The VRTrader.com VR Silver Newsletter - Monday10/15/2007
"Tools for the High Performance Trader"
Copyright ©2007, All rights reserved.
Redistribution in any form is strictly prohibited.
LEIBOVIT FILES | by Mark Leibovit
Monday, October 15, 2007
A Pivotal Week?
Economic Data and other events scheduled for October 15-19:
---------------------------------------------
Monday, October 15:
Empire State Mfg Survey 8:30 AM ET
---------------------------------------------
Tuesday, October 16:
ICSC-UBS Store Sales 7:45 AM ET
Redbook 8:55 AM ET
Bank of Canada Announcement 9:00 AM ET
Industrial Production 9:15 AM ET
Housing Market Index 1:00 PM ET
---------------------------------------------
Wednesday, October 17:
CPI 8:30 AM ET
Housing Starts 8:30 AM ET
EIA Petroleum Status Report 10:30 AM ET
Beige Book 2:00 PM ET
---------------------------------------------
Thursday, October 18:
Jobless Claims 8:30ET
Leading Indicators 10:00 AM ET
EIA Natural Gas Report 10:30 AM ET
Philadelphia Fed Survey 12:00 PM ET
Money Supply 4:30 PM ET
---------------------------------------------
Friday, October 19:
Options Expiration
---------------------------------------------
As I reported, broad-based Negative Volume Reversals ™ and/or 'Key Reversals' wereformed Thursday and in my view helped confirm the short-term cyclical peak I have beenforecasting. Over 3.9 billion shares traded on the composite tape for the New York StockExchange and on Friday we witnessed a rally attempt on 2.7 billion shares. A rally aboveThursday's intra-day highs (which were record highs) calls my forecast into question, butfor now My TIMER DIGEST 'Sell' signal remains in full force. The result should bepotentially several WEEKS of downside volatility. If recent such patterns in my workrepeat themselves, we could be looking at 1000 points to the downside in the Dow JonesIndustrials or 13,200! I am short all the major stock indexes at this time!
This signal has little to do with the fact the calendar says October. In fact, lastyear my cyclical forecast presented in the Annual Forecast Model depicted a summer bottomand advance from that point into year-end! Negative expectations for a so-called Septembernosedive only helped confirm a higher market in my view - the often referred to 'Wall ofWorry'. October, however, appeared to offer a somewhat different pattern courtesy of BenBernanke. We will only know, of course, 'in the fullness of time'. For now, I'm keepingrelatively low market exposure, but stay tuned intra-day (via the Platinum service) forany new recommendations or changes.
Yes, I could be wrong, but the ducks appear to have lined up and I have to go with mysignals. The Plunge Protection Team could serve as my greatest nemesis but also as mygreatest ally. As I've told you, they may very encourage a decline to provide ammunitionto Ben Bernanke to lower rates at the end of the month. A severe shakeout would again makea rate cut more palatable to critics. We saw it in August - why not in October? At thesame time, the Bernanke tipped his hand and a lower rates policy is an awfully bullishbackdrop to host a market decline.
Central bankers have three major weapons in their arsenal to influence the direction ofthe markets. The first weapon is known as "Jawboning," or brainwashing sessions,that plant ideas or fears into the minds of traders, to influence their behavior."Jawboning" to the media is generally the first option for central bankers,because it's cost free, and reaches a wide range of traders hooked to their computerterminals. The second option is outright intervention, either in the foreign exchangemarket, or in the government securities markets, where the game of competitive currencydevaluation is played on a daily basis. The third and most potent weapon is adjustments toshort term interest rates, which has a big influence on foreign exchange rates, and intoday's markets, has a big influence over stock markets. The three most powerful centralbanks in the global marketplace are the European Central Bank, the Federal Reserve, andthe Bank of Japan. The decisions and actions taken by the big-3 central banks often movethe Euro, the Japanese yen, and the US dollar, which nowadays, can trigger very big swingsin global commodity and stock markets, and smaller swings in government bond prices. Thebig-3 central banks must work in unison, if they are to have any chance at all, atcontrolling or directing the massive foreign exchange markets.
The big-3 central bankers will huddle together on October 19th meeting (this comingFriday), to discuss the hot topic of foreign exchange rates? So far, the G-7's strategy ofdealing with the fallout from the sub-prime debt crisis, is working out stock marketshave recovered their summer losses, and global exports are still booming. Will October19th be another pivotal day for the world equity markets?
