Investors start off the trading session this Monday morning fretting about the unresolved situation concerning the US debt. Good morning, I’m Kristin Bianco, with the Week Ahead Market Report for July 18, 2011.
Aussie Motor Vehicle Sales Depict Slowing Economy
The Australian Bureau of Statistics (ABS) released its monthly report on motor vehicle sales this morning to reveal two conflicting data movements with an ominous under-tone. Though overall vehicle sales were up 1.3%, overturning the previous two months’ negative movement, one category of vehicle sales portrayed an economy entering a slump.
Passenger and sport utility vehicles (SUVs) rose collectively about 2.5%, seasonally adjusted, in June. But the “other” category of vehicles, which accounts for business vehicles like trucks, buses, vans, pickups, and delivery fleets, sunk by approximately 7%. Consumers may feel better about purchasing a car, but businesses aren’t seen to be investing in their delivery infrastructure in similar fashion. These very minute signs point to an economy that may be slowing faster than many assume.
This Simple Strategy Has Never Lost Money
Article by DividendOpportunities.com
I’m going to show you a simple strategy that has never lost money in the market.
A recent study by mega-investment firm Oppenheimer proved just as much. Don’t worry, it’s not some too good to be true story. There are some caveats.
First, I could tell 100 people about this strategy… and I’d guess 99 of them would flat ignore it. That’s despite the evidence I’ll show you backing it up.
“That strategy is for suckers.”
“Its time has passed.”
“You have to be an idiot to think that would work today.”
I know some people will say this because they already have. We asked some of our regular readers to give us their thoughts on this strategy. Those were the type of responses I heard from some people. I was shocked.
Second, you can’t use this strategy for every stock. Use it on the wrong ideas, and you can still lose money. But across the market as a whole, it hasn’t failed once in the past 60 years.
The truth is, you don’t have to trade every day… or every week… or even every year to beat the market. In fact, your success actually increases the fewer trades you make and the longer you hold.
The best proof comes from the recent study by Oppenheimer. They looked at the S&P 500… going all the way back to 1950. Over that time, the S&P 500 has NEVER suffered a loss in a 20-year period.
Of course, we all know you can’t say the same for holding stocks for a year or two. When you hold stocks for a short period of time, your odds of losing money are much, much higher.
And you can lose a boatload of money in a hurry. In fact, in its worst 1-year period, the S&P 500 dropped -44.8%.
No wonder Warren Buffett has always said his favorite holding period is “forever.”
But it’s surprising how many investors still fight it. The average holding period for an investment was seven years in 1940, according to William Hutchings of the Financial News. By 2007, that period had shrunk to just seven months.
So while all the evidence points to longer holding periods being better for your portfolio… most investors are doing the exact opposite.
I even did a little digging on my own. I looked at the annual returns of the S&P 500 myself, going back to 1950.
You can see what I found in my chart…
On a rolling annual basis, the S&P 500 has dropped 16 times over a 1-year period since 1950… but zero times in any 20-year period.
The trend is clear. The longer you hold an investment, the better your chances of making money.
But unfortunately, you can’t just buy any stock, hold it forever, and expect to come out ahead. The market is littered with Enrons, Worldcoms, even General Motors. Holding forever didn’t matter a lick with them.
What you have to do is find a handful of companies that enjoy huge (and lasting) advantages over the competition… companies that pay their investors each and every year by dishing out fat dividends… and companies buying back massive amounts of their own stock.
These are the kinds of companies that can make you money no matter what. Once you find them, the strategy is simple — just buy their shares and hold “Forever.”
For the past month, my research team and I have been doing a ton of research on the impact of holding stocks “Forever.” Here are a few success stories we even heard from investors like you:
Today he’s been retired 27 years, is a member of two private country clubs, and has homes in both Florida and Massachusetts. |
With that as inspiration, my Top 10 Stocks research staff and I decided to pinpoint our “10 Best Stocks to Hold Forever.” These are 10 ideas we’ve marked to buy, forget about, and hold forever.
You can learn more about what we uncovered — including some names and ticker symbols — by viewing our latest research here.
