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It Is Friday, What Else Could You Expect?
Ah, the markets are surging higher today after yesterday's bloodbath decline. Well, this should not be a real surprise to traders. By now, we should all know that the stock market rarely declines on a Friday. You see, Friday is the end of the work week for most people. Therefore, if someone comes home from work and sees the Dow Jones Industrial Average (DJIA) lower by 100.00 points they are likely to save their money instead of spending it. Most retail stores, restaurants, and other entertaining venues will do the most business on the weekend. If the average Joe comes home and sees a stock market crash or sharp decline he will think differently about spending his hard earned money over the weekend.
If you look at a chart of the Dow Jones Industrial Average over the past two and a half years you will notice that there have been less than a dozen Friday's where the market has declined by more than 100.0 points. This is because the powers that be need the U.S. consumer to spend money. All of this weak dollar stuff that the Federal Reserve and other central banks have done, such as the zero percent Fed funds rate since December 2008, $1 trillion QE-1, and the current $600 billion QE-2 , will only work if the U.S. consumer spends money. Please remember that consumer spending accounts for roughly 70.0 percent of the gross domestic product (GDP) in the United States.
The Federal Reserve boss, Ben Bernanke, wrote exactly about this many years ago. Basically, he said if the stock markets are higher than the public will feel better. He is actually correct if you look at the Friday effect. The central bank controls the stock and commodities markets by the amount of cash reserves they create. The only negative for the Bernanke theory is that by creating cash he also creates inflation. When goods become too expensive due to inflation the economy will ultimately suffer. Just look at the price of gasoline, food, and most other commodities recently. However, the party for the stock market will usually last until that final point of inflation becomes too much pain for consumers. Since March 6, 2009, the inflation party has been in full force. Yesterday, the U.S. Dollar finally surged higher and look how quickly that inflation party came to an end. Today, the U.S. Dollar is trading flat and the party is back on. Today is also a Friday, the volume is extremely light, and the government job report was much better than expected.
Since the tech wreck, and the dot com bubble burst, in the year 2000, the solution for the stock markets by the central bankers has been to weaken the U.S. Dollar. That was tried by the former Federal Reserve boss, Alan Greenspan, in 2002 which lead to the greatest stock decline since the Great Depression in 2008. This time around the current Federal Reserve boss, Ben Bernanke, has done much more stimulus and money creation than Alan Greenspan ever did. This method that the central bank uses is really just playing yo-yo with the U.S. Dollar. Last year, the U.S. Dollar Index surged higher from November 2009 until June 2010 and that surge in the dollar caused the stock market to stage its first 17.0 percent correction since the inflation rally began in March 2009. This is a direct correlation to the U.S. Dollar Index and that is still all that really matters. At this point in time the stock market cannot stand on its own two feet with a falling U.S. Dollar. This is unlike the 1990's when the stock market and the dollar rallied higher together. When the dollar and the markets can trade higher together that is real wealth. Right now, when the dollar trades lower and the stock market trades higher that is just a trade off. Wealth is not created when that happens, and hopefully the equity you have has increased more than the dollar has declined. There is really nothing gained here.
Oh well, let us enjoy the Friday rally and remember to spend some money this weekend. Please keep an eye on the U.S. Dollar, if that green piece of paper catches a bid, today's rally may not last very long.
Nicholas Santiago
www.InTheMoneyStocks.com
It Is Still A Dollar Story
As long as the U.S. Dollar Index is declining lower this morning the major stock market indexes should remain strong. The leading commodities that were all crushed lower yesterday could all bounce up a bit on the back of a U.S. Dollar Index pullback. Traders must keep one eye on the dollar at all times.
Some leading commodity stocks that could see bounces today should the U.S. Dollar Index pullback include Freeport McMoRan Copper & Gold Inc.(NYSE:FCX), Cliffs Natural Resources Inc.(NYSE:CLF) and United States Steel Corp.(NYSE:X). Please remember that these stocks will usually trade inverse to the U.S. Dollar Index.
Nicholas Santiago
www.InTheMoneyStocks.com
Conspiracy: Jobless Equals QE3
The markets are wild today on the back of comments from the ECB and Jobless Claims that shot higher to 474,000. The SPDR S&P 500 ETF (NYSE:SPY), SPDR Dow Jones Industrial Average ETF (NYSE:DIA) are trading lower while the PowerShares QQQ Trust, Series 1 (NASDAQ:QQQ) are higher.
The Jobless Claims numbers have skyrocketed over the last month. Just a month ago, people filing for unemployment sat below 400,000. Last week, the number of filings jumped to 431,000 and this week to a staggering 474,000. This massive jump in Jobless Claims has many wondering if it is another ploy by the Federal Reserve and government to enact a controversial QE3.
In June, QE2 is supposed to come to a close as the $600 billion will have been used up. It is obvious, this infusion of money has done little to fix the massive housing problem or even truly curb the unemployment number. On the negative side, food and energy prices are killing the average American. If you take away the drug (free money), the junkie will freak out. Even Ben Bernanke must see this. Therefore, is it plausible to think that a sudden spike in Jobless Claims may give the Federal Reserve the ammo to push out QE3? It is hard to imagine this spike in Jobless Claims being a mere coincidence just one month prior to the end of QE2. Get the next trade off the Federal Reserves secret plan,take a seven day free trial.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
RealTick® graphics used with permission of RealTick LLC.
Commodities Crash, What To Do
The Dollar ripped higher today causing commodities to be annihilated. The Dollar jumped on ECB comments that pushed the Euro lower. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) hit a high of $21.18, +0.23 (+1.07%). This is a gigantic move in the Dollar. The Dollar has been collapsing lower all year but seems to have found support around current levels with QE2 coming to an end.
Silver is continuing to collapse. This is a sell off of epic proportions, following the 80% run higher in the last three months. The iShares Silver Trust (NYSE:SLV) is currently trading at $35.40, -2.87 (-7.50%). This is after hitting a high of $48.35 a week ago. In total, the sell off on silver is now at a staggering 27% in one week.
Jobless Claims shocked the markets today. After being in the 380,000 range a month ago, last week Jobless Claims jumped to 431,000. At 8:30am ET this morning, Jobless Claims were reported at $474,000. The increase in these numbers is shocking and the markets are reacting with selling. Tomorrow, the Non Farm Payrolls and Unemployment Number will be released. These will give further insight into the state of the jobs market in the United States.
