Dow -143.28 at 8599.18, Nasdaq
-45.42 at 1571.59, S&P -19.38
at 890.35
Inauguration a week away. It is now up in the air as to whether we
can have an inauguration rally as the indices closed near the short term trend
lines and if broken we ultimately could test the November lows. There are
however some layers of support before that low. This is options expiration week
so some more volatility is expected. In president elect Obama's victory speech
he started by saying, "Is there anyone out there who still doubts that
America is a place where all things are possible...." A few years ago not many in
the general public would have believed that the economy would be allowed to
create another bubble so soon after the demise of the Internet one when
all those in power said they would not let it happen again. Obama said people must
have a new spirit of service and sacrifice, patriotism, responsibility where
each of us should resolve to pitch in and work harder. I do not know if any readers at
all can understand what that means and exactly how do we pitch in? We are
already spending billions of dollars to keep the banks who caused in this
problem in business.
Asking the general public to sacrifice more while spending those billions
(trillions) on Wall Street and banks is a tough way to start a presidency.
Hopefully we will find the new president can help make some real changes once in
office though not many want to it seems. I watched some videos of Ross Perot
from the 1992 presidential campaign and with his pie charts and bar charts he
clearly outlined the financial problem that the country was in and said that the
budget deficit was not acceptable and needed to be fixed. He had ideas to do it
as well. He had a phrase that he did not want to spend 10 years to fix a
10-minute problem. We do not have a 10-minute problem and it will take time to
fix but his message was pretty clear. Identify the problem and take some
immediate steps today to start fixing it. We have shown this before from
the Federal Reserve website - their motto:
Stable and safe monetary system is their aim and as they
have failed miserably is their a sane person in the world who can justify them
still being in control of the US banking system? They are a profit making
corporation not a government one and they should be abolished. I think if
a new president made some moves like that he could gain confidence. How about a
major shakeup at the SEC as well as they definitely have been getting failing
grades. Bring back the up tick rule and enforce the naked short selling rule.
Both could be done n the first month in office. These and other things are not
hard to do at all it is just a problem as the brokerages have so much
power and seems the SEC dos not want to rock the boat. A new president could
really get things going if he took a page from Ross Perot and went on TV with
some charts and clearly showed the real problems and then the proposed and
detailed solutions. This is not too much to ask, it is actually exactly correct
to ask this of a president. They often instead like to give vague answers and
flowery speeches talking of how America is the best and will pull through. So
over the next month we will we see if it is business as usual or will be get
some bold changes. Hopefully president elect Obama will seriously consult
with people like Congressman Ron Paul who highlighted the problems and some
solution years before others were even concerned. Seems though that is is easier
to just keep the basic Bush policies going and print more and more money,
encourage people to buy on credit and - keep spending like made on
military all around the world. At least the country will end up with better
highways, bridges and school buildings.
This table below gives an idea of what the
government has been buying. It is not fro a totally
verified source but believe it to be pretty accurate. It does not show their
win/loss ratio so far but as this portfolio of stocks in
actually owned by the citizens of the USA there needs
to be some way to track their current portfolio and
their buys and sells. They have been buying stocks in very weak companies but you would think they may
as well buy some stock in some that have good earnings. I
noticed that private education provider
Apollo Group
APOL had $1.12 per share profit during its
latest quarter. That topped the consensus estimate of
$0.98 per share. APOL's advance gives support to other education
providers, which often benefit from higher enrollment
amid higher unemployment.
In another place I noted it was reported that the government has made an $8
billion gain on the $200 billion investment Treasury has made so far in U.S.
banks and companies until Dec. 30, that adds up to about a 4% return — or better
than most hedge funds, mutual fund managers and private equity firms can claim
this year as they have suffered in the red. It is, however only a paper gain.
Regardless of all the above, as stock traders we have opportunities every day to
make profits. If unemployment goes to 12 percent if many more banks fail, there
will still be good opportunities and we present them daily. We had over 50 good
trades so far this month and one of our Featured stocks ran up 175% so the year
has started well.
I read that this week we had the lowest number of new lows
on the NYSE since November 2006. Unfortunately the number of new highs is also
very low so we cannot read much into these numbers now.
This is another chart that cannot be
verified to total accuracy. It shows the expected
sideline cash that could come into the market or other
places. It is near the level it was when the 2002 rally
began. It may stay on the sidelines however for a long
time.
The non-farm payroll employment report for December
showed that the U.S. economy lost 524,000 jobs.
I wish they were right, but again,
the actual numbers showed a loss of 954,000 jobs but the
media likes to use the headline number instad. The
Labor Department termed the job losses as large and
widespread across most major industry sectors.
Economists had estimated a job loss of 500,000 for the
month. While the goods producing sector lost 251,000
jobs, the service producing sectors lost 273,000 jobs.
