Day Five of the Bull?

The markets go for a fifth day of gains. But were they able to make it? The Asian markets start off with mixed gains but up in the green. Europe continues the rally making solid gains in all indecies. But as for the U.S., it looks like the train just ran out of steam.

Despite week economic news and the report that AIG is giving out bonuses with tax payer money, the U.S. indecies marched upwards. However, that was short lived. As of the closing bell, all indecies ended negative.

Standing news is that President Obama has ordered that every legal avenue be explored to block the AIG bonuses.

Asia:
Nikkei => 7,704.15, +134.87, +1.78%
Hang Seng => 12,976.71, +450.91, +3.60%
Straits Times => 1,586.32, +8.80, +0.56%

Europe:
FTSE => 3,863.99, +110.31, +2.94%
DAX => 4,044.54, +90.94, +2.30%
CAC => 2,791.66, +86.03, +3.18%

US:
Dow => 7,216.97, -7.01, -0.10%
Nasdaq => 1,404.02, -27.48, -1.92%
S&P => 753.89, -2.66, -0.35%

Me:
AMD => 2.48, -0.04
F => 2.10, -0.09
NG => 2.40, -0.06
FPL DI => 3.60, +1.16

Looking into the technicals of this rally, it looks like the bull is about to be slaughtered by the bear. And here are the reasons why.

• We had 4 full days of overall gains in the U.S. market.
• The Dow has put in what appears to be a grave stone doji,
• The S&P is more of an inverted hammer (but it might as well be a grave stone), and
• The Nasdaq put in a solid bullish engulfing.
• None of the indices broke above the 50 point threshold of the RSI indicator.
• We have the stochastics and MACD of all three indices approaching oversold levels, plus the MACD is under the zero line as it has been the entire rally. So if you are not in the market now, it's too late anyway.

What is the market going to do tomorrow. I predict a 10% chance of a big rally, 30% chance of stagnant movement, but a 60% chance of the bears taking over. Time for me to analyze and put in a few put plays for the coming week.

That is my opinion, you can take it or leave it.

Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.

A Fourth Day of Gains: Bull Market or Head Fake?

Today, Wall Street put in a fourth day of gains. This is the market in review.

Friday the 13th wasn't a day of bad luck as it is touted to be. Overall all the markets did okay. Starting in Asia all indecies made solid gains over 4%. In Europe, only the DAX came under the wire, but only by a hair. With a five more minutes it might have gotten there. And the U.S., although diving at mid-day, ended the day with all indecies fractionally higher than yesterday.

Asia:
Nikkei => 7,569.28, +371.03, +5.15%
Hang Seng => 12,525.80, +524.27, +4.37%
Straits Times => 1,577.52, +83.99, +5.62%

Europe:
FTSE => 3,753.68, +41.62, +1.12%
DAX => 3,953.60, -2.62, -0.07%
CAC => 2,705.63, +11.38, +0.42%

U.S.:
Dow => 7,223.98, +53.92, +0.75%
Nasdaq => 1,431.50, +5.40, +0.38%
S&P => 756.55, +5.81, +0.77%

As For Me:
AMD => 2.52, +0.12
AMD DG => 0.20, +0.08 (Sold to Close @ 0.20)
F => 2.19, +0.09
FPL DI => 2.44, +0.09
NG => 2.46, -0.02

I sold out of the AMD $3Apr09Call (AMD DG) because it finally returned to profitability. Now why would I sell out of it now that it has returned to profitability? That is because $2.50 is a resistance zone for AMD since January 5th when, on huge volume, it broke over it for a few days. It has since then attempted to break over it about 6 times and failed. Today was the first time it has exceeded $2.50 but it retreated back towards it before the market closed. That kind of activity indicates that those who purchased it back in early January were selling it off.

In addition, the Stochastic indicator shows that it is nearing the 70 mark where it retreated from previously. Also, the MACD has exceeded its most recent apex. Such things at the top of a move indicate that momentum may soon reverse. And since the options are more volatile than the stock, I am not willing to risk the gains I have made.

