This should set up
for a good rally once the bottom is established but historically July is not a
great month. According to Mike Burk, since 1963 the Nasdaq has been up 49% of
the time in July and has had an average loss of 0.2% making
it the worst month of the year for that index. During the 4th
year of the Presidential Cycle the Nasdaq has been up 36% of the time with an
average loss of 1.5%. However since 1928 the S&p 500 has been up 58% of the time
in July and had an average gain of 1.1% We have many things that helped to
extend this pullback. The Fed left the rates unchanged and this demonstrated
uncertainty as raising the rates may help combat inflation but leaving them low
is an effort to continue to help the banks and therefore the economy.
Consumer confidence is at its lowest level since the
recession in 1990. Research in Motion
has been a market favorite but their earrings came in
under expectation and Oracle gave a caution about the current
quarter. Oil made new highs (up 45% year-to-date and up
98% year-over-year) and the dollar fell. This past week
had quite a few downgrades in or related to the
financial sector even though it seems rater late to
start downgrading now. The right downs as they like to
call their huge losses have taken a lot of their cash so
it is likely some banks have been selling stock holdings
to use as capital and this also helped the market slide.
This year the short sell up tick rule was abolished so
this really really helps the shorts pile on any stock
that is falling. The financial markets are made to raise
capital for companies so the elimination of this rule
seems quite counter to the whole idea of the stock
market.
The market has been down 8 out of the last 10 days so a
bounce is due.
For the week the major averages with oil and gold the
only ones that were up.
While the markets were down it was
apretty good week for our watch list and here
are two of our new buys that did well. AMGN from
its break out at $45.
ABAT we hoped would pullback
and it did a
bit on Friday for a buy and worked out
very nicely up over 9%.
This Nasdaq chart just shows that the uptrend
long term is still in place.
The top and bottom sectors for the week.
The best and worst
industries this past week.
The very weak Thursday and Friday market paid little
attention to the consumption figures. The personal consumption expenditures (PCE)
data for May were up 0.4%. April was revised upward to a
0.2% increase. The second quarter average of
April and May data were above the first quarter average,
which they say is at a 2% annual rate of growth. Since
another gain is likely in June, due to spending
resulting from the fiscal stimulus, this puts the PCE
on track to post a 2.5% annual rate of growth in the
second quarter. As PCE represents approximately 70%
of GDP this shows there is still growth.
The final first
quarter GDP released by the Bureau of Economic Analysis
showed that GDP rose at an annual rate of 1%, which is
faster than the earlier estimate of 0.9% growth.
Jobless
claims came in at 384,000 for the week ended June 21st,
unchanged from the previous week's revised figure of
384,000.
The existing home sales report for April
showed a 1% decline to a seasonally adjusted annual rate
of 4.89 million units compared to a revised March rate
of 4.94 million units. On a year-over-year basis,
existing home sales declined 17.5%. The national median
existing home price was down 8% from a year-ago to
$202,300. Housing inventories grew to 4.55 million
existing homes available for sale, representing a
11.2-month supply compared to an 10-month supply in the
previous month. Housing
prices are tumbling at the sharpest rates ever with a
bottom still at least a year away,
New home sales
though unexpectedly increased in April, rising 3.3% on a
monthly basis to 526,000 units. However there was a downward revision made to
the March sales, which were revised down to 509,000 from
the initially estimated 526,000 units. On a
year-over-year basis, new home sales declined 42%,
representing the sharpest decline since 1981.
SRS the Ultra short for
real-estate made a double bottom in May and is up $26.00
from then. Not yet over bought. It is expected that the
housing slow down will last at least a year more.
Sometimes it is hard to decide
which charts to show. We do not want to show each 60-min
and 15-min chart as the usefulness is short lived. Those
are the type of charts shared and talked of in the chat
room. Here we try to just show a varied collection to
give a good sense of the market and some ideas of what
to expect. We try not to make it too long. If you have
specific recommendations of what you like to see let us
know.
