lurking according to my hardcore calculations. Over the last two weeks, I had been trying to figure out why, when and how the market was going to reverse after such insanely continuous gains. Day after day this market has inched higher.
After countless hours of analysis, number crunching and hard work, I found a Master Level on the SPDR S&P 500 ETF (NYSE:SPY) at $118.15. For those of you that are Research Center subscribers, you know this level well, as I have mentioned it for over a week now. Sure enough, the SPY ran right into this level mid day. No sooner did we cross it by $.02 to $118.17, then the markets started to reverse. The reversal was strong, quick and brutal for any traders or investors who were long. Luckily, key trades were given out on the short side and nailed beautifully.
United States Steel Corporation (NYSE:X) was given as a short play over $65.00. Today it hit a high of $65.44 before reversing to close at $62.37. What a drop, what a profit! U.S. Steel remains on my list of the Top 10 most bloated stocks at current levels. In addition, we saw JPMorgan Chase & Co. (NYSE:JPM) slam through a double top at $45.20. Once crossed, this became a beautiful shorting opportunity. JPM reversed by the end of the day to close at $44.94, after hitting a high of $46.05. These are just a few of the key trades today.
The markets initially rallied on solid news. Germany said it will help bail out Greece in a worst case scenario, Jobless Claims were solid, Best Buy Co., Inc. (NYSE:BBY) had great earnings and QUALCOMM, Inc. (NASDAQ:QCOM) raised guidance. All this positive news saw the DOW jump higher by over 120 points around noon. That did not last long. When all was said and done, the markets closed flat to lower, a monstrous reversal in place.
The crazy thing about the action today in the markets is simply the reversal on good news. A reversal on good news can often be a key signal for a larger reversal trend. While this may be the case, the InTheMoneyStocks overall reversal confirmation signal did not confirm today. Therefore, we must wait until tomorrow for more market data. We will enjoy our current positions and the profits from today.
Even more insane today were the amount of amateurs who went bullish after being bearish. It is just like the institutions to take the amateurs money and then reverse the markets in the direction they had wanted. Learn the game, it will save you.
Join the Research Center immediately to get the latest action directly from pro traders. Get guidance on the markets, calls on stocks, the dollar, oil and gold as well as top notch education. Join now and get the information that could make you rich!
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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By InTheMoneyStocks.com on March 25th, 2010 3:44pm Eastern Time
Since the stock market rally began in March 2009 much of the focus has been on the U.S. Dollar, gold, oil, copper, and the financial stocks. While these sectors have all been very important to the rally, there is one sector that has been overshadowed and may be the most important. It is the 10 year bond yield.
As the U.S. Treasury and the Federal Reserve Bank blatantly try and inflate the markets back to health, there is one problem that stands in their way; high yields. Since this stock market rally began there has not been a single ten percent correction. The only corrections that have occurred in the stock market were in June 2009 and January 2010. Note the performance of the SPDR S&P 500 ETF (NYSE: SPY). Both corrections lasted about one month. What many traders and investors failed to realize is that the 10 year bond yield moved up to about 4.00 percent when these corrections took place. In June 2009, the 10 year bond yield traded just above 4.00 percent and a stock market correction took place. In January 2010, the 10 year bond yield traded as high as 3.92 percent and we had a sharp one month correction in the stock market.
It seems the stock markets comfort zone occurs when the 10 year bond yield stays between 3.80% and 3.40%. When the rates remain at these levels the stock market seems to take its cue that it is safe to move higher. Today, the 10 year bond yield traded as high as 3.93% and the market has sold off from its high. When the 10 year bond yield gets above 4.00% it would be prudent to watch out as the rug could be pulled from this light volume stock market rally.
Traders that are looking to trade the yields to the long side or short bond prices can trade the ProShares UltraShort 20+ Year Treasury ETF (NYSE:TBT). This is an ultra fund which means that it is two times short the bond prices. If traders and investors would like to trade bonds prices to the long side they can use the iShares Lehman 20+ Year Treasury Bond ETF (NYSE:TLT).
