Stock Tiger Stalking Stocks™ For Monday January 21, 2008  You may subscribe to this newsletter free - subscribe Close Friday Dow -59.91 at 12099.30, Nasdaq -6.88 at 2340.02, S&P -8.06 at 1325.19   "Faith is taking the first step, even when you don't see the whole staircase." Martin Luther King Jr. Marin Luther King holiday is Monday so the US markets will be closed all day in his honor.   It was a nasty week for the markets and I have read that so far this is the worst month the market has had for thirty or more years  - though the month has not ended yet. The questions are about how long will the recession be (if we are in one) and how deep. How much longer will the housing market drop and how much worse will the bank's credit crisis become. Plus many more.     The Labor Department reported this week that the number of individuals claiming unemployment benefits for the first time declined 21,000 in the week ended January 12th to 301,000 from the previous week's unrevised figure of 322,000. This is only a report and not the  real figures though as claims were really up by 26,000. In the week before there were actually 521,280  initial claims and that number rose to 547,637 this week. This means an increase of 26,000 initial unemployment claims but the Labor Department preferred to use a technique of seasonally adjusting their figures instead of using actual ones. The fact that jobs seemed not to be declining suggested that maybe a recession would not amount to much but this is a number to watch now that we see the truth.   This week Fed chairman Bernanke basically said that that the economy is weak enough to need a stimulus and said that the Fed will lower interest rates by at least half a percentage point this month. Why the Fed does not act instead of speaking is a question for most. An immediate rate cut may not help the economy for 6 or more months but it may help the market. A stimulus may or may not help the economy at all and may have no affect on the market.   President Bush proposed a roughly $150 billion package to stimulate the economy and that figure has not actually been decided upon yet nor the details. The lack of details left the market not knowing what to do so this news so far didn't have much beneficial impact on the market. If it turns out that taxpayers get this credit it could be $600 or more dollars but if people use it to pay down debt or put into savings it does not stimulate the economy and creates more government debt. If the payment came in April most will likely only go to paying taxes.   The Fed's meeting is a bit over a week away now so the market may forget about hoping for an intra-meeting cut and instead shift to how much the cut will be. We are for sure oversold and while oversold markets can become even more oversold, we have the conditions in place for a good bounce but can't seem to find the spark to get it going. With so much worry and despair in the market, a rally cannot be too long in the waiting now. The charts show that while we may be in a longer term bear market we are also at a technical level where a tradable bounce may happen. Earrings will now begin in greater numbers so check any stocks you own, long or short, so you are not surprised. The reaction to earnings will be a market tell. Will good earnings be sold or bought? Our main style of trading break outs and break downs and taking at least partial profits as they come and setting stops is particularly useful so far this year as it keeps you out of holding the general market declines. At the least you need to hedge any holdings using options or market ETFs. The major index's performance for the past week: And the leading and losing sectors: This S&P 500 weekly chart shows the usual appearance of a bear market. The price is below the 65-week EMA, the MACD is near or below 0 and the RSI is back under 50 into the red zone. The S&P is now down 15% from its high and a level that may support a bounce. If the bear market unfolds the typical pullbacks may drop to 20% or 25% and they coincidentally line up very well with support levels as shown here. For long term investors who do not trade it is pretty profitable to be short in these times and long while in the green zone as shown on the RSI and the EMA. On this monthly chart of the S&P 500 it shows that in the past the length of time it trades under this EMA is not nearly as long as it did from 2000  to 2003.   The various short ETFs have of course done well this year. If you use the UltraShort series they make about double the percentage moves of the indexes they track. The Dow ETF - DXD below shows a 32% gain since the December low. It is now a bit above the top Bollinger band and at resistance and very steep ascent so expect a pullback. (For the S&P 500 the UltraShort ETF is SDS and for the Russell 2000 RWM) Just thought we would show the Templeton Russian Fund TRF as it also broke below the trend line. Since the summer of 2002 this fund comprised of Russian stocks rose over 800% so a little pullback is ok. It may be worth watching for it to find support and build a new base as the long term growth in Russia is expected to stay high. Russia's economy was ranked as the 11th largest in 2006 and with a 2008 GDP growth projected at 6-7% Russia intends to be the fifth largest economy by 2020. This trades like a stock.   The Dow charts shows the RSI is again under 30, price at the support from the 2007 low and at the 62% retrace level of the moves since the summer of 2006. A rally out of these lows is expected this week.   As you look at these and other charts and if you want to play a bounce - we repeat the words for Martin Luther King Jr. "Faith is taking the first step, even when you don't see the whole staircase." We add however - "use stops!"     The Dow Jones Transportation Average has held its ground at the Summer 2006 lows and the 62% retrace and so far the RSI has actually turned up. The S&P 500 looks very oversold here and near the retrace level and support of the Spring 2006 high. RSI has reached oversold levels that usually lead to rallies. At some point a test of the 50-day EMA from the underside would be common and that is now 120 points higher. The Nasdaq daily shows the 50-200 EMA cross that is bearish if it lasts but index now at a significant Fibonacci number of 62% of the rally since July 2006.   