There is a massive rotation underway in money over the last week. Money is running from commodity stocks and into old school technology. While stocks like Chevron Corporation (NYSE:CVX) are getting crushed this week, old school tech stocks like Hewlett-Packard Company (NYSE:HPQ) and Intel Corporation (NASDAQ:INTC) are moving higher. This is a classic maneuver as money is looking for a new home and also looking for safety. Where is the money going next? Take the one week free trial of the Research Center to get the next big trade.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
RealTick® graphics used with permission of RealTick LLC.
Transport Stocks Sail Up Stream
This morning the major stock market indexes are all coming under some selling pressure for the fourth consecutive trading day. There is one sector that is bucking the short term trend and it the highly popular transportation index. This morning the Dow Jones Transportation ETF(NYSE:IYT) is trading higher by 0.98 cents to $98.62 a share. The IYT made a new 52 week high just three trading days ago at $100.67 a share. Often when an index makes a new high it will usually try and retest the high levels and does not just rollover. Traders can watch for intra-day resistance on the IYT around the $99.20 and $99.75 levels.
Some leading transport stocks that are trading higher today include CSX Corp.(NYSE:CSX), FedEx Corp.(NYSE:FDX), and United Continental Holdings Inc.(NYSE:UAL). Traders should watch the activity in the IYT as most of the leading transport stocks will trade in tandem with the index.
Nicholas Santiago
www.InTheMoneyStocks.com
Oil Gets Spanked By Stronger Dollar
This morning, WTI oil is trading sharply lower by $3.74 to $105.51 a barrel. When the U.S. Dollar rallies higher most commodities will come under some selling pressure. The United States Oil Fund(NYSE:USO) is trading lower by $1.32 to $41.94 a share. Traders can watch the $40.90 area for intra-day support. This is also a likely bounce area for the USO should it trade down to this level.
Many leading energy stocks are trading sharply lower this morning. Exxon Mobil Corp.(NYSE:XOM), Chevron Corp.(NYSE:CVX, and ConocoPhillips(NYSE:COP), are a few of the giant integrated energy stocks that are coming under selling pressure from a stronger U.S. Dollar. Traders should understand that if the U.S. Dollar continues to move higher most leading energy stocks could trade lower. On the flip side, if the U.S. Dollar begins to fade and trade lower these energy leaders will likely bounce higher.
Nicholas Santiago
www.InTheMoneyStocks.com
Experts Nail The Market Top, Watch It Unfold ...
Click the link below to watch the video:
http://www.inthemoneystocks.com/n_rant_and_rave_blog_single.php?id=12662
Oil stocks have collapsed this week, a sell off of monumental proportions. The drop was almost too obvious as oil was at a level where if it moved up, the oil stocks would sell off and if it moved down, oil stocks would also sell off. This was explained in the article published Thursday, April 28th, 2011 and can be viewed here: http://www.inthemoneystocks.com/n_rant_and_rave_blog_single.php?id=12561. This was a no win situation for stocks like Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP) and Marathon Oil Corporation (NYSE:MRO). Chevron and Exxon had rallied over 60% in the last three quarters and were already extended. Add in the major no win situation and the short was 100% in play.
While the three day drop on oil stocks has been fantastic, there are some signs that a short term bottom has been reached. The charts on everything from Exxon, Chevron to even the Oil Service HOLDRs (NYSE:OIH) are saying this.
Exxon Mobil dropped from a double top high of $88.23. It hit a low today of $84.06. This low of the day matches up perfectly with a pierce of the 50 moving average on the daily chart and is just $0.25 shy of a key gap fill going back to April 19th, 2011. This range should be solid support for three days or so.
Chevron dropped from a high on Monday at $109.58 to a low today of $103.70. As CVX hit the low today, it is less than $0.50 away from the support base in early to mid April at $103.35. This should hold it for a few days and it is likely to see CVX bounce for two to three days.
Perhaps the best example of all is the OIH. This represents all the oil services as an ETF. The OIH has dropped for three straight days, falling into the mid March lows of $149.50. This level is major support for the ETF and should hold in the short term. This should get a solid bounce in the coming few days before ultimately going lower.
While many oil stocks are hitting key daily support levels, it is important to recognize that this is only short term support for a minor bounce. After this happens, oil stocks will fall further to the downside. Ultimately, daily 200 moving averages should be hit which are far below current levels.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
RealTick® graphics used with permission of RealTick LLC.
Integrated Energy Stocks Lead Markets Lower
This morning, the major stock market indexes are coming under some heavy selling pressure. The decline in the major stock indexes looks to be very broad based. The one sector that is leading the decline this morning looks to be the large integrated energy stocks. Stocks such as Exxon Mobil Corp.(NYSE:XOM), Chevron Corp.(NYSE:CVX), and ConocoPhillips(NYSE:COP) are all trading lower by more than 1.00 percent. Energy stocks account for 16.0 percent of the S&P 500 Index.
Other leading energy stocks that are trading lower include Chesapeake Energy Corp.(NYSE:CHK), Devon Energy Corp.(NYSE:DVN), and Suncor Energy Inc.(NYSE:SU). Lately, when the U.S. Dollar Index has declined lower the energy stocks and most other commodity related stocks have bounced higher. That inverse relationship between stocks and the dollar has not occurred today. This tells us that the recent leading stocks could see further declines.
Nicholas Santiago
www.InTheMoneyStocks.com
KLA Tencor and Lam Research Up In Sympathy
This morning, the major takeover news comes as Applied Materials Inc.(NASDAQ:AMAT) buys out Varian Semiconductor Equipment Associates Inc.(NASDAQ:VSEA) for $63.00 a share in cash. This buyout is causing some of the other leading semiconductor equipment makers to rally sharply higher this morning.
Lam Research Corp.(NASDAQ:LRCX) is a leading semiconductor equipment maker that has been declining since early March 2011, when it traded as high as $59.10 a share. Yesterday, Lam Research stock traded as low as $46.65 a share. This morning LRCX stock is trading higher by $1.90 to $48.85 a share which is nearly a 4.0 percent increase. The stock should have some short term intra-day resistance around the $49.25 area. Should the stock rally above this level the next important intra-day resistance level will be at $50.00.
KLA Tencor Corp.(NASDAQ:KLAC) is another leading semiconductor equipment maker. This stock is trading higher this morning $1.09 to $44.05 a share. The stock has been making a series of lower highs on the daily chart which is not a sign of strength on the charts. Traders can look for intra-day resistance around the $44.50 and $45.00 levels.
