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Dallas, TX,
Report: Iraq Pullout Already Drafted
Decision Time
One Republican strategist is telling President Bush to stay the course in Iraq, and not to look for an exit compromise in Iraq. But one external source with a knack for sensational revelations says that the pullout from Iraq is all but a done deal.
But before we get to the meat of this story, it's important to get on the same page.
A great deal of activity is under way with regard to the U.S. role in the war in Iraq. The situation in the country is deteriorating, as sectarian violence, combined with the presence of international militants threatens to plunge the country into disorder.
And making matters worse, there have been reports of 140,000 Turkish troops having been amassed on Iraq's northern border, aiming to attack a Kurdish rebel group that has threatened the Turkish government.
So what's going on? Let's get up to date.
The New York Times, over the weekend, reported that an intense battle over the U.S. and its future in Iraq was ongoing at the White House. The White House denied the reports on Monday.
Republican strategist Bill Krystol, wrote an op-ed piece in response to the Times article on Monday, encouraging the White House to stay the course, and not to back down or make any deals now.
To continue this article... Click Here
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Energy Sector
IEA: More Supply Trouble Ahead
The International Energy Agency (IEA) added a warning about the global oil supply to its prediction of supply shortages of natural gas.
In a report issued on July 9, the IEA issued a "dire" forecast, "warning of an impending crunch in the supply of oil and natural gas needed to power world economic growth in coming years."
The situation, according to the IEA is multifaceted but includes several key factors:
1. Supply is leveling off from both OPEC and Non-Opec producers.
2. Demand is rising, both from the industrialized and developing world.
3. Refinery capacity has stalled, creating a bottleneck for product supply.
According to the Wall Street Journal: "The agency expects oil supply to be tighter in coming years than it had previously forecast, with little prospect of relief except a possible easing should world economic growth falter."
Even more daunting is this: "The IEA now forecasts that the Organization of Petroleum Exporting Countries will have precious little spare capacity left to pump extra oil by 2012. It also expects supply increases from non-OPEC oil producers and biofuel producers to start flagging after 2009. Natural-gas markets will also be tight because of inadequate supply increases, limiting the ability of consumers to switch between oil and natural gas. Still, demand for oil and gas is expected to grow at a brisk pace in the years to 2012."
Natural gas prices have been diving to new lows lately, which is why we have been watching the sector carefully, looking for a low risk entry opportunity.
We think that opportunity may not be too far off, and may be set off if and when the first major storm of the season hits the Gulf of Mexico's natural gas production zone.
Crude oil prices slipped slightly overnight, but remained well above important support levels.
Oil has moved above $71. Natural gas is hovering near the $6.50 area.
Until proven otherwise, the rising tensions in the Middle East, and the potential for tight product supplies remain two key reasons for price stability at the recently reached higher levels, barring a significant change in the overall situation of supplies and/or global tensions.
Energy stocks have continued to hold up, and remain a viable portion of a diversified portfolio. See our energy section for detials.
Being very careful in the energy sector at the current time remains the best strategy, given the potential for daily price swings.
$70 is still a key chart point for crude oil, while natural gas has been fading lately, after failing to rally above $8.
Our energy section has been updated and still has a core of open positions.
Gold is still range bound.
Chart Courtesy of StockCharts.com
Chart Courtesy of StockCharts.com
Trading oil? Check out Chapter 13 in Dr. Duarte's latest book "Futures And Options For Dummies" (John Wiley & Sons) - an excellent roadmap to the futures and options markets, and today's volatility. Order your copy today.
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Technical Summary
Chart Courtesy of StockCharts.com
Earnings Slump Begins
Alcoa and Home Depot delivered less than sterling news overnight, so stocks look ready to slump in the early going.
This is no surprise, since earnings season is well known for its volatility, and often features huge air pockets, where stocks drop signficantly when they miss expectations or forecast a less than rosy future.
That's why sell stops were invented, in order to protect against air pockets, or nasty surprises.
Of course, if a stock opens below a sell stop, there is often no protection, other than from further losses. But that's the nature of trading, making the best decisions possible and learning to take the lumps when they come.
Still, there is no excuse for being careless. Thus every positions should be monitored on its own merits, and trading rules should be followed carefully.
One way to cut risk is to use a seasonally based trading approach, either as part of your overall trading plan, or as the primary approach.
Our seasonality portfolio is now positive for the year, and will be out of the market until the end of this month, earning interest in 90-day Treasury bills.
For more information visit our growth stock trading section and read the section on seasonality trading.
Otherwise, it's a good opportunity to be patient, and to focus on strength.
We still like what we see in the semiconductor area, which continues to hold up, and could get a boost as chip sales showed a modest increase in the last quarter.
The S & P 500, remained above its 50 day moving average, another positive.
Nasdaq continued to show improvement, but is due for a pause.
Remember this, as earnings season and its inherent volatility unfolds.
A successful trading program requires several things, patience, attention to detail, risk management, and a sustainable trend.
A sustainable trend, up or down, allows for the steady adjustment of risk, meaning that sell stops, or buy stops if you're selling short, can be adjusted over time, giving the opportunity to reach a profit.
Volatile markets increase the chances of being stopped out prematurely, thus, making it difficult to make money.
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In these types of markets, there is a need to be patient. And patience usually gives traders the feeling that they are missing opportunities to make money. When that happens, inexperience leads to over trading, which tends to increase the opportunity of losing money.
In other words, as it has been for the past several weeks, the best strategy is to stick with what's working, and give this market time to work out its own kinks, without taking too much of our money away.
Think of alternatives to stocks, such as bonds and the dollar, which are still offering a unique trading opportunity, shorting bonds, and being long the dollar.
Otherwise, be patient. From a longer term stand point, based on historical trends, this should be a positive year for stocks, given the fact that it's the third year of the Presidential Cycle, which calls for rallies in the third and fourth years of a presidency.
Our long term forecast remains upbeat, unless the major indexes fall convincingly below their 200 day moving averages.
What To Do Now
Don't trade just to stay busy or to feel as if you're in the game. Be selective. Follow and review your trading rules. Get a good grip on your own willingness to take risk, and don't push the envelope beyond your comfort level.
Keep a lid on emotion, and stick to your trading rules. Aggressive traders should be controlling the risk of any short sales that are still open.
Consider taking some profits where it makes sense, and consider tightening stops where appropriate. Use our individual sections for guidance.
Selectivity remains the key to success. Look for strength, either on a continued basis, or in turn around areas, such as the semiconductors.
Visit all our individual sections, both our ETF and individual stock picks daily for new ideas, and changes to open positions.
Be very methodical about monitoring portfolios, adhering to trading rules, and ratcheting up sell stops is clearly still here.
Second guessing decisions, and hoping that things will turn out o.k. in the long haul, is the recipe for disaster at a time like this in the market.
Check all our sections daily. See tech, biotech, Fallen Angels, and timing systems for the latest adjustments. Our ETF trading systems for energy, Spyders, Small Caps, and technology have also been updated.
Chart Courtesy of StockCharts.com
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