The following stocks were showing "momentum until last week tumble"....
Please check FA & use tight stop as MORE pain may be on the way..so position to limit loss.
MA,BIDU,AKNS,CSIQ,LDK,AGU,SOLF,FSLR,STP,SPWR,
JASO,YGE,TSL,ESLR,HOKU,ASTI,ENER,BG,POT,MOS,MON,RIMM,
AAPL,VMW,CCJ,ICE,CTRP,WYNN,AUY,ABX,GG,KGC,
ISRG,WFR,AMZN,DRYS,FWLT,NDAQ,GRMN,SOHU,FMCN.
The above list is a good place to reposition once you feel comfortable.
Suggest picking 4 to 6 from above list...never just one or two...
On sunday I will post again by 10AM.
BLOG does NOT give buy or sell.
Please try to recover with rest & relaxation.....it was a "bummer of a week"
Saleem
36 comments:
Good morning Saleem,
Would you speak to the oil complex for us? I see lots of bull momentum being spoke about stocks such as OII, APA, SLB, RIG, BTJ, but I am not sure if all of the talk is to get retailers to buy, so that MM's can sell into us!!! I am obviously suspicious as to real or claimed momentum. I am wondering if you follow a batch of oil stocks and if so, I'd like to know what you see? Thanks much for your thoughts.
On another note, I think I made my first blunder for 08 as I sold RIMM for a loss instead of buying to average down. I acted hastily IMO. I wanted more cash in hand in case the market continues its downward spiral. I am trying to make shorter trades this year and take small gains as a disciplined practice. I am also trying to sell a stock if it turns around and goes back to my buy point, as we have discussed previously, in order to either break even or make a profit. Looking back at 07, my biggest losses were in stocks that I allowed to keep drifting down, in the hopes of recovery. Dead money and then lost money. YUK! I have a new set of trading rules that I have compiled from your blog, coupled with my own experiences. I guess the reason that I am showing you my new rules for 08 is to get your feedback on them. I have printed this set of rules out and keep it in front of me all day, to keep it as a minute by minute reminder of this approach. Here it is:
I call the list "JACK BE NIMBLE IN 2008"
*TAKE PROFITS FAST
*DONT BE GREEDY
*DONT LET A STOCK SINK BELOW MY BUY POINT (SELL AND TRY AGAIN TO PRESERVE CAPITAL)
*CUT LOSSES QUICK BEFORE THEY MOUNT
*DONT HESITATE -Snooze you lose
*BUY QUALITY, HIGH VOLUME STOCKS
*BUY EQUAL DOLLAR AMOUNTS
*DONT BE OVEREXPOSED IN ANY ONE POSITION
*BE PATIENT TO FIND GOOD ENTRY POINTS
*HAVE CONVICTION
*TRUST YOUR INSTINCTS
I am attempting more of a day trade focus and to be in cash as often as possible, so that when we have downward pressure, I can buy stocks on down days... to play the volatility that I expect to continue this year. Thanks for all of your selfless insight and giving your time. You are the only person that I have communication with regarding stocks, (and others that participate in this blog) as I am doing this full time and I don't have any friends that are in this business, to discuss things with. Your blog (You) is (are) a real God send to me. LOL. Doug...
P.S. I would like to let my winners run this year and I should have that on my list, but I really believe that we are going to see a lot of stocks breaking out for runs, but not holding the gains long, as MM's take profits off of good moves. This is what seems to be happening in the market for the last few months. Then it seems like the same stocks, the ones in favor, give new entry opportunities, over and over. That is why I am thinking about taking profits quickly this year, rather than letting winners run. Please correct me wherever you see fit. With high respect I thank you much. Doug...
Hi Doug,
First thing first......
Never worry what you have already done.....that is done & overwith...
Currently all stocks are crashing below their established support...which is NOT a good sign.
So...a conservative approach is very desireable...like trading with half your capital...until BB wakes UP & say UNCLE...
Taking loss in RIMM is NOT the end of the world.....
You can buy RIMM on uptrend again...if you think that is the best idea.....FA/TA wise...
Your rules are good GUIDE....but FA/TA should dictate trades.....
Sometimes taking LOSS is the smartest thing to do....if market is going to be unstable.....
Lot of investors & traders have been BURNT in 2007...& now 2008 is off to a very WEAK start.
So...the best feedback I can give you is to .....trade only with 50% and stay disciplined in that mode...
If you GROW that money....take half of the profit out from market each time....NOT tommorrow NOT next day ...BUT before you buy your next trade....
I am here all the time from 8am to 8PM....I will encourage you to use the comment section to ask any or all question about anything.....
I will be happy to communicate & give my 2 cents worth...which MAY be worth lot more with passage of time......
Saleem
Saleem,
As you know, I am generally using IH picks to trade. So I am depending on their TA/FA and DD to be in the right sectors with good entry points. Then I apply my new rules for 08 to those trades. I will admit that I do get in on some of your trades as well. Either way I get guidance from both. I do this because my TA/FA skills are not yet developed enough to do picks on my own... I will take your advice and pull % of profits out and invest only % of money and not all. I recently heard a pro trader discussing that retail investors tend to be all in way too often. That has been me in the past. I will attempt to profit this year with much less exposure, at any given time. Thanks for the advice and schooling. Talk soon, Doug...
Hi Doug,
Oil & oil related stock..I have no knowledge and do not follow...
I follow the price of oil closely...which has nowhere to go but DOWN......just a strong opinion where my money will NEVER be put into play....
I never buy...what I do NOT understand.....
Oil is UP because US$ has crashed...Now US$ is going to be UP for next 2 yaers...so logically OIL must come down as it IS priced in US$.....
That is why I am maintaining my Canadain $ short...everytime US$ goes UP against Canadian $...i smile all the way to my bank....
I expect base metals to fall also...
Gold is in its own world reflecting global uncertainty about economic growth $$$...
As I always say you must learn "fundamentals FIRST then Charts"whether economy,metals or stocks.....70% FA then 30% TA...
Saleem
Saleem,
The selling we saw on Friday really began a week ago Friday. A steady orderly selling process until Friday when the sell programs kicked in. The unemployment numbers had little to do with it. Market manipulation is more likely. Good news is rarely reported or reported as not good enough. The media needs to create unrest in the populous to get their candidate into the white house. You would think the world was coming to an end soon, all due to the current administration. When the markets tank, everyone's retirement is at jeopardy and they pay attention. Buy only the best of breed in this environment.
Hi Doug,
Please do understand that IH is 100% technically driven.....
So you must follow their trading style...because it is chart driven.
I have not been to their website...but based on what you have posted from IH...they NEVER talk about EPS trends or future Sales....which part of 70% FA...
You are paying close to $2000 yearly...so try to follow their system 100%.....you will gain much more....imho
TA does work with disipline also.
Just my 2 cents.
Saleem
Saleem just created a monster... since I am waiting for the bloodbath to finish, I am concentrating on some research and TA (Stockchart is going to start charging me soon even if I am only using the free tools...)
But my concern today is not TA but FA. I would like to find a reliable source (free) for Earnings history for at least 8 quarters (Yahoo gives 4 ) MSN gives up to 12 but here is the problem... the data I find on MSN differs from Yahoo (almost all the stocks I check).
Take this example for CCJ :
Yahoo :
http://finance.yahoo.com/q/ae?s=CCJ
MSN :
http://moneycentral.msn.com/investor/invsub/results/hilite.asp?Symbol=ccj
For example, 1st quarter says .17 on MSN and .14 on Yahoo
I also checked CNBC site (I like the way the present the info about earnings but their site always crashes on me) http://www.cnbc.com/id/15837281?q=ccj
Their data is identical to Yahoo. Here is my question : who should I trust or is there any way to explain those differences ?
Any other suggestions for reliable websites fo getting these financial data (still looking for quarterly sales number for past 8 quarters..)?
Thanks!
Hi Standard,
Nicely put together !!!
You must understand though that majority is a follower of trend ...
I would NOT be in 6 stocks & invested with my comfort level..if I thought that my stocks are going to tank....
In the end it is Stocks which makes money NOT markets....
Saleem
I like the fa 70% and ta 30% thesis Saleem. I do try to examine IH picks before I enter, in order to try to better understand their reasons. I will put more emphasis on FA in the future. I appreciate your feedback related to oil plays. You could be charging for this blog IMHO. Im glad that you don't though. LOL. Always learning and ever thankful. Doug... P.S. SOHU is scaring the heck out of me. I am in bag holder status, leftover from swing trade in 07. Trying to remain cool about the loss position that I am currently holding. ER at end of month and I hope this to be catalyst to get into porfit and out of the position. One more reason for my new rules for 08, avoid being a bag holder. LOL. Any feelings on SOHU?
