Trading Goddess

Currencies waiting for the NFP

2010-09-02T23:00:00.003-04:00

It has been just about as boring trading day as it gets, outside of holidays. Today's action was characterized by lack of trends and pathetic ranges. Markets are clearly waiting for a catalyst to spur them on, and most likely, that is the Non-Farm Payroll report, due on Friday. With generally positive economic data released so far this week, everybody is watching if this improvement is confirmed by job market. The consensus is, however, calling for a net loss of 100K jobs.

If there is a variation from expectations, markets are likely to respond strongly. I'm not going to bother with predictions about possible direction - that will be decided by the markets. However, if conditions remain relatively calm leading to the announcement, the volatility is almost certain increase, maybe dramatically. That means that currencies could move substantially before the Labor Day weekend, maybe as much as 100-200 pips, depending on which pair.

If the moves take place, chances are they will break through today's highs/lows, so those would be levels to watch for possible trade entries. Also, most other recent supports/resistances should serve the same purpose. Another approach is to wait for an hour after announcement and then open positions above/below the latest hourly candle. Should the moves be serious, they will continue in the original direction. However, if the aftermath of announcement is just noise, markets will likely retreat about an hour later, so no trades will be taken. One can chose just about any pair - the USD, JPY, CHF, AUD will all be effected, if the numbers are not very close to forecast.

What to do before the NFP? One could just wait it out, be patient. I want to get active on short time frames aiming for small pips. The snapshot above shows 15M chart of AUD-USD, which in a process of building a potential H&S. There are at least three distinctive trading set ups here, and similar price behavior can be found all over the place. Of course objectives would be small, too, in a range of 20-25 pips. However, the NFP should provide the biggest moves of the day.

Mike K.
http://www.fxmadness.com/

Forex trades review

2010-08-31T23:10:00.005-04:00

Some of the trades, or rather possible trades,discussed on Sunday did not get updated in the last post. The new CFTC rules governing Forex trading in USA were published, so I decided to devote a post to that. In a nutshell, starting October 18, maximum leverage on the major Dollar pairs will be 50:1 and on other crosses 20:1. Nothing truly damaging and quite a change from the proposed 10:1. Personally, I do not care, because my own trading does not include that high leverage. But the elimination of options available to traders is disturbing. Once again, it is the government “protecting” people from themselves. Who cares? If people want to blow accounts by trading at 100:1 or higher, let them. Well, it seems to be a done deal, unless, of course, some new provisions are added between now and the starting day.

Early week has been interesting, indeed. The emergency BoJ meeting took center stage and set the tone for currencies. The Bank of Japan expanded its loan program, a QE measure. As I wrote in Will BoJ ease policypost ”That will be reflected in Yen and its crosses, but predicting how the JPY will respond to an event which might or might not happen is, at best, too complicated to be seriously entertained.” The Yen strengthened on the announcement, not what most people expected, pushing all the crosses down in by a significant margin. These moves lasted through Tuesday, although seem to be running out of steam about now.

Volatility was expected after the open, so I was looking for gaps. They formed, but fairly small. The only one large enough, if barely, was in AUD-JPY. After few hours, the price made a minor low, creating an entry point at 77.06. This point was broken after the BoJ announcement and a trade was on. It did not last very long, the small 35 pips target was reached fast. Interestingly, there was slippage and spreads held rather steady, too.

That post also covered a possible long trade in USD-CAD. Premise was to look for a trend continuation from Friday, and then buy it first sign or reversal. Unfortunately, the follow up from Friday was rather meek, not fitting into the pattern. Still, the trade was given a shot, but the price set into a sideways action and I closed it for 7 pips loss. Few hours later I tried another long, this time on a simple breakout and rode it to 100 SMA for a 50 pips gain.

Last week, the EUR-CHF gave signs of possible reversal. I bought it at 1.3031, with a large, 300 pips objective. This pair made couple of run ups, trying to move lower, but the response to BoJ announcement spilled over to all CHF pairs. Swiss Franc acted as another “safe haven” and appreciated great deal. My trade was stopped out just under the low from 08.25. for a 71 pips loss. Since then, the EUR-CHF made another all time low at 1.2850.

Currently, I find did difficult to find trades that could be considered “suitable”. Markets are very nervous, well, not markets but the participants, which results in erratic moves. So, I sitting out a day, no trades on Wednesday. Do not feel comfortable right now and want to see more price development before new positions are contemplated. A day off. It is possible that the NFP on Friday will be the event of the week, but hope to be in action before that.

Mike K.
http://www.fxmadness.com/

Buy Stocks "In The Face Of Fear"

2010-08-31T14:39:00.000-04:00

TESTING 1 2 3 TESTING 1 2 3

And that folks is the order of the day when you look at the S&P 500 today.

1040 going once, 1040 going twice, SOLD at 1040. The market has now defended the 1040 level twice and in both instances we’ve bounced off of it. If you were watching the indexes this morning at the 1040 level you’ll have seen before we pulled away from it to the upside, the leaders (AAPL, BIDU, NFLX) all took off before the index did. It showed you that the market always moves with the leaders first.

While the premarket didn’t look good, THAT my friends is what we want to touch upon for a moment. Just because you see premarket looks horrible DOES NOT mean that you should immediately jump to an emotional conclusion out of FEAR. More often than not the first half hour knee jerk open is always garbage anyway, recent case in point? INTC news from a few days ago the last time we tested 1040.

This is why we always say:

“Let Your Stocks Tell You What To Do By The Action They Exhibit”

In addition to that we constantly drill into your subconscious the famous phrase heard around our world here at All About Trends and that is:

“In The Face Of FEAR”

Believe it or not, this is the secret to successful investing — to keep your most important asset in the game, that being YOUR STATE OF MIND. We’ll continue to drill this in your head so that it becomes second nature to you. Consider yourself warned. The funny thing about all this is that none of it has to do with stocks or indexes or chart patterns, its that of managing your emotional state of being. They say YOUR perception creates your reality and to a big degree that is true. But Ahhh when looking at the market through the reality of what is vs. what we want to see? That is the secret — The standpoint of the un-opinionated observer. It’s a mindset you really want to cultivate. Try it, practice makes perfect.

Let’s take a look at the S&P 500 over the last few days.

While we are at it let’s look at the leaders charts over the same time frame and frequency.

As you can see, the market takes off, the leaders take off and sometimes it’s the other way around — that being it’s a market of stocks and not a stock market.

To learn more, visit our blog site and sign up for our free newsletter and receive our free report — “How To Outperform 90% Of Wall Street With Just $500 A Week.”

Original Dow Stock from 1896 Currently Pays Almost 5% Yield

2010-08-31T10:54:00.001-04:00

Talk about a stock that stands the test of time. If you want a stock that is the eighth oldest listed stock on the New York Stock Exchange, celebrated its 120 year anniversary last year, one of the original stocks in the Dow Jones Industrial Average in 1896, has increased its dividend for the last six years, and currently yields 4.8%, then you will now know what this gem is.

The stock, Laclede Group Inc. (LG), which was formerly known as Laclede Gas Company, is a natural gas utility that is the longest lived of the Dow. It trades at 12.9 times earnings and has an operating cash flow of about seven times its total dividend payout. The company has increased its dividend every year since 2003.

Of course, there are plenty of other natural gas and propane gas utilities. WallStreetNewsNetwork.com has turned up 25 gas utilities with yields ranging from 2% to above 8%, such as Nicor (GAS) yielding 4.4%, Spectra Energy (SE) yielding 4.8%, and Chesapeake Utilities (CPK) yielding 3.9%.

To see a list of 25 gas utilities, you can get a free list of natural gas and propane stocks, that can be downloaded, sorted, and changed, check out the lists at WallStreetNewsNetwork.com.

Author does not own any of the above.

By Stockerblog.com

Dividend Increasing Stocks

2010-08-31T10:52:00.000-04:00

What Stock has Raised its Dividends for 54 Years in a Row?

Over the course of the last few years, the Dow Jones has lacked consistency, presenting a volatile platform of figures that are making investors ever more hesitant. What market analysts are now seeing is the growth and solidarity contained in dividend stocks, exposing growth stocks as being somewhat precarious.

Mark Skousen, editor of the Forecasts & Strategies newsletter, said at the San Francisco Money Show a couple days ago that over long periods of time, dividend stocks outperform non-dividend stocks, and dividend-increasing stocks outperform dividend stocks in general. This finding is not being ignored as dividend investors see a much better long-term return when investing in dividend stocks, especially those that increase their dividends regularly.

One of the main reasons why dividend increasing stocks are proving to be so much more lucrative is that they embody a select group of companies which have enough in earnings to reinvest back into the business itself, but have plenty left over to distribute to shareholders. Rising profits also means rising dividends for shareholders, which ultimately equates to rising stock prices in the long term.

During the last few months, while some of the major players have been looking rather shaky, companies that have increased their distributions are causing analysts and investors to re-think their choice of investments. WallStreetNewsNetwork.com has turned up a list of over 20 stocks that have had dividend increases over 30 years. One company has increased its dividend every year for 54 years! Can you guess which company it is?

I can almost guarantee that you use at least one of their products on a regular basis. You have either shaved with them, brushed with them, flossed with them, wiped with them, shampooed with them, or washed with them. The company was founded in 1837, so it's been around for a little while, and appears to have some staying power. Probably that staying power is do to the fact that people will always brush, wash, and wipe, whether there is a recession, a depression, a booming economy, deflation, or inflation.

Have you guessed the name of the company yet? If not, I'll tell you. It's Procter & Gamble Co. (PG), which raised its dividend from 44 cents a share to $0.482 per share, a 9.5% increase. And this was during our current recession. The company has been paying a dividend for 120 consecutive years since its incorporation in 1890 and has increased its dividend for 54 consecutive years at an annual compound average rate of approximately 9.5%. Currently, the stock provides a yield of 3.2%, and trades at 13.8 times forward earnings.

