By Gareth Soloway on April 21st, 2010 12:33pm Eastern Time
After unbelievable moves higher, many metal stocks are now seeing unique price action over the last couple weeks, going against the flow of the markets. The markets have inched higher, making a new 52 week high in the last week, but key stocks that are a solid gauge of a healthy economic rebound have stalled and some have fallen sharply. This may be as sign of trouble brewing as they can often be an economic leading indicator.
Take a look at these charts below. Southern Copper Corporation (NYSE:SCCO) topped out in January at a 52 week high of $36.29. While most other stocks have since taken out that January high in the recent stock market run up, Southern Copper has not. The stock hit a low of $30.84 today, well off that January high. This is a tremendous fall since January. Southern Copper is known as a leader, and strong price action would dictate global economic growth.
Next, let's look at AK Steel Holding Corporation (NYSE:AKS). The stock also topped out at a 52 week high at $26.75 in January and has since never even looked back. In fact, in the last two weeks, the stock has collapsed lower, hitting $18.51 today. This again does not show us a robust growth situation in the global economy which is what the markets supposedly have rallied on, over the last few months.
Stocks like United States Steel Corporation (NYSE:X), Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) and many other metal plays show the same chart.
In understanding how the metal stocks play a key role in showing economic growth, it leaves me to wonder if we truly do have as robust of a recovery on our hands or if it can last once the stimulus is taken away. In addition, it makes me wonder if these stocks rolling over could be a leading indicator for the markets to lose ground shortly. Join the Research Center to gain access to the secret techniques, guidance, plays and education that the hedge funds utilize to make billions.
Metal Stocks Are Getting UGLY (NYSE:FCX) (NYSE:X) (NYSE:CLF)
By Nicholas Santiago on April 21st, 2010 12:25pm Eastern Time
Most savvy investors and traders know that when the industrial metal stocks trade higher it is a sign of economic growth. The legendary trader, Jesse Livermore used to say that all houses are built with copper roofs. What he meant by that is, when copper is strong it is an indication that the stock market is strong. Therefore, when we look at the leading metal stocks at the present time there are some negative signs brewing in this market.
The first major metal stock that is acting poorly is Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX). This stock is still sharply below its January high which was 90.00 a share. Today the stock is trading down 2.00 points to 78.43. The stock will have some daily chart support in the near term from a technical oversold condition around 77.00 and 74.00. In any case this market leader has been weak and has more downside in the cards.
The next important metal stock that seems to be under pressure on the daily charts is United States Steel Corporation (NYSE:X). This stock has declined sharply since forming a recent top on April 6th, 2010 at 70.00 a share. Today the stock is down 1.24 to 57.65. The daily chart looks to have more downside to come. The stock will have some daily chart support in the near term around the 55.00 – 54.00 level from an oversold condition .
Another major market leader in the industrial metal space that is showing weakness is Cliffs Natural Resources Inc (NYSE:CLF). This leading iron ore pellet producer topped out recently around 76.00 a share on April 15th, 2010. The stock is lower today by 1.70 to 68.41. This stock will have good support on the daily chart around the 60.00 level. Although, it is weak and may still have further to decline in the near term.
The overall market indexes are still very strong and in a technical uptrend. However, these leading metal stocks are painting a different picture. We all know China is trying to cool off its real estate market by curbing mortgage lending. This could be a good reason for the pullback in these industrial metal names. If the emerging markets cool off what is left to this rally? Beware.
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OIL's $2.00 RALLY IS NOT ENOUGH to break above the 84 trend line, which similar to last Wednesdays $3.00 rally when it failed the $86.40 trend line resistance. Despite a stronger than expected ZEW survey from Germany, Greece continues to weigh on the euro, which is down a full cent. EURCAD enters its 6th straight weekly decline, while todays 300-pip decline, gives back 9-days with of gains. Prospects of retesting the 1.33 are on the rise, but AUDCAD is the pair which will likely face deeper selling against the loonie as the uncertainties from Chinas monetary policy escalates further. GOLD capped at 1144hourly trend line resistance from Fridays1160 high, calling for 1128.
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By Nicholas Santiago on April 20th, 2010 12:39pm Eastern Time
The energy stocks have lead today's market higher right from the opening bell. During the first hour of the day the major stock market indexes struggled and traded into negative territory. However, the energy stocks did not flinch and were rallying even as the market indexes declined.
Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX) are two leading integrated energy stocks that are trading sharply higher today gaining nearly 1.00 point on the day. Exxon Mobil Corp has the largest market capitalization in the stock market valued at over $325 billion. This stock can single handedly lift the stock market and often does.
The Oil Services Holders Trust (NYSE:OIH) is an ETF that holds a basket of the leading oil services stocks. The Oil Services Holders Trust is higher today by nearly 5 percent. The largest holdings in this basket of oil services stocks are Transocean Ltd (NYSE:RIG). This stock is up by nearly 4.00 points today to 92.26. The seconds largest component of the Oil Services Holders Trust is Schlumberger Limited (NYSE:SLB). This stock is higher by over 2.60 to 67.85. The third largest holding in the Oil Services Holders Trust is Halliburton Co (NYSE:HAL). This stock is up more than 1.90 or 6 percent to 33.45.
Now we can see why the Oil Services Holders Trust is having such an impressive day. When you can combine all of these leading energy companies moving higher it is easy to see why the markets are positive today.
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The Bank of Canada rate decision is due at 13:00 GMT will undoubtedly make another reference to the strong loonie dampening. But watch for any upgrades in the BoCs GDP growth forecasts. In Jan, the BoC forecasted GDP growth at 2.9% and 3.5% for 2010 and 2011. Daily stochastics in USDCAD treading on bearish ground, with support standing at 1.0070s. EURUSD seen capped at $1.35, which is the support of most of last weeks price action. GBPUSD boosted by higher than expected mar CPI figures, but emerging resistacne standing at $1.5440, hrly trend line from Apr 15 high.
