Talk about living in turbulent times! Have you noticed how the US stock market has been taking a beating of late?

If you wanted an example of a real yo-yo market, you only need have followed the Dow Jones over the last few weeks and this would have been a perfect example. Not that the Nasdaq was performing any better either!

With all this movement, it’s almost as if the market is desperately trying to establish a trend, but not quite settling into one.

Whenever this happens, our advice to any would be investor is to resist any temptations to jump in to make a quick kill, as the technical signals appear to be somewhat inconsistent and are not reliably leaning in one direction or another.

This is a typical sign that the market is in a yo-yo trading mode, with gains that are made in one week being given back the following. This is an expensive way to learn about market volatility.

It appears that a lot of the smart money is not convinced that the bottom is in place and therefore does not see an opportunity to buy good stocks cheap just yet.

Meanwhile there is lots of noise coming from market gurus and other would be “experts” on what stocks to buy and why, with many of them having conflicting views on what the market is doing at the moment.

Our advice? The market’s too unstable at the moment and some perfectly decent stocks are getting caught up in the general turbulence. Let things settle a little better before you even begin to think about diving in.

The only way to learn to trade is by doing. Imaginary "paper trading" won't cut it.

There is nothing like having real money on the line to test ones' psychological reactions to fear and greed.

Learn to Trade is really about timing. Buying and holding a position over a period of years proves nothing. How one reacts in every sort of market is key.

Set up an "experience" fund consisting of 10% of your available risk capital but not more than $5,000 maximum.

Force yourself to trade in only one issue at a time; long or short. You can trade 100 shares of an average-priced stock, 50 shares of a high-priced stock, or 200 shares of a low-priced stock but only one issue at a time.

If a second issue looks attractive, force yourself to choose which one to go with.

Your goal is to always be long or short the most suitable stock at the moment. If you can't find one, stay in cash until one shows up.

Look only for situations that look to yield potentially large gains. You won't always hit "home runs" every time, but a lot of "singles" or "doubles" isn't bad either.

Your goal should be to always show an "absolute" net trading profit each and every month. You're not interested in performing "relatively" well compared to some market average.

There is only one trading rule that is always correct: Losses must always be "cut"!

They must be cut quickly, long before they become of any financial consequence.

It is impossible, in my opinion, to rack up an accumulation of net trading profits over a large number of trades, that includes both profits and losses, without being "good".

Learn to trade well enough and you just might be able to quit you're day job.

A Mid-May meltdown in emerging markets and commodities has pressed the panic button of fund managers globally. In the past month mayhem nearly 2 trillion of wealth has been wiped out.

What markets had gained in last 6 months is wiped out in one month and this knee jerk reaction is attributed to hike of interest rates by Federal Reserve to control inflation. The growing fear among the market analysts is that with increasing interest rates and inflation there is an increasing chance of economic slowdown.

With concerns over US economic slowdown the emerging economies soon follow and most of them crashed by almost 20 to 25 % in the past month. According to www.emergingportfolio.com, investors have withdrawn almost 8.5 billions from the emerging markets equities in last one month.

What’s in store for the future?

The early 2006 rally is now thing of past and the market looks more bearish than bullish. In fact it will be a great surprise if the markets able to touch their mid-may high anytime sooner than couple of years.

In short to medium term the stock market looks range bound until fresh infusion of money in economy and job creation targets are achieved.

Economic indicators

Increasing crude oil prices has start putting strong pressures on companies’ bottom lines. With no way out Iraq any sooner and Iran crisis looming large, the oil prices will certain to spiral higher putting a big question mark on growth prospects.

Germany and France deep into a slumber, Europe doesn’t seem like the next engine of growth in the world hence all signs are indicating a prolonged downturn or at best flat markets across the world.

In these uncertain times many investors are worried about there mutual fund performance and are looking for mutual fund alternatives for growth.

There is one simple investment (and we mean anyone can do it) that has on past performance exceeded gains of 50% per annum, and this looks set to continue.

So what investment are we referring to?

The investment is copper

Prices of copper have increased in price more than six-fold since late 2001!

These gains look set to continue and this investment is a great alternative to mutual funds in terms of performance and risk / return.

It’s easy to invest in copper.

