The Red Roadmaster’s Technical Report on the US Major Market Indices + ™

Featuring Gold, Silver, Crude Oil and Forex Technical Up-date s

Vol. 02052011 # 1 Copyright 2 May 2011 Date Line: Singapore

The Red Roadmaster™

Paul A. Ebeling, Jnr. Editor/Compiler/Analyst/Commentator

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2 May 2011 6.00 am US EDT

Dear Reader,

You can read my Market Reports, and Up to Date International News daily and weekly on www.livetradingnews.com , www.paulebeling.com , and www.pinnacledigest.com as I round up relevant global market news and technical analysis up-dated daily. + You can see many of my articles and commentary on Nasdaq News, http://search.nasdaq.com/search?q="paul a. ebeling"&site=dotcom_collection&client=default_frontend&proxystylesheet=default_frontend&output=xml_no_dtd&proxyreload=1 and Google News http//news.google.com/news/search?aq=f&pz=1&cf=all&ned=us&hl=en&q=paul+ebeling

And the NASDAQ News http://search.nasdaq.com/search?q="paul+a+ebeling%2C+Jnr"&btnG.x=24&btnG.y=8&btnG=Search&btnG.x=21&btnG.y=14&client=default_frontend&proxystylesheet=default_frontend&output=xml_no_dtd&proxyreload=1&sort=date%3AD%3A

Red’s Bull and Bear Trade and Options Alerts

Red’s Bull Trade Alert: Southern Copper Corp. (NYSE:SCCO) (MX:SCCO)

See them daily at www.livetradingnews.com

Re-cap of the US Markets for the Week ended 29 April 2011

  US stocks got a boost to close the month from Caterpillar and other US industrials' shares

The S&P industrial sector index .GSPI gained 0.4%. Caterpillar (NYSE:CAT) is up more than 20% so far this year, along with fellow industrial Boeing Co (NYSE:BA).

On the Month: the DJIA is up 4%, the S&P 500 is up 2.8% and the NAS is up 3.3%

On the Week:  the DJIA is up 2.4%, the S&P 500 is up 2% and the NAS is up 1.9%

On the Day: The DJIA .DJI closed + 47.23 pts, or 0.37%, to 12,810.50, the Standard & Poor's 500 .SPX closed + 3.13 pts, or 0.23%, to 1,363.61, and the NAS Composite .IXIC closed + 1.01 pts, or 0.01%, at 2,873.54

Caterpillar (NYSE:CAT) gave the Top boost to the DJIA, advancing 2.8% to 115.83, after reaching an all-time high of 116.25 during the session.

April's gains were limited by slides in Microsoft Corp (NASDAQ:MSFT), the NAS index's most heavily traded stock, and BlackBerry maker Research in Motion (TO:RIM)(NASDAQ:RIMM).

Microsoft dropped 4.5% to 25.51 and was the biggest drag on the blue-chip DJIA after it reported a drop in quarterly sales of its Windows software, mirroring a recent downturn in demand for personal computers. US listed shares of Research in Motion fell 13.8% to 48.77 after the BlackBerry maker cut its Q-1 forecasts.

Merck & Co Inc (NYSE:MRK) reported higher-than-expected quarterly earnings, fueled by strong sales of drugs for diabetes, asthma and rheumatoid arthritis, while Chevron Corp (NYSE:CVX) reported a jump in earnings as Crude Oil prices rose.

Shares of Merck rose 0.4% to 35.92 while Chevron added 0.4% to 109.29. Both stocks are DJIA components.

Strong corporate earnings, lots of liquidity from the US Federal Reserve + the prospect of ultra-low interest rates for the rest of the year have sparked Bullishness sentiment, driving the NAS to a 10-yr high and lifting the S&P 500 more than 8% on the year.

The major US stock indexes also hit new yearly highs during this week.

The USD is  near a 3-year low against a basket of currencies.

The broad market's gains were modest on the day, but energy marked an impressive performance. The sector advanced 1.5% on broad strength, leaving only a hand full of sector members behind.

Occidental Petroleum (NYSE:OXY) 114.29, +9.16 was a Top performer; it rose nearly 9% to an all-time high by building on prior session momentum that came in response to a stronger-than-expected Quarterly report.

Strength in Chevron (NYSE:CVX)109.44, +0.63, marked a modest gainer after  posting a better-than-expected bottom line on light revenue.

Another upward push in Crude Oil prices provided a positive backdrop to the energy sector. The energy component hit a new multi-year high above 114 before it finished at 113.84 bbl  with a 0.8% gainer. On the week, Crude Oil prices finished 1.5% higher. On the month: they advanced almost 7%.

Precious metals were even Stronger performers. Gold set a new record high near 1570 before settling today at 1556.30 oz for a weekly gainer of 3.0%, and a monthly gainer of 8%.

Silver prices finished today's trade at 48.54, giving it a 2% gainer on the week and a 22% gainer for the month.

Volume and Breadth: trade was light, with about 7.17B/shrs traded on the NYSE, AMEX and NAS, below the daily average of 7.72B/shrs. Advancers bested decliners on the NYSE by 1,953 to 1,028, and on the NAS, advancers beat decliners 1,417 to 1,146

Advancing Sectors: Energy (+1.5%), Industrials (+0.3%), Consumer Staples (+0.2%), Materials (+0.2%), Utilities (+0.2%), Tech (+0.1%)

Unchanged: Consumer Discretionary

Declining Sectors: Health Care (-0.1%), Financials (-0.2%), Telecom (-0.6%)

Index Started Week Ended Week Change % Change YTD %DJIA 12505.99 12810.50 304.51 2.4 10.6NAS 2820.16 2873.54 53.38 1.9 8.3S&P 500 1337.38 1363.61 26.23 2.0 8.4Russell 2000 845.38 865.29 19.91 2.4 10.4

 

                                 The Major Market Indexes Technical Analysis

Date Symbol Price Technical Analysis Support Resistance

29 Apr 2011 QQQ 59.16 Neutral (0.17) 51.45 NIL

29 Apr 2011 DIA 128.11 Bullish (0.34) 109.67 NIL

29 Apr 2011 SPY 136.39 Neutral (0.21) 134.59 137.98

The Snap Shot of the World's Major Markets

DJIA 12810.50 +47.23 +0.37%S&P 500 1363.61 +3.13 +0.23%NAS 2873.54 +1.01 +0.04%S&P/TSX 13944.80 +50.39 +0.36%Mexico Bolsa 36953.70 +231.10 +0.63%

Brazil Bovespa 65993.40 +320.14 +0.49%STOXX 50 3011.25 +5.92 +0.20%FTSE 100 6069.90 +1.74 +0.03%CAC 40 4106.92 +2.02 +0.05%DAX 7514.46 +39.24 +0.52%FTSE MIB 22418.00 +37.77 +0.17%Nikkei 9849.74 +157.90 +1.63%TOPIX 851.85 +11.98 +1.43%Hang Seng 23720.80 -84.82 -0.36%S&P/ASX 200 4823.20 -49.80 -1.02%Shanghai 2911.51 +24.47 +0.85% Red's Bull Trader Alert: Red's Bull Trader Alert:  The NAS marked its best month of the year, the S&P 500 marked its best month since February, and the DJIA marked its best monthly performance since December.

 Action into the end of April was subdued allowing stocks to quietly put together an impressive series of advances.

Each of the # major equity averages gained about 2% on the week. The march higher was part of a longer climb that saw the Dow and S&P 500 advance in 7 of the past 8 sessions. Even though the NAS advanced only 1 pt Friday, which was enough to extend its string of gains to an 8th straight session, and the S&P 500 is up 8.4% on the year.

Participation has not been very wide, though. In fact, share volume on the NYSE has not been above 1B/shrs shares since Q-1's end, when asset managers moved to rebalance portfolios.

So far many players/investors remain on the sidelines. During the past 3 weeks, more than 300 members of the S&P 500 reported earnings, and more than 80% of them have either met or beat Wall Street's expectations.

