Seven Keys in Timing Stock Market Tops – Part II

Timing stock market tops and bottoms is risky business and we all know the more the more risk we take the more potential gain would could also made. Correctly timing a top or bottom for any investment is flat out exciting not to mention financially rewarding. But this high risk trading tactic does come with some major issues which you must FULLY understand so that you can protect your capital and self confidence.

On May 13th I wrote a special report on how to spot market tops just before they happen and how to do it with a very high probability of success. I also explain the major pit falls to be aware of so you stay on the right side of the market.

I recommend you read this special report right now.... "How to Spot and Time Stock Market Tops"

That special report truly showed you what was going to happen a few weeks before it did. Much like how this report shows you what is likely to happen in June.

Looking at the market with my YOU ARE HERE type of using cycles, volume, price patterns and momentum to forecast what is likely to unfold in the coming weeks. Depending on the time frame used for my analysis I can figure out with a high probability where price will be in a few minutes, hours or days also. Mall Market Directory – You Are Here

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.

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Are you trading with "Only 7 In Your Clip"

Ever watch those cop shows where they run low on bullets? In the middle of a firefight, one of them is down to a clip of slugs. It happens in war movies as well. What is the advice given? Pick your shots and skip the rest. This simply means don’t shoot aimlessly but have your eye firmly on what is probably a sure shot.

Over trading in trading is the problem many people have. Wanting to stack up the wins or recover from some losses is something we have all done or at least want to do. I am sure that many who have their rules down tight still have the urge but don’t follow through.

Obviously, constantly being in the market is a risk. Trade after trade, you never know which is going to be the winner as wins/losses are a random distribution. Having a few trades go in your direction is a good thing but they more you play, the more you may pay. I am not talking commissions only as paying the losses can add up to some hefty account percentage. Taking loss after loss? Unless the dynamics of the market have changed during your losing streak, expect more.

The simple thing to do ( I say simple, not easy ) is trade less and only trade the golden ones. What does that mean? Only take the trades that adhere 100% to your current setup definition.

Think of it this way. I am giving you 7 bullets in a clip. You only have 7 shots to define your week as successful or not. When those 7 slugs are gone, you are out of the action. How are you going to fire these shots to make them count?

If your plan calls for tests of support/resistance plus selling the high/low break of the reversal candle when exceeding 2 pips/ticks/points, do exactly that. Nothing marginal. No guesswork. Either the setup is there precisely as your plan states or it is not.

|Many people go into the heavy psychological reasons behind over trading. The “whys and what” may be great for an academic but solving it is much easier than laying out on a psychologists couch talking about your past. Just don’t do it. Have a rule of 7 bullets in the clip for the week. Walk away when you are empty. Many of you will fight the internal battle…sometimes even physical discomfort but look, we are all adults here. You DO have the power to choose WHAT you DO.

Let’s sum up the exercise. For the next few weeks, limit yourself to 7 trades per week. Pick the shots that fit your criteria exactly, without a shred of difference. This builds a solid habit of following rules and being in control of yourself. Without those, trading will not be something you will succeed at. That is not being dramatic, that is truth.

What some people need is accountability. When you are a member of the Premier Trader University trading program, there are trading coaches there that can assist you with staying true to a plan. With systems that plot out exactly where to enter and exit (even trail your stop), the only true battle you will face is with yourself trying to out think the market.

In the end, you want to be accountable to yourself. That takes time and this exercise can help you do just that.

Posted courtesy of our trading partners at NetPicks.com


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Precious Metals & Miners Start Bottoming Process

Precious metals and their related mining stocks continue to under perform the broad market. This year’s heavy volume breakdown below key support has many investors and trader’s spooked creating to a steady stream of selling pressure for gold and silver bullion and mining stocks.

While the technical charts are telling me prices are trying to bottom we must be willing to wait for price to provide low risk entry points before getting involved. Precious metals are like any other investment in respect to trading and investing in them. There are times when you should be long, times to be in cash and times to be short (benefit from falling prices). Right now and for the last twelve months when looking at precious metals cash has been king.

Since 2011 when gold and silver started to correct the best position has been to move to cash or to sell/write options until the next trend resumes. This is something I have been doing with my trading partner who focuses solely on Options Trading who closed three winning positions last week for big gains.

In 2008 we had a similar breakdown in price washing the market clean of investors who were long precious metals. If you compare the last two breakdowns they look very similar. If price holds true then we will see higher prices unfold at the end of 2013.

