bullbearinvestor.com

Thursday - June 22, 2006

Blog is Moving House

Updates to bullbearinvestor.com will stop for the moment so that I can concentrate on etfinvestmentoutlook.com. I will be posting regular ETF related comments on this site. There will be some free commentary and a subscription based newsletter. Once the work load is back under control, I will return to bullbearinvestor.com and offer a stock picking service. Best regards, Arthur

Click here for ETFInvestmentOutlook.com

By Arthur B. Hill - Thu 22-Jun-06 at 07:30AM in General
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Saturday - June 17, 2006

Gold ETF Enters Support Zone

After a harrowing decline the last 5-6 weeks, the StreetTracks Gold ETF (GLD) finally reached a support zone and RSI became oversold. This paves the way for a bounce and possibly a continuation of the long-term uptrend.

A number of technical items have come together to mark support around 55. First, the rising 200-day moving average currently sits at 54.16. The fact that GLD is above this moving average and that the moving average is rising is long-term bullish. Second, the January to March consolidation provides a nice support zone between 53.5 and 57. Third, the blue trendline extending up from the August low extends to around 55 and acts as support. And finally, the current decline has retraced 50-62% of the prior advance (May-05 to May-06). Even though a classic correction pattern did not form, the distance of the retracement (50-62%) is normal for a correction.

In addition to evidence for support, 14-day RSI moved below 30 for the first time since 7-Jan-05. I should point out that GLD took another month to bottom in early 2005 and there was another support test at the end of May, over four months later. There was a short-term signal in February 2005 when RSI formed a positive divergence from early January to early February 2005 and moved above 50. The same could happen here and gold may need some time to base. Buying now is for bottom pickers and aggressive traders. The other option would be to wait for RSI to form a positive divergence and move above 50.

By Arthur B. Hill - Sat 17-Jun-06 at 02:02AM in Commodities
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Wednesday - June 14, 2006

Value Picks Via Markman

Jon Markman of MSN Money talks with two value pros, Matt Feshbach and Tom Kahn, for some value picks with little or no debt. The idea is pretty straight forward. Good companies with little or no debt don’t need to worry about rising interest rates. Kahn likes Audiovoxx (VOXX), Hologic (HOLX), NY Community Bancorp (NYB) and IDT (IDT). Here is a chart look at two.

Audiovoxx has good risk-reward ratio at current levels and is consolidating at support. VOXX has been trending lower since early 2004 and formed a large falling price channel. The stock moved to support from the lower trendline and there is also support around 11 from the 2003 lows. The stock consolidated the last few months and a break above 13.2 would signal the start of a move off support.

NY Community Bancorp is another interesting play and it pays a 6% dividend. I personally wonder if this stock is not a value trap. On the price chart, NYB has been wallowing between 15 and 19 for over a year. There is lots of support just above 15, but no catalyst and no breakout. Where are the buyers? There was a surge in March and then the stock fell back to the 16-17 area (gray oval). I would like to see the stock hold above the prior lows and move above 18 before jumping in.

Click here for the full article from Markman.

By Arthur B. Hill - Wed 14-Jun-06 at 07:42AM in Stocks
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Tuesday - June 13, 2006

J&J Benefits from Tech Exodus

Where has money gone over the last six weeks? Not all HealthCare stocks benefited, but money moved out of Technology and into stocks like JNJ. This is a hybrid pharma and consumer staple company that does find no matter what the economy is like.

By Arthur B. Hill - Tue 13-Jun-06 at 10:31AM in Stocks
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Juniper Flag

Juniper Networks (JNPR) has a bull flag working. Watch for a break above 17.5 to signal a continuation of the late May/early June surge. The stock shows good relative strength and could lead a rebound.

By Arthur B. Hill - Tue 13-Jun-06 at 10:30AM in Stocks
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The Emotional Low

From an article at TheStreet.com comes a new term in technical analysis: the emotional bottom.

Several strategists believe an "emotional" bottom for U.S. equities has already occurred, and the stock market is struggling to break out of the doldrums. Mary Ann Bartels, technical research analyst at Merrill Lynch, believes the emotional bottom was reached last Thursday when the market sold off throughout most of the day, but rebounded sharply in the last couple of hours. Once done, however, market indices are likely to test previous highs, she says. Thursday's action "indicates an emotional day where sellers may have become exhausted and buyers are beginning to take control," she writes, adding that markets may take several weeks to build a "successful bottom."

Say What?!

Thursday’s low was not a real selling climax and not even a reversal. Yes, there were a number of hammers, piercing patterns and bullish engulfing patterns last Thursday. However, these formed with two hours of selling pressure (10-12) and four hours of buying pressure (12-16). Buying pressure fizzled on Friday and this showed just how weak the “emotional” low really was. Let’s try and leave the emotions out it – shall we.

