October 2008 Archives
Jeffries (JEF) the next brokerage in trouble ??
As the chart in todays post highlights Jeffries (JEF) may be the next brokerage firm to struggle.  After scoring a major top (orange dotted semi-circle) shares then broke what had been longstanding support (double red lines).  Once broken this support became a big resistance zone which shares then subsequently failed at on its recent snap back rally.  Of a more critical note is the fact that JEF shares are tesitng a longer term trend line (green line) for the third time in a relatively short period of time.  The high frequency of trend line tests in such a short period of time suggest that a likely trend break is coming soon.  A close below $ 14.00 would be a crucial breakdown and suggest a move to the $ 10.00 to $ 9.00 region. 
Raising the odds we are right here is the fact that JEF shares have a low FusionIQ Master Rank Score of just 41 (out of a possible 100)



CTGX shares may offer opportunity
Computer Task Group, Incorporated (CTGX) which provides business consulting, electronic business, and information technology management solutions has held up admirably during this correction and has a FusionIQ Master Technical score of 93.  Given it's strong relative strength and high FusionIQ ranking we think CTGX shares have a chance to outperform over the coming months.

Additionally, 10 of the top 15 institutional shareholders (who one could argue know the company better than anyone) have all upped their holdings in their most recent reported holding filings.

To see more stock ideas like CTGX visit us today at www.fusioniqrank.com and subscribe today !!


Dow consolidating off recent lows

As seen in the attached 31-day cart of the Dow Jones we see the index has recently set higher lows but has also set lower highs. These  converging peaks and troughs highlighted by the red lines suggest a resolution of this trading range is coming soon.  Given the host of sentiment indicators that suggest we are at a bottom we would expect this range to resolve itself to the upside  A move back above Friday's peak near 9,281 would be a bullish confirmation.

Another Senitment BUY - U. of Mich. Survey similar reading to 1970's Bear Market low level
Sentiment has been screaming a BUY for several days.  Now today we get a look at the University of Michigan Consumer Confidence and it is at its' lowest level since the end of the long economic malaise following the 1973-1974 bear market. 

With investors purging stocks on Friday in droves, the TIME Magazine cover depicting bread lines, the VIX deviation from its' 50-day moving average at all time highs along with many other pieces of sentiment indicators confirming this over negativity, today's Reuters/University of Michigan Confidence Survey looks to be just another piece of corroborating piece of evidence that suggest this is a good time to buy stocks.

If the successful investment mantra is to BUY when no one wants them and SELL when everyone wants them then this would be a BUY now !!

To see more interesting charts such as this please visit www.fusioniqrank.com and sign up today !!

S&P; 500 Setting a double bottom ??
The S&P 500 yesterday probed the recent lows and made a sharp reversal.  While it may be too early to tell, we do believe a double bottom may be setting as sentiment remains decidely negative and the S&P is off almost 40% in the last 12 months..
In an unrelated but possibly corroborating statement, Billionaire Investor Warren Buffet said he is buying U.S. stocks aggressively.

MDT Testing Critical Support

As seen in the above monthly chart MDT (FusionIQ Master Score 26 out of 100) shares are on the verge of a big collapse if they close below $ 35.00 as this would be a major breach of support (red line) after breaking its long-term uptrend (green dashed line).  Now there may be an attempt to hold or bounce it from support but any sustained time below $ 35.00 opens prices to $25.00 (black line) then ultimately a longer term target of $ 14.00 (blue line).



Newspapers stocks still weak
As seen in the attached charts of Gannett (GCI), publisher of the USA Today and the New York Times (NYT) publishing stocks have been under pressure for some time.  Note that FusionIQ flashed very, very timely SELL SHORT signals in both names in MAY/JUNE before both fell very sharply.

GCI made new lows yesterday and never bounced in the markets recent two day run up, so although these stocks appear to be beaten down they may keep going lower so avoid the temptation to bottom fish.

To get other timely signals such as GCI and NYT or other stocks your interested in subscribe to FusionIQ today at www.fusioniqrank.com/signup.php















Can you tell which chart is which ??

Can you tell which chart is which ?  Very interesting how the top chart (the 2002 low) and the (the current market chart - lower chart) look almost identical – food for thought – could today be the capitulation day  ?  If the pictures don’t lie we may be there !!









Sentiment Continues to Get Bullish

If one wants to be totally objective and unemotional then this chart of the VIXʼs Devation from itsʼ 50-day moving average shows that we have a screaming BUY signal.  As the red circles above show all major lows in the last 10 years have had VIX deviation from 50-day moving average readings north of 15.00, the PRESENT READING IS 26 !!  All of these lows saw significant market snapback rallies as follows:


·          1998 Reading                 Market Up + 27 % (3 Months Later) and + 36 % (6 Months Later)


·          2001 Reading                 Market Up + 22 % (3 Months Later) and + 22 % (6 Months Later)


·          2002 Reading                 Market Up + 14 % (3 Months Later)  and + 19% (6 Months Later)



If historical evidence holds correct then this reading should provide a similar solid tradable rally.



Bottoms Take Time to Form

Following up on yesterday's sentiment piece which detailed how investors are under-allocated to stocks and over-allocated to cash relative to their 21-yr respective mean allocations, the futures bumped early n the AM after a globally coordinated central bank rated cut was announced. Presently the futures are giving up that early morning strength.  That said we still believe that investors aren't fearful enough and that the coordinated easing will be perceived as a sign of just how bad things are - we think we need one more purge to wash out all the sellers.


However dont' be in a rush to find the bottom  as they tend to take longer times to form (lasting ones) as the attached image below shows the S&P 500 took 9 months in 2002 to complete its bottoming process. Next support comes in at 950 on the S&P (black line) then 932.


Weak Crude Price Additional Sign Economy Is Slowing
As seen in the chart above Crude Oil (green chart line) has fallen aggressively in the last several months.  Normally this would be a positive for stocks.  However as also seen in the S&P 500 (red chart line) has actually fallen as Crude has fallen.  This is a direct sign that Crude's weakness is more a sign that global demand for crude is waning and its falling, while ultimately a stimulous, is presently a warning sign and not a positive for stocks.


QID Scores Bullish Gap
As seen in the chart below the Powershares QQQ Ultrashort (QID - FusionIQ Master technical score 87 an inverse ETF that moves 2 times the amount (in the opposite direction) of the Powershares QQQ (the NASDAQ 100 ETF -FusionIQ Master Technical Score 16) scored a bullish breakout two days ago.  This bullsih breakout in a leveraged short ETF suggests the market still may have a ways to fall. 
The objective point and figure target for QID is $ 87.00.

EZPW - Pawn Shop Rocking as Economy Slumps
Several months back we highlighted EZPW shares as a possible way to play the slowing economy as it was likely their business would benefit from economic the slowdown. As the chart below shows EZPW (FusionIQ technical ranking of 100) scored a new high yesterday even as the DOW JONES and other indices here as well as abroad have slumped.
The unbiased point and figure target for EZPW shares is $ 27.50.

GE - Buffet to the Rescue ??? Maybe - Maybe Not
It has been highly touted in the media that Warren Buffet made a substantial investment in GE, additionally the company raised an additonal $ 12 billion by selling shares in an offering today,however the stock still acts like garbage. 
With a FusionIQ technical rating of only 14 (out of a possible 100) we have to say that the market is betting GE goes lower.  Again the old principle is not what is the news but how does a stock act in the face of that news.  We would suggest still avoiding GE given its low rating.  Support does not come into play again until $ 18.00.

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