Saturday, March 24, 2007

Comstock Homebuilding (CHCI) Potential Short Squeeze

This one is a little aggressive, but with a close stop for capital loss protection it has some potential.

The stock has gotten hammered over the last month and a half and it looks to me like it wants to make a sharp upward move from here. How high is any ones guess, but it does have some serious potential.

Ethanol Craze Has Finally Put Corn in a Dangerous Position

The ethanol craze has finally played its hand on the price of corn. Of course the vast majority of the public thinks that corn prices will go higher yet, but the technical picture tells a different story.

The Almighty C.O.T. index has given a full blown sell signal on corn futures, with the Commercial Traders(the ones we want to watch) starting to unwind their massive short position. They are telling us that corn prices are going to move lower and to sell any strength.

I know I have the chart a little clustered up, but the blue line represents the commercial traders. As you can see the commercials were heavy sellers on the last blow off ethanol rally.
Since that time the blue line has turned up above the 10% area for the buy signal.

I plan on making a post on the power of the C.O.T. index in your analysis not just for the futures markets, but the equity markets as well.

You can access these charts as well as a custom C.O.T. index at
I have a link on my blog. It is a great site for both analysis and education. I encourage you to take a look at the site and I also strongly encourage you to study the Commitment of Traders data.

General Motors Update

General Motors continues its nice rally off its double bottom.
Still looks like a strong intermediate term move that could take the stock as high as $45!

Equity Market Comment

  • SHORT TERM - The equity markets are still in an uptrend, but weakening considerably. I would expect more consolidation in this current area at the very least. A pullback of some sort is not out of the question either. However, it is not a short term down swing that I would be willing to trade.

  • INTERMEDIATE TERM - The S&P 500 confirmed its bottom at the most recent panic low. While a test of these lows is always possible, the strength of the trend suggests only a minor pullback before moving sharply higher again.

  • LONG TERM - The equity markets are in fine shape with valuation and sentiment models calling for higher prices. 2007 looks to be shaping up as a great year for stocks. Holding good strong mutual funds such as the Baron Partners Fund should yield a strong return above and beyond the benchmark index returns.

I will talk a little more later about a very strong mutual fund portfolio that can achieve growth style returns while only taking blended style risk. The best of both worlds.

Good Luck in your Trading!!

Blog Update for Markets to be Posted this Weekend

The Trend Analysis Blog will Be fully updated this weekend 3/24/2007.


Thursday, March 22, 2007

Update on WHI

Sometimes a little luck is always nice too!! WHI is up 9.7% since the March 9th buy. I certainly did not expect such a strong pop, but I'll take it.

Notice the strong accumulation as well, which indicates this move up has further to go short term.

Bullishness of Weekly CBOE Put/Call Ratios

I wanted to talk today about the phenomena going on with the weekly CBOE put/call ratios.
Since the 2001-2003 Tech Bubble the moving averages on this indicator have been making higher highs and higher lows.

I interpret this as a bullish indication of a lack of investor conviction about this entire rally from October 2002. It is as if the uninformed money is simply waiting for the other shoe to drop or at the very least keeping a strong hedged equity position.

I have also overlayed the S&P 500 on the chart below along with the moving averages of the CBOE Put/Call ratio. This will help you to see the correlation of high bullish and high bearish sentiment at different market junctures. Please click on the chart and check it out!

If you have a different take on the analysis, please feel free to let it rip, I am always very open-minded.

Good Luck on Your Trading!!

Wednesday, March 21, 2007

Still No Crowd Belief in This Rally

Although the market is a little overbought in here on a very short term basis, it is great to see the equity option players buying puts.

It is a very bullish Intermediate Term signal when we see the market up 150+ points and the CBOE Put/Call ratio closing the day at 1.12.

Today the market also confirmed its most recent panic low as an intermediate term bottom. While I certainly do not rule out a pullback of some sort, we are almost guaranteed that the chorus that was singing 1987 all over again will be wrong.

Actually there are more differences than similarities when you compare the here and now to 1987. If you are looking for a true comparison you might want to look at the 1995-1996 area.

Tomorrow I want to talk about the long term bullish trend in both the daily and weekly CBOE Put/Call Ratios.

Good Luck on All Your Trading!!

General Motors is Shaping Up Nicely

General Motors (GM) is looking very strong in here. I am seeing definite signs that the stock wants to move higher and sharply so. Aggressive traders can take a bite here, with a stop just below the double bottom. More conservative traders might want to wait until we clear a 50% retracement of the most recent decline.

Something Behind The Market

There are just simply too many signals that the market made an intermediate term bottom at the last panic low.

Here Are A Couple of Uranium Play Stocks

I had talked a couple of days ago about the serious potential for nuclear power world-wide and how we can capture this trend.

I have found a couple of very strong companies that should fare very in this current uranium environment.

