Using Elliott Wave To Trade Forex Markets

Posted on July 9, 2016 by Anthony Jerdine

Using Elliott Wave To Trade Forex Markets
By Anthony Jerdine

In terms of the total value of all transactions, the forex market has become the largest market in the world. As the economies of countries across the globe become more and more intertwined, the relationship between the currencies of various countries grows in importance. It is this development that continues to drive interest in the forex markets. This article will examine a method to trade forex markets using the Elliott Wave Theory.

The Elliott Wave Theory
The Elliott Wave Theory is a method of analysis developed by Ralph Nelson Elliott (1871-1948) that is based on the theory that, in nature, many things happen in a five-wave pattern. As applied to the financial markets, the assumption is that a given market will advance in a pattern of five waves – three up waves, numbered 1, 3 and 5 – which are separated by two down waves, number 2 and number 4. The theory further holds that each five-wave up-move will be followed by a down-move also consisting of five waves – this time, three down waves, numbered 1, 3 and 5, separated by two up waves numbered two and four.

In addition, the theory holds that each of the countertrend waves – i.e., wave number 2 and number 4 – will unfold in an ABC pattern. In other words, during waves 2 and 4 of a five-wave uptrend, the security in question will retrace part of the wave 1 advance in a pattern consisting of two smaller down waves (labeled A and C) separated by one up wave (labeled B). Likewise, during waves 2 and 4 of a five-wave down-trend, the security in question will retrace part of the wave one decline in a pattern consisting of two smaller up-waves (labeled A and C) separated by one down-wave (labeled B).

In reality, things typically do not unfold in such a neat, clean, and easy to follow five-wave pattern. As a result, many individuals who espouse a belief in Elliott Wave analysis nevertheless end up interpreting the current wave count differently than other adherents. And in fact, it can be argued that the Elliott Wave is as much an art as it is a science, and that various interpretations are to be expected.

As such, one important thing to note is that this article is not so much about how to generate an Elliott Wave count – since so many individuals end up with different interpretations – but rather about how to trade forex markets using the Elliott Wave as the driving force. For the purposes of this article, I will use the Elliott Wave count as generated objectively by ProfitSource source software by Hubb. The software has an automated algorithm for generating and displaying the wave count.

It should be noted that the preferred count can change dramatically from one day to the next based on the built-in algorithm, and that another person or program may arrive at a different interpretation of the wave count and any given point in time. Still the benefit of using this method is that for better or worse, the count is calculated using an objective algorithm and is not open to subjective interpretation.

Laying Out the Steps of a Plan
Before embarking on any trading campaign it is essential to have a plan in place. So let’s set up a straightforward plan for using Elliott Wave as a basis for trading forex markets. Here are the steps that we will employ:

Step 1. Select a method for generating an Elliott Wave count.
This may be based on your own analysis, or via some charting or analysis software. As mentioned, we will use the wave count generated by ProfitSource software by HUBB.
Step 2. Wait for a wave 5 to begin.
In ProfitSource this occurs when a wave marked as “3” changes to a wave marked as “4” (this actually indicates the end of wave 4 and the start of wave 5). Waiting for this to occur can be the toughest part, for this step can require a great deal of patience. A given single forex market may experience the setup that we are looking for only a few times a year.
Step 3. Look for confirmation of the trend using another indicator or indicators.
Long Setup Confirmation: Once a wave 3 above the price bar changes to a wave 4 marked below the price bar we will then assess the following indicators to confirm that a long trade should be made:
90-day Commodity Channel Index (CCI) is positive (i.e., greater than zero)
The three-day relative strength index reverses to upside for one day.
These two confirming actions do not have to take place on the day that the wave number changes from 3 to 4. As long as the both occur at some point prior to the wave count being something other than 4, then a confirmation is considered to be in force and we will enter a long trade.

Short Setup Confirmation: Once a wave 3 below the price bar changes to a wave 4 marked above the price bar we will then assess the following indicators to confirm that a short trade should be made:

90-day CCI is negative (i.e., greater than zero)
The three-day RSI reverses to downside for one day
These two confirming actions do not have to take place on the day that the wave number changes from 3 to 4. As long as the both occur at some point prior to the wave count being something other than 4, then a confirmation is considered to be in force and we will enter a short trade.

Step 4. Identify a reasonable stop-loss point.
For a long setup we will subtract three times the three-day average true range from the low established leading up to the trade as our initial stop-loss point. For a short setup we will add three times the three-day average true range to the high established leading up to the trade, and use this as our initial stop-loss point (See example to follow).
Step 5. Enter trade and stop-loss order.
We will assume that a trade is entered at the next day’s open price. The stop-loss order will also be placed. This order is a trailing stop and we be updated each day that the trade is open.
Step 6. Consider taking some profits on first good move and trail a stop for the rest of the position.
Trade Exit Plan
1. If stop-loss order is hit then the entire trade is exited.

