The VRTrader.com VR Silver Newsletter - Tuesday2/26/2008
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LEIBOVIT FILES | by Mark Leibovit
Tuesday, February 26, 2008
Testing Both Ends Of The Trading Range
Economic Reports and Market Events February 26-29:
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TUESDAY, February 26:
Producer Price Index (PPI) for January (8:30 am ET)
Weekly Chain Store Sales (8:55 am ET)
Consumer Confidence Index for February (10 am ET)
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WEDNESDAY, February 27:
Durable Goods Orders for January (8:30 am ET)
Fed Chairman Bernanke testifies before House (10 am ET)
New Home Sales for January (10 am ET)
EIA Petroleum Status Report (10:30 am ET)
Treasury auctions 2-year notes (1 pm ET)
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THURSDAY, February 28:
Weekly Initial Jobless Claims (8:30 am ET)
Gross Domestic Product (GDP) for 4th Qtr (8:30 am ET)
Fed Chairman Bernanke testifies before Senate (10 am ET)
Treasury auctions 5-year notes (1 pm ET)
Weekly Money Supply (4:30 pm ET)
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FRIDAY, February 29:
Personal Income & Consumption Spending for Jan. (8:30 am ET)
Chicago PMI for February (9:45 am ET)
U. of Michigan Consumer Sentiment for February (10 am ET)
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From Friday's intra-day low to yesterday's intra-day high the Dow Industrials have ralliednearly 500 points with the SPX rallying nearly 50 points. The market seems to bemagnetically drawn to extremes points in the recent trading range, but then suddenly losesmomentum and flip-flops the other way. This is hellish for investors and heavenly fortraders willing to to jump in and out of the market in a one or two day move. Looking atthe SPX, we may very well be heading back to 1390-1400, but I believe it is part andparcel of nothing more than sideways action ahead of ultimately another wave lower largelydue to the 'Slope of Hope'.
By example, the market had given back its gains just after noon yesterday and choppedaround for the next couple of hours, but news crossed the wires around 2:30 p.m. ET thatStandard & Poor's took MBIA off CreditWatch and assigned a negative outlook.Additionally, the ratings agency affirmed the 'AAA' rating of Ambac Financial, yet saidthe company remains on CreditWatch with negative implications. The decision by Standard& Poor's not to downgrade the ratings at this time helped mitigate some of the worstfears about the potential for a wave of counter party-related write-downs at financialcompanies. This development still doesn't qualify as an all-clear signal regarding theissues facing the bond insurers, but it is certainly the type of news that creates a sensethat things are headed in the right direction.
Earlier, just befoe noon, Federal Reserve Governor Randall Kroszner made the obviouscomment that there are no quick fixes to the holes in bank risk-management practices thathave come to light in the wake of the recent financial market turmoil. Apparently,investors had been hoping for a quick fix because the market dropped on the statement.
Bonds are weak yesterday with the long bond down 30/32. The ten-year rate is up to 3.875%and looks to be testing last week's high of 3.96% and the psychologically significantnumber of 4.00%. I've warned that interest rates should go higher for quite some time asinflationary forces begin to unleash out of control.
Part of yesterday's rally may also being attributed to the housing figures: "U.S.stocks pulled solidly higher Monday after data on the troubled housing industry provedslightly less bleak than predicted, and renewed activity appeared in the deal-makingfront." Yet, the report itself look dismal. Resales of U.S. homes and condos dropped0.4% in January to a seasonally adjusted annualized rate of 4.89 million. It was thelowest sales pace since the real estate group began tracking combined sales in 1999.Resales were down 23.4% compared with the previous January. The inventory of homes on themarket rose 5.5% to 4.19 million, representing a 10.3-month supply at the January salespace, close to the record high of 10.5 months set in October. The inventory of unsoldhomes rose 18.4% compared with January 2007.
The only positive is that economists expected the number to be even worse. But thenumbers were still terrible and have been terrible month after month. Even if this numberis positive, it would only be one month and one point does not make a line.
However, there is in fact little correlation between housing and the stock market.Remember the market crash of 2000 to 2002? Housing was soaring during that time. And thestock market had risen in 2006 and most of 2007, yet housing was plunging. So why did themarket really go up? Was it in fact the housing report? As Michael Lewis wrote in hisclassic book Liar's Poker, "Most of the time when markets move, no one has any ideawhy. A man who can tell a good story can make a good living as a broker." The housingreport causing the market to rise is a good story, but it is just a story. And even iftrue, we didn't know the numbers in advance and we couldn't predict how the market wouldreact to those numbers. In the short term, fundamental analysis of the market isimpossible.
Tech was a laggard again as small caps and the blue chips led the way. We expect morefireworks as the subprims slime works its way through the financial system. Just as easilyas the market moved higher on the feel good news regarding the bond insurers, things couldget dicey again as new revelations or allegations come forth regarding the unsoundinvestment practices of the last few years.
