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For Monday April 11, 2011

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Dow -29.44 at 12380.05, Nasdaq -15.72 at 2780.42, S&P -5.34 at 1328.17

Jokers,  US Congress and President  synonymous - on budget talks. They all seem to want to make some great theater out of this, but it is not at all. If you are making $75,000 per year, but spending $105,000 per year by over using your credit cards you know it will lead to disaster unless you stop spending more than you are making or your income rises substantially. Of course you can get away with these bad habits for a while but they will not end well. The US budget for 2011 is a bit under $4 trillion. But as the government is not making that much money they just borrow it year after year and they really do need to stop this practice, but none of the elected officials want to do it. The Congress has been in talks over the last couple of weeks but mostly they use the time for political speeches that they think somehow will make them look good in the voter's eyes. CNBC broadcast  Sen. Reid talking about how his opponents only wanted to make it harder for women to get cancer screening tests and that his own daughter and wife would suffer. I am not making this up, he really did say that - and people like this get elected. Go figure. A meaningful cut in the budget is going to hurt some programs short term, but if nothing is done, they may have to be totally eliminated in the future. A cut of say 10% may be meaningful, which would equate to about $400 billion but as it seems no one would agree to that, let's say a tiny 5% across-the-board reduction in spending $200 billion. It is not that much to ask. But instead, what have they been bickering about, only $38 billion, about the same amount of money the Fed pours in to the markets every 12 days. It's like a joke. The $2 trillion the Fed has poured into the economy has helped stockholders and corporations but not the average individual. With a 15% real unemployment rate and 44 million on food assistance, corporations are reporting record profits, and I think if challenged by the president or Congress, many corporations would be willing to help in funding programs that need to have short term cuts. To have weekly full-page ads in the New York Times listing the corporations that are helping in such a program would also be a way of thanking them for supporting their country. We don't hear any leadership talking about something like this however, why not? The market dip on Friday was partly to do to worry over a government shutdown, and this is still not completely ruled out as the agreement on this minor spending cut has not been finalized. The market is probably so used to this type of behavior, that it probably has little affect on the market as long as the Fed's money keeps coming in.

The Dow was up for the week, while the other indices down slightly with the mid-caps and small caps dipping the most. These have been the market leaders so one would expect pullbacks to be a bit more as well, but they should be watched as if they weaken more aggressively it is not a good sign for the market. If the market were to pullback more we may find the Dow outperforming as many like to shift into larger caps in the  belief of less risk. With the dollar declining over 1% this week, this exaggerated moves in oil and gold as they are priced in dollars. The markets, though not losing much ground last week had some chart weakness, which may lead to some more pulling back at some point during the week, but we may have some rebound by the end of the week. There are some timing models looking for some market tops within the next 14 days but no technical reason to now expect a long term top.

We had 23 stocks hit their trigger price this week and only two were shorts. This shows that buyers are still out in force. On Friday DYAX made about an 8% gain on double its normal volume.  We sent out an alert posting the chart as it triggered.

We pay close attention the the volume of a stock near the open and HRZ started off with 25% volume in the first minutes, suggesting that it could be a strong mover. We sent out an alert and  the volume exploded finally over 1,000% and the stock at its high had risen about 36%.

First-time claims for unemployment benefits in the U.S. fell by a little more than expected in the week ended April 2nd. According to a report released by the Labor Department initial jobless claims fell by 10,000 to 382,000 from the previous week's revised figure of 392,000. Economists had expected jobless claims to slip to 385,000 from the 388,000 originally reported for the previous week.              charts RTTNews

The consumer price index, even excluding food and energy which the Fed tends to ignore, keeps making higher highs. Rents are part of core CPI though and a report suggests that rents could go up as much as 15% in the coming year.

Crude oil stockpiles increased by 2 million barrels last week showing that there is plenty of supply yet prices continue to rise. Some cities in the US still have rent controls that as part of the law limit the amount that rents can be increased. If it is legal to do in those cases why are there no oil price controls as it is obvious that the rise is not justified. Meanwhile the government gives about $41 billion is subsides and tax breaks to oil and gas companies as if they needed some incentive to produce more oil. If they eliminated these even for a year it is more than the budget spending cut tentative agreement.

U.S. consumers increased their debt by a seasonally adjusted 3.8% annual rate in February, the fifth straight monthly increase and the largest since June 2008, Consumers likely borrowed more to take out loans for new cars and to finance purchases on their credit cards. The increase points to stronger consumer spending in the coming months. More buying coming from borrowing does not necessarily though point to a stronger economy.  

Wholesale inventories increased by 1.0% to a seasonally adjusted $437.99 billion, the Commerce Department said Friday. The growth in inventories wasn’t necessarily an indication wholesalers were stocking up in anticipation of future sales. Rather, goods piled up as sales fell 0.8%, to $378.97 billion. Also, the 1.0% increase in inventories was driven by a big gain in petroleum stockpiles amid rising oil prices. 

The top and bottom sectors for the week. 

This week's  indices  show the dollar weaker so as oil and gold are priced in dollars, they were up by comparison on top of their speculator demand.

