Saturday, April 21, 2007

A Potential Powder Keg!

Mylan Labs is on the verge of potentially offering a great return. Of course we will have to wait and see what the stock decides to do, but there is a real opportunity here!! Take a look at the chart.

The Condition of Gold

With the recent popularity of the precious metals and gold especially I thought it deserved its own post and not just with the other commodities.

Take a look at the chart below and you will see some pretty interesting stuff. While I certainly am not an eternal bear on Gold, I do think it needs one more leg down in order to stay a healthy viable market for years to come.

Of course I realize that my opinion is in the vast minority, but I always feel more comfortable in that position!

Weekend Equity Market Comment

There is no question on the daily that the S&P 500 has shown some real strength. Just when it looks like it wants to move lower it makes another sharp thrust up. The sentiment number are just about neutral in here as the actually got more bearish as the market rallied. This is a long term bullish indication.

Take a look at the daily chart for the most recent analysis.

There are some very interesting things going on in the equity markets as it seems to have reached a point of decision. Take a look at the weekly chart below for an interesting analysis.

Friday, April 20, 2007

Weekend Commodity Market Analysis

It just does not look good for Corn and all the late party attendees on the Ethanol craze.

The smart money continues to warn against the impending implosion of crude oil prices. I have a feeling it is going to catch many off guard and this could cause it to get very ugly!!

It is not only the Commercial Traders (smart money) that can tell us what is going on underneath the market. This example of the Small Speculators (Dumb Money) is telling a bullish story about the 5 year note and interest rates. Take a look and see exactly how powerful this C.O.T. data really is!!
I always try and get on the side with the smart money which are the commercial traders. These are the men and women in the know as this is their lifeblood for their companies. The smart money is expecting much lower prices as the chart suggests with the blue line near the low area of its range. There is also a weekly transitional candle pattern this week as well. Lower prices are in the not to distant future for Cocoa!!

The soybeans are in much the same position as Corn, they are very vulnerable to the downside!
Take a look at the chart and you will see what I mean.

Remember that the commodity fund positions are deemed to be what movement the market is capable of. For example if the funds are extremely bullish as is the case here and the smart money is extremely bearish it causes a great set up for a markets collapse and this is across every market, not just soybeans.

Weekend Stock Analysis

USEC had a nice snap back rally, however the intermediate term trend has stilled turned lower.

Revlon is looking like its shaping up and I continue to look for signs that a true rally is underway.

IndyMac, much like Corus Bancshares has made what appears to be a secular low.

Horton on the weekly chart is really shaping up nicely. The housing market looks like it has made its bottom and building and housing stocks seem to be a good buy.

Gander Mountain has been a great performer, but is brushing up against some strong resistance here. It will take some real strength to break through these levels, but if it is able to achieve this it should be clear sailing after that.

Ford continues to be on the watch list for a possible breakout!

DVSA continues to correct and should offer some potential once this short term correction has run its course. Take a look at the chart.

BDAY much like the other Three White Soldier stocks I have been following, continues to work lower.

Thursday, April 19, 2007

Educational Module - Evening Star CandleStick Pattern

I realize it has been a while since I posted an educational module and I apologize for the delay on my part.

I thought it fitting to continue along the lines of the candlestick patterns. The last module covered the Three White Soldiers and put the pattern into real time use to prove the usefulness of the pattern.

This module I want to show you yet another very reliable pattern, but on the bearish side this time. The pattern is the Evening Star and coupled with sell signals on other simple technical indicators this pattern can be very powerful!

Protecting yourself from a false signal is quite easy as well. There are times that an evening star pattern will form, but the stock or index will make one more nominal high before it begins its decline in earnest. Typically the stock will not rally anymore than 1.5% above the high, so should you see this level taken out it is a warning to you that the pattern may not be valid.

Take a look at the two examples I have given you. We will follow these stocks in real time to see how this pattern works. I will also look for the pattern in a few other stocks along the way and we can put those to the test as well.

FORD - Possible Breakout from Pattern

The symmetrical triangle on Ford is very interesting and not just because it is a symmetrical pattern. There are some other things going on here, such as the width of the Bollinger Bands getting very narrow. When these bands get narrow it portends a sharp break one way or the other, much like the symmetrical triangle. A straddle is a smart way to play this pattern.

I personally think that the price is going to break higher as the trend going into the narrowing of the Bollinger Bands was up and typically a stock will breakout in the direction of the trend just before the bands narrow. It is going to be very interesting to see what happens!!

Keep and eye on this one as it might just offer some educational value!!

