The Red Roadmaster’s Technical Report on the US Major Market Indices + ™ Crude Oil, Natural Gas, Gold, Silver and Forex Technical Up-dates
Vol. 083109 # 1 Copyright August 31, 2009 The Red Roadmaster™ Editor/Compiler/Analyst/Commentator August 31, 2009 6:00 AM EDT
Summer Edition #6 Dear Reader, I can be read daily and weekly on www.livetradingnews.com , www.dynamitecaps.com and www.stockpreacher.com and in a round-up of global market news and technical analysis, including updates daily throughout the week. Today’s Stock Talk list includes: Echelon Corp (ELON), Intel Corporation (INTC), ING Groep NV (ISP), Marvell Technology Group (MVRL), and Tiffany & Co. (TIF).
Alert: RR looks at ING Groep NV (ISP),and Tiffany & Co. (TIF) for the 1st time
Small Cap Stocks to Watch this Week Archer Entertainment Media Corporation (AEMC), Compliance Systems Corp. (COPI), GetFugu, Inc. (GFGU), Hythiam, Inc. (HYTM), NexHorizon Communications, Inc. (NXHZ), Neah Power Systems, Inc. (NPWS) and TOMI, a Professional Air Remediation Company (TOMZ). See them all at www.livetradingnews.com, www.pinnacledigest.com, http://stockpreacher.com/stocktalk and www.dynamitecaps.com Listen to "The Red Roadmaster" AKA Paul A. Ebeling, Jr., on the Big Biz Show with Bob "Sully" Sullivan every Thursday at 1:40p PDT on the CBS/Business Talk Radio Network. Go to www.bigbizshow.com for your local listing and or go to www.livetradingnews.com and www.stockpreacher.com to tune in Live.
Re-cap of the US Stock Market Action for the week ending 31 August 2009 All three major US indexes posted their 2nd weekly advance.
On the week, the DJIA + 0.4%, the S&P 500 + 0.3% and the NAS + 0.4%; modest, but in the GREEN. Early in Friday's session the S&P 500 rose to 1,039.47, its highest intra-day level since October 14, 2008, before fading a bit on profit taking as US stocks held close to the line on Friday after the consumer sentiment report offset good news from tech stalwarts: Dell Inc and Intel Corp. as the leading NAS closed once again in the GREEN. On the Day: The DJIA closed minus 36.43 pts, or 0.38%, at 9,544.20, the S&P 500 slid 2.05 pts, or 0.20%, to close at 1,028.93, but the NAS tallied a + 1.04 pts, or 0.05%, to end the session at 2,028.77. Consumer sentiment in August was reported at a 4 month low on worries about high unemployment and personal finances by a Reuters/University of Michigan. Intel led the NAS' major gainers rising 4% to US$20.25 after the chip maker raised its Q-3 Y 2009 revenue outlook on strong demand for its microprocessors and chip sets. (See Stock Talk below). Dell tracked North by 1.8% to US$15.93 after reporting Q-3 Y 2009 earnings late Thursday that beat expectations. Tiffany & Co charged North 11.3% to US$37.57 on the NYSE after it reported strong Q-2 Y 2009 results and lifted its outlook (See Stock Talk Below). Citigroup rose 3.6% to US$5.23 leading the S&P financial index up 0.2%. In the Headlights: Shares of the two largest US home funding companies, Fannie Mae and Freddie Mac, gained sharply, extending a trend seen earlier this past week: Freddie Mac was up 7.1% at US$2.40 and Fannie Mae gained 6.3% to US$2.04. Volume and Breath: Trade was light on the NYSE, with 1.19b/shrs changing hands, below last year's estimated daily average of 1.49B/shrs, and on the NAS, about 2.36b/shrs traded, a bit above last year's daily average of 2.28B/shrs. Advancers outnumbered decliners on the NYSE by 1,507 to 1,490, and on the NAS, though, the opposite: about 17 stocks fell for every 9 that rose.
The Most asked Question on the Week The Big Q: Red, have I missed the move, or is it just the beginning of the Bull Market? The Big A: My work tells me that we are in a Bull Market that began on March 9, 2009. Redâ€™s Star Rated Market Sectors: 5 being the Brightest. Equities: 5 Stars: mining, agricultural, water, energy and alternative energy are the long-term in sectors that are involved with scarce resources and that have a positive supply/demand outlook in the future. 4 Stars: consumer staples, large energy companies. 3 Stars: industrial, utilities, medical and health care.
2 Stars: retail, media and consumer discretionary. 1 Star: financial and technology, always the initial leaders in a new Bull charge The Key to successful investing is: Courage, Confidence, Discipline, and Intuition. The Wrong Path: Fear and Greed Keen investors are buying their favorite stocks now, and making money in this new Bull Market, and I think you should be making money, too, because it is time that you get back into the market, so you will be one of the early winners. Read the Red Roadmaster's e book Knowledge is Power, the Latest Edition. Get in the Action with confidence and courage, its Free.
