How To Spot Big Trends?

Every trader and investor I know would love to buy at the bottom and sell at the top. The reality is that this is not a winning solution, nor is it possible to do this on a consistent basis.

What we look for at MarketClub is to catch the sweet spot of the trend. The sweet spot is the 70% to 80% that's in the middle of a trend.

I've been in this business a long time and know enough people in the industry to know that nobody buys the bottom and sells at the top. If they tell you that's what they do on a consistent basis, run a country mile because they are exaggerating their capabilities.

In this short video, we look at crude oil and how you can spot the big trends using MarketClub's "Trade Triangle" technology. I think you'll find the video informative, educational, and it will give you an insight into how we look at the markets.

The video is free to watch and there are no registration requirements. I hope you enjoy the video and make a comment on our blog about how you feel about the crude oil market.

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

15 thoughts on “How To Spot Big Trends?

  1. A weak dollars means higher commodities prices and inflationary pressure and hence higher interest rates. And it pumps up the US stock market which is already an impossible bubble with a P/E ratio of about 30 and a ridiculous yield of around 2%. So; this mess is clearly heading for a big correction. Timing it exactly is very difficult since markets are heavily controlled and manipulated and to a great extent state run. And of course your dog has been a way more reliable economic source than Bernanke for the past years.

  2. Hi Adam,

    I don't think we'll be testing the March lows anytime soon - ie. within the next 3 months. I think we'll have down markets from here until the first or second week of March and then a rally until the end of May before we'll see a correction at that point for June and July.

    Going down to the March lows would mean a double dip recession and given the good news that has been coming out recently like better than expected positive GDP, lower employment, good manufacturing numbers, plus great earnings on both top and bottom numbers for over 70% of the companies thus far that have reported, doesn't lead me to believe that we'll see anything close to the March 2009 lows when markets were severely oversold at that point. If we do revisit the March lows, there would need to be a pretty severe catalyst to make that happen (like the U.S. being downgraded or going bankrupt, Greece and other Euro countries defaulting, etc.) and within the current economic environment for the foreseeable future, I just don't see that happening. "Maybe" in 2011 or 2012 we could see a retest of the March 2009 lows if for example, the U.S's debt problems become so severe that everyone starts to panic again. But, for 2010, I don't think we'll be retesting the lows. I can see us being in a trading range for the entire year with corrections here and there during the regular periods when they tend to occur like in June/ July, September, October, and a bit in December.

    Just how I see things - anyone else have any other comments, please feel free!

    Westerngal

  3. Westerngal,

    It looks like your premise was correct. Bernanke just confirmed that he is not raising interest rates any time soon.

    I also think we will be stuck in a broad trading range for the next three months. I would not be surprised to see the lower end of this range tested. And that would be the lows seen in March of '09.

    All the best,
    Adam

  4. I don't think interest rates in the U.S. will be hiked until the end of 2010 or in Q1 of 2011. Bernanke has made it clear that he won't hike interest rates until the employment rate is under control which means at around 8% - and no one, including the Fed, expects that the rate will be in the 8's by the end of this year. He's also made it clear that he cares more about the employment rate than he does the threat of inflation. And the only reason to hike rates is in order to keep inflation in check - yet, currently, there is no inflation, so rates don't "need" to be hiked anytime soon!

    So, interest rates should stay as they are for "an extended period of time" (Bernanke's words). Plus, it's within the best interests of the U.S. to have a weak dollar - not a strong one - in order to be competitive in the global marketplace in order to reduce their trade deficit - so, the dollar should resume its downtrend - most likely around April when it tends to go down anyway starting at around that time of year, every year! This means, markets should be in a trading range at least until end of Q2 - so, small corrections here and there (like 7-8%) but nothing major.

    Anyone have any comments about this?? Please feel free!

