Monday, August 31, 2009

ValueLine Arithmetic Index ($VLE): Small Cap Leads

While watching CNBC today, one of my favorite chartist, Carter Worth...mentioned the Value Line arithmetic Index ($VLE) and how it's out performed the big cap, more heavily weighted indexes, the "big names" are lagging.
I've made several observations over the last 5 weeks on the $VLE, here are the links to my previous blog posts: July 23rd; August 10th & August 15th
below is the video clip. Is this rally over? Read....

*click on chart to expand image

Friday, August 28, 2009

Nat Gas Stocks Look Interesting

Is Natural Gas set to make a move higher??? Since March 6th $NATGAS has declined 18%, yet Chesapeake (CHK) is up 67%, Devon (DVN) 65%, PenGrowth (PWE) 85% & PenWest (PWE) 81% ...the last 2 are LP's that pay a nice dividend too.

The US Department of Energy (DoE) is investing nearly US$300 million in its Clean Cities Grant from the American Recovery and Reinvestment Act to support clean fuels, vehicles and infrastructure development. ~link~

*click on charts to expand image

Thursday, August 27, 2009


BUY GOLD!!! The US Dollar is going lower, with a massive deficit and no one really pushing the purchase of the contrarian. Watch the 78 level on the US Dollar ($USD) a break below that and Gold, in this chart GLD the gold etf, could see further gains. Earlier this year we saw gold climb, but the US Dollar too, reflective of the fear that gripped investors as a global financial meltdown was possible.

*click on charts to expand images

Updated Charts: S&P 500 & Crude Oil

The markets are seeing some red today, again I still believe a pullback is coming and the rally is over extended. Yesterday, SeaBreeze Management founder Doug Kass, who called the bottom in March. Release a report on saying this rally has peaked. I agree!
Below I've posted a weekly as well as a daily S&P500 ($SPX) chart and a crude oil chart ($WTIC). I see oil near term pulling back but eventually breaking over resistance of $75 and heading to $90. As for the $SPX my downside target near term is 950/060. But we could stage a rally into the yearend with 1123 as an upside target, as traders chase performance.

*click on charts to expand image

Tuesday, August 25, 2009

Markets Very Extended; Correction Overdue

This market has been waiting for a sell off and continues to climb a wall of worry. But as I go over some of my indicators, including tonight's chart...the action I've seen on the hours up into the close this week has me more convinced that we're going to see a correction very soon. This market is very extended and overbought, suggest keeping stops tight, buying puts or taking money off the table.

*click chart to expand image

Monday, August 24, 2009

Higher Oil Could Hinder Stock Rally?

Could Oil ($WTIC) breaking over $75 hinder the recovery and the stock market rally? A lower dollar could push oil higher as the $SPX approaches 1050 level.

Oil looks like it is set to breakout out of a "Cup & Handle" formation...very bullish. That coupled with a bearish dollar...could equal a market top and correction.

*click on chart to expand image

Nearterm Resistance?

Took a look at the US Home Building Index ($DJUSHB) along with the Transport Index ($TRAN) up against the $SPX & $SPXA150R. Interesting, that 3 day 25% bottom-to-top move in the $SPX last year and the Fibonacci levels? Bottom line 1,050 level on the S&P should be pivotal this week. I expected a pullback several days ago, got a headfake and this rally continues to have legs. BUT, a 10% correction could come at anytime. Suggestion, take some profits and have some cash, to buy at lower prices seems to be in order.

*click on chart to enlarge image

Friday, August 21, 2009

Update: Itz Pix

Update on some stocks I've recommended over the last 7 weeks, actually LNC & ABT are from August as well as SDS, the rest from July '09. LWAY the only short sale from $13.05 exited today after crossing the 5% stop loss. As for the SDS Proshare ETF hedge, the stop there remains at $42.

Credit Liquidity & Market Volatility

Two years ago everyone was saying "credit freeze" was holding back the economy & markets. In the below chart I compare market volatility ($VIX) & credit liquidity (TED) against the S&P 500 ($SPX).
What is the TED spread? It's the difference between the short-term LIBOR rate (London Interbank Offered Rate) and the yield on 3-month U.S. Treasuries (a 'risk free' yield). The formula is to subtract the 3-month Treasury yield from the LIBOR rate, and you're left with the TED spread. When the TED spread is high (as in 3.0 or higher) banks are less likely to lend or borrow and when it's low or normal (below 1.0) banks are lending.

