Friday had the release of nonfarm payrolls and it showed a loss of 84,000 jobs during
August and that started another market decline. The silver lining of a poor job market
as stated by some is that it may help cool inflation. Financials helped the
market the most it seems on Friday as they had gains for the day. Even though
over the next year there may be a couple of the top 50 banks fold and many
smaller ones, there seems
to be many smaller banks that are doing fine. When giving out mortgages,
regional or local banks tended during the housing bubble to keep to the usual
standards of checking credit for applicants, requiring appraisals and other
safeguards to help keep their risk profile to a minimum. Many of these bank
stocks however declined with the group in general and may have become oversold
even on a fundamental basis. The credit-bank crisis however is real and has a
long time to go yet.
John Mauldin said that he received an email from
Art Cashin where Art wrote. "Paul Volcker at
Calgary Conf. says financial crisis "most complicated" he's ever seen. Losses
will clearly exceed $500B and U.S. growth will be slowest since the Great
Depression."
This US dollar continued its strong
gains (up 3% this year) and this also helped oil to
pullback further. The dollar is extended and should
pullback but if this is a major trend change the US
markets will eventually be helped as foreign capital
returns as they would gain both in dollars and it
stocks. (at least the perception)
Many funds had redemptions in August
and may have had to sell stocks this past week to cover
those. At the same time as we work toward the year end
there are hedge funds who will want to try and make up
for losses by buying stocks once they think that the
upside gains outweigh he downside risk.
We think at the moment that we will
find a market bottom in the next 6 weeks and then have a
tradable rally into the year end. The charts in general
are too mixed now however and the tech stocks will need
time to bottom as so many look very poorly.
The top and bottom sectors for the week.
The best and worst industry groups.
On our video for Thursday morning we reminded all of several UltraShort ETFs to
buy for a market decline continuation and they all put in over 8% gains for that
day. Here are those charts and some others to review. Many financial writers
suggest that people stay in cash as that is a way to eliminate losses but it does
not provide a possibility for gains. ETFs can be treated like stocks in that
they can be traded when they have a good risk to reward set ups like there were
for Thursday as many were at a trend line break areas.
These are Short ETFs so they go up when the index they track declines. When they
say Ultra it means they move about 200% of the index they track. We will mention
the inverse or Long plays to each of these. Nice to keep handy to trade one or
the other when there is sector movement. You can of course just stay with one as
all can be bought and shorted but some people cannot or do not like to sell
short.
DXD short for the Dow had a good break out and if the market rallies
this and the others below will pullback. Watch the trend lines as if they
return there they may bounce again so re establish longs. The inverse to this is DDM.
SDS short for the S&P 500 The inverse to this is SSO.
QID short for the QQQQ Nasdaq 100. The inverse of this is QLD
MZZ is short for the S&P 400 Mid Caps. The inverse for this is MVV
SMN short for basic materials. The inverse for this is UYM
DTO short for crude oil. The inverse of this is DXO
DUG short for oil and gas sector. Inverse of this is DIG.
60-minute chart of DUG shows the gap in more detail. For a very short
term this level just under $40 if broken may set up a deeper pullback and higher
volume selling would be an indication.
DZZ is short for gold. The inverse of this is DGP. This shows a
minor break would be over $36.
UUP is double long based on a US dollar currency basket. This inverse to this
is UDN. This is now quite overbought.
AGA is short the agriculture sector. The inverse to this is DAG.
XHB is not a double or Ultra ETF. It is the housing sector and worth
watching as it is at a trend line and 50-day EMA. We do have one housing stock
on the watch list today also. If this were to break above then it may be worth
while checking other housing stocks.
UYG is an ultra long for the financial sector and it could break out. The
inverse to this is SKF.
A general overview of major indices and their Fibonacci and Bollinger band
placements.
The Dow formed a hammer candle on Friday which may lead to a rally. If
this happens the resistance will be at the broken trend line closer to 11400.
For a final low of the year (or at least a better trading low) we would like the
RSI to go under 30 and stochastics under 20.
The Dow monthly the bear flag we expected did turn out to be one and a
test of the July lows seems appropriate in the next month.
Dow Jones Utilities hit the 200-day EMA. Looking left you see the support
at 438 if this current level breaks.
The Nasdaq this wider view shows the bounce at support on Friday. The
lower trend line was draw excluding the intra day candle shadow on the July low
however.
Another view shows the Friday bounce and now being down 5 days in a row a bounce
is not out of line but the July lows seem to be calling.
The Nasdaq 100 had quite a nice triangle going and if it had bounced at
the lower trend we could have had a good run. As it is the pattern is now broken
and a new one will have to develop.
The VIX is still quite low as readings over 28, it seems, are the norm to
mark market lows.
Nasdaq summation index I have no answer as to why the NASI has
remained so high while the Nasdaq has fallen as it used to be a pretty good
indicator of tops and bottoms.
The S&P 500 60-minute chart is nearing resistance at the 1250 area and
even stronger if it goes above at 1260.
The NYSE 60-min chart shows the RSI , stochastics and MACD all made it to
very oversold territory and therefore the rally on Friday. The broken trend line
is now resistance.
The number of stocks on the NYSE now trading over their 50-day average is 61%.
The new 52-week high number for the NYSE has now reached extreme lows.
The S&P 400 Mid Caps have also made a Friday hammer. We would expect
that any further rally would halt at the broken support line where shorts are
sure for sure waiting.
