Greetings from Peter at www.TradingSmarts.com  You are receiving this Newsletter because you either subscribed to it at my site, or bought one of my many products.  It is e-mailed only to those participants who opted in voluntarily, and is not sent to unwilling partners.  Your e-mail address will never be given away to a third party under any circumstance.  We do not do any third-party advertising.  So, we will not flood you with one offer after another from outside sources.  Thank you for your business and readership!  We value you as a customer!

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The TradingSmarts Newsletter plumbs the profundities of the markets, and issues forth 'piranha' trading strategies.  

Please don’t click away or delete too soon, or you’ll miss my commodity trading rules, currency trading strategy, and stock market successful trading strategies coming up shortly.  Also, you will find my commodity, currency, and stock picks of the month later on in this Newsletter.

You should view this Newsletter while you are connected to the Internet, so that you can see the imbedded charts (if any) and graphics.  It may take a while for the charts to load, if you have a slow connection, so don’t panic. 

Help! I need 1,620 new subscribers by 6:32 am January 17th.  Please feel free to forward this Newsletter to three (or more) of your business associates, colleagues, family members, friends, neighbors, and relatives, and urge them to subscribe by going to www.TradingSmarts.com and accepting the offer when they click away from that page.  Thank you!  You are encouraged to do so by sending this Newsletter along in its entirety, but portions may not be reproduced or disseminated separately, as it is copyright protected.  Thank you for acknowledging this!

If those that you send this Newsletter on to have pop-up blockers in place, that will prevent them from subscribing.  In such case, please have them let me know, and I'll do the subscribing for them: prbain@tradingsmarts.com

Peter Sez - Peter’s Rants 'n Raves: It's obvious to me that a lot of traders try to trade far too many markets and/or stocks altogether.  You'd have plenty on your plate if you would just concentrate on the DIA, the QQQ, and the SPY.  These are quality tradables – simply the best – especially the QQQ.  They are liquid.  They have options on them.  You are not going to get much slippage with them.  So, the question begs, "Why not just go with those three, instead of always trying to pick winning stocks?"

In the commodities world, of course, I hand-pick the selections for you in Section 7 of this Newsletter.  So, all you have to do is pull the trigger, after doing a little bit of homework, of course.  For the more gutsy folk out there, you could certainly latch onto, say, a bond, a currency, and perhaps an E-mini, if you wish to aggressively trade those markets on your own.

And, in the Forex world, you only have to worry about the four major pairs, and forget about the cross-rates.

T-Bonds and stock index futures provide the best combination of liquidity and volatility

So, if it's action you want, I've just given it to you.  You don't have to look any further.

Here's a strategy that will whet your appetite for the QQQ:

www.tradingsmarts.com/newsletterqqqoptionmagic.htm

And, for those of you who insist on trading individual stocks, I am giving you an option in Section 3 below, while at the same time asking you if you want me to resume posting my own stock picks in future editions of this Newsletter.  All you have to do is send me a note: prbain@tradingsmarts.com  I don't mind doing so, but just want to know how useful my picks have been to you in the past.

Quote of the Month: "To improve is to change; to be perfect is to change often." --- Churchill

Got Some Success Stories? If you have a story to tell, please let me know, and I’ll publish it right here – in the very next issue.  Don’t be bashful.  Share and share alike.  Share your secrets with my wide audience.  We won’t live long enough to make all the mistakes imaginable in this business.  So, let’s help each other.  I don’t know all the answers.  I am sure you know some real beauts.

For those of you who missed previous issues of this Newsletter, you can read them online by going to: commodity trading rules, currency trading strategy, and stock market successful trading strategies  

If your trading is all foam and no beer, be sure to read my Newsletter on a regular basis.  And, please send me suggestions for things you want to hear about.