After a large drop it is common to
expect a rally to resistance which was broken support
and then a resumption of the downtrend for at lest a
test of the lows. March was such a test of the January
low and we had a very good move from there with many
stocks doubling in a couple of months. We may rally soon
and it could last longer than expected. Seems a general
thought that we may have a short lived rally and then a
drop lower where the leaders such a the Naz 100 will
fall further as they are sill stronger that the Dow and
may need to play catch up on the down side. Even with
the historically weak month of June we could have a more
extended rally and only pull back to test the lows in
Mid to late July. The volume and strength of any rally
in June will help predict the later outcome.
Many use a 20% decline from a high to mark a bear
market. The Dow had a high October 9, 2007 of 14,164 so
a 20% decline would put it at 11,331. It got there but
you can imagine at window dressing end-of-month and
end-of-quarter that those big funds did not want Bear
Market headlines on the weekend so they got the Dow
to close 14 points higher so still in a bull market. It
did close 288 points below the January intraday low. At
the time of drawing that triangle it looked like a valid
one and actually the break out of it came at an
appropriate spot toward the apex. If it is valid, the
apex (white line) could mark a turn point. It is now
obviously oversold so some bounce will come. As it goes
back up many will be waiting to short at resistance so
how strong that resistance turns out to be will provide
information about the future and if we have further to
decline. At the March low the NYSE has
759 stocks making new lows and on this low while there were only 492
new lows it is likely that this is high enough to suggest a retest of
the low will be needed. One would want to see
significantly less new lows on a retest. RSI is already
under 30 so we look for it to move back over 30 and
stochastics to move over 20 as these would signal a
short term buy at least.
The weekly Dow chart shows it easily dropping
under the 200-week EMA and below the 3-year trend line
as well s the 38% Fibonacci retrace. If we rally and
then retest and the test fails, the 50% is at 10,800
area and that has strong support.
This monthly Dow chart shows
the fall below the 50-month EMA and horizontal support.
RSI and stochastics are not in oversold
territory. They may not get there during this decline
but if and when they do could represent a good buying
opportunity. (to be considered at that time).
The Dow renko chart gave a
sell over a month ago and gave no interim buy signals
and has given about 1400 points in profit using this
"automatic" system. The buy will come on a move back
over -100 on CCI and our custom stochastics back over 20.
We also use the parabolic SAR but it is not shown on
this chart for simplicity. Using the e-mini Dow
this drop was worth so far about $7,000 per single
contract. Check the Global Futures link on the
home page as they have s free simulated
account for you to try it out. Futures are inexpensive
to use as margin is only $500 per contract. We have a
poll there about which futures are most popular and it
is pretty evenly divided. We will probably end that poll
this week.
Last week we presented the full list of ProShares Ultra
ETFs both long and short. They are an excellent way to
profit from declines in the market directly and also to
hedge any open positions you may have. DXD is the short
ETF for the Dow and aims to give a 200% return compared
to the Dow itself so on Friday while the Dow
movement was 0.93 % this was a bit over 2%. DXD was
under the bottom Bollinger band the last time on May 19
near $49 and on Friday was totally above the top
Bollinger band at $64.50 so a nice $15.50 gain or about
31% profit in 5 weeks. Not nearly the gain archived
using futures but very good just the same. I would be
taking profit or at a minimum have a close stop.
DDM is the long for the Dow. It is now totally
below the Bollinger bands while RSI is under 30. This is
in a buy range and you may wait for the RSI and
stochastic's buy signal or scale in if you prefer. Of
course a market can "crash" and you can get caught on
the wrong side but the odds are very high that this will
go up to test the $64 level in the near future.
The Dow transports still are
much stronger than the Dow but did close under the
200-day EMA and the 50% retrace but over the 62%
retrace. It put in a little hammer candle on Friday
suggesting a bounce likely Monday however that may have
been only the late day funds buying for the end of the
month. They are not supposed to buy up their stocks but
they can keep a bid under them as there is one
market day left in the month. If they do that it may be
enough to cause some shorts to cover and some fresh
buying to come in.