2. If the three-day RSI reaches 85 or higher for a long trade, or 15 or lower for a short trade, or if the wave count changes from 4 to 5, we will sell half and adjust our trailing stop as follows:

For a long trade we will use a trailing stop that subtracts one times the three-day average true range from the previous day’s low.
For a short trade we will use a trailing stop that adds one times the three-day average true range to the previous day’s high.
3. If the wave count changes to something other than a wave 5, we will simply exit the trade on the next day.

Example Setup and Trade
In Figure 1 we see the setup for a short trade. On the most recent trading day, the blue number 4 first appeared above the price bar. Prior to the day, a blue number 3 had appeared below each price bar for the past several days. This suggests that a wave 5 decline may be setting up.

Below the bar chart you can see that the three-day RSI ticked lower on the day and that the 90-day CCI is in negative territory. This confirms the setup and constitutes a sell short signal, so we also calculate our stop-loss price by adding three times the average true range over the last three days to the current day’s high price. On the next day the euro/yen cross was sold short at 112.63 and a trailing stop was entered at 117.74.
Figure 1 – A sell short setup for the euro/yen cross is completed.
In Figure 2 you can see that roughly a month later the three-day RSI registered a reading below 15. As a result, on the next day we would have bought back half of our position at 109.50 and also adjusted our trailing stop to only one times (rather than three times) the average true range over the past three days added to the current day’s high, thus generating a much tighter trailing stop (this tighter stop does not appear until Figure 3).
Figure 2 – Three-day RSI signal profit-taking opportunity; half of short position is covered and trailing stop is tightened.
Finally, in Figure 3 you can see that the euro/yen cross worked slightly lower over the next several weeks, but ultimately our trailing stop was hit and the remaining portion of our original short position was closed out at 109.44.
Figure 3 – Trailing top is hit; trade is exited.

Conclusion
There are many ways to interpret an Elliott Wave count. There are also many methods for entering and exiting trades once a signal is deemed to have occurred. This article serves as an example of just one way to go about performing these tasks. Whatever method one ultimately chooses the keys to successful implementation are to:

Develop some objective way to interpret the current Elliott Wave count. Consider employing some sort of filter or filters to ensure a valid trading signal.
Always have a stop-loss point.
Consider taking profits on the first good move in the expected direction and then letting the rest ride with a trailing stop.

7 Secrets

Posted on May 11, 2016 by Anthony Jerdine

1.Walk 25% faster
Psychologists studies shows that slovenly posture and sluggish walking attract unpleasant attitudes toward oneself, work and even people around us. However, psychology also tell us that you can also improve your attitude and emotions by changing your posture and speeding up your movements.
Follow someone who is functioning at an “average” level in life and pay close attention to how that person walks. That person has an average way of walking. Right?
Now find someone who is very successful and pay attention to how that person walks. Let me know what you’ve noticed.

2.Don’t overthink about it
“Actions cure fears”. The more you wait on something to happen or the more you wait to take a decision is the more unlikely it is going to happen. You want to start your own business, don’t wait on the economy to get better, it will never get better. Eliminate every excuses and come up with reasons why you should start your own business or accomplish whatever you think about every day.

3.Speak Up
Be a leader and hold that position. Be the first one to comment on something, be the first one to have an opinion, be the person of influence and people will treat as you are. Make it a rule to speak up at every opportunity you have.

4.Be cheap
Stop ALL spending except on those things that can increase income. Do NOT spend to consume;spend only to increase income. My mentor had $1,200,000 in cash but he was still driving a Toyota Corolla at the time. He was saving most of his income and people thought that he was always broke. In reality, he was being “cheap”. You need to be cheap to increase your stack and have money to invest in the future.

5.Write your goals
Get a journal and treat it as the most sacred journal you ever had.
Respect it and consume it every day. Find the purpose of your mission. What do you want to accomplish? What do you want your life to look like? How much do you want to earn? What type of friends do you want to have? Describe every details of the life that you desire into words. Writing your goal with a pen allows your mind to focus on one only thing which is the action of writing those goals. Make it a rule to wright your goals every single day. Your goals will start changing soon or later. You’ll have bigger goals and a bigger vision.

6.Create a dream board
After writing your goals, put them into pictures, numbers, and ideas. Have several dream boards around your house and your office. They will remind you of your goals and you’ll always be connected to them.

7. Develop the habit of reading every day
Every successful people have a strong habit of reading. By reading, you learned about the mistakes of others and you have the power to avoid them when you see them. Reading also grow your knowledge and your confidence. Even if it’s 10 minutes a day, it will impact your mindset. Have you ever met a shy and dumb millionaire? If yes, I would love to meet that person.

Make it a rule to apply those secrets as a daily routine and you will become as powerful as any CEO on the planet.

6 Things to Understand about Human Brain

Posted on April 21, 2016 by Anthony Jerdine

I was reading a good Book on a beautiful Cleveland morning. The author of Riveted explains how you can make your message go viral (it takes real skill, or you will be ignored and forgotten).

