Watching the Watchlist

Here we are in another week of trading and there is still money (latinum) to be made. I think there are a lot of stocks out there that are either on the verge of bouncing and starting on heading up or have already turned and marching forward to a new top. Use these stocks to start building your own watchlist and keep an eye on those break outs. Here are some stocks that that are at a resistance level and verge of a break out and possibly it will put the oo-mox back into your trading....

BBV - CNQR - DECK - DNR - DV - FLIR - GMCR - MPWR - MVL - OTEX - PSEM - SDA - STD - WRNC

I like MVL because they know how to make a great movies like Iron Man and also the Hulk this summer along with the merchandising that comes with it should be huge.

A good movie made from a comic book equals a lot of money. So keep an eye on it.

These are just a few of my favorite things. Have fun with them.

Bernanke Sees Improvement

Bernanke is seeing improvement in the financial institutions. I think we will see a few more reports like this over the summer as the Fed sets up to finally address the inflation issue. Due to the elections the Fed will be afraid they might be seen as trying to influence the outcome so they will hold off on interest rate hikes. If the "good news" comes earlier we may see hikes sooner and then a lull during the election. Be sure to watch Wednesday's CPI report.

Cornerstone Growth

Using similar criteria to Wall Street legend William O'Shaugnessy's Cornerstone Growth Fund I look for undervalued stocks in strong industry groups showing long-term relative strength. Check them out:
CALM - Uptrend with momentum, 10.5% dividend yield
AKS - Support bounce off a 30-day moving average
KOP - Pennant flag break out, 1.86% dividend yield
CQB - Support bounce off a 30-day moving average
FLR - Support bounce off a 30-day moving average beware of $170 as resistance but allow room for a break
ACU - Retesting an ascending triangle
BG - Support bounce
WMT - Pulling back look for a bounce or bull flag, 1.64% dividend yield
NM - Broke resistance w/ volume, 3% dividend yield
GSI - Awesome fundamental stock, Bull flag for a target of $13.50 in the short-term but don't be afraid to let it run
MEA - Forming a bull flag as it is retesting a major resistance break from last month
MAN - Last 6-months has been consolidating and reversing now making a higher low

Are Biofuels the Problem?

Energy prices are going through the roof and as I wrote the other day that prices may go to $10 a gallon, the emphasis has been on alternate energy solutions. This has created opportunities for alternate energy companies to cash in on the hype and demand. Biofuels have filled this new demand and has also created a growing (no pun intended) problem. Since biofuels is grown on farms and creates ethanol, this has caused a problem on the world food supply. Recently, US Secretary of State Condoleezza Rice spoke on the increasing world food prices.

Since the all the rules of acquisition are all about profits and gaining as much as possible, can you fault farmers in taking the initiative to gain as much of it as possible? Here are some biofuel stocks that I am looking at currently and really see if some profits can be made.
ADM
BG
BP
CAG
CVX
MON
PEIX
RDS.B

One little wrinkle in the whole genetically modified seeds that is the largest component of ethanol, is that the UN has created a task force on world food prices. This may cause a problem with the worlds largest genetically modifying engineering of biofuels company, ADM. They have already halted construction of 2 plants for creating biofuels.

What do you? You want to help the environment but do not want to pay the price? It is cause and effect theory.

Numerous States Already Feeling Recession

The AP is reporting 23 states are struggling with lower tax revenues due to the recession.

ETF Watchlist

If you are looking for diversification here are some ETFs that I like.
Basic Materials XLB - Broke out last week and is retesting
Consumer Staples XLP - Still trending sideways but is showing relative strength, historically a very strong industry group during a recession
Energy XLE - Broke resistance about a month back and is finally pulling back some, buy on the bounce
Utilities XLU - Low interest rates drives investors to the markets looking for high dividend yields

The Cure for High Oil Prices

Can more regulation and more taxes somehow bring down oil prices? What in the heck are they thinking in Washington. Commodities and stocks work in long-term 18 year cycles. That is what happened in the 1900s, 1930s, 1970s, and today. It isn't government conspiracy or Bush and his big oil friends who want to drill in Anwar it is demand from China and India coupled with a weak dollar. This is the price we pay when 3rd world countries progress and our Monetary policy makers lack backbone. Rejoice in the wealth being built in these countries and realize eventually, supply will meet demand through new wells, efficiency gains, and alternatives. It is not an over night fix so be ready to endure high inflation for quite some time. There are plenty of ways to profit from this commodity boom so become educated. Read the not so well written but sufficient book "Hot Commodities" by investing legend Jim Rogers!

