StockTiger Stalking Stocks for Monday May 2, 2011 The leading stock market newsletter.

Its May Day. Similar to Easter in that a marking of spring and the start of the farming time of the year, May Day is related to old Celtic festivals. In many countries it is International worker's day or Labor day. In the USA I remember taking flower to teachers each year on this day. After all, the April showers bring May flowers. For the stock market we hear "sell in May and go away" as historically it is more profitable to be in the market November through April and out the rest of the time. But heck, they never heard of POMO. That link show the repurchase schedule until May 11. It is about $6 to $8 billion per day and can you guess that some of that money ends up in the stock market? So the Fed prints money that gets used to buy stock by those selling treasuries and boosts share prices. Along with this the added dollars cause the value of the dollar to decline so prices of US goods and services for foreign countries is favorable so this increases sales for international US companies which helps their stock price rise. The companies learned that they can get by with lots less propel so that makes them more profits and their stock prices rise. They make so much profit that they pay outrageous salaries and bonuses to top management and all the stock options would dilute the shares but with all that profit they just buy back the stock. McGraw-Hill MHP to buy back about 4.2 million shares this year. L-3 Communications, LLL plans to buy back up to $1.5 billion in common stock. Costco COST announced up to $4 billion in stock repurchases. DuPont DD announced a buyback of up to $2 billion. Merck MRK with an additional $5 billion in share buybacks and IBM approved an $8 billion stock buyback. When a company has less shares they make more on a per share bases so this helps the share price to rise. So this scheme continues to work and stock prices keep moving for now. It is not the economy improving so much, as the unemployment picture and GDP figures show and some day it will likely collapse but at the moment the charts still are very bullish.

Mike Burk tells us that during the 3rd year of the Presidential Cycle since 1928 the SPX has been up 60% of the time with an average gain of 0.2%. The best ever May for the SPX was 1933 (+14.4%) the worst 1940 (-22.9%).

The Flash Crash in 2009 was May 6 and it was unexpected and it could happen again. We do not expect such a thing either with such strong charts but to have a down week this week would help the overbought condition. Maybe an up Monday and turn- around-Tuesday to the downside.

First-time claims for unemployment benefits showed an unexpected increase in the week ended April 23rd, Initial jobless claims rose by 25,000 to 429,000 from the previous week's revised figure of 404,000. The increase surprised economists, who had expected jobless claims to fall to 390,000 from the 403,000 originally reported for the previous week. charts - RTTNews

Pending Home Sales, which is a leading indicator of housing market activity released by the National Association of Realtors climbed 5.1 percent to 94.1 in March, the highest the index has been since last November. It was the second-straight monthly increase for the index, which tracks agreements to purchase homes. The results beat expectations: Economists were looking for a 1.5% increase.

Growth in gross domestic product, a measure of all goods and services produced within US borders, slowed to a 1.8% annual rate after a 3.1% fourth-quarter pace, the Commerce Department said. Economists had expected a 2 percent growth pace. Output was also restrained by harsh winter weather, rising imports as well as the weakest government spending in more than 27 years

Durable goods orders rose by 2.5 percent month-over-month in March, while economists had expected a more modest 1.9 percent increase.

This week's indices shows only the US dollar was down - and this really helped the others to go up.

The monthly multi-index chart shows us that the NASDAQ, Russell 2000 and of course gold ran over their 2007 highs, while the Dow, the S&P 500 and thankfully oil lagged. Those pushing over the top Bollinger bands show strength but also shorter-term overbought conditions.

The Dow broke above its top trading channel line and on a pullback watch this level for support as if it holds would be a buy signal

A 120 min Dow futures chart shows the move over the 161.8% projection on Friday and its nearing the top trendline at R2 (resistance 2 pivot) on Friday. If it stays above the lower trendline, it remains a long. We post charts like this throughout the day on our twitter stream

The transports have now also broken above their top trendline and horizontal resistance and in Dow theory terms have confirmed the move in the Dow so this is quite bullish.

The utilities, which had not been able to break out have also done so this past week on improved volume.

The Fibonacci levels shown on this weekly NASDAQ chart are placed at prior support levels, which gives us some estimated resistance at 2938.