This is a bull market and all traders need to do is to time their entry correctly and then sit back and enjoy the ride.

So why is copper so bullish

Quite simply, we have low inventories tight supply and huge demand as global economic demand soars, as the new economic super powers of China and India join the economic elite.

Copper is a barometer of economic growth and global demand overall is soaring, there is simply not enough copper to meet demand and this means higher prices.

Risk

When looking at mutual fund alternatives is copper more risky than mutual funds?

We don’t think so, at the end of the day, mutual funds are much more volatile than many believe and the investment performance of most fund managers is dire – if you make double digit gains your lucky!

Copper on the other hand is up 600% in just a few years and you can trade with unlimited profits and limited risk with options.

Diversification

Reduces risk of your overall portfolio and copper is therefore an mutual fund alternative investment that can compliment your existing portfolio and reduce risk.

Commodities buy and hold

If you are looking at commodities as a mutual fund alternative then you need to adopt a simple buy and hold strategy for long term gains – Keep in mind, your investing for the long term.

Other opportunities for 50 – 100% annual gains

Copper is not the only commodity that makes a great mutual fund alternative investment, there are many more.

We have recently for example, written articles on energies and you may have seen our recommendations in just two weeks make more than most fund managers do in a year!

Check out our previous articles and you will see.

In fact, our copper trade last week achieved a similar performance!

Commodities are a great mutual fund alternative investment, because they are easy to understand, their real and everyone can follow the trends happening in the global economy.

Could this be the most profitable of all?

As a mutual fund alternative copper is a great investment, crude oil and unleaded gasoline have also done very well for us, but perhaps the best mutual fund alternative of all is natural gas.

Natural gas continues to trend lower, but will probably become one of the biggest commodity market bull moves of recent years and investors can easily make 100% per annum.

Why?

Because crude oil prices are high and natural gas is cheap and not subject to geo political concerns that affect crude oil.

So, the switch to gas that has already started will accelerate. Furthermore, supply will not be able to keep pace with demand and this will see huge price spikes.

Many Americans working overseas may experience higher tax bills under the new law signed by President Bush. In some cases, overseas taxpayers could face tens of thousands of more dollars in taxes.

Those most affected will likely be those living in high cost areas, such as Hong Kong and Singapore. Those whose companies don't help cover the additional tax burdens of living abroad may suffer the highest increases. For companies with special relief packages for taxes, the additional costs could mean that fewer workers will be working abroad.

Under the old law, Americans working overseas could exclude up to $80,000 of foreign-earned income for 2006. Under the new law, the figure rises to $82,400. But the rate after that level is now higher than before. The new law also reduces the amount of housing costs that can be excluded or deducted.

The provision is expected to raise an estimated $2.1 billion in revenue over the next 10 years.

It is unclear how companies will react to the new law. The additional tax burden is expected to "significantly affect the cost" of overseas assignment, according to an Ernest & Young report.

In some areas of the world, American workers can expect to have as much as $20,000 in additional taxes for this year.

The monthly chart below shows SPX managed to close the month above the middle Bollinger Band, maintained the bullish MACD, and held Money Flow steady. So, the cyclical bull market remains intact. Also, intermediate-term technical indicators, e.g. the NYSE's Summation Index, Bullish Percent Index, and Oscillator MAs, reached low enough levels in June, consistent with other cyclical bull market pullbacks, to indicate an intermediate-term bottom. However, a breakdown of those lows will lead to a larger correction or a bear market. Also, SPX had a classic October to May rally and has entered the seasonally weaker period. Consequently, a volatile trading range will likely take place over the next few months.

The daily chart below may indicate the SPX July trading range. Volume normally decreases over the summer. Major support levels are 1,253 (multi-year Fibonacci level) and 1,246 (previous support & resistance). Major resistance is 1,275 (previous support & resistance) and 1,290 (downtrend high). So, the July trading range may be between 1,246 and 1,290. There are many minor support and resistance levels within the range. A rise above 1,290 is bullish and a fall below 1,246 is bearish. Short-term technical indicators are useful (some shown below and explained in the Option Trading Log next day and next week trading plans), along with influencial market events, which may or may not have been fully discounted.

Free charts available at PeakTrader.com Forum Index Market Forecast category.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.