Lam Research Corp. and KLA Tencor Corp. are two of the larger semiconductor equipment makers. It is difficult to know who would takeover these big market cap companies. Therefore, this bounce in these two stocks could be short lived. That is the reason that we want to follow the charts and not solely rely on the news.
Nicholas Santiago
www.InTheMoneyStocks.com
Market Eyes Friday Jobs Report
All eyes turn to the Non Farm Payrolls number this coming Friday. The market is looking for continued positive readings on job creation. Lately, the market has been perplexed by higher Jobless Claims, last week hitting 426,000. This number is a sharp jump from a month ago when Jobless Claims were in the mid 380,000 range. In addition, the GDP reported last week was nothing to write home about, coming in at 1.8%. For a market that is getting steroids from the Federal Reserve, it seems somewhat on the weak side. As the Federal Reserve continues their quantitative easing policy, and the Dollar dives day by day, is the economy stalling out already?
Today, the markets are hovering slightly negative. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $136.02, -0.20 (-0.15%). This shows overall weakness in the market as their is no catalyst for upside until the Non Farm Payroll number on Friday. The weakness is even more apparent when we look at the Dollar. The Dollar is down again which is no surprise, however, a weaker Dollar usually pushes the markets higher. Today the PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $20.90, -0.07 (-0.33%).
Energy stocks like Chevron Corporation (NYSE:CVX) are leading the markets lower while financial companies like JPMorgan Chase & Co. (NYSE:JPM) are fighting back, trying to keep things neutral.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
The Trade: Energy Stocks Weaken Further
Oil stocks have nowhere to go but down. That was the analysis given last week in an article on this very blog. At this time, Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) were trading at their double top, 52 week highs. View the article here. This hypothesis was based on the current price of oil between $110 and $115 per barrel. The analysis clearly showed that higher oil would cause the markets to sell putting pressure on oil stocks, based on an economic slowdown, while lower oil would cause the oil stocks to sell directly, even if the markets moved higher. Essentially it was a lose, lose situation for oil stocks. In addition, stocks like Chevron and Exxon had rallied 60% higher in the last ten months. Since that alert, the oil stocks have stalled out and started to retreat. Chevron hit a high of $109.17 that day and is now trading back to $107.00 This should continue in the coming weeks.
Any sector related to energy seems to be on the weak side over the last few days. Just last week, Total SA, a European oil company, agreed to buy up to 60% of SunPower Corporation (NASDAQ:SPWRA) for $1.38 billion. The whole solar sector opened sharply higher on this positive news. However, by the end of the day, many solar players had given up a majority of their gains. By today, the entire gains from that news and then some have been wiped out. This is very bearish for the sector. After the close of trading, First Solar, Inc. (NASDAQ:FSLR) will report earnings. This will shed more light on the solar industry. If oil continues lower, solar stocks should remain weak. Take a one week free trial of the Research Center. Get in depth coverage of the solar sector.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
RealTick® graphics used with permission of RealTick LLC.
Financial Stocks Keep Market From Dropping Further
The large financial stocks have been under pressure since early April 2010 when the leading bank stocks reported earnings. This morning the major stock indexes are struggling to stay positive. However, it is the large financial stocks that are showing some intra-day strength and are actually keeping the S&P 500 Index from selling off further.
Bank of America Corp.(NYSE:BAC) is trading higher this morning by 0.27 cents to $12.62 a share. This stock has sold off sharply since mid-January 2011 when it traded as high as $15.31 a share. BAC stock will have intra-day resistance around the $12.60 and $12.90 levels. The daily chart of BAC remains in a downtrend.
J.P. Morgan Chase & Co.(NYSE:JPM) is the leading financial stock in the entire stock market. This stock is trading higher this morning by 0.58 cents to $45.76 a share. J.P. Morgan stock topped out in early April after the company reported earnings that were not well received by investors. JPM stock has struggled over the past few days around the $46.00 level, this level remains the intra-day resistance area.
Wells Fargo & Co.(NYSE:WFC) is trading higher by just 0.08 cents to $29.21 a share. WFC stock still remains very weak on the daily chart by trading below the daily chart 50 moving average. This stock looks to have intra-day resistance around the $29.50 level. Should the stock begin to decline traders can look for some short term intra-day support around the $29.00 level.
Nicholas Santiago
www.InTheMoneyStocks.com
Rare Earth Stocks Dominate The Action
The rare earth stocks exploded on the scene in December 2010 when they spiked higher during the holiday season. This sector which produces lithium, beryllium, indium, gallium, neodymium, and terbium continues to hold up well on the charts at this time.
Molycorp Inc.(NYSE:MCP) seems to be the leading rare earth stock in the sector. This stock remains in a choppy sideways base on the daily chart. The stock is trading above all of the major moving averages which puts the stock in a strong uptrend and a good technical chart position. This morning Molycorp stock is trading higher by $4.40 to $76.00 a share, which is a new 52 week high.
Avalon Rare Metals Inc.(AMEX:AVL) is another leading rare earth stock that is trading higher this morning by 0.57 cents to $9.40 a share. This stock is trading in a loose sideways base on the daily chart. This type of pattern could trade higher, however, loose consolidation patterns have a tendency to fail sometimes and break lower. Intra-day the stock will have resistance around the $9.55 area. Should the stock rally higher the next resistance area would be around the $10.00 level.
Rare Element Res Ltd.(AMEX:REE) is another leading rare earth stock based out of Vancouver, Canada. This stock has made a lower high pivot on the daily chart and this is a sign of likely weakness. However, a close back above the $15.53 area would put the stock in a strong technical chart position. This morning REE is trading higher by 0.76 cents to $14.61 a share. Short term traders must watch for resistance around the $14.85 and $15.10 levels. These are two short term levels where the stock could see some intra-day selling pressure.
The Pros profit from these levels and more everyday while trading. Come look over the virtual shoulder of the best in the industry as they navigate the markets, make calls, display their live charts, speak over your speakers live, respond to your questions live, in our Intra Day Stock Chat. Join for free, start with our Free Trial.