The two gaps on the Nasdaq chart that needed
filling eventually have now been filled. Stochastics are
oversold but RSI is not yet under 30. This does not rule
out a rally but we feel a move under 30 gives a better
reading on a "final" low for the intermediate term.
The weekly Nasdaq is back just a tad under the 200-week
EMA and the 4-year trend line. During the 5 years on
this chart stochastics have never made a significant
bounce until they went under 20 or close to it first.
This Nasdaq McClellan oscillator is in the area
under 50 which in the past precedes at least a tradable
rally.
The Nasdaq bullish percent is again back under its
support line by a bit and stochastics dropped under 80
which could mean that this will fall some more..
The VIX seems a mystery as one would think there
would be more fear in the market and this would be
higher. Some say it is lower and it is common to do so on
re tests. However in March it was a retest of the
January lows and it sill managed to reach 35. Chart wise
it is poised for a possible break out at the retrace
line and usual horizontal break out line over about 25
or so.
The VIX does not show much fear but
these are some interesting recent reactions from TV
personalities. (from photographer Keith Taylor)
The semiconductor index SOX continues lower.
The S&P 500 is very near its March low and RSI
is under 30.
For shorting the Nasdaq 100 the QID reached the first gap and filled it on
Friday.
This S&P 500 bullish percent chart gave a sell
signal at a reading of about 60 and is now at 33. During
this time the S&P declined around 122 points. This is
not a fast acting chart but seems a useful addition to
giving market signals. If using this for ETF or Futures
trades there have been only 5 since the first of March
so no over trading.
The weekly NYSE looks like it may need to test the 200-day one more time.
This could be a re test of the base of a wave 4 with a 5th wave up to come. That
could eventually take it to new highs.
The NYSE percent of
stocks over their 50-day average is now back to the
former buying range at 20. It has gone as low as 7.69 in
the past but pretty quick spikes.
The NYSE
advance-decline issues in the channel not awfully
far from the lower support.
The Russell 2000 could hold the 62% retrace on this first leg of
decline.
The Russell 2000 60-minute chart shows the gap was filled and tested ok
so far.
The S&P 400 Mid Caps bounced at the 50% retrace. RSI though may have
to dip under 30 yet.
This commodity ETF GSG
did not gain too much this week even thought it made new
highs. There is a possible turn-around candle it made on
Friday.
Oil made a new high on Friday but gave most back by
the close. MACD shows no strenght.
This chart shows how many hours one with an average wage had to work over the past
43 years to buy one barrel of oil. Less than an hour in 1965 and 1999 and over 6
hours now. Another reminder that this is a bubble. If theses prices stayed we
would likely be swimming in oil as so many wells would come on line and oil
sands re profitable over $70 a barrel I have read. There is a TV reality show
named Black Gold about 3 teams of Texas oil wide cats drilling wells to see who
is first to strike the oil.
Gold ran over its 3-month
trend line on Friday and many gold stock had strong
advances. If you want to trade on the price of gold and
do not use futures the "double" ETFs for gold are DGP
for going long - and DZZ for shorting gold. These
are nice to keep "handy" as a quick way to jump in when it
is moving either way.
A little longer view of gold.
Our gold cloud chart showing the top of resistance at 940. As this type of chart
to us is new we will be anxious to see how it works as the price reaches the top
resistance.
The gold and silver index XAU
of hedged stocks broke out of the triangle on Friday. We
have a couple of gold stocks on the watch list but much
of the movement was in stocks that do not really have
good set up on their charts but were oversold.
This ETF for gold miners GDX on the renko 60-min chart did especially
well from the buy signal on Wednesday. From $43.75 to a high of $48.70. See how
the Parabolic SAR also points out the buy ans sell signals.