*click on chart to expand image

Resilient Market

Is this rally for real? This market continues to confound even smart money, its resilience is unbelievable! Currently 1025 is resistance the next Fibonacci level on the upside is 1130, the 50% level from the '08 high to the March low. I was looking for a pullback last week...which we got (somewhat) but it wasn't to my 950 target, shallow rallies are being bought. My view continues to be that Sept/Oct historically has proven to be a bearish time for equities. What will drive stocks, earnings have several weeks before they start reporting. Today's report from Helicopter Ben was encouraging as well as the housing report. The bulls are using any economic report to support the rise in stocks. know there was a but due... JOBS(albeit a lagging number & indicator) still weighs on the market. One interesting note I heard on CNBC today, 1 in 17 homes in CT is in default or 90 days behind in their mortgage payment. The consumer is strapped, how can they spend money when there are no jobs and they cannot even make payments on their homes? Our economy needs the consumer, yes the perception has been that the economy is improving and yes I understand that the markets discount this...but what if things don't improve. Productivity can only carry you so far. I remain cautious and as I mentioned several posts ago that you take some money off the table on some of the big gainers, have some cash to redeploy and hedge your positions.

Here is a quote from Larry McMillan's Weekly update, "When the market sold off, breadth declined sharply, thereby temporarily relieving the massive overbought condition that had been in place during the rally from early June to early July. But the rally over the past three days saw strong market breadth again, and once again the breadth is overbought.

In summary, there are still short-term negatives in place: $SPX is bumping up against the 1010 resistance area, breadth is overbought again, and the term structure of the $VIX futures also reflects an overbought condition. Intermediate-term indicators are bullish, however, with the possible exception of $VIX. In a nutshell, the market is likely to make a volatile move away from the 1010 area. "

*click on chart to expand image

Reflections on Bernanke and Possible Replacements

Interesting video and discussion on Fed Chairman Ben Bernanke's job and if he should be replaced.

Thursday, August 20, 2009

Milestone for Itz Stock Chartz

As of today, Itz Stock Chartz has been on the web for 7 weeks and been visited 6,000 times. Hopefully I've shed some insight into the market and stock charting. Please let me know what you think and/or would like to see (leave message on comments).

Thank you

A Look at Gold & The Markets

This video clip from CNBC, sums up what I've been saying now for several weeks. Especially on Gold. see yesterday's chart below.......

On the move in the markets this past week, talk lately has been on how the Shanghai Index (China market) has been a precusor to our market. Just recently having corrected 20% (bear market), but in the context of an explosive 100% rally. My indicators are still showing increased volatility and an overbought short term market. My downside target on the S&P 500 remains 950, but even the slightest blimp down has been met with buyers, a very resilient market, that has even those much more experience and smarter than me confused. But markets do that...fool you that is for longer than you think. But like I highlighted yesterday, from CNBC-Doug Kass said; "It's best to lose opportunity than capital."

On my suggested stocks list, I'd forewarned over a week ago that the markets were extended and to take some profits, plus hedge. Keep in mind we're entering Sept/Oct, historically bearish months for the markets. Bottom line...remain cautious and nimble.

Wednesday, August 19, 2009

Gold Trend Higher

A look at the shorter term oscillators show that Gold or in this chart the ETF GLD is nearing a BUY signal.
The longer term view is more positive for the price of $Gold as the U.S. economic
policy situation is so negative. The Obama administration will take action in an attempt to bolster its collapsing political power. Also, Fed Chairman Bernanke is in re-election mode as his appointment as Chairman is up for renewal in January. All in all, these factors mean more't spending and the Federal Reserve monetizing the U.S. deficit created by that spending. The Federal Reserve has no choice but to move toward direct financing of the Obama Deficit. Bottom line Gold will rise as money is "printed"!
*click chart to expand image

Buffett & Kass Comments

Two investors I follow that I respect and listen to are Warren Buffett & Doug Kass. Warren Buffett had an Op-Ed piece in the New York Times today Warren Buffett Link, I urge everyone to not only read his commentary but to view the Doug Kass CNBC video, really insightful information.

