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March 28, 2004
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PREMIUM EDITION
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Issue #110
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| WEEK ON WALL STREET: Week In Review / by Bob Coppo |
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| Our new Week on Wall Street columnist is Bob Coppo. Bob is Managing Director and Chief Technical Analyst for JNL Financial Consultants, Inc. The company has operated StockmarketTimer.com on the internet since 1997 and provides investment advice to both individual and institutional clients. Make sure to visit his site, StockMarketTimer.com. |
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Friday's Action: Stocks built on Thursday's rally for much of Friday's session, only to give up those gains at the closing bell. Economic reports were mixed, giving little in the way of market direction and volume was light. Major world markets finished mostly higher on Friday. London's FTSE closed down 0.37%; Frankfurt's DAX closed up 0.27%, and Paris' CAC 40 closed up 0.62%. Japan's Nikkei closed up 2.08%, Hong Kong's Hang Seng finished down 0.30%, and Sydney's All Ordinaries Index closed up 0.84%. In economic news, Personal Income in February rose 0.4% while Personal Spending increased by 0.2%. Consumer Sentiment for March was revised to 95.8 from 94.1. Volume came in at 1.32 billion shares traded on the NYSE and 1.58 billion shares traded on the Nasdaq. Market breadth was positive, with NYSE advancing issues over declining issues by 1.20, and up volume over down volume by 1.27; Nasdaq advancing issues over declining issues by 1.05, and down volume over up volume by 1.05. Leading sectors were Airlines, +2.42%, Forest Products, +1.46% and Broker/Dealers, + 1.37%. Laggards were Semiconductors, -1.25%, REIT's, -1.12% and Biotechs, -0.76%. Nasdaq 100 futures closed 5 pts lower to settle at 1419.50, while the S&P's settled up 0.10 pts at 1106.10.
Weekly Recap: Despite Thursday's huge rally, the market posted another down week as investors weighed the opportunities presented by deeply oversold conditions against concerns that geopolitics could sink equities once again. On Monday, Israel's assassination of a Palestinian leader and Taiwan's controversial presidential election re-ignited fears associated with the Spanish terrorist bombings two weeks ago. The Dow came within 12 points of the psychologically important 10,000 level and the market spent the rest of the week trying to recover. The political uncertainty, however, did not translate into losses for all investment vehicles. Gold, known as a safe-haven, rallied throughout the week and reached $423.50 the ounce on Friday, its highest level since the first of the year.
Economic data were largely in line with expectations (final Q4 GDP at 4.1%, February Durable Goods at 2.5%) and earnings reports were sparse. Chip maker Micron Technology beat Q2 consensus estimates by $0.02 Wednesday night and helped launch the SOX index to a 4% gain on Thursday. Goldman Sachs's blow-out Q1 report, however, did not have the same effect on the brokerage sector. Broker/dealers were one of the worst performng groups for the week. Other sectors that followed the brokers into negative territory were tobacco, biotechs, breweries, and oil services, with a 5% drop in the price of crude oil hitting the energy sector. However, a statement Friday by a member of OPEC's economic board that the cartel will cut quotas April 1st suggested that the oil price would not be headed much lower anytime soon.
For the week, the Dow lost -2.3%, the S&P 500 finished -0.3% lower, while the Nasdaq fell -2.2%. The small cap Russell 2000 lost -2.9%. Next week, the market will probably tread water until Friday, when activity should pick up with release of the March employment report. The market will need to see job growth above consensus estimates of 100K to abate concerns regarding the stalled labor market. On the earnings docket, some of next week's major reports include CarMax, ATI Technologies, Bed Bath Beyond, Best Buy, Circuit City, Monsanto, Gucci, Pier 1 Imports and Schnitzer Steel. Best Buy (BBY) is of particular interest as the sentiment toward the company is near exuberance.
Trading Futures on the VIX: The CBOE began trading futures on its CBOE Volatility Index (VIX) Friday, launching the newly created CBOE Futures. VIX futures will trade under the symbol "VX" on the CBOE electronic platform. The CBOE Volatility Index (VIX) Futures will track the level of an "Increased-Value" Index (VBI). The Options Price Reporting Authority (OPRA) will publish VBI data as VXB for OPRA subscribers. Check with your quote vendor for real-time data availability. The VBI is 10 times the value of VIX. The contract size is $100 times the Increased-Value VIX (VBI). Contract months will be the two front-month contracts plus two contract months on the February quarterly cycle (February, May, August, and November). The VIX is an interesting trading vehicle because it tends to move in definite patterns bounded by its upper and lower standard deviation (Bollinger) bands. You can learn more about CBOE Volatility Index Futures at the CBOE website.
A Conservative Approach to Long Term Investing: Our investment philosophy has always been to diversify our capital between high risk and more conservative vehicles. We believe conservative investing should be viewed with an eye towards retirement. The ideal investment vehicle would preserve capital while still generating acceptable long term growth. America First Investor has developed just such an investment model. Based on a Nobel prize winning theory of asset allocation and sector rotation, the model has produced solid results over the last two years. In 2002, the AFI model produced gains of 82.3% while the bench mark S&P 500 Index lost 23.4%. In 2003, the model outperformed the S&P again, gaining 43.9% to 26.4%. But just as important, the maximum monthly draw-down was only 5.1%, while the average draw down was less than 3.0%. Compare that to an average monthly gain of 4.0% and an impressive 88.9% win to loss ratio and you get an idea of just how solid this model is.
Since its inception on January 2, 2002 to March 25, 2004 the America First Investor Portfolio gained a solid +188%. During this same time period, a buy-and-hold strategy with the S&P 500 Index lost -5%. On a quarterly basis, the AFI model produced steady equity growth, even during the bear market of 2002.
America First is offering first time subscribers a FREE 30-day Trial. To learn more, click HERE.
The COT Report: The latest Commitments of Traders report from the CFTC shows that Commercial Hedgers sold some 22,400 S&P 500 futures contracts last week to reverse their position to net short -17,27 contracts. Large Traders remained net short -28,429 contracts, with the entire offsetting net long position of +45,705 contracts held by Small Traders, the so-called "weak hands". For the Nasdaq 100 futures, Commercials bought some 4,600 contracts to bring their net long position to +17,997 contracts. Small Traders were net short -3,003 contracts in the Nasdaq. Commercial action in Dow futures saw the smart money sell some 13,800 contracts to bring their net long position to +929 contracts.
Commercial Hedgers made a massive shift of over 22,000 contracts in the S&P's last week to reverse their net position to short once again. Shifts of +/- 20,000 contracts in one week are rare, and in this case, should be considered a bearish sign.
Sentiment Surveys: The latest Investors Intelligence survey showed that the percentage of bullish newsletter writers came in at 45.4%, while the percentage of bears registered 23.2%. The bullish ratio (bulls/bulls +bears) came in at 66.2%.