Another company, which provided its shareholders with a huge dividend increase, is Walgreen Co. (WAG), the drug store chain. They just boosted the payout from $0.138 per share to $0.175 per share each quarter, an enormous increase of 28.6%. But what is even better is the history behind the company's dividends, providing its shareholders with dividend bump-ups for 35 years straight; and as long a people continue to need medicine and prescriptions, the company should continue to raise dividends. The stock now yields 2.5% and has a forward PE ratio of 11.5.

Of the stocks that have been raising dividends 30 years or more, seven of them have yields above 3%, and 17 have yields above 2%. For a free list of dividend increasing stocks, which can be downloaded, sorted, and changed, visit WallStreetNewsNetwork.com.

Author does not own any of the above.

By Stockerblog.com

Stock Recommendations at the San Francisco Money Show

2010-08-31T10:49:00.002-04:00

The show was held at the San Francisco Marriott Marquis Hotel on August 19th through August 21. The keynote speaker was Steve Forbes, Editor-in-Chief of Forbes Magazine, who spoke very candidly about his opinion of the current administration and its policies adversely affecting the economy and the stock market. However, he was positive about the future and expects many favorable changes to take place over the next couple of years. He went into detail about how capitalism and the free market can save the economy, even with health care, Social Security, and Medicare. His latest book has recently been published, How Capitalism Will Save Us: Why Free People and Free Markets Are the Best Answer in Today's Economy.

The Opening Ceremonies panel discussion was on Nanotech, with four panelists discussing the various aspects of this fast growing industry, and how nanotechnology is used in heathcare, technology, batteries, transportation (boats with nanotech hulls), and many other areas.

Some of the stocks that were mentioned in this industry include Harris and Harris Group (TINY), the stock with the great stock ticker symbol, a venture capital company which specializes in early stage nanotechnology companies. Other companies mentioned were Nanosphere (NSPH), Starpharma (SPHRY.PK), A123 Systems (AONE), Cree (CREE), First Solar (FSLR), and SunPower (SPWRA).

There were 55 seminars to choose from on Thursday, 99 on Friday, and 24 on Saturday, covering everything from options, to ADR's, to ETF's, to dividends, to low priced stocks, to China stocks, to numerous other topics.

One interesting presentation was called The Top Ten ETFs and Stocks You Should Buy Now, with Mark Skousen and Doug Fabian. Skousen mentioned Enterprise Products Partners (EPD) due to its rising dividend, currently yielding 6%, and insider buying. He also recommended Ford (F), due to the fact that sales are rising substantially, the early paydown of debt, and a forward PE of 10.

Fabian recommended iShares S&P Global Telecom ETF (IXP) due to its 4.8% yield, paid quarterly. He also likes PowerShares CEF Income Composite (PCEF), which invests in master limited partnerships but doesn't issue K-1s. It pays an 8.5% yield.

Another informative speaker was Michael Murphy who's presentation was called 'Best Tech and Biotech Stocks for the Next Ten Years.' In the Content on Demand sector, he likes TowerStream Corporation (TWER), a company that puts wireless towers on buildings and offers broadband services to businesses. The company has already signed up eleven cities. Insiders own 30% of the company.

In the biotech arena, one of the stock he recommends is Rochester Medical Corp. (ROCM), which makes catheters made of silicone instead of latex, to avoid the latex allergies for some patients. This also allows the use of anti-fungals in the catheters.

One stock he favors in the energy sector is Connacher Oil (CLL.TO), a Canadian company that is in the oil sands industry. Murphy also likes the geothermal industry due to the very favorable government tax credits and loans available to developing projects.

If you missed the MoneyShow in San Francisco, you can check out other upcoming MoneyShows at MoneyShow.com.

Author owns F.

By Stockerblog.com

Troubling Tuesday - Bears and Bears and Bears, Oh My!

2010-08-31T09:25:00.000-04:00

"I will not fear

Fear is the mind killer,

Fear is the little death

That brings total Oblivion

I will permit my fear to pass

Over me and through me

And where it has gone

I will turn the inner eye

Nothing will be there

Only I will remain."

That is the Bene Gesserit incantation for bravery from Frank Herbert’s "Dune," one of my favorite books. When the markets turn nasty on us it is time to get analytical, not emotional and we need to let our fear pass over us as we step back and evaluate the situation with fresh eyes, and a calm mind.

Above is a chart of our major indexes and their year-to-date performance. As we tested our -5% lines last week, we added a fresh round of Disaster Hedges, a series of trade ideas that can make 500% or more if the market falls further and in an afternoon Alert to Members yesterday, we added another SDS hedge with a 400% upside. Having some high-reward hedges in your portfolio allows you to set aside just 2% to protect your entire portfolio against a 10% drop in the markets. 10% is A LOT for the markets to fall and, of course, now that they have brakes on the market, we can always add more hedges along the way down. Should the market fall "just" 5%, we STILL make 10% on our hedges and that nets our portfolio (in this example) UP 5% on a 5% drop in the market. If our bullish plays were also hedged with covers - then so much the better!

Most importantly, having a balanced portfolio with hedges allows you to play the market WITHOUT FEAR. Warren Buffett famously advises investors to "Be greedy when others are fearful" and our own PSW Rule #1 is "Always sell into the initial excitement," which doesn't mean always buy but we look for opportunities to sell fear (naked puts) on a dip, the same way we sell our own positions into spikes up that we consider overdone.

In last week's "Disaster" article, I wondered if we were in the panic/capitulation part of the above chart and, if we are, then THIS should be the blow-off bottom. It is possible that I've been wrong and that I am in DENIAL and we have a long, long way further to fall, which is why we love our disaster hedges - it lets us take a bullish chance at these inflection points, knowing that we are well-protected to the downside. Yesterday we took a couple of bullish stabs on the premise the S&P would hold 1,155 but no luck there, now we are not likely to do anything until we see a break over our levels.

It does seem kind of silly to freak out that the markets are down 5% for the year and, if you go to Yahoo Finance and change the chart to a 1-year view, you'll find that we're UP 5% in the past 12 months but down close to 20% over 2 years and down about 10% over 5 years. Hardly the end of the World, is it? You would think investors would have more backbone considering we were down 40% (on the 5-year chart) in March of 2009, which was down 70% from the top - now THAT'S panic!

Investors tend get very caught up in the day-to-day market moves and forget about the big picture. Our Q2 Buy List and our 9 Fabulous Dow Plays are generally 2012 trades that we initiated about 5% lower than we are now and we built in 20% protection using our "How to Buy a Stock for a 15-20% Discount" strategy and we have remained 65% cash BECAUSE we were not sure our range would hold up but, for new Members - this is an opportunity to initiate some of these trades at the entry prices we were lucky enough to get earlier this year. We even have a nice, cooperative VIX that's giving us good put and call prices to sell into.

If we are buying at 10,000 on the Dow and taking 20% downside hedges on our purchases then we are good to Dow 8,000. Add a little disaster hedging and we're good to Dow 7,000. If you are more bearish than that, here is the web site of the Survival Warehouse - you probably already have the guns and ammo... While I generally hate to argue with people who have stockpiles of weapons, on June 6th I did write "The Worst-Case Scenario: Getting Real With Global GDP!" where I pointed out that things are just simply not bad enough to sit on our hands with a big pile of cash (or gold).

The Dow and the NYSE are up slightly from that spot but the S&P is down 4%, the Nasdaq is off 6% and the Russell has fallen 9% since then (3-month view). So how do we play this? We play the Russell to go up and we play the Dow to go down. In a perfect world, they both move to the down 4% line and we gain 4% on each side. If the market turns up, the Russell will hopefully climb faster than the Dow, which is already "up" and if we go down, we can hope for the Dow to catch up spectacularly to the other indexes with a huge fall. This is how you can be market neutral but still do quite well on either side of your bets. By taking plays where we SELL premium, we lock in an additional profit generator as the decay of premiums is one of the very few sure things we get in the markets. NOW is the time to take advantage of the fear and greed of others!

Today is certainly fear day in the markets. The news cycle has been getting more and more bearish and I noted to Members in yesterday's chat at 3:20 that we were getting relentlessly bad news led off by our favorite bond pimp, Mohamed El-Erain, who predicts a "lost decade" for America with no hope for the unemployed who are "frozen" in bad communities due to a dead housing market. Hugh Hendry was even worse on British TV last night, telling the EU viewers "I expect bad things are going to happen - further bad things. I think the most productive use for speculators today is to conceive of what are the worst possible economic outcomes."

This morning we are getting even more (if that's possible) doom and gloom as we wait for Retail Sales Data, NY ISM, Case-Shiller Home Prices, Chicago PMI (9:45), Consumer Confidence (10:00), Investor Confidence (10:00), Fed Minutes (2pm - dissent on the Fed is scary and there's lots of it - as I reported last week), Farm Prices (3:00) and ABC Consumer Confidence at 5pm.. Yesterday was our 2nd lowest-volume day of the year, with Yahoo showing just 2.9Bn shares traded on the NYSE vs 4.1Bn on Friday. The NYSE finished the day 1% over Friday's low but you sure wouldn't know it from listening to the MSM, where they are selling the end of the World as we know it.

White House Advisor Austan Goolsbsee made the mistake of not bitch-slapping Wolf Blitzer last night when Wolf said "How worried are you about a double dip recession" and the fact that he said "I don't think we will have a double dip recession - but we should keep an eye on that" translates into the headline (and I'm not joking): "And Now Even the Administration is Talking About a Double Dip." Let me ask you a question - do you resent being manipulated or are you so used to it that you now get a sort of empty feeling when the media doesn't jam their hand up your ass and pull your strings?

