Last Few Hours Left For The March Contest…
Do you think the government’s spending is out of control?
You have until midnight (PST) to answer this question by clicking on the link on the right hand side of the blog. We will be drawing a random participant and sending them some goodies that only a trader would love.
Good Luck!!!
General Motors Rick Wagoner finally admits his biggest mistake
It takes a big man to admit a mistake, especially when the mistake almost crippled an industry giant. Rick Wagoner, former GM CEO, came clean this week admitting his mistakes. Now, no one likes to see anyone lose a job, but this mistake placed General Motors (NYSE_GM) in jeopardy years ago.
So what was Rick Wagoner’s big mistake?
Is the move in crude oil over?
Crude oil plays such an integral part in our lives whether we care to admit it or not. This one source of energy drives the US economy and indeed the world’s economy.
So what’s ahead for the new black gold? After seeing this market move to its best 
levels in some time, we have seen a sharp pullback from the recent highs as the crude oil market appears to be mimicking the equity markets. Read more
Is it all over for the S&P500?
The S&P500 market, along with the other equity markets, rallied sharply and created a massive gain of 20% in a matter of weeks. This is the biggest and fastest gain that these indices have seen since the 1930s.
So the question is: Is the move over, or is this the pause that refreshes?
In my new video I go into detail as to what I think is happening in the equity markets right now and in particular in the S&P500 market. Read more
GM One Step Closer To Bankruptcy And The Markets Tank
The ouster of GM Chief Executive Officer Rick Wagoner is sending shock waves through the financial world this morning. So here’s what we think is going to happen in the markets and in particular the S&P 500. Read more
The MarketClub Minute - Lesson 2
Enjoy,
Adam Hewison
President, INO.com
Co-creator, MarketClub
We Revisit The Crude Oil Market
In my new video on the crude oil market we see how this market has been creeping up in value and in now trading over $50 a barrel. The question is “How high can crude oil rally given the world economy?”
The potential is that crude can go higher as the United States is addicted to oil and cannot at this stage run without it. The same goes for most other countries. Whatever the arguments are for crude oil I think you will find this short video of interest.
The short video outlines the path for crude oil and is free to watch.
I hope you learn something from this video. Feel free to give us your feedback on what you think is going to happen to this market in the future.
All the best,
Adam Hewison
President, INO.com
Co-creator, MarketClub
P.S. Did you see our new video on how to use the new MarketClub Charts? Watch it here.
Is This Rally In The S & P 500 For Real?
Check out this short video and see if the rally in the S & P 500 market is for real, or if it’s just a rally in a bigger bear market.
My brand new video details what I think is going on in the equity markets. I also want to share with you the key S & P 500 number that if broken will turbo charge this market.
The video is as always, free to watch. Your comments and feedback are always welcome.
Adam Hewison
President, INO.com
Co-creator, MarketClub
P.S. Watch my earlier video on this market here.
Using Volatility in Your Market Analysis
The longer I’m here at INO I find myself in contact with some of the most knowledgeable, yet unheralded, trading minds. John Foreman is one of those trading minds. He will be a speaker at the LA Traders Expo in June, he’s written books, and he focuses on teaching all levels of traders! I’ve been a fan for a while and I will be at the Traders Expo to hear him speak. Oh yeah his site is TheEssentialsofTrading.com.
All that being said, I invited John to teach on something that’s been on my mind…and the mind of EVERY trader out there, volatility. So read the article, post comments and questions for John, and then check out his site…in that order!
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As a market observer I have to say its kind of funny that a year ago after the Bear Stearns meltdown the question on everyone’s lips was whether that was the bottom in the stock market and now, as so many folks have thrown their hands up in disgust, we just might have seen it. There are several different things which lead me to think the bottom has either been put in or will be soon. In this article I’m going to outline one of them - one that helped me stay bullish into 2007, but warned me that things were changing midway through the year – and show you how you can use it.
Reading the Volatility
Volatility is one of the most useful metrics for any trader. Many have learned to use it to help in money management – to help size their positions, set their stops, or to just plain stay out of the market when it’s getting hairy. Volatility can also let us know when the market is getting ready to change states. There are two readings I look for that purpose, closing price volatility and ranges.
Closing price volatility is simply looking at how widely dispersed period closes are over a given period of time. It’s going to be high when the market is trading across a wide range or when it’s moving quickly in one direction. It will be low when the market is in a tight range or trending slowly. In my experience, this type of volatility is most interesting when at extreme readings.
Ranges are exactly that – looking at the high to low spacing. More volatile markets produce wider period ranges. Less volatile markets have narrow period ranges. Where I find this volatility most useful is when it’s transitioning from declining to rising or vice versa.
Measuring the Volatility
Each type of volatility noted above can be pretty easily tracked. Closing volatility is the subject of the extremely popular Bollinger Bands. Similarly, Average True Range (ATR) is the metric which measures period ranges. Both can be found included in many technical analysis charting packages.
Now, having said that, I need to insert an additional layer over the top of the normal studies. Recall that I said that closing price volatility is most interesting at extremes. How do we see an extreme reading for the Bollinger Bands? We look at how wide or narrow they are, then we look for extremely tight or extremely wide Bands. In terms of ATR, remember that I said turning points were important, which means looking for those times when the study is turning up from a low reading for turning down from a high one.
Take a look at this chart of the monthly S&P 500 to see the volatility in action.
Let me break down the different plots here.
The top line is a normalized version of ATR (N-ATR). That means I’ve taken the base ATR reading and divided it by the 14-period moving average to express it as a percentage. That way I can compare it historically. If I didn’t do that, we wouldn’t be able to look at it with any kind of perspective. Notice the sharp rise in N-ATR from 1987 at the point of the Crash. If I didn’t normalize the study that would only be a little bump in the line because the S&P was only in the 200s-300s at that point.
In the middle of the graph above is the monthly S&P 500 candlestick chart with Bollingers Bands overlaid.
On the bottom of the graph is the Bollinger Band Width Indicator (BWI) which does something similar to N-ATR in that it normalizes the width of the Bands so they can be viewed in a historical context. BWI is the distance between the upper and lower bands divided by the 20 period moving average (or whichever one is being used to plot the Bands). That gives us the Band width expressed as a percentage, just like the N-ATR. It lets us look for those extreme readings mentioned previously which can tell us that something very interesting is probably coming.
This could be a major story on tonight’s news.
Dave Maher, my business partner sent me this article early this morning. It is worth your time to read what is really happening with AIG and some very talented folks there.
If you can remember to comment here on this blog about what this AIG employee has to say, we would appreciate it. I think it will get some good dialog going as to what is really happening to our country.
Maybe it’s time to stand up and tell Congress we are “mad as H*LL and not going to take it anymore”.
Here’s the link
Adam Hewison
President, INO.com
Co-creator, MarketClub