Hi Frogvest,
FA 70% charts/TA 30% is my mantra..
Between Yahoo Finance & MSN the LOWER number is an accurate number.
Yahoo gives you last 4 q of actual vs estimate...which is extremely useful.....
I always follow the EPS trends which gives me better picture.
Read Key Statistics on yahoo Finance...it is motherload of very real info...but it is backdated to previous qurterly report as filed with SEC.....
So...current news & developement is very critical...lot happens in 90 days in the world we live in...
Hope it helps !!!
Saleem
Hi Doug,
As I had mentioned to you before that SOHU downside is $50 area...
Can it go lower to $48 in this environment YES !!!
Should you sell SOHU @ $48...NO !!!
Based on my 70% FA.....
SOHU is a $75 stock in 08....
What you should do...sell @ $60..
Profit must be taken no matter what.
Should you add here NO !!!
You need 4 to 6 stocks to HEDGE your bet ALWAYS...even when BB is smiling !!!
Saleem
Great advice Saleem. Thank you so much for getting me straight on SOHU. I am not trying to get rich out of greed or lust for money. I just want to help ensure my Family has needs met and maybe a little vacation once in a while. LOL. That is where my heart is. Your help is so much appreciated. Ive learned like 5 things from you this morning. Very productive conversations for me this morning. I wish I had value to offer you but I am level 101. LOL. Your friend, Doug...
SALEEM
Here is the IBD rankings: Peace
Rank Company
---- ----
1 BAIDU.COM INC ADS
2 INTUITIVE SURGICAL INC
3 POTASH CORP SASKATCHEWAN
4 SUNTECH POWER HLDGS ADS
5 VIMPEL COMMUNICATIONS
6 F C STONE GROUP INC
7 MCDERMOTT INTL
8 PRICELINE.COM INC
9 APPLE INC
10 RESEARCH IN MOTION LTD
11 ATWOOD OCEANICS INC
12 BUCYRUS INTERNATIONAL
13 CHINA MEDICAL TECH ADS
14 C N H GLOBAL NV
15 NATIONAL OILWELL VARCO
16 C F INDUSTRIES HOLDINGS
17 NEW ORIENTL EDU&TECH ADS
18 COMPANHIA SIDERURGIC ADS
19 CHIPOTLE MEXICAN GRILL A
20 FOSTER L B COMPANY
21 SYNCHRONOSS TECHNOLOGIES
22 WUXI PHARMATECH INC ADS
23 LIFECELL CORP
24 H M S HOLDINGS CORP
25 MASTERCARD INC CL A
26 TURKCELL ILET HIZME ADR
27 T THREE ENERGY SERVICES
28 GAMESTOP CORP CL A
29 RANGE RESOURCES CORP
30 EXPRESS SCRIPTS INC
31 HARBIN ELECTRIC INC
32 MOBILE TELESYSTEMS ADR
33 STERLITE INDS INDIA ADS
34 ARENA RESOURCES INC
35 F M C TECHNOLOGIES INC
36 KOPPERS HOLDINGS INC
37 GIGAMEDIA LIMITED
38 CORE LABORATORIES NV
39 GOOGLE INC
40 HOLOGIC INC
41 DAWSON GEOPHYSICAL CO
42 NATURAL GAS SERVICES GRP
43 FREEPORT MCMRN CPR&GLD
44 MINDRAY MEDICAL INTL ADS
45 H D F C BANK LTD ADR
46 M E M C ELEC MATERIALS
47 CTRIP.COM INTL LTD ADR
48 MILLICOM INTL CELLULAR
49 MORNINGSTAR INC
50 CREDICORP LTD
51 DOLBY LABORATORIES INC
52 BLACKROCK INC
53 MASSEY ENERGY COMPANY
54 QUICKSILVER RESOURCES
55 SOUTHWESTERN ENERGY CO
56 ATLAS AMERICA INC
57 AGRIUM INC
58 COCA COLA HBC SA ADR
59 L K Q CORP
60 TEAM INC
61 CAMERON INTL CORP
62 ENERSYS
63 AMAZON.COM INC
64 CAPELLA EDUCATION CO
65 DEERE & CO
66 A B B LTD
67 BOLT TECHNOLOGY CORP
68 TRANSDIGM GROUP INC
69 IRIS INTERNATIONAL INC
70 ANSYS INC
71 OPTIONSXPRESS HLDGS INC
72 SMITH INTERNATIONAL
73 OCEANEERING INTL INC
74 NASDAQ STOCK MARKET INC
75 OPEN TEXT CORP
76 DYNAMIC MATERIALS CORP
77 GREEN MTN COFFEE ROASTRS
78 CENTRAL EUROPEAN DIST CP
79 CYBERSOURCE CORPORATION
80 ABAXIS INC
81 CHINA MOBILE LTD ADR
82 GLOBAL SOURCES LIMITED
83 BLUEPHOENIX SOLUTIONS
84 DENBURY RESOURCES INC
85 MONSANTO CO
86 GRAFTECH INTERNATIONAL
87 FOCUS MEDIA HOLDING ADS
88 PHASE FORWARD INC
89 HURON CONSULTING GRP INC
90 B H P BILLITON LTD ADR
91 GARMIN LTD
92 DIANA SHIPPING INC
93 GILEAD SCIENCES INC
94 SCHLUMBERGER LTD
95 HUMANA INC
96 NOBLE CORP
97 PERDIGAO SA ADR
98 MERIDIAN BIOSCIENCE INC
99 JINPAN INTERNATIONAL LTD
100 NATCO GROUP INC CL A
Please note that MA is on the listing:
Madmax
Hi Madmax,
Thank you so much for your hardwork in listing of all IBD 100....
I rate IBD extremely useful for learning about stocks...and what makes it in the top 100...
But again picking 4 to 6 is absolutely critical....
Saleem
Saleem, Thanks again for quick answer. Therefore, I understand that CNBC also has the accurate numbers since they reflect what yahoo is saying, but with more details (imo). I spent a lot of time checking their website (CNBC). I realy like the way they present the data. If I can focus my research by using no more than 5 websites, I would be happy. I find it easy to get loss in the research.
Therefore, I realy want to set a checklist of steps to take before deciding to make a trade. There are so many numbers, I need to focus on what, in my mind, will move the stock or not.
It’s the same thing for TA. There are so many indicators, you can't use them all (reading a lot about TA lately, I understand that the key is to find a system that suits your goal. There a no magical reciepe...)
And you are right: we must have a plan when to get out, even when we are losing money.
Finally, I have the firm belief that if you do not invest the time when "playing" the market, it becomes only that, a game of chance. If anybody is interested, I will be posting my checklist once I am satisfied with it...)
Saleem,
Once again, Thanks for posting your trades on the blog. Some how, I was not comfortable with tech SECTOR last week. I sold my AAPL booked small profit(better than loss). Then I tried to purchase at 5O MA. But what a day ... selling continued untill 4 PM. I am going to sell PCP on monday and stay in sidelines until FED speaks about further rate cuts. I am still expecting a rate cut here. Thanks a lot for your FA/TA.
Hi Saleem,
How right you are! It's individual stocks that make you money and not the market. The herd can be stampeded by just a few carefully aimed shots. That's what I've been noticing,,,everything is just so precise and weighted. Am I the only one who sees it? Should I care? I apologize now for being off subject.
Standards
God Bless
Saleem and Doug,
Enjoying the posts...
A question for Doug re:IH. I REALLY like this service but it seems I'm getting something different than you based on the price you're paying. Before this trial ends and I decide to subscribe, I'd like more info from an existing user on the pros/cons of the options offered. Let me know if you're open to talking about it and answering some questions.
Saleem, I gather from your post that you advise no more than 50% exposure at any one time and never exceed this limit. If you want to take a new position you first sell another. Is this correct? If yes, are there times when you've broken this guideline?
I appreciate your disciplined approach because my elcectic one has been way too exhausting, not to mention unsatisfying in terms of performance. Also do you stick to 4-5 stocks because of focus considerations or are there other reasons? This style seems to have worked for you really well last year. Was it the first year adhering to it after trying other strategies or had you been working this way awhile? Lastly, do you EVER act upon a catalyst that you deem persuasive for a short term trade on a stock that's not on your usual radar screen - or does discipline rule out that option?
Hope I'm not over doing it on the questions...and please feel free to NOT answer if I'm being too nosy.
Thanks again!
Beatrice
Hi Beatrice,
As a starting point ....I have been trading for 40 years....
I was too much FA & believing ever glowing report by Value Line....
