Online Trading Day

The trick is to make sure you don’t die waiting for prospertiy to come. – Lee Iacocca

Here is another Wolfe Wave Set up on the Russell 2000 E-mini.

NEW YORK (Dow Jones)–Shares of search-meister company Google (GOOG) and shares of Chicago Mercantile Exchange Holding Inc. (CME) have virtually no fundamental connection – except being pricey. Perhaps that’s a virtue now that shares of almost any existing U.S. investment bank can be had for a song.

But a technical glance at a couple of lush stocks like the CME and Google shows that even the rich have their problems.

For example, shares of Google are trading near $451 as the result of a technical breakdown below $569.67 weekly support in January. Of course, an uptrend on the weekly chart would require a move above $569.67. Such a move may be in place if shares can take out $468.44 resistance.

If they can’t, then traders can reasonably anticipate a downtrend to initial support at $349.47.

Chicago Merc Gets Mercurial

Shares of the CME, similarly, broke down on the weekly chart in February when they took out $540.26 support. The resulting downtrend hit a low of $282.04 in last July. Current trading near $398 shows that shares are technically strong above $345.42 support. On the other hand, an uptrend on the weekly chart awaits a decisive move above $531.56, as it turns out.

The Baleful Stock Market

Whether or not the U.S. government bails out distressed institutions, or whether it simply bails, the market will have the last word in any case.

The Dow Industrial Average would be breaking out on the weekly chart if takes out 11839.60 resistance. The weekly breakout points for the S&P 500 and the Nasdaq Composite are 1286.68 and the 2391.30 to 2408.50 band, respectively.
(Stephen Cox, a chartered market technician, is chief technician for Dow Jones Newswires.)

-By Stephen Cox, Dow Jones Newswires; 201-938-2064; stephen.cox@dowjones.com

This is a great post from the WSJ. Enjoy

You can view the post at:

http://blogs.wsj.com/deals/2008/06/30/mean-street-five-lessons-for-financial-panics/

June 30, 2008, 4:41 pm

Mean Street: Five Lessons for Financial Panics
Posted by Deal Journal
Baron Rothschild’s adage was to “Buy when there’s blood in the streets.” Mine is “buy when CNBC starts telling you to short the market.”

Last Tuesday, CNBC exhorted its viewers to consider shorting stocks. Jim Cramer followed up a few days later by urging his followers to “sell everything” except commodities stocks.

My gut says these are classic stock market “tells” that signal a contrarian buying opportunity, but I could be wrong. And that is the beauty of a financial panic–and our first lesson.

Lesson #1: Nobody knows where the market bottom is.

It may be hard to believe, but your guess on the stock market bottom is as good as anyone’s. That anyone includes Ben Bernanke, Hank Paulson, Bill Gross, George Soros, Warren Buffett, Lloyd Blankfein and even Jim Cramer.

In six months, the media will dig up some lucky market analyst who made a “remarkably prescient” call and turn them into a hero, a la Elaine Garzarelli, the analyst credited with predicting the Crash of 1987.

Lesson #2: Do not sell into a panic.

Anyone who sold their stocks on Black Monday, Oct. 19, 1987, came to almost immediately regret it. I know I did. I was a junior banker in London and watched the meltdown on our lone department Quotron.

My brain said, “Hang on, hang on.” My wallet said, “Run for your life.” With one phone call, I sold every Fidelity stock fund I had and promptly lost a quarter of my net worth.

The temptation to panic is primal. Be a man, not a monkey.

Lesson #3: Look forward, not backward.

Does anybody remember how negative sentiment was in October 2002? The S&P 500 was down almost 50% from its record of 2000. The Nasdaq Composite Index was off 75%. I had just returned from 10 years in Europe to run the UBS tech banking group.

What struck me when I first visited Silicon Valley was how negative everyone was. That was because my colleagues and clients saw the world through the distorted prism of the Internet boom. They couldn’t see the tech market getting better in the future, because the tech market couldn’t be any better than it had just been.

The market looks forward, but people like to look backward. A Cisco Systems shareholder that owned the stock at $77 has trouble forgetting that $77 price when the stock falls to $15. In time, it doubled to $30.

Is Citigroup at today’s closing price of $16.76 so different? Wall Street in 2008 is Silicon Valley in 2002. It will get better in time.

Lesson #4: It’s investing, not gambling.

Why do we obsess over our ability to pick the bottom or top of a stock price or the market? Statistically, it is a total crap shoot.

As Bernard Baruch said, “Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.”

Financial panics bring out the worst in these tendencies. All this weekend, I was chewing over whether or not it was the right time to buy the XLF, the financial sector ETF that is trading at nearly half its record high.

I haven’t pulled the trigger yet, but I know that picking a bottom is a mugs game. Admittedly, an awfully tempting one. Better to use common sense. Set price and allocation targets, space out investments over time.

