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The bears then have an opportunity this next week to step up and try to make some money. We show some support areas on chart below to watch and if broken we are likely to see a longer correction. Here are how the indices did for the week. I have added the 10-year note yield. It did drop a bit this week but not much. It seems we are in a long term raising rates time now and if so this will at some point put a greater pressure on stocks as talked of later.
And the top and bottom sectors.
The 10-year bond yield is still within its long term channel but a break out could come soon
The 30-year bond yield has already broken out of its 15-year down trend. It closed at a yield of 5.26%. Huge funds institutions and even governments who manage huge amounts of money have to diversify and when rates in a very low risk instruments like this become more attractive then more money goes into them and not into stocks so this puts pressure on stocks. As long as interest rates though in Japan stay low the carry trade will continue to provide liquidity but one day we are likely to see the Japanese rates start to go up along with the US bond yields and that would put double pressure on stocks.
The Dow had the one day drop on Wednesday and was followed by a nice reversal day Thursday that could have set up for our typical Friday strong close but not this time. The Bollinger band and 50-day are both at 13290 area and that is also general support. The level below that is at about 13200 as shown. A break there could knock off another 200 points easily.
The Nasdaq had to fill the gap but it did much more and support trend line is shown near the 50-day EMA and a break of that would be drawn to the dotted line just under 2540.
The S&P 500 is already at its 50-day EMA so expect to see it at the dotted line for at least a test.
The percentage of stocks on the NYSE trading above their 50-day EMA is now under 50% and looks like it will go lower.
The Russell 2000 even with its rebalancing that brought in tons of new money was not enough to hold it up as it fell $5 on Friday. The trend line break could take it in time to the 200-day.
But with the rather gloomy talk above it is strange to see the semiconductor sector doing so well. In the past it was perhaps more important to the general market than now but there is obviously some good optimism in this sector for some reason.
Using the SOX chart it broke out on Thursday and has pulled back though would be unusual to not see another try soon.
CY as an example was one semi on our watch list that broke out on Friday. It ended the day giving up much of its earlier gains but in such a weak market it still did well.
Oil again made an additional level break out as we are in the seasonal bull time for it.
Gold fell below its trend line a while back on this weekly chart and has not been able to rally back. We would like to see the 65-week MA tested again like it has done many times in the past. It is now at $637.
Now to our Special Situation stocks and some extras. NNRF still has been in the sideways consolidation this week but did tack on some gains. We could not be more bullish on a company and the stock. We are pretty sure they will be start a "road show" where many large money managers in Europe will hear about the company. We would watch the news as companies often announce developments during such times and these could greatly effect the stock price. It may be good to double up for a return to the longer term uptrend.
CFPC None of us like the recent price action on Coffee Pacifica but as a longer term investment it just keeps looking better. The stock was at $0.94 when we introduced it as a long term investment and had some revenue targets of $12-15 million in 2007 and $30-50 million in 2008. This is very good but the stock ran up so fast that it brought in momentum buyers in the $2 area the first and second time it went there instead of long term investors. That is the problems if they run up so fast because the momentum players see it and jump in and when a stock stops going up they sell out. This then drops the price and longer term holders decide to take some profits and late buyers who planed to hold or who bought higher sell to protect short term gains and forget about the long term. The stock is now at the 200-day and before in May it bounced from there. The company has not been overly verbose on telling stockholders about all their newer activates but there has been some very good things that have taken place since our first report. First as you know the concept of how they work directly with coffee growers is unique and I believe a "green" and kind way of doing business. They work in cooperatives so that each of the cooperatives have stock in the company so each farmer gets benefits in its growth. They get better prices and health care etc as we have talked about. Over 123,000 farmers supply the coffee and more are on the way. As you know, Coffee Pacifica added Ethiopian coffees and I believe that Starbucks was the only major exporter before. With CFPC's unique cooperative approach however they were able to make this arrangement. This next tidbit has been overlooked by the investing public: In the press release of June 14 about the SCAA's 19th Annual Conference & Exhibition it was mentioned that the company intends to add at least two new green bean country origins upon finalization of the agreements. That will make 5 countries. And in each they work with cooperatives. If you have not seen their video of the first coffee cupping competition you need to watch it and I think you will begin to see one reason why we like this company. In the annual meeting on August 9 the board plans to request a name change of the company to "Growers Direct Coffee Company, Inc." as it will clearly state what they are all about and of course now they are no longer only in the Pacific region. The company has also retained BB&T Capital Markets and I think they will greatly help them in futures plans. On the CFPC website it says, "Coffee Pacifica, Inc. is interested in acquiring “Roaster Retailers” who are vertically integrated sellers of coffee, and who operate their own coffee roasting facilities. These business opportunities offer potential to roasters that supply their own retail coffee shops and who supply roasted coffee through other food service distribution channels such as grocery stores." Well......You have perhaps seen the SEC filing in which they intend to make an offer to buy at least controlling interest in Diedrich Coffee. Diedrich is a current customer so this would be a natural fit. We know that CFPC has some roasting now as they own www.uncommongrounds.net and to add more would be great as the margins are so much higher. For Diedrich this would also be great as their cost for green beans would obviously be less and CFPC's distribution networks would also be extremely beneficial. So we look forward to an official offer and for any addition country additions as the press release pointed out. The price is near enough to that of our original note on this stock and we expect it to make a reversal this week and start its longer term move back up. The company is in a much better position than in our April report so we expect the next move up will also be greater but we actually hope it is not so fast as a 400% move in 12 trading days as that is just much to volatile as we have seen. Accumulation when some are selling is a way to start to build positions or to add to existing ones without having to chase a stock up.