Shameless brag time!  Time to toot my own horn!  Let the record speak for itself.  Not that my head is swelling or anything like that, but I just had to reinforce my record with the following observation.  In the December Newsletter, I recommended natural gas as a buy.  Thursday, December 4, just days after that Newsletter came out, natural gas traded in New York had its biggest one-day rally in more than nine months.  Now, come on, admit it.  Aren't you even remotely impressed.  I am not wanting to boast – just to get you to pay attention to my picks in Section 7 of this Newsletter.  They aren't just some big yawn.  They're there for you to make money with.  My crystal ball is obviously working overtime.

Also, sugar gapped up twice two days in a row, within days of my Newsletter coming out early December!!  And, the euro went beyond my target of 1.25.

To further scrutinize my track record, you can review this same section in the last Newsletter by going to:  commodity trading rules, currency trading strategy, and stock market successful trading strategies

If you don't believe what I am telling you here, you can audit my results by reviewing all of my picks in the back issues of my Newsletter at: commodity trading rules  You'll notice that I didn't just cherry-pick my winners.

So, please take my  picks of the month seriously.  Ka-Ching! 

If you want to hone your trading skills in commodities, currencies, stocks, or markets in general, get the scoop at: commodity trading rules, currency trading strategy, and stock market successful trading strategies         

One approach to trading stocks includes using three of the market’s most trusted indicators to spot stocks on the verge of a powerful move. When all three indicators move in the same direction at the same time, you are well on your way to making many times more money than the best Wall Street traders.

All three indicators head upwards just before a stock rallies – every time a stock pops up. All three indicators turn down just before a big sell-off happens – every time a stock plunges.

A slow stochastic indicator consists of two lines: a slow-moving line and a faster-moving line. When the quick one falls below the slower one, this signifies that more people are selling the stock than buying. These are the stocks that will most likely fall in price.

And, when the faster line crosses above the slow-moving line, this means that more people are buying the stock than selling. These are the stocks you want to get into for explosive gains.

The RSI indicator, which provides a “Strength” measurement, moves up or down based on a stock’s closing price relative to the last 14 trading days. The Strength reading will move up, if a stock closes near the top of its 14-day trading range . The Strength reading will fall, if a stock rises, and can’t close near the day’s high.

This approach also measures the “Trend” by using what’s known as a Moving Average Convergence/Divergence (a.k.a. MACD) indicator. Again, this indicator is made up of two lines: a MACD and a signal line

A stock is in a legitimate uptrend when the MACD line cuts above the signal line. And, you can be sure the stock is heading down when the MACD line dips below the signal line.

When a stock has momentum, strength and trend all moving at the same time, and in the same direction, a sure-fire trade is in the works … which means you’re on the verge of making some serious money.

You will also make money when stocks are exhibiting bearish formations of all three indicators.

These three indicators all working in tandem don’t lie. The results cannot be manipulated. For a double whammy, trading options on heavily traded stocks, when these three indicators line up, will really get your trading mojo going. There is no lack of liquidity with such stocks. There will always be enough buyers and sellers in options trades to get you in and out at the best possible price.

Of course, you can try to spot the occurrence of all three indicators firing at the same time by yourself. But, that might be a hit-or-miss proposition, and it would take a lot of work on your part. How would you like to have access to a computerized system, which uses a highly complex mathematical model, and goes well beyond just looking at just these three indicators?

The system I am talking about goes through ~ 7,800 stocks on a daily basis to look for the most liquid stocks first. Then, it takes the stocks that pass that test, and passes them through a computerized filter, which narrows the field to a select few stocks that are poised for a move the very next trading day.

The remaining stocks, that pass the final test, are made available to subscribers who subscribe to this service. You too can participate for sure. In your Inbox, you will receive first thing each and every morning only those stocks you should trade that day – either up or down. They’re won’t be all that many. Just the cream that will consistently drive profits your way.

You will find the results to be absolutely astonishing. Rave reviews are already pouring in from keen participants – just weeks after the launch of this program. Even a seasoned fund manager has become a devout adherent. The program has been in development since 1999, and the programmer who wrote it finally cracked the code – after long hours and years of effort. If you wish to take advantage of this offering, please let me know: prbain@tradingsmarts.com Opt in now before the programmer realizes what he has created, and gets greedy.

