Ford Makes The All Star Watch List Again

With all of the troubles the domestic automakers have had over the last 3 years, Ford has had the roughest go.

Currently in their 7th year of a turn around plan that was supposed to take 3 years. Of course to their defense, their plans have been changed about 50 times so how could we even expect anything to take hold.

However, given the number of problems they have had in that time, it seems as though they may just be turning the corner.

They should begin to feel the benefits of the hourly buy-outs this year and they have also managed to ween themselves off most of the incentive packages for new car buyers. Although this process of moving away from large cash back offers has eaten into sales volumes, it has more than made up for that with the help to the bottom line which is what they sorely need.

Providing we do not see any sabotage moves on managements end, then this trend should continue and this is exactly what wall street has been looking for.

The chart below has a very strong pattern being traced out and although we have yet to get a trigger to enter the stock, it still remains a very strong watch list stock.

Weekend Market Comment For W/E 2/15/08

A fairly mellow option expiration Friday as it seemed most of the position squaring took place on Wednesday and Thursday.
It was a great day for trading however as we had about as textbook symmetrical day as you can get, lower early followed by higher later in the day.

The chart below makes some very interesting points about the intermediate term health of this market, so please take a look.

The Nasdaq remains the primary focus of the big boys and should prove to outpace most of the other broadly based indexes.
It also remains in an intermediate term position for higher prices, but probabilities tell us it might have to wait a couple of days before we continue higher.

Friday saw the market work lower to the lower corrective target and then begin moving higher.

This is a bullish development and also solidifies the low on Friday as a pivot point for either higher prices or lower prices. This level needs to hold fast if we are going to continue to work our way higher.

The next couple of days show a tendancy of being negative so we may simply flop around in here until we find our way out of the pattern induced negative slope. This should end on Thursday and from there we should see a sizeable rally begin.

Current Stock Coverage - 2/15/2008

MRK has done very well this week handily out pacing the market.
The stock remains in the buy zone and should prove to be one of the leaders on the
next leg higher in the general market.

Gander Mountain has reached a critical point that should determine the short term

course of its stock price. A solid break of this downward trend line on expanding volume

will be a huge positive. A failure and turn away may very well bring about one more test of the stocks lows.

AMD had a very average pull back today and on declining volume which is a bullish development. I expect the stock to get back on track with higher prices as early as Friday.

I talked yesterday about the Airline Index either proving or disproving a continuation of its intermediate term rally and today was a failure and caused us to exit the last half of our position.

No complaints however as it managed a very nice return for us and in a very short time frame.

We will see what this potential decline in XAL is made of as Long Term the index still has a good amount of pent up demand and much higher prices. We may very well re-visit again.

Equity Market Comment - 2/14/2008

Just about right on schedule was the ultra short term correction we had anticipated.
It is also possible although not likely that we took care of the entire corrective process in one day.

If this is to be the case then we should begin to see some higher prices tomorrow in order to complete the first leg up of a more complex structure.

The target for the final high of this complex leg is 1375 to 1379. From there I anticipate a larger correction than the one we just had or are finishing now.

Here are some of the seasonal tendancies for Friday, which is option expiration by the way.

February Seasonal for the 15th - Only a 50/50 proposition for an up day, so pretty much a non statistical event. However, tomorrow does hold the third best average returns for the month so if Friday is going to be a rally day it has some strong odds of being up strongly.

Still, this only ranks Neutral.

The Day Of The Week numbers are pretty bullish with Friday being the highest of all the days of rallying. 60% chance of a rally and also the highest average return of all other days.

These two combined rank Bullish

Pre-Expiration Statistics show Friday having the second lowest odds of a rally day, but still ranks 53% so this is rated Neutral. The Average Returns for Fridays in the week before expiration are the worst of the week with a negative 0.20%. This is rated Bearish.

The Holiday seasonality is the worst of the bunch, with Friday carrying the lowest chance of a rally day, only 31% and the worst average return of the entire pre and post holiday period with a negative 0.18%

This Is A Double Bear.

