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Monday - March 7, 2010
The Current Market
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Closing prices week ending (3/5/10) vs
week ending (2/26/09)
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The DOW 30 has closed back over the 10,000 level for
14 straight days
after falling under for 1 day, after trading over it
for 63 trading days
All but one index ended the week in positive territory
for the year, up from four the week before
The
indices closed higher on the week, as investors regained some optimism the U.S. economy is on the mend.
News
that the unemployment rate held at 9.7 percent in February as employers only fired 36,000 Americans, fewer than
expected. The figures suggested the job market is slowly improving but that any significant hiring is still anyone's
guess as to just when this might happen.
The
storms back East probably inflated some of the job losses but by less than the 100,000 or more that was estimated.
Without the storms, the economy likely would have seen a net jobs gain in February for only the second time since
the recession began two years ago.
The Federal Reserve told us consumer borrowing rose by $4.96 billion in January, surprising economists who
were expecting a decline by $4.5 billion. It was the first monthly gain after 11 months of declines and it was
the largest increase since July 2008. This means the overall increase came in at 2.43 percent and followed a revised
2.23 percent drop in December.
Earnings
reporting for the final quarter are winding down, but the tally so far shows more than 70 percent of S&P 500
companies have beaten earnings estimates for the fourth quarter, well above the 61 percent considered a typical
quarter, according to Thomson Reuters, which began tracking data in 1994.
Oil
prices moved higher on the week as China Premier Wen Jiabao said his country is on track for 8 percent growth this
year. Since China is the second biggest consumer of oil in the world after the U.S. it means the need will be strong
for years to come.
The
energy sector has been out of favor lately so any news of holding production will be good for the oil & gas
stocks.
Tomorrow
(Tuesday) will celebrate the first anniversary of the stock market's drop to 12-year closing lows on March 9, 2009.
Since then, the markets have screamed with the SPREAD and the Value line increasing over 100% while the others
are not real far behind.
March
started out like a tiger and if this pace keeps up a few days longer it may very well turn into a lamb.
The
11 month old rally is turning into a 12 month rally, but we have to ask ourselves if the economy is growing so
strong as to warrant this strong of a rally? Last week brought new highs on four indices, the Nasdaq, RUT, VL &
SPREAD, all favor the big OTC stocks, which in turn is very bullish for all markets. The big OTC stocks are the
country and the economy can never recover with out the smaller companies playing a major role.
When
I see new all-time highs on the SPREAD I end up with few reasons to be bearish, after all, I made the SPREAD and
I believe in it. I have been using it for 20 years and it is telling us the markets are going higher. The problem
is, it is much harder to discover just when the markets are going to take a break. Some times just the idea of
a new high is a good enough reason to call the markets overbought.
I
still favor the mining industry for the longer term, followed by "special product" high tech, homeland
security companies, military contractors, such as Boeing, and discount retail and wholesale department and food
stores.
There
is resistance on the DOW 30 at 10,700 and support at the 9750 level. This current trading range is a strong range
as it traded in this range from 1998 to 2000 and again from 2004 to 2006. June of 2006 was the last time the 10,700
level was tested until the new 52 week high of 10,725 on 01/19/2010.
Gold
still seems to be base building around the $1100 level, closing at prices ($1,135.20 oz), up + $16.30 on
the week, up + $82.40 in the last 4 weeks and up
+ $16.30 for the month of March. Following weeks
of record-setting gains, gold fell back from the $1,227.50 high reached early in December but has turned back quickly
since. Gold closed back over the $1100 level for week 3, after staying under it for 4 weeks. Selling dollars and
buying gold was a recent play and might still be.
Oil
prices closed the week at $81.50 a barrel (March's futures on Friday's close), up + $1.84 on the week
and up + $1.84 for March (weekly close). Friday's close is back over the $50 level for week 46, back over
the $60 level for week 32 week, back over the $70 level for week 12 and back over the $80 level after staying under
it for 7 weeks.
The
2010 high for oil was $83.95 on Jan. 11, about the same time that retail gasoline prices reached a high for the
year of $2.7583 per gallon.
The
record "weekly" closing high is $145.29 a barrel, set 7/3/08. There is no reason to believe prices will
climb back to anywhere near the previous high levels in the next few months, but the recent gains may have some
holding power. The $75 to the barrel mark is a fairly strong support level, but the closing over the $80 mark could
be a sign of higher prices holding for awhile.
