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Trading Blog          Thursday,  March 28,  2013

3/28/2013

 
MARKETS  UPDATE  (4:05 pm EST)

We are now in the middle of a time zone where strong reversals can manifest in all of the markets we follow, so we need to examine the trend of each right now. 

The broad stock market is trending up this week, and so a reversal here would be down.  It should also be noted that the DOW and S&P 500 are both making new highs this week while the NASDAQ hasn't yet done so, which is another bearish sign.  On the bullish side, however, all directional momentum in these markets is still pointing up, and until we get a bearish momentum signal in these charts, I am reluctant to sell short, even though it is tempting to do so now because the charts are looking overbought and toppy and timing factors suggest a reversal here.  If we get a bear signal tomorrow, we will consider short selling.  Remember, we must always keep in mind that the Federal Reserve's  "tampering"  with the natural cyclic flow of these markets over the last several years works against short selling by artificially propping the markets up. 
Still out of this market for now.

Our crude oil long positions are doing very well at the moment with the price pushing above $97 today (we bought crude at $91 on 3/6), and I am tempted to take profits here because of the possibility of a reversal.  Several technical and momentum indicators, however, are still quite bullish, so even if a correction occurs, it may not be that deep.  We will stay long for today and wait to see what the charts look like tomorrow.

As anticipated, we are getting a slight downtrend in the precious metals this week, but they are holding well above our support levels ( $1500 -1530 in gold, $26 -27 in silver) and we are still long.  I will repeat here that
the technical picture for gold and silver continues to look very bullish, and (barring a break below the supports) we should stay long now because a strong rally looks imminent.  

We are getting ready to buy the Swiss Franc as it seems to be making a double bottom to its March 14th low, further supporting the idea that this is the start of a new cycle in this currency.  I would like to see a few more bullish momentum signals before going long, however, because we try to hold our currency positions for as long as possible and would like a very high level of confidence in the trade.  We try to avoid short-term trading of currencies on the  website (see Alternative Investor Strategy for my suggestion of using foreign currency -usually the Swiss Franc- to periodically hedge against a devalued dollar). 
Still waiting to buy.







Trading Blog           Monday,  March 25,  2013

3/25/2013

 
BRIEF CRUDE OIL UPDATE (3:30 pm EST)

In last night's blog I mentioned the possiblity of taking profits and selling our long crude oil positions should the price approach $95 or above this week.  It did that today (reaching $95.65 early in the day), but because the charts also flashed a strong bullish momentum signal, and because other technical signals are looking strongly bullish at the moment, we are going to hold on to our long positions in crude.  As mentioned last night, there is the possiblility of a correction down this week, but given this strong bullish technical picture, we may just ride it out.  Stay tuned.

Trading Blog            Sunday,  March 24,  2013

3/24/2013

 
MARKETS  UPDATE  (11:35pm EST)

As I mentioned in my last blog, timing factors point to the possiblility of significant reversals in all the markets we follow next week, so I will discuss each one here in terms of our strategy going into the week.

The broad stock market was relatively stable and flat last week so we will watch closely its movement into the middle of next week (a sharp rise into the week would suggest a reversal down to follow, but a strong fall early in the week might lead to a low which could be the turning point for another strong rally).  The DOW, S&P 500, and NASDAQ  all continue to flash strong bullish momentum indicators, and until this changes, any corrections in these markets may be minor.  I should also mention here that market manipulation (some behind the scenes and some more overt such as the Federal Reserve's recent liberal application of "quantitative easing") always needs to be factored into our analysis of the broad stock market, and this usually favors rallies and reduces the depth and duration of corrections.  This pattern of "truncated" corrections is something I have been observing for at least the last five years in the broad stock market.  The overall picture for this market is not clear at the moment which is why
we are on the sidelines for now and waiting for a stronger directional signal.

Crude oil
trended down into last Thursday, but then was up on Friday and is up some more today.  As with the broad stock market, we will watch carefully crude's direction into the week and look for a possible reversal. 
If prices rise close to $95 or above, we may take profits in our long positions to sidestep what could be a significant correction.