The latest AAII survey showed a decrease to 31% bulls, and an increase to 43% bears. The bullish ratio came in at 42%, while the 4-week moving average remains high at 59%. One thing to note about the AAII survey is that, while membership in this organization is quite large as investor groups go, the number of members that actually participate in the survey is very small. Thus, large fluctuations in survey results from week to week are not uncommon.
The latest Market Vane survey came in at 61%, indicating that the majority of commodity trading advisors (CTA's) remain bullish on the future direction of the S&P's.
The Short Term Outlook; 1-5 Days: We said in Thursday night's column that the odds favored making higher highs on Friday, and that happened. Friday's price action favors making lower lows on Monday. Friday's morning climb to higher high and then a late day sell-off resulted in a number of bearish "shooting star" candlestick patterns. The QQQ, NDX and COMPQ all formed shooting stars. The pattern is characterized by a long upper tail and a small real body at the bottom of the daily range. While the shooting star suggests that we could see a little more downside or consolidation, it is not normally indicative of a major top. The chart of the QQQ below shows the formation of the shooting star and price stalling at the 20-day moving average. The fact that volume was relatively low however, suggests that the sellers didn't have much conviction.
Another short-term bearish indication Friday was the action of the NDX Volatility Index (VXN). The VXN closed on support and it's 5-day RSI closed below 30%. Our expert system generated a buy signal for the VXN at Friday's close, suggesting the index is ready to move higher. Since the VXN is inversely correlated to the NDX, a rally by the VXN would be bearish for the Nasdaq.
SMT's Pivot Point Forecast; 1-2 Weeks: Our Pivot Point forecast is currently on a buy signal. Our next Pivot Point is forecast to occur on or near March 29th.
The 60-mn NDX chart below shows that the StochRSI indicator is in the BUY zone. For Monday, resistance for the S&P's comes in at 1111.50 and then 1117.50. Support lies at 1101.50 and then 1098. For the Naz, resistance comes in at 1428 and then 1439. Support lies at 1412 and then 1407.
The Intermediate Term Outlook; 2-6 Weeks: The Risk Aversion Indicator, represented by the NDX:Dow Ratio, has been a good forecaster of the general market trend over the last couple of years. As the chart below shows, the ratio crossed below its 70-day exponential moving average at the end of January, coinciding with the yearly high for the Nasdaq Composite on Jan 26th. The slope of the EMA is trending down and the ratio is trading below it. The indicator suggests that we have most likely seen the market high for the year.
Our Market Trend Indicator (MTI) is currently positive and trended slightly higher on Friday.
Free Stock Picks! This week's free stock picks are listed below. SMT's Stock Picks is now a regular daily feature on our web site. Click HERE for details.
Top Stock PickS for Monday, Mar 29, 2004:
FTI, IFSIA
Good Trading!
Charts and data appearing in today's column are courtesy of:
StockCharts.com
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Last week's Fresh Picks came through for an average gain per pick of just under 7%.
Our bottom-feeding paid off with beaten-down semicon play WFR as the stock gained a very healthy 14% on the week, closing Friday at its absolute high for the week of $9.03. At this point, WFR has re-established support at $8.38, so we'd use that as our stop here with an initial target of $9.22 with a break above leaving the door open to even bigger gains.
Our second pick, insurance play SCO, didn't fare as well, closing out the week just $0.02 below where it began for a loss of 1%.
Make sure to also have a look at the Track Record page on the site for our 2003 monthly breakdown showing each and every Fresh Pick from the year, along with its price when recommended and where it's trading at today. For specific targets and stops, please see the archives.
Have you traded any of our recommended plays along the way? We'd love to hear from you and how you did. Please send your stories to comments@talkingpoints.com.
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| TECH WATCH: Micromachine Research / by Jeff Neal, Technical Market Columnist |
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Jeff Neal is a veteran options strategist and trader with over a decade of experience in the trading business. Jeff has had a diversified business career operating a very successful management consulting business with his clients representing some of the largest companies in the world.
He has a B.S. in Computer Science from Indiana University and an MBA in Finance from the University of Indianapolis. Jeff is a writer, mentor, and options strategist for Optionetics (http://www.optionetics.com/) and as head of his own hedge fund is an active options trader in both the equity and futures markets.
Jeff Neal - Staff Writer & Options Strategist - Optionetics.com ~ Your Options Education Site
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Micromachine research and development is no longer just in the government and college domains but also extends to many private companies looking to profitably exploit this new technology. The size of these companies range from the very large public blue chip companies such as Intel (INTC) and IBM (IBM) to the smallest start-up type and private firms.
A good majority of micromachine research in the private business sector emanates from the semiconductor industry. This particular industry has been reducing electronic component sizes smaller than one-millionth of an inch. However, micromachine research and continued size breakthroughs do not come without a substantial cost. In fact, just one company many times cannot take on these costs. That is why over the last decade or so companies have looked to the Federal government for assistance and have also split the costs with other firms.
The reason this type of collaboration has been so successful, particularly for company partnerships, is due to the fact that typical competitive concerns in the semiconductor sector are not really based on the technologies needed to manufacture these ever-smaller electronic components. The actual competition in this sector is surrounded around product function and price. So there is virtually no competitive intelligence disadvantage in collaborating their research efforts with other companies.
Also, the Semiconductor Industry Association is a tremendous support organization to semiconductor companies in regards to there research efforts. They facilitate these endeavors through its primary research entity the Semiconductor Research Corporation that provides research and development money to private firms and universities as well. The Semiconductor Research Corporation directly invests over $40 million each year in companies in a collaborative effort for micromachine type research.
Another type of funding that comes from a different research subsidiary called the Microelectronics Advanced Research Corporation which provides money and grants to universities around the country that are performing research in the micromachine arena. This has resulted in many spin-off companies being created as a result of these sponsored projects. However, the Micro Advanced Research Corporation does not participate directly in spin-off companies or profit from the commercial usages of the developed technology.
As extensive as this research activity in the semiconductor space is, it is not the only industry looking to exploit micromachine technology. Many of these firms, if asked, probably would not identify their companies as being in the micromachine field, however, the industries in which they operate profitably utilizes and employs this technology.
For example, manufacturers of very small machines and components use micromachine technology to actually produce these types of goods. Also, factories that employ autofabrication in there manufacturing process utilize this technology extensively. Others include companies that simulate various raw materials, new drugs, chemical methods, and biotechnology testing. All of these firms use micromachine technology to do their work.
There are still relatively few public firms that are purely built on bringing the micromachine technology to market. But some that are worthy of mention and do trade options include Nanogen Inc. (NGEN), which integrates advanced microelectronics and molecular biology into a platform technology serving the medical diagnostic field. Also, Nanometrics Inc. (NANO), which supports the thin film metrology systems for the semiconductor, flat panel display, and magnetic recording head industries. And finally, there is Nanophase Technologies (NANX), which markets nanocrystalline materials for use as ingredients in a range of commercial applications.
This technology will continue to grow and with more and more new applications being brought to market every year this should be a very exciting field for technology investors to closely monitor. Add to that the tremendous growth potential and that spells lots of volatility, which is music to the ears of seasoned options strategists.
