At StockTiger 2008 was a very good year for making money. It was not as easy as
it had been in years past when you could hold partial positions weeks at a time
or longer but there were some times when this was still the case. In the spring
we identified early on a very good move staring in the biotech sector and the
stocks in our group ran up for several weeks. We had so many short
positions in various stocks that ran down a long time. In the last week of October
we put out a list of oversold gold stocks that were all trading below their
Bollinger bands and a chance then for them to eventually go back to the top
bands. We picked the
bottom to the day and those stocks have now doubled in price and more since
then. (AEM, ABX and KGC are a few) Great results in a bear
market. From our watch list we had over 868 picks hit their buy points or short
sell points. If you had bought or shorted 1000 shares of each stock and closed
the position at the best profit of the first day the gains would have been
over $900,000. No one traded them all of course nor took all profits on the first day
but it shows the huge number of potential profitable trades we have presented in
the past year. At some point or points in 2009, even if the bear market continues
as we believe it will, there will be bear rallies lasting more than a few days
and we will be ready to spot them. We continue to believe that low risk entry
points near support or resistance and talking partial profits on the first day
is a winning combination that works in any market as we have shown over the
years. For 2009 we will continue to provide entry points that are attractive for
at least short term trades and the market conditions at the time will determine
the length of the holding period after that. We wish you all a great year in
2009!
The week ahead will again be slow
news with
almost no earrings being given and the 4 main economic
news items are listed later on.
On Friday (the last bar on the right)
only 517 million shares exchanged hands on the NYSE.
For comparison, the market has averaged about 1.5
billion shares per day during the past year.
This was the lightest full session activity in 5 years.
Reuters reported that sales at U.S.
retailers fell as much as 4% during the holiday season as
it was the weakest in
decades. However Amazon.com announced that sales between Nov. 1 and Dec. 24
marked the best holiday season ever.
The U.S. economy
contracted at an unrevised rate of 0.5% in the third quarter, with the
contraction coming in-line with expectations. In the second quarter, real GDP
growth was 2.8%. On a year-over-year basis, third quarter GDP grew 0.7% compared
to 2.1% growth in the second quarter.
New
home sales declined 5.3% in October to a seasonally adjusted annual rate of
433,000 from the revised September rate of 457,000. On a year-over-year basis,
new home sales slumped 40.1%. The median sale price of new homes was $218,000,
down from $221,700 in September and lower than $234,300 in the year-ago period.
Inventories at the end of October fell to 4.23
million from 4.27 million in September. However, the months' supply measure
increased to 10.2 from 10 months in September due to lower sales activity.
Durable goods orders declined 1% to $186.9 billion in November.
Economists had looked forward to a 3.1% decline in the durable goods orders for
November. The key non-defense capital goods orders, excluding aircraft, rose
4.7% in November after a 6.6% slump in the previous month.
Jobless claims rose 30,000 to 586,000 in the week ended
December 20th from an upwardly revised figure of 556,000 for the previous week.
Economists had expected jobless claims to edge up to 558,000 from the 554,000
originally reported for the previous week. The four-week moving average rose to
558,000 from the previous week's revised average of 544,250.
Personal income fell 0.2%
month-over-month in November compared to downwardly revised 0.1% growth in
October. Economists had expected personal income to have remained unchanged in
the month. Meanwhile, personal spending fell 0.6%, a less severe drop than the
1% decline in the previous month and the 0.8% decline expected by economists.
The
oil inventory report for the week ended December 12th showed that crude oil
stockpiles rose by 0.5 million barrels to 321.3 million barrels. Crude oil
inventories remained in the upper half of the average range for this time of the
year. Gasoline inventories increased by 1.3 million barrels per day, but they
remain near the lower boundary of the average range for this time of the year.
The past weeks major indices:
The top and bottom sectors:
The best and worst industries for the week:
Mike
Burk reports that since 1928 the S&P 500 has been up 63%
of the time in January with an average return of 1.4% making it the best month
of the year for average returns and 2nd to December for the
consistency of returns.