All the best,
Paul Tracy
StreetAuthority Co-founder, Chief Investment Strategist — Top 10 Stocks
The Senior Strategist – European Debt Situation in Focus
This week will be affected by the debt crisis in the US and in Europe.
In the US there is a deadline Friday for reaching an aggreement concerning the debt ceiling.
And in Europe there will be a meeting Thursday with the financial ministres. Where they hopefully will find a solution to the growing debt problems in Europe.
Senior Strategist Ib Fredslund Madsen comments on the past and present week on the financial markets.
Video courtesy of en.jyskebank.tv
My Technicals and Thoughts on US Dollar, SP500 & Gold to start the week
By Chris Vermeulen, thegoldandoilguy.com
The dollar is and has been in a strong down trend for many years and I feel as though it’s getting close to another major land slide. It could take place any time in the next month or so according to my weekly chart analysis.
The general rule is if the dollar falls in value then we tend to see both stocks and commodities rise. The inverse relationship at times can be tick for tick meaning if the dollar ticks down one increment then we see the broad market or specific commodities move in the opposite direction at the same time.
Since 2009 the relationship between the dollar and investments has been so close that if you were to just focus on what the dollar was doing then you could almost trade equities and commodities without reading their charts. The dollar index chart is one of those trading tools everyone should be analyzing. At $80 a month for getting the dollar index data feed it’s not a cheap trading tool…
Dollar Index 4 Hour Candle Stick Chart:
This chart clearly shows this month’s price action for the dollar which is pointing to lower prices if things play out according to the charts. This short term chart shows that in the next day or so we should see the US dollar start to sell back down.
SP500 Daily Chart (Stock Market):
The SP500 index is a great barometer of what the overall stock market is doing. The chart below shows the 5 and 14 day simple moving averages and their recent crossovers.
Last Friday we had a bearish crossover and if the market does not rally early in the week then I am anticipating further weakness in stocks. While I am still bullish on stocks as of this moment the coming week will quickly tell us what stocks are going to do. If we get a bounce which turns into a strong follow through rally then we should see a sizable rally around the corner and also a falling dollar.
Gold Weekly Chart:
Back in May when gold was hit with strong distribution selling I posted my thoughts on how gold could be forming a 6-12 month topping pattern and how price could get choppy. Well, we are now entering that period which could prove to be interesting…
Keep in mind this is a weekly chart and from the looks of things this top could play out for another 5-6 months from here. Silver is in much of the same predicament but trading way below its May high. I’m thinking more of a double top in silver over the next few months.
Weekend Trend Trading Conclusion:
In short, I am bearish on the dollar for a week or so which should help boost stocks and commodities. After that we could see all investments make some big trend changes if buyers don’t step up to the plate to buy. If we any major headline news about the sky is falling then it could trigger a sharp correction. Unfortunately, at this time head line news is running wild spooking investors from buying much of anything other than gold. Any resolution to foreign economic issues will put pressure on both gold and silver and likely help boost stocks.
The past month I have been very cautious because the market is wound up and ready to explode in either direction. During times like this I prefer to stay mostly in cash until I get low risk setups and a clear trend.
That’s all for now, but if you would like to get my pre-market video analysis of the dollar index, each morning and intraday updates along with my trade alerts be sure to join my premium service at $59 a month which is less than the cost for the dollar index charting data feed!
Get my trading reports free each week here: http://www.thegoldandoilguy.com/trade-money-emotions.php
Chris Vermeulen
Euro Weaker as Merkel and Trichet Butt Heads
The US dollar was off to a strong start this week as pressures in Europe have kept equities lower with banking stocks leading the plunge. Traders are expecting a report to show decreasing securities purchases of US securities but it could be the bond purchases from Europe that highlight the North American trading session.
The euro began the week lower with the EUR/USD being sold off the as forex trading began in New Zealand with the pair gapping lower but failing to break the 1.4000 level. Last week’s EU banking stress tests were mostly disregarded by financial markets given the criteria used was considered inadequate due to the yields for much of the periphery are trading at much higher levels than what was used in the stress tests.