Happy Trading.
Jeff Neal
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
jeff@optionetics.com
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| MARKET TA: Riding the Waves / by Dale Woodson, Technical Market Columnist |
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Dale Woodson is the editor of Woodson Wave Report, a market-timing newsletter. Woodson Wave Report identifies turning point targets in the Dow, NASDAQ, and S&P 500 index as well as the bond and gold markets using Elliott Wave analysis and fibonacci ratios. Since publishing the newsletter began online in 1998, Woodson Wave Report has been downloaded in twenty-five different countries.
We encourage our subscribers to visit his site at http://www.woodsonwave.com and please see Dale's complete bio following his column.
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TIMER DIGEST’S (P.O. BOX 1688, Greenwich, CT. 06836/ 203-629-3503)
#9 LONG TERM STOCK MARKET TIMER FOR THE YEAR 2003.
#4 GOLD MARKET TIMER FOR THE YEAR 2003.
#8 STOCK MARKET TIMER FOR THE FIVE-YEAR PERIOD OF 12/31/98- 12/31/03.
#6 STOCK MARKET TIMER FOR THREE-YEAR PERIOD OF 12/29/00- 12/31/03.
#4 STOCK MARKET TIMER FOR THREE-YEAR PERIOD OF 12/31/99- 12/31/02.
#5 STOCK MARKET TIMER FOR THREE-YEAR PERIOD OF 12/31/98- 12/31/01.
#4 STOCK MARKET TIMER FOR THE YEAR 2001.
#7 STOCK MARKET TIMER FOR THE YEAR 2000.
#5 BOND MARKET TIMER FOR THREE-YEAR PERIOD OF 12/31/99- 12/31/02.
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DOW
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WAVE DEGREE
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COUNT
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FROM
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DIRECTION
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TARGET
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GRAND
SUPERCYCLE
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THREE
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1784
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UP
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Year 2012
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SUPERCYCLE
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(V)
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1932 or 1942
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UP
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Year 2012*
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CYCLE
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V
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12/6/74 or 8/12/82
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UP
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Year 2012
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PRIMARY
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4
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8/24/99
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DOWN
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.618 = 5803
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INTERMEDIATE
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(A)
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8/24/99
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DOWN
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Complete @ 8062 on 9/21/01
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(B)
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9/21/01
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UP
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Complete @ 10,673 on 3/19/02
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(C)
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3/19/02
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DOWN
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Complete @ 7197 on 10/10/02
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(D)
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10/10/02
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UP
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Topping, high 10,753 on 2/19/04
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(E)
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12/31/03
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DOWN
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.500 = 6865/ .618 = 5803
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PRIMARY
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5
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NOT YET
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UP
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Year 2012
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* "…it should terminate about the year 2012"
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* "...not expected to terminate until about 2012"
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R. N. Elliott, Educational Bulletin O
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R.N. Elliott, Interpretive Letter No. 17
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October 26, 1942.
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August 25, 1941.
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Primary degree wave 2 down (1987 - 1990) running flat correction.
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Primary degree wave 3 up (1990 - 1999)
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Primary degree wave 4 down (8/24/99 -?)
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“…wave (E) down had just begun…the first wave down in that decline is still unfolding… A Fibonacci 34 days from the top gives us a target date of 3/24/04 while a Fibonacci 55 days marks 4/14/04 for a possible target.”
The Fibonacci gods have smiled upon us once again as the Dow appears to have completed the first wave down of this major decline at the 3/24/04 low just above the 10,000 mark. A Fibonacci .382 retracement of this decline gives us a target price of 10,300 for this upward correction, while -.618-retracement points toward 10,408. Keep in mind this is a bear market and surprises should be to the downside.
WAR AND THE STOCK MARKET – ONE YEAR LATER
It has been exactly one full year since the war in Iraq began. How many times have you heard phrases like “the market fell on fears of war” or “the main direction of the market is up and it will continue to rise unless some shock like war occurs”? Once again, the experts were wrong. We all know the only things that actually move the market are human emotions like hope greed and fear. An actual war more often times marks a low point, despite the popular belief that it can actually signal the start a decline. As the chart above so perfectly illustrates, if anything, war moves the market up, not down. We talked about this factor a year ago, as it became obvious that war in Iraq was imminent. From the March 7, 2003 report from Woodson Wave.
“The direction of the stock market is not a result of war. In fact, the cause and effect is just the opposite. War is a product of the stock market. Just as peace reigns at the top of bull markets, wars tend to occur at the bottom of bear markets, usually near the bottoms of c waves…”
It is safe to say that the war in Iraq started much closer to a bottom than to a top. It is also safe to say from the chart above that the direction of the stock market was definitely up, not down after the war began. And lastly, as the chart below illustrates, wars do tend to occur near the bottom of c waves. Instead of looking toward events and outside noise for market turns, at Woodson Wave we focus on a more reliable source – the Fibonacci sequence. And, once again, as the spiral called for a top, the market has accommodated.
Sure, we all know that the market moved up from the beginning of the war exactly one year ago. We also know that the always-reliable Fibonacci weekly spiral called the top of wave (D) to within nine days. Since that top, we have seen some intense selling pressure in the markets. This of course, is the last wave down in the now five-year old bear market. The good news is that it could end this year. The bad news is the worst is yet to come. And if you think about, the good news is actually bad news because if the bear market does end this year (as we expect) that means the decline will most surely be a devastating one.
Wave (E) down is the worst. It’s the wave that will bring everyone to his or her knees. At the bottom, it should definitely fall below the low of wave (C) at 7197. Our long-standing Fibonacci target for this decline is 5803. And if we connect the lows of wave (A) and (C) and allow for a “thrust” below that trend line, which is common in triangles, then the target is even lower still.
But for now let’s focus on the near term. In the near term, wave (E) down has just begun. It should shape up to be a five-wave decline. The first wave down in that decline is still unfolding. It is difficult to label the first through third waves of this decline, as there are several possibilities. However, the most recent price action has taken on the definite shape of a triangle. And triangles always appear as fourth waves. We can expect one more decline in wave five to develop in the next few days to complete the initial decline in wave (E). A fibonacci 34 days from the top gives us a target date of 3/24/04 while a fibonacci 55 days marks 4/14/04 for a possible target.
We have viewed the rise from the lows of last August as a corrective wave. The most recent top occurred last June. Our stance from the February 7, 2004 report:
“Recall that in the big picture, bonds moved lower in a steep decline from last June to the August lows… while wave two up can certainly move higher and maintain the wave count…”
Move higher is certainly what the market has done. In fact this move higher is about to challenge the entire wave count. Remember second waves can retrace up to 100% of the preceding first wave. The move up in the bond market frankly surprised us and we moved to a neutral stance, expecting this rise to terminate soon. So far, it has yet to do so. At this point, the retracement has moved well past the .382 and .618 fibonacci levels. Not far away is the high of last June. Once that high is eclipsed, we will need to rethink the count.
