Here Goes!

So now what do the BULLS and the BEARS do?

Here are the arguments for both sides

THE BULLISH ARGUMENT: The bulls argue that it’s a global economy, interest rates are low, inflation is under control, we are awash in cash and the subprime fallout is under control.

THE BEARISH ARGUMENT: goes like this, interest rates are too low and have to go higher. Inflation is just around the corner. Subprime is going to be worse than anyone ever expected, and the dollar is in a free fall.

Take a look at what we said on Jun 24th about the market and Blackstone Group.
I think you’ll find it interesting.
 
The time to take care is now. Listen to the market as that is the only true answer to your financial future.

Is it time to fade the rallies or should we be buying dips. That’s the argument that is going on right now in the market place.

I am not going to comment on what you should be doing right now in this blog posting but what I will say is this.

IT DOESN’T MATTER.

Let me say that again. IT DOESN’T MATTER.

Why would I say something like that on the biggest volume day ever at the NYSE.

Here’s a cruel reality of the marketplace.

It doesn’t matter where the markets are headed. What matters most is you get the direction and timing right.

The reality is, all markets are trading markets. They are all driven by market sentiment and perception.

What matters most is that you get the direction of the market right. You can only determine the trend by using pure market action. The easiest way to do this is by using technical analysis and a program that tells you in plain english what the market is doing.

Here’s a look at what our indicators are showing before the market opening on July 25th.

Has the first negative signal already occurred. Look at what we alerted short term MarketClub traders to 7/18. The red triangle indicates to get out not to go short. The key level for the DOW is 13,400. A move below this level alert intermediate term traders to exit the market.

Lastly what would totally turn the DOW into a true bear market according to out "Trade Triangle" formula is a move below the 13,000 level.

Right now the major trend remains positive for the DOW, but I still have this  uneasy feeling this morning that sentiment and perception is changing.

Cheers,

If you use the Firefox browser, this is an essential plugin.

Snap Shots plugin for Firefox enables you to place your cursor over a link and see a snapshot of the web page.

This plugin is just one of those cool tools that make the web so much fun.

Boooooring!!!

Bernanke said that economic growth in the past year has a proceeded at a pace that is consistent with sustainable expansion after having run at an above-trend rate earlier in the current economic recovery.

The Financial Services Committee should be embarrased for wasting the tax payers money with the dumbest set of questions I have ever heard. They talk about government like they are detached from it and not responsible for anything that has happened on their beat.

If you agree or disagree … you can post a comment at the end of my post/rant.

I would like to ask Dr.Bernanke just two question.

Here they are…

First question:
What about 75 dollars a barrel for crude oil!!!

Here is what the Fed Chief said, “If energy prices level off as currently anticipated, overall inflation should slow to a pace close to that of core inflation in coming quarters.”

Energy prices leveling off … what quote machine is Ben Bernanke watching. I wonder if he has one (he does), are you plugged in Ben??

Second question:
What about the dollar going down the tubes.

This I found interesting, the dollar is of little concern to the good Doctor Ben, why you might ask. Well it turns out that the dollar policy comes out of the Treasury Department and not the Federal Reserve. So Ben doesn’t have to worry about it.

End of story.

This is classic Washington politics, the right hand has no clue what the left hand is doing. That way they can always do what they do best in Washington, and that is pass the buck. No pun intended.

Here’s what I really wanted to say today. Can Ben Bernanke single handedly stop the DOW Rally? I somehow doubt it, but you might get a lot out of
this short educational video .  The video shows you an easy way to measure how high the DOW should go on its current upswing.

One last thing.

Dr. Bernanke if you have time, call over to the Treasury Department and have them check out this
video on the new world currency

For sure, it’s not the dollar.

The rant is over. I feel better now.

Cheers,

How does one family, the Bancroft family have so much clout? The family has been running Dow Jones & Co. for over 100 years and currently owns 64% of the company. The 35 voting Bancroft family members have also set demands that will be placed in the sales agreement if Murdoch gets his way.

