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Sun, December 13, 2009 12:47:31 PMFrom: 24-7 Stock Alert <[e-mail]>View Contact



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24-7 STOCK REPORT December 12, 2009



DJIA: 10,471.50 10-YR TSY: 3.54% CRUDE OIL: $69.56
COMP: 2,190.31 GOLD: $1,115.10 $USD INDEX: 76.58

S & P 500: 1,106.41 SILVER: $ 17.13 VIX: 21.59




"The opportunity of a lifetime must be seized during the lifetime of the opportunity." - Leonard Ravenhill







US MARKETS:


Greetings stock fans. Market participants were treated to yet another week of chop-and-churn as US equities markets continue to do the ‘bump-and-grind’ apparently unwilling/able at the moment to embark on a move into higher territory, while reluctant to give ground on the south-side, as well. Thus, we continue to witness range-bound action and until or unless, either end of the spectrum (SPX 1120/SPX 1085) is willing to ‘give’, we can expect more of the same ‘tug-o-war’ behavior.

As we referenced in last week’s letter to readers, “market participants have focused on economic data releases as their primary ‘tell’ in determining the mood and temperature of the tape where we’ve been the recipient of a ‘mixed bag’ of data. Hence, the continued range-bound action with a poke ‘here-and-there’ above previous highs, yet unable to do so on a ‘closing’ basis, thus far,” which remains the case as of this writing.

Furthermore, we also went on to state the following last week when we noted, “the tape remains in decent shape from a technical perspective with the ‘staircase’ pattern of higher lows and higher highs in the Spoo’s (S&P 500) remaining intact, as well as all three major indices ‘appearing’ to now be moving in synchronized harmony with each ‘knocking on the door’ seeking higher ground, as it was just a few short weeks ago where both the S&P and COMP were lagging the leadership of the DJ Industrials,” which also remains relevant today.

As a direct result of the ‘seemingly’ indecisive mood of both investors and traders, US equities markets closed this past week of trade virtually UNCHanged and well within the multi-week ‘sideways drift’ with both the DJIA and S&P 500 posting fractional gains, while the COMP finished fractionally lower on benign volume as evidenced by the chart below:





As is evident above, the Spoo’s continue to consolidate at the upper end of the range, while trading above their 20; 50 and 200-Day moving averages respectively, which continues to depict a favorable technical posture. Although relative strength remains stuck in ‘neutral’ via its RSI 56 read (indecisiveness), we’re beginning to notice a ‘slight’ uptick in MACD which ‘may’ be suggestive of a potential assault at the 0 line in the days ahead that could possibly facilitate yet another attempt at ‘potential’ resistance located at the 1120 level? We await the verdict.


Nonetheless, we remain mired in range-bound mode and should the Spoo’s be capable of going ‘topside’ of the 1120 figure, on a ‘close’, in the days ahead, such would more than likely usher in further buying, while on the opposite end of the spectrum, a breach/violation of the 1085 figure on a ‘close’ would more than likely prompt additional selling pressure.

In the meantime, we continue to view this tape as a ‘market of stocks’, where selectivity remains paramount in one’s success/failure in navigating the landscape with a slight bullish benefit of doubt based on the technical’s, while seeking favorable risk/reward opportunities as we await the outcome of the present stagnation.



GLOBAL MARKETS:

Much like the US, global markets/bourses traded in a subdued/lackluster fashion and when the final bell had tolled to finish the week, prices reflected a ‘mixed picture’ throughout Asia with the BSE 30; Jakarta Composite; Nikkei 225; Singapore Straits; Seoul Composite and Taiwan Weighted all posting modest gains, while the Shanghai Composite; Hang Seng and KLSE Composite finished a shade of crimson. Nevertheless, there was no significant change/alteration from last week as the majority of Asian markets/bourses remain perched at the upper end of their multi-month trading ranges. As for ‘Down Under’, both the All Ordinaries and NZ50 closed out the week with minimal losses, yet remain positioned within their respective multi-month channels ‘seemingly’ content in their sideways drift, for now. Moving on to Europe, the CAC; DAX and FTSE found mild selling pressure during last week’s trade and as a result, posted moderate losses across the board. Without belaboring you, overlay the charts of all three with that of the S&P 500 and voila!



BONDS:

Nothing has changed/altered in ‘Treasury Land’ as the 10-Year continues to trade in its multi-month zone of 3.2%-4% where the ‘Note’ tacked-on 6bps in this past week’s action to close out at 3.54%. With that said, from a technical perspective, relative strength, as well as a favorable MACD may be suggesting further upside in yield, and if the 10-Yr can go ‘topside’ of the 3.6% figure on a ‘close’ in the days/weeks ahead, it may just find itself making a run to the upper end of the range (3.85%-4%). Should such scenario indeed play itself out, bond prices would succumb to selling pressure with the proceeds more than likely seeking further risk appetite via equities markets. On the flip-side, should the yield on the 10-Yr stumble/deteriorate in the days/weeks ahead, reverse the aforementioned.



METALS:

It was a difficult week of trade for both Gold and Silver as investors/traders fled for the exits resulting in notable selling pressure with the ‘yellow metal’ posting losses of 4%, closing out at $1115.10 (- $46.30), as well as breaching its first level of ‘potential’ support at the $1150-$1155 zone on a ‘close’, while ‘Hi-Ho Silver’ fared no better and found itself on the receiving end of a 7.2% hair-cut, finishing out at $17.13 (- 1.34), as well as violating its first line of ‘potential’ defense at $17.50ish on a ‘close’. Having recently found themselves perched at ‘lofty/frothy’ levels, both metals have taken a backseat to strong dollar action of late and find themselves in pause/correction/consolidation mode, which we view as healthy despite the expected slippage and has had no meaningful impact on the primary (lon g-term) trend. Moving forward, gold finds ‘potential’ short-term support at $1100 and perhaps more importantly, at the $1050-$1070 area with recent highs ($1226) acting as ‘potential’ headwinds, while silver finds ‘potential’ support at $17 and perhaps more significantly, the $16 figure with $19.75ish acting as a ‘high-bar’ resistance. The levels are defined, trade/act accordingly.