The EMA average of the number of new highs on the NASDAQ closed just under some resistance on Friday and one would expect it to have closed much higher as the NASDAQ was making new highs.

We have been showing GOOG for several weeks, as it was at a possible bounce point at the 61.8 retracement and close to the trendline just a bit lower. We were then prepared to buy at the trendline with a stop underneath or on a break over the congestive pattern at 531. The trade did trigger this week as we posted during the week, and gained 13 points, closing at resistance. So we could see either a breakout over this resistance to filling the gap or a partial retracement. When written, the volume was still low, but on Friday it did close with higher than usual volume. At the start of the trade we only had one indicator giving a buy and that was the RSI but now stochastics and Williams have joined in, with only MACD and the histogram lagging.

This is a 120 min chart showing the breakout buy and the subsequent retest of support and a second buy chance if you missed the first. The initial run was to the 127% projection and after the breakout retest to the 161.8% projection and closed on Friday at a bit longer-term 161.8% projection. On this chart in the lower section at $523, we see the 127% downside projection which was basically inline with the 61.8% retracement in the above chart. With this kind of trade we can't know if this is the final low, which may last four years or not, but it is a good set up for valid entry and stops can be set to at least keep it a profitable trade

The semiconductor index is still lagging even though the NASDAQ is making new highs. With all these smartphones, tablet PCs and greatly expanded media file use you use one would expect to see this index on fire. This is a bit of a red flag at the moment for the sector.

The S&P 500 monthly chart closed over the 161.8% projection and now faces resistance above 1400 at the yellow line.

THE NYSE shown in the top half of this chart has also made new highs, though the number of stocks making new highs minus those making new lows, as shown in by this moving average has not yet even reached the level it was in February.

The percentage of stocks on the NYSE now trading over their 50 day average is at 76%. So certainly not high enough to warrant any topping of the market.

The Russell 2000 shown on the monthly chart closed nine points above the 2007 high with the RSI is still not over 70.

This weekly chart just shows the apex of this triangle coming soon and we will see if it corresponds to some more volatile move one way or the other.

120 min chart of the Russell 2000 futures and its tightening wedge. This pattern causes some caution as does the fact that on Friday it ran to the 161.8% projection and was unable to close above that level. Watch the lower trendline for possible short term breaking and first support back at the 141% projection.

The banking sector bounced at the 200 day EMA but is still under the 50 day EMA so we may see some pinball movement here if it cannot break higher. The market has been going higher without out these financials which is not usual and if they do join the in we could see quite a party.

The emerging market ETF has had lower volume and has not yet been able to break to new highs.

It is quite uncommon to see a red candle on the Russian trading system monthly chart, but we see one as the month of April ended lower by 0.8%

The FTSE has also been unable to make new highs though it did make some advancement during the week.

The Canadian TSX Venture index broke down from its bear flag and has been consolidating but this pattern could go either way, as it has been trading for days of low volume, but the odds are slightly better to the downside.

The crude oil price now is not based on real supply and demand of the oil but only on the futures contracts and as long as the government does not stop this behavior of gouging it could continue to the 78.6% projection at $123.

We have not run through all the solar stocks but we did notice that the KWT solar energy energy ETF, in green, did make a bounce this week so it may be worth looking at a few solar stocks.

We have been cheerleading for the natural gas index for some time and we did get a minor break above the trendline this week, closing up 5%. It may be the start of something bigger so a sector to pay attention to.

Natural gas ETF UNG of course been was up for the week, closing just over its top Bollinger band with resistance at the blue line overhead. A break over could take it to the top trendline in which case it would be over the 200 day EMA in red and quite bullish. There was good volume Thursday and Friday.

The commitment of traders report at the close on Tuesday shows quite the opposite of what one may expect. The large speculators increased their long positions while slightly increasing their short ones, while the commercial traders increased their longs and increased their shorts by an equal amount. We would have expected the commercials, who are more often right in the long term, to have added to their short positions and decreased their longs.

Gold broke above its top parallel channel line so will watch that line for support on a pullback, which we expect this week.

The buys in gold have been at the 161 day EMA for several years. During the pullback in December 2009 the pink line measures the height it got to above this EMA. We could reach the same height with another $10-$15 and if so, we then also would expect a pullback.

