I Miss Milton Friedman.

The best video I came across in a few months. In a time when economists like Nouriel Roubini, Paul Krugman and Joseph Stiglitz get all the attention from the media and politics, I find Milton Friedman`s lessons even more unvaluable. What would he think, and what would he say if he saw what has happened to America?

"Though opposed to the existence of the Federal Reserve, Friedman argued that, given that it does exist, a steady, small expansion of the money supply was the only wise policy, and he warned against efforts by a treasury or central bank to do otherwise." - in Wikipedia

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

Great Quote: US Treasuries And The Tech Bubble

“US Treasuries are not insurance any more than tech stocks were insurance in 1999.”

Eric Falkenstein

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

The Bulls Parade Is On The Finish Line.

Interesting piece on Retail Investor`s sentiment:

"The bulls are officially on parade. It’s all blue skies from here. QE2 has saved the economy and the USA is set for another epic stock market rally that will involve no downside. At least that’s the sentiment expressed by the most recent small investor survey. Of course, these are the same investors whose sentiment was near an all-time low just 7 weeks ago with a bullish reading of 20.7% and an S&P 500 that was almost 15% lower."

With that said, I would also like to add Marc Faber`s short term stock market outlook, "A correction is overdue, but I would not think that a bear market is around the corner. The correction will be a buying opportunity and then we will have a boom in stocks and in commodities like we had between the end of 1999 and March 2000 when markets went up very strongly."

So for now, it seems that the line of least resistance will be down. Some important data is to be released later today (GDP, Chicago PMI and Consumer Sentiment). I will keep an eye on the Chicago PMi and especially on Monday`s ISM Manufacturing numbers. As you remember this recent rally has started with an upbeat ISM in the end of August or early September.

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

Initial Claims Data Much Better Then Consensus.

Initial Claims: 434,000 vs 455,000

This will put a floor on prices and may even propel a rally in equities. Have a great trading day.

The comments section is back on.

PS: It seems that the "not so much QE2 trade" is gaining momentum, markets are weaking;

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

Closed EURUSD And S&P Futures Shorts. Back Into Full Daytrading Mode.

I had a good run on both shorts, especially on EURUSD and I closed both trades last night. I am focusing again exclusively on intraday plays on eMini S&P 500 Futures, Nymex Oil Futures and EURUSD until I detect a good opportunity for a multiday play.

In a few minutes the Jobless Claims numbers will be released (key data for assessing the state of the economy) and later at 10.30 ET, the EIA Natural Gas Report will come out. I know many of you are Natural Gas day traders, so this is the high point for your week in terms of volatility. Fasten your seat belts. :)

We had 3 "Earnings 1 Day" plays from yesterday, and it seems that today we did not hit the perfect 5 on 5 like yesterday, but it looks good overall. Our 2 long plays were:

- Hill-Rom Holdings, Inc. (NYSE:HRC) rose 5.8% in after hours
- Choice Hotels International, Inc. (NYSE:CHH) fell 6.3% in after hours

And our short play:

- Quantum Corporation (Public, NYSE:QTM) fell 4.70% in after hours

On a different topic I will leave you with a site suggestion (http://www.automotive-images.co.uk/). This is Andrew Hill`s website a former GM, Lotus and MG Rover car designer turned into an artist. This is one example of his work:

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

Bill Gross Calls The Top In The Bond Market

“It is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. It raises bond prices to create the illusion of high annual returns, but ultimately it reaches a dead end where those prices can no longer go up.”

Bill Gross, Bloomberg

Related: ProShares UltraShort 20+ Year Trea (ETF) (TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (TLT)

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

Sea Of Red. Still Short EURUSD And eMini S&P Futures And I Am Loving It.

Futures are printing red across the board this morning. I am still short EURUSD and eMini S&P Futures, so this sea of red matches my red ship perfectly.

I am working on the "Earnings 1 Day Setups" to send to subscribers in a few minutes. Have a great trading session and check this live performance from Jay-Z. Powerful and inspiring.

PS: I am getting started on Facebook, but I am not yet really convinced about it...

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

Its Hard To Find Oversold Stocks. A Correction Is Just Around The Corner.

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

The History Of The Fed, Over The Last 20 Years, Is One Of Bubble To Bubble

“The Fed would like to talk up as many asset classes as it can. The history of the Fed, over the last 20 years, is one of bubble to bubble: one bubble deflates to create another bubble. We are certainly heading into the mother of all bubbles with commodities and gold.”

