Posted by dentist 007 on January 22, 2010 at 7:06am
nas 100 has held up better than most in the recent tank.hre is a relative strength chart of nas 100 against s500.this in theory is the one that bounces first.the rel strength of nas has broken out against s50030 min data plot.the chart is a plot of the rel strength value
Guys really sorry about the length of this video...but there is a valuable lesson to be learnt (how I made a mistake which cost me a very good trade)...if you look to get into elliott wave...you might want to watch exactly how I was labeling this market as I went along...Key rules to keep in mind here:Waves B (corrective) NEVER have 5 wave structures...Waves C (corrective) DO have 5 wave structures...Waves A (corrective) can be EITHER 5 or 3 (this has implications I wont teach you now).
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Goldman Sachs Grp. (NYSE: GS) reported net profits of $8.20 per share on revenue of $9.62 billion. This blew away the earnings per share number which was expected at $5.20, however, missed the revenue number slightly which had been expected at $9.65 billion. When analyzing these numbers, this is just the start.
The key with Goldman Sachs that will worry Wall Street and should truly bother Main Street is that not only did Goldman Sachs not beat revenues which means their earnings beat was due to cost cutting, but, two-thirds of their revenue was derived from trading! That is correct, they made over $6 billion just from trading. Why is that shocking? Well as we know, trading can be up and down. Normal people lose some and win some. Even a great trader has a lousy trade here and there. Granted, Goldman Sachs is way above a great trader, they have computer programs to push the markets in certain directions, buy program abilities and connections to the government that other companies only dream of.
Why should Main Street be worried? Again, because two-thirds of their revenue came from computer trading programs and Goldman Sachs traders. Main Street needs to be assured these trading programs and traders are not manipulating, bullying the markets and pushing the markets in a direction on purpose to take the "little persons" money. If Goldman Sachs is paying billions in bonuses, whether in stock or profits, Main Street needs to know their trading profits are not out of the wallets of hard working Americans getting "played". Transfer of wealth from the small to the big is not the answer to a recovering economy just a divergence between rich and poor.
This applies to all other major Wall Street firms as well, though Goldman Sachs is by far the biggest gorilla in the room. JP Morgan Chase & Co. (NYSE: JPM), Morgan Stanley (NYSE: MS), Wells Fargo & Co. (NYSE: WFC) and Bank Of America Cp. (NYSE: BAC) are others. Watch carefully the proposals by President Obama on excessive risk taking.
Commentary From A Concerned Chief Market Strategist.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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By Nicholas Santiago on January 21st, 2010 3:38pm Eastern Time
The markets have sold off all day long as word leaked out that President Obama was going to implement new rules for the large banks. The President announced an outline of the new rules that he plans to put in place to limit the so called big banks, or as we would say 'too big to fail' banks from proprietary trading. Please realize this is how these banks have been making the bulk of their money. Today Goldman Sachs (NYSE:GS) reported earnings that were simply off the charts due to proprietary trading. Companies such as J.P. Morgan (NYSE:JPM), Morgan Stanley (NYSE:MS) and others all had huge trading profits as well. It is safe to say their money is not being made from lending or making loans. Since today's news was released the big bank stocks have literally plunged, dragging the rest of the market with it. On the flip side many regional banks have done well, such as New York Bank (NYSE: NYB), Sun Trust Bank (NYSE:STI), and Regions Financial (NYSE:RF).
This administration has been one of the most calculated and crafty administrations when it comes to the stock market. Please recognize that the President called the bottom in the market in early March 2009 by saying it looks like a good time to buy stocks. Just that statement alone makes a long time career trader, who has been around many phases of market history, and studied even more, shake my head. His working group must watch the stock market intra day more than I do, and I happen to trade for a living.
