Stock Tiger Stalking Stocks™ For Monday July 21, 2008  You may subscribe to this newsletter free - subscribe Past 5 days Dow Nasdaq Close Friday Dow +49.91 at 11496.57, Nasdaq -29.52 at 2282.78, S&P +0.36 at 1260.68   Bounce. We finally got an oversold bounce as the VIX spiked up some and the banking sector hit extremes. At the same time oil started its pullback which sure did not hurt. On Tuesday there were 1304 new lows on the NYSE - a new record. From that Tuesday low the Dow ran up 4.9%, the Nasdaq 3.2%, the S&P 500 up 3.8% and the Russell up 5.3%. Bounce players had been waiting for such a capitulation event for quite a while as the market has been oversold. The parts that were missing were such a huge number of new lows and a spike up in the VIX. It played out on Tuesday and then the other buy signals like stochastics, RSI and MACD kicked into gear on Wednesday to really gets things going. From the Russell 2000 low on Tuesday it ran up 50 points to the Thursday high. 50 points in two days and each e-mini futures contract gained $5,000 from the low to the high so you can see why they are so popular. The banking sector chart shows this wash out, capitulation, panic selling that took place on Tuesday. There was fear in the air with some people finally giving up. The banking sector BKX chart shows this quite well with the long candle tail on Tuesday then the RSI crossing on Wednesday.   The weekly BKX chart shows the quick drop below the 1998 low and a move up from that low of over $17 or  about 38%. Wednesday was this sector's largest move up in history. This sector has some very liquid stocks so it allowed some big players to buy. I am sure many were just waiting for the 1998 low to be broken in order to start buying as some long standing stops got hit to drive it lower. There is now quite a lot of profit in many of these stocks for the low side buyers and they may want to lock in those gains this week. We are in earrings season and it will be very busy this week so much does depend on the reports but one would expect to see a pullback this week. The other factor in general is that when we get so many new lows at a bottom, that has to be tested and generally does so within a few weeks. On this weekly chart note that the RSI and stochastics have not yet given a buy. When in time it does, there will be resistance at the broken trend line over $70 so this then may be a short entry. Briefing com wrote, "The market is exhausting to watch some weeks because nothing happens.  Other weeks it is exhausting to watch because there is a lot happening.  The week that just concluded fits into the latter domain." If you are trading our watch list stocks it does not mater what the market is doing in the very short term as if it is not trending you can just take profits sooner. If you are trading the markets them selves there are some days where there are no great risk reward setups so it can be better to sit on your hands during those time and then when days like Tuesday happen you are ready for action. We hope you are trading the watch list stock as this week alone we had 23 stocks hit their buy or short sell prices and made profits. Oil was the big looser this week down 11%. We and many have said the perhaps the Fed ought to be abolished. It is interesting that only this week Bernanke said that the Fed believes the increases in crude oil prices (roughly 100% over the last year) are due to tight supply and increases in demand, not from speculation. Bernanke said that if it was speculation, one would expect to see an increase in inventory levels -- which is the opposite of what is actually occurring. Well speculators are not taking actual delivery of course and if it is in such high demand then how can it drop so much in only a week. If it was in such high demand then those who buy to keep inventory filled up would have kept buying. Seems they did not like the high price and there, this week anyway, was not strong enough demand to keep the price up. Of course if you believe in speculators it is quite easy to understand that when gains of 100% have taken place that some would prefer to book their speculative profits. BTW - Bernanke also feels the trade deficit is largely to blame for the dollar's decline. I think it is more understandle if we use his earlier terms. Seems it is a supply and demand issue and there are just to many dollars in the supply side and too little demand. Anyway this is how the weekly major indexes did. The top and bottom sectors for the week. Looks like an upside down version of only a week or two ago. The best and worst industries for the past week. The former looser made the most gains as the former winners the most losses as at least a temporary rotation from one to the other took place.   A report this week shows that consumer prices rose 1.1% in June, faster than the expected increase of 0.7%. The retail price inflation has the fastest rate of increase since November 2007. (charts RTTNews) Crude oil stockpiles declined by 5.9 million barrels in the week ended July 4th to 293.9 million barrels. Seems logical that if demand is decreasing and price is rising (as it was a week ago) that there would be less buying to put in storage. At each report attention is paid to inventories but as it does not seem at all hard to get supply I am not sure why it matters so much if the inventory levels go up and down. One would think that inventories would increase on low prices. Buy low - sell high. However gas inventories rose by 0.9 million barrels and distillate fuel stockpiles rose by 1.8 million barrels. The Labor Department reported that the initial claims for unemployment benefits increased 18,000 in the week ended July 12th to 366,000 from the previous week’s revised average of 348,000. If you look at the details though the actual number of initial claims of unemployment was 475,954, compared to 383,839 last year (2007). That is a big difference. This chart though is the headline numbers they prefer you to see. The Philadelphia Federal Reserve's " Philadelphia Fed Index", a regional manufacturing survey, posted a July reading of -16.3.  