I don’t often recommend services of this sort, as I am usually pretty picky. However, this one has certainly captured my interest, and deserves yours too. In this first edition of this Newsletter for this brand New Year, I am forgoing the publication of my favorite stock picks, usually found in section 7 of this Newsletter, so that I can focus your attention on this new initiative. Please let me know if you wish me to continue including my hand-picked stocks in future editions: prbain@tradingsmarts.com

And, now, more on those two indicators …

Just because an oscillator crosses the zero line or midline, this should not be used to generate buy and sell signals, regardless of the current trend. The oscillator’s behavior should be viewed in conjunction with other aspects of technical analysis.

Oscillators should never be used in a vacuum. They should be used to confirm a buy/sell decision – in conjunction with, say, trendline analysis – as opposed to just issuing such signals.

Markets can stay overbought or oversold for quite some time, especially where a distinct trend is evident. So, the fact that a market is overbought or oversold is not sufficient information unto itself.

Here are those two popular oscillators again:

Stochastics – It is based on the assumption that when a stock’s price rises, the closing price usually gravitates toward the daily highs and, when a stock’s price declines, the closing price usually gravitates in the direction of the daily lows. It consists of two lines, %K and %D. %K is constructed by locating the highest and lowest point in a trading period, and pinpointing where the current close is in comparison to the trading range. %K is then smoothed with a moving average, with %D being a moving average of %K.

For more on the use of this indicator, please click here: stock market successful trading strategies sto

Relative Strength Index (RSI) – This indicator is predicated on the assumption that higher closes signify market strength, and lower closes signal market weakness. It is constructed using three lines - the Relative Strength Index and two moving averages of the Relative Strength Index. The index is calculated by finding the percentage of positive closes to negative closes.

RSI pegs tops above 70%, and lows below 30%.

For information on using RSI with Bollinger Bands. MACD, and a 50-day Moving Average, please click here: stock market successful trading strategies rsi

Most people fall into the trap of indicator fascination. They are always shopping around for that perfect indicator. When one fails them, they’re onto the next, and so on and so forth … until they quit trading altogether in total exasperation.

They also want their favorite indicators, like Stochastics and RSI, to always line up together to signal a trade at the same time.

That rarely happens as you can well appreciate and, when it does, you’re most probably already too late to take the trade by the time you spot the occurrence. You would be much better off picking just one indicator, and studying it to death. Get to know its every application, rhythm, and use, and then trade with it confidently. My own favorite indicator is MACD. You can get to know more about it by going to: stock market successful trading strategies macd  or stock market successful trading strategies ezine

In addition to the indicators I have addressed in this section, a lot of traders use moving averages and their derivatives, as well as momentum analysis as their technical indicators.  But, nothing beats price pattern recognition.  If you don't already have a copy of my document on reading bars, don't be bashful: prbain@tradingsmarts.com  
 

Get the drill on trading at: commodity trading rules, currency trading strategy, and stock market successful trading strategies

The cowboy lay sprawled across three entire seats in the posh Amarillo theatre. When the usher came by and noticed this, he whispered to the cowboy, 'Sorry, guy, but you're only allowed one seat.' The cowboy groaned but didn't budge. The usher became more impatient. 'Sir, if you don't get up from there, I'm going to have to call the manager. The cowboy just groaned.

The usher marched briskly back up the aisle. In a moment, he returned with the manager. Together, the two of them tried repeatedly to move the cowboy, but with no success. Finally, they summoned the police. The cop surveyed the situation briefly, and then asked, 'All right buddy, what's you're name?'

'Sam,' the cowboy moaned.

'Where ya from, Sam?'

With pain in his voice, Sam replied ... 'The balcony.'