Barring education and health services, which added
45,000 jobs and the government sector, which added 7,000
jobs, all the other sectors lost jobs, with the weakness
more pronounced in the construction, manufacturing and
professional and business services sectors.
For the current reporting week
ending January 3, 2009, the advance number of initial
claims came in at 726,420.
The unemployment rate based on the
household survey rose 0.4 percentage points to 7.2%
If you add people who have
part-time jobs but would like a full-time job, and what
are called marginally attached workers, the current rate
is already 13.5% This
soaring unemployment has caused more Americans to fall
behind on loan payments than at any time since 1980.
In December, the number of unemployed persons increased
by a seasonally adjusted 632,000 to 11.1 million. Obama
talks about creating 3 million jobs. If he can do it,
that would only partially offset the job losses that
will happen in his first year in office. Unemployment
could rise to 9-10% or more this year and on into 2010.
That means we could easily see another 3 million lost
jobs over the next year. That is going to put a lot of
negative pressure on consumer spending. It also means
that wages are not likely to rise, and we have already
hard evidence of wages falling in many industries as
companies try to find ways to remain solvent.
In October, consumer credit fell by $3.6 billion or
1.6% to $2.58 trillion, with revolving and non-revolving credit declining by
$0.2 billion and $3.4 billion, respectively. Consumer
credit (barrowing) dropped by a record $7.94 billion
in November. That was the biggest decline since the data series began in January
1943. The good thing about this is that savings rates are going up, something
the government could have been encouraging for the last decade instead of
pushing credit on everyone.
Wholesale inventories dropped 0.6
percent in November while sales were down a record 7.1
percent. Businesses are expected to keep paring
inventories in coming months as sales weaken further in
the midst of a recession that is already the longest in
a quarter century.
This week the Bank of England lowered the official
bank rate paid on commercial bank reserves by 0.5 percentage points to a record
low level of 1.5%.This is the lowest rate since it the bank was founded
under King William III (of Orange) and
Queen Mary II in 1694. The central bank noted that the world economy is experiencing
a downturn and said it expects growth to be weak for some considerable time.
.
This
chart illustrates how the stock market has performed during the average
post-election year. Since 1900, the stock market has tended to underperform from
early January to late February and again from early August to early November
during the average post-election year. Some parts of the year have, on average,
outperformed. The most notable period of outperformance has occurred from late
March to late May. In the end, however, the stock market has tended to
underperform during the entirety of the post-election year. One theory to
support this behavior is that the party in power will tend to make the more
difficult economic decisions in the early years of a presidential cycle and then
do everything within its power to stimulate the economy during the latter years
in order to increase the odds of re-election.
The major indices over the past week:
The top and bottom sectors last week.
Top and bottom industries varies from the sector chart this week.
The multi-index chart with 50-day EMAs and trend lines
The Dow had run to a resistance zone and once again backed off. Options
expiration week so this could bounce again.
The Dow point and figure chart last week was quite bullish but now has
become a Double Bottom Breakdown with a price objective of 8100. This is a
computer calculation.
The transports had moved over its 50-day but now back under and close to
a trend line. A break under on this or many of ht charts could set up a sharp
decline also.
The Nasdaq similar to transports now back under 50-day and at a trend.
60-minute Nasdaq chart shows the trend line and another just underneath
then the downward trend line below that.
The NASI though shows no signs yet of rolling over but in the past it has
lagged also.
The VIX bounced some at the 200-day EMA.
The S&P 500 daily is certainly rather boring as it continues in this
range week after week.
The 60-minute S&P 500 and the clear trend line below whihc it needs to
hold.
The number of stocks on the NYSE now trading over their 50-day moving average
hit the normal level where pullbacks start - and one did.
We showed this chart on the blog this week as it is from the T theory work of
Terry Laundry. The blue line for a T and the left point at the brown line makes
up the left side when the NYSE advance-decline issues were at a peak in late May
of 2007. The center post came in March of 2008 and then if you add the distance
of the left to the center onto the right from the post you get the second brown
line and the completion of the T. This predicted that a short term top in the
market would be reached and that a new T, short or long term would begin to be
formed. If this continues in the decline then we could test the November lows on
the indexes.
The S&P 400 mid caps closed Friday below the 50-day EMA built at the
horizontal and trend line support but a drop under will bring in the short
sellers.
The Russell 2000 dropped below its horizontal support and is now at the
trend line.
The point and figure chart for the Russell 2000 is now a High Pole
Warning but still shows a price objective of 620.
The 30-year bond prices fell more on Monday but then moved sideways
near the 38% retrace level. This could be a bear flag formation setting up.
The real estate ETFs are quite popular in the chat room as they are volatile.
This SRS 9-39 EMA are one way to trade mechanically on crosses and
closing the position at the end of the day.