So, while I mentioned that the correction may have been taken care of in one day, the seasonality of the markets has other ideas and I always listen to the market.



The 30 min chart shows the S&P 500 making its way down to one of the retrace points, thus one reason I thought the short term selling pressure might be over.
Either way the element of risk is really only about 10 S&P 500 points from here.

Be leary of the market making an early strong rally back up to the 1361 area. If the market conforms to this set-up I would be an aggressive ultra short term short seller for a final leg down to 1339 +/- 3 points. This may be a bit short term focused, but it will be paramount to the condition of the market on the intermediate term front should this play out.

As it stands now, we view this as nothing more than a normal corrective process in an otherwise complex rally structure with the ultimate lows having already occured in the 1270 level of the S&P500.

One more note is the PUT/CALL ratio during trading today.
It showed some serious bearishness right out of the gate before the market even began to deteriorate. As I stated before, we need this to remain in the bearish sentiment levels as long as possible in order to keep the intermediate term rally in progress.

TRADE ALERT - LIVE CATTLE TRADE

WE WERE STOPPED OUT OF OUR LONG APRIL CATTLE TRADE TODAY AT BREAK EVEN.

CATTLE BROKE BACK INSIDE THE CONSOLIDATION ZONE AND CLOSED THERE.

CURRENTLY WE REMAIN
SHORT COTTON
SHORT SUGAR
LONG MAY LUMBER - CONSERVATIVE EXECUTION AT THE CLOSE TODAY

AMD - Looking Very Constructive

AMD confirmed its bottom today with the higher high and higher low. (Aggressive Confirmation)

Aggressive traders can purchase half their intended line right in here with a protective sell stop just below the most recent lows.

Conservative traders can wait for a pullback of sorts before entering on the long side.

You have the option of purchasing the stock outright, or purchasing call options.
If you choose the call option play, I would purchase the April $7 Calls, which currently are .75 by .77

XAL Update - Remaining Position

The Airline Index is offering up some clarification as to its near term direction.
We are sitting with only half our position as we took a very nice profit on the first half already.

We will know shortly what to do with the remaing position as the index will clue us in upon a break on either side of the triangle.

A break to the downside and we exit our remaining position.
A break to the upside and we continue to hold long.

Equity Market Comment - 2/13/2008

Three days in a row of higher highs, higher lows and higher closes.
With the way equities have behaved this year, this type of market action seems almost magical.
So far things have gone pretty much the way we had anticipated and the Nasdaq is living up to its potential also.

Things seem to come in threes with the markets, so it would not be unexpected to see some type of breather tomorrow before we continue to move higher.


The probability/seasonality model for tomorrow pans out like this:
1. Monthly seasonality shows a 65% chance of decline with the 2nd largest average decline for the month. This is a Negative.

2. Options Expiration Week brings tomorrow in at a 58% chance of closing higher and the second largest average gain for the week. This is Bullish.

3. Pre-Presidents Day shows a 54% chance of decline tomorrow.
Which is a Neutral Reading.

4. Day of the Week seasonality brings in a 55% chance of the market moving higher. Another Non Event which is Neutral.

5. Lastly the day of the year statistics show tomorrow being an up day 53% of the time.
A non event and a Neutral Reading.

Not much to hang your hat on there, with 3 neutral readings and 1 bullish 1 bearish.
However, the bearish side takes this contest simply because it has a 65% chance and the bullish has only a 58% chance.

The short term charts are showing some exhaustion here, but the capability to move 10-15 points higher before taking a rest.

Short term traders can look to take profits on strength tomorrow as a pull-back of sorts seems to be in the cards. It should be a very brief pull-back, perhaps only 1 day and then we should continue higher.

Keep an eye on this wedge off the lows on the 15 minute chart as it should give a strong indication of short term direction for those traders in this time frame.

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IN A NUT SHELL, WE REMAIN IN A BULLISH MODE OF BUYING WEAKNESS, BUT WE EXPECT SOME TYPE OF MINOR RETREAT ON THE WAY. NOTHING TO WORRY ABOUT, BUT SHORT TERM TRADERS SHOULD TAKE SOME PRETTY NICE PROFITS.