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By Nicholas Santiago on March 25th, 2010 1:32pm Eastern Time
Citigroup Inc. (NYSE:C) has rallied higher throughout the month of February and March. This move comes even as the company paid back the TARP, and issued more shares diluting the stock further. In 2007, the market capitalization for Citigroup Inc. was about $180 billion when the stock was trading over 50.00 a share. Today the market cap is about $124 billion with the stock trading just above 4.35 a share and having 28.48 billion shares outstanding.
Where can this stock go from here? One can only guess how high this stock can go in a bull run. However, we do know the short term resistance levels for the government owned bank. Citigroup Inc will have good short term resistance at 4.35, 4.52, 4.74, 4.97, and 5.18. The stock could see pullback or a pause at each of these levels.
The market continues to climb the wall of worry. Everything that has been in the bottom of the barrel is rising, and as long as this bull run remains Citigroup Inc. will be fine. However, when and if this market reverses use caution as these recent moves higher can reverse quickly.
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By InTheMoneyStocks.com on March 25th, 2010 12:22pm Eastern Time
The markets started with a gap higher today on the back of positive comments from Europe on the Greek situation. It seems like Germany is willing to bail them out after all. In addition to this global news, Best Buy Co., Inc. (NYSE:BBY) reported stellar earnings and QUALCOMM, Inc. (NASDAQ:QCOM) raised guidance. This was the recipe for a rally or so the market thought. Jobless Claims came in slightly ahead of estimates to keep things positive from a economic standpoint.
The markets started with a solid gap higher, yet the selling began almost immediately. The selling caused the markets to fall into the high from yesterday. At this point the markets were still solidly higher, just nicely off their top. The markets began to float higher again as light volume took over. Ben Bernanke was on Capital Hill discussing the financial situation along with the economy. Between 11am and 11:30am ET, the markets got a major bid. They ripped higher on buy programs across the board. Financials, technology, retail and more, surging.
After two days of sub par price action, Amazon.com, Inc. (NASDAQ:AMZN) is surging on the back of the Best Buy positive sales numbers. Amazon is higher by 6.55%. Google Inc. (NASDAQ:GOOG) is surging again today, following the major reversal yesterday. At an approximate price of $544.00, a one million block was bought. This signaled the bottom and a major move higher on Google Inc. Today, the price sits at $567.65. Not a bad profit for that institution that picked up the one million block at $544.00.
The markets continue higher, driven by end of quarter window dressing, short squeezes and some obvious propping by key high level players. The markets have rocked higher for over a year now without one 10% pullback. It has been a thing of beauty, fun, profitable but also something that is very scary. One never knows when the music stops and the small trader is left holding the bag.
Stay tuned to future updates. Join the Research Center at InTheMoneyStocks to get trades, analysis, guidance, technical education and more.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks
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By Nicholas Santiago on March 25th, 2010 10:53am Eastern Time
Since the last small market correction that ended on January 5th, 2010 the market has soared to new highs for the year. The SPDR S&P 500 ETF (NYSE:SPY) at that time hit a low of 104.58. Since that time, the SPY has made a new 52 week high and is now above 117.50 level; this rally represents over a 12 percent increase in about seven weeks. This is truly an amazing move higher in such a short time.
The retail sector has been very strong lately. The Retail HOLDRs ETF (NYSE:RTH) is now trading above the 100.00 level. When retail is strong it is usually an indication of a strong market. Today Best Buy Co (NYSE:BBY) reported better than expected earnings and the stock is trading sharply higher by 3.00 points to 44.17. When you combine this with comments out of Europe that Germany will help bailout Greece, we have a rally on our hands this morning.
With this massive bull run on our hands what is going to bring this market down? It will be euphoria as it always is. Once the market knows that things have improved as much as they can, only then will it decline. Usually when everyone in the public believes things are back to normal the turn will occur. Until that time enjoy the rally. Once the music stops it will turn ugly again. However, rarely does anyone ever hear that the music has stopped playing. Watch for the reversal to take place on great news and euphoria. That is often the signal that the rally has finished.
