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Stock Tiger Stalking Stocks™
For Monday September 10, 2007
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Close Friday
Dow -249.97 at 13113.38, Nasdaq
-48.62 at 2565.70, S&P
-25.00 at -1453.55
This is for September 10 a day of some memorable events in
the past. 1955 "Gunsmoke"
premiers on CBS TV - it ran for 20 seasons.
1960 Running barefoot,
Ethiopian Abebe Bikila wins Rome Olympic marathon. 1971 Nikita Krushchev, former Premier of Russia, dies.
1972 Heavyweight boxer
Muhammad Ali defeats Ken Norton, redeeming his loss to Norton in
their previous encounter.
1990 Hard Rock Cafe
opens in Las Vegas Nevada.
That's it for the important stuff and now to
the markets. The weak jobs report was the media's reason given for
the market pullback on Friday. The news though was not new as
the September 5
ADP National Employment Report
suggested that a deceleration of employment may be underway. The
August increase of 38,000 was the smallest since June of 2003
and the second consecutive weak monthly reading. That report
also said that employment among large businesses fell by 32,000
in August, the third consecutive monthly decline. Still, however
the market does like to trade on the incorrect data from the
Bureau of Labor Statistics even though it is almost always
greatly revised a month or two later.
This nice graph from RTTNews uses the government's numbers but it
has pretty colors. It shows that the U.S. economy lost 4,000 jobs in
August after adding 68,000 jobs in the previous month. July’s
job growth was originally reported as 92,000. This marked the
first decline in about 4 years. Economists had expected an
increase of 110,000 jobs in July. Average hourly earnings rose
$0.05 or 0.28% to $17.50, in line with the consensus estimate.
The annual growth in the measure was 3.9%. You will note that
this does say the August increase was 68k but that ADP and much
more accurate report says 38k for August. This demonstrates that
the real numbers are not as important as the ones used by program trading
that moves with these reports. I read that the US has a
population growth rate of about 3 million a year or 250,000 per
month. Some people of course retire each month but I have also read
that about 150k new jobs a month are needed just to keep up with
population growth so anything under that is actually an increase
in unemployment.
Former Federal Reserve Chairman Alan Greenspan said the current
market turmoil is "identical" in many ways to that which
occurred in 1987 and 1998, the Wall Street Journal reported in
its online edition on Friday. - He said "The behavior in what we
are observing in the last seven weeks is identical in many
respects to what we saw in 1998, what we saw in the stock-market
crash of 1987." He made that comment on Thursday.
With these negatives it becomes almost certain that the Fed will
make a rate cut which could have actually made the market rally
and it may still do that. On Friday though the market acted more
logicaly in at least trading as if they took the credit problems
and housing decline more seriously. I do not think actually that
many believe that the housing issue is gong away in a few months
as this generally takes years to unfold after such a bubble. The
employment report did show a
loss of 22,000 jobs in the
construction sector. The Fed rate cut is so widely
expected that any rally that comes may not last too long - at
least for it in itself. Rate cuts do not change the economy in
the short term, only the perception.
But - the market does not trade only on reality and at the
moment there are still many pretty good looking charts. They are
not as dependable long term as they were in the past 3 years but
the market sure is not dead. The recent huge moves in
speculative stocks or ones with news shows there is still a lot
of money ready and willing to participate. We saw the big moves
in SCON and NFLD and this week was also hot for
CTDC which was rather common for that stock which can trade
up very aggressively on virtually no meaningful news. TARR
was on a tear after news on Friday took it up from a buck to
three. CRDC went from $5.15 to $12 and in a serious
bear market you do not see this kind of action as people in
those times are
trying to get out of stocks.
This graph shows the typical action for the Dow in September. We were
expecting the test of the recent lows and this is it now so
maybe this year the bounce to come next week will be stronger
than in past years. You know that we are in the 3rd year of the
presidential cycle.