Silver still in pretty tight range but near a possible break above about
$18.00.
The EURO-Yen ratio chart
got to resistance and has pulled back some.
The US dollar on Friday dipped
below the channel support but not yet to the June low.
Stochastics are under 20 again so a move back over may
start the next increase. This is base building and may
still take another half year to start a longer term move
up. We will watch the economies of Europe and the USA as
the one that strengthens first may lead that currency
higher.
The economic calendar from briefing.com. Remember that
the US markets will be closed on Friday for Independence
Day holiday.
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 I was in the NNRF /
Nucon-RUS office this week stopping in to say hello and
see what was going on. They were busy answering many
requests for more information and proposals for their
shielding materials BIECOM – FEECOM
– BAECOM – FEBAECOM and BICOFLEX. They were also
making additional designs for the test installation of
RadSeal for Rosatom. The design on the
containers for transporation and storage of solid high
level radioactive waste is also progressing well. This
is Nuclear Container Corporation that is a joint
partnership as previously announced. The press release
in the past had talked of this in terms of late 2009 but
there may be the prototype already at the December
conference and show that I attended last year. These
containers will include units from 10-80 tons and
will meet all limits established by the International
Atomic Energy Association for containers of this type.
As they stated at the start of this joint venture,
"Russia has to deal with approximately 60,000 tons of
high level nuclear waste. Russia will require
approximately 2,100 containers from 2010 to 2020 for the
storage of high level nuclear waste. With the
development of the new Type B(U) containers, NNRF and
ECNC hope to secure a significant portion of this $1.4
billion container budget."
In the past
we showed this video of a crash
test for containers
- (casks) This is not the container being designed and
developed by NNRF, Inc and Engineering Center of Nuclear
Containers. It is interesting though as tests for
containers are similar as detailed by the International
Atomic Energy Agency. The video gives an idea of the
seriousness of this project as these containers could be
used world wide.
PYR.v Pyramid plans to raise $15 million to
be used to fund development drilling, work-overs and
exploration on the Company's oil and gas properties and
to take advantage of select acquisition opportunities in
the Gulf of Mexico. The company has been very
responsible with its use of money and this should help
to increase earnings through more oil. We already expect
a ncie gain this quarter over last due to
increased production.
Pyramid Petroleum to Raise Up to
$15.0 Million by Way of Convertible Debenture Offering
PLTG The company is progressing very well
with very frequent news of additions to their natural
gas pipelines as well as more oil coming on line. We
expert this stock to do well this year.
Platina Energy Group Report Total
Depth on Well Number (4) in Kentucky
GWDC -
Growers Direct Coffee Company
Grows Brand Awareness in European MarketsNew additions to our
watch list
.
Remember that we add many stocks to it each trading day.
despite the poor market we had 15 new stocks hit
their trigger point last week. So the charts above give
a general look at the market, the ones below make you
money. Some over the last couple of months have doubled
in price and several more more ran up 30-50%.
ALGT Short under $19.64
OSIP Biotech over $41.20
CELG Biotech over about $63.77
SSRI If silvers starts to move this one may break out of the
possible bull flag - over about $29.50 on strong volume
EGO Gold over $8.75
ACOR Was on list but now at break out - Over $33.35
PDE Broke a bit Friday - continuation over $47.80
DV Over $61.60
LNUX Over $1.70 is a possible break point however back over $1.62
50-day EMA may be good for experienced on volume
FALC Short under $7.00 or $6.90
then $6.75 but is has dropped a lot so many have a bounce.
UXG Gold broke the trend and 50-day so now in this area
$2.30ish
FINL Broke out on Friday with huge volume so now after some
consolidation
INO Over about $1.11 with good volume
CNEH This is on list but wanted to point out
as it was a while ago - Over $4.70
Summer Scenes
Photograph by Polf
green whirl
Photograph by Ohrim This is real
summer. I like this.
Photograph by
Natalia Jeshoa what a sky.
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