CRUDE OIL:

Although oil remained in a decent posture heading into the week from a technical perspective, we directed members/readers attention to ‘potential’ warning signs last week when we noted, “While ‘black gold’ remains within our referenced ‘potential’ support of 75, as well as ‘potential’ resistance residing at the 82 figure, with this past week’s close, oil now finds itself trading below both its 20 and 50-Day moving averages respectively, and should continue to be monitored with a close eye.” With the $USD putting in a solid week of trade, crude found itself succumbing to lower depths this past week of trade as ‘black gold’ slid the ‘slippery slope’ to the tune of 8% (- $6.14bbl) closing out the week just shy of the 70-handle at $69.56bbl. Despite short-term oversold conditions and a potential ‘bounce’ in the offing, n ow that ‘potential’ support at $75 has been breached/violated with ease on a ‘close’, both the $65 and $60 levels and perhaps most importantly, its 200-Day moving average, ‘may’ act as future support, while previous support ($75), as well as our longstanding $82 figure represents resistance as we move forward in the days/weeks ahead.



CURRENCIES:

The $USD index built momentum on top of the prior week’s close where the ‘greenback’ was able to recapture its declining 50-Day moving average and close above the hurdle for the first time since May, as the index posted gains just north of 1.1% for the week and perhaps more importantly, stemmed the short-term downtrend bleed. As we noted to readers this past week, “ While further work is required for the ‘Buck’ to mend it ways and a ‘clearing’ of the declining 50-Day moving average would be a start, ‘potential’ resistance lies ahead at the 76.50 level, as well as the 77-77.50 zone.” With the ‘Buck’ now having attained the former (recapture of the 50-Day moving average on a ‘close’), we now find the index resting right at our noted ‘potential’ resistance level at 76.50 (76.58 12-11). While the in dex ‘may’ require some short-term pause/consolidation before embarking on loftier levels, it’s now evident that after months of steady grind lower, the ‘greenback’ has reversed the short-term trend, for now, while the primary longer-term trend still leaves ‘little to be desired’. Nevertheless, as we move forward, our previously referenced levels of ‘potential’ resistance remain intact, whereby the 76.50 and 77-77.50 zones may provide headwinds from a short-term perspective, while prior resistance (50-Day moving average 75.80ish), as well as the 74.25ish figure lending ‘potential’ short-term support. From a technical look, members/readers may wish to pay heed in the days/weeks ahead to the ‘potential’ development of an inverse H&S pattern (bullish) forming within the $USD index with the left shoulder/s and head now completed, as well as the possibility of a severe ‘short squeeze’ d ue to the universally acknowledged $USD ‘carry trade’ that has been in practice during the past year. Lastly, we wanted to reiterate our thoughts from late October, which remain pertinent today, when we stated, “Should the $USD be capable of ‘taking-out’ and ‘clearing the hurdle’ at its declining 50-Day, a move to the 78-79.50 zone remains a viable possibility. If such scenario were to occur, the developments would certainly have negative implications for the metals, both Gold and Silver, from a short-term perspective, as well as the equities markets themselves. If on the other hand, the ‘greenback’ were to be stifled/rebuffed, reverse the above noted short-term implications.” In essence, the action of the $USD foretells the story with respect to direction within equities and commodities markets.



US Markets:

Short-Term: Neutral- Mixed Signals-Consolidating

Intermediate-Term: Neutral- Ditto- Mixed Signals-Consolidating

Long-Term: Bullish- SPX 1,000 Has Been ‘Re-Captured’

(Yet, within the confines of a secular-Multi

Year Bear based on Weekly charts)



POTENTIAL INDICES SUPPORT/RESISTANCE:



SUPPORT RESISTANCE



DJIA: 10,230; 10,122; 10,020 10,517; 10,632; 10,834

COMP: 2,155; 2,138; 2,113 2,215; 2,240; 2,267

S & P: 1,085; 1,070; 1,045 1,120; 1,140; 1,168



POTENTIAL SET-UP’S:





LONGS:


Great Basin Gold (GBG) 1.67; From here back to 1.60 and more aggressively above 1.90


Smartheat Inc. (HEAT) 15.29; X Crossing 16.50


Headwaters Inc. (HW) 5.05; X Crossing 5.33


Playboy Enterprises B (PLA) 4.03; From here back to 3.70 and more aggressively above 5.25


Rex Energy Corp. (REXX) 10.61; X Crossing 11.01


Santarus Inc. (SNTS) 4.82; From here back to 4.50 and more aggressively above 5.83

Stillwater Mining Co (SWC) 9.26; On pullbacks to 8.50 and more aggressively above 10.40




SHORTS:


Changyou.com LTD (CYOU) 30.76; Breaking below 29

Hess Corp (HES) 55.63; Back to resistance at 58 and more aggressively breaking below 53

Nucor Corp (NUE) 42.25; From here back to resistance at 44.40 and more aggressively breaking below 38.25

State Street Corp (STT) 39.40; Back to resistance at 44 and more aggressively closing below 39.25



Have a profitable week of trade!!



24-7 Stock Alert





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