Ian Woodward's Investing Blog

Here’s a bonus for you tonight; I’m sure you are itching to see the picture I see.  Look over to the extreme right and you will see a thin pink line and thick pink line, representing two days in a row.  All told we have three Hindenburg Omen signals this week, as described in my previous blog.  Best Regards, Ian

Late Breaking News!  This is getting monotonous, but I have just downloaded tonight’s file, and I have another Hindenburg Omen to report.  This makes three this week…one on Monday, one yesterday on Wednesday and one today.  Maybe my Stress Reduction Exercise today is very timely!

My good friend, associate and partner, Ron Brown, sent me the snapshot below of how the top 19 Chinese Stocks faired in today’s market, and as a result he gave me the perfect theme for today’s Blog. You can see from the list that they did not fair too well today, but one-day does not make a trend.

Sometimes we can’t see the forest for the trees, what with concerns of Earnings Reports and the FOMC Meeting on the 31^st. October and Trick or Treat time on the same day.  Looming in the background is the concern of the impact of Global Markets, and I need hardly remind you that the Hang Seng Index is doing a dance “to da moon!”

However, I felt a few Stress Reduction Exercises may be in order to keep you in shape for things to come, especially since this Index is outstripping the Nasdaq in its hey-day back in early 2000.  I know we have had a couple of shots across the bow in the last few days what with the two Hindenburg Omen signals that have been clocked up on Monday and again yesterday.  Although you all know that I am neither a fear-monger nor a glass-half-empty type, it strikes me that the real worry may not be here but there…meaning Global Markets ala Hang Seng.   Keep your Powder Dry, play close to the exits and have tight stops is the name of the game right now.  Best Regards, Ian.�

 Late Breaking News as I go to Press – We have had a second Hindenburg signal today, on top of the one on Monday!

The U.S. economy slowed at the end of the third quarter and into the start of the fourth, while businesses grew even more uncertain about the future, the Federal Reserve said in its latest beige book released Wednesday.  Housing continued to take a toll, meanwhile, and is expected to remain “subdued” for several months, the Fed said.

U.S. stocks pared gains on Wednesday, with the Dow turning negative as a disappointing outlook from United Technologies Corp (UTX) and lackluster hardware sales from IBM (IBM) tempered optimism about profits.

Needless-to-say, the Market took a beating mid-way through the session, but once the dust cleared the little engine that could…the Stock Market, rallied again to wind up positive for the day on the Nasdaq and only a paltry 20 points down on the DOW.  This could have been the third distribution day in a row and that coupled with the one last Thursday would have suggested that we were heading for a correction today.  We still may be, but the Bulls live to fight another day.  Did you see the QID and the QLD change places as they each had a swing from positive to negative territory and back again? The VIX jumped 2 points and gave back as many (between friends) at the close.  Volatility and Yo-Yo Market continue to be the key words of the moment.

The Lesson learned today is to never panic, and if your stomach can bear the agony and the ecstasy, just wait till the market is closing to make your call, unless of course it is painfully obvious the market is headed for a disastrous day of >200 points on the DOW.  The way I do that is to watch the Gorilla RonIandex I gave you in the Newsletter and although that Index got down to near zero gain for the day, it stayed positive and came roaring back to give us a 1.44% gain based on 100 share lots.  Ron and I have emphasized it often to watch the Leaders, and here they are.  Best Regards, Ian.

After Hours the Technology Stocks of the likes of Yahoo (YHOO) and Intel (INTC) reported stellar Earnings for the 3^rd Qtr.  After three distribution days on Last Thursday, yesterday and today, we needed good news to prop this market up and hopefully that will happen tomorrow after the dismal reports from Keycorp: 

1. Shares of Yahoo surged nearly 10 percent in after-hours trading following a more than 4 percent decline in regular trading on the Nasdaq Tuesday.
2. Shares of INTC jumped nearly 5 percent after-hours immediately following the announcement, after closing down slightly at $25.48. 

This led to a spate of buying in the Technology Stocks in after hours, and this looks encouraging for further good news later this week when two key earnings reports are due from GOOG on October 18 and AAPL on Oct. 22.  This should stiffen up our backbones as here are some After Hours results:

Do your homework, but as usual they were nibbling today on MOS and POT in the Chemical Specialty group, and QMAR, NM, and FREE in Transportation-Shipping, but be careful as many of these stocks are extended.  You live by the sword and die by the sword, but when the wind is at your back, attack.  Your trump card is “nimble”, so use it if things go sour. 

Best regards, Ian.

Overview:

We have just two weeks to go until we meet for the October 27 to 29 HGS Investor Seminar here in sunny California, and the HGSI Team will be here to greet you in full force.  Besides Ron and I we have the pleasure of George Roberts and Matt Sorrels at the seminar in addition to Denis Trover and Bill Roberts who helped me do the Hindenburg Omen (Hindy for short) research.    

I gave you a preview of what to expect on the Blog labeled “The Goose that Laid the Golden Eggs” which concentrates on establishing early warning signs at both Market Tops and Bottoms using the NYSE Index.  In addition, you have noticed that I have resurrected a process we use relating to ferreting for Wolf Packs and that is the thrust of Ron’s movie for this month’s newsletter. The technique uses the proprietary feature of RelStr/Vel/Acel in the Group Ranking Tool and we will show you how to flip through and spy those groups that show signs of life as they abruptly change from red and yellow to green from one week to the next.  We will do this exercise as a Case Study so that you can become proficient at the concept, but we felt we would also explain the process to you ahead of time so that those attending and the newsletter users get a movie from Ron and an explanation from me with snapshots of the views we use. 

I’m sure you all breathed a sigh of relief when the FOMC intervened not once, but twice to give relief to Central Banks in coping with the sub-prime debacle by reducing the Fed Funds and Discount Rates.  We were snatched from the brink of a Bear Market, and the subsequent Bounce Play has been spectacular in its rise to not only wipe out the deficit, but also have most Indexes move into New High territory.  As a teaser, I show you a one page spreadsheet of the Hindy and give you chapter and verse on the perspective of the past eight weeks, the Calendar of Events affecting the market direction leading up to the FOMC meeting on October 31^st. and Ron’s and my Trick or Treat present to you all well ahead of time!  Enjoy.  

We have had a strong sign up for the seminar and expect a full house and look forward to seeing you bright eyed and bushy tailed on Saturday, October 27^th.  I assure you that as usual it will be well worth the trip, and you will go home with your Bongos under your arm and singing “Bingo, Bango, Bongo”!

Best regards, Ian