VR Trader Morning Commentary
Started by
TTHQ Staff
, Feb 02 2009 11:09 AM
No replies to this topic
#1
TTHQ Staff
-
- Admin
- 8,597 posts
www.TTHQ.com
Posted 02 February 2009 - 11:09 AM
TheVRTrader.com VR Silver Newsletter - Monday 2/2/2009
"Tools for the High Performance Trader"
Copyright ©2009, All rights reserved.
Redistribution in any form is strictly prohibited.
"Tools for the High Performance Trader"
Copyright ©2009, All rights reserved.
Redistribution in any form is strictly prohibited.
LEIBOVIT FILES | by MarkLeibovit
Leibovit Files
Monday, February 02, 2009
Hell To Pay?
UPCOMING ECONOMIC RELEASES/MARKET EVENTS
February 2-6, 2009:
---------------------------------------------
MONDAY, February 2:
Motor Vehicle Sales
Personal Income and Outlays
8:30 AM ET
ISM Mfg Index
10:00 AM ET
Construction Spending
10:00 AM ET
3-Month Bill Auction
1:00 PM ET
6-Month Bill Auction
1:00 PM ET
---------------------------------------------
TUESDAY, February 3:
Turnaround Tuesday
ICSC-Goldman Store Sales
7:45 AM ET
Redbook
8:55 AM ET
Pending Home Sales Index
10:00 AM ET
4-Week Bill Auction
1:00 PM ET
---------------------------------------------
WEDNESDAY, February 4:
MBA Purchase Applications
7:00 AM ET
Challenger Job-Cut Report
7:30 AM ET
ADP Employment Report
8:15 AM ET
ISM Non-Mfg Index
10:00 AM ET
EIA Petroleum Status Report
10:30 AM ET
---------------------------------------------
THURSDAY, February 5:
Chain Store Sales
Monster Employment Index
Jobless Claims
8:30 AM ET
Productivity and Costs
8:30 AM ET
RBC CASH Index
9:00 AM ET
Factory Orders
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
Money Supply
4:30 PM ET
---------------------------------------------
FRIDAY, February 6:
Employment Situation
8:30 AM ET
Consumer Credit
3:00 PM ET
---------------------------------------------
STOCKS - ACTION alert -
"Right now, we're in a death spiral," warned Richard Parsons,Citigroup's incoming chairman. "It only gets worse if there's nointervention. If we don't use taxpayer money, the financial systemcollapses, and we'll have hell to pay," he said.
Looking at the break in key stocks such as TXT, IP, WMT, PG, FDX,and UPS and the near breakdown of MMM and PFE, there is NO questionthis market is going lower. Blood is in the water and the sharks arecircling. Platinum subscribers are currently positioned short theS&P 500.
Other bearish indicators include a tremendous fall off in insiderbuying and company buybacks despite much lower equity prices. If priceswere truly cheap, this should not be happening.
At the core of the crisis is the unrelenting
slide in US home prices, which in turn, is piling-up even bigger lossesfor banks,
leading to a tightening of lending, rattling consumer confidence andspending, and
forcing companies into massive layoffs to cope with the depression.
According to the Stock Trader's Almanac, its highly accurate"January Barometer," states that as goes the S&P-500 Index inJanuary, so goes the year for the stock market. Since 1950, the"January Barometer" has had a 92% accuracy rate. In January, the DowIndustrials fell 8.8%, the S&P-500 lost 8.6%, and Nasdaq lost6.4-percent.
The stock market rallied at Friday's open after a better thanexpected GDP report, but then fell quickly after a worse than expectedconsumer sentiment reading and a further decline in the Chicago NAPM.Most of the afternoon, the market traded with no direction, beforefalling at the end of the day and closing near the day's low. For theday the Dow was off 148.15 at 8000.86, the S&P 500 was off 19.26 at825.88, and the Nasdaq Composite was off 31.42 at 1476.42. Volumeincreased over Thursday and breadth was weak.
Friday's action does not bode well for the bulls. As the Dow tradedon both sides of 8000, volume increased on a decidedly negative day.This is the Dow's lowest close since November 20. Those thinking thatthe Dow should bounce here because the 8000 level was defended lasttime around should pay attention to the anemic quality of that recentbounce.
Recall that in Wednesday's closing commentary, I downplayed the bigrun-up in reaction to the 'bad bank' news. All that rally did was takethe indices into resistance from which they have retreated rathereasily. We are now sitting squarely on the low angle uptrend line offof the November low. Even calling it a trendline at this point is areach, but it does capture the latest advance attempt from 8000 in theDow. If we get any form of concerted selling on Monday, we will breakthrough to the downside, setting the November 21 intra day low of 7449in the market's sights.
Things could get downright ugly again folks as the President andCongress throws us deeper into debt with no apparent direction for the'stimulus' bill except to grease the palms of special interest groups.The market knows when it smells a rat, and the lack of euphoria overhouse passage of this pork laden bill is proof enough that there issomething wrong.
