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kenny1703 (< 20)

April 2012

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Bartender - Ben

April 25, 2012 – Comments (0)

It seems that the main “drink” on the menu for the market is the FOMC report which will be served during tomorrow afternoon’s cocktail hour, after they wrap-up their two day meeting.

All the drinks will of course be served with a garnish of Apple earnings, which came in far better than expected at $12.30 EPS after the market close that sent the stock higher in after-hours trading.

Prior to Apple’s announcement, none of today’s news was exceptionally good, but the market seemingly shrugged it all off.

It’s no surprise that the consumers aren’t really all that confident as the Conference Board’s gauge for consumers’ expectations declined to 81.1 in April, down from 82.5 in March.

Also, the Case-Shiller report was released showing that U.S. home prices dropped sharply in February to hit the worst level in almost a decade. And sales of newly built homes during March dropped 7.1%, largely because of a sizable upward revision to the government’s data on sales for February.

Bad numbers, scary numbers and of course revised numbers...... we might as well put the bevy of today’s financial data in a blender and serve it up over ice.

All eyes are on Benny and the Inkjets to see if they will once again be pouring a toxic cocktail of “liquidity.”

Trade well and follow the trend, not the so-called “experts.”


Best Trade to all,

Larry Levin  [more]

Recs

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Secret Trading Tip #3 : A Little Lesson in Lingo

April 23, 2012 – Comments (0)

The world of trading has many parts that seem a little foreign to new traders. There are plenty of catch phrases, symbols, and other banter that can be intimidating or even confusing at first. One of the biggest sources of confusion includes the shorthand that you see for many markets. Understanding what you are reading is important, and learning the basic lingo can come in handy.

Everything has a specified time and place

All futures contracts (be it for commodities or financial instruments) have very specific parts, quantities, and dates associated with them – and that’s before you even worry about the price! Not all contracts are created equal. The value of the S&P 500 contract is five times the value of the e-mini S&P 500 contract. Those are two symbols you wouldn’t want to confuse! If there are markets you want to trade, visit the exchange’s website and learn about the key parts for each contract. These will include:
The contract size
The futures months for the contract
The format for the price quote
The smallest amount by which the price of the contract can move (whole points or fractions of a point, also known as minimum tick)
Any daily trading limits for price movements
Trading symbols for the contract
- And much more!

Gimme an H! Gimme a U!

Memorizing all of this might seem like a bit of overkill, but in modern electronic markets making a mistake can happen in seconds and cost an unlimited amount of loss and confusion. Just remember that “fat finger” trade and the trouble it caused!
Let’s take a look at a contract I trade, the e-mini S&P 500. This futures market trades electronically (hence the “e”) on the CME Group’s Globex platform. On their website, I can go to Contract Specifications and learn that:
The symbol for this market is ES. I can use this code to find price quotes on many tickers.
The contract size is $50 x the e-mini S&P 500 futures price. I can use this value to calculate the dollar risk/gain per point in the market. Basically, if each point is worth $50, a 3 point movement would be $150. If I want to calculate the total dollar value of a single contract, I just have to multiply the current price by $50. If the market is trading at 1,280.00 that means it is worth 1280 x $50 = $64,000.
The minimum price fluctuation is 0.25. That means that if I am making an offer or trying to quote a price, I know that there are quarter point increments so I can’t offer a price like 1265.30 in this market. It would have to be 1265.25 or 1265.50.
The contract details also list the trading times so I know when a session begins and ends, and also the trading contract months. This market has contracts for March, June, September and December (the quarterly cycle) – these months will be written with their own symbols as well – H, M, U, Z. The full list of monthly symbols is:

JAN - F
FEB - G
MAR - H
APR - J
MAY - K
JUN - M
JUL - N
AUG - Q
SEP - U
OCT - V
NOV - X
DEC - Z

Each contract will expire at some point, and that date is relative to the contract month.
If you can understand the lingo, you can avoid costly mistakes
Some of this might seem like a no-brainer; after all, a lot of trading programs will give you the info with a single keystroke so you don’t have to memorize all of it. The reason I think it is still relevant to know this is because taking the time to learn and understand how the markets work and what the lingo means can save you potential trouble. What happens if you are long ESU11 and you try to close the position by selling ESZ11? Can’t do it – you would know that the ES U11 is the e-mini S&P 500 for September (U) 2011 and the ES Z11 is the e-mini S&P 500 for December (Z) 2011.

Best Trade To You,


Larry Levin
Founder & President- Trading Advantage __________________
Larry Levin's Trading Advantage is a leading investment education firm that empowers traders to achieve and surpass their financial goals. More than 50,000 students have used Larry Levin's proven techniques for powerful results.   [more]

Recs

1

The Spanish Guitar

April 18, 2012 – Comments (0)

Monday was another down day for the S&P500, but a rather pleasant day for the Dow. Caterpillar and Shitibank had nice rallies going – for a while. Both finished well off of their highs. AAPL and GOOG on the other hand were slammed all day long. Are they in a race to see which will reach $500/share first?

On a more positive note for the markets in general, this was the fourth heaviest exchange volume of the year. Perhaps we may are headed towards more practical levels?

But even the bright spots on the valuation and volume horizon, it can’t hide the black cloud that is Southern Europe. With another European Central Bank bailout eminent, it’s the same old tune. Unfortunately, this time it’s a louder instrument.

The Greek lyre has been replaced by a cacophonous Spanish guitar. Yes, Spain will be the next member of the Eurozone to beg for a financial bailout. Spain’s bond yields are now perilously close to the 7 per cent level that forced Greece, Ireland and Portugal to come singing their “woes is me, we ain’t got no money” song to the ECB.