  5. In the final analysis it all hinges around the dollar and its trade. It is the world's reserve currency and all major commodities trade in dollars. And the profits of US multinationals (whose fortunes control the movements of the entire US stock market) are heavily dependent upon the rate of the dollar. So; the dollar is an economic weapon to be wielded and also defended. Once oil producers show signs of wanting to trade their commodity in some other currency you will soon see impossible terror hollywoodshows and consequent desperate war lies from psychopathic serial liars.

    It's an economic war and those terror hollywoodshows and middle east wars were mainly meant to secure oil and deny China it. But China has grown much more quickly than those psychos could ever imagine and now they have been forced to compromise. At least for the moment. Hence the current rise of the dollar and the consequent depression of the price of commodities. Of course all along the way China is aggressively buying up world resources with her massive dollar assets.

  6. The US stock market is amazingly overvalued, having on the whole a P/E ratio of about 30 and a measly yield of around 2%. This is reflected both in the very broad measure of the Wilshire 5000 and the DJIA. So; this mess is impossibly overbought and doomed to take big corrections. In fact it was in meltdown about a year ago but was then pumped up again in a wild bear market rally which has recently been showing signs of collapsing.

    There was a huge bull run in stocks from 1982 to 2000 and the consequent bear cycle should last at least until 2015 with worsening crashes although it's difficult to exactly time this. In any case, the FED has clearly decided to prick the bear market stock bubble and bring it under control with interest hikes. This means a stronger dollar which depresses inflation by taking down prices of commodities. That's how they hope to muddle through this depression by gradually hiking interest rates while importing deflation with a stronger currency.

  7. I have a question about the different triangles. When I started using MarketClub, I seem to remember the guidelines as follows:

    Stocks: Use Monthly triangle for trend, weekly for trigger.
    Forex: Use Weekly triangle for trend, daily for trigger.
    Spot metals: Use Weekly triangle for trend, daily for trigger.

    So would another commodity like Oil also follow the weekly/daily advice?

    That said, never really understood the distinction of why to use monthly/weekly for stocks and weekly/daily for other things. Seems to me that all three horizon indicators - monthly, weekly and daily - would be just as valid for each instrument, albeit perhaps applied differently by different investors depending on their time horizon.

    Could you explain again the rationale behind emphasizing different time triangles for different types of investments?

    Thanks!

    1. Jabalong,

      Thank you for your feedback.

      You bring up a very valid point. Some investors trade longer-term and certainly that would fit more into the monthly, weekly triangles strategy. While some investors prefer short term trading and that falls into the weekly daily camp.

      The monthly trade triangles are very important as it takes a great deal of energy to move the market and the monthly trade triangles.

      If one was being conservative you would include the monthly in your analysis. This adds another filter to your trading and certainly would cut down on the amount of trading you would be doing if you were just using the weekly and daily triangles.

      What is nice about MarketClub is the fact you can adapt these parameters to best suit your style trading.

      I hope this addresses your question in a satisfactory manner.

      All the best,
      Adam

  8. I still can't understand why everyone thinks they have to be a fortune teller........
    I am a trend trader, my system gets me in fairly early and allows me to catch a large percentage of the trend..... I could care less about government reports, or what any of the rest of the talking heads have to say. Price action shows all.

  9. The FED has gone to a hiking cycle which must bolster the dollar and in turn depress commodities and dollar dominated assets such as US stocks. These are highly interconnected factors. Commodities trade in dollars and hence their price tends to move in inverse relation to the dollar rate and a higher dollar means fewer dollars to book at home for US multinationals, in turn depressing their profits and stock price. So; I guess the general trend for at least the next 1-2 years must be to go long the dollar and short the US stock market.

  10. John,

    Thank you for your feedback.

    We will see how things turn out. It is always nice to hear someone with a potentially different viewpoint that's what makes the markets so interesting.

    All the best,
    Adam

  11. Hi: I think you are not factoring in the economy and the global affect of a "slow" recover. I see Oil around $82.00 Memorial Day...and then dropping to mid to low 70's ( U.S. Commerical Mortgage problem )Then back to $85 to $95 at or after Labor Day. So, we shall see....thanks for your imput as opposed to my views...Jay

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