For the month of January, the Dow was off 8.84%, the S&P 500 wasoff 8.57%, and the Nasdaq Composite was off 6.38%. Not a good sign forthose who believe in the January Barometer. According to the StockTraders Almanac's January Barometer, the month of January tends topredict the direction of the market with a 91.4% accuracy ratio, withonly five major errors recorded since 1950. According to broaderresearch from Quantitative Analysis Service, the month of January tendsto predict the direction the market will take for the year accurately65% to 75% of the times.
Bloomberg reports that earnings reported so far this quarter aredown 38%. The S&P fell an equal 38% last year. Coincidence?Additionally, the fourth quarter will mark the sixth- straight periodof decreasing profits, the longest streak on record.
The overall market trend is still down and we will treat correctiverallies as selling opportunities until the market shows us that it isserious about moving higher in the form of widespread Positive VolumeReversals ™.
Though I am still very much a bear, a rally still has potential. Onepossible scenario I am toying with involves the market posting newmarket lows NOW and then reversing higher into another tradeable rally.Remember, we've been trading in a broad 750-950 range in the SPX. Webottomed on the most recent decline at 804 on 1/21 and Wednesday wetouched 877.
If we can play the upside, we will, but:
Remember, Don't fall in love with the upside! The 'Bad Bank' ideasounds appealing on the surface, but those who are behind it (with theexception of Sheila Barr at the FDIC) and those who will benefited fromit should, in my opinion, be behind bars. By printing more and moremoney to bail out 'friends' on Wall Street, isn't the US Government nobetter than Bernie Madoff in running a Ponzi scheme? I think so.
As for the Super Bowl Indicator, a triump by a team from theNational Football Conference tends to foreshadow an upbeat year for themarket. Conversely, a triumphant team from the American FootballConference signals a bearish year.
But here's the twist: a triumph from one of the old NFL teams(before the merger with the American Football League) also is a bullishsign. This Sunday, two old NFL teams do battle -- Pittsburgh andArizona (formerly the Chicago Cardinals). So bullish?
Alas, last year the New York Giants of the NFC won the Super Bowl,and look what happened on Wall Street. This newsletter is being sentout ahead of the Super Bowl game, but it appears the market will worklower regardless who wins.
---------------------------------------------
GOLD - ACTION alert -
The precious metals had a great day Friday, hitting rally highs,despite the rising dollar. Gold gained 18.80 to 927.10 and hit a rallyhigh of 929..60 in the afternoon, putting us right at resistance of930. Silver rose 0.32 to 12.67 and hit a high of 12.70. Platinum was up14 to 987. Copper futures settled up 0.0110 to 1.4685.
Commodities as a whole (the CRB Index) has been creeping higher. Theonly two groups that have not meaningful participated to date is energyand meats in the commodity complex. It appears, however, commodities asa whole are breaking out of bases and could really take-off here.
Precious metals are benefiting from a huge flight to safety. Back inthe autumn stock market crash, Treasuries were the flight to safetyinstrument. Since then, the US government has "invested" $700 billionin financial firms through the TARP, expanded money supply, and ispassing a $819 billion stimulus plan. With all the new supply comingonline to fund the growing budget deficit, gold has replaced USTreasuries as the safe investment of choice.
Meanwhile, next upside resistance for gold is 930, 960 and 985 andthe record high at 1037. Beyond that, I am looking for 1200. There is aseasonal tendency for a rally into February or early spring, usuallyfollowed by a correction. Traders have to be aware of this risk,whether we post new record highs or not. Subscribers to the AnnualForecast Model have a clearer picture of what I'm referring to here.
I continue to recommend accumulating the physical metal whenever youcan get your hands on it.. Reason? There is not a single central bankor financial institution in the world that can create more gold. Itssupply is extremely limited. All the gold ever mined in the history ofthe world would fit into two Olympic-size swimming pools. In addition,every central bank on the planet is printing fiat money like crazy.Plus, if you think the financial crisis is bad thus far, tighten yourseatbelts because it's about to get a heck of a lot worse.
---------------------------------------------
BONDS - ACTION alert -
Treasuries fell Friday despite the stock market decline. The longbond future lost 28/64 to 126 22/64.
Treasuries had their worst January in 25 years, getting hit bymassive government debt sales to finance Washington's plans forpropping up the flailing economy. As of Thursday's close, an index ofTreasuries of all maturities has lost 3.61% in the month, making itdown the worst start to a year since at least 1984.
With all the new supply coming and Congress/Obama increasing ourspending even more, traders are concerned that future bond auction willbe much larger and demand will be weaker.
I've been writing for weeks that Treasuries will get hit by themassive amount of debt the federal government is taking on and therisky investment in financial firms. As predicted, bonds are nowfalling. However, if the stock market retests the low, as is possible,treasuries will likely rally. But the big trend is clearly down astraders continue to worry about the government's ability to pay off itsdebts and the low yields just aren't attractive enough to compensatefor the risk the Treasury has taken by buying up huge portions offinancial firms.
---------------------------------------------
CRUDE OIL - ACTION alert -
Oil ended little changed on Friday after we got better than expectedGDP, but worse than expected consumer sentiment. Crude oil closed up0.24 to 41.68.
After all that volatility, crude oil has gotten kind of boring thelast few weeks. Have we found a new trading range for oil? Or is oilgetting ready for a big move?