The point today is simple. The Obama administration is trying to put in some rules, other than calling the rules the Glass Steagall Act of 1933. The Glass Steagall act was put into effect to prevent another "Great Depression." The act states that commercial banks cannot engage in investment banking activities and authorized deposit insurance. In other words, everything that they do now, and have been involved in since 1995-1996 when the act was repealed under the Clinton administration. Why don't they just reinstall the act that seemed to work 72 years?
We have to chuckle today when Congressman Barney Frank made an appearance on our favorite cable business channel to say that the new rules would not be implemented for at least 3-5 years. This comment gave the market an immediate pop intra day. This administration is behaving like a fish out of water. They are flip flopping more than Senator John Kerry did in his run for President. Regardless of party lines this administration seems to just bow down to the big banks that are too fat to fail and seem to run the world. I say take a stand Obama, before your approval rating drops even further. The market does not care. It will survive. Remember the old saying, "as a President's approval rating goes, so goes the market."
Nicholas Santiago,
Chief Market Strategist
www.InTheMoneyStocks.comRead more…
HOW DO BANKING REFORMS AFFECT THE DOLLAR?
It has been another active day in the financial markets with the Dow Jones Industrial Average plunging more than 200 points and the dollar moving in vastly different directions against the euro, Japanese Yen and British pound. Despite the lack of consistency in the dollar’s performance, there is one overarching theme in the forex markets today, which is risk aversion. All of the higher yielding currencies have plunged and the only reason why the euro did not participate in the move is because it has already become grossly oversold. Politics have dominated the headlines all week and unfortunately politics can shape economics which is why the dollar had such a sharp reaction to the Republican win in Massachusetts Tuesday night and today’s proposals for banking regulations from President Obama.
How do the Proposed Bank Regulations Really Affect the Dollar?
Based upon the price action in the forex market, it appears that Obama’s proposal to prohibit banks from engaging in proprietary trading, investment or sponsoring of hedge funds as well limiting the growth of liabilities is dollar negative. To some degree this is true and to some degree it is not. In order to understand how the proposed bank regulations will really affect the dollar, we need to first understand what the regulations mean. Fundamentally, all of the proposals are aimed at limiting risk taking by banks. This means that there is will be less speculation in the financial markets which suggests that trends in the forex or other markets may not extend as far as they have in the past. For example, when oil hit a record high, speculation by hedge funds and banks and not a real increase in demand was behind the move. It could also lead to wave of deleveraging if banks are forced to close their proprietary trading desks and unwind their positions. Banks generate a significant amount of money from their proprietary trading operations and therefore their profits may be negatively affected. Of course most banks will find ways to go around the rules and that could involve going private (which Goldman Sachs could do), spin off their prop desks or move offshore. It can also put foreign banks at an advantage from a competiveness and profitability standpoint. Based upon this breakdown, the proposed bank regulations is overwhelming negative for the dollar but also negative for risky assets. If the dollar was a high and not low yielding currency, it would have weakened across the board but since it is a cheap funding currency, the more significant implication would be the need for banks to unwind their risky positions and buy back U.S. dollars. The proposals are just proposals for the time being and it remains to be seen whether it will get through Congress but that has not stopped traders from selling first and asking questions later. Unfortunately Asian traders will probably follow suit this evening.
The Distortion in Jobless Claims
Meanwhile this morning's U.S. economic reports were mixed. The number of people claiming unemployment benefits rose to an 8 month high as jobless claims hit 482k. According to the Labor Department, the jump was due to an "administrative accumulation from late December and early January holidays and did not reflect economic reasons." This suggests that the prior improvement in jobless claims could have also been distorted. The spokesman from the Labor Market said it took extra time for government workers to sort through the applications that were piling up which is definitely not a positive sign for the labor market even if continuing claims improved. Once again, falling unemployment rolls most likely reflects the expiration of unemployment benefits than the accumulation of new jobs. Continuing claims also does not count the number people who are receiving extended benefits under federal programs. This group increased by 613k to 5.92 million in the week ending January 2nd, which is on top of the 4.599k million people counted in the continuing claims report. Unlike manufacturing activity in the NY region, manufacturing activity in Philadelphia slowed this month with the index falling from 22.5 to 15.2. The pace of hiring is still improving but shipments, new orders and average workweek have slowed. There is no question that the pace of the global recovery is moderating and that may be further exacerbated by tighter monetary policy conditions in China. Leading indicators on the other hand rose 1.1 percent, far stronger than market expectations and slightly stronger than the previous month. There are no economic reports due for release from the U.S. tomorrow.
