The VRTrader.com VR Silver Newsletter - Tuesday 2/26/2008
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LEIBOVIT FILES | by Mark Leibovit
Tuesday, February 26, 2008
Testing Both Ends Of The Trading Range
Economic Reports and Market Events February 26-29:
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TUESDAY, February 26:
Producer Price Index (PPI) for January (8:30 am ET)
Weekly Chain Store Sales (8:55 am ET)
Consumer Confidence Index for February (10 am ET)
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WEDNESDAY, February 27:
Durable Goods Orders for January (8:30 am ET)
Fed Chairman Bernanke testifies before House (10 am ET)
New Home Sales for January (10 am ET)
EIA Petroleum Status Report (10:30 am ET)
Treasury auctions 2-year notes (1 pm ET)
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THURSDAY, February 28:
Weekly Initial Jobless Claims (8:30 am ET)
Gross Domestic Product (GDP) for 4th Qtr (8:30 am ET)
Fed Chairman Bernanke testifies before Senate (10 am ET)
Treasury auctions 5-year notes (1 pm ET)
Weekly Money Supply (4:30 pm ET)
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FRIDAY, February 29:
Personal Income & Consumption Spending for Jan. (8:30 am ET)
Chicago PMI for February (9:45 am ET)
U. of Michigan Consumer Sentiment for February (10 am ET)
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From Friday's intra-day low to yesterday's intra-day high the Dow Industrials have rallied nearly 500 points with the SPX rallying nearly 50 points. The market seems to be magnetically drawn to extremes points in the recent trading range, but then suddenly loses momentum and flip-flops the other way. This is hellish for investors and heavenly for traders willing to to jump in and out of the market in a one or two day move. Looking at the SPX, we may very well be heading back to 1390-1400, but I believe it is part and parcel of nothing more than sideways action ahead of ultimately another wave lower largely due to the 'Slope of Hope'.
By example, the market had given back its gains just after noon yesterday and chopped around for the next couple of hours, but news crossed the wires around 2:30 p.m. ET that Standard & Poor's took MBIA off CreditWatch and assigned a negative outlook. Additionally, the ratings agency affirmed the 'AAA' rating of Ambac Financial, yet said the company remains on CreditWatch with negative implications. The decision by Standard & Poor's not to downgrade the ratings at this time helped mitigate some of the worst fears about the potential for a wave of counter party-related write-downs at financial companies. This development still doesn't qualify as an all-clear signal regarding the issues facing the bond insurers, but it is certainly the type of news that creates a sense that things are headed in the right direction.
Earlier, just befoe noon, Federal Reserve Governor Randall Kroszner made the obvious comment that there are no quick fixes to the holes in bank risk-management practices that have come to light in the wake of the recent financial market turmoil. Apparently, investors had been hoping for a quick fix because the market dropped on the statement.
Bonds are weak yesterday with the long bond down 30/32. The ten-year rate is up to 3.875% and looks to be testing last week's high of 3.96% and the psychologically significant number of 4.00%. I've warned that interest rates should go higher for quite some time as inflationary forces begin to unleash out of control.
Part of yesterday's rally may also being attributed to the housing figures: "U.S. stocks pulled solidly higher Monday after data on the troubled housing industry proved slightly less bleak than predicted, and renewed activity appeared in the deal-making front." Yet, the report itself look dismal. Resales of U.S. homes and condos dropped 0.4% in January to a seasonally adjusted annualized rate of 4.89 million. It was the lowest sales pace since the real estate group began tracking combined sales in 1999. Resales were down 23.4% compared with the previous January. The inventory of homes on the market rose 5.5% to 4.19 million, representing a 10.3-month supply at the January sales pace, close to the record high of 10.5 months set in October. The inventory of unsold homes rose 18.4% compared with January 2007.
The only positive is that economists expected the number to be even worse. But the numbers were still terrible and have been terrible month after month. Even if this number is positive, it would only be one month and one point does not make a line.
However, there is in fact little correlation between housing and the stock market. Remember the market crash of 2000 to 2002? Housing was soaring during that time. And the stock market had risen in 2006 and most of 2007, yet housing was plunging. So why did the market really go up? Was it in fact the housing report? As Michael Lewis wrote in his classic book Liar's Poker, "Most of the time when markets move, no one has any idea why. A man who can tell a good story can make a good living as a broker." The housing report causing the market to rise is a good story, but it is just a story. And even if true, we didn't know the numbers in advance and we couldn't predict how the market would react to those numbers. In the short term, fundamental analysis of the market is impossible.