I was also too much into finding my OWN picks..mostly BARGAINS...
That cost me big time in lost equity on a consistent basis....
Then I gradually started to shift towards message of the market....
Was doing extremely well with blue chips in 1987...MCD,WMT to name a few...
Then came 1987 crash.......lost $100,000 equity......
That turned me more towards learning everything there is to know to be profitable......
Benefitted big time since....even crash of 2000 to 2002 did not affect my equity @ all.....
What I have learned is that to make money you need to be ahead of the curve in stock picks.....
Strong stocks which are just on the cusp of a breakout in terms of their business...not TA.....
FA will tell you that EPS & Sales are rising rapidly.....so keep buying those stocks.....
Why 5 or 6......?
This way you are not affected as much by the downturn in markets or economy......
5 or 6 stocks gives you time to think which one needs to be sold based on FA/TA.....
5 or 6 stocks gives you exposure to many sectors which are booming...
50% of total equity/liquid funds is absolutely critical to maintain in markets....no matter what.....
Overexposure in markets @ any time is never a good thing.....
You must enjoy the fruit of your hardwork.....so i have a habbit of pulling money out everytime I make good profit.....
Lot of proplr have been wiped out of all equity because they put every penny to work in markets....
Other 50% can stay in mutual funds as they are conservative way to grow money......
Daytrading is very intoxicating...and you can lose lot of money in a hurry.....just picture last two weeks.....
Many investors & traders are "numb with loss"
With 5 or 6 stocks you have a much better chance to..not only maintain your equity but move rapidly ahead......
First ...preserve capital....where we are right NOW....
Second.... position to recoup any loss...where we should be next week..
Third...grow your equity which should be the-focus after fed cuts rates.....
Fourth....you do NOT make money ..unless you are in the market.....
Fifth....know that lot of stocks DID go UP even on friday...
If you need any more pointed Q/A I am by my computer !!!
As I practice...that no question is a bad question.
Saleem
Hi Ram,
Taking profit is a very smart approach.....
Fed cut is a given....
Markets are deeply oversold...so they are ready to turn...not for more than a day & half...
Saleem
Hi Standards,
No you are not off subject...
Even on friday many stocks were green....including owned by me & others...AKNS & SOLF not only were green...but were moving further UP in AH.....
Comfortable exposure in markets never hurts...if you are in strong stocks.....
Sector strength matters.
Saleem
Saleem,
A voice is saying "Why re-invent the wheel. Just follow Saleem's advice... and start over." Whoever said you're a godsend is right.
I'm still unclear re: how much is in stocks at any one time. I thought 50% was in stocks and 50% money market. Where does the 50% in mutual funds come from for conservative growth?
I was thinking 5-6 stocks was not diversified enough and therefore my question re: the why of it.
I smiled to read you restrict it to that number to achieve enough diversification.
You mentioned in an earlier blog you only trade stocks exceeding a million or more in volume. Why and would this change for you depending on the size of the portfolio you're working with?
BTW what is BB?
With gratitude,
B
Hi Beatrice,
The price that I quoted for IH alerts, was a special promotion price at the time. I pay $139 per month. I believe their normal price is a little higher. I actually signed up for a more expensive price charge, but was later surfing on the net and found a better price that they were offering. I called their phone # and told them I had just signed up and found this better price and I asked them to change my cost. They did, without hesitation.
Now I will comment on IH and my experience using them. First of all, I have watched many of their stock picks hit the actual target that they set for the sale price. So, I do know that they have a solid TA team. I have been stopped out of three stocks so far. That did hurt, but I have made way more successful trades with them, so I have to say overall, their picks are winners at least 4-1 ratio. The main reason that I am using their service is to get into quality stocks that are breaking out, in hot sectors. Then I trade them much quicker than most swing traders and I take partial gains on their picks. I still think that if you just bought when they say buy and sell when they say sell, you would come out a winner in 2008. For my own personal reasons, I tend to take small gains fast and move on. Normally that would force one to struggle the next day to find suitable entry points but because I have IH, I know that I can go to their open trade table (trades that they are currently in) and find stocks that are below their initial buy point and I play those stocks, with the conviction that those stocks will soon surpass their original entry point. Even stocks that are above entry price but still open trades with IH, are good trades to continue with. I am also having some success trading good stocks that are moving up but have regular pullbacks as we know that most stocks dont go up in a straight line. So the bottom line is IH keeps me in good sectors with quality stocks that TA is showing breakout status. The guidance that they provide in their nightly reports also helps me to better understand the markets and why IH chooses the stocks that they do. I am going to copy two reports for your perusal. The first is their nightly report that speaks to the market current conditions and strategies for the next day. The second one is their current trade list. They provide these nightly updates on all stocks that they have a position in, so that we can read their take on current status/performance expectations. Please take note that IH puts their money where their mouths are, as they actually buy these stocks, not just make recomendations. Here are the two latest reports: I apologize to all in advance for the length of this post
* * * *
01/05/08 Investment House Alerts
* * * *
IH Alert Subscribers:
MARKET ALERTS:
Targets hit alerts: IWM; PZE; SDS; SMH; SPY
Buy alerts: None issued
Trailing stops: None issued
Stop alerts issued: GME; ICE; NYX
SUMMARY:
- Employment report confirms economic plunge, Fed & administration remain indifferent, market responds in kind
- Job creation not negative but it may as well have been.
- Fed is in a tough position, but doing nothing for fear of inflation definitely won't help.
- Positives: valuations are reasonable, fiscal stimulus will eventually pass, global economy will survive, and that equals a shorter economic hiccup.
- Market getting short term oversold as NYSE indices approach natural support at the November low, but a bounce is not likely to change the market's character.
The first three days are in the book and they are way down.
Futures were up ahead of the jobs report as stocks were going to try and build off of Thursdays push and rebound some in relief to the prior selling. Then the jobs report missed big with unemployment jumping to 5%, the futures tanked and so did the market when the bell rang. They were down, fell hard to midmorning, bounced toward lunch, then rolled over again and sold to the close. The action confirmed the market's weak technical positioning that it has built in since Q3.
On top of the jobs report China issues its quarterly statement that it would 'take measures' to 'slow' its economy. INTC received an analyst downgrade and it was clocked on the session, capping a week that saw it decline 18.5%. The ISM services topped expectations (53.9 versus 53.5 expected) but the impact was similar to a lone raindrop hitting hot pavement.
Investors were waiting on what Fed Vice Chairman Kohn and President Bush had to say about the economy and what Bush intended to do about the economy given the string of weaker data summed up by the jobs report. Kohn didn't even mention the unemployment report in his comments. It was classic denial. The WSJ ran a story for the Fed Friday indicating that price increases in food and energy may keep it from cutting rates at its January meeting. Kohn refused to discuss the jobs report as it flew in the face of the Fed's adamant position that inflation was the primary concern. As for Bush, he did not come out with anything with his meeting with Bernanke and Paulson. Most speculate he will do something at his state of the union address on January 28. He did say the economy had a solid foundation and the financial markets were strong. That was a punch in the nose to investors who know the stock and bond markets are signaling major trouble. You know the result: more fuel to the downside fire as investors realized they waited in vain.
Technically the action was crappy to crappier, at least looking at the major indices. They gapped lower and continued selling through the session. The size of the losses and the close at the lows signaled massive weakness.
Internals: Horrid as you would expect, matching the point declines. -4.4:1 breadth on NASDAQ and -3.4:1 on NYSE. NASDAQ foreshadowed this action as breadth was worse than NASDAQ on Wednesday and Thursday; NASDAQ was losing its relative strength. Volume surged to the downside of course, spiking above average on both NYSE and NASDAQ. After cracking the 200 day SMA on Wednesday and Thursday, big institutions were dumping NASDAQ shares as the growth model they need was formally laid to rest by the jobs report.
Charts: Nothing positive here, at least long term. NASDAQ took awhile to start its selling, but when it did it quickly surpassed the NYSE indices. It broke below its November low, the first of the three large cap indices to do that; again, NASDAQ quickly overtook the NYSE large cap indices when the dam broke. SP500 and DJ30 sold hard as well, but they remain above their November lows though barely. They both closed at this same level in August after that big spike lower intraday mid-month. Maybe they can form a double bottom here, but they will have to prove it and no one was ready to buy into that possibility just yet. One thing that this test of the November lows does is set up an oversold bounce after just over a week of selling.