The Nasdaq weekly chart shows the trading channel still in place as the index closed just over the 200-week EMA and stochastics extremely low. The Nasdaq bullish percentage indicator is at the lowest reading of this decade. While some indicators do not yet show such pessimism this one does and this usually comes near a buying time.  I recently read: "Buy when stock prices are low and hold on to your securities... People seem unable to grasp these simple principles. They do not buy when prices are low. They are fearful of bargains." J. Paul Getty - However - we like stops in a bear market. The Nasdaq 100 proxy QQQQ monthly almost back to the 50-month EMA. I would feel better actually in the long run if it did tag the 50-month. MACD lines have not crossed to the negative and the histogram is still positive. The stochastics in the past have found support near the 50 line. This SOX weekly chart was drawn last week and it is now at support and actually had a gain on Friday. The 50-day and 200-day EMAs are just crossing which is bearish unless they reverse soon. Stochastic are in oversold area where in the past a rally soon followed. The NYSE broke down through the two first support levels and is now where it found support in March and again in August of 2007. It is also at the 68% retrace of the period shown. RSI is in oversold territory. The weekly Russell 2000 chart shows the retrace now about at the 38% Fibonacci retrace of the 4-year period shown. It is below the 200-week so bearish but the RSI is close to oversold levels where it made a bottom in 2003. 668 was the low support in 2006. The percentage of stocks on the NYSE now trading below their 50-day EMA are not as low as they were in August but as low as other market lows over the last 2 years. This ProFunds UltraShort small cap fund is nearing resistance and is quite overbought on the stochastics. Japanese Yen broke out again but does not look too stable with its rapid rise. The 30-year bond yield is back to its November low. Gold pulled back and triggered the short sale using the stochastics indicator. It does not always go back under 20 right away so keep stops if short. The 850 area is shown first area of support on further pullback. The US Dollar maybe making a higher low? The Value Line monthly - broke the trend line in December and with 8 more trading days in the month not far from the 38% Fibonacci retrace of its 2002 low to 2007 high. Economic calendar from briefing.com -- not much this week.   Longer term notes: Some of the longer terms stocks had a volatile 2008 but have grown their business or strengthened their business plans and from these low levels the upside gain possibilities greatly outweigh the downside risk. Here we look for higher rewards over months and years not days or weeks. NNRI - company officers are in Moscow this week while auditors begin the year end reports for ATOLL and NNRF, Inc. I will meet with management later in the week. You know our NNRF Q&A Page  http://nnrf.stocktiger.com/  if you have any. SIPC - Sipp Industries' stock continues in the trading range with low volume at the moment which will change as the company nears the production and distribution. I expect the company to file their 10-K report with the SEC soon and this will make them fully reporting and then they will file with the SEC for approval to move to the OTC as they have already completed their NASD 15-C-211. PYR.v - Pyramid had in the past announced a plan to acquire a wholly owned subsidiary of Capco Energy, Inc (AMCO). This would have increased their ownership of some wells form 5% to 29%. Pyramid this year did complete a purchase of some properties from ConocoPhillips.  This week they announced that they terminated the plan to buy AMCO. Capco Energy is also controlled by  Mr. Ilyas Chaudhary, the CEO and major shareholder of Pyramid and it seems more straight forward to to buy from totally outside companies such as they did with ConocoPhillips. We expect the company to have current quarter cash flow in line with last quarter - $0.06 cash flow and about $0.01 in net profits. The company is paying off debt at a high rate so by mid year this will greatly be diminished and net profits will begin to rise. PLTG Platina announced secured debt financing for $1.5 million that will allow them to complete four additional wells on the Tennessee property. This may lead to a cash flow positive by the end of the quarter. GWDC had no news this week but this stock price is up from the week ago low. Positive management changes are expected this month. CRYX pulled back some as traders do their thing. We expect this to be a very good year as they and FedEx put their plan into action. Additions for the watch list. Watch List charts are becoming harder to find now and when that has happened in the past a market change happened pretty soon and in a week or so more charts were setting up. These charts are selected from thousands and none are as sure to trigger as they used to be. ABI  Short  under $32.59 IVGN  Over $98.00 then $98.15 horizontal CN  Over $66.15 then $68.97 horizontal. This a Chinese stock and as you see often gaps. IPSU  Sugar - Over $21.22 to the 200-day. MTRX  Short  under $17.89 NBIX  Over $6.00 into the gap   BSC  Short  under $69.80 STSI  A momentum play - use caution - over about $1.40 SRS  ProShares UltraShort  Real-Estate ETF over about $140 if real estate weak. DVN   Short  under $79.92 CSE   Short  under $13.58 These are made out of paper - for the creative person to make. I thought they looked rather fun. realsimple     Tristan Tom · Golden Gate Bridge  in Fog That's a full lid for today - will see you all during the week. We have published a donation page for the ease of you giving to a charity of your choice. If you have benefited from our site we encourage you to share with a charity. We have a few recommendations who all use a high percentage of the donations for the actual program use. If you have some we should add please send us a note. Donation Page 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. If you use StockTiger mail you can access your account using simply my.stocktiger.com You can also access your mail using your Blackberry. 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