Gander Mountain - A Possible Trend Shift

Gander mountain seems to be trying to come back to life, as its bear market took it from $16 to $4 or a decline of 75%.
There are multiple signals that are calling for the stock to break from its major downtrend and make a run towards $10 at a minimum.

The stock has a very large test ahead of it breaking the downtrend line off the $16 high.
Also, it has formed a "W" bottom with volume confirmation and a close above 5 3/4 should break the stock out. Of course we will need the stock to have an expansion in volume when it breaks above 5 3/4.

But, I get ahead of myself.
First thing first, as the stock needs to close above the intermediate term trendline from the last long term high at $16.

Keep in mind that this is a high risk venture, but it also may deliver a very impressive double!
Don't forget to use your stop loss orders to limit your losses should the trade get triggered.
Place your stop wherever you feel at ease. Personally I try and risk no more than 18% on a high risk equity trade such as this.

AMD - Has It Reached Its Point of Rally

AMD is starting to exibit the signs of a stock that wants to make another move up.

The hourly has a rolling bottom forming with confirming volume with an accumulation pattern on the daily charts.

The key to the puzzle now is two fold.

Number 1. No violation of the lows at 6.22 on an intra-day basis
Number 2. A Higher High and Higher Low with a higher close a bonus, but not a must.

XAL - Sold Half of the Position

The airline index broke to the bearish side of the wedge on the half hour chart and triggered our sell on 1/2 of the position.

The downside target for the wedge is 35.25 which is about 6% lower from current prices.

We are holding the other half of our position and may even add to it once we achieve the downside target. This will have to be determined upon reaching those levels.

The remaining position has a stop loss at 34.25 which will still lock in 12% should the stop get triggered.

The model continues to call for higher prices and based upon the models abilities to predict price so far, we would be foolish to doubt this forecast.

EQUITY MARKET COMMENT - 2/12/2008

Quite a wild ride today as volatility once again raised its head just to let everyone know it has not gone to sleep.

The market closed quite a bit off its highs, especially in the case of the NASDAQ.

From a pattern standpoint, this reversal and lower close in the NASDAQ actually has bullish

qualities and the scenario of a sharply higher move in the secondary stocks remains on course.





We have a few probability factors that are going to play into the market tomorrow and also played a roll in the action today as well.

Seeing as today is now done, I will only go over what tomorrow might bring us based on history.

First we have the pre-holiday trading factor (Presidents Day Monday).

Tomorrow brings the highest odds at 67% and the largest average gain 0.2% of the entire 10 day holiday period (5 days before and 5 days after). This Is Bullish.

Second we have the seasonality of pre-options expiration with Wednesday weighing in at 47% positive. A statistical non event, but a very slight negative just the same.

Third we have Wednesday's being positive 59% of the time second only to Friday's
This Is Bullish.

Fourth we have Wednesday's giving the highest returns, once again with the exception of Fridays.
This is Bullish.

Last we have the 13th of February being positive only 47% of the time. Another statistical non event, but a slight negative.

All in all it looks to me like tomorrow should be yet another rally day and with traders on their most recent kick of put buying at any sign of strength we could have a very good week.

General Motors - The Future Looks Strong

You thought the move in General Motors was impressive from $17 to $43.

The next leg up has potential all the way to $63, so the return here should be excellent.

There are quite a few factors that will lead to this major move in the stock, but to sum it up,
GM is by far, much further along in their turn-around then are Ford and Chrysler.

GM is doing many of the right things in the right manner.
Now granted I say this under the concept of automaker mentality.

While GM seems to be making great strides as far as auto companies are concerned, if you were to compare their progress to a large universe of companies they would rate sub-par.

However, the market factors this way of thinking into the price so we don't have to concern ourselves to much with it.

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XAL - Giving Us A Bull Market Return In Under A Month

We have had a very nice return off the Airline Index (XAL) so far.

Up 20.8% since purchase and climbing.

There are some signs however that the advance may be getting tired and so some precautions
should be put into place.

The next major short term move in the index should be based upon the outcome of the Triangle break.