Leadership: As we expected in the Thursday report, a weaker jobs report sent just about all stocks lower. Technology pretty much gave up. Despite the overall selling, energy, agriculture, heavy construction, metals - - the international plays, all held near support. Of course, so did defensive stocks such as JNJ, PG, MO. Nonetheless, if you look at their positioning you would not expect to see the indices tumbling down six straight sessions and crashing through support. With the market getting oversold and these stocks holding near support, a relief bounce should slingshot them back up. If it does not then when the relief bounce ends things are likely to get really ugly.
THE ECONOMY
Jobs report manages to hold positive by a hair.
Given the weekly jobless claims a negative non-farm jobs report was a possibility. Thus the 18K jobs to the upside was almost a moral victory. Well, not almost. It was not really close. It was the weakest showing since August 2003. That was Q3 2003 and you may or may not recall that the economy grew at a 7.3% pace in that quarter. Cool. So this report means nothing, right? Not quite. At that time the economy had been in the toilet for over a year and one-half and was on the rebound. This time it is heading the other way.
November was written up to 115K from 94K. October was revised down to 159K from 170K. The missing link for December was the private service sector. It was 93K, well below the 152K three-month average. Of course it did not help that the usual monthly losers (construction and manufacturing) were lower as well.
Employment is a lagging indicator. The ISM reports, durable goods, retail sales, leading indicators all were heading lower in advance of this report. ECRI's annualized growth rate hit its lowest level since the end of the 2001 recession. Moreover, the market has struggled since the summer. When the jobs report finally caught up with the other indicators the market figured the die was cast. It was already lower and weakening and this data sealed up the package.
Fed is in a tough position but that is what it is there for.
The Fed has to deal with some issues that its predecessors did not, mainly some modest but persistent inflation left over from Greenspan's low, low interest rates that were left too low way too long. Thus we keep seeing some issues with consumer prices, mainly outside of the core, but within the core prices are quite well contained and the inflation pressures, the things that drive prices in the future, have waned. Indeed, ECRI's future inflation gauge fell to a 31-month low. It is very good in predicting inflation and this report indicates inflation just is not the problem.
What we are seeing as inflation is the rise in food and in energy. Of course, it seems everyone but the Fed knows that the ethanol mandate is what is pushing our food prices higher: a food chain based upon corn syrup will rise in price if corn prices rise. As corn is an inefficient feedstock to make ethanol, it takes a lot of corn to produce a gallon of fuel. Thus we are competing with fuel when we go to the store to buy food. This doesn't even account for the massive amounts of water it takes to produce one gallon of ethanol, another cost we are paying.
The irony of this ethanol folly is that it is doing nothing to dent oil or fuel prices. US consumers and businesses are not pushing prices higher; they are part of it, but it is a world effort, along with a lot of worry and speculation that is keeping a premium in oil prices. The Fed cannot change this unless it can bring down all world economies and thus reduce oil demand. It is as if the energy market knows we are not going to produce enough ethanol to make a difference. If we planted every open space in the US we might have enough to impact energy prices, but all of the fertilizer used and water wasted, not to mention the leveling of all open spaces to plant, are much more costly than the price increases in oil. There is already empirical evidence of the fallout of this planting: along the Mississippi river there is so much planting of corn and a corresponding increased use of nitrogen and other fertilizers, the runoff has killed fish in a 175 mile stretch of the river. We go to all of the expense to clean up our water and then pass a scientifically unsupportable government mandate that provides the incentive to pollute again. Nice, well thought out planning. Instead, energy prices keep climbing, almost mocking this effort.
Unfortunately the Fed is being pressed by the gold bugs and other central banks into maintaining a hawkish stance, one that places inflation fears above growth concerns. On Friday that WSJ article was the Fed attempting to prepare the way for a 'no action' meeting in January. Talk about ill-timed. Did they bother to look at the jobs data that they did have ahead of its Friday release? Worse, did they have it and still run that 'let them eat cake' article? The Fed Funds futures contract has basically priced in a 50BP rate cut in January post-jobs report. Does the Fed still maintain its position post-report as well? It cannot change oil prices by raising rates. It cannot lower food prices by raising rates; indeed, you can track the rise in our food prices to the mandate to produce more ethanol. Raising rates is not going to lower food prices.
So we have a Fed that does not want to cut rates needing desperately to do so as well as continue injecting liquidity into the market. Problem is, it can hack rates 50BP in January and again in February and still not make a difference. Not because that would not finally provide an environment of easier money, but simply because the Fed is too late to the game.
Needed: some fiscal policy stimulus.
Monetary policy cannot solve the issues. The Fed has waited too long as it did in 2000. It cut rates from over 6% to 1% and the economy went steadily lower. It was not until the fiscal stimulus, and specifically the second round that provided investment incentives, that the economy recovered. Right now the economy needs fiscal stimulus.
And aren't we lucky. Friday President Bush met with Bernanke and Paulson to discuss options. He commented after the meeting about the strong markets and solid economic foundation, but gave no details of what he has or doesn't have in mind. Speculation is that he will wait until the State of the Union on January 28 to announce any possible stimulus. As with the Fed action, that is too late.
Of course it will still need to get through a hostile Congress, and with that situation about all that tends to pass, particularly for lame duck President in his last year, is a 'rebate' program such as the first tax cuts in the last recession. They had zero impact. Of course they did. Every time this cheap, politically expedient 'incentive' is used it does nothing. What is needed is a change in corporate tax rates, say down to 0%. Also, some assurance that the dividend treatment will be extended as well as the investment incentives would give certainty and thus capital investment once more. There is some momentum to reduce corporate tax rates and to provide the middle class a tax cut or make those currently in place for the middle class permanent. The latter likely would not have much impact at all, but it is doable. That is a sorry commentary on the current political climate. We hear the democrats are working on a stimulus plan of their own as each party tries to beat the other to the punch in an election year. You can bet that will be targeted at those who don't pay taxes and the dubious benefits that provides the economy. We also hear, however, that a corporate tax cut is another democratic proposal in the offing. Some sow's ears, some pieces of gold.
There is thus potential for some fiscal action, but it has to be the right kind, and unfortunately the parties are philosophically opposed to one another as to what kind of stimulus they will agree to. We all know what works: proposals that incent capital investment. Sadly, what we know works often falls victim to political games, and in an election year where half of the candidates (on both sides) are railing against corporate greed (do they know that most corporations are considered small, i.e. family corporations?), providing the right kind of tax cuts as stimulus is about as likely and the process about as pleasant as passing a quarter-sized kidney stone.
THE MARKET
Well the market made a swan dive Friday, leaping off the cliff after seeing the unemployment report. The selling confirmed the topping action the volatility and quick successive corrections in 2007 foretold. The economy is heading for a significant slowdown whether it reaches recession levels or not. The market has started lower ahead of that and the Friday action spells more economic slowing to come.
There are some positives. There is the continuing strength in the global economy. Sure some of Europe is slowing and China may find out what happens when you try to slow your economy: you get what you wanted and much more. Nonetheless, the strength in the stocks with overseas ties, even with their pullbacks, shows there are some nice upside possibilities still.
Second, valuations remain low, much, much, much lower than in the prior recession. Yes earnings expectations are going to be revised lower and that will hurt valuations, but stocks are also diving lower already, so valuations will hold as the price losses and lowered estimates offset each other. If the selling continues as it looks it will continue to do given the patterns and the economic indications, valuation will only improve.
That means the stock bear market will likely be much less severe than 2000 to 2002. Stocks will not have to shave off massive amounts of points to have very, very appealing valuations. Again, that means the stock bear market will be lighter and the economic slowing should be less severe as well. At this point, much of the cause of the slowdown, i.e. the housing and mortgage issues, are well down the road and much closer to the end than the beginning. The Fed will finally get rates down to the right level, now likely sooner than later, and we will get some kind of fiscal stimulus. If by luck it is the right kind, this whole slowdown could be a year or less. Of course the market sells off ahead of the actual decline and it bottoms and starts to recover ahead of the economic rebound. That means the market should be heading back up before year end.
MARKET SENTIMENT
VIX: 23.94; +1.45. Disappointingly modest bump in VIX as the market dove lower. It will likely surge if the selling continues, but its lack of movement indicates there is more than just a bit of selling to go before it and the other sentiment indicators hit levels that tell us a sustained recovery is ahead.
VXN: 28.62; +2.03
VXO: 26.78; +2.23
Put/Call Ratio (CBOE): 1.12; +0.21. Back above 1.0 on the close. It will take several more of these closes as well as other sentiment indicators to 'get right.'