I almost get tired of pointing this BS out but then I remember that corporations like GE and NWS have entire television stations with multi-Billion Dollar budgets and they PAY people to say this stuff over and over and over again 24 hours a day, 7 days a week and they never, ever stop hitting people with their message. So it is up to me and other "small voices" to do what we can to balance the scales - to at least keep some small semblance of balance in the system that would otherwise allow Corporate America swallow this country whole.

The relentless negativity is doing its job as even hedge fund managers are heading for the exits with a 50% increase in bearish sentiment in the past 30 days! 47% of 104 hedge fund managers polled by TrimTabs said they were now bearish on the S&P with just 17% bullish, down 50% from the month before. "The developments hedge fund managers are telegraphing bode ill for equities," BarclayHedge Chief Executive Sol Waksman said in a statement. Hedge Fund manager Daniel Loeb turned negative on Friday and came out blasting the Administration (which he once supported), a trend among hedge fund managers as the administration seeks to tax their fees as ordinary income (35%) rather than the 15% they now pay - a loophole that baffles pretty much everybody since the money is not long-term, nor is it a capital gain.

Last month, Steve Schwarzman likened the administration’s plan for taxes on private equity to “when Hitler invaded Poland in 1939.” Mr. Schwarzman later apologized for the “inappropriate analogy.” In addition to very angry hedge fund managers, we have people like INTC's Paul Otellini telling us how awful things are. Last week, at a dinner at the Aspen Forum of the Technology Policy Institute that “the next big thing will not be invented here. Jobs will not be created here.” Then, after his comments tanked the market, he went out and spent $7.7Bn for McAfee and $1.4Bn for a division of IFX - it's so much easier to get a good seat in a theater if you shout "FIRE" on the way in, isn't it?

We've been discussing why the Administration would let things get this bad but, as I noted above - THIS IS NOT SO BAD. Down 5% for the year is not exactly a reason to break open the piggy bank, even if they wanted to (and even if we had a piggy bank that didn't already have a $15Tn IOU in it). It's that $15Tn IOU we keep forgetting along with the hundreds of Billions in state debt. All this fear is allowing the Federal and State Governments to borrow money at record lows. In fact, the Bond Buyer 20 General Obligation Bond Index fell to 3.88% last week, the lowest level in 43 years. And, don't forget that you used to be able to get tax-free Municipal Bonds - not anymore...

That's down from 4.4% in June - an 11.8% drop in less than 3 months! That kind of drop helps States balance their budget and shaves $45Bn a year off what the Federal Government must pay in interest to service their own debts - why should they fight that? If people want to panic into bonds - let them I suppose. I pointed out in yesterday's post that the 10-year was also flirting with record lows but they have been lower - after WWII, when the government was also scrambling to refinance war debt and International uncertainty was driving money from all over the World into US Treasuries. This also keeps the dollar strong (money flowing into dollar-denominated assets) and THAT's where we run the danger of a Japan-like lost decade.

The Nikkei fell 3.5% this morning as government action failed to do anything to get the Yen off it's 15-year highs. Japan also has zero interest rates and has had it for years and 10-year Yen notes fetch just over 1% BUT PEOPLE BUY THEM. That keeps the Yen very strong and is a nightmare for exporters as TM, for example, prices a Camry in the US at $20,000, which they hope will be 1.8M Yen but the Yen falls to 85 and now Toyota only gets 1.7M Yen - possibly their entire profit wiped out by currency exchanges. Things have now gotten so bad in Japan that 1/3 of the manufacturers surveyed are considering moving production out of country and the PMI growth was the slowest in 14 months (but at least it's growing).

The Hang Seng lost 1% following the Nikkei south and the Shanghai was off half a point. India fell 0.34% and blew the 18,000 line at 17,971 despite putting up an impressive 8.8% growth in GDP, which is not something you hear discussed on CNBC, nor will you hear that auto sales in India rose 38% in July - because it doesn't fit in with the parade of bearish analysts they march on screen one after the other. Like China, India is talking about reigning in their economy - not stimulating it. China's GDP report comes out tonight and, so far, China has FAILED to stop their HUGE GROWTH. They have taken some pretty drastic measures too and, if they do manage to succeed in today's data - you can expect the bears to latch onto it like it's proof that the whole world is coming to an end by Friday.

Euope is no better and is trading down about 1% ahead of the US open as Euro-Zone Unemployment remains at 10% for the fifth straight month. French retail giant, Carrefour posted a profit the way all International corporations are doing these days - with growth in emerging markets offsetting slowness at home. This is my base case on the Global GDP (see link above) and it's very hard for me to get bearish when I still see reports like this.

I still think it's all BS. I'm still more in favor of buying off these levels than selling but I am getting VERY lonely over here and I have to face the fact that it may be Denial (back to the above chart) and that my Hope is coming too early in the cycle. Of course, that's why they call it the "Point of Maximum Financial Risk" at both the top and the bottom of our channels - fortune may favor the bold but only fools rush in where angels fear to tread.

Let's watch our levels and be careful out there!

CFTC and final rules for retail Forex trading

2010-08-30T22:53:00.001-04:00

Federal futures regulators finalized new rules for the retail foreign exchange market late Monday, but they backed away from their original proposal to place strict limits on the amount of borrowed funds retail foreign exchange investors can use.
The rules, posted after business hours on the Commodity Futures Trading Commission’s website, create a new regulatory regime for firms that deal in retail foreign exchange products by requiring them to register with regulators and abide by minimum net capital standards.
The original proposal had called for capping leverage at a strict 10-to-1 ratio, instead of the existing 100-to-1 for major currencies. That portion of the proposal drew a record number of comments as dealers, investors, and lawmakers all raised opposition amid fears it could kill the industry in the U.S.
As such, the CFTC said late Monday it had scrapped that part of the plan. Instead, the agency said it will allow the National Futures Association to impose its own leverage rules as long as they require investors to place a minimum security deposit of 2% on trades involving major currencies and 5% on the notional value of the trade for all other currencies. The National Futures Association is the self-regulatory organization for the industry. The CFTC said it will review the leverage requirements periodically to ensure they don’t need to be adjusted.
The retail foreign exchange market is a niche market that allows mom and pop investors to bet on price movements in foreign currencies by purchasing off-exchange contracts through a brokerage firm. The use of leverage allows them to greatly increase profits, but volatility in prices can also result in magnified losses.
The CFTC has sought to impose greater regulations on the industry amid concern about a growing number of fraud cases. Congress gave the agency expanded authority in 2008 to impose the rules that were announced Monday. Those include imposing a $20 million minimum net capital standard on foreign exchange dealers and greater disclosure rules to help benefit customers.
“The CFTC has worked to craft rules that will protect American investors, and at the same time provide for the operation of legitimate business activity,” CFTC Commissioner Bart Chilton said in a statement late Monday. “With these new rules, the agency is ensuring that people investing in forex are protected from fraud and abuse.”
The CFTC’s new rules haven’t yet been published in the Federal Register. They will take effect Oct. 18.

Mike K.
www.fxmadness.com

Positive Reversal Creates Buying Opportunities

2010-08-30T10:00:00.001-04:00

MARKET STAGES POSITIVE REVERSAL FRIDAY

Friday's action can be summed up in one picture:

Or maybe it should be "Houston We Have Lift Off"

But that should have come to no surprise as the one-minute chart of the S&P 500 told the story loud and clear -- DOUBLE BOTTOM. How many times have we talked about that change in trend pattern around here? How many times have we said the early indicator that the trend is about to change from down to up is the Double Bottom pattern? This is part of the reason why we use multiple time frames and frequency charts.

Notice how the markets instantly launched the moment it retested those lows?

And speaking of double bottoms, take a look at market leader BIDU in the same time frequency:

And on top of that, we see the same thing when looking at the Russell 2000:

The fact that you had the double bottom, positive divergence and many of the leaders kicking into gear Friday makes us want to continue to buy stocks that have formed bullish chart patterns such as the Pullback Off Highs pattern.

=========================================================
PULLBACK OFF HIGHS -- THE BEST PATTERN FOR BUYING STOCKS

So now that the market has changed its trend from down to up, it's time to buy stocks that have formed bullish patterns.

The classic bullish pattern is what we call the Pullback Off Highs pattern.

As you can clearly see this issue is locked in an uptrend. However within that uptrend you can also see a trend within the overall trend that are mini downtrends. Those mini downtrends are commonly referred to as Pullbacks Off High's or POH's for short. Everyday we scan for issues that are in clearly defined uptrends that are Pulling back Off Highs. Every week our paid newsletter service puts out a list of names that are showing this pattern for you to be aware of IN ADVANCE.

Last week, we featured SINA on our watch list.

As you can see, we have an orderly pullback to chart support at the blue line and towards the 50-day moving average. The full stohcastics are very oversold. This has all of the elements for a change in trend move from down to up. And pow! Friday this issue triggered a long side trade by breaking above the pink line.

To learn more, visit our blog site and sign up for our free newsletter to receive our free report -- "How To Outperform 90% Of Wall Street With Just $500 A Week."

Will BoJ ease policy?

2010-08-29T15:26:00.007-04:00

Last week in Forex trading ended with corrections to prevailing trends. High flying currencies, namely the Japanese Yen and the Swiss Franc, weakened considerably during last hours of trading. That was in response to the speech by Bernanke during the FED annual symposium in Jackson Hole, Wyoming. He outlined likely additional steps to be taken by the central bank in order to spur the economic recovery in the USA, watered down new quantitative easing.

Now it is time for the Bank of Japan. The BoJ is expected to hold an emergency meeting on Monday to ease monetary policy to counter the Yen’s strength. This anticipation was heightened by Governor Masaaki Shirakawa’s return to Tokyo from a trip to the United States earlier than projected. Speculations abound on what new steps might be taken, but most likely outcome is to expand a program for short term, low interest loans, even though such scheme is already in place and, so far, failed to produce desired results. Another option is to step up purchases of government bonds. And, of course, everybody is looking for signs of intervention, which, frankly, is not very likely to happen.