The chart below illustrates the sharp decline from the highs of last June. The move up from the lows of last August hardly resembles a motive wave, as overlaps are aplenty. However, it would take a move above the highs of last June to eliminate our count. We maintain a neutral position as we wait for the wave pattern to unfold.
We have maintained a short position in the gold market against the early January high. We count the current decline as a fourth wave. This decline, as it is a fourth wave, should not violate the price territory of the first wave. In other words, this decline should hold above the $380 level. A Fibonacci .382 retracement gives us a target of $398.57 for the decline while a Fibonacci .618 pullback points toward $377.73 in the April contract. To date, the low for this move is $388.20, right between our two targets. This brings us to another common Fibonacci target level that we would like to mention – the .500 retracement. A fifty per cent retracement gives us a target price of $388.15, within a mere five cents of the actual low. Combine this with the fact that the three-wave pattern appears complete at that low, and we can label the fourth wave as complete. The first indication that our wave count is correct will be a move above the third wave high of $432.30. Woodson Wave moves to a long position in the gold market.
Positions for rating services:
The “positions for rating services” below are assumed positions taken for rating services such as Timer Digest to rate our newsletter and rank us against other market timing newsletters. While the Elliott wave patterns and fibonacci ratios have implications regarding the overall direction and turning points in the markets, a reader is not justified
in inferring that any trading advice is given. Woodson Wave Report, LLC does not offer specific trading recommendations.
Long-term counts are found on weekly and/or monthly charts and generally cover a time period of years to decades.
Intermediate-term counts are found on daily and/or weekly charts and generally cover a time period of weeks to years.
Short-term counts are found on daily and/or hourly charts and generally cover a time period of days to hours.
Dow:
Long term: Remain short expecting wave (E) down to new lows.
Intermediate term: Remain short expecting wave (E) down to new lows
Short term: Remain short.
NASDAQ:
Long term: Remain short expecting wave (E) down to new lows
Intermediate term: Remain short expecting wave (E) down to new lows
Short term: Remain short.
S&P 500:
Long term: Remain short expecting wave (E) down to new lows.
Intermediate term: Remain short expecting wave (E) down to new lows
Short term: Remain short.
Bonds: Remain neutral.
Gold: Move to a long position.
Dale Woodson is editor of Woodson Wave Report, a market-timing newsletter. Woodson Wave Report identifies turning point targets in the Dow, NASDAQ, and S&P 500 index as well as the bond and gold markets using Elliott Wave analysis and fibonacci ratios. Since publishing the newsletter began online in 1998, Woodson Wave Report has been downloaded in twenty-five different countries.
Timer Digest rates Woodson Wave Report as the #5 stock market timer and #5 bond market timer for the three-year period from 12/31/98 through 12/31/2001. Woodson broke into the top ten rated stock market timers by placing #7 in the year 2000. He followed that up with a #4 rating for the year in 2001. These ratings were achieved during a period when market timing was extremely difficult as the bull market was turning over to bear and most were caught off guard.
While there is no feeling like catching a turn on the dime, Dale especially enjoys writing the newsletter. He is most proud of the numerous correspondences complimenting him on his writing abilities. He has a real passion for his work. He knows that the market will move in certain Elliott wave patterns and fibonacci sequences. His challenge is to identify those patterns and sequences in advance, while there is still time to profit from them.
Woodson Wave Report offers monthly, quarterly and yearly subscriptions. Newsletters are delivered via email and URL links and are published on the first Friday of every month. Special interim reports are released as market conditions warrant and targets are achieved. All new annual subscribers receive two months free.
You can subscribe to Woodson Wave Report via the secure online order form link below: http://www.woodsonwave.com/orderform.html
Disclaimer: The Woodson Wave Report combines Elliott Wave analysis and Fibonacci ratios to identify turning point targets in the Dow, NASDAQ, S&P 500 cash, bond and gold markets with respect to both price and time. The monthly newsletter is generally released on the first Friday of the month and special interim reports are issued as market conditions warrant and as targets are achieved. The information contained in the report is prepared solely for informational purposes and should not be taken as an offer to buy or sell any investment vehicle. Past performance is no guarantee of future results. Woodson Wave Report is waived of any liabilities.
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| GOLD RUSH: Gold Bull Gains Strength / by John Dowdee, Ph.D., Gold Editor |
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Gold Bull Gains Strength
Last week the gold bull gained strength. Bullion opened the week at $413.80 and quickly bolted through resistance (around $415) to a new short term high of $422. The bear then exerted some pressure, forcing the bull backward to $416 (which has now become an area of support). On Friday, gold streaked to $425 before closing at $423.20, almost $10 per ounce higher than it started the week. The action by the yellow metal was even more impressive since it occurred at the same time the dollar was firming (reaching a high of over 89). It appears that there is a good chance gold has bottomed and will be challenging the high of $431.50 in the coming weeks. As illustrated by the long term gold chart, bullion needs to surpass $431 for the bull market to resume in earnest.
Unfortunately, gold stocks, as measured by the XAU index, did not fare as well as the metal. The XAU opened the week at 102.84 and then fell to 98.91 before rebounding to 101.51. On Friday, the XAU gapped higher to 103.49 but was eventually pushed back to close the week at 102.54, resulting in a few ticks loss for the week. If the XAU can clear 105, it will be a large plus, but it will take a close above 114 to put the bull firmly back on track. The relative under performance of the XAU is worrisome since stocks normally lead the bullion price but if gold resumes its bull market, it will eventually pull stocks along. There is strong support between 95 and 99. However, if the XAU closes below 94, this will be very bearish and could delay the bull market in both bullion and stocks for several months.
Based on the strength of gold, I have now begun to accumulate gold stocks. As discussed over the last several weeks, on of my favorite “blue chip” gold mines is Barrick (ABX). The price of ABX stayed within a tight range (between $21.80 and $22.45) for most of the week but finally broke out on Friday to $22.76. Barrick has been under-performing (only increasing 33% over the last few years compared to over 100% for the XAU). However, Barrick has now ended its hedging policies, so it should play catch up with the unhedged producers (like Newmont). I see ABX as a value play. On the other side of the coin are the momentum investors. If you like momentum, look at Glamis (GLG). This stocks has increased from below $3.00 a share in 2002 to almost $18.00, a 600% increase!
Glamis is a mid-cap miner (capitalization about 2 billion compared to 12 billion for ABX) with properties primarily in the United States (California and Nevada). The momentum does not show any signs of abating so I have begun buying GLG for my longer term portfolio.
In addition to technical analysis, we also look at some of the gold fundamentals and will be explaining some of these measures in the coming weeks. One such measure is the “carry trade”. Here how it works. In the late 1990s, speculators would borrow gold from the central banks at low interest rates, sell the bullion, and invest the proceeds at higher LIBOR interest rates. The difference between the gold lease rate and the LIBOR is called Contangos. This strategy would make even more money if the price of gold was falling since the speculators could repurchase bullion later at a lower price to cover their loans. This selling of borrowed gold into the open market in effect increased the supply and helped to drive down the prices. However, since 2001, LIBOR rates (along with other interest rates) have fallen precipitously. There is no longer a large difference between the gold lease rate and the LIBOR. Also, with the price of bullion rising, it would be risky to sell borrowed gold since you might have to pay a much higher price to cover. This combination has essentially wiped out the once lucrative carry trade and has in effect tightened the supply side, causing prices to increase.