One of the stipulations of the agreement will be a guaranteed protection of the Wall Street Journals editorial independence. The family is concerned that Murdoch will use the Wall Street Journal and Barron’s as another instrument to spread his political and business agendas, says Bloomberg.

It will, given Murdoch’s publishing history be interesting to see how long he can keep his hands off the Journal and Barrons. Remember this is the same gentleman who bought "The Times" of London. Many Londoners still haven’t gotten over that one.

Since early July share prices for Dow Jones & Co have flattened. Speculators are unsure if the Bancroft family will approve the board’s decision to accept the News Corp’s bid. However the stock is 65% higher than the April 30th close, the day that the offer became public.

How will the share price of News Corp pan out? If the takeover is approved by the Bancroft family will we see a jump in price? The power is in the hands of the Bancrofts, it is just an interesting story to keep in mind.

What About ALCOA?

How did Alcoa make out after the rejection? Well, with an open (7/12) of over 5.3% increase from previous days close, and since had an additional 3.8% increase in after hours trading between the 7/12 and 7/13. If MarketClub members had been using the suggested technique they would have been in a position to gain off the rejection of the Alcoa bid.

Perhaps you have heard good things about a company and their products, maybe something about a good management team, or perhaps they have released some incredibly good sales data. Some nice starting points for any investment research. But what does the market think about them? I’m not talking about analysts at the big investment firms (who may have their own agenda) but what do the people with money in their pockets and big investors think of the company?

To answer that question we read the tape. Yep, reading the tape (technical analysis of the charts). Understanding the price movement of a stock is reading right into the minds of the investors putting their money into (or taking money out of) the stock. It is important to remember that any stock price moves up or down for only one reason. And that reason is people moving their money… in or out of the stock.

The science of technical analysis of stock charts is the study of human behavior. By interpreting the movements on the charts we are seeing the greed & fear behind the scenes of the people with the money. When we see a stock price begin to fall and the number of people selling is tiny compared to when the price was going up that tells us that as a collective the majority of the money is "sticking with it". Only a small amount of people are taking money out. On the other hand when we see a large number of people (volume) taking money out as compared to the volume when the price was going up then we have a big warning sign before us. It is telling us that the mass collective thinking on the stock is to "get out".

The New World Currency

Dear Trader,

Adam Hewison
President INO.com

Long-Only Commodity Funds- Who Are They & How To Profit From Them?

WHO ARE THEY?
HOW DO THESE FUNDS WORK?

Long-Only Commodity Funds (LOCF) and ETFs are the 800 pound gorilla in the room that can no longer be ignored. These funds are big, slow, and powerful. By understanding how they function an investor can profit from the inherent predictability of these funds.

Long-Only Commodity Funds invest in a variety of futures contracts, creating a basket of commodities. Energy related commodities comprise the largest percentage of the contracts held totaling 50-75% of the total portfolio. This is due to the significance of the products both domestically and globally. Energy contracts included in the “basket” are Crude oil, heating oil, and natural gas. Other commodities included in these funds are precious and base metals, grains, meats, sugar, and coffee. The largest of these Funds is the Goldman Sach’s Commodities Index (GSCI) with approximately $55 Bil dollars invested. Other notable LOCFs include the Dow Jones AIG Commodity Index, the Deutsche Bank Liquid Commodity Index (DBLCI) and the Rogers Commodity Index.

To understand how these funds operate, let’s look at the GSCI. This Fund holds long positions in the nearby futures contract for every commodity in it’s portfolio. As expiration of the futures contracts approaches, the fund will liquidate (sell) it’s entire position in the current month and establish a new position (buy) in the next active month. This action of selling the nearby futures contract and buying the next contract month is called “the Goldman Roll” and is done between the 5th and the 9th of every month.

CAN THE COMMODITY BULL MARKET CONTINUE?
CAN THESE FUND HOLDERS CONTINUE TO MAKE MONEY?