A sudden and unexpected surge in the US Dollar Index would clearly be coincident with adecline in equities and precious metals, but will the 'powers that be' let it happen?
With the Federal Reserve expanding the US M3 at an annualized 14% rate, its fastest in35-years, other central banks are forced to print large quantities of money, to preventtheir currencies from rising too fast against the US dollar. This is the essence of"competitive currency devaluation". The net result of "competitive currencydevaluation" is explosive money supply growth worldwide and enormous asset inflation,which is showing up today in global commodity and stock markets. Consumer and producerprices are also rising but government apparatchniks can fudge the inflation figures, to anunsuspecting financial media, which is not valiant enough to question the propaganda.
US Treasury chief Paulson prefers an orderly devaluation of the US dollar against allmajor currencies, with the exception of the Japanese yen, to boost US exports, which hit arecord high of $138.3 billion in August, and up 6% from a year ago. Stronger exportshelped to lower the monthly trade deficit to
Currency traders live in fear of the Japanese ministry of finance, which holds $935billion of foreign currency reserves, and has authority from the Japanese parliament toborrow up to $600 billion to finance intervention operations in the FX market, involvingthe yen. Remember, the only two significant corrections in the global stock and commoditymarkets this year were accompanied by brutal un-windings of the "yen carry"trade. The flow of cheap capital from Tokyo is artificially inflating stock marketsworldwide by 10% to 15%. The "yen carry" is a major force in the globe markets,and any attempt by the Bank of Japan to raise its interest rates can slam global markets.
---------------------------------------------
Editors note: As you may have noticed, we have been posting our daily VR list for bothSilver and Platinum subscribers. Silver subscribers who find this useful should upgrade toPlatinum where you can pull down VR charts for many securities and watch the patternsunfold for yourself.
I've extended posting this information on a complimentary basis to Silver subscribersfor the time being. There is no technical service on the planet that posts Positive andNegative VR! Why? Because they are proprietary to VRTrader.com! And, Platinum subscriberscan pull up VR Charts on just about any stock from the home page of my website.
http://www.volumereversaltrader.com/vr_platinum/GetVRChart.asp
A Volume Reversal ™ is change from a Rally day to a Reaction day accompanied by anincrease of volume or a change from a Reaction day to Rally day accompanied by an increasein volume. Volume Reversals ™ coming off intermediate lows or highs have greatersignificance in helping to define those lows or highs and important pivot points in themarketplace.
How do you use this list? VRs are buy and sell triggers and are particularly useful indefining lows or highs in stocks and stock indexes. Traders find them particularly useful,especially coming off market extremes as an indication of a change of direction. Use theVRs in conjunction with your other technical indicators and you've added a uniquetechnical tool to your arsenal.
List of Volume Reversals 10/12/07 - Sectors
*** Sectors Positive Volume Reversals ***
Computer Software & Services - Business Software & Services
PTI - Patni Computer Systems Ltd ADR
TIBX - Tibco Software Inc
*** Sectors Negative Volume Reversals ***
Media - Marketing Services
CCO - Clear Channel Outdoor Holdings Ltd
Specialty Retail - Other
CWTR - Coldwater Creek Inc
SPLS - Staples Inc
DISCLAIMER
This newsletter is a publication dedicated to the education of stock traders. Thenewsletter is an information service only. The information provided herein is not to beconstrued as an offer to buy or sell securities of any kind. The newsletter picks are notto be considered a recommendation of any stock but an information resource to aid theinvestor in making an informed decision regarding trading in stocks. It is possible atthis or some subsequent date, the editors and staff of VRTrader.com may own, buy or sellsecurities presented. All investors should consult a qualified professional before tradingin any security. The information provided has been obtained from sources deemed reliablebut is not guaranteed as to accuracy or completeness. VRTrader.com staff makes everyeffort to provide timely information to its subscribers but cannot guarantee specificdelivery times due to factors beyond our control.
Suggestions? Comments? on the newsletter service. We would like to hear from each andeveryone of our subscribers. Our email is mark@vrsurvey.com.
Copyright © 2007 VRTrader.com.
Do not duplicate or redistribute in any form.
