Wednesday, October 27, 2010

Dollar Index

The US Dollar index is trading around multi decade lows. It is forming a "L-formation" at the 70 level. Note the high of the reaction goes to the exact fib 38% line. If the Dollar breaks below 70, the first target is a 70% wave projection of 55. The final target would be 40 by 2015. If it does break below 70, BUY GOLD.

Wednesday, October 6, 2010

Silver VS Stocks

Found this chart in the APMEX email. In 10 years, the stock market is down 11%. Silver is up over 300%.
Has anything changed?
Or, will the current over spending by the government, debasing the currency by the fed and search for safety continue. I think the move in metals is only beginning.

Gold as Inflation Hedge

Just finished a great article on how Gold has really been a great hedge for inflation. When measured against the governments CPI numbers for the last 40 years, Gold has outperformed CPI by a factor of SIX.
Read the whole article in the next issue of Futures Truth magazine.

Thursday, September 30, 2010

Rally for Stocks?

We've had a breakout of a Head and Shoulders bottom on SPY.
I'm looking for a move up to previous highs. Barring some
political - economic - terrorist shock.

Thursday, September 23, 2010


Tuesday's Wall Street Journal reported that the PIMCO Total Return Fund cut its U.S. government related holdings practically in half. From 63% to 36%. Does Bill Gross, the fund manager, see a bond bubble? That seems like a huge cut back to me? Any ideas out there?


On Monday, Cotton reached a 15 year high.
What a nice trend that has been. Up 33%
this year. Compare that to a basically flat
year, so far, for the Dow.
Get in Commodities

Tuesday, September 7, 2010

Gold Demand

From the site
Total Gold demand in Q2, 2010 rose by 36%
Investment demand rose 118% from Q2 '09 to Q2 '10.
Industrial demand rose 14%.

Wednesday, August 25, 2010

Cotton Bubble?

Stephen Gandel, of CNNMoney thinks Cotton is in a Minor Bubble

See the whole article here

Regarding Cotton,

Why It's Hot

Cotton prices have nearly doubled in the past year to 80¢ a pound. The world has been using more but producing less. Last year's U.S. cotton production dropped to 12.2 million bales, the smallest crop in 20 years. And rising populations are causing nations like China and India to devote more land to foodstuffs and less to cotton.

Why It's Worrisome

The two-year run has given farmers plenty of time to ramp up production, which means more cotton will soon be on the market and lower prices will follow. The USDA estimates that U.S. production will hit 18.6 million bales this year, up 50% from a year ago.

Verdict: A Minor Bubble

Analyst Sharon Johnson of First Capital Group says cotton has traded around 50¢ a pound for much of the past decade. When cotton has spiked above 80¢, it hasn't stayed there for long. "Prices are overvalued," she says.

Monday, August 23, 2010

China Gold Buying

Interesting article on seeking alpha today about gold.
Martin Hutchinson claims that China usually holds 10% of its reserves in Gold. Currently they only hold 1.5% in the yellow metal. With current reserves at $2 trillion, China might be in the market to buy $85 billion worth of gold. This equates to over 67 million ounces.

Wednesday, August 18, 2010

Winner, Winner

Interesting video on yahoo on blackjack and trading.
Go to this link to see it.
Jeff Ma on Yahoo
One thing he said which struck a chord with me was "people are more impacted by a loss than by a win". Meaning, you are more negatively impacted by a LOSS of $1,000 than you are positively impacted by a WIN of $1,000. So, your wins should always be more than your losses to maintain emotional equity.

Saturday, August 14, 2010

Gold and 34 Week Moving Average

A post on Seeking Alpha shows the 34 Week Exponential Moving average on Gold.
See the article here :
The author states that the Expo Moving Average is a good stop. Maybe? I tested via the Futures Truth Excalibur platform on a 34 week simple moving average. Only entering on a Friday Close above the 34 week simple moving average. Exiting on a move below the 34 week moving average. This method gets stopped out 50 times and shows a Total Hypothetical profit of $14,140 and Maximum Drawdown of $32,890. A better method for this TRENDING MARKET would be to place the stop 5% below the Simple Moving Average. This shows a Total Hypothetical profit of $47,140. A max drawdown of $24,300 and percent winners of 59%. Such a big stop works well on trending markets. Probably not so much on congestion markets.
All results hypothetical. Past performance not necessarily indicative of futures results. This is for informative purposes only.

Friday, August 13, 2010

Gold Breakout

December Gold looks like it had a Yum-Yum breakout of an Irregular Head and Shoulders bottom. It is Irregular in that it has 2 Left Shoulders and only 1 Right. The move from the bottom (Head) up to the breakout point should provide a measure above the breakout to the price target.

