Equity Market Comment - HEDGE IN PLACE

It is extremely important at this point of the rally to emphasize the wide spread negative divergences the market is putting forward, both on a daily and weekly basis. It is these divergences along with the current bullish sentiment and the inability of the short term model to get into a buy signal area even as the market moves higher that has made the intermediate term look very weak and negative.

Long term I remain extremely bullish, but intermediate term the equity markets are ripe for a substantial correction. A correction that is substantial enough to put on a defensive stance by hedging our long positions.

Please notice I have placed a sentiment chart showing that the current bullishness is the highest since early 2004, which preceded a sizable correction.

It is also important to note that the forecast model for the market shows a high being put in place on May 8th, which is today and a low not being put into place until August 24th, so keep these dates in mind as we move forward.

Updates Will Be Resumed As Of Today

My apologies for no advance notice on my absence.

I took my beautiful wife out of town for our anniversary and one of the conditions was for me to leave everything behind and live our lives like we were 20 again!

It was Great and it was a much needed recharging of my batteries.

I will be updating the blog tonight and there is quite a bit to cover, so please stay tuned!!

Some Of The Stocks We Have Been Watching

Dean Foods Finally Broke!
Look for strong support at the first green line




DVSA is starting to look great, and the stop loss area is so close it is almost a risk less trade.

CORS is yet another one that is looking good. Broke out of its coil and should head higher.

Remember Corus Bancshares also made a multi year secular low recently, so it offers some real long term potential.

Equity Market Comment

Whatever you do, don't get sucked into this rally around this area.
The smart money continues to dump their equities to the weak investors and this is not bullish at all. Keep in mind that this is only on an intermediate term time frame.

Long Term, the Equity Markets remain very healthy. There is just a bit of investor complacency that needs to be weeded out.

Lumber is Starting to Shape Up Nicely

Keep a close eye on Lumber here as it begins to act very bullish.
It still needs to show more on the positive side, but much like cotton and sugar it would be prudent to keep tabs on them.

Markets Comment

Still waiting for Sugar to turn the corner to buy. Today was constructive, but we have seen this pattern now for weeks. Sugar needs more confirmation across the board before a long position can even be considered.

Aggressive Traders can get bullish on Cotton as intra-day it made some very positive signs.

Still to early for Trend Traders to Enter this Market

Hogs continue their decline as well. The hogs have reached a point where we could really see some acceleration to the downside!

Cocoa made its expected two day counter trend rally, but if this trend is to continue down, we should not see the market up on Thursday. Intermediate term cocoa remains bearish.

Gold has reached a short term point where a rally might be expected. This should only be a counter-trend rally however as the intermediate term trend is without question DOWN!!

Rates moved up just a hair today, but the intermediate term trend remains down for rates.

Crude Oil continues its decline and should do so for the foreseeable time.

It still has just a bit more to confirm before we can call this a major trend shift.

The pattern remains the same as each time we get a short term sell signal, the market manages to have a sizable rally.

I still have my hedge in place however as an intermediate term correction is imminent.

Equity and Stocks Comment

While WHI has struggled as of late, it appears like it wants to move higher. I continue to hold my position that a secular low has been put in place.

USEC- Is in an area now where we might expect some type of snap back rally. However I will keep the hedge in place as the intermediate term trend remains clearly down.

While there was a nice reversal today in the market, the rally on the whole was rather tepid.

I continue to look for an intermediate term correction.

DVSA - Reached and exceeded its downside target, but it was able to close above its support level, therefore a buy signal was issued. A stop at 7 1/8 is in order but this stop will be on a closing basis only.

Commodity Market Comment

SUGAR - Still looking for a bottom in here. Has some serious hurdles to clear before it will have the ability to work higher.

COTTON - Continues to try and put a bottom in.

COCOA - Intermediate Term trend remains down, but should be about ready for some type of counter trend rally.

CORN - Continues to chop around in here, with a break out of the consolidation zone to the downside expected.