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Jan Philly Fed survey at 15.2 from 22.5, Leading Indicators +1.1 vs. exp 0.7% from +0.9%. Stronger than expected earnings from GS ($8.20/share) fail to fuel back US equities back into the green. USDCAD remains supported at 1.0440 before an expected retest of 1.0520, while CADJPY remains capped at 87.70. USDJPY requires a break above 91.90 in order for the recent upleg to be preserved. EIA oil Inventory data due at 16:00 GMT instead of 15:30 due to late release following MLK holiday. Crude oil inventories exo at +2.2 mln from 3.7 mln.
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By InTheMoneyStocks.com on January 21st, 2010 11:07am Eastern Time
Comments are flowing from the Intra Day Stock Chat and the Research Center after InTheMoneyStocks nailed the exact high on January 11th, 2010 on the market.
Since their call that the market top was in, traders, investors and swing traders positioned themselves short the market. Each time the market fell since then, it rebounded back to the highs and the amateur traders, investors and swing traders began to doubt that InTheMoneyStocks was truly the best out there for guidance and education along with amazing market calls. However, after today, there are no doubts left. The comments, testimonials are flowing like water. "Best Day Ever!", writes one member.
Chief Market Strategist Gareth Soloway put his reputation on the line by saying the market top was in on January 11th, 2010. He stood by it calmly, never wavering each time the market retested it. Last night in the Nightly Technical Analysis Video he pointed out the M-A bearish formation on the charts and again reiterated that the market would sell hard and break down. The market has paid him and his premium members in a major way!
What a call! No guts, No glory! Profits galore for everyone at InTheMoneyStocks.com!
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By TRADER X on January 21st, 2010 10:56am Eastern Time
AAPL is a market leader and a favorite trading stock by most traders and investors. AAPL has gone negative on the day and will have strong intraday support at the 206.00 level.
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By InTheMoneyStocks.com on January 21st, 2010 11:24am Eastern Time
Once again, InTheMoneyStocks.com reads the charts better than anyone. Their methodology truly showing it is #1 on and off Wall Street. Below are some of the simple patterns that were recognized days ago giving premium members to the Research Center and Intra Day Stock Chat the edge to be short this market into the last two sell off days. Members have said this is their biggest profit day ever!
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By InTheMoneyStocks.com on January 21st, 2010 11:54am Eastern Time
Research Center and/or Intra Day Stock Chat is where the keys to becoming a pro and profits are. Join now!
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Chinese GDP growth for 2009 beat forecasts printing at 8.7% versus 8.5% projected while inflationary pressures increased markedly as CPI rose to 1.9% versus 1.5% eyed. The inflation rate was at its highest level in more than a year, turning positive for the second month in a row. The news heightened fears that Chinese monetary authorities will begin to tighten policy, possibly raising rates in Q1 of 2010.
Other data including Retails Sales which rose 17.5% versus 16.4% forecast was also impressive confirming the notion that Chinese policymakers have been successful at rebalancing growth by stimulating domestic demand rather than relying exclusively on the export sector.
The fears of potential tightening sent high beta currencies lower on risk aversion flows with the euro setting 5 month lows awhile Aussie dropped through the .9100 level. Overall, the idea of rate hikes from PBOC should not necessarily be bearish for the risk trade as it implies that growth in Asia Pacific region remains robust and should continue to help drive global recovery forward. However, the move to a more hawkish stance by Chinese monetary authorities comes at a time when growth in the Eurozone is beginning to cool.
