Posts Tagged ‘interest rates’

Federal Reserve Interest Rate decision tomorrow

Wednesday, December 16th, 2009

Today is Tuesday December 15th and the markets backed off a little today.

The S&P was off about 6 points and the Dow around 49 before it was all said and done.

The range of movement was terrible again today. I saw from around 10 to 12:30 there was so little movement you might have wondered if the markets were even open. You could expect more of that tomorrow as the Federal Reserve Open Market Committee meets tomorrow on interest rates. They will decide if the rates need to go up and the answer to that is probably NOT. The producer price index came out today if I heard right on the radio and it may have shown that prices increased, but what can the Fed do. With the economy on the still on the edge, they do not want to raise rates, that may coke off any hopes of a recovery, or that is how the argument goes.

This economy is messed up, it is hard to see how it is ever going to get fixed. With the way things are being done at the top, there is a lot of work to do, let me just leave it like that.

If you want to see how things really are, go to my website, www.sniperdaytrading.com and scroll down to middle of the front page and look on the right side. You will see a debt clock and under that you will see, something that says “click here at your own risk”, a little humor goes a long way when you look at this stuff. If you click on that link, you will see one picture of the whole U.S. economy. If you look and Think about what you are seeing, it won’t take long to see how things really are. It may take you some time, but don’t forget to look at “The Bottom Line”, as some on Wall Street have said. You will see how things really are. Some may really not want to know and if thats you, don’t look, no kidding. The last line of that page is unreal.

Anyway, back to the markets, I guess I got on a sort of rant there. Well, the Fed is going to decide what to do about rates and at 11:15 West Coast time, the news will be out and the trading will begin. You will see volume and movement, a lot of it. It is not exactly like it used to be in the past, but when you compare it to the movement we have been seeing these days it will look like a lot.

Typically, you will see movement in several directions as the market does its typical shake out of position traders. You will usually get a mixed interpretation of the news as prices go up and down wildly. It won’t be until a few misdirection take place that the real direction will emerge.

caution is in order. I mean it. Anyone who attempts to trade the news at this time had better know what they are doing or you will be sorry, that is for sure. If you trade it at all and I will probably not, traders should wait a little bit until the dust settles before trying to participate. Occasionally, it will take off in one direction and not look back, but that is not the rule. Be sure you have your stop in place at the moment of order entry or you will be sorry.

You can expect price movement possibly the first hour and after that, it is going to slowly go down and down to nothing. Around 11:00 am, it is going to perk up and the it is going to get wild after 11:15 am West Coast.

That is the best advise I could give you. Other than that, we are up against the brick wall. Resistance looks stiff at current prices but anything can happen. I always say that and this time is no different. We won’t be able to see the sentiment numbers until Thursday and so will have to wait on that.

The daily momentum is still down, with the weekly and monthly up. The 120 minute chart is still pointing up even with todays drop. The hourly has just turned down, which is much more sensitive than the 120 minute. This setting smooths out a lot of the false breaks and keeps the momentum alive for a long time until it really turns.

I did not trade today, I saw the price action was similar to yesterday and did not want to have a repeat. The early morning open had a bit of a twist today. I did see that the price action was choppy and going nowhere on the open, what a twist. That is just like the market to do that, when you think you will get movement, you get nothing but chop.

Taking the pulse of the market is essential, and could have kept you waiting until a little after 7 am when we saw a solid break out up, in two waves. That is all the market had to the upside and experienced draw downs throughout the rest of the session.

One last observation and I will talk more about it tomorrow. The end of the year is approaching and we have not had any meaningful sell off as of yet and it is possible the sellers are waiting until January 1st to sell. We have a 66% return from the March 6 bottom of 666 ( 3/6/09) that is a little weird. To many 6’s there for me, but I didn’t do it. It is what it is. The thing about it is, if the selling takes place after the 1st the taxes on any of those big gains will be postponed for another year. Someone out there is thinking about it, more than normal because of the large returns, much bigger than normal. Just food for thought.

Until tomorrow, “Good Trading” and be careful!

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Important Market Update

Saturday, October 10th, 2009

Today is Saturday, October 10th and I have a few comments for this last weeks price action.