Whatever they do, or do not, currencies should be responsive to any news from Japan. If the meeting is held, as speculated, than the exact steps taken by policy makers will be scrutinized and assessed, followed by criticism of actions being to strong or enough. That will be reflected in Yen and its crosses, but predicting how the JPY will respond to an event which might or might not happen is, at best, too complicated to be seriously entertained. Even the Friday closing indicates uncertainty in markets.

The intermediate chart of USD-JPY shows a nice uptrend for most of Friday, followed by additional push after the Jackson Hole event. Normally, this would indicate a follow up after the weekend. However, the closing action puts that in question. We can see a shooting star forming right at 62% Fib retracement level of the last price swing, as well as 100 SMA, suggesting that the price has run into a strong technical resistance. This indicate that chances are high for the correction to have run its course and the USD-JPY ready to resume downtrend. All Yen crosses look virtually identical on this time frame. Whatever the outcome of the BoJ meeting, if it happens, it will have help market “decide” what it wants to do here. As far as immediate trading goes, it is probably wait and see, or exploit gaps. In the environment of heightened volatility, they have good chance to form, hopefully providing short term trading opportunities, lasting few hours.

And what about the Most watched Forex chart? The weekly graph of the USD-JPY looks very interesting. Very strong downtrend is unbroken, the slope is still steep, but… What happened on Friday gave the last weekly candle shape of a hammer, a strong reversal pattern. It was formed at new low, is very distinctive and is in conjunction with MACD divergence. Put together, technicals indicate a correction within the prevailing downtrend. How big? Probably to reach one of the retracement levels. Could be a good buying opportunity (longer term) for those who think that BoJ will intervene, or who are bullish for any other reason. However, one should expect a rough ride, even if the correction does happen.

The Canadian Dollar closed very strongly on Friday. The USD-CAD ended the week on a low of a day, hence making it a candidate for a trend exhaustion play. If the downtrend continues after opening, then a reversal pattern few hours into the day will likely be a buy signal. Details will have to be worked out once things start moving. There should be a lot of action this week, with many other crosses showing interesting price behavior and volatility increasing everywhere. More in next update.

Mike K.
http://www.fxmadness.com/

FED in (Jackson) Hole

2010-08-27T23:45:00.003-04:00

The FED held its annual monetary symposium in Jackson Hole, Wyoming today. That was the big event of the day, one that everybody waited for. Currencies, and most other financial markets, practically froze in hours leading to Bernankes’s speech at the meeting. Mr Chairman acknowledged that the economy is not doing what he had been predicting. At the same time he declared that FOMC “is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly.”

So, what is it that the FED will or can do to stimulate economy? They can further increase purchases of securities, mainly the US treasuries, in an attempt to keep long term interest rates loww. Another option is a reduction of the interest rate the Fed pays on banks’ excess reserves, supposedly encouraging (forcing) US banks to start lending. Currently, the central bank pays 0.25% on these deposits which would drop to 0.1% or even 0%.

Frankly, neither one of these steps seems like strong stimulant to the economy, but Mr. Bernake is a very convincing speaker and the markets responded positively. Currencies reversed their recent trends, for today at least, with both the Yen and the Swiss Franc falling. Apparently today nobody was interested in safe havens and “risk” was the name of the game. Before getting too enthusiastic, though, one should remember that we have had these phases of “Bernanke effect” before and they did not last…

Outside of the last few hours of trading, it has largely been a boring day. I stayed away from trading, why bother? Out of trades mentioned here during this week only the EUR-CHF long is still opened. It was taken using a daily chart so has s respectively longer time horizon. Above is the hourly chart of EUR-CHF, showing what happened since the position was initiated. Also, it shows a possible new buy opportunity forming there, much shorter term. A breakout above the 1.3140 high looks promising, if the upside continues, with a target of 90-100 pips. But this has to wait until next week. If the price action develops as I would like to see it, the trade would have to be taken in different account, to keep risks reasonable. Have a great weekend!

Mike K.
http://www.fxmadness.com/

Intervention rhetorics

2010-08-26T00:34:00.003-04:00

One day after the strong Yen move rumors abound on the possibility on intervention. Every half an hour or so, there is an update about what Noda or Kan said, or did not say, who called whom, why there was no meeting but a phone call, etc. It is taking on a shape of circus. More seriously, so far there has not been direct threat of intervention, even if every comment from Japanese officials is interpreted that the are “getting ready”. Perhaps, but so far nothing happened and who knows if anything will.

Some claim that that an intervention would not work. All it would accomplish is to provide speculators with even better levels to buy Yen again. This action could go on for months, requiring real commitment from BoJ. There are also opinions that the only way to weaken the JPY is to roll out another campaign of quantitative easing, which, with time would sour the Japanese currency for everybody. However, at this stage it is difficult to say if the Bank of Japan has enough tools for such an operation, never mind the stomach. For now everybody keeps guessing and trading goes on.

In the brief update yesterday I mentioned that the trade in NZD-JPY from Opening gaps in AUD post reached its target. All Japanese Yen pairs were sitting at or near supports and looked ready to break them. Some did it earlier than others and Kiwi-Yen was one of the last. Entry was at 59.65, with 90 pips objective. Price moved about 10 pips lower than that, and has been reversing since. The trade was good, worked as expected, which doesn’t always happen.

One of the Yen crosses that moved earlier was the beast, GBP-JPY. Here entry was at 131.90, targeting 130.30, or 160 pips. This pair fell even lower, making a low at 128.80, after this snapshot was taken. Since then all these pairs have been recovering, so right there are no plans to go short again. Charts must form bearish reversal patterns on either hourly or 4 H charts. Will see what happens on Thursday and decide the course of action.

Meanwhile, the EUR-CHF made an all time low, dipping under 1.3000. The daily candlestick for Wednesday turned out to be a doji, a possible reversal pattern. On top of this, the price and the MACD form a divergence. While the divergences to not mean an all out trend reversal, they increase a probability for a substantial price correction. I bought it at 1.3031, with a hard target of 1.3330, risking about 90 pips. We shall see what happens…

Mike K.
http://www.fxmadness.com/

Chocolate Lowers Heart Failure Risk for Women

2010-08-24T02:02:00.000-04:00

Chocolate has lots of benefits. It reportedly reduces wrinkles and aging according to chocolate maker, Barry Callebaut AG (BYCBF.PK), and it also helps lower blood pressure and reduce the possibility of strokes. It is even good for your liver. Chocolate has even been beneficial for Warren Buffett's Berkshire Hathaway (BRK-A) (BRK-B).

It seems like every month, another benefit turns up. Now it turns out that, according to a Swedish study of about 32,000 women, chocolate can reduce the risk of heart failure in women. There was a finding of a 32% lower heart failure risk for women who ate European chocolate. However, there is a caveat; researchers said that the chocolate should only be eaten in moderation.

Fortunately, there are several investment opportunities with a large exposure to chocolate. Here are a couple that may be worth taking a bite out of.

Hershey (HSY) was founded in 1894. It is the largest manufacturer of chocolate in North America and one of the largest chocolate and candy companies in the world. Hershey's Kisses were invented in 1901 and their chocolate chips were brought out in 1928. The stock has a P/E of 22, a forward PE of 17, with a tasty yield of 2.8%. It sports a PEG ratio of 2.39.

Rocky Mountain Chocolate Factory Inc. (RMCF) is a very low cap stock [and should therefore be considered very speculative], based in Durango, Colorado, which makes and markets caramels, creams, mints, and truffles. The company, which was founded in 1981, has over 300 franchise locations in 40 states, along with Canada and the United Arab Emirates. The P/E is 16, and the company pays a delicious yield of 4.1%.

If you want to see a list of all the publicly traded chocolate stocks, go to WallStreetNewsNetwork.com.

Author does not own any of the above.

By Stockerblog.com

Stocks Going Ex Dividend the Fifth Week of August

2010-08-24T02:00:00.000-04:00

Here is our latest update on the stock trading technique called 'Buying Dividends'. This is the process of buying stocks before the ex dividend date and selling the stock shortly after the ex date at about the same price, yet still being entitled to the dividend. This technique generally works only in bull markets. In flat or choppy markets, your have to be extremely careful.

In order to be entitled to the dividend, you have to buy the stock before the ex-dividend date, and you can't sell the stock until after the ex date. The actual dividend may not be paid for another few weeks. WallStreetNewsNetwork.com has compiled a downloadable and sortable Excel list of the stocks going ex dividend during the next week or two. The list contains many dividend paying companies, all with market caps over $500 million, and yields over 3%. Here are a few examples showing the stock symbol, the ex-dividend date and the yield.

The Empire District Electric Company (EDE) market cap: $794.8M ex div date: 8/30/2010 yield: 6.5%

First National Bank Alaska (FBAK) market cap: $634.2M ex div date: 8/30/2010 yield: 5.2%

Kellogg Company (K) market cap: $19.0B ex div date: 8/30/2010 yield: 3.2%

Lockheed Martin Corporation (LMT) market cap: $26.3B ex div date: 8/30/2010 yield: 3.5%

McDonald's Corporation (MCD) market cap: $76.7B ex div date: 8/30/2010 yield: 3.1%

The additional ex-dividend stocks can be found at wsnn.com. (If you have been to the website before, and the latest link doesn't show up, you may have to empty your cache.) If you like dividend stocks, you should check out the high yield utility stocks and the Monthly Dividend Stocks at WallStreetNewsNetwork.com or WSNN.com.

Dividend definitions:

Declaration date: the day that the company declares that there is going to be an upcoming dividend.

Ex-dividend date: the day on which if you buy the stock, you would not be entitled to that particular dividend; or the first day on which a shareholder can sell the shares and still be entitled to the dividend.