Bulls: 52.2%. Falling further after breaking back below the 55% threshold last week (54.9%). Down from 56.50% after a jump up from 53.3% and 49.4% the week before. Didn't make it below 45% (it hit 40.6% on the low for the prior round of selling). It spent 5 weeks above the threshold 55% on the last spike higher. You have to go through the process of wringing out the bulls with a decline of significance, a.k.a. a move into the lower 40's. The theory is that when too many investors or advisors are bullish then most of the money is in the market and there is nothing ready to come in off the sidelines to drive prices higher. On a steady climb from a low of 40.6%, the low for this round. Never made the thirties. Hit 56.7% in June and now it has blown past that. The market peaked about a month later. For reference it bottomed in the summer 2006 near 36%, and 35% is considered bullish.
Bears: 24.5%. Bears are rising with the market's inability to hold a rally, up from 23.1% last week. Improving from 22.4% before that. Fell like a stone from 25.6% the prior week and 27.6% the week before. Down from 29.0% after one week at a higher level, jumping from 26.6% the week prior. Up from 22.2% after bouncing up and down over 20 for several weeks. It is still significantly above the threshold 20% considered bearish. Fell to a low of 19.6% on this round. Bearishness peaked at 37.4% on this move and it fell to 18% in August. It topped the June 2006 peak (36%) on this run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005).
NASDAQ
Stats: -98.03 points (-3.77%) to close at 2504.65
Volume: 2.525B (+30.27%). Volume surged as NASDAQ dove. All of the low volume in December as NASDAQ rallied and faded resolved in a big downside surge. Volume has jumped as it did in early November when this last round of selling really got underway.
Up Volume: 191.19M (-694.778M)
Down Volume: 2.322B (+1.295B)
A/D and Hi/Lo: Decliners led 4.37 to 1. Heavy downside breadth as techs were finally dumped. NASDAQ 100 led the selling with a 4.3% decline.
Previous Session: Decliners led 1.76 to 1
New Highs: 49 (-14)
New Lows: 475 (+211). With this drop the lows are already reaching levels that can indicate a bottom, but the other indicators are not there yet.
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
Gapped lower and sold to the close, breaking the summer 2004/summer 2005 up trendline that held in the August selling. That is a serious breach. The August closing low at 2450 looks like a sure thing and the March 2350ish lows are not out of the question. It is down 12.3% from the late October high. That is the longer term picture. Nearer term the NASDAQ is 6 days straight down with an 8.25% loss just on this move. It is a might oversold and with that gap lower it will be trying to fill that gap. It may take another downside session to turn it back up, but with this kind of rapid decline a snapback is in the works.
NASDAQ 100 (-4.30%) broke down as well, breaking both the 200 day SMA and the November consolidation in its plunge. When it broke it broke hard.
NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: -35.53 points (-2.46%) to close at 1411.63
NYSE Volume: 1.649B (+24.57%). Volume was above average for the first time in two weeks. More dumping of the large caps.
Up Volume: 106.61M (-416.088M)
Down Volume: 1.537B (+758.483M)
A/D and Hi/Lo: Decliners led 3.44 to 1. Not as bad as NASDAQ but hardly great.
Previous Session: Advancers led 1.13 to 1
New Highs: 35 (-26)
New Lows: 561 (+252). Jumping quickly to levels that indicate an oversold condition.
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP500 rode the financials lower toward the November low (1406). A week of hard selling and approaching the November low. That starts to spell a rebound to test this selling. As noted above, a bounce suggests (though very quietly) an attempted double bottom. It has to prove a character change at this point, however, i.e. a strong surge on with solid volume, and . . . financials recovering. Nothing suggests that at this point, just a relief bounce.
SP600 (-3.24%) screamed lower, undercutting the November and December double bottoms. This is the lowest it has been since October 2006 when it was three months into a year long run to a new high. After this 8.8% drop in six days the small caps are primed for a rebound to test the prior bottoms at 380. That will set up another downside play.
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Similar to SP500, the blue chips were in emergency dive mode Thursday, dumping toward the November low (12,724) and the February peak on high, above average volume. That level, either with a slight undercut or not, will likely lead to a relief bounce before the Dow continues its selling.
Stats: -256.54 points (-1.96%) to close at 12800.18
Volume: 304M shares Friday versus 200M shares Thursday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
MONDAY
A fairly light week of economic data by comparison though now earnings season gets underway. With a slowing economy the big question facing investors is how much will earnings estimates and guidance fall. Stock prices are already factoring in that decline based upon a slowing economy. As noted above, with valuations starting this correction much lower than in the last correction, how guidance holds up will give us insight into how deep prices will fall.
Near term the momentum is down, but an impressive oversold condition is building. With the NYSE large cap indices just over the November lows and over a week of selling, a rebound move is in the works. The odds are it won't change the character of the market, i.e. turn this hard selling into a new rally. There is that possibility, but the upside, at least for US-tied stocks and the major indices, has to be proven. It is true that a recovery starts when things look bleak, but this is still pretty early in the game for the downturn. After all, the economic data is still mixed and will likely all turn to the downside before this episode is over.
A relief bounce will tell us whether the upside means business by the strength it shows. More than likely it will result in a lower high and the selling will resume. It will also allow us to gauge the strength of some leaders that broke lower as well as those that held up. We anticipate energy and the other groups of leaders, though fewer in number what with tech caving in, will continue to advance as they ride the rest of the global economic story outside the US. The moves may not be as dramatic, but again, how they recover off the past week's selling will tell us more with respect to them as well. Finally, it will allow us to reload some downside plays on SPY, IWM, etc. and ride the next leg lower if the rebound fails (as is the likely scenario).
Thus there could be a bit more near term downside as last week's selling carries over to start the week, then a relief move. It won't change anything and the downside will in all probability continue as the US markets have to find bottom still. That will take quite a bit more work as the indicators, sentiment and otherwise, are not all lined up as you would see at a bottom. We have the wrinkles of having the stronger world economy and the stocks benefitting from that even as the US indices dive, and the overall reasonable P/E levels unlike past bear markets. With that understanding of the lay of the land we will take advantage of the near term and longer term upside opportunities offered as well as the downside as the US markets struggle to find their lows during this economic slowdown.
Support and Resistance
NASDAQ: Closed at 2504.65
Resistance:
2539 is the August 2004/April 2005/October 2005/March 2007 up trendline
2550 to 2540 from May/June consolidation and the November lows
The 200 day SMA at 2615
2634.60 is the June peak
The 50 day EMA at 2658
2725 is the July high
The March up trendline at 2729
2735 is the December intraday high
2765 is the November/December/February up trendline
2778 from a July 1999 peak
2834 is the October interim peak
2861.51 is the October peak
Support:
2451 is the August closing low
2386 is the August intraday low
2379 from the October 2006 peak
2370 from the April 2006 peak
2340 from the March 2007 low
S&P 500: Closed at 1411.63
Resistance:
1430 from the August interim lows
1440 - 1437 from January and March peaks
1452 is the June/July 2006 up trendline
1459 is the February peak
1475 from peaks in December 1999 and January 2000
The 50 day EMA at 1476
The 200 day SMA at 1491
1490.72 is the early June closing low and early August peak.
1524 is the December high
1530 to 1535 are the June twin peaks
1534 is the early July high
1539 is the mid-June intraday high
1541 is the early June high
1566 is the July 2006/March 2007 up trendline
Support:
1406 is the August and November 2007 closing low
1403 is a longer term trendline from the August 2003 and September 2004 lows
1374 is the March 2007 closing low
1370 is the August 2007 intraday low
1325 from May 2006 peak prior to the summer 2006 correction
Dow: Closed at 12,800.16
Resistance:
12,845 is the August closing low
13,050 to 13,000 range
13,092 is the December low
The 200 day SMA at 13,366
The 50 day EMA at 13,352
The 90 day SMA at 13,495
The early July peak at 13,671
The early June high at 13,676 (closing), 13,692 (intraday)
The mid-June high at 13,689
The August high at 13,696
13,740 is the July 2006/March 2007 up trendline
13,750 is where it stalled in early December
13,930 is the late October peak
The July high at 14,022
14,088 is the early October closing high
14,198 is the October intraday high.
Support:
12,786 is the February 2007 peak
12,743 is the November low
12,518 is the August intraday low
12,250 from late March 2007 lows
12,050 from the March 2007 low
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
January 8
Pending home sales, November (10:00): 0.6% prior
Consumer Credit, November (3:00): $8.5B expected, $4.7B prior
January 10
Initial jobless claims (8:30): 336K prior
Wholesale inventories, November (10:00): 0.5% expected, 0.0% prior
Crude oil inventories (10:30): -4.05M prior
January 11
Export prices, December (8:30): 0.8%
Import prices ex-oil, December (8:30): 0.7%
Trade balance, November (8:30): -$59.5B expected, $-$57.8B prior
Treasury budget, December (2:00): $52.0B expected, $42.0B prior
End part 1 of 3
Beatrice,
this is part two. Sorry again to all for the length of post but I wanted Beatrice to have a chance to see what she might spend her dough on. Beatrice, please note that some of these stocks are (buy not hit) status, which means they have not entered those stocks yet but are watching closely. Ok, current trade table:
PLAY: Denotes the type of pattern or play.
