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Stock Tiger Stalking Stocks™
For Monday June 11, 2007
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Dow +157.66 at
13424.39, Nasdaq +32.16 at 2573.54, S&P
+16.95 at 1507.67
Its a wild ride. A forth day reversal. After a 3-day
drop in the markets to the 50-day EMA in many indexes and the
lower Bollinger bands, indexes made an excellent reversal on
Friday trimming the losses for the week.
The media does not point out the Bollinger bands or EMAs so
they say the Friday rally is because oil was a bit lower and
that there is talk of a U.S. Steel buy out and thereby
alleviating the concern that the higher interest rates would
slow the recent active M&A activity.
Actually interest rates have been climbing since March and very
rapidly since May so higher rates was not really the cause of the
market decline so much as technical reasons IMO. This added two day
jump in rates only took them to an overbought area and a retracement
will come this week though long term they are up.
The 10-year note ran to
5.24% Friday morning so this probably did set off some program
selling at first but it did not last long as seems too much money
was ready to jump back in.
Perhaps closer to a reason for some of the selling this week
if we look to outside sources is the early week rally in the
Japanese Yen. Some may have thought it had a double bottom from
the February low and some unwinding of the carry trade took
place. It gapped down a bit on Friday and the US markets
rallied. At some point this will really start to move up and
that would likely start a real move lower in the US markets as
we saw in February.
For the week this is how the major indexes did.
That does not
look to pretty so here they are in year-to-date. Note how the
AMEX is the leader as it has been for many years.
And the best/worst sectors for the week.
Some technology actually gained on the week.
The Dow never even made it to test the 50-day EMA so that
may be coming this week. It did make it to the lower Bollinger
band and that was enough for it to rally. The stochastics hit or
almost hit the 20 line but did not yet go below. A better long
setup would come after a move below and then a move back above
20. It could complete the pullback this week if this is all that
is going on at present. There is yet no reason to assume that
the market has finished its bull run. There are some warnings
but that is all so far. We may still see a test of the highs
before a much larger and longer pullback happens. The market has
not really been strong as many important sectors have actually
been going down while the Dow has been leading the way up.
Longer term I am not expecting any great moves to the upside
but lets see if this pullback can bottom this week and at least
suck in some sideline bears in a final rally.
The Nasdaq got close the the support lime for the 4th
time. Each time it touches or slightly pierces it the support
line weakens a little so one day it will crack and not hold.
This is the first time the 50-day has been touched since April.
The semiconductors again showed
their strength by rallying at the support line (break out line)
this suggests that they may at least make another test of the
highs.
The Russell 2000 also rallied right at the
trend line and the 50-day EMA. Stochastics have not yet turned
up so more downside seems to await before any medium term move
back up.
The NYSE also hit the 50-day and may now have resistance
where shown. Here also the stochastics have not gone under 20 so
we await more downside to come.
And the number of those in the NYSE now above their 200-day
averages is still above the support as shown. The lower section
of the chart show that the NYSE is almost at its channel top
line.
This yellow line slipped a bit
on this S&P 500 when I drew it but I think this general
area may be a support on a test of the sell off. Will, like on
the others, be watching the stochastics for a bottom and
reversal.
Gold was not yet ready for prime
time and at some point that blue line will be tagged. Until then
our very simple buy-sell indicator is very useful for playing
the tracking stock GLD or the futures. GLD has its
200-day EMA at $63.71 ($637 on gold) and got to $67.74 on Friday
so may bounce.
The Dow/Gold ratio continues to suggest that the Dow will
out perform gold though it is now above 80 on stochastics in the
monthly chart.
Oil again this week got to its break out
resistance and failed but summer driving season is here.
By the end of the day Friday the
30-year yield had given back much of its Friday rise.
The US dollar did break above resistance. This
give foreigners who invest in the US markets a boost as their
stock sales can now buy more of their own currency.
In past months we also saw the start of the first red monthly
candle for the Value Line chart only to end the month in
the green for the last 10 months.
Economic calendar form Briefing.com
Coffee Pacifica CFPC pulled back this week
while waiting on news and hit the 50-day EMA and trend line
support and put in a good Friday reversal. This is poised to
move back up as the 50-day is going in that direction anyway and
the company plans to continue increasing its coffee supply and
therefore its profits.
