Traders' Library

Deflation Wins The Day

Today's action suggests that the deflation story is the dominant story in the market. We saw bonds rise while commodities and gold declined. Stocks eked out a rise but every other market showed that deflation is the key story. The reason behind it is that virtually every economic indicator is showing that the US economy is weakening. This also weighed on the US dollar.

Right now, I have been highlighting the fact that the US economy is not going to rally at all over the coming 1-2 years. Although the Fed has massively eased, people and corporations are hoarding that liquidity rather than spend it. The same story is also being seen all over the world. Only emerging markets are going to show decent economic growth.

What this means is that we must continue to expect the major global stock markets to remain in bear markets. Look for most commodities to also drift lower. Gold will tend to hold up OK but silver will suffer more because it is more of a economic good rather than a monetary good.

My strategy is to be very selective in buying stocks, make sure that there are plenty of hedges on, and start to look for bargains to buy when the market starts to turn around.

ETFs, Gold, BP, and more

Weighing the Week Ahead: How Full is the Glass? (a Dash of Insight)

 

Jobs Data Coming Up (BigTrends)

 

Lights, camera, no action ( Buy the Rumor Sell the Fact)

 

Charting the Current Bank Index and Regional Bank ETF (KRE) (Green Faucet)

 

Bears Retake the Tape, Bulls Wait for News (Green Faucet)

 

Retail Investors Diving into BP Shares (WSJ)

 

‘Fear Index’ Back Near Early June Levels (WSJ)

 

Big Gaps Down When SPY is Near Recent Lows (Quantifiable Edges)

 

The Long and Short of the Gold Market (Seeking Alpha)

Commodities, Unemployment and the World Cup

Understanding the Employment Issue (Dash of Insight)

 

SPY Option Strike Clusters for Friday Expiration (Afraid to Trade)

 

Investors Like BP Escrow Deal With Obama, But Stay Cautious(WSJ)

 

Swiss National Bank Likely Gets Kick out of Spain’s Soccer Loss (WSJ)

 

Bookkeeping: Closing ETFS Physical Palladium (PALL) (MrSwing)

 

Today in Commodities: Calm Before the Storm? (SeekingAlpha)

Major Markets, ETFs, and the new iPhone 4

Weighing the Week Ahead: Mounting Worries(A Dash of Insight)

 

Major Markets and Futures Returns Year to Date June(Afraid to Trade)

 

20 Most Oversold/Overbought ETFs(BigTrends)

Oscar Alert!(Daily Options Report) 

Deepwater Drillers: Analysts Cut Bait(WSJ)

Apple iPhone for Verizon: End of Year Launch?(WSJ)

The U.S. is Least Bad! The U.S. is Least Bad!(InfectiousGreed)

The World at a Glance(MrSwing)

Markets Continue to Slide Lower(Daily Market Action)

Who’s Actually Making Money in the ETF Industry?(Seeking Alpha)

4 Reasons to Consider Natural Gas

By Kevin Grewal, Editorial Director at www.SmartStops.net

Oversupply in the natural gas market has taken its toll on the commodity, but some investors are flocking to it and for good reason.

First of all, the parts of the nation that historically use natural gas are expected to witness colder temperatures than normal. According to the National Oceanic and Atmospheric Administration, winter temperatures from southern and eastern Texas to southern Pennsylvania and down to the tip of Florida are expected to be colder than normal, which will likely spur the demand for natural gas.

Secondly, macroeconomic conditions are favorable for the odorless gas.  An unstable dollar, fears of inflation and a low interest rate economy are making commodities attractive.  Many have fled to gold, but crude oil and natural gas also give investors a hedge against inflation and a declining dollar. 

Tops, Crude Realities, Market Recaps, and Las Vegas

Stocktwits TV

Finding stock ideas (dash of insight)

Process drilldown (random roger)

We may have just topped (planet yelnick)

Oct. 21 Recap= A key reversal day? (trader mike)

Market recovers Wed losses (toni hansen)

Wall St. breakfast (seeking alpha)

Crude realitities (big trends)

A lesson on concentration (the chart addict)

Arbitrage in baseball (infectious greed)

Jimi Hendrix- Catfish Blues, BBC session (trader rock)

Davis Matlock by Edgar Lee Masters (poetry foundation)

Vegas One-day Trading Seminar! Nov 22

Get the yellowtail roll at Tao, Vegas [for when you are out for our show...] 

