Wednesday, February 16, 2011

Silver's Big Test

!! Jack Steiman, On Wash, Rinse, and Repeat Upcycle (SwingTradeOnline)

It's the same ancient tale. Wash, rinse, and repeat. The market goes
higher until the daily charts get those 70 RSI readings, and then it
sells off a bit to unwind some. Once unwound just a modest bit it
starts its journey once again to the upside. At some point that'll
stop. The RSI, stochastics, and MACDs, will some day really sell off
when everyone expects it not to.

For now, you give the market the benefit of the doubt, and know that
once it unwinds, some of the moves back up will once again resume. It
would be just perfect if we'd sell hard for a while to allow those
oscillators a real rest, but they may not come for a while longer. So,
for now, you continue to play with long exposure only. Shorting makes
modest sense, and those of you who have tried it have doubtless
learned a hard lesson about shorting a primary uptrend.

I can't argue with you for a pullback being necessary, but the
earnings keep coming in on a positive note, frustrating the bears.
Earnings rule the roost, and we are seeing mostly very strong numbers
from the majority of sectors. The commodity stocks continue their
overall rampage as it has become clear to all that inflation is the
real global conundrum, even if printing press Bernanke refuses to tell
the truth to this country's inhabitants. He's trying to tell us that
inflation isn't terrible. All you have to do is take out the cost of
food, health care, and energy, and all is fine. Too terrible that
these are the things we use most, but as long as he tells us we don't
count them, he's satisfied to lie to us all. Whatever!

The commodity world knows differently and that's why they continue to
lead this bull market higher. Lots of participation everywhere else as
well, but nothing has led like those commodity stocks. Inflation is
the real conundrum from a total world perspective.
The stock market is telltale us that. Look at FedEx Corporation (FDX).
They warned, and said part of the reason is because of higher fuel

The market is very overbought, folks. Don't lose sight that within
bull markets we do get overbought, and sometimes quite a bit so. RSI's
are in the mid 70's on the Dow. Low 70's on the S&P 500, with the
Nasdaq right near 70. Many other index charts are well above 70. There
will have to be a pullback very shortly. Be prepared for it and don't
be shocked when it hits. A excellent pullback doesn't end the bull
market, but it does offer up more opportunities. That's something I
wouldn't mind seeing as it's getting harder and harder to find
excellent set-ups due to highly compressed moves already in place.

Can overbought get more so? Sure! But, make no mix that the higher up
we go in terms of the oscillators, the harder we'll fall when it
snaps. I need not remind you of how quick things can turn down. We've
all experienced this unexpectedly. Don't get caught off guard.

The Nasdaq has fantastic support down at 2755/65. This trend line has
held perfectly thus far. 2860 is the ancient high from 2007. This is
unlikely to get taken out should we continue higher, even through some
small-term pullback's to unwind a bit. 2757 is also the 20-day
exponential moving average. 2755/2757 is very powerful support. On the
SPX, 1305 is the 20-day exponential moving average, with 1275 the
50-day exponential moving average. I'd like for this market to visit
the 50-day on the SPX, but I am not counting on it. The bull market
remains in break down, but small-term things are perilous.
Don't get overly aggressive, but keep some scratch in the game.

!! Mike Paulenoff, On Silver\'s Huge Test (MPTrader) !!

Spot silver prices pivoted off the Jan 25 low at 26.34 and have since
climbed towards a confrontation with the prior bull market high at
31.29 established on Jan 3. Spot silver has in excellent health more
than 80% of the "bearish engulfing candle" -- key downside reversal
candle off of the 31.29 high on Jan 3 high to the 28.83 low on Jan 7.
This usually results in a total recovery that tests the top of the
candle (31.29).

Such a test could be forthcoming in the hours immediately ahead, which
will have significant technical implications for silver prices

If this 31.29 level is hurdled and sustained, it should trigger upside
continuation towards 32.50-33.00 thereafter. From a huge picture
perspective, only a decline that breaks the Jan low at 26.34 will
confirm that silver has place in a significant peak.

The Silver Wheaton Corp. (SLW) sample resembles the spot silver
sample, but must hurdle its Dec-Jan resistance line, now at 37.17
prior to acceleration towards a retest of its Dec high at 42.34. If
spot silver hurdles and sustains above 31.29, SLW should play catch-up
in a rush.

!! Sinisa Persich, On our Free Stock Pick: BTU (TraderHR) !!

Peabody Energy Corp. (BTU) surged 3.06, or 4.87%, today on
higher-than-average volume and finished at its highest close in more
than two years. It closed at 65.90, substantially above key resistance
at 65.00, confirming the breakout. The close was also near the high of
the day, another excellent sign and indication of possible
continuation of current momentum.

We're looking for a go towards the 69.50 area in the next couple of
days. Preferred access (buy stop) price is at 66.20, with a stop loss
at 64.00.

!! Harry Boxer, On 4 Charts to Watch (TheTechTrader) !!

The market still pushes forward and there are a lot of stocks looking
not only positive, but breaking out.

BSQUARE Corp. (BSQR) is looking excellent, up another 1.21 to 11.99
Monday. It closed right at the January highs, which could lead to a
nice thrust if it breaks out. I'm looking for it to eventually go up
to the 17 - 18 zone.
Small-term trading target is 14.

IPG Photonics Corporation (IPGP) had another fantastic day Monday.
That's two in the last three sessions, with a huge run up of 12.87
last Thursday, a pause-day Friday, and run of another 7.25 on Monday.
That's 20 points in three sessions. Although it's overbought for sure
small-term and has exploded through the top of the channel with a huge
breakaway gap, there may be more upside. Look for something perhaps in
the 55 - 58 zone.

Oil stocks are running, and Northern Oil and Gas, Inc. (NOG) is no
exclusion. On Monday it popped 1.24, or 4.3%, on 1.16 million shares,
breaking out across the neckline of a head-and-shoulder's bottom It
looks like it's headed at this point to approximately the 33 range, my
small-term trading target.

Tianyin Pharmaceutical Co., Inc. (TPI) had a huge pop Monday of 25%,
up 65 cents, closing at 3.24, right at the declining topsline. Next
target up around the Oct-Nov double top near 3 3/4 should be
forthcoming shortly.

Other stocks in our Charts of the Day video are Almaden Minerals Ltd.
(AAU), Augusta Resource Corp. (AZC), Flotek Industries Inc. (FTK), FX
Energy Inc. (FXEN), InterDigital, Inc. (IDCC), Interphase Corp.
(INPH), Cheniere Energy, Inc. (LNG), Oasis Petroleum Inc. (OAS),
Optical Cable Corp. (OCCF), O2Micro International Ltd. (OIIM), Procera
Networks, Inc. (PKT), Uranium Energy Corp. (UEC), US Energy Corp.


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