In the author’s opinion, these Funds are a terrible investment and you should stay away from them. Yes, commodity prices may continue their rise in the future. However, it’s inevitable that prices will get too high and the weight of higher production, will force prices back down. The commodity bull market is very much like the bull market in stocks in the late 1990s. During that time, money was pouring into Mutual Funds at an unprecedented rate. This caused stock markets to move higher and higher until they greatly exceeded any reasonable fundamental valuation. The same is true for commodity prices. Investor demand rather than true supply/demand fundamentals are constantly driving prices higher. Eventually, commodity producers will dramatically increase production to profit from higher prices and prices will violently correct downward.

THE GOLDMAN SACHS COMMODITY INDEX MONTHLY CHART: AS MONEY HAS FLOODED INTO THIS INDEX, PRICES HAVE CONTINUED HIGHER. HOW LONG CAN THIS TREND CONTINUE?

A better alternative is to stick to a profitable trading program, or a Commodity Trading Advisor (CTA) that can profit from large moves but will liquidate their position in the commodity before the price crashes back down. The best alternative is to find an experienced CTA that will go short the market and profit from a price crash.

HOW TO PROFIT FROM LOCF!

When trying to profit from LOCF, it is important to know the characteristics of these funds. First, these funds make up a large percentage of the open interest in many commodity futures contracts but they rarely adjust their position sizes. Therefore, during periods when investors holding short positions are likely to reduce their position size, these Funds will continue to hold their massive long positions. This can cause an explosion in prices to the upside. As buying pressure intensifies due to a lack of sellers, many participants holding short positions are forced to cover as the rally intensifies. During this period, very few participants (led by the LOCF) holding long positions are taking profits and are often increasing their long positions.

Example:
Copper: See weekly chart below.

For most of the last 30 years, copper has traded in a range between 60 cents and $1.60.

In 2003-2004, prices moved slowly but steadily higher, reflecting strong worldwide demand for copper and the emergence of LOCF which began accumulating long positions. However, in 2005 and 2006, LOCF grew by leaps and bounds. This resulted in large steady buying of copper futures, which sent prices rocketing higher. Compounding this was the fact that these funds never took profits and stayed with their positions no matter how high prices reached. Copper prices were forced to constantly move higher in an attempt to find new sellers to meet the demand. Eventually, prices will stay high enough for l ong enough to allow copper mining companies to dramatically raise production, which will eventually cause a total collapse of the price.

As LOCF continued to grow in size in 2005 and 2006, they bought large quantities of copper contracts. This mixed with positive fundamentals led to an unprecedented rally in copper prices.

PROFIT STRATEGY #1: Always buy upside breakouts in these commodities and exit quickly if the momentum ends.

PROFIT STRATEGY#3: Find a unique strategy for spread trading that is not well known and that can profit from the movement of money caused by LOCF.

The final and potentially most powerful strategy for profiting from LOCF is through spread trading. When these funds roll their long positions from the nearby futures contract to the next one (“the Goldman Roll”), the impact on the spreads between contract months is dramatic. Many professional traders have made fortunes over the years by trading in advance of the Goldman Roll. However, with so many traders aware of this opportunity, it is crucial for traders to find unique and creative ways to profit from this market moving event.

One unique and profitable spread trading program is the Platinum Commodity Spreads Program or PCSP offered by Platinum Trading Solutions and traded by VanKar Trading Corp. This program uses state of the art software that tracks the movement of money in and out of the spreads affected by the LOCF. In doing so, it is able to identify profitable spread trading opportunities. In 2007, this program has completed a total of 23 actual trades in customer accounts using a variety of commodity spreads with the following results.

2007 ACTUAL TRADES

Total of Profitable Trades $14,863.90
Total of Losing Trades $ -2,252.95
Total Net Profit $12,610.95
Average Profit per Spread $ 548.30

These results are based on trading a single spread per trade. Because spreads typically have much lower margin rates than outright futures positions, traders are able to hold larger positions and therefore make substantial profits should the current winning ways continue.

CONCLUSION
The Long Only Commodity Funds are a powerful force that is likely to dominate the market for years to come. Like any major force in the markets, full understanding and creative thinking will allow you to profit handsomely from this market condition.

For more information, please visit:
http://www.ino.com/specials/platinum/spread4.html

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