Remember that gold stocks are volatile and are not for everyone. You should never depend on anyone else’s opinion. You should do your own due diligence and evaluate your risk tolerance before making decisions to buy (or sell) any stocks or funds. Best of luck!
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| MR. SWING'S PLACE: Weekly Swing Trading Ideas / by Larry Swing |
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Each week, Mr. Swing analyzes his database of more than 9,200 securities to scan for swing trading opportunities. But be warned: Do not expect a fast way to make money. Mr. Swing is going to show you how you can accumulate small gains weekly, ultimately making money through a disciplined, low-risk trading approach. While he realizes that this short-term swingtrading approach is not for everyone, he hopes that the information given at MrSWING.com will be useful to you in the near future...
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These are your Swing Trading Opportunities for this week:
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Talking Points member - Over the nearly two years that we have carried the Mr. Swing's Place column, Larry's picks have consistently put in great performances. Don't miss out on the full swing-trading content available at Mr. Swing.com. Take advantage of some of the great programs available by clicking here.
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NOVL (Long) - Chart of the Week
Analysis:
NOVL gapped up strongly in early November, and then formed a good trend which endured well into the widespread downturn that began mid January. However, the stock did begin to weaken in early February, and eventually fell nearly 35% from its highs. Since then, the stock has formed a double bottom, reaching first lows of 9.31, then a high of 10.54, followed again by a low of 9.32 this Monday’s session. On Tuesday and Wednesday the stock rallied strongly again. Today, the stock closed at 10.63, breaking above the double bottom’s intermediate high on roughly twice the stock’s average volume; simultaneously with this bullish development, the stock also broke above it’s upper Bollinger band.
Key Levels:
Entry: Market open.
Target: We anticipate that even a minor rally on the indices would push the stock near to resistance at 11.66. Our target is 11.49.
Stop Loss: Just below the highest closing price of the double bottom pattern. Specifically, we will place it at 10.23.
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>TRADE in the DIRECTION OF THE MARKET<
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| Mr.Swing DISCLAIMER: Information for the stock observations was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the stock observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MRSWING.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the strategies described above. © Copyright 2002, MrSwing.com. All rights reserved. COPYING AND OR ELECTRONIC TRANSMISSION OF THIS DOCUMENT WITHOUT THE WRITTEN CONSENT OF MRSWING.COM IS A VIOLATION OF THE COPYRIGHT LAW. |
| THE TRADER'S MINDSET: The Trader Within / by Bennett McDowell, Columnist |
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Founder and President of TradersCoach.com, Bennett started his financial career on Wall Street with the firm J.J. Kenny Co. in 1984 after serving as an officer in the U.S. Navy. Bennett also served as a Retirement Plan Specialist with the Equitable in New York and has investment real estate experience as well. In addition, his 1979 Economics BA degree from Syracuse University in upstate New York gave him a foundation on which he was able to build a solid background in Finance.
Bennett has extensive experience in trading the financial markets and is currently an active trader including day trading the financial futures markets. He also coaches many traders through his company TradersCoach.com.
Considered an expert in technical analysis and complex computer trading platforms and applications, Bennett has educated and helped traders worldwide improve their trading. Bennett is well known for helping traders overcome sabotaging psychological issues that keep them from reaching their full potential. In addition to his educational and coaching abilities, Bennett, a registered securities broker, manages money and trades for clients throughout the United States.
Bennett released his home study course Applied Reality Trading, also known as "ART" in January 2002. His cutting-edge course teaches traders his state of the art Pyramid Trading Points, Money management, and developing the "Trader's Mindset." Bennett is also known for developing The Trader's Assistant - a premier trade-posting record-keeping system for traders, as well as writing and publishing The Survival Guide For Traders, a book on how to set up and organize your trading business.
Bennett provides private consultation/coaching services to many traders throughout the world by telephone, video conferencing, and in person. Working with Bennett, traders spend time focusing on trading system development, trading psychology, and disciplined money management.
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The Right Stuff
What is it and why do you need it to be a profitable trader?
“The secret to my success was that somehow I always managed to live to fly another day.” Chuck Yeager, first pilot to break the sound barrier
Most everyone agrees that Chuck Yeager has “The Right Stuff”. Just read the book by Tom Wolfe, entitled “The Right Stuff”, and you’ll enjoy the entire story from start to finish. It begins by telling how Yeager courageously broke the sound barrier in 1947 and then goes on to explain how the NASA program sent Neil Armstrong and Buzz Aldrin into outer space to become the first men to set foot on the moon in 1969.
There’s something to be learned from the great pilots of all time since flying is really no different than trading. It’s risky, exciting and offers a feeling of freedom. You as a trader are very much like the pilot of a fighter jet going into combat. You are competing with the best of the best and for every winner there is a loser. The goal of course is to become the winner more often than the loser. Statistically, you will need to be in the top 10% of all traders just to go home at night and break even. To actually make a profit, chances are you are in the top 5% of all traders. Pretty tough odds, wouldn’t you say?
Those odds are quite similar to the career navy pilots who faced a 23% likelihood of dying in an accident in the 1960’s. Grim statistics to be sure. Why then do pilots and traders choose to face such devastating odds? Most probably because they have a passion to excel in an arena that most would never even dare to enter. The challenge of it all is exhilarating!
So here we are traders in the most competitive and cutthroat environment known to man and woman. How does one survive and eventually achieve consistent profitability?
Quite frankly, survival is the key. Better that you focus on survival than on “…getting rich quick…”. Don’t be enticed by the many authors and trading software sales people out there who say “…my system will earn you thousands of dollars quick and easy…”. The “fast cash” concept is an illusion and a gimmick to lure in masses of naïve would be traders. The reality is that trading is a profession like any other and requires skill, experience and know-how. These ingredients are developed with time and dedication and there is no “quick and easy” answer.
To survive can be defined as to “…live to fly another day…” as Yeager would say. The goal for traders is to come back to trade day after day and strive for a skill level that ensures consistent profitability. You want to stay in the game long enough to learn the necessary survival skills as opposed to wiping out your capital before you reach that goal. If you keep your goals relatively modest and realistic every step of the way you have a better chance of becoming consistently profitable.
That doesn’t mean you won’t be “…pushing the envelope…” and stretching your ability to the max and going for the Gold. It means that your ultimate goal is to live to trade another day and not “…screw the pooch…” as the early test pilots in Yeager’s day used to call crashing and burning. It’s a little more realistic and modest than the “Get Rich Quick” approach.
Just try to preserve your trading capital, don’t get greedy and always have respect for the power of the market regardless of how financially successful you have been in the past. That’s how to survive and to profit and that’s what the game is all about, plain and simple.