_______________________________________________________________ Redâ€™s Edge and In the Trenches Set up your trading to cut losses and let profits run. Every trader/investor must determine the method that fits the individuals personal risk tolerance. That is based on targets, available time, knowledge, and useful and familiar strategies we. Example, someone who only trades stocks will have a different loss cutting strategy than one who trades call ratio back spreads and someone whose primary strategy is selling options may have a different approach than someone whose primary strategy is buying options. How one cut losses and let profits run is truly personal, and must be part of the trader/investorâ€™s individual plan. Here are some of the basics: As a general observation it is very that retail traders buy stock with the idea that it will go North (up in price). They enter positions for any number of reasons. Among them: something read or heard in the media, a tip from a someone who already owns a stock or is about to, a broker's suggestion/recomendation; or personal knowledge gained through Due Dilly research, or personal experience, i.e. buying the story. And when they buy, there is likely no consideration to the entry price, or exit price in the event the stock turns against in the short term. These trades are often made without consideration of how much is at risk and/or of how much they are willing to risk on the trade. These are those whose Rule is: Buy and Hold. The Buy and Hold strategy more often then not has no plan for when or how to cut losses, and the exit strategy is based on need or whim. Profits may run with the Buy and Hold strategy, but so do losses. So then it makes no sense to hold stocks during down turns and allow profits turn into losses. Logic dictates that the first part of cutting losses and letting profits run requires a plan, a plan created within a disciplined structure from the start that determines the entry point and the exit point that is set before entering a position with a trigger that quickly closes out a losing trade and keeps a trade on that is running until it runs out. Without a plan there is no basis to cut losses, and no way to make sure profits run. If there is a win, it is gamblerâ€™s luck. Key: recognize that cutting losses and letting profits run is the instrument for success in trading/investing in stock and commodities.
Accept it as the 1st Rule, and create a plan that sets forth the where and how losses will be cut, that is a personal judgment based on risk tolerance and other guiding factors. Stay tuned, more next week on how to do it. Red Trading stocks and commodities is not for everyone. There is Risk, and Risk is what most folks are not willing to take; but when you acquire the knowledge, Risks can be managed and controlled. Download Knowledge is Power, Red's Road to Riches, It is Free. The differences between the winners and losers are that the winners take it seriously and they always add to their knowledge. They read, study, learn nuances, attend seminars, and sometimes use a coach or a mentor. Successful traders are not those who say coaching or seminars are too expensive. They understand that they can recoup such costs in a single trade. The unsuccessful folks have the opposite POV, shying away from and ignoring the benefits of a trading education because of the minimal cost. Remember, Knowledge is Power; it will change your life for the better. Red In the Trenches: Even if you know absolutely nothing about how to start making a living in the stock market, and want to learn how to do it, the first step is to learn from someone who knows how to do it successfully. The stock market is about success, and the lifestyle that comes with it, but it must be done carefully, both by picking the issues and in the trading of them, because one wants to make money doing it independently and without stress. A journey of a thousand miles begins with the first step (Confucius). Have a great week, and the rest is up to You!
My pal Wally Steinâ€™s Words of Wisdom "There are only two ways to live your life: One is as though nothing is a miracle, The other is as though everything is a miracle. I believe in the latter." -- Albert Einstein
______________________________________________________________________ This Weekâ€™s In View and 6 + Big Stories In View: The New Bull Market Up-date Stock prices took off on March 9, 2009 at precisely 15:00 hrs EDT, as investors and traders moved back into the hammered financial and technology sectors.
Stocks are in a new Bull Market and its main benchmark, the S&P 500, should hit the 1050/1100 range during the next quarter. This is reachable when we considering that a reasonable number for next yearâ€™s earnings is about US$75 PPS, with the S&P at 1050 that is about 14 X earnings, up from 12 at the beginning of March. Investors/traders have been looking for a pullback in here to get a chance to buy companies at more attractive valuations. That correction that has so far not happened; no matter how hard they try, the Bears are not able to talk the market down for long, and the dips have been shallow. Note: Early in Friday's (August 28, 2009) session the S&P 500 rose to 1,039.47, its highest intra-day level since October 14, 2008, before fading a bit on profit taking as US stocks held close to the line on Friday after the consumer sentiment report offset good news from tech stalwarts: Dell Inc and Intel Corp. as the leading NAS closed once again in the Green. Looks to me, like there is more Northside action ahead. Red To capture a cyclical upswing out of the leading tech and financial sectors, equity analysts at JP Morgan have recently gone "overweight" on the industrial and material sectors and are now "overweight" in all cyclical sectors, including consumer discretionary and technology where analysts are expecting cyclical sectors to experience the strongest earnings growth. This is Rotation: a clarifying signal that we are in a New Bull Market. Below are the Red Roadmaster's tried and true indicators that the equities and commodities markets in the US and around the world have emerged flying bright colored ensigns.
Redâ€™s Star Rated Market Sectors: 5 being the Brightest. Stocks 5 Stars: mining, agricultural, water, energy and alternative energy are the long-term in sectors that are involved with scarce resources and that have a positive supply/demand outlook in the future. Green is the watchword. 4 Stars: consumer staples, large energy companies. 3 Stars: industrial, utilities, medical and health care. 2 Stars: retail, media and consumer discretionary. 1 Star: financial and technology, always the initial leaders in a new Bull charge
Commodities 5 Stars: Gold is the insurance policy against financial market collapse. 4 Stars: Agricultural & Soft Commodities have huge potential going forward as the supply/demand balance is positive in most of these commodities. Water and arable soil globally are become more and more precious. People will always need to eat, and they must drink water.
3 Stars: Energy, the long-term supply/demand outlook is extremely positive as the world is running short of cheap, easily accessible energy. 2 Stars: Base Metals and other Precious Metals, these are reliant on industrial activity, the long term trends in the emerging markets is positive. Keen investors are buying their favorite stocks now, and making money in this new Bull Market, and I think you should be making money, too, because it is time that you get back into the market, so you will be one of the early winners.