The DJIA has
risen 24 times and fallen 5 times in the 29 third calendar year
of the Presidential Cycle since 1891. The overall, average gain
for the 29 third calendar years is 12.31%, with the 16
Republican presidencies averaging gains of 5.12% and the 13
Democratic presidencies
averaging gains of 21.14%. This year so far ranks as the
worst since 1947. The graph shows that usually the first half of
September is the strongest half. We cannot tell yet how this one
will play out but if you are long stocks than it a good idea to
hedge them with a short or using the inverse market ETFs.
The weekly index results - gold was the winner.
Here are the winning and loosing sectors for the week:
The Dow broke below the bear channel it had formed but
held above the 13,000 support. If that does get taken out then
the 200-day EMA could be the support again as is was in August.
You know the 50-200 pinball game that often plays out when a
stock or index gets trapped between the two averages for a
while.
This 15-min chart shows the buy signal intra day on Friday a the
RSI went over 30 and stochastics over 20 while the prices were
right at support and the lower channel line also. From that buy
signal the index rallied about 80 points before it broke its
little uptrend that is clear on a closer-view chart. This
demonstrates that these buy signals at over sold levels and at
support can make for very nice low risk trades for the short
term and sometimes longer. It closed back at the support area but
suppose we will gap one way or the other in Monday.
The longer term Dow chart shows
it is still inside the 17 month channel.
We can see that the Dow sell off correlated
again with the rise in the Japanese yen. This may move a
bit higher but the move, like the last one up, is too rapid so
we again expect a pullback this week.
The transportation averages is a
weak chart and if transpos are weak this suggests that economy
is weak also.
The Nasdaq gapped down on
Friday and closed back under the 50-day EMA. This then is likely
to go lower but also eventually come back to fill that gap.
S&P 500 closed on top of the 200-day EMA. You see
possible additional support below at about 1430 if the 200 breaks.
S&P 500 The long term monthly chart sill is not a major concern as
long as the 20 month EMA holds. Usually though when the RSI breaks below the 70
line it does not immediately go back above it. This suggesting that we are in
for a longer time of correction or at least consolidation.
The QQQQ monthly looks better and the Friday
pullback hardly shows. We know that lately the Nasdaq 100 has been
stronger than the S&P 500 and these two charts point that out.
The SOX semiconductor index - the
Stochastics made a little bounce and the candles still sell inside
the lines.
The Russell 2000 support may be as shown. The small
caps have lost their power this year and will probably continue to
underperform the larger caps.
Oil almost back to its high of 2006.
USO and the oil fund is one way to play
the rising oil prices.
The US Dollar got weaker the last few days.
This has one benefit; companies who sell products internationally
now have better prices. It is also good for tourist business and
hotels in the USA as all prices in the US are more attractive to
foreigners.
The Dollar to Euro ratio chart also looks to
be about at the test of the low - maybe a bounce here.
Gold has made a nice move in 4 days. We
look for good risk/reward gold stock set ups but today only add two
gold stocks to the watch list. You can also use the Gold tracking
stock GLD and it trades at 10% the price of gold. The Market Vectors Gold Miners ETF symbol GDX
which tries to duplicate the performance of the
AMEX Gold Miners index
is also a way to trade gold stocks in a single buy or
sell.
Gold longer term weekly
shows the dip to the 65 week Moving Average that has bee the support
buy point for many years.
My favored index Value Line not so
encouraging for the broad market but this is a monthly chart and the
month has just begun.
 The
economic calendar from briefing.com
In the
chat room on Friday it was pointed out the
TARR
had a possible break out at $1.10 then 1.25. Not too long after the
$1.10 trigged and next the $1.25 there was news that really brought in
the buying and the stock ran from $1 - over $3 for the day. There
have been several like this in the last few weeks so there are sill
plenty of gamers ready to play.