Since the beginning of this year, I have made fund purchases on about 20 different dates with an average cost base equivalent to an S&P 500 level of 1346. On that money, I am down about 5%. There are mutual funds that charge that much for an up-front load. Investing like this won’t make you rich, but you won’t gamble yourself into the poorhouse either.

Lesson #5: It’s only money.

There is no point in fighting the tape or your emotions as the market is gripped by panic. Next time the Dow industrials are down 300 and heading down further, do what you make your children do: take a time out. Turn off CNBC, your computer and BlackBerry and leave the office. (Wall Street professionals, unfortunately, this doesn’t apply to you­. You will get fired.)

I am a believer in the equity markets and have most of my net worth tied up in the stock market. So every panic over the past two decades has cost me, albeit temporarily, big chunks of my net worth.

Does it hurt? Of course. Do I lose sleep over it? Occasionally. But I always keep in mind that it is only money.

I think of my dad, who would inspect my weary face after my exhausting banker trips to Japan, India, and Hong Kong. As he put it: “There’s no point in being the richest man in the cemetery.”

Some readers have asked me what news events Fundamental traders use to trade. Below is a list of events coming up in March that Fundamental traders may be interested in trading.

Dow Jones US Economic Indicators Calendar
All dates are in ET/GMT

Indicator Date Time Last
Feb Existing Home Sales March 24 1000/1400 N/A
ICSC Chain Store Sales Index For Mar 22 March 25 0745/1145 N/A
Redbook Retail Sales Index For Mar 22 March 25 0855/1255 N/A
Mar Conference Board Consumer Confidence March 25 1000/1400 N/A
Mar Richmond Fed Manufacturing Index March 25 1000/1400 N/A
ABC/Wash Post Consumer Conf For Mar 23 March 25 1700/2100 N/A
Feb Durable Goods Orders March 26 0830/1230 N/A
Feb New Home Sales March 26 1000/1400 N/A
Initial Jobless Claims For Mar 22 Week March 27 0830/1230 N/A
4Q Final GDP March 27 0830/1230 N/A
4Q Corporate Profits March 27 0830/1230 N/A
Feb Help-Wanted Index March 27 1000/1400 N/A
DJ-BTMU Business Barometer For Mar 8 March 27 1000/1400 N/A
Feb Personal Income March 28 0830/1230 N/A
Feb Personal Spending March 28 0830/1230 N/A
End-Mar Reuters/U Mich Sentiment Index March 28 1000/1400 N/A

March 2008 Futures Calendar All Report Times are Central
Monday
24 Easter Monday
Export Inspections 10:00

Tuesday
25 Consumer Confidence 9:00
LT: Mar TOCOM Rubber
Apr TOCOM Gasoline & Kerosene

Wednesday
26 Adv Durable Goods 7:30
New Home Sales 9:00
API / EIA Energy Stks 9:30
LT: Mar Pork Bellies
LTO: Apr Copper/CBT & NY Gold & Silver/NY Ht Oil, Nat Gas & RBOB

Thursday
27 Census Crush^ 7:00
Cotton Consumption^ 7:00
Export Sales 7:30
GDP (Q4 ‘07) 7:30
Jobless Claims 7:30
EIA Gas Storage 9:30
LT: Mar Copper/Long Gilt/CBT & NY Gold & Silver/NY Platinum & Palladium
Apr NY Nat Gas

Friday
28 Dairy Products Prices 7:30
Personal Income 7:30
Hogs and Pigs 2:00
FN: Apr NY Nat Gas
LT: Mar Hang Seng
Apr ICE Ht Oil, Nat Gas, RBOB
LTO: Mar Hang Seng

FN: First Notice Day
LT: Last Trading Day Futures
LTO: Last Trading Day Options
^ Tentative Date
-2 yr Note dates subject to change based on US Treasury choice on Notice Issue Day.
WCE: Winnipeg Commodity Exchange
Government and Exchange dates can change without notice; please verify.
Holidays listed here are not necessarily exchange holidays.
Currencies = Euro, Japanese Yen, Swiss Franc, British Pound & Australian Dollar

The Fed Cut the interest rate again today. This brings up a lesson in different trading theories.

When you trade, most people use Fundamental Analysis or Technical Analysis or a combination of the two.

Traders that use financial information and press releases to predict the future market prices are Fundamental traders. It has been my experience that Fundamental traders, trade the news. Fundamental traders would have traded this rate cut very aggressively.

Traders that use technical analysis, use chart patterns, indicators, etc, to predict the future market prices.

I am a Technical trader because I believe that Fundamental traders enter the trades too late. When news hits the streets, the market professionals have already acted on the prices which is too late for the smaller investors like you and I.