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February 2014

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Gilead Sciences Sets Up As A Beautiful Short

February 27, 2014 – Comments (2) | RELATED TICKERS: GILD

The biotech sector is in one of the biggest bubbles since the Dot.com era. Some of the largest biotechnology companies in the world have doubled and tripled their size in the last year. One such stock is Gilead Sciences, Inc. (NASDAQ:GILD). The stock is hovering up 100% from its lows a year ago and has a market cap of $128 billion.

Reasons For The Short:

1. Biotech sector in a bubble with cracks emerging.

2. Gildead Sciences is up 100% in the last year with no significant pull backs.

3. The valuation is unsustainable for Gilead Sciences in the near term.

4. The stock has not been able to push through the technically important $85.00 level.

Overall, this sector has been an area where money has continued to flow. The music appears like it is coming to a stop. Gilead should have a pull back to $76.00 then $65,00.  [more]

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Refinery Stocks Run Out Of Fuel, Watch These Levels

February 27, 2014 – Comments (0) | RELATED TICKERS: VLO , TSO , PSX

This morning, many of the leading oil refinery stocks are declining sharply lower at the start of the trading day. Some of the leading stocks in the sector that are selling off include Valero Energy Corporation (VLO), Tesoro Corporation (TSO), HollyFrontier Corporation (HFC), Marathon Petroleum Corporation (MPC), and Phillips 66 (PSX). Day traders can watch for a couple of solid intra-day support levels on VLO stock around the $48.47, and $47.58 levels. Both levels could be intra-day bounce areas for the stock. 

Nicholas Santiago
InTheMoneyStocks.com
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Stocks Battle At S&P 1,850: China's Big Collapse On Horizon

February 26, 2014 – Comments (0) | RELATED TICKERS: SPY

The markets continue to hover around the January 15th, 2014 highs of 1,850.84 on the S&P 500. This week the markets have traded above that level intra-day, then pulled back below by the close. Even today, markets are flip flopping around 1,850.84 as all eyes are on that level. It is clear this is a major resistance level for the markets. A close above, the markets may see a near term short squeeze higher. The move would minor, in the range to 1%-3%.

One interesting factor for the markets is a key cycle anniversary tomorrow. Seven years ago on February 27th, 2007, the markets flushed hard. The Dow Jones Industrial Average was down over 400 points on major fears stemming from China. At that time, it was the 7th largest point drop on the Dow all-time. 

It is ironic that China issues are again circulating. There appears to be a major subprime lending issue much like the U.S faced in 2007-2009. In fact the lending is seen by many as being far more reckless than it was in the United States. The government in China has purposely pushed money into the system to create growth, no matter the risk. It appears China is near collapse. The big question is, when? Could the anniversary tomorrow be a tipping point? Will the cycle begin to play out? Just two days ago China's stock market fell 4%. There are financial tremors everywhere but the big one has not hit. The financial media outlets have largely ignored the China issue but it will likely become the next major catalyst for a big market pullback.

Gareth Soloway
InTheMoneyStocks.com  [more]

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Stock Market: How To Tell Institutions Are Sellers While 'Mom & Pops' Are Buyers

February 25, 2014 – Comments (2)

As the markets hover near all time highs, many wonder if we are headed sharply higher or will see another sharp pullback? The answer can be found simply by looking at who is buying the market and who is selling the market. Remember, anytime stock exchanges hands, there must be a buyer and a seller to the transaction. In general, if big institutions are net buyers of stocks, we would expect the market to go higher. If institutions are net sellers of stocks, the market should head lower. Why? Because they are the hall of famers, the all-stars. They have more information, inside information and have more experience than the rest of us. Generally, they will be correct. To make money in the markets, you ideally would like to be on the same side of the trade as the big banks, institutions and large hedge funds.

Data released over the weekend showed that the average investor put around $10 billion Dollars into the market in the week prior. This was the largest mutual fund inflow in three months. So right off the bat we see the small investor buying heavily. So how do we know what the large institutions are doing? Simply look at the price action on the markets. Note how the markets have hammered on their all-time highs on the S&P 500 but have not been able to break out above. If small investors (which we know are buying) and institutions were buying, the net buying would be ripping this market through those all-time highs. The fact that the stock market keeps getting pushed down at the all-time highs, tells us institutions are net sellers. This is the only way the markets would not be continuing to break the January 15th, 2014 highs and in dramatic fashion.

If institutions are sellers, I want to be a seller (short). While that direction has not paid off yet, if the big boys are positioning themselves that way, you can bet it will work soon.

