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Stock Tiger Stalking Stocks™
For Tuesday September 4, 2007
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Close Friday
Dow +119.01 at 13357.74, Nasdaq
+31.06 at 2596.36, S&P
+16.35 at 1473.99
Labor Day is a United States federal holiday that takes
place on the first Monday in September. The holiday began in
1882, originating from a desire by the Central Labor Union to
create a day off for the "working person". It is still celebrated
mainly as a day of rest and marks the symbolic end of summer for
many. Labor Day became a national holiday by Act of Congress in
1894. (Wikipedia)
Labor day is also a holiday in
Canada since 1872 so the US observance started 10 years later. Stocks rallied Friday
with NYSE advancers at 2858 and decliners at 484. The volume was
light so most await until this week to see what happens when the big
traders return to work as summer vacations end. Before the open it
was known that President Bush was going to talk of a plan to help
subprime borrowers from loosing their homes in foreclosure.
The Core PCE index that the Fed uses as one of its inflation
gauges rose 0.1% and 0.2% was expected so this shows the yearly rise
is in the range the Fed is OK with. Bernanke
said nothing on Friday that indicated that they would cut rates soon
but said they would continue to provide liquidity if needed and also
act if needed to help keep the economy strong.
 We
are now in September and as a chat below shows this is historically
the worst month of the year for stocks. The market in general did
nothing for the week but the Nasdaq did end up with a 1% weekly
gain. The Dow broke above its trend and about 20 minutes before the
close looked like it may make new highs for the day as it was about
to test the 12:30 highs when it then broke down instead and gave
back about 100 points in the last 15 minutes. For alert future's
traders this week had many very good entry and exit points for solid
gains. On this little Friday 5-min chart you see the buys at the
50-peroid bounces or short at the end of the day break of it.
Even with the historical calendar against the longs this month,
last year during the first week or so of September the Dow rallied
over 300 points. Friday was the last of the end-of-month window
dressing and we usually get a pullback within the first 3 days of
the new month so will be looking for one and then at a possible
entry for a similar rally this year. The fact that the Fed has said
that they are willing to "help" may keep some strength in the market
for a while though this does not speak of the short term volatility
moves we have been becoming used to.
This is how the main indexes did for the last week.
And the best and not so good
sectors for the week.
The averages monthly Dow gains showing the
weak September.
The Dow closed the week unchanged at just under the trend
line and a bit over the 50-day EMA. Of course it could break out
here to test at least the August high at 13,695 but it is very
common for a chart to also want to retest the 200-day. Seems
many talking heads on CNBC expect the retest of lows where they
would buy so if this is so there may not be a test as too many
are eager to buy. I think by late Tuesday or Wednesday we may
see a clearer trend but a high volume move over the trend line
could set the stage for the 300-point move up.
If you trade the futures I think it very
useful to use a 15-min chart for spotting trend lines, channels
and other support/resistance points and moving averages. You can
also use 5-min charts for more detail. For the Dow futures the
Dow index chart will not have the same price but it will act at
the same points. Of course if you use the
UltraShort Dow30 ProShares
DXD or Ultra Dow30 ProShares
DDM instead of futures than
use those charts. If you do not have real time charting or the
ability to draw on charts you can subscribe to
stockcharts.com real time charts for $300/year
and could pay for the whole year with one 60 point move on the
Dow with one contract - like in the last 10 minutes of the
Friday Dow move. The current channel is one to watch as other
than a gap the short would be on the break of the channel,
50-period and lower yellow horizontal line at about 13,300.
The transportation average still
very weak and until it improves does not support a longer term
sustained move in the rest of the markets.
The Nasdaq was the only major index
to close up for the week. The Friday candle in not a favorite at
all as it is typically a reversal candle so I expect at least
consolidation if not a test of the 50-day.
This is the Nasdaq 100 index (the top 100
market cap companies within the Nasdaq), compared to the S&P 500
index. It is a weekly chart and you see the break out in July as
the Nasdaq hit its high. If it can break out above the line and
hold than it would indicate a longer term situation where the
Nasdaq 100 outperforms the S&P 500 - so a shift back into tech.
Note that the 50-week EMA is moving up toward the 200-week so if
they crossed it would be bullish for this ratio. Remember that
this would only meant he the Nasdaq 100 would be outperforming
the S&P 500. They both could be in a decline but the Nasdaq
dropping less. If this were to happen you could do a spread
where you short the S&P 500 and go long the Nasdaq 100. We will
talk of it if it happens.
The NYSE has mace a nice run from
when the stochastics signaled a buy moving over 20 and is now
back over 70 so watch for any move back under 70. This is
similar to the Dow chart and to be bullish would need to break
over the shown resistance and 50-day and would want to see the
RSI move over its little trend line also.
The weekly Russell 2000 chart shows
a couple of weeks holding back over the long term trend line. A
break to watch on the next chart.
