Small Caps: Profiting From The Continued Rally 

The markets are sharply higher again today. A mega reversal took place on Friday and solidified choppy upside through the Labor Day holiday weekend. The markets have now had three higher pivot lows since the SPDR S&P 500 ETF (NYSE:SPY) hit the low of $110.27 on August 9th, 2011. These higher lows continue to tell intelligent traders and investors that the market has a little more upside for the next week or two. A possible upside target on the SPY would be $124.00 - $126.00. In that range, major resistance will begin to pound the markets.

Many stocks have already surged higher over the last couple weeks. Most investors are now looking for the next beaten down area to profit from. While stocks like Apple Inc. (NASDAQ:AAPL) and International Business Machines Corp. (NYSE:IBM) have already jumped, small caps may be the next area to find bargains.

Many small cap plays are extremely low on the charts. Look for plays discounted at their 52 week lows that do not have company specific negative news. In other words, find small cap and even some mid cap plays that have been hammered due to the markets weakness and not bad earnings or another bad press released. A few long ideas are AgFeed Industries, Inc. (NASDAQ:FEED) and Origin Agritech Ltd. (NASDAQ:SEED), two Chinese small cap agriculture plays.

Gareth Soloway
InTheMoneyStocks.com
 

The Key To The Stock Market Rally Exposed 

The bank stocks have finally started to participate in the market rally. This first started with Warren Buffett investing $5 billion in Bank of America Corp (NYSE:BAC) last week. Logic dictates the President of the United States asked Buffett to give the markets a boost of confidence. In addition, Buffett gets a 6% yearly dividend from the preferred shares and the option to buy 700 million shares of Bank of America at $7.14. This is a sweet deal but to be expected from a seasoned capitalist like the Oracle of Omaha. This action gave the financial sector a one day boost. Now Europe is giving it a more sustained rally.

Any sustained rally must contain gains by the financial sector. Remember, the banks are at the core of what is going on in Europe and the massive fear that has spread from their debt crisis. If you look at any bank chart you will see they have been a leading indicator of the recent downside and the hardcore issues hitting Europe. Bank shares like Goldman Sachs Group, Inc. (NYSE:GS), Citigroup Inc. (NYSE:C) and Wells Fargo & Company (NYSE:WFC) all made their yearly highs at the start of 2011. The weakness was a golden indicator of what was to come.

Now they have started to rally. While the rally may be short lived, it does show a build in confidence in the markets that will last through the holiday weekend of Labor Day. If you want to know the health of the market, simply follow the financial sector.

Gareth Soloway
InTheMoneyStocks.com

The Stock Market Playbook For The Next Week 

The markets are nearing a key resistance level. This should be short term resistance but probably not the end of the move up. The level on the S&P 500 is 1207. On the SPDR S&P 500 ETF (NYSE:SPY) the level coincides perfectly with $121.20. This level happens to be the pivot high from August 17th, 2011. The likely scenario is a stall-out here for a day or two, then a push through it to the $124.00 to $126.00 area. Once this next level it achieved, look for a significant pull back in the markets.

Reading the charts is everything. It told of the pivot bottom in the markets three weeks ago and the targets of each bounce and pull back. Learning how to decipher the charts is like having a crystal ball.

Gains are wide spread in most sectors. Financial plays are leading the pack. They have been the most oversold. JPMorgan Chase & Co. (NYSE:JPM) is trading at $37.21 +1.00 (+2.76%), Caterpillar Inc. (NYSE:CAT) is trading at $88.20 +3.04 (+3.57%) and Apple Inc. (NASDAQ:AAPL) is trading at $389.07 +5.49 (+1.43%).

Gareth Soloway
InTheMoneyStocks.com

Trade Lesson: Understanding Bottoming And Topping Tails

Most traders do not put all the pieces of the puzzle together when learning and using technical analysis. Let's talk about topping and bottoming tails. Simply put, a bottoming tail is a bullish signal and a topping tail is bearish. A bottoming tail MUST occur at the lows of a chart. This means that no point on the chart in recent history can be lower. Next, the tail must be substantial, not just a little thing barely seen by the eye. Additionally, the close of the candle must be in the upper 25% when measuring from the lows to the highs. If all these factors match up, you may have a bottoming tail. The same things apply for a topping tail.

Now to throw in the one key that most traders miss and costs them money. To truly keep your winning odds at 90% or better, you must also factor in the market. The below chart is of Corinthian Colleges, Inc. (NASDAQ:COCO) . You can see, a great bottoming tail formed based on all factors mentioned above. However, one factor would keep Chief Market Strategists away from this trade for now. While the stock had a great recovery, it still closed lower. That would not matter if the market for the trading day was flat or lower as well. However, the U.S. stock markets rallied 3-4% the day before. The fact that this still could not end the day higher tells us to give it a little time and then re-evaluate the trade.

