Thursday, August 13, 2015

Forget Hindenburg Omen and Death Cross – This Alarming Event Just Happened for the 5th Time in History and the Other Four Times the Stock Market Collapsed More Than 33%

from King World News
Forget the “Hindenburg Omen” and “Death Cross,” because today King World News is sharing a powerful piece that warns we have just seen an event that has only happened 4 other times in history, and each time the stock market has proceeded to collapse by more than 33 percent. This piece also includes 2 illustrations that all KWN readers around the world must see.
By Jason Goepfert Founder & CEO Of SentimenTrader
August 12 (King World News) – “The hits just keep on coming for stocks, at least according to some scary headlines. First it was odd breadth divergences, now a death cross. Such headlines usually aren’t worth following up on, but they do highlight a true concern with recent market activity.
Continue Reading at…

Chipotle Mexican Grill (NYSE: CMG) Is A Sell

Chipotle Mexican Grill (NYSE: CMG), a market favorite for the past few years, looks ready to tumble.

From a fundamental perspective, we have to wonder why restaurant fortunes in general have not improved in recent months. Over the winter, the unusually cold weather was blamed. But as the days got warmer, sales did not heat up. And even as gasoline prices plummeted diners did not open their wallets any wider.

On the sentiment front, poor action on good news is bearish. When things go wrong when there is every reason for them to go right we know that something deeper is going on in the market in question.  (more)

Corn Traders Just Got Crushed

Corn (and soybeans) are plunging, limit down on CBOT following data from the August WASDE report. The USDA unexpectedly raised output estimates for corn stocks and production dramatically higher than expected. This in and of itself would send corn prices lower but the significance of the shift is likely exaggerated by the fact that satellite imagery had suggested signficantly worse crop conditions ahead. One wonders who will be right?

from WASDE:
  • Corn end stocks: 1727MM, Exp. 1427MM, Last 1599MM
  • Corn production: 13686MM, Exp. 13323MM, Last 13530MM

Which sent the prices limit down...
But, as Bloomnberg reports, daily infrared images of U.S. farmland captured by satellite indicate worsening conditions for this year’s U.S. corn crop, according to one data-analysis company.  (more)

Own THE Long Bond $TLT, $TMF

• Several weeks after recommending a core long in 10-year and 30-year Treasuries in front of 2.40% and 3.25% respectively, I endorsed adding to those positions in my July 17th note “Bonds are Back”. Today, I would again add to those positions. I believe 10’s will take out 2.00% by the end of September and test the year’s low when it breaks below 1.75% before the end of the year (10’s/30’s curve will flatten further). Long Treasury yields are driven by expectations of global growth and inflation which I expect will both stay on a downward trajectory for the remainder of the year regardless of what the Fed does. (I also expect USD strength, commodity weakness, widening credit spreads, and an equity sell-off.)

The Fed is in a Bind

• The intention of Fed policy over the past 30 years has been to self-correct business cycles into a ‘steadier state’ by easing interest rates into weakness and hiking them into strength. Unfortunately, there is political-asymmetry between easing and hiking which has resulted in the stair-stepping of official interest rates down to the zero lower bound.

Arrowhead Research Corp (NASDAQ: ARWR)

Arrowhead Research Corporation develops novel drugs to treat intractable diseases in the United States. The company’s principal product candidates comprise ARC-520, an RNAi-based therapeutic that is in Phase IIa clinical trial to treat chronic hepatitis B virus infection; and ARC-AAT, a novel unlocked nucleobase analog containing RNAi-based therapeutic for the treatment of liver disease associated with alpha-1 antitrypsin deficiency. Its platform technology include Dynamic Polyconjugate platform, an RNAi delivery system that addresses multiple organ systems and cell types. The company is also involved in the development of Adipotide, which is in phase I clinical trial for the treatment of obesity and metabolic disorders; and CRLX-101 that is in phase II clinical trial to treat various cancer types, including relapsed renal cell carcinoma, relapsed ovarian cancer, and non-metastatic rectal cancer. It has research collaboration and license agreement with Shire AG to develop and commercialize targeted peptide-drug conjugates.
Take a look at the 1-year chart of Arrowhead (NASDAQ: ARWR) with the added notations:
1-year chart of Arrowhead (NASDAQ: ARWR)
ARWR fell off a cliff in October of 2015, but the stock finally found a bottom in December, eventually finding support at $6.00 (green). ARW has hit that support level multiple times so far this year, and now that the stock is testing that support level once again. Traders could expect some sort of bounce, but if the $6.00 support were to break, lower prices should follow.

The Tale of the Tape: ARWR has an important level of support at $6.00. A trader could enter a long position at $6.00 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.