Category: MarketClub Techniques, Tips & Talk

It's 7:30 a.m. EST and the markets are nervous and jittery.

It 's not going to be an day.

U.S. Equity markets are under heavy pressure this morning before the opening.

Here are the key support levels to watch today in the major indexes.

I would not be surprised to see these levels give way as early as today. If that happens watch out!!!

Investors are nervous, very nervous as todays economic news goes from bad to worse.

Stay alert and focus on the trends.

More than half a century ago, then-General Motors President Charles Wilson was quoted as having said, “What’s good for General Motors is good for the country.” That quote came to epitomize the auto giant’s arrogance. ... Fifty years later the world has changed as General Motors takes its biggest hit ever .... 38 billion dollars. OUCH!!! now that's going to leave a mark.

Adam Hewison

Supermodel, Gisele Bundchen is refusing to be paid, if you're trying to hand her a wad of greenbacks. However, if payment comes in the form of the Pound, Loonie, or Euro, she'll take it to the bank, or to her broker. The Brazilian beauty is standing behind billionaires like Warren Buffett and Bill Gross in a growing line of investor who believe that the USD will continue to drop with plenty of momentum.

The USD has decreased over 34% since 2001, and with the state of the current US economy, is felt by some to keep a steady decline.

Bundchen asked that she be paid in Euro for a recent endorsement with Pantene Hair, and a promotion contract with Dolce & Gabanna's new designer fragrance. She has little faith in a USD rebound and claims that her currency request is only due to an uncertainty of the US dollar in the near future, according to her twin sister and manager, Patricia Bundchen.

There are analysts that passionately disagree with millionaire, model Bundchen. Bloomberg analysts expect the dollar to strengthen in coming months as a stronger-than-forecast reports suggest that the U.S. will not experience a recession.

So, although Bundchen won't fill her $1000 designer purse with $1000 USD, some analysis are saying just hold on... a bounce back is yet to come.

READ MORE HERE...

What a week!

Crude trades over $95 a barrel, gold hits new highs and Google breaks over $700 a share. On top of all that, the Fed cuts rates by a quarter point, giving the market what it wants, and stocks crater on Thursday.

So what's ahead ... more volatility?

There is nothing new in the markets as financial history always repeats itself, which reminds me of one of my favorite market quotes. The quote is from former Fed chairman Alan Greenspan. The term he came up with is "Irrational exuberance" in a speech given at the American Enterprise Institute during the stock market boom of the 1990s. The phrase was interpreted by financial pundits as a typically cryptic warning that the market might be overvalued.

Although it is sometimes believed that Greenspan's comment was made near the height of the dot-com boom (and contributed to its downfall), it was actually said much earlier, in December 1996. Read more about it on Wikipedia.

The subject of todays blog posting is something you need more than ever in these volatile markets and that is money management.

In my previous Friday blog postings we discussed diversification and stops. These two disciplines are all part of your money management suite of tools. But there are two other elements that make up a successful money management strategy in my opinion.

The two missing elements I am talking about are and the importance of using FOCUS and DISCIPLINE.. You must have these two elements in your money management toolbox if you are going to succeed and make the kind of money that allows you to enjoy the good life.

Just imagine not having to worry about Fed actions, or stressing out about if some companies earnings is going to miss expectations.

Well, all that is possible with good money management. The tools we have discussed in our previous posts stops and diversification allow you the luxury of not worrying and stressing out over things you cannot control.

THE NUMBER ONE SECRET TO MONEY MANAGEMENT

All credit goes to the Oracle of Omaha, Warren Buffett for this secret. Mr Buffett who at 77 is a legend in the investment world. Here are Mr. Buffett two most important rules to investing.

Rule Number One: Never lose money.
Rule Number Two: Never forget Rule Number One.

If you follow this advice you will be very successful, perhaps like Mr. Buffett?

We were lucky enough to recently share some TV time with Mr. Buffett. You can watch it here.

Let's go back to our two topics today ... FOCUS and DISCIPLINE.

Here's an example of FOCUS.

Say you are bullish on a certain stock or futures market. You need to FOCUS on three key components. 1. Entry price. 2. Trade risk. 3. Profit potential.

Here's an example of DISCIPLINE.

This is what I believe is the difference between winners and losers in the market.

It can be all summonded up in one word DISCIPLINE!!!

Without DISCIPLINE the odds of being successfull in the market are against you.

Here's a simple recap of the four basic components that make up your money management game plan.

1. DIVERSIFICATION
2. STOPS
3. FOCUS
4. DISCIPLINE

Once you have mastered these four elements there is no doubt that you will be successful.

Next week The Friday Focus will take on the biggest hurdle most traders face and that is the importance of psychology in trading. Till then ... have a great weekend and a super profitable trading week.

Adam Hewison

When good news is bad news.

Hooray, hooray the Fed cut interest rates 25 basis point yesterday ... good news, right? This should have been good news for stocks so why did the markets crater? If the FED had cut by 50 basis points, would the market have fallen twice as far?

Here's a case of good news being bad news. When the market finally digest the Fed notes and saw that the odds where high that the FED was done cutting for the year, it said to itself OH, OH, no more getting the keys from the FED to take stocks for a ride.

Here's my take, and we have mentioned this before on this blog. The longs after a five year bull run are just tired. The technicals are beginning to break down and weaken.

MarketClub members should look at the MACD and see that several major indicies are rolling over but have not yet dropped into a full bear mode.

Here are the key levels we are watching very carefully ...

DOW: Major Support at 12,517

S&P: Major Support at 1,370

NASDAQ: Major Support at 2,386

We would go into an extreme bearish mode if these levels were to give way. Right now the indices are in a broad trading range that appers to have a negative bias.

As we have said before it's going to be a bumpy and interesting ride.

Watch the trade triangles for confirmation.

Good luck and stay tuned to this blog for updates.

Adam Hewison

The markets are waiting, we are waiting, the world is waiting to see what the FED is going to do this afternoon.

Traders that I am hearing from are mixed in their opinions. The consensus seems to be that we will see a cut of 25 basis points.

What if the Fed cuts 25 basis points and the market does nothing, what then?? The markets particularly the DOW and the S&P 500 are all acting a little tired but have not turned down and entered into a negative phase. Today could change all that.

The bright spots and strength have all been on the NASDAQ with APPLE, GOOGLE and RIM acting as the juggernauts of the economy.

It's going to be a volatile day, so fasten your seat belts and get ready for a scary ride.

Stay safe,

Adam Hewison