So what is “The Right Stuff”? General Chuck Yeager gives his definition in his autobiography entitled “Yeager”.
He says, “Ever since Tom Wolfe’s book was published, the question I’m asked most often and which always annoys me is whether I think I’ve got ‘the right stuff.’ I know that golden trout have the right stuff, and I’ve seen a few gals here and there that I’d bet had it in spades, but those words seem meaningless when used to describe a pilot’s attributes. The question annoys me because it implies that a guy who has ‘the right stuff’ was born that way. I was born with unusually good eyes and coordination. I was mechanically oriented, understood machines easily. My nature was to stay cool in tight spots. Is that ‘the right stuff’? All I know is I worked my tail off to learn how to fly, and worked hard at it all the way. And in the end, the one big reason why I was better than average as a pilot was because I flew more than anybody else. If there is such a thing as ‘the right stuff’ in piloting, then it is experience.”
There it is!! “The Right Stuff” is “experience” in the words of the great Yeager. And it is this very ingredient that will save your life, and your capital, time and time again. Which is precisely why you need “The Right Stuff” in trading the markets.
You will need to acquire experience to become profitable and stay profitable. You will need to maintain and sharpen your skills even after you’ve entered that coveted top 5% of all traders! This means having the courage and persistence to enter the markets and actively trade on a regular basis, even when you encounter losing streaks and equity draw-downs. It is this experience in the market that will ultimately enable you to overcome your trading obstacles or “demons” and feel the satisfaction of having accomplished something that so few have.
On gaining this essential experience, let me offer a few words of caution. If you do happen to encounter one of those dreaded losing streaks be sure to reduce your position size to reduce your over all risk. Remember that the ultimate goal is to survive the market and to preserve capital using discipline and sound money management. All the while gaining experience and “The Right Stuff”. Any losses you incur can only be regarded as tuition in the “Great University of Trading” known as the “Market”.
The challenge is to strike a balance between the cost of your “tuition” with the amount of experience you receive. Only you will know what your risk and loss tolerance is. (As a general rule risk no more than 2% of your trading capital an any single trade.) It is important to be honest with yourself regarding your true tolerance and it is essential that you are always trading with money you can afford to lose. This will help you to soften the fear and greed emotions and focus on the education and experience aspect instead.
Ultimately, you should be having fun while you’re trading. If you are not, then you aren’t doing it right! Maybe it means you’re working with the “Wrong Stuff”. If that’s the case try to get back on track and go back to your own trading basics. Again, reduce your position size, get some support from a trading “buddy” or “coach” and hang in there if trading is something you feel is your true calling in life.
You know yourself better than anyone else and the only way to become the “best of the best” is to do something you love to do and to stick with it. Maybe passion is the secret ingredient in the whole picture. Only if you have a deep desire to succeed can you endure emotionally draining stop-outs and losing streaks. Remember that the only real failure is to give up. The dollar amount of any loss is just a number and it is not an indication of failure. It is part of the learning process. You will find that sometimes the greatest trading lessons will come from losing trades that helped you to understand your personal trading in a new way.
Be sure you have this desire for trading if you truly want to succeed. Ask yourself, “Is this the one thing I’d rather be doing than anything else in the world?” If the answer is yes, then you are in the right business. If the answer is no then get out quick and find something else!
In Yeager’s words, “For the best pilots, flying is an obsession, the one thing in life they must do continually. The best pilots fly more than the others; that’s why they’re the best. Experience is everything. The eagerness to learn how and why every piece of equipment works is everything.”
Bottom line is if you’re missing true passion or obsession for trading then acquiring “The Right Stuff” will be all the more difficult. And when the competition is this intense there’s no room for “weekend traders” just as there’s no room for “weekend pilots”. The competition will eat you alive if you’re not constantly honing your skills and developing your experience. Having shared these few words of caution, may I say that trading is for me the greatest profession in the world! If you enjoy it then follow your heart and good luck to you in your pursuit of “The Right Stuff”!
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| CONTRARIAN CORNER / by Jeff Weber, Columnist |
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Fees, Fies Fo, Fum, open mutual funds got you on the run
There is over $7 trillion (with a "T") dollars in the open mutual funds industry. Actually calling them open is quite ironic, because trying to find out if they are treatly you fairly and fully disclosing information to you - like the fees they charge you; is virtually impossible. But you do have a few "Don Quitotes" out there - trying to tilt the windmills. A shining example of someone who cares for the small investor (very contrary) is John Bogle. John used to work for Vanguard, one of the bigger open mutual fund companies and knows the business inside out.
John says the biggest scandal in the open mutual funds industry is the excessive fees you pay to these "managers" of your open mutual funds. John expects the exorbitant management fees and portfolio-trading costs to be the next area regulators tackle. Well, they may try to tackle it, but I think many funds have traders big and strong enough to break tackles and go all the way for a mutual fund touchdown! Good Luck, John estimates that mutual fund owners pay over $100 billion a year in management fees and trading fees.
Some really samrt people tried to do the impossible and figure out the fees open mutual fund traders pay. they concluded that the fees take a big bite out of your mutual fund earnings. Even digging through required regulatory filings with the SEC, it is hard to find out just what the open mutual funds charge. (Question, how can the SEC regulate the fees open mutual companies are charging when even the SEC can't tell from its filings, what the mutual fund big boys are charging their customers??)
Well a new study by a group of financial advisors did the best they could. Researchers examined over 3,300 annual reports filed by stock funds in 2001. Think open mutual funds want anyone to know what they are really doing? No, because the researchers found many fund companies lump many funds together in one report, making it nearly impossible to figure out the costs for each mutual fund. Researchers then changed cause (threw in the towel) and instead, looked at a group's totals and estimated each fund's commissions based on size. How customer unfriendly!!!
here's what they were able to estimate. They determined that the average trading cost was $27 on a $10,000 investment. The researchers also determined which open mutual fund companies charged had the highest brokerage costs as a percentage of assets. The Big Five with the highest costs you have heard of, but not heard them bragging about having the highest trading costs: Fidelity - 1.06%; Fidelity Contrafund; Putnam Voyager A (you remember the big one in the insider trading scandal; investors wised up and pulled over $32 billion out of Putnam last November); Fidelity Equity-Income II - 0.79%; and AIM Constellation A - 0.47%. So just from looking at the above there is no rhyme or reason within even the same mutual fund company what the charge you, the small investor, for trading costs, I guess whatever they feel they can get away with. And remember the reserachers sais 427 for a $10,000 trade - most small investors are making smaller trads than $10,000 and probably paying even higher percentages for their small trades.
Seems quite obvious to me that the fee reporting reqiurements are totally inadequate and unfair to the open mutual fund investor - big and small. If you own or are thinking of owning open mutual funds (hey, I'm contrary and recommend owing closed-end funds traded on exchanges not by fund companies - commissions are also much lower) then you need to write or phone these open mutual fund companies and demand they clearly and simply post all their fees in their prospectus. By law all open mutual fund companies must send you a prospectus before you can buy any shares in the fund. If you see a very complicated and unintelligable account of fees (determined by the light of the moon) then you should call and ask the fund what are their fees (number's toll-free - go for it. If enough people start calling, then funds will change their tune about "hidden" fees and be more open. Hey, one fund company suddenly under the spotlight - Alliance Capital Management - agreed to cut fees by 20% on its stock and bond funds as part of its settlement with regulators - see there is hope!