The NAS will be rebalancing its benchmark Nasdaq 100 index Monday that will cut Apple Inc's (NASDAQ:AAPL) weighting. such rebalancing will affect the relative weights of all the securities in the index and cause popular index-tracking funds such as the PowerShares QQQ (NASDAQ:QQQ) to Buy and Sell shares to match the new composition

Major US stock indexes are at multi-year highs, and Wall Street does not look to be running out of gas in here. Nevertheless, despite some concerns, my work shows that options investors are buying less protection against a market correction, this surprising, but  the Put/Call Ratio on S&P 500 rose late last week and early this week, but fell in the last few days. That being the case we may see some reaction to the overbought conditions depending on the jobs number, but Shayne and I agree it would prompt a minor but very healthy pullback, maybe down to test the 1,340 mark.

May is a typically weak time frame and has been the 4 weakest month for the DJIA averaging a 0.2% gain since Y 1950, according to the Stock Trader's Almanac. It also normally marks the start of the worst 6 months of the year for the industrial issues. But remember, past performance does not insure future performance.

Stay tuned...

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Red's Bull Trade Alert:  Southern Copper Corp. (NYSE:SCCO) (MX:SCCO)

 2 May 2011

Profile: Southern Copper Corporation engages in mining, smelting, and refining mineral properties in Peru, Mexico, and Chile. It involves in the production of copper and molybdenum concentrates; smelting of copper concentrates to produce anode copper; and refining of anode copper to produce copper cathodes, as well as refined silver and copper. The company operates the Toquepala and Cuajone mines in the Andes Mountains located southeast of the city of Lima, Peru, as well as a smelter and refinery in the coastal city of Ilo, Peru. Southern Copper Corporation also operates underground mines that produce zinc, gold, and lead, as well as a coal mine, which produce coal and coke. The company was founded in 1952 and is based in Phoenix, Arizona. Southern Copper Corporation is a subsidiary of Americas Mining Corporation. Website: http://www.southerncoppercorp.com

LTN's Pattern Recognition Analyst, Paul A. Ebeling, Jnr, ID'd the early set up for the beginning of a Bullish trend in Southern Copper Corp.

Shares of SCCO closed at Thursday 37.01, and opened Friday at 37.17.

 SCCO closed the session Friday at 37.46, + 0.45 (1.22%).

The price range Friday was between 37.14 and 38.13.

Volume: 4,114,881/shrs was higher than its 3 mo average volume of  2,467,370/shrs. 

SCCO is trading below its 50 and 200 Day Moving Averages.

My Technical Indicators augur strong Bullish price action in here.

The stock's 52 week low is 25.56, and 52 week high is 50.35, its P/E ratio is 20.47, its EPS is 1.83, it RSI is 45.61,  the Div & Yield is 2.24 (6.10%), and the P/C ratio is 0.10 (9,244 Calls vs. 970 Puts changed hands Friday).

Performance Metrics for : Wk.+1.63.%,  Mo -6.93 %,  Q: 14.22 %, 6 Mo: -11.08 %: Yr. + 28.91 %.

AnalysisOverall Short Intermediate      Long

Bearish (-0.39) Neutral (-0.20) Bearish (-0.46) Very Bearish (-0.50)

Recent CandleStick Analysis   Bearish

Date Candle

29 Apr 2011 Inverted Hammer

28 Apr 2011 Bullish Engulfing

Open Gaps

Direction Date        Range

Up 29 Apr 2011 37.07 to 37.14

 Support and ResistanceType Value Conf.resist. 49.99 2resist. 47.33 6resist. 45.50 2resist. 43.85 2resist. 42.58 2resist. 42.02 4resist. 41.00 6resist. 39.61 3resist. 38.16 8supp 37.02 4supp 36.15 2supp 35.30 2

1 yr Price Target Price Estimate: 51.15

Earnings Date: 2 May 2011

Analysts' Recommendation: Buy

Disclaimer: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. Neither Ebeling-Heffernan, www.livetradingnews.com  nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither Ebeling-Heffernan, www.livetradingnews.com nor its affiliates are responsible for any errors or for results obtained from the use of this information. This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in Good Faith, are subject to change without notice. Before acting on any information contained on the website, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.______________________________________________________________________

This Week on the Economic Front in the USA

May 2nd  Monday

Construction Spending, March (10:00): 0.0% expected, -1.4% past

ISM Index, April (10:00): 59.7 expected, 61.2 past

Auto Sales, May (15:00): 4.75M past

Truck Sales, May (15:00): 5.19 past

May 3rd Tuesday

Factory Orders, March (10:00): 1.9% expected, -0.1% past

May 4th Wednesday

MBA Mortgage Index, 04/29 (07:00): -5.6% past

Challenger Job Cuts, April (07:30): -38.6% past

ADP Employment Change, April (08:15): 200K expected, 201K past

ISM Services, April (10:00): 57.3 expected, 57.3 past

Crude Oil Inventories, 04/30 (10:30): 6.156M past

May 5th Thursday

Initial Claims, 04/30 (08:30): 400K expected, 429K past

Continuing Claims, 04/23 (08:30): 3638 expected, 3641K past

Productivity-Preliminary, Q-1 (08:30): 1.0% expected, 2.6% past

Unit Labor Costs, Q-1 (08:30): 0.8% expected, -0.6% past

May 6th Friday

Nonfarm Payrolls, April (08:30): 183K expected, 216K past

Nonfarm Private Payrolls, April (08:30): 200K expected, 230K past

Unemployment Rate, April (08:30): 8.8% expected, 8.8% past

Hourly Earnings, April (08:30): 0.2% expected, 0.0% past

Average Workweek, April (08:30): 34.3 expected, 34.3 past

Consumer Credit, March (15:00): $5.0B expected, $7.6B past

____________________________________________________________________________________

This Week on the Earnings Front in the USA

Key earnings announcements for this week:

On Tuesday: Archer Daniels Midland (NYSE:ADM) and Pfizer (NYSE:PFI) before the opening Bell, and after the close, Comcast (NASDAQ:CMCSA) reports.

On Wednesday: Kellogg (NYSE:K) reports before the opening Bell, and Whole Foods (NASDAQ:WFMI) reports after the close.

On Thursday: CVS (NYSE:CVS) and General Motors (NYSE:GM) announce earnings before the opening Bell, and Con Edison (NYSE:ED) and VISA (NYSE:V) report after the close.

This week’s Top 5 analyst calls: Dendreon Corporation (NASDAQ: DNDN), Infospace Inc. (NASDAQ: INSP), Molycorp Inc. (NYSE: MCP), SIRIUS XM Radio Inc. (NASDAQ: SIRI), and Vical Inc. (NASDAQ: VICL).

And, do not ignore the Silver exchange traded funds of iShares Silver Trust (NYSE: SLV) and ETFS Physical Silver Shares (NYSE: SIVR). 

For the complete list go to: http://biz.yahoo.com/research/earncal/20110502.html 

__________________________________________________________________________________

The Most Asked Question Last Week

The Big Q: Red, what is behind the price rise in gasoline  The Big A: Lots of folks in the US grind their teeth when filling their gas tanks these now. The AAA survey says in most of the USA the price per gallon is at least US$4.00 and some places it is almost at US$5.00 gal. And with that the most often asked question last week is Why. Part the answer is the increase in demand and geo-political concerns in some Crude Oil producing nations.  Another reason is the taxes levied by the state and federal governments, and another reason is speculation in the free market. Early in April Goldman Sachs (NYSE:GS) reported that speculation is partially responsible for driving up the price in Crude Oil faster, higher than supply and demand. That means that market players are placing bets on Crude Oil making the price rise. And they can win, lose or break even on their speculations, they are not consumers so when they benefit they do not share their profits with the consumers at the pump. On the other side of that equation the consumer does share in the losses.

Remember the World runs for the most part on energy derived from petroleum (Crude Oil, Nat Gas and Coal)

The oil and gas industry in the USA has a powerful voice in Washington, DC called the American Petroleum Institute, and the industry POV is that, although Big Oil's earnings are huge now, they only reflect the Oil and Gas Companies'  contribution to the US economy, and that the price of their stocks are major contributors to the Nation's laborer pension funds and the portfolios of their investors, both institutional and individual.