The reading is worse than the -15.0 that economists were expecting. The ECRI’s Economic Cycle Research Institute weekly leading economic index is now deep into the territory associated with recessions. Its down over 10% this month, and this week is running down 8% on a year-over-year basis. As the chart below shows, that is something that only happens when the economy is in recession. On the housing front we had an interesting report this week. We figured the chart used should actually have been turned upside down to reflect a truer picture. The official notes were that the Commerce Department report showed that housing starts rose 9.1% in June to a seasonally adjusted annual rate of 1.066 million units from a revised rate of 977,000 units for May. Economists had estimated housing starts to come in at an annual rate of 960,000 units compared to the initially reported reading of 975,000 units. More accurate information would be if they said, "During June, starts of single-family homes dropped 5.3% to a seasonally adjusted annual rate of 647,000, the lowest in 17 years."  "On a year-over-year basis, housing starts declined 26.9%." The reason for the weird reported number is that New York City had a change in its construction codes, and that affected what is considered a housing start in the Northeast, especially in multi-family construction, which "jumped" 42% because of the code change. Also because of this change,  housing starts were up 102% in the Northeast. "With credit tightening and employment growth slowing, a recovery in housing activity remains remote," wrote Gary Bigg, an economist for Bank of America. In the key single-family segment, starts and permits have fallen to the second-lowest levels in 26 years.  This graph shows the situation in a broader view and shows no sign of recovery. A few people I respect have their data suggesting a housing recover in 2011. The housing prices may reach their lows quite some time before then but not a return to a "normal" growth curve.   Here is a multi-chart view of the major indices for a scroll through look comparison. The center Bollinger band is usually resistance so closes over it are bullish. The Dow bullish percent got down to 10% (3 stocks of the Dow) from 66% near the first of May. The RSI on the Dow daily chart and a move back over 30 for a buy signal as stochastics also moved over 20 and the MACD lines crossed. It closed at resistance and the higher resistance is at 11,600. If you think the Dow will continue the rally and do not trade futures one way is with the Ultra ETF DDM as it basically advances (or declines) 200% of that of the Dow. On Friday The Dow was up 0.44% but DDM up 1.78%. At some point this week we expect the market to pullback and to short the Dow going long, the counter part ETF to DDM is DXD so go long it for Dow declines. It is always a good idea to keep these two or other market ETFs on had to use for market direction profits. The transports were not as oversold as other indexes but also ran well and closed at the trend line and 50-day EMA. They are also again over the 50% retrace. Nasdaq McClellan Oscillator hit its low days before the market as its own buying sugestion. The Nasdaq tested support very successfully for a double bottom plus has the other indicators chime in with buy signals. This view of the Nasdaq is to give some perspective. Charts can be like art in that the more you look at them the higher your understanding may become and you will begin to pick out useful information that others miss. The weekly Nasdaq shows it is 40 points under the 200-week EMA and the broken trend line. This is likely going to be strong resistance and a break through failure result in a good pullback. There are however some tech earnings to be reported this week and may be surprises. The NASI crossed over the 5-day EMA. In the past this, if it held a day or two resulted in a tradable rally of  many day or weeks even if retests of the low occurred. The VIX ran to 28. Not as high as the former market lows as shown. The QQQQ Nasdaq 100 proxy is also in a trading downward channel so not conclusive of any trend change until it breaks out. The NYSE also had the three indicator crosses as mentioned before. It closed on Friday at resistance. The percentage of stocks on the NYSE over their 50-day EMA went from the low of 10.5% to 19% now. The bullish percent count of the S&P 500 dropped from the May high of 63% to the low this week of 24% to the Friday close of 34% The 60-min chart of the S&P 500 broke above the 7-week downtrend. This is bullish and it may retest the trend line again . Then we would like to see it test the 50-perid EMA at 1272. The S&P 500 daily showing the nearby resistance and the buy signals from last week. The S&P 400 MidCaps has made a series of three higher lows this year. Its moving averages are pretty close and it would only take a few weeks for them to cross back over bullishly. It closed over the 68% retrace so has 50% resistance at the dotted trend line. The Russell 2000 closed right at the trend line and the next resistance is the 50-day EMA and 50% retrace at 700. The FTSE London Financial Times index broke below its trading channel but made excellent gains also since then and has resistance at the trend. The FXI China 25 index  This ETF gaps a lot so if not for everyone. It is though exhibiting possible signs of renewed strength. We will this week review Chinese stock again as the last time not may were in good shape.   