I have, however, a sold $3Apr09Call against my current stock position (Covered Calls) that I picked up back on February 25th. I will be holding on to AMD from this point on, adding to my position on pull backs.

Speaking of Covered Calls, I also sold a $3Apr09Call against my Ford (F) position. This was done for much of the same reasons that I did it against AMD. Ford stock is nearing the top of an upward channel, the stochastic and MACD are high, and I intend on adding to my position on pull backs.

I see both Ford (F) and AMD (AMD) as viable companies, and their stock prices affordable. I also see the potential for more gains on this movement. Although it might get up to three dollars a share before the third Friday of April, I think it will pulling back below $3 before option expiration.

Nova Gold (NG) is another stock that I am trying to sell Covered Calls against. However, the next option available is the $5Apr09Call and it has not reached a price that I would like to sell at.

What can we expect for next week? Technically speaking, there is still plenty of upside left for this swing. However, if history is any kind of witness, and it usually is, There will be a pull back day coming. How strong that day is, will speak volumes about the future of the market.

If the pull back wipes out two or more days of gains, we can expect that the bottom was not quite reached and the prediction of 5000 for the Dow is still probable. If the pull back wipes out gains in small increments before putting in more days like this week, then we just might have seen the worst of it.

That is my opinion, you can take it or leave it.

Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.

Bear Market Rally Extends for Third Day

Economic bad news continues to come in and the market just shrugs it off. Is the bear market over?

Jobless claims rise as retail sales slip. Here we have another revision to the jobless claim numbers. The total number of claims is now at 5.3 million. This is the sixth time in seven weeks that a new high has been set. More job cuts were anounced.

The Commerce Department said that the retail sails fell by 0.1 percent. This is less than the 0.5 percent that analysts expected. But the government indicated that the January performance was up 1.8 percent, only 1 percent was expected.

We also have news about business inventory. It was reported that it was cut again in January for the fifth straigh time. Yet the market did not responde negatively to this.

What the market did was rise because the news from GM was promissing. GM told the Obama administration that it will not be in need of government aid as soon as they though because their cost cuts are taking hold.

Also, Standard & Poors cut GE's rating to AA but indicated that no further cuts are being considered. Investors were reported to have expected a deeper downgrade. This looked promissing to them. And the market rallied.

Fed reports record fall in household net worth. But that bad news was about the 4th quarter of 2008. I guess it is true that the news gets built into the price. Because these numbers were over two months old. The market completely ignored it. And the market continued to rally.

Asia:
Nikkei => 7,198.25, -177.87, -2.41%
Hang Seng => 12,001.53, +70.87, +0.59%
Straits Times => 1,493.53, -11.98, -0.80%

Europe:
FTSE => 3,712.06, +18.25, +0.49%
DAX => 3,956.22, +42.12, +1.08%
CAC => 2,694.25, +20.05, +0.75%

U.S.:
Dow => 7,170.06, +239.66, +3.46%
Nasdaq => 1,426.10, +54.46, +3.97%
S&P => 750.74, +29.38, +4.07%

My Portfolio:
AMD => 2.40, +0.09
AMD DG => 0.12, unchanged
F => 2.10, +0.14
FPL DI => 2.35, +.025
MIPS => 2.44 +0.07 (Stop @ 2.33, Sold @ 2.44)
NG => 2.48, -0.12

So, what do we have? We have a third day of gains in the market. The second time in three days that the U.S. market put in more than 3% in gains. Is the bear market over? Don't be silly.

Take a look at the three indexes. This isn't the first time that the market has put in repeated gains or has turned upward. For instance, the Dow put in 5 consecutive market days of gains between November 21-28 of 2008, over 1200 points. Yet the following day, gave back 600+ points. So is the bear market over? Not in the least.

The only way we will know if the bear market is over is when there are more positive days with gains averaging higher than the losses of the negative days which should be fewer and in between. When that happens we should see the most recent closing bottom (support) tested and rejected and then the previous ceilings (resistance) tested and blown through to create new supports to be tested and rejected.