I personally believe that the numbers get too much attention in the media and from pols as "Hot Button" issues.

Sure, the overall profit numbers look big because the companies are  big companies that move a lot of product around. To say that Big Oil's profits are too big only works if talk about the number. They are not overly big profits when compared to other companies and other industries.

Yes, when the price of gasoline rises, lots of folks complain, perhaps because it is not comfortable when the status quo of low priced energy rises. From my POV high Crude Oil prices mean, among other things, that it becomes more attractive to develop alternative energy something that I believe in. The worst thing that ever happened to wind and solar power companies was when oil prices collapsed from US$147 bbl to US$30 odd a bbl  Y's 2008 and 2009. On the other hand, when gasoline gets pricey people who bought a Prius get a payback, and that is good.

The fact of the matter is that every time a driving consumer visits the Gas Pump that signifies a transfer of money from many to a few, and in most cases, from the regular guy and gal to Big Oil companies who are mega rich in terms of their bottom line numbers.

Overall Big Oil's company profits do not finding their way back into the communities from which they are derived, and they are not used to create more jobs in the USA, or being invested in new equipment and exploration.

Of course, some of the profits go to shareholder as dividends and higher stock prices. It is interesting to note that in the case of 2 of the Big 5; Exxon (NYSE:EOM) and ConocoPhillips  (NYSE:COP), 50% + of their bottom line profits are used to buy back their own stock.

US$5.7B of Exxon's profits went to buy back its own stock, and the Company announced that it expects to buy back yet another US$5B worth in Q-2 of Y 2011.

In Conoco's case, it earned US$3B in Q-1 of 2011, and used US$1.6B of that to buy back 21M of it shares.

You should know that buying back stock out of the market is not uncommon among public companies when they experience a sudden and often temporary rise in revenue.

Stock buyback plans are usually a guarantee that the company's stock price will rise, by boosting earnings per outstanding share, increasing the demand for the stock, and sending a signal to the market that the company believes its stock is undervalued.

But from the POV of a company's CEO, and its Board of Directors, stock buybacks have lots of advantages.

Top company executives often get significant stock options. If stock prices do not go up, said options are worthless. On the other hand, the higher the stock price goes, the more valuable the option. For example; Exxon's stock is up 32% in 6 months.

Companies that buy back their stock can either retire it or simply keep it themselves, under the control of the Board of Directors, to reissue later or award as bonuses or to make acquisitions, it is "Money".

Dividends, however, are not a great deal for company executives, as in the USA they are taxed as income.

An increase in the stock price is not taxed as income, and it is not taxed at all until the stock is sold, and only then at the capital gains tax rate, which is limited to 15%.

A 15% tax  rate is a lot for the regular American family, which pays less than 5% of its income in federal taxes. But it is a significant break to those paying income tax at the highest marginal rate of 35%

The buying back shares benefits existing shareholders, and existing management.

In Y 2007, when Exxon was using US$30B a year from the previous Crude Oil-price rise to buy back its shares, a columnist said that: “In most cases, stock buybacks are suspect…. Managements should ignore investors' call to repurchase their shares and invest money in ways that will increase profit, not just earnings per share.” Certainly that gentleman is entitled to his opinion, but he is writing for readers not for the managers and investors in the companies.

An economics professor at NYU, studies wealth distribution recently opined, that when it comes to total equity in stocks it is very concentrated in the hands of the rich. The fact is that fewer than 50% of all American households owned any stocks as of Y 2007, and that is likely less now” because of the financial crisis that frightened most into selling at the low, and that includes 401k's, mutual funds and other issues.

Who are the shareholders then you ask, well, they are wealthiest 1% of households at 38%, the wealthiest 5% have 69%; the wealthiest 10% have 81%.

The lowest 60% of US households owns 2.5% of the total stock in listed public companies..

Big Oil is also conserving profits, because it is a precedented fact that just as soon as Crude Oil prices started to rise again a lot of that money started going to the bank, and that added more to the US$1T+ in corporate cash in reserve for a rainy day, that like personal and private bank saving is slows a recovery not fuel it.

Also, a large portion of Q-1's profits derived from federal subsidies, say Plus or Minus US$6B.

Recently US President Barack Obama proposed repealing US$4B a year in federal subsidies; the American Petroleum Institute says the proposal would actually cost the industry about US$90B over the next 10 yrs.

The Congressional response to Mr. Obama's proposal was weak from both sides of the aisle.

The Dems, afraid of being thrown clearly out of the Congress and the White House by an angry, gas-impoverished voting public, are seeing such a fight as a winning (vote getting) political issue.

The fact is that repeal would neither increase nor decrease the price of gasoline at the pump, it would take a chunk out of Big Oil's bottom line. But, pushing for the repeal will highlight the modern Republican Party's allegiance to now thriving Oil and Gas interests,  something that, in a period of high gasoline prices and even higher profits, may not augur well for them.

But, as you ponder this information you must be keenly aware that the Oil and Gas industry does with its cash is; they lobby influence in Washington DC. Example:  Exxon, during the same Quarter it made about US$11B it spent US$3M on lobbyists, small but significant. Not to mention the contributions made to the pols across the spectrum. 

By last Friday all the Big Five Oil companies had reported Q-1 earnings. Between the 5 of them, ExxonMobil, BP, Shell, Chevron, and ConocoPhillips they made US$34B in profits in Q- of Y 2011 + 42% Y-Y.

Exxon, the largest cleared US$10.7B profit from January through March, up 69% from Y 2010, and that is because the price at the gas pump is up from, (on the US national average) US$2.88 to $4.00+ per gallon of gasoline.

Gasoline prices rise as Crude Oil prices rise, and when Crude Oil prices rise for reasons that have nothing to do with how much it costs to bring it out of the ground, there comes a "windfall" for the folks who produce it.

The average cost to produce 1 bbl of Crude Oil in the US, including exploration, development, extraction and taxes, is about US$30, according to a US Energy Information Administration survey. The current cost to buy 1 is about $113 as of the close of pit trade in the US last Friday.  Still, as I see it gasoline is cheap when you compare it to what a Coffee at Starbucks or a bottle of Fiji water, and it does get one to work and back... Stay tuned... ___________________________________________________________________________________

Red’s Edge and in the Trenches

Reflect and Resolve to Make Money  The area that I believe to be of great importance to those of us who have a keen interest in trading markets is how to better Play the Game of trading and investing. 

The 1st thing to do, IMO, is to reflect on what was done last year and how well it was done. I believe it will be the common denominator that some stuff was done well and some not so well. That said it would be a good plan to work to be better at what was not done so well in this New Year.

Looking into the past may be helpful to put together Resolutions that will bring positive changes that bode well for future action in the markets, in order to set up for continuing success.

The common areas that most all traders/players work on to improve in order to continuously post good Percentage and Money records are:

1. Formulate a Trading Plan for their business; this is a business, though many of refer to it as a Game.

2. Follow and fine-tune the Trading Plan along the way. 

3. Learn to Cut Losses 

4. Stop Cutting Profits

5. Manage your money; remember Your Money and Your Responsibility.

6. Education, Education and more Education, Knowledge is Power.

7. Last but not least are; never enter a position without a Way Out (aka Exit Strategy)

Lumped into 1 Key Trader/Player Resolution and followed will likely lead to improved trading results.

That said, always strive to do your best, use the best tools, be patient with yourself and be happy.

Each new day comes with new opportunities, challenges, and changes.

All the best,

Paul A. Ebeling, Jnr.