"Unchecked carbon emissions will likely cause icebergs to melt. Unchecked greenback emissions will certainly cause the purchasing power of currency to melt. The dollar’s destiny lies with Congress." —Billionaire investor Warren Buffett is chairman of Berkshire Hathaway

"It's best to lose opportunity than capital." - Doug Kass -Seabreeze Partners Management

Tuesday, August 18, 2009

Dow Jones Industrial

Just took a quick look at the Dow Jones Industrial chart along w/the point & figure(PnF), as with the $SPX 950 downside target...the $DJIA has a target of 8850.

*click on chart to expand image

Key Levels To Watch

Key levels on Oil, the US Dollar, Baltic Dry Index & the S&P 500.
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$SPX,$SPXA50R & $VIX Chart

August 18, 2009 9:25 AM

A look at the Volatility Index ($VIX),$SPX, $SPXA50R, S&P500 stocks trading over their 50day moving average. Yesterday was a 90% day, percentage of stocks down, as I type the futures are pointing to a higher open in the indexes. Will they stay high into the close? It feels to me that this opening should be sold. I still this as a more significant pullback and will hold to much needs to be seen? The line in the sand is the 950 level for the S&P500, a break below that level could see the July lows tested very quickly. The Volatility Index has been elevated and breaking higher, now it doesn't necessarily mean it will go lower...just great moves in either direction...but complacency has definitely given way to uncertainty of a sustainable recovery. We are entering September a historically bearish time for equities. I just heard Art Cashin discussing how the Baltic Dry Index ($BDI) should be monitored ...ahhh hello...what have I been saying lately? More later.....

*click on chart to expand image

Monday, August 17, 2009

Is The US Dollar Set To Rally?

My observation over the last several weeks...has been to WATCH the Baltic Dry Index ($BDI), I've posted several blogs on this index. I don't see any rally in the dollar as being sustainable, not with the US government debt load. Shorter term possible move up to 80 level, however the long term trend for the dollar is down.

In late February, long-time bear Robert Prechter, Founder & CEO of Elliott Wave International appeared on "Closing Bell," where he predicted a sharp rally. Prechter has been studying the charts for the past 30-years. That's a pretty bullish call for the perma-bear! Since March 9th, the S&P 500 has seen one of the fastest upside moves ever. According to Prechter's latest Elliott Wave Theorist, that 50% gain in five months carried the index to the lower end of his target zone of 1,000-1,100.
Now, he's turning bearish again. His biggest call: the dollar is forming a major bottom and starting a multi-year advance.Prechter also says that the potential for the dollar's bottom is an important thesis for deflation. Another bold prediction: Prechter is calling for the next wave of deflation!
All of this just another bearish signal for stocks and he's recommending investors switch to cash.
I don't necessarily agree with his long term view, but shorter term, we could see a pop in the dollar. see CNBC video clip below....

*click on chart to expand image

Double Dip???

Interesting observation, worth listening to.

Market Pullback [Mid-Day Update]

The Pullback is on! Key levels to watch on the S&P500 ($SPX) 945 the 50% retracement from July & the 50 day moving average; 925 is the 61.8% retracement & lower end of the channel and last 875 the July low & 200ma.

Note the spike in the Volatility Index ($VIX) as i pointed out earlier last week.

Those that follow my blog suggestions, should of taken some profits and hedged, eg ProShares Ultra Inverse S&P (SDS), suggested 8/13/08 @ $44.62 currently $47.50 (+6.5%) PO $53.

*click on charts to expand images

Saturday, August 15, 2009

The Australian Dollar, Baltic Dry Index & Equity Indexes

The Baltic Dry Index ($BDI) measures the daily cost of shipping raw materials by boat around the world. The index tracks dry bulk cargo vessels used for transporting commodities like iron ore, coal and agricultural products. It specifically measures is shipping demand against the worldwide available capacity on dry bulk ships. When the $BDI rises, it indicates a rise in global demand for raw materials and commodities and when it falls, it indicates lagging demand for these items. And demand for raw materials is a predictor for future economic activity because when producers want to build cars, roads, or buildings, they order more raw materials required for their products. These orders lead to increased shipping activity and the index rises.

