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Now the Bonds are Giving Us Hints That Higher Rates are Ahead

The 30 year bond futures have broken below the lows of the past few weeks and this may be the start of a bigger decline ahead. As bond futures fall, rates increase. Watch the next rally in both the 30 year bonds USZ09 and the Ten Year Noteas TYZ09. If the next rally in unsable to move above the high of the previous 3 days, then we may be in store for a more serious decline later this month. Active traders should be on alert for potential shorts in these markets.

A severe correction in the equity market may prevent a market fall in the bonds or notes, but so far there has been nothing but an incredible rally in the equity markets. Combine this with higher commodity prices to instill a fear of inflation and you get a depressed bond market in the futures markets. What we do in the futures markets in the bonds and notes the next few days may set up a trend that will last for several weeks.

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2009.10.14 / no responses / Category: Bulls and Bears, Mortgage Rates, TCC, The Stock Market
Physical Commodities are on the move

Crude oil has moved back above the $73.00 level and natural gas has now retouched the $5.00 level. By itself this move is not significant, but there are other commodities which are also reaching upper price levels that suggests that a bull market may be ahead.

Soybeans has blasted off from its lows like a roman candle and the corn and wheat markets have also enjoyed a very strong rally recently. All of these markets should be watched very closely over the next few weeks. If they all hold near current price levels in the days ahead, this will be a sign that buyers are stepping in and willing to support every minor price decline or correction. Small corrections after a significant price rise is a sign of a change in momentum. If strong buyers are followed by weak sellers, this is a set up for an additional rally. This is what we have in the grain markets and the energy markets. We have had a nice rally recently. Now let us see if aggressive sellers are absent in the next decline.

Why do I suggest that traders watch the physical commodities? Baker Hughes (BHI) just set a new high for 2009. So did Schlumberger (SLB). These bull markets are beginning to catch investor attention. If the energy markets find a base, this will help these two stocks.

Want an ETF to watch over the next few weeks? Watch DBA. Power Shares Agricultural. If the grains continue to establish a bullish scenario in the futures markets, this will help this ETF find a new bullish footing. A close below $25.00 in DBA cancels this view, but watch this ETF over time. If you see the next down move is greatly diminished and has the appearance of lack of selling interest, this will set up the potential for a bullish price run later in the month. I will watch this for the Shufflers and keep you up to date on the progress.

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2009.10.12 / no responses / Category: TCC, The Stock Market
And the Band Played On

While the stock markets all rallied in a fit of enthusiasm for the bull market, other markets continued with their trends as well. Gold breached the $1,060 level for the December Futures contract and the dollar index set a new low for the year. Just what we needed, as other countries are having closed door meetings about whether the US dollar should continue to be the world’s benchmark.

Now I can’t imagine why the world would be nervous about our future stability. I know we have record single year deficits and future exposure of tens of trillions of dollars, but we have the best and the brightest working to solve these problems. No I am sorry I may be wrong about that. The world’s greatest generation is retiring. They are buying up cheap condos in Boca Raton, Florida. They are getting fitted for golf clubs and tennis shoes. They are saying the hell with it and hunkering down.

The generation in charge is clueless about what to do. They would rather keep being elected than solving a problem. They would tell their ten year old the way to solve a debt problem is to first quit spending, but then tell their voters what is needed is a trillion dollar stimulus package. This isn’t a political statement! Both parties have driven this country into the ground and we are at the edge of the cliff on whether we can suitably recover from this mess. This is why meetings about the future of the US are taking place around the world. They see what we all see – a Washington leadership that is incapable of functioning at every level.

So what do we do as investors and active traders in this environment? Learn how to manage your own funds and trade the trends before you. In the next few weeks, Traders Country Club will be making some important announcements to make sure the Shufflers are ready to take the reigns and control their own nest egg. Besides, when it is our turn, we want to make sure we all can enjoy the Florida sun and be on the back nine before noon.

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2009.10.09 / no responses / Category: TCC, The Stock Market
The World Still Has Concerns Over Our Future

Has the stock market made you feel confident in our future? Are all our problems in the past? Has the current administration made a change the whole world can believe in? There is a commodity that suggests the answer is NO.

Gold has set a new recent high and now approaches the $1,060 barrier overhead. The continued interest in gold is not a good sign for our financial situation. Imagine a one ounce rock and understand there are individuals, by the millions, who are willing to pay over $1,000 in US dollars for that rock, rather than hold US dollars.

Stocks are indeed making a strong and continuous bull market run, even though corrections are beginning to occur more frequently. However, do not feel completely comfortable. As long as there is a continued strong interest in gold versus other assets, there is some fools gold out there. Whether it is the fools who are paying $1,000 an ounce for the rock or the fools who are believing in this stock market rally only time will tell.

