Whenever I cruise the world of trading blogs, one common theme I often read about is how the government is propping up the market and that impending doom is coming to the stock market. Many of these posts come from individuals with substantial trading experience. It might come from a well known blogger or posters.
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March 10, 2010 05:15 ET: MORE POOR UK DATA as UK Jan manufacturing output fell 0.9% (vs exp +0.3%) but rose 0.2% y/y, while Indus production -1.5% m/m vs exp -0.8%. GBPUSD enters its 3rd daily decline, eyeing $1.4850 as the 2 and 3 hour stochastics point lower. EURGBP attempting to close above 0.91 for the first time since Nov 30--the 61.8 retracement of the 0.94-0.86 decline. Therefore, EURUSD weakness must emerge in order for EURGBP to retreat anew as we do not expectc any marked rebound in cable above $1.5. JUST AS GOLD PEAKED OUT at 1140, SILVER topped out at 17.55unable to close above the 61.8% retracement of the 18.85-14.62 decline. Daily silver stochastics also flattening. Updates and IMTs are updated less frequently as Im on a business trip in Milan. GOLD prelim resistance at 112650% retracement of the decline on the 4-hour chart, now eyeing 1115.
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By InTheMoneyStocks.com on March 9th, 2010 9:28pm Eastern Time
To truly understand the markets, one must think the opposite of the average investor or trader. When it comes to the total volume in the market, more than 90% is generally from institutions. When it comes to the total number of market participants, 95% of them are the average investors or traders. This is a peculiar disparity but totally understandable. This is also how many of the institutions make their money. In other words, by moving the markets in ways pull money from the average investor or trader or going the opposite of what the masses believe.
There was a fantastic example of this in the markets on Tuesday, March 9th, 2010. The SPDR S&P 500 ETF (NYSE:SPY) was slowly inching higher all morning and early afternoon towards the master double top level from mid January. This exact price on the SPY was $115.14. The average investor and trader, all 95% or more of them were looking at that level as being major resistance and looking to sell their positions there and even possibly go short the market at that price.
As I have discussed earlier in the article, if everyone expects it to happen, it will not happen as institutions attempt to take money not give it to the smaller trader/investor. Sure enough, the SPY tagged $114.99 and reversed, selling hard as institutions dumped. This could be seen by as volume surged. Why was this significant? Because it did not allow the amateur trader or investor to sell their longs and take profits and did not let them short the market. Truly masterful! Every average trader expected the $115.14 to be tagged and because of that, it was destined to not hit.
Whether it hits tomorrow or in the next week, we will have to see. I have expressed my expert views to my premium members of the Research Center and Intra Day Stock Chat but one thing remains certain, if the markets do move up into $115.14, and all the amateurs short, you can be sure institutions will push the market higher to stop them out.
This is pure and simple market psychology or essentially big money controlling little money. Learn the game and never again be caught on the wrong side of the trade.
A few other significant notes on the market. The iPath S&P 500 VIX Short Term F (NYSE:VXX) which tracks the S&P 500 VIX Short-Term Futures, saw a huge block trade of 3 million on March 8th, 2010 at approximately 3:30pm ET. This appeared to be a large buy. The VXX shot up into the close, jumping well off the lows. Someone big obviously betting the market was coming into a wild ride period. The VXX was higher today.
In addition, Goldman Sachs Group, Inc. (NYSE:GS) on Tuesday, March 9th, 2010 saw a huge block trade go off for 1.5 million shares on what appeared to be the sell side. Just a little while after this institutional monstrous order went through, the markets dropped sharply and Goldman Sachs was slammed to the negative side. Another key signal? Quite likely.
Where does that leave us in the coming days? What other interesting things does this tell us about the markets and stocks? Where is the place to put your money? Join the Research Center to find out!
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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By Nicholas Santiago on March 9th, 2010 12:51pm Eastern Time
Since the February 5th pivot, the stock market has rallied higher. The S&P 500 is now approaching its January 2010 high at 1150.00. This recent rally has been lead by the small capitalization stocks in the Russell 2000 index and also the technology heavy NASDAQ Composite. These two indexes have made new highs for 2010.
The laggard in the market has really been last years leaders such as copper, gold, and silver. While these stocks have bounced from the February 5th correction low, they have not come close to reaching the January highs. Leaders in the copper stocks such as Freeport McMoRan Copper and Gold Inc. (NYSE:FCX), and Southern Copper Corp (NYSE:SCCO) are higher, however, they are not leading the markets as they did back in January.
