Why Great Stocks Drop Hard and Reverse

Institutional sell programs and bots cause disruptions with David Banister, Chief Strategist at the Active Trading Partners......

One thing that will always over rule charts and technical analysis is fundamentals in the long run. To be sure, I love technical analysis but I always combine my work there with fundamental research. I rarely if ever buy a stock just because the chart looks nice, that is almost always a recipe for disaster.

With that said, how many times have you seen a good company with strong fundamentals and a seemingly great looking chart break down over 1-2 weeks and take everyone out of the trade? Then for sure, the stock reverses right back up all the way back to where the decline began? To make matters worse, this happens without any real news or any bad news as it were. What is it that causes these crazy down the mountain and up the mountain moves anyways?

Insitutional Sell Programs— sometimes referred to as “Bots” or “Algo” program trading

How does it work?

In an apparently strong fundamental growth stock with no apparent issues, an institution will have a pre-defined price at which point instructions are triggered to liquidate the entire position almost at any price once that price point is hit. They protect themselves ahead of time with Puts, which give them profits if the targeted stock drops hard while they are selling out of the position, thereby locking in their targeted sell price.

Lets take several examples, here's the 3 month charts to show you exactly how they look on paper.



Free Webinar with Carolyn "The Fibonacci Queen" Boroden "How to Use Fibonacci Analysis in Your Trading" this Wednesday, July 17th at 8:00PM est

Continuous Commodity Index Points to Rally in Gold & Silver

During the recent weeks we have seen commodities especially precious metals continue to drop in value. Market participant sentiment has become more bearish on commodities and couple that with a rising dollar it’s no wonder why we continue to see commodities as a whole fall in value.

Money has been flowing out of bonds at record levels this summer telling us most of market participants are feeling bullish on the stock market. This shift in sentiment of the masses are typical as they move their money from the risk on safer assets (bonds & commodities) and rotate into risk-on assets like stocks. While this is a bearish (contrarian sign) stocks could easily continue to rally for an extended period of time and possibly several more months before they actually top out.

Just click here and we'll take a look at the financial market business cycle diagram.



Don't miss this weeks Free Webinar with Carolyn "The Fibonacci Queen" Boroden. Just click here to attend "How to Use Fibonacci Analysis in Your Trading" Wednesday, July 17th at 8:00PM est

Free Webinar: How to Use Fibonacci Analysis in Your Trading Wednesday, July 17th at 8:00PM est

For years Carolyn Boroden has been using Fibonacci based market geometry and symmetry that provides the edge needed to succeed in choosing your entry and exits points for your biggest trades. And you can easily use these methods whether you are trading stocks, currencies, ETFs or commodities.

In this Free webinar Carolyn "The Fibonacci Queen" Boroden and "Simpler Options" John Carter will show us......

*     How to identify Fibonacci support & resistance zones

*    The simple way to manage your risk/reward using Fibonacci ratios

*    The brain dead easy ways to set up your support & resistance zones

*     How you can identify what markets to trade and when

*    The secret to identifying high probability targets in stocks and ETFs .... and much more

Simply click here and fill out your email address, click submit and you will be automatically registered for the webinar.

Watch "How to Use Fibonacci Analysis in Your Trading"

See you on Wednesday,
Ray @ The Crude Oil Trader

Weekly Precious Metals Market Recap with Mike Seery

The precious metals had one of the best weeks to the upside in quite some time because of statements from Ben Bernanke coming out basically stating he’s going to continue QE3 forever which put the fire under gold prices up 4 days in a row before Friday as profit taking set in down about $3 at 1,277 an ounce after settling last Friday 1,212 now trading at 1,278 above its 20 day moving average but below its 100 day moving average and now has started to form excellent chart structure with a possible bottom being formed in recent weeks hitting a 3 week high in yesterday’s trade.

I have been bearish gold and the precious metals for quite some time but I’m recommending to sit on the sidelines with a possible break out to the upside which is pretty amazing as I’ve been bearish forever but the trend can change very quickly so I’m looking at gold to the upside if it breaks out above 1300.

Silver futures for the September contract are right at their 20 day moving average but below their 100 day moving average also at a 3 week high also developing excellent chart structure settling last Friday at 18.73 up around $1.00 this week currently going out around 19.78 an ounce and if you’re looking to get long this market I would buy a futures mini contract and place a stop below the contract low risking around $1500 per contract.

Copper futures which I have been bearish for quite some time and now I’m neutral because it hit a 10 day high in yesterday’s trade also with excellent chart structure settling at 3.0650 last Friday currently going out around 3.17 a pound trading above its 20 day moving average with a possible short term bottom in place as the entire precious metal sector is starting to look bullish.

I’m still advising traders to sit on the sideline and wait for a 4 week high before entering and that could be next week especially if we have tighter trading ranges but the tide may have turned as Ben Bernanke refuses to let commodity, housing and stock prices to go down & he will do anything in is power to keep printing money and keep artificially inflating prices that should be much lower in my opinion.

This man has way too much power in my opinion there are 7 billion people on this planet with one person dictating everything & I think that is out of control & has never happened in the history of the world and I do believe one day this will end in a total disaster and I do mean total disaster.