A Financial Times article highlights the major roadblock to a resolution in the European debt crisis as German Prime Minister Angela Merkel and ECB President Jean-Claude-Trichet butt heads. Merkel wants investor participation in a new bailout agreement while Trichet opposes any plan that would bring a default rating on a nation’s sovereign debt. Trichet pledged to refuse to accept the debt of a nation in default in return for ECB liquidity provisions. This will likely be the driving theme as Thursday’s EU emergency summit draws near. Currently EUR/USD support is seen at 1.4000 and move below here would likely target last week’s low at 1.3840. To the upside the resistance line on the hourly chart that falls off of the June 14th high may contain and may offer better entry levels near 1.4150.
European woes dragged riskier assets lower with the London FTSE 100 down 1% with banking stocks leading the declines though the Nikkei 225 finished up by 0.4%. Spot crude oil was lower at $96.80 from $97.50. Spot gold continued to push higher as the commodity climbed to above the $1,600 psychological resistance level, highlighting the tension in the financial markets.
This afternoon the TIC long-term purchases report will be released and could continue to show further reserve diversification out of the dollar by central bank reserve managers, though this report may be overlooked by the ECB’s Securities Markets Program (SMP). Rumors of ECB bond buying were circulating as the ECB may have attempted to support the sovereign debt of both Italy and Spain. Last week Italian bonds came under pressure amidst contagion fears. Today Italian 10-year bonds are approaching the dangerous 6% level as the European debt crisis seems further than ever from being resolved.
Read more forex trading news on our forex blog.
ForexCT’s Afternoon Market Thoughts for 18 July 2011
Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.
Forex CT 18-7-11 Video News Update
Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.
US TIC Long-Term Purchases on Tap
The US economy will largely be absent from the economic calendar today, with the exception of the ever-important TIC Long-Term Purchases report which measures the level of foreign and domestic investment in the US. A minor housing market index from the National Association of Home Builders (NAHB) will also get published about an hour later, but is not expected to impact market direction.
Economic News
USD – USD Flat ahead of Light News Day
The US dollar was seen trading flat at the start of this week as traders began to view the lackluster performance of the US economy these past several weeks as a sign that regional economic growth will be limited. The dollar has been primarily gaining from such momentum due to the shift into safer assets.
Though news has been both positive and negative, traders have been predisposed to short the higher yielding assets in general as the US and European economies falter. Assisting this shift was a dismal NFP jobs report out of the American economy which revealed sluggishness in US employment growth that may affect economic and financial outlook for the US and its neighbors over a longer period.
As the August 2 deadline rapidly approaches, we are beginning to see some hedging behavior with the Swiss franc (CHF) and Japanese yen (JPY) acting as alternate stores of value should the US default on its loans.
As for today, the US economy will largely be absent from the economic calendar, with the exception of the ever-significant TIC Long-Term Purchases report which measures the level of foreign and domestic investment in the US. A minor housing market index from the National Association of Home Builders (NAHB) will also get published, but is not expected to impact market direction.
EUR – EUR Trading at Record Lows vs. CHF
The euro (EUR) was seen trading lower last Friday following news of pessimistic growth in the US economy. Against the US dollar (USD) the euro was trading somewhat bearish in late trading as shifts into safe-haven investments pulled money out of the euro and into stores of value. The EUR/CHF, however, was more straightforward, with a severe downturn coming Thursday, followed by even more bearishness on Friday. The pair opened this week at a record low of 1.1414 after closing last Friday at 1.1539.
It appears the EUR also moved mildly lower versus the Japanese yen as safe-haven assets across the board experienced a rise due to increased market pessimism. With no news expected out of the euro zone today, much of this sentiment is not likely to be reversed.
Traders are looking for a way to store value, but show concern towards investing in the US dollar at the moment due to the debt limit talks taking place in Congress. A failure to lift the debt ceiling could result in a default by the US government, causing ratings agencies to downgrade US debt and pull the global economy bearish.