We had an interesting week, in that we had another yet larger pivot point established in the reversal back up, close to new highs. It would appear that with Thursdays strength,  overcoming the overhead resistance we have a good chance to hit the high side of the rising wedge that I had previously shown. Currently coming up to a double top in the major index’s, but I would expect at least a big push up to the 10,000 plus zone on the Dow and 1100 + zone for the S&P. This is very clear resistance in the charts. I believe we would have to have some amazing catalyst to push it past the upper range of the wedge. It is not likely it will go much past it, but you always have to see the possibility just in case.

I am going to give to two numbers. One for the Dow and one for the S&P. These numbers are what many traders are looking at and people who know how market rhythm tends to flow.  The numbers are: Dow- 10,320  S&P-  1120 . This is not a science but it is something to be aware of. A natural flow of market price action would be for the Index’s to retrace back to a 50% re-tracement at a minimum. This happened back in 1929, during the crash and it has happened countless times in various time frames through out individual stocks and market index’s. Back in 1929, the re-tracement took about 6 months. We went from 400 on the Dow to 200. Then over the next 6 months we pulled back up to 300 exactly, a 50% re-tracement. What happened after that, was the “death of a thousand cuts”. It was a slow painful process of declines that took the Dow down to a low of 40 on the index’s, a 90% decline from the top, over the next 3 years.

For me, it is hard to see a sustained move higher in the face of our current financial situation. There is no job growth, in fact it is going in the opposite direction, a first for a real recovery.  The dollar is coming under intense pressure. Japan, Middle east, China and others stated just last week that the medium for exchange in the oil market was going to be something other than the dollar, most likely the euro-dollar. That is going to hurt, badly. There is so many looming problems, but big ones, not small. The consumer is not spending, the driving force in our economy. The baby boomers are retiring, a very large group of our society by demographic’s, will not be spending big bucks, but just the opposite. In addition if so many are out of work, those people do not spend money.

The actual unemployment numbers are much higher than stated. Our fearless leaders thought it would be best if they don’t count the people who are out of work longer than one year. They just drop off the rolls. They may still be looking for a job but to no avail. Those people no longer exist, as far as unemployment is concerned. The real numbers are 17% unemployment, an off  the chart number and getting worse, as previously stated.  Bankrupcies are still rising, another off the chart category and credit card companies in an attempt to make more money have been jacking up interest rates on even there best customers to unheard of rates, 28 to 35 %. All of that extra money is being taken from them, snuffing out discretionary income. Looming problems, Cap & Trade,(government program)  if passed is going to suck buying power directly away from the consumer and pass it to the hands of government for the stated goal of saving the planet?, Really!  No comment.

The current debt of the country is “beyond belief”. Just this year, the annual deficit is in the Trillions, added to what is on the books. The Treasury auctions have not been going well and shadow entities have been buying these left over bonds so as not to create a panic by other foreign treasury holders. In fact, China has a current campaign to unload their treasuries back onto the open market, they are the largest holder of our debt, well over a Trillion $.

I don’t like reporting these problems and I know of many who would rather put it all out of their mind, what problems. Well, I feel a certain responsibility to at least point it out to my readers, as we get closer to this turning point that I have been talking about for 6 months. At the market low, in March, I initially called for a bottom in the market, followed by a sustained move higher after confirming signals were given. Since then, I have been saying that we were heading higher in a reactionary move from the March bottom. Well, we are getting real close. I did see the market sentiment turn more bullish last week. It jumped up to 50% plus.  A reading of 55% or greater usually is an excellent indication of a over optimistic public, signalling an eminent drop. We are not there yet, but as we approach the 50% re-tracement point for this whole move back up, a potenial turning point is fast approaching, beware.

Capital preservation is more important than capital appreciation right now. The public will never learn, they become the most bullish at market tops and the most bearish at market bottoms.  It is clear that “Greed & Fear”,  powerful emotions, are to often in control. But, for those who want to see the truth and choose to take the “blue pill” rather than the “red pill”, stand to fare much better overall. This is one, I would like to get wrong. I get no pleasure in sharing what I see, but I would rather know.

The stock market prices will only be reflecting what is going on 6 months in advance. At this time, economic reports have been coming in and some showing growth, but all short term stuff from government spending and stimulus, it won’t last forever.