DGP The double long ETF made a big breakout on higher than normal volume and ran up over 7% for the week.

Gold stocks continue to under perform the metal as it seems more investors buy GLD instead of the miners.

With such a breakout in gold you would expect the miners to have a similar move, but GDX remains lackluster in its triangle.

Meanwhile, the GDX renko chart shifted to a buy Friday, as it looked like it might even with the under performance of miners. On this latest short leg several times we spoke of being able to take profits, even on a mechanical system, especially when it looks like a possible whipsaw time. With gold going up it logically seemed likely that GDX would shift to a buy. If in doubt about any of these signals one can always sit out a cycle to wait for a more obvious trend change

This commitment of traders report from Tuesday shows the large speculators decreasing their long positions and increasing their shorts while the large commercials are doing the opposite. This as it was at gold is a surprise as we would think that the speculators would still be piling on the long side, while the commercials would be adding to their shorts

Silver closed just $.12 under the 161.8 resent projection from the $4 lows 9 years ago. Monthly chart.

On the daily chart again silver closed over the top Bollinger band and above the 161% rejection from the 2008 lows. At the moment this is a game of chicken, but profit takers will likely turn out to be the better winners. I heard a story where a man took a bag of silver dimes 2 a silver dealer in order to sell and there were many people in line and waiting. He thought that they were all doing what's was doing, but it turns out they instead were all buying.

From our stockcharts public page this SLV renko chart had a single red box one day but not enough to change to a sell signal.

Copper continued its decline this week, and it is nearing the lower Bollinger band. But the 50 day EMA at 393 may be calling its name. It has likely seen its highs as many commodities may shift to the downward direction in the coming month or two.

Platinum futures never moved so aggressively during the last year, as did Palladium. This week, however it did break to a multiyear high and if we see some follow through it may be beginning a new movement higher.

The Euro index added 1.7% this week, riding the top Bollinger band pushing towards it's 151 2009 high. RSI closed over 70 and when it did the last time it marked the high within a few weeks

This 120 min euro dollar futures chart shows its confinement between Fibonacci lines. With the trendline close by a break would start a retracement, perhaps a test of breakout support just under 1.46

EUO , which is an ultra short for the euro rose 2.7% on Friday as its RSI moved up over 30. Williams and MACD have not yet confirmed the buy, but at a minimum it is worth paying attention too.

The dollar monthly chart shows the 3.7% loss in the value of the dollar during April, while the US treasury secretary confirmed the strong dollar policy, as did treasury secretary Snow before him. I'd like to know what they've been smoking.

We have been looking forward to the RSI going under 30, because that signifies it being in over sold territory. It does not mean it willshortly bounce, but it does mean it is qualified to be making a long term low if it does reverse. Even a bit lower would be nice and a bit more time so that all will notice it and then a move back over 30 may be bought more aggressively

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We begin earnings season so Check the updated Earnings Calendar on all overnight holds.

Volatility mean opportunity for futures trading and it is free to try it out.

Global Futures has many platforms available for trading futures and Forex but a very popular one is Global Zen Trader as it is very customizable with exceled built in charting that can be used free floating. We made a short video about it giving a very general overview, and we have links on that page to several other videos about this platform. You can try it for free using live streaming data in order to see if future's trading is right for you.. link here so give it a watch and try it out.

Futures and Forex trading

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This weekend's transmission of Hearts of Space is named Inside Looking Out (Mark Hollis Retrospective) You have until 3AM EST to listen for free on their site or check your local PBS radio station for their schedule.

New additions to our watch list We add many stocks to it each trading day

BKS Over $11.25

JBHT Over $48.53

BKCC Over $10.63 or $10.81

SOA Over $26.57

HIG Over $29.12

IL Over $32.25

CALX Trade within triangle or at a break out over $22.53

CAG Over $24.51

For your eyes and mind

Under Water - White Sea - Artic Circle

All photographs by Victor Lyagushkin

That's a full lid for today - have a great week.

Check the Earnings Calendar on all overnight holds.

Check the current message center also for other good stock candidates as there are several there right now.

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