Free Stock Market Research Report by Jason Ng, the man behind The Star Trading System (one of the best option trading systems)

Yes, its Fed week again and another week of extreme volatility. Ex-Fed Chairman Alan Greenspan was criticized for having dropped fed fund rate all the way to 1% and keeping it at 1% to spur the economic recovery of 2003. Will Uncle Ben do the same thing this time round? It sure seem like a rate cut is certainly going to happen and with only 50 basis points left to the 1% mark, What could he have done differently? No matter what, I still see a 1% fed fund rate in the horizon because it is not the 1% that’s the problem but how quickly the Fed bring that rate up again when the economy recovers that’s the problem. As long as Uncle Ben bring rates up quickly enough when the economy recovers, we should not see any severe inflation problem.

Another important thing to look out for this week is the Consumer Sentiment and Confidence numbers (see economic calendar). Consumers are the backbone of the US economy (actually, they are the backbone of the GLOBAL economy) and a recovery in those numbers would certainly signal a bottom.
Finally, I believe the stock market is ready for one final capitulation right now as major indices stage significant bearish breakout out of their triangle formations. This breakout can clearly be seen in all technical charts including point and figures. I see the stock market going for at least the low of the last crisis at about 7100 this time round and this could be the final capitulation or the "wash-out" if you will. So far, the Dow has given back all its gains since the last crisis. Which means that if you are an ultra-long term investor or have invested in an index fund since 2003, you would have been back to zero and probably some losses by now. This is also why nobody should be pure buy and hold for the long term type investor in today’s dynamic market anymore. Learning to hedge your portfolio with stock options is a skill that even long term investors need to master.

Star Trading System’s Thought For The Day : "Every Morning Marks A Brand New Beginning"

Free Stock Market Research Report by Jason Ng, the man behind The Star Trading System (one of the best option trading systems)

Our entry procedure protected us from some really terrible losses yesterday when the market opened up and then ended up. Indeed, this is one of the most important aspect that makes the Star Trading System different from other technical based systems. We do not rely 100% on signals produced the day before but confirms it on the day of entry itself using an entry procedure, making sure that the dynamics that created the signal yesterday is still valid today. The entry procedure is the most important aspect to fully master in this course.

It is important that you check the bid ask spread of your chosen options again if any qualified for entry because bid ask spread can opened up very suddenly in this volatile market.

The Star Trading System continue to produce a flood of bearish stars today, anticipating a downside breakout. Let’s see if we get an entry today.

The Dow was up by 172 points today as investors accumulate around the 8500 support level. However, that did not stop today’s candlestick from skewing the triangle formation into a Descending Triangle Formation. A descending triangle formation is the bearish version of the triangle formation with breakout expectation to downside and is characterized by a descending channel line and a flat trend line, forming a right angle triangle. If the pattern holds, we should see an all out bearish breakout within the next 5 trading days. Can this pattern be reversed? Certainly! If the market finds enough strength to at least get back above 9000 points.

The economic data pouring in today continues to be bearish and we all know that the data are going to be bearish for months to come. So, if the stock market is a discounting mechanism, when will the stock market price in a bottom for the recession? Well, based on historical references, the stock market should find a bottom and reverse about 3 to 6 months before the economy recovers (at least in terms of unemployment rate). So, if you think unemployment rate is going to come back down in 3 to 6 months time, you should believe in the current support level. For me? I think this mess isn’t going away in just 3 to 6 months time, so I am not about to believe that the 8500 support level is the bottom.

Star Trading System’s Thought For The Day : "Check and Double Check"