Oil shares, especially several of the various oil ETFs such as OIH,XLE, DIG, DXO, and USO have found buyers in recent days and are actingmore like 'stocks' than 'oil stocks'.
Upside potential still exists back to 50.00, 55.00, 65.00 andbeyond, but from what level? Was THE LOW at $32 or will it come fromeven lower levels?
---------------------------------------------
US DOLLAR - ACTION alert -
The U.S. Dollar Index traded higher as it and the Yen rose againstthe Euro after euro-zone inflation fell to a near-10 year low andunemployment in the region rose to a two-year high. The dollar indexwas up 0.531 to 86.000.
Consumer prices in the 16-nation euro area gained just 1.1% over thepast 12 months, down from 1.6% by that measure in December, accordingto Eurostat. It was the lowest level for year-over-year inflation sinceJuly 1999. The EU report also showed unemployment rose to 8% inDecember, the highest level since November 2006. This caused the Euroto fall as the ECB now has more room to lower interest rates.
Also hurting the Euro, Ireland's government debt-rating outlook waslowered by Moody's Investors Service, which said the financial crisisis likely to "significantly affect" the country's economic strength.The outlook on the top Aaa rating was changed to "negative" from"stable." The economy will contract 5 percent this year, the most ofany euro-area nation, and the budget deficit will soar to almost fourtimes the European Union limit, according to the European Commission..
Despite all common sense reason otherwise, it appears the US DollarIndex is headed back to and through the November 21 high of 88.463 withpotential into the 90s! However, if we break under 77.688, December18's low, next support (target) would be 75.89 and then potentiallythrough the 70.00 bear market low.
The bottom line is that recent history says a weak Dollar is goodfor stocks and gold. Of course, nothing is carved in stone and themarket makes rules to break 'em, so we have to be vigilant.
---------------------------------------------
URANIUM - ACTION alert
Ux U3O8 Prices* (Uranium)
January 26, 2009 Posting
Spot: $48.00. Bull market high in the cash market was $136.00.
The March Uranium Futures closed at $50.00. The current bear marketlow is $45.00. June 13, 2007 hosted the bull market high of 154.95.Major support lies well under the market at $36.00. Confirmation of abottom should be evident when the uranium shares begin as uraniumshares regain their footing. We're getting some early signs here, sostay tuned.
---------------------------------------------
In the news:
The economy shrank at a 3.8 percent pace at the end of 2008, theworst showing in a quarter-century. This figure is much better than the5.4 percent drop economists expected. Still, the figure could berevised lower in the months ahead and some analysts believe the economyhas been contracting in early 2009 at an even faster pace. A build-upin business inventories, which in calculating GDP adds to economicactivity, masked the fourth-quarter's true weakness. When inventoriesare stripped out, the economy would have contracted at a 5.1 percentpace in the fourth quarter, closer to the 5.4 percent drop thateconomists expected. Battered consumers slashed spending at a 3..5percent pace at the end of 2008, following a bigger 3.8 percentannualized cutback in the third quarter. The last time consumerschopped spending for two straight quarters was in the closing quarterof 1990 and the opening quarter of 1991.
Consumer sentiment rose in January to a final reading of 61.2 from60.1 in late December, a four-month high, according to a surveyreleased by the University of Michigan and Reuters. Analysts werelooking for a January result of 61.5. While sentiment remains atrelatively low levels, lower prices have provided some relief, even asworry persists over income and ongoing job losses.
The economy in the Chicago region continued to worsen in January,with more businesses reporting worsening conditions than at any time inthe past 26 years, according to the purchasing managers index releasedby the NAPM-Chicago. The Chicago PMI fell to 33.3% in January from35.1% in December.
Amazon.com reported a surprise gain in fourth-quarter earningsthanks to strong holiday sales, beating the consensus view of WallStreet that had been predicting a decline in earnings for the period.Amazon reported earnings of $225 million, or 52 cents a share, comparedto earnings of $207 million, or 48 cents a share, for the same periodthe previous year. Analysts had been looking for earnings of 40 cents ashare. Revenue grew 18% to $6.7 billion -- beating the $6.48 billionpredicted by Wall Street. AMZN gained 17.6%.
Exxon Mobil reported a profit of $45.2 billion for 2008, breakingits own record for a U.S. company, even as its fourth-quarter earningsfell 33 percent from a year ago. Net income slid sharply to $7.8billion, or $1.55 a share, in the October-December period. Thatcompared with $11.7 billion, or $2.13 a share, in the same period ayear ago. Revenue in the most-recent quarter fell 27 percent to $84.7billion. Both the per-share and revenue results topped Wall Streetforecasts. On average, analysts expected the company to earn $1.45 ashare in the latest quarter on revenue of $69.1 billion. XOM slipped0.7%.
The nation's second largest oil company, Chevron, reported profitsof $4.9 billion for the fourth quarter, though revenues slid 26 percentwith oil prices in sharp decline. It earned $2.44 per share in thethree months ended Dec. 31. Like Exxon, Chevron easily beatexpectations of analysts, who were looking for profits of $1.81 pershare. CVX lost 0.1%.
Caterpillar announced 2,110 new job cuts as the heavy equipmentmaker scales back production to match falling demand. The cuts at threeIllinois plants come after the company announced other work force andcost-cutting actions earlier this week. CAT was down 3.1%.