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2009.10.06 / no responses / Category: TCC, The Stock Market
The Deeper Correction Has Arrived

My last post reminded our Shufflers that we had to look at the market with a bullish bias, but the age of the bull market was about to become a factor. Trends always have corrections as they progress. During the early life of the trend, many corrections are 2-4 days and relatively small, as traders and investors come into the market and buy small dips to keep the bull market alive. After 3 months of this type of buying, there is a time when a deeper correction occurs. Buyers simply step aside and are more cautious about their purchases. This occurred in July of this year.

We are now under the same market condition. The deeper correction that you are now seeing is “typical” for this stage of trend. A complex correction is the likely outcome over the next week or so. How deep will the correction be? This depends upon the news and financial outlook that develops over the next few weeks of course, but traders should expect many up and down days. The vertical rally is over for now.

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2009.10.05 / no responses / Category: TCC, The Stock Market
Bond Futures Suggest No Fear of Inflation

The 30 year bond futures set a new high for the past 4 months. This means rates are on the decline and this would not be the case, if there was a serious concern over inflation among the investment community. While there is certainly talk about the coming inflation due to the dumping of money into our economy, the bonds are not showing any signs that the inflation demon is on the horizon.

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2009.09.30 / no responses / Category: Mortgage Rates, TCC, The Stock Market
Like a Force of Gravity

The dominant trend of a market can take over prices like a hidden force of gravity. Yesterday I mentioned that the stock market was at an important juncture. The decline of last week was large enough to bring some potential that we were approaching a ledge in prices that could cause a larger correction in the bull market that we have enjoyed for the past several months. It was nearing the make or break time in the market.

It apparently was “make” time, as the bullish trend pulled prices higher in all the indexes. This was a perfect demonstration that the dominant trend in any market should always be respected. The “trend is your friend” is not just a tired old expression. It is backed by statistics when examining price behavior.

The only problem with the market is the age of the trend in daily prices. Prices normally begin to have deeper corrections after 3-3 1/2 months of consistent rallies. The decline in early July is an example. We are nearing a period in the cycle of prices where another larger correction against trend is increasing in likelyhood.

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2009.09.29 / no responses / Category: TCC, The Stock Market
Correction or Change in Trend?

The stock market is coming to a very important fork in the road. The Dow has fallen from its recent highs near 9,950 and has now fell back to near 9,600. Since the average daily range for the Dow is slightly over 100 points, this decline is not too severe as far as corrections go. The same can be said for the SP500 and the Nasdaq 100. What we have so far is a typical price correction in a bull market. We do not have enough evidence that the bull market has changed tends to a bearish trend.

That said this coming week may be an important week, as we continue to watch this price decline. If the Dow breaks below 9,500 this coming week, traders need to turn on their more sensitive radars and begin to watch prices more closely.

“Vertical” selling waves can sometimes be the start of a much larger correction or change in trend. So far the Dow has had down closes for three consecutive days. If this wave of selling continues, it may set up the first major reversal since the entire bull market began in March of this year. We will continue to watch the market in our daily blogs and let the Shufflers know, if they should begin to ring the register and bring in some profits from this recent bull market.

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2009.09.27 / no responses / Category: TCC, The Stock Market
Last Look McDonalds (MCD)

As investors build a portfolio, they must put their stock selections into a context of the stock’s individual trend as well as the stocks relative strength versus the SP500 or Nasdaq. You want to compare your stock in relation to the big engines. I have followed MCD now for several consecutive days to highlight the importance of this analysis.

I had mentioned that McDonalds MCD was not acting well as an individual stock when it was compared to the market as a whole. The stock indexes were rising, but McDonalds was hovering near its recent lows. I said in my blogs to watch the stock and see what happens if the entire market takes a breather and sets back a bit. The theory is that, if the stock cannot go up while the whole market is in a rally mode, what do you think the stock will do, if the whole market declines?

MCD set a new low on Friday and was down again today. Now we may see a small bounce over the next few days just to correct this recent decline, but the fall in the price of the stock is a clear picture of what can happen if you ignore individual stock relative strength when building a portfolio. I just thought you may have wanted to gain a little more incite into stock selection, as you learn how to take control of your own financial empire.

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2009.09.14 / no responses / Category: TCC, The Stock Market
Keep Watching McDonalds (MCD)

Yesterday I mentioned that McDonalds was demonstrating poor relative strength when this stock was compared to the SP500 “big engine” and that a decline in that stock was probable, in the event the entire stock market declined. The theory is that if a stock cannot rally when the entire stock market is advancing, what do you think the stock will do, if the entire stock market begins to fall?

The dow was down a bit today to stop the recent advance and McDonalds (MCD) set a new low for the past 3 months. Traders Country Club was created to educate new investors in how to trade the markets with a proper perspective and analysis. If the stock market corrects further next week, watch MCD. Learn how to avoid the “dogs of the dow”.

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2009.09.12 / no responses / Category: TCC, The Stock Market