Daily Market Comment

Equity - While the DOW and S&P 500 continue to hold their price levels quite well, the broader indexes have already entered the corrective phase. It remains only a matter of time before the S&P 500 follows suit. It also looks as if the Chinese Market could be in a bit of trouble short term here, so we will have to wait and see what effect that has on our markets.

10 Year Note - Rates continue to look like they will move lower, with a minimum target of 4.475% on the 10 year note.

Cocoa - Resumed its decline today in full force after its failed rally attempt yesterday. Cocoa continues to have some real potential to collapse in price!!

Corn - Continues to rest before the decline continues. I continue to look at the $4 area basis the July contract to hold any rallies. I am very bearish on the intermediate term.

Sugar #11 - Fairly decent rally in Sugar today and very constructive that the lows of yesterday were not violated. Sugar still has to prove itself, but today was a start. Once Sugar does prove itself it has some great upside potential.

Crude Oil - Continues its retreat with the $60 area the first major area of support. Take a look at the most recent post on Crude to get the entire story. Here is a hint - BUBBLE!!!

USEC Corp. - USU is showing a serious shift into bearish hands. While the action today does offer some potential for a small snap back rally. However, the intermediate term has turned bearish and we need to look for support at 16 1/2, 15 1/8 and 13 3/4.

BDAY, DF and DVSA - Continue their corrective patterns.

Ford - I will be posting an opinion on Ford as the stock today closed in an area that my launch quite an assault upwards.

Wednesday, April 18, 2007

Opportunities in Beaten Down Housing Sector.

As usual Wall Street has over-reacted to what it considered a looming time bomb. I am talking about the supposed real estate bubble that never was. You know, the bubble that was being talked about for 2 1/2 years.

If everyone is talking about a bubble guess what..... There isn't one!!

With that being said, there are some opportunities in the Building, Materials and Real Estate Market. Below you will find the first in that group and one that offers some great potential.

Daily Market Comment

Equity - While no evening star pattern was made today, the short term model did go negative. Expect an intermediate term correction to begin.

10 Year Note - Rates continue to move sharply lower and very close to an intermediate trend change which should bring rates on the 10 Year Note down below the most recent low at 4.475%.

Cocoa - Strong downside reversal today as cocoa attempted to rally to new highs. Some follow through on Thursday would be constructive for the bearish argument, but the price action seems very much like a commodity that wants to move lower.

Corn - No change in analysis. Please refer to yesterdays post on Corn.

Sugar #11 - Sugar, while it has some excellent upside prospects, continues to work its way lower. It is exactly this type of market action that makes confirmation of a possible trend change imperative to trading profitably. While the decline today was sharp, it does not take away from Sugar remaining on the watch list and quite the contrary, the market needs to be observed even closer for a potential washout bottom!

USEC Corp. - (USU) Confirmation of an intermediate term trend change from up to down was signaled today. Support levels are as follows - 16 1/2, 15 1/8 and 13 3/4. I anticipate this pullback to be nothing more than a normal correction in its ongoing bull market.

BDAY, DF and DVSA - All continue with their corrective patterns. You can review their support levels on earlier posts.

Tuesday, April 17, 2007

The Never Ending REIT Rally!!

While residential builders have been getting clocked over the last 18 months or so, the Commercial Real Estate Market remains very robust.

Take a look at the REIT Industry chart, it has some real potential.

By the way, the residential home building market looks like it bottomed about 6 months ago and there are some great bargains out there.

Individual Stock Analysis

The Moment of Truth for Revlon!

The stock has had a multitude of false starts and it needs to prove that this is not just yet another fake out.

GM - General Motors after its breakout of the coil yesterday has stalled and could break down a little bit here. The focus however is that the double bottom in GM represents an intermediate term low and although the day to day fluctuations may get a bit hairy, the intermediate term needs to be the focus.
DF, DVSA and BDAY - All three of these issues are looking like they need a rest and a retreat in price would keep their rally from the Three Wide Soldiers Healthy.

The Potential Demise Of Crude Oil

Crude Oil looks poised to begin the next leg down of the bear market it entered after briefly touching $80 per Barrel.

I have two charts here, the first is the daily chart and the second is a weekly chart.

What I want you to notice on the daily chart is the evening start pattern that was completed yesterday and confirmed today. This pattern has very bearish implications for the crude oil market.

The Weekly chart below has its analysis right on the chart and trust me when I say that my take on the Petrol Complex puts me in about the 2% minority for my outlook. Most continue to think that the world has entered a new era of higher gas and oil prices and the low end of this range is $50. As you can see I disagree!! Does anybody remember the last time we entered a supposed New Era and Traditional valuation Modules were considered outdated and of no value.