Always look at the trading day in the markets and match it up to the stock chart. Too many traders see a pattern and ignore the macro action on the markets. If you want to be a complete trader, start with the micro view of the stock, then expand your view to the macro market. If all things align, a 90% success rate trade will be your reward.

Bernanke Is The Banker That Cried Wolf

The stock markets have rallied higher over the past week for several reasons. The first and most important reason for the stock market rally has been the comments of the Federal Reserve. Since the Jackson Hole speech by Federal Reserve Chairman Ben Bernanke the stock markets have rallied higher on expectations of a September quantitative easing.

Nearly every investor is expecting the Federal Reserve to begin another round of quantitative easing. It is important for all traders and investors to realize that the Federal Reserve just ended their last $600 billion QE-2 program in late June 2011. The last round of quantitative easing(QE-2) caused massive inflation around the world. Food riots broke out all over the Middle East and Northern Africa shortly after QE-2 was implemented in November 2010. Now since the Federal Reserve knows that traders and investors will chase the markets higher on any thought of a QE-3 program the central bank can simply hint that QE-3 is close without ever doing it.

How long will the stock market continue to believe the Federal Reserve? This is the billion dollar question that everyone is asking. The next FOMC meeting is on September 20-21 regarding any policy changes by the Federal Reserve Bank. This tells us that the central bank could dangle the carrot in front of the institutional traders and investors until that September meeting.

Short term traders should continue to watch the action in the financial stocks. Leading financial stocks such as J.P. Morgan Chase & Co.(NYSE:JPM), Bank of America Corp.(NYSE:BAC), Morgan Stanley(NYSE:MS), and Citigroup Inc.(NYSE:C) will tell traders everything they need to know. If and when these stocks begin to sell off that is a warning sign that traders are no longer buying the Bernanke put.

Nicholas Santiago
InTheMoneyStocks.com

Gold Miners Daughter

The Market Vectors Junior Gold Miners ETF(NYSE:GDXJ) is trading higher by 0.06 cents to $37.41 a share. The popular ETF of the smaller gold mining stocks has rallied sharply higher since August 5, 2011 when it traded as low as $31.62 a share. Traders can watch for intra-day support around the $36.85 level. Should the GDXJ rally or trade higher on the session the next important intra-day resistance level is around the $38.00 area. The daily chart for the GDXJ remains in good technical shape by trading above the daily chart 50 and 200 moving averages.

Some gold mining stocks that are part of the GDXJ include Allied Neveda Gold Corp Allied(AMEX:ANV), Hecla Mining Co.(NYSE:HL), and numerous gold mining stocks that trade on the Toronto Stock Exchange. The important daily chart resistance for the GDXJ is around the $40.00 level at this time.
 

Nicholas Santiago
InTheMoneyStocks.com

The Master Stock Market Outlook Revealed 

The markets are floating higher on the day. The SPDR S&P 500 ETF (NYSE:SPY) is trading at $122.86, +1.18 (+0.97%). The ADP Private Sector Employment numbers were released this morning at 8:15am ET. They came in with a gain of 91,000. This number was solid and the markets liked it. However, all eyes are on the Federal Reserve for their next meeting on September 21st and 22nd. Ben Bernanke made it clear last week at Jackson Hole that there was likely new easing coming to the United States, in some form. The markets, much like a drug addict, cheered these comments. While economic data will continue to flow towards that meeting, the markets will continue to look forward to QE3. The Federal Reserve is going to have to live up to some major policy announcements. Should they not deliver, the markets may see some major downside in September.

The rally has been solid so far. Since last Friday's low, the markets have jumped 8.5%. Short term, this is an extended move but unlikely to see a major drop in the near term. Consolidation in the form of a pause is most likely. The outlook continues to be bullish for the markets with a random down day thrown into the mix. The SPY continues to have an upside target of $124.40, then $126.25.  The upside will also be aided by the coming Labor Day Holiday weekend. Holiday weekends often see a float on light volume on either side. This must be taken as the likely scenario.

While the markets look to continue higher for the next week or two, the easy gains are definitely already in. The markets likely only have another 3% upside potential. In addition, the markets will not see their 52 week highs again. On the SPY, this level was $137.18. The upside rally will last until September 9th, 2011. After that date hits, downside could come quickly at any point in the following two weeks.