Jim Davies says you have to understand 6 things about the human brain to win friends and influence people:

1. We are interested in stories about humans…

2. We pay particular attention to things we hope or fear are true…

3. We delight in finding patterns…

4. We are attracted to incongruity, apparent contradictions, novelty, and puzzles…

5. The nature of our bodies—the nature of our eyes and other sense organs, affects what kinds of things draw us…

6. We have certain psychological traits, many of which are evolved, that make us like and dislike, believe and disbelieve…

So when you speak, write, and interact with other people, make sure you utilize all 6 of these to compel, fascinate, and persuade everyone you meet.

Oil Stocks Jump

Posted on April 13, 2016 by Anthony Jerdine

Oil Stocks Jump on Promised Production Freeze
By Anthony Jerdine April 13, 2016

Shares of offshore driller SeaDrill Limited (SDRL) skyrocketed Tuesday, climbing almost 30% to a high of $3.99, fueled by a 4.5% rise in oil prices. This continues the tug-of-war between the bulls and bears the market has witnessed over the past couple of weeks.
Another Case of “Too Fast, Too Soon?”
On Tuesday the bulls sent oil prices higher on reports that Saudi Arabia and Russia have agreed to a production freeze ahead of the producers meeting in Doha, Qatar on Sunday. This was further driven by a Reuters report suggesting the government expects the U.S. crude output to decline by 560,000 barrels per day in 2017 to 8.04 million barrels per day.

“People are now realizing that this OPEC meeting could be a historic turning point for the market,” Phil Flynn, an analyst at Price Futures Group, told Reuters. “Now, with U.S. production cuts, our sense is that we’re entering a new cycle upwards.”

SDRL shares closed Tuesday at $3.83, rising 24.35%. The company makes money from drilling contracts, supplying drilling services for oil and gas wells. And as oil prices rise, it raises optimism about the company’s potential revenue in the quarters ahead. Not to mention, rising oil improves the prospects for more favorable drilling contracts. But is this another case of “too fast, too soon?”

As it now stands, U.S. oil prices are now at their 2016 highs and well above $40 per barrel – an important near-term psychological benchmark. On Tuesday, Crude oil (West Texas Intermediate) closed at $42.17 per barrel, while Brent crude closed up $1.86, or 4.3% at $44.69, according to CNBC.com. But as we’ve seen in recent weeks, oil can take a sudden negative turn.

Investors should remain vigilant, if not a bit skeptical, that a meeting between members of OPEC (Organization of Petroleum Exporting Countries) Sunday will result in a production freeze.

“The market appears to be taking a lot of support from positive statements. But, this isn’t the first time the Russians have come out and made remarks related to a production freeze being imminent,” said Gene McGillian, a senior analyst at Tradition Energy, according to CNBC.
Despite Tuesday’s massive rise in the share price, SDRL stock has suffered 64% declines over the past twelve months, compared to a 2% decline in the S&P 500 (SPX) index during that same span. Is now the best time to take some profits from SDRL shares? The stock has a consensus sell rating and an average analyst 12-month price target of $1.73, implying a decline of 55% from Tuesday’s close.

Law of Attraction

Posted on April 11, 2016 by Anthony Jerdine

The Law Of Attraction is a modern spin on ancient philosophies. Through conceptualization and effort we can draw more positive elements and opportunities to us. If we imagine an opportunity or aspect of reality and focus on it, working towards that goal, we can manifest our desires and wishes.

It’s a simple concept that a lot of people complicate. Below is a checklist of common occurrences that happen as we start to strengthen and broaden our communication with the universe or higher power.

You Always Feel Ready For Change

You aren’t afraid to face your fears and challenges head on, giving everything you’ve got to life. You accept the things you can’t change and are grateful for what you can change. Change is a necessary and unstoppable part of life. By welcoming constantly in flux aspects of life, we ensure that we are in a position to best take advantage of our shifting horizons.

Your Attention Is Kept On The Present Moment

The present moment is the only time frame that we have power over. The past is irreversible and subject to interpretation depending on why we are looking backwards. The future is completely uncertain and full of assumptions and expectations. The best way to manifest a better tomorrow is to keep our present moment in line with our intentions.

You Naturally Turn The Negative Into Positive

You understand that you won’t be successful at everything you do all the time. Besides our own shortcomings sometimes negative aspects pile up at our feet, seeming to limit our options. You use the negative in your life to serve your best interests. Treat negativity like you would fertilizer or manure, use it to strengthen and grow other formations within you. Learn from your mistakes and don’t let them haunt you.

You Feel Happy And Content

Your abilities give you a sense of Zen, regardless of what’s going on in your life. You are confident in your ability to roll with the punches and maximize your harvest of good things in your life. Even when everything seems counter intuitive and wrong you understand these feelings will pass.

