Forget what the FED did today

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OK, we got it right on the stock market, crude oil and inflation ... now what?

Dear Reader,

You may have missed my September 13th appearance on Bloomberg TV. If you did, you may want to watch this video and see what I was saying about stocks, crude oil ($10,000 later) and inflation.

So how did we get it right and Chairman Bernanke and the FED get it completely wrong?

By viewing this short Bloomberg TV interview, you will see first hand that we predicted problems with the US markets and the economy on major financial networks over 5 months ago. The market action on Friday was not a surprise to readers of this blog. Is there more to come?


Watch the video.


Original post.

I have said this before, we are not in buy and hold markets anymore. You need to be fluid and go with the flow. The old market adage is "Don't fight the tape".

Every success in the markets.


Adam Hewison

Gold recoils from record highs; consolidation seen

(Recasts, updates with closing prices, market activity, changes dateline to NEW YORK, previous LONDON) By Frank Tang
NEW YORK, Jan 17 (Reuters) - Gold slipped further away from record highs after a choppy session on Thursday, extending the previous session's steep losses and hit by chart-based weakness and falling energy prices. The yellow metal could decline further in the near term, largely due to a possible recovery of the dollar, but losses should be limited by flight-to-quality demand amid credit worries and inflation concerns, market watchers said.
"The failure of gold to take out Monday's high at $914 was seen as a negative by a lot of traders. I just don't see this market turning around unless there is a news item coming out that takes people by surprise" said Adam Hewison, president of INO.com.

Spot gold fell as low as $876.90 an ounce, and was last quoted at $876.70/877.40 by New York's close at 2:15 p.m. EST (1915 GMT), against $885.60/886.30 late in New York on Wednesday, when it dropped 2 percent. It hit a record high of $914 on Monday. The most-active gold contract for February delivery at the COMEX division of the New York Mercantile Exchange settled down $1.50 at $880.50 an ounce. "$900 level is going to be a fairly important level for the market just to digest for the moment. I think we have to get more consolidation in the market to push it to the $950, $1,000 levels," Hewison said.

Weaker crude oil prices dented gold's appeal as a hedge against inflation. U.S. crude futures ended 71 cents lower at $90.13 a barrel on Thursday. "Given the recent volatility, wide intra-day price swings seem set to continue," said James Moore, precious metals analyst at TheBullionDesk.com.

The dollar slipped versus the euro on Thursday after Fed Chairman Ben Bernanke repeated in a speech to the U.S. Congress' House Budget Committee that more easing may be necessary. Bernanke also said he will support efforts to craft a fiscal stimulus package and repeated the U.S. central bank was ready to act aggressively to counter recession risks.
Investors have priced in at least a half-percentage-point cut in the benchmark U.S. rate this month, with some saying the Federal Reserve could cut rates by three-quarters of a point. The Fed is scheduled to render its interest rate decision at the end of a two-day meeting from Jan. 29 to 30.

Zachary Oxman, senior trader with Wisdom Financial in Newport, California, said gold should consolidate in the near term, moving in a trading range between $870 and $900. "Any big corrections here are going to be met with some long-side accumulation buying," Oxman said. In research news, consultancy firm GFMS said on Thursday that the price of gold is expected to correct lower in the near term, but then surge as high as $1,000 an ounce later this year, as a weak U.S. dollar and lingering credit turmoil burnish the metal's investment appeal. Meanwhile, industry-sponsored World Gold Council (WGC) said on Thursday that higher gold prices and increased volatility hurt the consumption of gold jewelry in India, the world's top gold buyer, in the fourth quarter of 2007. In 2006, India imported about 715 tonnes of gold.

London-based ETF securities expected to more than double the money managed in its listed exchange traded commodity funds, including precious metals, to about $7 billion by the end of 2008. In other bullion markets, the key gold futures contract for December 2008 delivery on the Tokyo Commodity Exchange (TOCOM) ended 26 yen per gram higher at 3,074 yen in a technical rebound after falling by the daily 120 yen limit on Wednesday. In industry news, Highland Gold Mining Ltd plans to raise gold output by at least 10 percent this year and is on track to hit 200,000 ounces of production by 2009, managing director Henry Horne said.

Silver rose to $15.86/15.91 an ounce, versus $15.84/15.89 late Wednesday, supported by news that BHP Billiton Ltd/Plc had stopped operations at its Cannington silver mine in Australia after a fatality earlier in the day. Platinum slipped to $1,555/1,560 from $1,559/1,564 an ounce late in New York on Wednesday, while palladium was down $5 to $366/371 an ounce. (Additional reporting by Atul Prakash, Daniel Magnowski in London)


*Reuters is a registered trademark and belongs to Reuters

30,000 feet above the markets

Hi Traders,

We are only two weeks into the new year and it's turning out to be one heck of a ride. There have been so many opportunities to make money, I hardly know where to begin.