Scott Minerd, the Santa Monica-based chief investment officer at Guggenheim Partners LLC

Related: United States Oil Fund LP (ETF) (NYSE:USO) , iPath S&P GSCI Crude Oil Total Return (NYSE:OIL), PowerShares DB Agriculture Fund (NYSE:DBA) , SPDR Gold Trust (ETF) (NYSE:GLD), iShares Silver Trust (ETF) (NYSE:SLV)

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

Short S&P Futures And Long USD.

After some hesitations over the last few sessions it seems that the risk trade is now off. I am staying short S&P 500 Futures and long USD versus EUR.

Yesterday I wrote F5 Networks (FFIV) would report after the bell. Well, that was incorrect. It will report today. I am very sorry for that.

On other topics, I will leave you with the fantastic test drive of the Ferrari Enzo, probably named after my son. :)


TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

F5 Networks, Inc. (FFIV) Has A Great Earnings Track Record.

As I am preparing the "Earnings 1 Day Plays" Report to subscribers I want to share with you that F5 Networks (FFIV) has a very good historical performance on the day after it releases the earnings report. On average FFIV has rallied 4.9% and has been beating earnings estimates on 77% of the reports.

It may very well be an interesting play. F5 Networks (FFIV) will report today after the bell. Our best play last week on this setup was Chipotle Mexican Grill, Inc. (NYSE:CMG). We caught a 15% one day rally on that stock.

Have a great trading day.

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

A Must Read On Fed`s Permanent Open Market Operations (POMO)

A must read on Fed`s Permanent Open Market Operations (POMO): A CASE STUDY ON THE FED’S PERMANENT OPEN MARKET OPERATIONS

"I’ll be honest with the reader. When I ran this data I was really hoping that I would find evidence showing that the POMO’s have no impact on market direction. The conclusion is unsettling for obvious reasons. And while this might be nothing more than a case of datamining the evidence is convincing that the Federal Reserve is helping to boost equity prices without creating an equally positive change in SUSTAINABLE economic growth. I’m not a conspiracy theorist, but when I’ve got the Manager of the System Open Market Account for the Federal Open Market Committee telling me that he wants to keep “prices higher than they otherwise would be” combined with this evidence it makes it very hard to believe that the Fed isn’t attempting to outdo Bernie Madoff."

in the Prag Cap

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

Trading Service Subscription Update

The system showed very little volatility this past week. The Daily Stock Picking System rose on Monday 0,84% and then fell for 4 consecutive trading sessions, from Tuesday to Friday (-0,61%, -0,91%, -0,65% and -0,89%). The daily losses were minor, all smaller then 1%. The system is now up 98% year to date:

We were very active last week on the trading subscription service, opening two swing trade shorts on EURUSD (we are up 17 pips) and on eMini S&P Futures (we are down 9 points), placing three Nymex Oil Futures intraday trades (-12 ticks, +27 ticks and -57 ticks) and one eMini S&P Futures intraday before the swing short was opened (-2,5 points).

Also last week, we scored big on two "1 Day Earnings Play", Chipotle Mexican Grill, Inc. (CMG) +14,80% and Informatica Corporation (INFA) +6,00%, lost on Align Technology, Inc. (ALGN) -12,40% and had a break even trade on The Chubb Corporation (CB) -0,75%.

It was not a fantastic week, but I am sure there will be plenty of opportunities in the next few weeks.

Besides, on my own trading I have also traded heavily on Nymex Oil Futures, EUR Futures and eMini S&P Futures on intraday very short term plays that cannot be replicated on the subscription. I had a very week and I am looking forward into next week.

I will leave you with the Lamborghini Murcielago road test. Fasten your seat belts:

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

Getting Started On Facebook.

I like to be trendy, modern and stay up to date. But I am only joining Facebook now. I am the last person alive to be joining Facebook. I am feeling like a caveman.

So, add me as your friend to keep tracking the trading activity on the blog.

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

A Perfume Made For Traders. Meet 1 Million.

I wear 1 Million, Paco Rabanne`s perfume. I cannot imagine a more appropriate perfume for serious traders then this. Can you? :) Besides the fragrance is superb.

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

Does Riverbed (RVBD) Still Have More Fuel In The Tank?

A subscriber just send me an email asking me about Riverbed Technology, Inc. (NASDAQ:RVBD). He was planning to short it and just wanted to know my view on it. Well, I answered, "Lets put it this way, I would never buy that stock here and now. With that said, and with the stock being so overbought, a short is probably a smart play. Of course many things can happen, for example the company can be bought by a bigger player... But if anything out of the box does not happen you will be paid for shorting it. Check NFLX pattern yesterday and today. It may very well do a similar pattern."

I placed a small short line myself at 55 USD.