As I mentioned in the last blog, It is looking like there could be a minor correction down in both gold and silver before these metals begin to take off strongly.  If gold and silver rally strongly early in the week, we may consider taking profits on our long positions (and reentering after the correction), but if prices move down Monday - Wednesday we will probably ride out any corrections as long as prices remain above the strong support levels at $1500-1530 in gold and $26-27 in silver.  Despite this potential correction, all technical signals for gold and silver continue to be extreemly positive and bullish.   

The Swiss Franc flashed a major bullish signal today which supports our suspicion that March 14 was the start of  a  new cycle in this currency which is bullish.  Like the other markets discussed above, this one could also reverse next week (most likely towards the end of the week) and take a small correction, so
we will watch the price carefully for an ideal entry point.



 

Trading Blog          Wednesday,  March 20,  2013

3/20/2013

 
MARKETS  UPDATE  (5:15 pm EST)

Most markets appear to be stable and calm so far this week with the notable exception of currencies.  Of course, the volatility of the U.S. Dollar, Euro, and Swiss Franc is being caused right now by the plan of eurozone officials to impose a one-time tax of up to 10% on bank depositors in the island nation of Cypress to bail out its troubled banking system.  Understandably, the Cypriot public is outraged, and whether or not the plan goes through remains to be seen.  This bold act by the eurozone, however, has generated fear in other European nations that similar plans may be in store for their ailing economies.   A widespread panic driven withdrawal of money from European banks could easily cause a run on the banks and potentially set in motion a broader collapse of the European economy.  While this is only speculation, the European stock markets are very fragile right now, and it probably wouldn't take much to kick them into a serious downward trend.  This is a concern for us because a plunge in European markets would almost certainly have an adverse effect on the U.S. stock market.

According to the market timing information I study, next week could be a major turning point for all markets, so we need to watch carefully the trends into that time frame (up or down) and look for a possible reversal of that trend.
For our long positions in gold and silver this could mean a slight correction down before a strong rally up (as long as we don't break below $1500-1530 in gold and $26-27 in silver we stay long). 

If the broad stock market continues to rally into next week, we could see a sudden reversal down, but a downtrend into next week could create a launching pad for more bullish rallying. We will watch this from the sidelines as we are out of this market for now because of its ambiguity. 

Our long positions in crude oil are looking good and could rally quite a bit more, but we will carefully watch crude's behavior into next week for possible bearish signals that may suggest early profit taking.  Staying long here for now.

In my last post on the Swiss Franc (3/3/13) we had observed that it was probably making a major bottom and about to begin a new significant trading cycle which is bullish.  This indeed seems to be the case, and it has corrected nearly down to 1.045 (last Thursday), which may be the final bottom.  As I am very conservative with my currency strategy and because the Cypress news has caused recent volatility in currency prices, I am waiting for more bullish signals before buying into the Swiss Franc. 
On the sidelines here, but will likely be buying soon.

Trading Blog          Monday,   March 18,  2013  (1:45 am EST)

3/17/2013

 
BROAD STOCK MARKET AND CRUDE OIL UPDATE (1:45 am EST)

In my last blog post on Friday I did not have time to describe the condition of the broad stock market and crude oil in much detail, and so I will elaborate on this a bit more here as both of these markets are a little tricky to call right now, at least short-term.