Sentiment across the euro zone has also turned negative, with many analysts and economists expecting further moves towards safety by traders this week. Any more bearishly-leaning news out of either economy will likely pull down on the EUR even further as investors flee risk.
AUD – AUD Trading Lower as Safe-Haven Assets Grow
The Australian dollar (AUD) was seen trading moderately lower versus most other currencies last Friday after news began to shift many traders back into risk averse assets. The Aussie has been experiencing several wide swings lately from the various shifts into and away from riskier assets. A vote on China’s economic confidence after its latest rate hike also impacted the AUD heavily, causing movements away from the soaring Aussie.
As traders witnessed a turn towards safety after last Friday’s economic reports from the United States. The resultant move into safe-haven assets has helped to push down on the AUD as traders turn away from its high interest rates in order to store value in lower yielding assets like the Japanese yen (JPY) and US dollar (USD). Australia’s economy is publishing a report on motor vehicle sales this morning, which will likely impact the value of the AUD very little. Traders should keep an eye on data out of Europe and the United States for signals on the direction of risk appetite this week.
Gold – Gold and Silver Prices Advance despite USD Pressures
The price of precious metals like Gold and Silver found support this past week despite the rising strength of the US dollar, the currency in which such assets are valued. Precious metals bear their name as a result of their traditional store of value in times of uncertainty. Gold has been trading with rather mild price action since this past April, but traders have been awaiting price resurgence due to the rampant increase in risk aversion due to rising tensions from Greece and dismal jobs reports out of the US.
As investors seek safety, the value of gold and silver, which have been seen trading with mixed results, jump to a 2-week high of $1594.80 and $39.75 per troy ounce, respectively. A sudden jump in dollar values due to this week’s risk averse environment has so far done little to suppress this price movement as these two assets serve as traditional stores of value. Should risk sentiment hold steady this week, the prices for these precious metals may continue to find support as the week moves ahead.
Technical News
EUR/USD
After a gapping lower to start last week the pair moved below the 200-day moving average and on the subsequent rebound the EUR/USD found resistance at its 100-day moving average, a previous level the pair struggled to close below between the months of April and July. While the rebound higher was sharp the failure of the pair to move above the 100-day moving average and to close above the opening gap signals weakness in the pair. Initial support is found at last week’s low at 1.3870 followed by the rising trend line from the June 2010 low which comes in at 1.3750. A break here is significant as it would compromise the long term uptrend for the euro, exposing the 50% retracement level at 1.3410. To the upside, the 100-day moving average is the first resistance at 1.4290 followed by the falling resistance line from the May and July highs at 1.4490.
GBP/USD
The GBP/USD price collapsed only to find support at the 38% retracement level of the May to April move at 1.5780 while the rebound higher was capped at the neckline from the head and shoulders reversal pattern. Positive divergence is found on the RSI-14 as the price made a new low but the RSI did not. This signals a potential warning sign for sterling bears. Resistance is located at 1.6230 off of the falling trend line from the April high. Above this level the previously broken trend line from the May to April move at 1.6330 will come into play. To the downside a break of 1.5780 would signal a resumption of the downtrend and would target 1.5650 which has served as both support and resistance in October and in December of last year.
USD/JPY
The USD/JPY downtrend resumed with a vengeance last week as the pair broke below the 80 yen “line in the sand” and the support from May 5th at 79.55. This level has now turned into resistance as often happens to previously broken support levels. Only last week’s low at 78.46 and the bottom of the long term wedge from the Sept 2004 at 77.60 stands in the way of the all-time low at 76.11.
USD/CHF
The Swissie has moved in one direction and one direction only. The pair made a halfhearted attempt close above its 50-day moving average and moved sharply lower from there setting a new all-time low at 0.8082 which serves as the initial support level. Any move higher may find resistance at 0.8275, the falling trend line from the February high which comes in at 0.8450, and 0.8550.