USEC Corporation (USU) - is a leading supplier of enriched uranium fuel for commercial nuclear power plants. USEC operates the only uranium enrichment facility in the United States and supplies more than half of the U.S. market and more than a quarter of the world market. Annual revenues are about $1.6 billion.

BHP Billiton Plc (BHP) - BHP Billiton Limited, together with its subsidiaries, engages in mining, drilling, and processing mineral resources. It operates through seven segments: Petroleum, Aluminium, Base Metals, Carbon Steel Materials, Diamonds and Specialty Products, Energy Coal, and Stainless Steel Materials. The Base Metals segment engages in the exploration for and mining, processing, and marketing of copper, silver, zinc, lead, uranium, and copper by-products, including gold.

BHP is quite a bit more diversified than USEC Corp. With this in mind, an investment in both would be the prudent course.

Tuesday, March 20, 2007

Almost There!!

The S&P 500 is very close to its final confirmation of a new intermediate term uptrend.

All systems seem to be go from Sentiment to the Technical Picture.

Do's and Do Nots of Successful Investing

Here is a great list of the right and wrong in the world of investing.
There are many more, but these are what I think the most important.
Feel free to add to the list, I am going to make it a permanent part of the Blog!

1) Buy and hold doesn't always work.
2) Cut your losers, and let your winners ride.
3) Don't fight "the tape" (the trend).
4) Don't fall in love with your stock; it won't fall in love with you.
Don't have more than 5% at risk in any one position.
6) When a stock hits a new high, it's not time to sell. Something is going right.
Not selling a stock for a gain, simply because the taxes, is a bad idea.
8) When all you're left with is hope, get out.
9) Have patience and stick with your discipline.
You can learn more from your bad moves than your good.
11) Real estate cycles are not the same as stock market cycles.
Neglected sectors often turn out to offer good values.
13) There's usually only one reason corporate insiders buy stock.
14) Don't miss a good one by being too concerned with the exact price you pay.
15) Try to buy a stock when it has few friends.
16) Be patient: don't be rattled by fluctuations.

Get Onboard the Uranium Push!

You hear all this talk about the price of Crude Oil and Natural Gas, but when was the last time you heard about the simply amazing 750% rise in the price of Uranium. If Crude had a similar move upward it would be selling at over $200 a barrel! So which commodity is really the scarce one here.

The story is really very simple, the world has fallen asleep at the wheel on fueling nuclear technology. China is building nuclear power plants at a huge rate as is India. I expect this to come back to life in the U.S. as well.

The chart below is only updated through 2001, but you can plainly see that the demand for uranium has far outstripped the supply being mined. This can only mean much higher prices.

Below you will find a chart of the price of Uranium from 1995 to current, moving from $10 per pound to over $75 per pound. As a matter of fact uranium is currently trading over $85 per pound.

Trust me, this is only the start of the rise in Uranium prices as demand will only increase and there is already a huge supply gap in place.

So how do we take advantage of this situation.
There are a few stocks that have excellent potential to fully capitalize on this push of the world into nuclear power. I will give you a couple over the next week, but you can do some looking on your own as well. There is excellent long term prospects for the sector.

Monday, March 19, 2007

Long Term Buy on WHI

There are just certain stocks that from time to time that will put together a symmetrical pattern that is simply to strong to overlook.

Such is the case with WHI, which has made both a time and price symmetrical pattern. This is known as price and time confluence and is a very strong indication of a stock about to begin a long term move upwards.

Upside target is for $35 per share or a little over 700%.

Click on the chart below and take a closer look, it may be worth your while.

50% confirmation

A move above the 50% retracement of this decline will confirm the low has been put in place.

There are simply to many indications that a major low has been established and we will look back at this short sharp sell off as a great place to buy that this 50% confirmation seems to be only academic.

I hope I didn't just Jinx it!! : >

Here is a little lesson for you. Can you spot the positive divergence in this chart?

You Have To Love This If You Are Bullish On Stocks!!

These are current headlines on Yahoo Finance.
Typically this type of advice comes just before a substantial market rally!!

Get long- and short-term tips to invest in a down market.

Investing in a Bear Market.

How to protect your portfolio from market Downdrafts.

Sunday, March 18, 2007

The Next Berkshire Hathaway

Let me pose a question.

If you had the ability right now to go back 20 years and purchase

shares of Berkshire Hathaway for $550 per share, would you embrace

the opportunity.

I know, I know, it is a silly question and one that we all know the answer too, but

this opportunity is right before you now.

The stock is White Mountain Insurance and will be the next Berkshire, rewarding those

savvy enough to pick up their shares with huge riches beyond their expectations. As a matter of fact Berkshire Hathaway has been accumulating the stock.

Please check out the company and purchase it over time. I have posted a chart of the stock


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