Click here to check in with Mike on other weekly futures like the grains, sugar, orange juice, cotton, lumber and coffee.
 

How to Find Key Levels in Precious Metals to Take High Probability Trades

New video: Today's Crude Oil Trade....Key levels, entry and exit points, with John Carter

We are feeling lucky today as our trading partner John Carter of "Simpler Options" is sharing some of his trading techniques and he is using crude oil as an example in today's video.

But the key isn't the oil trade example you'll see, it's the strategy someone taught John that makes the huge trade possible. That someone is none other then the Fibonacci Queen, Carolyn Boroden.

The short video makes available to you the same strategy John uses when he trades oil and how he identifies entry targets and when to take profits.

Click here to watch "Today's Crude Oil Trade....Key levels, entry and exit points, with John Carter"

Platts: ICE Brent futures lose previous quarter's premium to NYMEX WTI, Dubai

After a strong performance at the beginning of the year, the forward Brent complex lost some of its strength to WTI and Dubai crude futures in the second quarter of 2013 on a combination of European demand woes and stronger East and West crudes.

The narrowing of the spread between the ICE Brent futures and NYMEX light sweet contract, known as Brent/WTI spread, was a notable change in the quarter.

Toward the end of June, the ICE Brent front-month futures contract narrowed its premium to front-month NYMEX crude to below $6/barrel, more than halving from the beginning of the quarter. (A trend which of course has continued, with the spread tumbling below $5/b and even $4/b in just the first three days of July.)


Here's a short video in which John Carter shows how he trades oil and how he identifies targets when to take profit.

New video: Carolyn Borodens "Secrets to Maximizng your Profits and Minimizing your Risk"

In today's new video from John Carter he shows us how the strategies taught to him by our very own Carolyn "The Fibonacci Queen" Boroden helped him make 93k because Carolyn made it clear how to use her secrets to know when to exit these big trades.

You may recognize Carolyn from CNBC, but she's trading with us now. If you have been following the Crude Oil Trader then you know John Carter has made us a lot of money in 2013. Bringing in HIS instructor, one of the real "hot hands" on Wall Street, is going to take all of us to another level whether you are trading commodities, equities, currencies or options.

Click Here to Watch Video

Here's what John will be covering in this video. You'll learn......

• How to Know When to Enter a Trade

• How to Know When to Take Profits

• How to Find Key Levels to Take High Probability Trades

• How to Time Your Trade for Maximum Profit

• How to Minimize Your Risk

Just click Here to Watch Carolyn Bordens "Secrets to Maximizng your Profits and Minimizing your Risk"

Rigzone: Rail Delivery of Oil, Petroleum Products Continues to Increase

From Robin Dupre at Rigzone.....

With U.S. crude oil producing at record amounts and outstripping pipeline capacity, the country is relying heavily on railroads to move new crude oil to refineries and storage centers, reported the U.S. Energy Information Administration (EIA) Wednesday.

The total amount of crude oil and refined products being transported by rail is close to 356,000 carloads during the first half of 2013, up 48 percent from the same period last year, according to Association of American Railroads.

“U.S. weekly car loadings of crude oil and petroleum products averaged nearly 13,700 rail tankers during the January to June 2013 period. With one rail carload holding about 700 barrels, the amount of crude oil and petroleum products shipped by rail was equal to 1.37 million barrels per day during the first half of 2013, up from 927,000 barrels per day during the first six months of last year. Crude oil accounted for about half of the 2013 daily volumes," reported AAR.

"Increases in rail transportation multifactor productivity can be traced to technical progress, such as improved capital inputs and technological changes in the form of improved methods of service delivery. Improved technology for locomotives, freight cars, and track and structures have increased reliability and reduced maintenance needs," added the United States Department of Transportation.

A large portion of the produced crude oil is from North Dakota where there is not enough pipeline capacity to move supplies, therefore dependency on delivery of oil by rail is substantial. North Dakota currently ranks as the second largest oil producing state after Texas, reported EIA.

"The roughly 700,000 barrels per day of crude oil, which includes both imported and domestic crude oil, moved by rail compares with the 7.2 million barrels of crude oil the United States produces daily," added EIA.

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Shell Names Ben van Beurden as new CEO

Shell (RDS.A) has named Ben van Beurden, the head of its Downstream business, as CEO to replace Peter Voser, who had already announced he is leaving the company. Van Beurden will take over in January next year. He joined Shell in 1983 and has held a number of technical and commercial positions in the company's Upstream and Downstream operations.

A "solid Shell man," new CEO Ben van Beurden has worked for Shell [RDS.A] for 30 years, turning around the chemicals business and spending 10 years in its liquefied natural gas business. But Chairman Jorma Ollila's comment that the new CEO would "continue to... develop the strategic agenda we have set out" suggests there's no real change ahead - which leaves little for investors to get excited about.


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The 30 Second Technical Flash Chart Report on U.S. Equities

Chris Vermeulen shows us how U.S. Equities opened higher on Monday and are, in his opinion,  setting up for a sharp pullback based on technical analysis using trends, cycles, momentum, volume, market breadth and key resistance zones.

Take a look at his chart work for a quick flash of what he thinks.

Entire article > "The 30 Second Technical Flash Chart Report on US Equities"



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