Gareth Soloway
InTheMoneyStocks.com
 

Slip Sliding Away

The major stock indexes started the morning trading sharply higher. At 10:00 am EST the SPDR Dow Jones Industrial Average(NYSE:DIA) traded as high as $116.97 a share. Since that high pivot the major stock indexes have been slowly declining throughout the session. The highly traded and followed DIA is now trading lower by 0.09 cents to $115.26 a share. The SPDR S&P 500 Index Trust(NYSE:SPY) and Powershares QQQ Trust (NASDAQ:QQQ) have also declined sharply this afternoon reversing earlier gains. Traders can watch for intra-day support on the DIA around the $114.95 and $114.00 areas.

Nicholas Santiago
InTheMoneyStocks.com

Gold And Silver Can Still Be Traded

Recently, the precious metals have received massive media coverage. Some traders say that gold is a bubble and is now bursting. Other traders say that gold is the only safe haven for people to put their money. It is important to note, gold is now in a 10 year bull market. Bull markets such as the one we have seen in gold will simply need to have a correction from time to time. If you ask the average person on the street if they own any gold bullion or gold coins they will tell you no. In fact, most people do not own any gold or silver outside of their personal jewelry. This tells us that gold may be do for a pullback or correction in the near term, however, a bubble is a little bit of a stretch at this time.

Gold is the ultimate indicator of central bank activity. When central banks increase the money supply or add cash reserves at the major banks gold will usually trade higher. Many banks are now taking gold as payment and collateral. This tells us that gold is still in demand and more importantly becoming a currency.

Back in late April 2011, silver was surging higher, nearing the $50.00 an ounce level. At that time, the CME Group increased margin requirements on four separate occasions. This margin hike caused silver to sell off sharply as many speculators simply did not have enough capital on hand to hold the position. On two separate dates over the past month the margin rates were increased for gold. The price for gold declined sharply from the August 22, 2011 high. Many traders and investors are now worried that margin hikes will be implemented again for gold. This fear of margin increases is now keeping the price of gold contained. This tells us that gold should simply be traded at this time. Remarkably, gold is still holding up very well considering the sharp decline that occurred on August 24, 2011. Believe it or not, gold can still make new highs from here if it can build a base and consolidate around the current levels.

The gold bull market is still very much alive. Gold may need to correct or pullback in the near term, however, that would actually be healthy for gold. Traders can watch for intra-day support on the SPDR Gold Shares(NYSE:GLD) at the $176.25 and $175.00 levels. The intra-day resistance levels for gold are around the $178.50 area.

Nicholas Santiago
InTheMoneyStocks.com

Stronger U.S. Dollar Index Stalls ISM Euphoria 

The major stock indexes were all trading lower on the day before the ISM data was released. Once the ISM number was released the major stock indexes surged sharply higher. The Institute for Supply Management said that the index declined to 50.6% in August from 50.9% in July. While this ISM number is the worst number in quite a long time it is better than expected. More importantly, the U.S. Dollar Index has soared higher after the announcement, this is the reason why stocks have deflated from that initial move higher in the market.

When the U.S. Dollar Index trades higher on the session it is prudent to expect commodity and energy stocks to pullback. Leading stocks such as Freeport McMoRan Copper & Gold Inc.(NYSE:FCX), Southern Copper Corp.(NYSE:SCCO), and Cliffs Natural Resources Inc.(NYSE:CLF) have all pulled back from the intra-day highs. Should the U.S. Dollar Index decline or pullback throughout the trading session then these leading commodity stocks are likely to bounce higher. All traders should be watching the U.S. Dollar Index very closely.

Nicholas Santaigo
InTheMoneyStocks.com

Stock Market Readies For Jobs Data

The markets are seeing some profit taking ahead of the Non Farm Payrolls and Unemployment Report. These reports will be released to the market tomorrow morning at 8:30am ET. As these loom, investors are taking some profits off the table from the recent rally. In the last week, the markets surged 8%.

In the last two days, the economic news has started to look less dire. Yesterday, ADP Private Sector Employment came in at 91,000. This was better than Wall Street had expected. In addition, this morning the ISM Index for August reported in at 50.6. This was far better than expectations. In addition, any number over 50 shows expansion in the economy. While it was barely over 50, the markets had anticipated a major slowdown. After this report hit the markets at 10am ET, a dramatic spike was seen in the S&P 500. However, within minutes, profit takers returned and the markets have gone back to the flat line with eyes on the jobs number tomorrow.

