The Dow dipped down to the 38% retrace on Thursday. Friday it also
dropped to the lower Bollinger band but recovered to close with a hammer and
back over the 38% line. Some see this as a start of a possible 5 wave with 1
being the drop and two (now) the relief rally then a larger 3 drop to come.
The long term Dow shows that it did not make it to
the lower channel line during last weeks pullback.
The Nasdaq made a new multi-year high on Wednesday and ended
the week up a bit.
The Nasdaq bullish percent stands at 45% so neutral and tells us little.
The Nasdaq 100 shown using the Qs is only 3 points away from the 62%
retrace so seems it should at least test that area in the coming weeks or
months.
This is a weekly ratio chart of the Nasdaq 100 to the S&P 500 showing how much
better the Naz 100 is doing than the S&P. The Nasdaq 100 is made up of the top
100 market cap stocks in the Nasdaq - big tech - however look at the SOX
below.
The SOX semiconductor index bounced at the 62% retrace from the July 2006
low to the July 2007 high. It is weak and hard to understand how the Nasdaq can
be making new highs without it. The answer is that only the larger caps in the
Nasdaq 100 seem to be lifting the index while not many semis are participating.
The NYSE made a new all time closing high this week. At the same time many
stocks in the NYSE were making new lows so with this and a few other
requirements some are again talking about the
Hindenburg Omen that may not always
predict a market pullback but is always present before a major one. So far the
trend line is holding.
This percentage indicator of number of stocks in the NYSE above their 50-day is
also now rather neutral
The Russell 2000 is at the bottom of its trading channel that looks like
a possible bear flag. The 200 day however is still under the 50-day (bullish) so
maybe it will recover one more time.
Gold continued higher this week as the US dollar falls. A
couple of our break out buy gold stocks keep going - like VGZ
who had a buy at $5.00 and it closed Friday at $7.40. Many other
gold stocks however have done little or have gone down during the
run up in gold price. This still suggests a pullback coming. We have
added a couple more gold stocks to our break out list but there are
not so many like there were in the big run over 1 1/2 years ago.
This monthly gold chart may not be a valid trend line as it has only two touches
but it is bullish. The fact that stochastics even on a monthly chart are at 98
points out the overbought nature of the commodity.
On our longer term daily chart you see the negative divergence present in the
stochastics. It is making a lower high while the price of gold goes higher. I
have put the Fibonacci 38.2% line at the 700 level as it was a former resistance
and it also lines up quite well and this suggest this level is also a possible
topping. May of 2006 showed us that it can get quite overbought and very far
above the moving average shown.
Oil is also showing similar topping the way we have placed the Fibonacci lines.
The 62%, 50% and 38% line up very well so seem to be valid. This does not mean
that a break out above these lines will not take place as the 127% level (above
the top line) is also a common level but stockcharts does not have that number
on the drawng tool
Many have been playing the rise in oil buy owning the USO and it closed
just under the break out line however the move up has been extremely vertical so
a quick break out carries the associated risk.
The US dollar is a
nightmare. The US government lives on borrowed money and keeps
printing it non stop as the value of the dollar is at a 40 year low.
16% of spending in the USA is for imported goods and of course much
that is not has components that are imported. This is adding to the
inflation which the government hides but the consumer sees it in
higher prices.
You can compare the US dollar to
many currencies but here we show it against the Euro. It hit the
bottom of this channel so maybe we can see a bounce. I remember
traveling n Euro countries when the US dollar was at a premium so
was worth more than the Euro. Now if you stay in a 150 Euro hotel
you will be paying $217. $67 more per night while the US treasurer
keeps telling us how he has a strong dollar policy. Ha
The Japanese Yen holds above its 50-day.
The 30-year bond yield
fell to a new yearly low and you see possible support at the
December 2006 low.
Economic calendar from briefing.com
Long term stocks
NNRI This is a view
used to show how similar this current decline is the to one in 2006.
Note that there is positive divergence in the RSI and MACD. They are
not great at timing the exact move up but they are quite good at
predicting a move back up before it happens. The last time it broke
out at about $0.65 and ran up to $10.00 and this time the trend line
break will be at about $2.52. Of course we think in time it will
far exceed the previous high.
PLTG
previously announced that they were acquiring a large interest (47.5%) in a
63-mile pipeline in Texas, including 6 producing wells with a cumulative
total of 50 barrels of oil and 450 thousand cubic feet of natural gas per day.
This week they filed form 8-K about this with the SEC. The company had taken a
Promissory Note to raise money for this acquisition and I found it interesting
that for this Promissory Note, Blair Merriam, the Company's President
pledged 2,000,000 shares of his own personal stock as collateral. I think it a
very good show of support for the president to put up his own stock like this.
The stock price is still in the new trading range and this
sideways basing may be building to make a move back over $0.30. Stochastic are
still pointing down but the tock is stable and shows several levels of support.
CFPC - as we mention in the Monday morning video - on
Thursday The chart showed a possible reversal candle and followed on
Friday with an up day which we had not seen in a while. The
company is making progress on increasing supply and toward store
openings in China but has been really lacking in the Investor
Relations Press Release information. I expect to see the stock
higher again over the next couple of weeks.
New additions to the watch list
ANV Gold
Over $7.80
OMPI Over $24.00
PHM Short
under $13.32 - $12.88 shadow
TGB Gold - Over $6.00 $6.27 shadow
MEG Short
under $26.37
LOW Short
under $25.70
IACI Over $30.35 - $30.79 shadow
CX Short
under $28.00
IAG Gold -Over $9.14 - $9.24
APH Short
under $42.00 for a quick trade or Long over $45.85
AMWD Short
under $23.50
USU Over $9.51
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Kirillo-Belozersky Monastery in Russia from the the 14th century -
Photo by
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Not sure which city this is in - Photo by
Sergei Motilev
November
4, 2003 the sun unleashed an X28
flare--the most powerful ever recorded. The effects on
Earth were many: Radio blackouts disrupted communications. Solar
protons penetrated Earth's upper atmosphere, exposing astronauts
and some air travelers to radiation doses equal to a medical
chest X-ray. Auroras appeared all over the world--in Florida,
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