Peter Schiff Part 2

Among all the "Peter Schiff was right" videos on Youtube, I found this one, a client of his complaining about huge losses.






As I posted earlier this week, Mish posted a "Peter Schiff was wrong" post last weekend. I do not wish to get into the middle of the controversy, but it does illustrate something that is absolutely vital to being a successful investor - knowing when you are wrong, admitting it quickly, and getting out. Schiff apparently has his clients in foreign stocks which are getting crushed worse than U.S. stocks are, and they are taking huge losses. Schiff insists that the situation will reverse, but if he is wrong, his clients' money is gone. the lesson is, preserve capital, live to fight another day.

Earnings Summary Week of Jan 24

There were four stocks on the earnings spreadsheet reporting last week. GHM was not in the Wall Street Journal's earnings report, so I will not update that until I have some verifiable numbers. RFIL, RMTR, and TRCR all reported quarters of negative earnings growth.

The relative strength spreadsheet is updated and uploaded. The earnings sheet should be done early tomorrow.

Relative Strength Scans

Here are the preliminary results of this week's relative strength scan. There are 149 stocks that are in the top 25% of their 52 week high-low range. Click on the picture to enlarge it.

IBD 100

As you may remember, I missed IBD last week and wasn't able to track the IBD 100 this week, so these charts are a little rushed. NFLX was last week's big gainer, and is a textbook breakout, although it didn't appear on the new highs list, so I would asssume it's not at a 52 week high. In december it formed a low handle, which it broke out of in mediocre volume, made a nice move up, then formed another handle, which it broke out of in huge volume (probably earnings). This could easily pull back to support, which would be an ideal entry point. (I forgot to put the blue arrow on last friday's close, out of practice).

CFL was the second biggest gainer, it is a recent IPO and doesn't have a lot of trading history, but it does appear to be building a base. Last Friday it was bouncing off support and would have been a good entry point. Relative strength stayed flat while price was declining. CMF has gone negative, but I don't know how much you can read into that with a stock that has been trading this short a period.

LHCG was last week's big decliner. Earlier this month there was a big down day on high volume (probably earnings), but there was a lot of late buying that looked pretty encouraging. However, this gave a warning when it couldn't stay above the 50dma, and the high volume selling that started last Friday was a clear sign to get out. Unfortunately, relative strength did not give a warning here, as it hit a new high just before the price caved in.

RNT was the second biggest decliner, and shows the value of stop loss orders. This gave virtually no warning before dropping, and actually had a pretty bullish looking pattern, with the 50d-200dma cross, high CMF and relative strength, and support at the 50dma. I don't know what the catalyst was for the selling (it doesn't look like earnings), but it's important to get out when things don't look right.

I was actually prepared not to do an IBD 100 post this morning, so I will have the preliminary results of the relative strength scan within a couple of hours, and may look at some charts later tonight.

Friday New Highs

Friday's new highs, sorted by industry.

Today's high volume advancers from the relative strength list.


And the decliners.




And a Friday bonus.

January Ends With A Whimper

The first month of 2009 is in the books, and was it ever ugly. A couple of bull traps managed to suck in some buyers, giving the big guys a chance to sell, and they did. The change of administrations was widely pumped as a reason for a rally, but it is becoming cleaqr that the incoming administration doesn't have any better handle on what's going on than the outgoing. At least we don't have Paulson to kick around anymore. Professor Bernanke is rapidly running out of options, and he may end up doing what he should have done in the first place: Stay out and let the correction unfold. The government is going to need a lot of resources to take care of the displaced workforce that is rapidly growing, but they've blown it in a failed attemot to prop up the financial system.

The SPX came very close to testing 818 in the afternoon. It is becoming apparent that it is forming a symmetrical triangle pattern, which usually resolves in the same direction it started, although they also have many head fake breakouts and breakdowns, so don't jump in at the first break.

The Same pattern is showing up in the Nasdaq. This one is going to resolve sooner, so it will probably be the index that leads up or down. Despite a drop in the last two days, the relative strength with the SPX is still pointed up.

The Russell 2000 does not have quite a symmetrical pattern, but close. It is also close to breaking the lower line. Relative strength is weakening, which is not encouraging at all. This has outperformed during every rally this year, and severly underperforms during the drops.