Record date: the day when you must be on the company's books as a shareholder to receive the dividend. The ex-dividend date is normally set for stocks two business days before the record date.

Payment date: the day on which the dividend payment is actually made, which can be as long at two months after the ex date.

Don't forget to reconfirm the ex-dividend date with the company before implementing this technique.

Author does not own any of the above.

By Stockerblog.com

Opening gaps in AUD

2010-08-23T22:34:00.004-04:00

The Australian Dollar proved to be the currency to watch in early trading on Monday, just as expected. The election was inconclusive and there was a shakedown in the Aussie. Interestingly enough, that was what the general media predicted - weak opening. All of AUD pairs gaped down, some of them substantially and the initial uncertainty caused very wide spreads. For example, very early on the GBP-AUD was quoted with 90 pips spread and AUD-USD had 40 pips. However, all this proved to be short lived, things returned to normal and the Aussie started to recover.

Obviously it was impossible to trade trend exhaustion, since there was no continuation from Friday, but the gaps also provided decent trading opportunities. It has been weeks since any playable gaps on the open formed, so it was good to see them today, considering that it was a backup scenario anyways. Last post covered the EUR-AUD and AUD-JPY, so I focused on these two pairs. Other crosses were tradable as well, just a matter of choice, really.

The EUR-AUD jumped about 110 pips on this platform and started to close it right away. Had to wait for minor minor highs and lows to start forming, in order to chose an entry. Also, it was important for the spreads to return to normal, otherwise it could have been too expensive. This trade brought 56 pips in a relatively easy manner. As always, it was not my intention to close the gaps completely. Extreme parts of gaps can not be trusted since they are often different from one platform to another. Just the large, middle chunk is of interest.

Opening gap in AUD-JPY was much smaller, but large enough to try and play it. Here the return was not as smooth, but eventually trade brought 26 pips. Over all, not bad, wish it could be done every week. On some occasions trading reversals at the gap close is advisable, but not today. Moves were too dependent of fundamentals- the election issue, so no attempt was made. Speaking of the Yen, it just keeps getting stronger, pushing at, or getting close to, important supports. In spite of all the talk about intervention, markets do not seem to care.

For example, on the 4H chart of NZD-JPY, the price just keeps gravitating lower and lower and seems to be destined to fall through 59.70. Good entry would be at 59.65 , with 90 pips objective. Many other Yen pairs have similar look right now, just a matter of picking a favorite. Or two, or three. Couple of notes. The USD-JPY, which the focal point for all Yen crosses now, keeps finding support at 85. Reactions at that level do not look like somebody (BoJ) is defending it, rather more as if large participant were playing the range (85-86). It will eventually give way, unless there is an intervention. On the subject of intervention – the BoJ have not threatened with one yet, nor issued a statement that Yen appreciation was “excessive”, which on previous occasions was a code word for intervention. So far all we had were hearsay and innuendos. Personally, I do not think they will do it at this level, but that is only a personal opinion. However, trading downside breakouts in Yen pairs requires keeping watch, rather than set and forget approach. To be on a safe side, one has be ready to pull a plug quickly, just in case…

Mike K.
http://www.fxmadness.com/

6 Reasons To Buy Stocks In The Short-Term

2010-08-23T12:37:00.001-04:00

When looking at the charts, we see a potential bull count, specifically this wave 2 morphing into a bigger wave 2.

What is interesting are a few tidbits that make us think a little deeper about us possibly being still in wave 2.

1. The S&P 500 chart off the March 2009 lows through present shows that of a recent uptrend line being created off the July lows. That trendline was dang near touched Friday as shown below.

2. Options expiration. Last weekend we talked about how typically they move the market the opposite direction that most people think and how we had the feeling that the four down days prior to going into options expiration week may not have been enough bearishness to turn the tide vs. the uptrend off the July lows. Sure enough it wasn’t and the market to those who were still emotionally attached to the uptrend outcome got hammered.

3. Friday the OTC Comp (remember it and the Russell 2000 LEAD the market) hit the 61.8% fib level earlier in the week and FAILED TO BUST TO THE DOWNSIDE. Said another way — the 61.8% fib level held and we got a reaction off of it. Even a fair amount of the names in play on our follow the leaders list for the most part took it all in stride. A fair amount of the recent go go names also just treaded water when all was said and done.

Notice we still have a gap that could still yet be filled just over the 50 day average?

Also notice since late May the OTC Comp hasn’t really gone anywhere? Ahhh but a fair amount of individual stocks have and that’s where our focus is going to be on next week.

Bottom line on this chart are two things we want to really key in on.

The lows pretty much need to hold (light blue line). But even if it doesn’t don’t despair as there are the makings of a falling bullish wedge (See SPX chart below.

We need to break the pink line to the upside if we are going to stage an abc to the upside pattern as shown above.

4. The Hindenburg Omen apparently triggered late last week Remember what we said about whenever the blogosphere and everyone starts talking about something it’s about time to do the opposite? Well, we are there.

5. The charts also show the makings of a potential B wave pullback in a bigger wave 2 abc up. Not to mention a backtest of the bigger trend channel from the April highs through the July lows as shown in blue in the chart below.

6. September is already being touted as a bad month historically and seeing as how we are approaching it from an overold condition a headfake to the upside would not be out of line due to the bearishness out there. It wouldn’t surprise us in the least. In fact it would be the perfect set up.

Mess with the bears some more by staging a C wave up to retest the 1131 level perhaps? That is just enough to suck in the bulls then as what is normally true with bear market rallies, short cover rallies and the like. That being they would suck in the little guy, make him feel all excited, get him all emotional and then?

BURY HIM.

Please keep in mind that we’re not construeing we are going to follow that path (don’t get attached to this outcome). We’re just saying it’s a great set up that makes perfect sense and besides the last week or so was very difficult due to blink your eyes you missed it for both the bulls and bears alike as the big moves as usual lately took place in the form of a gap. After the gaps you really got no decent follow through in either direction unless you were already there and they were news events generally speaking.

It really has that look and feel of being more of a market of stocks than it is a stockmarket with more stocks trading to the beat of their own drum if you will. And that is where our focus is going to be next week – individual stocks.

The bearish side of the equation is that we are in wave 3

What bothers us about it is that of this supposed wave 3 is that it really hasn’t thus far lived up to its name (“The Wonder To Behold”) We mean where are the fireworks, where’s the shock and awe?

We can see the wave 1 down on the big picture chart and we see us being in the wave 2 rising wedge break and us now being in the supposed dreaded wave 3. We see that and we all do, but where is the decisiveness. Where is the “with conviction” impulse move to the down side?

We’re not saying it’s not going to happen but it sure seems at this moment in time like a dud.

That all said we are going to use the short term SPX chart early next week to key our trades off of.

To learn more, visit our blog site and sign up for our free newsletter to receive our free report — “How To Outperform 90% Of Wall Street With Just $500 A Week.”

All eyes on Australian Dollar

2010-08-22T14:34:00.004-04:00

The biggest news developing over the weekend was the election in Australia. Neither of the candidates, the Prime Minister Julia Gillard, nor the opposition leader Tony Abbot, gained the majority in yesterday’s vote. This is the first time in 70 years that general election did not produce a majority government. The prospect of hung parliament is creating uncertainties about pending reforms and a possible shift toward less business friendly government. While mailed votes are being counted, a process which could take day, Australian bookmakers favor odds for Tony Abbot. One can place bets on the outcome.

Last week Australian Dollar lost some ground against most currencies. In a rather unanimous opinion, analysts and reporters blamed it on, at the time, the prospect of inconclusive election. The prevailing sentiment on Sunday is to see weakness in the Aussie at the open. Of course, this is all a guess, and not worth placing trades right at the start of trading. However, all this talk about slumping AUD last few days is a little exaggerated. After all, this currency made gains on Friday, rising during entire US session. Even though in most cases the Aussie did not close at high levels for the day, the last moves before the weekend were bullish.

Tuning out the election speculations, I’m looking for similar plays to the ones made last week after the open. If the Aussie bullish trends continue, as seen on hourly charts, reversal candlestick patterns will be signals to enter trades in opposite directions. This should happen 4-6 hours after trading starts. Details will be worked out when, or if, the set up emerges.

The Euro-Aussie pair looks even more interesting in this context, because it is approaching an important support level, increasing a probability of reaction around 1.4190 or so. And GBP-AUD cross is on the watch list as well. On the other hand, if the media is right and the Australian Dollars falls from the start, gaps could develop. These are always trading opportunities, even though not too frequent recently. Same for the Japanese Yen. One can expect more intervention innuendos and noise on the subject, leading to possible opening gaps.

Mike K.
http://www.fxmadness.com/

Who Rules America?

2010-08-22T11:45:00.000-04:00

Professor William Domhoff has updated his excellent study of wealth distribution in America and the results are just as sickening than they were in 2005!

We looked at the uneven distribution of incomes when I wrote "The Crisis of Middle-Class America" earlier this month and I'll re-post the main chart here as it's important for the readers to get a fix on where they really are on the economic food chain. When I talk about the need for more taxes, I'm generally (like our President) referring to the top 1%, the 1.4M people in this country who earn more than $393,000 a year - where 10% more tax ($40,000) may force them to skip a vacation vs. the alternative of taxing the bottom 90%, who earn $30,000 a year, which would force them to skip heat, food, clothing, etc.

The chart above EXCLUDES capital gains, which are over 70% of the top 0.01%’s incomes so it grossly understates the situation but it does give you a clearer idea of what was going on in the lower brackets leading up to the crisis. Go ahead, do the math - adding up the total wages of the bottom 90% against the total wages of the top 10% give you a real idea of what a "fair and just" system we’re participating in:

14,836 people earn $17,271,381 in average annual income ($256Bn), 133,525 earn $2,569,388 ($343Bn), 593,444 earn $760,680 ($451Bn), 741,805 earn $393,583 ($292Bn), 5,934,440 earn $188,513 ($1,119Bn) and 7,418,050 earn $117,688 ($873Bn) while the the wages of the bottom 90% are 133,524,900 people earning and average of just $30,173 ($4,029Bn).