Combining Chart Patterns with Pivot Point Analysis: www.tradingsmarts.com/newsletterchartpatterns.htm 

Commitments of Traders - Funds: www.tradingsmarts.com/newslettercotfunds.htm

Currency Trading Strategy - Icing on the Cake:  www.tradingsmarts.com/newslettericingonthecake.htm

Dogs of the Dow Re-visited: www.tradingsmarts.com/newsletterdowdogsrevisited.htm 

Forex Hedging (Currencies - Hedging Exchange Rates): 

www.tradingsmarts.com/newsletterforexhedging.htm 

New Years Resolution: www.tradingsmarts.com/newsletterresolution.htm 

Are options dead? www.tradingsmarts.com/newsletterdeadoptions.htm

The Magic of QQQ Options: www.tradingsmarts.com/newsletterqqqoptionmagic.htm 

VIX Perspective: www.tradingsmarts.com/newslettervixperspective.htm  

U.S. Dollar Collapse: www.tradingsmarts.com/newsletterusdollarcollapse.htm 

U.S. Dollar Protection: www.tradingsmarts.com/newsletterusdollarindexput.htm 

You will find the whole shebang on trading in my book by clicking here: stock market successful trading strategies

Isn’t it time?

Over twenty years ago, Joe Krutsinger started his futures and options career with ContiCommodity. He has been involved in all aspects of the industry, and continues to develop trading systems for brokerages and clients. He teaches the development of systems using state of the art system automation software.

Joe has traded everything from soybeans to pork bellies, the S&P, the NASDAQ, and bonds. He is starting to do a lot of work in Forex pairs and Forex trading now. He thinks this is the next BIG opportunity. Of course, I knew that a long time ago.

Isn’t it time you too made the switch? Find out more by clicking here: currency trading strategy

Currency Update:

The dollar is being pressured by a sizeable twin current account deficit in the U.S. and the spread between U.S. and European interest rates.  The Fed appears to be little concerned about the U.S. dollar decline, and also seems to favor keeping interest rates low for quite some time.    

China has its yuan pegged at a fixed rate against the dollar, and Japan intervenes to keep the yen down.  As a consequence, the euro has taken most of the heat, and has risen accordingly.  Gold has moved almost in lockstep with the euro.  Nickel (used mainly in stainless steel production) and silver are also seen as defensive plays against the beleaguered dollar.

Canada's loonie continues to be one of the preferred ways of playing the U.S. dollar weakness because of the yield advantage over the U.S.  But, look for the central bank to possibly cut interest rates at its January 20 meeting, causing speculators to snap up short-term debt, such as the two-year bond.

New Currency Trading Strategy:

Please be sure to read Sunil's addition to my currency trading strategy towards the end of the yellow box below.

Hot Commodities

Feeling lucky?  Huge returns only come from brave actions.

According to my interpretation of the latest commitments of traders data, the following commodities futures represent good trading opportunities to the short side: corn, orange juice, silver, and unleaded gas.

I didn't see any suitable long candidates.

Traders, trading these commodities at absurd prices, are practically giving their money away. Why not take it? You will be doing God's own work ... helping to teach valuable moral lessons to those who need them.  You might also be paid well in the process.

Please adhere to the 11 commodity trading rules outlined in the May/03 edition of this Newsletter.  You can read it by going to: commodity trading rules

Caution

Be sure to observe the rules around trading active contract months – i.e., open interest and volume.  FutureSource.com is a good “source” of such information.  That was all explained in my May issue of this Newsletter.  You can go there by clicking here: commodity trading rules 0503   

MACD is a good indicator to help you trade commodities.  You can read all about it at: commodity trading rules

My book was originally inspired by commodities futures, and the profit potential they stood for.  You too can get your very own copy at: commodity trading rules

Hot Currencies

The four major pairs (EUR/USD, USD/JPY, GBP/USD, USD/CHF) are always hot – each and every day of the week.  That never changes from session to session.  That’s the nice thing about trading currencies on the Forex.  You only have to worry about four entities, rather than 7,800 stocks, or 72 commodities.  Of course, you can get the latest at: currency trading strategy

Hot Stocks and Real Gems

With the market doing quite nicely, traders are piling in.  But, not SO fast.

