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Stock Tiger Stalking Stocks™
For Monday June 18, 2007
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Dow +85.76 at
13639.48, Nasdaq +27.30 at 2626.71, S&P
+9.94 at 1532.91
Back up they went. We had another strong Friday close -
I think the fifteenth in a row and this time a extended bounce
from the recent pullback. The government claimed low inflation
- that is if you took out the important things (see chart later
on) and perhaps this added to the rally however it may have been
options expiration related as well. INTC was upgraded
so its gap added to the Dow and Nasdaq gains. We are pretty
certain that this gap will be filled.
Since Tuesday's sell-off, the Dow is up 2.6%, S&P 500 up 2.7%
and the Nasdaq up 3.0%.
We often point out that stocks go up when energy goes up (of
course CNBC says the opposite) And this week energy moved up sharply
as oil prices moved over $68/bbl for the first time since late
March.
Friday's volume was heavier than usual but it was options expiration
so to be expected.
Probably one of the more important
things to watch is the Japanese interest rates as at some point
they will go up and make a change in the carry trade. If the
rates stay low investors can continue to borrow from Japan and
invest in higher return areas like the stock markets. At some
point their investments will become higher risk as they have to
pay more to borrow and money will start coming out of stocks and
be paid back to Japan.
RTTNews stated:
"The Bank of Japan opted to
hold interest rates unchanged at 0.5% following its June
Monetary Policy meeting. The decision was adopted unanimously,
with all 9 members of the board voting for the decision.
Economists anticipated an unchanged stance, given no clear
signals or official acknowledgement of steering clear of the
deflationary environment In its monthly assessment of
economic and financial conditions, the bank maintained its earlier
stance that Japan’s economy is expanding moderately. The central
bank also believes that the economy will continue to expand
moderately. The company noted that public investment is showing a
flattish performance and the housing market is increasing moderately
with some fluctuations.
DBS Research Group expects 25 basis point interest rate increases in
the third quarter and the fourth quarter, taking the overnight
uncollateralized rates to 1% by the end of the year. Specifically,
the firm expects the first hike after the upper house election due
on July 22nd."
The
Commerce Department reported that the consumer price index rose 0.7%
in May after it increased 0.4% in April. The increase was lesser
than the 0.6% growth expected by economists. Annually, consumer
prices increased 2.7%.
Excluding food and energy, the CPI
revealed a 0.1% monthly increase after it increased by 0.2% in the
previous month. Economists had expected a 0.2% increase in the core
reading. Annually, core consumer prices increased 2.2%, softening
towards the upper bound of the Fed's tolerance zone of 1%-2%. In
April, the annual rate of core consumer price inflation was 2.3%.
From RTTNews a look at the
inflation gauge - consumer prices - all items and also minus the
most important ones food and energy.
This is how the major
indexes did for the past week.
And the top gainers and
losers for the week.
Before we look at the
general index charts here is the inverse Dow ETF. The options
expiration week is over and often there is a pullback
afterwards. Watch the stochastics and if they go under 20 again
- watch for when they go back above to go long. Of course the
Dow may dip sooner and this may not drop under 20. It is also
only a guide and still for short term plays as even though a
market top seems "near" it does not mean that a large scale long
term pullback is soon to begin. One thing that may cause a big
drag on the economy is of course the housing sector. This
video is a
collection or interviews and segments form CNBC and other
programs on housing. If you double clock on the small video it
will then show full screen.
The Dow made it back to its highs and almost
to my Fibonacci target shown. With many shouting the Dow 14000
mantra maybe it can do it but I think the smart money is now selling
into this rise.
The Nasdaq
gapped up to the previous high - not a very constructive thing
to so as the gap will be filled.
The semi conductors after testing their
break out have come back to the next level again. A break out
here would be bullish but not on a gap up. It really would need
to back and fill first to make a more meaningful break out
later.
The S&P 500 - nears its highs again.
The Russell 2000 also gaped up on
Friday though it is farther from its high than other indexes.
