Dec 1, 2010 Small Cap Stock Picks
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Small Cap Stock Picks Video: AAU, MMG, VYOG, EXK
Apr 1, 2010 Small Cap Stock Picks
James W. Shelton III
The EUR/USD trades on the defensive after German retail sales for the month of February were worse than expected. Most analysts were expecting no change at all in the report while it came in at -0.4%. It is also worth noting that German retail sales for the month of January were revised to the downside, adding to euro selling pressure. Both these elements raise a rather critical question, what will become of Germany’s fragile consumption recovery. This same question can be applied to the wellbeing of the United States as the ADP employment change, an economic indicator, was released worse than expected yesterday. The EUR/USD did gain nicely upon that release but remains unable to capture critical levels with a close above 1.3530. There is critical support around 1.3270, a break below this would be a break of a critical swing low, warranting lower prices. Taking a quick look at the upside, 1.38 remains extremely critical.
The S&P futures traded lower in the New York session but quickly recouped losses during the 15 minute session they are open after the NY close. The 15 minute session is typically used to close out day trading positions. The fact that the market rallied so dramatically in this short time period may be a great indication of the extreme selling pressure that traders placed on the market. Trading under yesterdays low would most likely warrant institutional selling, taking us to our first support around 1156. On the other hand, higher prices, closing above the 1176.5 high seen last Thursday would help enforce the bullish sentiment that has controlled the marketplace off last years March lows. The U.S. equities experienced selling pressure yesterday as the ADP employment report, as I mentioned earlier, came out worse than expected. I must point out that the month’s most critical economic indicator will not be tradable as many markets enjoy an Easter Holiday. The economic indicator in reference is the Non-Farm payrolls, expected to come in at a positive 190K on Friday. Markets would react poorly to this number if it comes in negative as the United States Government initiates removal of unprecedented facilities and quantitative easing that aided in the current, yet fragile, economic recovery.
Crude oil was able to close above the critical $83.25 level we had mentioned in previous weeks and currently experiences follow through in a similar direction. As we discussed, many institutional traders would be holding off on their longer time frame trades until a close above the $83.25 level or below the critical support area around $79.00 occurred. $92.00 a barrel is the next resistance level, and this is found when analyzing price action from 2008. Many traders attribute the most recent strength in crude oil to extremely optimistic economic indicators of nations that use this commodity heavily as they experience rapid growth. One should take note that these nations have extremely low interest rates and one nation in particular, China, has an extremely cheap currency aiding in export growth.
Speaking of interest rates, I am inclined to point out that France and Italy have just released their PMI numbers. They come in at 40 month highs, display growth but also inflation. Inflation should soon become a concern as central banks leave interest rates at extremely low levels.
Gold rallied in a big way while these PMI numbers were released, as inflation continues to become a global concern. Gold remains within a range on the daily chart and may continue to do so until a significant event triggers a breakout. Perhaps tomorrow’s employment report will do the trick.
Mar 17, 2010 Small Cap Stock Picks
In the overnight, the euro/usd broke through the critical 1.38 level, triggered stops, and failed to follow through. The pair currently trades at 1.3775 and still looks to be a bit overextended. The euro has enjoyed nice gains as a Greek debt downgrade threat by Standard and Poor’s is silenced upon “bailout” agreements. Significant resistance is still in place at the 1.3850 level or the February 9th high (red line chart below), while many institutional offers and stops are reported at this level. The dollar is weaker for a second day today before the wholesale prices report, expected to post a decline for the first time in first time in five months, warranting the trade recognizing that the U.S. will maintain loose economic policy and continue to pump stimulus.