Consumer products maker Procter & Gamble reported that itssecond-quarter profit jumped 53 percent, boosted by its sale of theFolgers coffee business, but said that sales are slowing in the tougheconomy. The company also lowered its earning projections for the fullyear, citing the economic uncertainty and market volatility. P&Gsaid net sales fell 3.2 percent to $20.37 billion on lower volume and astronger dollar. The company earned $5 billion for the quarter,compared with $3.27 billion a year earlier. Earnings per share were$1.58, in line with Wall Street expectations. PG fell 6.4%.
Honeywell International said that its fourth-quarter earnings rosenearly 3%, as a lower tax rate and a decline in costs helped to offsetsteep drops in its transportation and specialty-material businesses.Though results were in line with Wall Street expectations and theindustrialist reaffirmed its 2009 outlook, its first-quarter outlookcame in far below analysts' mean estimate. Looking ahead, theconglomerate forecast first-quarter earnings in the range of 50 centsto 60 cents a share, down 30% to 40% from the same quarter in 2008.Sales are expected to fall 10% to 17% to a range of $7.4 billion to $8billion. Analysts expected 76 cents a share in the current quarter onsales of $8.3 billion. Nonetheless, the company reaffirmed its 2009earnings outlook in the range of $3.20 to $3.55 a share on sales of$33.6 billion to $35.3 billion. HON gained 0.4%.
---------------------------------------------
---------------------------------------------
VR TRADER.COM WATCHLISTS:
Please note:
The VR Watchlist is currently now only available via theVRTrader.com website accessed via your assigned username and password.Please email mark@vrsurvey.com if you misplaced that information.
At this time there are no Watchlist listings.
---------------------------------------------
SAMPLE DAILY VR LIST:
Editors note: The Daily VR List here is abbreviated with the fulllist only available to Platinum subscribers by clicking on 'Current VRList' on the Home Page of VRtrader.com.
Silver subscribers who find this useful should upgrade to Platinumwhere you can pull down VR charts for many securities and watch thepatterns unfold for yourself. There is no technical service on theplanet that posts Positive and Negative VR! Why? Because they areproprietary to VRtrader.com!
How do you use this list? VRs are buy and sell triggers and areparticularly useful in defining lows or highs in stocks and stockindexes. Traders find them particularly useful, especially coming offmarket extremes as an indication of a change of direction. Use the VRsin conjunction with your other technical indicators and you've added aunique technical tool to your arsenal.
What is a Volume Reversal? There are several proprietary subtletiesto the Volume Reversal ™ algorithm, but essentially a VolumeReversal ™ is a change from a Rally day to a Reaction dayaccompanied by a increase of volume or a change from a Reaction day toRally day accompanied by an increase in volume. Volume Reversals ™coming off intermediate lows or highs have greater significance inhelping to define those lows or highs and important pivot points in themarketplace. The Volume Reversals ™ presented here provide you witha unique research tool that may have trading (short-term) significance,but it also may have 'trend changing'(intermediate) significance aswell. The sector Volume Reversals ™ show where big money is possiblyaffecting an entire group of stocks. The stocks listed under the grouphave posted Volume Reversals ™ along with the group as a whole. Theindividual stocks listed have posted Volume Reversals ™ on their ownand are valid plays as well.
To see a visual representation of Volume Reversals ™, please goour Current Portfolio section and click on any recommended stock. Or,if you would like to get a VR Chart for a specific symbol, please clickhere. Please note that not all symbols may be currently available.
List of Volume Reversals 1/30/09 - Sectors
*** Sectors Positive Volume Reversals ***
METALS & MINING Gold
AUY Yamana Gold Inc
DROOY DRD Gold Ltd Adr
*** Sectors Negative Volume Reversals ***
BANKING Savings & Loans
BRKL Brookline Bancorp Inc
CHEV Cheviot Financial Corp
DIVERSIFIED SERVICES Business/Management Services
AAC Ableauctions.Com Inc
AUSA Access Plans Usa Inc
DRUGS Biotechnology
CGRB Cougar Biotechnology Inc
CRL Charles River Labs Intl
DRUGS Drug Manufacturers - Other
ADLR Adolor Corporation
AGN Allergan Inc
FINANCIAL SERVICES Closed End Fund - Debt
APX Apex Municipal Fund
BBF Blackrock Fl Municipal Inc Tr
FINANCIAL SERVICES Closed End Fund - Equity
ADRE BLDRS Emerging Markets 50 ADR
AEX Nets Netherlands Index Fund
FINANCIAL SERVICES Closed End Fund - Foreign
BHK Blackrock Core Bond Trust
BZF Brazil Fund Inc
FINANCIAL SERVICES Credit Services
AACC Asset Acceptance Capital Corp
CACC Credit Acceptance Corp
HEALTH SERVICES Medical Appliances & Equipment
CLSN Celsion Corp
ENDO Endocare Inc
UTILITIES Electric Utilities
BKH Black Hills Corp
D Dominion Resources Inc
---------------------------------------------
Leibovit Files
Monday, February 02, 2009
Hell To Pay?