The key here is for the price to move and hold above the major resistance line. A breakout would trigger a rally in gold to $2600 – $3500 per ounce. With that being said gold and silver may be starting a bear market. Depending what the price does when the major resistance zone is touched, my outlook may change from bullish to bearish. Remember, no one can predict the market with 100% accuracy and each day, week and month that passes changes the outlook going forward.

The chart below is on I drew up on May 3rd. I was going to get a fresh chart and put my analysis on it but to be honest my price forecast/analysis has been spot on thus far and there is no need to update.

Gold Daily Technical Chart Showing Bottoming Process:

Major technical damage has been done to the chart of gold. Gold is trying to put in a bottom but still needs more time. I feel gold will make a new low in the coming month then bottom as drawn on the chart below.

Silver Daily Technical Chart Showing Bottoming Process:

Silver is in a similar as gold. The major difference between gold and silver is that silver dropped 10% early one morning this month which had very light volume. The fact that silver hit my $20 per ounce level and it was on light volume has me thinking silver has now bottomed.

But, silver may flounder at these prices or near the recent lows until its big sister (gold) puts in a bottom.



Gold Mining Stocks Monthly Investing Zone Chart:

Gold mining stocks broke down a couple months ago and continue to sell off on strong volume. If precious metals continue to move lower then mining stocks will continue their journey lower.

This updated chart which I originally drew in February warning of a breakdown below the green support trend lines would signal a collapse in stock prices, which is exactly what has/is taking place. While I do not try to pick bottoms (catch falling knives) I do like to watch for them so I am prepared for new positions when the time and chart turn bullish or provide a low risk probing entry point.

While we focus more on analysis, forecasts and ETF trading another one of my trading partners who focuses on Trading Stocks and 3x Leveraged ETF’s has been cleaning up with gold miners.

Gold, Silver and Mining Stocks Conclusion:

Precious metals continue to be trending down and while they look to be trying to bottom it is important to remember that some of the biggest percent moves take place in the last 10% of a trend. So we may be close to a bottom on the time scale but there could be sharply lower prices yet.

The time will come when another major signal forms and when it does we will be getting involved. The exciting this is that it could be just around the corner. So if you want to keep current and take advantage of the next major moves in the market be sure to join our newsletters.

From COT trading partner Chris Vermeulen


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Weekly Energy Markets Recap with Mike Seery

We've asked Michael Seery of INO.com to give our Crude Oil Trader readers a weekly recap of the futures market. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.....

Energy futures had a volatile trading week as usual with crude oil basically finishing unchanged this Friday afternoon at 94.10 still trading below its 20 and 100 day moving average with very little chart structure with giant swings to the upside and to the downside with a possible double top around $97 and if you’re looking to get short this market my recommendation would be to put a stop above 97.35 in case the market does rally settling last Friday at 96.30 basically unchanged for the trading week.

Heating oil futures for the June contract are trading below their 20 and 100 day moving average after hitting a 4 week high last Monday down for the 4th consecutive day as we enter the summer when demand for heating oil generally lightens so I’m still not bullish this commodity but I’m still advising traders to basically sit on the sidelines in crude oil and in heating oil.

And look at unleaded gas which is still trading below their 20 and 100 day moving average settling last Friday at 2.90 with major support 2.70 down 800 points for the week currently trading at 2.84 and I do believe that a bottom has occurred in unleaded gas prices as we enter the demand season in the next couple of months.

The commodity markets have been extremely volatile in recent weeks with the U.S dollar hitting contract highs a couple of days back, however crude oil and its products have held up very well despite all the negative news with record inventories here in the United States they continue to hang near recent highs and I just wonder how long that is going to continue especially in heating oil & crude oil.

Trend: Sideways – Chart structure improving


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The Headline Data that Financial Media Ignored on Wednesday

Wednesday was a wild trading session where we saw the largest intraday selloff in the S&P 500 E-Mini futures that we have seen in some time. Intraday price action was driven largely by statements made by Chairman Bernanke and the release of the Federal Reserve Meeting Minutes which saw some monster intraday moves and a large spike in the Volatility Index (VIX).

While the world is focused on when the Federal Reserve is going to taper their Quantitative Easing program and the impact those actions will have on financial markets, I wanted to look at another divergence in the economic data which is supported by market action.

Instead of trying to determine how or when the Federal Reserve will taper or end their monetary experiment, I wanted to juxtapose statements that were made today with the actual facts. Readers can draw their own conclusions.