Gareth Soloway
InTheMoneyStocks.com  [more]

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Five Steps To Making Money In The Market

February 25, 2014 – Comments (0)

How often have you bought a stock because someone told you it was a good company to own? It is still amazing to see so many individual investors with such a gamblers mentality when it comes to the stock market. In this article, I will provide you with five simple steps that will help you dramatically improve the odds of making money on every trade or investment that you take. In fact, if the stock you are looking to buy does not comply with any of these steps involved it might be better to simply leave the equity alone. Here is the five step checklist that you should have before buying any stock:

1. What is the current pattern on the chart telling you? The small retail investor has a tendency to buy stocks at extreme highs. Just think about it, why would someone want to own a stock after it has rallied sharply higher for a few weeks or months. I cannot begin to tell you how often the small retail investor has bought a stock at the all time high. For example, in September 2012 Apple Inc (NASDAQ:AAPL) was trading around $700.00 a share which was an all time high. The stock was showing many signs of institutional distribution leading up to that top, but the public was supporting the equity while institutional money was distributing the stock to the public. Do not chase equities after they have made parabolic moves on a stock chart. 

2. Anytime a stock receives numerous upgrades by prominent brokerage firms at extreme highs it is often a sign of a top. Apple Inc (AAPL) stock was being upgraded on a daily basis when the stock was nearing the $700.00 level. This is a classic sign of institutional distribution taking place in the equity. In September 2011, J.P. Morgan Chase & Co (NYSE:JPM) upgraded gold to $2500.00 an ounce. Gold topped out a week later at $1923.70 an ounce. In July 2008, Goldman Sachs Group Inc (NYSE:GS) upgraded light sweet crude to $200.00 a barrel. At the time of the upgrade oil was trading around $142.00 a barrel. That same week oil topped out at $147.27 a barrel and declined down to $33.20 a barrel over the next six months. Either these firms are great at calling tops or they simply upgrade these equities so the retail investors can buy what they are selling.

3. Buy stocks that have supporting factors on the chart. Supporting factors will increase the odds of the trade or investment. For example, prior high volume breakout levels will usually be a solid support area on a chart where the institutional money will usually step in and support an equity. Once again, learn to read a chart, it will help you throughout the rest of your trading career.

4. Know the next major resistance point after you buy the equity. It is very important to know where a stock is going to stall out or even pullback once you are in the money. Every stock that is traded will have several major and minor support/resistance levels. It is critical to identify these levels. One little technique that I like to apply is to sell part or half of my position once the stock has reached its first major resistance level. This takes a lot of the pressure off of the individual trader because you now have made some money and can simply protect the remainder of the position with a break-even stop. It is always better when you trade with the houses money.

5. Always have a stop loss on every trade you enter. A stop loss is really the only form of insurance that we have as a trader. Just think about all of the traders in the 1990's that did not see the 2000 bear market top forming and did not have a stop loss. Believe it or not, there are investors holding stocks from back then because they did not have or use a stop loss. Leading stocks such as Microsoft Corp (NASDAQ:MSFT),  Broadcom Corp (NASDAQ:BRCM), and Cisco Systems Inc (NASDAQ:CSCO) are just a few names that are still trading well below their highs made in 2000. The legendary trader Jesse Livermore always stated that everyone should have a hard 10.0 percent stop loss from entry to protect themselves. I personally believe that a solid technical stop loss can work even better, but that is something that you will have to judge for yourself. Either way, a stop loss is critical when trading and investing.

Nicholas Santiago
InTheMoneyStocks.com
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If You Know Nothing About A Stock Chart Know This

February 24, 2014 – Comments (2)

The majority of people that trade stocks, whether professionally or personally will rarely use stock charts to track the price action. Typically, the general public will buy or sell a stock because of a story/news they just heard about the company. For example, I recently talked to a married couple that bought Sirius XM Holdings Inc (NASDAQ:SIRI) in late 2004. The reason they bought the stock was because the popular disc jockey Howard Stern signed a long term deal with the company. So I asked them, how is that investment working out for you? They responded that it has been terrible for them, they have been holding the stock since December 2004 and the stock is nearly $5.00 lower than their purchase price. At the time they bought SIRI, it was trading around $8.00 a share, today SIRI trades around $3.85 a share. Clearly, these people were buying the story behind the stock, and this "story" placed them in a position which has been underwater for nearly 10 years. 

