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Of two minds: The Stock Market's Textbook Change of Trend
This Week's Theme: "I've got a bad feeling about this..."
The Stock Market's Textbook Change of Trend
March 4, 2010
Global stock markets are rolling over in textbook change of trend.
This week's theme will be familiar to anyone who has seen the original Star Wars films in which Luke, Leia or Hans Solo utter the ominous words "I've got a bad feeling about this..." just before a crisis strikes.
I've got a bad feeling about the global equity markets; they are rolling over, presaging a potentially powerful trend down. Let's start by scraping away the happy-happy propaganda about the "global recovery" and confessing that all the central bank manipulations (zero interest rate policy, unprecedented deficit spending, the propping up of insolvent banks and the mortgage markets, manipulation of equity and bond markets, etc. etc. etc.) have created a simulacrum "recovery" which is already faltering despite governments borrowing 10%-15% of their GDPs in a desperate attempt to reinflate the asset bubbles which fed the Elites and the State so well over the past decade.
The "recovery" is a travesty of a mockery of a sham.
We all know employment is still falling, housing is still falling, commercial real estate is falling at a quickening pace, shipping and rail traffic are declining, tax revenues are plummeting, and so on. Here is one representative chart of China's manufacturing new orders--yes, China, that suposed "engine of the global recovery" is rolling over, and as I type the news is the Shanghai stock market fell 2.4%. Little wonder; there is nothing but government stimulus to keep the bubble inflated.
For more on why China's property bubble will pop, please read my AOL Daily Finance article Why China Can't Cool Its Overheated Real Estate Boom.
Chart source: Is China's Lower PMI Report the Canary in the Coal Mine? by Prieur du Plessis.
charts link http://www.oftwominds.com/blog.html
Let's use the Dow Jones Industrial Average as a proxy for global stock markets. The same patterns are visible in most major markets.
Here is a textbook example of a change in trend from up to down. I've drawn three trendlines to illustrate how the market has weakened in the past 4 months. The initial strong uptrend (red line) has been decisively broken, and this weakness was evidenced by the way the uptrend flattened (blue line).
The green line indicates that the market trend was basically flat from mid-November, a classic sign that the uptrend was weakening.
In a real Bull market, this loss of momentum is considered consolidation, as the market (in a favorite financial media cliche) "digests its gains." (Why does this bring to mind a python consuming a pig?) This consolidation sets up the next leg up.
Alternatively, this hesitation is distribution, as insiders and traders sell their shares to others who believe the uptrend is still in place. Distribution is marked by one classic sign: heavy volume on down days, light volume on up days--precisely the pattern of the past two months.
The Bulls attempted one final push in January to spark a new uptrend but this rally failed, breaking through all the Bull's trendlines.
Now another classic topping pattern is forming: a head and shoulders. After noodling around the 10,500 level for six weeks, the DJIA lurched higher in January but quickly surrendered the new uptrend, leaving a "head" around 10,750 (10,767 was the intraday high).
Now the Dow is banging up against resistance at 10,450, day after day, as the low volume rallies go nowhere (distribution). This futile flailing is forming a right shoulder.
In another classic sign of a change of trend from up to down, the 20-day moving average has slipped below the 50-day MA, and remained below it for over a month. That is not evidence of an uptrend or a flat trend; it is a textbook example of weakness.
Uptrends tend to last a long time, while downtrends tend to be explosive. Thus we can anticipate that the market will cascade down rather quickly when the world's speculators and investors wake up to the fact that global growth is a government-induced chimera, that asset bubbles are still deflating, that business as measured by tax revenues is falling, that households are poorer, that government deficit spending is unsustainable, and that the Eurozone is falling apart.
For more on why this is so, please read my AOL Daily Finance article The Greek Debt Crisis Exposes the Eurozone's Fundamental Flaws.
There is nothing fancy about the technical analysis displayed in this one chart. It is a textbook example of how trends change.
Before you get too excited, though, please re-read the HUGE GIANT BIG FAT DISCLAIMER below which explains that these are the scattered, freely offered opinions of an avowed amateur observer and are not investment advice in any way, shape or form.
OK, now that the gory details have been dispensed with, let's get back to the coming train wreck: how low will the market fall?
I have long held the opinion (often stated here) that markets tend to re-test their lows, with the 2002-2003 period offering a recent classic example. Given the absurdly threadbare nature of the "global recovery"--a glossy facade of managed perception masking a rotting structure in slow collapse--then it doesn't take much imagination to see the Dow falling rather quickly to re-test the March 2009 lows around 6,500.
