Ian Woodward's Investing Blog

If only we knew, but then it is unlikely anything will come of it other than:

 So, it is time to take a break and smell the roses in my Wife’s Garden. 

Have a great long weekend and keep your Powder Dry! Best Regards, Ian.

Two Hair Raising Experiences in a Day!  One was on the Market and the other at the DMV.  The good news is we had a Eureka Signal today and I passed my Driver’s Written Test!

I have been spoon feeding you with blow by blow commentary for three weeks now.  So I am going to turn the tables on you and maybe you can take a crack on the highgrowthstock.com bulletin board to see if you agree with my fly specking (looking for minute clues) whether a bottom is setting in or not.  Remember how we were whipsawed with a similar situation in May through July of 2006.  I say it again, trading in moments is where it is at right now, and take your trades off before the end of the day!  Best Regards, Ian

Last week I likened the Fed Chairman to the Grand Old Duke of York.  There is no question he saved the day a week ago last Friday and marched the Stock Market Indexes to the top of the hill.  I also warned that the market may get impatient that the Fed hasn’t done more, and after a week of a decent bounce from their lows, we trotted down the hill today on its way to test the low again. Three news items weighed down the market today: 

1. Merrell Lynch (MER) downgraded three major United States banks, Citigroup (C), Lehman Brothers (LEH), and Bear Stearns (BSC) were all downgraded from buy to neutral, amid concerns over the institutions’ debt exposure.  The downgrade sent financial stocks rattling down, as it brought more pessimism to an already battered sector.
2. The Consumer Confidence Index declined to 105.0 in August from a revised reading of 111.9 in July. Analysts had expected the index to fall to 104.5, so the drop was normal and expected.
3. Then the Federal Reserve released the minutes of the FOMC meeting on Aug. 7th. The release renewed investors’ fears that the Fed will continue to place their emphasis on inflation risks and an interest rate decrease is less likely than previously thought. 

These are examples of a bigger problem that will plague the Stock Market for some time to come, and unless the Fed can pull another rabbit out of the hat, and particularly turn this last item around, it will be rough sledding for some time.  Their cloth is three weeks to the FOMC Meeting.   Now we must batten down the hatches and/or find short candidates while the storm continues to brew.  I have done my job in drawing the lines in the sand at the OK Corral, so I need say no more for now. 

So let the cards play out and we shall see where they fall, but the Bears have the upper hand right now.  Note how the Nasdaq finished right around 2500, and we now wait to see if it bounces or 2500 provides little resistance and the Index continues down. Whether it is a coincidence or not, the lesson learned is to always expect a retest of the lows when the S&P 500 has gone down >8% as it is most unlikely that it can recover with a V Bottom.   Best Regards, Ian.

The Stage is set for the Gunfight at the OK Corral

The Combatants:  Bulls and Bears: 

The Site: The Nasdaq with lines drawn at 2572 for the Bulls and 2387 for the Bears 

Early Signs of Who’s Winning: 

The Bulls:

1. 4-dma, 9-dma come up through the 17-dma; later 17-dma up through the 50-dma
2. A Eureka Signal with a Follow through Day of 35 points up and 2 Billion Shares
3. Directional Movement: Di+ above Di-
4. The Nasdaq Index gets above the 50-dma at 2572 and then above 2616…the Upper BB

The Bears:

1. The Nasdaq breaks down through the 200-dma at ~2500
2. The Nasdaq goes down below the Lower BB, i.e., 2460, and %B goes Negative
3. The Nasdaq breaks the previous low at 2387
4.  The Nasdaq drops over 16% from the High…down to 2290

Best Regards, Ian.

Doodling on a lazy Sunday afternoon while watching the golf, I struck on an old idea of using the Ranking Module to ferret for Wolf Packs, i.e, stocks that are hunting in packs.

I applied the 0a Key to All Securities and was struck by the number of Chemical Specialty stocks that were high up on the list.  I counted ten in the top 20.  The Combo Rank attached to this filter brings stocks with strong 1 and 5 Day Industry Price gains to the top, so one knows we are working with stocks with strong current momentum.   In addition the Group Rank using Ian Slow is a healthy 92, so it has long term Group Rank Performance.  However, here is a group that has recently been trashed, but is coming out of the ashes.  So I applied the Ranking Module view using Accel/Vel/RS as the view.  The crafty thing is to scrunch the view down to just show the single Industry Group one is interested in the view as shown below: 

Note that the setting for the numbers shown is for the Percent Change for the past three weeks, and one can quickly see that although the group has been trashed, it is rising from the ashes very rapidly.  Here are the top 10 stocks for Chemical – Specialty which look very powerful for beaten down stocks:

Understand that this is a Case Study to help you use the HGSI Software tools to ferret for strong Wolf Packs, which may provide opportunities if the market settles down.  Just look at the number of Box 7 stocks – there are seven of them.  Also note the %E/P, Rev/Share and ROE for all these stocks.  No wonder they have high ERG!  It’s always “Your Call”.

Best Regards, Ian.