The table below shows the how far
the indices have moved from the 52 week low.
The
table above shows the strength in the big OTC stocks as the VL
and the SPREAD, both indices that favor the big
OTC stocks, still lead the pack, but the mixed bag comes from the Transports, which has been up as much as 96 percent.
The DJT
is an index of only 20 stocks and this makes it hard to put a lot of faith into, but it is telling us this sector
of the economy is in favor. The SPREAD & Value Line have more than doubled since the low in March, a sign of increased
activity over almost all industries.
BUY NOW !
A
"Featured" Spotlight Stock!
Mineral Hill Industries Ltd. (MHI.V) (TSX) (52 week range 0.03 - 0.20 (Pink Sheets MHIFF), now at $0.05. Mineral
Hill Industries is our newest addition to the Stocks
in the Spotlight. We are excited about a company growing in the lithium industry, and the current properties held
by MHI offer strong possibilities for not only "high grade" lithium but other rare metals.
Click
on the following link to learn more about MHI. MHI
MHI
is one of my "top" buys for the current market, with the only way to go as up. The
recent backing in price was on good news and there has been a solid jump in the average daily volume, a very bullish
sign. I can't think of any reason someone would want to sell here, making the stock a "best buy". Also,
MHI should move on it's own and not necessarily with the markets, therefore if the markets take a big fall MHI
could climb at the same time. Could be an up
fast stock on any news! Buy now!
BUY ON PULLBACKS !
Advanced Micro Devices (AMD)
(52 week range 1.62 - 10.04), now at $8.61. AMD
moved from the low of $1.62 on November 25, 2008, to a new 52 week high of $10.04 a few weeks ago. AMD was moving
with the markets, but when news a few weeks ago, that Intel Corp. has to pay a $1.25 billion settlement came out
there was an immediate move in the price of AMD. The link below will take you to the news about the settlement.(more)
Although AMD has been very strong it has climbed
quite a bit and the recent backing should be expected. Look at this pull-back as a possible time for entry. If
the economy continues on a recovery, AMD will recover along with it.
I liked the stock under $2 and I like the stock here.
Could we see $40 again???
Buy here if long term, or under $7.53 if a short term player!
BUY HERE !
A
"Featured" Spotlight Stock!
A "Buy Here, Buy Now" "Spotlight
Stock"
Jet Gold Corp. (JAU.V)
(Canadian)(Pink Sheets JAUGF)
(52 week range 0.06 - 0.16), now at ¢0.07.
Jet Gold is an exploration and development company with interest in natural gas, oil & precious metals.
Press Release's
Jet
Acquires Rare Metals - Gold-Silver-Tellurium (Au-Ag-Te)PR Newswire
PR Newswire (Thu, Feb 25)
VANCOUVER, February 25, 2010 /PRNewswire-FirstCall/ -- Robert L. Card, President, Jet Gold Corp. (TSX-V:JAU.v - News)
is pleased to announce that the Company has negotiated an option agreement to acquire a 100% interest in the Big
Hammer property near Terrace, British Columbia, Canada. The Big Hammer property hosts a new rare metals, Gold-Silver-Tellurium
(Au-Ag-Te), discovery made by the British Columbia Geologic Survey in 2007. (more)
Assay
Results From Big Hammer - Gold-Silver-Tellurium
PRNewswire (Thu, Feb 25)
VANCOUVER, February 25, 2010 /PRNewswire-FirstCall/ -- Robert L. Card, President, Jet Gold Corp. (TSX-V:JAU.v - News)
is pleased to announce assay values from its proposed acquisition of the Big Hammer gold- silver-tellurium (Au-Ag-Te)
property. The acquisition of the Big Hammer property is subject to the approval of the TSX Venture Exchange.(more)
I
believe Jet Gold has a strong management team that is dedicated to achieve success. Tellurium is hot and a company
can sell all it can find. Gold is hot and profitable to mine at current prices. The new property appears to be
a "right place, right time", but only time will tell and as news is made the price of the stock
is capable of moving quickly.
The
price of the stock makes investing in Jet Gold a steal. There are not that many shares in total and much less in
the float, especially at the current low levels. I expect the first bounce to be a good one.
I
don't see any reason to expect the shares of Jet Gold to remain here, and moving lower should be out of the question
when we consider the last few press releases. Volume has been increasing and now is the time to pick up some shares.