And since things tend to overshoot when human emotions are in control (i.e. stock markets), I would not be surprised if the Dow were to overshoot the old low below 6,500 to the 5,800 or 5,900 level.
I would also not be too surprised if it held slightly above the old low, around 6,900.
We shall see, and soon.
Every little bit adds to their pain and your gain :)
I just know some are stitting on the sidelines waiting for the squeeze to commence.....I would think by that time it would be too late. It'll move too quick. But I have never been in a squeeze such as this so I will have to defer to the ones who have been. :)
You aren't alone it that for sure. :)
Every day I buy more and the next day or later that day my buys look great. Can't beat that with a stick.
This chart defies gravity and the cover hasn't even begun yet.
Not sure when the too late to buy will kick in...????? chasing it up towards $2 or $5??????
LOL just go with it. :)
I'm all tapped out for the day now. pfftt. guess I'll just sit back and watch it ferment. Gonna bubble over bigtime here soon. :)
Mayhaps I should send them a pic of me before my morning coffee.
Obviously didn't scear um enough though. LOL
Attacking them with another 4100.........
Pfftt MMs. LOL Nuthin but legalized crooks.
Nope..not even close to what the covering will be like. :)
Dat one a gimmee fo sure IMO. :)
Yes...if this goes first I got two others to work on .:)
LOL just give me one more day to get some more before kaboomage please. :)
She is quivering. I told her what's in store for her and to watch the chart.
Just keeps getting better every day. :)
I have to use three times the duct tape ...........OMG LOL
Wrapping the duct tape around me now.
LOL won't be able to love either if I fall out of my chair.
.39!!!!!!!!!! woo woo
Yes it would be a shock...she loves carrot bones though so maybe not doggy he**.
Ut Oh>German Ifo says nearly impossible to keep Greece in euro zone, report says - DJ
DJ reports it will be very difficult for Greece to stay in the euro zone, the head of Germany's Ifo economic research institute said, according to German newspaper Boersen-Zeitung. "It will be nearly impossible to keep Greece," Sinn said at an event in Frankfurt, the paper said. "Any attempt to stabilize Greece is hopeless. This is a bottomless pit." He said there are only two options for Greece to get out of its misery. The first one, legally impossible, would be for the other euro-zone members to gift Greece the EUR30 billion it needs annually. The second option would be a "real" depreciation within the euro zone to boost Greece's competitiveness--which, since it doesn't have its own independent currency, would mean cutting prices and wages. But this would cause social tension, Sinn said. "The only way is to leave the monetary union," Sinn was quoted as saying.
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Sent By: stuffit To: FoodStamps4stocks Date: Thursday, March 04, 2010 9:23:36 AM
Headliners>
NEWS
09:20AM ECB Phases Out Some Emergency Stimulus Measures as Greece Threatens Growth
09:18AM Bank of America warrants sale raises $1.54 billion (AP)
09:17AM Jobless claims drop, productivity revised higher (AP)
09:16AM AB InBev sees flat beer sales (AP)
09:16AM Oil falls toward $80 after 2-day jump (AP)
09:16AM Productivity up sharply, labor costs drop in 4Q (AP)
09:16AM Greece offers key new bond issue (AP)
09:16AM European Central Bank leaves rate at 1 pct (AP)
09:16AM Stocks edge up ahead of unemployment report (AP)
09:16AM Retailers report gains for February (AP)
09:16AM Wendy's/Arby's 4Q loss narrows (AP)
09:08AM Indications: U.S. futures mildly up after weekly jobless claims
09:06AM EU watchdog condemns Commission
09:05AM NewsWatch: U.S. futures steady before weekly jobless claims
08:57AM European Central Banks Stand Pat
08:53AM New U.S. Jobless Filings Declined Last Week
08:52AM Bristol Expects Impact From Plavix Patent Loss
08:51AM Hedge fund dinner party sparks U.S. euro probe
08:50AM Bank of America TARP Warrant Sale Is Said to Raise More Than $1.5 Billion
08:48AM Productivity in U.S. Climbed 6.9% in Fourth Quarter; Labor Costs Fell 5.9%
08:47AM Wal-Mart increases annual dividend
08:46AM Citigroup Chief Expresses ‘Gratitude’ to Bailout Panel
08:45AM Before the Bell: Coca-Cola, Boeing, unemployment claims in focus
08:44AM Mixed open seen for stocks
08:44AM U.S. Stock Futures Advance on Jobless Claim Decline, Productivity Increase
08:43AM Greece Begins Bond Sale as It Waits for Help From Europe
08:43AM Facebook CEO in no rush for IPO
08:41AM Stock futures little changed after jobless claims
08:38AM Firms Tap Cash Piles for Deals
08:37AM Consumer Groups Push for Creation of Independent Financial Agency in U.S.