Today, I'm going to show a pattern on a stock chart that will help you make money regardless of the story that you hear in the media, or anywhere else. One key note you must understand is, when the so-called "news" about a stock is reported in the media, the stock has already been aware of this information. You see, the stock market is very  efficient, by the time the news hits the media, this information has already been baked into the stock price. So when the news is released to the general public, it is usually too late to jump on board. This is where the old market adage comes from, "buy the rumor and sell the news."

Beginner traders and investors, look for these two chart patterns and they will help to save you from the losing "news trade." 

Scan stock charts and look for patterns that are basing or forming consolidation patterns before buying a stock. Charts with these patterns have helped me make money on a consistent basis many years ago, and  they still work just as well today. Basically, the way to identify this pattern is to look for a stock that is off of its lows on a chart, then it starts to trade sideways for a long period of time (note the chart below). If you are looking at a daily chart then you would want to see sideways consolidation for a couple of weeks, or even months before expecting the stock to move higher. Remember, if you want to build a house you need to first have a solid foundation before you put up the walls, the same goes for trading stocks. All solid breakouts in a stock happen after a solid basing pattern forms on a chart. 

The legendary trader Jesse Livermore said, “all through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis.” The bottom line, learn to read a chart. If you know nothing about reading a stock chart, at least understand the consolidation pattern and advance your skills from there. But most importantly, you must understand that what you hear in the news or other media outlets is almost always baked into the cake (aka stock price already). If you want to profit for the long term and not fall into the traps which make almost all amateur and fundamental traders lose money, learn to read the charts now. 

Nicholas Santiago
InTheMoneyStocks.com
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Gold Is Overbought, But Ultimately Poised To Go Higher

February 21, 2014 – Comments (0)

On January 2, 2014 I wrote an article explaining why I thought gold was forming a solid near term bottom and would likely increase in price. Since that time, gold futures have surged higher by nearly $100.00 in price. In that article, I gave three compelling reasons for the potential surge in gold, the case that gold is real money, and the current bullish chart pattern that gold was forming. 

So, besides gold rallying higher recently has anything really changed? The answer to that question is no. The financial media are still very bearish on gold futures. Gold continues to be real money, it cannot be printed like U.S. Dollars, Japanese Yen, or any other fiat currency backed by nothing. Money printing is precisely why virtual currencies such as Bitcoin have become so popular lately. Just think about all of the nations that are facing food price inflation at this time because of all the money printing that is happening around the world. As a contrarian trader and investor I am generally bullish when the crowd is looking for lower prices. My last point for higher gold prices was the chart pattern that was forming in late December 2013. Well, now that chart pattern has formed and continues playing out. It is also signaling gold futures to move into the $1400 area, currently gold futures are trading around $1321.00 an ounce. 

Now let me be clear, gold is slightly overbought at this time on a daily chart. Overbought means that gold has rallied so much in the short term that it needs to consolidate or trade sideways for a little while before moving higher. After all, in late December 2013 gold futures were trading as low as $1181.40 an ounce. Remember, equities are very much like people, if you run up a steep hill you will probably need to rest before running further up the hill, it is the same with equities. So while gold may need to rest or pullback over the next few weeks it is ultimately setting up to trade higher. 

Nicholas Santiago
InTheMoneystocks.com
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Real Rally Or Fake Rally

February 20, 2014 – Comments (0)

Is this a real rally or a fake rally? This is an important question when you are thinking about buying or selling stock. The question can be answered very simply. All you need to do is focus on the S&P 500 high at 1,850.84. So far the markets have not taken out the January 15th, 2014 high (on an end of day closing basis). As long as this is not taken out then I would remain extremely cautious on this market. It may just be a reflex buy the dip bounce as the small investors jump in while the large institutions sell into them. We should know within days.

Gareth Soloway
InTheMoneyStocks.com  [more]

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The Rising USD/JPY Lifts All Boats

February 20, 2014 – Comments (0)

If you want to know if it is a risk-on or risk-off day, just follow the USD/JPY (U.S. Dollar verse the Japanese Yen) chart. When the stock market rallies, it is because the USD/JPY chart is trading higher. You see, the highly leveraged institutional money is betting on a strong USD/JPY. So when this currency pair trades higher, the institutional money can also take their leveraged capital and buy the S&P 500 Index. Just look at the stock market when it declines, it is because the USD/JPY is declining as well.

Earlier this morning, the USD/JPY bottomed around 3:00 am EST. Ironically, so did the S&P 500 index e-mini futures (ES-H4). Traders and investors should take advantage of this important correlation as it will not last forever, but it has been working since late 2012 so now is the time to be aware and take advantage of it.

