A bear market rally, or a genuine turn in the market?

Posted on by The INO.com Team

A bear market rally, or a genuine turn in the market?

With the Federal Reserve cutting the discount rate 50 basis points to 1%, it remains to be seen if this will loosen up the credit markets. There remains a great deal of mistrust among banks and borrowers at the present time, and until that changes, we would look for the economy to limp along.

The sharp move up, in both the DOW and the other indices on Tuesday was a sharp counter trend rally to what remains a prolonged bear market. One day does not make a trend, and we will not know for some time if the lows we have seen recently in the past month are going to be the final lows of this bear market.

My gut feeling is, that we will see more sideways action in these markets for some time to come. I would not look for any dramatic upside action in stocks. If we do see a further rally from current levels, it would be perfectly normal within the confines of a bear market. If you are inclined to trade these markets from the long side, I suggest doing so with a slightly smaller position than you would normally trade. We expect the volatility level to subside from its current torrid pace and fall back to a more normal level as we move sideways.

The judicious use of a game plan and money management stops is highly recommended for everyone. These markets can cut you into pieces in hours mainly because of the market's inability to fashion out a firm trend either on the upside or downside.

Just because the market is going sideways does not indicate that all is over on the downside. The longer we see these markets move sideways, the greater the opportunity that we may be building a base to carry the markets higher.

Adam Hewison

President, INO.com & Co-creator, MarketClub

The rate cut maybe too late for the baby boomers ...

Posted on by The INO.com Team

The rate cut may be too late for the baby boomers ...

As many baby boomers are facing retirement, this recent meltdown in the stock market has put many in a precarious position. Money they had counted on for their golden years has quickly disappeared and will not likely return anytime soon.

To illustrate this point, a friend of mine recently sent me a chart which I would like to share with you. This charts shows that we may be going into a prolonged period of no growth in the overall stock market. The NASDAQ peaked at 5,132.52 on March 10th, 2000. The NASDAQ market is in many ways more important than the DOW, and should be considered more of a leading indicator. If that is truly the case, then we have been in a bear market for the last eight years.

If many stocks have lost 50% of their value, they must now go up 100% just to get back to where they were. If we are to assume that the stock market grows by 10% a year (and that is not a good assumption), then it's going to take at least 10 years for many of these stocks to reach the heights they once were at. Many stocks will never come back. I don't think we will ever see Yahoo trade anywhere close its all time intraday high of $500.13 (set January 4, 2000).

I expect to see a prolonged economic climate that is not conducive for stocks to move higher. However, there will be pockets of opportunity where certain markets and sectors will move higher.

All in all, this is not a rosy picture for either the US economy or the world economy. As I have said many times on this blog, these are trading markets and not markets to hold long-term. Witness our General Motors blog, and the fact that General Motors (NYSE_GM) is a scrambling to either avoid bankruptcy or to find a partner. The latest rumor is that they're looking at Toyota (NYSE_TM).

Trading throughout the balance of this decade and into the early part of the next decade is going to be the key to survival and for recovering the profits in your portfolio. We strongly recommend that you approach these markets with some level of expertise and knowledge of technical trading.

The future is going to be the future and we need to take advantage of every moment and prepare ourselves to be the very best we can be in whatever business or endeavor we are pursuing.

Every success in the future,

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

Forex 1-2-3 Method

Posted on by The INO.com Team
Let's face it... Forex is a market that has HUGE potential, HUGE liquidity, and little good information out there on how to trade it with success. That's why I've asked Mark McRae from Forex Avenger to come and teach us a bit about a 1-2-3 Method that his partner David Curran from Forex Avenger has had major success with. Please take time, read the blog entry, and visit Forex Avenger to see the success they have experienced trading forex!

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This particular technique has been around for a long time and I first saw it used in the futures market. Since then I have seen traders using it on just about every market and when applied well, can give amazingly accurate entry levels.

Lets first start with the basic concept. During the course of any trend, either up or down, the market will form little peaks and valleys. see the chart below:

The problem is, how do you know when to enter the market and where do you get out. This is where the 1-2-3 method comes in. First let's look at a typical 1-2-3 set up:


Nice and simple, but it still doesn't tell us if we should take the trade. For this we add an indictor. You could use just about any indicator with this method, but my preferred indicator is MACD with the standard settings of 12,26,9. With the indicator added, it now looks like this:

Now here is where it gets interesting. The rules for the trade are as follows:

Uptrend

  1. This works best as a reversal pattern, so identify a previous downtrend.
  2. Wait for the MACD to signal a buy and for the 1-2-3 set up tobe in place.
  3. As the market pulls back to point 3, the MACD should remain inbuy mode or just slightly dip into sell.
  4. Place a buy entry order 1 pip above point 2
  5. Place a stop loss order 1 pip below point 3
  6. Measure the distance between point 2 and 3 and project thatforward for your exit.
  7. Point 3, should not be lower than point 1

The reverse is true for short trades. As the market progresses you can trail your stop to 1 pip below the most recent low (Valley in an uptrend). You can also use a break in a trend line as an exit.

Some examples:



There are a lot of variations on the 1-2-3 setup but the basic concept is always the same. Try experimenting with it on your favorite time frame.

Good Trading

Best Regards
Mark McRae Forex Avenger

Bio - Mark McRae is a fulltime professional trader, author and coach. He has coached some of the top names in Forex trading. David Curran, Forex's latest rising star attributes his success in the Forex market to the teachings of Mark McRae. To read more about David, go HERE

What the heck is going on in the gold market?

Posted on by The INO.com Team

Dear Trader,

Gold at the moment is perplexing to a great many traders. To many it was a shock when gold recently traded below the $700 an ounce level. So the question is, what happened to the $2,000 an ounce target that most gold bugs were calling for?

In my just released video, we explore that question and look at what we think will be this markets next move. You might find our analysis and conclusions rather surprising.

Enjoy the video,

Adam Hewison

President, INO.com& Co-creator, MarketClub

An 800 year trading secret that has stood the test of time.

Posted on by The INO.com Team

I can honestly say that 30 years ago I learned how to trade the markets in the pits of Chicago.

It was there, in one of those sweaty, tumultuous, in your face trading pits, that I learned one of the most valuable trading secrets in the world.

This one trading secret opened my eyes to why things happen in the markets.

This trading secret, which is over 800 years old, is one of the most monumental mathematical discoveries of all time.

The publication in 1202 of the "The Book of Calculation" was never meant to be a road map to success in the markets. However, it turned out to be an extraordinary blueprint for how modern day markets work.

The number sequences contained in this amazing 800 year old book, is like having a virtual DNA for every stock, futures and foreign exchange market.

No one knows for sure why these number sequences work. Some traders believe them to be mystical, others, like myself prefer to call them one of life's little mysteries.

I have been using this sequence of numbers to trade the markets for over 30 years. I have to say that after all this time, I am still amazed that these numbers still work!

My new 8 minute educational trading video that remains true to core principles of the "The Book of Calculation." Show you step by step, exactly how you can benefit from using this trading secret.

Once you view the video and absorb this valuable educational trading lesson, you can apply the exact same principles you learn to your own trading. What could be better than that.

We do not require you to register to view this video.

Discover and benefit today, from what I learned over 30 years ago in the trading pits of Chicago.

Every success.

Adam Hewison
President, INO.com.

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