The legendary trader Jesse Livermore used to say that the markets could be followed by watching copper. If copper headed the markets, then the rally was strong. If copper lags the markets than something was wrong. At this time copper stocks are holding up well, however, they are not leading this rally since February 5th, 2010.
Could this be signaling trouble for the major stock indexes in the near future? It is certainly possible. Therefore, copper stocks should be watched closely at all times.
Greek PM Papandreou's trip to Washington did not stop credit agencies from issuing cautious notes over Greek banks. Greece's austerity package was mainly designed to win some time and fend off the credit rating agencies. But if the aim of the austerity package is to serve as a bargaining tool towards France and Germany and a potential qualifier for IMF assitance, then we could see more noise/criticsim/counterstatements about European solidarity instead of concrete aid. Papandreou's also didnt prevent the ECB from slamming the idea of a European Monetary Fund, which is based on bailouts and rescue package--against the practices of the Bundesbank model. And during this cacophony of formal speeches and declarations, the Federal Reserve gives more details about its exit strategy, via reverse repos. This explains the defensive stance of the euro below $1.36 and the loonie's retreat bak to 1.03.
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By Gareth Soloway on March 9th, 2010 11:38am Eastern Time
Spot gold pulled back again today as the dollar hovered higher. The SPDR Gold Trust (NYSE:GLD) has now fallen into a key support at $109.00. Not only is this a necktie between the 50 moving average and the 20 moving average, but if you connect the recent daily lows (as seen below), there is a key trend line support. While this support looks amazing in many respects, be very cautious. A move below that support and the GLD could and most likely will see a tumble to the recent lows of $102.00.
Gold stocks like Yamana Gold Inc. (NYSE:AUY) continue to hover just off support as well. This stock looks to have good support around $10.00. However, should it fail to hold, a sharp down move would be expected. While AUY has been weak of late, Newmont Mining Corporation (NYSE:NEM) has been a powerhouse. This stock has soared from the range of $43.00 all the way to a recent high of over $52.00. In recent days it has pulled back to the $51.00 area. Keep a close eye on NEM as it does still look a little near term extended. Should the GLD break that key level, this could have a significant fall to it.
Please note that everything comes back to that key level on the GLD. Should the GLD hold the master $109.00 level, gold stocks should continue to do well in the coming weeks. However, should the GLD break, watch out below not only on gold, but on many of these miners. The dollar continues to show decent strength today. Gold moves the opposite way of the dollar. In addition, gold tends to move higher if panic sets in on the markets. I will continue to update you on gold.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
By Trader X on March 9th, 2010 10:46am Eastern Time
The IYT which is iShares Dow Jones Transportation ETF is trading higher on the day. Airline stocks seem to be the strong componant of the average. There will be intraday resistance at the 77.20 level.
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CHINESE GOLD REMARKS overnight helped drag the metal lower when the head of State Administration of Foreign Exchange said China faced constraints in adding gold holdings, considering it already holds 3000 tons. SAFE said the long term yield of holding was not good, dampening speculation that Beijing would buy the remaining 191 tons of gold on offer by the IMF. Whether these methods are a way to lower the price of gold with the intention of buying it later at more attractive prices remain to be seen. Golds failure to break 1140 gives way to 1105 as the next target, followed by 1087 viable this week. GBPUSD resumes its post-data damage, hitting the $1.4930 target in last IMT, but support standing at $1.4860. As yen stabilizes, NZDJPY and CADJPY appear most vulnerable of the yen crosses to lose their recent gains, eyeing 61.80 and 86.60. *** 3 DAYS REMAINING TO REGISTER FOR ASHRAF'S 1-DAY COURSE in LONDON *** Register here http://bit.ly/bSHPbbRead more…
On the cycles of the S&P500 / VIX ratio and the stabilizing cost of USD 3-month LIBOR relative to its yen counterpart.
Note: This article contains image(s)
Fifty two weeks after the S&P500 hit 12-year lows at 666, the index rose 68%, driving down near Januarys 19-month lows. Much analysis has been done on equity indices and the VIX on the S&P index options. But the relationship between the two merits some attention. While neither the S&P500, nor the Dow have yet retested their January highs, the technical dynamics of the SP500/VIX ratio can be used as a possible leading signal for a looming decline in the S&P500 index. On Friday, March 5th (52nd Friday of the 666 low in the S&P500), the S&P500/VIX ratio hit a 5-week high at 65.38. This level suggests these key developments:
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