Tech was a laggard again as small caps and the blue chips led the way. We expect more fireworks as the subprims slime works its way through the financial system. Just as easily as the market moved higher on the feel good news regarding the bond insurers, things could get dicey again as new revelations or allegations come forth regarding the unsound investment practices of the last few years.
Gold was weak today as the dollar held its ground. April Gold was down 7.30 at 940.50 while the March US Dollar Index settled .01 higher at 75.58. April Crude settled .42 higher at 99.23 as geopolitical tensions and supply fears continue to provide a solid underpinning there. However, Silver and Palladium were higher along with a strong showing in agricultural commodities. Commodity ETFs such as MOO, DBA, DJP, DBC and DBE put in strong performance. A word of caution. Though the big trend is higher here, we're beginning to hear a lot of 'noise' and table-pounding from commentators about the strength of these markets. Some are even suggesting this is the ONLY place to be in the stock market. We may be setting up for a correction here, so be careful about establishing new long positions.
Meanwhile, I remain on my TIMER DIGEST 'Sell' signal for the overall stock market. Yes, we can rally, but I don't think we're out of the woods yet. And, in fact, as I've written, we may be in the early stages of a multi-year bear market - though I expect to see some nice rally tries in this wild election year.
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Canadian, TSE and TSE Venture Commentary for our Canadian Clients updated for Tuesday, February 26:
TSE:
The TSE touched 13,728.45 on Monday (just shy of my published 13,742 resistance) an well through the 13,640 level. Yesterday, I stated that "I wouldn't be surprised to see it blast right through it - an event which may be sending us a message that we could be headed back to the highs in the months ahead." Volume declined yesterday which was a little disappointing. The key here is that Friday's low of 13,395.22 holds in the days ahead. Resistance is as follows: 13,772, 13,840 and 14,050 - above that the big highs at 14,600+. Support is now at 13,650, 13,480, 13,395, 13,106, 12,747, 12,600, 12,200 and 12,000 - the January 22nd low.
TSE Venture:
Friday was apparently a one day respite as yesterday saw a surge to a new recovery high of 2686.41 accompanied by a Positive Volume Reversal ™right into 2680 resistance. Prior to Friday we had advanced nine days in a row. Monday I wrote: "Nine days was the magic number in giving the TSE Venture acrophobia as it settled back on declining volume. Is a one day pullback sufficient? Hardly, but perhaps this index is stronger than we realize." Overall, this rally was kicked off by a Positive Volume Reversal ™ formed back on February 8. The February 7 low of 2480.44 which presents important short-term support. Potential to new highs exists, but I'll be more impressed above 2850. Support is 2639, 2580, 2530, 2480, and 2340. A break of 2340 opens up 2250 and possibly 1800 ahead. Resistance is now at 2730, 2850 followed by the 618 fibonacci number of 2975 and 3372.00.
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TIMER DIGEST has named Mark Leibovit of VRTrader.com 'TIMER OF THE YEAR' for 2006 and was named the #2 Timer for 2007. Currently, #4 for 2008. Also, for 2007, he was name the #4 Gold Timer. As you know, Mark was named the #1 Intermediate Market Timer (stock market) for the 10 year period ending in 2006!
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Ux U3O8 Prices*
February 18, 2008
Spot: $75.00 /lb. unchanged. Bull market high in the cash market is $136.00.
The June Uranium Futures are trading at $80.00.
Big low was $58.00 posted intra-day on August 16. The big high from June 13 is 154.95. Confirmation of a bottom should be evident when the uranium shares begin to move higher. I would use present levels as a long term buying opportunity.
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VR TRADER.COM WATCHLISTS:
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Editors note: As you may have noticed, we have been posting our daily VR list for both Silver and Platinum subscribers. Silver subscribers who find this useful should upgrade to Platinum where you can pull
down VR charts for many securities and watch the patterns unfold for yourself.
There is no technical service on the planet that posts Positive and Negative VR! Why? Because they are proprietary to VRTrader.com! http://www.volumereversaltrader.com/vr_platinum/GetVRChart.asp
A Volume Reversal ™ is change from a Rally day to a Reaction day accompanied by an increase of volume or a change from a Reaction day to Rally day accompanied by an increase in volume. Volume Reversals
™ coming off intermediate lows or highs have greater significance in helping to define those lows or highs and important pivot points in the marketplace.
How do you use this list? VRs are buy and sell triggers and are particularly useful in defining lows or highs in stocks and stock
indexes. Traders find them particularly useful, especially coming off market extremes as an indication of a change of direction. Use the VRs in conjunction with your other technical indicators and you've
added a unique technical tool to your arsenal.