The outlook from this Chief Market Strategist has been dead on since the bottom pivot was put in on August 9th, 2011. Tomorrow is going to be a wild card day. The markets need a strong Non Farm Payrolls number to continue their rally. However, even if the markets pull back on Friday, more upside is seen next week. This is mainly due to expectations of the Federal Reserve implementing further easing policies and light volume surrounding the Labor Day Holiday weekend. Once the SPDR S&P 500 ETF (NYSE:SPY) hits $126.25, then the party should come to an end. Late September and October may be very rough months for the market. Stay ready and keep it short term.

Gareth Soloway
InTheMoneyStocks.com
 

The Fed Against Goldman Is Like Watching The Dog Chasing His Tail

Just when you think you have seen it all you realize that you haven't. This afternoon, Goldman Sach Group Inc.(NYSE:GS) agreed to pay future penalties and review foreclosures in order to help compensate homeowners of wrongful seizures. This all occurred under a Goldman Sachs subsidiary Litton Loan Servicing LP. Goldman Sachs actually sold the lending firm today for $264 million.

Now, the Federal Reserve ordered Goldman Sachs to retain an independent consultant to review foreclosures initiated by Litton that were pending in 2009 or 2010. The penalties for the financial giant have not been announced yet, however, Goldman Sachs was just bailed out by the Federal Reserve in 2008. Now the same institutions that bailed out the investment bank is imposing penalties on them.

Many traders and investors believe that this is simply a public relations stunt and makes for good headlines. The Federal Reserve Bank has been under a lot of pressure recently by many political candidates. Obviously, Congressman Ron Paul(R-Texas) has been very critical of the central bank throughout his entire career. Most recently, other presidential candidates such as Congresswoman Michele Bachman(R-Minnesota), and Governor Rick Perry(R-Texas) have been very outspoken and critical of the Federal Reserve Bank as well. The central bank looks to be trying to clean up its image by today's announcement. This is almost the same problem that Goldman Sachs has had to face since 2009 regarding the bailout American International Group Inc.(NYSE:AIG), at that time Goldman Sachs was paid 100 cents on the dollar by the bailed out insurance company. In 2010, the SEC fined Goldman Sachs Group with a $500 million fine for involvement in an elaborate mortgage backed securities deal with billionaire hedge fund manager John Paulson. The Federal Reserve going after Goldman Sachs is just like watching a dog chase his tail.

This afternoon, Goldman Sachs stock is trading lower by $3.80 to $112.35 a share. The stock will have intra-day support around the $110.75 area.

Nicholas Santiago
InTheMoneyStocks.com

Pro Traders Weekly Play Book - Get Ready!

The first stock that we shall examine is Deutsche Bank AG (NYSE:DB). This is one of the largest German financial institutions in the world. This stock made a fresh new two year low last week closing at $36.27 a share. The stock has now declined by $48.00 since making a peak in October 2009 at $84.93 a share. The European banking crisis is certainly taking its toll on the leading German Bank. Traders can watch for some short term daily chart support around the $30.00 level. Should the stock decline further the next important support level will be around the $27.25 area. This stock remains very weak on the charts by trading below all of the major moving averages. Traders should be very cautious when trying to pick the bottoms in down trending stocks.

MF Global Holdings Ltd. (NYSE:MF) is a leading investment brokerage dealing in commodities and listed derivatives. The company provides access to approximately 70 exchanges around the world. Last week, MF stock made a new 52 week low, closing at $4.98 a share. Traders must always be cautious when stocks close below the $5.00 level. This is a point when many firms will no longer allow the stock to be bought on margin. The next short term support level for MF stock will be around the $4.60, $4.20, and $3.80 levels. Stocks that break down such as MF Global will usually bounce with the major stock indexes, therefore, if traders are looking to bottom fish this stock please make sure that the major indexes are at an important support area as well.  Trade these stocks, key levels and more live with the best traders in the world; when the opening bell rings tomorrow morning have the Pros on your side.
 


Invesco Mortgage Capital Inc. (NYSE:IVR) is a real estate investment trust that acquires, finances and manages residential and commercial mortgage-backed securities and mortgage loans. This stock made a new all time low last week closing at $16.42 a share. Traders can watch for short term support around the $16.20, $14.60, and $12.25 levels. IVR is another stock that is trading below all of its major moving averages which puts the stock in a weak technical position. All traders and investors should understand that it is very difficult to pick bottoms in stocks that are making new all time lows.  Take careful note of these key levels, place them on your charts.
 

The U.S. Dollar Index Holds The Cards For The Markets Today

This morning, the U.S. Dollar Index futures (DX U1) have surged higher by 0.57 cents to $75.78 per contract. Usually, when the U.S. Dollar Index pops higher it is on the back of fear in the European Union. Traders can look at the CurrencyShares Euro Trust (NYSE:FXE) and see that it is trading lower by $1.41 to $140.01 a share. 