There was not much activity for the past week and this week will also be a short
one so we will keep our comments short also this week. Butch Cooley presents a
look at the past and some insight to the futures in his Market Comments later
on.
The major indices' chart shows the the two-day rally could have made only a mini
bear flag with a drop to come.
The Dow weekly chart could go either way but if this only drifts lower it
could make another rally attempt later in January similar to how a stock pulls
back in a low volume way only to make a quick run higher.
Dow Jones transports at at a trend line with the 50-day EMA about 100
point higher.
The Nasdaq in a range now for 3 weeks so is a plus that it has held
ground.
60-minute chart of the Nasdaq with clear resistance at 1600 and
support near 1500.
The market volatility over the last couple of weeks has greatly decreased so if
we do get any January effect this could still attract longer term investors. The
VIX is back to levels seen in September, but then we thought even 30 was
high.
The long term weekly S&P 500 and the lowering volatility caused the
average true range ATR to drop. RSI is back over 30 though MACD has not made a
crossover.
S&P 500 daily chart show the double trend line
support and resistance.
S&P 500 60-min is at a trend line so caution and
resistance still at 920 area.
The NYSE could not make if over the 50-day EMA. Watch the MACD for any
negative crossover.
The advance decline ratio chart for the NYSE up to the bottom of
resistance line. Also the number of new highs on the NYSE have been declining
each week.
S&P 400 mid caps will likely move out of this pattern this week.
Russell 2000 similar to the mid caps big resistance at 498.
Oil monthly chart so reference RSI only 2 points above 30. It does not
have to go there for a rebound but would be nice if it did.
The above period for oil in the weekly chart.
USO US oil fund bounce some on Friday after a gap down open.
USO parallel channel on the 30-minute chart a break out could take it to
the 50-period at $30 to fill the gap. Then we could check the volume.
Stochastics at the moment are over 80.
Many people in the chat room traded the DXO on Friday as it gapped down
to under the bottom Bollinger band so was very oversold. It made a good
trade and a good possible longer term hold as the price was low and stops
could be placed to keep minimum profits in exchange for possible much higher
gains if this is the low.
The above chart, as most of our chats are in log scale. On a logarithmic scale
chart, the vertical spacing between two points corresponds to the percentage
change between those numbers. Thus, on a log scale chart, the vertical
distance between 10 and 20 (a 100% increase) is the same as the vertical
distance between 50 and 100. Because these charts show percentage
relationships, logarithmic scaling is also called "percentage" scaling. It
is also called "semi-log" scaling because only one of the axes (the vertical
one) is scaled logarithmically.
The chart below of linear. On a linear (arithmetic) scale chart, the spacing
between each point on the vertical scale is identical. Thus the vertical
distance between 10 and 20 is the same as the vertical distance between 90
and 100. While this kind of scaling is intuitive and easy to recreate by
hand, linear scaling should not be used on charts with large vertical
ranges. A move from 10 to 20 is much better than a move from 90 to 100, but
on a linear scale they both appear the same.
On this linear DXO chart we see the low on Friday hit the trend line
support. It is good to check charts sometimes in both scales to uncover more
information.
Gold was up 4% for the week and closed just under
this trend line on the weekly chart.
The daily gold chart shows it at a resistance point now.
The longer term chart also shows
a higher level of resistance near 925.
Gold Bugs HUI was up more
than gold which is bullish for gold stocks.
The HUI had a break out
from trend line this week and is between the 50 and
200-day EMAs.
A gold miners ETF GDX
also broke above its trend line.
Even though gold rallied this
week the GDX 60-min renko chart stayed on the
sell signal as the parabolic SAR has not yet gone above
the pattern. This trade may turn out to be a stop out
which is rare so far for this system.
Last week silver rallied
strongly over the recent range and then last week pulled
back and with a stop at the lower trend line it may be a
buy.