This morning, I can’t help but feeling as if our administration has started a battle, that being the United States vs. the World. I say this upon analyzing two very recent developments; Congress’s attack of the yuan and Martin Feldstein’s, a presidential adviser since the Reagan administration, diagnosis of the Greek budget deficit with a possible euro currency-exit. The former issue is of more concern and we shall discuss only this as many believe, including the Chinese Commerce Ministry, that a focus on yuan valuations will not improve U.S. trade inadequacy. The bipartisan bill was introduced, according to the Washington Bureau, by Senators Charles Schumer, D-N.Y., Lindsey Graham, R-S.C., Debbie Stabenow, D-Mich., and Sam Brownback, R-Kan. It is the result of Chinese Premier Wen Jiabao’s rejection of any move to increase or un-peg the value of the yuan. It is also worth noting that the World Bank recommended a stronger exchange rate and tighter monetary policy within China to avoid further inflation and remove any possibility of an asset bubble. I say further inflation because China’s most recent CPI index displayed that inflation is at its highest level in 16 months.
Commodities, in terms of energies and metals, are trading modestly higher as the dollar trades weaker against most of its counterparts. Let us discuss metals first as many believe higher prices are warranted while we head in to the high-production season, that being the spring and summer months. Gold is approaching an intermediate trend line and is in good position to break higher, if it fails to do so a lower high will be recognized and traders will place positions accordingly (chart above right; third red circle under black trend line). It is also worth noting that platinum is trading near a two month high as cheap dollars spur investment demand in this alternative asset.
Crude oil, which violently declined Monday, has recaptured the lower levels and trades very close to weekly highs. It does so upon OPEC’s first gathering of the year, where no change in production is expected, according to 11 of the group’s 12 members. Although, one should take notice that OPEC is exceeding production quotas as there own analysis shows they are pumping more oil than market demand calls for. The reason for this is rather simple; a supply cut would cause oil prices to soar, which in turn would hinder the fragile global recovery. At 10:30 am EST, petroleum inventories are expected to show another increase as refineries prepare for the summer holiday driving season. You can see the swing low that crude made; this will be a great selling point if we fail to break higher.
Not only did the Federal Reserve leave the discount window at its exceptionally low level, but they also left the “extended period” clause within the summary (excerpt below). With that being said, one should not expect tightening at the next FOMC meeting as they claim inflation is being managed and the economic recovery although progressing, is delicate. The Press release stated that:
“The Committee will maintain the target range or the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”
Mar 16, 2010 Market Analysis
The overnights largest development is that of a Greek lifeline. As mentioned yesterday, euro zone leaders met to discuss the future of the Greek economy and to create a strategy securing its functionality. The euro leaders devised a system that would offer emergency loans to Greece incase their highly protested plan of tax increases amounting to 4.8 billion euros ($6.6 billion) and wage cuts, would fail to thwart further economic disaster. This “bailout out”, as many call it, should not come as a surprise as finance and prime ministers have been very reassuring of Greece’s future within the euro these past weeks. With this assurance, was some form of financial guarantee not implied, as many believe Greece’s “honorable” tax increases and wage cuts will not suffice? The market tends to think so as this aid has been priced into markets since last week.
Since last week the EUR/USD enjoyed nice gains, breaking above the February 9th trend line. This is rightfully so, as the most recent sideways trade exceeds the consolidation taking place from December 22nd to January 13th. As I have stated so many times in the past, time is the most critical element when analyzing horizontal and vertical price development. It is only appropriate that I mention yesterday’s healthy selling and failure to completely recapture bearish sentiment as the pair traded below the critical trend line and eventually closed above. If the market is able to recapture the 1.3500 level, heavy selling would be warranted. But, this is unlikely as a medium sized correction of the EUR’s large downtrend is expected by many prominent trading firms, such as Goldman Sachs. (Their Target for the EUR/USD is 1.45)
Equity markets are undeniably at critical levels. In fact, it is rather comical to see them trade so quietly at these prices, in particular the S&P 500 cash index whose critical level of resistance is 1150. Yesterday traders sold this index down to 1142, but after a failure to break lower after 12 pm EST, bulls gave a bid and helped the index close slightly higher. Slightly should not be taken lightly as it was only a tick or two higher. The early selling that occurred can be viewed in two ways. The first viewpoint is this, as markets trade at critical levels, buyers have become exhausted and bears give the market selling pressure while they will continue to do so in the near future. The more market optimistic stance is this; markets trade at critical levels and have experienced significant vertical price developmental, sideways trade is necessary before breaking higher and the bear’s inability to keep prices at the day’s lows, is in fact, bullish. I will not necessarily pick a side but I am inclined to say this, the most recent pullback occurring from January 19th to February 5th, did not exceed, in terms of time, the bull markets previous retracement taking place from Jun 12th to July 7th, 2009. Knowing this, one is to deduce that there is great possibility for market growth.
