Buffett, Palin, FOMC
The market volume was much better today, but the market moved lower. The economic news was abundant and quite bearish this morning. UK property prices fell 8% last month. Freddie Mac requested $1.8 billion dollars beyond the $142 billion it already has received. Sarah Palin may get her own television show. A survey of U.S. small business found that 25% have cut prices this year - if small businesses are cutting prices they are not ready to hire new workers. Also, Buffett shortened his bond duration and he warned that deficit spending may force inflation higher. This could be a sign that The Oracle expects yields to rise sooner than most. Rising yields would stunt growth and it was about the last thing I wanted to hear before the FOMC rate decision.
The bearish headlines dragged the SPX lower from the open but the bulls found support at 1115 and proceeded to rally into the close following today's FOMC meeting. The Fed sounded much less confident in their economic outlook. Two points of interest from the report today. First, no commentary on energy and commodity prices. Second, (and more important) the proceeds from maturing securities will be reinvested in government debt. The result should be lower rates for corporate debt. There was nothing exciting from the report and it was not enough to get over 1130 resistance.
The market has struggled for direction throughout all of August and did not resolve anything today.
The dollar started the day strong, but reversed into the close. I am watching this currency closely. While no reversal pattern has emerged, the bearish momentum has decreased and I suspect a turn is close. A rising dollar is bearish for the market, especially commodities, and could result in us closing out our longs.
The Chart of the Day
Chris Banks (NYSE: CBK)
(CHART) may have put in an important low last month.
We looked at this stock in my weekend
TradeMaster Daily Stock Alerts' video. In the video we took a look at the huge move in
June, followed by a three candle star reversal pattern which began on July
19. The pattern occurred on higher than average volume and should result in
continued appreciation. Additionally, the bullish reversal occurred near
$6.50 which has proven to be an area of price support.
Shares have found resistance along the 50 day moving average in recent
sessions. Volume has increased and shares could be in the final minutes of a
bull flag break. My first target for the flag is $8.50 or about 25% higher.
If volume picks up in the next few sessions, shares could get an extra boost
that rockets them up to $9.75 over the next six weeks.
Watch List
The TradeMaster watch list was lower today, similar
to the market.
Leading the way higher were Chinese names like China Media Express
(Nasdaq: CCME) Rino Inc (Nasdaq: RINO) and Telestone Technologies (Nasdaq:
TSTC).
Send comments anytime editor@trademasterstocks.com