CFPC broke its low volume pullback trend on Wednesday with a
nice advance but it closed under its trend line. This seemed to me
very bizarre that anyone would have sold on Wednesday as there was
very exciting news:
Coffee Pacifica Announces Entry into
China Coffee Market with Joint Venture Partner
The next two days were more logical as the advance
continued on very heavy volume. I usually want to slap some who gap
a stock up as we do not like to have gaps below but too many, to much
in a hurry to move the stock up. With luck maybe it can dip the few
pennies to fill up that gap but this sure seems the end of any
downtrend. Several in the chat room this week bought at the $0.65 -
0.68 price range as they were "buying in the quiet times" and they
had a 50% gain for the week. On the
PR firms page for CFPC
there is a chart of
the projected retail coffee shop openings and projected revenue
from these retail coffee shops and it totals about $60 million
through the 4th quarter of 2009. This revenue is only for the shops
so does not include the sales of CFPC to the shops or the greatly
added profits for roasting the coffee. It
is interesting that according
to the International Coffee Organization, China is the fastest
growing coffee consumer in the world and they only consume 1% of the
world’s coffee. CFPC has created 10 new coffee blends specifically
for the Chinese market. 80% of all Jamaica blue mountain coffee is exported to Japan, China and Korea
and CFPC now controls about 33% of Blue Mountain coffee so by them
opening up their own shops in China they have certainly fulfilled
their slogan, "From tree to cup". They
anticipate opening approximately 300 coffee shops in China within
the next 5 years. I heard a fund on CNBC Friday talking
of how great they see the growth in Green Mountain Coffee (GMCR)
and I note that the stock is trading at $30 with a PE of 70 - I
think we have a very good future coming with CFPC.
I am not much of a coffee drinker but today at my grocery store I
looked and saw a 1/2 pound package of ground Blue Mountain coffee
from an Italian company for $91.00.
.
NNRF this week ended up
with its typical pullback as it has been doing each time it runs
up and this is the 5th time so not totally unexpected. It has
support area also on a detailed chart at $2.75, $2.60 and $2.45 and the
top break out is now at about $3.35. I expect a strong month for
the stock as earnings will be reported and they have the seminar for
EO.N on the 18th
in regards to their shielding materials. Even though we have
seen increased volume on the up days it has yet to break out but
as we have seen this week with CFPC it only will take a day or
two of buying to change the trend solidly to the upside.
Two oil/gas stocks - PLTG - is again pulling back so we are watching
this week as may again become a buy and it could make a double bottom but may not
get to the same low it did before. Long term it looks to be a very good buy. PYR.V has been at the same basic price
for 3 months but their production increases. This is lacking the volume necessary
to get enough attention. I think it will come in time so keep watching.
HSXI has also been sitting for months as we await the retail selling to
begin on television. The company this week put out an progress report
HealthSonix Business Developments on Target
in it they mention; "the in the field joint marketing program with a pharmaceutical
company is scheduled to commence mid September, at which time the
name of the company will be in the public domain". So this may get the
stock moving again.
Now additions for our watch list:
You may think with the weak Friday market that we would have more shorts but
although there are many stocks that we still have short positions in there are
not a large abundance of charts that are at a good low risk short entry point so we
will wait for more to set up. The charts that look best now are longs. Some
of these pulled bask late on Friday but we will set our alerts to let us know
when they are close to a buy point. ALNY Over $27.20
FDG Over $35.40
AOB Over $10.00 on volume
PAY Over $40.00 looks to be a trade
KGC Gold - over $13.60
LIFC Over $34.00 but resistance to $34.50
JRCC Over $5.85 into the gap
HMSY Over $25.70
MOGN Over $25.20 a level
RGLD Gold - a level at $31.43 to the break out at $32.50
TIBX Short
under $6.97
Gunsmoke cast 1955 - though not sure which season
this shot is from.
There is a contest for graphic designers and ad
agencies to design ads that can be placed on trucks as rolling
advertising. The entries for 2006 can be seen at
Rhino-Award.com
This year's contest closes in November and
the site has a picture of a truck you can download then do you art
on the picture and upload it to them. These are some from last year
that I like.
When It Absolutely Positively Has to Get There Overnight.
That's a full lid for today - will see you all
during the week.
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