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February 2016

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What Is The Recent Move In Gold Telling Us?

February 29, 2016 – Comments (1) | RELATED TICKERS: GLD , IAU , GDX

Gold has been one of the best performing assets in 2016. The price of gold has surged from $1061.00 to $1250.00 since the start of the year. Generally, most traders and investors will look for gold to do poorly when the U.S. Dollar is strong, but recently gold has rallied higher despite the strength in the dollar. 

Gold topped out in September 2011 at 1923.70 an ounce. Ironically, gold peaked the week after J.P. Morgan Chase upgraded the equity to $2500.00 an ounce. It is still amazing how these giant financial firms can still upgrade an equity at parabolic highs. As you all know, gold has declined steadily since the 2011 top. The precious metal has given back roughly 50 percent of its gain from the 1999 low to the 2011 peak. 

What is causing gold to rally in 2016? Over the past few years most central banks around the world have followed the Federal Reserve in creating easy money policies. Recently, the People's Bank of China, the Bank of Japan, and the European Central Bank have all began new forms of easy monetary policy. Japan and Europe have now moved to negative interest rates and this is something new that many investors are trying to understand and figure out. Hoarding money is very likely since many people will have to pay the bank to hold their money. In fact, Japan is seeing a surge in the purchases of safes. People are simply going to keep their money at home instead of depositing it with the banks. Many people will also rather have precious metals instead of holding lots of paper capital. These are just a few reasons why gold is trading at a high for 2016. 

The current pattern on the daily chart of gold is neutral. This is because the precious metal have risen so much recently. At this time, gold looks to be trading sideways on a weekly chart. This sideways consolidation pattern could lead to another break-out down the road. In fact, most of the recent sell offs in gold have resulted in reversal moves right back up to the highs. This is bullish action overall since the equity cannot pullback from its overbought condition. The price action in gold is telling us that there is something bigger going on globally regarding the financial system. Traders and investors should continue to keep a close eye on gold as an important asset class in 2016. Some ways to trade gold are by using the SPDR Gold Trust (ETF)(NYSEARCA:GLD), iShares Gold Trust(ETF)(NYSEARCA:IAU) and the Market Vectors Gold Miners ETF(NYSEARCA:GDX).





Nick Santiago  [more]

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Stocks Want To Go Higher: S&P To 2,000

February 23, 2016 – Comments (1) | RELATED TICKERS: SPY , JPM

Yes, I said it. Markets look like they want to go higher, even as they sit lower by around 1% on the day. Why? Simply put, there are a lot of negatives out there and the markets are overbought, even with that, the stock market is holding up relatively well. Let's look at what is going on...

First, JPMorgan (NYSE:JPM) said today they had more exposure in the energy sector to bad loans. These were very negative comments for the entire banking sector as JPMorgan is known as one of the best banks. If they have more exposure, you can bet other banks are worse off. Next, oil fell sharply, dropping almost 5%. We have seen it in the past and now is no different. Falling crude prices hurt the stock market. Lastly, the markets have surged almost 150 points on the S&P 500 in the last two weeks.

Think about it like this. JPMorgan said they have more exposure to bad loans from the energy collapse. This means everyone does. Oil fell sharply, always a negative for stocks at these levels and the market has soared lately. With all these factors the indexes have only fallen by approximately 1% today. This is a very modest sell off and likely a signal the stock market wants to go higher.

What is the upside target for the S&P 500? The technical chart level is 2005.

Gareth Soloway
InTheMoneyStocks  [more]

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Negative Interest Rates Are Coming And There Is Nothing You Can Do About It

February 23, 2016 – Comments (0)

The Federal Reserve is now looking closely at negative interest rate policies (NIRP). Fed Chairwoman Janet Yellen recently admitted this in front of a Congressional panel. Europe and Japan have already announced their own negative interest rate policies and it looks like the United States banking system is not that far away from their own form of NIRP. 

The idea behind negative interest rate policy is to stimulate bank lending by charging banks to park their cash. Unfortunately, this action could cause savers to park their cash under the mattress. If savers do this it would likely result in further deflation. Currently, we hear that the European Central Bank is looking to do away with the 500-Euro note. This action by the ECB is being done to simply make cash hoarding much more difficult. Last week, former Treasury Secretary Larry Summers suggested that the U.S. should get rid of the $100 bill. Does anyone see a pattern here? This is one of the primary reasons for the recent surge in gold. Generally, gold will decline in a deflationary environment, but gold is a hard asset and that is what people want to hold if they can not hold large amounts of cash. 