Rising industrial activity usually points to economic growth and rising stock and commodity prices and so that's why many economists and analysts tracking this index, will tell you that moves in this index precede moves in the stock market, both up and down, because global demand for raw materials is an early warning indicator of future economic production.

The primary advantage of the $BDI over other leading economic indicators is that it is a very clear indicator of supply and demand in global shipping. The supply of freighters is very stable and so when freighter demand rises, the index climbs because shippers don't book freighters unless they actually plan on using them and there is no element of speculation in this index.

A rising Baltic Dry Index typically points to increased global economic activity, increased production, rising stock prices, rising commodity prices, rising interest rates and rising value in commodity based currencies like the New Zealand and Australian Dollar. And a declining Baltic Dry Index indicates the opposite elements of global economic contraction.

The chart below has the $BDI as well as the Australian Dollar ($XAD), the S&P500 ($SPX)and the Value Line Arithmetic Index ($VLE). I ran the 150 day moving average on all of the indexes, a down trending moving average is bearish/ up trending bullish. My only concern is the daily move down in the $BDI since June, while the $XAD & stock indexes rose. The index had benefited recently from a rebound in commodity purchases (particularly iron ore) by China. However, it is likely that Chinese fiscal stimulus may have led to a stockpiling of ore which will need to be worked down. The recent weakness in the $BDI may be corroborating this view. That divergence has made me cautious & why I believe a pullback in the equity markets is possible in the near term.

*click on chart to expand image

Friday, August 14, 2009

Market Has Gotten Way Ahead Of Reality

Markets are down today on the negative Consumer Sentiment Report. ~read story~
Over the past several blog posts, I've suggested taking some money off the table and to hedge via the ProShares ETFs. The markets have gotten ahead of themselves, as Mohamed El-Erian comments on CNBC. I agree with his views, but look as the "pullback" as an opportunity to add to enter to the market.

Video Clip: Mohamed El-Erian CEO, CEO and co-CIO of Pimco, shares his outlook on the markets and the economy.

*click on charts to expand images

Freeport McMoran (FCX) & Copper; Expect a Pullback

One of my July "Itz Stock Pix" Freeport McMoran (FCX) is up +46% in 5 weeks as copper prices continue to climb. I've been pointing out that caution us warranted, valuations on FCX are extended here, trading at 17xs S&P earnings estimates of $3.85 for '10. That said continued decline in the dollar could drive copper prices higher. I expect a pullback in the stock near term, but longer term to climb further.

VIDEO: Carter Worth on CNBC discusses FCX ~link~

*click on chart to expand image

Thursday, August 13, 2009

Itz Stock Pix: Update & New Pick

This market continues to churn higher, even as most (including myself) are cautious and believe that a pullback is emminent. Below are the stocks I've suggested to long since July & August (LNC) & ABT) & one short LWAY. They've averaged about a 24% return over the last 4 to 7 weeks. I'm suggesting a new position today, the ProShares ETF UltraShort S&P500 ticker symbol SDS, closing today at $44.62. This is strictly a hedge trade for the next few weeks & NOT a long term hold. Set stop to your risk level, I suggest $42 as a stop. My upside target on the SDS is it's 50 day moving average, near $53.

*click on chart to expand image

Hedge Fund Manager Paulson Buying GOLD

Hedge fund manager John Paulson, who made billions betting against financials over the last 2 years, has been reported to be not only buying bank stocks BUT gold stock too. ~read~

Fed Helps Gold Rally: From Brian Hicks, co-manager of the Global Resources Fund, is still bullish on gold and says the Fed's interest rate decision and economic outlook will help gold hit $1,000.

As I've been blogging over the past several weeks...I believe gold is set to break to the upside. My July suggestions [Itz Stock Pix] are up substantially...AUY,HL AA,& FCX.

*click on chart to expand image

US Dollar, Gold & S&P500

Follow up to my blog post on Dollar/Gold from 8/3.