 

 

On the monthly timeframe the major indexes look healthy. The equity charts produced a hanging man candle for March but actually 59% of the time this type of candle leads to a rally continuation. Oil for the third month has its candle above the top Bollinger band, which is bullish, though this month it is totally above and will lead to a pullback, though this is not helpful for timing. 

The 60 min multi-index chart shows the pullback on Friday afternoon, dropping below the lower Bollinger bands and then some recovery in the last hour of trading. Where there are gaps nearby they are shown and the Fibonacci retracement levels if we were to test the recent pullback prices.

This 60 min Dow futures chart showing the drop from the double top back down to test the broken trendline, which also occurred just at the apex of this triangle, and it produced a rapid 25 point bounce. This bounce point held for four hours  until the market, with the help of the news media got the short term idea that a government shutdown was more likely and it immediately sold off making a double bottom as it fell to be 161% Fibonacci projection. The combination of the double bottom and Fibonacci level was a great set up for the longs who ran the price back up 40 points in that next hour. We had posted this chart prior to this event during the day on Friday.

The transportation average. Having reached resistance pulled back this week about the same as it had advanced last week.

The utility average stayed in a very tight range for the week still sitting just at resistance. It is just at the same level it was at six months ago, but and the volume has been very light.

The number of new highson the NASDAQ increased as the moving average of the new highs ran back over resistance and dropped a bit on Friday.

The NASDAQ itself as seen on the 60 min chart had gone below the trendline originally due to time and not price, but on Friday price joined in as well and closed near the gap support. RSI still points lower, and a drop below this support should fill the gap and may drop back to the Fibonacci level shown.

The NYSE had gone back to its recent highs as the moving average of the number of new highs minus new lows rallied back over the top trendline. This number, however, was not as high as it was at the February highs and it has been going lower since May of last year so the market strength is not growing.

The S&P 500 bullish percent index is still on a buy signal, though only about $.70 away from a sell. The 20 day exponential moving average is now at 1390 so if it holds above that it is bullish.

This daily S&P 500 futures chart shows some support at the 23.6% retracement level, which is also the Center., Bollinger band. If that would not hold we could see a retest of the recent lows near 1300 and the 38.2% retrace.

As the Dow futures dropped to their 161% downside projection level the S&P futures dropped to the 127% projection in the sell off two hours before the close as this is a 120 min.chart. It closed the day still under the broken trendline from the trading channel.

And here we see the S&P 500 60 min cash chart. During the week on our morning videos we have pointed out the sell point with a move under the 50 period EMA a on this chart and that did trigger more selling as it crossed. From the move up from the 1304 level we see Fibonacci retracement levels of 1326, 1322 and for the 61.8% retrace 1317.

 

If the S&P does sell off off then of coarse this ultra short will rise and it closed very close to a buy signal and would likely do so at a breakout above this resistance level. The other indicators alone suggested a buy recently. This live chart is on our stockcharts public page.

The SSO also on that page, long side variant of the above, and it is teetering on a sell signal.

The S&P 400 mid caps have been the strongest sector having made all-time highs and pulled back three days coming back to break out level support. This being such a strong index should  hold this support area or will be a market warning of at least a short term rollover.

 

The Russell 2000 monthly chart shows it ran 2 points over its 2007 high and has pulled back slightly, which is not uncommon at the first test of a former high.

 

The daily chart shows the Williams indicator close to crossing under 20, it has just slightly, RSI was rejected at 70 though stochastics is still over 80 and there has been no MACD crossover yet.

Our mechanical trading helper for the Russell 2000 did give us a  sell signal this week. This long  trade was about 50 points or $5000 profit per contract in less than a month and trades like this, as well as the one in the first three weeks of February, more than make up for some periods of whipsaws.

 

The 60 min. chart shows it reached the 838 support and made a minor bounce. The Russell seems more than any other index pays attention to technical levels. For further declines Fibonacci levels are shown

For a very short term, we show some retracement levels from the 818  bounce point on 5-min chart.

The banking sector has been unable to move over resistance, but lingers now at the 50 day EMA.

 

Interest rates on the 10 year increased slightly, closing at 3.57%.

 

As the financials have been week, this ultra short continued to rise until the pullback in the last days of the week, finding some support on Friday. This chart also on the public page.

The FTSE closed up .8% on Friday still under its broken channel trendline near its top Bollinger band.

The emerging markets remain strong adding 1% for the week after last week's breakout move.

 

The Russian trading system has also started the month off very well with a gain of 3.8% so far, The RSX Market Vectors Russia ETF has kept in a tight range this week.

The Canadian TSX Venture index also continued up each day after its lower range breakout earlier in the week. It had an  increase in volume especially on Friday.

GSG Commodity commodity ETF broke higher this week with a 4% gain as the confirmed buy signal was given seven weeks ago with the move over the 200 week EMA with very high volume.

Crude oil added 5% this week moving closer to a possible 78.6 retracement level though also presently in a resistance range from the third quarter of 2008. This move is not based on any logical fundamentals so is at the discretion of traders

On oil's  price affect on the market we know it is detrimental to the S&P 500 if these lines crossover.