Nicholas Santiago
www.InTheMoneyStocks.com
Intra-day Dollar Bounce Rattles Markets
Everyone in the world thought that the stock market would have been in party mode today after the announcement that Osama bin Laden was killed. Last night the S&P 500 e-mini futures soared higher when the news was made public. This morning the major stock indexes have struggled to stay positive, that is because the U.S. Dollar Index has rallied off its intra-day low. When the U.S. Dollar Index rallies higher the major stock indexes will trade lower and deflate. While the U.S. Dollar Index is still trading lower on the session by 0.03 cents to $72.95 it is sharply off of the low made around 11:00 am EST around $72.72. Short term traders must keep one eye on the U.S. Dollar Index chart at all times.
Major Level Tagged, Markets Sell Off Highs
The markets opened sharply higher on news that Bin Laden had been killed and a continued fall in the Dollar. The SPDR S&P 500 ETF (NYSE:SPY) is higher, trading at $136.76, +0.33 (+0.24%) while the PowerShares DB US Dollar Index Bullish (NYSE:UUP) is lower, trading at $20.88, -0.07 (-0.33%). A shocking stat shows just how closely tied the Dollar and the markets are two each other in the opposite direction. The U.S. Dollar is down around 8% on the year while the markets are up 8%. This shows that the markets are inverse to the Dollar and explains one of the reasons why the Federal Reserve favors a weak Dollar policy.
The SPY opened at a massive resistance level from a pivot on June 18th, 2008. This level happens to be at $137.10 - $137.15. No sooner did the market hit that level, then a sell off took place. After a short move lower, the markets again retested trying to break through again but failing. Another sell off took place, this one bringing the markets sharply lower to only minor gains on the day. This is a possible top on the markets in the short term. To get master pivot points, cycle dates and more, click here and take the one week free trial to the Research Center or Intra Day Stock Chat.
Commodities started the day with heavy losses, however gold is now soaring with the SPDR Gold Trust (NYSE:GLD) trading at $153.01 +0.64 (+0.42%). Silver has recovered off of major losses, but is still down. The iShares Silver Trust (NYSE:SLV) is trading at $45.73, -1.15 (-2.45%)
but had been as low as $43.58 and the United States Oil Fund LP (NYSE:USO) is nicely positive, trading at $45.53, +0.38 (+0.84%).
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
RealTick® graphics used with permission of RealTick LLC.
Casino Stocks Hit Blackjack
The leading casino stocks are all trading higher this morning. It now seems that whenever the Shanghai Index (China) is higher the casino stocks seem to benefit from the Macao markets and trade higher on the session.
This morning Wynn Resorts Ltd.(NASDAQ:WYNN) is trading higher by $3.30 to $150.45 a share. WYNN is making a new 52 week high breaking out of a one week consolidation base. Traders can watch for intra-day resistance around the $151.00 and $151.50 levels. Traders can watch for small intra-day pullbacks from these levels.
Las Vegas Sands Corp.(NYSE:LVS) is trading higher by 0.71.cents to $47.75 a share. This stock has had a tremendous rally since making a pivot low on March 15, 2011 at $36.00 a share. LVS should have some intra-day resistance around the $48.00 area. This stock is very strong today and the intra-day pullbacks could be minimal.
MGM Resorts International(NYSE:MGM) is trading higher by 0.20 cents to $12.86 a share. This stock does not have the same relative strength as WYNN, or LVS on the charts. MGM stock is trading near the lower end of the daily chart. The stock is still trading below the 20, and 50 daily chart moving averages, this formation puts this stock in a weak technical position. Short term traders can watch for intra-day resistance around the $12.95, and $13.06 levels.
Learn the Methodology of the Pros before the price increase. This is your final chance to attend this special weekend webinar at this price and receive our DVD for FREE! sign up now and reserve your space while its available. Find our page under the Educational Channel on the More Tools tab.
Nicholas Santiago
www.InTheMoneyStocks.com
Gold and Silver Love The U.S. Dollar Decline
Gold and silver are directly benefiting from the decline in the U.S. Dollar Index. In fact, the entire stock market is rising as the U.S. Dollar Index declines intra-day. Gold and silver are both making new highs this morning. The SPDR Gold Shares is trading higher by 0.68 cents a share to $150.49 a share. The next important intra-day resistance level for the GLD should be around the $151.00 area.
The iShares Silver Trust(NYSE:SLV) is off to the races this morning. The SLV is trading higher by 0.59 cents to $47.95 a share. Traders must watch for intra-day resistance around the $48.00 and $48.50 levels. If the U.S. Dollar Index somehow bounces higher throughout the day this will put selling pressure on gold, silver and most everything else in the stock market.
Get expert guidance and insight into the gold, silver, and dollar trade. Watch the Pros trade live. Join the Intra Day Stock Chat now and start next week with the Pros.
Nicholas Santiago
InTheMoneyStocks.com
Transports Lead Markets, Are They Tired Here?
The Dow Jones Transportation Index (DJT) is one of the most highly followed indexes by traders and investors. This afternoon the Dow Jones Transport Index is trading at a new 52 week high on the charts. This index can be easily followed or traded by using the iShares Dow Jones Transportation ETF(NYSE:IYT). The IYT is trading higher by $1.18 to $99.63 a share. Traders must now watch the psychological $100.00 level as the next important resistance point. When the transports trade higher it is often viewed as a sign of economic strength and expansion.
Some leading transportation stocks that are climbing higher today include CSX Corp.(NYSE:CSX), United Parcel Service Inc.(NYSE:UPS), and Union Pacific Corp.(NYSE:UNP). Many of these leading transportation stocks are looking extended at these current levels and may be due to pullback or consolidate soon. The index and many of the leading stocks continue to look strong, however, nothing goes up in a straight line and this may be a spot where the institutions decide to take some profits.
Stay on top of the action, remain on the right side of the day trade or swing trade.
Day trade with the Pros here, Swing trade with the Pros here.
Nicholas Santiago
www.InTheMoneyStocks.com
Tops: China And India Internet Stocks
The recent move up in Chinese and Indian internet stocks has been astounding. However, as fast as some of them have gone up, they may be setting up to collapse. The larger companies like SINA Corporation (NASDAQ:SINA) and Baidu.com, Inc. (NASDAQ:BIDU) have soared hundreds of percentage points in the last couple years but are now signaling a short term reversal. In early 2009, BIDU traded around $10.00 per share split adjusted. After crossing $150.00, this stock has shown signs of weakness. A pull back to $130.00 is likely in the next month. SINA traded at $19.00 in 2009 and now sits just off its current top just over $147.00.
