Dow +64.59 at 8629.68, Nasdaq
+32.84 at 1540.72, S&P
+6.14 at 879.73
S&P 500 History Tower shown at dailykos this image is of blocks where
each block represents one year of stock returns, using data since 1825 and each
column represents a range of return on the S&P index. On the right side are those years where the
index has risen from 50-60%. In the middle are
the more typical years, where the market has risen less
than 10%. To the left of the black vertical line are
years of declines and right now 2008 is the far left top block just above
1931. So the 1929 decline did not show its worst until 1931.
Click on the graphic to enlarge.
Friday the markets gaped down and some stock advisors sent out alerts that
the market would now go to at a minimum test the lows. The failure of congress
to decide on an auto bail out plan and the amazing alleged multi-billion
dollar Ponzi scheme by Bernard
Madoff could have given the bears all they
needed to really drop the market but again the buyers were willing to buy in
spite of the bad news. The Madoff
story if correct, is the single biggest financial story of the year. It is bigger than Enron or Tyco, bigger than Boesky and far bigger
than Bayou.
The difficult part of this is the
very choppy trading and the fact that there is no
increase in volume and we would want to see that to give
some confidence of a continued move higher. There
are however a greater number of very decent trading set
ups for the long side and you would think that this will
naturally lead to a higher market in general. There is
also renewed interest in speculative plays and in some
commodities. The semi conductor sector has at the
moment many good set ups and the ETF USD for that
sector has been acting positively. That sectors did not
have good news so this tells us that traders are quite
interested in getting some of these stocks moving in
anticipation for a year end rally. This in turn woudl be
good for the Nasdaq.
The Commerce Department said the U.S. trade
deficit widened to $57.2 billion in October from a
revised deficit of $56.6 billion for September.
Economists had been expecting the trade deficit to
narrow to $53.5 billion.
The wider deficit reflecting a decline in exports, which
in turn is seen as a corollary of slowing global growth.
October exports were down $3.4 billion to $151.7
billion, while imports fell $2.7 billion to $208.9
billion. The goods deficit eased $0.3 billion to $69.8
billion compared to a $0.4 billion decrease in the
services surplus to $12.6 billion. The Labor Department
said import prices declined 6.7% in November, steeper
than the 5.4% drop in October. The decline reflected a
25.8% fall in petroleum import prices and a 1.8% drop in
non-petroleum import prices. On a year-over-year basis,
import prices were down 4.4%. Export prices fell at a
3.2% rate in November, adding to the 2% drop in the
previous month
The weekly jobless
claims report for the week ended December 6th showed
that jobless claims rose 58,000 to 573,000 from the
previous week’s upwardly revised reading of 515,000.
Economists had been expecting jobless claims to increase
to 525,000 from the 509,000 originally reported for the
previous week.
The
Labor Department also said that the less volatile
four-week moving average rose to 540,500 from the
previous week's revised average of 526,250. Continuing
claims for the week ended November 29th increased
338,000 to 4.429 million. The
Labor Department also said that the less volatile
four-week moving average rose to 540,500 from the
previous week's revised average of 526,250. Continuing
claims for the week ended November 29th increased
338,000 to 4.429 million.
Retail sales fell 1.8% in November compared to the
previous month. The previous month's sales were
downwardly revised to show a 2.9% decline. Economists
had estimated 2% decline for November. Year-over-year,
retail sales were down 7.4%.
Sales, excluding autos, slipped 1.6%, adding to the 2.4%
decline in the previous month. The decline was worse
than the 1.8% drop predicted by economists. Sales at
motor vehicle & part dealers fell 2.8% compared to the
previous month, and they declined 25.2% from the
year-ago period. Sales at electronics & appliance stores
rose 2.8% in November compared to a 2% decline in the
previous month. Sales at gasoline station sales slumped
14.7% compared to a 12.9% decline witnessed in the
previous month.
The major indices for the past week.
The weekly sectors with commodities back on top.
The top and bottom industries for the
week with coal the winner.
In US dollars the Dow is down about 39.5% from its October 2007 high. However, when measured with
the price of gold it is down even more. It currently takes 10.5 ounces of gold to “buy the
Dow” but in 1999 it took 44.8 ounces so in gold terms
the bear market is 8 yeas old.
Some of the puppies we have gone to new homes but as of today
I still see three of them . Sometimes the camera is off. puppy
cam There is sound
also.
The multi index daily chart with all indexes still just under
their 50-day EMA. A move over those levels should bring in more
buyers.
This weekly Dow shows the indecision candle for the week.
The Dow 60-min chart closing basically in a trading channel but on Friday
a kind of bearish pattern at the 200-period resistance and top trend line.
The Nasdaq filled its gap on
Thursday and had a bounce on Friday. On continued
movement up the 50-day is resistance at 1646.