It appears the broad stock market may be at the start of a new trading cycle, and if so, it could continue its bullish rise for at least a few more weeks before topping out with new all-time highs in all three markets (DOW, S&P 500, NASDAQ).  There are technical signals that support this scenario at the moment, but there are are also technical signals now suggesting the market is topping out and could be ready to turn down and make a significant correction soon (this would indicate an old cycle ending instead of a new one starting).  It is noteworthy that even though the DOW recently broke its all-time high, the S&P 500 (which is generally considered to be a broader and more acurate reflection of the stock market) has not yet done so (it is close), and breaking through this level could be a significant bullish development.  The general public and mainstream media are quite bullish on the broad stock market right now, but this kind of public optimism frequently heralds major downturns, and like public sentiment towards the precious metals (low right now in spite of overwhelmingly bullish technical signals), mainstream Wall Street "talking heads" cannot be relied on to accurately gauge the broad stock market (and may even be considered contra-indicators).  Because the short-term picture of the broad stock market is not clear, we are staying on the sidelines for now.  I will say that the mid-term and long-term stock market picture continues to look bad, and we are therefore on constant alert for any signs of a major correction or "crash" unfolding (which we would sell short).

Crude oil, like the broad stock market, may also be in the early stage of a new trading cycle (which is why we established long positions in crude almost two weeks ago).  Our long positions have been doing well, and the price of crude should continue to rise if this trading cycle is new.  If it turns out that we are still at the end of an older trading cycle (instead of the start of a new one), then we may get another low before we rally.  Should that scenario unfold, we could bail out and then establish new long positions with little or no loss.  (Another option would be to just ride out the dip).  Note that crude oil and the broad stock market generally tend to move in sync with each other, so we will watch both markets carefully now for directional indicators.  We are holding our long positions here.

Trading Blog          Friday,  March 15,  2013

3/15/2013

 
MARKETS  UPDATE  (3:45pm EST)

I haven't posted any blogs since Monday as markets have been very stable and have shown little change throughout the week.   As I've stated before, I don't like to fill the blog with financial news chitchat unless it is directly relevant to our trading decisions.  Please note that I analyze these markets very carefully every day whether or not a blog is posted.  There are no changes to our current positions today.

The broad stock market continues to look quite bullish with most momentum indicators still pointing up; however, the DOW chart is looking a lttle toppy at the moment and appears to be leveling off (which may indicate the start of some sort of correction).  Considering its recent bullishness, blog readers may wonder why we don't have long positions in the broad stock market right now, and my answer is that the mid-term and long-term picture of the broad stock market is really not very good at all, and so any rallies, even strong ones, are likely to be short-term, and we should be cautious about entering them.  Our recently entered long position in crude oil (which has made good gains) was thought to be a better allocation of our resources than the broad stock market because crude appeared to be starting a new rally while the broad stock market's rally had already made significant gains.  (I will comment more on the current condition of crude oil and the broad stock market in a blog later in the weekend).

I know many traders holding long positions in precious metals right now are probably getting a little impatient and wondering when or if their investment is going to "take off".  I will repeat what I said in Monday's blog that until the support levels at $1500-1530 in gold and $26-27 in silver are clearly broken, we should remain with our long positions.  The technical picture for gold and silver has not changed and continues to look very good.

Trading Blog          Monday,  March 11,  2013

3/11/2013

 
BRIEF MARKET UPDATE  (3:45 pm EST)

All markets are remarkably quiet and stable today and conditions are little changed from last week, so I have very little comment to make today.  Our long positions in gold, silver, and crude oil are being maintained and are still looking good.  I would like to make the point here that many Wall Street pundits and the mainstream media are very  bearish on gold right now, but this pessimism should not be taken seriously because mainstream opinion on the precious metals is frequently a contra-indicator of the actual direction gold and silver take (i.e. public sentiment is usually high before a crash and low before a rally).  The overall technical picture for gold and silver is unusually positive right now and will likely remain so unless prices break clearly below the support levels around $1500-1530 in gold and $26-27 in silver.  Until that breakdown occurs, we will remain bullish.


Trading Blog          Friday,  March 8,  2013

3/8/2013

 
MARKETS  UPDATE  (2:15 pm EST)

I live in the Northeastern United States and woke up today with snow literally piled up against my doors and windows, so I am just going to post a short blog here as I do need to attend to the task of digging out.

There are no changes to our positions (long gold, silver, and crude oil) today. 