XLB, basic materials, was the weak sector today. Gold and silver miners, the strongest performing industry since it hit bottom in October, is in this sector, but the other industries have just been getting creamed. Notice that the triangle here has been broken on the downside.


USO, in the fund summary on yahoo finance, states that it attempts to track the spot price of West Texas Intermediate crude (WTIC). It doesn't loook to me like it tracks it that closely, but it does appear to have strong support around 28 and may be carving out a bottom. It's hard to imagine oil going any lower than it has, but if demand keeps dropping, we are running out of placess to store it.

An 8.8% drop in the Dow industrials for the month is a tough way to start the year. We now have 2 consecutive quarters of declining growth, so the Luskins of the world can stop arguing about there not being a recession. The worst part is, today's 3.8% decline in GDP will likely be revised downward. Ouch.

I'll have the new highs update shortly.

NJR

A very unimpressive breakout attempt. Volume was low, CMF is in decline, and relative strength is weakening. Unfortunately, among the new highs, this was probably the best looking chart.

PAR

Here is another stock that finviz says hit a new high, since it didn't enter the database until December of last year (about where the blue arrow is). It was traded on the NYSE ARCA, then got listed on the big board last month, which is when it entered Finviz's database. If we get a major rally where we are getting dozens of new highs every day, it is going to be a lot harder for me to ferret these out. Anyway, this is a decent looking chart, with relative strength rising.

Inferno Friday

GDP numbers came in this morning, and GDP shrank by 3.8%. The market has reacted accordingly, going right into the tank. As I am writing, the SPX is bouncing off 833. The biggest level to watch here is 818, if we can stay above there, we have a chance, if not, all hell could break loose. The only strength in the market is in XLE and XLU, weakness in XLP and XLB. Financials, for once, are not the big movers today. The yields on the long bonds are up again, another anomaly. I'm starting to suspect that the bond market is daring Big Ben to start buying treasuries.

I have 6 new highs, with one breakout, NJR, a utility, but it's not getting volume and looks like it will fail.

On the earnings sheet, TESS was scheduled to report this morning, and is down 25%. GHM reported, and is up about 1%. RMTR reported yesterday and is down 15%. So far, this earnings season has been pretty brutal.

Thursday New Highs

Thursday new highs, sorted by industry. I mentioned EAG last night, it is very difficult to find any information on it, but it really isn't one of the "leadership" type stocks we are looking for anyway.

The big volume movers from the relative strength list, first the advancers...


.....and the decliners. What is odd is that the biggest recipients of high relative volume did not move much.

Among the avalanche of news, it seems that Charlie Gasbag, er, Gasparino dropped the "F" bomb on CNBC today. I haven't had the ambition to see if it's on Youtube yet, but I'll bet it's there.

Giving It All Back

I don't know what triggeered the reversal today. It could have been the passage of the "stimulus" in the House (with zero Republican votes), or perhaps that unemployment claims are at record highs, or new home sales at record lows, or maybe just people seeing yesterday's strength as an opportunity to get out. Whatever it was, we dropped below 857 rapidly, and never could get back above it. We did get one positive: low volume.

The industrials got rejected at their pivot and headed down. For whatever reason, perhaps just exhaustion, these did not go down as much as the rest of the market today. Low volume here is also a saving grace.

The Nasdaq 100 are still above the 50dma, and today's carnage actually doesn't look bad here. That relative strength this has been showing is pretty incredible. AMZN reported after hours, and is trading up, so this will probably lead tomorrow.

The Russell 2000 is weakening relative to the SPX, and the trend is getting stronger. Big Caps seem to be leading right now, and a lot of it is the financials coming off bottoms. There really isn't "leadership" in the IBD sense of the term, meaning strong stocks with high earnings growth breaking out of sound bases.


Gold and silver miners are the only industry in a real uptrend. These got thoroughly trashed during the summer months, hit bottom in October, and are now headed up. This has been going on long enough that it can't be dismissed as an oversold bounce. Gold especially has held up fairly well when the dollar strengthen and trashed the rest of the commodities.