At least two of these and we can say yes this was a bottom. But the chances are we will see the past bottoms (Dow 6500, Nasdaq 1260, S&P 675) retested before the ceilings are tested and broken. What I will say is that responsibility is returning to market, and we may see some stagnation until jobless claims slow and more companies report profits. But be prepared to jump off the bull, and onto the bear, at a moments notice.

That is my opinion, you can take it or leave it.

Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.

Wall Street Extends Rally Despite Mid-day Fizzle, "Bearly".

Following the big "blip" on Wall Street yesterday, the international markets followed suite today. But the international rally was incomplete. Although the Asian market and most of Europe ended in the green, the FTSE couldn't sustain the rally and slide back into the red.

Mimicing the FTSE, the second day of U.S. market's rally fizzled out into the red during mid-day trading. Then the Wall Street bulls made a heroic charge in the last two hours of trading to end the day with the major U.S. indecies in the green, although only fractionally.

Asia:
Nikkei => 7,376.12, +321.14, +4.55%
Hang Seng => 11,930.66, +236.61, +2.02%
Straits Times => 1,505.51, +19.76,+1.33%

Europe:
FTSE => 3,693.81, -21.42, -0.58%
DAX => 3,914.10, +27.12, +0.70%
CAC => 2,674.20, +10.52, +0.39%

U.S.:
Dow => 6,930.40, +3.91, +0.06%
Nasdaq => 1,371.64, +13.36, +0.98%
S&P => 721.36, +1.76, +0.24%

Me:
AMD => $2.31, -0.01
AMD DG => $0.12, +0.01
BKC PX => Sold to Close @ $1.45
F => $1.96, +0.04 Bought @ $1.9150
FPL DI => $2.10, +0.25 (Bought to Open @ $1.85)
MIPS => $2.37, +0.01
NG => $2.60, +0.17

My put on BKC got stopped out. However, it looks like BKC ended with a bearish harami, and both the stochastic and MACD turning down from overbought conditions. I might get back into it tomorrow.

I got into F under consideration that it will most likely be the only one of the Big 3 to survive in it's present condition. This time I will not be setting a tight stop on it.

I got into a call option for FPL because mathematically the candlesticks are for a bullish engulfing, however they are not properly positioned. The stochastic and MACD are both extremely oversold and showing signs of turning. So far this position has profited today from an intra-day purchase right after the market open.

That is my opinion, you can take it or leave it.

Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.

Powerful Bear Market Rally on Leaked Memo

Wow, what a day. After a seesaw day yesterday, the indecies made a powerful move to the upside today on some very interesting news.

Asia:
Nikkei => 7,054.98, -31.05, -0.44%
Hang Seng => 11,694.05, +349.47, +3.08%
Straits Times => 1,485.75, +28.80, +1.98%

Europe:
FTSE => 3,715.23, +172.83, +4.88%
DAX => 3,886.98, +194.95, +5.28%
CAC => 2,663.68, +144.39, +5.73%

U.S.:
Dow => 6,926.49, +379.44, +5.80%
Nasdaq => 1,358.28, +89.64, +7.07%
S&P => 719.60, +43.07, +6.37%

As for me:
AMD =>$2.32, +0.18
MIPS => $2.36, +0.17
NG => $2.43, -0.11
AMD DG => $0.11, +0.01
BKC PX => $2.15

First, a memo was leaked indicating that Citigroup Inc operated with a profit for both January and February of this year. A surprising announcement considering the billions of dollars in government aid they have taken even up to the end of February.

So, if they truly are making a profit and can afford to give out some sort of bonus' to their Smith Barney fund managers, then why are they being given any aid at all. Why did the U.S. Government have to take a 36% stake in the company. Maybe if they had disclosed that they made been making a profit their stock price would not have dipped below $1.

So, the question arises, is it time to start considering Citigroup Inc. for a stock position? Only if you are a speculator. The stock price is well below all the commonly followed moving-averages (20/50/200), there has been no recognizable or significant candlestick patterns, the RSI is only now moving back up after being beaten below 30 points.

But on the side of speculators, the Chaikin Money Flow indicator is showing that volume is becoming less negative, the Stochastic and MACD indicators show that it is very oversold but turning.

So what am I doing? I am sitting on the side lines. I am going to wait for a pull back and an indication that this pop wasn't a one time thing.

