In this issue of TraderSavvy:
- Active Trader? Lind-Waldock has What You Need!
- Trade Virtual Dollars, Win $1,000 Real Cash! Futures Trading Contest
- Growing Season is Around the Corner! Get Free Corn Trades with Lind-Waldock
- Have an Opinion? Trade it! USFE Binary Event Futures
- LME Metals are Hot! Aluminum, Zinc, Nickel, etc
- Automate your Futures Trading Strategies

View additional market commentary on InsideFutures.com


TraderSavvy Newsletter for Futures Traders
In This Issue:

Greg Perlin of Lind-Waldock discusses his trading strategy in light of the Dow's recent rise.

April 30, 2007 TraderSavvy.com   |   Read Past Issues
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Published By Traders Media

The Dow: The Real Deal, or a Bubble?

If youíve read the financial pages or watched the news, you canít miss the headlines lauding the stock marketís recent ascent. The Dow Jones Industrial Average shot up past 13,000 for the first time ever on April 25, 2007, and had closed higher in 18 of the past 20 sessions.

Reasons for the surge have included decent corporate earnings reports, steady interest rates, and U.S. economic numbers that have been good enough to keep buyers on board.

Amid the Dowís record climb on Wednesday, April 25, we had a better-than-expected 3.4 percent rise in durable goods in March, and new home sales moved higher for the first time in three months. The Dow edged up further Thursday and Friday, April 26 and 27, but a weaker-than-expected U.S. gross domestic product reading gave reason for some pre-weekend profit taking in stocks, and the S&P 500 ended the week slightly lower.

(continued below...)


Special Message From Our Author:

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While investors seem to be cheering good news, what people aren’t talking about these days is the one gauge that could derail the market in a hurry—inflation. If you trade commodities, you might conclude inflation is more prevalent now than ever. Just take a look at a chart of markets such as gold, copper, or gasoline since the start of the year and you can see the trend.

I believe inflation will force the Federal Reserve not to lower rates, (as some market participants are speculating) but to possibly raise them. Consumer spending drives about two-thirds of the U.S. economy, and less spending on goods and services coupled with higher interest rates could let the air right out of the stock market. Remember the sub-prime lending debacle that made headlines last month? While the housing sector may see some signs of life from month-to-month, overall, I don’t believe the situation is improving.

Trading Strategy: Sell Dow Futures
I believe during the second quarter, the stock market is likely to see a sharp sell-off as investors realize things aren’t quite as rosy as they appear. I would recommend selling June Dow futures at 13,150, and put a protective stop at 13,250. My target is a move down to 12,805.

When the general public is so overly bullish and the press continues to tout these record levels, it may be a signal the market is overextended and is due for a correction. Too much complacency in any market can really catch people off guard. Remember Federal Reserve Chairman Alan Greenspan’s warning about “irrational exuberance” back in the late 1990s, and the bursting of the Internet bubble?

For more specific trading strategies to suit your particular situation in this or other markets, please feel free to contact me.


About Today's Author:

Years Trading: 14 Years
Favorite Movie: Field of Dreams

Greg Perlin is a Senior Market Strategist with Lind Plus, Lind-Waldock's broker-assisted division. A former CBOT member, Greg has been active in the industry for about 14 years as an independent floor trader, pit broker and floor broker with Cantor Fitzgerald, and as desk manager for Cantor's morning trade desk. For his Lind Plus clients, he brings the ability to remain calm through both adversity and prosperity, creating a solid foundation from which to develop market strategies. He believes success in trading commodities involves hard work and discipline, as well as a common-sense, flexible approach toward fundamental and technical analysis. He can be reached at 800-437-4189 or via email at gperlin@lind-waldock.com.

Past performance is not necessarily indicative of future trading results. Trading advice is based on information taken from trade and statistical services and other sources which Lind-Waldock believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder.

You can hear market commentary from Lind-Waldock market strategists through our weekly Lind Plus Markets on the Move webinars, as well as online seminars on other topics of interest to traders. These interactive, live webinars are free to attend. Go to www.lind-waldock.com/events to sign up. Lind-Waldock also offers other educational resources to help your learn more about futures trading, including free simulated trading. Visit www.lind-waldock.com.

Futures trading involves substantial risk of loss and may not be suitable for all investors. © 2007 Lind-Waldock® a division of Man Financial Inc All Rights Reserved. Futures Brokers, Commodity Brokers and Online Futures Trading. 141 West Jackson Boulevard, Suite 1400-A, Chicago, IL 60604.


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