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In
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Market Outlook
...Still on the Fence
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From the Blog -
How Unfrozen is the Credit Market Really?
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Review of Recent
Chart Analysis
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Updated Watchlist
Another
wild week on Wall Street ended up being a non-event in the grand scheme
of things. After reaching a low of 1753.78 and bouncing back to a high
of 1840.98, the NASDAQ Composite closed at 1838.22 on Friday... a mere
0.5% higher than the prior week's close. The other indices performed about
the same.
 So
what's next? We have to acknowledge it wasn't a hollow victory
for the bulls. The buying volume was good (especially for the summertime),
and the market managed to stave off making lows below the lows seen
with May's dip.
So, technically
speaking, the uptrend is still alive.
On the flipside,
it's not like the bulls performed a miracle. With the exception of the
NASDAQ, all the major indices remained under their respective 20 day moving
averages. (The wrench in the works is that the NASDAQ usually leads
the rest of the market.)
Our bigger-picture
take is still the same - the market's technically overbought, and we're
headed into what's typically a lethargic period for the year. Though the
presumption
of bearishness between May and September is an errant one, following
the 40% gain we've enjoyed between March and earlier this month, the odds
of more bullishness - immediately anyway - just seem far-fetched.
As we've had
to mention a couple of times in recent editions of this column though,
the 'evidence' (like a technical indicator, or a sentiment reading) of
a bearish period is still missing. That's why we're not pounding the table
on our near-term bearish outlook. On the other hand, there's not any real
'evidence' of bullishness either. That's why any forecast right now - from
anyone
- is just a judgment call.
Perhaps the
right thing to do is abstain from making a call, and let the market work
through its listlessness. (But that wouldn't be any fun, would it?)
We'll continue
to monitor breadth and depth for the hard evidence of which side's winning
the war. Stay tuned.
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From
the Blog - End of the Credit Freeze? |
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If you didn't
catch the blog entries from earlier this week, then you missed a fairly
revealing discussion about the true status of the so-called credit crisis.
We don't want
to let the cat out of the bag here, but if you want to learn more, read
about the TED
Spread first, and then the Libor-OIS
Spread second. (Don't worry - it's not as complicated as the word
'spread' would make you think.)
Though the market
really didn't do much on a net basis last week, things were actually pretty
exciting for many of the stocks we've been discussing lately.
 BRT
Realty Trust (BRT)
Though whether
or not you trade any of our ideas is up to you, we really hope you
took action after last
week's sermon on the merits of a chart like BRT's. If you did, you'd
now be up about 15%.
The basis for
our bullishness was the slow, rolling reversal of a downtrend into an uptrend.
What we liked best about the chart, however, was its minimal volatility.
Not that we're
complaining (since it worked in our favor), but the volatility meter was
cranked up a few notches with Friday's 10% gain.
At this point
we still like the chart, and we still believe the odds of more upside are
good. However, since the primary reason we liked the stock has now changed,
so too must our approach. Meaning what exactly? Not a lot... just
play tighter defense. We don't want to play around with a stock that's
this overbought, as a stock's tumbles can happen just as quickly as its
rallies. Keep it on a short leash.
 VCG
Holding Corp. (VCGH)
When we plotted
this chart's wedge shape for you last week, we had yet to see VCH
Holding shares actually trade outside of that 'zone'; we were simply waiting
for one side of the wedge or the other to break down, as that would be
the direction of the high-odds trade.
Well, though
not very forcefully, the lower wide of the triangle shape is the side that
cracked first. Therefore, the bears could make a very strong case for more
downside in the near future.
Normally we'd
strongly
suggest shorting a set up like this one, but so far, VCGH shares have
only marginally lingered under support. Ideally, we'd like to see at least
one strong, decisive tumble to new lows to really cement the breakdown
in place. If we can make a close under any of this past week's closes,
that would be a much stronger bearish signal than what we've seen yet.
 ICO
Inc. (ICOC)
The tumble to
new multi-week lows here has prompted us to move ICO Inc. from the watchlist
below to a 'featured stock' status. The continued downtrend isn't the only
compelling
bearish aspect of the chart though. We're actually playing two falling
resistance lines.... one short-term, and one long-term.
The short-term
one extends back to the June 5th peak; almost every high since then has
been aligned with that declining ceiling. Unfortunately, we couldn't plot
that line very clearly (but trust us, it's there) because we wanted to
zoom out so far on a weekly chart, you can't see a lot of short-term detail.
