Wednesday, May 30, 2012

Richard Russell - IMPORTANT - Major Bear Market Signal

Today Richard Russell issued a crucial warning regarding the stock market. Russell, the Godfather of newsletter writers, stated that markets have issued a major sell signal and we have now entered a “primary bear market.” Russell also warned, “I believe that the bear signal is telling us that Greece will default, to be followed by Spain, and the whole Eurozone may then fall apart.” Here is what Russell had to say: “IMPORTANT --- Dow Theory -- The D-J industrial Average recorded a high of 13,279.32 on May 1, 2012. This Dow high was not confirmed by the Transports. The two averages then turned down and broke below their April lows. This action confirmed that a primary bear market is in progress -- it was a textbook bear signal.” (more)

Canadian National Railway (NYSE: CNI)

Canadian National Railway (NYSE: CNI)

Christian Tharp, CMT

Canadian National Railway Company (CNR) is engaged in the rail and related transportation business. The company manages its rail operations in Canada and the United States. The company's network of approximately 20,000 route miles spans Canada and mid-America, connecting three coasts: the Atlantic, the Pacific and the Gulf of Mexico. CNR's network, and its co-production agreements, routing protocols, marketing alliances and interline agreements, provide CNR customer's access to all three North American Free Trade Agreement nations. In August 2011, the Company sold IC RailMarine Terminal Company to Raven Energy, LLC. In March 2011, Metrolinx acquired CNR's Kingston Subdivision rail line. Effective December 31, 2011, the company complete the merger of three of its the United States operating subsidiaries, which include Duluth, Missabe and Iron Range Railway Company, Duluth, Winnipeg and Pacific Railway Company, and Wisconsin Central Ltd.

To review Canadian National's stock, please take a look at the 1-year chart of CNI (Canadian National Railway Company) below with my added notations:

CNI has created a couple of important price levels to watch. First, CNI has formed a clear $80 (navy) level that spans the entire duration of this chart. That $80 level was the stock's 52-week high resistance before CNI broke above it. In addition, the stock has a previous, lower level of support (green) at $75. The stock currently appears to be pulling back to the breakout level of $80.

The Tale of the Tape: CNI has a key level to watch at $80. A long trade could be made on a pullback to that support with a stop placed under it. A break below $80 would be an opportunity to enter a short trade in expectation of a fall back down to $75 where another long position could be entered.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven't thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you'll be around for the next trade. Capital preservation is always key!

Jay Taylor: Turning Hard Times Into Good Times

Part 2
5/29/2012: Bill Tatro Predicts Dow 3500. Walker Todd on How Do We Get Out of This Mess?

Up Double-Digits in May... and This Stock Could Still Double‏

Have you ever grabbed a can of Monster Energy Drink and wished that you'd bought that stock when you discovered energy drinks? Probably not, but you should. Monster Beverage's (Nasdaq: MNST) stock has gained more than 26,000% since the beginning of 2003 -- a $1,000 investment would have grown to more than $260,000. Apple is a fantastic stock, but it has only gained about 6,800% over that same time.

The next big winner may be a tech stock, but simple consumer products like energy drinks offer less risk and take less specialized knowledge to understand.

The biggest winners also tend to start off as small stocks with low prices. MNST was less than $5 a share in early 2003 and had less than $200 million in sales when it began its big move. To find the next extraordinary winner, I like to look at small companies.

This week, I found the stock of a small company that doesn't seem to realize the market has been selling off lately. It's a small consumer products company with explosive growth in sales and earnings. Revenue is up 28% in the past twelve months, earnings are up 22% and this stock is up more than 55% over the last year. The stock is now more than 600% above the bear market lows that were reached less than four years ago. (more)

An Urgent Update on America's Energy Megatrend

In less than 10 years, every heavy-duty truck in the U.S. could be running on "alternate fuel."

Companies like Wal-Mart, Coca-Cola, AT&T, Pepsi, and Waste Management have already begun switching their diesel-engine trucking fleets. Today, small businesses with trucking fleets are looking to do the same.

I'm not talking about ethanol, hydrogen, or electricity. I'm talking about natural gas.

There's a fundamental shift taking place in the energy sector. We're in the early stages. And billions of dollars are at stake...

Like its energy cousin oil, natural gas has many uses. It's used as a building block to make chemicals, fertilizers, and plastics. It's also used to fire power plants and heat homes and factories. And it's becoming widely used as a motor fuel. (more)

Short-Term Indicators Hitting Overbought

The following is an excerpt from the May 29, 2012 blog for Decision Point subscribers.

The market opened higher and then fell apparently amid concerns about Spain this time. Prices did recuperate midday so stocks closed near the high for the day.

Stocks: Based upon a 05/15/2012 Thrust/Trend Model neutral signal, our current intermediate-term market posture for the S&P 500 is bullish. The long-term component of the Trend Model is on a buy signal as of 1/5/2012, so our long-term posture is bullish.

Looking at the daily bar chart we see that today’s top hit horizontal resistance before turning back down. Today’s positive price movement was enough to turn the PMO back up. The PMO bottom is in somewhat oversold territory, but not a place that gives me confidence that we have a solid price bottom. Volume was better than the holiday volume of Friday, but it is still weak.

Short-term indicators are now somewhat or mostly overbought.


Greyerz – $100 Trillion+ to be Printed, Expect Capital Controls

from KingWorldNews:

Today Egon von Greyerz told King World News, “The tens of trillions of dollars that needs to be printed is without derivatives. With derivatives we are talking about hundred of trillions of dollars that may need to be printed.” Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland. Von Greyerz also said, “We will have exchange controls in virtually every country. I can see this coming to the US in the next year or two.” But first, here is what Greyerz had to say about what is happening in Europe: “The bail out for Spain’s Bankia is now up to $25 billion in refinancing requirements, but that’s just the beginning. We’re looking at country after country here where the dominos are falling. The refinancing requirements worldwide are getting astronomical, and they will escalate at a faster rate.”

Egon von Greyerz continues @

Chart of the Day - Sherwin-Williams (SHW)

The "Chart of the Day" is Sherwin-Williams (SHW), which showed up on Friday's Barchart "All-Time High" list. Sherwin-Williams on Friday posted a new all-time high of $126.43 and closed up 0.78%. TrendSpotter just turned long again last Thursday at $125.33. Sherwin-Williams was last featured by "Chart of the Day" as the close on Feb 14, 2012 of $99.80. In recent new on the stock, Sherwin-Williams on April 19 reported Q1 EPS of 95 cents, well above the consensus of 82 cents. BofA/Merrill on April 2 downgraded Sherwin-Williams to Neutral from Buy on higher input costs and valuation but nevertheless raised its target to $115 from $105. In a more prescient move, Nomura on March 12 added Sherwin-Williams to its Conviction Buy list with a target of $137. Sherwin-Williams, with a market cap of $13 billion, is one of the world's largest producers of paint, coatings and related products.