Below are the turning points for Thursdays market. Traders make money in up and down markets and overall direction is not really important. Catching the turning points are.  The chart below is a tick chart of the S&P 500 futures market. Each increment of movement is called a “tick” and represents $12.50 when buying one contract. A contract is a leveraged agreement against the cash S&P500 market. Each day 1.5 to 2.5 million contracts are traded by a variety of people. Buying or selling one of these contracts and capturing 3 or 4 ticks of this movement at a time in a few moments, while risking 3 or 4 ticks, a 1 to 1 ratio, is just one type of order we place at Sniper Day Trading. The other type still only risks 3 or 4 ticks, but allows for the price to rise 8, 12 ticks or a whole lot more. Our indicators can tell us where to get out, but only after we have locked in partial profits at usually the 4 tick area or 1 S&P point. 

This type of trading is not for everyone, but if it appeals to you and want more information, send me an email and I could give you more information on my new reduced price for my trading program.

http://www.screencast.com/t/gN1tHUhw                Turning Points for Thursdays Market

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Federal Reserve takes drastic step, Buys 300 Billion in Treasuries

Thursday, March 19th, 2009

Today is March 18th and the Federal Reserve took a big step to buy treasuries.

All I can say is, “What a day.”

I did not know that today was a Fed decision day. Shame on me. I usually check the economic calender for that. I don’t usually pay too much attention to news, because it always shows up in the price anyway, but that is one I always look for – because of the explosive moves following the news.

It usually happens at 11:15 am West Coast time and I was in a trade just before the announcement, with only 1 contract and then, boom, a 10 point move for the S&P in minutes. I re-entered for another move up after a consolidation for another 11 point move and again I only had on 1 contract. I kept re-entering long, and some short, to the very top of the market.

The S&P hit 800, which was the support at the purple trend line that I had talked about a couple of months ago. Support, when broken, usually then becomes resistance and the market traded right up into that resistance. After noticing that,  combined with the fact that now we had traded exactly to a 62% retacement from 873, the last recent high, to 666, the last recent low and back to 62% retracement at 800 and previous resistance, it made more sense that this would be a higher target for the market to trade up to. And it did – with me in it.

Once the top was reached I saw a good spot for a short and went with it, still trading very light, I think I had 2 contracts there. That was good for about 12 points to the downside. I must have had about 50 S&P points in all, which is about 25 times the amount I need to get my daily goal of 2 points, but that would be at 5 contracts. I traded very small once my equity started to get over $1,500, but it added up real fast for a finish to the day at $5,500 after commission. I took 33 trades total. Yes, that was a lot. But it still turned out better than 75% winning trades in about 3 hours. I have a couple of short video’s showing some of this, take a look below, at the end of the first one is where the Fed released the news and the market shot up.

I must say, that I was a little surprised that the Federal Reserve said that it was going to buy 300 billion in Treasury securities on the open market and 750 billion more in mortgage backed securities, bringing their direct involvement to 1.25 trillion. This is the first time they have done this since 1960. Does anyone know what that means? To me it looks like there was no one to buy the treasuries. China said last week they were very concerned with the U.S. debt market.

Do you know that the Federal Reserve is a private corporation for profit and is not a federal agency. It’s as much Federal as Federal Express. If you did not know that, all you have to do is Google it. The Federal Reserve is owned by a group of private banks from the U.S. and Europe. Basically, the government brokered out the job to a private banking corporation. I know this may be a shock for many, but people are reacting to the news like this is a good thing. This group is beyond reproach and no one has ever performed an audit on this group.

It is relative to the markets and to the economic equation because, while it is holding interest rates down for now, it will have a reverse effect in the near future. The Gold market did not like the news at all trading up nearly 6% for the day at 965 an ounce. The dollar did not like the news at all either, dropping against all major currencies. But the stock market did like it, or so it thought.

It is going to be good for the market in the short run – how long that is, I don’t know – but in the long run, it will be disastrous. There is so much money being floated out there right now that no one can keep up with it.

Here is another thing you may not have known. The total bail out so far is said to be 8-9 trillion dollars. That is a lot of money. Again, why is that relevant? It is going to cause inflation like nobody’s business. All I can say is be careful with your long term money. Let’s hope the market moves up over the next few months giving those who want to get out of their long term investments an opportunity.