Nicholas Santiago
Chief Market Strategist
InTheMoneyStocks.com
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By Gareth Soloway on March 24th, 2010 7:52pm Eastern Time
The markets had a rare down day today. The most interesting part of the trading action, for the first time in almost two months, the markets could not start buy programs that held. Volume remained light but still, the market did not seem to show the same resiliency it has in the past two months. Even more interesting, many leading stocks that were weak yesterday, continued to be weak today. Stocks like Amazon.com, Inc. (NASDAQ:AMZN), Goldman Sachs Group, Inc. (NYSE:GS), Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) have seen two consecutive days of neutral to lower moves. However, Apple Inc. (NASDAQ:AAPL) and JPMorgan Chase & Co. (NYSE:JPM) continued to jump higher. These have truly been the leaders since the February 5th, 2010 low.
The most interesting thing I noticed as I traded intra day was the multiple attempts of the market to have their usual buy program. These attempts failed over and over again. This is a very rare occurrence in the last two months. It seems day after day the markets are propped up, light volume gives way to a small buy program. If the markets gapped lower, a buy program takes them positive. If the markets are flat into the last hour of trading, a buy program takes them to the highs of the day. While this is the norm, today it did not happen. While it did not happen, many times throughout the day it seemed like it started, then failed.
By no means should a trader of this market read into this too deeply. At this stage, we all must take this market with a grain of salt. We must wait for confirmation signals to show us the path. In all fairness, the markets took a lot of solid negative news in stride. The downgrade of the debt rating in Portugal spiked the dollar. New Home Sales were dismal. All in all, a rare down day did follow.
Tomorrow the markets will get Initial Claims and Continuing Claims reports. Initial Claims are expected to be around 450k. Most likely, this number will come in line with estimates, give or take 10k. I do not expect a major reaction off of the number. What I would watch for is more information and news out of Europe. It looks like things are beginning to unravel again and if the dollar rips higher, the markets may be under pressure. In addition to the economic news, watch earnings news from Best Buy Co., Inc. (NYSE:BBY) and Oracle Corporation (NASDAQ:ORCL). Best Buy reports tomorrow before the bell while Oracle Corp. reports after. These earnings reports could actually have more sway than the economic news.
In addition to Europe, more pressure building between the United States and China. Trade wars, currency manipulation are being thrown around too easily and one wrong step could cause a small market moving fiasco.
What worries me most? At current levels, stocks have great news factored in price. Should one blip hit the screen, we may seen a quick, big sell off on solid volume. Institutions continue to hold as volume has been light. Should they get spooked, dumping could occur.
I continue to watch the markets closely, looking for any signal that may point to a reversal in trend. For more info, up to date analysis, technical videos, alerts, market, stock, commodity and currency calls, join the Research Center at InTheMoneyStocks.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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FX TECHNICAL TRENDING. While we always advocated the importance of paying attention to fundamentals on this website, the past 2 weeks have been dominated by technical trending in FX markets, whereby the US dollar began accumulating strength against EUR, GBP and to a lesser extend commodity currencies, until even risk (Portugal downgrade and disappointing US durable goods) started to weigh in equities and led to broader USD strength against AUD, CAD and NZD.. While our $1.32 EURUSD target for quarter end is now appearing more popular, we lift the probability of $1.28 by mid April to 70%. Fed Chairman Bernankes speech on exit strategy tomorrow to the HOUSE was originally due for Feb 10 but was cancelled due to snow. Thus while the speech may be the same, the Q&A session could shed some new light. Yesterdays GOLD and SILVER HOTCHART is already $17 in the money vs. GOLD and 50 points in the money in SILVER http://bit.ly/dhtUhLRead more…
By ITMS News on March 24th, 2010 5:00pm Eastern Time
Note the following example where a channel had been forming on the SPY 10 minute chart. It was a nice downward channel that continued to bounce off the lower channel trendline and then hit the upper. These patterns break to the upside about 90% of the time and can be used as a great trading method for making money. The key is to understand that once the break is made, the technicals signal a move, and traders pile on the trade. This sent the SPY spiking higher like the below example. Gaining a solid understanding of channels and how to trade them like the Pros will advance your trading, and increase your profitability!
Learn the channel patterns and make money!
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