Taking Stock: That was a Retest

We finally had the retest, and it looks as though we will get another one, considering that we are at Dow 8000 and possibly dropping a little more.

The market, according to both Dan Fitzpatrick and Dr. Stephen Leeb, will probobly be stuck in a range for a couple more months until the stimulus packages and cash infusions work their way in to the economy, but I am not incredibly concerned about that because of the number of stocks that I have that are in an uptrend despite the somewhat stagnant, but volatile, market.

I noticed that Wells Fargo (WFC) gapped up, and now appears to be forming a flag pattern, which can be seen in the decreasing volume. Wells Fargo is quite possibly the only bank that did not need any cash infusions from the government, besides the money that they recieved for having acquired Wachovia. I think US Bancorp might be in a similar position also, but don't hold me to it.

I downloaded the conference call for CE Franklin last night, and they sound as though they are in a decen position. I need to look to see how much of their business is dependent on Canadian tar sands. Tar sands is expensive to extract & process, so it needs the price of oil to be at $80/bbl in order to be profitable. Other CAPEX (CAPital EXpenditures) have been being cut and/or reduced since the price of oil has been dropping. My understanding is that the CAPEX that has being cut is related to the places where it is expensive to produce oil for a profit, so those projects have been being cancelled. CE Franklin's Debt/Equity ratio is beautiful, coming in at 0.165. Their stock price is still below the book value also. I also noted in the conference call that they might make some more acquisitions, since the troubled economy has created some value and opportunities.

It looks as though Gold may have finally broken out above the $900/oz. level, and silver is following in suit. As Dr. Stephen Leeb has been saying for quite some time, the price of precious metals will likely outperform the rest of the market.

Crystallex (KRY) is in a definite uptrend. It was interesting to see that Hugo Chavez indicated that private gold mining companies may not be excluded from mining in Venezuela.

NovaGold (NG) is also in a definite uptrend. They managed to get thier bridge loan situated, and recieved some financing. What they need now is to get their Rock Creek mine back on-line, if they have not already done so.

Yamana Gold (AUY) and Pan American Silver (PAAS) have been in an uptrend, but should only be accelerated by the increase in the price of gold and silver.

Hexcel (HXL) is another that should now be in an uptrend. They had a good earnings report, and consequently had 2X the volume that day and four days of rally to follow it. That day of 2X volume put them above the 20DMA and 50DMA, with the 20DMA moving above the 50DMA. They should be in an uptrend now, but will be confirmed if there is a pull-back to the 20DMA and bounces off of it. I'm looking forward to the Boeing 787and the Airbus A380 to go in to production, hopefully starting this year. I think the production of those jets will be a considerable boost to the economy. B/E Aerospace (BEAV) is in an uptrend also, which is in the Aerospace sector along with Hexcel.

Consensus is that the price of oil is bottoming out, and can be seen in the price of Transocean (RIG) and Ultra Petroleum (UPL).

Dryships (DRYS) has really screwed up this time. They have been caught in the credit crisis, along with having a Debt/Equity ratio of over 1.3, which is quite high. George Economou has subsequently canceled some recent orders for some newbuilds, and canceled the dividend for the fourth quarter in order to preserve and/or raise cash. I sold all of my shares for the time being, but will watch for the price to bottom out so that I can but it back again. Part of my reasoning to buy it back is due to the BDI continuing to increase, thanks to China.

Taking Stock: Retest?

Was that it? Was that the supposed retest of the November lows that everyone has been talking about? I was anticipating it going lower than it did today. Maybe the market will drop tomorrow. I'll see what Dan Fitzpatrick says in his video tonight.

There was a certain beauty in the price movement of the precious metals stocks that I have. The movement was almost textbook, with it dropping back just enough to touch the 50DMA, both on Pan American Silver (PAAS) and Yamana Gold (AUY). Maybe now they will go through the 200DMA this time, and things will continue to work out the way I had so devilishly planned.

NovaGold (NG) and the infamous Crystallex (KRY) are not included in that price pattern. I think Crystallex will ultimately go higher, along with NovaGold.

Out of curiosity, I looked at the time frame in which it took oil prices to climb from ~$50bbl to the previous high of ~$140bbl. The timeframe that I found turned out to be 1.5 years, and only about 6 mos. to fall back to around $50bbl. I have been reading that the inventories of oil have been increasing, supposedly due to the lack of demand. There was also an article on Reuters saying that the price of gasoline has been being held up artificially due to refiners producing alternative products that are more profitable. Traders have also been buying oil and oil futures while the price is down, in hopes of selling it at a higher price later (that's the idea, right?).