Everyone has been trained in thinking, “it will come back, it always does”. This time could be different. Do your own research and think for yourself. Don’t listen to the experts and don’t even listen to me on these matters, but spend the time and check it out.

If you do a Google search using “total bail out so far”, you will get a few figures, but they are all up in the range I mentioned. It is nowhere near the figures we hear on the nightly news.

Sorry for the ramble, but it kind of ticks me off when I hear news like this. To those who are considering a career in trading and have the risk capital, the time to make money is now. The markets are moving nicely up and down and there is profit to be had for those who can wade their way through the noise.

http://www.screencast.com/t/FifEKWgjVXr               Today’s equity chart

http://www.screencast.com/t/u9xVvzQlpfW             Some of today’s live trades

http://www.screencast.com/t/kTfMA2×13w              Some of today’s live trades

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Big Day on Wall Street & Day 6 training

Wednesday, February 18th, 2009

Today is Tuesday February 17th, and we had a big day on wall street.

I don’t think the investment community likes the bail out plan because it more closely resembles a big government spending binge.  The way I understand it, there is going to have to be more and more of this spending in future years, to the tune of 2.5 Trillion or more dollars, wow, that is a lot of money. Look for inflation to be a big problem later in the year. They won’t be able to raise that much money without raising taxes and or printing it (money).  It is going to pull a lot of available cash away from the private sector, meaning people with businesses are going to have to pay more to capture some of the financing that they need.  Interest rates will go up for sure and so will inflation. Right now we are in a deflationary environment, but that is going to change later this year, you wait and see. I don’t think this is good for the economy and the market with wall street agreeing. The S&P sold off about 4 & 1/2 percent and today broke that all important support that I have talked about. Not a good development for long term money. The market is always going to foretell what is happening in the economy 6-9 months in the future. So lets still hope we get a reversal.

As far as indicators go, the daily did turn negative today. I don’t rely on indicators, but it is a little helpful at times for the person who is still learning how to read price action. The only glimmer of hope that I see, is a possible fake out. Many times the previous low (pivot) gets taken out by only a slight margin and that is enough to get shorts and people who have been hanging in there to throw in the towel. When that happens a fast reversal can happen. Right now, there is no way of know what the next move is, but by reading  current price action will we know if it is going to continue to break down. I would say be alert tomorrow and look for a possible reversal, but don’t have too strong a bias, just be aware that a reversal can happen, and  ”READ PRICE ACTION”. That is the only way you will know what’s going on.

As traders, that is easy to figure out. Don’t anticipate much, just read. I can not state that strong enough. The times that you have too strong an opinion about market direction, to the point that you become blinded from what is actually happening, is the times that you will not do so well. You can not force you will on the market, it does not care what you think. Its job is to take you “OUT”. So, take it easy and wait for high probability set ups.

Today’s day trading went well. I picked up my daily goal in about 20 minutes or so in the morning. I started out with +1 point but only got filled on 1 contract, not 5. Then had -1 point , +1 point, +1/2 point, +3 ticks, and then +1 point. I have the trades posted below. I did come back for another round a little later after taking a break. The equity graph shows all the trades net profit. I had 14 trades, with 12 gains and 2 losses. The market was really flowing nicely. I will show tomorrow some more trades in the 233 tick. If anyone is trying to trade and follow on there own, I would recommend that you do it in the 233 tick right now. Unless you know how to weed through the possible false signals in the 100 tick, you should be following the 233 tick for now. I will explain more in tomorrow post.

Lastly, when watching the training, you may want to scroll down to the bottom and go to the right side, there you will see a button that looks like a screen.  If you click on that, you will make the screen full size, it may be easier to view. I wish everyone who is follow me a great evening.

Vince

 

http://www.screencast.com/t/NgwtnTFbUO       Day #6 Training

http://www.screencast.com/t/BK9pKrXAos      Today’s equity graph

 http://www.screencast.com/t/oSpzKsaqESr         Some of today’s trades

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The Fed cut interest rates by 3/4% today

Wednesday, December 17th, 2008

Well, they almost emptied the gun today, no more bullets.

