SWING TRADING COMMENTS
BY: JOHN CRANE
John Crane on Twitter

POSTED FOR 6/26/09 -

September Dow Jones – Stocks rose the most in three weeks, as the Federal Reserve curtailed its intervention into financial markets after orders for U.S. durable goods unexpectedly increased, lifting optimism that the economy may be recovering. On the other hand, according to a recent report, the world's population of millionaires shrank dramatically last year as the number of people with assets of between $1 million and $30 million fell 14.9 percent to 8.6 million, according to the World Wealth Report released Wednesday. The steep reduction in millionaires represented the largest decline in the report's 13-year history. So who’s buying? As you know, I was looking for the market to roll over and begin a downward swing. The market did give me three down days and 200 points potential before turning higher on Thursday, but it never formed a confirming sell pattern for entry. Today’s higher close provided the needed pattern and identified 891.00 as a trigger price.

I’m confused. There is a big debate going on in congress about cap-and-trade systems for reducing carbon emissions. Apparently, this means the federal government will sell permits to allow utility companies, factories and manufacturers to release carbon emissions into the air. The same carbon they are currently releasing, but now they pay the government for permission. The theory is, the cap-and-tap system will reduce the carbon emissions (Does this also mean that after a drunk driver is ticketed for a DUI, he suddenly becomes sober?) The carbon emissions are still being released, but the cost of production is increased and that cost will be passed on to the consumer. The estimates of increased cost to the consumer run from $120 to $300 per month for utilities alone. Isn’t this a hidden tax to those who can least afford it? And, what is the government going to do with this money…plant some trees? According to MidAmerican Energy Holdings Corp, a utility owner controlled by Warren Buffett’s Berkshire Hathaway Inc, it would cost them $9.3 billion, over the next 20 years, for plant improvements to meet the bill’s carbon-dioxide reduction target, but the extra $9 billion for cap-and-trade allowances would be passed on to consumers. So it seems to me that the consumer is going to pay more for the same product and the same amount of carbon-emissions will be released into the atmosphere, so only the federal government comes out on top. What am I missing?

August Gold – Gold rose for a third day on speculation that record-low U.S. interest rates will boost demand. Gold dipped into the 60% buy window and quickly reversed and traded above the previous swing high, confirming a peg-leg reversal. I look for a pullback to the lower reaction line Monday or Tuesday. Buy Gold at $925.80 or lower, with a protective stop at $910.50.

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