Oil Prices Back In Sync With the Externals

Tuesday Morning October 6, 2009
by Dominick A. Chirichella’s Energy Management Institute

Volatility was once again the order of the day on Monday...only this time energy prices ended mostly higher following the equity complex to higher ground and a weakening dollar. For the first time in a few days the externals were both in sync providing energy investor/participants with a diversion from last week’s bearish fundamentals.  So far this morning buyers are lined up in both equities and energy markets while the dollar is taking another hit. The perception of an economic recovery trade is still in place as the Australian Central Bank became the first  country to boost interest rates adding to the view that most countries are expecting an economic recovery.  Australia raised interest rates based on their view that it was time to begin to reduce the stimulus provided by low interest rates as the risk of a major contraction in the country was over. Higher interest rates in non-dollar denominated countries is bearish for the US dollar and thus bullish for oil.

Will the Summer Season End Quietly?

Tuesday Morning Sep 1, 2009
Will the Summer Season End Quietly?
Excerpts From Dominick’s Daily Energy Market Analysis Issued Each Morning
By Dominick A. Chirichella

Dominick A. Chirichella is a director and senior partner for the Energy Management Institute, http://www.energyinstitution.org , and has been involved in energy & commodities markets for almost 40 years. EMI provides higher learning for energy professionals with comprehensive, fully accredited, energy education programs from basic to advanced level. It also provides critical business information services and thought leadership in the energy segments of Oil,  Gas, Power, Alternative Fuels, soft commodities and metals. For more info visit our website (www.energyinstitution.org) Contact him at dchirichella@emimail.org.

The market was volatile with a wide trading range for many of the markets with the day ending lower…all initiated by a 6.7% decline in China’s Shanghai A Shares bringing the year to date return down to 45.5% or only about half of what it was when it peaked at the end of July. As I discussed on numerous occasions China’s equity market was in the midst of an unsustainable up trend that saw money flowing into the equity sector from all ends as borrowing at low interest rates was as easy as saying 1-2-3. The Government became worried that a bubble was in the midst of forming and tightened up credit. The result of the aggressive government action has been a massive sell-off that has slowed the uptrend in equities around the globe as well as commodity prices. How much further the China correction goes is still a question mark. Today Shanghai A shares held on to a small gain of about 0.1% but as we all know one day does not make a trend.  For what it is worth the Chinese government suggested yesterday that they will continue with the stimulus programs until they are convinced that their economy is on solid footing…possibly a sign that they went a bit too far and are concerned with the steep drop in equity prices.

Is the Correction Real of Just Memorex?

Excerpts From Dominick’s Daily Energy Market Analysis Issued Each Morning
By Dominick A. Chirichella

Dominick A. Chirichella is a director and senior partner for the Energy Management Institute, http://www.energyinstitution.org , and has been involved in energy & commodities markets for almost 40 years. EMI provides higher learning for energy professionals with comprehensive, fully accredited, energy education programs from basic to advanced level. It also provides critical business information services and thought leadership in the energy segments of Oil,  Gas, Power, Alternative Fuels, soft commodities and metals. For more info visit our website (www.energyinstitution.org)Contact him at dchirichella@emimail.org.

***The correction continued on Monday with the eye of the storm focused clearly in the global equity markets which then spread to the currency markets forcing energy participants to once again focus on the fundamentals and when they do that the only action they can take is selling action. The equity markets were rattled a bit by the latest consumer confidence number released in the US on Friday suggesting that the American consumer did not look like it was ready to go on a spending binge. The US economy has dug itself out of most economic downturns in the past on the back of consumer spending. In addition with the US is a major importer of almost everything many manufacturing centers around the globe (like China, Singapore, Japan, etc.) are also very dependent on the spending habits of the US consumer. This mentality started a much needed downside correction in everything that as of this writing seems to be subsiding and in fact this morning equities are higher, the dollar is on the defensive and oil and natural gas are in positive territory.

Oil Projections from the Energy Management Institute

By Dominick Chirichella of the Energy Management Institute

Tomorrow the EIA will release their latest snapshot of oil fundamentals with the API data released late this afternoon. As has been the case for months the impact of the inventory data on oil prices will be mostly dependent on what is happening in the external markets. That said I am expecting a mixed report with my projections shown in the following table along with a comparison versus last year and the 5 year average for the same week on the assumption that the actual numbers come in as projected.