We can only wonder what the negative effects will be on savers, retirees, pension funds, and insurance companies. Only time will tell what is going to happen when NIRP is implemented, but it looks like it is coming soon and there is nothing anyone can do about it.




Nick Santiago
InTheMoneyStocks  [more]

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Future Mega Player On The Cheap: $FEYE The Buy Of The Century

February 18, 2016 – Comments (1) | RELATED TICKERS: FEYE

FireEye Inc (NASDAQ:FEYE) is a cyber security player, one of the biggest in the world. While being a mega player in the industry, it has fallen from $55.00 to $13.00 in the last 9 months. This epic decline has been partly based off of some worries over growth but mostly because of general market fear. In the last six months or so the FireEye Inc has been buying smaller niche players within their industry, cementing themselves as a future leader in cyber security. They are positioning themselves beautifully.

The key here is to note that FireEye Inc (NASDAQ:FEYE) is doing whatever it has to, to remain a leader while also realizing that cyber defense is becoming and will become the biggest war front going forward. Battles will not be fought in person, but instead using technology, hacking..ect. While the stock is depressed, for investors with a longer term view, it is almost a crime not to buy.

Gareth Soloway 
InTheMoneyStocks
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Leading Oil Refinery Stock Tesoro Corp (NYSE:TSO) Will Ultimately Drop To $53.00

February 18, 2016 – Comments (1) | RELATED TICKERS: ANDV

Many stocks and leading sectors have rolled over in the past few months. One important industry group that has really plunged has been the oil refinery sector. Leading stocks in this sector include Tesoro Corporation (NYSE:TSO), Valero Energy Corporation (NYSE:VLO), Phillips 66 (NYSE:PSX), HollyFrontier Corp (NYSE:HFC), and others. 

Tesoro Corp was one of the strongest oil refinery stocks in 2015. The stock peaked out in November 2015 at $119.67 a share. Today, TSO stock is trading at $69.05 a share. The current decline represents a 42.0 percent decline in the share price. Often, when stock decline with type of momentum they will drop down to the next major institutional support level. That area tells us that the potential downside in the stock is around the $53.00 area. Now please understand, there will be minor bounces and rallies along the way, but the pops should be sold until this stock hits the next major institutional support level around the $53.00 level.





Nick Santiago
InTheMoneyStocks  [more]

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Be Neither Bull or Bear, Be A Trader

February 17, 2016 – Comments (0) | RELATED TICKERS: AAPL , AMBA , TSLA

It still amazes me how people always want to be on a team. In politics, there are republicans and democrats. In sports such as baseball, there are National league fans and American league fans. In the trading and investing world, there are bulls and bears. Everyone feels like they have to pick a team, but the point of investing is to ultimately make money. As a trader, you should be neither bull or bear, but be on the right side of the trade. 

In September 2012, I was on a popular financial radio program warning people that Apple Inc (NASDAQ:AAPL) was giving us short selling signals. Many of the listeners did not like that analysis. Many followers of the radio program actually seemed angry that I would even give them that analysis. These people behaved like loyal believers and followers of Apple Inc. I had to remind them that the Apple Inc CEO doesn’t know them and that we are in the business of trading not cheer-leading. As you all remember, Apple Inc stock dropped by over 200 points a couple of weeks after making that call. Often, people will become attached to a stock if it has made them money in the past. This year I have seen similar reactions by the public in stocks such as Tesla Motors Inc (NASDAQ:TSLA), Ambarella Inc (NASDAQ:AMBA), and others. Please note that all of these stocks have fallen significantly from their highs over the past several months. 

There is an old market adage that traders and investors should follow, never fall in love with a stock. Simply put, stock are for trading not loving. If the trend is up a stock should be traded to the upside until the chart says it can no longer move higher. The same for downtrends, if a stock is declining it should be shorted until the chart says that it can no longer move lower. This is what trading is all about. Remember, be neither bull or bear, be a trader.