PS: if you look at yourself as a player/trader, and you like doing it, then it is Key to understand what makes you "tick"; plus it is very helpful to understand the motivations for your actions and their timing in the entering and exiting positions. It is very important to strive to remove the emotion and focus on the business of trading the markets to win. When you acquire the discipline and the tools to remove the emotion you are on the way to winning and perhaps winning Big. PE

To succeed in trading, a Player needs Knowledge; Gain it and use it wisely

____________________________________________________________________________________

The Key to Stock Market Understanding

We all know that markets and stocks go up and they go down. Players will have winning trades and losing trades. Individual trades do not determine if a trader is a success or failure. A losing trade can be a successful trade if the trader has followed the disciplined Plan and cut a loss timely.  So, that being said, and knowing that there will be times of drawdown for even the best trader, how is success measured in this business?

Well, one way is to go back and look at steps along the path that brought you to trading. This will likely help you understand how well you are doing.

Example: one of the first steps along the path to trading success was your learning how to use the computer, a basic skill that makes the work easier, faster and hopefully better, and it follows that improvements made in the steps along the path would likely improve overall success.

Next is, have you completed and do you use a well-defined and controlled trading plan? And have you learned strategies to trade up down or sideways markets? Have you developed an exit strategy, whether you have a discipline to cut losses-whether you are dedicating time to education through reading, or seminars and/or have you structured your time to permit regularly attending to the business of trading? Hopefully you are getting more knowledgeable, as knowledge is Key.

So, then take the time to look back from where you are now, so you can analyze the steps that you have taken so far, looking at what you have done you can see what you have not done as well and that may lead you to improve our trading.

You might look back and see that you have closed losing positions only after losses have mounted to the point where you feel hopeless.

That revelation could lead you to establishing a more disciplined exit strategy. Instead of waiting for hopeless, instead decide to use the reversal of some indicator, or the break through a moving average as a more disciplined way to cut losses more quickly and more efficiently. I tell people this all the time when they call to ask.

So, if you are not satisfied with your trading, look and see what actions can be improved going forward.

Success is not static and can become better than you ever thought when you are willing to examine how you got where you are, with a look to how you can make the necessary changes to get where you want to be.

Again, there are many ways to make and lose money in the markets. It is clearly worthwhile to learn how to make money and how to reduce or avoid losses if one is going to venture into this game.

For if you are not armed with Knowledge, it is better to forget the possibility of financial gain in the markets and simply live life on the sidelines. The risks for the ignorant are huge, and in this action, Ignorance is not bliss.

Safety

Safety is an illusion. You have all heard and experienced that, ask yourself, Is it safe to walk down steps, take a walk, cross the street, drive your car, sail your boat, swim in the ocean, fly your plane, ski and scuba dive, etc, etc, etc. So it is fair to say that it is not likely to have complete safety in life.

In the investment world, highly rated bonds were considered safe in the past, but that has been proved not necessarily so.

In the world of stock trading, safety is established with the exit strategy, and like most safety, it is imperfect at best. But it does work pretty well if you have established a good plan. And as a player/trader, you must begin with a clear understanding what is adequate safety for you. This column talks about the “Plan” throughout the year, Plan Your Work and Work Your Plan is a recurring theme here. It is your money, so for sure it is your responsibility.

Knowledge of Yourself -Your Plan is very helpful, and is used by professional traders to help them Win in a game where most lose. Knowledge is Power!

Again, the Reminder on Risk

Risk is everywhere including trading the markets; you must learn to manage risk.

When you seek profits in trading markets there is a certain factor that creeps in; it is the "Greed" factor; then comes the Risk factor that gives rise to the Fear factor in trading.

Likely, many bad trades are the results of a misunderstanding of/or an initial failure to pay attention to risk.

Once that risk becomes real for many folks, it can turn into fear and panic. Risk means we can lose something we have, and often, traders fail to realize just how much is at risk until it is too late for them

One of the most compelling facts regarding risk of loss in the market is that if a position loses 50%, it must then double, i.e. move up 100% to get back to even.

It is important to note that risk in the buying of stock in the market is one of the riskiest things on the planet.

When buying a stock, the total investment is at risk. And as we have seen recently, formerly great companies can fall to Zero.

You ask: Red, Are there ways to reduce the risk of losing my entire investment when buying stocks?

Sure, we have discussed them in previous articles. One is employ stop loss orders in place or trailing stop loss orders.

In most situations, these orders can work to prevent losing everything. It is unlikely that a stock will drop from USUS$50 to US$ Zero overnight, and most stocks that fail often post warning signs; and while they often fall fast, they usually take a bit of time to hit Zero bottom. In such circumstances, the stop loss may work to preserve capital.

Here is another way to protect an asset (some of us call it Insurance). That is to buy a protective Put. A Put option is a contract whereby the buyer of the Put has the right, but not the obligation, to force someone to buy his stock at a pre-determined price, called the strike price, any time before the option expires.

To obtain that right, the buyer of a Put pays a premium. The situation is at least analogous to an insurance policy where the insured (stock owner) pays a premium in order to assure that a loss is limited to the premium, plus any deductible.

You can learn about managing risk with options, but the major risk in options strategies is that options expire, so your puts and calls only have value until expiration; and assuming no change in the price of the stock, the call becomes less and less valuable as time passes, until there is no time left. Insurance…

Another thought that is often espoused is to diversify. There are differing schools of thought regarding diversification and there are many ways to diversify.

The above discussion lists some of the ways traders reduce and manage risk in a stock purchase transaction.

All of the above is intended to motivate you to seek a greater understanding of Risk and in doing so help you Win.

Again, think Education First.

For news and information please go to www.livetradingnews.com, www.paulebeling.com and www.ebeling-heffernan.com , www.aseanaffairs.com sign up for RSS feeds on the latest US Market News, ASEAN and World News, Twitter, and the Hot List, it’s Free

My pal Wally Stein’s Words of Wisdom Buy Low, Sell High or at least in the Middle; that’s Wally’s Lullaby

Sooner or later, those who win are those who believe they can!

Red’s Quote of the Week. "I always knew I was going to be rich. I don't think I ever doubted it for a minute"- Warren Buffett

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In View: Warren Buffett discusses a difficult year at Berkshire's annual meeting, ends upbeat

The annual gathering of the Berkshire Hathaway (NYSE:BRK-A) faithful in Omaha, Nebraska, heard Warren Buffett reflect on the years difficulties both corporate and natural.

As he reported preliminary Q-1 results for the textiles-to-trains conglomerate, the head of Berkshire announced the Company’s 1st insurance underwriting loss in 9 yrs.

Mr. Buffett spent time taking the shareholders packed into the Qwest auditorium through a detailed account of the resignation of David Sokol , whose purchase of Lubrizol shares ahead of its acquisition by Berkshire  prompted rare criticism of “the Sage of Omaha”.

Initial estimates for losses in the re-insurance division due to the Christchurch earthquake in New Zealand, flooding in Northern Australia, and the earthquake and tsunami which hit Japan total US$1.67B.

Mr. Buffett estimated that the natural disasters cost the re-insurance industry, which provides coverage to regular insurers of homes, cars and property, around US$50B.

Berkshire’s insurance unit lost US$821M, compared to an underwriting gain of $226M in the same period last year. If the rest of the year is catastrophe free, then it is conceivable that the Company's insurance business may break even, he said, but predicted a loss for the full year.

Approximately US$700M of the losses stem from an arrangement with Swiss Re set to end this year, where Berkshire takes a 20% of the Swiss re-insurers business.

On the departure of his trusted lieutenant, David Sokol, a man long thought as a potential future head of Berkshire’s operations, Mr. Buffett said, “what happened was inexcusable and inexplicable”. Mr. Sokol had resigned before the board had met to discuss the matter, he said, adding that “it may have saved us some money in severance payments”.  He also offered a defense of sorts, saying that, “I’ll tell you what goes through my mind, one important point, he made no attempt to disguise the purchases of his stock”.

Mr. Buffett also provided some explanation for those who thought he had a blind spot when it came to Mr. Sokol. Berkshire purchased MidAmerican Energy in 1999, and proposed to pay Mr. Sokol a US$50M bonus in the event that targets were hit, and his fellow executive Greg Abel US$25M. Mr. Sokol insisted they share the potential US$75M equally, Mr. Buffett said.

