Does it make you feel ... ?

I wonder if there is anything that is completely devoid of emotion, especially when you consider what can stimulate human emotion. I have my doubts, but I suppose it depends on how emotional stimulus is classified. I don't think anything can be completely void of cognition, but I also suppose that cognitive necessity also depends on classification.

Taking Stock: Warning about Cramer

I have the same problem with Jim Cramer.

Did he predict the DJIA dropping below 7,000? I still remember when he was on TV capitulating. It seems as though whomever I meet that knows anything in relation to the stock market does not like Jim Cramer. Go figure. I'm not bashing him, but would simply like to issue a warning.

Although, I reiterate in that it seems as though one of the most difficult things to do in regards to investing is knowing what to learn and where to start. One of the other difficult things to master is having the right thought process and rationale for as to when to buy, and when to sell.

Taking Stock: Macros

For the present term, it appears as though the broad market is going lower. The theme for gold is that it will be going much higher. Ben Bear-nanke was claiming that there is no threat of inflation, but that has yet to be forseen. He gave hints to the overall economy possibly improving in the second half of the year. According to Dr. Stephen Leeb, inflation will prove to be a problem in the not so distant future. The way I see it, Dr. Leeb has been right about quite a few things in the past year or so that I have been following him.

I looked at some of the macroeconomic indicators this morning, and they appear to be just barely starting to improve. One of the first things that I noticed starting to improve was the fact that there is actually demand for oil in the recent report. It was not much demand, but it was better than nothing. We will see if the crude inventories continue to decrease. Something that Dr. Leeb has been saying repeatedly is that there will be more oil shocks coming, somewhat proportionate to the previous oil shock of last year. I am interested in seeing if that happens.

A few other macros that I noted:
-Personal Income increased for the prior two months by 0.4%
-Personal Spending increased by 0.6%, which is up from -1.0%
-Personal Consumption & Expenditures increased by 0.1%

I don't watch the unemployment rate or jobless claims quite so much because it is a lagging indicator. The consensus for the unemployment rate is that it will continue to climb.

The report from the Bureau of Economic Analysis for the preliminary GDP was a contraction of 6.9%, which is a huge contraction. I recall seeing a report from, if I remember correctly, National Bureau of Economic Research (NBER) that there would be a small contraction in 3Q08, large contraction in 4Q08, and anoher small contraction in 1Q09. So far, the 3Q08 & 4Q08 have proven to be true.

To me, it appears as though the overall economy could quite possibly be starting to recover, although it is going virtually unnoticed.

Taking Stock: Trading Patterns

There are a few well-known trading patterns:
-Pennant
-Flag
-Wedge

I came up with a new one recently, which I call the Bearish Cliff Pattern. We had one in the major indexes in October & November of 2008.

Taking Stock: Trading Possibilities

I was also looking at CE Franklin (CFK) to make some trades. If it bounces off of the 20DMA, then I'll have two data points for both support and resistance on the uptrend. That would allow me to trade it in a channel.

I'm not sure about Compass Minerals (CMP) yet. As Dan Fitzpatrick says, "Don't be the first one out of the foxhole". It needs to start to bounce before I can put in a limit order and a trailing stop loss order. It looks as though $65 is the resistance level for Compass Minerals (CMP).

I am happy to see that DryShips (DRYS) could finally be starting to move higher again. I'm not sure of the proper name for it, but there is an overall long-term trend line that was serving as a severe level of resistance, and DryShips has broken through it. I also read a message board for DryShips, and I have noticed that quite a few other people have lost a substantial amount of money. It seems to be a common theme.

Jim Cramer was recommending Axsys Technologies (AXYS) not long ago. That's funny, because I was considering shorting it, considering that it is is a well-defined downtrend.

There's an article about the DJIA possibly being overhauled.

The DJIA broke another level of support last week. So far, at least from an empirical perspective, it doesn't seem to be a broad-based sell-off. It just seems as though positions are pulling back to the most recent support level. That is part of the reason why I am interested in the overhaul of the DJIA. I was somewhat shocked to read that GE is down to single digits, but I have heard that it is being grouped along with the financials. It is a similar situation to Wells Fargo (WFC), which is getting dragged down because it is in the index along with other financials. Wells Fargo is actually one of the better banks right now, because they did not participate in the sub-prime "give a loan to anybody that wants one" frenzy. Yet, since their stock is grouped along with the stock of bad banks, it will be dragged down along with them.

On that note, there is a good playlist of videos to watch on the credit crisis.

Since the broad market has broken support, I'll put in some stop loss orders for the previous support levels of stocks that I own. Once support is breached like that, then who knows how much lower it will go.

Taking Stock: Breakout Fakeout

Well ... so much for the supposed breakout! Instead, the broad market sold off to new lows. There has been some discussion about some of the DJIA-30 components being replaced with some new ones, which should be interesting.

As of late, I have just been looking for some trades, and to implement the guidelines that I have learned from watching Dan Fitzpatrick's videos. One of the stocks that I was looking at earlier today was Compass Minerals (CMP). It looks to me like it has a nice trading range/channel.

I was reading another article about Boeing being in production of the 787 Dreamliner. I also noticed that Airbus is in production of their A380 jet.

I am a little wary of Transocean (RIG) at the present time, because it normally trades dollar for dollar with the price of oil. Oil is ~$40/bbl, and Transocean is trading up ~$60/share. I put in a stop-loss order at $55/share as a precaution on the divergence.

Taking Stock: The Current Theme

The curent theme now is, as Dr. Leeb has been mentioning for months, is an impending breakout of the broad market to the upside due to inflation/reflation.

Check out Dan Fitzpatrick's free chart of the week and you will see what I mean.

I love it. That's what I have been waiting for for a few months now. It is a good scenario for precious metals and other commodities. I have also noticed that the earnings reports for quite a few of the companies that I have shares in will be repoted in the latter half of this month, which I am looking forward to.

The Baltic Dry Index moved to the upside by 168 points today, which is great for DryShips (DRYS). The CEO of DryShips, George Econonou, managed to get the debt covenants reworked with a better deal than what he had before. The stop loss that I had put in was executed, but I ended up buying it back for $0.40-$0.50 cheaper than what I had sold it for along with more shares than what I had before. The BDI moving up with leaps and bounds is a great catalyst for DryShips (DRYS) and dry-bulk shipping in general.

Great news from Boeing regarding the 787 Dreamliner. Granted, they are only for testing, but at least they are in production now. Now I am anxious for the earnings of both Hexcel (HXL) and B/E Aerospace (BEAV) to be affected by the production.