URE showing mechanical trade signals - with some whipsaws. This one shows
a 7-21 EMA set up to use as signals on a 15-min chart which may like to use.
Commodity iShares GSG pulled back and could pick up more to the downside.
Oil rallied to 50 from
35 and has pulled back to the trend line.
Oil is bidding for storage. You
can make 20-25% on your money in a few months if you can
buy oil and find somewhere to store it. At least 25
supertankers have been leased to store oil, and sources
say another ten are being bid for. It remains to be seen
if OPEC can really cut enough to make a difference in
the near term. Some think in time we may se gasoline
prices near $1 again. As it is still over the trend line
it may rally again shorter term.
US oil fund USO similar to the oil chart. Could bounce from the trend
line - or not.
DXO Double ETF for crude oil log scale chart - it
depends on the price of oil.
DXO this is a linear scale chart to compare.
Gold had gone to resistance and is pulling back.
We are having some deflation and it is likely to
increase up which puts pressure on gold in 2009.
GDX Renko 15-min chart with buys and shorts being closer together than
usual as gold is not trending up or down.
Gold Bugs HUI pulled back to the 50-day but
may drop more as stochastics suggests.
Silver in a $1 range $10.70 to
$11.80
The US Dollar pulled back Wednesday and
Thursday but recovered on Friday. It only got to
the 50-day EMA so may have to pullback again and
the C may also be an new A and the 84.02 level a B in
which case we may enter C on a pullback to test the
recent lows.
|
Butch Cooley Market Comments
(Butch is founder of
Leg Up House
and the
Butch Cooley Worldwide
Hunting and Fishing . He has
been an active trader for decades.)
Stock Market Comments
This is just getting old. I hate
writing constantly about bad news. Seems all the gains
lately have been what I call "depressed gains". I find
it much more exciting to be trading in a wild bull
market, and not being the bearer of bad news
constantly. I have found over many years of trading,
that good traders make their decisions based on reality
and the "now". And I'm afraid our economy and the rest
of the world's economies have a long ways to go with bad
news before they find any relief. Earnings are
beginning this coming week, and they will be just
terrible. Retail gains will be all but non existent.
Jobless claims will continue to get worse. More and
more Americans who wants to work will not be able to
shortly. Yes, this is definitely getting old. So how
about talking about something new? How about President
elect Obama. It's almost his time to take over, so I
figure he is fair game right now.
He's new and shiny. And can this guy give a a speech or
what!! Reminds me somewhat of a cross between the
Reverend Billy Graham and President Bill Clinton. Both
of those guys could captivate an audience. And so can
Mr. Obama. And he has been all over the news of late.
He is our next great hope to solve all of our ills. And
he sounds good. But, can he produce?
"Obamanomics" or "Nobamanomics" First of all, did we
get, or are we going to get the so called Obama Rally.
Well, we started the year off like we were going to get
this rally, but surely fell apart about mid week. That
may have been the rally too. But we are still above
8,500 so anything could happen next week. We do seem to
be tightening in a range between 9,000 and 8,400. So
that's not such a bad thing either. But rally or no
rally, what will President Obama bring to the table to
help Main Street and Wall Street. The campaign is over,
so none of that talk matters now. We don't have all the
details yet, but seems he has some ideas for tax cuts.
Ok, that's good. But, unemployed people and bankrupt
companies can't pay taxes anyway. All tax payers will
get a $500 credit, and couples will get around $1,000 or
more. Of course he would like us all to spend this
money. But I don't think it will go where they would
like. How about food and gasoline? Or Visa and
Mastercard. Or how about just put it in your wallet and
hold on to it for awhile? Businesses will get a $3,000
tax break if they hire people. Sounds ok. The problem
is President's don't make laws. Congress makes laws.
And if President Obama expects to win over Congress to
get an $800 billion stimulus package, well, there are an
awful lot of Senators and Representative out there that
have their own idea on how it will get spent. And who
will get it. So whatever President elect Obama is
telling us now, it won't be reality after January 20th.
He wants to revamp health care. So did Bill and Hillary
Clinton. Health care reform "floats" about as well as
lead. It's just not going to happen. There is a very
serious group of lobbyists out there that will see to
that. Now, get rid of lobbyists, and you might have a
chance.
He's going to fix the foreclosure problem. Ok, that
would be great. Really great. It is a major problem if
we want any kind of recovery soon. But I still don't
have a clue how he intends to do that. People who
bought subprime, are mostly the people who didn't have
the money to afford a house to begin with. And they are
the major players who are being foreclosed on. And take
time out to think that they may very well be the people
who make up a good part of the 524,000 people added to
the unemployment rolls this week. So, what are we going
to do, give them the houses? Unemployed people have
trouble paying bills.