In their rush to "do something," many of them are simply trading the WRONG stocks.

SO, trade only the very best marquee stocks, and play it safe … with the pared-down list of cult hotties ferreted out for you by the service I mentioned in Section 3 above, which wades through all the gobbledygook for you.  This is not just some ragtag collection.  No “dead man walking” stocks there.
 

Trading Techniques

No Hail Mary passes or fancy knee-jerk gizmos here … just stuff that rocks – but, even Muhammad Ali lost a few fights.  However, it was he who said, "It ain't braggin' if you can do it." 

Say “Hasta La Vista” to bad trades.  Hit the “sweet spot” of trading successes with these trading tips, and don’t forget that almighty tight …

Don’t be condemned to repeat past mistakes.  Everyone knows how to buy, but few people know how to sell.  When you are trading momentum stocks, where you are dealing with hairy-fairy fundamentals, that’s perfectly okay, so long as you have an exit strategy in mind – worked out on paper before you press enter.  Don’t just gloss over the following information.  Please study it in detail.

For stocks: Please refer to section 7 of the July/03 newsletter: stock market successful trading strategies 0703

If you would like a “free” copy of my special report on trading stocks the way the Big Dogs do, just drop me a line: prbain@tradingsmarts.com

For information on shorting stocks, please follow this link: stock market successful trading strategies shorting

A new posting: When is volume really volume? stock market successful trading strategies volume 

For currencies: Please see the Forex Section in the August/03 Newsletter: currency trading strategy 0803 and please be sure to read the entire newsletter for April/03: currency trading strategy 0403

For information on FX Solutions’ hedging, momentum, and statistical charting, as reported in the October Newsletter, please go to that Newsletter by clicking here:  currency trading strategy 1003  

For commodities: Please go to the May/03 Newsletter: commodity trading rules 0503  Also, please visit the June/03 edition: commodity trading rules 0603  And, the September/03 issue: commodity trading rules 0903

For information on when to cut and run in a commodities trade, the meaning and use of the 200-day moving average, the purpose of trendlines, the Relative Strength Index indicator, and the “4-9-18 Formula,” please refer to the last edition of this Newsletter by going to: commodity trading rules, currency trading strategy, and stock market successful trading strategies 1003

For more information on the role commitments of traders data plays in trading commodities, please follow this link: commodity trading rules 

Just some of the many trading gems you will find at: commodity trading rules, currency trading strategy, and stock market successful trading strategies

Courtesy Victoria Keeling: "I've only ever been an options buyer [calls and puts], but 'they' say writing options can be the best money maker.  In my experience, there is only one way to consistently make money with buying calls/puts ... 1) you must have impeccable timing, and so be able to jump on trades very early on in a move, as premiums will quickly be jacked up beyond a good risk/reward ratio ... 2) the shorter the trades, the better, due to time decay [1-3 days is ideal] ... 3) buy in-the-money only ... OTM options are cheap for a reason!!  And, buying them is the quickest way to decimate your account." 

Are options dead? www.tradingsmarts.com/newsletterdeadoptions.htm 

The Magic of QQQ Options: www.tradingsmarts.com/newsletterqqqoptionmagic.htm 

Options Terminology: www.tradingsmarts.com/newsletteroptionsterminology.htm 

My book addresses commodities, currencies, market indexes, stocks – and, of course, options too.  It’s all waiting for you with just one mouse click at: commodity trading rules, currency trading strategy, and stock market successful trading strategies  

This party is not running out of hors d'oevres and party favors just yet.  Perennial bears must feel like they walking on a beach in a rain coat.

As the saying goes, "All sunshine makes a desert."  But, only farmers and new lovers seem to welcome rain.  Investors don't.