6 Hot Topics including Key BRIC and Japan issues
The postwar political party system in Japan has ended, putting into question its relationship with the USA Japan’s center left opposition Democratic Party won a crushing victory over the long time ruling conservative Liberal Democrats on Sunday, redrawing the political landscape of the world’s 2nd largest economy. The result: the first time since the LDP's founding in 1955 that any other party has won an electoral majority in the Diet’s lower house, thus giving gave the DPJ a mandate to pursue its campaign policies of taming the nation’s powerful bureaucrats and rolling out generous child allowances and welfare payments. At 3 am Tokyo time, state broadcaster NHK said the DPJ had won 307 seats in the lower house compared with the LDP’s 119. Before the poll the LDP had 302 seats to the DPJ’s 112. “This election is not about a ruling party with an unpopular prime minister in a bad economy, this is about the end of the postwar party system in Japan,” said Gerald Curtis, professor at Columbia University in New York. “It’s the beginning of a different party system.” The result tore off one corner of the famous “Iron Triangle” established in the post WW II era, which featured a close cooperative three-way relationship between the LDP, the bureaucracy and Japanese business. Savvy political observers said Sunday’s result was likely to usher in a new political era featuring two dominant political parties competing for the favor of an impatient electorate wanting the government to revitalize the economy and tackle demographic challenges. Taro Aso, defeated LDP president and prime minister, said he would step down as party leader after a poll that had “shown people’s disappointment”. Other people were blunter. In remarks at LDP headquarters, where the mood grew ever more grim as vote counting progressed, Yoshihide Suga, deputy-chairman of the LDP’s election strategy council, said the defeat suggested “the LDP has passed its time”. The DPJ’s manifesto promised better welfare and a shift away from support for big business and construction spending, and calls for a rethink of Japan’s half-century alliance with the US raising concerns in Washington.
In a White House statement, US President Barack Obama, said he looked forward to “working closely” with Tokyo following the DPJ’s victory in a “historic election”.
World Commodity traders see rise in prices The World’s largest commodity trading houses have turned upbeat on economic growth, signaling firmer raw materials prices in the second half of this year. The positive outlook from traders including Glencore, Cargill, Mitsubishi, Archer Daniels Midland and Noble Group comes after a tough first half for the sector, with most companies reporting a plunge in sales and profits, however, executives are now optimistic for the second half on the back of China’s stimulus package. Glencore, the World’s largest trader, said it saw “encouraging signs of increased levels of business activity”. Mitsui & Co., Japan’s second largest general trading company, added that the global economy appeared to have “started to pull out” of the recession, while it’s larger rival Mitsubishi said the world was observing “the beneficial effects of economic stimulus measures”. Senior executives said China’s strong growth was filtering into neighboring Asian countries and noted restocking in the US after companies there had run down inventories to pipeline levels. These views are in sharp contrast with cautious comments earlier this year, and some executives admitted they were surprised by the speed of the rebound. “It feels as if the recovery is arriving six months ahead of schedule,” said one. Traders said they are Bullish on metals and minerals such as copper, coking coal and iron ore, even though prices have already doubled since January. Their view on energy is neutral, with most seeing Crude Oil little changed at US$70 bbl, while for food commodities; wheat corn and sugar, they see firm to strong demand going forward.
GM setting up to manufacture light trucks in China General Motors announced that it has formed a 50/50 Joint Venture with FAW Group to make light trucks in China for the 1st time, in a further sign that the US car maker has increased focus on the Chinese market in the face of weak US sales. Total investment in the JV with the Chinese vehicle maker will be US$293M GM said Sunday, under a deal that the two companies had been negotiating for several years. The partnership with FAW, called FAW-GM Light Duty Commercial Vehicle Co, will be GM’s 3rd JV with a local vehicle maker, but the first to produce trucks. GM’s other Chinese Joint Ventures produce passenger cars and mini commercial vehicles. GM passenger car sales in China rose 52% year-on-year in July, traditionally a weak month, according to figures from JD Power, the car consultancy. Total Chinese light vehicle sales in July were up a remarkable 60% year-on-year at 1.03M vehicles, the JD Power figures showed. Chinese light vehicle sales have continued to surprise vehicle market analysts since January 2009.
Brazil threatens to infringe on US drug patents Brazil announced that is preparing to infringe on patents on US pharmaceutical products, in retaliation against subsidies for US cotton farmers. The World Trade Organization is expected to rule on Monday that Brazil can contravene the drug patents. Brazil led a challenge against US cotton subsidies in 2002
and, two years later, the WTO ruled that about US$3B paid to US cotton farmers each year distorted global prices and violated trade rules. The US has continued the subsidies, arguing that the measures were consistent with its WTO obligations, but the WTO has supported Brazil’s case. It allowed Brazil to retaliate in 2005 but Brasília has instead sought a negotiated settlement to avoid damaging relations with the US, until recently its biggest trading partner, but now, Brazil has become more frustrated by the US refusal to remove its subsidies and, under pressure from its own cotton growers, is reported to be preparing to retaliate. One option reported in the Financial Times, would be to raise import tariffs against US goods. But Brazil is a relatively small US market, taking US$32B out of US$1,287B of US exports last year. Instead Brazil is preparing to take action over intellectual property, an area of much greater significance to the US. The WTO is expected to include this possibility in its ruling on Monday. According to a report in a Brazilian newspaper the government has prepared a “provisional measure” – a presidential decree that takes immediate effect, although it must later be ratified by Congress – to allow Brazilian pharmaceuticals companies to copy medicines protected by US patents. In 2007 Brazil followed Thailand in overriding a patent on a pivotal HIV medicine, allowing it to buy equivalents of Efavirenz, patented by Merck from rival generic suppliers under provisions permitted by WTO rules. The move followed years of brinkmanship during which Brazil achieved steep discounts on HIV drugs by threatening to break patents. Its expected move on Monday comes in the context of growing frustration in Brasília at the Obama administration’s reluctance to act on farm subsidies affecting cotton and other sectors of Brazilian agribusiness, especially sugar and ethanol.
