Stock Investing Guide

- Dugald Malcolm, Montreal

Recent market action has resulted in the bear striking a considerable technical blow to the charts of the S&P 500. When I last provided an update in early June, the charts showed the S&P 500 struggling around resistance at the 200 day moving average. Although it managed to sneak just slightly above it for a few trading sessions, there were just not enough trading volume to keep it there. From an intraday high of 1,131.23 on the 21st of June, the S&P 500 shed close to 10% by July 2nd. The severity of the decline, however, was not the biggest problem with this recent move. The most significant problem lies in where the market slide technically took us on the charts.

To begin with, not only has the S&P 500 moved below its 200 day moving average, but so has its 50 day moving average. The result is what is called the Death Cross, a very bearish indicator indeed. The las time we witnessed a Death Cross of the moving averages was at the end of 2007.

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Tags: 500, Sp 500

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It seems the more traders try to predict, the more it can’t be done. Just like we cannot predict future life events, we cannot predict future market events. The fantasy or “holy grail” that many traders believe is that we can predict the future of price activity. The reality is that we just cannot! Hopefully, I’m not bursting any bubbles out there, but better to hear it now than lose a ton of money later!

The greatest traders are those who realize this concept, accept it, believe it, and therefore trade based on the current reality in the market vs. the fantasy or market opinions, and always use stops and risk control. Great traders grasp the concept of risk and probabilities in trading. They also grasp the concept of money management, stop-loss setting, and simplification. In addition they understand that trading is both a science and an art!

If trading were just science, you could buy a mechanical trading system, start it, walk away, and come back and be rich. And if that system did exist, believe me, it would be so expensive that you and I could not afford to buy it; in fact it would probably be kept so secret that we would not know it exists!

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Here’s what the 50-year low in mortgages means to your wallet – and your sanity.

Many of you will travel great distances this long summer weekend, to visit hot sandy beaches and cool summer cabins in the mountains

I will not, but do not mourn for me.

I am quite pleased to spend the holiday on Seven Oaks Farm. It is my intention to tend to an outbuilding in dire need of scraping and painting. We have just had several old trees that fell over the winter ground to mulch, and I look forward to carting it up to the gardens.

Come Monday, we will head into the old village to drink lemonade, watch the parade in the morning and the local fire department’s fireworks come nightfall. With any luck, the chief will not ignite his overalls again this year.

But even if he does launch a rocket across the high school’s field (or perhaps especially then), it is all pure gold.

True Confessions

I didn’t always live on an old soybean farm in rural Maryland. I used to be… a

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Montreal, Canada

Yesterday’s $39 decline in the August gold contract makes me wonder just who exactly is unloading bullion in this increasingly uncertain economic environment. With the EUR surging, hedge funds and trading desks at major banks might have felt compelled to unwind their gold hedges. Even after Thursday’s EUR rally, gold prices are up 24% in EUR terms in 2010.

But with the U.S. dollar logging one of its biggest single day declines on Thursday, I’m sort of confused why gold prices would fall almost 4% and not rise amid dollar weakness. The EUR rally doesn’t explain everything.

In addition to traders dumping gold, my best guess is that some government-controlled conduit, perhaps the International Monetary Fund (IMF), entered the market and sold gold. The IMF has been looking for other buyers since selling a few hundred tons of gold to India and other regional central banks in the Indian sub-continent in late 2009; I’m not convinced the IMF wants to control its velocity of gold sales so it doesn’t disrupt the market. On the cont

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Tags: Gold

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