Upside play types: Asc Tri =Ascending triangle; BO=Breakout; Cup=Cup base; Cup hdl=Cup w/handle; DB hdl=Double bottom w/handle; Dbl btm=Double bottom; Flat=Flat base; FlyPlat=Flying Plateau; Pennant=Pennant; Rv H&S=Reverse head & shoulders; Saucer=Saucer base; Test 18=Testing 18 day MVA; Test 50=Testing 50 day MVA; Test BO=Testing the breakout (could be 10 day MVA test, etc.)
Downside play types: CCall=Covered Call; Dsc Tri=Descending triangle; Dbl Top=Double top; H&S=Head & shoulders; Put (generic downside);
PIVOT=Buy point
Tgt=Target stock price for the play. Applies to stock and options.
Vol=Volume for the most recent session.
TgtV=Target volume to enter the play.
Stop=Stop advisory point. This is advisory and we may or may not exit a play if it hits this level depending upon market conditions.
PLAY STATUS: Buy not hit (stock has not hit buy point); Buy not issued (stock has hit buy point but did not enter due to weak volume, poor intraday action, poor market action); Current (ongoing play already entered); Entered today (entered the play that session); Exited (closed the position); Target hit (play hit initial target; will note if took all or partial gain or let run further); Trailing stop (exited using a trailing stop loss).
Upside Plays
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
AMZN 01/03 Rev HS 88.79 -6.42 96.65 111.45 10M 8.6M 93.68
Buy Not Issued. AMZN with a huge gap lower and then fell from there Friday to close below the key 50 day EMA and support from the late October consolidation. Couldn't hold its own against the market selling at the close of the week and had to let this one go.
APA 12/27 Test BO 107.39 -3.20 108.56 122.75 3.3M 4.4M 107.54
Current. APA with a gap lower in the market trend Friday but managed to hold the 10 day EMA and support from November/December highs. Good to see it stand up against the pre-recession madness in the market.
APA 12/18 PreAnn 107.39 -3.20 105.89 121.45 3.3M 5.3M 107.54
APC 12/18 PreAnn 63.96 -2.79 62.44 71.95 4.2M 4.5M 65.38
Current. A nice energy stock so gave it the benefit of the doubt as most energy's held up well Friday. Down on natural gas inventories, but that kind of news is as vaporous as the gas APC produces. In other words, it impacts stocks on the day of the announcement but usually does not hold over for long. Still in a great uptrend early this month.
BG 12/26 Test 18 121.00 -3.23 121.82 139.95 1.2M 1.4M 119.54
Current. BG with a bit of a gap lower back to test the 10 day EMA intraday at 120 and bounce back to 121. Low volume in the selling to stop the bleeding early and keep BG looking alright compared to the rest of the market mayhem. Looking to see BG resume the Asc bse next week out of this pre-recession selling.
BG 11/29 Cup 121.00 -3.23 116.55 133.85 1.2M 1.6M 121.48
BIDU 12/29 Asc Bse 360.99 -14.09 395.24 454.00 5.9M 10M 383.44
Current. Gapped lower but held the 50 day EMA; a natural support point. The key here is if it can bounce off the key support next week. China said it was trying to slow its economy more so the China stocks got some trouble, but this news comes out every quarter, has a short term impact, and then the stocks shake it off.
BLK 12/29 Cup hdl 210.98 -14.82 222.31 255.95 660K 668K 216.00
BLK with some high volume selling in the market selling Friday as it sold back below the 18 day EMA to test support from the mid December lows near 205 intraday. If anything positive is to be said here BLK at least held the key support from that 205 low from December. Gets the axe if it can't cut the selling next week.
BTJ 01/03 PreSplt 40.77 -2.33 43.32 5495.0 239K 350K 41.38
Buy Not Hit. BTJ with some above average volume selling Friday as it returned just below the 200 day SMA after a solid breakout from Thursday. Bummer, was just looking to enter had it not been caught in this selling from the market Friday after the explosive Thursday move. Managed to hold up somewhat against the selling Friday however and looking to see if it can try for another move next week for the buy.
CF 01/03 Test BO 111.26 -4.58 115.66 129.95 2.1M 3M 109.78
Current. CF in some market selling Friday but nothing too horrible as it still held the 10 day EMA on below average volume. CF just back at the bottom of its test near 110 again and setting up to start the recovery move next week.
CF 12/19 Asc Bse 111.26 -4.58 100.66 119.95 2.1M 3M 113.32
Current.
CHL 01/03 Asc Bse 83.88 -1.56 87.88 102.95 2.3M 4.9M 84.25
Buy Not Hit. CHL still just walking lower and lower through this week as it descends into the lower 80s. Got some help from the Friday selling to land near the mid December low support. Need to see CHL hold above key support from the November/December lows near the 90 day SMA(81.80) next week or its gone.
CHU 12/27 DB hdl 20.42 -0.70 21.04 27.95 1.3M 2.6M 20.08
Buy Not Hit. Gapped lower to close just under the 50 day EMA so moved the buy point lower as it sold down to the 90 day SMA, a good bounce point in this pattern. Just need to see it bounce from here off this key support at the 90 day SMA for the buy.
CMED 12/22 Rev HS 46.75 -2.75 44.28 54.95 1.1M 1M 47.88
Current. CMED with some modest selling Friday on high volume, although trade was much lower in the Friday downside than the great Wednesday-Thursday upside sessions. Looking to make a nice, quick test out of this market selling into next week after three solid sessions in this weeks breakout.
CTRP 12/08 Rev HS 56.87 +0.28 58.05 71.88 533K 1.2M 55.68
Buy Not Issued. CTRP just taking it easy still and holding its own against a heavy downside session Friday. Holds along the bottom of its early December pullback to the 50 day EMA as it sticks around the mid 50s. Not getting much trouble from the market selling this week and just needs stronger volume to take the Rev HS upside for the buy.
CVX 12/22 Rev HS 93.35 -1.26 94.98 108.95 13M 10M 92.94
Current. Returned to the 10 day EMA Friday in the market selling with high volume but managed to hold the average as key support at the close. Still trying to take its Rev HS up out of this late December lateral movement and looks to do so soon after the pre-recession symptoms calm down.
CY 12/04 Cup 34.64 -1.38 35.90 41.65 5.2M 7M 37.21
Current. Not too much trouble from the market selling Friday for CY as it just returned to the 50 day SMA and held the average as support again. Can use this short step lower from Friday to reset and try again for another bounce higher from this low at the 50 day SMA once volume picks up again. CY still in pretty good shape here.
CYBS 12/22 Cup 17.55 -0.51 18.03 21.65 1.2M 1.1M 17.77
Current. CYBS with a short gap lower Friday on above average volume as it gave a doji to hold the 18 day EMA as support at the close of the week. Looks to be testing the Cup high for a bit here with this above average volume and expecting a short test with CYBS already showing a doji at support near the 18 day EMA.
DVN 12/26 Rev HS 90.30 -2.64 92.24 105.95 3.1M 4.4M 89.91
Buy Not Issued. Sold back to the 10 day EMA after a great Wednesday-Thursday session of gains for DVN. Managed to hold the 10 day EMA as support here and expecting DVN to try for the breakout again soon once volume returns for the buy.
ESLR 01/03 Test BO 16.76 -1.28 17.71 21.75 5.6M 5M 16.88
Current. Solar was hit as it was a big winner, but it did not mortally wound this stock or the sector. Just sold a bit below the 10 day EMA with below average volume to continue its test of the late October breakout. Nearing key support at the 18 day EMA(16.31) where we expect ESLR to bottom in this test.
FCX 12/29 Asc Bse 99.71 -4.40 105.88 122.95 10M 15M 102.95
Buy Not Issued. Sold past the key 50 day EMA and 90 day SMA on rising, below average volume. Still in a nice Asc Bse pattern even after this selling so let it stick around a bit longer. Need to see it bounce early next week to stay out of trouble though.
FWLT 01/02 Asc Bse 159.69 -9.48 165.06 188.89 2M 1.8M 162.32
Current. Sold big as it makes big moves up and down, but not entirely a disaster. Still looks to be a buy if this 18 day EMA test from Friday holds.
