By all accounts the month of July has been very positive for the major stock market indexes. The SPDR Dow Jones Industrial Average (NYSE:DIA) is now higher by more than 7.0 percent from the early July low pivot. This is a sharp advance higher in less than a thirty day period for the markets. The big question that most traders and investors are now asking is, how much upside is left in the tank?

July is an earnings reporting period for most companies; thus far the results have been mixed. In the beginning of the month the street reacted poorly to most earnings releases despite the numbers or guidance reported. Alcoa (NYSE:AA), and Intel Corp (NASDAQ:INTC) both sold off after reporting better than expected earnings. Recently the street has been reacting better to earnings and economic news. Even companies such as International Business Machines (NYSE:IBM) has bounced back after initially getting pummeled after reporting earnings. You can almost feel the mood of the market changing its mind on a daily basis. It is important to note that the Dow Jones Industrial Average has staged four major reversal days since July 16th. This is a very rare event and shows the amount of uncertainty that is still in the marketplace.

The driving force in this market is not earnings or the economic news. Nor is it the Federal Reserve Bank talking of the next remedy they have in the medicine chest. It will not be the European bank’s stress tests; it will not be any of these so called major events. It will be and has been one thing since 2008; it is the movement and action in the U.S. Dollar. When the dollar declines the markets inflate. When the dollar rallies the stocks markets around the world deflate. Personally, I believe it is that simple. Sometimes the stock markets will trade inverse to the dollar on a tick for tick basis. Other times the market will react inversely to the dollar on a daily basis. The end result is that the U.S. Dollar Index has dropped around 7.0 percent since the June high. It is rather ironic that the stock market is higher by 7.0 percent since the early July lows. It is all about the U.S. Dollar Index. The bottom line is when the dollar falls the stock market inflates.

Nicholas SantiagoChief Market Strategistwww.InTheMoneyStocks.com

- About the Author: Nicholas Santiago started trading in 1991. In 1997, he became a licensed Series 7 and 63 registered representative. He managed money for a large, affluent private client group. After applying his knowledge to his client base, he decided it was time to begin teaching those interested in learning his methods. He is an expert in Technical Analysis. He has become an accomplished technician in the studies of Elliot Wave, Gann Theory, Dow Theory and Cycle Theory. In 2007, he partnered with Gareth Soloway to form InTheMoneyStocks.Com and realize his dream of educating others about the truth of the markets. Article Source

The stock market has had big ups and downs over the past two years. Unfortunately, it has not served the buy and hold investor very well. And if one looks at the longer term, the Dow Jones Industrial Average is around the same place as it was in the late 1990s. A decade ago, people though momentum stocks and dotcom stocks would outperform all other assets. Gold, despite its reputation as a lousy investment that doesn’t pay dividends, has easily outpaced the stock market.  Even with all of this, there is one sector in the investment world that has done well. It’s the world of hot penny stocks.

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Let’s pretend for a second that there was a way to get a 20% profit on every trade. For example, if an investment of $1,000 was put into a hot penny stock that made 20%, the result would be $1,200. That $1,200 would become $1,440 after the second trade. Keep in mind that many investments get a profit far higher than 20%, but for the moment let’s assume a 20% profit per trade.  After the 38th successful trade, the investor will have $1,020,674.70 in his brokerage account due to the power of compound interest. All of this assumes the investor will reinvest all of his profits every single time, which is not hard to do if he’s getting at least a 20% profit each time.

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With the James Connelly formula, hot penny stocks that gain from 20% to well over 50% are used to help multiply the money in a brokerage account. Using this system, an investor can realistically make over 20% per trade consistently, allowing for compound interest to take an initial $1,000 investment to over $1 million in just 38 trades. The whole idea of the James Connelly system is to identify breakout penny stocks before they make the big move that makes them hot penny stocks. When a good penny stock is identified, investors using this system rush in before the stock makes it move. Once the stock has made its big move, then it’s time to sell and reap the 20% or more in profits. After that, it’s rinse and repeat.

As an astute student of mathematics, James Connelly defied his math professors who said he wouldn’t be able to find patterns in the stock market. However, opportunities for patterns came up in the micro cap stock market. Don’t believe Wall Street when they say emerging markets exist only overseas. It thrives during times when big cap stocks do poorly, like in the last decade. Investors need to put their money somewhere, so they look to other places such as penny stocks to get a better return. With more liquidity and patterns, now is the time to invest in hot penny stocks with the James Connelly system.

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