So interesting fact number one is that the 13M people in the top 10% earn (not including capital gains, which make up the bulk of their true income) salaries of $3.3Tn while the other 133M schlubs earn $4Tn.

We are NOT going to be able to "fix" this country until we recognize that this is fundamentally unfair. Even for those of us in the top 10%, we need to recognize that those other 133M people are our customers, in the very least. If they have more money to spend, then we will, in theory, be able to make more money serving them. What's really gone wrong in this equation is that the top 0.01%, including our multi-national corportate citizens, who control 34.6% of our nation's wealth (very good chart series here) have already effectively pulled up anchor and are sailing away to warmer waters.

In Robert Frank's excellent book "Richistan," he points out that "The wealthy weren’t just getting wealthier — they were forming their own virtual country. They were wealthier than most nations, with the top 1% controlling $17 trillion in wealth. And they were increasingly building a self-contained world, with its own health-care system (concierge doctors), travel system (private jets, destination clubs) and language. (”Who’s your household manager?”) They had created their own breakaway republic — one I called Richistan." I gave my take on this crowd in 2007's "The Dooh Nibor Economy (that's "Robin Hood" backwards!)."

The top 1% and the multi-national corporations they control care as much about America as you do about Guam when you are selling them some knick-nacks from your own company. It may happen to be an important market for them but it's a declining one and they have, for the most part, already decided to just squeeze it dry while it lasts while they put their real efforts into China, India - wherever the next wave of growth may take them. Meanwhile, their MSM PR flacks whip as many Americans as possible into a xenophobic frenzy because they don't want YOU seeking opportunity in the growing global markets - that's THEIR territory. Better you should stay here and fight over the scraps that are left.

Here are some of the more salient of Prof. Domhoff's charts to give us a quick picture of where we are in America today although it should be noted that things have gotten significantly worse for the bottom 99% in the past few years so the data points are lagging, but staggering nonetheless:

Share of capital income flowing to household categories

	Top -1%	Top 5%	Top 10%	Bottom 80%
1979	37.8%	57.9%	66.7%	23.1%
1981	35.8%	55.4%	64.6%	24.4%
1983	37.6%	55.2%	63.7%	25.1%
1985	39.7%	56.9%	64.9%	24.9%
1987	36.7%	55.3%	64.0%	25.6%
1989	39.1%	57.4%	66.0%	23.5%
1991	38.3%	56.2%	64.7%	23.9%
1993	42.2%	60.5%	69.2%	20.7%
1995	43.2%	61.5%	70.1%	19.6%
1997	45.7%	64.1%	72.6%	17.5%
1999	47.8%	65.7%	73.8%	17.0%
2001	51.8%	67.8%	74.8%	16.0%
2003	57.5%	73.2%	79.4%	12.6%
Adapted from Shapiro & Friedman (2006).

Table 2: Wealth distribution by type of asset, 2007

	Investment Assets
	Top 1 percent	Next 9 percent	Bottom 90 percent
Business equity	62.4%	30.9%	6.7%
Financial securities	60.6%	37.9%	1.5%
Trusts	38.9%	40.5%	20.6%
Stocks and mutual funds	38.3%	42.9%	18.8%
Non-home real estate	28.3%	48.6%	23.1%
TOTAL investment assets	49.7%	38.1%	12.2%

	Housing, Liquid Assets, Pension Assets, and Debt
	Top 1 percent	Next 9 percent	Bottom 90 percent
Deposits	20.2%	37.5%	42.3%
Pension accounts	14.4%	44.8%	40.8%
Life insurance	22.0%	32.9%	45.1%
Principal residence	9.4%	29.2%	61.5%
TOTAL other assets	12.0%	33.8%	54.2%
Debt	5.4%	21.3%	73.4%

Our friends in the top 10% already have 93.3% of the business equity and own 98.5% of all Financial Securities (in case you ever wonder why "Main Street" doesn't give a damn about "Wall Street") but they only have 79.4% of the trusts so they love to use "Death Tax" to appeal to the little people who do sometimes get an inheritance. Due to 401Ks, the poor do own 18.8% of the stocks although that number has been dropping all year as they flee the markets and the wealthy already own 87.8% of all non-residential real estate so nothing left to steal there.

What can a rich man do to increase his pile of cash? Well the bottom 90% still have 42.3% of all the cash on deposit so not paying them interest is a good way to start. They also have 40.8% of the money in Pension Accounts because, as the top 1% know, pensions are for suckers. The bottom 90% also own 61.5% of the nation's residential wealth and that is being taken away from them as quickly as possible with 5M foreclosures already in progress and another 5M homes 90 days or further behind on their mortgages with the HAMP program helping a grand total of 37,000 of them last month - what a joke!

Another joke is the one they like to tell about income mobility. In a recent OECD report, USA came in 3rd from the bottom in lack of opportunity for the bottom 99% to change their stars. In "Understanding Mobility in America," it is pointed out that Children from low-income families have only a 1 percent chance of reaching the top 5 percent of the income distribution while Children born to the middle quintile of parental family income ($42,000 to $54,300) had about the same chance of ending up in a lower quintile than their parents (39.5 percent) as they did of moving to a higher quintile (36.5 percent). Their chances of attaining the top five percentiles of the income distribution were just 1.8 percent.

The "middle class" of this country plays a game where their children have a 50/50 chance of winning or losing (weighted towards losing, actually) an their children have barely a better chance of cracking the top 5% ($188,000 income) than the people all the way at the bottom - effectively the 1 in 100 random chance of "winning" a better lifestyle. For the middle class, an increase in income volatility has led to an increase in the frequency of large negative income shocks, which may be expected to translate to an increase in financial distress.

Hard work no longer gets you ahead either: Households whose adult members all worked more than 40 hours per week for two years in a row were more upwardly mobile in 1990-91 and 1997-98 than households who worked fewer hours. Yet this was not true in 2003-04, suggesting that people who work long hours on a consistent basis no longer appear to be able to generate much upward mobility for their families.

I know not many people reading this are trying to make ends meet on the average salary of the bottom 90% ($30,000 - keep in mind the chart on the left includes the top 10% in calculating averages, which is ridiculous when the top 10% earn 10x more than the bottom 90% per person. It also does not include mortgages and rents.) if you were, it's doubtful you would have either the money to worry about investing or the time to worry about any economy outside your own household. One of our Members commented that one of the problems with the system is that families have fallen apart and that people should take personal responsibility for their situation, to which my response was:

You are right that family has fallen apart but of course they are going to fall apart when the bottom 90% of FAMILIES make $30,000 a year. Do you think you would have some stress in your life if you were trying to live on $30,000 a year? Do you think your kids would be perfect angels on the $10 a week allowance ($520 a year x 2?) that you would be able to shell out or do you think they might be tempted to make money illegally that may ultimately lead them into trouble. Or would they take on legitimate jobs that takes time away from their schoolwork and healthy socialization? No vacations, no travel, no college savings, not able to buy all the cool stuff they advertise on TV because that’s a life you can’t possibly afford. Retirement is a joke and if you get seriously ill, the deductable alone could wipe out your life savings. That is reality for 133M wage earners in this country and the 3.2 people in their average families.

Income inequality IS a problem. It can destroy the cohesiveness of a society when it surpasses certain limits. People lose their self-esteem when they see that they are relatively worse off (even though not necessarily poor), especially when their position in society isn’t completely their own fault, which is often the case. People’s income, even in supposedly meritocratic societies such as the U.S. and the U.K., depends heavily on their family and social environment, and not only on their own achievements. Income inequality therefore becomes a problem of justice, social justice. And it can also become a problem for democracy, in which case it becomes a human rights issue. assuming one believes democracy is a human right, of course - or is that just all talk when it's convenient? On top of that, people tend to be healthier and to live longer in more egalitarian societies but, of course, those gains come from improving the lot of the bottom 90% to bring up the average so why should rich old bastards here give a crap about that?

It may be a surprise to many readers that a Tulane University study found that: "increased income (or wealth) generally does not increase … happiness significantly, and to the extent that it does, relative income plays a greater role than absolute income. In light of this … redistribution, via a progressive income tax, will increase people’s utility (happiness) by improving their relative incomes." Until a generation ago, many Americans and their representatives argued vehemently that the wealthy ought to pay more in taxes, but that position has drastically declined in popularity.

In his book, The Great Tax Wars, Steve Weisman sets the debate in the context of the battle between those who invoke justice—progressive taxes create equity and hence justice—and those who invoke virtue—the belief that hard work should be rewarded and taxing higher income at an elevated level creates a disincentive to the hard work we should promote.

Leaders of a century ago invoked justice in remarkable language that is unimaginable today. President Woodrow Wilson called paying taxes "a glorious privilege." Supreme Court Justice Oliver Wendell Holmes Jr. observed that "taxes are what we pay for civilized society." In 1942, President Franklin Roosevelt said, "In this time of grave national danger, when all excess income should go to win the war; no American citizen ought to have a net income, after he has paid his taxes, of more than $25,000." That $25,000 is the equivalent of $323,208 in today's dollars. Can you conceive of a modern president suggesting that no American should earn more than $323,000 after taxes? (President George W. Bush went to war twice without once calling for such a common sacrifice to pay for it.) And President Harry Truman in 1948 vetoed a broad-based tax cut, even in the face of an expected and eventual congressional override, and then asked for a tax increase following his upset victory.

From "Tax Fraud" by Eliot Spitzer: But President Ronald Reagan transformed our conversation about government and turned taxes into the enemy of progress. It is commonly thought that President George H.W. Bush's violation of his "read my lips" pledge cost him re-election and President Bill Clinton's 1993 tax increases cost him control of Congress.