Interesting side note, the week of Black Thursday just before the Great Depression, congress was holding hearings on how to tax the railroads for their "windfall profits". You gotta love government. I bet if you looked back in 1999 when oil was trading around $11 a barrel congress was looking for a way to subsidize the oil companies to keep them afloat. Sometimes you get the bull like these oil guys are now, sometimes you get the horn like they did in 1999 and couldn't stay in business.

No Foolin I'm Bullish

Despite all my rantings on the economy and how I think the government is making things worse I am bullish for April. Seasonally speaking the market cycle is bullish this month. Last months break down in commodities on the DBA and the DBC along with weakness in Gold (GLD) and Oil (USO) tell me there is a window of relief from out of control commodity bulls. Even though Australia didn't cut rates last night we are seeing the dollar strengthen against most all other currencies, FXA, FXC, FXE, etc. Dollar strength tends to lead the stock market.

Don't get get me wrong, I am long-term bearish still. I think we will see the CNBC and BTV start marking the end of the credit crisis, calling Bernanke a hero, but the rally will be a sucker's rally. We have another $300 billion in losses coming for our countries financial institutions, we will see interest rate hikes later in the year when the Fed is forced to address inflation, and the rest of the world is now feeling out financial pain. Play the bullishiness while it last but use stops and position sizing!

The Road to end Free Markets

Congress is tripping over themselves to give the Fed more power to tinker with the economy. The so-called free market and financially smart Republicans have turned there back on the Milton Friedman's lassiez-faire economic policies that so many claim to hold to. The Democrats are in line to play a little one-up-manship to take the regulation as far as they possibly can.

Why can't we accept recessions as a normal part of life, as a healthy shake out, as way the invisible hand disciplines the ignorant the greedy. Congress reminds me of the parent who won't allow a child to feel the weight of the consequences of their choices and then can't figure out why the child is such a loser when faced with life on his/her own.

Fed's Sunday Surprise

The Fed cut the discount rate today instead of waiting all the way to Tuesday when they will most likely cut the overnight rate another half a point. Finally some are saying enough is enough. That's what we were saying at the end of last year when the Euro was only 1.25 of the dollar.

My EUR/USD Trade

Ok, so the Dollar keeps on getting hammered and the Euro just keeps on going up higher and higher. As you know, I have been bullish the Euro for a little while and have been doing well since 1.4600 on the pair. I was bearish for a short while but ended up going long again and set up a limit sell order at 1.5450 if the pair just shot up. Well, it shot up and I got out of my position at 1.5450 because of my order I had set up on it. I am a happy camper with all my latnium.

Going forward, I still see some bullishness around it as the dollar still weakens. There is talk now of the Fed possibly having an emergency cut because of the markets. I can't see it helping much and only postponing the inevitable. I definitely think that we are in a recession and even though we are no where like the 1920s, it still is a for of recession. In a article that is from 2006 on when recessions may have happened in the past, goes to show that we may be in a small one right now. This article goes into some good information on the make up of these recessions.

Now, my Ferengi side tells me that there is money(latnium) to be made in this time of crises. And that is what I am doing. I just have to be against the dollar till there is something that convinces me that it is turning around. Who know, maybe the dollar will become the new currency carry trade. Remember, making and getting latnium is the" true" oo-mox experience!!!!

We Need Food Synthesizers

The time is fast approaching where food synthesizers are needed badly. Look at this article on the soaring cost of food. The beauty of capitalism is that times like these prompt invention and innovation, especially when the need is so high. Of course there is always some profit to be made just look at the Powershares Agriculture (DBA) ETF index. Be warned, and I shouldn't tell you this because the Ferengi are not responsible for other peoples' ignorance and stupidity, but the seasonal cycles for grain tops out in what is called the February Break. Since the index rallied through February, we are long overdue.