It is going to be very interesting to see what Crude does from this point forward.

Daily Market Comment

Equity - Mixed day in equities today and a very narrow range for the S&P 500. I still continue to look for a correction in here.

The seasonal chart shows a peak in the April 16-17th area and a low made in the last 2 trading days of April.

S&P 500 has potential to make a bearish evening star pattern, so tomorrow will be quite key.

10 Year Note - Looks like it has almost made up its mind for rates to move lower. A crossing of the MACD will help to confirm the shift in the intermediate term trend.

Cocoa - Testing the highs, but market is still very vulnerable to a mini-crash. The cocoa market should turn lower from here with a possible brief new high.
Corn - Market is at the short term crossroads. Corn could have a sharp rally from here and retrace a bit more of the most recent decline or it could break and make a new low to end the first leg down.
Regardless of the direction it takes, the long and intermediate term in Corn is bearish!!
Sugar #11 - Continues to have strong rally potential, but a few more confirmations are needed before it can be taken in a serious manner.
Analysis of stocks will be updated later tonight.
I will mention that you should take a look at Ford as it offers a potential rally phase to above $11. I will be covering this in more detail later. Short term I expect Ford to continue to show weakness.

Monday, April 16, 2007

Daily Market Comment

EQUITY - Foiled again as the S&P 500 continues its rally phase with a very strong earnings based move. As is always the case, THE MARKET IS ALWAYS RIGHT and my analysis is secondary only. This alone is a very good lesson and one if you learn it early in your investing career can save you a lot of money. While no hedge was put in place as I had anticipated only a minor reaction in the vast scheme of things, it is always a little frustrating when your short term analysis goes astray.

That being said, I am still awaiting a pullback in stock prices to add to existing positions, especially USEC Corp. Once I get strong confirmation that a correction has begun I will post the support levels for the decline. The support levels I had previously posted are no longer valid with the strength today.

10 Year Note - Strong daily signal today that calls for a rally in bond prices. While the intermediate term model continues to suggest a falling bond market, if the 10 year note can be persuasive enough on the daily work then it may be time to establish some sort of position to capitalize on a rally in bond prices.

Corn and Cocoa - No real change in the condition of these markets. Please refer to the previous analysis on these commodities.

Sugar #11 - May yet attempt to test the most recent lows, but the work continues to suggest we are very close to a major low in the Sugar market and a substantial rally is in the near future. Stay tuned to this market for sure!!

Crude Oil - I will be posting a more detailed analysis of Crude Oil in the next couple of days. The gist of which will be why Crude Prices may be on the verge of another sharp decline.

GM - Broke out of its coil today to the upside on decent volume, not stellar volume, but enough to attract attention. Look for first strong resistance at $34 1/8.

DF - Much like the S&P 500, Dean Foods continues to rally strongly from the Three White Soldiers CandleStick Pattern. All of our real time Three White Soldier Pattern examples have done very well and should they come to find support on a pullback to the most logical area it will be an excellent example for educational purposes.

DVSA - Bearish reversal today which helps to support the pullback to 7 1/8 theory.

BDAY - Celebration currently is producing a short term distribution pattern that should culminate with a decline to 7 3/4-8.

I will be posting more Three White Soldier Patterns in the not to distant future.

There will also be a new Educational Module soon that will continue on the theme of reliable candlestick patterns that are not overly used.

AGL Update

Here is an update on AGL.
Notice that it has broken hard back into the consolidation zone.
Should see some strong support at 25 1/4.

Daily Market Comment will be Late tonight, try checking it first thing Tuesday morning.


Is there something bullish going on with Revlon?
There has been not only massive Insider accumulation through this long low level trading range, but also heavy institutional purchases as well.
The stock has also been churning for quite sometime and this is bullish as well.

To early to tell, but a better picture will be painted on the first pullback.
Keep an eye on it!!

CORUS BANKSHARES - Potential Secular Low!!

Times like these are when I look back and am very glad I keep my ear to the ground.

Take a look at CORS!!

White Mountain - The Next Berkshire Hathaway??

Although I have already made mention of this potential powerhouse, I thought it important to reiterate the long term potential of White Mountain.

Do yourself a big favor and research it, you will be very happy you did.

You can also go back on the Blog and see my previous comments.

Sunday, April 15, 2007

Sugar #11 Something Big is About to Happen!!

Sugar is starting to take form as perhaps the next big mover. Please take a look at the two charts along with the commentary on each one. Although I cannot rule out one last push lower, the odds of this happening are getting very small and with just a few more confirmations Sugar has some real potential!!

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