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Stock Tiger Stalking Stocks™
For Monday October 29, 2007
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Close Friday
Dow +134.78 at 13806.70, Nasdaq
+53.33 at 2804.19, S&P
+20.88 at 1535.28
The Fed (FOMC) Policy Statement will be given on Wednesday, October
31 - will it be trick or treat? Most are expecting another
rate cut and probably a rally to follow but that is always a risky
game to play - to anticipate first the statement and more
importantly - the market reaction to follow. (With my computer
being out of service for much of the weekend today's comments are
brief.)
We had the US dollar hit new lows this week and the price of oil hit
new highs. Meanwhile the housing market continues to have bad news
and although the consumer confidence number dropped more as it has
for 17 months while the market rallied. Go figure. I guess the
anticipation of another rate cut is keeping a floor under stocks and
then pushing them up.
I read that "existing home sales fell to an annualized rate of 5 million while
the number of homes for sale rose to a 10.5 month supply. Sales are
down 19% from a year ago." There are more foreclosures each day so
more homes added to the market which should keep things declining
for some time.
When the Fed decision is announced expect a decent move one way or
the other but it will take a couple of days to see if this gives us
any better guidance for longer term. There are other significant
numbers coming out this week as the calendar below shows.
All the major indexes closed up nicely this
week:
The top and bottom sectors for the past week: - note the move in
home construction - guess short covering?
This shows how most gains
historically in the S&P are made from November through April. We are
almost there.
The Dow closed back above the 50-day EMA and
the resistance so may be setting up to try for the recent highs. I
read though that the commercial traders of the Dow E-mini have been
adding to their short positions. They are often correct though that
says nothing of the immediate time frame. There is also some
negative divergence in other index charts but that also can be
delayed.
The Nasdaq closed again right at
resistance and the stochastics are flat.
The longer term Nasdaq view in the weekly chart
The fact that the Nasdaq is near it multi-year high when the semiconductor index
is pulling back is to me not a bullish thing at all. The Nasdaq has been
rallying mostly because the Nasdaq 100, the largest 100 market cap companies on
the Nasdaq has been rallying. I think for a healthy broad market we really need
to see participation from the Sox. It has pulled back to some support at
the 62% Fibonacci retrace line so may build a base there for a future rally.
This shows the Nasdaq 100 using
the QQQQ and not far from the 62% retrace and possible top.
The Russell 2000 made a climb back to
resistance.
The NYSE broad market
made a nice gain from the bottom candle hammer at the 50-day and the
move of the stochastics back over 20.
Interesting that the Japanese Yen has been getting close to
its former August highs but this time no worry in the market of
carry trade unwinding - instead they may put more on if the dollar
can rally a bit. Will watch the yen/dollar relationship.
Gold keeps going but I
expect a pullback not too long from now. It is getting quite far
above the 50-day EMA. These tops are hard to call though as it was
in May of 2006. Most gold stocks are not exhibiting such strength as
these prices would suggest they should.
The 30-year bond yield
made a triple bottom and it seems it may move back up. If countries
like Japan and China were thinking of buying less bonds and put some
of their money into the stock market instead this would raise rates
to attract more buying but the stock market would also rise.
Oil as it makes new highs
while the US dollar makes new lows and both may soon change
direction.
Oil in the Halloween theme:
The US dollar as it shows no support but a bottom at least for a rally may not
be too far away.
The week's Economic Calendar
from briefing.com
Two long term stocks:
NNRI made a double bottom last week and moved up on higher
volume and Friday pulled back on lower which is common for it. The
stochastics have now moved back over 20 - our usual buy signal. RSI
also had bounced from the 30 line.
PLTG continues each week to have news of
significant progress and it has made a nice base over the 50-day
EMA. Its next level break will be over $0.30 and would not be
surprised to see this happen quite soon. We know from the company
president that profitability is on the way, perhaps by the next
quarter and when this moves again it may act similar to the last
time and make rapid progress. For better profits as this is longer
term for substantial gains it seem advisable to buy at these lower
levels. Oil and gas prices are high so will be giving the company
even more profits. As they now are in a very active drilling program
they are bring more oil and gas online each month so in my opinion
this is long term up for a long time to come.
CYRX had pulled back rather as expected as the company had a
good announcement but said to ramp into their plan will take some
time so some are gaming that they could take profits and get back in
a bit later. CFPC sits and even dips as impatient people sell
as they for profitability should be buying as the company keeps its
growth and is planning to add more countries off supply.
Now additions to our break out - break down watch list:
CVG Over $19.22
HRP Short
under $9.10
NBR Short
under $27.00
TS Over $54.82
FCX Over $120.20
GS Over $239.33
VSCN Over $19.00 aggressive - or top at
$19.86
AA Over $40.04
VZ Over $46.00 - $46.24 shadow
RIO Above $36.05
CTCH Over $2.50
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In
keeping with the orange theme of this time of year we have:
Province
of Zeeland »
Zeeland 1
That's a full lid for today - will see you all
during the week.
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