Nicholas Santiago
InTheMoneyStocks.com 

Gold Miners Jump Out Of the Gate

This morning, gold and gold mining stocks are taking off to the upside. The popular Market Vectors Gold Miners ETF(NYSE:GDX) is trading higher by $1.64 to $66.55 a share. Traders must watch the $66.50 and $67.00 levels as short term intra-day resistance. The daily chart on the GDX continues to remain very strong, however, the GDX is starting to get a bit extended and overbought. Whenever, stocks or ETF's get extended on the daily chart they will usually need to pullback or consolidate before moving higher.

Other leading gold mining stocks that are surging higher this morning include Randgold Resources LTD.(NASDAQ:GOLD), Yamana Gold Inc.(NYSE:AUY), and Barrick Gold Corp.(NYSE:ABX). All of these leading mining stocks look very similar to the GDX on the daily chart. 

Nicholas Santiago
InTheMoneyStocks.com

Transports Plummet

The highly followed Dow Jones Transportation Index is declining sharply lower again this morning. Traders can look at the iShares Dow Jones Transportation ETF(NYSE:IYT) and see that the IYT is trading lower by 3.50 percent. Whenever the transportation index declines it is often a sign of economic contraction and slowdown in global business. The IYT is still trading above its recent daily chart low made on August 23, 2011 at $75.81 a share. Should the IYT close below that important level on the daily chart that could signal another dose of institutional selling. The IYT will have intra-day support around the $76.00 area.

Some notable transport stocks that are trading lower today include FedEx Corp.(NYSE:FDX), CSX Corp.(NYSE:CSX), and United Continental Holdings Inc.(NYSE:UAL). On a day like today when the major market indexes are all trading sharply lower everything will generally follow the S&P 500 Index. Therefore, traders must try and time all intra-day positions with a bounce in the major stock indexes.


Nicholas Santiago

Markets Rally Off  Lows, Watch This Level

The major stock indexes started the trading session down by 300.00 points just after the opening bell. Slowly throughout the trading day the major stock indexes have rebounded off the morning lows to trim the day's losses. Traders should now watch for some key resistance levels on the SPDR S&P 500 Index (NYSE:SPDR) around the $117.40 level. The SPY could see some intra-day pullbacks around these levels.

Some leading stocks that are trading higher today include Netflix Inc.(NASDAQ:NFLX), Amazon.com Inc.(NASDAQ:AMZN), Research In Motion LTD(NASDAQ:RIMM), and Apple Inc.(NASDAQ:AAPL). When the leading stocks can catch a bid in a bad market that is sometimes the way the market talks to us. Traders should watch these stocks for further upside should the major stock indexes continue to trade higher throughout the day. 

Nicholas Santiago
Inthemoneystocks.com

JPM Is Still The Only Indicator That Matters

When J.P. Morgan Chase & Co.(NYSE:JPM) bounces or trades higher the major stock indexes move higher. When this leading bank stock declines the major stock indexes moves lower. At this time, when there is a banking and financial crisis taking place traders can simply follow the leading financial stock in the market and that is JPM stock. This leading financial stock will have intra-day resistance around the $34.05 area intra-day.

Sure, other leading financial stocks such as Credit Suisse Goup(NYSE:CS), UBS AG(NYSE:UBS), and Barclays PLC(NYSE:BCS) will be important. These stocks are the leading European financial institutions and will usually have less effect once the European markets close for the day. Therefore, traders should concentrate and focus on JPM stock for the remainder of the trading day. 

Nicholas Santiago
InTheMoneyStocks.com

Gold Gets Slammed Early, Watch This Support Area

This morning, the popular and highly followed SPDR Gold Shares(NYSE:GLD) are trading lower by $6.50 to $176.34 a share. Spot gold is declining lower by nearly $50.00 to $1823.00 an ounce. The last time gold sold off so sharply the CME Group increased margin requirements for the precious metal. Traders should remember that in late April 2011 it took four margin hikes by the the CME Group before silver rolled over sharply. The margin requirements for gold have been increased twice since August 10, 2011. The GLD will have intra-day support around the $175.50 and $174.00 levels. 

Some leading gold mining stocks that are trading lower today include Newmont Mining Corp.(NYSE:NEM), Agnico Eagle Mines LTD(NYSE:AEM), and Yamana Gold Inc.(NYSE:AUY). All of the gold miners were very extended and overbought on the daily charts. These stocks needed to pullback from the overbought condition, meanwhile, they still remain in good technical shape on the daily charts at this time. 

Nicholas Santiago
InTheMoneyStocks.com