QE3: It’s our Duty to Trade It!

//QE3: It’s our Duty to Trade It!

Hawk’s Scan Sentry Report September 17

We all watched as the equities markets raced to new highs anticipating and responding to both the FOMC announcement on Thursday and the recent political and ECB developments in the Euro currency ‘crisis’. It is obvious that the force behind this recent leg of the current rally is neither technical nor fundamental; but simply the expectation of a continued supply of  free money for the bankers to inject into the financial markets. This drives the market up because the batch of fresh money creates more demand to buy the ‘securities’ we trade. As traders of the markets this is really a gift for meant us. It is ironic that the justification for QE-3 is the threat of run-away unemployment. We all know that pumping money into financial markets does not in and of itself create a single job unless you are a trader, which I assume you are if you are reading this blog. No typical employer is likely to employ any new employees until there is a demand for their products or services which cannot be met by the current staff. Therefore, the ‘job creators’ are not the employers. No, the job creators are the consumers who create demand for products. Consequently, as this infusion of ‘cheap money’ finds its way into the financial markets, it is our duty as traders to do our best to decentralize this wealth from the accounts of the large banking corporations into our own private accounts and thereby introduce it into the economy of middle-class people. Ours are the only jobs that are really given a boost by QE-3. Let’s do our best to take advantage of this golden opportunity, no this patriotic responsibility, to be the ‘valve’ that helps this wealth trickle down into the supply and demand based economy of natural persons. We need to use our trading skills to skim off as much of this QE3 money as we can; and we’re going to need some good market analyzing techniques to do this.

One of the ways I do my part is through my ‘mini-swing’ trading of equities. I like to look at both long and short possibilities in order to be ready to trade with the market whichever direction she decides to go.  Below are some charts of some of the symbols that I have identified this week for my weekly trading watchlist. Each contains a little explanation of the analysis visible on the chart. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.

_____Longs_____

OZM

(This is a breakout trade from the down trendline and from a pullback into the Triple Trender. Our target is the resistance level around $10.86)

DDD

(This is a bullish pullback trade combining signals from the Trender Pullback tool and the Trend Exhaustion 1 indicator.  Also note the ‘Pullback Divergence’ with the Radar2 Price Leader. )

_____Shorts_____

DAL

(Here we see a bearish Pullback 123 which combines a Trend Exhaustion 1 signal with a Pullback 23 signal. As is often the case this setup also identifies a Pullback Divergence).

HTLD

(Another bearish Trend Exhaustion 1 signal; again creating a divergence with the Radar 1 Fear/Greed indicator. )

May the trend be with you,

Hawk

Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Examples presented on this site are for educational purposes only.  It should not be assumed that the methods, techniques, or indicators presented in these examples will be profitable or that they will not result in losses. There is a high degree of risk in trading.  Readers using this information are solely responsible for their actions and trade at their own risk. Readers should always check with their licensed financial advisor .

2018-01-08T07:40:12+00:00September 17th, 2012|Hawk's Picks|