Many of the hottest sectors of the year have started a pullback. One is the agriculture sector and AGA is a new Double Short for the sector. It goes up as the sector index goes down. Expect a bounce in this and the other sectors that have started pulling back. GSG the commodity's ETF broke below its 50-day EMA and 6-month uptrend line this week. This will bounce but this probably means  long term change in direction where advances will be shorted. It will depend on the behavior after it is fully oversold on that bounce.   Oil monthly chart did not quite make it to our top channel line. On the daily chart oil dropped below the uptrend channel and the 50-day EMA. It is at the lower Bollinger band so we may see another rally this week and the general market pullback but this is its first close under the 50-day EMA and may mean a longer term correction has started. Our oil/ExxonMobile chart and seems the XOM move lower predicted the oil decline. We have been long DUG since it buy signal at $26. When this one turns down on a bounce back in the oil/gas sector you can switch to DIG the counter part to this one, or just short this one. DUG is not based on the price of oil or gas as such but is the basic opposite of the Dow Jones US Oil and Gas index DJUSEN. Here the two are combined. It aims to give a 200% retune of the % move of DJUSN. Another chart of DUG we have not shown it in a while is the 3 line break chart. It takes out the noise as it is not so fast to respond to smaller changes in price. This can be better to use for investors who allow a bit more room for fluctuations. This new ETF DTO is based on the price of oil and as a short fund its aim is to go up 200% of the down movement of oil. Another oil play is the US oil fund USO. It ran to the top of a trading channel and on the monthly appears to be pulling back. On the daily chart it broke below its uptrend channel and the 50-day EMA. This may have been its 5th wave up but Fibonacci wise we look to the 38.2% as the support level. It has now just filled a gap so could bounce here also. Gold ended the week unchanged. We have not labeled this with any Elliot wave numbers but you can see that this latest high at 989 may have been a 5 or a C in which case this would again pullback. This is tied to oil and more so to the US dollar so any Fed indications of rated changes can affect it a lot but this time of year often leads to pullback until the Autumn. It is however still bullish even with the stochastics cross over as MACD has not crossed over and both EMAs are still going up. The cloud chart of gold had it touch and bounce at the EMA and still nicely above the cloud which is now support. The gold and silver index XAU pulled back to it 50-day EMA and trend line. IF this holds here the watch list gold stocks may come back into play so we left then on for now. Silver had broken above its muli-month congestion range but is now pulling back.   The Japanese yen closed the week just under its 50-day EMA at the trend line and 38% retrace. If you would like to trade based on the yen the FXY is a yen ETF and rallies when it does. The US dollar bottomed this week as the market did and so far is moving up. To trade the US dollar one can use the UUP power shares that trades in the direction of the dollar. A light summer weekly economic calendar from briefing,com but many companies report this week. Earnings this week from Bank of America, American Express, Apple, Caterpillar and Texas Instrument to mention some that may be market movers for a day. Check others here Earnings Calendar 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! News on stocks of interest: NNRI We know that management will be meeting in Moscow this week with 2K Audit in regards to 1st and 2nd quarter earrings results so of course we look forward to the final resolution of the delay. PLTG  Platina Energy Group Reports Over $500 Million in Reserves Independent reserve report data quantifying its holdings in Kentucky and Tennessee for net oil and gas reserves. According to the report, the specific net recoverable quantities are 1.85 million barrels of oil and 24BCF of natural gas. At present pricing, this represents a value well in excess of $500,000,000.00 PLATINA ENERGY GROUP INC. Files SEC form 10KSB, Annual Report This report is for fiscal 2008 so doe not include the revenues from the new wells put on line. PYR.v No new news as volume is light again but they continue to have great production and in June paid off most debt. In each of the last two quarters they have had net revenue per share of $0.05 so if that continues even unchanged it would be $0.20 for the year and very attractive valuation at theses prices. New additions to our watch list. Remember that we add many stocks to it each trading day.   NDSN  Over $77.00 CIEN  Over $22.80 on good volume CIR  Over $63.00 to $63.35 or perhaps a short under $60.00 for a retrace. CTL  Over $36.60 GCO  Over $32.00 PFE  Over $18.75 to $19.00 HA  Over $6.80 - $6.90 but it is extended so consolidation first would be good. As an airline it moves also with oil. HRB   Over $24.30 - has a couple of candle wick highs a bit higher. GNK   Over $66.20 to $66.50 but needs strong volume VRX  Over $17.80     Photograph by Paj     Photograph by VRi     Midsummer   That's a full lid for today - will see you all during the week. Our daily videos are shown and archived on many video webs sites though the best technical quality is on our own site. Revver YouTube MetaCafe Veoh Crackle DailyMotion YahooVideo AOLVideo GoogleVideo MySpace MrSwing 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. 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