I guess I am still very much in the fog regarding how
President elect Obama plans to do anything. But I do
know he will have to work through Congress, just like
any other President before him. And it will not be an
easy sell. Like, where will the $800 billion come
from?
He wants to put some 3 million people to work on
"infrastructure". I guess this is road and bridges we
keep hearing about. Well, they sure can use the help.
I travel a lot and our Interstate System could use some
serious house keeping. FDR did something similar in
nature back in 1930 and 1931 as memory serves. And this
may come to be a reality. But, has anyone heard just
what this will cost? I mean we aren't going to give
everyone a shovel and go out a play road gang. We have
to pay them don't we? One of the reasons our roads are
a mess, and our bridges are falling down, is we couldn't
afford to keep up with them to begin with. So how does
this work now? I don't know.
I don't see any big changes coming I'm afraid. The old
guy is out, the new guy is in, and it's business as
usual.
Bernie's Scam: I wanted to mention this as I can only
see the fallout regarding all this missing money just
getting worse as time goes on. But this week, I found
out it effected me personally. Seems back about 10
years ago, I had some of my retirement money being
managed by my broker. I don't want to mention which
company here. It's not important. They were a good
firm, and I had an account with them for 35 years. Some
of my capital in an IRA was invested with Madoff. Now,
I made money on this investment. In fact, over 8 years
I did about 150% gains. That money has since come out
of Bernie's funds and last year I changed brokerage
houses. But I found out this week that I could be held
liable for my gains, and they may have been fraudulent.
Now, I didn't know exactly where my broker was putting
my money. We didn't have the capability to track our
investments then as we do now. And I have to believe my
broker didn't think they were fraudulent. But the SEC
may in fact hold me liable for all those gains, because
Bernie was a fraud. In short, I may have to pay it all
back. And I just don't like that. Now, I do believe
it's the burden of the SEC or the Federal Courts to
first prove they were fraudulent, and I'm not going to
jump up and write anyone a check just yet.
My point is Bernie scammed an awful lot of well meaning,
honest, and legitimate people. And it will take a long
time to unravel this knot.
Butch Cooley
|
The expected earnings reports this week. Also check the updated
Earnings Calendar
on all overnight holds.
Weekly economic calendar from briefing.com.
To try futures trading you may
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Featured Stocks
One of our Featured Stocks
ERF Wireless, Inc.
ERFW
http://www.erfwireless.com/
had a fantastic week. It was up 105% this past
week and a total of 175% since we featured it
here two weeks ago. They posted some news this week on
expanding their network, profitable revenues and
customer base.
ERF
Wireless Continues Aggressive Acquisition Strategy with
Acquisition of Centramedia Inc.
This is the daily chart showing the tremendous volume as
it increased until Friday. Remember now to protect your
profits. We expect some good things to come this year as
the company greatly expands but a 175% move in two
weeks puts any stock in an overbought condition.
This is the weekly chart showing the second break out
over resistance at $0.47. It may now be support on a
pullback.
Or coal company AWSR
http://www.americacoal.com/
only consolidated on light volume this week as seen on
the weekly chart. A colleague of mine went to meet with the
company officers and then went to one of the mines about 2 hours
outside of Salt Lake City, Utah. He was very impressed with
their new leadership and their plans for the future and he sees
tremendous growth over the next year and two.
Pyramid Petroleum PYR.v on the TSE
Venture Exchange
Pyramid made a very good move in
2008, up 100% or 300% depending on your buy price as our
initial price was about $0.50. It reached its high just
as oil, (shown with the pink line on the chart) reached
its $147 high. As oil pulled back PYR did also
and in the autumn a hurricane temporarily closed several
platform then in fact damaged several when it struck.
These platforms have either been repaired or are in the
final stages now. The stick price is now sitting above
the 50-day EMA and support and the Histogram is showing
positive divergence. The company had lower revenues in
the 3rd quarter as result of the quarter but still made
a profit of $0.03 for the quarter on revenues of
$4,702,012.
As the company said they have a share buy back plan and
are buying shares in the open market from time to tine
during the year. This company also has no debt.
This is a map of the properties (platforms and
pipelines) of Pyramid
Petroleum in the Gulf of Mexico. There are more detailed
maps and information in a
Corporate Overview file
on their website.
http://www.pyramidpetroleum.com/
About their 3rd quarter earnings Pyramid Petroleum CEO
Ilyas Chaudhary stated in early December, "I am pleased
with the operating results for the quarter. Pyramid's
production in Q3 suffered the effects of Hurricane Ike
and had other weather related interruptions. Overall,
however, our assets survived in good working order and
most, if not all repairs are either well underway or
nearly completed. The decrease in production volume
which was experienced in Q3 will continue to be seen in
Q4. Pyramid is continuing to position itself for growth
throughout 2009 and Pyramid's historical production
volumes are expected to return in Q1."
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