Equities and Rates Comment

While USEC is an excellent long term holding. It currently has the potential to have quite a correction and thus a hedge for the stock was put in place.

Once the correction has run its course the hedge will be lifted and more stock accumulated.

Keep a close eye on DVSA. It is starting to get close to the target.

The increase in volume today helped to clinch the intermediate term trend shift to down.Also the fact that this was the largest decline in 33 days, another key number.

Intermediate term trend for Interest Rates remains Down. Short Term direction also changed course to down. Take a Look at the Chart!!

The State of Revlon

Still has something to prove on its pullback and that is what will dictate a taken position or not. Take a look at the chart!!

Current Intermediate Term State of the Equity Markets

I had posted this chart earlier and it seems to have more and more relevance as time goes on.
The equity market would have been in much better shape had it corrected a while back, but it has over-extended itself and brought in a bunch of intermediate term complacency.

We will have to see how it plays out, but I really am starting to lean into the camp of the March low having the potential to be violated upon the decline. It is for this reason that I am going to initiate a hedge in the equity portfolio.

Call me Short Term/Intermediate Term Bearish here. I do remain Bullish long term.

This is a chart of the Sentiment of the equity markets. Not only are we near the area that declines usually begin, but there is a relationship with the 39 day moving average. Take a look at the chart.

Weekend Interest Rate Comment

It looks as if the 3 day jump in rates on the 10 year is complete and rates should begin their decline next week.

There is a possibility that rates may set new lows over the next 6-9 months as the economy begins to slow more than anticipated.

CHCI - Ready to Make a Break from it's Cyclical Negative Pattern

Comstock is really starting to shape up nicely and could offer a very nice upside move.

Take a look at the Chart!

Daily Equity Comment

10 Year Note - Take a look at the chart for the analysis.

S&P 500 - Really no change in the outlook for equties. I continue to look for an intermediate term correction and the nature of the decline will dictate the next couple of months market action. Not that the decline will take that long, but the decline is going to tell us alot.

Cotton, Time to Take a Look

Looks like it is trying to hammer out a low here. While it could drift lower over the next 1-3 days, we should begin to look for some kind of intermediate term low.

Daily Commodity Comment

CORN - Looks like it wants to break down again and complete the first leg down. Corn has potential to move sharply lower here during the completion of the first leg. Please understand that this most recent decline is just one in a series to come.

HOGS - Continue to move sharply lower with a real possability of a mini collapse in here, potentially a limit down move. Hogs have transitioned to a negative intermediate term trend.

CRUDE - Looks like it will break lower again.

COCOA - Sharply lower today, should have more of the same over the next few days.

LUMBER - Possible swing low established, needs just a bit more upside to confirm the potential bottom. Lumber has some excellent upside potential much like sugar.

SUGAR - Starting to shape up well, but it is still not out of the woods yet. We have to make sure this rally is not just to fill the gap from Monday.

U.S. DOLLAR - Appears to have made an intermediate term swing low. Need some confirmation, but could have a pretty sizable rally here!

APEX Result

Notice that where the two angle lines of the coil intersect we had a change in trend.

This happens quite a bit and not just on an intra-day basis either.
You will find it on Daily and Weekly Charts as well.

This would be a good one to print out and keep in your reference file!!

The Value of the APEX!

This is going to be a great educational tool.

Here you have a very nice coil, and the price should break out this coil either up or down.

Now, here is what I want you to pay attention to. Look to see what the price does at the intersection of the bottom blue line and the top green line. That is where they cross!

Stock Postings

The Stock Postings will be delayed today due to technical difficulties.

I will have them posted very late tonight, so check back in the morning.

Sorry about the delay!

LUMBER - May Be Emerging From its Coma

Lumber finished a very constructive two day chart pattern that is indicative of market lows. The clincher on the pattern is the gap lower day as Tuesday was.

Now, it is still to early to know for sure, but the pattern is enough to warrant keeping an eye on it. The Smart Money have been aggressive buyers as well. Funds have been heavy sellers. This really is a nice set up for a sizable rally, but much like Sugar we need more technical confirmation first.

