In today’s podcast (DOWNLOAD MP3 FILE) we reviewed rotation in global markets (chart), asset classes (chart) and sectors within the S&P 500 index (chart). We did a case study using Harley-Davidson (HOG) as an example to demonstrate how to size up a chart and set up a bull call spread. We also discussed the central role of leverage in trading.

Posts Worth Noting: From Charles Kirk, regarding the trading tactics of Gerald M. Loeb. From Dr. Brett, making a few trading psychology observations.

Charts of the Day: BRIC ETFs, HOG, Rice

The following charts were mentioned in today’s podcast. As usual, we applied InVivo.RMI indicators (available as a bonus to Portfolio Strategy subscribers) to the daily chart along with the widely-watched 50- and 200-day moving averages. The pink/cyan dots provide potential entry/exit signals while the price bars are colored red/yellow/green to identify relative performance.

• China Stocks, Once Frothy, Fall by Half In Six Months
  Investor psychology, however, has taken a big hit. Last August, Qiu Jiaxin, a 27-year-old school administrator, bought 100,000 yuan, or about $14,000, of Shanghai-listed Western Mining Co. after its stock more than doubled to about 60 yuan a share. Looking at the global resources boom, “we thought it would go up again,” says Mr. Qiu. It didn’t. The stock now trades at 20.85 yuan, and Mr. Qiu has delayed a home renovation and pushed plans for his wedding to 2009. The Shanghai resident isn’t selling just yet. “It is not a small pool of money. It is a big loss to us,” he says. “If we don’t sell, it is only a paper loss.”
• Would RBS rights issue draw you closer to emerging markets?
  According to the IFC Invest indices, In the last three years Brazil has returned 264%, Russia 176% and China 162%, while India has achieved 156% returns.