The strength of the rally this week may have been a bit unnerving for many as
they were not holding many positions so as the buying intensified some were
chasing prices up so as not to be left behind. In the recent past that has not
worked well as moves up were quickly erased. It seems that if you hold some
position for days it is still prudent to take some of your money off the table
on big move days as you can quickly buy some back on pullbacks if strong buying
continues. We found that worked very well with DXO this week as it
gained 55% you could have increased your profits with seem trimming on moves up
and re buys on retraces. For the past week over 90% of stocks in the S&P 500
closed with gains.
The Dow was down 33.8%
in 2008. To put this year's performance in perspective, this chart
illustrates the 15 worst calendar year performances of the Dow since its
inception in 1896. The Dow's performance in 2008
ranks as the third worst on record. Only 1931 and 1907 endured greater declines.
It is of interest that major banking crises occurred in 1931, 1907, 2008, and
1930 – the four worst calendar years on record in terms of stock market
performance
I noticed this tidbit on the Net: Severe financial
crises share three characteristics. First, asset market collapses are
deep and prolonged. Real housing price declines average 35 percent stretched out
over six years, while equity price collapses average 55 percent over a downturn
of about three and a half years. Second, the aftermath of banking crises
is associated with profound declines in output and employment. The unemployment
rate rises an average of 7 percentage points over the down phase of the cycle,
which lasts on average over four years. Output falls (from peak to trough) an
average of over 9 percent, although the duration of the downturn, averaging
roughly two years, is considerably shorter than for unemployment. Third,
the real value of government debt tends to explode, rising an average of 86
percent in the major post-World War II episodes.
Right now we are working through this but as we saw this week, the stock market
gives us great profit opportunities and in 2008 at stocktiger we had 890
trades that hit their trigger price and gave at least intra-day gains and many
made multi-week or multi-month gains. In the worst market most of us have seen,
these are pretty remarkable results.
The weekly major indices all were up with oil topping the list.
The top and bottom sectors for the week with only Investment Services posting a
small loss.
The best and worst industry groups for the week all posted nice gains with
commodities leading.
The multi index chart shows they all closed over their 50-dau EMA. The Dow shows
the Bollinger band and a short term overbought condition.
The Dow Point and Figure chart and a double top break out and a 10780
price objective.
The monthly Dow - has only had 1 trading day this month so let's enjoy
the green candle for the first time in 4 months.
The weekly Dow shows the minor resistance right about here and note the
MACD bullish crossover.
Transportation index had a good move over the trend line, up to
resistance and over the 50-day EMA.
The Nasdaq and its long term trend line. A move back to the 200-month EMA
is likely at 1782 if we get a confirmation of this started rally.
The P&F Nasdaq chart shows a triple top break out with a price objective
of 1966 and a trend line near 1850.
Nasdaq broke over the horizontal resistance and the 50-day EMA so very
bullish if only we had more volume.
60-minute Nasdaq and the break over the trend line.
When the Nasdaq summation index first
made its turn up in late November we commented that
usually these reversals tend to last some time but we
were still skeptical. It turned out to be a good
predictor.
The NAMO again in short term
overbought territory.
The VIX dropped under the 200-day EMA on Friday. The stochastics are
oversold. the RSI has some room to fall and the histogram is starting some
positive divergence.
The VIX P&F chart with a bearish triangle break down and a trend line
near 29.
Longer range projections (Elliot
guesses) are probably not terribly useful but they can
give us ideas of what to watch for if they do play out.
The S&P drop from the October 2007 high is often charted
with waves 1-5 but you can also project a simple A-B-C.
The A wave completed in late November and we had had a
26% move up from there in this current B wave. Typically
this wave can go up 50% after the more than 50% drop we
had seen. If that happens we would see 1111 for the S&P
before the C wave down begins. We can't know if that
will happen but we can see that we have been given 4 buy
signals from our indicators.
