Adam Hewison is back with four new videos, sharing his outlook for the S&P500, the dollar, gold, and crude oil in the near term. Even if you’re not a trader, Hewison’s seasoned way of explaining ideas is very well informed and useful, and his videos are worth watching, and keeping tabs on.
This week could be shaping up to be an extraordinary week in the markets. I strongly recommend that traders everywhere take precautionary measure measures to protect capital.
“While the S&P 500 made new highs for the year last week, it did not do so in a very convincing manner. In today’s short video I show you some of the elements that I think should be cause for concern.”
“It’s been a while since we did a video on the euro/dollar relationship. This relationship may be reversing again based on recent price action. In today’s short video I point out some of the changes we see happening in this market.”
Last week, Jim Rogers discussed his long position in the euro. The reversal of the dollar, may also be a sign that ‘risk’ is back on, though I suspect that will have more to do with the USDJPY cross. For the time being, however, the dollar looks set to weaken against the yen too.
This week could be shaping up to be an extraordinary week in the markets. I strongly recommend that traders everywhere take precautionary measure measures to protect capital.
This week could be shaping up to be an extraordinary week in the markets. I strongly recommend that traders everywhere take precautionary measure measures to protect capital.
“Last week we gave you a Trade Triangle alert to exit the gold market on the long side. Since that alert was issued gold has dropped significantly.”
Hewison points to a very specific key level of $1091.19. If gold breaches that level, Hewison says it will test around 1060, a he believes that gold will be range-bound for the next while.
Stocks could continue to push higher until May, but after that there is a serious risk of a double dip, Robin Griffiths, star technical strategist from Cazenove Capital, told CNBC.
Deflation is an economic problem that has become synonymous with the Great Depression, but in fact, there is little evidence to support the idea that deflation leads to depression.
Bloomberg’s Matthew Lynn writes, “Deflation is no threat at all. It doesn’t prevent an economy from functioning, and it doesn’t stop it from recovering either. The evidence suggests a period of sustained deflation might be what indebted economies need to get them back on the right track.”
Deflation is not something to be taken lightly, however, because among other things, it may lead to consumer complacency due to falling prices, inventory surpluses, overcapacity, and thus unemployment. Haven’t we already experienced that, globally?
Now that I’ve said that, the question remains, is it still a risk?
As shown in the graph below, courtesy of Clusterstock - Business Insider, the latest figures from the St. Louis Fed show that commercial and industrial lending is still declining.
The dilemma is that US banks can borrow for almost nothing and lend money to the government by buying 10-year Treasury Notes and 30-year Treasury Bonds with yields of 3.8% and 4.6% respectively. “Thus, the banks are thriving on the ‘yield curve’ while the poor slob on the street gets nothing for his savings (assuming he has any savings at all). And when you think about it, why should the banks make risky loans to the poor goof on Main Street when they can play the yield curve with almost zero risk?, remarked Richard Russell, author of the Dow Theory Letters.
It goes without saying that lending needs to expand before a decent economic recovery can get under way.
This article is a guest contribution by Tyler Durden, ZeroHedge.com.
PIMCO is cutting its exposure to all asset classes, confirming what all but equity chasers (yes, futures are up massively as the futures manipulation scam continues unabated) seem to know - the Fed buffet is now closed:
This all leaves us with portfolios that appear, more than at other times, to be hugging the benchmarks with no bold positioning. Some might suggest we’ve become closet indexers, but, on the contrary, we’re making a very active decision to run light on risk. At this point, we know this is not going to be a particularly high-yielding portfolio. You can only eat what’s in the cafeteria, and right now the cafeteria doesn’t have anything particularly appetizing in it.
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We expect the next monthly set of data from the Total Return Fund to indicate that the fund is now in aggressive cash retention mode, taking advantage of the last few months of unbridled Fed generosity.
Barry Ritholtz shares an interesting note on the rally in the dollar. The MACD has turned up and crossed over, signalling that traders and U.S. dollar carry-traders are nervous about their short positions in the dollar. With the Japan-easing underway, its possible that during the course of the year, the yen will replace the dollar as the primary funding currency. Time to bet on a return of volatility in risk assets.
On another note, the Canadian dollar is set to weaken relative to the greenback, should the rally in the dollar gain traction.
We know that “Short the US Dollar” has been a crowded trade for some time now. And, after falling 41% from 2001 to 2008, the fat part of the collapse has already happened.
