January 20, 2011 - Issue #619

In This Issue

1. Stock Market Is Not Physics: Part IV
2. Price Map Mar '12 British Pound - JS Services
3. Economic Calendar

Featured Articles This Week

1. Five Fatal Flaws of Trading
2. The European Debt Crisis and Your Investments

1. Stock Market Is Not Physics: Part IV

Another Example of Rationalization, Ripped from the Headlines
Almost every day brings another example of rationalization in defense of the idea that news moves markets. The stock market rallied for half an hour on the morning of April 20, peaked at 10:00 a.m., and sold off for the rest of the day. Almost every newspaper and wire service claims that the market sold off because "Greenspan told Congress that the nation's banking system is well prepared to deal with rising rates, which the market interpreted as a new signal the Fed will tighten its policy sooner rather than later."3 Is this explanation plausible?

Read the full article here

This article was syndicated by Elliott Wave International and was originally published under the headline Stock Market Is Not Physics: Part IV. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

2. Price Map Mar '12 British Pound - JS Services

MAR'12 BRITISH POUND ** BEAR TREND CORRECTION **
- Technically the MKT is "on the fence" and poised to either expand the corrective rise or return to the negative trend.
- On the SELL side accept REVERSAL and BREAKOUT strategies. DIR and DP BREAKOUT strategies may need to be "worked" as the neutral tone is expected to produce a few starts and stops. UP FADE strategies should wait for confirmation. A better strategy is a REVERSAL, as a violation of a major inflection point that cannot be held is a negative turning point signal with the potential to be the resumption of the negative trend.
- On the BUY side FADE strategies off the DP or near the previous session or move low will work best with the expectations targeting a new corrective high. Avoid UP BREAKOUT strategies but rather FADE negative reactions off the DIR after a positive signal. If the corrective trade is going to continue, it should hold structure. Once it doesn't, it's time to roll in the other direction.

JS Services is an independent technical research company that has been supporting the professional trading community since 1984 with research and trading tools in the Equity, Futures and FOREX markets. Learn more here.

3. Economic Calendar

Source: Moore Research Center, Inc.

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!