Gold was weak today as the dollar held its ground. April Gold was down 7.30 at 940.50while the March US Dollar Index settled .01 higher at 75.58. April Crude settled .42higher at 99.23 as geopolitical tensions and supply fears continue to provide a solidunderpinning there. However, Silver and Palladium were higher along with a strong showingin agricultural commodities. Commodity ETFs such as MOO, DBA, DJP, DBC and DBE put instrong performance. A word of caution. Though the big trend is higher here, we'rebeginning to hear a lot of 'noise' and table-pounding from commentators about the strengthof these markets. Some are even suggesting this is the ONLY place to be in the stockmarket. We may be setting up for a correction here, so be careful about establishing newlong positions.
Meanwhile, I remain on my TIMER DIGEST 'Sell' signal for the overall stock market. Yes,we can rally, but I don't think we're out of the woods yet. And, in fact, as I've written,we may be in the early stages of a multi-year bear market - though I expect to see somenice rally tries in this wild election year.
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Canadian, TSE and TSE Venture Commentary for our Canadian Clients updated for Tuesday,February 26:
TSE:
The TSE touched 13,728.45 on Monday (just shy of my published 13,742 resistance) anwell through the 13,640 level. Yesterday, I stated that "I wouldn't be surprised tosee it blast right through it - an event which may be sending us a message that we couldbe headed back to the highs in the months ahead." Volume declined yesterday which wasa little disappointing. The key here is that Friday's low of 13,395.22 holds in the daysahead. Resistance is as follows: 13,772, 13,840 and 14,050 - above that the big highs at14,600+. Support is now at 13,650, 13,480, 13,395, 13,106, 12,747, 12,600, 12,200 and12,000 - the January 22nd low.
TSE Venture:
Friday was apparently a one day respite as yesterday saw a surge to a new recovery high of2686.41 accompanied by a Positive Volume Reversal ™right into 2680 resistance. Prior toFriday we had advanced nine days in a row. Monday I wrote: "Nine days was the magicnumber in giving the TSE Venture acrophobia as it settled back on declining volume. Is aone day pullback sufficient? Hardly, but perhaps this index is stronger than werealize." Overall, this rally was kicked off by a Positive Volume Reversal ™formed back on February 8. The February 7 low of 2480.44 which presents importantshort-term support. Potential to new highs exists, but I'll be more impressed above 2850.Support is 2639, 2580, 2530, 2480, and 2340. A break of 2340 opens up 2250 and possibly1800 ahead. Resistance is now at 2730, 2850 followed by the 618 fibonacci number of 2975and 3372.00.
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TIMER DIGEST has named Mark Leibovit of VRTrader.com 'TIMER OF THE YEAR' for 2006 and wasnamed the #2 Timer for 2007. Currently, #4 for 2008. Also, for 2007, he was name the #4Gold Timer. As you know, Mark was named the #1 Intermediate Market Timer (stock market)for the 10 year period ending in 2006!
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Ux U3O8 Prices*
February 18, 2008
Spot: $75.00 /lb. unchanged. Bull market high in the cash market is $136.00.
The June Uranium Futures are trading at $80.00.
Big low was $58.00 posted intra-day on August 16. The big high from June 13 is 154.95.Confirmation of a bottom should be evident when the uranium shares begin to move higher. Iwould use present levels as a long term buying opportunity.
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VR TRADER.COM WATCHLISTS:
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Editors note: As you may have noticed, we have been posting our daily VR list for bothSilver and Platinum subscribers. Silver subscribers who find this useful should upgrade toPlatinum where you can pull
down VR charts for many securities and watch the patterns unfold for yourself.
There is no technical service on the planet that posts Positive and Negative VR! Why?Because they are proprietary to VRTrader.com!
A Volume Reversal ™ is change from a Rally day to a Reaction day accompanied by anincrease of volume or a change from a Reaction day to Rally day accompanied by an increasein volume. Volume Reversals
™ coming off intermediate lows or highs have greater significance in helping to definethose lows or highs and important pivot points in the marketplace.
How do you use this list? VRs are buy and sell triggers and are particularly useful indefining lows or highs in stocks and stock
indexes. Traders find them particularly useful, especially coming off market extremes asan indication of a change of direction. Use the VRs in conjunction with your othertechnical indicators and you've
added a unique technical tool to your arsenal.
