My 2 Cents » EWP

Three Reasons Why This Will Remain A Traders Market For Years To Come

inthemoneystocks — Wed, 11 Jan 2012 01:53:26 +0000

If you happen to be in a diversified retirement fund you probably finished 2011 basically flat. Many of the popular hedge fund managers also underperformed the S&P 500 Index last year. This tells us that it must be tough out there if the so-called smartest people around cannot beat the market. It really seems that the only people who can make money in this type of environment are the savvy traders who play these up and down moves. This market has not been an easy endeavor for the average person who simply listens to the media in order to take trades. Whenever the stock market tries to recover from a major economic shock such as 2008 it usually takes years to recover. Now I shall list the three reasons why this will remain a great traders market and not the typical buy and hold market that is preached by many on Wall Street.

1. Many people in the world resent Wall Street and the investment bankers at this time. Just look at the uprising that has occurred recently. The Occupy Wall Street movement is not going away. Ordinary people have lost faith in the investment world. This has obviously happened before; however, it will take time for the investment bankers to regain confidence in the public. When jobs are lost, homes are foreclosed, and retirement and savings accounts free-fall; it will definitely cause a lot of resentment in the investing community. These problems did not just occur in the United States, they happened all over the world.

2. The public seems to be fed up with the politicians. In the United States many people now believe that there is very little difference between the Democratic and Republican parties. Many people have lost faith in most governments around the world. Just look at the Arab Spring movement in Egypt, Libya, and other countries. These rebellion protests are still going on to this very day around the world.

3. Consumer confidence continues to remain at lows around the world. The average person around the world continues to worry about the large debt that most countries continue to have. Countries such as Greece, Spain, Italy, France, and even the United States have huge debt. How are these countries ever going to pay this debt off? Perhaps at some point in time there will be debt forgiveness, however, that would require bankruptcy and these days the biggest get bailed out by more debt. You see, the average person has a hard time getting their head around this idea because they cannot run their household or small business like this. If any normal person operated in massive debt they would eventually have to go bankrupt at some point.

These are the main reasons why this will remain a traders market for years to come. Sure, there will be multi-month rallies and short term glances of a bull market from time to time. On the flip side, there will be deep declines and sell offs that will scare the pants off of the average investor. The days where the small investor looks at the fundamentals (i.e. P/E ratios, book value, EPS, and EBITA) are over for now. The technical trader is the one who has the advantage, as it is simply the study of money flow and human emotion. This savvy technical trader will be the one to recognize the optimal opportunities in the markets. Learn to read and understand the charts and it will serve you throughout the rest of your investing life.

Nicholas Santiago
InTheMoneyStocks.com

Three Reasons Why This Will Remain A Traders Market For Years To Come is a post from the TradingMetro blog, My 2 Cents. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

The European Indexes Still Look Ugly

inthemoneystocks — Wed, 04 Jan 2012 01:29:34 +0000

A couple of weeks ago the European Central Bank (ECB) created a new lending facility to the banks in Europe. The European banks could borrow capital from the ECB at 1.00 percent for up to three years. Since the program began there have been over 523 banks that have taken advantage of the lending facility. Many traders and investors expect this to help the stock markets in the European Union, however, the charts on these indexes still look very ugly.

The iShares MSCI Italy Index ETF (NYSEARCA:EWI) is probably one of the most important indexes that traders can follow. Italy is the third largest economy in the European Union. This index is still trading below the important daily chart 50, and 200 moving averages which puts the index in a weak technical position. The 52 week low on the EWI was made on September 23, 2012 at $10.88 a share. This morning, the EWI is trading lower by 0.26 cents a share to $12.24 a share. Traders can watch for major daily chart resistance around the $13.00 level. Until the EWI can trade solidly above that important resistance area the EWI is vulnerable to further declines. Short term traders can watch for intra-day support around the $12.20 and $12.00 levels.

Other leading European indexes such as the iShares MSCI Germany Index ETF (NYSEARCA:EWI), iShares MSCI Spain Index ETF (NYSEARCA:EWP), and the iShares MSCI France Index ETF (NYSEARCA:EWQ) all look very similar to the EWI daily chart. This tells us that the European Indexes are trading together. Traders must remain extremely cautious when looking to own these indexes as they remain very poor charts at this time.