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

An Interesting Thought On QE2

"Of course, the more inflation expectations rise, the less likely we are to see the Fed proceed with its QE2 program. We've already heard more than one Fed governor say that QE2 is not yet a done deal. I still think there's an outside chance that the Fed does little or nothing in the way of QE2 after next months' FOMC meeting. Though that might be a disappointment to the market at first, any selloff should be viewed as a buying opportunity. It's never a bad thing for the Fed to do the right thing."

in Calafia Beach Pundit

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

NetFlix (NFLX) Is Down, Bank Of America (BAC) On The Radars.

It seems that Blogger is experiencing some technical problems and I cannot upload the technical chart with the overbought / oversold levels...

NetFlix (NFLX) opened down 3% so its a perfect time to close the short line in that stock.

I am following Bank Of America (BAC) closely. The stock is way, way oversold and ready for a bounce. I am not playing it right away, because I am bearish across the board and a market correction will surely send Bank Of America (BAC) even lower. But if I am wrong about the impending correction, BAC may very well be the star stock for the next couple of weeks.

As long time followers of this blog already know I love Montblanc pens. I inherited one from my grandfather and my parents also gave me one as a birthday present.  I only like to write with that pen, at least when I am working. It helps me focus. 

I am posting below the John Lennon`s edition. Another masterpiece from MB.

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

Naming A Submarine After My Trademark?

While reading the daily news I came across this headline, "HMS Astute: world's most advanced nuclear submarine runs aground". Well, what a better name then HMS to call the world`s most advanced submarine? :)

Markets are very quiet this morning. Nothing really happening at all.

TraderHMS offers a full trading subscription service. But there`s much more to life then trading. That is why this blog covers everything HMS loves outside of the markets: good music, art, cars, traveling and sports.

Are Markets Beginning To Crack?

Markets are finally beginning to crack a bit. The EURUSD trade is now more then 100 pips below the morning`s highs. And of course when the dollar catches a bid, stocks tremble.

This was one of the best goals from yesterday Champions League round. A beautiful, powerful strike from Chelsea`s Zhirkov. "From Russia With Love".

Bank Of America (BAC) Led The Reversal Today.

I was watching Bank Of America (BAC) trade lower and making new intraday lows and thought to my self, "markets will reverse". Of course that I was already short, so some of it might very well have been some kind of wishful thinking... :)

I was chatting with the Ottawa Trader and told him that the market was about to reverse as BAC traded lower and lower while ES trade near its highs for the day.

Now, seriously, markets seem to be reversing and BAC is down more then 3% as I write this post. Have you learned how to double your money?

The Safest Way To Double Your Money.

"The safest way to double your money is to fold it over once and put it in your pocket."

Kin Hubbard

Going Short NetFlix (NFLX) Again?

Yesterday I was able to do a good play shorting NetFlix (NFLX) at 164 and 165, and closing it at 161. I am checking the pre-market quotes now and it seems that NetFlix will open at 171. That is quite a gap. I am considering buying another ticket for a short ride. Nothing too big, because this is a fast and furious stock.

Have a great trading session. Check the SLR video I have posted last evening.

Goldman Sachs Is Not So Enthusiastic About The US Economy

Goldman Sachs (GS) is predicting sub-par growth in the US economy and lags well behind Wall Street consensus:

Initial Claims data will be released later today. The street is looking for 455k. Last week`s data disappointed a bit, and today`s data will probably set the tone for the session. I am still short eMini S&P Futures and expecting further volatility on the downside.

Bearish Final Hour. Meet The SLR.

I did a few dozen trades today in ES, ZN and EURUSD futures. Those were my usual short term trades (less then 15 minutes in the market in most of them). I am doing just fine with these trades in such an uncertain market. Its almost the electronic version of the moribund pit trader...

I am still carrying moderate short lines on EURUSD and on eMIni S&P Futures and I expect further downside this week and next. This surge in volatility is bearish and markets are still overbought. The last hour was also a bit bearish and I think that has to do with the Fed`s assessment of the economy in today`s Beige Book. (read a very good Beige Book`s analysis here)

Netflix (NFLX) is surging after hours after releasing its quarterly results. I am shorting the rally, having shorted at 164 and 165 a few minutes ago. I am targeting 160 for this short play.

As you know sports cars, or supercars are one of my passions. I like to share music, art, sports, cars and many other interests I have in life with my readers. The reason is that there`s much more to life then trading. And there are so many fantastic things to discover. Yesterday I found that fantastic music band (Belleruche). I hope you were so enthusiastic as I was, when I first listened.

Today I will share with you this fantastic video, meet the SLR McLaren, a £312,000 beauty.