08:37AM Wendy's/Arby's adjusted profit tops expectations
08:37AM Resurgent shoppers boost monthly sales, snow aside
08:35AM Movers & Shakers: Thursday's biggest moving shares
08:34AM VT opens bid talks with Babcock
08:34AM Murdoch May Lose More on Supermarket Coupons Than He Makes From `Avatar'
08:34AM Jobless Claims in U.S. Fell 29,000 Last Week to 469,000
08:34AM New, continuing jobless claims fall last week
08:33AM Retailers Fared Better in February
08:31AM Economic Report: Jobless claims fall 29,000 to 469,000
08:31AM Economic Report: Productivity revised higher in 2nd half of 2009
08:30AM Urban Outfitters Profit Soars 92%
08:28AM Pier 1 Forecast Beats Views
08:15AM ECB Keeps Interest Rate at 1% as Policy Makers Weigh Greek Crisis Response
08:14AM Metals Stocks: Gold slides after touching a seven-week high
08:13AM Fewer discounts help stores weather February snow
08:11AM Fed May Lose Supervision of Small State Banks to FDIC, Senator Reed Says
08:11AM Greece Offers 0.32 Percentage Point of Extra Interest on 10-Year Bond Sale
08:04AM Citi's Pandit says supports consumer protection
08:02AM ECB Keeps Benchmark Rate at 1% as Policy Makers Weigh Greek Fiscal Crisis
07:59AM Pinera May Splurge on Chile Earthquake Rebuilding After Vowing Austerity
07:53AM Pandit Thanks American Taxpayers for Citigroup's $45 Billion 2008 Lifeline
07:52AM Bristol sets baseline for profits post-Plavix
07:49AM Flaherty May Cut Borrowing to $82.6 Billion for Next Budget: Canada Credit
07:49AM Oil holds steady
07:49AM ECB holds rates, to unveil stimulus withdrawal steps
07:48AM BOE, ECB leave key rates unchanged
07:46AM Eurozone rates maintained at 1%
07:32AM Dollar firms against euro
07:25AM Nikkei falls back on stronger yen
07:25AM Bank of England Keeps Bond-Purchase Plan on Hold, Benchmark Rate at 0.5%
07:20AM Aviva to target growth in Europe
07:00AM UK bank holds interest rates
06:59AM India Stampede Leaves 63 Dead as Crowds Jostle for Free Clothes at Temple
06:39AM JPMorgan Tops Goldman in Investment Banking as Fees Rise 13% Amid Optimism
06:34AM Yukos Former Management Seeks $98 Billion From Russia in Human Rights Case
06:21AM Brazil Economy May Overheat on `Excessive' Foreign Inflows, Coutinho Says
06:16AM Greek Workers Occupy Finance Ministry, Block Streets in Challenge to Cuts
06:16AM Star Wars helps build Lego profit
06:15AM AIG `Still Exposed' After Rescue as Mortgage Insurer, Lender Cause Losses
06:05AM Argentine Senators Prepare to Oust Central Bank President Marco del Pont
05:59AM Yukos case against Russia begins
05:39AM Emerging-Market Stocks Snap Four-Day Rally as Greek Bonds Decline on Sale
05:35AM Toyota Rouses Japan on Crisis Response
05:26AM Greece Starts 10-Year Bond Sale as Protests Mount Against Austerity Plan
05:03AM Gun Control and the Coffee Shop
04:36AM Greece Starts Selling 10-Year Euro Bonds After Announcing Austerity Plan
04:05AM Junk Bond Distress Ratio Increases for First Time in Year on Deficit Woes
I have two..but if I spoil them any more the one will be so fat she won't be able to walk. LOL
Maybe I'll enroll her in a doggy diet camp after CDIV covers. :)
3 months of strickly carrot bones.
Just a little more eyes checking CDIV out. :) Wanting to know why it's active. If they only knew. :)
SA 9:00 AM Premarket gainers: CTIC +17%. ZUMZ +14%. PETM +11%. ANF +9%. AIB +9%. STP +6%. PIR +5%. DNDN +5%. FSYS +5%. SIGM +5%. GERN +5%. AGT +4%. URBN +4%. IRE +4%. CRX +4%.