Nicholas Santiago
InTheMoneyStocks.com

The European Indexes Still Look Ugly is a post from the TradingMetro blog, My 2 Cents. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

The European Circus

inthemoneystocks — Thu, 03 Nov 2011 00:47:40 +0000

It is still amazing how the stock market reacts to all of the news coming out of Europe. The reaction from all of the Greek news is somewhat comical. Why in God’s earth would the Greek government not default? It is absolutely in their best interest to simply go bankrupt. They have milked the European Central Bank (ECB), the International Monetary Fund (IMF), and the American tax payer who is the largest contributor to the IMF for all they can. If the Greek government goes bankrupt at this time they can create their own central bank and begin to print the Drachma once again.

Believe it or not, a new currency that is not tied to all of the other nations in the European Union would boost tourism in Greece. It would even boost olive oil sales. Just think about all of the business that the country has lost over the years because of the Euro currency. If you ever visited Greece in the 1990’s you know how cheap and inexpensive it was to visit a beautiful country. The Euro absolutely ruined that country and now Greece looks to be ruining the European Union. The bottom line, if you cannot pay your bills, bankruptcy is the only real option. The foolish move for the Greek government would be to continue receiving bailout money and remaining part of the Euro-zone.

Should Greece leave the European Union (EU) it would be likely to see Portugal, Ireland, and Belgium flee the EU as well. What would really be the carrot that would keep these countries in the EU? They know that they are all dead broke and the money to keep this failed science project together is not available by investors. The only way that the European Union could be bailed out would be to start printing money the way the United States does. So basically, the European Union will begin to monetize their debt following the model set by the Federal Reserve.

Spain, Italy, and France are the real problem nations in the European Union. These countries have a lot of debt that could be considered too big to bailout. Again, the only way to bailout these countries will be to print and create more money out of thin air. When a central bank does this there will be repercussions and it is usually in the form of inflation. Today, the European Central Bank lowered their benchmark interest rate by 25 basis points to 1.25 percent. The reason why rates where even at 1.50 percent in the first place is because inflation was hurting these countries. Now inflation will begin to tick higher again over the next few months making goods such as energy more expensive. This game of hot potato with money just gets more comical by the minute. Traders and investors can expect to hear more news and fiscal game playing out of Europe each and every day. Welcome to the European Circus.

Nicholas Santiago
InTheMoneyStocks.com

The European Circus is a post from the TradingMetro blog, My 2 Cents. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Last Ditch Effort Did Not Work

inthemoneystocks — Thu, 22 Sep 2011 12:39:26 +0000

This afternoon, the major stock indexes are still under severe selling pressure. The Dow Jones Industrial Average is trading lower by more than 440.00 points to 10,674.00. The one factor that is helping the stock indexes from declining lower is the quick drop in the U.S. Dollar Index. Around 2:20 pm EST there was news released that the European Union was looking to quickly capitalize the banks in the Euro-zone. We have to chuckle, what have they been doing for the past two years? All of the sudden they are going to quickly flood the banks with money, this is scary when you think about it.

In any case, the U.S. Dollar Index futures sold off by 0.40 cents in seconds and this caused a spike higher in the major stock indexes. Often when markets are selling off this sharply the institutions will try anything to cause a short squeeze to get the markets to trade higher. At this stage of the game most traders and investors must be wondering why the European Union is even in place. Greece could simply just be the tip of the iceberg. What is going to happen with Italy, Spain, and France over the next six months? That is the question that traders are asking themselves now. The days where the institutions drop the U.S. Dollar Index and cause a short squeeze might be over for the time being.

Nicholas Santiago
InTheMoneyStocks.com

Last Ditch Effort Did Not Work is a post from the TradingMetro blog, My 2 Cents. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Repeat of 1997, This Time It Is The West

inthemoneystocks — Tue, 09 Aug 2011 07:57:30 +0000

This recent stock market decline can now be compared to the 1997 Asian Financial Crisis also called the Asian Contagion. This time around it is the European Union collapse that is the leading catalyst for the declines in the stock market. Throughout history the markets have a tendency to repeat themselves in different regions. The debt that all Western countries have is really overwhelming when you think about it. What else could we expect when these numerous countries have higher debt than their national gross domestic product?

The United States is really not very different than Greece, or any other European Union nation when it comes to debt. This is also another problem for the world since the U.S. Dollar is the world’s reserve currency. In the past, all of these stock market crashes were resolved by printing more cash and throwing the money at the problem. This is called creating liquidity. This will obviously be the remedy this time around as it has been in the past via QE-1, and QE-2. Whether or not creating cash reserves can fix the problem remains to be seen. This time around it seems as if the markets are not responding to the cheap money as well as it has in the past. After all, the Fed funds rate has been at zero percent since December 2008. This time around, once the $600 billion QE-2 ended the stock market has cratered. The major stock indexes are lower by nearly 20.0 percent since the May 2, 2011 high.