UPCOMING ECONOMIC RELEASES/MARKET EVENTS
February 2-6, 2009:
---------------------------------------------
MONDAY, February 2:
Motor Vehicle Sales
Personal Income and Outlays
8:30 AM ET
ISM Mfg Index
10:00 AM ET
Construction Spending
10:00 AM ET
3-Month Bill Auction
1:00 PM ET
6-Month Bill Auction
1:00 PM ET
---------------------------------------------
TUESDAY, February 3:
Turnaround Tuesday
ICSC-Goldman Store Sales
7:45 AM ET
Redbook
8:55 AM ET
Pending Home Sales Index
10:00 AM ET
4-Week Bill Auction
1:00 PM ET
---------------------------------------------
WEDNESDAY, February 4:
MBA Purchase Applications
7:00 AM ET
Challenger Job-Cut Report
7:30 AM ET
ADP Employment Report
8:15 AM ET
ISM Non-Mfg Index
10:00 AM ET
EIA Petroleum Status Report
10:30 AM ET
---------------------------------------------
THURSDAY, February 5:
Chain Store Sales
Monster Employment Index
Jobless Claims
8:30 AM ET
Productivity and Costs
8:30 AM ET
RBC CASH Index
9:00 AM ET
Factory Orders
10:00 AM ET
EIA Natural Gas Report
10:30 AM ET
Money Supply
4:30 PM ET
---------------------------------------------
FRIDAY, February 6:
Employment Situation
8:30 AM ET
Consumer Credit
3:00 PM ET
---------------------------------------------
STOCKS - ACTION alert -
"Right now, we're in a death spiral," warned Richard Parsons,Citigroup's incoming chairman. "It only gets worse if there's nointervention. If we don't use taxpayer money, the financial systemcollapses, and we'll have hell to pay," he said.
Looking at the break in key stocks such as TXT, IP, WMT, PG, FDX,and UPS and the near breakdown of MMM and PFE, there is NO questionthis market is going lower. Blood is in the water and the sharks arecircling. Platinum subscribers are currently positioned short theS&P 500.
Other bearish indicators include a tremendous fall off in insiderbuying and company buybacks despite much lower equity prices. If priceswere truly cheap, this should not be happening.
At the core of the crisis is the unrelenting
slide in US home prices, which in turn, is piling-up even bigger lossesfor banks,
leading to a tightening of lending, rattling consumer confidence andspending, and
forcing companies into massive layoffs to cope with the depression.
According to the Stock Trader's Almanac, its highly accurate"January Barometer," states that as goes the S&P-500 Index inJanuary, so goes the year for the stock market. Since 1950, the"January Barometer" has had a 92% accuracy rate. In January, the DowIndustrials fell 8.8%, the S&P-500 lost 8.6%, and Nasdaq lost6.4-percent.
The stock market rallied at Friday's open after a better thanexpected GDP report, but then fell quickly after a worse than expectedconsumer sentiment reading and a further decline in the Chicago NAPM.Most of the afternoon, the market traded with no direction, beforefalling at the end of the day and closing near the day's low. For theday the Dow was off 148.15 at 8000.86, the S&P 500 was off 19.26 at825.88, and the Nasdaq Composite was off 31.42 at 1476.42. Volumeincreased over Thursday and breadth was weak.
Friday's action does not bode well for the bulls. As the Dow tradedon both sides of 8000, volume increased on a decidedly negative day.This is the Dow's lowest close since November 20. Those thinking thatthe Dow should bounce here because the 8000 level was defended lasttime around should pay attention to the anemic quality of that recentbounce.
Recall that in Wednesday's closing commentary, I downplayed the bigrun-up in reaction to the 'bad bank' news. All that rally did was takethe indices into resistance from which they have retreated rathereasily. We are now sitting squarely on the low angle uptrend line offof the November low. Even calling it a trendline at this point is areach, but it does capture the latest advance attempt from 8000 in theDow. If we get any form of concerted selling on Monday, we will breakthrough to the downside, setting the November 21 intra day low of 7449in the market's sights.
Things could get downright ugly again folks as the President andCongress throws us deeper into debt with no apparent direction for the'stimulus' bill except to grease the palms of special interest groups.The market knows when it smells a rat, and the lack of euphoria overhouse passage of this pork laden bill is proof enough that there issomething wrong.
For the month of January, the Dow was off 8.84%, the S&P 500 wasoff 8.57%, and the Nasdaq Composite was off 6.38%. Not a good sign forthose who believe in the January Barometer. According to the StockTraders Almanac's January Barometer, the month of January tends topredict the direction of the market with a 91.4% accuracy ratio, withonly five major errors recorded since 1950. According to broaderresearch from Quantitative Analysis Service, the month of January tendsto predict the direction the market will take for the year accurately65% to 75% of the times.
Bloomberg reports that earnings reported so far this quarter aredown 38%. The S&P fell an equal 38% last year. Coincidence?Additionally, the fourth quarter will mark the sixth- straight periodof decreasing profits, the longest streak on record.
The overall market trend is still down and we will treat correctiverallies as selling opportunities until the market shows us that it isserious about moving higher in the form of widespread Positive VolumeReversals ™.
