Posts Categorized: Trader Dan Norcini

Posted by & filed under King World News, Trader Dan Norcini.

Click here to visit Trader Dan Norcini’s website…

Dear CIGAs,

With global investors looking for direction in many of the key markets, today King World News interviewed legendary Jim Sinclair’s chartist, Dan Norcini.  Norcini told KWN that many of these markets have been taking a tremendous toll on traders.  Here is how Norcini described the situation:  “Traders are literally sitting on edge.  As each bit of economic data comes out or each story breaks out of Europe, traders have no conviction as to which way things are going.  So, what’s happening is this lack of conviction, this confusion, has traders jumpy.”

Dan Norcini continues:

“They are afraid of getting caught on the wrong side of the market because the moves, in many cases, are extreme.  Any news that seems to come out and shatter the market psychology, and you end up with some pretty violent moves in these markets. 

As an example, yesterday, almost immediately when the ISM cleared the wires, you had copper moving higher and crude broke above $106.  The stock markets also headed higher and the bond market took a hit.  Traders are jumpy, so they quickly jettison positions, in favor of what they think might be the beginning of a new trend.  That can change again the next day….

Click here to view the full interview on King World News…

Posted by & filed under Trader Dan Norcini.

Click here to read the full article on Trader Dan Norcini’s blog…

Dear CIGAs,

This morning’s big news item was the fact that US Q1 GDP growth came in at 2.2%, well under expectations of 2.6% growth predicted by analysts and well down from Q4 2011 growth of 3.0%. Under "normal" circumstances, such a number would have been expected to put downward pressure on the bellwether copper market. ‘Twas not the case however as copper shot up on the news bursting through the 50 day moving average in the process. What gives? Simple – we are now in an environment in which the more bad news we get, the more optimistic traders are becoming that the next round of QE is coming right up.

That is what gold began sniffing out in yesterday’s session and appears to be continuing today. We have been accustomed to seeing these rotten numbers generate the risk aversion trades, trades in which commodities in general are dumped and the Dollar is bid higher. We are now seeing a change in trader perceptions, which after all is what runs markets, in which the steady trickle of news showing a deteriorating growth pattern in the US is being met with increased expectations for QE sooner rather than later.

In other words, it is QE ON instead of RISK OFF.

As long as this perception continues, gold is going to move higher. The trick is just how bad do traders think the news has to get before it forces the hands of the Fed.

I think it should be noted here that we also have politics at play as far as the Fed is concerned. Governor Romney, the presumptive Republican nominee for President, has made it clear that he is not a big fan of Chairman Bernanke. Bernanke serves at the pleasure of the current President Obama. If Obama loses the upcoming election, Bernanke is OUT AND HE KNOWS IT. Now, maybe he no longer wants to play MASTER OF THE UNIVERSE, but methinks very few men are able to gladly relinquish such power. My guess is that he is going to make sure that if his boss goes down in flames at the next election, at least it will not be on Bernanke’s account for not acting to keep the markets from sinking lower.

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Posted by & filed under Trader Dan Norcini.

Click here to visit Trader Dan Norcini’s website

Dear CIGAs,

What more is left to say at this point other than the fact that the hedge fund computers and their damnable algorithms have destroyed the integrity of the US futures markets. The sheer size, extent, ferocity and volatility of the moves that these pestilential computers are creating have rendered these markets basically useless for what they originally came into being for, namely, risk management for commercial entities.

Price swings of this magnitude are blowing up hedged positions put on by commercials and other end users/merchants/processors, etc. While margins are reduced for legitimate hedgers, they still must meet any and all margin calls on any hedged position, whether that is a long position or a short position. Some will say that all they need to do is to buy or sell the corresponding physical commodity and while simultaneously lifting the hedge. That might work fine on paper but in the real world it is a fabrication.

A cattle feedlot, a grain elevator owner/operator, a cocoa processor, a cotton mill, etc, may or may not have the actual product ready to sell as it is still maturing or growing in the field or may not be ready yet to actually buy the product but they might have hedges in place while they are waiting. So much for their hedges in this sort of idiotically insane trading environment. Their hedges are getting blasted to kingdom come but they must maintain the thing if it moves against them meaning that they need cash to meet any and all margin calls.

At some point, the cost of doing so, with hedge fund running prices all over the damn planet on a daily basis, is no longer feasible.

I am predicting here and now that unless something is done to corral these hedge funds, the futures market is going to become useless as a risk management tool for non-speculative entities.

Take a look at the following CCI chart (it might as well be copper or silver for that matter) and look at the extent of the daily price swings. Tuesday saw a big sell off across the sector as traders feared European debt woes and that brought about the RISK OFF trades. Commodities were dumped, the Dollar was bid higher and up went the bonds. The next day was relatively tame by comparison as traders were hesitant to do much of anything. Thursday saw the entire losses of the previous two days erased as Fed Governor Dudleys’ comments were interpreted as making the case for another round of QE forthcoming sooner rather than later.

Today, news hit that Chinas’ growth had slowed in the first quarter to a "pitiful" 8.1%. Yep, such a debacle ( if we could get half of that over here, a lot of our fiscal budget woes and our unemployment problem would actually get better). I am of course being sarcastic but once again the hedge funds and their mindless machines dumped everything in sight since we all know that no one needs to eat when growth is slowing down now do they? The result, YEP – all of the Dudley rally went down in flames with the market right back where it ended Tuesday.

Maybe we all should just go the hell to sleep and wake up in a year and see if the chart has actually gone anywhere besides up and down like a stinking yo-yo.

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Posted by & filed under Trader Dan Norcini.

Click here to visit Trader Dan Norcini’s website

Dear CIGAs,

Years ago there was a men’s hair care product (okay – let’s call it what it really was and do away with the euphemisms – GREASE) by the name of Brylcreem. Boys and men slathered this stuff between the palms of their hands and then rubbed it into their hair. The result was that you could make that hair so stiff it would stay there all day no matter rain, fog, or gloom of night. Problem hair? No problem! Grease it into obedience!

In watching the price action in the S&P 500 this morning I am reminded of that commercial (Yeah I know – my brain thinks in weird terms!). The index had the audacity to become like a problem hair – uncooperative, unruly and generally out of place in the minds of the monetary authorities idea of what is supposed to be a beautiful head of hair.

So what to do about this? Why send the boyz out to the microphone and "grease" this thing back into compliance.

Note the price chart and you will see what I am talking about. For the first time this year the S&P had fallen BELOW the techically significant 50 day moving average. That is a gigantic "NO-NO", as it signifies a market moving toward a bearish posture.

Why, miracle of miracles, out trots New York Fed President Dudley with his comments fanning the hopes of those wishing for more QE, and "Voila!", back goes the S&P 500 through the 50 day moving average! Problem solved; hair greased back into place; now let’s go play Dodge Ball!

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