Today’s EZ PMI data will provide the market with the freshest read on the state of economic activity in the 16 member union. If the report misses its mark the EUR/USD could test the key 1.4000 figure as currency markets become even more concerned that a potential slowdown in China and weak economic activity in both services and manufacturing sectors in the EZ could result in anemic growth for the region in 2010.
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By Nicholas Santiago on January 20th, 2010 3:31pm Eastern Time
As corporate earnings season is fully underway many of the shining star stocks have sold off after their earnings release. The first major stock to report two weeks ago was Alcoa (NYSE:AA). The stock had an amazing move higher trading at a high print of 17.60 prior to it's earnings release. Once the earnings were released the stock sold off and it now currently trades at 15.25. Some recent stocks that have followed this pattern are Intel Corp (Nasdaq:INTC), International Business Machines(NYSE:IBM), and J.P. Morgan Chase (NYSE:JPM) which all had negative reactions after their earnings release.
Why did these market leading stock sell off after their earnings announcement? The answer is simple. These stocks have simply rallied too far too fast and the premium was already built into the current stock price. It is important to remember that stocks are very similar to a pendulum. They swing too far to one side and then they swing too far to the other side. The stock market is mechanism of extremes of human emotion.
It is important to remember that everyone loves to be on a winning team. How often do people root for a sports team that is winning even when they don't like the sport or know who is playing on the team? The same thing occurs with the institutional money. They simply jump on board a stock and drive it higher into an event such as earnings. Then when the public wants to buy the stock and be part of the team they simply pull the rug right out from under them and sell the stock as the public is buying. Really it is a genius plan when stop and think about it. Therefore, as a rule, stop and look at a chart before buying a stock into an earnings release or major event. If it has traded higher in parabolic fashion before earnings stay away for while as the earnings or whatever event it may be have been priced in already.
Nicholas Santiago,
Chief Market Strategists
www.InTheMoneyStocks.comRead more…
By InTheMoneyStocks.com on January 20th, 2010 1:42pm Eastern Time
Note the chart below and the key channel highlighted by InTheMoneyStocks.com. This reveals a key holding pattern that has yet to break. The big questoin everyone wants to know is...which way does it break? InTheMoneyStocks.com has that answer. Premium members of the Research Center and Intra Day Stock Chat will have that answer as well and can position themselves on the right side of the trade. Be ready. This is going to be fun and very profitable.
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Mind China's Double Digit Growth Markets may start witnessing shades of 2007, when strong Chinese figures led to market jitters on the grounds of accelerating tightening from the PBOC. Thursdays release of China Q4 GDP is expected at +10.0-10.4%, which would further justify broader tightening from the PBOC --such as raising the actual lending rates (beyond higher bond yields and increased reserve requirements). Such justification COULD CAUSE NERVOUSNESS in the markets, weighing on the principal source (China) of global commodity demand, starting with metals, followed by energy. If the GDP and retail sales (both due on Thurs) come stronger than exp, then China may as well announce more tightening as early as this week.
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By TRADER X on January 20th, 2010 10:05am Eastern Time
The bank stocks are all trading flat to positive today. This is helping the Dow Jones Industrial Average and the SPX from falling further than current levels. Should the bank stocks start to decline this could turn out to be a very big down day as most of the other sectors are negative already.
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By TRADER X on January 20th, 2010 10:25am Eastern Time
The GLD(gold ETF) is down over 2.00 points today as the U.S. Dollar is higher today. There will be intraday support for the GLD at 108.50. However, the dollar must be watched closely. If the dollar continues to move higher gold and the GLD should trade lower.
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By InTheMoneyStocks.com on January 20th, 2010 11:24am Eastern Time
InTheMoneyStocks.com again calls a sell yesterday as the market hit into a major trendline resistance point at $115.15. Sure enough, the call was perfect as the markets are being slammed. DOW is down 200 points on the back of earnings from IBM, BAC, MS, WFC and the dollar soaring on the republican win in MA.
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