Markets Rallying Back In What Is Probably Just A Reflex And Fake Move.

Markets are moving higher in the initial stages of today`s session in what seems to be a reflex rally. Price action over the course of the of next few sessions will tell us if the correction will unfold or if yesterday`s session was just a "shaking out the weak players" type of move.

We are hitting 1172 on the December Futures. This is an important level and if the market is really weak it should not trade much above this level.

I am looking forward to Champions League night again. Internazionale - Tottenham is probably today`s best match but I will watch my Barça.

Watch the 10 best goals from last year`s edition:

This Uptick In Volatility Is Bearish. Oil Fell The Most In 8 Months.

Crude oil tumbled the most in 8 months in yesterday`s session. Crude oil for November delivery fell 3.59 dollars per barrel to settle at 79.49 USD a barrel on the New York Mercantile Exchange, the biggest drop since February 4. The most active contract is now the December future.

This move marked a significant rise in volatility across the board. And as you know, volatility is bearish for prices.

Related ETFs: United States Oil Fund LP (ETF) (Public, NYSE:USO) , iPath S&P GSCI Crude Oil Total Return (Public, NYSE:OIL), ProShares UltraShort DJ-UBS Crude Oi ETF (Public, NYSE:SCO)

It Was A Fantastic Trading Session.

It was the best trading session of the last few weeks. I went into the session short EURUSD and short eMini S&P Futures. Well, it really paid off. I think subscribers are also quite happy about today`s session. We were well positioned to profit big time.

I really don`t have much time to blog this evening so I will introduce to the best music band I came across this year. Its a complex, retro yet modern  and progressive sound. Confusing? Meet Belleruche,

Related: SPDR S&P 500 ETF (NYSE:SPY) , ProShares UltraShort S&P500 (ETF) (NYSE:SDS), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort QQQ (ETF) (NYSE:QID), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ)

Trading Range Will Be Broken On The Downside.

Both IBM and Apple (AAPL) fell on after hours after releasing their quarterly earnings. Yesterday, I wrote that I was expecting a downside breakout to the 4 days trading range in the S&P 500 Index and that will probably materialize today. I am bearish on stocks for the next couple of days.

On a different topic I want to share with you this masterpiece, Arcade Fire performing "Neon Bible" inside an elevator. Amazing stuff:

Related: SPDR S&P 500 ETF (NYSE:SPY) , ProShares UltraShort S&P500 (ETF) (NYSE:SDS), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort QQQ (ETF) (NYSE:QID), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ)

Very Quiet Session So Far. S&P In A Tight Trading Range.

The S&P 500 Index has been trading in a very quiet trading range for the last 4 trading sessions. I expect that trading range to be broken on the downside.

So far, we have an inside day on the SPY. Lets see how the day progresses. By the way, we had two intraday recovery rallies on Thursday and Friday. That was probably the run that emptied this rally`s fuel tank...

Related ETFs: SPDR S&P 500 ETF (NYSE:SPY) and ProShares UltraShort S&P500 (ETF) (NYSE:SDS)

You Have To Find What You Love.

I will end the week with the most inspirational speech I have ever heard. I know many of you want to be full time traders but somehow miss the courage to try it.

Yes, trading is hard at the beginning, some of you don`t have what it takes to be a great professional trader, but...the question I ask you is, "Do you want to be asking yourself this question for the rest of your life and wonder how it would have been?..."

Listen to this magnificent speech from Steve Jobs. It can be a life changer for you:

It was a very good week. I traded ES, GC, CL and EUR heavily from both sides in my almost scalping trading style and I did a good short run on LDK Solar (LDK) from yesterday`s highs. I am feeling good about myself and about my trading.

By the way, we have redecorated our home, so my wife is very happy about it.

OPEC Wants A Higher Range For Oil Prices.

"OPEC stopped short of a commitment to defend the upper end of the price range, and with some countries muttering about higher food costs and a weaker dollar, we retain our view that OPEC will not change policy unless prices push above $100/bbl."

Source: JPMorgan Chase & Co

The technical situation of the oil market is pretty undefined, with the last 2 sessions showing a very tight range. So these conditions are setting the stage for a volatility breakout that can occur either way, but I expect it to be on the downside, due to seasonality factors, and especially due to a reversal in the risk rally across the board.

If you have any questions, please email me.

Related ETFs: United States Oil Fund LP (ETF) (NYSE:USO), iPath S&P GSCI Crude Oil Total Return (NYSE:OIL) , ProShares UltraShort DJ-UBS Crude Oi ETF (NYSE:SCO)

Mattel (MAT) Misses Earnings. Sell Any Intraday Rallies On The Stock.