Nicholas Santiago
www.InTheMoneyStocks.com
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Interesting Note: S&P 500 Ahead Of Fed Minutes

February 19, 2014 – Comments (0) | RELATED TICKERS: SPY , VXX

The Federal Reserve minutes will be released at 2PM ET today. This will give significant insight into what the Federal Reserve discussed during their last meeting. The markets will be looking for key chatter about whether there could be a pause to QE taper or if they plan to go full speed ahead with cuts. In the last two Federal Reserve meetings, QE has been cut by $10 billion each time. The market will be very happy if the Federal Reserve said they were leaning towards a more lenient policy on cuts to QE.

As the markets await the minutes from the meeting, we saw the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) hit the exact all-time high from January 15th, 2014. This level was nailed to the penny at $184.95. Once hit, the markets backed off immediately. Interestingly enough, the S&P 500 did not even come close to hitting that same all-time high at 1,850.84. It missed this level by over 3 points.

What does this all mean? It means that the markets are most likely going to begin their next major move on the back of these minutes. We will either break through the recent all-time highs or begin another sharp down move. One thing to note is that the S&P 500 VIX and the IPATH SP 500 VIX SHORT TERM FUT ETN (TSE:VXX) are both trading higher on the day, even with the market trading slightly higher. This tells us someone is loading up for volatility. It should be a very fun afternoon and coming days. Cheers!

Gareth Soloway
InTheMoneyStocks.com  [more]

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The Chart Behind Every Stock Market Move

February 19, 2014 – Comments (0) | RELATED TICKERS: SPY , FXY , UUP

The most important chart in the stock market today is the chart of the U.S. Dollar verse the Japanese Yen (USD/JPY). Simply put, when this currency pair moves higher, so does the stock market. The opposite is true when the USD/JPY chart declines, the major stock market indexes in the United States, Europe, and Japan will decline. 

If you look at a chart of the USD/JPY you will see that the major stock indexes such as the S&P 500 Index (SPY) will follow this currency pair in virtual lockstep fashion. This lockstep relationship between the USD/JPY and the major stock market indexes has been intact since late 2012. While this highly correlated relationship, like many others will not last forever, it is worth watching closely at this time.

Why does the major stock indexes follow the action in the USD/JPY chart so closely? The reason that the stock markets follow the USD/JPY chart is because the highly leveraged institutional money is betting on the USD/JPY going higher. In other words, the Japanese Yen will decline against the U.S. Dollar. When this happens the institutional money takes their leveraged profits and buys the major stock indexes in the United States and Europe. In fact, today the S&P 500 Index futures (ES-H4) was lower at the start of the trading session, but rebounded as soon as the USD/JPY chart surged higher. This chart of the USD/JPY should be on everyone's desktop at this time. 

Nicholas Santiago
InTheMoneyStocks.com
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Why This Latest Rally Is Just A Scam By The Institutions

February 18, 2014 – Comments (3) | RELATED TICKERS: SPY

The markets find themselves near all time highs once again, just two weeks after it appeared the sky was falling. So what gives? Is the market headed for another 30% move higher in 2014 or is there an epic collapse on the horizon? All signs point to a classic scam by large institutions to lure the small investor into the market prior to a 2007 type fall later this year and in 2015.

The media and analysts have piled back on the buy-the-dip commentary. Investors are pushing more capital into the markets every day, in many cases they are borrowing money to do it. The use of margin is at all time highs. The last time it was at all time highs was in 2007, prior to the financial collapse. History tells the truth and ultimately there are far too many similarities to ignore. For the record, the similarities not only mimic 2007 and 2000 prior to the epic drops but also going back as far as 1929. Many 'experts' and media commentators are saying there will be no collapse. Considering they are manipulated by the big banks...of course they would say that.

First, it is important to understand the game that is played. Large institutions use emotion to take money from the smaller investors. There are 90 million Americans that invest and less than 1% avoid being caught in this game. How does it work? Using the media and analysts along with the stock market moves, they pull the strings of investors to get them in and out when they wish. That means getting them to buy at the highs on a market and getting them to sell at the lows. Have you ever wondered why everytime you enter a stock it seems you are on the wrong side? That is the game being played on a minor scale.

How do you avoid the game? Simply do the opposite of what your 'gut' is telling you. If you feel like you should buy the market? Stay in cash or short it. If you are extremely scared, too scared to buy the market...then buy it. If the media is pumping Twitter (TWTR) like crazy at $75 (like they did a few months ago), short it. If the media and analysts are trashing a stock, buy it. A great example was when J.C Penny fell just a few weeks ago to $5.00. The media was trashing it and many gurus were saying it was going to '$1.00'. Yet here it sits with a 20%+ gain at $6.10. This works so well it is almost scary.