Another huge sign of a reversal is Rediff.com India Limited (NASDAQ:REDF). This is an Indian internet play. The stock has gone parabolic over the last two weeks, going from $7.00 to a high today of $17.98. However, after soaring in early trading, the stock has now reversed and gone negative. This is setting up for a perfect topping tail and should signal further downside. Sify Technologies Limited (NASDAQ:SIFY) is another Indian internet play that has soared. This looks to reverse as well and should pull back in the following week. To follow the reversal and profit off of REDF and SIFY, take the free trial now. Click on "more tools" on the top left and view our services on the Educational Channel.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
RealTick® graphics used with permission of RealTick LLC.
Goldman Sachs: Master Level To Watch
Goldman Sachs Group, Inc. (NYSE:GS) has major support just below the $150.00 level today at $149.60. There may be a solid bounce off this point and can be utilized as an intra day scalping level to the long side. The financial stocks have been very week in an otherwise strong market. The daily chart of Goldman Sachs is probably one of the weaker charts in the large cap arena. To get more details and information on the financial stocks and Goldman Sachs, take the one week free trial of the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
RealTick® graphics used with permission of RealTick LLC.
The Debacle That Is The Dollar
The Federal Reserve released their FOMC Policy Statement yesterday and for the first time ever, Ben Bernanke held a conference call. To show the lack of faith in him and the Federal Reserve, the Dollar crumbled. Investors ran into gold and silver in record numbers. Today, the Dollar is falling again with the PowerShares DB US Dollar Index Bullish (NYSE:UUP) trading at $20.97, -0.05 (-0.24%). In response to the weaker Dollar, the SPDR S&P 500 ETF (NYSE:SPY) is trading at $135.86, +0.19 (+0.14%). Always remember, the markets go the opposite way of the Dollar. Yesterday, the Dollar fell on the Federal Reserve's comments and the markets surged. Today the Dollar is slightly weaker and the markets are slightly stronger. Where is the Dollar a buy? Take the one week free trial of the Research Center and find out now. Click here.
Silver and Gold continue to surge higher. The iShares Silver Trust (NYSE:SLV) is trading at $47.26, +0.26 (+0.55%) and the SPDR Gold Trust (NYSE:GLD) is trading at $149.36, +0.16 (+0.11%).
This morning economic reports were somewhat poor as Jobless Claims were reported at 429,000. A month ago, Jobless Claims were hovering in the 380,000 range and were at multi-year lows. Since then, they have steadily crept higher. In addition to a poor jobless claims number, GDP came in at 1.8%. While somewhat in line with expectations, this number is concerning. The reason for concern focuses on the massive amount of money the Federal Reserve is pushing into the markets through QE2. With the massive stimulus, the growth should be higher. These economic numbers are definitely concerning but have little effect on the markets as long as the U.S. Dollar falls. Economic analysis and trade alerts available by taking the one week free trial of the Research Center. Find us in the Education Channel under "more tools".
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
RealTick® graphics used with permission of RealTick LLC.
Silver and Gold Soar After The FOMC
Gold and silver are soaring higher this afternoon as the FOMC keeps the Fed funds rate at zero percent. The iShares Silver Trust(NYSE:SLV) is trading higher by $2.58 cents to $46.63. The all time high for SLV was made two days ago at $47.00 a share. That level could get breached today as the U.S. Dollar Index continues to get pummeled.
The SPDR Gold Shares(NYSE:GLD) is trading at a new all time high today. The GLD is trading higher by $2.50 to $148.90 a share. It is still rather amazing that the Federal Reserve Chairman, Ben Bernanke did not address gold and silver.
To get more insight into the gold/silver trade, sign up for the one week free trial of the Research Center or Intra Day Stock Chat. Find us on the Education Channel under "more tools" on the top left of the page.
Nicholas Santiago
InTheMoneyStocks.com
Fed Speaks, Dollar Falls, Markets Rise
The Federal Reserve announced their FOMC Policy Statement at 12:30pm ET. Ben Bernanke was a friend to the market as expected and the Dollar fell sharply. No sooner did the Dollar fall, then the markets ripped higher along with commodities. The dovish nature of the Federal Reserve clearly shows a continued weak Dollar policy. This is good for the markets in the short run. The SPDR S&P 500 ETF (NYSE:SPY) jumped to $135.05, a double top from the high this morning. The Dollar had been positive with the PowerShares DB US Dollar Index Bullish (NYSE:UUP) trading as high as $21.22. After the Federal Reserve announced their policy statement, the UUP is now trading at $21.11. This is a massive, quick fall on the Dollar.
To get more insight on how to trade the Federal Reserve, sign up for the one week free trial of the Research Center. Find us on the Education Channel under "more tools" on the top left of the page.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
RealTick® graphics used with permission of RealTick LLC.
Alert: Sell Oil Stocks Now
Oil stocks are in a precarious position which leaves no alternative but to sell them. We have seen oil prices advance sharply higher over the last two months. This has been a combination of a stronger global economy and instability in the Middle East. With this rise in energy, stocks like Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) have soared. In July 2010, Chevron was trading at $67.00 per share. It now trades at $108.00, just off its 52 week highs. This gain is huge, coming in at over 60%. Exxon has had the same type of move as has other oil stocks like SandRidge Energy Inc. (NYSE:SD) have soared over 200% in that same time.
The reason why oil stocks should be sold is simple. Oil has reached a level just shy of $115.00 per barrel. As oil approaches that price, the markets seem to get skittish and sell off. When the whole market sells off, it is tough for energy stocks to push higher. The market sells on oil reaching this level because it hurts demand and the overall economy suffers. Not only do people drive less thus using less oil, but a slowing economy will also hurt demand through industrial channels. This hurts the amount of oil bought, thus profits for large oil companies may fall.
The other side of the coin shows a situation where oil falls. Imagine oil pulls back under $100 per barrel. Simply put, when oil falls, energy stocks like Chevron and Exxon sell off as well. If they are selling each barrel of oil for less and less, profits will take a hit. This puts oil stocks in a no win situation. This is a Catch 22. Not only have oil stocks rallied 60% or more in the last ten months, but a move higher or lower in oil will drive their stocks lower. Find out more information on Exxon, Chevron and SandRidge, take the free trial today.
Oil stocks should be avoided at all costs. Some oil stocks can be shorted because of this as well. The no win situation will be a win for those that take profits and those that short in the coming months.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
RealTick® graphics used with permission of RealTick LLC.