Industrial enterprises in 22 Chinese provinces, regions and municipalities generated US$163B of profit in the first 7 months of Y 2009, Industrial enterprises in 22 Chinese provinces, regions and municipalities generated US$163B of profit in the first 7 months of Y 2009, minus 17.3% from the same period of Y 2008, according to the latest official figures. The decline is 3.8 percentage pts lower than that in the first six months of Y 2009, the National Bureau of Statistics (NBS) said in a statement Friday. The revenues gathered by the industrial companies' core businesses reached 21.4 trillion yuan in the first seven months, up 0.9% from last year. The growth rate is 0.5% points higher than that in the first six months. Of the 39 industrial sectors, 14 achieved a rebound in profit growth, nine recorded a slow-down in profit declines and four turned slumping profit to rebounding profit. The 22 regions refer to China's provinces, regions and municipalities minus Beijing, Inner Mongolia Autonomous Region, Hunan, Guangdong, Anhui, Hainan, Chongqing, Yunnan and Tibet Autonomous Region. The NBS used to publicize national industrial profit every two months, but began to issue the information monthly to improve monitoring frequency on economy this year. Only 22 provinces, regions or municipalities now provide monthly industrial profit data.
India PM Singh's 100-Day Stock Rally Best Since 1991 Indian stocks rose more in the first 100 days of Prime Minister Singh's leadership than under any new government since 1991. Savvy market observers predict more gains as he opens up the World’s 2 nd fastest growing economy. “India is well-positioned to play the global recovery story,” said Gopal Agrawal, head of equities in Mumbai for Mirae, which has US$2.5B invested in India and favors automobile, metal and oil stocks. “The policy framework is in place and we have to see how it’s executed and how the people will benefit.” The Bombay Stock Exchange’s Sensitive Index climbed 16% since Singh started a second term on May 22 as international investors bought US$4.9B more shares than they sold, data compiled by the bourse reported. The advance is the biggest since the 40% rally after Prime Minister P.V. Narasimha Rao came to power, and compares with the 8.4% increase for the Standard & Poor’s 500 in the first 100 days of US President Barack Obama’s administration. Investors are optimistic Singh will accelerate road construction, ease limits on foreign ownership of banks and sell stakes in state companies. The economy may grow 9 percent annually in the coming three years, pushing the benchmark index beyond the record high of 21,206.77 reached in January 2008, according to Mirae Asset Financial Group, South Korea’s biggest money manager. The Sensex is 25% below that level. The Sensex has risen 65% this year to close at 15,922.34 on Aug. 28. It may reach 20,000 by March 2011, UBS AG analyst Suresh Mahadevan wrote in an Aug. 26 report. He advises buying Mumbai-based Tata Steel Ltd., the nation’s largest producer, and Mumbai-based JSW Steel Ltd., the 3rd biggest.
At the Movies from The Hollywood Reporter 'Final Destination' wins weekend 'Halloween II' opens in 3rd place Underscoring the arrival of 3D cinema, Warner Bros.' gorefest "The Final Destination" topped the domestic boxoffice during the weekend with a surprisingly strong, franchise-best bow estimated at $28.3 million. Rob Zombie's "Halloween II" had tricked some prerelease forecasters into predicting a No. 1 debut for the sequel horror remake but still proved treat enough for the Weinstein Co. with a solid $17.4 million in third place. Execs said they were sufficiently pleased with the bow -- and impressed enough with the rival pic's opening -- to Greenlight production of "Halloween 3D" for release next summer. Meanwhile, the Weinstein-distributed "Inglourious Basterds" fell a relatively modest 47% from its week-earlier opening tally to ring up $20 million in second place and $73.8 million in cumulative box office. Focus Features' Ang Lee-directed "Taking Woodstock" scored a so-so $3.7 million from 1,393 play dates to camp out in ninth place during its first Friday-Sunday frame. Two days of early solo engagements in Los Angeles and New York shaped a five-day cume of $3.8 million. Warners' family fantasy "Shorts" dropped 24% during its sophomore session for $4.9 million in eighth place and a $13.6 million cume. The 10 top films collected $110 million during the weekend; Nielsen EDI said that was 28% more than last year's
comparable Friday-Sunday span, which fell on Labor Day weekend. Summer 2009 boasts one more session than the year-ago summer, but the fall will have one fewer frame than the same season last year, according to EDI's boxoffice calendar. Among limited bows, Roadside Attractions' Vogue documentary "The September Issue" unspooled in six theaters and grossed $240,078, or a fashionable $40,013 per venue. First Independent's dramatic comedy "Big Fan" fetched $26,050 from single screens in New York and Philadelphia, representing a solid debut of $13,025 per venue. IFC Films opened the Japanese drama "Still Walking" with a pair of New York play dates to gross $21,546, or an encouraging $10,773 per engagement. Elsewhere in the specialty market, Sony Pictures Classics' music doc "It Might Get Loud" added 23 theaters for a total of 30 and grossed $132,681. That represented an acceptable $4,423 per venue, with its cume hitting $363,126. Freestyle Releasing's comedy "My One and Only" added six locations for a total of 10 and grossed $86,570, or a sturdy $8,651 per site, as its cume reached $172,559. And Roadside's youth comedy "Mystery Team" grossed a pleasing $7,941 from a single play date in Austin. The New Line-produced "Destination" boasted a record 1,678 3-D screens among its 3,121 theaters, with 3D auditoriums contributing a per-screen average more than triple that of conventional venues. "This was great, and it was all about the 3D and the fan support for the 'Final Destination' franchise," Warners executive vp distribution Jeff Goldstein said. A fourth installment in New Line's 9-year-old horror franchise, "Destination" was produced for an estimated $40 million. "Final Destination 3" posted the franchise's then-best tallies in February 2006, when it bowed with $19.1 million and went on to register $54.1 million domestically. Opening audiences for the fourth installment were 52% female, with 60% of patrons under 25. "Destination" gave Warners an industry-leading eight No. 1 openings this year, four of them New Line productions. Distributed under Weinstein's Dimension Films genre label, R-rated "Halloween II" underperformed Zombie's first remake based on the classic horror franchise - August 2007's "Halloween," which unspooled with $30.6 million en route to $58.3 million in domestic box office -- as well as the original "Halloween II," which bowed with $7.4 million in October 1981 and grossed $25.5 million overall domestically. "We did really well, all things considered in going against another horror movie," Dimension topper Bob Weinstein said. "We're very happy as the film was produced on a $15 million budget, and we did very, very respectably." Weinstein said the planned "Halloween 3D" represents a second franchise "reboot," with Zombie to be replaced by an unnamed new director for the project. "We wanted to see if there was still life in it," Weinstein said. "We think we can do something with it in 3D." Opening audiences for "Halloween II" skewed 50% male, with 54% of patrons under 25. Based on true events, "Woodstock" features an ensemble cast including Emile Hirsch and British actor Henry Goodman. Audiences were split among males and females, with 53% of patrons 25 or older. "The opening is disappointing," Focus distribution president Jack Foley said. The film played better in major cities than in smaller markets, he noted, but mixed reviews didn't help. "Reviews do matter for a film like this, Foley said. Looking ahead, three wide openers are set for the summer-ending four-day holiday frame as the industry strives to boost seasonal box office to an all-time high. Those include Lionsgate's sci-fi actioner "Gamer," Fox's romantic comedy "All About Steve" and Miramax's comedy "Extract."