CryoPort CYRX
also went to the 50-day EMA and to the 200-day also. The chart
shows a silly tail as there was a erroneous trade. The bid was
$1.50 the low of the day and a $1.05 trade went off in a split
second. No one bothered to cancel it though even though it was
bogus so maybe it was an MM trade for laughs.
NNRF did a slow 4 day
pullback and added the nice reversal on the 4th day as we like.
There was
news this week
that Russia's new
nuclear holding company is to start operations July 1. It
mentions the key players and of those
NNRF already has strategic alliances with ROSATOM and
ATOMSTROYEXPORT. As you may know ATOLL is a logical and
important candidate for an ATOMPROM acquisition. When the new
ATOMPROM gets listed on the London exchange it will bring
enormous interest into the Russian nuclear area. The only pure
play stock in this now is NNRF. On Thursday I posted about why
the NNRF share price has a big upside ahead. It is on the
message board. The
last highest volume days for the stock were to the upside so
many more are buying to hold than are simply day trading for
pennies.
PYR had a press release
for Tuesday but the Canadian Venture exchange had not seen it so
they halted the stock then after a couple of days they needed to
go over the reports on the amount of oil and gas the wells
produce and on on Friday released the news so the stock will
trade again on Monday. This is the
Press Release
from Friday. PYR is taking over CGYN. They both share the
same major shareholder and CEO so the deal requires an outside
third party appraiser to set the price. This will
significantly expand the operating wells and the properties that
may become wells for PYR. There will be news about expectations
of revenues posted on one the the company sites this week. I
will add this to our
PYR company page when it is out - probably on
Monday. This is a very good situation for PYR as it will
significantly increase their revenues. Will be anxious to review
those as for 2007 they could propel the stock to $3-4 area and
more in 2008. Will have more to day on this as the numbers are
shown.
I am now looking at a few other interesting companies who have
unique products and plans. Maybe I ought to put them under a
heading of "story stocks" These are ones that have an
interesting story and where the timing for their actualization
is close enough to be a considered to be included in a
portfolio. Some of these companies have been working on their
products for 5 or more years and are finally now about to market
them. This is the time that is interesting just at the time that
those who have waiting for years have been getting out. That is
why HSXI is interesting as the product was in development
and testing for many years and the generation two model is about
to be available. We will update you this week on any of
these new ones. Now a look at some of the
ProShares Ultra Short ETFs so you have time to prepare for any
index trading on weak days or in the future for longer term
holds. There is a huge number of ETFs but these new ones have
become quite popular do to their higher leverage. They generally
do around 200% the inverse of the index they track so if the
S&P 500 were to drop 1% - the SDS below would go up
about 2%. On Friday the S&P 500 was up 1.14% so this was down
2.83%.
These are traded like stocks
so you can use them intra day also. It is better to use futures
as they tie up less money and give much better percentages. At
some point this year you will probably be able to go long the
DXD for months if not longer. When the Dow tests the March
low of 11939 DXD would be at $62.50 or a gain of $12 from here.
A $2,000 investment would give you around 40 shares so your gain
if held from here to there would be $480. The same $2,000 would
buy a single e-mini Dow futures' contract and when the Dow goes
to 11939 from here the profit would be $7,425 so you can see it
is beneficial to have a futures' account. If your broker does
not handle futures many people use
ExpressTrade
just for that purpose.
We featured the DXD in the morning video to show the
break out and it put in a nice one day gain from our buy price.
SSG is the one to play
for the semiconductor index.
MZZ follows the S&P 400 mid caps in reverse
QID is the reverse of the
QQQQ with current resistance at about $49.25
TWM tracks the Russell
2000
For additions to the watch list we start with 3
short candidates.
This first one AMCC bounced on Friday so
may continue but we will set our alerts and sell short on a
break under $2.69
BCRX did not participate
in Friday's market rally and would break under $7.59
DXCM has been having low
volume consolidation at this level for a while and when it
breaks the chances are to the downside under $6.38 ($6.17
shadow)
For break outs we have VWPT over $1.30 as the
averages are about to meet and probably cross.
NOVC is a pullback play and we are thinking it may be at
the channel top near the $10 area.
FBR over $6.67 to at
least the 200-day.
These last two are very low volume stocks. They
slipped through my filter but will share them anyway. Do not
take big positions in low volume stocks. PACT
will watch for a break of the pennant about at $5.15 depending
on when it happens.
This was really tiny volume on Friday. XPRT would
enter the gap above $15.37.
Summer in motion.
That's a full lid for today - will see you all
during the week.
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.
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