CYRX As most know now CryoPort has not released news in over a month. They are in their comment period working toward the approval to the move to the OTC market. To release news now could slow the process so they await the approval. This has had a short term effect on the stock price and it has slowly returned to its break out price top. This stock also ran up too fast so for reasons stated earlier and that of no news has gone down on lower volume as impatient buyers left. As with CFPC, the CYRX story has not changed. It is still a new exciting disruptive technology that has a huge potential to change the shipping industry in regards to specific frozen shipments. It is my understanding from someone who knows about the comment periods that about every 10 days there is an opportunity to finalize all and so it could be this week. I can say the same here as in the case of CFPC that it ran up too fast and now is so close to the original price that to accumulate on the tiny volume days is better than to have to chase it when it reverses soon.
NPWS Neah Power CEO Paul Abramowitz was invited to speak at the Grove Symposium. As the largest fuel cell event in Europe in September this is a show that the company is known and people very interested in what they are doing. Our position is still for a short term play into late July and the nearing demonstration of the working prototype. It may turn into a longer term hold but we are in a wait and see about that. The stock now needs to close over the 50d-ay EMA on strong volume.
HSXI - made a dip and then rallied last week but as we said we would not necessarily count on a bigger move until closer to the time the September infomercials begin. The economic calendar from Briefing.com
I am showing this chart actually at the request of someone who follows the company. I know the the company a little but it has been in a downtrend so long have not kept up with them at all and do not indorse the company. POWERLINX™, PWNX has several products you may have heard of that transmit voice and or video over power lines or over twisted pair wires in a unique way. They have cameras and video screens for truck drivers to extend views in front and rear and a line of underwater cameras and you can see all of these on the company page. They announced a new product that will transmit audio over your home's electrical system. It consists of a send and receive unit that you just plug into normal power outlets. As example if you have a surround sound TV and want to hook up rear speakers there is no need to run wires or if you have an iPod or PC playing MP3s in one room and want to broadest to another or to the patio you can use this system. I see the company is still not making a profit but has increased sales. I have no opinion on the stock but am passing the information along. You can see on the chart that it did recently break out above the down trend line for a short time and is not at the 50-day EMA. Note: The stock has only an average daily volume of 10k shares. For those interested it is worth keeping an eye on it can move back over the trend line and hold it as you could use that area as a stop.
New additions to our watch list. PRWT over $14.67. Caution - Low volume stock - usually only 50k vol - Amazing volume Friday - maybe part of Russell 2000 as you will see many unusual volumes from Friday
NEXT another pretty low average volume 67K but break would be over $14.18
HSKA - no exact price for a break out - about $2.50 area for a trade
PTIE over $9.00 looks good - note the meeting of the averages
SAMC over $1.28
HLX over $41.50 - this stock has plenty of volume.
TRMB over $32.10 or $32.27 shadow high
SEA often a low volume stock but been pretty good last few days. Has break over $12.44 or an entry a bit lower for aggressive traders.
R the break would be at $54.70 but if it goes before consolidation use care as that gap may not need to fill but it does have a draw on the stock.
APOL over $49.75
KLAC semiconductor sector still strong - this would break over $57
TEVA over $40.90
ANGO over $18.00 - $18.13 old shadow.
MGG seems $30.25 a good place - has a $30.57 shadow.
And this is just for interest - I often look at charts quickly to pick out some interesting ones and this one sure caught my eye.
A summer salad.
That's a full lid for today - will see you all
during the week.
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