The latest market stats. – as at January 6/04:
 

Put/Call Ratio: .40 (For an explanation of the Put/Call Ratio, please click here: stock market successful trading strategies)

$VIX Volatility Index (a.k.a. the Wall Street's market fear gauge): 16.73 (For an explanation of the VIX Indicator, please click here: stock market successful trading strategies vix)

For an update on the VIX, please click here: stock market successful trading strategies vix update

$TICK: 297 - The New York Stock Exchange (NYSE) this indicator, which measures up-ticks verses down-ticks on the NYSE.  This statistic summarizes the number of stocks that are increasing in price, versus those that are decreasing in price.  Readings above 1,400 are rare.  A spike in TICK to that level and beyond is a sign of aggressive buying, and helps to explain a rally that helps push stocks from negative to positive territory. 

NYSE/DOW Crash Index:  -2 (invested)

NASDAQ 100/S&P 500 Crash Index:  2 & 2 respectively (invested)

A buy occurs when an index goes to a +6 from a sell, or a crash alert status.  A sell occurs when an index goes to a -6, and a crash alert occurs when an index hits -10.

NYSE Advancing/Declining Issues:  34350.00

COT (Commitments of Traders) – Commercial traders net positions

DJIA – Funds neutral; commercials shorter

NASDAQ 100 Stock Index – Funds neutral; commercials longer

S&P 500 Stock Index –  Funds very short; commercials longer   

If there is any part of this Newsletter than you cannot see because of the e-mail program you are using, please view it online at: commodity trading rules, currency trading strategy, and stock market successful trading strategies

Or, please send me an e-mail, and I’ll send you a PDF version of the Newsletter: prbain@tradingsmarts.com  It could be that you are not online while viewing the Newsletter, as we pull the charts and graphics down from our site – to save having to send them out with each e-mail copy of the Newsletter.  

If you don’t already have a copy of my internationally-acclaimed book “How to Trade Like a Pro in One Hour” and associated software, you can get your very own copies for the price of dinner and a bad movie!  Get the whole enchilada at: commodity trading rules, currency trading strategy, and stock market successful trading strategies

The book and program are for traders who trade any market, not just the Forex.

Please feel free to send your inquiries, be they comments, feedback, questions or suggestions, to me at: prbain@tradingsmarts.com

If you have any ideas or suggestions for future articles, they would be most welcome.  I especially invite any trading tips, strategies or techniques you may have that you wish to bring forward, and share with others.  If I include them in future editions of this Newsletter, you will most certainly get proper credit and recognition.  You will also receive a free bonus from me for your time and trouble.    

Happy trades to you, and here’s to your health, happiness and good relationships!

Thank you for reading this Newsletter!  Go forth and multiply your income!

God bless!

Peter R. Bain
www.TradingSmarts.com

PS: I would be more than glad to put on a seminar in your area, if you could pull together a large enough audience to make it worth my while.

PPS: If you wish to unsubscribe from this newsletter, please send an e-mail to webmaster@tradingsmarts.com (Brad Du Preez, MCSE) 

Disclaimer:  I do not promote or make any promises about short-term predictions or daring speculations.

There is a risk to investing and trading, so please use money you have set aside for that purpose, and guard it with your life by using good money management practices and principles, and good trading technique.  Please don’t invest or trade money you can ill afford to lose. 

I am not responsible for your decisions, and subsequent actions, based on the information contained in this Newsletter. 

Please note: The Securities Commission in the jurisdiction where I live and work precludes me from giving you trading advice or recommendations when it comes to any form of security.  So, I present my picks for educational and informational purposes only, and do not personally benefit from their inclusion in this Newsletter, or for any other reason.  Nor am I imputing my views to you.  Please proceed at your own risk, should you decide to act upon any of the tradables mentioned in this Newsletter.

E-mail: prbain@tradingsmarts.com
Web site address: www.TradingSmarts.com

Copyright© 2003 by Peter R. Bain/All Rights Reserved