Monday, June 3, 2013

S&P 500, What Next?

Stock market tops are tough to trade and time. That is because there are so many things happening in the media and emotions running wild that it's tough to get a grasp on what you should really be focusing on to keep a level head trade around it.
Market tops are typically not an event but rather a progression that takes much longer than most individuals expect. I still find myself jumping the gun at times and I know this and have been through this process hundreds of times in various investments. The human brain is a powerful tool but emotions can force you to override your rules/strategy still.

Stop Fighting! - Bulls & Bears are BOTH Correct at this Stage

It does not matter where you go to get your stock market news and reports... Everyone is arguing their bullish or bearish case more than EVERY. There is a reason for this and it's because the SP500, DJIA, RUT and NASDAQ appear to be entering a cycle top. What does this mean? It means the uptrend is almost over from a technical analyst point of view, and those who are have been bearish for a long time feel the market topping out more now than ever in their gut that this is the top.
Keeping it simple removing news, economic data, emotions and biases we are left with one thing which is technical analysis. This is based on price alone and that is important to remember because the only thing that pays you money for an investment is when price moves in your favor. Believe it or not price only has blips on the charts here and there which is based off news, economic data etc... In the big picture stock prices tend to lead economic data by several months and in some cases years.
So the big question is this... If price action is the only thing that pays you when trading why bother worrying about all the other opinions, news out there. That stuff only adds to the confusion and in most cases gets you on the wrong side of the market.

Timing the Market Top Conclusion:

In short, from a technical point of view the SP500 remains in an uptrend. But according to technical analysis the upside momentum is starting to slow. If we get a few more down days then the trend will flip and be down but it has not yet happened.
When the trend does reverse down you must remember that 80% of the time price will bounce back up to test near the recent highs before truly rolling over and collapsing. Think of it like a zombie movie. Just when you think you killed one it comes back to life for one last scare before its dead.
Just to touch on stock market bottoms so you do not get confused. Stock market bottoms are little different than tops so they are traded differently. I will cover them when the time comes.
Trading the market is not easy during this type of condition, which is why members and myself got long SSO on the 23rd and two days later sold out for a 3.5% gain. I am now looking to reload this week for another bounce/rally play but only time will tell if we get another setup.
Please share this article

VMware, Inc. (NYSE: VMW)

VMware, Inc. provides virtualization infrastructure solutions in the United States and internationally. The company's solutions enable organizations to aggregate multiple servers, storage infrastructure, and networks together into shared pools of capacity that can be allocated to applications as needed. Its cloud infrastructure products and technologies include its flagship data center platform, VMware vSphere, which enables users to deploy hypervisor, a layer of software that resides between the operating system and system hardware to enable compute virtualization; and vCloud Suite, an integrated solution for building and managing a cloud infrastructure optimized for use with the VMware vSphere platform. The company also provides end-user computing solutions, which are designed to enable a user-centric approach to personal computing, and secure access to applications and data from various devices and locations; and cloud application platform solutions providing open source application frameworks, application run-time, and data management solutions, as well as an open platform as a service.
To review VM's stock, please take a look at the 1-year chart of VMW (VMware, Inc.) below with my added notations:
1-year chart of VMW (VMware, Inc.) VMW has formed a solid support at $70 (navy), which would also be a 52-week low breakdown if the stock breaks below it. In addition, the stock has formed a potential trendline of resistance (blue). These two levels combined have VMW sandwiched within a common chart pattern known as an descending triangle. At some point, the stock will eventually have to break one of those two levels.
The Tale of the Tape: VMW has a down trending resistance and a 52-week support level to watch. A long trade could be made on a breakout above the downtrending resistance or on a pullback to the support. A break below the $70 support would be an opportunity to enter a short trade.
Please share this article

Sprott – A Mega-Panic Is Coming & Here Is The Reason Why

from King World News
Today billionaire Eric Sprott told King World News the reason why a massive panic is coming and what investors can do to protect themselves. Sprott also spoke about the non-stop financial chaos central planners are faced with “24/7.” This is the second of three written interviews with Sprott that will be released today. Below is what Sprott, who is Chairman of Sprott Asset Management, had to say in part II of this remarkable series of interviews.
Sprott: “What has me worried is we are in a financial system where the banking system is massively over-levered, where governments are massively over-levered, where entitlements cannot be paid, and so from an economic approach we all know that somewhere in the next 5 to 10 years it’s going to be a disaster.
Continue Reading at…
Please share this article

It’s A “0.6%” World: Who Owns What Of The $223 Trillion In Global Wealth

from Zero Hedge:
Back in 2010 we started an annual series looking at the (re)distribution in the wealth of nations and social classes. What we found then (and what the media keeps rediscovering year after year to its great surprise) is that as a result of global central bank policy, the rich got richer, and the poor kept on getting poorer, even though as we predicted the global political powers would, at least superficially, seek to enforce policies that aimed to reverse this wealth redistribution from the poor to the rich (a doomed policy as the world’s legislative powers are largely in the lobby pocket of the world’s wealthiest who needless to say are less then willing to enact laws that reduce their wealth and leverage). Now that the topic of wealth distribution (or rather concentration) is once again in vogue, below we present the latest such update looking at a global portrait of household wealth. The bottom line: 29 million, or 0.6% of those with any actual assets under their name, own $87.4 trillion, or 39.3% of all global assets.
Read More @
Please share this article

South African Rand Leads Emerging Market Rout

Emerging market currencies have tumbled across the world in another day of wild moves as the US Federal Reserve prepares to tighten the spigot of global liquidity.
by Ambrose Evans-Pritchard

South Africa’s rand punched through the psychological barrier of 10 to the dollar as investors flee countries with big current account deficits, deemed most at risk. The country’s central bank said it would take action to stem the fall in the rand if moves became “abrupt and disorderly”.
The Johannesburg Stock Exchange says foreigners have withdrawn €1.1bn (£940m) from South African bonds over the past 10 days. The Turkish lira fell to the lowest in 17 months against the dollar, though it has just been upgraded to “investment” quality by Moody’s. The Thai baht fell to a one-year low, a pattern seen in much of emerging Asia.
Bond yields have spiked sharply in Turkey, South Africa, Mexico and Hungary, rippling through down corporate spreads. Yields on 10-year Polish bonds have jumped 60 basis points to 3.60pc in May as even the strongest are drawn into the turmoil. “This is the end of the bull market,” said Benoit Anne from Societe Generale. “I am now throwing in the towel. We are out of virtually all our emerging market bonds.”
Continue Reading at…
Please share this article

US Weekly Economic Calendar

time (et) report period Actual CONSENSUS
9 am Markit PMI May
-- 51.9
10 am ISM May   51.0 50.7
10 am Construction spending April   1.0% -1.7%
TBA Motor vehicle sales May   15.2 mln 14.9 mln
8:30 am Trade deficit April   -$41.5 bln -$38.8 bln
8:15 am ADP employment May
-- 119,000
8:30 am Productivity 1Q   0.7% 0.7%
10 am ISM nonmanufacturing May   53.8 53.1
10 am Factory orders April   1.7% 4.9%
2 pm Beige book --   -- --
8:30 am Weekly jobless claims 6/1
345,000 354,000
8:30 am Nonfarm payrolls May   168,000 165,000
8:30 am Unemployment rate May   7.5% 7.5%
3 pm Consumer credit April   -- -$8.0 bln
Please share this article