Has the recent correction from March 2009 come to an end?

My friend Adam thinks so and he put together a video for you explaining why. He looks at the crash of 1929 and the similarities to today’s Dow.

I disagree with Adam.

The old going back to 1929 Dow myth is used by bears every time the market corrects.

Technical analysts call this grand cycles or super cycles. I say it’s grand BS. If you have to go all the way back to 1929 to rationalize why you think the market is going lower…

Look, what happened in 1929 has no impact on what is going on today. Take a look at the Fibonacci retracements on the Dow.

We have not even surpassed a minor 23.6% Fibonacci retracement yet which is 9749. In fact, as long as the 61.8% retracement holds (8136), the March uptrend is intact.

Remember Dines Theory of trend trading: “A trend will continue until that trend actually ends. On days a market trades sideways, assume continuation of the previous trend.”

In other words, it’s premature to say that the uptrend that began in March 2009 is over simply because of a 23.6% retracement.

I still recommend that everyone sit in cash until the retracement is over. For more aggressive traders like myself, I’m back in now as I believe the typical seasonal sell off after the Santa Claus rally is mostly over. But I’m not back in with both hands. I have a single stock (IDN) that I like the prospects of and I’m going to swing trade it with very tight stops.

Nevertheless, I want you to see Adam’s video to give you another opinion. Weigh my opinion and his opinion, then form your own.

China’s economy is growing vigorously and at rates which are still impressive even in today’s down global economy. At one point, during the Chairman Mao years, the Chinese economy was considered a basket case. Economic liberalization over the last couple of decades, however, has unleashed an appetite on the part of the country in terms of imports and exports that a significant.

Chinese leadership maintains that the country’s national economy is growing at ever faster rates with each passing month, and there isn’t much evidence out there that they’re not correct. China also seems to be on the brink of passing Japan as the world’s second-largest economy, maybe by the year’ end.

China’s Gross Domestic Product or GDP grew by 7. 1% in the first half of 2009, which is quite an impressive feat considering that China and most other countries were forced to undergo an economic restructuring due to the global economic collapse. Its GDP increase puts it by itself among the world’s top 10 economies in terms of showing an increase, also.

Many economists and financial experts believe that the strength of the Chinese economy will lead the rest of the world’s markets out of the current slump. For China, it’s important that this occur, as there are several economies — especially that of the United States — that China needs in order to sell its services and manufactured goods.

In order to mutually assist one another, China and the United States are seeking to work in a closer fashion in order to create an environment of economic and strategic cooperation that will lead to a rebound in the US economy. American consumers are the world’s single largest group of buyers of Chinese goods, which is a fact that the Chinese government recognizes acutely.

Just about every China watcher these days states that the country is going to a lot of trouble to be a responsible partner in terms of global economic activities. This is quite different from the days when Chairman Mao ran the country with an iron fist. Additionally, the Chinese economic stimulus program ran by the government has proven to be a great success, highlighting how effective a stimulus can be when done properly.

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Technorati Tags: finance, investing, stock market

What if you could accurately predict inflationary and deflationary cycles? How much money would you make with that knowledge?

What I am about to show you will blow your mind.

The index I am about to show you in my latest video below has accurately predicted every inflationary/deflationary cycle since 1957!

This index includes aluminum, gold, copper, silver, nickel, crude oil, heating oil, natural gas, unleaded gas, wheat, corn, soybeans, cocoa, coffee, cotton, orange juice, sugar, hogs, and live cattle.

So what’s the big deal with knowing when inflationary / deflationary cycles hit? You can become rich with this knowledge. Here’s how.

Since 1945, prices of goods and services have risen, on average, 12 percent within two years after a recession ends. The jump in prices that comes along with an economic recovery is called reflation, and that move often benefits materials, energy and technology firms.

Here are some more ideas.

Pick stocks in the following sectors: Basic Material, Industrial Goods, Oil, and Gold and Silver Mining companies.