The US dollar moved
back up recovering some of its losses from the week
before as it had bounced from the 62% retrace. When the
dollar is strong it can buy more Russian rubles. Lately
however the Russian central bank has allowed the ruble
to trade in a wider range and therefore weaken it. It is
quite a surprise to see now that one dollar can buy 30
rubles where only this summer it was under 24.
|
Butch Cooley Market Comments
(Butch is founder of
Leg Up House
and the
Butch Cooley Worldwide
Hunting and Fishing . He has
been an active trader for decades.)
Stock Market Comments
This is my last Market Comment for
the year 2008. What a year this has been!!! So, just
what happened and what is going to happen now??
Well, that's easy, things changed and now life is going
to change. The problem at the moment is most people
don't realize how significant the change was, and how
their lives are going to be effected. Even everyday
traders and those who work on floors in Wall Street seem
to be in some denial regarding this right now.
We went through the easy money period between 2003 and
2006. You can blame the Fed for that, and directly Alan
Greenspan. We boomed. Everyone was making money on the
availability of cheap money. In July 2007, we started
to see the effects of cheap money, sub prime loans, ARMs,
CDOs, SIV and other bundled financial transactions.
Housing started to go first. Mortgages were resetting
to higher payments, defaults started increasing and the
beginning of depreciation in the value of a house had
started. By August 2007, the markets started to accept
the fact we were in trouble. But it was a slow
process. To put it bluntly, the bomb went off. Just
when the bomb went off isn't important. What is
important is that it did occur and it caused extreme
damage to the world money markets. There was a lot of
fear being generated, but it was also being pooh poohed
by our Federal Reserve and Treasury. Our economy was
resilient, it was strong. There was nothing to worry
about. The government had things under control. The
Fed was on top of it.
In mid July 2007 the Dow was trading around 14,000. We
sagged through August and September, but in October fear
passed, everyone was reassured and we went back to
14,000. By February 2008, all the talk was about ARMs,
foreclosure and unemployment became an issue. Terms of
a "correction" were on the traders lips. But it was
absolutely forbidden to use the "R" word around this
time. Only the doomsday advocates and those who were
brave enough were talking about just how badly things
were going to get.
I think the reality of the damage came home to roost
when Bear Stearns folded. Soon after that occurred, it
was obvious that the Fed did not have control, that
Treasury was clueless and we broke 8,000. We started to
see banks fail. The FDIC stepped up to the plate and
reassured us all we were ok, and raised our insured
amount from $100,000 to $250,000. People started
pulling their money out of savings accounts, CDs, and
then equities. Secretary Paulson and Chairman Bernanke
appeared before Congress with a doomsday ultimatum.
Give them $700 Billion or the money markets as we knew
them would sink. Wow!!! Can you believe this? It
writes like a Stephen King novel. We pumped money into
everyone who asked for it, from AIG, to Citi, to GM and
Chrysler, Freddy, Fannie, American Express. The list
is pretty lengthy.
Ok, unemployment goes to 500,000 weekly, the Dow hits
7,400, oh yes, and the Madoff scandal comes to light.
There's a lot more, but that is the root of the issue.
So.....what the heck happens in 2009?
Well, ST put up a chart last week of the Dow from 1929
to 1933. When the Dow finally rolled of it's high in
1929 of about 380 pts, it dropped back to 200. From
there it took a series of bear rallies, making lower
highs and lower lows for 3 years. It bottomed out
around 42 pts. About 9 months later, that low was
confirmed in 1933 and things started back up. However,
it took until 1955 for the Dow to cross above 380 pts.
Charts don't just arbitrarily go up in down. There is
definitive cause and effect. From where I sit, and the
charts I make and track, we are in the early stages of
repeating this pattern in some form. And I am one of
those who thinks if we do go into a depression period,
it could be worse than the Great Depression of 1929. I
certainly don't want it to be that way, but it's how it
could play out from my view in 2009.