List of Volume Reversals 2/25/08 - Sectors
*** Sectors Positive Volume Reversals ***
Banking - Money Center Banks
BK - Bank Of New York Co Inc
BLX - Banco Latino Americano
BNS - Bank Of Nova Scotia
OFG - Oreintal Financial Group
NBG - National Bk Greece ADS
PNC - PNC Financial Svcs Group
RY - Royal Bank Of Canada
SAN - Banco SAntander Chile
TD - Toronto Dominion Bank
Drugs - Generic
BRL - Barr Laboratories Inc
MYL - Mylan Inc
Drugs - Manufacturers - Major
OSCI - Oscient Pharmaceuticals Corp
PFE - Pfizer Inc
SGP - Schering Plough Corp
WYE - Wyeth
Electronics - Printed Circuit Boards
FLEX - Flextronics International Ltd
JBL - Jabil Circuit Inc
Electronics - Semiconductor - Memory Chips
MU - Micron Technology Inc
Energy - Oil & Gas Pipelines
CPNO - Copano Energy LLC
DEP - Duncan Energy Partners LP
ENB - Enbridge Inc
EP - El Paso Corp
GEL - Genesis Energy LP
OKS - Oneok Partners LP
PAA - Plains All Amer Pipeline
RGNC - Regency Energy Partners LP
SGLP - Semgroup Energy Partners
Insurance - Life Insurance
AEG - AEGON NV
AGO - Assured Guaranty Ltd
AXA - Axa ADS
FFG - FBL Financial Group
GNW - Genworth Financial
ING - ING Group NV
MET - Metlife Inc
NFS - Nationwide Financial Srvc Inc
PLFE - Presidential Life Corp
PRU - Prudetial Financial Inc
PUK - Prudential PLC ADS
Manufacturing - Diversified Machinery
CMI - CUmmins Inc
CYD - China Yuchai Int Ltd
GDI - Gardner Denver Inc
IR - Ingersoll-Rand Ltd Cl A
ITW - Illinois Tool Worls Inc
KUB - Kubota Corporation ADS
OVEN - TurboChef Technologies Inc
MIDD - Middleby Corporation
RBN - Robbins & Myers Inc
SHS - Sauer-Danfoss Inc
TNC - Tennant Co
Manufacturing - Pollution & Treatment Controls
DCI - Donaldson & Co Inc
Materials & Construction - Manufactured Housing
CHB - Champion Enterprises Inc
CVCO - Cavco Industries
Metals & Mining - Aluminum
AA - Alcoa Inc
CENX - Century Aluminum Company
Metals & Mining - Industrial Metals & Minerals
ACI - Arch Coal Inc
BTU - Peabody Energy
CCJ - Cameco Corp
CHNR - China Natural Resources
CNX - Consol Energy Inc
FCL - Foundation Coal Holdings
FRG - Fronteer Development Group Inc
LMC - Lundin Mining Corp
MRB - Metallica Resources Group
TCK - Teck Cominco Limited
Metals & Mining - Nonmetallic Mineral Mining
BQI - Oilsands Quest Inc
GBN - Great Basin Gold
POT - Potash Cp Saskatchewan
ROY - International Royalty Corporation
Metals & Mining - Silver
CDE - Coeur D'Alene Mines Corp
EXK - Endeavour Silver Corp
PAAS - Pan Amer Silver Cp
Real Estate - REIT - Healthcare Facilities
HCP - HCP INc
HR - Healthcare Realty Trust
NHP - Nationwide Health Prop
VTR - Ventas
Real Estate - REIT - Residential
ACC - American Campus Communities
AVB - Avalonbay Communities
BRE - BRE Properties Inc
EQR - Equity Residential
HME - Home Properties Inc
MAA - Mid Amaerica Apartment Comm
SUI - Sun Communities
Retail - Home Improvement Stores
BLG - Building Materials Hldgs Corp
HD - Home Depot Inc
Specialty Retail - Auto Dealerships
CPRT - Copart Inc
GPI - Group 1 Automotive Inc
Transportation - Shipping
DSX - Diana Shipping Inc
ESEA - Euroseas Ltd
HRZ - Horizon Lines Inc
SFL - Ship Finance Intl Ltd
TDW - Tidewater Inc
TK - Teekay Corp
*** Sectors Negative Volume Reversals ***
**** NONE ****
Suggestions? Comments? on the newsletter service. We would like to hear from each and everyone of our subscribers. Our email is mark@vrsurvey.com.
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