Here is a 10-min chart of the Russell
2000 and you see the break out point over 803.50 - that
would expectedly take the average back to the resistance at the
gap level.
The volatility index VIX still at
the high end of the 5-year range - good market for quick trades
but not so dependable for longer term.
The semiconductor index SOX is
still under the 50-day and broken trend line.
The NYSE percent of stocks
trading under their 50-day averages has made a few tests of
the lows which is constructive and shows hope of moves back higher.
The Japanese yen after such a
big move a couple of weeks ago again has settled down. It is still
well above the channel break out so indicates a long term move up
but the current move may be lower and that will continue the carry
trade and that can support the markets if that is where they put the
money they borrow form Japan.
Gold still waiting for a
move over the trend line.
The US dollar has been in the range for
almost 2 months trying to build a base.
The economic calendar from briefing.com
NNRF closed the week up and it performed exactly as it
has done before in the lower volume pullbacks and this time
again going exactly to the trend line bottom triangle for a buy
and then rallying on volume that was higher than each of the
previous 8 sessions. RSI has this time gone over the 50 line so
a continuation may be in order. The chart shows the little break
out just overhead at the blue line and the bigger break out over
the top triangle line and the 50-day MA. (I show MA here instead
of EMA as sometimes a stock for a time seems to follow one over
the other so you can use which seems to be the better at the
time) Here it is clear that the MA is right at the trend line so
a break over that at $3.53 would be very bullish. After the
close on Friday the company announced that they have secured a
revolving credit line of $2.5 million with the company able to
use restricted shares of common stock as collateral. This is of
course excellent for the company as it provides capital for any
short term needs but this type of credit line speaks very
strongly of the lender's faith in the company.
Once the break out occurs there is resistance at the 5 ish area
where it consolidated for so long but when that is cleared the
stand out is the $6.25 that we willl draw as we approach it.
September we except to be a very positive month for the company
with presentations of shielding materials so possible orders and
earrings release to fill us in on the past couple of months.
Looks like we are again on a very productive path higher.
PLTG had a super rally from its low when the indicators
showed the buy at about 15 cents. This stock was very heavily
shorted and the reversal on huge volume may indicate that a lot
of the short position covered at the time. That does not mean
that the shorts have stopped completely but the date of
significant revenues is closing in as wells are being drilled
and will then be hooked up to the pipelines. Both natural gas in
Tennessee and oil in Texas so I like the current duel streams.
(others will come a bit later) This stock trades a lot more
volume in Germany usually than it does in the USA but there is a
lot of arbitrage in it. If you are only starting a position for
this long term oil/gas company it seem prudent to scale in by
not taking a full position at one time but over days or weeks.
These can give you several price levels and if you then trade
some around a core holding, you will have many opportunities to
takes some profits as you wish.
SCON has been very popular in the chat room. We
originally had this as a buy or short a couple of weeks ago and
the long triggered at $2.13. and ran to $8.62. We kept looking
for sell signals and while, the RSI and stochastics have not yet
provided one - and we suggest you watch for this to happen,
we did see a trial sell signal (and or short) at the break of
the Thursday closing price as shown at the red line. This is now
only based on the chart and not on the story at all. Remember
that NNRF ran from $0.55 to $10 so this one could also keep
going. The top Bollinger band now is closer at $7.66 so it is
not totally outside the range though RSI is very high. This may
be just consolidating for a move higher but it did give its
first warring sign on Friday with high volume and a red day.
With ones like this that has a ton of traders in it I sometimes
find that it can take more than one attempt to finally get an
entry that pays off. Taking some small losses while watching how
it trades is sometime part of a trading style. Of course
with big momo stocks (momentum) you need to be aware that they
may have gap opens.
Additions to our watch list. We buy as close to a break point as
possible and the chances of a more significant gain increase if
there is more than normal volume. Generally it is good to take
at least partial profit on the first day of the buy and set
stops to keep gains.
IAH This is an Internet Architecture ETF Over $52.20
ILMN Over
$49.40 then top break at $51.00
MYGN Over $44.61 - or $45.00
RYI Over $34.00 and moving averages - has tend
line at about $35.20
RIO Over $50.38 then $53.18 top break
HPQ Over $49.85
GRMN Over $105.00
MON Over $70.75
ABB Over $25.04
CSCO Over $32.00 has a $32.47 shadow
high
MR Over $36.05
CAM Over $82.00
AHO Over $13.68 - foreign so often gaps
open
ESL Over $52.77
CLS Has a level
over $6.02 if increased volume
End of summer is often a last picnic. These are from around the time
that labor day was made a holiday. 1888-1912. (Guess shorts had not
yet been invented)
It was Moscow's 860th birthday this weekend so many special
events and concerts all around the city.
That's a full lid for today - will see you all
during the week.
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