Stock Market Jan. 25-31

[Peter518]

The Chinese new year of Ox has arrived, let's wish everyone a healthy, bullish, and prosperous new year!

Here are

2009 Chinese Horoscopes for 12 Chinese Zodiac Signs In the Year of Ox

http://www.chinesefortunecalendar.com/2009/2009Zodiac.htm

and

 predictions on World Economy by Fengshui Master Paul Ng:

-----------------

Analysis of World Economy

In spite of volatilities, world economy would slowly improve. However, the number of natural
disasters may post the major drawback to such efforts.

Canada, while confronted with the negative “5-yellow” force, may be at the blink of financial
deficit. This would be magnified by the many promises during the federal election last year. It
may run into a deflation of up to 1%.

USA, regardless of its effort trying to retreat, still suffers from many battle grounds in the world.
These would be compounded by many natural disasters such as food problems, forest fires, and
flooding. Together they post an enormous drain on the US economy. It may run into a deflation
of up to 3%.

Russia would also suffer economically because of its involvement in several battle grounds and
its new arms race.

Many European countries would still suffer from last year’s financial catastrophe. New illnesses
may strain their economies.

The fastest growing country would continue to be China, which should enjoy an economic
growth up to 8%. India may have a setback because of continuous terrorism and natural
disasters. China would continue its robust growth regardless of the world’s setback. The
Chinese dollar will appreciate but much slower than last year.

Countries in South American and Africa would start a new learning course in the ruling of their
countries.

Interest rates in North America would continue to be low.

Canadian Economy
• Fiscal deficits may re-appear again at most levels of governments
• Interest rates will stay low and prime rates will fluctuate between 4-6%
• Can $ will fluctuate between $0.80 and $0.90 US.
• TSX should fluctuate between 8,000 and 13,000 points
• Corporations would continue to be leaner and meaner with consolidation and
centralized control
• There would be many layoffs, especially in the automobile sector
• Many US companies would continue to consolidate
• Many merger activities – “the fit lives”
• Competition among all businesses will be more fierce than before
• Much slower economic growth (-1% to 1%)
• Unemployment rate to be higher (6-8%)
-----------------

Links: http://www.paulng.com/CMS/uploads/2009-geo.pdf
http://www.paulng.com/CMS/index.php?/archives/28-Predictions-for-2009-Year-of-Earth-Ox.html


All the best!

Peter

[Peter518]

More on

THE YEAR OF THE OX

Please pay attention that USA President Barack Obama was born in the year of Ox (1961).  Hope he can bring some bullishness into the stock markets...

Good luck!

Peter


===========================================================
THE YEAR OF THE OX

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1/26/2009 - 2/13/2010 (Earth)

According to the Chinese Zodiac, the Year of 2009 is the Year of the Ox.  The Ox, or the Buffalo sign symbolizes prosperity through fortitude and hard work. Those born under the influence of the Ox or Buffalo are fortunate to be stable and persevering.  The typical Ox is a tolerant person with strong character.  Not many people could equal the resolution and fearlessness that the Ox exhibits when deciding to accomplish a task.  Ox people work hard without complaints at work or at home.  They know that they will succeed through hard work and sustained efforts, and do not believe in get-rich-quick schemes.         

Ox Years:  2/19/1901 - 2/7/1902 (Metal),  2/6/1913 - 1/25/1914 (Water), 1/25/1925 - 2/12/1926 (Wood),  2/11/1937 - 1/30/1938 (Fire),  1/29/1949 - 2/16/1950 (Earth),  2/15/1961 - 2/4/1962 (Metal),  2/3/1973 - 1/22/1974 (Water),  2/20/1985 - 2/8/1986 (Wood),  2/7/1997 - 1/27/1998 (Fire),  1/26/2009 - 2/13/2010 (Earth)

Famous Ox People:  Barack Obama, Catherine Freeman, Heather Locklear, Jane Fonda, Jack Nicholson, Juliette Lewis, Margaret Thatcher, Meg Ryan, Meryl Streep, Princess Diana,  Vivien Leigh and George Clooney.

