Wednesday, July 21, 2010

Jay Taylor: Turning Hard Times Into Good Times

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Green Shoots In The Form Of Double Bottoms?

While I’ve been fully expecting the markets to continue lower for at least one more leg down, I remain open to the possibility that they could throw me a curve ball or two. It's hard to remain objective in the face of index charts that are looking so terrible, but in reviewing some charts I came across a few stocks that could be completing small double bottoms, hinting that their corrections may soon be over.

A double bottom typically resembles a "W" and forms after a downtrend. Typically, a low is formed and then the stock bounces higher before coming back to retest the first low. The important point to remember is that a double bottom is not valid until the price closes above the center peak of the "W", also known as the neckline. (For related reading, see Analyzing Chart Patterns: Double Top And Double Bottom.)

Oracle (Nasdaq:ORCL) is a good example of a stock that recently cleared the neckline of a small double bottom. While the left side of the base was a little choppy, the overall price action follows the pattern in principle. After a decline, ORCL attempted to rally reaching just over $23.50. It pulled back from this level and retested its prior lows near $21.50. It then rallied sharply to clear its June high and the neckline from the pattern. ORCL is now in the process of testing the neckline as support. If it can hold here, especially in the light of a negative IBM (NYSE:IBM) earnings report, it could rally to its projected target near $25.50. (more)

Chart of the Day

Stock Picks:, Goldman Sachs, IBM

By and Bloomberg News Staff Janney Montgomery Scott equity analyst Shawn Milne maintained a buy rating and $175 fair value estimate on shares of (AMZN) on July 20.

On July 19,, the largest Internet retailer, said growth in sales of its Kindle digital reader accelerated every month in the second quarter and that it is selling more electronic books than hardcover versions.

The rate of Kindle sales also has tripled since the company cut the device's price to $189, from $259, Chief Executive Officer Jeff Bezos said in a statement.

"We've reached a tipping point with the new price of Kindle," Bezos said. " customers now purchase more Kindle books than hardcover books—astonishing when you consider that we've been selling hardcover books for 15 years, and Kindle books for 33 months." (more)

King World News Interviews John Williams of Shadow Stats

Walter J. "John" Williams - Founder of Shadow Government Statistics Newsletter and Specialized Economic Consulting Services: Analysis Behind and Beyond Government Economic Reporting. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies. John began a lengthy process of exploring the history and nature of economic reporting and in interviewing key people involved in the process from the early days of government reporting through the present. For a number of years he conducted surveys among business economists as to the quality of government statistics (the vast majority thought it was pretty bad), and his results led to considerable coverage in broadcast / print media and meeting with representatives of all the gov’s statistical agencies.

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Real Estate Market is Already in Depression

Simon Maierhofer,

Dogs are conditioned to perform tricks in order to receive a treat. Horses are conditioned to trot or gallop at command. Humans are conditioned to deny the existence of a bear market.

Conditioning is defined as a process of behavior modification by which a subject comes to associate a desired behavior with a previously unrelated stimulus. It's ironic that Webster's uses the term stimulus' to define conditioning, because that's the same term the government has used.

In fact, the government's and stock market's actions have conditioned investors to believe that the worst is behind them. Anytime we are presented with data that points towards a recession or depression, the general consent is: 'This time is different!'

Unemployment is up, housing is down but stocks are up, so things must be different. That's at least the logical conclusion on Wall Street.

This Time is Different (more)

Peter Schiff: Weak economy, Fed ease, China, WWIII

4 Reasons To Fear Deflation

by Rick Newman, USnews

When the price of cars or sweaters or iPods declines, it's a break for consumers and a welcome sign that economic productivity is improving. That helps drive up living standards. But when the price of everything drops, it's an alarming development that portends stagnation.

The consumer price index, which measures inflation, declines every now and then, usually when there's a big drop in the price of volatile goods like energy or food. But there hasn't been sustained deflation in America since the early 1930s. Now, we may be on the verge of yet another unnerving economic adventure. Inflation over the last 12 months has been a scant 1.1 percent, which is below the level most economists deem optimal. And so far this year, inflation on a monthly basis has been negative as often as it's been positive. The odds are growing that low inflation could become deflation—with some economists worried that it has already started to happen. (more)

Canadian Stocks Rise as Fuel, Copper, Gold Producers Advance With Futures

Canadian stocks rose for the first time in three days, led by energy and raw material producers, as commodities advanced and some traders speculated the U.S. Federal Reserve would try to provide further economic stimulus.

Teck Resources Ltd., Canada’s biggest base-metals and coal producer, gained 3.7 percent as copper rallied on prospects of Chinese demand. Suncor Energy Inc., the country’s largest oil and gas producer, increased 1.8 percent as oil reached a three- week high. Air Canada, the country’s largest airline, surged 13 percent after saying second-quarter profit increased.

The Standard & Poor’s/TSX Composite Index increased 86.41 points, or 0.8 percent, to 11,629.88. Most of the gain occurred late in the trading day on speculation that Fed Chairman Ben S. Bernanke will announce a lowering of the interest rate the central bank pays on banks’ excess reserves to stimulate economic growth. (more)

5 Stocks That May Be Poised to Rally

With the market selling off today, it seems counterintuitive for the average retail investor to add to their long equity positions -- especially in highly leveraged names.

However, this is exactly what the "smart money" does -- they look for stocks with good, liquid balance sheets, high short interest (fuel for a rally) and a reason to move higher (a catalyst).

So today Benzinga went on the lookout for names with short interest greater than 9.5%, high liquidity metrics, positive institutional flow over the previous quarter, and earnings dates on the horizon (during August). Here are some names to consider adding to your trading portfolio.

Ciena Corp. (Nasdaq: CIEN - News) is a provider of communications networking equipment, software and services that support the transport, switching, aggregation and management of voice, video and data traffic. It competes with the likes of Cisco Systems (Nasdaq: CSCO - News) and Infinera Corp. (Nasdaq: INFN - News) and just recently announced the acquisition of Nortel Networks Corporation's Metro Ethernet Networks business. (more)

Marc Faber: Fed to 'Print Money Like Crazy' by October

Gloom, Boom and Doom publisher Marc Faber says the Fed will begin “massive” quantitative easing by October.

“The economy is not robust,” Faber told Bloomberg. “We have mixed signals, but in general, the economy is still weak.”

And despite the euro’s recovery to $1.30, Faber also says he thinks Europe is stuck in a sideways economy for years, as austerity cuts and bailouts weigh on growth.

“I am not a great believer in this austerity that they are proclaiming,” Faber said in an interview with Daily Motion.

“I think the fiscal deficit will actually stay very high or even increase," he said. "And I think that if they decrease the fiscal deficit then it will be offset by very expansionary monetary policy, in other words monetization, so the whole burden to support the economy will fall on monetary policies, then they’ll print money like crazy,” he said. (more)

Ron Paul EXPOSES the Real GDP and Unemployment Numbers