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Frank started market timing in 1982 when the Federal Reserve cut interest rates and sparked the 1980’s bull rally. Realizing that this rally could have been forecasted, he began to search for indicators which had similar forecasting ability. Within a year, his first newsletter was launched,... More
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  • The 45 Minute Stock Market Crash

    May 7, 2010

    At about 2PM on Thursday, May 6, the U.S. stock market crashed. Really! The S&P 500 Index (SPX) was down 8.5% at its intra-day lows. The Nasdaq 100 Index (NDX) was down 10.1%.

    Some of the Canadian indexes had 15% intra-day losses. The Dow Jones Industrials (DJIA) were off 998 points at the bottom.

    Then presto, the markets reversed and climbed back to 2% and 3% losses in a matter of minutes. By the close most of the major indexes were off around 3%.

    It was a 45 minute market crash and a one hour market recovery.

    What could have caused such a steep and fast decline? And what caused it to so quickly recover?

    According to news sources someone made a bad trade, posting a Dow stock loss that caused the Industrial’s index to instantly lose 150 points.

    That set off sell programs as computers jumped in and within minutes, the market crash was in full swing.

    When the same stock that was the cause of the start of the selling was then posted with the correct trade, the Dow Index jumped 150 points, and the buy programs began kicking in.

    Of course millions of traders watching this added to the panic as they tried to get out of the way of what appeared to be a crash that would continue to unknown depths. Many lost a great deal of money I am sure.

    We may or may not have lower lows ahead. Maybe the lows on Thursday were the end of the correction. Maybe.

    But everyone should take heed. Free markets can react in ways unpredictable by anyone. No one can know ahead of time that such an event will occur (or they would have sold on Wednesday).

    Following well thought out trading strategies that incorporate strong money management rules are all we have to protect us from the wild, wild markets.

    The financial markets offer huge opportunities but those opportunities are accompanied by risk.

    Kollar is editor and chief analyst at ( which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.

    Disclosure: no positions
    May 06 6:09 PM | Link | Comment!
  • Has Biotech HOLDRS (AMEX: BBH) Bottomed?

    May 6, 2010

    Shares of the ETF Biotech HOLDRS (AMEX: BBH) have declined dramatically over the past two months. Is a tradable bottom near?

    Biotech HOLDRS reached a closing high of $106.99 on March 22, 2010. Since then, shares have declined 11% but have reached strong support levels.

    In the big global selloff on Tuesday, May 4, Biotech HOLDRS declined to $95.00 a share which is about 1% below very strong support at $96.00 a share, the 61.8% retracement of the entire March-April decline.

    On Wednesday, May 5, Biotech HOLDRS reversed from the $95.00 level and closed with a 1% gain at $96.37, on a day when most markets were lower.

    This could be a bottom. A bullish trade with a sell stop at about $93.50 a share would have little risk and a decent chance for upside gains to at least the $101-102 level if not higher.

    Disclosure: The ( ETF Timing Strategy holds a position in Biotech HOLDRS.
    May 05 5:51 PM | Link | Comment!
  • Where to Next for Powershares QQQ Trust (NASDAQ: QQQQ)?

    May 5, 2010

    Shares of the ETF Powershares QQQ Trust (NASDAQ: QQQQ) lost 3% on heavy volume on Tuesday, May 4 as U.S. and global markets sold off. What’s next for this volatile and widely traded ETF?

    The Q’s stopped at a strong resistance level two weeks ago. This was at the bear market rally high of $50.61 reached on June 5, 2008. $50.61 turned the stock market and the Q’s lower then, and have done so again now.

    The Q’s closed just above their 50-day moving average; a level watched by many traders as short term support.

    Below this, should the Q’s continue lower, are support levels at $45.33 and then $44.57. This would exceed a 10% correction so if we are on the cusp of a normal 10% correction, we could see buyers come in before either of these supports are reached.

    Disclosure: The ( ETF Timing Strategy holds a position in the Powershares QQQ Trust.
    May 04 5:31 PM | Link | Comment!
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