The "Stimulus" seems to be nothing more than several Congresscritters' pet projects being funded. I haven't looked at the details yet (I'm not that desperate for reading material) but I have heard it includes funding for STD prevention. Just what are they trying to stimulate here?

TRCR, which reported this morning, ended up for the day almost 3%. RMTR reported after the close, but has not traded after hours.

COCO

Trying to follow on tom a recent breakout, this just picked a bad day, although volume was a little on the low side. Just a very nasty reversal.

THM

This was the biggest mover on the new highs list. This is an AMEX small cap gold miner, which means I trust it about as far as I can throw it. This is a nice pattern, with good volume today, high relative strength, and decent accumulation.

Clueless Thursday

The market came under pressure this morning as our leadership is speaking out about the "bad bank" concept, and it is apparent they have no clue what they are doing. Here is a quote from Barney Frank, chairman of the House banking committee and past winner of the Idiot of the Week award:

"It has to be done quickly," said House Financial Services Chairman Barney Frank (D., Mass.), when asked Wednesday about the concept. "There are a variety of ideas, and this is something they should focus on."

Translation: "We have to get this done before the public finds out just how clueless we are and revolt."

So far, Geithner hasn't impressed me, he is dangerously close to being Paulson Jr. And the idea that we should be forcing banks, many of which are on the precipice because of making bad loans, to make more bad loans just seems insane to me. But what do I know.

The markets and the dollar are doing their dance again, dollar up, market down. Here is the last 10 days of the dollar index.

The SPX dropped to just below 857 (hitting 854) and is trying to wwork it;s way back up. Downside testing isn't much of a surprise here, and so far we are holding. XLU is green, everything else is red, with XLF down 4%, but they are improving.

I have 7 new highs so far, with one breakout, MRGE. COCO is probably the best looking chart of the bunch.

TRCR reported this morning and is down about 1%. RMTR is reporting after market close.

Wednesday New Highs

Wednesday's new highs. There is a descrepancy with EAG, finviz says it is at a new high, but stockcharts.com says it is not. I will attempt to straighten it out tomorrow.

Relative strength scan stocks with high relative volume. These are the advancers.....


And the decliners.

I have the following stocks confirmed to report tomorrow: RMTR and TRCR

Fed Sees Second Half Recovery, And Other Fairy Tales

857 was the looming resistance yesterday, and this morning it sat right below the 50dma, so we had the double whammy of resistance there, and I suspect a lot of traders were looking to go short. In true Paulson fashion, the Obama administration announced that it is considering a "bad bank" which will buy the toxic assetts from the rest of the banks and clear their books, sort of Enron style (I guess if the government does it, it's legal). 857 fell immediately at the open, then we blew paswt the 50dma and rallied into the Fed announcement, which turned out to be a non-event. Noramlly Fed announcements result in a rush of volume and great volatility, but there was little of that today. We ended up finishing the day just above where we were before the announcement. The SPX is now in the upper area of the trading range, and has new pivots to deal with. The 50dma now markes the boundary between upper and lower ranges, and it is pretty critical to stay above that.

The rush in volume was even lower on the Nasdaq. It's 50dma fell early as well, and has only one real resistance level to get through before retesting the recent high. Notice on the indexes we are close to anothe MACD crossover, further illustrating the uselessness of MACD in a trading range.

The Russell 2000 has also entered the upper range. I suspect that this will be the first to retest the previous high (if we get that far). It has been performinmg about on par with the SPX.

As usual, the financials were the big benefactor of the taxpayers' largesse. Shorts had to be scrambling to cover here. As I watched during the day, this did not seem to be moving as much as the other sectors afteer the fed decision. I don't know if that had any significance, or was just a figment of my imagination. As I mentioned earlier, I got a sudden headache, fell asleep, and have been a bit groggy ever since.

The U.S. Dollar index. I'm going to try to stay out of the Mish-Schiff debate, but this does not look like hyperinflation to me. I suppose this could collapse at any time, but the trend is clearly up. Professor Bernanke has a real world opportunity to test his thesis on deflation. For our sake, I sure hope he isn't wrong.

I'm pressed for time (usual for Wednesdays) so I'll be back with an update in about 3 hours.