Natural gas ran again to resistance and has pulled back slightly and it may again test the lower line so worth watching.

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The commitment of traders report for gold from last Tuesday shows that commercial traders added 16794 short contracts, while large speculators, added a similar number of long contracts. Having opposite ideas of where the price will head over the longer term.

This longer-term daily chart shows there is a potential for a large move to the upside while staying within the trading channel. There is still negative divergence in the MACD and RSI.

A closer look at gold showing the move over the 127% projection level based on the move between the horizontal dark blue line. There is a another set in a light blue from the March low and it's 161% is at $1482. Also here based on the first Fibonacci projection is a 161% projection at 1507.

The double long, gold ETF DGP gained 6.5% this week, but has surprisingly low volume, and overall money flow index still having negative convergence

Some gold miners of course were up this week, causing the GDM to Gold ratio chart to improve for the miners. If this moves it back over the yellow trendline it would show miners out performing gold to some degree and bullish for gold mining stocks.

 

GDX renko is still on the buy side, up now about six dollars from the last buy signal.

The point and figure charts include mechanical price objectives and it is interesting the variation on Friday. The 60 min. chart gives a price of jet to $73.50.

While the daily chart has a price objective of $83.00 and we would gladly accept either one.

The silver commitment of traders report from last Tuesday shows commercial traders adding 1900 short contracts or about two times the number of long contracts, while the large speculators actually now adding more shorts than longs though the speculators are still four to one long while commercial traders are almost 3 to 1 short

This shows silver's move above the 127% projection close to the 141% with a 161% at $43.00. Note how far away it is now from its trendline and see that when it did the same in late February it had a decent correction and at some point it will do the same again.

This silver futures chart shows these Fibonacci levels from the breakout area in closer detail.

Platinum continued its bounce from the trendline support adding 2.7% this week.

Copper bouncing from the 20 day moving average, added 5.7% for the week.

The Euro index  broke above its almost 2 year trendline just as the moving averages crossed over bullishly. These can be volatile times as moving average crosses can also reverse so future test of this trendline will be important for the euro. The last time the euro was at the trendline in 2009 the RSI had gone above 70 and at the moment it is at 67.

As the euro rises the dollar falls- why can't they just be friends? The dollar last time found support at 74.23, which is very close to our current level and the breach of that could test the 2008 level of 71.31.

This daily shows the breakdown from Friday.

And this just a closer view.

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cellerateRX

We have talked of Wound Management Technologies, and their focus currently on the distribution of their unique, patented collagen product, CellerateRX®. The stock WNDM has been pulling back  as we expected as it needs to  find its true base price as the current volume is light. The company may report its quarterly and year end results this week as it did in this timeframe a year ago and this will give us details to better judge the company's growth. A CellerateRX® infomercial has now started in test markets and there are online sales as well. The company started a YouTube page and the first video is from a television news program with a focus on treatment for wounds and the long term benefits, including speed of healing  and cost savings of collagen  treatment using CellerateRX®. They have added many short videos for the consumer, talking about the use of CellerateRX®  Check the Youtube page to learn about this wound care treatment. An the online Product Page for another video and on how order.

 

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Companies reporting earnings on Monday - Check the updated Earnings Calendar on all overnight holds.   

This week's economic calendar for the USA. 



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.

zen tradeer

 

Futures and  Forex trading

Global Futures continues to offer excellent service and a variety of trading platforms such as the new Global Zen Trader which includes charts. They have a special offer  for StockTiger readers - 20 commission free contracts.

To try futures trading you may sign up for a free simulated account that uses live streaming data. Several platforms to chose from. Futures can be volatile so great opportunities  for wide swings. If you call them ask for Trenton and mention StockTiger. Click on the Demo image below to sign up.

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This weekend's transmission of Hearts of Space is named Cinemotion the evolving landscapes of ambient film music. You have until 3AM EST to listen for free on their site or check your local PBS radio station for their schedule.  

hos

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

AMMD   Over $22.51

BAS  Back over $26.10 high was $27.90

BLTI We had it as a March buy so likley some still own. It mary move another time over $6.03 stil own it

CHSI   Over about $56.50

GGN   Over $19.35

MMR   Continuation from $18.75 - high was $19.25

PLAB   Over $9.23

WAC   Over 20-day at $18.08

For your eyes and mind 

Dalton Ghetti from Connecticut, creates miniature masterpieces on the tips of pencils. He said, "I experimented sculpting with different materials, such as chalk, but one day I had an eureka moment and decided to carve into the graphite of a pencil.” Dalton uses three basic tools to make his incredible creations – a razor blade, sewing needle and sculpting knife. He even refuses to use a magnifying glass and has never sold any of his work, only given it away to friends.

Sculpture by Dalton Ghetti  

A standard figure will take several months.

The longest Dalton has spent on one piece was two and half years on a pencil with interlinking chains.  He said: “The interlinking chains took the most effort and I was really pleased with it because it’s so intricate people think it must be two pencils”

 

 

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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