This Weekâ€™s Economic Data Monday, August 31st Chicago PMI, August (09:45): 47.2 expected, 43.4 past Tuesday, September 1st Construction Spendin, July (10:00): -0.2% expected, 0.3% past ISM Index, August (10:00): 50.2 expected, 48.9 past Auto Sales, August (14:00): 4.2M past Truck Sales, August (14:00): 4.2M past Wednesday, September 2nd ADP Employment Chang, (08:15): -246K expected, -371K past Productivity-Rev., Q2 (08:30): 6.1% expected, 6.4% past Factory Orders, July (10:00): 1.5% expected, 0.4% past Crude Oil Inventories, 08/28 (10:30): +128K past FOMC Minutes, August. 12 (14:00) Thursday, September 3rd Initial Claims, 08/29 (08:30): 570K expected, 570K past
ISM Services, August (10:00): 48.0 expected, 46.4 past Friday, September 4th Average Workweek, August (08:30): 33.1 expected, 33.1 past Hourly Earnings, August (08:30): 0.1% expected, 0.2% past Nonfarm Payrolls, August (08:30): -225K expected, -247K past Unemployment Rate, August (08:30): 9.5% expected, 9.4% past
Snap Shot of the Major US Market Indices NAS Stats: +1.04 points (+0.05%) to close at 2028.77 Volume: 2.315B (+9.42%) Up Volume: 1.596B (+296.593M) Down Volume: 729.483M (-62.044M) A/D and Hi/Lo: Decliners led 1.82 to 1 Previous Session: Decliners led 1.07 to 1 New Highs: 79 (+28) New Lows: 12 (+3) S&P 500/NYSE Stats: -2.05 points (-0.2%) to close at 1028.93 NYSE Volume: 1.392B (+8.26%) Up Volume: 890.386M (+25.865M) Down Volume: 484.688M (+85.288M) A/D and Hi/Lo: Advancers led 1.06 to 1 Previous Session: Advancers led 1.2 to 1 New Highs: 106 (+10) New Lows: 66 (+30) DJIA Stats: -36.43 points (-0.38%) to close at 9544.2 Volume DJIA: 205M shs Friday Stay tunedâ€Ś The Charts* The NAS Charts: http://stockcharts.com/h-sc/ui?s=NAS The S&P 500 Chart: http://stockcharts.com/h-sc/ui?s=sp500 DJIA Chart: http://stockcharts.com/h-sc/ui?s=djia
Stock Chart School: http://stockcharts.com/school/doku.php?id=chart_school Stock Charts Glossary: http://stockcharts.com/school/doku.php?id=chart_school:glossary_s *Charts from www.Stockcharts.com MARKET SENTIMENT The Sentiment Indicators: These indicators are psychological indicators that attempt to measure the degree of bullishness or bearishness in a market. These are contrary indicators and are used in much the same fashion as overbought or oversold oscillators. Their greatest value is when they reach upper or lower extremes. 1. VIX: 24.76; +0.08 2. VXN: 24.93; -0.08 3. VXO: 23.61; +0.22 4. Put/Call Ratio (CBOE): 0.76; -0.06 Note: Are you watching the VIX? It always tells us when we are moving back to a more rational market. *The Market Volatility Index (VIX) measures the volatility of the market. A recent news story described it as "the options market's gauge of investor fear." Traders use VIX as a general inverse indicator of market volatility and sentiment. High numbers mean that there's excess bearishness, and low numbers indicate excess bullishness. The VIX is updated intra-day by the Chicago Board Options Exchange (CBOE), using Standard & Poorâ€™s 500 Index (SPX) bid/ask quotes. It was created in 1993. **The CBOE NAS Volatility Index (VXN) employs the same formula used to calculate $VIX, which is based on the implied volatility of S&P 500 index options. This formula is derived from a basket of put and call options. Some are out of the money, some in the money, and some at the money. The resulting $VXN represents the implied volatility of a hypothetical 30-day option that is at the money. ***The VXO is the ticker created to track the "original VIX" that was calculated using the prices of S&P 100 options. The new VIX uses the ticker $VIX and is calculated using the prices of S&P 500 options. The fundamental nature of the VXO is the same as the VIX, but it is less robust and not as simple as the VIX. Bulls vs. Bears: Bulls: the Bulls are at 48.3% down from 49.4%. This becomes Bearish on a reading in the 60% range. The Bulls hit a high of 47.7% June on the run North off of the March lows. For your reference: The Bulls bottomed in the summer of 2006, the last major round of selling ahead of this 2007 high, near 36%; 35% is considered Bullish. Bears: the Bears are at 23.1% up from 21.3%. They have come back a bit from the drop two weeks ago from 31.1% and 35.6% the previous week. This is a huge exodus from the ranks of Bears. For your reference: Bearishness hit a 5 year high at 54.4% the last week of October
What to expect this week, and down the lineâ€Ś
Most of us is going to be a lot happening this week, as it is a big week for data week and technicals too. The Chicago PMI and the national ISM are the ones we have all been waiting for. The latest expectations are that it will come in at 50.2 vs. 48.9 in July. There are a lot of extended patterns on the leading NAS, but one thing is clear in this market, and that is this; every time the sellers have tried to sell it, the money has come and bought driving the indices back North. The Big Q: Is the Sector Rotation ready to begin? The Big A: The word on the Street is that savvy traders are looking to the Northside with energy and metals stocks. If they decide to jump out and lead, and if more of the sideline money comes back in, those stocks are the next wave. They all have set up good bases rotate into leading positions. Again, the leading big techs are tired and extended, they may follow, but they will not continue to charge North like they have been doing for the last 4 months. So, stay alert as the sectors begin their rotation. Savvy traders are buying into them now as they set up to breakouts. Make your plans as there some terrific stocks in energy, metals and industrials that have set up well in here and look ready to break out if the money stays put and new money comes to drive the Bull charge further North.