Central to the intellectual debate about marginal tax rates has been the question of whether higher rates discourage people from working. President Reagan is famously reported to have observed that, as an actor, once he hit the top marginal rate—then 91 percent—he stopped making movies for the rest of the year. The result of sky-high marginal rates, this anecdote was supposed to prove, was declining productivity and economic growth.

Is this true? Let's look at a graph of the nominal top marginal tax rate in any given year and GDP growth in that year.

A caveat—obvious but critical—is in order. Simultaneity does not equal causation. Annual growth rates are a consequence of many factors, macro and micro, and the isolated impact of marginal tax rates on growth is hard, if not impossible, to discern from these numbers alone.

That said, it's obvious that there is no correlation between higher marginal tax rates and slowing economic activity. During the period 1951-63, when marginal rates were at their peak—91 percent or 92 percent—the American economy boomed, growing at an average annual rate of 3.71 percent. The fact that the marginal rates were what would today be viewed as essentially confiscatory did not cause economic cataclysm—just the opposite. And during the past seven years, during which we reduced the top marginal rate to 35 percent, average growth was a more meager 1.71 percent.

More sophisticated efforts to analyze this relationship also produce decidedly murky results. An excellent review of this in the Yale Law Journal, "Why Tax the Rich? Efficiency, Equity, and Progressive Taxation," concludes that there is scant, if any, legitimate academic support for the proposition that moderate, as opposed to dramatic, increases in marginal rates have any impact on the willingness of the wealthy to participate in the economy.

So where does this leave us? Probably with Weisman's conclusion—that the debate between justice and virtue will continue for years to come. But this debate may be little more than a Rorschach test—an inkblot into which we read our underlying values about income distribution and social welfare. Those who see taxes as the bane of progress will still claim that higher marginal rates are the enemy of economic growth. Those who favor greater progressivity will say there is no evidence of such a claim. They will conclude—and they will be right—that the wealthier can afford to pay more, with no harm to the nation's economic growth.

Clearly there is no logic in a democracy for the bottom 90% to vote to maintain the status quo. Yet the chance of a Congressman being voted out of office is only about 20%, despite all the calls to "throw the bums out." Perhaps generations of replacing the old bums with new bums has made the voting public apathetic and that is certainly the way to the rulers of America want it to be because the only thing the bottom 90% have going for them is numbers. The Conservatives have done a great job of mixing religious divisions into politics to keep the people from seeing their choices as part of a class struggle rather than a moral/political division.

During 2003, over 450 economists, including 10 Nobel laureates, argued against the Bush II tax cuts. Their letter stated: "Passing these tax cuts will worsen the long-term budget outlook, adding to the nation’s projected chronic deficits. This fiscal deterioration will reduce the capacity of the government to finance Social Security and Medicare benefits as well as investments in schools, health, infrastructure, and basic research. Moreover, the proposed tax cuts will generate further inequalities in after-tax income."

In November 2009, The Economist estimated the additional federal tax revenue generated from eliminating certain tax deductions, for the 2013-2014 period. These included: employer-provided health insurance ($215 billion), mortgage interest ($147B), state & local taxes ($65B), capital gains on homes ($60B), property taxes ($33B) and municipal bond interest ($37B). These total $552 billion. A fuel tax of $0.50 cents per gallon would raise another $62 billion. This would reduce the projected deficit at that time by half while The CBO estimates the Bush tax cuts cost the Treasury about $1.8 trillion over 10 years if extended.

Reduce our deficit by $552Bn a year or increase it by $1.8Tn more over the next 10. It amazes me that we have to have a "debate" about this issue but there's your answer to who rules America - whoever has the gold is making all the rules...

Trades in currency crosses.

2010-08-20T23:48:00.005-04:00

Interesting couple of days in financial markets, including currencies. After the early part of the week, when things were, well, boring, markets sprang to life on Thursday. The catalyst this time was the Initial Jobless Claims, which is a little strange. While this report always creates a lot fuss and lip service, it rarely creates the kind of response like yesterday. After all, the NFP is normally more important, probably because of its monthly schedule, as opposed to weekly frequency of initial claims. But this illustrates how important the employment data has become, a true driver of the markets.

The numbers of initial claims were above forecasts, at 500K, a level last reached in November 2009. Later on discussions erupted whether this data is not skewed by the laid off census workers or people whose benefits had previously expired, but now were able to refile. However, by this time the damage was done. Once again money flowed into the “safe havens” at the expense of the Euro and the commodity currencies. The real test of these of these numbers will come at the next NFP report, which perhaps will clarify things a bit. Perhaps, because unfortunately, with frequent revisions of older data it is hard to trust these figures as they are released.

My last post discussed possible trades in GBP-AUD and the EUR-CAD. The Pound-Aussie trade was updated in the brief post on Tuesday. It was essentially a straddle set up, looking for a breakout either way out of range on 4H chart of this pair. In a slightly surprising move, the price plummeted on the strength of AUD.

Just like mentioned in the brief, the trade was closed late on Tuesday, once things settled down for the day. My objective was not reached and I simply decided to pocket the gains, which came to 53 pips. Since then the GBP-AUD rebounded sharply, coming close to the upper range of the congestion zone, or 1.75 area, before settling lower for the weekend. The buy order for an upside breakout is still valid.

Another trade from the same post did not materialize. The EUR-CAD touched the previous high, but failed to break it and trigger the buy order. What followed was a steep drop. Even though I was still looking for weakness in the Loonie, no action was taken here when it eventually came. Did not like the entries on this chart and let it go, focusing on CAD-JPY instead.

This trade was taken using hourly chart but the objective is better visible on the intermediate term graph. Once the trade was initiated on the break through a minor low (entry at 82.45), target was just above the low of 81.06, or 81.15 to precise. Price indeed came to 81.15, but on the bid, thus filling my take profit, so the trade was closed when the CAD-JPY started to rebound, at 81.37. Some bad luck, but 108 pips in profit is respectable, too. Have a great weekend!

Mike K.
www.fxmadness.com

TGIF - Stop the Week, We Want to Get Off!

2010-08-20T09:33:00.000-04:00

This week cannot end soon enough for the bulls.

While it's no shocker that we are finishing the week where we started and, in fact, finishing the options expiration period where we started last month (July 16th), it's still very disappointing that we are making no progress. This weekend I asked if it was "Time for a New, New Deal?" I went to DC over the weekend and I'll write about that this weekend but let's just say I'm not seeing the political will to actually do something major to put Americans back to work and, as I said last Friday, when I said "Hoping the Weekend Brings Perspective":

Weekend stance - off this disappointing two-day run I’d say as neutral as possible over the weekend. I do think we need a good blow-off bottom now because we blew our chance to turn it around on volume yesterday.

Trading Range - I was counting on QE2 AND a stimulus announcement by next week. After the weekend we may have neither so it’s really going to be all about watching our levels in absence of any fundamental market forces. Monday we have the NY Fed and NAHB Housing Index. Tuesday is Housing Starts, Building Permits and a PPI that will also be BTE along with Industrial Prodcution (probable disappointment) and Cap Utilization (dragged down by refiners). Thursday is Leading Economic Indicators and the Philly Fed and that’s it for the week so, once we get past housing, the newspaper is more likely to move the markets than the data points.

We got so-so Leading Indicators yesterday and a TERRIBLE Philly Fed, leading me to send out a 10:03 Alert to Members saying:

Whoa! Philly Fed is disaster! -7.7. Leading indicators are up 0.1%, which is in-line but Philly was expected at +8 so this is TERRIBLE! We should test yesterday’s lows at least on that.

DIA $103 puts give good bang for the buck at .74 to stop the bleeding - just keep in mind thay have a ton of premium and need to be taken off quickly when momentum stops

While that play worked out very nicely, the bleeding I referred to was my 9:43 Alert to Members where I reiterated my "small gambles" on SSO, QLD, DDM and USO - but I did say at the time: "Don’t forget we get Leading Indicators and Philly Fed at 10 and that can save us or kill us so be careful!" That's the problem with this market, danger around every corner for both bulls and bears! It doesn't do us any good to get attached to any position, as I pointed out years ago in "Bond Investing, James Bond That Is."

We are almost certainly going to be breaking 3 of 5 of our mid-range levels this morning, which is our official signal to flip bearish until we take 3 of 5 back out of: Dow 10,200, S&P 1,070, Nas 2,200, NYSE 6,800, and Russell 635. It's going to be a tricky call into the weekend but I do think we can lean a little bearish if we're under so that means adding another round of DIA Dec $104 puts to our Mattress plays and even considering additional disaster hedges (our last set are doing quite nicely!) in case we drop back to the late June lows, which are the 5% lines below our mid-range at Dow 9,690, S&P 1,016, Nas 2,090, NYSE 6,460, and Russell 603.

The Russell will give us a clue because they are already down at 610 and, if they break below our 5% line, then the others are very likely to follow down to at least the 2.5% line. Even as I write this, I'm not ready to go there just yet. Yesterday we looked at bullish plays on VLO, BWA, INTC, HOV, FAS, JNK and SQQQ (shorting it, which is bullish) because that's what we do at the bottom of a range. It may not be THE bottom, but, just in case it is, it's nice to have some upside for a bounce. We had a failed stick-save into the close and we knew that put us in for a rough ride this morning. I had already commented to Members at 3:04: "I would say that HOPE is the only thing left for the bulls right now. We did not get what we needed to move the markets higher."

