The Russell 2000 small caps bounced a bit Friday but am not in favor of mid air bounce and would rather see a move to test the trend and 50-day. The idea is if the economy is still growing faster then expected then maybe the small caps will resume their move and that big caps are not such a good play to be. Well, one day does not decide all of this so we stay with our plan and buy strong stocks and take partial profits quickly to assure winning trades.

The bond market reacted to the news on Friday that maybe the economy is stronger then they were pricing in or maybe or in  truth to the charts. The 30-year bond price has made a double top so it is common to see a pullback.

The inverse are the 30-year rates so as the bond prices drop, the yields rise and they closed above 48 or 4.8%. We said that for the yield curve to start to flatten out the long rates would have to rise of the short ones be lower. It is most likely already too late to prevent a recession but the lopsided rates cannot last forever.

Gold put in a good week. No way to know if it is helped with money flowing out of oils or consideration of inflation or next year's rate cuts. I suppose the why at the moment is not so important as just catching some of the moves. We have had several nice ones in gold stocks.

The long term chart shows the trend line break so it may run more but in time it should also come back down as the consolidation period looks much too short for it to just go on up to new highs and many gold stocks have run up significantly in the last 3 months.

Here is a closer view showing how it is extended but it could still make a run to the 640 area but would then need a pullback.

Gold Bugs  (Basket of Gold Stocks) also had stochastics over 80 but often a big solid red candle on the left is like free air and gives little resistance  (at least for individual stocks).

For the intermediate term however the XAU to Gold ratio chart has still not confirmed a buy. It does so when the 200-day moves below the 50-day.

This is a monthly chart so does not show minor changes but a while back when we showed this it looked like it may break to the upside which would mean the Dow outperforming Gold but it got turned back at the trend line as gold took off and the Dow pulled back. It does still look like a bullish chart waiting to happen though .....

Silver also has just broke above the trend line and has resistance at $13 area. We have added a silver stock to our watch list a bit below though many gold stocks also mine some silver.

A lot of people still are betting on a move up soon in oil. I do not think it a good intermediate term play now even if it bounces. It is at the 38% retrace and that is a valid level to stop a pullback but the time element is too short or the pullback too shallow.

The Strengthening Dollar Fund bounced at support as the dollar did as well. The 200-day is now below the 50-day so bullish however it has only recently happened so may only be a whipsaw at this point.

Here is the Dollar and it is making higher lows so hopefully it will keep going up. As it has fallen it helped the stock market as companies who sell to foreign countries therefore have lower prices and make more sales. However the greatly reduced buying power of the dollar offsets the rise in the market to some degree as your buying power is less.

I wanted to point out a sector screen as it is a quick way to check on what sectors are hot and which ones not and may singnal a trend change. It can be found at Profit.net at the link here.

Industry Groups Performance Grid From Prophet Net

These two parts to it leave a gap in between but it is to show you. The higher the number the stronger that sector. Here you see the first and second half of the table.

--------------------Not a complete chart ----------------

The week ahead economic calendar it quite light this week.

Calendar from Briefing.com

Be careful with your long holdings. WFMI is an example of how if stocks are extended that some poor news can have an exaggerated effect. Whole Foods dropped  $13.85, or 23 percent. They announced that  they now expect sales in 2007 to increase between 13 percent and 17 percent from an earlier range of 15 percent to 20 percent. So still a double digit increase in sales but maybe 2 or 3 percent less then an earlier range and the stock dropped 20%. This action has to have a lot of people scratching their heads as there is still a good increase projected yet the stock dies. It shows the run up in many stocks during the last 3 months had big expectations built in. For the most past big companies had given very low forecasts so easy to make them or beat but guess that Whole Food did not do this very well. People did have a warning though and if they saw the trend line break the the big drop the following day they had time to get out if they were paying attention. So pay attention to your stocks and if in doubt get out as you can easily get back in.

I need to follow that chart with a prettier one. We had a few gold stocks on our list that moved like this one but only saw this one in the chat room so too to late to post to the site. Anyway it may pullback a bit and if so could then be bought with a trend line stop.

HL a silver miner has a cup/handle break at $6.68 the about $7.10

AAUK a miner and is at a break out or fail  - $23.35 then $23.90

AUY another gold that seems extended now but we would still trade it short term but would like it better after a consolidation.

This is a nice looking chart - see the inverted head and shoulders pattern and the distribution of the days in each element. The measured move also fits,  maybe too well,  as it would fill the gap at $3.20. TGB

SWC is a very good example to point out support and resistance. As SWC fell in May the 200-day EMA gave it support for many tests then eventually it broke. Once support is broken it  becomes resistance from the other side. So as resistance, the 200-day has held back the advances for three tries already. We would now assume that when this resistance finally is broken it will again become support so a buy at this break out may be one to hold for a longer time. This is a palladium play.

LNUX  thanks Motorhead - This company is not Linux but sometimes it seems to move when there is interest in Linux (as the symbol is close) and there was recent news from MSFT about Linux. Regardless it made a nice Friday move and if it gets legs may break out again at $4.70

JOBS is getting increased volume and has a decent little base that may support a move above the resistance at $13.75

VSPC $0.86 looks interesting to go.

TTGL has many tails and not a really clean break out point but it has had super volume so seems another move may be in order.

PMST Pretty straight forward at $17.50

ATCO has more then doubled in the last couple of months but the moving averages just crossed so maybe it will go again.

GRSR is a longer term solar play and we have mentioned it several times. They're a pink sheet stock but will pretty soon be moving to the OTC. (they also trade on the Frankfurt exchange) They expect to do about $50 million this year and $60-80 million next year and are near profitability yet are trading at a price to sales that is incredibly low compared to the group.

Just wanted to pass along this interview with the the CEO titled "GiraSolar CEO Charts Strategy for Success"  GiraSolar

There is also an audio of him here and this interview is worth listening to as the CEO is very sharp.. http://wallstreetreporter.com/profile.php?id=21081#

They do most of their sales now in Europe but have now moved into the US markets.