List of Volume Reversals 2/25/08 - Sectors
*** Sectors Positive Volume Reversals ***
Banking - Money Center Banks
BK - Bank Of New York Co Inc
BLX - Banco Latino Americano
BNS - Bank Of Nova Scotia
OFG - Oreintal Financial Group
NBG - National Bk Greece ADS
PNC - PNC Financial Svcs Group
RY - Royal Bank Of Canada
SAN - Banco SAntander Chile
TD - Toronto Dominion Bank
Drugs - Generic
BRL - Barr Laboratories Inc
MYL - Mylan Inc
Drugs - Manufacturers - Major
OSCI - Oscient Pharmaceuticals Corp
PFE - Pfizer Inc
SGP - Schering Plough Corp
WYE - Wyeth
Electronics - Printed Circuit Boards
FLEX - Flextronics International Ltd
JBL - Jabil Circuit Inc
Electronics - Semiconductor - Memory Chips
MU - Micron Technology Inc
Energy - Oil & Gas Pipelines
CPNO - Copano Energy LLC
DEP - Duncan Energy Partners LP
ENB - Enbridge Inc
EP - El Paso Corp
GEL - Genesis Energy LP
OKS - Oneok Partners LP
PAA - Plains All Amer Pipeline
RGNC - Regency Energy Partners LP
SGLP - Semgroup Energy Partners
Insurance - Life Insurance
AEG - AEGON NV
AGO - Assured Guaranty Ltd
AXA - Axa ADS
FFG - FBL Financial Group
GNW - Genworth Financial
ING - ING Group NV
MET - Metlife Inc
NFS - Nationwide Financial Srvc Inc
PLFE - Presidential Life Corp
PRU - Prudetial Financial Inc
PUK - Prudential PLC ADS
Manufacturing - Diversified Machinery
CMI - CUmmins Inc
CYD - China Yuchai Int Ltd
GDI - Gardner Denver Inc
IR - Ingersoll-Rand Ltd Cl A
ITW - Illinois Tool Worls Inc
KUB - Kubota Corporation ADS
OVEN - TurboChef Technologies Inc
MIDD - Middleby Corporation
RBN - Robbins & Myers Inc
SHS - Sauer-Danfoss Inc
TNC - Tennant Co
Manufacturing - Pollution & Treatment Controls
DCI - Donaldson & Co Inc
Materials & Construction - Manufactured Housing
CHB - Champion Enterprises Inc
CVCO - Cavco Industries
Metals & Mining - Aluminum
AA - Alcoa Inc
CENX - Century Aluminum Company
Metals & Mining - Industrial Metals & Minerals
ACI - Arch Coal Inc
BTU - Peabody Energy
CCJ - Cameco Corp
CHNR - China Natural Resources
CNX - Consol Energy Inc
FCL - Foundation Coal Holdings
FRG - Fronteer Development Group Inc
LMC - Lundin Mining Corp
MRB - Metallica Resources Group
TCK - Teck Cominco Limited
Metals & Mining - Nonmetallic Mineral Mining
BQI - Oilsands Quest Inc
GBN - Great Basin Gold
POT - Potash Cp Saskatchewan
ROY - International Royalty Corporation
Metals & Mining - Silver
CDE - Coeur D'Alene Mines Corp
EXK - Endeavour Silver Corp
PAAS - Pan Amer Silver Cp
Real Estate - REIT - Healthcare Facilities
HCP - HCP INc
HR - Healthcare Realty Trust
NHP - Nationwide Health Prop
VTR - Ventas
Real Estate - REIT - Residential
ACC - American Campus Communities
AVB - Avalonbay Communities
BRE - BRE Properties Inc
EQR - Equity Residential
HME - Home Properties Inc
MAA - Mid Amaerica Apartment Comm
SUI - Sun Communities
Retail - Home Improvement Stores
BLG - Building Materials Hldgs Corp
HD - Home Depot Inc
Specialty Retail - Auto Dealerships
CPRT - Copart Inc
GPI - Group 1 Automotive Inc
Transportation - Shipping
DSX - Diana Shipping Inc
ESEA - Euroseas Ltd
HRZ - Horizon Lines Inc
SFL - Ship Finance Intl Ltd
TDW - Tidewater Inc
TK - Teekay Corp
*** Sectors Negative Volume Reversals ***
**** NONE ****
Suggestions? Comments? on the newsletter service. We would like to hear from each andeveryone of our subscribers. Our email is mark@vrsurvey.com.
DISCLAIMER
This newsletter is a publication dedicated to the education of stock traders. Thenewsletter is an information service only. The information provided herein is not to beconstrued as an offer to buy or sell securities of any kind. The newsletter picks are notto be considered a recommendation of any stock but an information resource to aid theinvestor in making an informed decision regarding trading in stocks. It is possible atthis or some subsequent date, the editors and staff of VRTrader.com may own, buy or sellsecurities presented. All investors should consult a qualified professional before tradingin any security. The information provided has been obtained from sources deemed reliablebut is not guaranteed as to accuracy or completeness. VRTrader.com staff makes everyeffort to provide timely information to its subscribers but cannot guarantee specificdelivery times due to factors beyond our control.
