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kenny1703 (< 20)

June 2012

Recs

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Siamese Twins

June 27, 2012 – Comments (0)

“The Eurocollapse is coming, the Eurocollapse is coming!” US markets finished lower Monday pricing in the expectation that the upcoming EU Summit will be an exercise in futility and may as well be run by rabble rousing soccer hoodlums.

George Soros may not have a solution, but he can certainly diagnosis the problem. Speaking to Bloomberg about the financial debacle that is Europe, the billionaire investor said,

“Basically there is an interrelated problem of the banking system and the excessive risk premium on sovereign debt - they are Siamese twins, tied together and you have to tackle both. It's recognized that you have to do that and there is no widespread agreement on what to do on the banking side. It's the beginning of a banking union and there is a
disagreement on the fiscal side and unless that is resolved in the next 3 days then I am afraid that the summit could turn out to be a fiasco, and that could be fatal, because you are facing the possibility of Greece leaving the euro and perhaps the European Union
and you need to strengthen the remaining euro structure to withstand that shock.”

Of course the “Siamese twins” phenomenon isn’t just a European problem. Here in the US, we have our own conjoined siblings – the banksters and the Fed – crippling the free market system through a no-fail guarantee.

We not only have to take care of our banks, but the European banks too, thanks to Ben Bernanke and the Central Banking Cabal. That’s a whole lot of mouths to feed in our very hungry multi-headed family.


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

__________
Larry Levin
President & Founder - TradingAdvantage   [more]

Recs

4

Movies

June 20, 2012 – Comments (1)

In 2002 a film entered movie theatres across the country and quickly became successful for its comedic value and charm: My Big Fat Greek Wedding. What’s playing out on Fraud Street and in every political chamber of the world is not a comedy, but a tragedy.

If this tragedy had a name it would certainly be changed from time to time along with the odd circumstances and never-ending bailouts. Now, however, it might be called The Big, Fat, Greek Relief Rally.

Last week the market was told that the baddies would win the weekend election, but all would be well as the Global Central Planning Nannies would be there to take care of us by rigging the markets to do their bidding. But the baddies didn’t win; the good guys won. That is to say, those that will NOT upset the apple cart won. When told to jump, they will respond with “How high sir?”

The market initially gave back its gains from Friday, but realized the Fed will give it QE3, 4, & 5 so why worry. The ES clawed back to unchanged and then traded in a miserably narrow range into the close with a final surge to close up on the day.

And why not, right? What’s different in the economic world end game today? Absolutely nothing! As mentioned above, the New Democracy's narrow victory Sunday means that Greece will continue playing by Germany’s rules as the ECB tries to prop up the rest of Europe.

Plus, we’ve moved on to today’s drama - the Large, Chubby, Spanish Debt Dilemma. Things in Spain are worsening fast as the countries bond yields head to uncharted territory (aka they aren’t really worth anything) with yields on the 10-year notes reaching over 7%.

The only marriage that matters is the one between Ben Bernanke and the Central Banks and their vow to solve the world’s problems by trying to print more money. Yes, here in the US we’re eternally wedded to all of Europe’s debt and there’s no prospect for a divorce.

The market no longer reacts one way for very long to the minor macro-economic or political events, because we’ve all wizened up to what’s coming – The Gigantic, Morbidly Obese US Liquidity Injection…coming to a theatre near you soon, with trailers of The Gigantic Italian Liability Monster.


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

___________
Larry Levin
President & Founder - TradingAdvantage  [more]

Recs

1

Mirrors

June 12, 2012 – Comments (1)

“Mirror, mirror on the wall; who’s the most rigged of them all?” The mirror in this fairy tale of “free markets” responds “Boxing. No wait, I’m changing my answer: global equity markets.”

Monday’s market action was a mirror image of Friday’s – the same but backward. As you know by now, Friday levitated much higher on no volume but somehow, magically, exploded even higher in the final minutes. Hopium was in the air. The market expected a bailout of Spain and went crazy into the close.

Stop and think about that. Would you put billions of dollars at risk in the closing minutes of a Friday with an impending bailout – or no bailout – of a major country on the line? You wouldn’t and neither would Fraud Street, unless it knew the outcome…unless it was rigged.