Mattel (MAT) will be under pressure today. The company missed earnings and revenues estimates and is going to be punished by fund managers and traders.

Its trading down 7 percent in pre-market. It will surely make a few intraday recovery attempts, and those rallies will probably be excellent short selling points.

On a different topic, check out this amazing Roger Federer video. I have been trying to post this video for a few weeks now but I always forget about it when I am about to post something. Here it goes,

Initial Claims Will Probably Be The Catalyst For A Sell-Off

"The number of U.S. workers filing new claims for jobless benefits increased last week by 13,000 to 462,000, the Labor Department reported. Economists polled by Dow Jones Newswires had predicted new claims would rise by only 1,000.


The four-week moving average, which aims to smooth volatility in the data, increased by 2,250 to 459,000 from the prior week's revised average of 456,750."

in CBS Market Watch

As you already now, Initial Claims is the most important economic data input for my eMini S&P Futures trading. As ECRI`s Achutan as said, its a leading indicator of future`s economic activity.

Have a great trading day.

History Suggest A Correction.

The last three times the S&P 500 index has rallied 5 percent or more in the period leading up to earnings season, the index has averaged a decline of 5 percent during the six week stretch of earnings season.

Is it time to short it? At least it`s a warning signal for long positions.

Related ETFs: ProShares UltraShort S&P500 (ETF) (NYSE:SDS), ProShares UltraShort QQQ (ETF) (NYSE:QID), Direxion Daily Finan. Bear 3X Shs(ETF) (NYSE:FAZ)

IBM Is Up 7 Sessions In A Row. You May Want To Fade That.

International Business Machines Corp. (NYSE:IBM) has been rallying for 7 straight sessions. Its a good candidate for a short term shorting.

The US Dollar keeps falling and falling, now going through 1.4000 vis-a-vis the Euro. There`s no doubt who`s winning the Currency War. General Bernanke is annihilating his enemies. I don`t know if you have read yesterday`s Credit Suisse research post, but they are expecting a counter trend move in the US Dollar over the next 3 months. So am I.

On a different topic, check out this awesome strike by Liverpool`s midfielder, Meireles:

The US Dollar Is Poised For A Rally.

I had to share these stats with you:

"Based on the net speculative positions in the USD there is a 100% chance (based on past occurrences) that the dollar will rally from here. According to a report today from Credit Suisse the US dollar has rallied 100% of the time from these levels on a 3 month basis."

Source: Credit Suisse

S&P 500 Index Still Overbought. Going Into Extreme Overbought Territory Today.

The S&P 500 Index is still overbought and will open higher again today. Today`s initial boost will probably send the index to an extreme overbought condition. Its your chance to cash in if you are long or to ride it short for a few sessions if you are on the sidelines.

Its exactly when stocks are so beloved by the investment community that the best shorting opportunities occur.

If you have any questions, don`t hesitate in emailing me.

Related ETFs: Related ETFs: SPDR S&P 500 ETF (NYSE:SPY) , ProShares UltraShort S&P500 (ETF) (NYSE:SDS), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort QQQ (ETF) (NYSE:QID), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ), ProShares UltraShort 20+ Year Trea (ETF) (NYSE:TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSE:TLT)

CSX Corp. (CSX) Rallies As Expected.

CSX Corp. (CSX) is rallying over 4.5% on pre-market. I hope you were able to take advantage of yesterday`s report on how CSX Corp. (CSX) historically reacts to earnings.

On the other hand, Intel (INTC) usually trades down on the day following its earnings release. For now it looks like is going to trade against its historical pattern, but the session hasn`t even begun yet.

I will leave you today with my favorite painting from Piet Mondrian:

Have a great trading day. Don`t let them beat you.

Akamai Tech (AKAM) Rallied Nicely. The System Will Do Well Today.

Akamai Tech (AKAM) was one of today`s system picks. AKAM was rallying over 3.5% so the system will have a great session.

Intel (INTC) will report after the bell and its reaction will probably dictate what tomorrow`s session will be like. I have posted about INTC earnings earlier today.

Warren Buffett On US Bonds

“It’s quite clear that stocks are cheaper than bonds. I can’t imagine anyone having bonds in their portfolio when they can own equities.”

Warren Buffett, Bloomberg

Related ETFs: iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX), SPDR S&P 500 ETF (NYSE:SPY), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort S&P500 (ETF) (NYSE:SDS), SPDR Dow Jones Industrial Average ETF (NYSE:DIA)

CSX Corp. (CSX) and Intel (INTC) Will Report Earnings After The Close.