Why do the institutions do this? Simply put, it is to profit. It all comes down to the mighty Dollar. When the markets or a stocks get too extended, the big players need to get out. By hyping those stocks, they lure the small investors into the market and can sell right to them. Once the institutions unload, the markets fall and the small investor loses their money. When low enough, the fear hype will reach a level that causes 'long term investors' to sell their positions right to the institutions. Once this happens, the markets can go higher again.

This latest rally and bullish sentiment in the media and analysts is just a way for the big institutions to get you in the market before the drop it. Read the signals and think logically. 

Gareth Soloway
InTheMoneyStocks.com  [more]

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Home-builder Stocks Could be Signaling Problems In 2014

February 18, 2014 – Comments (0) | RELATED TICKERS: LEN , TOL , ITB

Traders and investors will look at many different leading stock indexes, and sectors for clues to what the economy will do. For example, there are many traders that will strictly follow the transportation sector as a leading indicator. After all, if the transportation stocks are rising that is a good sign that the economy is growing and expanding. Over the past 20 years there has really have not been a better leading indicator than the home-builder stock sector. This industry group has been one of the best tells for the economy and I believe that is still the case.

The leading home-builder stocks have been one of the best performing sectors since October 2011. In 2013, the home-builder stocks basically stalled out and traded sideways in a range for most of the year. This important stock sector remains very range bound even at this time. Traders must take note that if the home-builder stocks are unable to break out to new highs over the next couple of months it will be viewed as a sign of weakness and a breakdown in the sector is very likely. 

Some of the leading home-builder stocks that traders should follow include Toll Brothers Inc (NYSE:TOL), Lennar Corp (NYSE:LEN), D.R. Horton Inc (NYSE:DHI), and KB Home (NYSE:KBH). Traders and investors that want to follow the entire sector can follow the iShares U.S. Home Construction ETF (NYSEARCA:ITB). 

Currently, the ITB is trading around the $25.00 area. The ITB is now trading into very good weekly chart resistance. Should a pullback occur the ITB will have solid weekly chart support around the $21.00 level. Unfortunately for the stock market, any decline down to the $21.00 area on the ITB would signal some problems for the U.S. economy and most likely the stock market. 

Nicholas Santiago
InTheMoneyStocks.com
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Three Possible Events That Could Trigger A Meaningful Stock Market Top

February 13, 2014 – Comments (0)

Almost everyday on TV we hear one person or another calling for a major market top. While most of these forecasts have not worked out very well there will be a time when the stock market does top out and stage a meaningful decline. Listed below are three potential problems that could lead to a meaningful stock market top and a real correction of 20 percent or more.

1. The currency market holds all of the cards. At this time, the most important currency pair to follow is the USD/JPY (U.S. Dollar verse the Japanese Yen). Obviously, when the USD/JPY chart declines it means the Japanese Yen is strengthening against the U.S. Dollar. When this happens liquidity comes out of the stock market. The reason that this happens is because the highly leveraged institutional traders are all betting on a weaker Japanese yen, so when the USD/JPY chart declines the institutions lose buying power and can no longer support stocks in the United States, Europe, and Japan. Recently, countries such as Turkey, South Africa, and India have raised interest rates to try and strengthen their currency against the U.S. Dollar for fear of a currency crisis. This could repeat again this year, so keep your eyes open for more currency problems around the world.

2. China has faced a lot of problems regarding their shadow banking system. Shadow banking is unregulated high-yield lending that largely takes place off banks' balance sheets in China. This problem is very similar to the U.S. sub-prime crisis back in 2007. This shadow banking problem has not been solved yet despite the efforts by the Chinese central bank. This is certainly an issue that could trouble the Chinese economy in 2014. 

3. Traders and investors must watch for potential conflict between Japan and China. Last year, both countries claimed ownership of a group of islands in the East China Sea. Leaders from both countries have recently mentioned that the relationship between the two countries is very poor. It is also important to remember that China is the second largest economy in the world. China also holds a lot of U.S. debt. Japan is the third largest economy in the world behind China so any conflict would result in serious problems for the global economy.       

Nicholas Santiago
InTheMoneyStocks.com
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IBM Will Pull Back Here: Resistance Trend Line Alert

February 12, 2014 – Comments (1) | RELATED TICKERS: IBM

International Business Machines Corp. (NYSE:IBM) is slamming into a key level of resistance. This level is at $181.15. Based on this resistance level and multiple other factors, IBM is an easy short here for a multi-day pullback. A $177.00 target can be used. Enjoy and profit for life.