The Russell 2000 small caps On Friday on my 3-minute chart the
Russell September futures hit the low within an hour or so of trading
close to the automatic support pivot drawn by quotetracker at about $701. It then
based there
and drew 4 candles on the 3 minute chart and then broke above this range at
around 703.50 for a buy. As it turned out it never looked back much and at the
high of the day was at 724.49 or a maximum gain of almost 21 points or for each
contract $2,100 in proifit. If you have a Global Futures account the cost in margin you use
for each contact is only $300 or $500. If you pay more or would just like to try
out futures trading they can set up a free simulated account that lets you trade with
real live streaming data and keeps track of your profits/losses as well so you
can practice and check the platform. If interested in this free account click on
the small banner.
Nice hammer candle on Friday but it would have to recapture the trend line and
50-day EMA to get back in the bulls favor.
The Russell 2000 monthly chart so far played out exactly as
pointed out as a repeat of the former candles being a bear flag. A couple of
steep advances up to be followed by a drop back.
GSG commodity iShares at possible support but no signs yet of any
reversal.
GSG weekly chart is now at the 38% retrace from the 2002 low to the 2008
high and the 50% retrace from the 2007 low. $54.50 is also support so a bounce
is likely. However with such a steep up and down price swing this would need to
go sideways a while or perhaps a rally and then another decline to set up for
any longer term moves.
Oil has a sloppy chart and is now at its lower Bollinger band so we may
see some rally. RSI is not quite under 30 while stochastics are breaking 17.
The oil monthly chart nearing the 38% retrace and center trend line of
the channel at about $97 to $100.
US oil fund USO has a gap now above as it approaches quite oversold
conditions. At some point though $80 may be reached.
USO monthly chart with Fibonacci 38% at about $78. This chart for
technicians is just quite elegant as the parallel channel is so clean.
Chart of the day showing inflation adjusted gas prices.
Gold still near the 50%
retrace but under the long term EMA support. Its failure
to hold that support suggests that it will go at least
to the trend line near $774 and if broken to the 62%
retrace and support at about $725 to $730.
The Gold Bugs HUI is well under support and
is quite oversold. Other than oversold bounces though or
particular fundamental plays this sector does not show a
good longer term set up as yet. We may though see a
bounce here at the 62% retrace.
Silver broke down from its bear flag and may be
headed to the $11.50 or $11.00 support.
The Japanese yen broke above its major EMAs. In the past a rising Yen was
matched with a falling US market.
The US dollar has been really great the last
several weeks. In Russia a
dollar could buy only 23.5 rubles not long ago but now one can buy
25.75. This longer term chart shows the break from the
trend line. It has been about 7 years from the last high
so this may be the start of a long term trend reversal.
Some times a trend lasts 10 years. We will know more
after a pullback and how it then responds.
The closer view of the US Dollar. It is
quite extended so could use a pullback but if the gains
continue past this Fibonacci level the resistance is the
yellow line. Stochastics are very high while RSI is not
quite over 70.
Weekly economic calendar from briefing.com
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!
Of interest:
NNRI had news this week.
Former Citicorp Corporate Finance
Director Appointed to NNRF Board of Advisors.
Steven E. Halliwell joined NNRF's
Board of Advisors and he has had significant
Russia-related business experience as the press release
details. He has also known the NNRF Chairman of the Board
Larry McQuade which will add
to their working relationship.
PTR.v
Pyramid Petroleum Announces
Resumes Operations at Gulf of Mexico Offshore Facilities
and Operational Updates
Says that there were no damages from
Hurricane Gustav and those platforms
that they closed before the storm are back in service.
The company recently reported second quarter sales
similar to the first quarter. They had sold their onshore
property in April to concentrate on their offshore
platforms and took a paper write down on that as it had
been paid for in stock originally. They then paid off
all debt so are now debt free and had revenues
last quarter of $7,911,854.
PLTG
Platina Energy Group Reports 50%+
Potential Reserve Expansion in Kentucky
The company continues with its growth and also had an informative webinar
recently which is now viewable on their
media page.
New additions to the
watch list.
Remember that we add many stocks to it each trading day.
CHK Short under $43.00 watch
$42.20 shadow
RIMM Short under $101.86 or watch
for a bounce play
CVS Short under $35.39
WMB Short under $27.00 (has
$26.84 shadow)
KFT Over $33.10
BZH Over $8.00 or $8.20
CEPH Over $77.75 then $78.90
CATY Over $22.50 then $23.50
CRMT Over $21.36
ECA Short under $65.40
Photograph by
Olya Matsko
Photograph by
Constantine
Photograph by Evgenni Gurov
That's a full lid for today - will see you all 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
interface so you can check your mail from anywhere, (you do not need a Gmail
account) send me (ST) a
personal message from the
message board
Include your First and Last name and the name you want to use. Your address will
then be (your choice)@stocktiger.com
Best regards,
Stocker.Tigcom
| |
Seasonal
decline. Well seasonal yes though this year is a bit different being in a
recession, in the midst of credit crises with growing unemployment and
increasing home foreclosures. Other than those details we often see a market
pullback in September or October as it sets up for a year end rally. The
trading this week broke trend lines in many of the indices in what seems like
preparation to test the July lows. This has been expected as the number of
stocks that made new lows in July was high enough to suggest the necessity for a
test. Friday saw buying in the afternoon and left some indices with hammer
candles that may lead to a counter trend rally but we would expect still a
further decline before any extended bear market rally.