Buy here & buy now!
The below table shows how far each index
is up
or off from the 52 week high vs the week before
The
table shows 0 indices closing off more than 10 percent to the "52 week high",
a definition of a correction, compared to 0 the week before. Four indices set new 52 week highs this past week,
a bullish sign with a leaning toward the OTC and growth stocks.
The SPREAD
reached the last "all-time" high on the 5th of March/2010 after backing off a little over 7.9% before
turning back up. Since the SPREAD is a leading
index, the new all-time high is bullish for the near term, but it needs to be confirmed by at least
one other index setting a new all-time high. The VL is the nearest with only 3.69% to go before reach a
new record all-time high.
Looking Forward
The
big question is just how long can the markets climb on hopes and dreams? Yes, most corporate earnings beat expectations,
but they should since they are coming off one of the worst market crashes since Carter made Little Liver Pills.
The ones missing targets might be the dangerous ones, since almost any improvement will show positive comparisons.
My concern is still with the number of Americans
still losing their jobs or can't find new jobs, because a jobless recovery will have short legs. I am still concerned
about the American Dream that is still an American Nightmare for so many. It is hard for a family to spend money when they owe twice what the home is really worth.
It sort of takes the wind out of the sales. Still, the markets are strong and indices are starting to set new 52
week highs again. This is great but is also a sign of a market possibly becoming overbought. Look to mining and
energy stocks for the longer term play and hopefully the least amount of downside risk. Continue to use caution and stay with the bargains in the smaller caps!
Buy
- VALUE - PRODUCT - OPPORTUNITY!
- Remember -
It is not what is "going" to happen that moves the markets,
but what investors "believe" is going to happen!
This
is the kind of market where the smaller companies and the newer companies may be the better place to be. Small
stocks tend to move on their own and not so much with current events. A choice small stock is a great place to
be in such confusing markets. If the move is a good one, the smaller stock will climb at a greater percentage,
allowing a stronger return on fewer dollars.
The
concept does work, but the problem is finding the best and the correct stock to move into. Look for a stock with
a great story, because with small stocks the story is what makes the difference.
Continue
to look for stocks near the lower end of the trading range with strong daily volume, and growing revenue, for the
best bargains. Avoid stocks that seldom have news and have stayed down too long.
Two Very Important Rules To Follow
"BUY LOW"
"HAVE PATIENCE"
Be sure to visit "The Past Week" for
a look at additional
information, stats and tables covering last week's markets.
Clicking on "Market Comment" will take you there!
Be sure to visit "Monthly Gains & Losses" for a look at the
past "monthly" performance on the indices going back to 1994.
Clicking on the "Index Gains & Losses" will take you there!
Be sure to visit our "Spotlight Futures" for a look at
metals, oil and currency futures updated weekly.
Clicking on the "Spotlight
Futures" will take you there!
Be sure to visit our weekly "Stocks to Watch" section
for brief of updated opinions on several
Spotlight favorite's from the past.
Clicking on the "Stocks To Watch"
will take you there!
"If in the right stock, at the right price,
the market direction will mean little!"
There
are still many negatives with the economy, and the markets, so continue to use caution and stick with value stocks
for safety. Close all PUTS. Choose wisely!
I am J.R. Budke and this is my opinion!
| The recommendations and updates in this week ahead may include "forward-
looking" statements as that term is defined in the Private Security Reform Act of 1995, & therefore are
subject to various risks & uncertainties. There can be no assurance that actual results, business conditions,
business developments, losses & contingencies, and local & foreign factors will not differ materially from
those suggested in the "forward-looking" statements as a result of various factors, including market
conditions, competition, advances in technology, acquisitions, potential litigation, personnel changes, capital
availability, and all sorts of other factors. Do not make investments based on the material provided in this article.
Investors should not make decisions based on any of the material featured here without first consulting with their
brokers and/or financial advisors. |
J.R. Budke was a stock broker from 1981 to 2000, an options principle
since 1982 and a branch office manager since 1987. JR became inactive as a stockbroker on 12/31/99. J.R. writes
most of the articles and opinions for the Stocks in the Spotlight. The
stories and stocks found on this site, or any "Stocks in the Spotlight" written material, are the opinions
of J.R. Budke, unless other wise stated, and should not be considered as advice.
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