Nick Santiago
inthemoneystocks.com  [more]

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Oil Has Hit A Floor: Buy Pullbacks: NYSE:XOM, NASDAQ:FSLR, NYSE:CVX

February 16, 2016 – Comments (1) | RELATED TICKERS: USO

Oil has hit a floor and will grind higher from here on out. Why? Simply put, major oil producing nations started to act when oil hit $25 per barrel. Saudi Arabia and Russia both inked a deal that they would not produce anymore crude above what they already produce. While there will be no reduction in production, it is the first sign that these countries are breaking. Should crude get down to $25 per barrel again, look for more rhetoric from these big producers.

At this stage, there is minimal downside on oil and investors should be accumulating well capitalized oil drillers. Potential candidates are Kinder Morgan Inc (NYSE:KMI), Transocean LTD(NYSE:RIG) and of course Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX). Even alternate energy names like First Solar, Inc. (NASDAQ:FSLR) can be bought.

Gareth Soloway
InTheMoneyStocks
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Don't Be Fooled, The U.S. Dollar Index Will Be A Lot Stronger A Year From Now

February 16, 2016 – Comments (0)

As many traders and investors know, the U.S. Dollar Index (DX) broke out in September 2014. At that time, the U.S. Dollar Index was trading around the $83.00 level. Today, the U.S. Dollar Index is trading around $96.90 per contract. Just so that new readers understand the U.S. Dollar Index is a measure of the value of the United States dollar relative to a basket of six foreign currencies. These currencies include the Euro, Japanese Yen, British Pound Sterling, Canadian Dollar, Swedish Krona, and the Swiss Franc. The Euro is the most heavily weighted currency again the U.S. Dollar in the index at 57.6%. That is why the U.S. Dollar Index chart and the EUR/USD (Euro vs U.S. Dollar) chart look inverse to each other. 

Many people in the investing world worry that the strong U.S. Dollar Index will hurt global exports. Well, the truth is that they will hurt global exports for the United States. However, the strong U.S. Dollar index will help to keep commodity prices low. Just look at a chart of crude oil and you will see that it has plunged as the U.S. Dollar Index has strengthened. You see, most of the oil in the world is priced in dollars and in order to buy a barrel of oil you must use U.S. Dollars. So it is safe to say that the strong U.S. Dollar is the primary reason for the decline in crude. 

Many people think that the U.S. Dollar Index is rallying higher since 2014 because it is a good currency, but that is not the case. The U.S. Dollar Index is rallying because other central banks around the world such as the European Central Bank, Bank of Japan, and the Peoples Bank of China are printing money in one form or another. This is causing investors abroad to flee other currencies and buy U.S. Dollars. This action by foreign investors is unlikely to change anytime soon. Now let me be clear, the U.S. Dollar Index is not going to surge higher in a straight line, that is not how markets operate. The trend in the U.S. Dollar Index should remain up despite having some pullbacks along the way. The current large pattern on the U.S. Dollar Index chart signals a move to the $105 level and possibly higher. Now a Federal Reserve interest rate cut could cause the U.S. Dollar Index to retreat, but it is likely that other central banks around the world would also print more money to counter that move. So either way, it is going to be difficult to find a reason at this point in time for sharp dollar decline. The bottom line, the U.S. Dollar Index should be a lot higher a year from now. 








Nick Santiago

InTheMoneyStocks  [more]

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European Banks Have The Zika Virus

February 11, 2016 – Comments (0) | RELATED TICKERS: BAC , JPM , WFC

What is going on with the European bank stocks? As you may know, the leading European banks stocks are now trading below their 2009 lows. This is not a healthy sign for stock markets around the world. Leading financial stocks such as Deutsche Bank AG (NYSE:DB), Credit Suisse Group AG (NYSE:CS), Banco Santander, S.A.(NYSE:SAN), and UBS Group AG (NYSE:UBS) are just a handful of stocks that remain under steady selling pressure nearly everyday. The talk of negative interest rates seems to add to the weakness in these stocks. Then the flattening yield curve is also something that is very negative for these stocks. The derivative markets are rarely talked about these days, but they are possibly the biggest problem with all of the global financial stocks. 

These problems in the European bank stocks are now spilling over to the U.S. banks. Leading U.S. financial stocks have been plunging recently. Just look at a chart of JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), Citigroup Inc. (NYSE:C), and Wells Fargo & Company (NYSE:WFC) and you will see how quickly these stocks have fallen since December 2015. Despite the decline in the large bank stocks the Federal Reserve (U.S. central bank) continues to stand firm that the economy remains fairly strong. Has the Federal Reserve ever gotten a crisis correct? 

