Sunday, March 23, 2008
RedDirtTrader Weekly Update
Let's start this out by looking at the BRIC perfchart. As we see some bullish divergence building on the oscillating indicators, the trend indicators look terrible. The ADX crossed above +DI and -DI is not back to the oversold area. So caution is worth more than Gold at this point in the BRIC Trade. Volume on the BIK has been very low. Another ETF may be stealing some business, I'll take a look and report back later.Now let's take a look at the Weekly S$P 500 Chart. The 1st thing about this chart that catches my eye is, the 10ema has been riding above the 10sma for awhile now. This would lead me to believe a close above the 10ema(1342.56 as of the close Thursday) could lead to a rally back to the 80ema hi-lo trading band. The lower end of the band is around 1380 and the high end of the band is about to 1430. You may want to take a look at the 60 minute chart for a close up view.
Now for something I normally don't do. We're going to take a look a chart for an individual stock. This is a company that has been buying back stock a very aggressive pace. During their most recent earnings announcement they said the board of directors OK'd another $Billion for stock repurchase. The CFO stated,"WE WILL be buying shares aggressively in the 1st quarter of 2008." How fortunate for this company they were able to do this at around 10 times projected earnings. The chart shows a hammer reversal, then a gap up, followed by a successful test of that gap for support. Take a look HERE and tell me what you think!
I can't leave you without something to study. So click on this LINK for some interesting analysis on trend lines.
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The Yen is getting back to normal tonight and I'd like to know if you think this is temporary (chart-wise) cause the logic is that they cannot deal with our dollar this weak.
The USD/JPY had not traded below 101.60 since October of 1995 until this month. If you look at a long term (monthly chart) of the USD/JPY you will notice the Dollar keeps making lower highs against the Yen as in 2002 and 2007. The support area was very strong at the 106.70 area as proven by the bounces in 2000 and 2005. This is a decending triangle on a very longterm chart. Very Good Question. I'm not so sure the BOJ will intervene in the currency markets this time. I do think a we should keep a very close watch on the 106.70 area. Old support tends to become new resistance and it looks like we could be headed back to that point. One thing about a strong YEN is it makes their most important import (OIL) cheaper, which should help them grow their economy,plus they now have a new major economy besides ours to export their goods to.(China) I'll have to study this a little more but thanks for the question.
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