SIGA

Despite the rally today, there were only 12 new highs (one is in dispute, I'll mention it in the new highs update), and only one real breakout. SIGA formed a classic double bottom, which means I usually miss the breakout point until it gets to a new high. The breakout point here is 3.6, and as you can see, it did try to break out early this month, only to pull back into a handle. It then broke out on low volume, but made a high volume move 2 days later. today it hit a new high on high volume and looks poised to go higher. CMF shows a lot of accumulation, and relative strength hit a new high and kept going up as this was forming the handle, a clear sign a breakout is imminent.

FOMC Decision

The FOMC has released their decision, and the market is rallying further off it. The Fed will hold rates steady and "stand ready to help financial markets". Apparently part of that help will be buying the long treaduries and forcing rates down.

Shortly after my post this morning I developed a splitting headache and went to lay down, and apparently fell asleep, for how long I have no idea. I'm still pretty groggy, but the headache is gone, but I'm not all there right now. I'll try to pull myself together before the close.

Won't Get Fooled Again

We blew right past 857 at the open. If you haven't heard, reports are that the Obama administration is going to set up a "bad bank", presumably to buy up bad assetts and clear the banks' balance sheets. I'm confused, isn't that what the TARP was for? Anyway, long term this may be a disaster, but short term, it looks like it's rally time! Get those CNBC cheerleaders on the field! The financials are getting yet another huge bounce, XLF up 9%. The defensive sectors, XLP, XLU, XLV are weak today.

Lots of new highs today as well. SXL appears to be following through on yesterday's breakout attempt. SPH has a promising looking chart. NCIT is trying to break out, but not getting volume.

I have a ton of earnings reports from the last couple of days, so I'll be spending a good part of the morning (it's still morning here) going through those. There is nothing on the earnings spreadsheet reporting today. Of course, I'll be keeping an eye on things and report anything important.

I'm getting a bad feeling about this.Meet the new boss, same as the old boss.

Tuesday New Highs

Tuesday's new highs, sorted by industry. No real trend developing here.

These are the big volume movers from the relative strength list. These are the stocks that advanced....


....and these are the decliners. I haven't had a chance to go through the charts, so I will leave that up to you. CVTX is possible acquisition.

Waiting For The Fed To Do Nothing

Volume dropped off a cliff today. I discovered that tomorrow is Fed day, although, I can't imagine anything that the Fed will do that will change anything. We didn't really accomplish much today, nor did we do any damage. I took a look at CMF today on the indexes, and although it has risen in the last few days, it has been in decline since just before the Santa rally. It just seems like there are a lot of people waiting for something to happen.

The NYSE composite shows slightly better CMF. I noted early last year that the relative strength of the Nasdaq composite to the NYSE composite was telling us which direction the market will go. Since the October low, the NYSE has slightly led the Nasdaq, and the market hasn't gone anywhere.

For the second day in a row, the Nasdaq got stopped by the 50dma. CMF looks better here than on either the SPX or NYSE. Volume here is dropping as well. Expect an increase tomorrow.

I have been waiting for an improvement in new highs, and we just aren't getting it. This is the NYSE.....


.....and the Nasdaq. We really need to see improvement here and soon or this market just isn't going anywhere.

Again I have to cut it short. Tuesday nights my updates are later than usual, but I may be able to get it in earlier tonight. We shall see.

EPIQ

EPIQ popped up on the new high list sometime in the afternoon, and was the only one that did not pull back substantially. Volume was good today, but is declining a bit. This is reversing a downtrend from earlier this year, the 200dma is starting to go up.

SXL

SXL is just having an awful time with the 52 level. Volume has been picking up, and 52 was broken briefly. Relative strength is high and accumulation seems to be picking up, so this may make another run soon.

NNDS

This is a pretty strange looking chart, but a nice surge in volume, relative strength is rising, CMF is improving. This dropped awfully fast and is rising awfully fast, which makes me a bit nervous.

Breakout Candidates

So far this morning there is really nothing to get excited about. SXL is breaking out to a new high, volume doesn't look too bad ut really needs to get better in order for this to get into an uptrend. So far is looks like it wants to consolidate just above 50.


NNDS is another that popped out to a new high. This one is getting a better volume boost, but again, it looks like it really likes the 60 level and is going to take a lot to go into an uptrend.

Nothing doing so far.