All the best,
Red PS: Savvy market observers are saying play the wrong side of a Barack Obama initiative (like healthcare reform) and you are likely to lose. Red
John Mauldin is back this week. Thoughts from the Frontline Weekly Newsletter
An Uncomfortable Choice by John Mauldin August 28, 2009
In this issue: An Uncomfortable Choice What Were We Thinking? Frugality is the New Normal And Then We Face the Real Problem The Teenagers Are in Control Choose Wisely Argentina, Brazil, Uruguay, New Orleans, Detroit, and More John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore To subscribe to John Mauldin's E-Letter please click here: http://www.frontlinethoughts.com/subscribe.asp
Chartistâ€™s plot your points Support and Resistance NAS: Close 2028.77 Resistance: 2070 the September 2008 intra-day low 2099 the mid-September 2008 closing low 2169 the March 2008 double bottom low Support: 2016 the August 2009 high The 18 day EMA at 1994 1984 from late September 2008 1962 the bottom of the August 2009 range. 1947 the October 2008 gap down point The 50 day EMA at 1926 1897 the October 2008 post gap intra-day high. 1880 the June 2009 high 1862 the July 2009 high 1786 the November 2008 intra-day high 1780 the November 2008 closing high 1773 the May intra day high 1770 the mid-October interim high 1673 the past April high 1666 the intra-day January 2009 high
1664 the May 2008 low 1661 is the April 2009 prior high The 200 day SM A at 1660
S&P 500: Close 1028.93 Resistance: 1044 the October 2008 intra-day high 1106 the September 2008 low 1133 from a September 2008 intra-day low 1185 from late September 2008 1200 from the July 2008 low Support:
The August 2009 intra-day high at 1018 The 18 day EMA at 1009 The November 2008 high at 1006 closing 1007.53 intra-day 992 the August 2009 consolidation low The 50 day EMA at 973 956 the June 2009 intra-day high 944 the January 2009 high 935 the January 2009 closing high 932 the July 2009 high 930 the May 2009 high 919 the early December 2008 high 899 the early October 2008 closing low 896 the late November 2008 high
888 the April 2009 intra-day high. 882 the early May 2009 low The 200 day SMA at 879
DJIA: Close 9544.20 Resistance: 9625 the October 2008 closing high 10,365 is the late September 2008 low Support: 9387 is the mid-October 2008 high The 18 day EMA 9367 9116 the August 2009 low 9088 the January 2009 high The 50 day EMA 9039 8985 the closing low in the mid-2003 consolidation 8934 the December 2008 closing high 8878 the June 2009 high 8829 the late November 2008 high 8626 from December 2002 8588 the May 2009 high 8581 the July 2009 high 8521 an interim high in March 2003 after the March 2003 low 8451 the early October 2008 closing low 8419 the late December closing low in that consolidation 8375 the late January 2009 interim high The 200 day SMA 8329 _______________________________________________________________________________
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Preferred - Stock ETF's Shine As the US Bank Nationalization fears have eased, reducing the volatility in these funds, investors have sought out preferred ETFs as an inexpensive way to access the preferred marketplace. Currently there are three preferred funds, PowerShares Financial Preferred Portfolio(PGF Quote ), iShares S&P U.S. Preferred Stock Index ETF(PFF Quote ) and PowerShares Preferred Portfolio(PGX Quote ). All three funds are in positive territory year to date, with PGF leading the pack with a 13.74 return for that period. All three funds have high trading volumes, with PGF taking the top spot with a three-month average daily trading volume of 1.3 million shares. Preferred ETFs offer investors inexpensive access, diversification and increased liquidity for preferred shares. Several factors have helped the preferred ETFs gain more attention in the last few months. Since financial companies have been in a weak position due to the ongoing credit and housing market concerns, the yields on their preferred shares have increased significantly. This has been a good trend for debt-like instruments as investors seek havens that provide their portfolio with income. The payouts provided by preferred securities have the payout advantage of bonds and the tax advantage of common dividends. Investors looking for regular distributions like the payout schedule provided by preferreds, while the Jobs and Growth act of 2003 reduced the tax on dividends, making payouts from these funds relatively tax efficient. When it comes to hierarchy, preferred stock has a senior dividend claim to common stock but takes a back seat to bonds. This means that in the event of the issuer becoming insolvent, preferred dividends will be paid before common stock dividends, but only after bond payments.
