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Market Commentary

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Fear Is Not Rational: The Limitations Of The VIX

Most of us as traders and simply as human beings seek clarity.  

We innately feel the need to make sense out of chaos.  We want answers.  We want black or white.  Gray makes many of us uneasy.  

So, there are often times when faced with the complex world that is trading, we want to boil things down into one universal truth, a methodology that we can apply wherever we go. Problem is we often find ourselves trying to put a round peg in a square hole.  Let’s take a look at VIX.  In general, equity...

Sep 19, 2014
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Large Caps Gaining Strength, Energy Stocks Losing Strength

The Largest Cap S&P 100/S&P 500 Relative Strength Ratio rose above its highs of the previous 8 months on 9/18/14 and remains systematically bullish. Large Caps tend to outperform in bearish general market trends as investors seek the perceived relative stability and safety of large size.

Energy stock sector ETF Relative Strength Ratio fell below its lows of the previous 5 months on 9/18/14, thereby reconfirming its preexisting downtrend.

Agriculture, PowerShares DB Agriculture Fund ETF ...

Sep 19, 2014
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Alibaba? Nah, I'll Just Pass On This One

As we are about to embark upon one of the biggest IPO's in history I thought it would be a good time to step back and see what this is all about and how you can shield yourself from a potentially dangerous situation.

As we know, Alibaba will come public this week.  The company is a juggernaut in Asia, selling everything online to anyone much in the way Amazon does here in the States.  

But there is tremendous hype covering this release of China's big online retailer.  It has become a media f...

Sep 19, 2014
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Can the Market Hold On At This Altitude?

Okay, so I suggested yesterday that Tuesday’s market move was a bit exaggerated for both the current climate and the “news” about the Fed.

  • I must admit, the buying that happened yesterday seemed a bit stronger than warranted.

The lack of follow-through yesterday suggested a soft bullishness, a lack of real commitment, which led me to another statement I made yesterday.  

  • I am bored with the market again. It lacks any real energy.

So, today, I wake up to a market that is spitfire full of ener...

Sep 18, 2014
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No Surprises From Yellen, But E-Mini S&P 500 Still Vulnerable

There weren’t any surprises in Wednesday’s FOMC announcement, but it did leave us a little room for debate. Policy rates remained the same , and the taper will continue, reducing asset purchases by $10 billion to $15 billion per month. The Fed expects to end the bond purchase program next month, which would appear to be step one towards a change in interest rates.

As it has been with many of the Fed’s announcements, market observers were paying closer attention to the “language” of the statem...

Sep 18, 2014
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Featured Stories

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A Guide To Alibaba’s (BABA) Record-Setting IPO

Over the past month, the IPO market hasn’t provided traders and investors with many compelling opportunities as activity has dried up. With Chinese e-commerce giant Alibaba lined up to go public on September 19, the IPO market will soon come to life in dramatic fashion.

Demand has been so strong that its expected price range has been bumped higher to $66-$68 from the original expectation of $60-$66.  With BABA offering 320.1 million ADS, its projected proceeds of over $24.6 billion put it o...

Sep 17, 2014
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5 Common Misconceptions About Market Profile®

I was in junior high school the first time I was introduced to Market Profile. My Dad was a grain trader and the hedge manager for Ralston Purina, a huge manufacturer of animal feeds, not to mention the creators of Chex cereals and Rye Crisp crackers. He spoke of a friend, Peter Steidlmayer, who was devising a different way to look at markets. “Any interest in this, son?” Off I went on my skateboard as trading was not on my list of priorities, yet.

Years later, struggling to learn to trade, I ...

Sep 16, 2014
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Sixth Anniversary Of Lehman Collapse: Time To Watch Financials

This month marks the sixth year after Lehman Brothers filed for Chapter 11, an act that served as a precursor to market meltdown of October 2008.   

Six years later, and despite the amazing recovery for the general market since the market bottomed in 2009, the financials as a sector continues to lag.  

Figure 1, the 10-year PerfChart for the S&P Sector ETFs, depicts the Financials relative weakness during a decade plagued by low interest rates that created an environment for risk taking ending...

Sep 15, 2014
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A Game Plan For Trading Stocks In The Fourth Quarter: Window Dressing

Get ready for the most active season in the stock market.
 
The last quarter has the highest trading activity of the year for the stock market and for the market in general.

Here are some of the major events that traders are ready to speculate upon heading into the fourth quarter:

1.    Last earning season of the year – main reason why market will accelerate its action into the year end
2.    Black Friday / Cyber Monday so-called Cornucopia Trading
3.    Christmas Rally
4.    Quarterly Expiration /...

Sep 11, 2014
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Yes, The Market Will Crash: Here's Your Checklist To Prepare For It

With the Dow recently surging past 17,000, the debate is on about whether it is a bubble that is looking for a pinprick or if it is a strong bull market that will power past 18,000 and beyond.

Yes…it could definitely go to 18,000 or 19,000 or more in the short term because the main driver is not a bullish economy…it is the bullish impact of Federal Reserve policy. In other words, this is an artificial bull market that is driven by monetary stimulus. The danger of a pull-back or a sharp correc...

Sep 10, 2014
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