Gareth Soloway
InTheMoneyStocks.com
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Gasoline Heats Up On The Charts

February 12, 2014 – Comments (0) | RELATED TICKERS: UGA

Just when you thought it was safe to start the car again, gasoline prices are once again heading higher. The average price of gasoline in the United States is around $3.31 a gallon. Obviously, states such as California, Hawaii, New York, and Connecticut are higher due to taxes and environmental regulations. Either way, cheap gasoline at the pump seems to be over for now. 

Higher gasoline prices act as a direct tax on the U.S. consumer. Light sweet crude, which is the type of oil that we use in the United States is now trading back over $101.00 a barrel. The winter season in the United States has been exceptionally cold this winter. Cold weather and higher gasoline prices are a one-two punch to the U.S. consumer. After all, it is the U.S. consumer that accounts for 70.0 percent of the GDP (gross domestic product) in the United States. While the U.S. consumer has been resilient for the most part higher energy prices are certainly going to take its toll on their spending habits. 

Traders and investors that want to track the price of gasoline should follow the U.S. Gasoline Fund (NYSEARCA:UGA). Recently, the UGA has surged higher by $4.00 since February 3rd, 2014. Today, the UGA is trading around $59.70 a share. There should be near term daily chart resistance around the $61.40 area, so further upside cannot be ruled out. Some other energy ETF's that traders and investors may want to follow include United States Oil Fund (NYSEARCA:USO), United States Natural Gas (NYSEARCA:UNG), and the iPath S&P GSCI Crude Oil TR Index ETN (OIL). 

Nicholas Santiago
InTheMoneyStocks.com
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Inside Market View: Interview And Analysis On The Next Major Move

February 11, 2014 – Comments (2)

The market continues to move higher, its fourth day in a row. After panic was everywhere just last Wednesday, euphoria is emerging today. The market swings continue to befuddle the average investors as well as many Wall Street pros.

Below I will reveal the questions I asked and the answers he gave.

1. This is a monster bounce in the market and many are becoming bulls again. Is there more upside to come?

Answer: The markets are near another top. Technically speaking, we approaching a gap fill on the daily S&P 500 chart as well as slamming into the daily 50 moving average. A pullback may start as early as tomorrow. I have sold a majority of my longs on this bounce for a great gain while finally today, starting to accumulate some shorts.

2. So you do not think the markets will hit new all time highs in 2014?

Answer: We are less than 2% away from the all-time highs. However, I would be somewhat surprised if the markets can get to all time highs and hold it. Perhaps they briefly test it, but that is all. We have to recognize that the drugs being pumped into the stock market are coming to a close. The Federal Reserve is pulling back on its money printing ways. This was one of the major reasons why the stock market has risen so much since the lows of 2009. Just that uncertainty alone will mean the markets will be on shaky ground. In addition, currently the technical charts do not support that a move much higher than this area.

3. How should the average investor play this market? I get the feeling most investors feel whipped in 2014.

Answer: That makes total sense. Just as they all were going long at the end of 2013, the rug was pulled out from under them. This is what the institutions pride themselves on doing. Whipping the little investor in and out, essentially taking their money. Always remember, the stock market is a transfer of wealth from those with less knowledge on the 'game' to those that know the game. I truly try and help every average investor learn the game so they are not on the wrong side of the market.

Average investors should be using this market bounce as a selling opportunity. I cannot stress it enough that this market action is identical to what happened in 2007 and in 2000. The declines that followed were epic. We project that 2014 will be a whippy year with some downside but 2015 is the big down year per cycle analysis. This bounce is a gift to the average investor, allowing them to sell near the all time highs. The funny thing is, this bounce is what will coax more small investors to jump in the market, putting them on the wrong side of the trade. The games that are played on Wall Street will blow your mind.

This concludes my interview with Chief Market Strategist Gareth Soloway. I will periodically touch base with him in the future and get his updated views for everyone. Stay tuned.

Bryan Leighton
InTheMoneyStocks.com     [more]

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Buy: Sugar Starting To Look Very Sweet

February 10, 2014 – Comments (3) | RELATED TICKERS: SGG

Sugar has been in one of the ugliest bear markets in recent history. It has fallen to epic lows, not seen since 2010. An over supply from South American countries has flooded the market and is making it almost impossible for U.S. farmers to turn a profit. Just last week, for the first time in what seems like forever, sugar popped higher by about 10%. Over the last few days it has started to trail lower again. Please note the chart below.