Good Things Keep Happening To You

Despite any hiccups or shortcomings, you always seem to come out on top. This is due to the fact that you’re flexible mentality and forward moving momentum help you adapt and maximize any possible benefits. Also, you have learned to be appreciative for what you have, so this celebration attracts more benefits to you.

Wheatgrass

Posted on April 5, 2016 by Anthony Jerdine

Posted by Anthony Jerdine| April 5, 2016 Wheatgrass Turn Gray Hair
Back to Its Natural Color?

Gray hair: The ultimate telltale sign of aging. Approximately half of all 50-year-olds are at least 50% gray. Try as you may to postpone the inevitable with expensive, foul-smelling and messy dyes, the battle against gray is predictable… gray is pretty much the undefeated champion. Or is it?

Regular consumption of the young grass of a common wheat plant can recolor those grays so that you can enjoy your lush, natural color well into your senior years. And it doesn’t just stop at the gray. This young cereal grass slows down the entire aging process by rejuvenating your cells, detoxifying your body, fighting tumors and tightening loose and sagging skin.

Gray Isn’t Just a Sign of Age

The age-old healing system of Traditional Chinese Medicine (TCM) links hair pigmentation to the quality of your blood and the strength of your kidneys. According to TCM, gray doesn’t mean old as much as it points to weak kidneys and blood.

Made up of 70% chlorophyll, wheatgrass, from the wheat plant triticum aestivum, restores the health of your kidneys and blood.

Chlorophyll helps to strengthen, build and oxygenate the blood. It is remarkably similar to hemoglobin, a compound that carries oxygen to the blood. Once consumed, chlorophyll is transformed into blood. It then transports nutrients, such as oxygen, to your cells, tissues and organs, rejuvenating, protecting and strengthening.

Renowned nutritionist, Dr. Bernard Jenson, discovered that wheatgrass and other green juices high in chlorophyll are nature’s best blood builders. In his book Health Magic Through Chlorophyll From Living Plant Life, he cites several cases in which he was able to boost red blood cell count in a matter of days simply by having patients soak in a chlorophyll-water bath. Consuming wheatgrass and other green juices regularly has been proven to boost red blood cell count even more rapidly.

Beyond Beautification and into Total Body Health

Wheatgrass is made up of an impressive array of nutrients that reinforce and rejuvenate everything from our cells and tissues to our organs and bodily systems. In addition to its 70% chlorophyll makeup, wheatgrass contains 17 essential amino acids, 90 minerals, 13 vitamins and 80 enzymes. Prominent research scientist Dr. Earp-Thomas says that,”15 pounds of wheatgrass is the equivalent of 350 pounds of carrots, lettuce, celery and so forth.”

Wheatgrass delivers an impenetrable line of defense against disease. An all-natural and powerful detoxifier, wheatgrass protects the liver and purifies the blood by neutralizing toxic substances such as cadmium, nicotine, strontium, mercury and polyvinyl chloride.

Detoxifying is the first step. From there, wheatgrass takes the offensive as a proven anti-cancer agent that stops tumors in their tracks.

Fact: Cancer cells cannot develop in oxygen rich environments!
Wheatgrass is an abundant source of liquid oxygen. Boosting the production of red blood cells and increasing oxygen in the blood helps fight cancer cells because cancer cannot survive in such alkaline rich environments.

A recent study published in the journal Mutation Research pitted chlorophyll against beta-carotene and vitamins A, C and E. Chlorophyll had a greater anti-cancer effect than all the other nutrients. Wheatgrass truly is total body nutrition in one gulp!

Why Has This Proven Anti-Aging Cure Been Hushed Up?

Practically every week, new alternative health breakthroughs are discovered. Most of these anti-aging and longevity cures are already scientifically proven to heal a wide variety of diseases… eliminate pain… slow down or reverse the aging process… and enhance total body wellness. Yet, these powerful health alternatives—most of which are inexpensive or free—are unknown to most people because mainstream media rarely reports them. To the contrary, these powerful health solutions are systematically suppressed and even banned.

The reason for this is simple: these inexpensive natural treatments threaten the profits of mainstream medicine and the pharmaceutical industry. Imagine what would happen to the earnings of Big Pharma and the medical industry if people had the information they needed to heal themselves of virtually any disease or health problem? Everyone would be able to optimize his or her own health and well-being… and no one would ever need medical treatment again—except for emergencies and natural disasters.

Oil Producers Not Alone in Downturn

Posted on March 31, 2016 by Anthony Jerdine

Oil Producers Not Alone in Downturn
By Anthony Jerdine | March 30, 2016

Much is written about the plight of shale oil producers stemming from the downturn in oil prices. Forty-two oil companies declared bankruptcy in the U.S. in 2015, according to Haynes and Boone, and management consulting companies like Deloitte predict much more will experience the same fate in 2016. (For more, see: 5 Energy Companies Crushed by Low Oil in 2016.) Oil producers are not the only ones suffering in the oil downturn. Many other sectors related to oil production are also facing challenges as the number of Exploration and Production (E&P) companies declaring bankruptcy grows.