Energy Sector Loses Steam
This morning all of the leading energy stocks are under some sharp selling pressure. This sector has lead the major stock market indexes higher since August 2010 when the Federal Reserve announced its quantitative easing program.
Some of the leading stocks that are trading lower this morning include Chevron Corp.(NYSE:CVX), ConocoPhillips(NYSE:COP), and Devon Energy Corp.(NYSE:DVN). Short term traders can watch for short term intra-day support on DVN around the $87.00 level. The is where scalp traders can look for a quick bounce trade. Please remember that the stock is weak today and the bounce may not last very long.
Nicholas Santiago
InTheMoneyStocks.com
Bernanke Rally, Can It Last?
Every trader that I know is talking about the FOMC meeting tomorrow. This is when the Federal Reserve Bank Chairman, Ben Bernanke, is scheduled to give his first ever press conference after an interest rate decision. The market this afternoon is betting that Helicopter Ben is going to keep the money pump flowing. As we all know the Fed's quantitative easing program (U.S. Treasury purchases) is due to end sometime in June 2011. Can the stock market stand on its own two feet without the constant cash reverses being created by the Fed on a daily basis? Chairman Bernanke is getting to live out his college thesis that states if the stock market goes up people will feel better and everything will be better. It sounds like Coue's rule, this is where you look in the mirror and say, “every day and in every way I am getting better and better.” Eventually, you are supposed to feel better. Meanwhile, as Chairman Bernanke gets to live out his college dream the U.S. Dollar Index seems to be declining into the abyss.
What can Chairman Bernanke say about the U.S. Dollar Index? After all the U.S. Dollar Index has declined by nearly 17.0 percent since June 7, 2010. What will Chairman Bernanke say about the zero percent interest rate policy that he has put into place since December 2008 for the too big to fail banks. Has anyone looked at the interest rate on a savings account lately? We may as well put our cash under a mattress, outside of writing a check there is very little use for a bank these days. What are the retirees on fixed incomes going to say when they see prices increase on a daily basis as there money continues to buy less and less. Will Helicopter Ben address the high oil, gold silver, copper, and every other commodity prices? Perhaps, he will simply say that it is demand driven.
The one question that I would ask Chairman Bernanke would be, if we are a free market society then why are the Fed funds rate set by the Federal Reserve and not set by the market place? How does the Fed or anyone else know what is best for the free markets. Then I would ask him if we really live in a free market society? How can we when the banks can still borrow money for nothing on a daily basis and charge an average of 17.0 percent on a credit card. What do these banks do with all of those cash reserves that are created everyday from QE-2?
Ah, tomorrow is going to be fun watching these questions get answered, if they are asked. As far as we know he may just take a page out of Alan Greenspan's book and simply mumble an answer that people could never understand. Greenspan was good at answering his own questions despite being asked something entirely different. This is going to be a must watch. In the trading community this press conference will get higher ratings than a Seinfeld reunion.
Nicholas Santiago
InTheMoneyStocks.com
Buy Or Avoid: Have These Stocks Bottomed?
As the markets continue to hit new 52 week highs, certain former winners are sitting at their lows. In a market this strong, how did these stocks fall out of favor? Are they good buys?
The first stock is Cisco Systems, Inc. (NASDAQ:CSCO). This stock was a former darling until recent earnings misses. Company management has said they are restructuring and hope to turn things around. The stock is down from a 52 week high of $27.74 to its current price of $17.40. With the current valuation, Cisco is looking attractive. The stock seems to have found significant support in the $16.50 to $17.00 level and has held multiple times. With the power of the name and an insane amount of cash, the bad news may be priced in and the turn around starting.
Semiconductor Equipment & Materials maker Cree, Inc. (NASDAQ:CREE) is another former darling of the markets. This stock soared all the way to $81.69 before falling over 50%. It currently trades at $40.35. The stock recently hit the $38.50 level which is major support on the daily and likely a short term bottom. Ultimately, this stock seems to be in purgatory for the time being and should only be played as a swing trade off the $38.50 level. The swing trade bounce can take the stock to $47.00 before it meets major resistance and will likely pull back.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
RealTick® graphics used with permission of RealTick LLC.
As Inverse As It Can Be
Whenever the U.S. Dollar Index declines the major stock market indexes will inflate and advance higher. The chart below clearly defines this inverse relationship in real time. The U.S. Dollar Index has now declined lower by 17.0 percent since June 7, 2010 when it traded as high as $88.70 per contract. This morning the U.S. Dollar Index is trading around $73.85. There is the stock market rally for you. Dilute the currency and inflate asset prices. We can only wonder how long this can continue before the inflation rally ends?
Nicholas Santiago
InTheMoneyStocks.com
Day Trading Lesson: Understanding The Gap And Slow Day
Often day traders watch the markets for 'gap and go' trading sessions. This is when the S&P 500 futures trade higher 7.0 – 10.0 points before the opening bell and rally throughout the rest of the trading session. Often day traders will look for a small pullback and jump on board for a move higher into the close.
Today the market made a 'gap and slow' day. This is when the market gaps higher by 15.0 to 20.0 points at the open and then stalls out for the rest of the session. Many inexperienced traders will usually buy the highs thinking the market is about to break out. Wrong, the market will usually trade sideways and sometimes even drift slightly lower into the end of the session. Day trading requires experience. Traders should not just guess or assume, that is gambling.
Day trading is a very calculated endeavor and it is imperative to know what type of trading day it is. For example, today the SPDR S&P 500 Trust(NYSE:SPY) made a high around 10:00 am EST. Since that time the SPY has traded in a 0.30 cent range for the rest of the day. Welcome to a gap and slow day. Learn to trade like the Pros and profit with them. Take a Free Trial to our services now and receive the best stock market advice found anywhere else, period.
Wells Fargo Clocks The Financial Sector
While the markets are surging higher today, financial stocks are weak on the back of earnings from Wells Fargo & Company (NYSE:WFC). The company reported net income that rose 51% but revenue fell. Revenue dropped to $20.3 billion from $21.5 billion. This was mostly due to lower mortgage fees. Wells Fargo is getting hammered today, trading at $28.70, -1.37 (-4.56%).