Based on the price action in the last week, sugar is now a buy. For easy access, follow the iPath DJ-UBS Sugar Subindex Total Return Sm Index ETN (NYSEARCA:SGG). The SGG is a tracking ETN an easy way to follow the sugar price action. The current pull back off the 10% pop is a classic in-spirit-of bull flag. The price target for a buy is $52.00. This also matches up with the 20 moving average.

Upside potential on the SGG from the $52.00 level is target of $56.50. Should it close below the recent lows of $49.25, a stop out should be used. This is one of the sweetest trade setups I see in the market currently. Enjoy!

Gareth Soloway
InTheMoneyStocks.com
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All Reversal Candles Are Not Created Equal, Three Ways To Increase The Odds

February 10, 2014 – Comments (0)

As a trader we often hear the term engulfing candle, or outside trading day very often, but how can that help make us money? Well first, we must understand that an outside day or an engulfing candle is simply a reversal bar on the chart. For example, if price reverses the prior day's candle in the opposite direction than we have an engulfing candle, or what we older traders would refer to as an outside day on the chart. Now it is important to understand that all engulfing candle formations are not created equal. While these chart patterns are extremely important, you will need to look at other factors on a stock chart to know if it is a really meaningful and powerful reversal pattern at hand.   [more]

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Your Eyes Should Be Glued to The Currency Market

February 06, 2014 – Comments (1)

If you ask any trader or investor what is the most important currency to follow they would probably say the U.S. Dollar. After all, the U.S. Dollar is the world's reserve currency. If someone in Asia, or Africa wanted to buy a barrel of oil they would need to convert their money into U.S. Dollars in order to pay for that barrel of oil. Almost every major commodity is traded in U.S. Dollars, so it is understandable why the U.S. Dollar should be followed. If a trader or investor trades the U.S. Dollar Index, they are trading the U.S. Dollar verse a basket of six other major currencies, including the British Pound, Euro, and the Japanese Yen. 

Do you know which currency is most important that trades against the U.S. Dollar at this time?  [more]

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Abercrombie & Fitch Is The Gem Inside Retail

February 05, 2014 – Comments (1) | RELATED TICKERS: ANF , LULU , RDEN

A majority of earnings from retailers have been horrid this quarter. Whether it is Lululemon Athletica inc. (NASDAQ:LULU), Sears Holdings Corp (NASDAQ:SHLD) or Elizabeth Arden, Inc. (NASDAQ:RDEN), there has not been many bright spots. One stock that gave Wall Street a surprise was Abercrombie & Fitch Co. (NYSE:ANF). After reporting, the stock surged from $33.21 to a high of $38.15. As the markets have collapsed in 2014, ANF has dropped sharply. This gives us an opportunity to buy a retailer who is actually performing for a great price. This looks solid at its current price of $32.52, -0.64 (-1.93%).

Gareth Soloway
InTheMoneyStocks.com
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Natural Gas Stocks Continue To Stay Hot

February 05, 2014 – Comments (0) | RELATED TICKERS: COG , CHK , DVN

As we all know, the major stock indexes such as the Dow Jones Industrial Average, and the S&P 500 Index are in a confirmed correction at this time. The major stock indexes in the United States have all fallen by more than 5.0 percent since topping out in mid-January. Traders and investors that are looking for stocks to buy should look for stocks and sectors that are showing relative strength when compared to the major stock indexes. 

One sector that has shown strength in the near term has been the large natural gas stocks. Some of the leading stocks in the sector include Cabot Oil & Gas Corporation (COG), Chesapeake Energy Corporation (CHK), Southwestern Energy Co. (SWN), and Devon Energy Corporation (DVN). All of these stocks mentioned are holding up well despite the recent downturn in the major stock indexes. 

Traders can watch for near term daily chart support on Devon Energy Corp (DVN) around the $56.00 level. This is an area on the chart where the stock should find institutional sponsorship. The $56.00 level was also an area where the stock broke out in August 2013. Often stocks will revisit their breakout levels before rallying higher again. 

Nicholas Santiago
InTheMoneyStocks.com
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Three Reasons Why Any Bounce Is Just A Tourniquet Fix For This Market

February 04, 2014 – Comments (0)

As we all know, stock markets around the world have tumbled in 2014 so far. The Nikkei 225 Index is trading down by over 10.0 percent since the start of the New Year. Other leading stock indexes such as the Dow Jones Industrial Average and the S&P 500 Index are trading lower by more than 5.0 percent. While these declines are not really that much in the scheme of the recent bull market, they are occurring at a time of the year when market should be strong. Most traders know that the best months for stocks are from November to April. When the markets close lower in the month of January, it is a warning sign that 2014 could be a very weak year for the major stock indexes. 

