How Elliott Waves Help You Navigate in Uncertain Markets

One criticism we at Elliott Wave International sometimes hear about wave analysis sounds something like this: "Sure, it's easy to find Elliott wave patterns in market charts after they've been completed. But try and do it going forward. You never know what the pattern is until it's done, so what use is Elliott?"

A basic Elliott wave pattern looks like: 5 waves up and 3 waves down. (In a bull market. In a bear, it's 5 down and 3 up.)

Every blanket statement is an exaggeration, and the one above is no exception. Still, it's true that when a wave pattern is just starting to develop, you don't know for sure what it will end up being. Sound like a weakness? Well, let's look at a couple of examples first. Say you are looking at a chart of your favorite market, and you see this:

What is this Elliott wave pattern? Well, at this point, it's not even a pattern -- it's just two legs of some future pattern. But that doesn't mean that as a trader or investor, you can't act on this limited picture. If you think the market is bullish and you're looking at waves 1 and 2 -- with wave 3 up next -- you can apply the First Rule of Elliott: Wave 2 cannot retrace more than 100% of wave 1. You can then put a stop-loss just under the start of wave 1 and watch what happens. Relax: You have managed your risk, and you know exactly where you're wrong.

Now, let's say your market shows three waves, like this:

Are these waves 1, 2 and 3 -- or are they A, B and C? The first scenario implies more bullish potential, but the second one means that the move is corrective and will at some point be completely retraced. Opposite views, yes -- but that doesn't mean that as a trader or investor, you can't act on this limited knowledge.

If it's a 1-2-3, then you know that once 3 is over, corrective wave 4 will take prices in the opposite direction: down, in this case. And if it's an A-B-C, you know that once C is over, prices will also reverse: also down, in this case. Conclusion: Impulse or correction -- that's unclear yet, but either way what should come next is a decline. You can put your stop-loss just above the top of the wave 3 (or C) and watch what happens. Relax: You have managed your risk and you know exactly where you're wrong.

As you can see, you don't always need to wait until an Elliott wave pattern completes itself before using it to your advantage. You would be hard-pressed to find another forecasting method that helps you navigate market uncertainty with the same precision.

You can see Elliott wave analysis of real markets right now in our latest publications -- risk-free:

• May Elliott Wave Financial Forecast (U.S.) -- "The Zombie Economy"
• May European Financial Forecast -- "Faster Decline Than Even Great Depression"
• May Asian-Pacific Financial Forecast -- "Stocks Climb a 'Wall of Worry'"

Extracted from EWI

When to Quit Your Day Job to Trade Full-Time

1. Are you a successful part-time trader? You'll need to be successful at trading futures on a part-time basis before you think about moving into the full-time trader ranks. Don't be fooled into thinking that trading futures on a full-time basis will allow you to spend more time to cure your part-time trading ailments. In other words, don't say to yourself: "If only I could spend more time trading markets, I could have more success than I've had just trading 'one-lots' here and there."

2. Do you have enough money available to live on when (yes when, not if) you hit a streak of losing trades? A losing streak will inevitably occur -- and probably sooner rather than later. And I don't mean a losing streak of two weeks but more like a stretch of poor performance of up to six months or longer.

3. Do you have the psychological stamina to be a full-time futures trader? Quite frankly, most people do not. Can your psyche (not to mention your pocket book) handle six months of mostly losing trades?

4. Will your immediate family members support you -- even during a prolonged rough stretch of trading? Believe it or not, this is a very, very important question. For example, if your spouse does not support your decision to trade full-time, then you are likely doomed to failure. The pressure of having to produce winning trades and knowing that your spouse is skeptical of your efforts is almost insurmountable.

5. And on your part, will you be able to uphold your family or other important responsibilities even during a rough trading stretch? Or, will you brood and kick the dog when he happens to cross your path?

Personal Views On Gold Price And Markets

Forget about hoarding a few ounces of gold as a protection against currency disruptions or purchasing loss due to inflation or whatever the industry is selling you. From a long term standpoint you could be dead before it does you any good. You are far better off watching the trend in gold or gold stocks and getting in on the trend and GETTING OUT when the trend is over.

Neither gold nor gold stocks are suitable as “INVESTMENTS”. They are, however, great as speculative vehicles. As such you are not looking at long term trends to invest but at intermediate or short term trends to speculate. For this, in my view, the technical discipline is your best bet to develop speculating or trading tactics.

You must have heard the saying, “you cannot time the market” a hundred times. They are right. You cannot time the market if you are using the fundamental discipline, and almost all of the “experts” who cannot time the market are fundamentalists. Yes, there are technicians that cannot time the market but most of them can.

