Friday was looking like it would end a bit down but some late day
buying stepped in and gave the day a positive close as is shown
above. CSCO announced that they had increased the amount of money
authorized to buy back shares - now it is $62 billion worth. The
stock price is now where it was January 2004 so if my math is
correct they could buy back 2 billion shares- there is now about 6
billion outstanding. This news likely helped the Friday close. Also
there may have been many that were expecting a late Friday sell off
and instead the buying caught them on the wrong side so they had to
cover.
Several companies have issued warnings that they may experience
slower growth - due to the economic environment. I guess in
most cases this has been expected and may have been priced into the
stock. This is one unknown factor in the market now - we know there
is a slowdown and more to come and that inflation is at least double
what is being reported but how much of this is priced into
stocks is not know.
Most people know that the holiday week is more
often up than down so expect a rally. Does this mean that the shorts
will figure it good to try and sell it? I am guessing the longs will
win out this week as there is a lot of negativity out there and that
usually helps - especially in an over sold market. When people are
too positive and bullish than it usually means they already bought
so we run out of buyers but if all are negative they have a lot of
cash on the sidelines to tap into for rallies.
This is how the Dow has done in the pre-election years - the
average over the last 105 years. This year the pattern is pretty
normal but this month has dropped more than usual so maybe we can
make up for it with a year end rally. The market is now oversold and
Thanksgiving week is up about 66% of the time.
The sector wins and losses for the past week:
The major index moves for the past week:
The Dow in this rough draft of what could be a triangle to come. If the
bottom line holds we could see the year end rally break through the small
downtrend line and maybe even make new highs. It will be good though to see
which sector is stronger and the big cap Dow stocks have been quite strong for so
many months while the Russell 2000 has done little so maybe the small caps can
get back into the game.
This longer term Dow view
shows that it has held above the 32% retrace of this 16-month move.
The RSI briefly touched the 30 line. Enough to created a good bounce
is yet unknown but it could be.
The Nasdaq does not have much of a chart
to say anything about. It is 50-200 pinball and until it breaks out
or down it is not very interesting.
The weekly Nasdaq view shows the slight bounce off the middle trend line
which is near the 50-week EMA.
The bullish percent index shows the oversold conditions now close to
levels where it was just before rallies.
The SOX has broken another support area in the oversold territory and at
the lower Bollinger band. It has yet to show signs of a bounce.
The S&P 500 we show with the triangle that is so far a guess of what it
may look like. First we need a bounce this week to take it off the lower line so
lets just start there and see.
The NYSE closed back over its 200-day EMA and is above the 50% retrace.
The number of stocks in the NYSE that are above their 50-day averages bounced
near this level in the past but a few times it went lower first.
The Russell 2000 dropped for 3 days and this year has not dropped 4 days
in a row so that suggests we go up on Monday.
The Russell 2000 weekly view shows it at the bottom trend
line.
The Value Line index is a good broad market index and it too is at its
bottom trend line.
Oil has pulled back some and perhaps has put
in the high of the year
For several weeks we have been seeing a pullback in
gold coming and it has started. Note how the Fibonacci numbers lined
up well to predict the top. The long term bottom line is at $542 and
the 38% line is at $730 and that predicted a top could come at the
level you see. Perhaps it will now go to the short term 38% at about
$775 or the 50-week EMA at $766. There may also though still be
enough momentum in gold for it to make another rally. The long term
price high was $875 in about 1980 and it was unable to tag it.
The US Dollar finally put in a little
bounce this week - sure would be nice if this is a bottom. The
government after all says they have a strong dollar policy - what a
joke. But am no laughing.
The 30-year bond yield
did test the December low. With pretty high inflation rates really
should be higher so logic says that this low should hold. Eventually
the logic will win - but when?
The Japanese Yen consolidated a bit but
still has three gaps below so at least 1-2 will fill. When this
drops we expect the market to rally.
Economic calendar from briefing.com -- a light week.
NNRI (NNRF, Inc) Published the third quarter report and it was for
the most part about what was expected as until the completion of the move to
equity accounting we will not see the ATOLL results directly but only from
dividends and they are not immediate. As you know the second quarter for ATOLL
was great again with $19 Million in sales and about $4.25 million in profit after
taxes for a first half year total of $9.5 million in after tax net. From March 13
forward NNRF owns 50% of ATOLL so is credited with 50% of the profits. (The
following is my wording as as I am not an accountant please excuse any misuse of
terms) NNRF completed the 50% acquisition of ATOLL in March and they are very
interested in growing the business which means things like adding additional
equipment to expand production and so forth. When you are doing this you do not
turn around and immediately start taking all your money out of that company. NNRF
receives money from ATOLL in the form of dividends but in doing so all other
shareholders of ATOLL also receive dividends as you cannot just give them to
select shareholders. This can change when the accounting changes and that is
being addressed. Someone also asked if NNRF could not receive the dividend and
then book it as profits and then loan money back. Sure they could receive money
and have to pay taxes on it and then loan money and have to pay interest - or
they could leave money at ATOLL while it was still the best for ATOLL and the
future earnings of NNRF.