Once Fraud Street asked the mirror what the Spain bailout outcome would be and those “special banksters” got their answer – “It’s a done deal” – they drove the market much higher.

This morning, however, there was no add-on buying frenzy. Fraud Street got nervous. In its best imitation of Gordon Gekko who said “Sell it all. What the hell, so we only make ten million,” the banksters today sold Friday’s ramp-job and surely pocketed 10-times Gekko’s quote. After all, they happened to buy at just the right time – like ol’ Gordon happened to often do himself.

In addition to the simple lack of add-on and all-out buying this morning, we read the following during the trade day from Reuters:

European finance officials have discussed as a worst-case scenario limiting the size of withdrawals from ATM machines, imposing border checks and introducing capital controls in at least Greece should Athens decide to leave the euro.

EU officials have told Reuters the ideas are part of a range of contingency plans. They emphasized that the discussions were merely about being prepared for any eventuality rather than planning for something they expect to happen - no one Reuters has spoken to expects Greece to leave the single currency area.

Belgium's finance minister, Steve Vanackere, said at the end of May that it was a basic function of each euro zone member state to be prepared for problems. These discussions appear to be in that vein.

But with increased political uncertainty in Greece following the inconclusive election on May 6 and ahead of a second election on June 17, there is now an increased need to have contingencies in place, the EU sources said.

The discussions have taken place in conference calls over the past six weeks, as concerns have grown that a radical-left coalition, SYRIZA, may win the second election, increasing the risk that Greece could renege on its EU/IMF bailout and therefore move closer to abandoning the currency.

No decisions have been taken on the calls, but members of the Eurogroup Working Group, which consists of euro zone deputy finance ministers and heads of treasury departments, have discussed the options in some detail, the sources said.

As well as limiting cash withdrawals and imposing capital controls, they have discussed the possibility of suspending the Schengen agreement, which allows for visa-free travel among 26 countries, including most of the European Union.

It must take phrases like “worst case scenario” or “impending doom” to bring a reality check. Could it be that finally there’s not enough hopium left in the pipe?

Then again, Backstop-Ben will soon be looking into the mirror without asking a question. Rather, he’ll point to his reflection and say “Now it’s all up to you big guy.”


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


_________
Larry Levin
President & Founder - TradingAdvantage  [more]

Recs

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Trading Tip #30: Advanced Technical Indicators - Bollinger Bands

June 10, 2012 – Comments (0)

Let's take another look at a more advanced technical tool - Bollinger Bands. These were developed by John Bollinger in the 1980s. In simple terms, they use a simple moving average and standard deviations to give a different perspective on potential highs and lows.

Bollinger Bands have a middle band and two outer bands.

The middle band shown on this indicator is a moving average, usually a simple moving average (see Tip #29 for more on those) although some traders do use the exponential moving averages. The standard deviation formulas for the outside bands might be calculated like this example:

* Middle Band = 20-day simple moving average (SMA)

* Upper Band = 20-day SMA + (20-day standard deviation of price x 2)

* Lower Band = 20-day SMA - (20-day standard deviation of price x 2)

The actual values used may depend on user preference. Use and interpretation may also vary.

This technical tool is a way some traders try to define and observe potential patterns. I don't claim to be an expert on these, but there are some common basics that analysts agree on. Volatility is the name of the game for the upper and lower band. Since they are based on standard deviations from the middle band they move closer to the middle when volatility contracts, and further out when volatility expands. Based on this level of volatility, the relationship between those lines and prices can be used to signal potential market conditions. Some analysts might see an overbought market where prices touch the upper band. Conversely, an oversold market might exist when prices are edging towards the lower band.


Past performance is not necessarily indicative of future results.
courtesy of Barchart.com

Other subtle patterns can be seen with Bollinger Bands on a chart.

The way the prices interact with the bands can lead to different kinds of patterns that technical analysts might interpret for trade designs. They have names like W-bottom or M-top or walking the bands. If you like playing with these statistical measures, you might enjoy reading more about them. Generally speaking, the visual cues regarding volatility are the main feature for this kind of chart overlay. They can also be used in conjunction with other analysis or observations as a way of complementing other signals or patterns. Play with Bollinger Bands and see how they might work with your trading tools to confirm or sharpen your market observations.