This time around there are financial problems in China, Japan, and Europe. All of these enormous economies are printing money in one form or another. Yet, the major stock market indexes are all plunging lower. This problem is not going to be easily fixed by the central bankers anytime soon, so stay on guard as 2016 is going to be a very volatile year. Traders and investors should continue to watch the leading European financial stocks for clues to the future action in the markets.







Nick Santiago
InTheMoneyStocks  [more]

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This Is How New All Time Highs Could Easily Happen #NYSE #NASDAQ #S&P

February 10, 2016 – Comments (0)

Every analyst and their mother are screaming about a continued massive collapse in the stock market. The fear is palpable, it tastes like onion and garlic. Billions of Dollars are being pulled from hedge funds and mutual funds on a monthly basis. There is significant fear at every turn. While this is true, there is a small chance the market could surprise everyone and head to new all time highs. Let's look at what would have to happen to create this scenario?

1. Oil would need to head back to $50/barrel. This would alleviate major concerns over oil company debt. The move would need to happen quickly to avoid major defaults. The time frame would be in the next month. If oil shoots back up, the banking stocks would jump higher as investors stop worrying about how much exposure they have to the impending defaults.

2. Janet Yellen would need to give the pause signal for future rate hikes for the remainder of 2016. This may happen if the US stock markets continue to stay shaky and the global recession continues to worsen.

3. China infuses a massive stimulus package that starts seeing growth return. Any uptick in economic data in China will send the world markets soaring. In addition, it would add fuel to a commodity rally.

4. Investor sentiment gets so bearish, a short covering rally could be epic and cause the markets to retest and break the highs. Investors, realizing they are on the wrong side, jumping back on the buy side.

While intriguing to think about, the likelihood of these things happening in the near term of maybe 5%.

Gareth Soloway
InTheMoneyStocks  [more]

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If You Are Not A Short Term Trader You Won't Survive

February 10, 2016 – Comments (3)

It is amazing to think how smart everyone can look when stock markets are rallying higher everyday. Since March 2009, the S&P 500 Index has surged higher by 1468 points. As you may know, the S&P 500 Index peaked out in May 2015 at 2134.72. It is safe to say that this rally from the 2009 lows was one of the biggest price advances ever in stock market history. Many traders and investors give the credit of the stock rally to the Federal Reserve Bank's easy monetary policy. This reason is certainly one of the primary reasons why the stock markets surged higher. Other reason for the enormous advance in stock prices were due to stock buybacks, corporate consolidation, and bankruptcy restructuring.
It is safe to say that when the stock markets were rallying higher it was almost easy to make money. Simply put, if you picked a stock that went lower the overall market would help to rescue the equity from the decline. In other words, the stock rally would bail out a bad stock trade. That is why people love bull markets. This is a normal condition of easy monetary policy. Now these markets are not so forgiving. Perhaps you have noticed what happens to stocks when the company misses earnings, they get slaughtered. Just look at stocks such as LinkedIn Corporation (NYSE:LNKD), or Tableau Software, Inc. (NYSE:DATA) recently. These stocks have lost half of their market capitalization after reporting poor earnings. Other companies have been sold off sharply just for initiating poor guidance. The point is that markets are now different and will show no mercy on companies when the news is bad. 

So how can traders and investors make money at this time? Simply put, the buy and hold method does not work in bear bear markets. Remember the old market adage, markets take the stairs up and the elevator down. In other words, stocks decline much quicker in bear markets. The only way to make money in this type of environment is to understand and use charts. You must simply understand the technicals. The days of listening to P/E ratios, book value, earnings per share, and the rest of the fundamental jargon is over. You must simply be a short term trader that buys solid technical support levels and sells major resistance levels. At this time, the path of least resistance is downward. Nearly every trading session we see huge price swings in the major stock indexes and this how you can make money in this market. If you are going to try and use the Warren Buffett (buy and hold) approach you better hope that you live a long long time because it could be a while before some of these stocks see their 2015 highs again. Simply put, if you are not a short term trader you won't survive in these markets.