Recently, we have been told that the housing market is in the early stages of recovery. Unfortunately due to low interest rates housing has turned back into a speculative market. Consequently, a lot of so called fast money is flowing into housing which in many cases is either being purchased for rentals or by foreign investors as a speculative investment.

At present the housing market is not being driven by capital formation at the household level and data indicates that construction jobs are under pressure and affordability is reversing.

This first chart illustrates what has recently transpired in the 10 Year Treasury Yield.....Click here to read J.W. Jones' entire article and view his charts for "The Headline Data that Financial Media Ignored on Wednesday"


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Gold Stocks: Its Time To Be BRAVE!

By David Banister, Chief Strategist the Market Trend Forecast.........

I used to half joke with some of my investing friends that the best time to buy stocks is during or right after a crash. Think 1987, 2000-2002, 2008-09, and now perhaps Gold Miners?? Well, before we get too far ahead of ourselves, lets examine evidence of a “Crash”: I like to use crowd behavioral, empirical, and technical evidence in combination.

1. In a recent money managers poll, virtually nobody was bullish on Gold or Gold stocks, and over 80% of those polled were bullish on the SP 500 and US stocks.

2. The percentage of Dumb Money traders (non-reportable traders) in the futures markets with short positions on Gold is at all time highs, they tend to be very long at the highs and very short at the lows.

3. The insider buying ratio of Gold Mining stocks to sellers is running over 10 to 1, the highest since October 2008 when Gold bottomed out at $685 per ounce from $1030 highs. Quoting Ted Dixon, CEO of Ink Research, “such a high level of buying interest among officers and directors within their own businesses in the resource sector has correctly foreshadowed a recovery in share prices in the past: That high point of nearly five years ago came about six weeks before the Venture market bottomed on Dec. 5, 2008…While the excitement that surrounded mining stocks as recently as two years ago has waned, experienced value investors recognize that such periods of investor neglect often give rise to the best deals” Source: Theglobeandmail.com

4. The ratio of the HUI Gold Bugs Index to the SP 500 is at multi year lows and in near crash mode on the charts. The RSI Index (Relative strength) on the weekly charts is at 10 year lows at -13.71, which is off the charts low!!

5. Most trading message boards I view at Stocktwits and others are universally bearish on Gold and Gold stocks.

6. Gold is in a wave B or Wave 5 down re-testing the 1322 lows which we have discussed here for weeks as very likely if 1470 was not taken out on the upside… this is a normal sentiment pattern and re-test.

7. Gold has been in a 21 Fibonacci month correction pattern off a 34 Fibonacci month rally from 686-1923. In August of 2011 I penned articles from 1805 right up to 1900 warning of a massive wave 3 top forming. Everyone was bullish, now it’s the complete opposite.

8. Currency debasement continues around the world with negative real interest rates. This is bullish for Gold once this correction has run its course.

9. Hulbert Digest Gold Sentiment index is at an all time low (gold newsletters at -35 sentiment readings!!)

10. Gold -Silver put to call ratios are at all time highs

I could go on and on with headlines and such, but you get the idea. This is the same type of sentiment I wrote about on the stock market on Feb 25th 2009, here is that article... and nobody on the planet was bullish.

Below is a chart showing the Bullish % index for Gold Miners, as you can see the last time we were at 0% was late 2008 when Gold had bottomed out and insiders were also buying like crazy like now:



The GLD ETF chart also shows a likely re-test or slightly lower of the 1322 futures lows of April, when Insider buying hit 10 year record levels:



Obviously Gold could end up going a lot lower than we think, and the Gold Mining stocks could sink further yet. But for those with a 3-6 month horizon, we expect the 21-24 month Gold correction to complete by no later than October 2013. During the next several months the opportunities to buy some miners on the cheap will potentially make some investors a lot of money in the coming few years.


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How Russia Is Creating the Contrarian Play of the Decade....Tuesdays can't miss webinar

Years from now analysts will look back at the end of 2013 as the beginning of a historic bull market. They’ll see that the harbinger of this run up was in plain view for anyone who bothered to look.

I’m talking about uranium, and the harbinger I’m referring to is the historic Megatons to Megawatts agreement between the U.S. and Russia. This agreement expires in December 2013. Its ending concludes an era of cheap nuclear fuel for America and opens the door for Russia to sell its uranium on the world market to the highest bidder.