Did you know that CSX Corp. (CSX) has historically surpassed earnings estimates 78% of the time and has risen an average of 2% on the following day?

We are tracking earnings on the Trading Subscription Service.

Short Gold Stocks. Federal Reserve Policy Mistakes.

This is an excerpt of a fantastic article about Fed policy written in yesterday`s WSJ:

"Yes, a sustained deflation would be a big problem, but it is unlikely in today's circumstances. Countries with a depreciating exchange rate, an unsustainable budget deficit, and more than 1 trillion dollars of excess monetary reserves are more likely to inflate. That's our problem today, and it's another reason the Fed should give up this nonsense about more stimulus and offer a credible long-term program to prevent the next inflation."

Allen Meltzer, in WSJ

Markets are trading red in pre-market, I think that a correction will ensue. I am short gold stocks via the Market Vectors Gold Miners ETF (NYSE:GDX) for a short term shorting raid.

Serge Farra from the ETF Corner was really inspired in today`s post. He uses a scene from American Psycho to illustrate today`s market conditions...

Profits And Losses Are A Significant Part Of The Trading Process.

"You cannot be a successful trader if you are not willing to have both profits and losses. Both are a significant part of the trading process. Most people don`t understand this concept. They want to be right all the time. They want to make money on every trade."

Van K Tharp, in Supertrader

I will leave with a true masterpiece from Renoir:

Pierre-Auguste Renoir was a French artist who was a leading painter in the development of the Impressionist style. He was a celebrator of beauty, and especially feminine sensuality.

Who Is Right? Bonds Or Stocks?

"The FX and bond markets are now projecting an environment of U.S. economic weakness, which I largely agree with. The equity markets, however, are forecasting a period of sustained recovery and inflation. One of the these markets is wrong."

in The Prag Cap

I would like to add that not only stocks markets are forecasting a period of sustained recovery and inflation, but so are the commodities futures. My educated guess is that the virtue is in the middle. Both markets will converge into a low growth, moderate inflation scenario.

Related ETFs: ProShares UltraShort 20+ Year Trea (ETF) (NYSE:TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (Public, NYSE:TLT), ProShares UltraShort S&P500 (ETF) (NYSE:SDS) , ProShares UltraShort QQQ (ETF) (NYSE:QID)

Trading System: Weekly Update

Here`s the weekly update for the Stock Picking System:

The system had a volatile week, dropping -2.84% on Monday, rallying 2.28% on Tuesday, falling again -3.23% on Wednesday and then ending the week on a two day winning streak, 0,39% on Thursday and 1,72% on Friday.

I will leave you with a great quote from Leonardo Da Vinci, "Simplicity is the ultimate sophistication."

Have a great weekend.

A Trading Exercise

Imagine yourself taking the other side of every trade that you actually make. What does that position feel like? Also imagine yourself being a neutral observer who watches as you and the other person both take a position on the market. What do you think that person would think?

Greenspan Says We Are Involved In A Dangerous Game

“We’re involved in a dangerous game. We’re increasing the debt held by the public at a pace that is closing the gap between our debt and any measure of borrowing capacity. That cushion is growing very narrow.”

Alan Greenspan at foreign-exchange conference in New York sponsored by Bloomberg LP

And I ask, for how long can US Government Bond yields be at such extreme lows?

Related ETFs: ProShares UltraShort 20+ Year Trea (ETF) (NYSE:TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSE:TLT), iShares Lehman 7-10 Yr Treas. Bond (ETF) (Public, NYSE:IEF)  

Bill Gross On The Employment Report

“The private-sector growth is somewhat heartening but in total you have to expect that state and local and government jobs are going to be a drag for a number of months and perhaps a number of quarters.”

Bill Gross, co-chief investment officer at Pimco

Is QE2 Really Needed?

"The investing world has worked itself into a frenzy of anticipation over the arrival of a second wave of Quantitative Easing from the Fed, which is supposedly going to be announced at the FOMC meeting in early November. The idea behind QE2, as it's called, is that the economy needs to be force-fed more money in order to pump up growth; $1 trillion of added reserves in late 2008 didn't help much, so we need a lot more.

This idea deserves to be buried alongside the corpse of Keynesian economics. Government spending can't boost growth because government spends money very inefficiently (especially when the spending program is designed by Pelosi, Reid & Co., and consists mainly of transfer payments and payoffs to unions). Government spending also needs to be paid for, and the funds that are borrowed to finance the spending represent funds that are removed from the pool of capital available to finance private sector initiatives. Similarly, quantitative easing can't boost growth for the simple reason that growth only comes from initiatives that boost productivity and/or increase the total number of people working. Printing money ultimately results only in higher prices, not a bigger economy."

in Calafia Beach Pundit

How Does Alcoa (AA) Perform After Releasing Its Earnings?