What all is effected here? Well that's simple, money.
But this time it's the entire world money supply that's
having the problems. 2008 was the year we identified
some of the problems with the money supply. 2009 will
be the year we start to pay for it. In short, it is
"infected" with huge debt, and unrealized losses. From
the research I have attempted, credit derivatives are
the key. These things are complicated and complex. The
important thing to look for imo, is how much was
invested into these vehicles. It's been difficult to
determine that exactly, due to the lack of
transparency. But there are a few smart people out
there, certainly smarter than I. who have been able to
come up with a "guesstimate". And that number is
simply unreal, somewhere between $900 trillion and
possibly an excess of a
quadrillion dollars. That's a BIG number!!! If
these vehicles collapse, well, it will be bad. So
Treasury, and the Fed will continue to throw money into
the system in hopes of buying time to allow these
things to bleed off, to reach some kind of contract
expiration. We traded these things with everyone. So
every economy is infected with them.
Treasury and the Fed have been working overtime, giving
away money, to keep these things from coming apart. And
it is estimated they need another 2 years of doing the
same thing. Time it would seem is crucial. And it
might just work, at least there is some hope in the
plan. It's the unknowns that we have to look out for.
GM was the biggie in 2008. Letting GM fail was simply
not an option. That would have upset the apple cart.
But, the next question I have is can GM survive anyway?
The government can continue to give away money to them,
and probably will. But to what end? At some point, GM
has to sell cars, a lot of them, and exact a profit.
Well those cards aren't even in the deck right now.
Next issue is housing. The real estate business for all
intent right now is dead. Values on homes continue to
fall, and they are going to continue to fall. I see no
real plan yet that will contain this problem. There is
a misconception that the ARMs have all reset and that
problem has gone away. ARMs are resetting continually
and will do so for years to come. Interest rates have
dropped dramatically, but credit is very tight. And
people who can qualify for a home, are reluctant to buy
as the value they pay today may be less tomorrow.
Foreclosures will increase and inventories will also
increase. So where do we find a bottom in this
equation?
Unemployment will continue to increase. How high?
Pretty high. In 2009 some experts are calling for 10%.
I don't subscribe to the accuracy of the Dept of
Commerce unemployment figures. They are manipulated,
and most of us realize they are. So 10% from Commerce
is meaningless. Look for a reality number of closer to
20%. At the bottom of the Great Depression, my history
tells me unemployment reached 25%. Well, there were a
lot less people working back then too. So 20% now would
be an unbelievable number of individuals on
unemployment.
The equities markets simply don't have any capital right
now. Everyone has seemingly run for cover in the bond
markets. That won't continue. If I'm correct and my
charts are correct and we continue downward, the only
money left in the equities markets will be day traders
and short term buyers jumping in on bear rallies. That
will not be enough to hold the current low of 7,400 in
the Dow. So we could see 6,000 range this year, and
probably will. Eventually, the markets will find
bottom. I learned years ago not to go looking for a
bottom. It will happen all by itself, and we will
know. But what of those who ran to cover in bonds?
Will their money be safe? Well, they will probably be
hit hard if rates rise and values fall. As they were
forced to sell equities off at substantial losses, so
too will they sell their bonds for additional losses.
Maybe cash in the mattress is the answer?
Bailouts, I guess, will continue as long as the Fed
prints money. I've lost track of what we are committed
to right now. Close to $9 or $10 trillion in the Bush
Administration. And what will President Obama's
stimulus plans run? Who knows right now, but it is
sounding more and more like another trillion, minimum.
I mentioned States that have budget problems a week or
so ago. Well, my guess is we will bail out at least
some of them. California is a mess. Michigan seems to
be unemployed right now, and it's just going to worsen.
I'm not sure if a State can declare bankruptcy??? But a
city can. And many will. There is a ton of lost
revenue coming this year for these folks. In addition,
we will continue to pump more bailout money into
companies we have chosen to bailout in 2008. And we
will add companies. All of this is a serious threat to
future inflation, but that will have to be dealt with at
another time. Right now, inflation is not the problem.