Best Trades to you,

Larry Levin

Founder & President - Trading Advantage  [more]

Recs

0

The B-List

June 06, 2012 – Comments (0)

It’s just another day in the new financial-bizzaro world where any little piece of data may move the markets. Forget imploding Europe or mounting debt levels, the market “reportedly” went higher on a better than expected ISM Non-Mfg number.

You may ask, what the heck is the ISM Non-Mfg number anyways? It’s a gauge of new business orders from the Institute for Supply Management. Think of it as the “B list” of economic data reports, akin to the aging celebrity who appears on the late-night cable movie… or those on The Apprentice: you’re fired!

Anyways, the non-manufacturing ISM index edged up to 53.7 in May from 53.5 in April, a touch above economists' forecast. And woo-hoo, we got a small broad market rally because of a surprise 0.2% jump, as opposed to a flat reading from the Betty White of economic data.

The real reason for the rally may be just another day of “hope springs eternal.” Until Ben or his ECB cronies make any pronouncements, we still have the prospect of LTRO3, or QE3, or some crazy combination of both on the near term economic horizon.

No worries – it’s coming.

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


__________
Larry Levin

President & Founder - TradingAdvantage  [more]

Recs

2

Secret Trading Tip: What is day trading?

June 03, 2012 – Comments (0)

Day trading is probably one of the most misunderstood labels in the industry. Some people might picture a random trader acting like a cowboy just buying and selling with pure abandon. Others might imagine a seasoned vet pouring over charts and analysis, looking for a chance to try to scoop up a few points here or there. Let’s set the record straight on what day trading does – and doesn’t – entail.

Day trading is definitely not for the faint of heart.
Day trading is possible because of the great amount of leverage there is in the markets. The ability to buy or sell contracts that represent exponentially greater values than what is held in deposit in a trading account can mean the chance for big gains or even bigger losses. That is why a lot of day trading is thought of as gambling or a Wild West show.

There are a lot of traders out there who exclusively day-trade.

The mechanics to day trading are straightforward. You are in a trade and out of it in the same trading session. There is no “holding” the position overnight or through to the next session, looking for more potential profits. That is position trading. Why open a trading position and close it in the same session? There are a bunch of reasons that someone might cite, but the most obvious is that there is a different kind of exposure between trading sessions.

For a day trader, there is an inherent risk that the market may gap up or down and against an open position when trading begins in a new session. Picture some of the overnight or over the weekend financial bombshells that could be dropped. A couple of good examples are those nights when Asian markets have tumbled on their fundamentals and North American markets open much, much lower the next day. This would be a gap to the downside that would be a big negative to an open long position.
Closing things out before the session ends is a way that some traders try to avoid that kind of exposure.

So how do day trades work?

Most markets are a constant flux between buy orders and sell orders, and it is unlikely that a highly liquid market (one that has many buyers and sellers, making it relatively fluid to open and close positions) would stay at a constant price through a whole session. Day traders look to buy low, sell high and scoop up a few points to their benefit.
Trades can be based on:
- Identifying and trying to follow a trend
- Looking for technical signals that suggest a coming reversal and try to play a breakout
- Playing market movement off identified support or resistance
- Quick in-and-out trading strategies like scalping, where the trader tries to identify arbitrage opportunities where there is a price imbalance
- Any personal system a trader might use to try to identify trade opportunities
The last one on this list is becoming more common as trading moves into the electronic world. Programs on computers look for specific algorithms and other identifiers that may signal price action that a day trader can use to try to gain an advantage.

The one thing that people need to remember is that this style of trading can also quickly accumulate fees and commissions for each round-turn on a trade. Since you are not approaching the market with a single buy-and-hold approach, you have to factor these extra costs into the 2-3 points you are trying to gain on every trade. Make sure that there is enough room to make the risk-to-reward ratio worthwhile.

Day trading is fast, and risky, and not for everyone.

The quick pull-the-trigger style trading that is synonymous with day trading is not for everyone. There are great disadvantages and heavy risks. I think the big trick is to find and stick to a trading plan. Having a pre-determined approach to the market – a place to get in and a place to get out for profit OR for loss – should help you keep your head on straight. Trading with a plan instead of raw emotions is what separates the cocky cowboy image most people might have from the actual serious day trading reality.

Best Trades to you,


__________
Larry Levin
Founder & President - Trading Advantage  [more]

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