Earnings season officially starts today with Alcoa (AA) and Micron Tech (MU) releasing their earnings reports after the bell.

We will have a segment on the Trading Subscription Service related to the earnings season. We will try to detect opportunities to buy and sell short stocks based on their historical performance on the report day.

I am offering you today`s analysis on Alcoa (AA) for you to have a view of the service being offered. Historically (over 30 quarters of data), Alcoa (AA) was able to beat EPS estimates only on 36% of the time, and has fallen on average 1.5% on the day following the report and over 2% on the 5 days following the report. Besides AA is overbought going into the earnings release.

If you want to subscribe to the service, you can use the Paypal button on the right side of the Blog.

Are The Japanese Going To Let Their Currency Appreciate?

“It’s not our intention to engage in a currency devaluation race for the sake of the national interest. We could conduct smoothing operations when movements are extremely volatile, that would be permissible.”

Fumihiko Igarashi, Japanese Vice Finance Minister

Yesterday, I read a very interesting piece on the Yen that I want to share with you:

"Japan is facing an uphill struggle to weaken yen"

The article was written by Tadashi Nakamae, president of Nakamae International Economic Research and a former chief economist of Daiwa Securities.

Gold Futures Seasonal Chart

Related stocks and ETFs: SPDR Gold Trust (ETF) (NYSE:GLD), Market Vectors Gold Miners ETF (NYSE:GDX), Newmont Mining Corporation (NYSE:NEM), AngloGold Ashanti Limited (ADR) (NYSE:AU), Harmony Gold Mining Co. (ADR) (NYSE:HMY), Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), Barrick Gold Corporation (USA) (NYSE:ABX), NovaGold Resources Inc. (USA) (AMEX:NG)

I Am Going Home To Play With Enzo. Nothing Is Going On.

Tomorrow we will have the Initial Claims Data, sort of a prelude to Friday`s Employment Report.

Some of the high flying tech stocks were hard hit today. That was new and has certainly called my attention. Akamai (AKAM), NetApp (NTAP), Salesforce.com (CRM) and VMWare (VMW) were all down more then 5 percent.

I think the next asset to be hit with a major and sudden correction is Gold. I have a Gold short on via futures. Its a very risky play, but I think its worth it. I expect it to break down to 1,250.

I am going home. I am leaving early, as I want to play with my son.

Salesforce.com (CRM): A Wall Street Darling Getting Hit Hard

This stock was due for a sell-off for a long time now, but it has been hit pretty hard.

Gold is probably the next darling to be hit...

Related: salesforce.com, inc. (NYSE:CRM) and SPDR Gold Trust (ETF) (NYSE:GLD)

Goldman Sachs Is Bearish On The US Economy

“We see two main scenarios. A fairly bad one in which the economy grows at a 1.5 percent to 2 percent rate through the middle of next year and the unemployment rate rises moderately to 10 percent, and a very bad one in which the economy returns to an outright recession.”

Jan Hatzius, Goldman Sachs chief U.S. economist

Related: SPDR S&P 500 ETF (NYSE:SPY) , ProShares UltraShort S&P500 (ETF) (NYSE:SDS), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort QQQ (ETF) (NYSE:QID), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ)

88% Of Stocks Are Overbought. A Warning Signal?

"As of yesterday’s close 88% of all stocks traded on the NYSE were above their 50 day moving average. We have seen these levels just twice in 2010. In early June the % of NYSE stocks above their 50 day moving average reached 86.27%. In the ensuing month stocks sold off 8.5%. In April the % of stocks above their 50 day moving average reached 88.8% – just a tad higher than yesterday’s closing level of 88.11%. We all know what followed in May. In 2009 the index reached the 88% range twice and remained overbought and the market continued to rally, however, I think it’s safe to argue that 2009 was a bit anomalous. While the economic environment certainly appears to be less dreary than it was just one month ago it also appears that equities have priced in this “better than expected” environment."

in The Prag Cap

Related ETFs: SPDR S&P 500 ETF (NYSE:SPY) , ProShares UltraShort S&P500 (ETF) (NYSE:SDS), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort QQQ (ETF) (NYSE:QID), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ), Market Vectors Gold Miners ETF (NYSE:GDX), Energy Select Sector SPDR (ETF) (NYSE:XLE)

Is Friday`s Employment Report Going To Surprise On The Upside?