What you
can see on this long-term chart, however, is a major resistance
line that extends back to April of 2008, The June 5th peak was the third
time since then it's been met. If the last two instances are any indication,
there's a lot more downside in store.
Other recently-mentioned
tickers include....
Aristotle
Corp. (ARTL) - The bullish support and resistance lines that were
generally guiding the stock higher? Yeah, well, the support side of
the range started to break down last week. No cause for major alarm yet,
but it's definitely a shift in one of ARTL's attractive features.
Neogenomics
Inc. (NGNM) - We were touting this stock's breakdown last week, once
support at $1.30 had been broken. Despite Friday's high of $1.38 casting
some doubt on the analysis, the stock came back to close at $1.26. The
action may have actually been a benefit to the bears, acting as confirmation
there are more sellers than buyers.
Mirani Brands
Inc. (MRIB) - We tracked MRIB's downtrend all the way from 25 cents
to 15 cents last week... not a bad little 40% move. At the time we figured
that was about all the chart could muster, so we advocated closing out
any short trades if you had one. Hopefully you weren't listening... Mirani
shares fell all the way to 7.5 cents by Friday.
At this point
we'll say it again (with more certainty though) - if you're short MRIB,
now would be a great time to make an exit and lock in those gains.
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This
Week's Watchlist |
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As always, the
newest additions are at the bottom of the list, while the older ones are
at the top. We went ahead and removed the ones we said we would last week,
in case you were wondering where a few of them went. Also notice that a
few more are going to be axed today.
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U.S. Gold Corp.
(UXG) - breakout attempt #3 began on Friday, we still don't trust it
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Gabelli Healthcare
& Wellness (GRX) - still making higher lows, but not yet making higher
highs
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Flow International
Corp. (FLOW) - back above the 20 day average... remains volatile, but bullish
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Aristotle Corp.
(ARTL) - the lower edge of the trading range broke down this week....now
on notice
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Herzfeld Caribbean
Basin Fund Inc. (CUBA) - not falling anymore, but not yet rising
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JAG Media Holdings
Inc. (JAGH) - completely reversed its downtrend, no longer worth following
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Far East Energy
Corp. (FEEC) - remains volatile, but still in an uptrend
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Solar Power Inc.
(SOPW) - found support at the 20 day line after getting reeled in, uptrend
intact
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Neogemomics Inc,
(NGNM) - Friday's recovery effort failed by the end of the day
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Oncothyreon Inc.
(ONTY) - we're switching this one from a bearish idea to a bullish one
(though overbought now)
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Affymetrix Inc,
(AFFX) - nice slow rebound at a major support line
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New Energy Technologies
Inc. (NENE) - the overbought problem was solved last week, perking up again
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PolyMedix Inc.
(PYMX) - still in downtrend, but starting to stabilize - we're taking it
off our watchlist
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Petaquilla Minerals
(PTQMF) - continues to work on a rebound
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China Pharma Holdings
(CPHI) - let's remove it from our watchlist... still consolidating
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VCG Holding Corp.
(VCGH) - see notes above
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Fieldpoint Petroleum
Corp. (FPP) - yeah, we're dumping this one... no action
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International Coal
Group Inc. (ICO) - decent rebound this week, though we'd like to see follow
through
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Blue Earth Solutions,
Inc. (BESN) - didn't make any bullish progress, but is finding lots of
buyers here
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International Stem
Cell Corporation (ISCO) - let's take it off our list, the breakdown was
undone on Friday
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Echo Therapeutics,
Inc. (ECTE) - found support at 20 day line before breakdown started, give
it one more week
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Spark Networks,
Inc. (LOV) - huge rally on Friday, though perhaps a little overbought now
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ICO Inc. (ICOC)
- closed at a new multi-week low on Friday... solid resistance lines
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The Dixie Group,
Inc. (DXYN) - let's remove DXYN from our watchlist, the breakout failed
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BRT Realty Trust
(BRT) - see our notes above
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Mueller Water Products,
Inc. (MWA) - pushing higher again, let's take it off the watchlist
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AtriCure, Inc.
(ATRC) - still moving higher, and still only in erratic leaps
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Reading International
Inc. (RDI) - way overbought now, perhaps to the point where a pullback
can't be halted
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Updated: 8:06 am PST (16:06 GMT), March 10, 2010