The revenue miss on Wells Fargo is putting the whole financial sector under pressure. JPMorgan Chase & Co. (NYSE:JPM) is trading at $44.31, -0.34 (-0.76%) and Bank of America Corporation (NYSE:BAC) is barely positive, trading at $12.39, +0.05 (+0.41%). Goldman Sachs Group, Inc. (NYSE:GS) is slightly higher as well, $152.89, +1.03 (+0.68%).
While some of the financial firms like Goldman and Bank of America are slightly higher, the Dow Jones Industrial Average is soaring by 200 points. In other words, even the positive financial stocks are under performing. The overall financial earnings announcements from the major players have been somewhat dissapointing. JPMorgan, Goldman Sachs and Bank of America all sold off after they reported earnings. Today, Wells Fargo is selling off.
Special Note: The one saving grace about Wells Fargo is the 200 moving average it is hitting on the daily chart. This may act as a short term bottom on the stock, especially ahead of the light volume holiday this weekend.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
RealTick® graphics used with permission of RealTick LLC.
Dollar Pimp-Slapped, Market Rallies
The markets opened sharply higher today on the back of a major beat down of the Dollar and some positive earnings. Anytime the Dollar drops, it rallies the market. The bigger the drop in the Dollar, the larger the up move in the market. Today, the PowerShares DB US Dollar Index Bullish (NYSE:UUP) opened lower by 1.00% and the markets, with the help of some solid earnings, opened up well over 1.00% higher.
The Federal Reserve continues to be stuck in their pimp-slap mode on the U.S. Dollar. Anytime the Dollar tries to push up, they smack it down. They are so focused on keeping the equity markets up, they are willing to crush the Dollar almost ever day as they print trillions of Dollars. The scary thing about this action is not the massive debt the United States has built up, but more so the commodity surge as a result. The average American is struggling to buy food and energy and each day the Dollar collapses, those products get pricier. The Federal Reserve has tunnel vision. They believe they must keep the markets up at all costs, flooding the market will trillions of Dollars. They do not notice or refuse to notice and care about the hardships the massive weakening in the Dollar is creating. Gas over $4.00 per gallon? Who cares! A majority of ones salary spent on groceries? No big deal! It is sad but truly the state of things. Perhaps the massive trillions of Dollars printed has created a few extra jobs here and their. However, salary growth has remained neutral as energy and food prices have soared 25% in the last six months.
As the markets rally on light holiday volume and a weak Dollar, a flood of solid earnings hit the markets. Key earnings results from Intel Corporation (NASDAQ:INTC), Yahoo! Inc. (NASDAQ:YHOO) and VMware, Inc. (NYSE:VMW) are keeping technology strong while energy stocks are leading the Dow Jones Industrial Average and S&P 500.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
Swiss Cheese Rally
This morning, the major stock indexes are soaring higher. The rally looks to be broad based as almost every stock on my screen is in the green. Most sectors are trading higher including technology, retail, energy, and mining. While everything looks really strong today there are some holes or pockets of weakness in this rally.
One area that is somewhat on the weak side is the large financial stocks. This morning Well Fargo & Co.(NYSE:WFC) reported earnings and the stock is trading sharply lower by $1.30 to $28.80 a share. Anytime a major financial stock declines this sharply it will usually keep the rest of the stocks in the sectors on the weak side. Other stocks such as J.P. Morgan Chase & Co.(NYSE:JPM), and Bank of America Corp.(NYSE:BAC) are trading near the unchanged level an not participating in the market rally.
Mosaic Co.(NYSE:MOS) is a leading agriculture stock that is trading lower this morning by 0.95 cents to $75.75 a share. This stock is putting some pressure on the rest of the agriculture sector. Traders can watch for intra-day support on Mosaic stock around the $75.17 area.
CSX Corp.(NYSE:CSX) is a leading rail road stock that is trading lower this morning after reporting earnings. The stock is trading lower by $1.31 to $74.74 a share. Whenever a leading stock is trading lower on the session it can weigh on the other rail road stocks.
In any case, the major stock market indexes are soaring higher this morning in a broad based rally. There are a few leading stocks that are coming under selling pressure. The stocks that fail to participate must be watched closely going over the next week due to the weak relative strength. Should the major stock indexes decline or pullback these weak stocks could be the first to fall.
Nicholas Santiago
InTheMoneyStocks
Entry Alert: To Buy Solar Stocks
The solar stocks have been dropping significantly over the last two weeks as global cut backs on subsidies loom. The fears are great that with austerity measures being pushed through, less rebates will be available solar. First Solar, Inc. (NASDAQ:FSLR) has fallen nearly every day for the last two weeks from a level of $163.00 to its current price of $133.23, -3.71 (-2.71%). Other solar stocks have been hit just as hard like Canadian Solar Inc. (NASDAQ:CSIQ) and SunPower Corporation (NASDAQ:SPWRA). Below are the key levels of support that look attractive as long plays.
First Solar has significant support on the daily chart at $128.95. This represents a pivot low from late December 2010. A solid bounce should occur at this level. Canadian Solar has been hit the hardest of late, falling from $16.79 on February 18th, 2011 to its current price of $9.44, -0.11 (-1.15%). The major support to buy this stock is at $9.00. This will be a major support and with an oversold stock like CSIQ, a likely hard bounce level. Lastly, SPWRA is approaching its 200 moving average on the daily chart. Should it hit this level it will also coincide with a double bottom from mid March at $14.25.
The solar stocks are currently being discounted based on fears of cuts to subsidies. Should oil stay strong, it is likely that demand will remain solid for alternate energy and a majority of solar companies will survive and flourish. These levels are the master supports in the short term and should be taken as solid levels to buy for a swing trade. To gain more hardcore analysis, swing trades and education, take the one week free trial of the Research Center and Intra Day Stock Chat. Click here.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
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Banks Weak On Goldman, BofA Buy Level Looms
The markets opened slightly higher today after Tim Geithner defended the U.S. credit rating. He expressed his belief that there is "no risk the U.S. would lose its AAA credit rating". This helped weaken the Dollar and lift the futures for a positive open. After the SPDR S&P 500 ETF (NYSE:SPY) opened at $130.76 and moved to a high of $131.07, it faded and is currently trading at $130.63, barely positive. Volume is much lighter today after the panic of the credit outlook downgrade by Standard and Poor's seems a distant memory and the Passover holiday is now in full swing. In addition, Easter is coming this weekend and with many kids off from school, some traders are taking it lighter this week.