I did not show the NYSE chart today as it
is similar to many here but note that even though they are all
at or close to new highs, the number of stocks participating are
fewer as these are the number of stocks on the NYSE trading
above their 200-day moving average. If this were a solid rally
we would expect to see this number expanding not contracting.
The Nasdaq 100 again at the top of the channel and the
stochastics above 80.
The Nasdaq top 100 NDX shown in the above
chart looks like a big move but shown on the longer term it is
not even close to being at the 38% (62%) retrace of the drop
from 2000.
Have not show the Commodities chart in a
while. Has been in a range and resistance to watch is shown.
This is a basket and the components are shown at
this site
Gold still weak and trying to stay in the current range,
Stochastics are back under 20 but the better short term buy
signal comes after it has dipped even lower and then turns back
over 20. We would like it to continue down a couple more
months as it could set up a good gold buying set up for the 4th
quarter.
The monthly Dow to Gold
comparison still shows the Dow in the lead but the stochastics
now are over 80. They may stay a while though as they have in
the past and maybe this can get to the resistance line. Gold has
been weak and this is only another chart to watch as to see when
gold may have bottomed. End of the summer may be the time.
The US Dollar has rallied back to the trend line so this
week a pullback or break out. A stronger dollar is great for the
foreign investor as they get more when they convert and it is
better for their competing industries as their prices get more
attractive. For US exporters the higher dollar means less sales
as a rule as their products then cost more for the foreign
buyers.
The 10-year to 3-month ratio
chart - the yield curve as it is called. All the talk last year
of the inverted yield curve and how soon we would enter a
recession. Well that did not happen (yet) though the curve was
under 1 (10) for about 10 months - a very long time. In 2000 it
was only negative for a few months before the rescission. This
very steep rise ifs normal after being inverted but also too
fast and is in need of correction.
We zoom out a bit to show the possible resistance in this range
up to 11.65. This suggests that we will see a short term
pullback in long term rates soon. (or increase is short term
ones)
This 10-year chart gives a long term
perspective of how far apart short term and 10-year rates can
get and while the recent yield curve looks dramatic short term -
it is not so much in this comparison. Note the S&P 500 in the
lower part of the chart and how the last time the yield curve
went up the market dropped. We would expect that again this will
be the case - just a delay in timing this time around. Also note
how steep it rose the last time after being under 10 (negative)
in 2001.
NNRF I think we are now entering the period of the second major
rise in the stock price in the stock price. It has been consolidating for
almost two months - similar to how FRPT did a year ago before it made its second
major move up. I believe June 25 begins a major road show to the East and Middle
east where there is great interest in nuclear. It is very common for a
company to have positive announcements in the same time frames of such events so
I would want to be a buyer in front of any such events. The two next break outs
are at around $6.50 then over $10.00 and I think we could take out both this
summer.
Thought it interesting to look
at the monthly chart of NNRF to show how extremely narrow the
trading range is now. This generally precedes a significant move
and with the road show ahead we think the upside will be
excellent.
CFPC Coffee Pacifica still in the pennant pattern
and the MACD near support line. We like this company and the
expansion of the market they are doing. It only needs more to
know about this profitable company. Stochastics are again
oversold so look for a move back up. The pullback as you see has
been on very light volume.
CYRX we hoped would have been on the OTC by now. The
process is that they are in the comment period when they get
asked written questions, the company answers them adn then can
receive more questions. Unfortunately it is not a sit down
office meeting but one that takes place in writing and therefore
takes time. When the company is finally given the approval to
move to the OTC the process would take about 4 days. Then we
believe the company will begin to release information of their
plans and progress. To do so while they are still in this
comment period may only delay the process as they could then get
more questions. So the stock dips as some holders are
impatient and of course the smart money will
lower the bid at any opportunity to try and bring in any sellers
at a better price. Note that the volume is tiny
and shows that most all the buyer on the run up are being
patient and have no intentions to sell. Also
note that the MACD histogram has stayed positive on this
pullback. This looks like a bull flag like it was the lat time
the stock pulled back and then had a big move up.