Crude oil trades lower this morning as China and India are expected to “cool” rapid economic growth, as they have seen the highest inflation levels in nearly a year and a half. Two other elements aiding in lower crude prices are the facts that OPEC will leave oil production unchanged at a time when demand is questioned and that petroleum inventories, released tomorrow at 10:30 am EST, will show an increase in stockpiles for the 7th week in a row. If traders bring price below yesterday’s lows, we very well could see a change in trend.
Gold is trading higher as many assume the Greek bailout will be funded by partial gold reserve liquidation. The commodity’s demand can also be attributed to a safe haven play as the Federal Reserve decides on interest rates at 2:15 pm EST, today. One should note that the market has made what appears to be lower highs in the major trend but higher lows in the intermediate trend. Trading below 1096 would eliminate discussion of higher lows and most likely send the market lower.
Expect quiet markets until the Federal Reserve interest rate decision occurring at 2:15 pm EST, today. No change is expected and this will remain to be the case until they remove the line “for an extended period of time” from their minutes and summary’s. If a change does occur, once more extremely unlikely, markets will trade in complete chaos.
Sep 29, 2008 Stock Market News
Ahhhhhhhhh finally we get some more progress going with this bailout plan thing or whatever you want to call it. Sentiment for this bill is swing both ways with many disapproving i think more so because it has focus on wall st. and not the american tax payers. In my opinion i just want to see some damn stabilization in this crazy stock market and get things back to a normal and at least give us some directional movement in the market to make for better trading opportunities. So Sure give me a little more tax so i can make way more in the stock market!!!
Now we gotta wait on the reaction from the congress to see if this bill even passes. Currently global markets, U.S. stock futures, gold, and oil are all down on news of the bailout agreement as this is your typical buy the rumor sell the news play as Cramer was also stating you should be selling into this latest rally. I’m really looking forward to seeing how this week plays out, Bush is expected to speak publicly about the bill Monday morning before the market open.
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Sep 25, 2008 Day Trading
Gold and silver have been a huge play over the last week or so with many stock in the industry rally 30-60% in that short period of time. But what goes up must come down. No significant profit taking has yet to take place in these stocks yet and it appears that they are nearing that calling as prices near heavy resistance levels and bearish candle patterns are coming into play. Looking at the gold and silver sector we can see price action failing to breakout at resistance. Wednesday failed to hold its rally and closed just barely up on the day suggesting weakness in the chart. With such a large rally its likely that we will see price retrace to a support level such as the 13/9 ema’s in the near term.
Day Trading Opportunities:
Looking at our first stock ??? we can see that price made a huge rally from the early 5′s and peaked today near heavy horizontal resistance around 9.50 also forming a bearish shooting star reversal candle suggesting downside movement from here. I think $8 or so should be in near sight for a short term day trade. i plan to go short Thursday with a tight upside stop.
Next stock were looking at is ???? which also made a magnificent rally over the past week yet looks like its glory days are coming close to a close. Price spike intraday on wednesday to tap out at its strong descending resitance trendline as we can see on the chart below while forming a very bearish shooting star candle suggesting negative momentum in the near term. We should also expect to see this stock head to support levels around the 13/9 ema’s around $6 or lower for a short term trade. I want to go short here near the open.