In closing, the world money managers have been tasked to
keep the world money system functioning. I'm not sure
that is possible. One of my favorite quotes from
college days was from Albert Einstein. "You can not
solve a problem with the mentality it took to create
it". If Albert was correct, we have some serious
troubles ahead in 2009.
Butch Cooley
|
Very few earnings being reported this week: - also check the updated
Earnings Calendar
on all overnight holds.
Weekly economic calendar from briefing.com. The market will be closed on Thursday
but due to some old rule about not
allowing the market to be closed for 4 days in a row the market will open again
on Friday.
To try futures trading you may
sign up for a free simulated account that uses live streaming data.
Futures have been very volatile so great opportunities right now for
wide swings.
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!
In the last couple of years we have several times
presented stocks in this space that had an interesting
product or service but was yet not known well. Most of
those were small companies with none or very little
sales so were very speculative with higher risk so
important to keep stops. Many of these did amazingly
well short term so made good trading profits while the
market was still in a bull phase, but as
undercapitalized companies perhaps did not attract
management that were up to the task of fulfilling the
company's expectations, the long term was not so bright.
When we see a company with some interesting situation
now we would like it to be a company who already has
revenues and earnings so is not dependent on raising
additional money to survive. We want the company to have
good communications with their shareholders with regular
updates and of course to file SEC reports on time. Over
the months ahead we may talk of several companies who
have some unique situation and are not yet known well.
As we have done in the past, we show a chart with
support lines so any investment risk is minimized if it
is broken.
Our coal company AWSR
http://www.americacoal.com/
closed over the 200-day EMA. Over the coming
months they are working toward greatly increasing their
production. This past week they announced that their
wholly owned subsidiary Hidden Splendor Resources, Inc.
has successfully emerged from Chapter 11 so now they can
resume new contact talks with buyers. They have so far
entered coal supply contracts with a number of new
customers over the past several months, collectively
representing up to $40 million in potential revenues in
2009. The new company management is know in the industry
and the coal is a very good quality low sulfur "clean
coal" now in growing demand.
In January we will talk of ERF Wireless, Inc. ERFW
http://www.erfwireless.com/
They provide secure wireless networks
for the regional banking industry and the oil and gas
industry. The key word is Secure as in wireless this is
very important and they provide this service in remote
areas where there is no valid competition. ERF Wireless
owns and operates one of the largest wireless broadband
networks in the U. S. that covers a large percentage of
the oil and gas production regions in Texas, New Mexico
and Louisiana. This high speed access if very important
to this industry. We will be writing more about them but
the chart right now looks has pretty close to support
and could break over the 50-day EMA so wanted to mention
it as we had done on the blog.
New additions to our
watch list.
Remember that we add many stocks to it each trading day.
LII
Over $31.78
AVT
Over $17.72
BJ Short
under $32.00
SSRI Silver over $15.10 - wick high at
$15.55
TKR Over $18.35 to $18.65
WCG Over $13.24 into the gap
AEM Gold over $49.36
ABX Gold continuation if volume improves
DROOY Gold over $5.95
GG Gold over 30.80 - to recent high
Also remember to check the
blog
as
information is posted many times each day - please
post your own comments and charts.
Feed the eyes
Photograph of snowy tree
Photograph by mezz in chat room.
Las Vegas with the most snow they have had in 30 years.
Bench in
Kuzmenkey Park
Photograph by Naret Visesvongsa
That's a full lid for today - will see you 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
. If
you would like a free StockTiger.com email address that uses the Google Gmail
spam filter and you can check your mail from anywhere. Send me (ST) a
personal message from the
message board.
Include your First and Last names and the name you want to use. Your address will
be (your choice)@stocktiger.com
Best regards,
Stocktiger.com
| |