PYR.V Pyramid
Petroleum This as you know is on the
TSX Venture exchange in Canada so you will have to check with
your broker as to the symbol they use for it. As our
special report
shows the expected 2007 EPS is $0.25 cents after the current
merger is complete so with the stock trading at under $50 cents
this is an excellent price. People have yet to hear of the
company and it was you all who helped in the big volume day
recently and that will help to spread the word. The company's
most recent acquisition was only in April and that added
an additional 350 barrels a day in production and over $8
million a year in revenues. When the current merger is completed
the total barrels a day (or equivalent as some is gas) will be
1960 or $3.7 million a month as they have a year locked in price
of $64/barrel. The CEO has a long history of being able to buy
oil producing interests and combine them to greatly increase the
market capitalization of the companies.
Forbes has a
listing of 200 small oil companies (PYR is too new to be on the
list) and you can see the PEs are from 10 to 19. At $0.25
expected for PYR and a PE of 14 the price would be $3.50 so we
are ahead of the crowd in discovering this one. It has a pretty
wide price spread as it is not a big volume stock yet so would
suggest you keep an order at the bid and then be able to pick up
shares on any intra day sells at the bid. This way you can
average up as the price moves.
HSXI the CEO did another audio interview recently at
greenbaron
and expected the infomercial to be
complete the first half of July and then the Florida test
marketing. He said that instead of starting the major promotion
in the summer they plan to begin it in the first week of
September. I expect some partnerships to be announced with drug
companies as their prior press releases stated but do not know
if they will do it soon or wait until the time the major
advertising campaign begins.
NPWS Well, we put
out an information page and thought there may be some interest
but an all time high volume of over 3 million shares was not
expected. It is now at the trend line and would guess that the
company sees this greatly increased interest and may put out
some news as it sure has people ready to read any. Our initial
time frame is until the release of the prototype in late July
but of course if that goes well this may become a long term hold
as the market potential is huge.
SDVC has now officially changed its name
to Sibling Entertainment Group Holdings, Inc. and its new
symbol is SIBE. The merger is still not complete so we have
not continued any coverage yet but wanted to let those interested
know about the change.
I believe we mentioned DGRI Dutch Gold in the past. It is not
a stock I follow too much but they have good earnings and I
have heard that buying interest will be coming in July and the stock
may run over $3.00 by the end of that month. If you kept in a bid at
$1.60 or under you may get a fill on any weakness.
The economic calendar from briefing.com
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New additions to our watch list.
NPSP over $4.40 - note the $4.54
200-day EMA as may be resistance - $4.65 however seems a first
target if the 200-day breaks.
TWLL over $15.30 to first
fill the gap, use volume as a guide to whether it could then
move higher.
TVL over $20.00 with a
$20.24 shadow.
CKXE over $14.65.
DRL a pullback play
to buy if the line holds. Maybe could drop to $1.47 or only
$1.52. One to be watched for the possible reversal but I do not
like it so much as a reversal if it goes to fill the gap.
PTSFE over $1.54
CVTX over $11.50 but note the possible 200-day
resistance.
CHCG above $8.00 is a break out but
seems a buy over $7.50 in this case is a play
Now we have five plays that are similar.
Sometimes these can take months or years to move back up but we
will not wait that long. After these big sell offs they also
generally will sell off again even if they move up first so
these are likely short term trades if they trigger.
TRMM would be a buy over $1.65
BBI This is now at its $4.58 level
GRZ over $6.00 but as it is there now (and above the
50-day) If it runs on the open it may pull back to test it
again and that could be a buy also.
CAMP over $4.85. If
volume is strong it could go to gap at $5.75 but would still
sell some on the first move.
BRKR over $9.41
Like anywhere in the world I guess -- a June bride is always a happy sight.
A pond by the Ostankino broadcast tower (with restaurant of
course) built in 1967 and 540 meters tall. (The CN tower in
Toronto is 553 meters) Popular city place to row boats on the
weekend or operate remote control models. The monorail is new to
Moscow as the city has already such a complex system of metro,
busses, electric trains, trams and trolley busses.
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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