Will it continue? That’s what today’s chart looks at.
How likely is it that the rest of the world will stand idly by and allow: a) US manufacturing competitiveness a huge advantage via weak currency?; 2) Massive US debt to be inflated away through dollar weakness?
Quite possibly not, as other currencies engage in a race to the bottom. The chart below suggests a dollar rally is in the offing: >
Adam Hewison strikes again with the ten-thousand-foot-view of the market with three new technical analysis videos on the Dollar Index (DXY), Crude Oil, Gold - These are relevant analyses given that crude and gold are both priced in US dollars:
The above chart is Adam showing the declining trend of the US Dollar Index along with the positive (standard) MACD Divergence… and the recent positive trendline break. As such, his video is entitled:
“The crude oil market continues to soften and is now close to some important levels that I think we should look at. In my new video we look at what is happening in this market right now and what we expect to happen in the future.
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As we have indicated in our earlier posts, we are now in the official “silly season” for trading. What I mean by that is the markets will be very thin, choppy and can be moved by a relatively small amount of money.”
Finally, Adam posts a quick 3-min update on Gold strangely titled:
We are already in the “silly season” and what I mean by that is after December 15 most traders are not serious about the markets and they’re not committed to any large positions for the balance of the year.
As you will see in the video, gold has fallen back to an area that should provide support, however it will remain choppy and thinly traded for the balance of the year.”
This post is a guest contribution by Charles Kirk, author of the popular The Kirk Report.
From time to time I have been asked to offer my perspectives on things I have found common in successful traders. I have always struggled with my reply to that question because there are only a few traders of which I have gained enough understanding of what they do every day to achieve their results.
However, in Van Tharp’s latest book “Super Trader,” he provides ten common characteristics frequently found among the best of the best among the hundreds of traders he’s worked with throughout his career. Like me, I think you may find it of interest!
1. They all have a tested, positive expectancy system that’s proved to make money for the market type for which it was designed.
2. They all have systems that fit them and their beliefs. They understand that they make money with their systems because their systems fit them.
3. They totally understand the concepts they are trading and how those concepts generate low-risk ideas.
4. They all understand that when they get into a trade, they must have some idea of when they are wrong and will bail out.
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5. They all evaluate the ratio of reward to risk in each trade they take. For mechanical traders, this is part of their system. For discretionary traders, this is part of their evaluation before they take the trade.
6. They all have a business plan to guide their trading. You must treat your trading like any other business.
7. They all use position sizing. They have clear objectives written out, something that most traders/investors do not have. They also understand that position sizing is the key to meeting those objectives and have worked out a position sizing algorithm to meet those objectives.
8. They all understand that performance is a function of personal psychology and spend a lot of time working on themselves. You must become an efficient rather than inefficient decision maker.
9. They take total responsibility for the results they get. They don’t blame someone else or something else. They don’t justify their results. They don’t feel guilty or ashamed about their results. They simply assume that they created them and that they can create better results by eliminating mistakes.
10. They understand that not following their system and business plan rules is a mistake.
This week on WealthTrack Consuelo Mack sits down with global investor Dennis Stattman, founding manager of the BlackRock Global Allocation Fund. Now in its 20th year, this Morningstar favorite has consistently delivered market and peer beating returns with less risk. In a wide ranging discussion, Stattman discusses the investment perils and opportunities he is tracking around the world.
Note: The transcript of this interview is not available yet, but will be posted here as soon as it arrives.
Bloomberg’s William Pesek discusses the ongoing debate between inflationists represented by Jim Rogers’ views, and deflationists represented by Nouriel Roubini.
It’s a, well, golden opportunity.
Investor Jim Rogers thinks gold will double to at least $2,000 an ounce. Economist Nouriel Roubini says that’s “utter nonsense.” As these well-known market personalities duke it out, they’re doing us a favor by highlighting a critical debate: Which is the bigger threat — inflation or deflation?
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The risk is that policy makers go overboard looking for exit strategies. That, in a nutshell, is Roubini’s shtick and it’s hard to refute the views of the New York University professor. Yes, inflation must be contained, but so must the forces of deflation in the short run.
This post features video recordings of a lecture series by George Soros at the Central European University in Budapest, discussing capitalism versus an open society.
Part 1:
Soros explores the “agency problem” and its impact on both markets and politics. The principal-agent problem, in which those who are to represent others tend to place their interests ahead of those they are supposed to represent, poses a risk to ethical considerations, and in Soros’s view undermines values necessary for the operation of an open society.
