There are a lot of reasons why we could imagine that the markets
could have put in a top and now enter a bear market but usually bull
markets end when there is a lot of enthusiasm and much sideline cash
pouring into stocks and we sure do not have that now. We have a lot
of worry and low consumer confidence, huge - really huge bank losses
while the war continues etc. We also have had though a couple of
months of severely declining stock prices at the start of an
historically very good month. 75% of the time December is up and we
think it will be this year also.
Recently I mentioned how at some point in late winter we had a
couple of weeks when it was very hard to find any break out or break
down candidates. It was really like maybe we would have to stop
posting any. Then things changed to being a great time for playing
them. The change happened quickly. Over the last few weeks it also
has been increasingly hard to find good setups and I look at 1000s
of chart a day. One thing is clear is that a large number of stocks
have been in a big decline over the last couple of months. Very many
stocks have lost 30-50% and what seems to be encouraging is that
some now seem to be starting to show bases being built or downtrend
lines close to being broken. If we do get into a recovery for these
poor charts it may be good to be aggressive on the best charts when
it starts. If you look at how the watch list stocks have performed
after they triggered in the last 2 months you will see that the
majority of shorts continued to drop adding excellent gains while
the longs overall did not increase to such an extent. Maybe December
can reverse that. That is how we think it may shape up at this
point.
The markets put in a sizable rally this last week and we should get
and welcome a retest - the amount of retracement will vary for each
index. The Nasdaq looks about the weakest right now. To give back
50% of the recent gains or even all of them would not rule out a
move to new highs this month or into January. We saw the Japanese
Yen make many gap ups in October and November and it drove the
markets down, the carry trades were being unwound and those Yen gaps
needed filling and that helped drive the US market back up. We have
the US dollar trying to build a base while the EURO seems to be
topping out. These longer term trends do not change overnight but
there are way to many on the short side of the dollar and another
decline may be a buying opportunity.
Gold for several years used to have a pretty good counter
relationship with the "main" stock market. You could have a basket
of gold stock on the ready and buy them on declining market days and
consistently do very well. This changed a year ago of so and was not
so reliable. This relationship may be coming back? If so we
want to be long the market as gold declines and gold may have or
already or may be topping out. So at this point we are in a positive
mood for seeing higher equity prices this month after an expected
retrace of the recent rally. Many missed this move or did not expect
it to be so strong and they may be more aggressive if they get
another chance to buy at low levels.
Here are the major indexes and how they did last week.
This is a Dow futures chart from Friday starting at 4 AM my time or
8 PM EST.. The
times being Moscow times so the break out was at 7:00 AM EST. Quite
often the volume picks up around an hour before the US opens and you
can make a good trade. Here was 40 points pretty easy. Not all
futures can be traded around the clock but many can be and offer
additional opportunities to normal US market hours.
The semiconductor index rallied at the stochastics crossing
of 20 and at the support as shown. Will watch on a retracement as
that level now should hold if tested.
You see the S&P 500 also back up but to resistance after its move from
the 50% retrace line.
The NYSE is a pretty nice looking chart. If it moves
higher and stochastics gets over 80 you can watch for it to move under 80 as it
can be shorted as it needs to do a retest to some level. The 200-day EMA is that
50% retrace so that a place to watch. A break out also could be played but with
tight stops.
Right on schedule the rally started from the low percentage
of NYSE stocks trading over their 50-day moving averages as it has done 3 other
times in the last 2 years.
The Russell 2000 also saw the turn back up right at
support. So the news may not so much predict the market as the charts predict
the news. The Russell hit 735 on the Tuesday low and 780 high on Friday or 45
points in 4 days. Each futures contract pays $100 per point or $4,500 for
the week - good week if you were long. For the day (depending on broker) a
contract requires a margin of $500 to $1800. Would like to see the stochastics
get under 20 as seeing it so close though it has worked well before a couple of
times - this time a year ago and again in this year's spring decline - it is
nicer IMO to see it dip under 20 to start a major rally.
Longer term Russell shows
it back inside the channel.
Oil topped at the Fibonacci suggested level. Maybe it will try again or
even break over $100 but looks like it is still headed lower in the medium term.
It has to test the $80 area as seen on the chart.
Gold made a lower high on the last move so now we
will see if it makes a lower low as well. The 50-day is at 778 and then has 50%
Fibonacci retrace support (from the August low) at between 750 and 760. Gold
stocks themselves are not in general doing very well. Gold has run up more on
emotion than on any jewelry demand so can move down also. We know there is
is growing demand in India an China as their economies grow but this move has
been very steep since August.
The Japanese Yen and it
crazy move up and back. It will test the 50-day I bet this month.
The US Dollar to EURO
ratio chart shows it back inside the channel. Maybe too soon for
it to hold but points to the eventual move up in the dollar and down
in the EURO.
And here the US dollar on its own.