GIGM 12/26 Asc Bse 17.98 -1.03 20.91 25.22 1M 2M 19.45
Buy Not Hit. Solid chunk of selling Friday on rising, below average volume past the 90 day SMA for GIGM. Hasn't been able to find a bottom in this pullback from late December so far and decided to let this one off the hook.
GMCR 12/18 Cup hdl 39.64 -1.99 41.50 49.95 347K 300K 39.69
Current. Gave back the great breakout from Thursday as it sold with the market on above average volume Friday. Still holding above key support at the 18 day EMA at the weekend here and looks to resume the Thursday breakout once it shakes off this market selling from Friday.
GME 12/15 Test 50 57.04 -3.07 60.98 72.65 4M 4M 60.77
Exited. Gapped and sold for some pretty sizeable loss Friday with above average volume as it closed beneath key support from the 50 day EMA and December lows. Was time to get out of this one as it looks to head even lower from here.
GOOG 12/29 Asc Bse 657.00 -28.33 692.57 785.00 5.4M 8M 684.77
Buy Not Hit.
GOOG 12/03 Cup hdl 657.00 -28.33 687.88 742.00 5.4M 8M 713.32
Current. Was slaughtered after gapping lower but it held above the December intraday low and there is support at that level that we are looking to bounce it back to test near 675 and the 50 day EMA. Needs to do so next week otherwise could be some serious trouble for GOOG.
GOOG 11/17 Test 50 657.00 -28.33 659.65 724.95 5.4M 8.6M 713.32
Current.
HAL 01/03 Dbl btm 38.01 -1.11 39.39 45.85 11M 15M 37.65
Current. Returned this weeks gains into the 39s as Friday brought HAL back to the 50 day SMA on above average volume selling. A little frustrating after such a nice breakout late this week but HAL still in decent position at key support here to make another bounce higher next week.
HOLX 12/29 Test BO 71.12 +0.79 70.36 80.95 5.1M 3.2M 69.02
Current. HOLX with some wild intraday movement on high volume as it managed to close with a short step higher, a rarity in the market selling from Friday. Great job of holding onto the breakout from Thursday and expecting HOLX to continue higher into next week. Awesome.
HOLX 12/15 Asc Bse 71.12 +0.79 67.88 77.65 5.1M 3.6M 69.39
HUM 12/12 Cup hdl 79.47 -1.15 77.91 89.95 1.6M 2.4M 78.88
Current. Light selling on average volume with a majority of the market in a tailspin through the floor. HUM doing a pretty good job of just making a quick test of its Cup hdl high from Thursday with this Friday step lower. Expecting HUM to resume the Cup hdl higher next week.
ICE 12/17 Test BO 170.79 -9.11 185.36 209.95 1.4M 2.2M 188.11
Exited. Gapped and sold through the 50 day EMA to let us know it was time to part ways. Looks to continue lower into next week. Ouch.
IMO 12/22 Rev HS 53.50 -1.44 55.15 65.95 272K 325K 54.57
Current. Sold some more Friday with below average volume as IMO just continues to test its Rev HS high from late December. Nothing really out of the norm here as IMO looks to test a bit lower to key support at the 50 day SMA and mid December lows near 52 before bottoming.
ISRG 12/27 Asc Bse 305.00 -16.75 335.35 395.00 1M 2.1M 323.11
Buy Not Hit. Gapped and sold through the Friday session on rising, below average volume as it closed beneath key support from the 50 day EMA and December closing low. Dropped this one for now after the negative action at the weekend but keeping a close eye on this one next week.
MA 12/17 Test 18 201.19 -10.93 211.98 244.95 3.8M 4.8M 204.22
Current. Almost sold it but it held the mid-December lows and rebounded some intraday to let it stay another session. Need to see MA recover this huge gap into next week if it wants to stay on our good side.
MOS 12/17 FlyPlat 95.41 -2.30 86.10 99.95 3.8M 5M 95.88
Current. Short step lower to post a doji at the close with average volume. MOS so far very quiet in the New Year as it just continues to rest after the great, uptrend into late December from November. Resting and consolidating now at this new high and looks to resume higher once volume picks up again.
MRO 01/03 Asc Bse 59.57 -2.31 59.25 71.95 6M 8.6M 57.88
Buy Not Hit. Sold hard Friday after looking like it was recovering from its testing low at 61 from the 10 day EMA mid week. Now heads for the 50 day EMA and looking for a buy off of a test of the key 50 day EMA.
NDAQ 12/13 Cup hdl 44.64 -2.69 48.32 56.00 1.9M 4M 47.98
Current. Was ready to exit after its gap lower but as it held near the 50 day EMA and on not horrid volume we decided to wait and see what the bounce brings.
NYX 11/01 Test BO 79.77 -3.85 91.29 99.95 5.8M 7M 87.08
Exited. After what looked to be a steady test back to the 200 day SMA NYX plummeted on the poor session Friday with the market and gapped and sold past the 200 day SMA with no problem. No choice but to get out of this one and wait for the dust to clear from this crash.
NYX 10/23 Cup 79.77 -3.85 88.85 99.95 5.8M 5M 87.08
Exited.
OII 01/03 PreAnn 73.37 -1.81 75.55 90.95 613K 785K 71.35
Buy Not Hit. Slight pullback for OII Friday on below average volume after a great upside session from Wednesday and Thursday. Just using this market pullback from Friday for a quick test as OII looks to resume higher next week for the buy.
ONXX 12/26 Asc Bse 57.37 -0.61 59.15 70.95 754K 1.8M 56.45
Buy Not Issued. ONXX minding its own business Friday with a doji in the short step lower on low volume. Still inside its consolidation range from November, ONXX continues to try and take its Asc bse even higher this month with volume finally picking up again. Needs to resume the Thursday bounce higher for the buy.
PZE 12/13 Cup hdl 15.25 +0.78 12.84 15.55 3.1M 400K 14.32
Target Hit. Took part of the 22% gain Friday as PZE actually continued its breakout in a very downside market. High volume in the surge upside as PZE completely ignores the market trend. Looks excellent.
RIMM 01/03 DB hdl 103.35 -9.47 102.25 132.95 28M 30M 98.38
Buy Not Hit.
RIMM 11/27 Test 50 103.35 -9.47 119.22 136.95 28M 32M 116.21
Current. Gapped lower and sold to close at the low, but it is above some strong support at 100 from the November consolidation lows. If it holds there we will go buy for at least a trade on a bounce so moved the buy point accordingly.
SDS 12/12 Rolling 57.85 +2.63 53.96 60.75 21M 21M 56.88
Target Hit. Took some solid gain (35%) off the table as it approached the November peak and it has been a screaming move higher. Left half the position on the table to see just how much SDS has in the tank in this surge from late December. Pretty impressive.
SGR 01/03 Dbl btm 64.04 -3.24 67.57 79.95 2.4M 1.6M 64.97
Buy Not Hit. Gapped lower to post a doji on some modest losses Friday with high volume in the selling. Held supports from the early November consolidation levels and looks to just be making a quick test out of this Friday pullback. Needs to resume the explosive Thursday move higher for the buy.
SID 12/15 PreAnn 86.56 -3.69 82.33 99.95 1.7M 1.4M 87.88
Current. SID sold on high volume back to the 18 day EMA. Managed to hold the average as key support intraday and bounce back a bit. Looks to hold here at sturdy support before some stronger volume returns to take the move higher.
SII 12/19 Rev HS 72.45 -3.05 72.11 83.32 2.4M 2.8M 73.78
Sold back Friday on average volume back below the 10 day EMA but bounced a bit intraday at support from the 18 day EMA. SII still in acceptable shape, just needs to stay above the 18 day EMA next week to keep out of trouble. If it holds and bounces it is a new buy point for this energy stock.
SLB 12/29 Dbl btm 98.00 -4.31 100.93 114.95 9.9M 12M 99.78
Current. Held the 10 day EMA after a dump lower Friday to find support from early price consolidations and peaks here from October/November. If it can bounce we still like it and will look at more. Another one of the strong energy plays that held up.
SOHU 12/15 Cup hdl 50.46 -2.74 56.68 69.95 1.2M 2.6M 54.69
Current. Left it in place as it is holding some support and volume was still low. Part of the China contingent, and the Chinese announcement it would try and slow growth impacted it near term. Needs to find support from the late November low near 47.50 to stay on good terms with us.
SPWR 12/04 DB hdl 126.12 -5.17 130.38 149.95 2.5M 2.8M 137.89
Current. Modest selling Friday on rising, below average volume for SPWR as it returned to the 50 day SMA and held the average as support at the close along with the December lows. Still doing a great job of smoothly testing its late December high in the DB hdl and looks to finally have bottomed this week.