The European markets remain very fragile. The problems in Europe are being resolved by the same method that the Federal Reserve solved the problems in the United States, by buying government bonds. This is really just a band-aid on the problems that are in place in the Euro-zone. As the debt crisis begins to expand into Italy, Spain, and even France, the problems will simply become worst in due time. At this time, the stock markets are extremely oversold and bounces will occur. So far, every bounce has been met by selling. We shall see if these markets can firm up for a little while, however, the major problems for the European Union and the United States will be here for years to come. We can only hope that the Western countries do not face another Weimar Republic situation in the future. History has a tendency of repeating in future generations.

Nicholas Santiago
InTheMoneyStocks.com

Repeat of 1997, This Time It Is The West is a post from the TradingMetro blog, My 2 Cents. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Vampire Market

inthemoneystocks — Tue, 02 Aug 2011 13:12:07 +0000

Since July 21, 2011, the Dow Jones Industrial Average has dropped lower by 786.0 points, the popular stock index is now trading below the psychological 12,000 level. This is one fast and massive drop for all of the major stock indexes in such a short period of time. The debt ceiling bill has been passed by the politicians and the stock market participants do not care. If the politicians caved on the debt deal because of the stock market they sure look silly now. In any case, there is now blood in the street, we call this a vampire market. This is when the institutions either run for cover or they step in and buy stocks. It is important to remember that it is the institutions that move markets, not the small retail trader at home with a small online trading account.

The problems in the European Union seem to be getting worst by the day. Investors are now looking at France as another weak link in the already broken European Union. The iShares MSCI France Index Fund (NYSE:EWQ) has been plummeting lower since early May. Today the EWQ traded lower by 0.79 cents to $23.97 a share. The EWQ is short term oversold at the moment, however, the trend is down and the index is trading below all of the major moving averages. If the EWQ does not bounce soon the problems in the European Union are going to get a lot worst.

Other leading European stock indexes that are trading lower this afternoon include iShares MSCI Spain Index (NYSE:EWP), iShares MSCI Germany Index (NYSE:EWG), and iShares MSCI Italy Index (NYSE:EWI). All of these indexes are short term oversold at the moment, however, that does not mean they cannot trade lower. Yes, there is blood in the street right now, this is a vampire market.

Nicholas Santiago
InTheMoneyStocks.com

Vampire Market is a post from the TradingMetro blog, My 2 Cents. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Let Us Trade The Politicians

inthemoneystocks — Mon, 01 Aug 2011 12:54:37 +0000

The major stock market indexes all sold off lower this morning after staging a sharp gap higher open. The catalyst for the stock market pop at the open was obviously the passing of a debt ceiling resolution in Washington. Shortly after it looked as if a compromise was made by both parties, statements from leading members of the Congress have said that they are not sure if they will vote for the deal. The stock market only wants to have certainty. Even if the debt ceiling was not increased the stock market would have declined for a few days and then found a low. If there is one thing that the politicians should have learned by now, it is that the markets hate uncertainty. How can someone really invest or trade when they do not know if the rules are going to be changed in the middle of the game? There simply is no certainty in anything that the politicians do.

This afternoon the House of Representatives was scheduled to vote on the debt ceiling compromise at 2:00 pm EST, however, that vote has been postponed until tonight. If traders want to know why the Dow Jones Industrial Average is in a 300 point intra-day range, this is the reason why. It is important to also note that the global markets are also facing uncertainty from politicians and bankers abroad.

Italy has been in the news as the latest country to need a bailout in the European Union. Earlier, yields spiked higher in Italian debt signaling further problems for that country. The same thing occurred in Spanish debt as yields spiked higher in that country, which is again very negative. This is just so much uncertainty surrounding these countries that traders must simply remain nimble in this type of environment.

The United States is supposed to be the leader of the free world. It does not seem like it is a free world anymore, nor does it seem as if the United States is the leader. It really seems that the Chinese are the leaders and we all know they are not free, they are still governed by a communist government. Last night, the Shanghai Index traded flat as a board. The Shanghai Index did not rally on the back of the U.S. Debt ceiling news. That was the first clue that told us this stock market could be weak after the opening bell. Maybe we should trade in these politicians for a news set of talking heads. These people simply cannot make a firm decision. Raise the debt or don’t raise the debt, lets just make a decision already.

