Ao minuto: Praças europeias respiram de alívio, indiferentes a possível violação de cessar-fogo

[Figas]

TradingMarkets.com
While The Market Is In A Stalemate, Look At Gold
Thursday July 24, 5:01 pm ET
By Mark Boucher


The market remains within the constraints of the trading range that has been in force since June. So far there are no solid indications of whether this stalemate will end in a real 1/3-2/3 correction, or in a continuation of the intermediate-term cyclical uptrend, as the forces of massive fiscal and monetary stimulus oppose the forces of overexuberance on the runup to date.
This past week the Euro hit an uptrendline and has bounced sharply off of this first significant support zone near 1.11. Gold has also bounced sharply off of the 340 support level within the 320-40 support zone, and (NYSEHUINews), (NYSENEMNews), and (NYSEFCXNews) have made new highs leading gold stocks higher. Our gold models remain bullish. Global bonds remain in a sharp downtrend though initial support levels are being reached in US bonds here.



Commodity prices (CRB) and currencies (AUD, CAD, NZD) have yet to react strongly to strengthening global economic indicators, and we would suspect normally that until these markets are leading a recovery, that more backing and filling will develop.

Watch the uptrend lines and the intermediate support zones we've been publishing for weeks for indications of whether this correction will retrace 50%-67% of the move since March before gaining new legs: S&P below 960, Dow below 8940, AND Naz below 1590. Conversely, watch for accumulation days and new highs on strong volume in all the major indexes above 1025, 9375, and 1700 respectively to confirm a new leg up. We also continue to suggest that investors closely watch the global equity leadership for clues as to whether the current consolidation will get nastier - China, Thailand, India, Russia, Latin America, US small cap value, and small cap value EMs for clues as to whether the next move will be up or down in global equities. So far evidence is gaining ground that the leadership is stalling here, but no conclusive broad decline has yet developed.

The story is similar for the internal US market leading groups. The leading sectors of the US rally have been biotech and medical related, telecom, Internet related, Home Building/RE/Mortgage, Natural Gas, and software, with small-cap value being the leading market segment. While downside leadership is so far not clear, the plurality of the breakdown in upside leadership is starting to grow a bit.

We still believe that aggressive central bank and fiscal action that will lead to a new leg up after the current correction/consolidation, but that investors will have to be extremely flexible and very nimble to do well in this environment, which is likely to be more tricky and volatile than any we've yet experienced since the 1999-2000 peak. Investors will need the compass of confirmation by breadth and internals before moving into any asset class aggressively - and they will need to be ready to pull the plug on nearly any stock investment at a moments notice if breadth and technicals align in a negative fashion.

We have been noting the pickup in activity in Iraq in recent weeks, and this week's killing of Saddam's sons is confirmation that things are heating up. Be on the lookout for a possible re-acceleration of the on-going war that could shock the markets, and be aware that many top intelligence services expect another phase of the war to develop in the months ahead.

Investors should continue to cautiously add stock exposure as trade signals are generated that meet our strict criteria. Our model portfolio followed in TradingMarkets.com with specific entry/exit/ops levels from 1999 through May of 2003 was up 41% in 1999, 82% in 2000, 16.5% in 2001, 7.58% in 2002, and we stopped specific recommendations up around 5% in May 2003 - all on worst drawdown of under 7%.

Last week in our Top RS/EPS New Highs list published on TradingMarkets.com, we had readings of 9, 8, 23, 21, and 24, accompanied by 3 breakouts of 4+ week ranges, and no valid trades and one close call in FCX. If new daily highs can rise again above 20 consistently next week, the market has a shot at continuing the rally as long as these hold up. The action continues to rate as cautiously bullish biased, but nothing like that of the great bull markets of the 1980's or 1990's. Position in valid 4 week trading range breakouts on stocks meeting our criteria or in close calls that are in clearly leading industries, in a diversified fashion. Bottom RS/EPS New Lows remained non-existent last week, as they have been since mid-April, showing low readings of 4, 3, 4, 3, and 2, with 0 breakdowns of 4+ week patterns, no valid trades, and no close calls, so the short-side remains muted. Continue to watch our NH list and buy flags or cup-and-handle breakouts in NH's meeting our up-fuel criteria that are in leading groups, but add no more than two positions a week.



For those not familiar with our long/short strategies, we suggest you review my book "The Hedge Fund Edge," my course "The Science of Trading," my video seminar where I discuss many new techniques, and my latest educational product, the interactive training module. Basically, we have rigorous criteria for potential long stocks that we call "up-fuel," as well as rigorous criteria for potential short stocks that we call "down-fuel." Each day we review the list of new highs on our "Top RS and EPS New High List" published on TradingMarkets.com for breakouts of four-week or longer flags, or of valid cup-and-handles of more than four weeks. Buy trades are taken only on valid breakouts of stocks that also meet our up-fuel criteria.

Shorts are similarly taken only in stocks meeting our down-fuel criteria that have valid breakdowns of four-plus-week flags or cup and handles on the downside. In the U.S. market, continue to only buy or short stocks in leading or lagging industries according to our group and sub-group new high and low lists. We continue to buy new long signals and sell short new short signals until our portfolio is 100% long and 100% short (less aggressive investors stop at 50% long and 50% short). In early March of 2000, we took half-profits on nearly all positions and lightened up considerably as a sea of change in the new-economy/old-economy theme appeared to be upon us. We've been effectively defensive ever since.

On the long side we like (NasdaqNMCCRTNews), (NasdaqNMSFNTNews), (NasdaqNMAVIDNews) and (NasdaqNMUNTDNews) still, the close call from this week, FCX, and the close call from last week, DRL. No short-side opportunities have developed via our strategy for some time. We also like conservative gold stocks, like FCX pfd A and NEM, some broad EM exposure like DEMSX, Eastern Europe, China, and Thailand, in particular - though here investors may want to tread cautiously until it is clear that the correction/consolidation is ending







Technicals and breadth have yet to confirm whether the massive liquidity infusion is going to have traction quickly, or whether a more meaningful correction is upon us. We're in a stalemate. Continue to watch for clear leadership in leading new industries and plurality of breakouts in those industries, for follow-through by close call and criteria stocks, for breakouts by the averages that will confirm if this bear-market rally has legs, and for further breadth thrusts, to tell us that a better bullish cycle is developing here.

Mark Boucher