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Moving averages are "lagging indicators" which means
they confirm changes in trends after they have already happened. And
because they are trend-following indicators, they work best in a
trending situation. If there is an long uptrend, moving averages will
get you in the stock and keep you there until the market tires.
http://clix.to/wallmann
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We got a soggy day on Monday as we felt we might and then Tuesday
they got all warm and fuzzy, giving us a big snap back day. Wed after
a horrifying pull down, they reversed engines and got us back to
respectable and today we made small gains across the board. This all
makes some modicum of sense. It was our guess that we'd start the
week soft and then if nothing blew up at the Democratic conventions,
we'd see them get more and more brave. Granted, having oil hit 43 a
barrel certainly took a lot of the steam out of them, but they are
still trying their best.
What now? I think we can still move sideways and a bit higher despite
it being a Friday. I think that we got horribly oversold and they are
trying to make up some ground but that we have some major headwinds
against us. Oil as you know is indeed a problem. So is the less than
stellar numbers on durable goods and even some of the weakening we
are seeing in pockets of the country concerning housing. If oil comes
down somewhat, and nothing goes boom overnight and into tomorrow, we
feel fairly safe thinking we can end the day green.
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This week S&P upgraded it's view on YHOO and that looks pretty good.
We think that EBAY is looking good here too and if the market doesn't
take a punch, picking up EBAY above $80.35 sounds about right.
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This week saw SBC saying good things and VZ doing relatively well.
Yes, both of them lost a ton of hard line subscribers as we expected,
but they are finally "branched out" enough to be creating income from
their other operations and it's starting to add up. Telecom is
definitely not dead and did you hear the "rumors" that maybe AT&T is
up for sale? Imagine that.
We came into the week with VSL and we still have it. Knock on wood,
it's doing okay, but boy is it slow. What about Friday? The telecoms
have come a long way, especially VZ, so we're not sure we want to try
and chase it. But a move above say 39.15 does look tempting. Likewise
JNPR above $23 looks like a trade in the making. Just be careful that
we don't get a gap and trap Friday.
http://clix.to/wallmann
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We wanted to pass on the retailers for the beginning of the week
since we were not sure about the sentiment factor. Then we saw that
consumer confidence was very high, so they all perked up. Even WMT
was back on track with their 2 to 4% forecast. Since we didn't know
which way confidence was going to go, and now we do, do we buy into
something? We think we have a shot at LOW for a "trade". At 48.90, a
move above $49.20 could get us in it.
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This week was pretty kind to the drug patch as earnings reports
weren't bad and there was some other positive news items. That has
JNJ, LLY, MRK and even SGP looking like they want to run a bit. In
fact, interestingly SGP trading over 19 makes me smile a bit. A few
months ago we felt that it might be a turn around story, and although
it meandered around that 17 level for ages, it's finally begun to
wake up. We believe someone either buys them, or they straighten out
on their own.
For Friday it would be easy to pass on all of them, but we are going
to take a shot at JNJ if the get above $56
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The techs have put in a bounce this week yet surprisingly they are
still just a few points above that May low of 1865 that we crashed
through and bounced back over. So where do we stand in tech land?
Exactly where we were last week. The SMH is still underwater for us,
but at least trying to claw it's way up and we didn't get involved in
anything else.
Do we want something? We're going to pass. After the bell KLAC beat
the estimates by 3 cents, and "maybe" that will get some of the chips
moving higher. If so, there are certainly a lot of them that have
been sold lately. AMAT, ISSI, BRCM, and a host of others have been
hit lately. They could all go, in fact, watch TSM above $7, they
could make a move.
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OSIP is sitting at $59.03 and we'd be tempted to go into it on a move
above $60
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The financials look like they are on an upswing and we wouldn't be
against going after GS if this momentum continues. We'd try it on a
move above $90.25.
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http://clix.to/wallmann
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