Thursday, August 12, 2010

Gimme Shelter

Some people say they don't see inflation.
From Daily Reckoning at

In 1970, a year after the Rolling Stones released the greatest rock 'n' roll track of all time, you might have picked up a front-row ticket to see the British invaders for around $20. Adjusted for "official" inflation, that same ticket (or any other $20 item) would today set you back $112.35. That's a 461.8% jump in price. (Adjusted for unofficial inflation - i.e. actual prices - a front-row Stones ticket would cost something like $350). Some safekeeping!

Tuesday, August 10, 2010

sell dollars

This loss of entrepreneur confidence in the system will ultimately accelerate the demise of all paper currencies.
From the Daily Reckoning,
August 10, 2010

Saturday, August 7, 2010

stock market performance

This is 6 months old but still illustrates the importance of diversification across asset classes. Gold and Silver are up big for last 5 years. Crude Oil has done nicely too. The S and P 500, not so much.

Friday, August 6, 2010

More Money

Our government’s current solution, regardless of party, is to print more money. This brings to mind a statement by Ethel Kennedy (wife of RFK) when notified by her accountant that her checking account was overdrawn: “That can’t be, I still have checks left.”
From Whiskey and Gunpowder newsletter

Thursday, August 5, 2010

Stafford Daytrade System

Yesterday was a narrow range day. Not much action. Stafford Daytrade made 2 points none the less. Of course past performance is not necessarily indicative of future results. We bought at 1122.25. Holding till the close to cover at 1124.50. $100 per emini contract. Not bad for a day with a 10 point range. All trades must be considered hypothetical because they may or may not have occurred exactly as mentioned. Please see disclaimer on

Wednesday, August 4, 2010

10 stock market myths

Nice article on staying out of stocks.

Ten Stock-Market Myths That Just Won't Die

by Brett Arends

1 "This is a good time to invest in the stock market."

Really? Ask your broker when he warned clients that it was a bad time to invest. October 2007? February 2000?

2 "Stocks on average make you about 10% a year."

Stop right there. This is based on some past history — stretching back to the 1800s — and it's full of holes.

read the rest here.

Tuesday, August 3, 2010

Mid-Term Elections

Bloomberg Business week for July 26 reports that "The Standard & Poor's 500 stck index has advanced 15 percent on average in years when there was a Democratic President and REpublican majority in Congress. In 1994's congressional elections, Dems gave up their majority in both the Senate and House. This was followed by a 34 percent surge in 1995 in the S&P's.

Monday, August 2, 2010

Interesting article on silver, which has been up big for the last 2 days. Nice spring off the lows. Three Reasons Silver will go up.
1. Silver has many more uses than gold.
3. Silver is rarer than gold.
Does this mean $1000 an ounce silver?

Saturday, July 31, 2010

Is Gold in a Bubble

Found this chart online from a WSJ article.
It compares the runup in prices of Gold versus two other bubble - Nasdaq stocks in 90s and housing in the last 10 years.
Does this mean Gold can double from here before it is in a bubble?

Friday, July 30, 2010

Swing Trade in Google Stock

I got short 75 shares of Google on Wednesday at 487.83. This was a little after the 30 minute breakout down. I should have sold higher just below 490. So I'm starting about $2 lower than I should. My original stop was above the high of the day. Price on Wednesday closed very much in my favor. I had a partial profit objective to come out of 25 shares at 481.66
Thursday showed a strong open with follow thru up. This petered out with a double top and price started moving lower. I raised my first target to just above Wed's low at 483.66. This was filled and I moved the stop loss on the remaining 50 shares to 486.26 - above the open of the day. As this would be a clear-out since the low of yesterday was taken out. This stop was hit. Looking at the chart last night, I noticed a beautiful Head and Shoulders bottom around 12 noon. I should have moved my stop loss down to just above the neckline, shown in red, to 482.26. This would have been an extra $2 on the exit. Still a profitable trade. But, could have been $4 better.

Thursday, July 29, 2010

Upside target achieved in Euro Currency

The upside target projected by the neck line break of the Head and Shoulder's bottom formation has been reached. It is denoted in the chart by the top of the BLUE line. Recent action has shown an extension high. It this an Upthrust and a short opportunity?

Wednesday, July 28, 2010

Jim Rogers

According to the "Investment Biker"
The world has consumed more food than it has produced for the past five years. This is the first time in recorded history that’s happened. This despite there being no worldwide drought for several years.
Does this mean its time to buy grains?