Though I am still very much a bear, a rally still has potential. Onepossible scenario I am toying with involves the market posting newmarket lows NOW and then reversing higher into another tradeable rally.Remember, we've been trading in a broad 750-950 range in the SPX. Webottomed on the most recent decline at 804 on 1/21 and Wednesday wetouched 877.
If we can play the upside, we will, but:
Remember, Don't fall in love with the upside! The 'Bad Bank' ideasounds appealing on the surface, but those who are behind it (with theexception of Sheila Barr at the FDIC) and those who will benefited fromit should, in my opinion, be behind bars. By printing more and moremoney to bail out 'friends' on Wall Street, isn't the US Government nobetter than Bernie Madoff in running a Ponzi scheme? I think so.
As for the Super Bowl Indicator, a triump by a team from theNational Football Conference tends to foreshadow an upbeat year for themarket. Conversely, a triumphant team from the American FootballConference signals a bearish year.
But here's the twist: a triumph from one of the old NFL teams(before the merger with the American Football League) also is a bullishsign. This Sunday, two old NFL teams do battle -- Pittsburgh andArizona (formerly the Chicago Cardinals). So bullish?
Alas, last year the New York Giants of the NFC won the Super Bowl,and look what happened on Wall Street. This newsletter is being sentout ahead of the Super Bowl game, but it appears the market will worklower regardless who wins.
---------------------------------------------
GOLD - ACTION alert -
The precious metals had a great day Friday, hitting rally highs,despite the rising dollar. Gold gained 18.80 to 927.10 and hit a rallyhigh of 929..60 in the afternoon, putting us right at resistance of930. Silver rose 0.32 to 12.67 and hit a high of 12.70. Platinum was up14 to 987. Copper futures settled up 0.0110 to 1.4685.
Commodities as a whole (the CRB Index) has been creeping higher. Theonly two groups that have not meaningful participated to date is energyand meats in the commodity complex. It appears, however, commodities asa whole are breaking out of bases and could really take-off here.
Precious metals are benefiting from a huge flight to safety. Back inthe autumn stock market crash, Treasuries were the flight to safetyinstrument. Since then, the US government has "invested" $700 billionin financial firms through the TARP, expanded money supply, and ispassing a $819 billion stimulus plan. With all the new supply comingonline to fund the growing budget deficit, gold has replaced USTreasuries as the safe investment of choice.
Meanwhile, next upside resistance for gold is 930, 960 and 985 andthe record high at 1037. Beyond that, I am looking for 1200. There is aseasonal tendency for a rally into February or early spring, usuallyfollowed by a correction. Traders have to be aware of this risk,whether we post new record highs or not. Subscribers to the AnnualForecast Model have a clearer picture of what I'm referring to here.
I continue to recommend accumulating the physical metal whenever youcan get your hands on it.. Reason? There is not a single central bankor financial institution in the world that can create more gold. Itssupply is extremely limited. All the gold ever mined in the history ofthe world would fit into two Olympic-size swimming pools. In addition,every central bank on the planet is printing fiat money like crazy.Plus, if you think the financial crisis is bad thus far, tighten yourseatbelts because it's about to get a heck of a lot worse.
---------------------------------------------
BONDS - ACTION alert -
Treasuries fell Friday despite the stock market decline. The longbond future lost 28/64 to 126 22/64.
Treasuries had their worst January in 25 years, getting hit bymassive government debt sales to finance Washington's plans forpropping up the flailing economy. As of Thursday's close, an index ofTreasuries of all maturities has lost 3.61% in the month, making itdown the worst start to a year since at least 1984.
With all the new supply coming and Congress/Obama increasing ourspending even more, traders are concerned that future bond auction willbe much larger and demand will be weaker.
I've been writing for weeks that Treasuries will get hit by themassive amount of debt the federal government is taking on and therisky investment in financial firms. As predicted, bonds are nowfalling. However, if the stock market retests the low, as is possible,treasuries will likely rally. But the big trend is clearly down astraders continue to worry about the government's ability to pay off itsdebts and the low yields just aren't attractive enough to compensatefor the risk the Treasury has taken by buying up huge portions offinancial firms.
---------------------------------------------
CRUDE OIL - ACTION alert -
Oil ended little changed on Friday after we got better than expectedGDP, but worse than expected consumer sentiment. Crude oil closed up0.24 to 41.68.
After all that volatility, crude oil has gotten kind of boring thelast few weeks. Have we found a new trading range for oil? Or is oilgetting ready for a big move?
Oil shares, especially several of the various oil ETFs such as OIH,XLE, DIG, DXO, and USO have found buyers in recent days and are actingmore like 'stocks' than 'oil stocks'.
Upside potential still exists back to 50.00, 55.00, 65.00 andbeyond, but from what level? Was THE LOW at $32 or will it come fromeven lower levels?
---------------------------------------------
US DOLLAR - ACTION alert -
The U.S. Dollar Index traded higher as it and the Yen rose againstthe Euro after euro-zone inflation fell to a near-10 year low andunemployment in the region rose to a two-year high. The dollar indexwas up 0.531 to 86.000.