Diana Shipping Inc. (DSX)

Diana Shipping Inc (DSX)


So, Bajoran Profit has been busy lately being a producer of some sorts and so asked me to post this information on Diana Shipping Inc. I am sure that he will be writing more on this position later.

DSX currently has a peg ratio at .74 and a dividend yield over 8% and has recently bounced off a good support level. There could be a return to a $32.50 level and then on up even higher. These are my thoughts but Bajoran Profit can speak for himself.

As for me, I am going to get some more latinum and have a party with my last trade on the Euro. Nice run and still running. The pullback never emerged but that is ok, I am still bullish. I see it going to 1.5450 at this rate. With the large ascending triangle that it made, this 500 pip move is possible. I am keeping my stops semi tight on the way up just in case some econo-nerd from the fed or government says something to pull it back. We will see.
- oo-mox

My Euro Trade

Like most Ferengi's, their passion usually revolves around 2 things: Latinum and oo-mox. Since we don't trade latinum here on earth yet, and we call OO-MOX something else, my passions are not so dissimilar. As you know (all 1 reader out there) that I am passionate about currency trading.

Here is a trade that I recently did on the EUR/USD. I actually told several people to play the bounce off of a strong diagonal support level. There has been a strong resistance level at 1.4900 since November. The Euro has tested this level three times and also creating higher bottoms three times. On the last support level bottom that it created on 2/07/08, was a great entry play to the resistance level again. A move from 1.4500 to the resistance was the play to make. Who doesn't want to make 400 pips? I set my target at 1.4950 and got out yesterday with a 450 pip profit. Not bad for a very good predictive play.

Recent trade on the EUR/USD

Now the pair has broken this strong resistance level and is continuing up another 200 pips to a very overbought area. I expect a pull back now to the new support of 1.4900 and then a bounce back up to 1.51 to even higher levels. I really can see a move to 1.60 now a higher possibility over the next year. I guess a wait and see on that one. But an new entry at a bounce of 1.490 may be a good bounce.


New trades on the EUR/USD - one short reversal trade

For a short trade from these highs to 1.4900 may be a good quick short term play because of overbought area on the position. It may be good but be careful and have fun if you do. Watch your risk and don't over leverage.

We may see some wild things happening but I am in a short trade already to the support area. We will see how it goes.

More Doom and Gloom

I found this article to be very insightful as far as a Doomsday scenario. Remember it doesn't have to be all issues occurring at once but just a few of them back to back, to make life really difficult.

Clear Message from Universal Translators

Reed Elsevier Plc (RUK)

Big money movers seem to be sending a message on Reed Elsevier Plc (RUK) the last two days, while much higher than normal volume has appeared. Breaking up to new all time highs a window has opened as the stock gapped higher. While this stock specializes in many different areas of information technology and retrieval one that is most interesting to the Ferengi is that work it has done in the are of Machine Translation as a partner in the Babylon translation technology. One caveat I must highlight is before our recent volume in the stock it was only trading about 50,000 shares a day. I will usually pass up a stock with such little liquidity, especially, since I rely on stop losses so much. It is to easy for a stock to be manipulated by big money and market makers.

BTW as a rugby fan how can I pass up a stock with a ticker symbol of RUK?

Autopilot

Like something right out of Star Trek, okay not really Star Trek but more like Time Cop or Demolition Man, cars that may drive themselves. Looking at GM stock it might take ten years to care but the concept is cool.

The Star Trek Stock Picker

One of the topics we hope to expand on in the future is how many inventions we saw on Star Trek 30 years ago that have come to pass. How many of us imagined we would all be talking into communicators (flip phones) a decade and half ago. If we had this vision we probably would have made a lot of money buying stocks like WCOM, MOT and QCOM assuming we knew when to sell, eh.

Well once again Star Trek is giving us an idea of how the market or in this case how the economy may turn in the future. You may be familiar with the hemline indicator, as the economy goes so goes skirt hemlines. If short skirts are in fashion then normally you will see a bullish market. The inverse is also true, if longer skirts are in fashion the market tends to be bearish. We also know that there is a 90% correlation with lipstick sales and a recession. During a recession lipstick sales will rise (I don't know if that is a result of money being tight and so women are forced to cut back on fashion and use lipstick as a substiute of self expression, or maybe it is a number of men who have been emasculated by the markets and are hiding in dark rooms questioning their manhood.)