There are many experienced speculators (and manipulators) in the gold and silver stock industry. They are in it for the money (as you should be). Their trading (or manipulation) is seen on the charts and picked up by various technical techniques. They are the ones who determine when the bull trend will start and when it will end, especially for the more speculative stocks with nothing much behind them. You can do a lot worse than to follow their activities BUT remember to get out fast when the charts indicate their activities are now on the down side.

If you are in the market for any length of time one thing is almost a certainty. You WILL lose sooner or later. No one, to my knowledge, lasts very long without coming up to a losing trade. It’s how you handle those losers that separates the men from the boys.

Extracted from Precious Metals Central as I strongly agreed with their view..

The Best Buy Signal You Can Get

Insider Buying ... buying activities only

by Alexander Wissel, Editor in Chief, Investment U

Did you miss the perfect insider buying opportunity? You might have.

Over the past two months stocks have climbed almost 40%. After hitting historical lows - and being completely oversold - the markets have been clawing their way back up, week by week.

And even with the ugliness caused by the release of the banking stress tests last week, it doesn’t look like we’ll be seeing values plunge. There’s simply too much money sitting on the sidelines, and it’s slowly creeping back in.

Since 1987 the American Association of Individual Investors (AAII) has conducted a monthly survey on how we allocate our money between stocks, bonds and cash. And per the most recent survey, the percent of direct investments in individual stocks is at an all-time low of 17%, nearly half the historical average of 31%.

Thus, a mountain of cash remains on the sideline. If even a quarter of that cash returns to the market - and I suspect more than that will - we could feasibly march another 15% to 20% higher from here.

Investors who have been waiting for the perfect entry point could be quite disappointed to learn that we’re not going to get it. We may not see a second bottom or this “perfect entry point” everyone expects.

Even if there is a slight pullback, we may not see these price levels from March 6 again - realistically, in our lifetimes.

So what is a careful investor to do? Easy. Follow the time-tested steps we use to pick out undervalued companies in any market - including this one. Chief amongst them is insider buying…

Insider Buying - The Best Buy Signal Investors Can Get

Quite simply, the single best buy signal that investors can get is strong insider buying. Heavy insider trading is the surest way you can tell if the management believes their company is undervalued.

• Insiders are the officers who run a company, the directors who oversee the officers, and 10% beneficial owners of the stock who are presumed to be more than ordinarily well apprised of the company’s business and future prospects.
• Insiders know virtually everything that can be known about the company they run. They know the pace of sales day to day. They know of new products in development. They know whether the company is a takeover candidate or is already getting unsolicited offers.
• They know everything that reasonably can be known about their company’s business prospects, employees, customers, suppliers and competitors…

In short, insiders have an unfair advantage when they go into the market to trade their own company’s stock shares. After all, they know not only all the public information about their company but a great deal of non-public information as well.

For this reason, the U.S. government requires all insiders to report their transactions to the SEC by the tenth day of the month following the month in which they buy or sell their company stock shares.

It’s how “Uncle Sam” helps level the playing field for smaller investors. It opens a window on what the insiders are doing with their money. It also gives us an insider advantage when deciding whether a value play truly is undervalued.

Why It’s Risky To Base Your Investment Decisions on Insider Buying

It’s important to be careful when basing your decisions on the movements of insider buying. They can easily give you mixed signals. And while insider buying is the clearest signal you can get, insider selling is about the cloudiest.

Take a look at most publicly listed stocks and you might be surprised at how many sales are being recorded. Every day executives and officers are selling their company stock. But unlike purchases, there are a number of reasons why.

It could be that these officers have a large amount of their salary given to them as stock. Many executives receive salaries of $1 and the rest of their multi-million-dollar compensation packages are paid in stock. The only way they get that money is through regular stock sales.

It could be that these individuals are going through a nasty divorce, putting kids through college, building a new house, supporting a family member, or even has a gambling addiction.

Either way, the point is clear: Insider stock sales are not a clear signal to sell.

Bill Gates has been a regular seller of Microsoft (NYSE: MSFT) for decades. So has Larry Ellison at Oracle (Nasdaq: ORCL). Yet if you’d held these stocks for the past 20 years, you would have done okay. In fact, you would have earned many, many times your original investment.

Even in the case of Enron where company executives were dumping billions of shares en-masse’, we cannot guarantee that there were no other motivations outside of the companies performance.

On the other hand, there is only one reason an insider purchases a stock: They believe it’s undervalued. That’s why insider buying is the best buy signal that you can get when trying to find undervalued companies.

