How Can I Make Money In These Crazy Markets?

November 23, 2011 by FreeCharts

Greetings!

I have been preparing for the current and future events for some time. Many, many people have emailed me and requested the spreadsheet I have prepared for vendors I have used and would recommend. The list of vendors I have used that I would not recommend is probably as long if not longer.

Preparing for what may be a short disruption or perhaps a longer disruption of services is prudent in my opinion. Most of what I suggest is consumable and you and your family will use or can use it up in the future should we somehow, by some miraculous act of God, figure a way out of the debt and currency crisis.

Do I think we are going to have a complete meltdown of our society reverting back to an 1800's lifestyle. No, I would hope not. I do however believe it is possible to experience great difficulty should the Euro actually collapse and ultimately damage the dollar more than our government and the Fed have damaged it on their own.

A disruption of services could mean delayed delivery of energy, food, medical supplies, anything transported over the highways. How could this happen? Should the government stumble on making delivery of money and food stamps to folks who have been dependent for their very existence for generations, I believe areas with high concentrations of these people could become very ugly places frought with danger. Transportation could find it very difficult to enter or exit these areas, which are primarily larger urban areas.

Am I the only one who believes we could be facing a more severe downturn in the economy? No. But aren't most the people who believe this is likely a bunch of crazies huddling in their basements with buckets of wheat, cases of ammo, listening to ham radios through the night? Well some may be

There are also brilliant people who are well aware of the markets and the big global picture who are forecasting trouble ahead much worse than what we saw in 2008.

One gentleman we heard of this week is Mark Mobius. Who is Mr. Mobius and why should we listen to him? Mr. Mobius is the CEO of Templeton Funds Emerging Markets Funds.

Mr. Mobius in 2001 was awarded Emerging Markets Equity Manager of The Year. In 1999 he was recognized as one of The Top Ten Money Managers Of The Twentieth Century in a Carson Group survey. To read more about Mr. Mobius, click here.

In late May, Mr. Mobius indicated the lessons that should have been learned from the 2008 crisis and the causes leading up to, have not been learned. In fact, the problems leading up to the 2008 crisis have not only not gone away, they have gotten worse leaving him with the opinion another crisis is definitely going to happen and is right around the corner.

What will trigger such an event? We could be seeing it this next week as Standard & Poor's as well as Moody's, bond rating agencies, are poised to lower America's credit rating again due to the "Super Commitee's" inability to cut spending. The markets did not respond well from the last downgrade.

This time is different, however. The government knows this is coming if they do not find solutions. They have sat on this as both parties stick to their guns. Republicans want to cut spending with no additional tax increases, democrats want to continue spending and raise taxes. At the moment, they appear to be in a log jam.

This committee is playing Russion Roulette with the creditworthiness and the economy of America. We are currently enjoying higher bond prices and a stronger dollar because Europe is smoldering.

It seems to me this is a race to the bottom. Europe seems to be in the lead but we Americans, always competitive and never wanting to lose, could leap frog Europe this next week and once again take the lead towards the trough.

I don't know about you, but it seems to me if we can encourage other countries to impose austerity measures, why shouldn't we? No matter what direction we go in, someone is going to feel some severe pain. Either the folks out of work, the employed tax payers, the folks who have never worked and wouldn't even if they could work at home rating television programing and Hostess treats while testing Trojan condoms and sampling various beers and liquors in enormous quantities.

The reality is, America is in financial trouble. No one wants their ox gored. Unless someone's ox gets taken to the meat packer, a lot of folks are going to go hungry. Then comes the real trouble and the downward cycle begins as noted above.

You and I know this is coming just as Mr. Mobius and many others do. Now is the time, thanks to Europe's financial woes providing an extended window of opportunity, for us to prepare for what may very well be coming our way. If you want my spreadsheet, email me at RBiggs@FREECharts.comand I will send it out to you immediately.

I will be traveling this next week so I will respond to requests until mid day Sunday and then other requests will have to wait until I return unless I can set up my trading computer differently this weekend.

I hope all of you have a wonderful Thanksgiving and think about positioning yourselves so you can have peace of mind no matter what the reporting agencies, Standard & Poor's and Moody's, or the markets do.

Silver, Back Down Below 3250 As Forecasted

Assuming you have been receiving and reading my newsletters for more than a week, you should know of my opinion silver would go from 3250 to 3400 or higher. It did. I suggested getting long at 3250 and then shorting at 3400 and waiting for silver to get back down to 3250.

Moves like this would have grossed 300 points at $50 a point. You would have had to wait a couple weeks for it to happen but happen it did. Yet another lucky guess.

I had a gentleman write me two weeks ago and demanded I take him off the newsletter list because the trade recommendations in his opinion stunk. I took him off the mailing list of nearly 12,000 per week for a free newsletter.