In the original Star Trek series in order to make the crew members look more uniform in thier uh, uniforms, breast enhancements were placed in the costumes so the actresses would have similar shape and size. Of course, this has been a money maker for many astute surgeons and silicon producers. Mentor MNT a breast enhancement producer has been oscillating sidways for about two years now. Recently we have began to see it, dare I say, sag.

MNT


Could it be that inversely to lipstick sales rising in a recession that cosmetic surgery would fall. If that is the case you will want to check out this recent article. I'm not sure what I would call this indicator, I'm a little afraid to go down that road.

Using your Lobes on Job Numbers

Today market participants and conservative politicos were excited about what they saw as a positive job reports. Wiser commentators downplayed the significance of the report and here is why. The job report doesn't account for illegal migrant workers. Construction jobs are taking the brunt of the bearish housing market which has been perhaps the largest employer of illegal workers. Housing start are so slow now that contractors no longer need to take on the risk of hiring these workers. Therefore, these workers don't go in and apply for unemployment for obvious reasons. So in a reporting sense they don't count.

The unemployment records have been screwed for sometime. First of all we haven't been accounting for the the number of illeagal workers in the past. This means those already low unemployment numbers not only had us at full-employment but over-employment. This was a very inflationary sign through all of last year. Wages on "lower tier" jobs were pressed higher because we were "growing" at a fast pace (Or at least we thought we were and kept building on those inflated expectations.) We Ferengi agree with business owners that paying higher wages is hard on the bottom line.

Sales people who were working in the housing and mortgage fields are also left somewhat an accounted. They may very well be looking for work or they may be dying on the vine. Commission based salesman may hold out for some time because of the nature of the sale business. You cannot be in sales and have a defeatist attitude so many salesman will stay at much longer then they can afford. In the end many people should be looking for some type of back up plan and that takes training.

The point that I am making here is to assess the Economic numbers with a grain of salt. I have only pointed out a few weaknesses in the numbers right now. Perhaps the biggest discretion in the numbers is after a person has been unemployed for so long we just quit counting them. If we had counted unemployment like that in the 1930s then the Great Depression would've been the Fairly Big Recession. In the end many people should be looking for some type of back up plan and that takes training.



The market will once again give us the truth of what is going on. We find this by using our relative strength tool. This time we will examine the Education stocks. These are stocks like Apollo Colleges (APOL) whose subsidiary University of Phoenix you are probably most familiar with. Also ITT Technical Institutions (ESI), Corinthian Colleges (COCO), and finally Career Education (CECO) to name a few that lead the markets back in 2001-2003. We can see in our graph here that money has been flowing into this industry group for about a year. This tells me that the "Smart Money" believes that unemployment and/or underemployment (having a job that doesn't cover your needs) are a much bigger concern then what the economic numbers are telling us.

Insurance Surveillance

Chances are this week aren't going to see much action in the markets as far as buying and selling. We Ferengi always keep an eye on the lunar cycle and the lunar cycle is moving into its consolidation phase, but that is a topic for a different time. I my post Finding Stocks the Ferengi Way I highlighted Insurance (Accident & Health) so I will highlight a few stocks in which I the Bajoran Profit am keeping my lobes alert for.

Long term chart of UNH

In the 2 year weekly chart of UNH we see the downward trend has been broken although we are definitely cautious since see another resistance level at 56. Our oscillators at the bottom both gave us bullish divergences as a an alert to the recent movement and the trend reversal. With the new found uptrend in the industry group we are bullish on this stock's ability to break resistance. This is probably not the entry for a swing trader but the trend trader should consider a small position here.

Short term chart of UNH

The next stock in this group is WLP or Wellpoint Inc. The long-term chart of WLP shows a downward consolidation that was recently broken. The trend trade could entry here with a stop around $82 and then scale into a larger position if and when the stock breaks the $86 resistance level.

Long term chart of WLP

The shorter term play would be the channel itself. No doubt the break a few weeks ago would've been the best entry but we are half way through the $10 move now. Entering now with a stop at the quarter mark ($82.50) can still allow us to make a little off them move here and keep at least a 2 to 1 reward to risk ratio.

Short term chart of WLP