Once that issue was addressed, the mood of Mr. Buffett and the crowd lifted, even though questioners repeatedly returned to the Sokol matter throughout the morning.

Mr. Buffet, as usual, did not hint as to the identity of his successor other than to say, “The leading candidate now I would say is straight as an arrow. “

He did, however, lay out the reasons for his wish to have his Son, Howard Buffett, to Chair the Board.

“The bible says the meek shall inherit the earth, but the question is will they stay meek?”, he said, arguing that it is not easy to displace a CEO who is also Chairman. Having his Son as Chairman would be a “safety measure for the possibility that the wrong decision has been made. Stay tuned...

Berkshire Hathaway, Inc. Common Stock (NYSE:BRK-A) traded + 180.00/shr after hours Friday at 124,750.00/shr after being off 55.00 during the regular session.

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Hot Topics

See all of the Latest World News on www.livetradingnews.com up-dated hourly 24/7

ConAgra makes an unsolicited bid for Ralcorp, private label food maker Shares of Ralcorp Holdings Inc (NYSE:RAH) rose Friday on a media report that said ConAgra Foods Inc (NYSE:CAG) made an unsolicited bid for the private label food maker, and that talks were "no longer ongoing." ConAgra sent a letter to Ralcorp about 2 months ago, the report said.

When contacted, a ConAgra spokeswoman said the company had no comment.

Ralcorp, which also makes Post branded cereals, did not return calls or mails requesting comment.

ConAgra, the maker of Healthy Choice frozen meals and Slim Jim meat snacks, has been struggling with increases in costs of commodities such as Gas, Dairy and Wheat.

Some food industry executives and analysts say that the sector will likely see fewer mergers and acquisitions in Y 2011 compared with Y 2010, partly due to high commodity prices and companies' wish for the perfect right strategic buys.

Ralcorp, which sells a wide range of products such as pasta, cereals, corn snack products, syrups and salad dressings, has grown through acquisitions buying as many as 20 companies in the past 10 yrs including American Italian Pasta for US$1.2B last year.

Ralcorp has a current market value of over US$4B.

Ralcorp shares, which were halted on the NYSE, were up 8.5% at 77.47 in afternoon trade after rising to 81.19. Shares of ConAgra rose 0.2 to finish at 24.40.

Morning Coffee welcomed Worldwide

As the aroma of the freshly brewed Coffee reaches markets such as China, and consumption rises in producing countries like Brazil, the Global Coffee industry is seeing a Boom that could reshape the market and lead to higher prices.

For hundreds of year, poor farmers in Africa and Latin America have grown Coffee beans to satisfy the daily caffeine needs of consumers in the US, Japan and Western Europe.

While the traditional markets remain central to the industry, markets in Asia, Africa and Latin America are now becoming very important.

It is clear that Coffee market is at a turning point, as demand in Western Europe and the US is leveling out, and consumption in emerging markets is on the rise, especially in the Coffee-producing countries.

Brazil is an example of the trend. Already the largest Coffee producer in the World, it is set to become the biggest Coffee consumer next year.

The Brazilian Coffee Industry Association (ABIC) forecasts that domestic demand will Top 21M bags, of 60kg each, in Y 2012, which is up 50% in the past decade and surpasses that of the USA.

“The World of Coffee consumption is changing,” says Nathan Herszkowicz, ABIC executive director. “Brazilians are drinking more Coffee every day too.”  And other emerging markets, particularly in Asia, are “shifting from tea into Coffee”, he adds.

The rapid increase in demand from emerging countries, which echoes other commodities markets such as Crude Oil and Copper, is one of the main reasons for the rise in the speculative investment in Coffee, according to analysts and traders.

The rise in demand has an impact beyond the industry. For years, Coffee has been a niche commodity market, largely handled by roasters and trading houses. But lately less specialist players have gained exposure through popular commodities indices.

This week the cost of Arabica Coffee, the high-quality bean appreciated by Espresso connoisseurs, hit its highest level in 34 yrs, above US$3 lb. Arabica Coffee prices have risen 125% in the past year, forcing retailers to raise prices.

JM Smucker (NYSE:SJM), the US company behind the popular Folgers brand and a trendsetter, has raised retail prices 3 times during the past year, totaling a 23% rise.

Unlike the previous four Big rallies of the coffee market in Y's 1975-77, 1985-86, 1994 and 1997, which were triggered after frost hit Brazil’s Coffee belt, the current high has broader reasons.

Supplies are running low in a larger number of countries, particularly in Colombia, a Top producer of premium Arabica beans, while demand in producing countries such as Brazil, Indonesia, Mexico and Ethiopia is on the rise.

As important as the rapid increase in producing nations’ consumption is the arrival of the Coffee culture to Asian countries such as China.

Coffee shop chains consider the region a top priority. Howard Schultz, Starbucks (NASDAQ:SBUX) CEO, says he is seeing the morning Coffee ritual take hold in China, confirming plans to triple the Company’s number of stores there to more than 1,500 by Y 2015.

According to the International Coffee Organization, Global demand for the beverage has risen 2.4% per year over the past 10 yrs.

But the increase masks a divergent trend: while consumption in the traditional markets of Western Europe, the USA and Japan grew by just 1.1% per yr, demand in producing countries grew by an impressive 4.3% per yr. Consumption in non-producing emerging countries expanded by 3.8% per yr. Such divergent consumption trends have narrowed the demand gap between different markets.

In Y 2000, the traditional consumers accounted for more than 60% of Global demand, estimated then at 105.5M bags.

But in Y 2010, after a decade of strong demand in emerging and producing countries, the share of the US, Western Europe and Japan fell to less than 53% of the 134M bags consumed Globally.

If the current consumption trends continue as they likely will do, by Y 2015 consumers as the market has know them will represents less than 50% of the market for the 1st time.

The rise in demand from emerging countries is affecting not only quantity but also quality.

Consumers in nations such as Brazil and Indonesia have for years consumed coffee made from Robusta beans and those Arabica beans that are of lower quality.

Keith Flury, a soft commodities analyst at Rabobank, 1 of the largest lenders to agribusinesses, says demand is starting to move up the quality ladder, with consumption of premium washed Arabica beans rising, albeit from a level that is still low.

If trends towards greater consumption and higher quality continue in emerging markets, traders and industry executives say the result will be correspondingly higher prices

Demand rises in Japan for Chinese products Export from some northeast China provinces are rising to feed Japan's hunger for food and raw materials as the country is recovering from a quake and nuclear crisis.

Exports of textiles, farm products and mechanical equipments to Japan are also on the rise in Shandong.

The province's export to Japan leaped from US$81.6B in February to US$1.58B in March, up 54.2% Y-Y.

Some food producers in northeast China are also overwhelmed by orders from Japan as more Japanese consumers switch to imported food out of radiation concerns after the Fukushima Daiichi nuclear power plant was crippled by quake-triggered tsunami on March 11.

Orders for the pickles of Seiwa, a food company in Dalian City of northeast China's Liaoning Province, jumped 50% to 32 tons after the earthquake.

Brown alga, or undaria pinnitafida, a common food in Japan, is now mainly imported from China as the disaster has devastated main production bases in Fukushima and Miyagi prefectures.

China's export of farm products to Japan is expected to increase as concerns of radiation contamination linger in Japan. Some Japanese companies have come to look for sea food supplies, said a spokesman for Dalian's Foreign Trade and Economic Cooperation Bureau.

In addition, building material suppliers in northeast China are receiving  orders as Japan starts reconstruction and the production of some local companies are halted or hampered by the quake.

The Dalian branch of Tostem, a leading Japanese manufacturer of windows, doors and interior decoration materials, is expanding production for the mounting orders that its parent company in Japan could not handle.

Export of building materials will increase 50% this year in northeast China's Jilin Province, said Hua Xuesong, head of the foreign trade and economic co-operation office of the provincial commerce bureau.

China's export of furniture and textile to Japan will also rise rapidly this year, Hua said.