Consumer prices in the 16-nation euro area gained just 1.1% over thepast 12 months, down from 1.6% by that measure in December, accordingto Eurostat. It was the lowest level for year-over-year inflation sinceJuly 1999. The EU report also showed unemployment rose to 8% inDecember, the highest level since November 2006. This caused the Euroto fall as the ECB now has more room to lower interest rates.
Also hurting the Euro, Ireland's government debt-rating outlook waslowered by Moody's Investors Service, which said the financial crisisis likely to "significantly affect" the country's economic strength.The outlook on the top Aaa rating was changed to "negative" from"stable." The economy will contract 5 percent this year, the most ofany euro-area nation, and the budget deficit will soar to almost fourtimes the European Union limit, according to the European Commission..
Despite all common sense reason otherwise, it appears the US DollarIndex is headed back to and through the November 21 high of 88.463 withpotential into the 90s! However, if we break under 77.688, December18's low, next support (target) would be 75.89 and then potentiallythrough the 70.00 bear market low.
The bottom line is that recent history says a weak Dollar is goodfor stocks and gold. Of course, nothing is carved in stone and themarket makes rules to break 'em, so we have to be vigilant.
---------------------------------------------
URANIUM - ACTION alert
Ux U3O8 Prices* (Uranium)
January 26, 2009 Posting
Spot: $48.00. Bull market high in the cash market was $136.00.
The March Uranium Futures closed at $50.00. The current bear marketlow is $45.00. June 13, 2007 hosted the bull market high of 154.95.Major support lies well under the market at $36.00. Confirmation of abottom should be evident when the uranium shares begin as uraniumshares regain their footing. We're getting some early signs here, sostay tuned.
---------------------------------------------
In the news:
The economy shrank at a 3.8 percent pace at the end of 2008, theworst showing in a quarter-century. This figure is much better than the5.4 percent drop economists expected. Still, the figure could berevised lower in the months ahead and some analysts believe the economyhas been contracting in early 2009 at an even faster pace. A build-upin business inventories, which in calculating GDP adds to economicactivity, masked the fourth-quarter's true weakness. When inventoriesare stripped out, the economy would have contracted at a 5.1 percentpace in the fourth quarter, closer to the 5.4 percent drop thateconomists expected. Battered consumers slashed spending at a 3..5percent pace at the end of 2008, following a bigger 3.8 percentannualized cutback in the third quarter. The last time consumerschopped spending for two straight quarters was in the closing quarterof 1990 and the opening quarter of 1991.
Consumer sentiment rose in January to a final reading of 61.2 from60.1 in late December, a four-month high, according to a surveyreleased by the University of Michigan and Reuters. Analysts werelooking for a January result of 61.5. While sentiment remains atrelatively low levels, lower prices have provided some relief, even asworry persists over income and ongoing job losses.
The economy in the Chicago region continued to worsen in January,with more businesses reporting worsening conditions than at any time inthe past 26 years, according to the purchasing managers index releasedby the NAPM-Chicago. The Chicago PMI fell to 33.3% in January from35.1% in December.
Amazon.com reported a surprise gain in fourth-quarter earningsthanks to strong holiday sales, beating the consensus view of WallStreet that had been predicting a decline in earnings for the period.Amazon reported earnings of $225 million, or 52 cents a share, comparedto earnings of $207 million, or 48 cents a share, for the same periodthe previous year. Analysts had been looking for earnings of 40 cents ashare. Revenue grew 18% to $6.7 billion -- beating the $6.48 billionpredicted by Wall Street. AMZN gained 17.6%.
Exxon Mobil reported a profit of $45.2 billion for 2008, breakingits own record for a U.S. company, even as its fourth-quarter earningsfell 33 percent from a year ago. Net income slid sharply to $7.8billion, or $1.55 a share, in the October-December period. Thatcompared with $11.7 billion, or $2.13 a share, in the same period ayear ago. Revenue in the most-recent quarter fell 27 percent to $84.7billion. Both the per-share and revenue results topped Wall Streetforecasts. On average, analysts expected the company to earn $1.45 ashare in the latest quarter on revenue of $69.1 billion. XOM slipped0.7%.
The nation's second largest oil company, Chevron, reported profitsof $4.9 billion for the fourth quarter, though revenues slid 26 percentwith oil prices in sharp decline. It earned $2.44 per share in thethree months ended Dec. 31. Like Exxon, Chevron easily beatexpectations of analysts, who were looking for profits of $1.81 pershare. CVX lost 0.1%.
Caterpillar announced 2,110 new job cuts as the heavy equipmentmaker scales back production to match falling demand. The cuts at threeIllinois plants come after the company announced other work force andcost-cutting actions earlier this week. CAT was down 3.1%.
Consumer products maker Procter & Gamble reported that itssecond-quarter profit jumped 53 percent, boosted by its sale of theFolgers coffee business, but said that sales are slowing in the tougheconomy. The company also lowered its earning projections for the fullyear, citing the economic uncertainty and market volatility. P&Gsaid net sales fell 3.2 percent to $20.37 billion on lower volume and astronger dollar. The company earned $5 billion for the quarter,compared with $3.27 billion a year earlier. Earnings per share were$1.58, in line with Wall Street expectations. PG fell 6.4%.