The S&P P&F chart and its
spread triple top breakout and a price objective of 1082
and nearer trend line near 950.
The daily S&P 500 and the move
over 50-day EMA and resistance at 1007.
60-min S&P and what should now
be support at 918.
This 15-minute S&P shows a
shorter term buy that came on Wednesday and the steep
path it took - now needs to pull back.
The NYSE has the first
Fibonacci line just overhead but it does not line up
with resistance. The 50% retrace however does at 6424.
He NYSE advance decline ratio
chart and its advances.
The percentage of stocks on the NYSE
trading over their 50 day moving average is reaching
levels often associated with pullbacks. The TRIX is
about to cross over also.
The S&P 400 mid caps had a
good move after the break of this triangle.
The Russell 2000 small caps ended
December with a nice green candle and a bullish
move of the RSI from under 30 to over 30.
The Russell 2000 P&F chart and the Double
top breakout with a trend line at around 595 and a price objective of 611.
The daily Russell 2000 and its
move this week shows it now over the top Bollinger band.
The bond yields increased the last
two trading days causing bond prices to fall and helping
stock price rise as money came out of bonds and into
stocks. The 5-yera yield closed at 1.7%
The 30-year yield closed at 2.8% with
RSI moving over 30.
30-year bond prices fell as
RSI went under 70, stochastics under 80 and MACD crossed
over.
The London FTSE also had a
strong rally week and on target to test the 50% level at
4657.
The Chinese i-Shares FXI
gapped up Friday to resistance at 31.29 so would be a
watch list break out buy but as a foreign issue can
often gap up or down..
The commodity sector CRB index
has rallied back over the yellow resistance line and RSI
has crossed up but not yet stochastics or MACD.
The commodity iShares GSG is
also at resistance and can be traded as a stock.
Oil monthly never had its RSI
drop under 30 and it may or may not do so in the future.
At the moment though we have have a good rebound.
The USO monthly.
Oil daily and its mover over
the trend line with resistance near 50 and the 50-day at
54.50.
The ETF OIL
also over the channel trend line.
And USO daily with similar chart.
Last week we featured DXO the double long for oil and showed both the
linear and logarithmic scale charts to emphases the strong buy signal on both.
It was at the bottom of the channel so very low risk and a time when one could
buy more than usual and hold for a longer period. It had gapped down on the
previous Friday yet came back strong which often suggests that the sellers are
exhausted and a strong move will follow. It closed up 55% for the week on very
heavy volume and we are very pleased with this play as many in the chat room
participated all week. It also offered many chances to scalp intra day, selling
partial positions and buying back lower each day. The overhead resistance now is
at $3.63.
This is the 5-minute DXO chart for the week and shows that the gap from
the previous Friday filled early Monday for a great entry price and after its
quick run to 2.32 pulled back to the 200-period for another good entry point at
2.12. Now we need to monitor how much the pullback will be and the level of
interest of the dip buyers. After such a good week some backing and filling
would be expected.
Gold is sitting still right at resistance trend line and a pullback could
come again. Much depends on the movement of the US dollar.
GDX Renko chart is still on a buy signal and would change to short
sell if the CCI goes back under 100 and the SAR dots go back over the
pattern. We received a call from a subscriber who has been using his own system
for trading gold stock movement and his has done very well at over 30% a year
and in 2008 did around 80%. He was intrigued by our system so did the 2008
calculations and realized that this one made returns of over 200% for the year.
Several times we have said that this system is a gold mine. (this does not mean
it always will be but it sure has been this year.)
The HUI has climbed all the
way back over its longer term support at above the 270
area. The lower portion of the chart shows gold
and its down trend line resistance overhead.
Daily HUI and the 200-day
resistance overhead.
Platinum broke out this week and is over its 50-day EMA. Our
platinum penny pick ANO ran up 30% this week and our two other
palladium/platinum picks on the watch list SWC and PAL are doing
well also.
Silver is back to its recent
high and may break out again.