India's Air India's pilots strike in 4th day, operations stalled Air India's operations came to a standstill across the country after its pilots' strike entered the 4th day Saturday, civil aviation officials said.

"Only 39 domestic flights out of regular 320 are being operated today. We have curtailed more than 52 percent of our domestic flights and operating on only trunk routes that is too metro cities. Under the

contingency plan, we have reduced the number of flights as we do not have any pilots,” a spokesperson of the troubled flag-ship carrier said.

Some 850 Air India pilots are ignoring stern warning of dismissal by management, and the Delhi High Court's decision to initiate contempt proceedings against them.

Indian Commercial Pilots Association (ICPA), which is spearheading the strike, is demanding a higher fixed component in the salary package, pointing out a disparity among the pilots before merger of Air India with domestic National carrier Indian Airlines.

The Indian government has rejected the demand of the pilots of the state-owned airline company, which is dependent on large government subsidies for its operation.

The strike has resulted in tens of thousands of passengers stranded at air terminals and air fares rising drastically.

Warner Music set to change hands for US$3B

Warner Music (NYSE:WMG), the US group behind Cee-Lo Green and Bruno Mars, is likely to change hands for an enterprise value of more than US$3B, with 2 or more bids expected Monday for the whole Company.

Several people familiar with the 3-month auction said Len Blavatnik’s Access Industries was competing with a consortium bid by Platinum Equity, the mergers and acquisitions group run by Tom Gores, and the Gores Group, a private equity firm run by his brother, Alec.

Both teams Friday submitted evidence to Goldman Sachs (NYSE:GS) that they had lined up financing.

Banks had offered up to US$2.2B in debt financing, the players said. Bidders would also inject about US$1B in equity.

UBS, Credit Suisse and Jefferies were among the banks that have been talking to bidders about providing financing, they said.

Sony (NYSE:SNE)(TY0:6758), which owns the Sony Music Entertainment record label group and 50% of Sony ATV music publishing, teamed up with investor Ron Perelman , and Guggenheim Partners on a possible bid, people familiar with the plans said.

But the group, which would see Mr. Perelman take the recorded music and Sony and Guggenheim the publishing assets, could struggle to beat bidders as Warner has a preference for offers for the whole Company that carry minimal risk of regulatory delays.

Sony declined to comment.

While any deal could be derailed by last-minute hitches, bids are expected in a range of 7.50 to 8.50.shr.

Shares in Warner Music closed up 0.09 at 7.47 Friday, valuing its equity at US$1.16B.

Warner Music declined to comment.

A win by the Gores brothers or Mr. Blavatnik would surprise many people given the apparent advantage companies in the business had at the beginning of the auction, and given the failure of Guy Hands’ private equity takeover of EMI.

Potential savings from combining parts of Warner’s business with another music company led many industry executives and bankers to believe that BMG, KKR’s publishing joint venture with Bertelsmann, would buy Warner-Chappell  music publishing, and Sony Music or Universal Music would pick up some Warner record labels.

But BMG’s bid was rejected as too low, and Sony and Universal have been handicapped by potential antitrust risk.

Mr. Blavatnik or Mr. Gores could reap hundreds of millions of dollars from a combination of Warner Music and EMI’s recorded music business.

Citigroup (NYSE:C), which seized control of EMI from Mr. Hands’ Terra Firma group this year, is expected to pursue an auction of the UK music group in the months ahead

The successful bidder for Warner Music is set to face competition from many of the groups that showed interest in the Warner auction, including BMG.

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At the Movies with Monica Petrucci from Tinsel Town

International Box Office: Paramount's 'Thor' Claims # 1 with strong US$83M Opening

Universal's "Fast Five" takes in a solid US$45.3M on its 2nd weekend overseas, while Fox's "Rio" drops to # 3. 

                It’s May Day today, and Summer is in 2nd gear on the foreign theatrical circuit.

Paramount’s Thor decisively claimed the weekend’s # 1 box office spot on the foreign theatrical circuit with a gross of $83 million, Y 2011’s biggest opening weekend tally by more than $25 million from some 7,250 locations in 56 overseas markets.

Director Kenneth Branagh’s interpretation of a Stan Lee Comic Book about an otherworldly renegade warrior defending planet earth opened # 1 in the UK and Ireland, $9M from 500 situations over 5 days, in France, $8.1M from 579 locales, South Korea, $5.7M from 513 spots, Italy, $5.5M from 455 locations, and Spain, $5M from 377 situations.

Thor also recorded 1st place openings in several smaller markets including Taiwan, $2.1M from 58 sites for a per-screen average of $36,206, Singapore and the Philippines. In Vietnam, the opener yielded $308,000 from 19 sites, which Paramount said was a 3-day debut record for the market.

So far, Thor has tallied an overall foreign gross of $93M. The Marvel Entrainment outing opened last round in Australia where this time it drew a 2nd weekend tally of $3.3M from 226 locations, a 42% from the opener, hoisting the OZ take to $13.1M.

Universal’s Fast Five, which like Thor opened overseas last weekend in the UK Australia, South Korea and New Zealand, drew $45.3M this time from 3,211 play dates in 14 territories, running up its early foreign gross total to $81.4 million. Worldwide, the 5th sequel in the TurboCharged car action franchise has grossed $128.9 million. so far

Fast Five grabbed # 1 slots in each of its 10 new overseas markets with Russia leading the pack with $11.5M drawn from 712 sites. Other #1 debuts included Germany $10.2M from 633 spots, Austria, $1.4M from 82 situations, and Turkey $900,000 from 175 venues, Universal’s biggest opening weekend in the market ever.

Biggest Fast Five holdover was Australia where it commanded the # 1 slot with $4.7M from 230 sites, off 41% from the opening round. The OZ take stands at $20.9M.  

Thor is set to open in Finland and China by next weekend, and Fast Five will open in 45 markets this week including France, Italy, Brazil and Mexico.

20th Century Fox’s Rio, which has been the # 1 box office title overseas for the past 3 frames, finished its 4th with $31.7M 10,560 locations in 67 markets. International take for the family-oriented animation title now stands at $263M.

Have a some fun go see a movie this week.

Monica Petrucci from Tinsel Town.

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US Major Markets Support and Resistance Marks

DJIA Close: 12,810.54

Resistance:

13,058 from the May 2008 high

Support:

The 10 day EMA: 12,573

12,391 the February 2011 high

12,283 the March 2011 high

The 50 day EMA: 12,264

12,110 the March 2007 closing low

12,094 the April 2011 low

11,893 the March 2008 closing low

11,867 the August 2009 high.

11,734 from November 1998 high

11,555 the March 2011 low

11,452 the November 2010 high

The 200 day SMA: 11,388

 

S&P 500 Close: 1363.61

Resistance:

1364 the March 2007 low

1370 the August 2007 low

Support:

1344 the February 2011 high

The 10 day EMA: 1343

1340 the early April 2011 high

1332 the early March 2011 high

1325  the March 2008 closing low

The 50 day EMA: 1318

1313 the August 2008 interim high

1295 the April 2011 low

1275 the early January 2011 high

1255 from the late December 2010's range

1249 the March 2011 low

1235 the mid-December 2010 consolidation low

1227 the November 2010 high

1220 the April 2010 high

The 200 day SMA: 1220

 

NAS Close: 2873.54

Resistance:

2956 from November 2000

3026 from the October 2000 low

3042 the May 2000 low

Support:

2862 the 2007 high

2841 the February 2011 high

The 10 day EMA: 2830

2825 the 2007 closing high.

2816 the early April 2011 high

2802 the early March 2011 intra-day peak

2796 the February 2011 Gap Open Down mark

The 50 day EMA: 2767

2762 the February 2011 low

2729 the 127% Fibo extension of the August 2010 move

2706 the April 2011 low

2686 the January 2011 closing low

2676 the January 2010 low

2645 from the December 2010 consolidation

2603 the March 2011 low

2580 the November 2010 closing high

2569 the November 2011 Gap Open Up mark

2550 the May and June 2008 high

The 200 day SMA: 2548

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   US Market Sentiment + Bulls vs. Bears

The Market

Are you watching the VIX?