The Wild Card
EUR/GBP
At 0.8740 the pair is testing the rising trend line from the mid-February low. Momentum is to the downside and forex traders should note a close below the support at 0.8720 would confirm a break of the trend line. The next major milestone in the reversal of the pair is the 200-day moving average at 0.8660 followed by the trend line off of the January and February low at 0.8630. To the upside 0.8850 may prove to be resistive as could the broken trend line from the May and June lows which come in at 0.8890.
Forex Market Analysis provided by ForexYard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.
E-mini Trading: So You Think You Want to Trade E-mini Contracts For a Living?
By David Adams
The dream of working from your home harvesting buckets of cash in your pajamas (if that is your preference) is an idealized view of economic nirvana often associated with e-mini trading. Unfortunately, for a fledgling trader nothing could be farther from the truth. Countless internet educators trumpet “easy money” to be made with relative ease are a contributing factor to the mistaken viewpoint that e-mini trading is an easy road to untold riches. There are many factors a new trader must consider when considering embarking on an e-mini trading career. First and foremost, trading e-mini contracts is not an easy road to reaching economic mega-bucks.
I think that it is also important for you to realize that with the proper effort, study, and experience you can make a great living trading; but only if you, as a trader, are willing to put forth a level of effort and diligence that the e-mini business requires of a successful trader.
Do you have what it takes to succeed in the e-mini business?
Consider these facts, symptoms, and solutions related to failure and success in the e-mini trading business. For example:
• New traders who enter the e-mini trading business without comprehensive trading education and mentoring fail at a rate exceeding 90%.
• New traders who enter the e-mini trading business with comprehensive trading education and mentoring fail at a rate of approximately 50%.
• To succeed, a maximum effort is required in acquiring trading related knowledge and experience. Furthermore, there is no substitute for acquiring specialized knowledge via a qualified mentor to guide a new trader’s training in a direction that accentuates the positive skills of the trader and remedies the deficiencies in the new trader’s education.
• Even with a sound training program and the guidance of a qualified mentor, a new trader faces the difficult task of assimilating a wide variety of trading related information that is essential for e-mini trading profitability.
• To complicate matters, the market often goes through periods of time when it is difficult to extract profits in a consistent manner. These periods can occur during a trader’s initial foray into the market and become quite discouraging. The market is always in a state of flux and highly random price action can be the norm for extended periods of time. This can be daunting for a new trader if these unfavorable conditions are present during his or her initial entry into the e-mini market. In the trader must be resilient and persistent through a variety of ever changing market conditions.
• To become truly proficient in e-mini trading, a new trader must go beyond the minimum requirements for success. It’s important that a new trader continually update and expand his or her knowledge base. Learning to trade the e-mini contracts is a lifelong and ongoing process and every trader must maintain a “student” mentality to ensure success. When a trader decides he or she has learned all there is to know to be successful, a process of intellectual regression begins and most traders begin the process of slow failure.
The point of this short article is not in a complicated one; the odds of succeeding in the e-mini trading business favor a well-prepared, motivated, and intellectually curious individual. A trader who thinks that participating only in a trading course will assure success will be sorely disappointed. In short, the trading business is an all-encompassing career choice, not an odd job to assess once trading competence. Great traders consume knowledge through trading journals, trading periodicals, and furthering their education by reading many of the fine books that have been written about trading. The most successful students I have trained are highly motivated and willing to expend maximum effort in their quest for success. On the other hand, students most likely to fail try to skate by with a weak and minimal effort.
Do you want to succeed in the e-mini trading business? If you do, pour your heart and soul and into achieving the success you desire. Half measures and shortcuts in training will result in unsatisfactory results, and ultimately failure. Your success in this business is your direct responsibility.
In summary, I have tried to present a realistic picture of what it takes to succeed in the trading business. I had discouraged individuals from expending anything less than maximum effort in their quest for success. Finally, I have pointed out that a new traders success ultimately is his or her responsibility in conjunction with a qualified instructor or mentor. Give it all you have and reap the benefits of your efforts.
About the Author
Real Live Trading Doesn’t Lie. Spend several days in my trading room and see if you can benefit from a fresh and unique view on trading e-mini contracts. Sign up for your free trading experience by clicking here