Nicholas Santiago
InTheMoneyStocks.com

Let Us Trade The Politicians is a post from the TradingMetro blog, My 2 Cents. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Global Market Play Book: Master Levels

inthemoneystocks — Mon, 04 Jul 2011 16:26:42 +0000

The major stock indexes in the United States and Europe have staged a massive rally over the past week. The catalyst for the large point move is credited to another Greek bailout package. This is the second bailout and austerity package for Greece in just two years. This current bailout has very little to actually do with Greece itself. This bailout for Greece was just another way to protect many of the major banks that are holding bad European debt. In any case, the major European stock indexes rallied sharply higher into the end of the trading week. In this week’s report, we will isolate important resistance levels for a few of the leading European stock indexes.

The German DAX Composite has been the strongest stock index in the European Union. This index did not come close to its March 2011 lows which were just under the 6500 level. This leading Euro-zone index continues to lead the markets higher and must be followed closely by all traders. Please examine the chart below to find all near term resistance levels of which the Pros will keep on their radar.

The Spanish Bolsa de Madrid IBEX 35 Index soared higher this past week after the Greek austerity vote passed. This is one of the weaker stock indexes in the European Union. You can easily see that the low made last week in this important index exceeded the March low. Traders should know that new lows are always a sign of weakness. Spain, and Italy, are the two nations in the Euro-zone that are expected to eventually need a bailout. The unemployment rate in Spain remains extremely high, especially among young people. Traders can look at the chart below for important resistance levels.

The French CAC 40 Index rallied higher along with every other major stock index last week. Unlike the Spanish Bolsa chart this index made a higher low pattern by not trading down to the March 2011 level. Many investors consider France to be the strongest country in the Euro-zone next to Germany. Traders should follow the chart below to see the next important resistance levels for this leading European stock index.

Nicholas Santiago
InTheMoneyStocks.com

Global Market Play Book: Master Levels is a post from the TradingMetro blog, My 2 Cents. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.

Is This The Next Leg Of The Bull Market Or Just Bull Shhh?

inthemoneystocks — Thu, 30 Jun 2011 13:05:01 +0000

There is really no person that can deny the size of the rally over the past four trading sessions. The highly popular and followed Dow Jones Industrial Average(DJIA) has surged higher by 460.00 points in just four trading sessions. This is an enormous move in such a short period of time. One would think that cancer was cured with the action in this stock market. In reality, all that happened was the can of problems in Greece, and the European Union, was kicked down the road a little bit. There is not anyone on the earth that really expects Greece to resolve it’s problems in the next few years. The country will ultimately have to default.

You see, the stock market really is not about Greece, it is about banks. Yes banks, the banks are the institutions that are holding Greek, and European paper, or what we call Greek bonds(debt). If Greece defaulted the banks would lose a lot of money, as there so called bond investment went sour. It is always about the banks. In 2008, when the stock market crashed and every leading financial institution was insolvent, it was about the banks. Nothing has changed since that time, bailouts continue to occur on a daily basis. This action by the central banks and the International Monetary Fund will continue until the people lose faith in paper money. Until that time, it would be prudent to simply expect more bailouts for other nations and states down the road.

As traders, we continue to simply trade what we see on the charts. Traders really do not buy into the story that is being sold to the public via the mainstream media. How many times have we seen a public official rescind a comment, or statement that they have made six months or a year earlier? The answer is that we see it and hear it all the time. For example, when President Obama ran for office he said that he was against debt, now he says we need debt. The debt is over $14.3 trillion at the moment, how much do we really need? Lets take the Federal Reserve Chairman Ben Bernanke, in 2007, he said sub-prime loans were not a problem, then in 2008, sub-prime loans were the problem. Currently, Chairman Bernanke says that there is no inflation, yet the world is crying about inflation. Can anyone believe this stuff anymore? The only truth is the charts. The charts were oversold and the stock markets bounced ahead of a major U.S. holiday. As fast as these markets go up they can just as easily come down. If you want the really scoop on the markets just stick with the charts.

Nicholas Santiago
InTheMoneyStocks.com

Is This The Next Leg Of The Bull Market Or Just Bull Shhh? is a post from the TradingMetro blog, My 2 Cents. Get a blog like this for free by joining our trading community today. TradingMetro is the forex trading system and forex trading software marketplace for self-directed traders.