Losers: CMTL -9%. CIEN -8%. MR -4%.
LOL I always pick the ones that nobody else wants. Turn out to be the best IMO.
Thankfully CDIV doesn't fall into that catagory. :)
DOWNERS>
CMTL -13%
CIEN -9%,
DAR -6%,
CLDX -5%,
FSIN -5%,
FNSR -3%,
CRA -4% downgraded by JPM
SINA -3%,
ALT -2%,
It's great!!!! No major upwards spike to entice flippers, just a steady increase day after day. Adds up bigly it do. :)
9:02: ITT awarded task order to support U.S. military prepositioned equipment
Oh my...news would make this explode immediately. But I will content myself with the daily grind of only 2 or 3 cents. Hard to choke down (insert major sarcasm) but I guess I'll just have to be happy with that. LOL
UPPERS>
On RPTS>
DIVX+ 12%,
BELM +11%,
LHCG +11%,
PETM +9%,
ANF +9%,
ZUMZ +7%,
CWTR +7%,
SIGM +6%,
TTWO +6%,
STP +6%,
KWR +6%,
SXCI +4%,
SNTS +3%
Fins>
AIB +8%,
IRE +4%,
RBS +4%,
LYG +2%,
BCS +2%,
Other news:
CNAM +36% scrap steel supply contract with major China Steel producer valued at up to $100 mln in 2010
DNDN +4% updated results from its pivotal Phase 3 IMPACT (IMmunotherapy for Prostate AdenoCarcinoma Treatmen study demonstrating that Provenge extends overall survival in men with metastatic, castrate-resistant prostate cancer)
LOL I've always had a soft spot for freaks.
08:50: ECB's Trichet says high levels of debt put burden on money policy, however governments must take determined efforts on deficits
ECB's Trichet says loans to firms may remain weak for some time
03-04 08:47: ECB sees 2010 GDP 0.4-1.2% vs. Prev. 0.1-1.5%
Good Morning Peoples :)
Are we going to have kaboomage today? Or just another 2 or 3c gain?
Either way I know it's going to be a great day. :)
The SEC charges a Miami couple with running a $135M Ponzi scheme. The duo lured in unwitting investors with promises of 9-16% returns.
-04 08:06>Baltic Dry Index gains 210 points to 3,121
Daily Highlights: 3.4.10
Submitted by Tyler Durden on 03/04/2010 08:15 -0500
* Asian stocks decline on concern China lending to slow; Euro pares gains.
* Australia's January trade deficit narrows on increased iron ore shipments.
* China to boost defense spending by 7.5% in 2010 - slowest pace in a decade.
* Japanese businesses cut spending for an 11th quarter even as their earnings rebounded.
* Greece's financial aid plea snubbed by Merkel in 'historic moment' for EU.
* Mortgage rates offered by some Hong Kong banks are too low: Regulator.
* The Obama administration reasserted Volcker rule.
* US economic conditions kept improving slightly at the start of 2010: Beige Book.
* Adidas reported a sharper-than-expected 65% fall in Q4 net; issues cautious f'cast for 2010.
* Air China to buy Shenzhen Airlines Co., to add a hub in the south of the country.
* Anheuser-Busch InBev reported an 11% increase in Q4 profit on lower costs.
* ANZ Bank approved by Indian banking regulator, for starting off banking services in India.
* Aviva Plc posts $1.6B full-year profit on increase in investment income.
* Canaccord Fincl to acquire closely held Genuity Capital Markets for $277M in cash.
* China Mobile's plan to take a stake in Shanghai Pudong Development Bank.
* Citigroup Chief plans to tell US taxpayers he’s grateful for the $45B bailout.
* Foot Locker swings to Q4 profit of $23M, revs up 0.6% at $1.33B - beating est.
* Maersk has first annual loss ($1.29B) in at least six decades as freight rates drop.
* MGM Mirage will sell shares in its Macau, China, venture with Pansy Ho in the 3Q.
* Mitsubishi, France's Peugeot-Citroën said they are scrapping their capital-alliance talks.
* Reliance Industries has no plans to increase its bid for LyondellBasell Industries.
* Renault to identify nonstrategic assets that might be sold off to help reduce its debt.
* Rio, Vale ask for 50% iron ore contract price increase, reports.