The Volatility is low now. The VIX broke below the levels hit from late Y 2010 and early 2011. The last time volatility broke below this level, the S&P500 sold off, and rebounded to a new rally high, seems like a bit of a pull back is on the horizon, the VIX suggests, but does not guarantee.

Last Friday the VIX was up and the market was up, not typical movement. When I see the volatility rise when the market rises, it is a warning to look for a pullback in the near term.

Shayne and I discussed this on Friday, when we look at the S&P 500, the run after the breakout it augurs for a pullback to test  the move, this is normal action. As it indicates that the market is overbought and wants to back and fill. That is the way it looks to us now.

1. VIX: 14.75; +0.13

2. VXN: 16.54; +0.34

3. VXO: 14.06; +0.52

4. Put/Call Ratio (CBOE): 0.93; +0.1

                                                            Bulls vs. Bears:

The Bulls are at 54.3% vs. 54.2% last, they are steady as "she goes" a being careful in here. The Bulls are close to that 60 level that signals some trouble in a Bull run. So, start to be careful and watch for breakdowns, but remember there is also a lot of liquidity in this market, so the move can extend despite excess Bull sentiment.

For your Reference: to be really Bearish the indicator must to get up to the 60 to 65% mark.

The Bears are at 18.5% vs. 19.2% last. The Bears are not as negative as they were on the prior week, and up sharply from 16.3% 3 weeks ago, and down from 23.1% at the beginning of April. They tapped 18.7% on the April low, and a high of 27.8% on the February leg. 

For your reference: a break above the 35% mark considered Bullish. Bearishness hit a 5 yr high at 54.4% during the last week of October 2008.

NB: Watching the VIX. It always tells us when we are moving back to a more rational market. *The Market Volatility Index (VIX) measures the volatility of the market. A recent news story described it as "the options market's gauge of investor fear." Traders use VIX as a general inverse indicator of market volatility and sentiment. High numbers mean that there's excess bearishness, and low numbers indicate excess bullishness. The VIX is updated intra-day by the Chicago Board Options Exchange (CBOE), using Standard & Poor’s 500 Index (SPX) bid/ask quotes. It was created in 1993.

**The CBOE NAS Volatility Index (VXN) employs the same formula used to calculate US$VIX, which is based on the implied volatility of S&P 500 index options. This formula is derived from a basket of put and call options. Some are out of the money, some in the money, and some at the money. The resulting US$VXN represents the implied volatility of a hypothetical 30-day option that is at the money.

***The VXO is the ticker created to track the "original VIX" that was calculated using the prices of S&P 100 options. The new VIX uses the ticker US$VIX and is calculated using the prices of S&P 500 options. The fundamental nature of the VXO is the same as the VIX, but it is less robust and not as simple as the VIX.

What to expect this week and down the line….

This will be a full week with a lot of economic data leading up to Friday's nonfarm payrolls report.

The important reports are: The ISM starts the week. Factory orders are out Tuesday.

We are halfway through the earnings season, and 50% the S&P500 stocks reported, the Earnings season has May to go with some of the biggest names to report.

And again earnings will driving the action, as they have for the past 2 weeks. IMO this market is set up nicely from a technical POV with fundamentals to support.

The Big Q: will the market come back to test the move after breaking through the resistance on a 2 week run?

The Big A: the tendency is to come back and test the run.

The market always needs a catalyst, so far it has been earnings, and even if the news is good the market has to pull back at some point.

Some of the Key leaders appear overbought in here, and are ready for a pause to refresh before getting up to run again and break to the Northside for the next leg up. Classic Bull market action. Leaders lead...

That said I am looking for pullback off of this rally, and at the same time look for upside plays. If there is a pull back, it will not be a roll over sell off but some healthy backing and filling IMO, again a pause to refresh and extend the rally.

Nevertheless you have to take into account that there is a lot of money coming into the market, and that money has to go somewhere, and the market is the place. And I believe that it is foolish to play any down move in major stocks like CAT, GOOG, AAPL, and AMZN. The Downtrend to play is the USD as it heads into Deep South territory below 70 on the Dollar Index. I like the EUR-USD pair for that play

Whatever index I look at other than the SOX, thought it may be setting up for some Northside action, I see big moves still in progress and this is not the place to look for a Key reversal, but buy point opportunities IMO.

Remember thought, that this is the beginning of the month of May and the likely event will be that some new money comes in to the markets to drive the good stocks up. Stay tuned... 

Have a terrific week.

All the best,

Paul A. Ebeling, Jnr.

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  Red's Weekly Report on Gold, Silver and Crude Oil

Red's Weekly Report on Gold, Silver and Crude Oil

 Charts by Omega Research

 2 May 2011

 Paul A. Ebeling, Jnr.

www.livetradingnews.com

The Overall Fundamentals

Geo-political chaos remains in the MENA region. The 2-month Civil War in Libya continued and even migrated to Tunisian territory, triggering condemnation from the Tunisian government.

The Tunisian authorities have 'informed the Libyans of their extreme indignation, and demand measures to put an immediate Stop to these 'violations'.

 In Syria, security forces arrested a number of people and warned against unauthorized protests. But, the Muslim Brotherhood announced it would be supporting a 'National project in which all Syrians achieve what they dream of: liberty, freedom and progress.

 Over 200 members of Syria's ruling Baath Party resigned to protest the violent crackdown against pro-democracy demonstrators.

 Despite agreement of an initial Palestinian unity deal between Hamas and Fatah, Israel refused to accept the treaty, calling it a 'grave mistake' as it would destroy prospects for peace talks.

A few weeks ago, Shayne and I raised our concerns about disruption of Crude Oil facilities during Nigeria's election frame.

Now that the election is over with Goodluck Jonathan having won the Presidential election on April 16, the near-term risk on Crude Oil supply should be reduced. But, players should remain cautious as many in the North of the Country are not content with Jonathan's victory. Riots have occurred in 14 states since last Saturday, so the possibility of Crude Oil supply disruption remains a deep concern.

Commodities extended gains in European session as the USD remains under pressure. The front-month contract for WTI Crude Oil price rose to 113.7, besting the prior 31 month high, while Brent Crude moved narrowly above 125.

The Gold price drove further North with the benchmark Comex contract rising to a new high of 1535.4. Not all precious metals were as Strong as Gold thought; Platinum and Palladium retreated some after Thursday’s rally.

PGM prices have been struggling since the Great East Japan Earthquake. Demand disruption has prompted selling of the metals even thought supplies are tight.

While being upstaged by the US FOMC meeting, the RBNZ left the OCR unchanged at 2.5%. The decision was anticipated, and it looks to us here at LTN that the NZ central bank will not reverse the rate cut from March anytime soon.

At the meeting statement, policymakers mentioned that "Outlook for the New Zealand economy remains very uncertain following February's Christchurch earthquake" and "Crude Oil prices plus the elevated level of the NZ Dollar are both unwelcome" as they will likely dampen economic activity.

In Australia, resumption of rate hike appears to LTN as imminent as inflationary pressures are increasing. Inflation in OZ rose +1.6% Q-Q in Q-1 Y 2011, higher than consensus of +1.6% and +0.4% in the past Quarter. On annual basis, the reading rose +3.3%, compared with +2.7% in Q-4 Y 2010. Core CPI also rose +0.85% Q-Q on average, signaling increasing wage and price pressures there.

In Japan, core inflation remained negative territory in March with core CPI contracting -0.1% Y-Y, following a -0.3% decline in February. Advanced Tokyo signaled a return to core inflation.

Separately, industrial production contracted -15.3% and -12.9% on monthly and annual basis respectively in March, evidencing negative impacts of the natural disasters.

The Bank of Japan (BOJ) Friday left the policy interest rate unchanged at Zero %. Despite deteriorating economic conditions, the central bank did not announce further stimulus at the meeting.