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By Trader X on April 19th, 2010 1:54pm Eastern Time
Exxon Mobil Corporation (NYSE:XOM) is a leading energy stock and major market mover. When this stock trades higher or lower on the day the major indexes will often follow. This reason for this could be due to the fact that Exxon Mobil Corporation (NYSE:XOM) has the largest maket cap in the stock market. Today XOM is positive by a couple of cents. The will be intra-day resistance for XOM at 68.13 and 68.35. Both levels could be possible pullback areas for XOM
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By Gareth Soloway on April 19th, 2010 1:02pm Eastern Time
As I continue to trade based on technical charting, I look at past charts and am amazed at how well they truly work. One of these best examples can be found on Amazon.com, Inc. (NASDAQ:AMZN). The chart on AMZN, seen below, shows a move into the late 2009 highs. This high level at $146 also represents an all time high on the stock.
My reasoning for shorting this was mainly technical but I also used common sense. First, the double top all time high is always a great play. The second factor was the Kindle. The Kindle is in direct competition with the IPAD now, Apple Inc. (NASDAQ:AAPL) new gadget. With Amazon trading at all time highs, plus major competition in the works, it seemed like a no brainer.
Sure enough, the technicals gave the heads up, and the thinking process was true as AMZN has pulled back solidly to the $140.00 level from $146.00. Read the charts, they tell you the truth unlike the nonsense hype from Wall Street and the media.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks
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By Gareth Soloway on April 19th, 2010 12:08pm Eastern Time
The markets have just slammed into a technical support level at a double bottom from Friday. While this generally is a strong support area, it may not hold. As a Chief Market Strategist, I am seeing a change in technical price action in the markets today. While over the last two months, middle of the day, light volume has floated the market up, today, it is taking it down. In addition, there is continued worry over financial regulation in the wake of Goldman Sachs Group, Inc. (NYSE:GS) being charged with civil fraud. Global economic worries are focused on Europe from the lack of travel because of the Icelandic volcanic eruption.
The SPDR S&P 500 ETF (NYSE:SPY) hammered into the double bottom from Friday. This level may hold in the short term but is unlikely to hold in the long run because of the key factors mentioned above. It is looking like this market has a chance of confirming a pivot top. Keep your eyes on this market, with oil dropping, financials dropping and even stocks like Apple Inc. (NASDAQ:AAPL) falling, the market is on the verge of a possible short term correction.
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Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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FRIDAY's 14% SPIKE IN THE VIX suggests that Fridays declines in US equity indices might not be a 1-day event. Each of the last +8% spikes in the VIX (Jan 20th and Feb 4th) involved a decline of at least 5% and lasting at least 1 week in US major indices. One UNUSUAL DEVELOPMENT in the recent rally of US equities is that emerging market indices (Brazil's Bovespa and India's Sensex) had fallen by as much as 4% BEFORE the high was reached in US indices. Such rare divergence between emerging market equities and those in the US suggested that S&P500 and Dow are due for a correction of at least 3-5%, which could drag the S&P500 and the Dow towards 1,150 and 10,550 respectively.
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By Trader X on April 19th, 2010 10:30am Eastern Time
The U.S. Dollar Index has declined sharply ever since the opening bell rang at the New York Stock Exchange. This type of dollar action occurs almost daily. It is notorious for occurring when the stock market is vulnerable to a decline. By know everyone should know that a falling dollar will help lift many commodities and inflationary related stocks.
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By Gareth Soloway on April 19th, 2010 11:46am Eastern Time
The markets are slightly lower on the back of continued worry about financial regulation in the aftermath of charges of fraud against Goldman Sachs Group, Inc. (NYSE:GS). In addition, a volcanic eruption spewing tons of soot in the air in Iceland has put a stop to most air travel across Europe. This is causing oil to drop sharply. Oil is down over $2.00 today and the United States Oil Fund LP (NYSE:USO) is down over 2%.
Volume seems to be subsiding today as Wall Street is now waiting for further information on Goldman Sachs. Wall Street understands that this charge is politically motivated with financial regulation on the horizon. President Obama needed a push to have enough votes to pass the strong financial regulation he wants and now he will have it.
In January, financial regulation started the correction, now it seems it could be starting it again. As a Chief Market Strategist, I am looking for a key confirmation signal. Should that happen, this market may have put in the top.
Aside from Goldman Sachs, other noteworthy news came from Citigroup Inc. (NYSE:C). They reported earnings of $.14, beating on revenues and EPS. Wall Street had expected a break even quarter.
Earnings overall have been very solid. From technology to financial firms, they have been beating on almost all counts. However, some companies have fallen on earnings. Why? Simply put, stock prices have run up since the February 5th, 2010 bottom and in many cases were sitting at new 52 week highs and in some rare cases, 2007 highs. This tells us that these stocks had already factored in the amazing earnings they have been reporting.
After the close today, International Business Machines Corp. (NYSE:IBM) is set to report. Analysts are expecting $1.94 per share while the whisper number sits higher at $2.01. It will be interesting to see how the stronger dollar over the last quarter impacted their earnings.
IBM is just warming up the tech sector for the big fish tomorrow. After the close on Tuesday, Apple Inc. (NASDAQ:AAPL) will report earnings. This will be the biggest tech stock of earnings season. Everyone is curious to see how sales have been. AAPL is hovering near all time highs as it sits under the $250.00 level. Earnings are expected to be around $2.43 per share. The whisper number is expected to be upwards of $2.75 per share.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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