My interest in the price of oil is due to my positions in Transocean (RIG) and Ultra Petroleum (UPL). Natural Gas prices virtually track the price of crude oil. Transocean tracks the price of oil, so I suppose what I am saying is that Transocean and Ultra Petroleum trade almost in sync with each other. I have been keeping an eye on the charts and watching the 50DMA progress to flattening out.

Jim Crammer was talking about Transocean in a video on his website, saying that it is "too dangerous to own right now". I used to attentively watch him, but now I just use him for ideas. If you want to buy Transocean (RIG), just make sure you get it near support. Stephen Leeb has been right about many things (much more than Cramer), so I figure that he will ultimately be right about there being price shocks in oil. As he has mentioned in his Market Updates, major oil projects have been being cancelled, which will cause a shortage in oil one demand picks up again. On that note, I am confident in saying that China is back in the swing of things.

I have also noticed that Boeing and Airbus are supposedly going to ramp-up production of their new jets this year. I'll believe that when I see it in the headlines.

I'm still sticking with my sector rotation strategy.

Taking Stock: When The Going Just Isn't

This market has a tendency to make me feel like an idiot, but if I don't learn anything from it then I am a fool. The market will ultimately go higher, even though it may not be in the near term.

- The BDI is still going higher.
- Inflation is inevitable, which even Berananke acknowledged in his recent presentation.
- Oil is not becoming any less scarce.
- China is still growing.
- The Boeing 787s and A380s will eventually be built.

Taking Stock: Pretty Picture!

I found a very pretty picture today. The trend line for one of the commodity indexes has been broken!

I also did some re-allocation of my positions:
-Sold Axsys Technologies (AXYS) at $50/share, because it may very well break down from here, and The Obama-nator has been talking about making defense cuts.

-bought some more Dryships (DRYS) @$12.50/share

-put in a limit order to re-start my position in B/E Aerospace (BEAV) @ $10/share, even though I wanted to get it at $5. It looks as though it will go higher. The 52-week high for BEAV is upwards of $50/share. Do the math.

-going to put in a limit order for Commscope (CTV) also, but have to determine a price. I had sold it last year up ~$30 or so per share.

-looking to take the cash that I salvaged from Axsys and re-allocate it to Bucyrus (BUCY) and Hexcel (HXL).

I am very happy to see that NovaGold (NG) managed to get their bridge loan approved, and now have a $60M investment from a private equity group. They have also extended their loan to $75M, so I am looking for NovaGold to move higher from here.

The infamous Crystallex (KRY) rallied handsomely recently, which I think is partially due to Rusoro having put in an all-stock bid for Gold Reserve (GRZ). At present, it looks as though Crystallex will start to move higher also. Normally, Hugo Chavez and his governmental cohorts only require 15% of the gold from a mine, but I think he and his gang will end up requiring 50% of the gold from Las Cristinas.

The Metals & Mining stocks, along with other commodities stocks, tend to trend along with the CRB/CCI. Inflation will more than likely become prominent before long, which will be beneficiary to commodities. I still think the Dollar will go lower sooner or later, which contributes to inflation. I'm also still sticking with my strategy of a little sector rotation, and cycling some funds from my precious metals positions to my energy positions, which have yet to start to trend higher. I think energy has bottomed, which is supported by multiple information sorces (Leeb, Fitzpatrick, and even Cramer), and can also be seen in the price of gasoline at the pump lately. Remember when gasoline went from ~$4.00/gal. down to ~$1.75/gal. in a short period of time? Well, it is currently back to ~$1.90/gal.

Taking Stock: HAPPY New Year

Last night and this morning, I was reminiscing on the adage that says what the market does in January, is what is likely to happen the rest of the year. Last year, we had a broad market sell-a-thon in January. This year, it looks as though we will have a breakout due to the massive amounts of liquidity pent-up on the sidelines that is now working its' way into the market.

Things are looking up. The Dollar has dropped, and now it looks as though the bear market rally has begun. I'll be looking for the indices to go to their 200DMA, and possibly higher, then anticipate another leg down.

According to the infamous Dr. Roubini, we are not done with deflation, so I am wary and keeping and eye out for that, hence the possible next leg down.