First off, I think you should watch this video as it applies to all the market volatility we are seeing right now. I made the video several months ago and it's about the most important rule change I have ever seen in my 37 years of trading. Yes, I admit, I love the markets and trading in them, where else can you have this much fun?

This major Security Exchange Commission (SEC) rule change, is a shocker, and it's having exactly the effect I thought it would on the markets. It was put in place in 1938 to protect investors and to curb volatility.

Ask yourself this, is volatility higher or lower than it was 12 months ago?

If you answered higher, you are 100% correct. Anyway, I highly recommend that you take a couple of minutes and watch the video. There's no charge, and no need to register.

As I am writing this blog posting I am cruising at 30,000 feet thanks to Southwest Airlines on my way to San Francisco, California. The trip is partly for business, but mainly to spend some time with one of my daughters before she takes off to live in New Zealand. If you haven't guessed it already, she met a young man from that country and has decided to move there and make New Zealand her new home.

Life presents many opportunities, and I am proud of my daughter for taking this one.

As a dad and a trader I find life's opportunities fascinating, don't you?

Anyhow, my daughter's move to Kiwi Land got me thinking about a lot of things most of which are personal and I'm keeping to myself. But, it did get me thinking that I haven't written much on this blog about currencies lately.

How many of you have ever traded in the currency markets?

Now the currency markets often refereed to as the forex markets, are huge, highly liquid and offer a totally new set of great trading opportunities.

The reason I mentioned that my daughter was moving to New Zealand is the fact that the New Zealand dollar which is referred to as the Kiwi dollar, has had a remarkable run up against the US Dollar. One of the principal reasons for this strong upward move is interest rate differentials. Here in the US, chairman Ben Bernanke seems H--L bent on lowering rates, while in New Zealand they have been on a steady course of raising them.

Take a guess which country all the money is flowing into? It's going to the countries that have highest interest rates.

Here's a chart of the Kiwi dollar against the US dollar for the past few years. Doesn't it make sense that you would want to have you money in currency that is paying one of the highest rates of return on capital in the world and is appreciating? Of course it does, and that my friend is perhaps the most important fundamental reasons why trading in the forex markets make sense.

Did you know that MarketClub has real-time currency quotes on all the major currencies, including the Kiwi dollar? If you are already a member of MarketClub you might want to run our "Trade Triangle Technology" against the Kiwi dollar and some of the other major currencies. I think you'll be impressed at the numbers and sweet returns you'll find there.

If you are not a MarketClub member check out this forex video ... it's free and there is no need for registration. The video will give you a glimpse into MarketClub's "Trade Triangle" approach to the forex markets.

Right now I've got to wrap up this blog posting as the captain of flight 810 to San Francisco is informing us to switch off all electronic devices for landing.

So until next time, every success in life and in trading.

Cheers,

Adam Hewison

If you lost the shirt off your back... maybe a MarketClub member will lend you theirs


The 4th quarter was just another nail bitting chapter in the story of “battered U.S. Financial institutions.” Although now international investors are helping to bail the water out of sinking companies like Citigroup and Merill Lynch, many investors lost their shirts with the dive that these companies took through Q4. With NYSE_MER falling 17.32% and NYSE_C dropping 36.1%, MarketClub members managed to profit with possible gains of 12.48% and 24.83% respectively.



World Rides to Wall Street's Rescue

By David Enrich , Robin Sidel and Susanne Craig of the Wall Street Journal

In the latest sign of America's sinking financial fortunes, investors from as far afield as Japan, Korea, Singapore, Saudi Arabia and Kuwait have come to the rescue of Wall Street.

The list of players that agreed yesterday to pump a combined $19.1 billion of capital into Citigroup Inc. and Merrill Lynch & Co. spotlights a dramatic shift in power. After flooding the world with capital that fed both economic growth and excess, battered U.S. financial institutions now are turning to countries and companies that not so long ago were suffering through their own disasters.

Yesterday's infusions follow earlier investments into … Read the rest of the article here



Q4 MarketClub Member Results


Monthly triangle has been red since July 2007

Entry on weekly corresponding red - 10/15/07 @ 45.86
Exit on weekly green - 12/10/07 @34.65

Enter weekly corresponding red - 12/20/07 @ 29.5
Exit close of 4Q - 12-31-07 @ 29.32

2 Trades Up $11.39 /share

*Q4 per share dropped 36%, however MarketClub members used the triangles for a 24% gain

Monthly triangle has been red since February 2007


Entry on weekly corresponding red - 10/17/07 @ 69.91
Exit on weekly green - 11/30/07 @ 61.18

1 Trade Up $ 8.93 /share

*Q4 per share dropped 17.32%, however MarketClub members used the triangles for a 12% gain


These results were generated by using MarketClub's suggested method for reading the "Trade Triangles" for equities. Please see a video on the suggested method here.