[jjj000]

I think Heather Locklear just may be able to solve the world's financial crisis

[sidewinder]

Heather could solve most all of my problems.

Mr. Ng just might be slightly bias though.  8% growth for China seems a little high even for China in this economic climate.

[Bottomfeeder]

No doubt about Heather....just don't let her do the driving

Sidenote....my GLD charts show that Fridays double top breakout, which also just broke through into positive momentum zone is a very positive development, from a daily chart perspective.

In viewing previous momentum breakthroughs over the past year, on average that is followed up by about 12 more days of accelerating momentum.  Sorry best I can explain it!

I need to do a bit more research on this momentum relative to price to understand better if/how this indicator lags price.  But I think it is quite bullish.  I am jumping the gun a bit here guys because I haven't completed my work, but I wanted to put it out there in case there is interest.

I will get to work on it in the morning.  GLTA next week!

[sidewinder]

More thoughts from a twisted Mind:

GLD  … Any pops tomorrow and you can look for selling late in the day. You probably already know this …. Gold stocks usually move up or down before Gold does.  So if gold is up tomorrow and you see gold stocks start to sell off the price of gold should follow.  AEM, Barrick and others have had a decent run last week so watch what’s going on during the day.

The last new high GLD made prior to Friday was Dec 31st .  This last run starts at the low of the day on 1-15-09.  If you do a fib retracement from the high12-31 to the low 1-15 where is the price now?  Smack on the 100% line.  Next target is the 161.8 fib line at $92.23 which just happens to be a dead line to the high back on Sep 29 last year at the little double top.  So my way of thinking is since it actually closed above the $86.52 high on 12-31 it has a chance to go to $92.23 the 161.8 fib and the Sep high.  OK now we have a target and a reason for the target.  The stochs are at the top of their range and ADX diverging with +DI over –DI, all good things.  But, the ADX indicator is below the middle and that indicates the trend is not that strong. 

My next question is what potential for profit do I have?  If it opens where it closed Friday I could get in at 88.53.  The most I can expect would be the 161 fib line at 92.23 a potential  for a gain of $3.70. 
This thing jumps all over the place, just look at the candles; I mean it’s a bronco.  Where will I put my stop? Well one place would be the low on 1-21 at just below 82.98.  The way this thing moves around you just have to give it room.  So now with a stop at .25 cents below that low $82.78 I have a potential to lose 88.50 – 82.75 (rounded off) $5.75 to attempt to gain 3.70.  Sorry next. Not my idea of good risk reward ratio. 

Sorry Bottomfeeder, I just can’t see the double top you are talking about.  Could you tell me the dates on the daily where you see the double top you are talking about.  I guess you can call the Dec 31 top and the other day the second one.  To me GLD looks like wild assed wide chop since the middle of November.

 Since it is Gold we are talking about, looking at the chart makes me dizzy. It gives me the feeling that there are a whole lot of very confused people out there.  You can’t go into any coffee shop or the grocery store without hearing the people talking about the economic situation and it invariably leads to talk about gold.  Ask the mailman, the plumber or the guy that cuts the grass.  They all KNOW gold is the thing to hold.  They don’t really know why but they have heard this all their life and if they have a little something in an account somewhere they are going to buy some.  Now we got these ETFs and anyone can get a piece of the action for $82.  You suck em in, knock em out and start the process all over again.

One thought about stops.  If you arbitrarily place stops, (favorites being 7% 10% and on the doughnuts (the prime number $.00) as I have heard so of the guys remark here think about this. The market makers are pros and know these numbers as well as their own names.  They will take you out of the trade.  You lose.  MM 1 investor 0.  So know where and why you place a stop.
       
"Wall Street never changes, the pockets change, the suckers change, but Wall Street never changes, because human nature never changes" -Jesse Livermore-

[Peter518]

sidewinder, great thoughts on Gold...

Good luck to all.