Red Roadmaster Market Insights on Crude Oil, Natural Gas, Gold and Silver, and Currencies Crude Oil prices moving higher, Natural Gas moving lower in 2009 Nymex Crude Oil (CL) After edging higher to 75.0, Crude Oil retreated sharply to as low as 69.83 last week, but recovered from there and close above 70 level at 72.86. Initial bias remains neutral this week and some more sideway trading might be seen. As noted before, with near term trend line support (now at 68.00) intact, rise from 58.32 is likely still in progress. Above 75.0 will bring rally resumption to long term fibonacci resistance at 76.77 (38.2% retracement of 147.27 to 33.2) first. On the downside below 69.83 will flip intraday bias back to the downside. Also, considering mild bearish divergence condition in 4 hours MACD, break of the mentioned trend line support will argue that rise from 58.32 has indeed finished ahead of 76.77 fibo resistance and will turn focus to 65.23 support for confirmation. The bigger picture, there is no change in the view that rise from 33.2 is a correction to whole down trend form 147.27. Strong resistance is expected as Crude Oil enters into 76.77/90.24 fibo resistance zone (38.2% and 50% retracement of 147.27 to 33.2) and bring reversal finally. On the downside, a break of 65.23 support will now be an important signal that crude oil has already topped out and will turn focus back to 58.32 key support for confirmation. The long term picture, there is no change in the view that fall from 147.27 is part of the correction to the five wave sequence from 98 low of 10.65. While there rebound from 33.2 is strong and might continue, there is no solid evidence that suggest fall 147.27 is completed and we're still preferring the case that rebound from 33.2 is merely a corrective rise only. Having said that strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27.
Nymex Natural Gas (NG) There is no change in the overall bearish view in Natural gas. While some consolidation might be seen in near term, upside recovery is expected to be limited by 3.25/60 fibonacci resistance zone, (38.2% and 50% retracement of 4.162 to 2.692). Current decline, which is part of the whole down trend from 13.69, is expected to resume sooner or later to next long term projection target at 2.50 after completing the consolidation. A decisive break of 3.60 will be an important signal that natural gas has bottomed out and will turn focus to 4.16 resistance. The bigger picture, whole medium term fall from 13.69 resumed after completing triangle consolidation from 3.155. Such decline is treated as the third leg of the long term consolidation pattern that started at 15.78 back in 2005. A further fall should be seen to next target of 100% projection of 15.78 to 4.593 from 13.69 at 2.50 and possibly below. I expect strong support between 1.96 (02 low) and the 2.5 projection target to finally conclude the whole decline from 13.69. On the upside, break of 4.162 resistance will now be an important signal that natural gas has finally bottomed out.
Global Gold and Silver trading higher in 2009 Comex Gold (GC) Gold's break of 959.9 resistance on Friday clears the outlook a bit and indicates that rise from 931.3 is possibly resuming whole rally from 904.8. Initial bias is mildly on the upside this week for a test of 974.5/992.1 resistance zone first. Strong resistance could be seen there and bring another falling leg of the sideway consolidation that started at 1007.7. On the downside, below 942.4 support will turn the intra-day outlook neutral again. Break of 931.3 will indicate that another fall is indeed underway for 904.8 support instead. The bigger picture, price actions in Gold remains choppily bounded in converging range between 865 and 1007.7. While there are some possible developments inside such range, there is no change in the preferred view that it's merely consolidation to larger rise from 681, and should be near to completion. On the downside, in case of another fall, strong support should be seen at 904.8 support level and the case of deep fall to 865 is not likely. On the upside, break of 974.3/992.1 resistance zone will be the first alert that rise from 681 is resuming and will turn focus to 1007.7 Key resistance level for confirmation. The long term picture, medium term consolidation from 1033.9 should have completed as an expanding triangle to 681 already. Rise from there is tentatively treated as resumption of the long term up trend from 253 and will target 61.8% projection of 253 to 1033.9 from 681 at 1160 after taking out 1033.9 high. A break below the 801.5 cluster support will augur that consolidation from 1033.9 is still in progress and will delay the long term Bullish case.
Comex Silver (SI)
Silver's rebound from 13.495 extended further to as high as 14.86 last week. The break of 61.8% retracement of 15.185 to 13.495 at 14.54 dampened the view that Silver has topped out at 15.185 and in turn indicates that rise from 12.435 is still in progress. Initial bias remains on the upside this week for a test of 15.185 resistance first and break will target the current medium term top at 16.25 next. On the downside, below 14.475 will bring consolidation but another would still be in favor as long as 14.04 support holds. The bigger picture, the outlook in Silver is mixed now with main question on whether it's topped out at 16.25 already. We're still slightly favoring the case that silver's medium term rebound from 8.4 has completed at 16.25 after touching 16.08 key support turned resistance, with bearish divergence condition in daily MACD. It's also possible that silver is forming a head and shoulder top pattern too (ls: 14.635, h: 16.25, rs: 15.185?). A break of 13.495 near term support is at least needed first to give us more confidence on this case while break of 12.435 support will be the confirmation. A break above 15.185 resistance will in turn shift favors back to the case that rise from 8.4 is still in progress for another taken on 16.08/19.55 medium term resistance zone. The longer term picture, recent development suggests that Silver's fall from 21.44 to 8.4 just part of a long term correction to the five wave up trend from 4.01. Such down trend form 21.44 is possibly not completed and fall from 16.25 is tentatively treated as resumption of such fall that will eventually send silver through 8.4 low. Strong support is expected at 5.45/8.5 support zone in case of down trend resumption. In case of another rise above 16.25, there will still be no change in the long term neutral view and upside is expected to be limited by 19.55/21.44 resistance zone to bring at least another medium term fall to continue to long term consolidation patter between 8.4 and 21.44.
