Insights, insights, insights....

This is the goal of every trader: to gain an insight into the market he or she is trading so as to consistently make profits.

I hope to supplement your insight formation processes with this blog, and wish you all the best in your trading endeavours!


(Please click on the pictures to get a closer view)

Today, I will be featuring some of the 30 component stocks in the Dow so that readers can use the information to perhaps decide where this crucially important index is headed in the short, medium and long term.

The technical picture on Dow Jones Industrial Average components


IBM

With over a 6% weighting in the Industrial Average, and with the relative strength of technology , IBM is, in my opinion, a crucially important stock in deciding the direction of the Dow.


























Personally, I believe there is a switch of capital from consumer discretionaries and financials over to techs. Witness the strength of Microsoft(despite Bill Gate's selling),Hewlett Packard and even Intel, not to mention the soaring ebullience of Google, Baidu.com and Research in Motion!

Citigroup

With an analyst's moxie putting the banking giant in sharp focus this last week, Citigroup's rebound or further breakdown could help or impede the Dow's progress.
The bank's slogan used to be 'Where Money Lives', but longtime resident Moolah seems to be fleeing its home lately.




















On a medium-term basis, Citigroup stock has seemingly broken down completely, but the Fibronacci levels indicated could provide some measure of support.


















For the last stock to be featured today, think OIL!



Exxon Mobil

















The meteoric rise in the price of black gold has caused Exxon Mobil stock to behave almost like an Internet stock did in the late 90s, as investors hoping to participate in its record profits chased the stock up to the rafters.

However, Crude Oil has little upside from current levels, and news reports are alluding to the fact that Exxon may actually now be hurt by such stratospheric oil prices, perhaps due to their hedging against it.



Next, the 'Halo' stock.

Microsoft

















The next topic I want to focus on is the carry trade. For this I monitor the technical picture of the JPY/USD cross very closely. The sudden surge of the Yen to 112 to the Greenback on Aug 17th was a clincher that emboldened me to buy into stocks that day.














Currently, the JPY is the only major currency to fall,albeit slightly, against the US Dollar, while every other currency is gaining like gangbusters, especially the Euro, on the heels of the second Fed rate cut in less than two months.

One of the reasons is the carry trade, where traders borrow in Yen and convert to Dollars and other currencies like the high-yielding Aussie and Kiwi to trade emerging market stocks.

The chart above shows that the 114 level has not been broken despite the volatility of last week, and so the carry trade is alive and kicking!

However, speculative traders may need to monitor the 114.00 level as this level needs to be supported intra-day for the current uptrend of the US Dollar to be maintained.