Daily Commodity Comment

COCOA - No change in the intermediate term analysis. The trend remains down and there still remains a high probability of some very quick heavy selling in the offing.

CORN - Intermediate and Long Term Trends remain down on Corn. I posted some key resistance areas to look for any counter trend rallies to terminate, so please refer to the intra-day posting I made.

CRUDE OIL - The June Contract looks like it wants to test the $66.20 resistance area again. my analysis on Crude still has not changed. I am very bearish.

SUGAR - Once again Sugar is attempting to find a bottom and stabilize. The action today was positive, with an inside day and a very tight range, however, Sugar has been rampant with false starts so we need more evidence that the trend has in fact shifted.

HOGS - Continue to form a major top. I do think the high is in and although we had a decent rally today the ultra-short trend should shift back to negative very soon. I am looking for Hogs to have quite a decline Intermediate term.

10 Year T-Note - Look for rates to continue to go up a bit here after a decent rally in the 10 year notes. Not much downside really in the T-Notes and the Intermediate Term Trend on the 10 year interest rate continues to be Down.

Daily Equity Market Comment

There is just simply no question that this market is quite amazing as each time it begins a decline, it snaps back in force. I am going to say force and not strength, simply because the short term model remained negative and there are negative divergences abound right now.

This action we are seeing, while it is always nice to see the equity markets advance, is not healthy for the intermediate term. The most constructive thing this market can do at this point is to pull back on an intermediate term basis and gather much needed strength for the next major leg up. There simply is no strength in the last 4 rally days.

Of course the market is always right, but I must say that if the market continues to move higher in the fashion it has been, then I am going to entertain at least a 25% hedged position. Lets wait and see what develops.

Resistence on July Corn

As July Corn continues its counter-trend rally, I thought I would re-post the price levels that could hold the upside in check and possible reversal points.

Remember, Corn is in a Bear Market!!

1st - 394 3/4
2nd - 407 even
3rd - 419.25

Somehow This Has Happened Before!

Daily Stock Comment

USEC Corp. - Continues to behave like a stock in a corrective mode. I am still expecting an intermediate term correction in USEC that could shave 10%-20% off the share price. However if this does occur I will add to already existing positions as long term this stock is going to be a superstar!!

Revlon - No real change in the condition of Revlon. I still would like to see it work lower and find support in $1.12 to $1.15 area.

Gander Mountain - GMTN attempted to plow through some very strong resistance today, but was met with overhead selling and reversed lower. While there is a chance of a short term correction here, I remain bullish on the company long term.

F, BDAY, DVSA - No real change, please refer to yesterdays post.

Daily Commodity Comment

COCOA - Continues the decline and should trend lower for an extended period of time. I still expect a fast string of bloodbath down days as the exit from positions is made in haste.

CORN - Corn seems to be stuck in a trading range after part of its decline. While it could break out of the range to the upside, that price potential is severely limited and opens the door for selling once again. A breakdown to the downside could lead to a climax low with panic selling and huge volume. Keep in mind that if this does happen it will still be only the first leg completed for the decline.

SUGAR - Continues to drift lower and still is not even close to giving a hint that the trend is going to transition. Sugar does have some excellent upside potential, but certainly not until a solid trend change confirmation is in place. Stay tuned to this one!

CRUDE OIL - The resistance I spoke about yesterday held very nicely t $66.20 and the market moved sharply lower. I anticipate a continuation of this decline in crude oil prices.

LEAN HOGS - Please take a look at the new post I made today regarding the condition of the Hog Market, it has some real selling opportunity.

Equity and Credit Market Comment

Finally a swing high has been made in equities and this should lead to at least a short term correction. Of course I am looking for a more intermediate term move and I will be posting the S&P 500 support levels.

The 10 year note has been rallying very nicely, but it appears it may need to breathe here and perhaps rally a bit. Take a look at the chart, it is very interesting.