By Arthur B. Hill - Tue 13-Jun-06 at 10:29AM in Sentiment
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Friday - June 09, 2006

Bullish Candlestick Reversals Abound

Stocks declined in the morning and rallied in the afternoon. As a result a number of bullish candlestick reversal patterns formed on Thursday. These include piercing patterns, hammers and bullish engulfings. The hammer is a single candlestick pattern and the others form with two candlesticks. All three require confirmation and follow through over the next day or two is needed to forge a short-term bullish reversal. Ideally, follow through should come with expanding volume. Follow through on low volume would show lack of confidence. Today I will highlight a number of stock charts with these bullish candlestick reversals.

Energy stocks rebounded yesterday and RIG formed a big hammer near its May lows. Volume surged and this reinforces support around 75. Follow through above 80 is needed to confirm the hammer.

Anadarko Petroleum (APC) formed a piercing pattern on high volume. The piercing patterns forms when the open is below the low of the black candlestick and the close is above the mid point. This pattern formed at support from the March low and a break above 50.5 would confirm the pattern.

Sealed Air (SEE) formed a high volume hammer at support. A break above 52.5 would confirm the hammer and turn the short-term trend bullish.

Dow component 3M (MMM) formed a piercing pattern at support from the prior gap.

Lowes (LOW) formed a bullish engulfing with above average volume. The stock found support near the late May gap and a break above 64 would turn the medium-term trend bullish.

Apple (AAPL) formed a bullish engulfing at support yesterday. Support stems from the March low and the reversal formed on good volume. Now for some follow through above 68 to confirm.

By Arthur B. Hill - Fri 09-Jun-06 at 06:58AM in Stocks
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Stocks Showing Strength

This next group shows stock exhibiting strength over the last few days and showing good upside volume.

Komag (KOMG) attempted a breakout towards the end of May, but this breakout failed and the stock moved to a new low. While the broader market dipped early yesterday, KOMG opened firm and held above its early June low. The stock finished strong with a long white candlestick on good volume and I would expect a trendline breakout in the coming days. .

RSA Security (RSAS) held firm at the end of May and broke resistance yesterday. While the Nasdaq was breaking to new lows, RSAS was trading above its May lows and showing some relative weakness. The breakout occurred on good volume and this stock will likely lead if the Nasdaq reverses its current downtrend.

Gentiva Health (GTIV) held firm in May and showed some relative strength. This firmness turned into buying pressure over the last seven days and the stock looks poised to break triangle resistance at 18.25.

General Electric (GE) is looking relatively strong. The stock held up pretty good in May and formed a bullish engulfing on 24-May (gray oval). While the broader market swooned the last two weeks, GE held firm and upside volume continues to outpace downside volume. This shows accumulation and I would expect a breakout at 35.2.

Within the biotech group, Millennium (MLNM) is showing signs of life with good volume. The stock bottomed at the end of May and broke above trendline resistance in early June with good upside volume. The stock met resistance at 9.7 yesterday, but strong upside volume suggest more upside in the stock price.

By Arthur B. Hill - Fri 09-Jun-06 at 06:57AM in Stocks
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Tuesday - June 06, 2006

Still Betting on the Consumer?

The Wall Street Journal reports:

Morgan Stanley expects U.S. growth to fall to 2.4% in the second quarter from 5.3% in the first. "The American consumer is now a prime candidate for the weakest link in the global growth chain," writes Mr. Roach. Weak labor income, a shaky housing market, high debt burdens and rising energy costs "are putting the squeeze on over-extended U.S. consumers when they can least afford it." Mr. Roach admits that he has been calling for the demise of the U.S. consumer for years, a call that many economists have made in vain. But he seems fairly certain the time has come for the consumer to stand down in the U.S., which will have ripple effects around the globe, as export-driven economies such as Japan and China feel the pain.

How about this reversal in Wal-Mart (WMT)? The stock gapped and moved above 49 for two days. This surge was greeted with a gap down and immediate drop below 47.5. It is not a good sign with the nation’s biggest retailer reverses on the dime.

By Arthur B. Hill - Tue 06-Jun-06 at 03:02PM in Economy
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As IBM Goes….

As IBM goes, so goes the overall market. This stock was stuck in a range from March to mid May and then broke support in May. The stock consolidated for a few weeks and moved lower the last two days. Broken support turns into resistance at 81.3 and it would take a move back above this level to revive the bulls. As long as 81.3 holds, I expect lower prices in this tech bellwether.

By Arthur B. Hill - Tue 06-Jun-06 at 03:01PM in Stocks
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AMD Breaks Support

AMD may be winning the war against Intel (INTC), but the stock just broke down and cannot buck overall weakness in techs. Actually, the stock came down hard in March and stayed down in April and May. Even though the stock traded flat when the Nasdaq cratered, it failed to follow through on the gap off support and broke below 30 on Monday. This is not a good sign and the next support zone is around 25.