Investors continue to pour billions into open mutual funds despite the scandals and fee ripoffs. But mutual fund comapnies now are very sensitive that they will lose a large number of their investors if they are tainted by the scandals and fee ripoffs - so strike while the iron is hot and demand improvements in fee disclosures from your mutual fund company - your retirement will be glad you did.
Here are three stocks I like this month and one is even look good for margining:
El Paso - (NYSE: EP, $6.79)
52 week: High - $9.89 - Low $5.57
EP I recommend again because gutsy investors see fundamental value (gas prices will go up,up,up) Just the value of the gas pipeline and production, makes the stock worth $14 a share.
MedImmune - (Nasdaq: MEDI, $23.00)
52 week: High - $42.09 - Low $20.77
MEDI had bad year due to FluMist flop - stock went down from 42 last June to around $23 now. But analysts figure Flu-Mist problems can be fixed and MEDI has strong other drug Synagis & drugs in clinical trials.
Microsoft - (Nasdaq: MSFT, $25.03)
52 week: High - $30.00 - Low $23.60
MSFT Stock very low - bad news of European fine figured in the stock - they're hear to stay and great long-term play.
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| INSIDE TRACK: Weekly Insider Report / By Jeff Williams |
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| Jeff Williams is a partner with http://www.insiderreview.com For the past seven years Jeff has done extensive investment research as a member of an institutional investment team. His background consists of a degree in Finance from the University of South Florida with a minor in Economics. Jeff's everyday activities as an insider stock analyst consist of analyzing data available through a multiple of sources as it applies to all publicly traded companies. With this information he can then make short-term and long-term evaluations on a company’s present and future performance based on insider buying patterns. Each month Jeff will share with you his thoughts on stocks he believes to display the most interesting insider buying patterns. |
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Interesting Buy Patterns
Open market insider trading activity for TGT 12/08/03 through 03/17/04
Target Corporation
Target Corporation is a general merchandise retailer in the United States comprised of three operating segments: Target, Mervyn's and Marshall Field's. Target is an upscale discount chain that aims to provide quality merchandise at attractive prices in clean, spacious and guest-friendly stores. As of February 1, 2003 (fiscal year end 2002), there were 1,147 Target stores operating in 48 states. Mervyn's is a promotional, middle market, neighborhood department store with 264 operating stores as of February 1, 2003. Marshall Field's is a traditional department store chain operating 64 stores in eight states as of February 1, 2003. The Company also offers credit to qualified guests in each of its business segments. These credit card programs strategically support Target's core retail operations and are an integral component of each business segment. In addition to its proprietary credit card programs, Target began a national rollout of the Target Visa credit card during 2001.
William W. George is the former Chairman of the Board and Chief Executive Officer of Medtronic, Inc., a therapeutic medical technology company. He joined Medtronic in 1989 as President and Chief Operating Officer. He was elected Chief Executive Officer in 1991 and Chairman of the Board in 1996. He retired from his position as Chief Executive Officer in April 2001 and as Chairman of the Board in April 2002. He is a director of The Goldman Sachs Group, Inc. and Novartis AG. He has been a director with TGT since 1993.
Impressive to see a director that has been with the company since 1993 buying so much stock. It is also noteworthy that this is by far the largest purchase that George has made. His previous largest purchase being 5,000 shares at $27 on 02/21/03. That trade worked out well. We suspect that George is once again buying because he sees solid business conditions going forward and a higher stock price in the coming months.
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| COMMODITIES: Weekly Commentary / By Guy Edrington |
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| Guy Edrington has been trading over 15 years. He is President of New World Trading Ltd. which publishes A Commodity Trading World and is registered with the NFA as a commodity trading advisory newsletter service. |
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On Sundays in Talking Points, we will be posting our end of Friday daily commentary on the U.S futures and commodities markets with our opinions as to which markets are trending, non trending, support, resistance and if we are bullish, bearish or neutral for Monday. If we have indicated that we have changed to bullish, take a closer look at that market to see if a buying opportunity exists on Monday
If there is a change to bullish or bearish pay closer attention to that market to look for opportunities. This commentary is based ONLY on charts and technical analysis.
Livestock
April Live Cattle are trending up. Watch for support at 8000 and resistance at 8250. Changed to bullish on February 23rd. Changed to neutral on February 11th.
Grains and Oilseeds May Corn is trending up. Watch for support at 2970 and resistance at 3040. Changed to bullish on March 09th. Changed to neutral on March 02nd.
Food and Fiber
May Cotton is trending down. Watch for support at 6375 and resistance at 6650. Changed to bearish on March 04th. Changed to neutral on March 02nd.
Metals
May Silver is trending up. Watch for support at 6920 and resistance at 7300. Changed to bullish on March 01st. Changed to neutral on February 20th.
Energy
April Natural Gas could be starting to trend up. Watch for support at 5490 and resistance at 5700. Changed to bullish on March 11th. Changed to neutral on March 08th.
Currency
June British Pound is trending down. Watch for support at 17765 and resistance at 18105. Changed to bearish on March 02nd. Changed to neutral on February 24th.
Interest Rates and Stock Index
June SP500 E Mini is trending down. Watch for support at 110100 and resistance at 112600. Changed to bearish on March 08th. Changed to bullish on March 04th.
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Disclaimer: The analysis is accurate to the best of our knowledge. All opinions and conclusions expressed in this report reflect the judgment of New World Trading Ltd. as of this date and are subject to change. This report and any views expressed herein are provided for information purposes only and should not be construed in any way as an inducement by New World Trading Ltd to buy or sell any futures or option mentioned. New World Trading Ltd does not accept any liability for loss or damage howsoever caused to anyone trading futures or options in reliance upon such information. New World Trading Ltd, its officers and/or employees and/or affiliates may or may not have positions for their own account in the futures and/or options contracts referred to herein. There is a high risk of loss in futures trading.There is a high risk of loss in trading futures and options.
Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site or newsletter. The past performance of any trading system or methodology is not necessarily indicative of future results.
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Do you have comments, thoughts or opinions on Talking Points that you would like to share? Email them to letters@talking-points.com.
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Weekly Stock Picks From Bob Coppo - New Feature!
Bob Coppo's picks will return next week
Good Trading!
Bob Coppo is Managing Director and Chief Technical Analyst for JNL Financial Consultants, Inc. The company has operated StockmarketTimer.com on the internet since 1997 and provides investment advice to both individual and institutional clients. Make sure to visit his site, StockMarketTimer.com.