Three Insider Buying Triggers To Watch For

Here are three “insider buying triggers” you should look out for:

• Purchases around price points. Keep an eye out for upper management, executives and directors consistently buying large amounts of stock around a specific price point. You’ll start to notice that they stick below a certain price level.
• Insider purchases relative to their current holdings. A director who owns a million shares, and who buys 10,000 more isn’t as interesting as one who’s buying two million more shares. Are they buying larger amounts than their current holdings?
• Salary levels of insiders. A director making $40 million who risks $30,000 isn’t as interesting as a middle manager that risks a majority of his annual salary on the same $30,000 purchase. The size of their purchases relative to their salaries lets you know how sure they are of their investment.

These are some of the biggest tips that the insiders give us that the markets are undervaluing a particular stock. By taking these simple cues, we can turn their insider knowledge to our advantage.

Following the insiders is one of the easiest, and most profitable, ways Oxford Club subscribers have used to beat the markets year after year.

Good investing,

Alexander Wissel

Editor’s Note: Insider-buying signals have been used for years by the principals of The Oxford Club to achieve above-average returns on their portfolios. In fact, one of our premium services - The Insider Alert - does nothing but track investment opportunities based off the “insider advantage” they give us.

More on this topic (What's this?)

Insider Buying: The Best Buy Signal You Can Get (Jutia Group, 5/11/09)

Insider Buying: The Best Buy Signal You Can Get (Contrarian Profits, 5/11/09)

Price Matching with a Twist (Canadian Personal Finance Blog, 4/12/09)

Read more on Best Buy at Wikinvest

10 Golden rules of CFD trading

1. Know your market

Choose a market that you understand. This will help you to take clear views on the direction of price movements. It will also help you to research your trades using the news and charting tools available through the secure area of our website, found at http://www.cityindexasia.com/.

2. Have realistic trading targets in place

A trading plan should provide a general set of rules which you can refer to.The plan might specify things such as:
- Profit goals (per day, month, year)
- Maximum losses you are prepared to take
- Size of the trade at any one time
- Entry/exit point

Without a set of rules, emotions such as greed, fear and hope may take over and lead you to make irrational decisions. Of course, as you become more confident, these rules can be changed and adapted to any new strategy you may wish to adopt.

3. Don’t overtrade

Trade within your financial means. Don’t use up your entire margin with a single opening trade, and always have extra margin to cover your position should it go against you.

4. Cut your losses

In a losing situation, it is easy to let losses accumulate in the hope that prices will turn around. By getting out of loss making positions early, you will avoid losses getting too large.

5. Use closing orders (stop losses) to manage your risk

You can place closing orders (stop losses) on trades both online and over the telephone to help minimise your losses.

6. Expect losses

Even the best traders in the world get it wrong. Analyse your losing trades and learn from your mistakes. Don’t get emotionally attached to your trades.

7. Be disciplined

Do not let emotions take over – stick to your rules. Consider the appropriate levels to take profit and losses.

8. Don’t put all your eggs in one basket
Trade a variety of markets to spread your risk.

9. Don’t trade on rumours

Have your own opinion about every trade so that when you are ready to trade you will be confident that you have taken a valued and considered view.

10. Keep informed and up–to–date

Make use of all the resources available to you to maximise your understanding of the markets. The City Index Internet Trading Platform is constantly updated to give you the latest news and information from well respected news providers.

Astro and Stock Market Investment

Extracted from :

ASTRO ECONOMICS® STOCK MARKET NEWSLETTER

Volume 14 - Issue 3 Published by Astro Economics, Inc. March 1, 2009

http://www.astroeconomics.com/news/news.htm

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HOUSING CYCLE – BOTTOM AUGUST 2009

The current down cycle in real estate values should bottom in August of this year. Using the 22-year Nodal Cycle, the highs in the cycle occur about 11 years after the low in the cycle. During the Great Depression of the 1930s, real estate values hit bottom in February 1935, moving to a high in June 1944. An example of how real estate values actually work: If you had purchased a house in 1960 for $20,000 near the high in the cycle and you wanted to sell it 10 years later in 1970 near the bottom of the cycle value of the house would still be only $20,000. But by 1980, near the top in the cycle, that same home would have increased in value to $80,000. Using these cycles can be very profitable if home-buying is more than just a place to live. The last top was about May 2000 moving to a bottom this year. The next top in the cycle will be in 2020. When is it time to buy and when is it time to sell? Those buying in the next few years will be reaping the profits in 2020.