Technorati Tags: cattle, cocoa coffee, copper, corn soybeans, crude oil, economic recovery, gold and silver, heating oil, hogs, inflation and deflation, natural gas, oil heating, orange juice, recession, silver mining companies, silver nickel, technology firms, unleaded gas, wheat

Of the three major indexes–DOW, NASDAQ and the S&P 500, only the NASDAQ is running on thin air.

What do I mean by running on thin air?

The NASDAQ should be leading the market higher in classic sector rotation theory. The NASDAQ, and specifically tech stocks, is always the first sector to lead coming out of a bear market.

So far the NASDAQ is the only index to push beyond the Fibonacci 50% retracement level. Both the Dow and the S&P 500 have rallied strongly from their March lows but have not made it over the 50% retracement level.

Many institutional traders are looking at the NASDAQ’s Fibonacci 50% retracement level as a key pivot point for what the market will do for the rest of the year.

While not all the pieces are in place to go short or get out of long positions, one of the first clues is being put in place today by the Japanese candlestick charts.

In my new video, I share with you the NASDAQ retracement levels, as well as one of the key components that could lead to a potential reversal to the downside.

Do not be caught off guard. This is a short video you need to watch.

Technorati Tags: bear market, classic sector rotation theory, Fibonacci, indexes, institutional traders, japanese candlestick charts, nasdaq, pivot point, retracement, sector rotation, stocks

Some people go MUHAHAHA… all the way to the bank.

Other people go boo hoo hoo… shed crocodile tears… then post paranoid conspiracy videos about how the stock market is rigged.

Have you ever wondered, as I have, about what makes the difference between these two types of people?

What makes the difference is having a system and then exercising discipline and sticking to that system.

A system will keep irrational emotions out of your trading.

There’s no doubt about it, the markets are very difficult at times. On the other hand, you can laugh all the way to the bank if you approach the markets in a systematic way.

Which brings me to my latest video on the S&P 500.

Lots of people have been saying for many months that the S&P 500 can not go any higher because the rally is not based on fundamentals but instead on the perception that things are going to get better.

Let this be a hard lesson learned if you’ve been sitting on the sidelines and missing out on massive profits.

Perception is the most powerful element of the market. Perception trumps both fundamental and technical analysis.

So what’s going to happen to the S&P 500? Is it going to continue going higher for the rest of the year, or are we close to a turning point?

In my new short video, I show you several key areas that this market is fast approaching. These levels could be the Achilles heel for this market and potentially set the direction for the rest of the year.

Technorati Tags: key areas, market perception, massive profits, stock market

Stock market is considered very risky for investors. There are other alternatives such as bonds. Bonds backed by the state government are very safe and have some the highest rating accorded to them by the agencies.

Now there are states which issues bonds like the state of California issues the California Tax Free Municipal bonds and these are secured by the State government of California. That will mean no matter what will happen the principal and the interest are safe as they are backed the state.

Muni bonds offer the benefit that it will be easy to get the safety into your portfolio. California government is under the stress because of huge deficits so be careful while investing. Overall the belief is that these are the one of very safe instruments for investment. There are a lot of states that offer these bonds apart from California.

If you live in Arizona then invest in Arizona stat bonds as you will not be liable to pay any state taxes. This is because of the fact that these investments are no longer tax free for residents of other states. It implies that the State tax will have to be paid by you but there will be no Federal tax.

Always spread your risk and that is good for your investments. Diversify so that some part is in municipal bonds. For higher gains you should invest some part in the stock market and you should have some part on the savings account.

You can make more money with bonds when you have a diversified portfolio. Diversification is essential to make sure that when something happens to the stock market you have other avenues where the investment income can be from. This is in effect the spreading of your risk portfolio. Always make sure that you invest in these bonds for safety factors.

The author suggests diversification using California tax free municipal bonds and independent broker dealers

Technorati Tags: California Tax Free Municipal Bonds, finance, financial planning, money, stock maket investing, stock market