Midstream Companies
Oil transportation companies, also known as midstream companies, are feeling the pressure of low oil prices. E&P companies, or upstream companies, are hoping to exit deals made with these midstream transportation companies as oil producers seek bankruptcy protection under Chapter 11 restructuring, reports Oil & Gas 360. It is an unusual move because these transport contracts are usually unbreakable and remain in place even after production is sold to a new owner post-bankruptcy. In this lower oil price environment; however, upstream companies that are burdened with high debt loads are seeking alternative ways to free themselves from other financial obligations to provide more flexibility during bankruptcy proceedings.

This is a real headache for midstream companies that negotiated transportation contracts when oil prices were significantly higher than they are today. Bankrupt E&P companies are no longer able to pay previously negotiated prices and are trying to cancel pipeline contracts to clear the way for possible acquisition deals. For example, Quicksilver Resources Inc. is seeking to cancel its pipeline transportation contract with Crestwood Midstream Partners LP(CEQP) by March 31 to close the sale of its U.S. assets to BlueStone Natural Resources for $245 million, Reuters reports.

In another deal, Sabine Oil & Gas filed a motion in court to cancel its midstream contracts. Sabine argued that it “could not deliver the required minimum amounts of gas and condensate and that rejection would save Sabine as much as $115 million,” according to the law firm Jones Day. Fitch Ratings, a credit rating agency, said in a press release related to Sabine Oil & Gas’s motion to cancel its contracts with the midstream service providers that “counterparty risks continue to be a concern for the midstream service space given expectations for continued E&P bankruptcy activity.”

Offshore Drillers
Another sector that is under a lot of pressure is the offshore drilling sector. Moody’s, another credit rating agency, says the offshore drilling industry is going through a severe cyclical downturn, and the agency expects day-rates to remain depressed over the next several years because of low producer spending and rig oversupply.

Paragon Offshore plc filed for bankruptcy on February 15, affecting $2.4 billion worth of debt, according to Moody’s. Paragon joins several other energy companies that have sought creditor protection amid the oil rout. Hercules Offshore Inc., the owner of the largest fleet of shallow-water drilling rigs in the Gulf of Mexico, said Feb. 11 that it’s exploring strategic alternatives — just three months after emerging from bankruptcy, Bloomberg reports.

At the end of February, Moody’s concluded rating reviews on six U.S. offshore drilling companies. Moody’s downgraded two companies’ ratings three notches, three companies’ ratings four notches and one company’s rating (Ensco plc) five notches to B1 from Baa2. The sharp downgrade reflects Moody’s view that Ensco’s leverage will increase to very high levels as more of its rigs roll off contracts in an extremely challenging offshore contract drilling market.

Multiple notch rating moves are rare for the rating agencies and are usually reserved for industries or companies under considerable financial strain.

Rig Contractors
Rig contractors have suffered the double blow of declining customer demand due to tumbling oil prices and a glut of vessels that continue to be built to meet orders made before the rout, Rigzone reports. Transocean Ltd. (RIG) leads the industry in reducing its fleet, with 24 rigs scrapped since the downturn began and it could retire another eight to ten over the next year to 18 months. In the meantime, Schlumberger (another oil industry service provider) said it’s not expecting a meaningful recovery in its own activity until next year.

Bank Loan Exposure
Debt has fuelled the shale boom, but as prices fell, companies that borrowed too much have started to find themselves under strain. This is also putting pressure on the banks that lent to these companies to fund the expansion. IMF economists warned in February that commodity price shocks could weaken banks in developing economies. It is not just regional banks in the US that are feeling the pain—big international banks have exposure to the oil sector too.

As an example, bankrupt Paragon Offshore mentioned earlier, has debt that includes $708 million due under a revolving credit agreement and $642 million due under a secured term loan, both organized by JPMorgan Chase Bank, Bloomberg reports. As a result, several major banks are reducing their exposure to the energy sector by attempting to sell off souring loans, declining to renew them or clamping down on the ability of oil and gas companies to tap credit lines for cash, the Wall Street Journal reports.
It is not just production companies that are hurting from the drop in oil prices. Everyone from businesses that sell ancillary services such as transportation to the banks that finance the industry is feeling the effects of low prices. If oil prices stay at depressed levels for an extended period, then the number of companies filing for bankruptcy is likely to rise and will extend beyond just the upstream producers.

Apple Encryption Case

Posted on March 30, 2016 by Anthony Jerdine

Apple Encryption Case: FBI Cracks Shooter’s iPhone (AAPL)
By Anthony Jerdine| March 29, 2016

The Department of Justice has brought an abrupt end to the encryption fight it had been waging with Apple Inc. (AAPL) over an iPhone used by Syed Rizwan Farook. In a two-page filing Monday, the government said it had gained access to the phone’s data and no longer required Apple’s assistance:

“Applicant United States of America, by and through its counsel of record, the United States Attorney for the Central District of California, hereby files this status report called for by the Court’s order issued on March 21, 2016. (CR 199.)