Goldman Sachs Group, Inc. (NYSE:GS) reported earnings and revenue that beat Wall Streets view but after opening higher, the stock quickly went negative. This action is bearish in the short term for financial firms. Bank of America Corporation (NYSE:BAC) is taking another hit today but is quickly approaching a possible buy level at gap fill. This level is at $11.95 and coincides with a major gap fill spanning back to December 8th, 2010. This will be a short term support level and should give the stock a few days bounce. Bank of America reported earnings last week that were not up to par as worries about mortgage losses from real estate continue to weigh.
Even with all the negative issues surrounding the banks and financial firms, JPMorgan Chase & Co. (NYSE:JPM) is mustering a small gain on the day, trading at $44.08, +0.12 (+0.27%). The stock came into solid support at $43.50 yesterday. This level should work as short term support as well.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
Stocks Crushed - Here Are The Buy Levels
The markets are getting crushed today on the back of a negative outlook issued by Standard and Poor's on the United States credit rating. Stocks are getting smacked across the board on this market weakness. While many stocks are taking a hit, some key names are hitting master support levels and may see a bounce for the remainder of the week.
JPMorgan Chase & Co. (NYSE:JPM) is taking a hit today after reporting earnings late last week. The stock is trading at $43.69, -1.20 (-2.67%). While it may look ugly now, JPMorgan is coming into significant support at $43.40. This is a perfect double bottom from March 17th, 2011. Look for a bounce off this level into the end of the week.
Bank of America Corporation (NYSE:BAC) reported earnings last week that did not thrill Wall Street. The stock has been punished accordingly and is trading at $12.39, -0.43 (-3.35%). Should the stock continue to fall to $12.00, a key gap fill will be hit stretching back to December 8th, 2010. This will be a prime level to buy at for a short term bounce.
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LDK Solar Co., Ltd (NYSE:LDK) is seeing some downside today on the back of weaker oil. This solar play finds weakness when oil is weak. When oil is stronger, often, solar stocks will rally as well on alternate energy hopes. Today, LDK hit the 200 moving average on the daily chart at $10.46. In addition, this level is a double bottom from March 14th, 2011 and a master gap fill from January 7th, 2011. The combination of these three levels should signal solid support for the rest of the week.
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Whether the market is up or down, there are always great swing trades. The charts will show you the master levels and high probability longs and shorts. Note the charts below. To get hardcore market analysis, swing trades and education, take the one week free trial of the Research Center. Click here.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
Markets Sell On S&P Negative Outlook
The markets sold sharply this morning on the back of a downgrade by Standard & Poor's. They downgraded the long-term credit in the U.S to negative. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $129.94, -2.10 (-1.59%). This downgrade was inevitable, as the trillions printed by the Federal Reserve continues, however, the markets have been enjoying a period of ignorance is bliss on this matter. Today seems to be somewhat of a reality check.
Off of the downgrade in long-term credit, the Dollar spiked dramatically and oil dropped sharply. The spike in the Dollar goes contrary to what many would think would happen. The Dollar spiked higher as borrowing costs jump. As investors get more and more negative on on the debt of anyone or any country, they require a higher return (interest rate) for the risk they are taking in lending money. As these costs go higher, it will be harder for the U.S. to borrow money. In tune with that, it is feasible to think less will be borrowed. Less Dollars equal a stronger Dollar. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $21.68, +0.23 (+1.05%) while the United States Oil Fund LP (NYSE:USO) is trading at $42.75, -0.96 (-2.20%).
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
Three Ring Circus: Gold, Silver, and the U.S. Dollar
How low can the Federal Reserve allow the U.S. Dollar to decline? Every trader and investors understands the argument that a weak U.S. Dollar will usually boost exports and help to create inflation. However, the negative fact for the world is that the U.S. Dollar is the world's reserve currency. Therefore, when the U.S. Dollar declines goods for everyone in the world will inflate higher. Has anyone bought a vegetable lately? Produce has skyrocketed from last years prices. Look at the price of gasoline, the average price of gasoline in the United States is now $3.90 a gallon. All of these high prices for food and energy are occurring because of the weak U.S. Dollar Index.
All of the people that are on fixed incomes feel the effects of the weak U.S. Dollar the most. The U.S. Dollar is buying less and less goods for these individuals while there income remains the same. The inflation created from a weak U.S. Dollar is a direct tax for all consumers.
This morning the U.S. Dollar Index is trading higher by 0.47 cents to $75.36. This move higher in the U.S. Dollar Index is causing gold and silver to decline from their morning highs. Many traders and investors have bought gold and silver as an alternative to the U.S. Dollar. Eventually, the controlling powers of the United States will have to try and boost up the U.S. Dollar in order to keep gold and silver from breaking out further and scaring the public that the U.S. Dollar is nearly worthless. We shall see if we are now nearing that time as Standard and Poors has downgraded the outlook for the United States to negative this morning. Please understand that this is just an outlook cut by S&P as the credit rating of the United States is still triple A(AAA) rated.
Nicholas Santiago
InTheMoneyStocks.com
Scary: Markets Move With Oil, Stagflation Looms
The markets opened lower with initial weakness in oil. As the morning progressed, oil surged to the upside and the markets followed. Contrary to most retail investors thinking, weak oil is actually bad for the markets while strong oil is good. This is primarily due to the indexes being over weighted with energy and commodity stocks. When oil drops, stocks like Chevron Corporation (NYSE:CVX) and Exxon Mobil Corporation (NYSE:XOM) fall. They are major components of the Dow Jones Industrial Average, thus, the index is likely to be weak. When oil spikes, those stocks are strong and the Dow responds accordingly. The United States Oil Fund LP (NYSE:USO) is trading at $43.23, +0.48 (+1.12%). Take a one week free trial of the Research Center to get amazing calls and profit with the pros. Click here.
In addition to oil causing early weakness, Jobless Claims were reported higher than expected at 412,000 and Producer Price Index numbers came in hot as well. The Producer Price Index for March was reported at 0.7% while the core PPI, excluding food and energy came in at 0.3%.
This is a scary thing for the markets as inflation is starting to rise but more people are filing for unemployment. The worst case scenario for the Federal Reserve would be stagflation. Stagflation is where there is inflation but no growth in the economy. Think of it this way, usually when there is inflation, there is growth in the economy so people are making more money to pay for more expensive items. With stagflation, they are not making more money and prices are going up. This hurts the population much more. To get hardcore market analysis, swing trades and education, take the one week free trial of the Research Center. Click here.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com