The Fall of Starbuck’s Stock
February 24, 2009
As soon as I touched land in Beijing, I headed to the closest Starbucks to enjoy a cinnamon spice mocha. While it was great to have a sip of the heaven from an expanding global company, when looking at the technicals of Starbucks for a buy, count me out. Starbucks [SBUX: 24.28, +0.01 (+0.04%)] has a multi-month resistance trend line that has been tested over three times, along with over five separate lower highs signaling an extremely bearish stock. Read more
The Dow Support Has Broken, What About the S&P 500?
February 24, 2009
On Friday the Dow Jones Industrial Average [^DJI: 10624.69, +12.85 (+0.12%)] broke its daily support of 7,451, plunging further down to 7,106 today (shown in the first chart below). You may ask if this is a representation of the whole stock market breaking support. This is a good question, the answer is in how the averages of our two major indexes, the Dow and S&P 500, are derived. The Dow is calculated by taking the sum of the 30 stocks and divided that by divisor that prevents things such as stock splits from affecting average. The S&P 500 is calculated using the float based weighted average market capitalization of the 500 stocks that make up the index. That said, the 500 stocks that comprise the S&P 500 are most likely a better judge of the stock market as a whole. Since the S&P is a more accurate measure of the market, it is used more frequently by professionals to do things such as judge the performance of most major equity funds.
Is the US Dollar Going to Gain Value While our Government Spends?
February 19, 2009
Given the amount of money the government is spending to try and fix the economy, the devaluation of the dollar seems almost certain. However, in order for the US dollar to become devalued other currencies have to become more valuable relative to the US dollar, thus pushing the value of the dollar down. But when we look at the technicals of the US dollar index, we become rather bullish. The Index has a major multi-year support at 80 that was broken in the middle of 2007, (as shown in the first chart). This support became resistance that was tested in September of 2008 and that resistance was broken in October of 2008 thus returning the 80 level into support. It has now retested this support twice in December of 2008 and has held both times as we can see in the second chart. Looking at the third chart, the index has clearly broken out of its weekly downtrend, thus a separate second bullish signal. The index is now retesting its recent highs of around 88.40 and if we see a break in these highs this should trigger a move to its next important resistance level of 92.60.
Is It Time To Go Bullish On Potash?
February 18, 2009
Taking a look at Potash Corp. [POT: 125.27, +8.34 (+7.13%)], we can see how it has developed a bullish trend. This is noted with the three consecutive higher lows. Previously Potash was a bearish stock with its consecutive lower highs. POT also has what seems to be a very strong technical trend line. As long as we do not break this trend this stock is very bullish. Below we have a daily chart of Potash. Read more
S&P 500 February Techincal Recap (02/18/2009)
February 18, 2009
Taking a look at the S&P 500 Monthly chart, we can see how there has been a slight break in the 800 support level. The last time this happened was in the middle of November after which the index broke support very briefly but was able to recover for the next month. The support was also tested briefly in July and October in 2002 and once in March of 2003. The support has not been fully breached in the past will most likely hold this time which would signal a possible intermediate bottom for an opportunity for a short term bullish trade or to get rid of any equities if you are still holding some. However, if this support becomes resistance this will signal further downward pressure. If it does signal more downward pressure, we will most likely see a pull back to the 800 level which would be resistance, before we continue on downward. Below is a chart of the S&P with the 800 level support showing. Read more