“The government has now successfully accessed the data stored on Farook’s iPhone and therefore no longer requires the assistance from Apple Inc. mandated by Court’s Order Compelling Apple Inc. to Assist Agents in Search dated February 16, 2016.

“Accordingly, the government hereby requests that the Order Compelling Apple Inc. to Assist Agents in Search dated February 16, 2016 be vacated.”

The government had wanted to force Apple to provide assistance to the FBI in unlocking the phone, which was used but not owned by one of the shooters who killed 14 people in San Bernardino in December (the owner consented to have the phone searched). Due to security features Apple had developed – largely in response to Edward Snowden’s 2013 revelations about government snooping – the phone could potentially have erased all of its data if officials had entered the passcode incorrectly ten times.

Apple refused to help the FBI, arguing that doing so would in effect create a “back door” to its products that could be exploited by any number of government or criminal actors. In an interview, CEO Tim Cook called the software the FBI was requesting “the equivalent of cancer.”

On March 21, the DOJ said in a filing that the FBI may have found another way to bypass the phone’s security measures, as an unnamed third party had come forward offering assistance. If Monday’s filing is to be believed, that party, which remains unidentified, was successful.

In response to the news that the DOJ would drop its dispute with Apple, the company released the following statement to the media:

“From the beginning, we objected to the FBI’s demand that Apple build a backdoor into the iPhone because we believed it was wrong and would set a dangerous precedent. As a result of the government’s dismissal, neither of these occurred. This case should never have been brought.

“We will continue to help law enforcement with their investigations, as we have done all along, and we will continue to increase the security of our products as the threats and attacks on our data become more frequent and more sophisticated.

“Apple believes deeply that people in the United States and around the world deserve data protection, security and privacy. Sacrificing one for the other only puts people and countries at greater risk.

“This case raised issues which deserve a national conversation about our civil liberties, and our collective security and privacy. Apple remains committed to participating in that discussion.”

Unresolved Questions
The outcome leaves a number of difficult questions brought up by the case unanswered. The appropriate role of the 18th-century All Writs Act, which the government had used to try to compel Apple to help it unlock the phone, is still unsettled. The larger debate over the balance that government and business should strike between security and privacy concerns is also unresolved.

That debate had widened to the point that, by late February, a host of public luminaries had come out on either Apple’s side or the FBI’s, with President Obama decrying the urge to create “black boxes” that no warrant could gain access to, and Silicon Valley CEOs such as Mark Zuckerberg and Sundar Pichai supporting the stand taken by their Apple counterpart. The public also became involved, with 89% of respondents to a February 18-21 Pew Research Center poll expressing an opinion on the case:

From Cook’s perspective, it is likely a relief not to be involved in an ongoing dispute with the U.S. government. He is no longer in danger of being declared in contempt of court and jailed over the original court order, issued on February 16, which might eventually have compelled Apple to provide the software the FBI wanted.

On the other hand, Apple’s encryption has been shown to be vulnerable. The government, in short, may have created its own back door, which may worry iPhone owners and which begs the question: will Apple now create even stronger encryption, perpetuating the arms race between security forces and privacy advocates? The answer is almost certainly yes, so the issue is likely to resurface.

The Verdict
The FBI, according to a court filing, has found another way into the iPhone used by Syed Rizwan Farook, presumably through the assistance of the unnamed third party it mentioned last week. It is not certain that the government has in fact been able to access the phone, but in any case it’s abandoned its pursuit of Apple’s assistance, which CEO Tim Cook had bitterly resisted giving. That leaves the broader debate over the balance between privacy and security in the post-Snowden, post-9/11 era unresolved. In addition, iPhone owners are likely wondering whether the government can now bypass their encryption.

ChartAdvisor 3/27/16 (SPY,DIA)

Posted on March 27, 2016 by Anthony Jerdine

By Anthony Jerdine| March 27, 2016

The U.S. markets moved lower over the past week, as of Thursday’s close, with the steepest declines coming from small-cap stocks in the Russell 2000. With crude oil prices falling nearly 4%, hopes that the crude market rally could save struggling U.S. oil producers were dashed by record levels of supply build-up. There is also growing concern over the weakening of U.S. manufacturing, particularly amid dovish monetary policy decisions out of the European Central Bank (ECB) and Bank of Japan (BOJ).