In looking back at when he subscribed, he should have seen 8 oscillations in the e mini S&P grossing 400 points, netting around 320 points in September with 2 oscillations in silver grossing 500 points netting 380 points at $50 a point also in September. This was based on a model account of 50k. 700 points net at $50 per is a pretty good month. October was slower with less oscillation profits, September being exceptional. I also had a loser of 13 points in October when I suggested shorting the e mini from 1224 with a 13 point stop.

Currently I am not a CTA and don't hold myself out to be one. I only mention the above so that you will track the trades suggested. If you do so, I believe you will develop a great deal of confidence in my no nonsense approach to money management and trading.

This month, for my clients, we have only had two trades. We are not in a hurry to get into the next trade. We would rather wait until a trade looks good for us. I think if you were to talk to my clients, they would tell you they are pretty happy with their service thus far. Obviously I don't control the markets and losing trades can and do happen. It is my opinion if we use sound money management and do what we can to limit our potential losses, we stand a much greater chance of making money and keeping everyone happy.

Ok, back to silver. Let's look at a couple charts and see what we think silver is likely to do in the coming days.

December Silver

Looking at a daily chart of the December Silver, we can see it was a slightly lower low today but also a lower high. The close today is significantly higher than yesterday's close. This is bullish.

December Silver With Moving Averages

The moving averages overlay shows silver closing today right at the 3 day moving average. It would appear silver would like to get to the 9 day moving average as well. I believe silver will have to retrace to the 3375 area to make this happen.

December Silver With RSI

Above we can see the RSI overlay. It appears the RSI dipped slightly below 40 but did not reach the oversold area of 30 before enjoying a nice day back to the upside today. It appears also the buyers in the room are looking to take control of this market in the very near term. Sunday night could be interesting.

December Silver With Stochastics

Looking at the stochastics overlay, which is a trend indicator, we can see the trend was certainly pointing down for the past couple days. No surprise with yesterday's activity. However, it does appear the trend has changed and the market is moving back to the upside. The 3 day is clearly pointing up and the 14 day is beginning to go horizontal. By the time the 14 day is pointing up, the move, or at least the major portion of the move, will already have occured. If you are a silver trader, I would look to get in Sunday night rather than waiting until Monday. Snooze you lose.

For the moment, based on what we are able to see at this time, silver appears to remain in the 3250 to 3400 range. The range is actually much wider but if you set your buys and sells at the extremes, you will likely miss oscillation profits.

General Market Commentary

Below we see a corn chart. It appears corn has strong support at the 600 mark. With the dollar strengthening, or should I say going up, I believe this has pushed corn down. Couple that with the recent harvest, it is the time of the year when lows are put in. If this is in fact the low for the coming year, fixed income people are going to find buying food significantly more unpleasant next year. Even if they do not eat much corn, most of the corn crop goes to feeding chicken, hogs, and cattle. Food prices will likely reflect higher priced corn by summer if not earlier.

December Corn

Crude oil has quietly moved up to over $103.37 per barrel. We are not seeing much increase in the pump prices for gasoline yet, but we will. The rise has been steady and orderly. The past two days were simply a predictable sell off. Looking at the chart should teach us a lot about reading charts. Wednesday was clearly a blow off rally. Thursday had a lower opening than Wednesday's close. Small specs look like they still believed in the rally only to be overtaken by the large specs and commercials. As the rally gets re established, the small specs will likely be late to the party and suffer again. With support at 90 and a high of 103.37, a 50% retracement would take the market to 93.80 using Fibonacci numbers. This tells me there may be a little more downside to crude oil. We have a weekend ahead of us and a lot can happen around the world in two days so if you are thinking of getting short, take a good look before jumping in.

December Crude Oil

Finally, let's take a look at the December T Bonds. As you can see, if you have spectacular eyes, the bonds penetrated the 3 day moving average and the 9 day as well. This appears bearish with major support at 140 00. If we see a close significantly below 140 00, next stop is likely to be 135 00. That is a $5,000 move from 140 00 and nearly $8,000 from today's close.

December T Bond

I am trying out a more brief format for a greater number of markets. Let me know what you think. RBiggs@FREECharts.comAlso, if you have a particular market, stock, mutual fund, or ETF you would like to have me include in a newsletter, let me know and we will give it the once over and see what the charts are telling us.

We are considering whether to keep Forex as part of the website or not. Let us know what you think about Forex. We are considering doing something else rather than have Forex depending on the level of interest.

Thanks again for taking the time to go through our newsletter. Next Tuesday I will be focusing on technical analysis and ways you might integrate these ideas into your trading. Please test them on paper before risking a nickel. On the left hand side of today's newsletter are links to pages in our website that will provide quotes, charts, and a great deal of information on virtually any stock, commodity, forex pair, mutual fund, or ETF.

Sincerely,

Robert Biggs
FREECharts.com