Second, U.S. Rep. Barney Frank, chairman of the House financial services committee, said that the up-tick rule, intended to hinder shorting stocks unless they first moved up in price, may be reinstated within a month from now.

Well it looks like all the discussions on the financial media outlets have been heard. 'Bout time!

That is my opinion, you can take it or leave it.

Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.

Seesaw Day Ending Down

It was a seesaw of a day. The U.S. markets opened lower on sentiment with the international markets, but rallied shortly afterwards on news merger and acquisition news. A late rally in the European markets also followed this news.

Asia:
Nikkei => 7,086.03, -87.07, -1.21%
Hang Seng => 11,344.58, -576.94, -4.84%
Straits Times => 1,456.95, -56.17, -3.71%

Europe:
FTSE => 3,542.40, +11.67, +0.33%
DAX => 3,692.03, +25.62, +0.70%
CAC => 2,519.29, -15.16, -0.60%

U.S.:
Dow => 6,547.05, -79.89, -1.21%
Nasdaq => 1,268.64, -25.21, -1.95%
S&P => 676.53, -6.85, -1.00%

As for me:
AMD => 2.14, unchanged
MIPS => 2.19, +0.06
NG => 2.54, -0.16
AMD DG => 0.10, +0.01
BKC PX => 2.15, +0.15

The Top Headlines of the Day:
Upon the open the U.S. markets rallied to the plus side on news that Merck successfully bought Schering-Plough for $41.1 billion. In addition, President Obama repealed President George W. Bush's act banning government funding of stem cell research using frozen embryos that would have been destroyed anyway.

Some pharmaceutical companies that I watch posted gains on this news. For instance Genentech Inc. (DNA) posted additional gains (92.63, +1.77) on top of the enormous gains it made last Friday when it was rumored that the repeal would occur today (Correction, this was on the buyout move of Roche). Others posted modes gains after gaping up, like Geron Corp. (GERN, 4.51, +0.64) and Stemcells Inc. (STEM, 1.98, +0.60). Of course, debates about the ethics of using frozen embryos continues.

Maybe the Republicans should consider these embryos in the same honor and respect that they consider the soldiers who died and were maimed for this country. Or maybe the Democrats should consider the soldiers in the same light that they consider the embryos. From my perspective, a loss of human life is a loss of human life, whether it is by enlistment, draft, or parental consent. It is like two neighbors straddling the same fence but leaning to either side and trying to make the other lean in the same way. They are both still straddling the fence.

That is my opinion, you can take it or leave it.

Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.

The People Watch the Watchmen

Apparently a lot of people watch the Watchmen. This weekend, so far, Watchmen brought in a gross of $55,655,000 at 3,611 theaters for an average of $15,413 per theater in only 3 days as of 7:00 PM, Sunday, March 8th, 2009. The company that distributes this movie is Warner Brothers, a subsidiary of Time Warner Inc. (TWX)

Current TWX is priced at $7.47 per share with weak relative strength and oversold conditions in both Stochastic and MACD. The Stochastic and the MACD, however, show signs of reversal. Also, the price movements of the past two days just barely illustrates a bullish engulfing candlestick pattern. Not very promising in my opinion, but there is some probability.

I am not one to put a lot of money on a stock that has low probabilities but I am more likely to put money on the options for it. The 7.00APR09 call option is just in-the-money (ITM) and costs $0.86 per contract share with a Bid/Ask of 0.85/0.90. The 8.00APR09 put option is just ITM and costs $1.00 per contract share with a Bid/Ask of 0.90/0.95.

I won't be playing this, but I will be watching it for future reference as to the effect of box office earnings on the stock.

Investor's Opinion: Who watches the Watchmen?

That is my opinion, you can take it or leave it.

Disclaimer: I am not a stock broker; I am not a financial advisor; I am not recommending to you what to buy or sell. I am just an opinionated investor. If you decide to follow in my footsteps you are taking risk. It is inevitable that I may be wrong. So if you are going to follow in my footsteps that is your own personal decision. I am not responsible for any loss that you may, and probably will, incur regardless of my opinion.