Bring on the bad news.

It seems to this observer that the more bad news we get the higher the DOW goes.

So bring on the bad news!!

I read online, that UBS, you may have seen their ads of TV. You know the ones I am talking about "YOU AND US" just wrote off 3.41 BILLION dollars in sub prime loans and the market rallies over 200 points as I am writing this.

I guess removing the B out of UBS to US stands for the Billions they lost in the sub prime debacle. For sure heads will roll at UBS as banks HATE to lose money.

Who likes to lose ... nobody!

O.K. here's another one coming up ... Merrill Lynch.

It is also rumored that Merrill Lynch could be writing off as much as 4 Billion dollars! Does that mean the market will go up another 200 points.

Who knows?

So far this year the Dow Jones Industrial Average is up 11% and the NASDAQ Composite Index up 12%. Now we subtract the decline of the dollar and put that into the equation and we come up a 4.85% for the Dow and 5.85 for the NASDAQ. Not bad but hardly stellar.

While many commodities are priced in USD dollars, think crude oil and gold, the world in general is benefitting from the US's "strong dollar policy" as parroted by U.S. Treasury Secretary, Hank Paulson.

Can you imagine if the US ever had an official weak dollar policy ... heck. the DOW would be at 20,000 in a New York minute.

With further declines in the dollar likely, we expect that the US stock market to remain resilient in the near-term.

One thought, do you recall the lyrics from that famous Blood, Sweat, & Tears song that came out in 1969, SPINNING WHEEL.

Here is the first few lines of the song.

Catch the whole song here

Just something to think about.

Sometimes the market can be Blood, Sweat, & Tears, but not right now. We are not there yet, but it will happen, it always does.

Be prepared.

Cheers,

Adam

Whether it is nobler in the minds of ... O.K. lets give Shakespeare a rest and get down to reality.

Inflation or recession, what if I told you it doesn't matter?

In the next twelve to eighteen months there are going to be some amazing opportunities in the markets thanks to the upcoming economic climate. The opportunities I want to talk about today will only be available for those who are prepared to take advantage of a very special time in history.

DOES HISTORY RING A BELL AT THE TOP OF A MARKET?

No way! So how do you figure out when the tide has turned for the economy and we are headed towards a recession or huge inflationary pressures.

Unfortunately, you don't receive a personal email from Fed Chairman Bernanke giving you a private warning that the market is going to hit the fan.

So how do you know, how do you prepare yourself?

Here's how the two camps analyize the markets.

There are two camps that most traders fall into when the question of market analysis comes up. Either they are fundamentalists or they are technicians.

At this point I have to admit I am a market technician and I am proud of it.

The fundamentals are usually well known to most investors. What isn't known is how much of the known fundaments are priced into the market. Now that's the major dilemma facing most fundamentalists. When is it time to get out ... exit the market, head for the hills?

A technician on the other hand relies on price action to determine his views. The price action of any market is the biggest single most important indicator in any market technicians toolbox.

Market action is the sum total of all the greatest money managers in the world. What could be better than that ... having thousands of these great traders and investors around the world contributing to and working for you and your bottom line. Using technical analysis gives you this and a whole lot more. Is it perfect? NO, it isn't perfect but using the right tools, filters and a disciplined approach it will consistently out perform most other market approaches.

If nothing else technical analysis can prepare you for the future with confidence. To see what I mean take a look at this video on technical analysis and our "Trade Triangle" approach.

Cheers,
Adam

P.S. Be sure to vote in our latest poll "Inflation or Recession that is the Question"

The $900 million option on the SPY (referred to in a previous post) expires today. At first it seemed as if an anonymous trader/institution was informed or was part of a potential market shakeup. However, contributing editor, Keith Fitz-Gerald of MoneyMorning.com has shed light on the trade that had trading chat rooms buzzing.

Of course many of you know that I am not options savvy and since many of you have talked to me on the phone you know that I have never claimed to be. Although the explanation for the “Bin Laden” trades has gone over my head, I do understand that there was logical justification.

Here is an except from Fitz-Gerald's article “The '$900 Million Conspiracy' Trade That Wasn't?”...

“But as a professional trader, I could see that it was very possible these were set up as a so-called “box-spread trade.” This is a highly specialized transaction that professional traders or sophisticated institutional investors use on occasion to “box” in the market and guarantee profits, risk or, as may be the case with this trade, financing.

Without boring you with the details, here’s what you need to know about how this type of trade works. Basically, the counterparties, in this case a buyer and a seller, agree to a trade at a price that essentially splits the difference between current interest rates or prices. The price the trade takes place at is really is a moot point.

What’s important to understand is that the seller benefits because they essentially get to borrow the money from the buyer at a slight discount to prevailing market rates, while the buyer is able to keep his money moving in what is essentially a cut-rate loan at a time when he probably can’t lend it to others at all and risks it standing still – the kiss of death for a financial firm that depends on its liquidity for daily operations.

As it turns out, that is just what it apparently has turned out to be…a box-spread trade of some type.”

-Keith Fitz-Gerald of MoneyMorning.com

The anxious butterflies in my stomach disappeared after reading this follow up article. Those of you who thought, "there has got to be a logical explanation," well here it is. Those of you who thought, "there is something strange going on and who's involved," sorry (but the conspiracy theory sure is interesting to think about).