Economic calendar from briefing.com
Some we follow longer term:
NNRI The company will be at the Moscow
show (Atomic Ecology) for Tuesday and Wednesday this week at AtomEco-2007 which is a
show for waste management, decommissioning and
dismantlement and environmental remediation. NNRF will be
specifically showing Biecom and Feecom as well as NuCap along as
talking of their other products and services. This is the show's
partner page where you see the NNRI green
logo. It will be educational to see the range of things shown there
and the participation of the visitors. On the chart the stock still needs to break the trend to reverse back up.
We pointed out the positive divergence on the weekly chart but this
is not a timing indicator. It is a very reliable indicator overall
but does not tell us the exact date the turn back up will start. I
know it is not pleasant to have the stock price fall as the company
continues to improve the business but there are many areas of
progress and we will address with management the wish from many of
you that they keep us shareholders better informed.
This 60-min chart of NNRI was pointed
out as also showing positive divergence in MACD, RSI and CMF. All
three of those indicators have already reached their lows so they
point to higher prices. $1.83 then $1.87 then $2.10 are prices to
break on this chart.
PYR.V Last week we talked about the
growing earnings of Pyramid Petroleum and this week they were
confirmed:
THIRD QUARTER HIGHLIGHTS
- Revenues, net of royalties, for
the Q3, 2007 were $6,387,949 compared
to $594,732 for Q3,
2006.
- Cash flow from operations for
the Q3, 2007 was $2,118,455 (6 cents
per share) compared
to $330,950 (1 cent per share) for Q3, 2006.
- Net income for the Q3, 2007 was
$397,234 (1 cent per share) compared
to $29,204 (nil) for
Q3, 2006.
This month the acquisition of the Capco properties should be
completed and then we should see the real pick up in earning toward
our projection of $0.18-0.19 in 2008. They have now shown they are
on track by posting a 1 cent net profit. They will continue to
increase production towards the 2,000 barrels equivalent per day.
The volume is still low as the stock is on the TSE Venture exchange
in Canada but by next quarter on the Toronto exchange and as these
earnings get known we expect much more interest in the stock and a
several dollar price by the end of 2008. On the
message board in the PYR thread
there is a post comparing the price to what RAL.TO - Rally
Energy was when they were producing 2,000 barrels per day and they
make the point for a fair price in the range of 400% to a 1,000%
gain from here.
CFPC is now GWDC as you know Coffee
Pacifica changed its name to Growers Direct Coffee Company. The
stock price has backed off again after the run up but the company is
really improving in my opinion. The company announced that they are
going to restructure the management of the Company, effective
January 30. This is great as they had been lacking in company
updates. Many people have mentioned how Paul Khakshouri, the new
Chief Operating Officer is doing a much better job and the PR has
changed to the better in the last couple of weeks. The company plans
to also add coffee from Columbia, Guatemala, Nicaragua and El
Salvador. Read the recent pres releases and I think you will be very
pleased with the company progress and its plans. I think this
will be a good winner in 2008. The earnings also have already
started to show it and next two reports will also improve.
PLTG Platina Energy continues also to
increase production. For the natural gas wells they have about a
60-day time between the completion of a well and the hooking it up
to the pipeline and receiving payment so this will happen pretty
soon and once started the earrings will increase each month. The
stock has been in the same small range just over the 50 and 200-day EMAs.
Later in the week we will talk more about
another oil stock HENC Holloman Energy. At the moment its
symbol has an E at the end - so HENCE but they will file a financial
form this week and have the E removed. The stock ran up after the
merger/acquisition and while people waited on the company receiving
money it became a trading stock and it dropped and then up and down.
They have well property in Canada and in Australia and I am
especially interested in the Australian wells that they will start
to bring in during January. That location has an 86% success rate
per well and they will be drilling 3 wells to start, with an
estimated rate of 800+ barrels a day so we expect about 2400 per day
by about the end of the end of first quarter. They also have about
23 well sites in Canada but more on that at a later time. They have
added John Crosby to the board and he is an attorney for Shell Oil
in Australia and Brunei Shell Petroleum.
The company will finance the drilling of new wells using bank
financing so will not have to issue more shares. This stock has a
usual volume of 150,000 shares a day so does not take a lot to move
it back up. (the stockcharts chart will not be accurate until he E
is removed from the symbol so here is one from marketwatch)
CNGJ our Uranium exploration did not
break out but now is at the former support and with the form 43-101
to be filed this month which will outline the expected worth under
the ground we expect a good break above this downtrend.
LLSR Lantis Laser, Inc. is not a
stock I am following closely but mention it as many sites have begun
to talk it up so it may become a momentum trade - both up and down.
They have a laser imaging device for dentists to use in place of
x-rays. They hope to be in production later in 2008. They received
an award of best of new products from Popular Science magazine so
had a good run up on Friday with big volume with that annoucement.
New additions to our watch list:
(thanks Fastcash from chat room for several of these)
VIV $6.10
Fed
steps up.
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