Friday, April 30, 2010

Itz Week End Review

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As Itz highlighted last week, Greece, earnings, FOMC were key events to watch in the went past. Debt issues with Euro along with no movement or wording change from the Fed rallied gold. Oil suprisingly rallied in part to the BP rig explosion in the Gulf. However, Itz Stock Chartz has been suggesting one hedge their portfolios, via options or ProShares etf's or even taking some money off the table. This coming week's big event will be the Jobs Report on Friday. Expectation are for a bullish number...the markets may sell off the news good or bad.
As the old stock market adage states, “Sell in May and go away,” emphasizing that the worst part of the year for stock performance is the months between May and November. To be sure, a $10,000 investment in the Dow Jones purchased in November and sold in April grows to $480,000, while the same strategy employed between May through October shows a loss of $328 (study: between 1950 – 2003) . . . thus, “sell in May and go away.” Itz is not suggesting to sell, however one must take this into consideration and hedge accordingly.

Itz has been posting several overbought index metrics over the last few weeks...LINK..LINK The CBOE equity put/call ratio is at 0.32, for its heaviest “call volume” relative to “put volume” since August of 2000, stocks are the most overbought since the rally began in March 2009. April 16th, was the first 90% Downside Day since February. The Volatility Index ($VIX) is at very complacent levels. In another method of measuring investor sentiment, on April 15th poll of its members by the American Association of Individual Investors, showed bullishness has jumped to 48.5%. The AAII poll is usually considered to be giving a warning when it reaches 50% to 55% bullish. It reached 54.6% bullish in October, 2007, at the exact top of the 2003-2007 bull market. And it reached 52.8% bullish on May 8, 2008, which was one week before the market began its serious 2008 bear market plunge. However, it only reached 47.5% bullish on June 4, 2009, and a correction began a week later. And it only reached 47.4% bullish on January 14 of this year, and the January-February correction began a week later. The reading this week was 41.36% Bullish link

Itz Stock Chartz suggested readers to enter ProShares UltraShort CrudeOil @ $12, it is down 6%. Oil rallied this week mostly on the news from the RIG/BP oil rig explosion and subsequent oil spill. The EIA weekly report on Wednesday showed a build in crude supplies of 1.9M barrels & distillates build of 2.9M. EIA LINK Yet, oil rallied and is approaching the recent $87 highs. Itz is keeping an eye on the Australian dollar $XAD, it has over the past few years peaked as oil has peaked. The Australian dollar on Friday @ 4pm was US$0.9209, the concensus is that the RBA will raise rates next week. The $XAD is hitting resistance & should be monitored carfully this week a breakout there and oil could follow.

Airtime: Fri. Apr. 30 2010 | 2:00 PM ET
Discussing whether the market momentum can continue with this uncertainty, with Jeffrey Hirsch, Stock Trader's Almanac and CNBC's David Faber.

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