Concerning US data flow, the focus today is on Q-1 Y 2011 GDP which likely rose at a +1.8% annual rate, slowing from +3.1% in the past Quarter. Initial jobless claims may have dropped -8K to 395K on the week ended April 23, while growth in pending home sales eased to +1.5% M-M in March from +21% in February

The Overall Technicals

 Comex Gold (GC)

Intra-day bias on Gold is on the Northside and this run is expected to continue to 161.8% projection of 1309.1 to 1445.7 from 1380.7 at 1601.7 next, which is close to 1600 psych mark.

On the Downside: a clear break of 1492, the Key support, is a must to signal short term Topping. Barring that my POV is Bullish even in case of a pullback.

The Big Picture: Gold's long term up-trend is in progress, and has gained momentum again. That being the case I will stay Bullish as long as 1445.7, the Key support, holds and expect the current up-trend to target 100% projection of 1155.6 to 1432.5 from 1309.1 at 1586. And I will be on the lookout for a Key reversal signal around 1600 as Gold will likely meet with medium term channel resistance there. Stay tuned...

 Comex Silver (SI)

No change in mu outlook for Silver. Silver continues to consolidate below 49.82 short term top and intra-day bias remains Neutral.

Some more sideway trading could be seen but any downside should be contained by 38.2% retracement of 33.565 to 49.82 at 43.61 and bring on a rally resumption. A clear break of 49.82 should send Silver through 50 psych level towards 200% projection of 17.735 to 31.275 from 26.30 at 53.38 next.

The Big Picture: the long term up-trend in Silver is in progress, and accelerating. This rally will likely extend through 50, the psych level, to the next long term projection target of 261.8% projection of 4.01, the Y 2001 low, to 21.44, the Y 2008 high, from 8.4 the Y 2008 low, at 54.03.

On the Downside: sustained trading below the 55 days EMA now at 37.152 is needed as the 1st signal of a medium term reversal. Barring that my outlook is Bullish on Silver. Stay tuned...

 Nymex Crude Oil (CL)

With 110.71, the minor support intact, Crude Oil's rebound is favored to continue towards 100% projection of 33.2 to 83.95 from 64.23 at 114.98 next.

On the Downside: a clear break below 110.71 will turn the bias back to the Southside, and bring another fall to extend the consolidation from 113.46 IMO.

The Big Picture: the medium term rebound from 33.2 is in progress, and a Stronger rise should be seen towards 100% projection of 33.2 to 83.95 from 64.23 at 114.98.

That said, there is no change in my POV that this rally is the 2nd  wave of the consolidation pattern that started at 147.27, the Y 2008 high). So, I will look for a Key reversal signal above the 114.98 projection mark. But, a clear break of 96.22, Key support, is needed to indicate medium term Topping IMO. Barring that, I am Bullish on Crude Oil. Stay tuned...

 

 Red's Weekly Forex Up-date: EUR-USDCharts by: FXaccu

EUR-USD; extends to the Northside, and targets higher Highs

EUR/USD - Price action on EUR-USD, a daily chart is shown below as of Friday, 29 April 2011, continues showing up Strong Bullishness, as it established a new 16-mo high, without making much of a pullback or retracement since breaking out above the 1.4500, Key resistance mark last week.

This continued Northside rise extends and accelerates the steep up-trend that has been going since the beginning of the year.

Once it broke out above 1.4500, the price action has hit my 1.4800 target, and gone on to beat this mark and to reach for even higher highs IMO.

There a Bearish retracement due soon, but the overall directional trend bias continues to be to the Northside in here.

The Key resistance mark to the Northside is around the 1.5150 price Zone now, that represents the resistance highs that were reached back in late Y 2009.

This 1.5150 target also represents the 161.8% Fibonacci extension of the major Bearish correction that occurred in the last two months of Y 2010. Stay tuned...

 ____________________________________________________________________ The LTN Hot List

The LTN “Hot List” contains potential investment opportunities suitable small, mini and micro cap portfolios.

Red’s Bull Trade Alerts and Option’s Alerts are suitable for Big Cap portfolios See them daily at www.liveradingnews.com

Red’s Rules to always Play by…

Do what they do on Wall St. and not what they say; that means tune out the “Noise”.

Some folks like to buy stocks because they are upgraded, or sell stocks because they are downgraded; that’s the wrong approach. Learn how to evaluate stocks for yourself. It is not a difficult process; the steps are 1) check the volume for a buying or selling patterns, 2) recognize support and resistance levels and utilizing key charting patterns. I use www.stockta.com for my data. Knowledge is Power (and Money)

Over my 30+ yrs playing the stock market in earnest, I have learned that there are winning stocks that most traders and investors completely ignore and abhor. And when played right, these overly unappreciated issues often lead to huge gains, but it is all about timing.

There is no mystery here; you all know and/or have heard about “penny stocks” i.e. those that trade under USUS$5.00/shr on US markets (10’s of thousands of stocks trade on other world markets under

USUS$5.00/shr and are not referred to in the same pejorative manner). This is just a label (designed to diminish their value and keep you away, IMO). The fact is that there are many, many studies made over the years that prove that these stocks outperform the overall market, and when there is a steady new Bull Market, the little stocks (small caps, micro and mini caps) lead the Charge.

As a class, they are the most undiscovered and underappreciated sector of stocks and the sector where the biggest chance ends up big winners on a consistent basis. I call them Little Gems; they are indeed Wall Street's buried treasure for those who wish to go treasure hunting.  Here, in the RedRoadmaster, I work to uncover solid, moneymaking companies whose shares are grossly undervalued and virtually undiscovered, and they sell for USUS$5 or less a share. 

And do not forget to always include some small, mini and micro cap (pennies and juniors) sues in your sights; they can give you explosive percentage returns like no others.

Savvy traders do not wait for the stock market to hit bottom, recover or get toppy; they do not double down or resort to tricky, desperation moves. They make simple moves on good data and bank some gains.

Do not think get rich - think get rich slowly; it works.

Even if you know absolutely nothing about how to start making a living in the stock market, and want to learn how to do it, the first step is to learn from someone who knows how to do it successfully. The stock market is about success, and the lifestyle that comes with it, but it must be done carefully, both by picking the issues and in the trading of them, because one wants to make money doing it independently and without stress.

You can’t reverse your “bad plays”. Breathe through your nose, count to 10 and move ahead. Go forward, and only focus on what the opportunities are in front of you to win in the stock market game. You do not live in the scrapbook, and always take what the market gives.

A journey of a thousand miles begins with the first step (Confucius); Download and read and study “Knowledge is Power,” my e-Book, its Free.

Always remember that we look at the risk first and decide how to manage it before ever entering a position. Yes, losses will be incurred; it is part of this and any business, and not a bad thing if they are controlled.

Again, think “get rich steady" and not "get rich quick" and think Education!

The Bull is charging, and this perhaps this the best investing scenario since the early 80's.  It is happening now and savvy players and investors are positioned and in the action. Remember to always be nimble and take what the market gives.

Have a great week, and stay tuned.

Paul A. Ebeling, Jnr. Aka The RedRoadmaster

Co-Founder of www.livetradingnews.com and www.ebeling-heffernan.com.

Please check out www.paulebeling.com, www.RedRoadmaster.com and www.bull-penny-stocks.com. Also, you can follow me on Google News and Blogs. You can contact me at Redroadmaster@aol.com

Disclaimer: The foregoing is commentary for informational purposes only. It is designed to help the reader learn the fine art of technical analysis. Links are provided to articles and stories referenced in this Report. Some statements and expressions are the points of view and/or opinions of Red Roadmaster™, aka Paul A. Ebeling, Jnr. and the contributors. This information is not meant to be a solicitation or recommendation to buy, sell, or hold securities. I am not licensed or registered in the securities industry. The information presented herein has been obtained from readily available sources believed to be reliable, but its accuracy is not guaranteed. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors. I do not receive compensation in any manner from any of the companies that are discussed in this Report. Please feel free to print and/or send The Red Roadmaster’s Technical Report on the US Major Market Indices ™ to your friends and associates, no permission is necessary. ©2002/2010 Paul A. Ebeling, Jnr.

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