Fed funds are at 1/4% now. That means when financial institutions borrow money from the fed, they will do it at 1/4%.  Virtually free money for them. Some people do not know that when a loan for a house or car is issued, the banks borrow that money from the fed and they just create it out of thin air. The tangible asset is the collateral, so when the cash comes through the system it is counted as an asset on the banks books which allows them to loan more money out. The whole process is a bit complicated.  They call it the fractional reserve banking system. It all works fine until you have a situation like we are facing now.  Hope they can work it out.

The S&P did what I predicted it would do yesterday. It held onto the support it recently showed and moved right up. The inital move was done in the futures night trading and this morning the cash market caught up to the futures when the market opened. I knew it was going to be slow going while approaching the fed decision, as well. We did not get very much movement after the open because the move came in the  pre-market overnight. After the open it just was pretty much flat for hours.

That is very typical during big decision days like today. I would have done better to wait for after the Fed decision, but it was OK. I was up for the day by 3 &1/2 points on the NASDQ, but I had taken 21 trades for the day. At $5 per transaction cost, that’s -$105.  I ended up slightly down after transaction costs.

I have a chart of a couple of positive trades and a chart of the Dow and S&P showing the big move they made today. Take a look at the “Wedge” that was forming up to the Fed decision at 11:15 today. I pretty much knew it was going to be an upside breakout but it is still hard to get in there with such a small stop that I run.  I just waited until the dust settled and took a few trades to even myself out for day. Planning for a better day tomorrow. Until then bye for now.

http://screencast.com/t/bSeaOp3etdc

http://screencast.com/t/bSeaOp3etdc

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Fed to lower interest rates tomorrow?

Tuesday, December 16th, 2008

Will he or will he not, lower interest rates tomorrow?

At 11:15 a.m. Tuesday, the Federal Reserve will make a decision on whether or not to lower interest rates.  I believe they will and I think the market believes this as well.  They do not have much more room to go down if they lower the rates tomorrow. I do not think it is going to help very much because banks are not lending money. No money for houses, no money for cars, etc.   I even asked my large bank branch if they were making home loans and she said, “not any”. 

This is only going to help the banks, again.  It’s all about the banks. They will get money from the fed when they need it and if there is any money loaned out, it will just yield the banks a bigger margin. They will hardly pass these savings on to the people. They figure they have the right to make up their losses on the back of the American people. Nothing new there. I think you can tell I am very opinionated about the whole matter.

Today we had what is called an inside day. That happens when today’s range stays within the previous day’s range. This tends to build up pressure for a move in the direction of the breakout. I still believe that the break out will be to the upside.

Moving on, we will be approaching another Holiday week and people will want to buy stock because of the perceived value they will be getting. Everyone likes to buy things on sale, right? Well, I believe this is only going to last for a short while. The stage is being set for what I call, “Pump and Dump”. People will continue to buy stocks for a short time, maybe into early next year. That’s the pump part of it. When prices reach a point where it represents another opportunity for those who did not get out when they had the chance to now exercise that option and get out, that’s the dump part. The people who bought will be left holding the bag waiting for the thing to come back and it won’t for a long time.

This is all just my opinion and things can change. I will tell you, there are a lot of things that have yet to be uncovered within the economy and corporate profits and it is not good news. So we will have to wait and see.  As far as tomorrow is concerned I think it is going to be a big up day blowing past Friday’s high when the dust settles. There should be some good volume in the early a.m. and then it is going to grind to a halt by about 8 a.m. until the news is released at 11:15 a.m.  Then you are going to see a lot of volatility, down-up-down and the final results will be up for the day.

I and anyone else needs to keep and hold there opinion loosely. It could be just the opposite and if you condition yourself to only look for up trades while the market is dropping, you are going to be on the wrong side of the market. Everyone needs to let the market tell us what is happening and not our opinions. Technically, we do need to stay above Friday’s closing numbers to remain in the uptrend. If we break down hard and stay there, the downtrend will likely continue.

I did some trading in the NASDQ 100 futures today. There is a little less risk per trade going on in that market and thought I would give it try. It came out good. I think I had 10 positive trades in a row before I had a move against me. I did take a couple of trades in the S&P but both of those did not work out. The profit I picked up in the NASDQ was more than enough to offset the other and still meet my daily goal for the day.

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