Honeywell International said that its fourth-quarter earnings rosenearly 3%, as a lower tax rate and a decline in costs helped to offsetsteep drops in its transportation and specialty-material businesses.Though results were in line with Wall Street expectations and theindustrialist reaffirmed its 2009 outlook, its first-quarter outlookcame in far below analysts' mean estimate. Looking ahead, theconglomerate forecast first-quarter earnings in the range of 50 centsto 60 cents a share, down 30% to 40% from the same quarter in 2008.Sales are expected to fall 10% to 17% to a range of $7.4 billion to $8billion. Analysts expected 76 cents a share in the current quarter onsales of $8.3 billion. Nonetheless, the company reaffirmed its 2009earnings outlook in the range of $3.20 to $3.55 a share on sales of$33.6 billion to $35.3 billion. HON gained 0.4%.
---------------------------------------------
---------------------------------------------
VR TRADER.COM WATCHLISTS:
Please note:
The VR Watchlist is currently now only available via theVRTrader.com website accessed via your assigned username and password.Please email mark@vrsurvey.com if you misplaced that information.
At this time there are no Watchlist listings.
---------------------------------------------
SAMPLE DAILY VR LIST:
Editors note: The Daily VR List here is abbreviated with the fulllist only available to Platinum subscribers by clicking on 'Current VRList' on the Home Page of VRtrader.com.
Silver subscribers who find this useful should upgrade to Platinumwhere you can pull down VR charts for many securities and watch thepatterns unfold for yourself. There is no technical service on theplanet that posts Positive and Negative VR! Why? Because they areproprietary to VRtrader.com!
How do you use this list? VRs are buy and sell triggers and areparticularly useful in defining lows or highs in stocks and stockindexes. Traders find them particularly useful, especially coming offmarket extremes as an indication of a change of direction. Use the VRsin conjunction with your other technical indicators and you've added aunique technical tool to your arsenal.
What is a Volume Reversal? There are several proprietary subtletiesto the Volume Reversal ™ algorithm, but essentially a VolumeReversal ™ is a change from a Rally day to a Reaction dayaccompanied by a increase of volume or a change from a Reaction day toRally day accompanied by an increase in volume. Volume Reversals ™coming off intermediate lows or highs have greater significance inhelping to define those lows or highs and important pivot points in themarketplace. The Volume Reversals ™ presented here provide you witha unique research tool that may have trading (short-term) significance,but it also may have 'trend changing'(intermediate) significance aswell. The sector Volume Reversals ™ show where big money is possiblyaffecting an entire group of stocks. The stocks listed under the grouphave posted Volume Reversals ™ along with the group as a whole. Theindividual stocks listed have posted Volume Reversals ™ on their ownand are valid plays as well.
To see a visual representation of Volume Reversals ™, please goour Current Portfolio section and click on any recommended stock. Or,if you would like to get a VR Chart for a specific symbol, please clickhere. Please note that not all symbols may be currently available.
List of Volume Reversals 1/30/09 - Sectors
*** Sectors Positive Volume Reversals ***
METALS & MINING Gold
AUY Yamana Gold Inc
DROOY DRD Gold Ltd Adr
*** Sectors Negative Volume Reversals ***
BANKING Savings & Loans
BRKL Brookline Bancorp Inc
CHEV Cheviot Financial Corp
DIVERSIFIED SERVICES Business/Management Services
AAC Ableauctions.Com Inc
AUSA Access Plans Usa Inc
DRUGS Biotechnology
CGRB Cougar Biotechnology Inc
CRL Charles River Labs Intl
DRUGS Drug Manufacturers - Other
ADLR Adolor Corporation
AGN Allergan Inc
FINANCIAL SERVICES Closed End Fund - Debt
APX Apex Municipal Fund
BBF Blackrock Fl Municipal Inc Tr
FINANCIAL SERVICES Closed End Fund - Equity
ADRE BLDRS Emerging Markets 50 ADR
AEX Nets Netherlands Index Fund
FINANCIAL SERVICES Closed End Fund - Foreign
BHK Blackrock Core Bond Trust
BZF Brazil Fund Inc
FINANCIAL SERVICES Credit Services
AACC Asset Acceptance Capital Corp
CACC Credit Acceptance Corp
HEALTH SERVICES Medical Appliances & Equipment
CLSN Celsion Corp
ENDO Endocare Inc
UTILITIES Electric Utilities
BKH Black Hills Corp
D Dominion Resources Inc
---------------------------------------------
Suggestions? Comments? on the newsletter service. We would like tohear from each and everyone of our subscribers. Our email is mark@vrsurvey.com.
DISCLAIMER
This newsletter is a publication dedicated to the education ofstock traders. The newsletter is an information service only. Theinformation provided herein is not to be construed as an offer to buyor sell securities of any kind. The newsletter picks are not to beconsidered a recommendation of any stock but an information resource toaid the investor in making an informed decision regarding trading instocks. It is possible at this or some subsequent date, the editors andstaff of VRTrader.com may own, buy or sell securities presented. Allinvestors should consult a qualified professional before trading in anysecurity. The information provided has been obtained from sourcesdeemed reliable but is not guaranteed as to accuracy or completeness.VRTrader.com staff makes every effort to provide timely information toits subscribers but cannot guarantee specific deli very times due tofactors beyond our control.