Sunday, July 25, 2010

Every time you hear that someone on this planet is spending another $1Trillion, that means they need $150 from every man, woman and child on the planet. Unfortunately, 80% of the people on this planet don’t have $150, so that pretty much kicks the bill up to the 1Billion of us who can pay it at $1,000 each. If you are unfortunate enough to live in a small country like America, with only 300Million people, when your Government runs a $1.5Trillion annual deficit like ours does, that means they will be needing all 300Million of us(man, woman and child) to send in $5,000 each to cover the shortfall. If we don’t pay it now - then we’ll have to pay it later, plus the prevailing rates of interest. OR WE DEFAULT
Another reason to buy gold.

Friday, July 23, 2010

Head and Shoulders Bottom in Copper

September Copper traced out a very similar patter as the E-minis (see today's chart). The Head was a spring of earlier lows. Copper has shown nice follow thru up after the breakout. The pattern suggest September Copper could carry to 345.

Head and Shoulders Bottom in Stocks

E-Minis broke Out UP today.
The Head, Left and right shoulders are marked on the chart. Note that the head was a Spring of prior lows. A "Spring" is a break and immediate reversal of a prior pivot low. Today's close above the the line which connects the two pivot highs signifies a breakout. I did not buy today as I don't like to initiate new positions on a Friday. I will look to buy a 30 minute or afternoon breakout on Monday. The target to the upside is a move equal to the distance from the Low of the "head" to the trend line, projected up from the trendline break.
This is for educational purposes only.

Wednesday, July 21, 2010

Wow! What a day!
The day trade system got long via it's "Counter-trend" technique. The stock market has been down for a little while and today, set up the potential for a move up. Which is what happened - ON STERIODS. Quick Note - the VB and the Stemwinder2 systems use the same entry methods. The difference lies in how the separate versions of the system exit a position. The system held this trade long ALL day. Coming out on the close for over a 22 full point profit. 22 S&P points equals $5500 before commission and slippage. Of course, PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. All results must be labeled hypothetical as they may or may not have been taken exactly as shown. Please see disclaimer on our website at
The mini SPs had different numbers thanks to a slightly different price action. Still a good day in my opinion.

Monday, July 19, 2010

Rotating Day

3 Minute Chart of E-Mini S and P 500.
Yesterday (Friday) was a big down day with a high open and a low close. So we are expecting a rotating day today. A ROTATING DAY is one whose price will rotate around the open of the day. Today opened higher and showed price follow thru higher. These higher highs were NOT confirmed on the MACD. Since we are expecting a move back down to, and possible below the previous day's close, look for a short set-up. A short position could have been taken below 1068 on a break below the low of the third high. This bar also shows a tail which is a sign of sellers entering the market. Initially, place your stop loss above the high of this bar. Look to cover about a point above the close of Friday(yesterday).
Later in the morning, after price made a move below the previous day's close, a divergent buying opportunity presented itself. A long position could have been taken on break above the third drive to new lows. A stop would be placed below these lows at 10:51 EST. Looking to cover a point shy of the previous day's close. These trades are hypothetical and for educational purposes only. See hypothetical disclaimer at

Sunday, July 18, 2010

China Downgrades US

Interesting article on Seeking Alpha. If the Chinese stop financing our debt, who will? The Fed?
I'm looking for a topping pattern in US Treasuries. I'm already short treasuries via the inverse ETF : RRPIX
Stafford Daytrade had a great day Friday. The Breakout feature of the system got short the SPs around 1073. A "Breakout" means an Opening Range Breakout. Also called a Volatility Breakout. With this technique, you reference the opening price of the day. You look to go long a certain distance above the open or go short a certain distance below the open. The distances are usually some measure of market volatility. Hence the name Volatility Breakout.
Price fell all day. We held short all day. Coming out on the close above 1063. Making close to 10 full handles. Cha-Ching. Of course past performance is not necessarily indicative of future results. Please note, trades may or may not have been taken and must be labeled hypothetical. Please see hypothetical disclaimer on our website at

Friday, July 16, 2010

Buy Point in S&P 500

Daily chart for the S&P 500 September futures contract. June saw the culmination of a horrible quarter for the stock market. From the highs of late April to the low on July 1, the S&Ps were down over 16%. The talking heads were talking “Double Dip” recession. I was considering a major short position. I saw the dramatic break below the late May and early June lows. I was remembering Prechter’s prediction of 1000 on the Dow Jones and thinking this is “IT”.
Then, I delved deeper into the charts. A few key points why this might NOT be the break revealed themselves. First, price was right at the bottom of the rough channel carved out since early May. July 1 saw buyers come in and push the market higher off this point. This is evidenced by the large “tail” on the July 1 candlestick. Read the rest of the article here.