The Nasdaq summation index continued higher and is above the lower half
of the chart again suggesting more bullish conditions.
The VIX is again below its
50-daY EMA and the indications support a continued move
down which suggests the market continues up.
S&P 500 weekly shows the complete indecision as there was less than a
half a percent in change for the week on a closing basis.
S&P 500 daily and the gap was filled.
The S&P 500 60-min chart shows how the 50-period EMA had been resistance
for a long while until it was broken and this week it acted as support on the
pullback.
The NYSE is 350 points below its 50-day EMA.
The number of stocks on the NYSE trading over their 50-day EMA continues to rise
as they are now 33% of the socks from the October low of only 1% of all stocks.
S&P 400 mid caps in this triangle with the 50-day EMA not far above a
pattern break out point.
Russell 2000 small caps caps similar to the mid caps.
TLT 20-year bond prices closed back at the top of the range on Friday.
The FVX 5-year yield closed at 1.55%..thats low.
Ninja Trader is a free charting program but if you subscribe to it you can also
use it to make trades with your broker. It is popular with people who like to do
mechanical trading. You can write scripts for it to follow so it can place
trades for you. They have many popular systems and this is one we have talked
about several times. This is simply to buy or short the SSO or SRS when on the
15-min chart there is a cross of the 16 and 34-day EMAs and then close your
position at the end of the day. The SSO triggered a short on Thursday for
about 1 point and it could trigger a long soon on a rally. The SRS
triggered a long on Thursday for about a 20 point gain and a short on Friday for
about 10 points. You can easily back test them by looking at charts from the
past. They have a pretty decent win ratio of over 60-65%. (there is no guarantee
that it will continue to work so well)
We mentioned earlier the semi conductor stocks have been looking pretty good and
we put USD the ETF on the watch list last week. Some interesting ones are
KLAC, QLGC, BRCM and AMAT.
The commodities index CRB weekly put in a bounce this week of 8.8% and is
back now to its resistance.
This just shows the year to date performance of oil and natural gas.
The oil weekly chart shows the 20% gain for the week though RSI is stil
under 30.
Many oil producing countries depend on the income to keep them going and as the
price of oil rose they spent more money and now need higher priced oil than in
2000 just to stay ahead of the game. This graph shows how much they needed per
barrel of oil then and now. You can see that Venezuela is in the worst shape and
may be near to production costs. Russia is not on the chart but I have read its
number is $70. Regardless of the total accuracy of this data we know that if a
country needs money they have to actually sell more barrels of oil at lower
prices to pay for the country's needs and responsibilities OPEC wants to cut
production to help lift prices and at the same time there is a need for
countries to bring in more money now as the price decreased they did not want to
be the last one standing and they sold more.
USO oil fund gained 11% this week.
Gold on this long term daily chart shows it moved back to the underside
of the broken trend line which is now resistance at the 200-day EMA.
The close view also shows it is
at the 50% retrace and a small double top which may be a
break out or failure.
On the gold cloud chart we see the move back over the resistance cloud
completely so now the bottom of the cloud may act as support.
From the bespokeinvest
blog we see consensus analyst estimates for the price target of gold through 2012. These target prices are based on
the median of 21 gold analysts surveyed by Bloomberg. As shown,
analysts currently aren't expecting a big rally or a big decline in gold over
the next few years. By mid-year 2009, analysts are expecting gold to be at
$825/ounce, which is less than $10 from its current price of $820. At the end
of 2011, analysts expect gold to be down to $790, and then down to $762 by the
end of 2012.
Our GDX Renko chart
made good profits again this week as the cover and buy
signal came when the parabolic SAR went under the
pattern and the CCI returned back over 100.
The Gold Bugs HUI gained about 23% this week and will have resistance at
the broken former support line overhead.
The HUI
is a basket of unhedged gold stocks (BUGS) and at some
point if gold prices rise enough the HUI may perform
better than the XAU unhedged stocks as it can benefit if
prices rise. Here are the components that make up this
index.
HUI components
The XAU closed Friday jus under the trend line
Component stocks of the XAU
XAU components
Silver still basing near
the $10 area.
The US dollar weekly
chart and the 4% decline this week.
The daily USD now it looks like the high may have been the completion of
wave 5 and that we may be in an a-b-c pattern at the moment - this being C.
|
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
I'm going on a short vacation, and leaving fairly soon.
So I have a bunch of one liners, maybe give you some
pause for thought, and also help you make money.
GS reports next week, and is won't be pretty. Plan
ahead.
GMAC has until 5 pm ET on Friday to come up with some
$30 billion in order to become a bank holding company.
