Email this page!
| Monday Sep 18, 2006
Don't trust a package dealTaipan Group's Dynamic Market AlertBy J. Christoph Amberger-- Don’t trust a package deal -------------------------- Big Oil’s top executives are fleeing the industry that made them multimillionaires for the next generation of energy riches! These former top dogs from Exxon, Texaco and even Haliburton are now running a tiny, $4.00 bio-fuel manufacturer and have managed to get their hands on millions of shares of the company at rock-bottom prices. -------------------------- Don’t Trust a Package Dealby Ann Sosnowski On Friday night, a large group of late twenty-somethings (myself included) decided to indulge in some bowling. More specifically, we were returning to a popular event that our own generation spearheaded: Rock-and-Bowl. The concept is simple really: You pay a set fee of $15, the bowling alley turns the regular lights off and the disco ball and black lights on, the speakers blast our really bad “alternative” music, while you bowl as many games as possible. Our motley group was pretty good, self-professed bowling intermediates. We’d been raised in elementary school bowling leagues in the city of Baltimore (where duckpin bowling was first invented). Bowling was a legacy handed down to us, and boy, were we excited to return to it after so many years. We arrived an hour or so ahead of Rock-and-Bowl, just to practice. After paying $3.25 to rent a pair of less-than-flattering red and white bowling shoes, and $4.25 for a single game (as well as a few beers and a few slices of cheese and pepperoni that were jaw-shatteringly cheap) we were more than ready to start bowling on our “package deal” for the remainder of the night. But it seemed our deal was short-lived… An hour after the black lights came on, they went off again, and the teens that were running the joint were hooting and hollering that it was time for everyone to leave so they could clean up the place and do whatever it is that teenagers do these days. For $15 per person, we only bowled one and a half games. That’s more than three times what we paid for the first game, minus the shoe rental. Talk about inflation… It’s amazing how expensive it is to roll a chipped ball down a wooden corridor and a hit a few pins. I’ll never trust a “package deal” again.
-- I have to admit that I’m in the bearish camp, calling for a downturn in the value of the Dow Jones Industrial Average. To be perfectly honest, the index is overvalued. Relative strength, an indicator of buying levels, is high and almost overbought at 68.02. Additionally, MACD, an oscillator that measures convergence and divergence levels is extremely high, and calling for a drop. That indicator is also performing as it did in June 2005, which took the Dow down 2.85% in a matter of days. While price is rising, momentum is falling, another bearish indicator. But to be fair, I’ve been studying the Federal Reserve’s meetings and its relationship to the Dow Jones Industrial Average. The last time the Fed held rates (at 6.5%) was when Greenspan was at the helm on June 28, 2000. The month before, the Fed had raised rates by 50 basis points. In June 2000, its response was short and sweet, and reflects an eerie similarity to the current state of the U.S. economy in terms of inflationary pressure: “Recent data suggest that the expansion of aggregate demand may be moderating toward a pace closer to the rate of growth of the economy's potential to produce. Although core measures of prices are rising slightly faster than a year ago, continuing rapid advances in productivity have been containing costs and holding down underlying price pressures. “Nonetheless, signs that growth in demand is moving to a sustainable pace are still tentative and preliminary, and the utilization of the pool of available workers remains at an unusually high level. From June 28, 2000 until January 3, 2001, the Fed kept rates at 6.5%. In January, they lowered them. In that six-month time period, the Dow moved from 10,506 to 10,945 -- a gain of 4.18%. Conditions on the Dow showed that it was primed for a short pop. All indicators signaled a buying opportunity and the Dow was ready to regain its support above the 10-day, 50-day and 200-day moving averages.
-- But the rally wasn’t without a correction. The Dow was still forced to abandon a continued rise as it hit the worst performing months of the year. After hitting a high of 11,401 in September 2000, the Dow dropped all the way to 9,654 by mid-October, losing 15.32% of its value after showing all the signs of being overbought, similar to the Dow’s indicators now. Of course, the September-October correction has always been a weak period in the major indices, and this drop just reiterated The Stock Trader’s Almanac’s insistence on keeping buying to a minimum before November. According to the historical cycle watchers Yale and Jeffrey A. Hirsch of The Stock Trader’s Almanac fame, September is the worst month not only for the Dow, but the S&P and Nasdaq as well. The week after Quadruple Witching Day in September, which we’re starting today, is in their words “pitiful.” The “worst six months” of the trading year ends after Halloween. The Dow Channel (the semi-flat range trading from 2004 to present) has been tested at its low every year in October, and then begins to bounce with the start of November. According to my calculations, the next low will be reached this October at a definite value of Dow 11,000 and a probable hit at Dow 10,500. For trading purposes of our WaveStrength traders, value will come shortly in the form of put options on the Dow for the next month and a half. Regardless of the Fed lowering or keeping rates, (and even raising them again, which doesn’t seem probable at this juncture) the Dow is in for a cyclical retracement and will do what it has done every year within this technical channel. It doesn’t matter what the Fed does; the cycle cannot be overlooked. The Dow is in for a correction, and this is the last chance to sell at high levels until the end of 2006. So if anything, at least be prepared in your portfolio: Protect yourself going into November with puts dated two months out on the Dow, and expect a drop to at least Dow 11,000… If it doesn’t fall any further than that, then we’ll be lucky. Iran’s president makes us 34.88% gains since Fridayby Christian DeHaemer -------------------------- Earnings Announcements for Monday, September 18, 2006 Sino Land Company Ltd and Somanetics Corporation are releasing earnings. Brought to you by your FREE American Capitalist. Sign up here:
Unlock Dates for September 2006 9/20/06 – Clayton Holdings Inc is unlocking 7.5 million shares. Keep an eye on Tim Hortons Inc. and Himax Technologies for significant sell-offs. You may want to short shares or buy puts on these two positions. Brought to you by Extreme Volatility Speculator Quote of the Day “A politician needs the ability to foretell what is going to happen tomorrow, next week, next month, and next year. And to have the ability afterwards to explain why it didn't happen.” - Sir Winston Churchill
On June 30, 2006, at 11:41 a.m. EST, a one-page news release from a small Texas company announced the most dangerous partnerships in Big Oil since Exxon Mobil.
|
| Home | About Dynamic Market Alert | Contact Dynamic Market Alert | Subscribe to Dynamic Market Alert | Join Discussion! | Media Calendar | Advertising | Search | Whitelist Us | Disclaimer | Privacy Policy | Sitemap