International markets were mixed over the past week, as of Thursday’s U.S. close. Japan’s Nikkei 225 rose 1.3%; Germany’s DAX 30 fell 1%; and, Britain’s FTSE 100 fell 1.2%. In Europe, Markit PMI readings picked up in March in a sign that the region avoided a further slowdown in March. In Asia, China has shown some signs of strength during the first quarter of this year, although regulators believe that there’s still a lot of reforms that need to be pushed through to grow.

inRead invented by Teads
The S&P 500 SPDR (ARCA: SPY) fell 0.69% over the past week, as of Thursday’s close. After briefly touching its R2 resistance at 204.98, the index moved lower toward its trend line support. Traders should watch for a breakdown toward the 200-day moving average at 199.58 or a rebound to retest its R2 resistance. Looking at technical indicators, the RSI remains overbought at 63.75, while the MACD could see a bearish crossover over the near-term.

SPY Chart

The Dow Jones Industrial Average SPDR (ARCA: DIA) fell 0.43% over the past week, as of Thursday’s close. After briefly breaking through its R2 resistance at 175.42, the index retreated toward its trend line support. Traders should watch for a breakdown to R1 support at 170.01 or a rebound higher to retest its prior highs just above its R2 resistance. Looking at technical indicators, the RSI is overbought at 68.36, while the MACD could be coming to the end of an uptrend.

DIA Chart

The PowerShares QQQ Trust (NASDAQ: QQQ) fell 0.1% over the past week, as of Thursday’s close. After briefly breaking above its 200-day moving average, the index fell lower toward its R1 support at 106.27. Traders should watch for a rebound toward R2 resistance at 110.35 or a move lower toward its 50-day moving average at 102.81. Looking at technical indicators, the RSI appears modestly overbought, while the MACD may experience a bearish crossover.

QQQ Chart

The iShares Russell 2000 Index ETF (ARCA: IWM) fell 2.23% over the past week, as of Thursday’s close. After nearly reaching its R2 resistance at 110.19, the index fell to its R1 support at 106.03 and has remained near those levels. Traders should watch for a rebound to its R2 resistance or a drop to its trend line support at around 102.50. Looking at technical indicators, the RSI remains neutral at 55.42, but the MACD could see a near-term bearish crossover.

IWM Chart

The Verdict
The major indexes moved lower over the past week, as of Thursday’s close, but many still appear overbought based on their RSI readings. Next week, traders will be closely watching several important economic reports, including crude oil inventories on March 30 and employment data on April 1.

Why ETFs Are Popular with Wealthy Investors

Posted on March 22, 2016 by Anthony Jerdine

Why ETFs Are Popular with Wealthy Investors
By Anthony Jerdine | March 22, 2016

The higher their net worth, the more likely wealthy investors are to invest in exchange-traded funds (ETFs), according to research by Spectrem Group. This is particularly the case with younger investors, the study, Asset Allocation, Portfolios and Primary Providers, found.

The study breaks down just how much ETFs account for in the portfolios of affluent, millionaire and ultra-high net worth investors. Spectrem’s research also reveals which demographic is most likely to give their financial advisor the responsibility of managing their ETF investments.

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Here are the salient points from the study that can help advisors zero in on how better to serve these demographics. (For related reading, see: Finding and Retaining High Net Worth Clients.)

Allocation Among Investors
Domestic ETFs make up 14%—with an average value of $26,000—of the portfolios of mass affluent investors. This is up slightly from 2014 when ETFs with an average value of $25,000 made up 13% of their portfolios. These investors are defined as those with a net worth between $100,000 and $1 million (not including primary residence).

One-fourth of millionaires with a net worth up to $5 million invest in domestic ETFs. The mean value of these investments is $88,000. This is down from last year when 28% invested in domestic ETFs, which had an average value of $92,000.

Ultra-high net worth investors, or those with a net worth between $5 million and $25 million, are the most likely to be invested in domestic ETFs, Spectrem’s study found. Forty-three percent, up from 40% in 2014, are invested in ETFs. ETFs in their portfolios have an average value of $438,000. This is down from $469,000 in 2014.

The likelihood of the mass affluent, millionaires and the ultra high net worth investing in ETFs in the next 12 months also increases with their net worth. Thirteen percent of mass affluent investors indicated that they would invest in ETFs over the course of the next year. This compares with 21% of millionaires and 31% of ultra high net worth investors. Each percentage is basically unchanged from 2014, Spectrem points out.

Significance of Age
When it comes to ETF ownership, age is only a significant factor among millionaire and ultra high net worth investors. Of the 25% who are invested in ETFs, 63% are Millennials. Only 37% are Gen Xers and 23% are Baby Boomers. Among the 43% of ultra high net worth investors who invest in domestic ETFs, almost half are 47 years old and under or 48-54.

Young millionaire and ultra high net worth investors are much more likely than their older counterparts to give their financial advisor the primary responsibility of managing these investments. Almost seven out of 10 millionaire Millennials and 44% of ultra high net worth investors ages 47 years old and under indicated that their financial advisor is primarily responsible for managing their ETFs.

Diversification and Other Drivers
Diversification is one of the primary factors affluent investors consider when selecting an investment. ETFs are finding increasing favor with wealthy investors for their diversification benefits, the research found. They are lower cost and there is a wide variety of ETFs to choose from. These funds can also be traded at any time of the trading day—like stocks—and not just at market close, like mutual funds.