The following are three reasons why any short term bounce is just a tourniquet for this market.

1. The large institutions are still highly leveraged to the weak Japanese Yen trade. Since late 2012, the large institutional firms have been betting that the Japanese Yen would continue to decline. After all, the Japanese central bank is printing more money than the Federal Reserve, so we can see why they would bet this way. Basically, when the Japanese Yen strengthens against the U.S. Dollar, the stock markets in the United States, Europe, and Japan decline. Just look at a chart of the S&P 500 Index and the Japanese Yen, they are almost inverse to the tick. So this tells us that the leveraged money in the short yen trade exits stocks when the short yen bet goes against them. Unfortunately for Japan, there debt is simply skyrocketing, and if the current money printing experiment fails they will face financial problems that they might not be able to fix. Could you imagine if the world's third largest economy collapsed? Well, that could become a reality, although you will not hear this in the mainstream media.

2. The problems in China are not going away soon. China is the world's second largest economy. Recently, the country has seen their economic growth (GDP) stall out and even decline. PMI readings have signaled contraction in manufacturing. The country also has a liquidity problem, they are constantly injecting money into the system. There is also a shadow banking crisis in the giant country. Shadow banking is unregulated, high-yield lending that largely takes place off of the banks' balance sheets. It is somewhat similar to the sub-prime crisis in 2008, but only affecting the Chinese banks. 

3. The economic problems in the United States are growing by the minute. Where do I start when it comes to the United States? First, corporate profits are declining. Companies are buying back their stock to try and keep their share prices up, but stocks are finally falling after reporting poor earnings. The Affordable Care Act, sluggish economy, high unemployment, higher taxes, and the recent central bank taper of QE-3 are just a few of the problems hitting the U.S. economy.  

If there is one thing we know with certainty, its that this market environment creates volatility and volatility is a day trader and swing traders best friend. Last year was a great year for the short term investor/trader; however, with all of this action on the horizon, 2014 will be even more fun. 

Nicholas Santiago
InTheMoneyStocks.com
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Key Level Wiped Out On S&P: Very Bearish

February 03, 2014 – Comments (0) | RELATED TICKERS: SPY

The S&P 500 was holding a major level, the 1,770-1,775 level. This was the bouncing level tagged multiple times last week. Today, the S&P has wiped that level out with force. A close below that level today would be very bearish for the overall markets. Unless we see a major reversal to the upside today, be prepared for more downside with a few small bounces along the way.

Most sectors are taking heavy losses with the NASDAQ leading the percentage decline, down 2.40%.

Gareth Soloway
InTheMoneyStocks.com  [more]

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Traders Must Know The Weather Outside

February 03, 2014 – Comments (0)

How often have you woken up from a deep sleep only to see that it was raining outside? Once you knew that it was raining you most likely dressed accordingly and brought an umbrella with you as you left the house to go work. Once you know the weather outside you can plan correctly. Well, traders and investors must do the same thing before they make an investment decision, they must know what type of market they are in. For example, if the major stock market indexes are in a bullish trend then traders will want to be looking for long consolidation bases on charts for break-outs to buy. They might also look for minor pullbacks to the 20-day moving average for continuation rallies. These are just a few ways to trade a bullish up trending stock market. 

What happens if the stock market starts to come under distribution or enters correction mode (down-trend)? If the stock market starts to sell off and corrects then traders must play the market differently. You see, the weather has now changed in the stock market environment, therefore as a trader and investor we must change and adapt to the conditions that are present. Traders that are looking to buy stocks at major support levels should trade smaller share size, and make sure that they have a defined stop loss in place. They may also want to look at lower support levels since stocks can generally decline further than most people expect in down trends. When stocks decline they will often fall much quicker than when they were advancing higher. Have you ever heard the old market adage, stocks take the stairs up and the elevator down. Most people in the public are not used to trading downside markets so it is usually more difficult to navigate through. Savvy, and experienced traders and investors can even look to sell short stocks that are forming bearish chart patterns when the major stock indexes are in down-trends. 

All bull market rallies and bear market declines will end at some point in time. Every market will become overbought in up-trends and oversold in down-trends. When these turning points occur the reversal moves are fast and furious. This is another reason why traders and investors should learn to understand how to read the charts. Simply understanding volume, moving averages, chart patterns, and support / resistance lines can make and save traders thousands of dollars. The bottom line, traders and investors should get educated, and they must always know the type of environment the markets are in. 

Nicholas Santiago
InTheMoneyStocks.com
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