DEFLATION

In the previous issues we talked about deflation and what it means to the value of money. Instead of salary increases, there will be cuts in pay. Goods and services will not increase in price nor will housing prices rise. We are repeating the 1944-1956 planetary cycle when Neptune was in an air sign, Libra. Currently Neptune is also in an air sign, Aquarius. Low inflation and low interest rates were part of the success of rebuilding the economy after the Great Depression and World War II.

THE STOCK MARKET DIRECTION

The stock market’s direction is not necessarily in direct correlation to the direction of the economy. In fact, the market is usually ahead of the economy. In last month’s newsletter we said, based on the Bradley Model, that the market most likely will start to move up after late February. Then most likely we will see a steady climb into the summer. Short pullbacks could occur late March and again early May moving to new highs around mid-July and a higher high late August...then a steady move down in the fall with the low in November. How do you get back into the market, if you have been on the sidelines? The answer is…cautiously. Start with small lots, about half of what you might normally purchase. As you see the market advance, add to your positions. There is usually another opportunity to purchase on a pullback as the market doesn’t travel up in a straight line. Begin to accumulate stocks that have been on your watch list. Protect your principal with an 8% stop on your purchases.

FOCUS ON HEALTHCARE, ENERGY & EDUCATION

President Obama gave a call to action in the areas of healthcare, energy and education as important parts of America’s economy. Last year these were the sectors we designated as favored sectors for 2009 in this current Jupiter in Aquarius cycle. Another area in the spotlight as a result of the recently signed $787 billion stimulus bill is U.S. Solar Energy companies.

(We already have stocks in these sectors listed on our Recommended List.)

Sohu.com, Baidu.com, Illumina, Emergency Medical,
NCI, Inc., Sunpower Corp., Green Mountain Coffee,
Emergent Biosolutions, Google, H M S Holdings

HORROR MOVIES

The last time the market dropped 50% was in 1931. As we watch the relationship in business to the economy, we’ve noticed that horror films tend to dominate the movies in times like these in 1931 and in 2009.

ECONOMIC CYCLES

Economic cycles are also based on the 22-year Nodal Cycle. The economy was already starting a slow transition to below average from April 2003 to January 2005 (although the downturn may not have been recognized at that time). The downward direction continued from January 2005 through December 2007. Now is the lowest period in the economic cycle from January 2008 until July 2009.

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40 Points HAND BOOK 2009 for You & Family

Health:

1. Drink plenty of water.
2. Eat breakfast like a king, lunch like a prince and dinner like a beggar.
3. Eat more foods that grow on trees and plants and eat less food that is manufactured in plants.
4. Live with the 3 E's -- Energy, Enthusiasm, and Empathy.
5. Make time to mediate on GOD's Word & for prayer.
6. Play more games.
7. Read more books than you did in 2008.
8. Sit in silence for at least 10 minutes each day.
9. Sleep for 7 hours.
10. Take a 10-30 minutes walk every day. And while you walk, smile.


Personality:

11. Don't compare your life to others'. You have no idea what their journey is all about.
12. Don't have negative thoughts or things you cannot control. Instead invest your energy in the positive present moment.
13. Don't over do. Keep your limits.
14. Don't take yourself so seriously. No one else does.
15. Don't waste your precious energy on gossip.
16. Dream more while you are awake.
17. Envy is a waste of time. You already have all you need.
18. Forget issues of the past. Don't remind your partner with his/her mistakes of the past. That will ruin your present happiness.
19. Life is too short to waste time hating anyone. Don't hate others.
20. Make peace with your past so it won't spoil the present.
21. No one is in charge of your happiness except you.
22. Realize that life is a school and you are here to learn. Problems are simply part of the curriculum that appear and fade away like algebra class but the lessons you learn will last a lifetime.
23. Smile and laugh more.
24. You don't have to win every argument. Agree to disagree.


Society:

25. Call your family often.
26. Each day give something good to others.
27. Forgive everyone for everything.
28. Spend time with people over the age of 70 & under the age of 6.
29. Try to make at least three people smile each day.
30. What other people think of you is none of your business.
31. Your job won't take care of you when you are sick. Your friends will. Stay in touch.


Life:

32. Do the right thing!
33. Get rid of anything that isn't useful, beautiful or joyful.
34. GOD heals everything.
35. However good or bad a situation is, it will change.
36. No matter how you feel, get up, dress up and show up.
37. The best is yet to come.
38. When you awake alive in the morning, thank GOD for it.
39. Your Inner most is always happy. So, be happy.


Last but not the least:

40. Please Forward this to everyone you care about