This is creating a profit opportunity of such magnitude that Casey Research has called together a world class faculty of energy experts for an urgent discussion:

·   Spencer Abraham, former U.S. secretary of energy

·    Herb Dhaliwal, former Canadian minister of natural resources

·   Lady Barbara Judge, chairman emeritus of the UK Atomic Energy Authority

·   Amir Adnani, CEO, president and director of Uranium Energy Corp.

These experts, along with legendary natural resource speculator Rick Rule, will sit down with Casey Research's chief energy investment strategist Marin Katusa to discuss the nuclear power industry and offer their insights into what's shaping up to be the kind of speculative opportunity contrarians live for.

The event is free and premieres online Tuesday, May 21 at 2 p.m. – click here to save your seat.

See you there!




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National Oilwell Varco Announces Doubling of Dividend NOV

National Oilwell Varco (NYSE: NOV) today announced that its Board of Directors has approved an increase in the regular quarterly cash dividend to $0.26 per share of common stock from $0.13 per share of common stock, payable on June 28, 2013 to each stockholder of record on June 14, 2013. The Company has increased its quarterly cash dividend every year since the Company started paying cash dividends.

Pete Miller, Chairman and CEO of National Oilwell Varco, remarked, "This dividend increase reflects the Company's strong financial condition and our confidence in our business going forward. We are pleased that our continued execution and strong cash flow enable us to provide a significantly higher dividend directly to our stockholders. Our business model continues to generate strong operating cash flow that enables us to invest in and execute strategic internal growth and pursue acquisition opportunities to further strengthen our existing businesses."

National Oilwell Varco is a worldwide leader in the design, manufacture and sale of equipment and components used in oil and gas drilling and production operations, the provision of oilfield services, and supply chain integration services to the upstream oil and gas industry.

Here's a free trend analysis for National Oilwell Varco NOV


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Update.....Is it finally time to go long coffee? Mike Seery weighs in!

Late last week one of our trading partners Jim Robinson gave us his take on the sideways trading in coffee right now. Mike Seery jumps in to give us his take with a recap on how coffee traded last week and where he sees it headed. Is it time to go long coffee?

Coffee futures finished down 295 points and had a disappointing week finishing lower by about 800 points still in a real seesaw chart pattern finishing around 137.00 a pound creating a false breakout to the upside last week with a false breakout to the downside a couple weeks ago so were still unable to breakout of this 8 week consolidation.

We are entering the volatile season in coffee as frost season is right around the corner which could propel prices higher if there are any weather problems but this trend is sideways and I’m still recommending traders to avoid this market until a trend develops and I do believe that the three year downturn in prices is nearing an end in my opinion.

One strategy if you’re looking to get involved in coffee and avoid some of the volatility which could be coming is to look at bull call option spreads and that is an option play which limits your risk to what the premium cost and I would go out to the month of September which gives you around 3 months to hold that position before expiration.

Trend: Sideways – Chart structure - excellent


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Weekly Energy Recap with Mike Seery

The energy futures bucked the trend this week despite the fact that the dollar continues to surge higher but is not putting any pressure on energy prices as July crude oil is still trading above its 20 and 100 day moving average finishing up around $.90 this Friday afternoon at 96.40 a barrel climbing higher for the 3rd consecutive day following the S&P 500 to the upside.

I’ve been advising traders to sit on the sideline in this market because there is no chart structure and I guess the trend might be to the upside but at this point I don’t believe there’s a solid trend to sink your teeth in with major resistance at 98 – 100 which could be tested next week. This market is showing incredible strength in my opinion due to the fact that gold is falling out of bed with many other commodities but even with record supplies here in the United States prices still continue to hang near the top and of the trading range.

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Heating oil futures for the June contract are trading above their 20 day moving average but below their 100 day moving average trading right at 4 week highs up around 300 points the trading week looking to breakout to the upside with major resistance at 2.95 as crude oil is propping up all of the products.

Unleaded gasoline for the June contract is trading above its 20 day moving average but still below its 100 day moving average hitting a 5 week high today as I’ve stated many previous blogs I believe a triple bottom may have occurred in unleaded gas prices and I think were headed higher as demand season for gas starts Memorial Day weekend.

The chart structure in heating oil and in unleaded gasoline is much better than it is in crude oil so focus on the products at this time especially unleaded gas to the upside as prices here in Chicago are flirting around 4.75 a gallon because the fact that we have extremely high taxes and a special summer blend so there is a chance that we could see prices head higher at the pump the summer.

Trend: Higher – Chart structure excellant

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