* Wynn Resorts will provide about $250M for the riverfront project it’s seeking to take over in Philadelphia.
Economic Calendar: Data on AM Initial & Continuing Claims, Factory Orders to be released today.
Earnings Calendar: ABV, CIEN, COHN, COO, CRWN, DLM, EQY, FLY, FTEK, SZE, TD, TK, UDRL, URBN, WEN.
RECENT RATING ACTIONS
SCIENTIFIC GAMES CORP (SGMS)
AUTOZONE INC (AZO)
BOYD GAMING CORP (BYD)
STAPLES INC (SPLS)
COOPER INDUSTRIES PLC (CBE)
SCIENTIFIC GAMES CORP (SGMS)
DILLARD'S INC (DDS)
NEWMONT MINING CORP (NEM)
HARTFORD FINANCIAL SERVICES (HIG)
MCDERMOTT INTERNATIONAL INC (MDR)
GENERAL MARITIME CORP (GMR)
ROWAN COS INC (RDC)
Data provided by Egan-Jones Ratings and Analytics
24/7 Top Day Trader Alerts (ZUMZ, CNAM, PETM, MDVN, FSYS, STP, URBN, CIEN)
Posted in pre-market on March 4th, 2010
Comments Off
These are this morning’s top day trader and active trader alerts seen in early pre-market trading. We have offered the moves, a news summary, and brief color on each for trading references where applicable.
Zumiez, Inc. (NASDAQ: ZUMZ) shares are surging as a winner in cold weather themes after it said February same-store sales rose by more than 11%. Shares are indicated up almost 12% at $17.90 on only about 8,000 shares as of 8:30 AM EST.
China Armco Metals, Inc. (NASDAQ: CNAM) is surging to new highs this morning after it entered into a scrap steel supply contract with a major China Steel producer. The deal is valued up to $100 million this year. Its market cap was only about $53 million before the news-pop. Shares closed at $5.30 yesterday and at 8:30 AM EST we have shares up 41% at $7.51 on 55,000 shares. Average volume is only about 109,000 and the old 52-week range (3-month only) was $3.00 to $5.90.
Petsmart Inc. (NASDAQ: PETM) is hitting new 52-week highs after the pet retail destination beat earnings and gave a strong outlook. The old 52-week trading range was $16.17 to $28.10 and the shares are up 10.6% at $30.65 on about 50,000 shares as of 8:31 AM EST.
Medivation, Inc. (NASDAQ: MDVN) has been trading all over the place this morning after yesterday’s biotech implosion on its failed Phase III Alzheimer’s study. We had seen a gain of almost 2% earlier but shares are down about 0.2% more at $13.07 at 8:28 AM EST on about 138,000 shares.
Fuel Systems Solutions, Inc. (NASDAQ: FSYS), a maker of alternative fuel components and systems, said Q4 earnings were $1.12 EPS vs. $0.98 expected; Revenue was $164 million vs. Thomson Reuters estimate of $158 million. 2010 guidance looks in-line to better as well. Shares are up 5% at $29.69 on 75,000 shares as of 8:29 AM EST.
Suntech Power Holdings Co., Ltd. (NYSE: STP) is up after it beat earnings estimates: Q4 earnings were $0.27 EPS vs. $0.11 expected; Revenue rose almost 40% to $584 million vs. $470 million or so expected. Shares are up 6% at $14.50 on 250,00 shares as of 8:29 AM EST.
Urban Outfitters Inc. (NASDAQ: URBN) is up after earnings rose by about 90% and after it exceeded analyst estimates; lower taxes helped, but it also had record sales and rising margins. Shares are up almost 5% at $34.99 on almost 30,000 shares as of 8:27 AM EST.
Ciena Corporation (NASDAQ: CIEN) is getting spanked on light earnings today after Q1 earnings fell short at -$0.12 EPS against Thomson Reuters estimates of -$0.06 EPS. The telecom equipment player said revenue was up 5% to about $176 million, short of the $185+ million expected. Shares are down 8.25% at $13.35 on almost 600,000 shares as of 8:28 AM EST. Shares had been down under $13.00 earlier this morning.
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JON C. OGG
24/7 Rumors>
Prudential plc is preparing to make cuts at the AIG (AIG) insurance unit in Asia that it is buying (Reuters).
Nortel has been granted permission by a bankruptcy court to sell its VoIP assets to Genband for $282 million (AP)
Pearson has selected three private equity firms to be the final bidders for its Interactive Data unit. (FT)
Douglas A. McIntyre