FOREX Currency Trading EUR/USD Weekly Outlook EURUSD: Switches Focus To The 1.4446 Level EURUSD-With a reversal of most of its losses off the 1.4444 level, its Aug 03'09 high seen the past week, risk for more upside gains targeting that level continues to be envisaged. Beyond that level will put the pair in position to head further higher towards the 1.4719 level, its Dec 18'08 high and possibly higher towards the 1.4875 level, representing its Sept 21'09 high. Both its weekly and daily RSI have turned higher suggesting further upside strength. Immediate support lies at the 1.4326 level, its Aug 13'09 high ahead of the 1.4044 level, marking its Aug 17'09 low with a turn below there creating further downside pressure towards its MT rising trend line at 1.3968. Decisively invalidating that level will mean additional losses towards the 1.3747 level, its Jun 16'09 low. On the whole, having reversed almost all of its declines off the 1.4446 level, EUR now looks to target further higher level prices and possibly resume its MT uptrend. Directional Bias: Nearer Term -Bullish Short Term -Bullish Medium Term -Bullish Performance in %: Past Week: +0.14% Past Month: -0.83% Past Quarter: +5.89% Year To Date: +1.65% Weekly Range: High -1.4776 Low -1.4207
Disclaimer: This report is prepared solely for information and data purposes. Opinions, estimates and projections contained herein are the author's own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which the author incur any responsibility. The does not accept any liability whatsoever for any loss arising from any use of this report or its contents. This report is not construed as an offer to sell or solicitation of any offer to buy any of the currencies referred to in this report.
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Red’s Rules to Play by… Do what they do on Wall St. and not what they say. Some folks like to buy stocks because they are upgraded or sell stocks because they are downgraded, that’s the wrong approach. Learn how to evaluate stocks for yourself. It is not a difficult process, the steps are 1) check the volume for a buying or selling patterns, 2) recognize support and resistance levels and utilizing key charting patterns. I use www.stockta.com for my data. Knowledge is Power (and Money) Over my 30+ yrs playing the stock market in earnest I have learned that there are winning stocks that most traders and investors completely ignore and abhor. And when played right, these overly unappreciated issues often lead to huge gains, but it is all about timing. There is no mystery here, you all know and/or have heard about “penny stocks” i.e. those that trade under US$5.00/shr on US markets (10’s of thousands of stocks trade on other world markets under US$5.00/shr and are not referred to in the same pejorative manner). This is a US Label (designed to diminish their value and keep you away, IMO). The fact is that there are many, many studies made over the years that prove that these stocks outperform the overall market, and when there is a steady new Bull Market, the little stocks (small caps, micro and mini caps) lead the Charge. As a class, they are the most undiscovered and underappreciated sector of stocks and the sector where the biggest chance big winners on a consistent basis. I call them Little Gems; they are indeed Wall Street's buried treasure for those who wish to go treasure hunting. Here, in the RedRoadmaster, I work to uncover solid, money-making companies whose shares are grossly undervalued and virtually undiscovered, and they sell for US $5 or less a share. And do not forget to always include some small, mini and micro cap (pennies and juniors) issues in your sights; they can give you explosive percentage returns like no others. Savvy traders do not wait for the stock market to hit bottom, recover or get toppy; they do not double down or resort to tricky, desperation moves. They make simple moves on good data and bank some gains. Do not think get rich - think get rich slowly; it works. Even if you know absolutely nothing about how to start making a living in the stock market, and want to learn how to do it, the first step is to learn from someone who knows how to do it successfully. The stock market is about success, and the lifestyle that comes with it, but it must be done carefully, both by picking the issues and in the trading of them, because one wants to make money doing it independently and without stress. You can’t reverse your “bad plays”. Breathe through your nose, count to 10 and move ahead. Go forward, and only focus on what the opportunities are in front of you to win in the stock market game. You do not live in the scrapbook, and always take what the market gives.
A journey of a thousand miles begins with the first step (Confucius); Download and read and study “Knowledge is Power,” the Stock Preacher’s e Book, its Free. Always remember that it is wise to look at the risk first and decide how to manage it before ever entering a position. Yes, losses will be incurred; it is part of this and any business and not a bad thing if they are controlled. Again, think “the "get rich steady" and not "get rich quick". The Bull is charging again, and perhaps this is the best investing scenario since the early 80's. It is happening now and savvy traders and investors are positioned and in the action. Have a great week, and stay tuned. All the best this summer,
Red PS: Some of you know that I am the founder of Archer Entertainment Media Communications, Inc., www.archeremc.com and non Executive Chairman of the Board, also that I am a Founder, and the President of www.livetradingnews.com Check it out please, let me know your thoughts. Redroadmaster@aol.com Disclaimer: The foregoing is commentary for informational purposes only. It is designed to help the reader learn the fine art of technical analysis. Links are provided to articles and stories referenced in this Report. Some statements and expressions are the points of view and/or opinions of Red Roadmaster™, aka Paul A. Ebeling, Jr. and the contributors. This information is not meant to be a solicitation or recommendation to buy, sell, or hold securities. I am not licensed or registered in the securities industry. The information presented herein has been obtained from readily available sources believed to be reliable, but its accuracy is not guaranteed. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors. I do not receive compensation in any manner from any of the companies that are discussed in this Report. Please feel free to print and/or send The Red Roadmaster’s Technical Report on the US Major Market Indices ™ to your friends and associates, no permission is necessary. ©2002/2009 Paul A. Ebeling, Jr.
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Published on Aug 31, 2009