The problem is that Spain's €1.1-trillion economy is twice the size of the previous three bailout victims put together. It seems Spain was “mistaken” about their debt levels. The Wall Street Journal reported that Spain’s Debt/GDP ratio is closer to 135% than its “official” 68.5%.

It’s so bad in Spain that their inept federal financiers have to bail out the even more inept autonomous regions. Some regions have failed to pay public service contractors for months and now the Spanish central government has offered credits to help pay those debts. It’s the equivalent of the federal government bailing out say Michigan or Mississippi and telling Texas and Florida they have to clean up the mess.

Trade well and follow the trend, not the so-called “experts.”


Larry Levin
President & Founder - TradingAdvantage
__________________
Larry Levin's Trading Advantage is a leading investment education firm that empowers traders to achieve and surpass their financial goals. More than 50,000 students have used Larry Levin's proven techniques for powerful results.   [more]

Recs

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Trading Tip #20: Understanding Candlestick Patterns - Harami

April 08, 2012 – Comments (0)

I've already covered some of the better known patterns like doji (Tip #18) and engulfing (Tip#19) – now it's time to add harami to your candlestick chart pattern arsenal. Let's take a look at what this technical signal looks like, and what opportunities might be presenting themselves when you see it.

Harami patterns can be bearish or bullish

Harami, like engulfing patterns, are a two candlestick formation. They are actually often confused with engulfing patterns because they both involve candles where one real body is bigger than the other. The difference is that in harami, the preceding (or first) candle in the pattern is the longer one of the pair; it encompasses the whole body of the second candlestick.

If you see this two candlestick pattern, it could be a sign of a reversal

In a candlestick chart, bullish harami are formed when a long filled (or red) candlestick appears during an established downtrend and is followed by a smaller hollow (or green) candlestick. The reason this is a bullish signal is based on the idea that the first candle forms during a session with potentially high volume and bearish sentiment. The following day, there is a gap higher to open, a smaller trading range, and prices were supported above the previous day's close. This is seen as a potential indication that things are about to turn – a bullish reversal.


A bearish harami is made up of a long hollow (or green) candlestick occurring during an established uptrend which is then followed by a smaller filled (or red) candlestick. Similar principles apply to this signal as they did to the bullish version – the first day makes way for a smaller range led by a gap lower and selling pressure that kept prices from rising.


It is worth noting that some candlestick chartists suggest harami can include candlesticks of any color combination – filled + filled, filled + hollow, and hollow + hollow. The whole point for them is for a larger candlestick to be flanked by a smaller one. The reversal signal is just potentially stronger when the second candle is a different color. The two different candle sizes are just seen as an abrupt and sustained bit of trading contrary to the prevailing trend.

Harami are telling you that there has been a sudden trading shift

This candlestick pattern tends to crop up when there has been an apparent loss of trading momentum. The kanji definition of harami is embryo – I take this to mean that the second candlestick is just the early start of a new trading direction, contrary to the existing one. Like most candlestick patterns, it may be wise to look for confirmation of a reversal once you spot harami.

Best Trades to you,

Larry Levin
Founder & President- Trading Advantage   [more]

Recs

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Trading Tip #20: Understanding Candlestick Patterns - Harami

April 08, 2012 – Comments (0)

I've already covered some of the better known patterns like doji (Tip #18) and engulfing (Tip#19) – now it's time to add harami to your candlestick chart pattern arsenal. Let's take a look at what this technical signal looks like, and what opportunities might be presenting themselves when you see it.

Harami patterns can be bearish or bullish

Harami, like engulfing patterns, are a two candlestick formation. They are actually often confused with engulfing patterns because they both involve candles where one real body is bigger than the other. The difference is that in harami, the preceding (or first) candle in the pattern is the longer one of the pair; it encompasses the whole body of the second candlestick.

If you see this two candlestick pattern, it could be a sign of a reversal

In a candlestick chart, bullish harami are formed when a long filled (or red) candlestick appears during an established downtrend and is followed by a smaller hollow (or green) candlestick. The reason this is a bullish signal is based on the idea that the first candle forms during a session with potentially high volume and bearish sentiment. The following day, there is a gap higher to open, a smaller trading range, and prices were supported above the previous day's close. This is seen as a potential indication that things are about to turn – a bullish reversal.

http://tradingadvantage.com/lp/tradingtips/images/email20_chart-right.png  [more]

Recs

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Economic Fantasy Land

April 04, 2012 – Comments (0)

The market is back to the races in Q2 today with a whole lot of green on the board. Stocks, oil, gold, and commodities all finished higher today.

The reason: the news folks were touting the manufacturing numbers from February.

Yes, the ISM index of national factory activity rose to 53.4 in February, topping economist’s expectations of 53.0. Although it was only a .4 bonus, it was a full point above last month’s number.

The economic data released Monday was far from uniformly positive. Construction Spending data was not the +0.7% gain that was expected but a -1.1% decline. It was also far worse than last month’s release of -0.1%. It doesn’t seem to matter. Any and all economic data is viewed through a myopic lens that screens out any negative information and over-emphasizes the positive.

As we saw today, the market went straight up despite the aforementioned construction spending that suffered its biggest drop in seven months. In addition, we learned the euro zone's manufacturing sector contracted for an eighth straight month in March, with the downturn spreading to the core economies of Germany and France.

But none of this seemingly matters. With the central planners in charge, we’ve become conditioned to the good-news-only part of the proposition.

When you continue to operate in economic fantasy land with a Federal Reserve determined to keep the dollars coming, and interests rates low, there’s no reason to consider the bad news.

Trade well and follow the trend, not the so-called “experts.”

Best Trade to You,

____________
Larry Levin
President & Founder - TradingAdvantage   [more]

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