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1. DYN (Dynegy Inc., Oil and Gas Operations) $3.63 - Buy. We lead off this week's Fresh Picks familiar name for those subscribers who have been with us for the last couple years - Dynergy. Those who can't shake the memory of Enron and the power-trading scandals of the last several years will also remember this one as a scrapper who survived the mess through restructuring, slimming down, and re-focusing its business model. Dynegy Inc. owns operating divisions engaged in power generation, natural gas liquids and regulated energy delivery. The Company is in the process of restructuring. This includes the sale of Northern Natural Gas Company, the sale of United Kingdom natural gas storage business, the sale of its global liquids business, major progress toward its exit from the third-party marketing and trading, or customer risk management business, including the completion of its exit from European marketing and trading and the transition of ChevronTexaco Corporation's natural gas marketing business back to ChevronTexaco and the reduction in associated collateral requirements. Last week, DYN was forced to revisit the painful days of the scandals as a former DYN midlevel tax executive, who helped engineer the complicated Alpha transaction, which disguised a $300 million loan as cash flow in an effort to burnish the company's finances, was sentenced to 24 years in prison - one of the longest sentences for a white-collar crime in recent memory. We see the news as a good time to revisit the stock, as the ugly trial is now concluded with the company improving its fundamentals and continuing to plow forward. For the fiscal year ended 12/31/03, revenues rose 9% to $5.79 billion while net income from continuing operations totaled $539 million vs. a loss of $1.68 billion. The numbers leave DYN with a trailing price to earnings ratio of just 3.95 and with attractive price-to-book and price-to-sales ratios of 0.64 and 0.23 respectively. The stock now trades in the middle of its 52-week range, but looking at the chart we get a sense the trend will be turning higher here following Friday's nice gain on heavy volume. With the MACD sitting right on the trend line and an RSI and stochastic showing oversold, the stock bounced nicely off support at $3.40 last week. That support level has held steady four times since September 2003. We are hopeful that the court ruling last week will put DYN back on investors' and traders' positive radars. The stock has pretty much sold off since mid-January when it peaked at $5.30, with the selling having accelerated over the last month, leaving very little in the way of overhead resistance. The first test will be the February low of $3.91. A positive move Monday would put the stock back above its 13-day MA of $3.66, a bullish sign that would add some backing to our conviction here. We would use the $3.91 level as an initial target, with a stop trigger just below support at $3.38. There's also a lot of shares still short out there, which add fuel to the fire for a nice pop off this bottom if those traders feel its time to cover. Short-term price target: $3.91 (8% gain) Stop loss trigger: $3.38 (7% loss)
2. MSFT (Microsoft Corporation , Software and Programming) $25.03 - Buy. It's not often we look too close at blue chip techs like MSFT, but the chart here just looks too good to pass up. Microsoft Corporation develops, manufactures, licenses and supports a wide range of software products for various computing devices. The Company's software products include scalable operating systems for servers, personal computers (PCs) and intelligent devices; server applications for client/server environments; information worker productivity applications; business solutions applications, and software development tools. They are without a doubt the one true bellweather of tech. We love the fundamentals here, and see this as a great long-term hold candidate, but for the purpose of this Fresh Pick, we are looking at it strictly as a chart-based trading play following a nice correction in the Nasdaq. Last week MSFT hit a low of $24.01, breaking below the low it set in November 2003 of $24.84, on news of a $500 million fine in Europe. To Microsoft, $500 million is an easily absorbable amount, considering the company's cash position of $52.78 BILLION and $0 debt. The news and the market trend as a whole put MSFT on our radar as a buy late last week, and the stock turned around nicely off the bottom on Wednesday and Thursday. Friday saw a bit of a pullback, which we view as a nice entry point, as the close still came in above the 13-day MA. The MACD has is turning up here and is sitting right on the line, with the stock still mildly oversold. We'd look for an initial move toward the 50-day MA of $26.54 as our first target point. For a longer hold, we'd look toward resistance around $27. We'd also use Tuesday's low of $24.01 as our stop. Short-term price target: $26.54 (6% gain) Stop loss trigger (if bought at current price): $24.01 (4% loss)
As always, do your own research before buying or selling any security. Our recommendations are for informational purposes only and are only our opinions. Make sure to read our Disclaimer
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Online issues can be found at
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and click on the "Past Issues" menu item.
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1. We are not brokers, investment advisors, or securities dealers. Our newsletter is provided as our personal opinions and are for informational purposes only.
2. Information on our website may contain "forward looking statements" as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.
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Our Picks
The stocks profiled on Talking-Points.com are only the opinions of Talking-Points.com and its representatives. These opinions are based on our research, which may be extensive or limited, done on each individual stock. Our sources include, but are not limited to, online research, company profiles, member suggestions, past performance, magazines, newspapers, analyst suggestions, broker recommendations, contact with the company, company rumors, and other similar information sources. All opinions are based on information that is accessible by the public.
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Investing in stocks involves risk. You should consult a qualified financial advisor or stock broker before making any decisions to invest. Stocks reviewed on this website or through email are for informational purposes only. You should do your own thorough research before making any investment decisions.
Accuracy of Information is not Guaranteed
Talking-Points.com works to verify the accuracy of all information contained on its website but does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Talking-Points.com does not represent itself to be, nor is it a registered investment advisor or stock broker. As advised before, you should do your own research before making any investment decisions. Past performance of stocks profiled on this website is not a guarantee as to future performance. The performance of other members choosing to invest in any stocks profiled on this site may or may not be an indication as to your performance.
Our Positions in the Stocks Mentioned
Talking-Points.com and its representatives reserve the right to buy and sell any stock mentioned on this web site. Talking-Points.com reserves the right to buy or sell any of these profiled stocks before, during and immediately after they are posted to the site. Talking-Points.com is not responsible for any gains or losses incurred do to investing in these opinions.
Our Relationship to You as a Subscriber
Obtaining a subscription to the emailed newsletter does not in any way create any principle-agent relationship between Talking-Points.com and the recipient. Receipt of the recommended stocks, either via email, or directly from our website, is not in any way a recommendation to buy or sell but is just the opinion of StockTalkReport.com and its representatives and should be used for informational purposes only.
Compensation Received if Any
As in compliance with the 1933 Securities Act Sect. 17 (b) any and all compensation received from a company is publicly stated.
Forward Looking Statements
Information presented on the Talking-Points.com web site and supplied through the newsletter may contain "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact and may be "forward looking statements." Forward looking statements are based on expectations, estimates and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through the use of words such as "projects", "foresee", "expects'", "will," "anticipates," "estimates," "believes," "understands" or that by statements indicating certain actions "may," "could," or "might" occur.
General Risks, Research and Types of Orders
Short-term trading can be extremely risky. It is highly recommended that when ever making a decision to buy or sell you use limit orders. As with any investment decision, careful research should be done before making any decision to invest. As with any decision to invest it is usually recommended that you use limit orders, especially in fast moving, volatile stocks. You should only invest money that you are willing to lose. We also encourage you to read up on the SEC policies regarding online newsletters. Also before investing online please visit the Securities Exchanges Commission website and read about how to avoid internet scams.
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