Lean Hogs and Their Potential to Follow Corn Lower

Hogs are looking very vulnerable to a sharp decline here.
The technical picture is very weak.
The Big Boys have been Major Sellers
The Small Traders are Excessively Bullish
They are Near Some Very Strong Resistance

These are just 4 reasons to look for hogs to decline and it could get ugly.

Potential Confirmation

This will give us a good idea as to whether or not a correction has begun.

On this 5 min. chart, we should expect the market to reverse and move lower once again
right at these levels. We will have to wait and see what it tells us.

Speculative Issue - URST

From time to time I might come across a stock selling for under $3 that looks to me as if it wants to make a fast sharp high return move. Such is the case with URST.

Take a Look!!

Where is the Dollar Headed

The course of the U.S. Dollar may be shifting as I type this.
We need to start looking for some type of major bottom now that all the talk is about the Pound surpassing 2.

It is very possible that the brunt of the decline will come against the pound with the Euro not to far behind.

Now this all may be a bit pre-mature, but then again it might not (nothing like covering all the bases : )) Seriously, it is a time to keep the dollar on your radar for a potential secular shift in trend.

Current Stock Watch

USEC - Should begin to move sharply lower here as the counter-trend rally appears to be over. The stock continues to offer solid long term prospects, it has just gotten a bit ahead of itself price wise and needs to release a little bit.

If this double bottom GM has put into place is legitimate and strong then it should find some support quite close to the area it is trading in now. 30 1/2 should be strong support.

Revlon - I continue to wait for the pullback to continue in order to judge the health of the stock. We need to see if this move is for real or if it is just another fake out.

GMTN - Starting to work its way through some very heavy resistance. A close above $14 on strong volume should cause a serious short covering rally. Take a look at the short interest in Gander Mountain, it is HUGE!! This could provide some excellent fuel for a strong rally as those shorts run for cover.

FORD - Looks poised to make a strong rally. Although with symmetrical triangles the price can break either way, the internals seem to point to an upside breakout. Sometimes a Straddle is a good thing in a situation like this, then it can break any old way it wishes!!

BDAY & DVSA - Both are getting close to their downside price targets.

IndyMac and Corus Bancshares both appear to have put their secular lows in place. However, with the extent of price damage they both endured, it might take a period of choppy action before a sustainable rally can ensue.

Daily Commodity Market Update

COCOA - Continues its decline. I am still expecting a 2-4 day bloodbath on the downside as the smart money has been heavy sellers and the Fund traders will only be able to support this market so long.

CORN - A move to new lows for this decline may end the first leg of the decline. However, at what price the first leg ends is any ones guess. We will just have to continue to monitor the market and see what it tells us. The Long Term on Corn remains down and still has a long way to go before any substantial bottom is put in place.

SUGAR - Broke to new lows yet again. I am still awaiting a strong confirmation that this decline has terminated. There is some serious upside potential in Sugar, but we need some good solid confirmation that a bottom is in place before it is even considered.

CRUDE OIL - Look for strong resistance at $66.20 basis the June contract. The Intermediate term trend remains negative.

Daily Equity Market Comment

The negative close today across the board is a bearish sign short to intermediate term for equities. Although The only confirmation I have gotten so far that at least a short term correction has begun is from the Hourly work, the daily work continues to break down.

Notice that the short term model went to a zero today and this after such a strong rally over the last 7 trading sessions. Of course this market has been quite immune to the negative divergences so far, therefore a stronger confirmation than just the hourly work is needed.

Metallurgical Coal Leader

Fording Coal will announce their first quarter earnings after the close today and if I had to side one way or the other based upon the weekly technical picture, I would say it will report stronger earnings than are being expected.

Aside from that, the stock looks to have a pretty strong long term technical picture. Take a Look.

Peeking Out from the Doghouse

Remember the days when Fannie Mae was the Wall Street darling and if you ran a mutual fund and did not have it somewhere in your portfolio you were borderline certifiable?

Well now that those days are gone and Fannie Mae is still in the dog house I think it is a great time to take a look!