Despite the above NNRF did book $50,000 from ATOLL I believe this is part of the
$247,000 from the period NNRF only owned 13.5% of ATOLL and the additional sum
was not received until after the quarter ended. My point is
we know from ATOLL's numbers the amount that will come to NNRF so the exact date
of its being received is not to me so important as long as they use the money
while it is located at ATOLL in a way that is good for the longer term benefit for
us shareholders.
The quarterly report shows greatly diminished losses from the previous quarter
(and mostly non cash ones). The total was -$0.05 per share for the last quarter as
compared to -$0.17 per share in the previous quarter so a very positive and
significant improvement. The operational loss was cut in half also and interest
expenses were down from $4.4 million to just over $1 million. This also is a
very good improvement. Cash on hand and prepaid expresses were both up at the
end of September so positive progress is shown in many places.
Also on this filing they announced that they have completed the first 2.5%
interest in there plan toward buying a larger stake in Velcont along with ATOLL.
They made a $400,000 payment and are progressing in a similar way to their
purchase of 50% of ATOLL - a step at a time. In general a very productive
quarter.
Not from the SEC filing but for your information if you do not know:
Global Matrechs, Inc. Receives First European
NuCap(TM) Order From Sales Partner NNRI
NNRF has ordered more than one metric ton of NuCap
which is made by Dow Corning and used to encapsulate highly radioactive
material. We do not know for which project this is intended yet but are happy to
see the progress as they had stated that some remediation work would begin in
the forth quarter and here we see them in action.
The company cares about its shareholders and wishes to improves shareholder
communication so has authorized the setting up of a question and answer page
where you can send in questions for company officials to answer. In time this
will build a data base of answers so that they do not get asked the same
question over and over. This also will let you know that the information is from
the company and not from outside opinion or assumption.
Shortly we will announce this page and if you like you can send brief questions
to me now for submission. Realize that there are some areas that the company may
not comment on due to on going negotiations, competitive reasons and so forth.
We wrote this before but a reminder that in about 2 weeks:
On December 4th and 5th the company will participate in the conference in
Moscow named
"AtomEco-2007"
put on by The Federal Atomic Energy Agency (Rosatom)
and JSC Atomenergoprom. This is an Exhibition and Conference in the field of
radioactive waste management, decommissioning and dismantlement and
environmental remediation. I will attend and will report back of course as this
is exactly their business. I will again be meeting with senior management at
that time.
The weekly chart shows the pullback this week that we have seen repeated
a few times before after a run up. The volume this week on the pull back was
lighter than the run up volume the week before and that is positive. The drop in
price is not fun but it will not change the longer term upward movement of the
stock price. The company is increasing its activities on so many fronts and is
making solid progress so the chart is not at all reflective of the
company positive achievements, growth or its prospects. Stock prices at times get out of
sync as traders can go to extremes one side the other and we think it is very
undervalued now. On the chart we do see that there is positive divergence on the
MACD histogram while stochastics have been back and forth around 20. The nuclear
services company Energy Solutions ES had its IPO this week. It was originally going
to be priced between $19 and $21 but it came at $23. The stock made no gains on
the first days of trading but think it may create some interest over time to the
sector so also to NNRF as people look for companies with similar activates that
are at very attractive pricing. I believe that NNRF will close the year much
higher and even chart indicators suggest the same.
CFPC weekly - the volume has been much higher the last two weeks as the
price rose 50%. The stochastics have just gone above 20 and the MACD is about to
make a positive crossover it seems while the histogram is almost positive. This
one like NNRI above had positive histogram divergence before it nice move up. It
is a pretty reliable indication - not always great on exact timing but on the
movement to come.
PLTG weekly - not much new here as it consolidates in the same place.
Stochastics still rising and MACD closer to crossing and that will be very
bullish. The 50 and 200-day EMA are spreading slowly apart and this is also
bullish.
CNGJ we have talked of for a 12 days
as it gained on very good volume and the company is supposed to soon
file its form 43-101 that will outline their underground holdings.
Before bringing this to your attention we did DD to try and
determine if there were any large shareholder who may sell or any
144 stock due etc. It appeared as if any stock from the September
run up had been sold and there would be no "hidden" seller. We did
not like it that a couple of those penny sites mentioned this company
but the company said they had not contacted these sites nor paid for
any. On Friday there was significant volume and the stock broke the
$0.35 support for the second time so we imagine that any holders who
bought in that range or higher we stopped out. This was a surprise
as it seems that there must have still been some holders left for
the first move who used this to exit. We do not like that action on
heavy volume so will wait before making any buy backs for news or
chart improvement.
Additions for the
watch list:
ALDN Over $25.00
BE Short under
$4.00 - $3.83 shadow low
Thanksgiving
week.
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