Vid Clp: Discussing whether Fed chief Bernanke is leading us down the same road, with Peter Schiff, Euro Pacific Capital and the Fast Money team. Mr. Schiff is short the US Dollar.

*click on chart to expand image

Wednesday, August 12, 2009

Rewarding Failure

Interesting economic views from Nassim Taleb, principal of Universa Investments and author of 'The Black Swan,' on CNBC 8/12/09.

Tuesday, August 11, 2009

Apple (AAPL) Set To Pullback

Looking for Apple (AAPL) to pullback to the $150 level.
*click on chart to expand image

Baltic Dry Index ($BDI)

The Baltic Dry Index has been heading lower since June. Crude oil is now under $70 and appears to be heading towards its July lows, as I type the markets are again selling off. Interesting report from Bloomberg ... ~read more~

As I stated in Sunday's post ... My observations and call is that individual should take some money off the table on the big gainers like FCX or AA. Keep some cash on hand as I expect a pullback nearterm, where you can redeploy that cash on a longer term play.

*click chart to expand image

Volatility Index ($VIX)

The Volatility Index ($VIX) has declined enormously from historically high levels just several months ago. However, could we see it break out of the descending wedge...or at least start to trade with in a range going into the second half of 2009? I'm expecting a pullback in the markets, after all it has risen 50% from it's March lows and most believe has gotten slightly ahead of itself.

*click on chart to expand image

Monday, August 10, 2009

Expect A Market Pullback

Once and awhile I like to look at the Value Line Arithmetic Index, it consists of a simple mean or average in which the sum of the items is divided by the number of items. The Value Line index does a better job than the S&P 500 and Dow Industrials do at picking up the price action of smaller stocks, because the $VLE is equally weighted. One of the more particular aspects of the Arithmetic Index is that, based on the way the index is put together, it tends to advance farther in a bull market and decline less in a bear market. Note the double bottom Nov '08 & March ' has doubled from the bottom.

Debating what to expect from the Fed tomorrow, with Jeffrey Saut, Raymond James; Peter Boockvar, Miller Tabak on CNBC.

*click on chart to expand image

Sunday, August 9, 2009

Week In Review [$SPX, $COMPQ & $RUT]

Stocks rallied Friday after the latest employment numbers showed signs of a stabilizing job market. The Labor Department report showed 247,000 jobs were cut from nonfarm payrolls last month, less than the 320,000 expected, and the prior two months were revised to show 43,000 fewer jobs were lost from payrolls than first reported. It's been a good run for the market but it is looking a little overbought, but the underlying support is there. I see a brief period of consolidation, the markets will move upwards again.
Caution is warranted here as Mohamed El-Erian, chief executive of bond fund manager Pacific Investment Management Co, said Friday that U.S. stock markets are on a "prolonged sugar high" and that the bull market is unlikely to last. ~read story~

The big news this will be the FOMC meeting on Tue/Wed and their announcement on interest rates. They are not expected to make any changes but there is always the danger that they will modify their statement to include some indication of when they will start raising rates. The bond market is already pricing in higher rates with the 10-year note yield closing on Friday at 3.85% and the highest in nearly two months. The prospect of a rebounding economy is being felt in the bond market. Over $75 billion in debt will be sold this week and interest rates are rising. The Fed could help the Treasury by applying pressure to rates in order to make the auctions go smoother. There are $37B in 3-year notes on Tuesday, $23B in 10-year notes on Wednesday and $15B in 30-year bonds on Thursday.

My observations and call is that individual should take some money off the table on the big gainers like FCX or AA. Keep some cash on hand as I expect a pullback nearterm, where you can redeploy that cash on a longer term play.

*NOTE the S&P500 Percent of stocks above 50, 150 & 200 day moving averages is at overbought levels. Although they can stay there as the market grinds higher, it is a warning sign. ~see chart~ At the bottom of today's blog is a video clip from CNBC of Carter Worth,Oppenheimer Asset Management and the Fast Money of favorite chartist.