By Arthur B. Hill - Tue 06-Jun-06 at 03:00PM in Stocks
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Monday - June 05, 2006

Jim Rogers, Commodities and the Dollar

Jim Rogers gets the lead story in Barron’s over the weekend. Among other pursuits, Rogers worked for George Soros in his famed Quantum Fund and rode a motorcycle around the world for 20 months (see Investment Biker at Amazon.com). He not one to mince words and this paragraph sums up his outlook pretty well:

To Rogers, the past few years have witnessed another changing of the guard; commodities will rule over stocks and bonds for the next decade or more. Inflation will continue to flare and not just because of rising raw-material prices. According to Rogers, new Fed Chairman Ben Bernanke is "an amateur with no knowledge of markets" whose academic work revolved around how nations could avoid depressions by printing more money. And, finally, he throws into this witches' brew the likelihood of a collapse in the dollar as a result of America's accelerating debtor status. Rogers views commodities as the ultimate refuge from these scourges.

What would Rogers see if he were a technical analyst?

The US Dollar Index bounced off support at 80 and he would expect the index to break 80 and head much lower. This would break a 16 year support level and be mighty bearish for the greenback. Notice that the index recently broke rising wedge support (gray oval) and is already headed for a support test.

Rogers is also bullish on commodities and would view the breakout at 250 in the CRB as the start of a 20 year bull run. The CRB trended lower for 20 years so why not trend higher for 20 years. The only problem is that if the world stock markets turn south and take the world economy with them, demand for commodities will dry up.

By Arthur B. Hill - Mon 05-Jun-06 at 03:29PM in Commodities
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Saturday - June 03, 2006

Dow Consolidates Above Key Support

The Dow came down hard in May, but found support at 11050. This support level stems from January resistance and the April low. A key tenet of technical analysis is that broken resistance turns into support. The Dow broke above 11050 in February and this level turned into support in April and May.

Since reaching support, the Dow consolidated over the last two weeks and a pennant type consolidation is forming (gray oval). The sharp decline created an oversold condition and the Dow needed to work off this condition. A two week trading range is just the trick, but the pennant is a bearish continuation pattern. A move below the May low would confirm the pennant and call for a continuation of the May decline. The obvious target is the 200-day moving average around 10850. It is also worth noting that the Dow was the only major index NOT to move back above its 26-May high on Thursday and this shows relative weakness. The S&P 500, Russell 2000 and Nasdaq all surged above their 26-May high on Thursday.

For a bullish resolution to this consolidation, I will be watching resistance at 11300. This resistance level stems from the 50-day moving average, the 26-May high and the October trendline extension. The October trendline provided support until May and now acts as resistance. A break back above 11300 is needed to put the Dow back into the bull mode.

By Arthur B. Hill - Sat 03-Jun-06 at 04:11AM in Indices
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Friday - June 02, 2006

An Uninspiring Bounce

Nasdaq volume was above average, but below the levels seen in May and not that impressive overall. You can also see that the Nasdaq has yet to break back above broken support and there is a resistance zone between 2235 and 2300. The one day bounce is impressive, but I think this resistance zone is even more impressive.

NYSE volume was just average and below the high levels seen in May. While money moved into big techs, it was not as enthusiastic about non-techs and this bounce off support is not that impressive - yet.

Also notice that the Dow did not even make it back above last week’s high. The Russell 2000, S&P 500 and Nasdaq all broke last week’s high and the Dow is lagging.

By Arthur B. Hill - Fri 02-Jun-06 at 02:15PM in Indices
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Thursday - June 01, 2006

CHKP, UIS and MER

I am starting to see signs of buying pressure in CheckPoint Software (CHKP). The stock fell apart in late March and early April, but managed to firm in mid April and May. A double bottom formed over the last two months and the advances in April-May show above average volume (gray boxes). In addition, notice that On Balance Volume formed a higher low and positive divergence over the last two months. CHKP consolidated over the last four days and I am looking for a continuation of last week’s surge to break 20 and turn bullish.

Unisys (UIS) is finding a mind of its own with a gap and three day surge above resistance at 6.5. Yesterday’s breakout occurred on above average volume.

As brutal as the current decline in Merrill Lynch (MER) looks, it is no worse than that seen in March-April 2005. In fact, I see at least two similarities. Both peaks formed with rising consolidations and both declines found support near prior consolidations (blue circles). It took MER over a month to find its footing and start moving higher in April 2005. I would expect at least the same now. After the decline from the low 80s to the upper 70s, it will take a few weeks for the stock to establish its footing (base) and the best we can expect is flat trading the next few weeks.

By Arthur B. Hill - Thu 01-Jun-06 at 07:34AM in Stocks
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