Even though the precious metals seem reluctant to "take off" at the moment, they are holding well above their support (and our stop loss) levels, and we are still anticipating a good rally here.

The U.S. jobs report issued today showed better than expected numbers, and this seems to have had a positive effect on the broad stock market, which continues to look very bullish.  The U.S. Dollar, which was showing some weakness yesterday, also seemed to benefit from the jobs news and surged up significantly.  This dollar strength may be a factor in holding down the precious metal prices.  It is important to keep in mind, however, that the effect these reports have on markets is often temporary and superficial.

Crude oil's situation is unchanged and we are maintaining our long positions here as well.

Bottom line: we are still long gold, silver, and oil  and out of the broad stock market and Swiss Franc for now.

Now I'm off to tackle the snow!

Trading Blog          Wednesday,  March 6,  2013

3/6/2013

 
CRUDE OIL TRADE ALERT  (2:45 pm EST)

A good trading opportunity is setting up in crude oil right now.  There is a good chance that crude is at or near the start of a new trading cycle and the price is at a strong zone of support.  This is a bullish set up, and it is an ideal spot to go long as we can set our stop loss just below the buy price underneath the support so should it break we would exit the longs with minimal loss.  This support level is around $88 and the price of oil is just under $90 at the time of this writing.

The broad stock market continues to look bullish (at least short-term), and because crude oil and the broad stock market often move hand in hand (they both tend to reflect public sentiment about the economy), this bodes well for crude.  Interestingly, the industrial metal copper also looks poised for a short-term rally, and this too would be a bullish broad economic indicator.  We have the advantage here of getting in at the start of a potential rally in crude, whereas the broad stock market's rally is already underway.  Note that our previous reluctance to sell crude oil short because of possible conflicts in the Middle East leading to a surge in price is irrelevant here as we are going long and such a conflict would only increase our profit. 

Based on all the above, 
we are establishing long positions in crude oil today.

Trading Blog          Tuesday,  March 5,  2013

3/5/2013

 
BROAD STOCK MARKET UPDATE (11:45 pm EST)

I am posting a late blog because I was traveling today and was unable to analyze the markets until late in the evening.  The big news today is that the DOW broke and closed above its all-time high of 14,198.  The significance of this is debatable, but it does reflect optimistic investor sentiment at the moment in the broad stock market and is likely connected to the relief many people are feeling now that the sequester "crisis" has passed seemingly without incident (although it will take time for the full impact of the budget cuts to be felt).  The breaking of the all-time high in the DOW was accompanied by a negation of several bearish technical signals that had manifested over the last week.   Strong bullish momentum signals also appeared today in the S&P 500 and NASDAQ charts.  Despite these bullish technical signals, there are several cycle and timing factors that make these markets potentially unstable right now.  We will remain on the sidelines and will wait to see if this sudden optimism in the markets can persist.



 
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The Alternative Investor takes no advertising or incentives from any company, institution or investment that is discussed on the website.  Any trading and investing information presented is based on Alternative Investor's independent and unbiased research and analysis of current financial markets.

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All statements and trading/investment information on this website represent solely the personal opinion of The Alternative Investor based on information available at the time of writing and are intended for educational purposes only and are not a recommendation to buy or sell securities, commodities or currencies.  The Alternative Investor is not a licensed broker or financial advisor.  The Alternative Investor presents the trading and investing information on this site in good faith based on his own research into current financial markets but cannot and does not guarantee profit and does not guarantee against any financial losses that result from using this information.  All users of this website and the information presented within it assume full responsibility for their own personal trading/investing decisions and any losses that may result from them.

Trading and investing in any financial market may involve serious risk of loss.  For this reason all traders and investors should never place more money than they can afford to lose in any individual market.  The Alternative Investor monitors several markets and encourages a balanced distribution of funds among them (and others).  The Alternative Investor recommends consulting with a professional financial advisor before making any transactions with financial ramifications.  All trading, investing and financial transactions should always be made in accordance with the appropriate laws and legal regulations in your area of jurisdiction.

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