Stock Tiger Update

For Wednesday January 3, 2007  

If you wish to subscribe it is free http://stocktiger.com/submit.php

Our site is also free and has a message board and live chat room during  market hours and our morning video of setups and market charts plus tools and of course our daily break out stock plays.

http://stocktiger.com/

"If you want a happy ending, that depends, of course, on where you stop your story."

-- Orson Welles

For the year 2006 the market story stopped on Friday - Happy New Year all for 2007

Close Friday

Dow -38.37 at 12463.15, Nasdaq -10.28 at 2415.29, S&P -6.43 at 1418.30

It was a low volume holiday week so we can't really read much into the action because it could change when the big traders come back next week. As it turns out next week will only be 3 days of trading with lots of news in the calendar so perhaps the volatility will pick up.

We totaled the triggered picks for the month of December and the past quarter:

December - if you bought 1,000 shares of each and sold at the high on the first day total gain was $26,640  if you sold all shares the first day at the close the total gain was $17,781  We know that no one bought all and exactly 1,000 shares and caught the high but many bought more and held much longer. We use this as a benchmark to show possible one day gains and to compare months.

For the Quarter the total high first day gains were $126,442 and the end of day gains were $84,631

The average per trade selling 1,000 shares at the high of day was $516   With 245 winning trades in the past quarter we hope you caught a lot of them.

 The poll shows quite a wide preference for the amount to use per trade. The largest single category is $6,000 to $12,000 (maybe as it is the widest) but it also is a range where you can make enough profit on a trade to take some the first day with a noticeable gain.

Actually the combined range of $12,000 to over $20,000 has about the same number. Our picks have a wide range of prices but the average is about $14 so 1,000 shares in our example fits pretty well.

The amount you place on each trade is not so important as that you develop consistent results. We like to take some profits the first day and know sometimes it cuts into our gains but by taking profits then placing stops you book profits almost every day you trade. Once you are doing this on a regular basis you can experiment with position size and how much you sell on the first day. Even for long term holdings it is good to take some profits from time to time and then you can buy those shares back on dips that always come. That way you have build up booked profits so if the unexpected happens you have built in profits anyway.

I guess a ton of people are expecting a good correction in January at some point and I hope so also. We will point out later how this can be good. This is a chart that shows the length of rallies since 1900. It shows the one we are in now is aver 1,000 days and the forth longest but below average in gains. However this the the stodgy Dow as the broad market has done much better. Still if history repeats this could be a good year if we ever get a 4-year cycle low - soon. The average gain after the election cycle just past is 50%.

Here are the Dow charts for the first quarter of the year for the last 6 years. Note how many of the years had March 31 prices almost the same at January 1 regardless of the moves in between. Which of these 7 charts will 2007 first quarter look like? Send us a note if you have a guess or make a note on the message board.

2006   +425 points

2005  -400 points

2004  Almost unchanged

2003  within 200 points

2002  within 100 points

2001  -590

The Dow January  2000 was 11,500 and now at 12,500 or a gain of 9% in 6 years so with inflation it is a good sized loss.

The broad market Value Line however was 1,029 in January 2000 and today is 2,200 for a gain of over 100%. CNBC just is in love with continually talking up the Dow with each "new high" but they totally miss the real market.

We mention the broad market and the Wilshire 5000 is very broad. We have not looked at it in a while but it has been unable to break above the last resistance to get to an all time high. It could probably use a good pullback also.

The Dow may be stodgy but it has the past 5 months had a very nice run. Not much to say on it now as long as the trend line is holding. We do not trade Dow stocks often but the chart points something out. December we had substantial profits but they were lower then the previous months. Note how the Dow gained little in the last 2 months. A couple of hundred points higher. Our pullback and break out plays make the biggest gains when we have a volatile market and that happens after a market has been rather flat for a while or at a change in direction. When the market is flat then the break outs often do not move as much as fast. Once this consolidation resolves then it will lead to a more volatile market for a while and we will again see more wide swing trades.

The S&P 500 is also holding above the trend. We think there is some weakening but will wait to say more until next week when volume comes back to the market.

The Nasdaq seems the weakest and it would be needed to get real movement going again.

The Russell 2000 was unable to break out and has fallen back again but we will watch next week for the real tip to what is to come. Right now it is a cautious chart.

The NYSE is a pretty chart in general. This may change a lot this quarter but maybe on a pullback the lower channel line will hold. This is a type of pattern that could technically continue a long time. A drop back to test support at 9000 would be very good and could lead to a continuation.

This Nasdaq-S&P 500 ratio chart shows the underperformance of the Nasdaq. It is at a possible horizontal support (not drawn) now so we will watch this week. Some think the Nasdaq 100 (the top 100 in the Nasdaq by market cap) may be putting n a bottom now. Seems early to me but will watch for a bounce.

Oil was unable to break out last week so failed at the 200-day then dropped below the 50-day. Guess ol' Boon Pickens did not quite get it right when he said in the Autumn that we would be looking at $100 oil pretty soon.

Gold Continued with its bounce from the trend line and 38% retracement and is now near $640 and some former resistance. To me it is not yet compelling in general and you see it could actually be forming a head and shoulders making the right shoulder now. This could fit in with a pullback later in January as I think gold would not necessarily go up but could fall with the market.

The 30-year rates made it above the trend line and ran into the 200-day so expect rates to pullback a bit here or at least consolidate. They closed at $4.8% not high enough to hurt the housing market which has its own troubles.

The yield curve which compares the 10 year rates to the 30-year rates is still inverted as it is below 1. If the US does not enter a recession in 2007 it will mean this indicator is wrong for the first time in a very long time as usually when it is inverted for so long the recession comes within about 6-9 months.

You know we like this monthly chart a lot. Note how the last candle for December is the smallest range. The lack of volatility we mentioned earlier. It is necessary and will lead to more action pretty soon.

Here is the economic calendar for next week. Only 3 days in the trading week and see how full it will be.

Here are a dozen new additions to our watch list.

Note: the video on the Home Page features a few of the picks each day just to highlight either new ones or ones that are close to a possible break out.

DVSA is one Drucwolf noticed in the chat room on Friday. It had a high volume move then a reversal so this may signal a bigger sell off. However it is worth watching as it may make another attempt. If the low holds then we can try a play back over $11 or wait for the move back over $11.45. But this does have a history of pulling back more.

Motorhead showed ANO a miner with a nice set up to break out over $1.25.

I had XL picked out before the close on Friday and it pulled back. It is quite a nice looking chart and with a stop under the 50-day EMA could be ok. Now either a buy at the lower trend or a break above the top. It is quite a low volatility stock lately so perhaps suited for people who do not watch the market too much. Just keep a top in place.

DSX straight forward break out buy above $15.85.

CHP above $5.05 or at trend with tight stop.

NWRE may be extended too much to break out yet but $13.45 is the number.

STZ is a good volume stock and would break out over $29.10

CTDC we think this stock is maybe $6 over priced or so but it can move. It is a buck 45 away from a break out but point it out as a fast trade if it starts some new action. Gamblers could buy some near the 50-day if it drops with a stop just underneath.

FVE break out over $11.25