To me this is more important than whether or not
Treasury uses TARP to give the Big 3 money. Without
GMAC, GM doesn't sell cars through their dealers. In
short, the dealers start disappearing, and with that
comes the end to GM imo. They are working the system,
trying all kinds of debt swaps to qualify as a holding
bank, which allows GMAC to then access TARP money. They
could get an extension. Keep your eyes on this.
There are 6 States out of 50 States that do not have
budget problems. Did some research this week and found
this out. CA and NY are probably in the worst shape.
So what do we do here, bail 44 States out? Might as
well make it all 50, because if we bail one, we bail
them all. Someone has to start showing fiduciary
responsibility. Before long the National Association of
Dahlia Growers is going to want TARP money. And there
isn't a bunch left. We already have spent most of the
$350 allocated so far. I think there is about $14
Billion left, and possibly that is going to the the auto
companies.
OPEC meets Dec 17th. Look for a cut of 2 million
(possibly 3 million) in daily production. Question is
has the market got it priced in already? Maybe 2
million, but no more imo. And keep an eye on the USD.
I get a lot of emails each week. Where is bottom, was
7400 the bottom? People, imo, other than day trading, it's
way too early to be calling bottoms. This is going to
be a very lengthy process. We have a number of bottoms
ahead of us. Trade with caution. If it doesn't go your
way, get out fairly quickly. These markets are tough
right now. Look at all the bad news we have had in the
last two weeks, yet the markets put a pretty good bear
rally together, and a lot of us made money. Any other
day, we would have tanked on this kind of news. But I
also believe the news is going to catch up with us, and
we have some down in the future.
One last comment on Madoff and his Ponzi Scam. I have
to admit, I don't get it. I had a friend in Arizona who
came to me once about an off shore oil deal that was
just paying tons of returns, 40% a week!! He wanted my
opinion. It was a Ponzi. I knew he wouldn't listen, I
could see the greed in his eyes. So he went ahead and
dropped $10k into the investment, and got a $4,000
return in 7 days. Came and showed me the check. He
then dropped $100k in a little longer term, and a second
$100k in another longer term. Came and showed me his
second check from the first investment. Another
$4,000. And then it was over. The guys who sold him
the investments disappeared and he was out $202K.
Mentally, he never recovered.
What I don't understand about Madoff, was he was never
going to disappear. What was the point?? Did Bernie
actually think he would not get caught? Or is he just
nuts??!!! How stupid. It's just not all that difficult
to make money legally. Oh well, I'm out of here.
Butch Cooley
|
Here are expected earning's dates for the
week - also check the updated
Earnings Calendar
on all overnight holds.
Weekly economic calendar from briefing.com.
To try futures trading you may
sign up for a free simulated account that uses live streaming data.
Futures have been very volatile so great opportunities right now for
wide swings.
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!
We want to mention a bit about coal and then the company
America West Resources
AWSR. You saw above that coal this past week was the top sector and top
industry. The sector reached its peak prices in June of
this year and looks like it made its low in November.
In the USA about half of all electricity is produced
from coal. Next is nuclear power then hydro power, oil
and gas then wind, solar and others with
minor use in comparison.
Coal production ramped up significantly between 2003 and 2006 as consumption increased in that four-year span as much as it
had in the 23 years before that.
As we saw with many commodities there was a momentum run
up in prices that peaked this year. Driven to a large
part by big money from speculators, pension and hedge
funds. The unwinding of the positions caused a drop
which may have been overdone on the downside as it was
overdone at the top.
This shows the prices reached per ton of coal and the
steep decline so now they are back to longer term trend.
To take a snapshot of the recent activity here are some charts showing the base
that was build during the last month.
KOL is the
sector ETF and had a 2008 high of $60. It has gained 50%
from its November low.
ACI went
from $2 in 2000 to $76 in June this year. It has risen
over 50% in the past few weeks.
JRCC has tripled since
the November low but its high in June was was $62.
Now we look at a turn-around story in
coal, America West Resources, Inc. in Utah.
Symbol AWSR. Trading on the OTC as AWSR.OB Web Site:
http://www.americacoal.com
America West Resources, Inc.,
through its subsidiary, Hidden Splendor Resources, Inc.,
is a coal producer that was not able to participate in
the large run up in stock prices of coal companies as we
mention below, but with very recent developments may now
be able to move forward to becoming a nicely profitable
company.
In 2003 before the
significant gains that coal has made, the former
management of AWSR signed production contracts
that locked in a long range delivery price that was less
than half the current coal price. This contract also
restricted them in the ability to sell to whom they
wished. Over time, production and delivery costs
increased and of course repair and replacement of
machinery had to be done and the company acquired too
much debt to afford and filed for Chapter 11 on their
subsidiary, Hidden Splendor Resources. During that time
there was no interest in the stock as the outcome was
uncertain.