This being the case, I am going to suggest a stop of half the position upon a break on the lower side of the pattern.

The reason I only say half the position is explained in the 2nd chart below.


The probability model has been simply incredible during this advance in the Airlines Index.
As you can see, the model calls for yet higher prices as we have not even hit the halfway mark
according to the model.

It is because of this model that I am only going to part with half of my position should the triangle break to the downside. I will let the remaining half ride as gthe model dictates higher prices.

If the triangle breaks to the upside all the better for us as we will remain in our full position and continue to ride the index higher.

COMMODITY TRADE UPDATE

THE CATTLE TRADE REMAINS PROFITABLE, BUT HAS STALLED JUST ABOVE THE CONSOLIDATION BREAK OUT POINT.

THIS COULD BE NOTHING MORE THAN A RE-TEST OF THE BREAK OUT, BUT KEEP YOUR STOP JUST BELOW THE BREAK OUT POINT JUST IN CASE IT IS SOMETHING OTHER THEN A RE-TEST.

LUMBER IS STARTING TO COME TO LIFE AND IS REACHING A POINT TO WHERE WE CAN MOVE THE STOP UP TO BREAK EVEN.

THIS WAS THE AGGRESSIVE PLAY.
THE CONSERVATIVE PLAY IS STILL FLAT AWAITING A PULLBACK IN ORDER TO GO LONG.

SUGAR HAS GOTTEN ABOUT AS CLOSE AS IT COULD TO STOPPING US OUT, BUT WE ARE STILL HANGING ON BY THE SKIN OF OUR TEETH.

IF WE CAN MANAGE A LOWER HIGH, LOWER LOW AND LOWER CLOSE TOMORROW WE SHOULD BE SET UP FOR LOWER PRICES AGAIN.

COTTON CONTINUES TO BE OUR STAR OF ALL THE TRADES.

WE CONTINUE TO MOVE THE STOP DOWN TO LOCK IN MORE PROFIT AS THE PRICE RETREATS.

WE ARE SHORT FROM 72.00 AND SITTING ON ABOUT A 125% R.O.I.

KEEP MOVING YOUR STOP DOWN AS THE TRADE GOES OUR WAY.

LET THE MARKET TAKE YOU OUT.

ALL IN ALL, THE TRADES ARE DOING QUITE WELL.

THE EXCEPTION IS SUGAR, BUT IT DOES HAVE A CHANCE HERE IF IT ACTS ACCORDINGLY.

I HOPE SOME OF YOU ARE GETTING A SLICE OF THE COTTON TRADE.

MRK Update - Downside Targets Achieved

MRK has reached its target we had talked about back in the summer of 2007.

We are now at a level that warrants a solid purchase.

As this chart said back then about PFE being in a great position to move higher, this advice remains the same.

It may take a little longer than MRK's recovery, but it WILL happen.

ANAD - Reduce Half Your Position

ANAD is up 18.5% since the Hit and Run Post.

The stock has hit its minimum target but looks poised for more upside.

We have sold half our position after the run up and will leave the other half on the table
in case the stock has more left in it.

Place s sell stop at $10 to protect the remaining position.
If we get stopped out we will still have an 11% gain on the second half.

EQUITY MARKET COMMENT - 2/11/2008

While not a barnburner of a day today, it went in the correct direction.

Once again the Inside Day with a Lower Close as we had on Friday predicted
an up day.

We took advantage of this on the weakness this morning and closing the position on the strength at the close.

Today we had an outside day with an up close and I don't have my almanac handy, but I am fairly sure this is a neutral pattern.

We would also expect some type of pull back Tuesday as the Monday/Tuesday reversal works its magic.

There was quite a large amount of put buying today, especially for a rally day and this is the way we would like it to stay. For the longer we can keep the majority waiting for the giant slam lower, the longer we can expect the market to move higher.


The NASDAQ has been the star as of late and the pattern today indicates higher prices to come.

We remain steadfast with our buy weakness mind set and although we are not out of the woods yet, there are certainly a large amount of indications that we have put a major intermediate term low into place.