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I posted on Tuesday, August 17th that the Dow Jones will drop to 10,000 points from 10,450 points then bounce a bit, and again head lower to the next support level 9,600.  As you can see from trading the actions of August 26 and 27 that it is exactly how it is playing out.

Looking at the 6 month chart for the DJIA, it looks like the market is at the beginning of a downtrend, the 10 and 200 day moving average is well over the price adding to downward pressure, however it looks like their might be a small pop upwards as the price hits the 50-day moving average, but after that my guess is that the downward trend will continue bringing the Dow Jones down to 10,000 and if it breaks past that down to 9,600 again.  Also looking at the MACD it looks like a downward indicator as well ( please read my disclaimer).  I have been wrong before so do your own due deligence, this is just my read on the market.

I recently bought some contracts in iShares Silver ETF (SLV) for Jan 2011 @ $19. Why am I now looking into silver, my reasoning behind it is that the stock market at this point may have topped and for the rest of the summer most likely will go down ( as mentioned in last article). In light of this, GOLD and SILVER have an inverse relationship to the stock market, so my speculation is that within the next six months when the stock market goes down the price of silver will be rising. The iShares Silver ETF is currently trading at $18.43, and I am speculating that it will be above $19 by years end.

Recently I have re-installed Metastock 10 stock charting program on one of my computers running Ubuntu linux. In case you are thinking “Metastock 10 does not run on Linux”, let me clarify…I am running the stock charting program in a VMWare image of Windows XP. The funny thing is a message comes up when I start Metastock that says something like “This program does not run in virtual machines” however, everything seems to work fine.

Below are a set of links to videos which teaches you the basics of “Trend Trading.”  Given the fact that some economist in the U.S are saying that the recession has bottomed out, it may be a good idea to learn and train yourself to be a better trader when the slow recovery comes around.  Even in this current environment, there is still some money to be made by the volatility.

Here is a video of a British economist, talking about how the rest of the world feel right now about the irresponsibilities of the U.S Government and the U.S financial system.

Click “PLAY” to watch the video…interesting views.

Get the Flash Player to see this player.

When it comes to stock trading the term “Dead Cat Bounce” basically means a sucker rally, after a steep drop in the market. The term dead cat doesn’t sound very appealing, but somehow this phrase “Dead Cat Bounce” stuck among Wall Street financial professionals.

As you can see from the chart above, the Dow Jones Industrial Average has had quite a drop since last october, from 14,000 top down to now around 7000 points.  Is the worst over?  Have the markets hit bottom yet?

Here is the last video of the Trend Trading video course. It will introduce you to the basics of shorting stocks or options. Basically, shorting is a situation or strategy for when you think the underlying stock of a company is going to go down in share price, instead of up.

Click on PLAY to watch…below.

Knowing when to play the gaps for trading stocks and options is the subject of this Part 5 of the Trend Trading video trading course. This is a good video for beginners to learn how to make money with gaps, and how to identify and profit from them.

Click on the PLAY button on the flash player below to begin the video.