*click charts to expand images

Friday, August 7, 2009

A Look at the US Dollar

Yesterday I brought up the US Dollar, along with the Treasury auctions next week. The Dollar has shown some strength of of the Jobs Report numbers this morning and is currently at 78.9 as I type. I have annotated 2 charts below, one a daily highlighting a downtrend channel. The dollar is now testing the upper end of that channel near the 79 level. On the second chart there appears to be a possible "Bullish Divergence" pattern setting up. My observation suggest a rally in the dollar could bring it up to the 80 level, then a resumption of the decline towards the 76 support level. Bottom line...depends on how the Treasury auctions go next week?!

*click on chart to expand image

Thursday, August 6, 2009

10 Year Treasury Note ~ US Dollar ~ S&P 500

The yield on the 10-Year hits 3.75, as the US Treasury announces $75 Billion Quarterly Refunding.
The US Treasury announced that it will auction $37 billion 3-Year notes next Tuesday, $23 billion 10-Year notes on Wednesday and $15 billion 30-Year bonds on Thursday.
Yesterday Freddie Mac priced $4.5 billion 3-Year Reference Notes at 37.5 basis points above the 3-Year Treasury. This incremental cost is a tax on Americans, as Fannie and Freddie remain in Conservatorship.
Look at the daily chart for the yield on the 10-Year($TNX). Note the spike down in yield in March. That’s when the Federal Reserve announced that it would be buying Treasuries in a Quantitative Easing measure.
*click on chart to expand image

Wednesday, August 5, 2009

S&P 500 & NASDAQ 100 & the 150 Day Moving Average

I've posted 2 charts the S&P500 daily with the 150-ma & the percentage over 50,150 & 200 dma's. As well as the Nasdaq100 ($NDX) chart.
The Fast Money traders ask how does a bull begin with Carter Worth, Oppenheimer chief market technician.

*click on charts to expand images

Tuesday, August 4, 2009


Yamana Gold ($AUY) one of my suggested gold stocks, reports earnings after the close today and is currently trading at $9.90 +2.4% for the day. I suggested this gold stock back in July around $8.50 [+16.5%]. Below is a chart of the US Dollar, Swiss franc, the S&P500 & $GOLD. The Dollars decline since March has seen gold consolidate while the S&P 500 rise 50% from is March lows. It looks like several resistance & support levels are set to be surpassed!

*click on chart to expand image

Monday, August 3, 2009

S&P500 Breaks Over 1,000 Level

The S&P 500 ($SPX) finally has broken through the psychologically resistance level of 1,000. It's been since November of 2008 since it has closed above that level. The momentum is definitely upward, but, I still remain cautious with several indicators in extreme overbought levels. ~$SPX CHART~ Note* 26 week EMA getting close to crossing over its 52 week SMA BUY CONFIRMATION SIGNAL!

Update on suggested BUYS:
BUYS:From July picks
Freeport McMoran (FCX) $45 ~ $65.14 +44.76%
Alcoa (AA) $9.14 ~ $12.60 +37.86%
Hecla Mining (HL) $2.53 ~ $3.26 +28.85%
Yamana Gold (AUY) entry $8.50 currently $9.65 +13.53%
Apple (AAPL) $141 ~ $166.43 +18.035
Transocean (RIG) $67 ~ $82.06 +22.48%
China ETF (FXI) $37.15 ~ $43.65 +17.25%
Valero (VLO) $15.82 ~ $18.64 +17.83%
Google (GOOG) $394 ~ $452.21 +14.77%

August picks: Just one day return

Lincoln Financial (LNC) $21.19 ~ $22.66 +6.94%
Abbott Lab (ABT) $44.82 ~ $44.99 -0.38%

One Short sale from July
Lifeway (LWAY) $12.80 ~ Shorted @$13.05 again +1.90%

Sunday, August 2, 2009

Two Conservative Stock Picks

Here are two stocks that I see having value and somewhat more conservative in nature. Lincoln National Group (LNC) and its affiliates got crushed with the financials and has gone from $5 lows to over $20 now. I still see it rising further as value investors recognize that the write-downs were paper losses.

Abbott Labs (ABT) as fears subside over the President's health care reforms, this stock reported good numbers in its last quarterly report, it's well diversified, pays a 3.5% dividend and has an attractive valuation.

*click on charts to expand image