Copper is also improving - we will not show a chart here but will put a
list of copper stocks on the
blog
later.
The US dollar has rallied back to the 32% retrace line and this is
resistance and then again at the 50-day at 83. The MACD would have a bullish
crossover if it happens to advance further. There is a gap just at the 50-day
level.
|
Butch Cooley Market Comments
(Butch is founder of
Leg Up House
and the
Butch Cooley Worldwide
Hunting and Fishing . He has
been an active trader for decades.)
Stock Market Comments
Looking over my charts on the Dow
from 2008 it looks like we started the year at 13043 and
closed down to 8776. A drop of 34%. And I read where
WalMart and McDonald's were the only two stocks on the
Dow 30 that were up for 2008. Kind of tells you where
people are not putting their money!!
But on the first day of the 2009 trading year, the Dow
jumps 258 points, almost 3%. Of course the gains were
wide spread, low volume and no real leadership. Some
would think that traders are picking up widespread stock
bargains. Volume has been low the entire holiday
trading season, with volume on the NYSE over 1 billion
shares only 2 days out of 7. Some will say that is
because there is still no conviction. None the less,
the Bear Rally continued and money was made. After all,
that is why we all do this, isn't it.
I got more email in the months of November and December
08, than I normally receive in an entire year. 90% of
it was from people wanting to know when the markets were
going higher? I don't know. I am not a "soothsayer", I
have no crystal ball, and I can't see any further into a
chart than the far right side. I get up in the morning,
like most people who trade, turn on the computers, catch
up on the news, futures markets, gold, oil, who is
shooting at who and where. I log onto stocktiger.com
and various market news feeds. I turn on CNBC, and
Bloomberg. And then I try to think ahead of the market
pace. I listen to what other people are doing, and I
consult my charts. Always looking at charts. I made
most of my gains in 2008 by buying ProShare Shorts. Not
very exciting, but was definitely a worthy effort this
past year. In fact, it was almost too easy. But to
watch the market run from 13000+ this year to 7,400 is
not very exciting over the longer term. It means we are
in serious trouble, and that trouble did not go away on
December 31, 2008. And a 258 point rally on January 2,
2009, does not mean "things are good". In fact, nothing
has changed.
The world money supply is still a total mess.
Unemployment is still running wildly high. Bailouts are
continuing. The Fed is giving away money left and
right. Banks still won't show us their balance sheets,
and still pretty much refuse credit. Many are in still
in serious danger of failing. Housing prices are still
dropping and foreclosures are still increasing.
Commercial real estate is falling apart. Retailers took
it in the shorts over the Xmas season. Many will not
survive. Many corporations are on the brink of
bankruptcy. The 4th quarter GDP is expect to reach
-6%. So when are the markets going back up? I suppose
when all of this "junk" I just mentioned goes away? In
the fall back in 1929, it took about 4 years to reach a
real bottom and to turn the markets up with some
conviction.
The Dow was down almost 50% in 2008. Bad news became
good news. Volatility in the markets was pretty wild.
The thought now is the markets couldn't go any lower, so
now money will flow back in. And on Jan 20th, President
Obama will walk into the White House, roll up his
sleeves and bring the US back from the abyss. If this
is the current market sentiment, then we will most
definitely see some rallying continue in January 09, and
that's a chance to make more gains. But cautiously!!
Eventually the sentiment will turn negative again, even
if President elect Obama can make the changes we need to
see to remove the "junk" from the economy, it is all
going to take time. A lot of time. But there will be
rallies like yesterday for certain. I continue to trade
with "knowledgeable caution". Breaking 9,000 on the Dow
does not mean too much right now, And earnings will be
report soon. That ought to be good.
ST mentioned something on Friday, about taking some of
your gains off the table when your stocks are running
up. It's good advice, it's how money is made. I sell
in "halves" all the time. I will hit a resistance point
on a running stock, and pull have my gains out. You
don't have to hit the top every time, or buy dead on the
bottom. In fact, it's impossible to do constantly. It
all about making gains instead of losses. Solid
advice. Greed and Fear are amazing motivators.