Peter

[pinetree]

We're at the 62% retr from the March highs.  First downtrend is broken, a positive sign, but the main downtrend still very much intact.  This was my chart analysis last night.

I figured we're at a significant retracement area, price of gold has gone from 800-900 in 6 trading days, I don't want to chase for what I see as a small potential upside.

[Peter518]

Seems financial stocks are leading the market to recover...and FAS or its Feb 12.5C options at $1.2 are good buys.

[Peter518]

Commodities and dry shipping are having a good run today...especially base metal, copper, and its miners, such as RTP, FCX, QUA.TO, etc.

If Baltic Dry Index (BDI) is a leading indicator for the world economy,  it seems the world economy is slowly recovering...

Hope the pace can keep going in the right direction...

[pinetree]

Peter, I've been watching the BDI too, since bottoming in early Dec it's made two successive higher lows now.  I did a paper trade on DRYS at Friday's close.  It had a strong reaction off the Dec lows as well as 50ma support, up 9% as of now.

Sidewinder, I always put my stops a few cents below what I think should be a technical support level.  It does make me a little uneasy sometimes because the stops I pick arent any special secret formula, and some are probably widely watched areas.  But I guess that's the way the game is played.  If it's more than 7% risk I usually won't take the trade.  I try to do risk/reward ratios like the one you did but I have a hard time quantifying the amount of upside I'm looking for.  So I usually only focus on controlling my downside risk.

[punter]

Good eye boys, the nascent recovery of the BDI is only days old and barely up from 'free'.

http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm

[Peter518]

The market is still very choppy even though DOW closes in green.  However, financial stocks can not hold their early gains, and close in red.  If financials can not catch up with general markets, it does not bode well with the markets.

FAS is down about 4% today, but its Feb 12.5 calls fall over 30% due to time decay and IV decrease...My morning call on FAS options is proved premature and lousy one.   Too bad!

As some fellows, especially JDH and sidewinder, suggested, gold stocks retreated today even though gold spot price is up due to profit taking.

Good luck to all.

Peter

  

[Peter518]

Good eye boys, the nascent recovery of the BDI is only days old and barely up from 'free'.

http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm

Good link,  Punter.  Thanks.

Baltic Exchange Dry Index (BDI) apparently has lead SP500 (green) to fall since May 2008:



Hope it will lead SP500 to recover...

[sidewinder]

BF I figured you had your reasons for considering the GLD trade and I certainly did not mean to attempt to sway your trade.  It did pop and drop today even though it closed up from Fri. Just looked at the chart.  I was just trying to get an idea of another traders thought process and share mine, sort of.  

I generally use a last support area with a few cent room also.  And yes many others do also but you have to put a stop somewhere and I figure if the last support breaks it was most likely going to happen without any hanky panky at the MM.  Any trade breaking support and I don't want the risk anyway and it's just a part of the cost of doing business if you will.  Thanks for the chart with the fibs on it, I see what you were talking about.  Funny, we used different placements for the fib attachments and we both got a fib line going right through the candle at almost the exact place just different percentage of retracement due to that.  But even so, it hit fibonacci number.  Scary huh.

Second week scalping the ym and I need some rest after today.  That is taxing for a beginner.  Geezz, I thought I was in the saddle until today.  Got whipped around trying to trade on the 2 and 5 min timeframe, got on the back side of a trade and refused to admit it.  Violated Rule #1.  Protect the capital.  glad it was only a paper trade account because it did not take but a few minutes to get into some "Long dollars"  did not have a single losing trade last week and got cocky.  Today really taught me a lesson. Made quite a tidy profit in the run up first thing this morning only to give it all back when I got hung out to dry trying to trade the chop just prior to lunch.  Got on the wrong side prior to the drop just after 13:00.  Good lessons for me today on emotions and ego.  There simply is no place for it when your account is "armed and hot"  

Getting the reward for the March 7.50 BAC calls I bought Friday paid off although I was very uncomfortable holding over the weekend.  in about .35 and out pretty much at the peak this AM at .93.  

Good trading everyone.