Spectrem points out that young investors who tend to be more tech-savvy and environmentally conscious than older generations may find ETFs increasingly attractive. That’s likely because there’s a large pool of specific ETFs that track markets appealing to investors interested in niche markets, such as technology and socially-conscious companies.
ETFs are very popular with high net worth investors. Young millionaire and ultra-high net worth investors are also much more likely than their elders to give their financial advisor the responsibility of managing their ETF investments. Having a good background in ETFs and being prepared to offer a wide selection of them can only help advisors looking to broaden their cadre of wealthy investors.

Will European Deflation lead to More Stimulus

Posted on March 18, 2016 by Anthony Jerdine

By Anthony Jerdine  March 18, 2016

Eurozone central planners officially target a 2.0% annual inflation rate, but they failed to hit that mark in 2013, 2014 or 2015. This is a problem, at least according to many prominent Eurozone economists, because it highlights the risk of deflation in the region. To these economists, most of whom follow the policy teachings of John Maynard Keynes, the threat of deflation trumps nearly every other macroeconomic concern.

Deflation is a monetary phenomenon where the general price level in an economy declines. The value of a currency increases during deflationary periods when the money supply shrinks or when increases in productivity outpace its growth. Consumers see falling prices, and workers see an increase in the purchasing power of their wages.

Keynesian thinkers warn that deflation causes consumers to save too much and spend too little, slowing economic growth and threatening a downward spiral. Most are willing to print seemingly unlimited sums of money to avoid that result.

“The risks of acting too late outweigh the risks of acting too early,” Mario Draghi, the president of the European Central Bank (ECB), told an audience at a conference in Germany on Feb. 4, 2016. He was trying to rally support among a German population fatigued by years of unsuccessful stimulus plans.

The Theory Behind Deflation and Stimulus
Deflation seems beneficial to the economy at first glance. Declining prices allow individuals, especially the poor and those on fixed incomes, to enjoy higher standards of living. Indeed, some economists argue that a little deflation is normal and healthy, not destructive. However, to Keynesians such as Draghi, declining prices invoke the Paradox of Thrift, which states that lower prices cause less spending, which means less business revenue and slumping profits. They argue this has the potential to lead to a recession.

When Draghi was pressed in October 2014 about why higher prices would help Europeans, the central banker responded: “I’ve said many times, the recovery is weak, fragile, uneven, and still is, so the hope is that when we see some price pressure, some price power, back in the economy, at the same time, we would also like to see some strengthening in the economy.”

Major central banks try to avoid deflation through easy monetary policy. Easy monetary policy is supposed to raise prices, lower interest rates and discourage saving to make borrowing and spending more attractive. For those who believe spending is the engine of economic growth, as the Keynesians do, this is the obvious solution.

The Evidence of Past Efforts
The Federal Reserve, ECB and Bank of Japan all responded to the threat of deflation in 2008 and 2009 by buying toxic assets, which flooded capital markets with cheap money and lowered interest rates.

Currency devaluation and easy-money efforts date back more than a century and have mixed results. The Fed’s own quantitative easing programs were underwhelming in the United States, and the Federal Open Market Committee opted to raise target rates in December 2015. Japan has been mired in a low-interest-rate regime since the late 1980s, and has virtually zero growth over that period to show for it. The ECB acted less swiftly and less dramatically than its Japanese and American contemporaries, something European doves point to as a reason for the region’s tepid recovery from the Great Recession.

The Eurozone’s and Japan’s gross domestic products (GDPs) are still well below 2008 levels. The United States, by contrast, added more than $2.5 trillion to its GDP between 2008 and 2015. It is possible that friendlier business conditions and a general faith in the US. dollar are responsible for this difference, rather than varying levels of monetary stimulus.

In December 2015, the ECB announced more aggressive bond purchases, slashed its deposit rate from 0.1% to -0.3% and extended its stimulus program a potentially indefinite length of time. The president of Germany’s Bundesbank, Jens Weidmann, strongly dissented and argued against extra stimulus, arguing that it harms price stability.

What Comes Next
According to ECB data, consumer prices fell by 0.2% in February, probably because energy prices were very low. It was the region’s first calculated deflation since September 2015.

Inflation in the Eurozone was below 0.5% on a monthly basis every month between July 2014 and February 2016. The most direct way to push prices up even further is to devalue the euro. The ECB can most easily devalue the euro through a more pronounced asset-buying program and throwing even more cheap money at European capital markets. In other words, the ECB can make it uneconomical to hold on to euros.

The ECB has a scheduled policy meeting on March 10, 2016. The return of deflation should spark lively debates between hawks and doves on another stimulus round. Draghi seems firmly committed to fighting deflation, and the ECB has a majority of Keynesians. Expect future stimulus programs in Europe and added downward pressure on the euro.

Will European Deflation Lead to More Stimulus?