Butch Cooley
|
The expected earnings reports this week. Also check the updated
Earnings Calendar
on all overnight holds.
Weekly economic calendar from briefing.com.
To try futures trading you may
sign up for a free simulated account that uses live streaming data.
Futures have been very volatile so great opportunities right now for
wide swings.
When any of you sign up for a new
stockcharts.com
accounts there is a space to put in a referral name
on that form. If you enter
stocktiger@stocktiger.com they give
us credit. Thanks!
You know we follow many mechanical trading systems from
ninja traders that are popular in the chat room also. If
you use a platform like Ninja trader you can have these
trades executed automatically. This week several of them
were good plays that took the thinking out of the
equation. SRS the ultra short for real-estate
trigged a short sell on the 15-min chart as the
9-period EMA crossed under the 39-period EMA. Many
people on these type of trades prefer to close all
positions at the end of the day they trigger to minimize
risk but we show how it did for the full week. There
will be a buy signal when they cross back over.
URE is the ultra long for real estate and some
prefer to trade it as it is a lower priced ETF. Here we
show the use of the 7 and 21-period EMAs and their
crossover to trigger the long and short trades. A short
was triggered on Friday.
Here is the SSO Ultra for the S&P 500 with the
same EMA parameters. Big move this week.
Coal stocks ranked well this week -
You know we have a low priced turn-around coal miner but
also have ACI on our watch list as it had broken
above its trend line. This week it also broke above its
horizontal resistance and at the 50-day EMA. Coal as a
source provides about 50% of the USA electrical energy
needs.
JRJC also had a break out again this week and up
now over 300% since the November low.
Or coal company AWSR
http://www.americacoal.com/
gained again on the week and is near its highs. They are
just finishing that private placement so that will give them the
added capital for the continued expansion. Up volume has been
greatly above that of down volume which is very bullish.
We have yet to write more about ERF Wireless, Inc. ERFW
http://www.erfwireless.com/
but we will in the future. We have been
talking of it as the price was at the trend line area
near 24 cents so appeared to be a very good
technical buy. At the same time we like the company
niche play of supplying secure wireless networks
for the regional banking industry and the oil and gas
industry, particularly in remote areas not serviced by
the majors.
New additions to our
watch list.
Remember that we add many stocks to it each trading day.
YZC Chinese Over $8.10 or on pullback to fill gap
VLO Energy over $23.52
CBST Biotech over $25.26
ACH Chinese aluminum over $16.20 or on
pullback
EXEL Biotech Over $5.51 and 200-day EMA
NTII Biotech penny over $0.38 on strong volume
COGO Chinese back over $5.00 or $5.12
FCSX A scalp over $4.50 or longer if volume
good
MOS Over 50-dayEMA at $37.50 then recent high
of $38.50
PTR Chinese Over $96.00 or watch on pullback
Also remember to check the
blog
as
information is posted many times each day - please
post your own comments and charts.
Photograph by
Sam Bo
Photograph by
Sam Bo
Photograph by
Sam Bo
That's a full lid for today - will see you during the week.
We have published a donation page for the ease of you giving to a
charity of your choice. If you have benefited from our site we
encourage you to share with a charity. We have a few recommendations
who all use a high percentage of the donations for the actual
program use. If you have some we should add please send us a note.
Donation Page
Check the
Earnings Calendar
on all overnight holds.
Check the current
message board also for other good
stock candidates as there are several there right now.
If you use StockTiger mail you can access your account using simply
my.stocktiger.com
. If
you would like a free StockTiger.com email address that uses the Google Gmail
spam filter and you can check your mail from anywhere. Send me (ST) a
personal message from the
message board.
Include your First and Last names and the name you want to use. Your address will
be (your choice)@stocktiger.com
Best regards,
Stocktiger.com
| |