As you see on this chart this
became a penny stock and the volume became tiny.
We know the reason for the company and stock decline but this week was a
significant announcement that will re start the company back to profitability as
Hidden Splendor Resources will emerge from Chapter 11 bankruptcy on December 19,
2008. The U.S. Bankruptcy Court for the District of Nevada has approved the
company's reorganization plan and the Company believes that it will have
sufficient cash flow from operations to fund its future financial obligations to
Hidden Splendor's creditors. The company has appointed seasoned management to
aggressively move forward with its growth plans and the restructured past debt
is now in an affordable repayment plan. The company has received addional
investment and has more to come this month which will really kick start their
turn-around process. The new CEO is Dan R. Baker who
formerly was Executive Vice President at
CONSOL Energy (CNX) on Forbes Best 400 Big company list. This is an
important fact as he and the others on the new management team have the
experience to help turn the company to profitability.
America West is mining in Utah as the map shows, a major coal supplier. The
location is important due to the properties of the coal itself. It has a quality
BTU rating and a very low sulfur content which is desired to reduce any global
warming effects.
We have heard President Elect Obama's call to invest in
America's energy future -- including investments in
clean coal. Clean Coal Technologies have resulted
in more than 20 new, lower-cost, more efficient and
environmentally compatible technologies for electric
utilities, steel mills, cement plants and other
industries. Coal will remain the largest single source
of electricity—accounting for more than half of the
nation’s power generation in 2025.
AWSR is focused on the mining of clean and compliant (low-sulfur) coal
and its sale to United States utility companies and for industrial power
generating as well. In the future the company plans to expand
Metallurgical Coal production for expert
especially to Asia.
The company in the Horizon Mine alone has approximately 8 million
remaining mineable tons under lease from the Bureau of Land Management while approximately 220,000
tons of the remaining coal mining territory is fee coal
owned by its Hidden Splendor.
The mines currently employ
approximately 70 people and they are operating as a one
section mine with a production of about 25,000 tons per
month. The company will expand this to a
multiple-section mine and they expect to generate
between 600,000 and 2,000,000 tons per year as per the
company website. The move for a one section to a two
section mine can start pretty quickly and that could
raise their production to the 50,000 per month. With the
current coal spot price around $60 - even if they
lock in $50 per ton that would equal $2.5 million per
month or $30 million in sales per year at the low side
of the equation.
There are currently 126,619,928
shares issued and outstanding and the company can authorize up to 300,000,000
total after a current amendment change filing. This does not mean they will
issue that number as it could be used in the future for mergers or acquisition.
This change is explained in detail on the company's website under SEC Filings
and their latest Schedule 14C
filing.
As long as the PIPE or (Private Investment
in Public Equity) is finalized this month as scheduled we see limited downside
as the reorganization has been approved and they will emerge from Chapter 11 on
Thursday. The volume has been very light but that will probably pick up as the
company adds additional revenues. The purchase of stock here would be based on
company performance which should be steady growth over the coming months and
years.
The company's 4th quarter 2008 and annual report will be due the end of
March but we expect many announcements before that time as progress is made.
(Note - I have no position in AWSR at the moment. I may receive stock from a
third party and if so it would be 144 restricted stock which could not be sold
until after 6-months from the time of issue.)
New additions to our
watch list.
Remember that we add many stocks to it each trading day.
ZION Short
under $25.00
FCSX Over $5.18
GSS Gold over $0.84
ASIA Chinese over $12.65 or $12.80
SINA Chinese Internet over $28.00 -
50-day EMA overhead
ATHN Over $34.00
LNC Over $18.00 on good volume Has
50-day EMA at $20.25
EGN Over $31.65 then 50-day EMA now at
$32.60
ALK Airline over $28.00
SWC Palladium over $4.12
PAL Palladium over $1.73
SLW Silver over $4.65 with shadow at $4.95
HITT Back
over $30.33 then trend line at $31.30
Also remember to check the
blog
as
information is posted many times each day - please
post your own comments and charts.
Phillip
Petit. He had a dream to walk a wire between
the twin towers even before they existed. He planned,
practiced, waited and on August 7th, 1974 he and his
helpers
snuck atop the Towers, set up and at 7.15 he walked on a high-wire over 1,350
feet up in the sky for about 45 minutes. He was then
arrested but later the changes dropped and he performed
a free show in NYC and was given a permanent pass to the
observation deck. He was an inspiration to people around
the world to not give up on their desires regardless of
the obstacles. It has been 34 years, he now lives in the
USA and there is a new enthralling documentary film
about him, his friends and his years of planning
named Man on Wire.
Feed the eyes
Photograph by RuThief
Photograph by Mary Shaburova
Photograph by Ayle
That's a full lid for today - will see you during the week.
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