"The strength of this index, which measures temporary and contract employment, is quite impressive. Compared to the same week a year ago, demand for temp workers is up 25%. This reflects some underlying vigor in the economy that is hard to ignore or explain away. I'm beginning to suspect that the jobs number will be surprisingly strong this Friday. And given today's 2% equity rally, the market may be suspecting the same thing."

in The Calafia Beach Pundit

Crude Oil Is Very Overbought

“The very strong rally over three days coming after a period of inaction has brought crude oil in the overbought area. The technical momentum in crude oil, both WTI and Brent, is very strong but almost too strong.”

Olivier Jakob, Petromatrix

Related: United States Oil Fund LP (ETF) (NYSE:USO), iPath S&P GSCI Crude Oil Total Return (NYSE:OIL), ProShares UltraShort DJ-UBS Crude Oi ETF (NYSE:SCO)

A Market Top In Gold?

Check this great gold technical analysis from Serge Farra from the ETF Corner:

GLD : Could Gold have a mini crash ? Sure !

He is calling a top in the Gold market:

"Bullish sentiment on Gold is rampant. I'm even starting to see Gipsys in the street of Paris selling their fake gold teeths !! I am calling for a top in GLD today. I don't think this thing can go higher without a fast and furious 10% correction at least. It's a long term bull market in Gold .. but it really does smell like a short term bubble !!!" - Serge Farra

Related stocks and ETFs: SPDR Gold Trust (ETF) (NYSE:GLD), Market Vectors Gold Miners ETF (NYSE:GDX), Newmont Mining Corporation (NYSE:NEM), AngloGold Ashanti Limited (ADR) (NYSE:AU), Harmony Gold Mining Co. (ADR) (NYSE:HMY), Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), Barrick Gold Corporation (USA) (NYSE:ABX), NovaGold Resources Inc. (USA) (AMEX:NG)

5 Year Government Bonds Yields At 1.22%.

With gold rallying, commodities on fire and economic indicators coming out above expectations how is it possible for the 5 Year Government Bonds yields to be trading at all time lows?... Who will borrow money to the US Government for 5 years to earn 1.22% per annum?

I am not. I am taking the other side of that trade. Its a medium term play that cannot go wrong.

I will leave you with the fast and furious Ferrari Dino.

A Currency War. Who Will Print Faster?

Very interesting thoughts on the incoming currency war from Cullum Roche:

"It looks like the global race to the bottom is heating up. Central banks around the world are attempting to devalue their currency with the hope that exports will take the place of a lack of private consumption. Of course, it’s mathematically impossible for everyone to devalue and become a net exporter. At this juncture, the only major region that doesn’t appear to be easing monetary policy in some manner is Europe. It’s safe to assume that they won’t stand by idly while global central bankers drive the Euro ever higher….The global credit crunch appears to be going along as expected. The next steps in this intricate dance usually involve some form of trade war followed by recession followed by some form of global conflict. Let’s hope history plays out differently this time around."

Well, who will print faster? The Japanese with their Oki`s or the US with their HP`s? It seems like Europe will be left behind...

Small Investors Are Still Moving Into Bonds

"The latest AAII small investors allocation survey showed a continued move into bonds. Small investors are clearly hesitant to embrace the equity markets and continue to seek income in the safeness of bonds. The latest survey showed a 55% equity allocation (60% historical average), 25% bond allocation (15% historical average), and 20% cash (25% historical average."

in The Prag Cap

S&P 500 Profits Cut for First Time in Year by Analysts

Interesting article on Bloomberg: S&P 500 Profits Cut for First Time in Year by Analysts

Analysts are beginning to cut profits outlook for the S&P 500 Index. This can be a bear catalyst going into earnings season...


Related ETFs: ProShares UltraShort S&P500 (ETF) (NYSE:SDS), ProShares UltraShort QQQ (ETF) (NYSE:QID), Direxion Daily Finan. Bear 3X Shs(ETF) (NYSE:FAZ), ProShares Short S&P500 (ETF) (NYSE:SH), iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX)

S&P 500 Still Overbought. Downside Risk Is Very High.

S&P 500 is still very overbought and the risks are obviously on the downside. The US Dollar is also gathering some strength. A short term reversal is probably in the cards.

The KLAC Short Call Worked Perfectly.

Well, KLA-Tencor (KLAC) did exactly what was supposed to do. Opened higher, reversed and sold off. That an easy play...

Have a great weekend.

KLA-Tencor Is Overbought. Time For A Correction?

KLA-Tencor Corporation (NASDAQ:KLAC) is overbought and has rallied for 6 straight sessions. With stock index futures up big in the pre-market session, probably KLAC will open with an up gap.

It will be a good shorting spot for a 3 to 5 day holding period.