Does The Economic News Even Matter Anymore?
Day Trading Opportunities Are Everywhere
Almost every trading day we hear about the stock market making new all time highs. Yet, there are stocks and commodities that are in bear market territory. Trading volumes are some of the lightest that we have experienced in the past ten years. Many retail investors and traders are now gun shy in this stock market since the former leading stocks and sectors such as BHP Billiton Ltd. (NYSE:BHP), Silver Wheaton Corp (NYSE:SLW), Southern Copper Corp (NYSE:SCCO), SPDR Gold Trust (NYSEARCA:GLD) have stopped rallying. The new market leaders have been the financial stocks, housing stocks, and Google Inc (NASDAQ:GOOG). In this light volume environment it is very easy for the large financial institutions to keep the major stock market indexes floating higher. After all, remember the old market adage that states you should never short a dull market. A dull market is a light volume market and that is exactly what we have been seeing every trading day for months.
Now, this does not mean that you cannot make money on a daily basis. Just today, I gave out a short trade on Cisco Systems Inc (NASDAQ:CSCO) at $24.12. The stock is now trading $23.49 a share. That is a 0.63 cent decline in just a little more than one hour. There are day trading opportunities every trading day. Day traders can also be done with work after the first couple hours of the trading session. What other job in the world can give you that type of freedom?
Now finding these opportunities everyday are not easy. It takes a skill that very few people in the world possess. It also takes practice, patience, and dedication to master these skills. Often, when someone wants to learn to trade they want instant gratification, but it does not work that way. Think about it, if you want to become a doctor, lawyer, CPA, or engineer you cannot practice your craft until you have completed many years of schooling. Then you will need to study under other professionals before you can start your own practice. In the trading world you need to study under someone who has been in the business for many years and model what they are doing everyday. Modeling is the key to success if you ask me. You will also avoid many of the pitfalls that the trader before you has made. That alone could be worth its weight in gold. Remember, the trading opportunities in the stock market occur everyday if you know what you are doing.
Throughout 2013, the leading retail stocks have been very strong. This leading industry group seems to be a little weak today. One of the leading retail stocks that are coming under some selling pressure today is Bed Bath & Beyond Inc (NASDAQ:BBBY). Today, BBBY stock is trading lower by $1.43 to $67.69 a share. Short term day traders should watch for intra-day support around the $67.00 level. Swing traders will want to watch for daily chart support around the $64.00 level.
Some other leading retail stocks that are trading lower today include lululemon athletica inc (NASDAQ:LULU), Target Corp (NYSE:TGT), and Lowe's Cos (NYSE:LOW). Traders can usually track the retail sector by following the Market Vectors Retail ETF (NYSEARCA:RTH). Today, the RTH is trading lower by 0.16 cents to $52.66 a share.
Forget Stocks, It Is The Japanese Yen That Is Moving Markets
As we all know, almost every central bank in the world is printing money to boost exports and support asset prices in the stock market. To their credit, the money printing idea has worked as markets around the world have been rallying. Japan is now the most aggressive money printing country. The Bank of Japan (BOJ) said that they would put $1.4 trillion into the economy over the next two years. The Nikkei 225 Index (Japanese stock market) has gained nearly 7,000 points or 80.0 percent since October 2012. This rally in the USD/JPY, and the Nikkei 225 Index has been parabolic and shows the power of money printing or the devaluing of the currency.
At this time, the major stock indexes around the world seem to be trading higher when the Japanese Yen declines against the U.S. Dollar. Traders can simply look at the chart below and see how the S&P SPDR 500 Trust (black line) and the USD/JPY (green line) trade higher together. The red line is the SPDR Gold Shares which is trading inverse to the USD/JPY. The bottom line, if the Japanese Yen starts to strengthen against the U.S. Dollar the current rally in stocks could come to an abrupt end.
Ego Alert: Jamie Dimon Makes His Biggest Mistake
Jamie Dimon let his ego get the best of him and it caused a major error in judgement. Often times, ego is the downfall of some of the greatest men in history. Word surfaced today that Jamie Dimon would keep his head directors role along with the CEO title at JPMorgan Chase & Co. (NYSE:JPM). The vote was tight but ultimately he succeeded. Word has it that Jamie Dimon threatened to quit if the head director role was taken away from him.
What Was The Critical Error?
He should have let the company name another director as head. Why? He would enshrined himself as one of the greatest leaders of all time through the financial crisis and beyond. If he let the directors position go, any negatives the company experienced in the future would be blamed partially on him not being in that leadership role. If the company continues to have success, it would still be looked at as his company as the CEO.
Ultimately, he would have insulated himself slightly by allowing another person to take his place as director. By staying in the position, everything that happens will be under an even closer microscope with his head on the chopping block. This was a simple ego move my Jamie Dimon with no real thought. It will be an error in judgement he will likely regret in the years to come.
Markets Go For 19th Straight Gain On A Tuesday
Light volume in play, markets slightly positive, media pumping and it looks likely the U.S. stock markets will have their 19th straight positive Tuesday. This is a roaring bull with little to stand it its way as long as the Federal Reserve is backstopping it. Yields are being kept so low by the Federal Reserve that the only possible angle for investors is to buy stocks. As stocks balloon higher, a bubble forms. It is much like musical chairs. It great until the music stocks. Then watch out below. Enjoy the ride and profit!
Three Mistakes A Trader Should Never Make
As traders and investors we deal with a lot of emotion each and everyday. Obviously, when a trade is working out in your favor you feel on top of the world. On the flip side, when a trade is going against you, it will make you feel terrible. Below I shall list the top three mistakes that most novice traders will make, read this and make sure you do not fall into these traps:
Bernanke Vows To Keep The Pedal to The Metal
The Federal Reserve Chairman Ben Bernanke is beginning to testifying in front of the Joint Economic Committee. In his opening remarks, the head of the central bank has signaled that he shall continue to keep the current quantitative easing program in place. Traders and investors can easily see the decline in the U.S. Dollar Index after his comments were released. Chairman Bernanke warned that reducing the Federal Reserve's efforts to keep borrowing rates low would carry a substantial risk of slowing or ending the economic recovery. This means that he will keep interest rates at zero percent and continue to buy $85 billion a month worth of mortgage backed securities and U.S. Treasuries for the foreseeable future.
Large financial stocks are soaring higher after the news. Leading stocks such as J.P. Morgan Chase & Co (NYSE:JPM), Goldman Sachs Group Inc (NYSE:GS), Morgan Stanley (NYSE:MS), and BlackRock Inc (NYSE:BLK) have all moved sharply higher leading the rally in the major stock indexes today.
Everytime This Signal Emerges, Markets Sell
The CNN Greed & Fear Index is one of the best signals I have seen. I have followed it for some time and anytime it gets above 90 to Extreme Greed, a sell off or pull back occurs within one week. This has even been the case in a market manipulated by low interest rates and Federal Reserve massive printing of money. The Greed Index today just jumped over the 90 level, settling at 91. This to me signals a possible reversal in the coming days.