Click here or on the image below to view the video clip.
Part 2:
He analyzes the agency problem inherent in the American political system. He believes the main culprit is a decline in public mortality which he says is fostered by the rise of market fundamentalism.
Click here or on the image below to view the video clip.
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Part 3:
Soros states that while capitalism is not directly opposed to an open society, it poses a major threat to its survival. Because of opposition, he believes market and political participants should operate in separate spheres. Soros summarizes the lecture with a postulate that a focus on the “cognitive function” and on focusing on the public good will allow representative democracy to function better, and even only a small number of adherents to this would allow a new middle ground to be rediscovered.
Click here or on the image below to view the video clip.
Jeremy Siegel is professor of finance of the Wharton School at the University of Pennsyilvania. But he is perhaps best known for his 1994 book Stocks for the Long Run, in which he explained why he believes buying and holding stocks is the best approach to investing.
In Part 1 of an interview with John Authers, investment editor of the Financial Times, Siegel is asked whether he got it wrong against the backdrop of last year’s market crash.
Click here or on the image below to view the video.
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In Part 2, Siegel explains why the ageing populations in developed countries mean investors need to put money into emerging markets, or risk losing out.
Click here or on the image below to view the video.
Source: John Authers, Financial Times (here and here), October 14, 2009.
An interesting survey has just found its way into my inbox, courtesy of Ratio Trading. The survey of more than 500 experienced futures brokers asked what, in their experience, caused most traders to lose money. There are some repetitions in the list, but it is nevertheless a worthwhile exercise to give it a quick read to again remind ourselves of the many investment pitfalls out there.
1. Many futures traders trade without a plan. They do not define specific risk and profit objectives before trading. Even if they establish a plan, they “second guess” it and don’t stick to it, particularly if the trade is a loss. Consequently, they overtrade and use their equity to the limit (are undercapitalized), which puts them in a squeeze and forces them to liquidate positions.
Usually, they liquidate the good trades and keep the bad ones.
2. Many traders don’t realize the news they hear and read has already been discounted by the market.
3. After several profitable trades, many speculators become wild and aggressive. They base their trades on hunches and long shots, rather than sound fundamental and technical reasoning, or put their money into one deal that “can’t fail.”
4. Traders often try to carry too big a position with too little capital, and trade too frequently for the size of the account.
5. Some traders try to “beat the market” by day trading, nervous scalping, and getting greedy.
6. They fail to pre-define risk, add to a losing position, and fail to use stops.
7 .They frequently have a directional bias; for example, always wanting to be long.
8. Lack of experience in the market causes many traders to become emotionally and/or financially committed to one trade, and unwilling or unable to take a loss. They may be unable to admit they have made a mistake, or they look at the market on too short a time frame.
9. They overtrade.
10. Many traders can’t (or don’t) take the small losses. They often stick with a loser until it really hurts, then take the loss. This is an undisciplined approach…a trader needs to develop and stick with a system.
11. Many traders get a fundamental case and hang onto it, even after the market technically turns. Only believe fundamentals as long as the technical signals follow. Both must agree.
12. Many traders break a cardinal rule: “Cut losses short. Let profits run.”
13. Many people trade with their hearts instead of their heads. For some traders, adversity (or success) distorts judgment. That’s why they should have a plan first, and stick to it.
14. Often traders have bad timing, and not enough capital to survive the shake out.
15. Too many traders perceive futures markets as an intuitive arena. The inability to distinguish between price fluctuations which reflect a fundamental change and those which represent an interim change often causes losses.
16. Not following a disciplined trading program leads to accepting large losses and small profits. Many traders do not define offensive and defensive plans when an initial position is taken.
17. Emotion makes many traders hold a loser too long. Many traders don’t discipline themselves to take small losses and big gains.
18. Too many traders are under financed, and get washed out at the extremes.
19. Greed causes some traders to allow profits to dwindle into losses while hoping for larger profits.
This is really a lack of discipline. Also, having too many trades on at one time and overtrading for the amount of capital involved can stem from greed.
20. Trying to trade inactive markets is dangerous.
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WSJ What's News Late Edition, March 16, 2010by The Wall Street Journal 16 Mar 2010 at 5:51pm
Stocks move higher as the Fed maintains its position on interest rates; the FAA orders Boeing to update the autopilot software on 777s to prevent them from running off the end of runways; and thieves make off with 75 ...
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