SRCL 12/27 Asc Tri 57.33 -1.72 59.65 69.95 442K 575K 57.42
Buy Not Issued. Volatile week for SRCL as it gave back yesterdays bounce higher and then some to close back beneath the 50 day EMA. Let this one go for now but keeping an eye on it to see if it can find some support as it looks to head downhill some more from here.
SRCL 12/20 Asc Tri 57.33 -1.72 60.38 69.45 442K 575K 58.38
Buy Not Issued.
TKC 12/29 Pennant 26.10 -1.18 27.41 33.95 941K 2M 25.77
Buy Not Hit. Gapped and sold down to the 50 day EMA Friday on low volume. Looking to play this on a bounce off the 50 day EMA next week where we expect TKC to bounce off key support from the average. Moved the buy point to take into account this move.
VIP 01/03 Test 18 40.73 -3.03 41.88 52.95 3.2M 3.4M 39.95
Buy Not Issued.
VIP 12/03 Test BO 40.73 -3.03 36.78 42.85 3.2M 5M 42.38
Current. Foreign telecom play that sold to the 18 day EMA on below average volume. Still keeps it in the trend and expecting it to give us a new buy off out of this selling so lowered the buy point.
VIP 11/08 Test 18 40.73 -3.03 32.52 40.45 3.2M 3.2M 42.38
Current.
WFT 12/05 Trnd Rv 68.77 -2.23 67.58 77.95 3.5M 6.1M 69.95
Current. One of our solid energy plays as WFT got knocked around a bit Friday, but still in excellent shape, testing the 18 day EMA intraday. Looks good to bounce from here next week after this tap at key support.
XTO 12/12 DB hdl 53.19 -0.88 54.13 61.45 5.8M 5M 52.11
Current. Sold back to post a doji Friday on high volume after some modest losses as XTO fell into the market trend. Great breakout move from Thursday as XTO blasted into the 54s, looks to resume the breakout soon and recover this selling next week out of this doji.
YGE 12/17 Cup hdl 34.87 -3.15 35.48 42.50 3.4M 4.3M 39.88
Current. Was ready to pull the cord on this one but it is a China play and with the report on the slow down in China we decided to see if it will rebound. Volatile so we were not choking on this as it gapped and sold past the 18 day EMA Friday with above average volume.
Downside Plays
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
IWM 12/11 Put 72.09 -2.24 76.21 73.15 120M 90M 74.41
Target Hit. January options so took the 33% gain as IWM gave a huge gap lower Friday on the market downside session.
MDY 12/29 Put 148.65 -4.27 155.96 152.00 6.4M 5.5M 153.31
Hit the target Friday on a big gap lower with average volume. Managed to hold the August opening low mid-month and started to bounce some, indicating it may try to rebound from here. If it does we will let it and then re-up the position.
SMH 12/29 Put 29.25 -1.56 31.88 30.45 21M 9M 29.65
Target Hit. Took half of the 94% gain as SMH took another step lower Friday on explosive volume. INTC downgrade really helped out with SMH now looking to roll downhill some more from here. Awesome.
SPY 12/11 Put 141.31 -3.55 147.98 143.65 232M 200M 145.08
Target Hit. Took the gain (29%) as we were playing January options with SPY gapping and selling through the Friday session on average volume. Sold near the November low & bounced some. Will let it rebound off this selling and set up another short.
End part 2 of 3
Hi Beatrice,
BB is...Ben Bernanke US fed chief..
I personally do NOT believe that an average investor/trader has the expertise to get good return...year after year....
In my years of investing ..I did leave my 50% in very good mutual fund....
Here is my mutual fund story...
I contributed $17,500 to Fidelity on Oct 12,1987.....5 days later markets crashed....end of october my total stood @ $12,500..a 28.5% loss in 2 weeks....
Guess what ..I kept the faith in Fidelity and kept trading their funds from Magellan to technology to money market & back.....
In 1994 July I cashed it all @ $36,600 a return of ...a return of 109.1% of my original investmentin less than 7 years..15.5% annualized after a horrendous drubbing..
But if you take the low of $12,500..then I tripled my money.....a return of 42.8% annualized....
The moral of the story is investing is long term.....
Individuals do NOT have the knowledge to GROW their money on a consistent basis.....
So 50% is your play money....either you GROW it ...or give it to mutual fund so it CAN grow year after year...
Trading requires tremendous time to gain knowledge......
I am not sure if you have gained enough knowledge to do well on your own......
If you have the knowledge already...then your results should be satisfactory.
Choosing 5 or 6 stocks are not that easy...once you relize that there are 6,000 stocks to choose from.....
The more you work @ it...the more knowledgeable you will become...then you will have your own system.....
But...in the end results matter..
I am trying to be realistic.
Saleem
Wow Doug - thanks for showing me what you're getting. Wondering how you got that to paste onto the blog...
They sent me part 2 and 3 as well which contains the plays - your subscription gets you that as well I presume? If yes, then I'm getting no more info than you and I'll scout around to see if I can find a lower price than the $197 quoted.
Thanks again!
Hi Doug,
Thanks for posting IH analysis plus buy & sold list.
I enjoyed reading their technical take on the indices & stocks.
Saleem
Hi Saleem,
I didn't know that Beatrice had already received a report from IH. LOL. That was such a long post, I was a little apprehensive to post. I am relieved to know that you enjoyed it. I love coming to your blog, twice daily and sometimes more. But I dont want to overuse your time or take away from others needs and thats why I felt like my posts were too long. Have a great evening. Doug...
Saleem,
Any thoughts as to your trading strategy for Monday? My plan at this time is to hold my remaining stocks AAPL, JEC, and LDK, about 75% of my portfolio. All three of these stocks received a kicking on Friday and may receive some more punishment in the near term until BB cuts the rates and maybe the President comes up with some additional economic stimuli. The reason, I will be holding is AAPL and JEC are extremely strong fundementally and will be heading up soon. They just got taken down with the rest of the market. LDK will be heading up once the MM that helped push it down get their greedy hands on enough LDK shares and push it back up to a more reasonable value.
Hello Saleem,
I have started trading recently. I have few mutual funds, but no stocks.I offen read comments posted on blog.I have very few FXI. The market is so volatile so i was wondering how to start. Please help me I appreciate.
Thank you so much
Regards
Preet
Hello Saleem,
I have started trading recently. I have few mutual funds, but no stocks.I offen read comments posted on blog.I have very few FXI. The market is so volatile so i was wondering how to start. Please help me I appreciate.
Thank you so much
Regards
Preet
LDK investors check this latest report out and you will be impressed..!!
http://www.kjworld.com/LDK/WhatISayAboutLDK.pdf
Hi Doug,
My time always goes for reading great analysis...IH does a great job....
Your money is well spent with IH.
You are never taking my time.
You can tell...I enjoy responding to any question by anyone.
Saleem
Hi Preet,
First of all there is a big difference between mutual funds & ETF (Exchange Traded Funds)
FXI is chinese superstar stocks fund..it is an ETF...which can be traded like stocks and is always narrowly sector specific.
Mutual funds are generally very broad based having 400 stocks...ETF30 stocks....
I will suggest you try to position in ETF first and then start your journey into stocks..by reading the details of each ETF.....
You can go on www.amex.com where you will see a list of all country specific ETF & sector /region specific ETF.
But If you must Dabble in stocks immediately then start with very small quantity..like 10 shares each from stocks I own & Bruce owns.
Bruce & I tend to like similar type of stocks and we are generally more loyal to our research....
Do NOT worry if we sell those stocks ...because we are traders...and we keep buying the same stocks many times.
So...buy 6 stocks based on your selection from Bruce & Mine...
Keep reading BLOG & Comments section.....plus go to yahoo finance & MSN.com moneycentral and read about analyst selections and their reason why.....
Start slowly and have monthly $ allocation to an ETF or stocks...
You need to tag along with someone...we are NOT bad either & it is FREE......
Good luck...
Saleem
Hello Salim,
Thank you so much for your valuable advise. I appreciate your response and act according to your advise.I have full respect and regards for you.
I know your analysis will never go wrong.
As per your advise i have started my investment in mutual funds and then started investing in to ETF. Now i have understood how the mutual fund and ETF trade.
So i thought of investing in stocks. I am reading yahoo finance and try to understand the market but the market is so volatile.
But it becomes very difficuilt to understand the specific movement of stocks.
I have done analysis in few stock like STV,CSIQ,YHOO,CSCO,MSFT,ORCL,
LDK,RIMM,BIDU,ACH please help me if i am wrong in analysis.
What do you think about Monday market, how it is going to be.
Thank you so much.
Regards
Preet
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