Nick Santiago
InTheMoneyStocks  [more]

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Oil Hit Key Support & Bounced Because Of This Simple Key

February 09, 2016 – Comments (0) | RELATED TICKERS: USO

The United States Oil Fund LP (ETF) (NYSEARCA:USO) fell sharply today as more economic fear swooped in to freak investors out. As it fell, it hit a major level that only technical traders would see. This level should blow your mind because it is exactly where oil went to and why it bounced and could continue to bounce. Anyone not reading the charts should learn how. There are millions in profit available to those that know this stuff.

Gareth Soloway  [more]

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Is QE-4 Around The Corner?

February 09, 2016 – Comments (0)

As we all know, the Federal Reserve raised the fed funds rate by 25 basis points in December 2015. Since that quarter point rate increase the stock markets around the world have been tumbling lower. Volatility has surged higher as central banks around the world scramble to figure out there next move. In the past, jawboning by the Federal Reserve has been used to calm the markets, but this time many traders and investors believe that the Federal Reserve has its hands tied. Stocks now seem to come under severe selling pressure on a daily basis. 

Recently, the 10-year U.S. Treasury Note yield has plunged to 1.72%. This is signaling that investors would prefer to be in U.S. Treasuries instead of stocks. Oil prices have plunged to less than $30.00 a barrel signaling weak global demand and a stronger U.S. Dollar. What can stop these markets from deflating further? In the past, the answer to a deflating market has been lower interest rates and add lots of liquidity (quantitative easing) to the system. These days the large European banks such as Deutsche Bank AG (NYSE:DB), Credit Suisse Group AG (NYSE:CS), Banco Santander, S.A. (SAN), and UBS Group AG (NYSE:UBS) are making new multi-year lows on a daily basis. In fact, most of these Euro bank stocks are making new all-time lows. Something is wrong when leading financial stocks have this type of price action.

Problems in Asia have been increasing on a daily basis. The Nikkei 225 Index has dropped by nearly 4000 points since early December. The Shanghai Composite Index has plunged by nearly 50.0 percent since its June 2015 high. What are these central banks going to do to help stabilize these markets?

In late 2008, the central banks around the world staged a very coordinated effort to inflate the stock markets around the world. Can they do this again? After all, the Peoples Bank of China, the Bank of Japan, and the European Central Bank are all doing there own version of quantitative easing right now. So what is wrong? Why are markets tumbling? You see, the Federal Reserve is going to have to join the money printing party once again. The Fed is the missing piece of the liquidity puzzle. After all, most all commodities are priced in U.S. Dollars. The strong U.S. Dollar is one of the primary reason for the weak oil and commodity prices that we are seeing at this time.

Everyone should forget further rate increases by the Federal Reserve. The fed is going to need to cut interest rates and eventually start another QE program to get these markets up around the world. Maybe this time the central bank to the world (Federal Reserve) won't call it quantitative easing, but it's going to need to do something if it wants these markets to stop deflating. In my humble opinion, QE-4 is around the corner.  [more]

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Oil Set To Spike Another 20%: Buy These Stocks

February 04, 2016 – Comments (1) | RELATED TICKERS: CHK

Oil has put in a near term bottom. While most analysts are insanely bearish, the charts and cycle work confirm it. The upside target is $38.00-$40.00 per bbl. The price action in oil has changed dramatically in the last few weeks. Bearish oil inventory reports have initially caused a quick sell off, only to reverse and squeeze the price higher. When you see this type of price action at the lows, it is an extremely bullish signal. Simply put, it means institutional money is buying the dips now. Of course they will not tell you that, but the money flow proves it.

With 20% upside in oil, many beaten down oil stocks will see dramatic squeezes. You can see the squeeze taking place already on names like Freeport-McMoRan Inc (NYSE:FCX). Freeport is already up over 50 its recent lows and saw as much as a 24% gain today before pulling back. So what are other names that should see a squeeze if oil is to climb another 20%? Companies like Seadrill Ltd (NYSE:SDRL), Kinder Morgan Inc (NYSE:KMI), Transocean LTD(NYSE:RIG) and Chesapeake Energy Corporation (NYSE:CHK).

Every one of these names is loaded to the top with shorts. An oil price near $40 would cause massive short covering. These stocks probably have 30-50% upside potential if (and only if) oil spikes close to $40.00.

Gareth Soloway
InTheMoneyStocks

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