Trader Rog's Corner
Investors and traders who watch the regularly scheduled "jobs report" clearly understand what to expect days before the event. It arrives with great fanfare and trepidation. Immediately, the bond markets react and pre-market S&P trading accelerates, providing high drama and great fanfare.
This circus event is a pretense of fabulous new employment but in reality is an apparition. It is only a disguise or semblance of a false show. This is the grand fog, the smoke-and-mirrors ceremony, a prelude to the shearing of the Sheeple by the hedge funds enabling them to exit with profits while wooly little lambs stand crying in the rain with their bombed out stock accounts, not having a clue as to what just hit them. For the big boys to get out you need a rally. If you do not have one, you make one. That is what today is all about.
Considering all the crash-and-burn charts we have been reviewing lately, I knew it was time for something really fabulous preventing a major selling slide so imminent, a child could see it coming. After the closing bell, a broker cheerleader was loudly extolling the virtues of this fabulous market, proclaiming the second coming of "big cap stocks" and the wonderfulness of our Dow and NASDAQ poised to spring to the moon. He was so excited and irrational, it's a wonder he didn't hurt himself. I was so glad I had not just eaten or I might have returned my dinner.
It was all so obvious prior to, that I didn't even bother watching the ceremony already knowing the conclusions last week. They had to do this or you might have seen a Black Friday today. All those big index markets had double or triple topped while prices were scraping on the bottom near major support levels and you could smell the raw fear in television interviews taken with wise old men who have seen this all before; many more than once.
Dow Jones Industrial Average: Closed at 10947 +114.47. Price bar jumped above overhead resistance and closed on an up bar saying they will do this again on Monday, March 7. Volume was cut in half from previous days as chart indicated. PMO lines were up, but touching. The 200-day is 10394.53 and next main support is 10600, then the 200-day line. Expect more buying on Monday and selling beginning on Tuesday. The rally looks like a three wave, which means more power to come. Volume tells us there is no follow-through, so we shall see. This market has some more jumping around at higher levels before the selling comes to us in earnest. Short trend is up; intermediate trend is up; and long trend is down. Gunslinger daytraders will make some cash here while the rest of us had better stand aside and hunker down.
S&P 500 Large Cap Index: Closed at 1222.08 +11.61. Price bar closed above resistance and finished at bar's top. This means more buying on Monday. Unlike the Dow, volume was strong, showing us how the PPT can hammer the shorts and buy handfuls of S&Ps to prop things up. This is the market easiest to manipulate. Chart shows a double top with today's bar above the resistance. This too, looks like a three wave up with more buying to come. Short and intermediate trends are up, and the long trend is down. This is no place for amateurs or even experienced pit traders. They will hand you your head. Stay out.
S&P 100 Index (OEX): Closed at 583.18 +5.25. Everything is the same as the S&P 500 except this chart has produced a triple top. Price on both S&P charts is above all moving averages. All trends are the same as the S&P 500 and same advice goes here as well. Stay out.
NASDAQ 100 Index: Closed at 1522.84 +10.95. Please notice this chart is a departure from the Dow and S&P charts. It has a firm, tight triple top, has failed in a five wave down pattern, and has formed a very neat miniature head and shoulders between 1500 and 1550. Instead of big rally price bars like the others, the NASDAQ has formed a continuation triangle with the apex pointing at 1500. This is where the support channel will be hit when this index goes down in earnest. PMO was not as strong as the others, but volume was strong, showing us selling as well as a little buying. You will know when the stocks are going south, as the NASDAQ will be the leader going down first. Price bar range was very narrow top to bottom and finished in the middle. No conviction with weakness. Short trend is up; intermediate trend and long trends are down. Run away from this one very quickly. Stay out.
30-Year U.S. Treasury Bond Price: Closed at 112.97 +0.85. Bonds stopped their selling almost exactly when price range bar hit main support. The PMO and MACD Histogram continued with negative bars, but showed a little up relief at the end as price returned to almost 113.00. Bonds completed a five wave down, hit support and came up in a small one wave. Outside pressures still make this market difficult to determine or trade. Short trend is up; intermediate trend is up; and long trend is down. Stand aside.
Gold: Closed at 433.60 +4.00. Chart has finished a five wave down and also completed waves one and two up. Next we come into the big three wave up, which is the largest. PMO is up but tilted to the side a little in reaction to the current wave two. All recent closes were over 429, which means rally. Next objective in the three wave is $445 then $455. All trends are up and price is over all moving averages. It's too late for options now. Buy junior gold and senior gold stocks and move your stops up with the rally. Silver is almost a carbon copy of the gold chart. The only difference is that silver will rally further and faster than gold in the next 4-6 weeks. Buy both silver and gold.
U.S Dollar Index: Closed at 82.53 -0.73. Both the dollar and the bonds smell inflation. Price has formed the smaller right shoulder of the head and shoulder pattern. Dollar is correcting down in an A-B-C typical pattern. It is now forming the C wave down, which should find support at .8200, .8150, and .8100. All trends are down until dollar finds next main support. It will not drop under .8000 unless the stock market crashes. Look for weeks of choppy side action after the support is found. Stay out but watch it closely for opposite currency trends in euro, yen, pound and Swiss. No action required. This market is a great barometer for signals.
CRB Index: Closed at 309.16 +1.64. Price bar looks like a Saturn rocket going to the moon, directly driven by oil, grain, and precious metals with the most power provided in the order given, respectively. I have to find some older charts to discover probable resistance points. This market will rally throughout March and/or until oil hits next resistance level of $62.00. My new local independent grocer just opened a beautiful, brand new store. The prices appear to have gone up 25% to 50% across the board. I know it's not all for the building. It's commodity inflation. We do not trade this market, but some do. For big risk takers, go long in increments of 5 points per move, i.e. 295, 300, 305, 310, etc. When you hit a +5 take your earnings and exit. All trends are up. We are recommending most CRB sector markets in our trades. Buy.
Light Sweet Crude Oil: Closed at 53.78 +0.21. Main resistance is $55 and $58. I think we will see $62.00 in this rally top by April. Watch the unleaded gas contract for April. If it breaks over $1.50, we will get over $60 oil. Oil is still in the three wave up. A smaller corrective four wave down will come in about two weeks and will be mild before more buying up in the five wave. PMO is up and lines are spreading, showing more power to come. Today's price bar closed near its top, telling us more buying is coming next week. Keep in mind that big oil rallies are not good for big stock rallies. They go opposite. All trends are up, and prices are all above the three moving averages. Oil is suffering from a shortage and war scares. Do not be swayed any other way. Buy junior and senior oil stocks. Explorers, distributors, gas suppliers, drillers, and energy service companies, and energy unit trusts in Canada for income.
A time like this month is what investors and traders dream about. Move fast and watch your entries, exits, and especially risk stops. -Trader Rog
*******************
March 13, 2005
Jay Taylor, Editor of J Taylor's Gold & Technology Stocks
www.miningstocks.com