Featured Articles

By Jason Pearce

The Ratio Is Ready to Rumble

Gold and silver are highly-correlated. Making a bet on the direction of one of these metals is, by default, betting on the same direction in the other. As a matter of fact, silver is often referred to as “poor man’s gold” because you can buy it at a substantially cheaper price and it still exhibits the same trend as the yellow metal. If you overlaid the price charts of gold and silver and take off the price scale, you’d have a pretty tough time determining the difference between the two.

Read full article at: http://www.martinkronicle.com/2016/02/21/tipping-point-goldsilver-ratio/

 

By Jason Pearce

A Yen for a Bull Market

Currencies can be ideal markets for trend followers. The macro fundamentals that move the currencies tend to persist for long periods of time. This gives traders plenty of time to get on board and a plethora of setups for getting in and out of trades. One great example of this is the Japanese yen.

From the 2007 bottom, the yen rallied for nearly four and a half years. As Japan kept sinking further and further into deflationary quicksand, the currency advanced like a skilled Samurai warrior of old. Consider how the events unfolded:

The Nikkei (Japan’s stock market) peaked in 2007. This pushed investors back into cash and propped up the yen. This was the beginning of a “risk off” environment.

The financial crisis rocked the world a year later in 2008. This sent stocks and commodities spiraling downward while cash and Treasuries went to the moon. Although stocks and commodities bottomed in Q1 of 2009, the economy stayed sluggish. This continued to lend support to the currency.

Two years later, the world watched in horror as Japan was rocked with a 9.0 magnitude earthquake on March 11, 2011. The resulting tsunami killed tens of thousands of people and caused the infamous Fukushima disaster at the nuclear power plant. Volatility in the yen surged as the currency…

Read full article at: http://www.martinkronicle.com/2016/02/07/when-to-get-in-the-yen-again/

 

 

By Jason Pearce

The Industrial and Precious Metals Connection

Despite the fact that there are different fundamentals that drive the demand for industrial metals and precious metals, there still appears to be a link between the price trends in these two sub-sectors of the metals category. If one were to take a very macro view, perhaps this price correlation is due to the fact that trends in inflation and economic growth impact both.

Using gold as the representative for precious metals and copper as the representative for industrial metals, a long-term price chart of the two reveals two things: First, gold and copper to tend to move in the same direction a majority of the time. Second, it shows that the copper market tends to be more volatile and sensitive to price swings than gold.

Read full article at: http://www.martinkronicle.com/2015/11/29/goldcopper-ratio-important-inflection/


Seasonal Opportunity In Energies

By Jason Pearce

A High Energy Seasonal Spreadcrude oil

Energies are an important sector of the commodity markets as they have one of the most widely-felt impacts on the global economy. The price of crude oil is used as a bellwether of inflation. This is why you may see the price of oil quoted in many market news reports. Heck, even the non-traders among us notice how much gasoline prices can fluctuate throughout the week. Driving by the local gas stations every day can prompt plenty of comments at the water cooler later on at the office.

Interest rates, currency exchange rates, shipping costs, the economy, war, and politics can influence the price of crude oil. Just as importantly, the tail can wag the dog as crude oil prices can influence interest rates, currency exchange rates, shipping costs, the economy, war, and politics! …

Read full article at: http://www.martinkronicle.com/2015/11/17/seasonal-opportunity-energies/


Inter-Market Spreads: Current Trade Candidates

by Jason Pearce

Trading At the Margins

Commodity markets can sometimes shoot to the moon or crash into the abyss. Price trends can also persist for years at a time. Yet, history shows that commodities are mean-reverting over the long run.

It’s somewhat intuitive that this would be the case. Supply and demand adjusts to accommodate the price. When price is at multi-year highs, producers ramp up production to take advantage of the profit margin. Buyers start backing off or, in some cases, find cheaper substitutes. Eventually the market gets saturated as a supply glut starts to build and prices plunge…

Read full article at: http://www.martinkronicle.com/2015/11/12/inter-market-spreads-current-trade/


Sugar: The Emerging Bull Market

by Jason Pearce

Goodbye, Mr. Sugar Bear

https://i1.wp.com/www-martinkronicle-com.zippykid.netdna-cdn.com/wp-content/uploads/2015/10/Sugar-Bear.jpgSugar has been in a bear market for so long that it only seems to move in two directions: down and down some more! However, no trend lasts forever. This certainly does not mean that we should forget the words of Keynes who said, “The market can remain irrational longer than you can remain solvent”. But the fact of the matter is that changes in supply and demand will cause a trend to eventually reach its conclusion over time. Since markets have a habit of overshooting their equilibrium price, the end of one trend is often followed by a new trend in the opposite direction. If nothing else, a sharp retracement should occur as trend followers unwind their positions when the ride is over.

Looking at a combination of market fundamentals, price action (the ‘technicals’), and seasonal patterns, it is quite possible that the recent two-month increase in sugar prices …

Read full article at:  http://www.martinkronicle.com/2015/10/30/sugar-emerging-bull-market/



How to Define the S&P 500 Trend

Define the macro trend and use it to your advantage.

By Jason Pearce

Trend Simplicity

When trading and investing, the first question that one must answer is: What is the trend of the stock market?  If you don’t get this one right, every question and answer that follows is for naught.
William of Ockham, a fourteenth century philosopher, is credited with the principle that the simplest answer is the best one.  A modern version is the KISS principle.  This has nothing to do with the 1970s rock band, although Gene Simmons may own the trademark by now.  The acronym stands for Keep It Simple, Stupid.  Technical traders apply this principle by …

Read full article at:   http://stocks.about.com/od/Trading-for-a-Living/fl/How-to-Define-the-SampP-Trend.htm


 

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