4/7 Journal and Misc Notes

...The markets rallied today, but once again NYSE volume was higher than Nasdaq volume, and Nasdaq was on the light side at 1.7B shares. NYSE had 90 new highs vs 22 new lows, but Nasdaq only had 55 new highs vs 82 new lows. So, the rally is still suspect, especially with turn of the month buying done.
...On the other hand, I am finally getting short term bullish. The Nasdaq finally closed above its 200 day EMA today, and it increasingly is looking like the low set eight sessions ago may be an intermediate term low, what with the short term lows holding that were set three sessions before it and four sessions after.
...MSFT has been making a strong move, and that should bode well for the index as well, at least short term. I'll be scanning tonight for some short term trades on the long side.
...Beyond the short term, I think the rally will fail - I still don't see any sign of buying enthusiasm. When it tops out, I'll be looking to load up short or back into the oils if they have bottomed by then.
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Links:
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http://www.joe-duarte.com/index.asp
...I subscribe to Dr. Joe Duarte's free Monday newsletter update. It is a nice way to start the week. He gives good background information. Today on his site, his newsletter update is entitled "China and the U.S.: Rising Tensions Over Trade. Oil: Saudis Fear Global Economic Slowdown. Stocks: Trying to Round Out A Bottom. It's an interesting article.
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http://news.ft.com/cms/s/d7a003c4-a6a2-11d9-a6df-00000e2511c8.html
This is an article in the Financial Times online addition titled "World Bank Warns on Dollar 'Risk' For Poor". Its lead sentence, "Developing countries that have amassed large US dollar reserves face a growing threat of big losses from a sudden decline in the dollar, the World Bank warned on Wednesday."
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Quotes:
...Also of note was a quote from the Wall Street Journal: "The world bank warned that the global economic recovery has peaked, and said that the severity of the coming slowdown will depend on how skittish foreign investors are about buying U.S. - dollar-denominated assets."


Intra-day notes: Old favorite XTO is clearly being distributed the last few trading days. It has traded on a percentage basis well below the overall XOI oil index the past few trading sessions. It closed a full 2.6% below XOI. I have noticed pretty much the same thing all week...Not sure why they are weaker than their peer group. I see where the president of the company is retiring. They were also downgraded by JP Morgan 3/1, but that has been a while ago, and I normally don't pay much attention to analysts upgrades and downgrades anyway. For that matter, Deutsche Securities initiated coverage on XTO 4/1 with a Buy recommendation. I know XOI is for oil, and XTO actually is an oil and gas company, and some folks consider it as more of a gas company, but I have kept an eye on the relationship between XOI and XTO for quite a while.
...I keep a core position in XTO in the long term portfolio. I first bought this stock back in the mid 90's, and many times since have wished I had just stayed in it from the first time I came across it instead of trading in and out. Quite some time ago, I finally decided to keep a position in it as a long term buy and hold, although I still look for opportunities to trade it in the short term port. Right now, as I mentioned a couple of days ago, it looks like a better short than long, but I'm not trading it and don't have any plans to do so - of course that could change by tomorrow, LOL.
...XTO is one of my most favorite long term stocks. I am a long term energy bull. They are a well run company with an excellent niche in their industry. I also like the fact that they are completely contained in the good old US of A, which negates the political tensions in the world's hot spots.
...I also keep a core position in their sibling CRT. I first came across CRT when it showed up one day in my account. I had never heard of it and at first thought there must have been some kind of mistake. It turned out that XTO had spun off some of it to XTO shareholders. CRT is set up to pay out royalty payments to shareholders on some of the oil/gas properties in New Mexico and Oklahoma. It pays monthly, and for the last year or so those payments have averaged around $.20 per share per month, which has been very nice. I have added to the CRT holding several times. I don't keep it on the live ticker, though. With its small float, it sometimes takes some gutwrenching twists and turns.
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WMT: WMT warned this morning that its profits would be around the lower end of projections. It is interesting that their average trading volume over the past 10 days has been 15.7M volume, compared to 11.7M three month average trading volume, and the stock has gone from 50.58 to 49.35 over those 10 sessions.
...Price and volume can be good indicators. It reminds me of looking at price and volume charts on both K-Mart and Sears the two or three trading days before the news was announced that K-Mart was buying Sears. Go back to November and take a look for yourself.
...One of the reasons my system has gotten simpler over the years is because of ignoring news items. I have come to believe that most of what you need to know when trading can be discerned from watching a stock's price and volume movement. I keep a core list of stocks that I watch daily, so I can get to know their trading habits. Then I look at scans sometimes during the day or evening to get new short term trading candidates.
...But I try to stay away from trading on news. First, I know I'm not smart enough to know how the market will react to the news. Also, I also often see footprints on the price and volume charts on the sessions immediately preceding the release of the news item that would make a suspicious mind wonder whether some folks had already taken their positions.
...When I'm trading at my best, I enter positions during quiet periods for a stock and then subsequently get a move in my favor. When I'm reacting to news items and getting jerked back and forth by intra-day gyrations is when I have the best chance of getting hurt.
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