Keep in mind this all seems like a lot of drama but NONE of this affects our long-term trading. Our long-term trade ideas are fairly conservative and our goal is to be about 35% invested in long-term trades that have a 20% downside cushion (Dow 8,150, S&P 850) with 65% cash so yes, we are very bullish off of those levels. Unfortunately, those long-term plays, that can make 20% or better returns, are like watching paint dry so we amuse ourselves trying to find short-term trade ideas in this roller-coaster market. Some of our Members ONLY day-trade, some are only long-term, some play both and that's all fine but when I start to see too many people worrying too much about the day to day gyrations of the market - I think it's a good time to point them back to our Buy List and our Dow Plays, which haven't been touched since early July and are doing just fine. Just because the market is stressed, doesn't mean you have to be as well...

Meanwhile, I still just can't get behind the the bears. We have a commodity sell-off this week and I love commodity sell-offs because they put money back in the pockets of the bottom 99% - who REALLY need it. Gas was hitting $3 last month and now it's heading back to $2.50, which saves people $8 when they fill up the tank. It doesn't seem like much to the investing class, who spend $8 on a latte while waiting for their tank to be filled but, to the other 270M people in America, it's a lot of money (assuming 2 cars per 100M households that fill up once a week each), $6.4Bn back in the pockets of consumers each month - so I LOVE oil sell-offs!

I don't know why people thought the BOJ would put up with the Yen falling below 85 to the Dollar. That was never going to happen and any strengthening of the dollar is very bad for oil. We had also expected the NYMEX crew to gnaw their own legs off to get out of the September contracts (and don't even get me started on that scam) and oil is still selling off this morning, below $74 but this should be the end of it and I still like USO to recover next month - even if it is another fake rally based on Iran or Pirates or Rent-A-Rebel because it's sure not going to be demand, which was destroyed long ago and is not likely to come back with 25% of the WORLD population unemployed or under-employed.

Petroleum inventories rose to 1.13Bn barrels in the US last week, the highest level since the Energy Department began keeping combined weekly data in January 1990, according to a report Aug 18th. Oil has fallen 9.9 percent since reaching a three-month high on Aug 3rd. Demand for fuel products has declined 6 percent to 19.7 million barrels a day since the recession began in December 2007.

Supplies may rise further as U.S. refineries shut for regular maintenance and the vacation-travel season ends, sapping demand for gasoline and jet fuel. “Supply is rising faster than demand is recovering,” said Tim Evans, an analyst at Citi Futures Perspective in New York. “I don’t expect the bottom to just drop out here, but I think we will be asking the question: do we need OPEC to cut back?” That's right Tim, God forbid we let oil find it's real price and give the rest of humanity a break, right?

David Ristau's Oxen Group began a series on Alternative Fuel Investing that's certainly fuel for thought, especially if we do get some hurricane activity or something else that keeps oil over $70 despite the lack of demand because this will really be the last straw for global governments, who can't afford to send larger and larger percentages of their people's disposable income to OPEC, who have done very little to endear themselves to the rest of the World since... ever.

The Yen tested the 85 line again last night and the Nikkei did not like that one bit as they fell 2% to 9,179 and that tugged the invisible 1,000-point band that connects the Nikkei to the Dow this morning. The BOJ, of course, stepped in this morning and the Yen is dropping like a rock so we'll see how long they can keep that up. We are ready for a dollar break-out but we need some positive news before that happens, one would think! The Hang Seng dropped half a point and the Shanghai took a big, 1.7% hit, dropping 45 points to 2,642 but that's not really a worrying level and they were just catching up to yesterday's late Hang Seng drop, which I pointed out in the morning post. India held flat (down 0.3%) at 18,401.

Europe is all over the place with the FTSE down 0.4% and failing their 5,200 watch level, the Dax is down 0.75% and barely over their critical 6,000 line and the CAC is down 1.14% to test 3,500 so a HUGE pass or fail day for the markets - wish us luck - because we're going to need it to avoid a downturn!

Have a great weekend,

- Phil

Fake See-Through Skirts: What Does It Mean for the Stock Market?

2010-08-18T01:00:00.000-04:00

Many investors are familiar with the skirt length stock market theory or indicator, where the current fashion for length of skirts determines which way the markets will go. The flappers during the roaring 20's had very short dresses, and the stock market was roaring. During the depression of the 1930's, the length of skirts and dresses dropped. During the 1960's, the mini-skirt came out and the stock market took off. Then floor length dresses came into vogue, and stocks tanked. And so on.

But now we have a unique fashion trend. Supposedly in Japan, skirts are being worn with paintings on the back which make it appear that the skirts are transparent. (PG-13 rated)

If you think this kind of clothing might look good on your wife or girlfriend (or yourself, if you are a woman), you can actually buy this type of clothing from an apparel company in Germany, Alba D'Urbano Couture. (R rated)

However, the important issue is what this means for the stock market. If this type of apparel catches on in the United States, then analyzing the stock market from the skirt length theory is somewhat difficult.

This would be my take. A stock market with lots of fake-outs, appealing opportunities which don't work out, investments that turn into bummers, and no way to analyze figures as you can't tell what's real or not.

By Stockerblog.com

Puget Sound Energy Distributes Rotten Egg Smell by Mail

2010-08-18T00:58:00.000-04:00

Puget Sound Energy, which used to trade on the New York Stock Exchange, and is now privately held, distributes electricity to over a million customers and natural gas to over 700,000 customers. But this month, the company will be distributing something else, a scartch-and-sniff flyer that smells like rotten eggs. The company did this to let customers know what a gas leak aroma smells like.

Although you can't invest in this rotten eggs smell distributor, there are plenty of other natural gas utilities that are available for your portfolio, over 20 with yields above 3%. For example, Nicor Inc. (GAS), with the unforgettable stock ticker symbol, pays a dividend of 4.3% and sports a forward PE ration of 14.6. The company distributes natural gas to over 2 million customers in Illinois.

Piedmont Natural Gas Co. Inc. (PNY), a North Carolina nat gas distributor with almost a million customers, pays a 4.1% yield and trades at 16 times forward earnings. The company was upgrades by Robert W. Baird Company in July.

For a list of over 20 high yield natural gas and propane utilities, you should check out the list at WallStreetNewsNetwork.com.

Author does not own any of the above.

By Stockerblog.com

Warren Buffett on Chocolate and Candy

2010-08-18T00:56:00.000-04:00

The following video of Berkshire Hathaway's (BRK-A) Warren Buffett, gives great insight into how he thinks before making an investment, how he created value added for the company, and increased sales substantially. No wonder why he is a billionaire and top trader and investor.

In the video, he discusses his purchase of See's Candies, which operates over 200 retail shops in the western United States. You will also see Buffett's sense of humor. If you have never had See's Candies, you need to try some at your first opportunity. You will love the peanut brittle, my favorite.

If you think there are investment opportunities with other candy companies, here are a couple worth looking at.

Hershey (HSY), founded in 1894, is the largest manufacturer of chocolate in North America and one of the largest chocolate and candy companies in the world. Hershey's Kisses were invented in 1901 and their chocolate chips were introduced in 1928. The stock has a P/E of 22, a forward PE of 17, with a flavorful yield of 2.8%. It sports a PEG ratio of 2.39.

Tootsie Roll Industries Inc. (TR) is known for its ever famous Tootsie Rolls. It also produces Apple Pops, Charms, Sugar Daddy, Sugar Babies, and Tootsie Roll Pops. The stock has a P/E and forward PE of 26 and sports a yield of 1.3%.

If you want to see a list of all the publicly traded candy and chocolate stocks, go to WallStreetNewsNetwork.com.

Author does not own any of the above.

By Stockerblog.com

What Two Stocks Do Warren Buffett and George Soros Agree On?

2010-08-18T00:55:00.000-04:00

The two top traders/investors are Berkshire Hathaway's (BRK-A) (BRK-B) Warren Buffett and George Soros. Both of these billionaires have been investing in stocks for years, with very successful track records. If you look at the list of stocks that each own, you will find only two that they agree on.

First, there is the ever popular Wal-Mart Stores Inc. (WMT), which will be announcing earnings next week on August 17. The stock sports a forward price to earnings ratio of 11.6 and a reasonable price earnings growth ratio of 1.23. The stock even pays a 2.3% dividend.

Both of these traders also like the cable company, Comcast Corporation (CMCSA), which recently reported a 6% increase in revenues but an 8.6% drop in earnings. The stock carries a forward PE of 12.5 and a very decent PEG ratio of 1.19. The company recently raised its dividend to now generate a 2% yield.

For a list of stocks that Warren Buffett owns, along with other interesting stock lists, go to WallStreetNewsNetwork.com.

Author does not own any of the above.

By Stockerblog.com

The Charts Forecasted A Bounce

2010-08-17T14:56:00.001-04:00

In our free weekend newsletter, we said:

“This week is options expiration week and normally the market moves in the opposite direction that most people think or shall we say are emotionally invested in.

That all said when we look at the daily chart of the S&P 500 we see from a technical indicator standpoint that of us being very close to a bounce (full stohcastics wise) and we need to be aware of that.”

And that’s exactly what is transpiring! Check out the chart below.

The real action though is the OTC Comp., we talked about the 61.8% fib level
and we talked about how the OTC leads. Here’s the chart from the 13th of Aug.

Here is the current chart

In addition, we pointed out that we had a watch list full of stocks that were building out a lot of Pullbacks Off Highs (POH) longside patterns and that is telling us something. It tells us that soon to expect a move to the upside, at least in those names anyway. This is how the market talks to us.

Here’s how a few of them have fared since this weekend:

Triggered a long side trade Tuesday morning by breaking above the pink line at 16.50!

Wow! The September 50 calls were featured in our options watch list at 9.80. In just two days they are at 14.40!

With each of these, they have formed long side pullback off highs patterns as shown by the pink line. A break above the pink line triggers a long side trade. And that’s what each has done.

And they’ve done it in tandem with the market.

To learn more, visit our blog site and sign up for our free newsletter to receive our free report — “How To Outperform 90% Of Wall Street With Just $500 A Week.”

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