The selling got serious yesterday. But once again, as TradeMaster technical analyst Jason Cimpl forecast, the dip was a buying opportunity. Stocks are up this morning as if nothing happened…
But of course, something did happen. Cracks in the rally are beginning to show. And economic data is starting to weaken. Consider this morning’s Producer Price Index (PPI). This popular measure of inflation on the wholesale level came in stronger than expected. Prices for food are ticking upward.
No doubt the Fed is relieved to see a little strength in prices, as overall, prices have dropped 3.7% over the last 12 months. The only thing that scares the Fed more than inflation is deflation.
My question is: at what point do rising prices motivate the Fed to start sopping up the flood of liquidity it has released over the last eight months? Clearly, there will have to be stronger signs of recovery, but with the potential for full employment numbers to be higher than they’ve historically been, I can’t help but be concerned that the Fed will follow the Greenspan model and act too late.
*****However things play out, Jason has TradeMaster Daily Stock Alerts members taking profits this morning. They booked 12% on the US Oil Fund (USO) and 17% on Chinese hog farm and feed company AgFeed (Nasdaq:FEED).
One might have expected profits hard to come by with anything swine-related given the recent pork related pandemic. But a good read on a stock chart will beat conventional wisdom any day. Nice job, Jason.
By the way, if you’re interested in finding out more about TradeMaster Daily Stock Alerts and how Jason’s providing a steady stream of consistent winners to subscribers, go here. You’ll also learn about a special opportunity in three stocks he’s targeted as poised for big run-ups in the coming weeks (not months, not years, but weeks). Visit this link for more.
*****Even though we are looking at the potential for the current rally to peter out and give way to lower prices, I find it funny that certain analysts refer to it as a sucker’s rally.
After all, the S&P 500 has advanced 33% since March 10. Some stocks have done far better. Members of my advisory services SmallCapInvestor PRO and TradeMaster Daily Stock Alerts have had the opportunity to make some solid gains. If that makes us suckers, well, so be it.
*****It was reported by the Washington Post that many senior officials in the Fed and the Treasury were well aware that AIG (NYSE:AIG) was about to dole out billions in bonuses using TARP money months in advance.
Officials had even hired PR firms to examine how to sugar-coat the news so it could more easily be rammed down Americans’ throats.
Apparently, measures to keep AIG from plundering the Treasury were not on the table.
This is appalling news, and further demonstrates just how far up Wall Street’s patoot Tim Geithner is. Sure, there’s no evidence that Geithner had direct knowledge of the planned bonuses, but do you really think he didn’t know? If these Wall Street lapdogs were smart enough to hire PR firms, I think they could probably have figured out a way to give Geithner "plausible deniability."
If I were President Obama, I’d be calling for Geithner’s resignation. Period.
*****In looking at 3-month chart for Graham Corp (AMEX:GHM), a pattern emerges. The stock has consistently made solid runs to new short-term highs that are followed by sharp drops lower. Each and every drop has been bought and led to new short-term highs.
So in examining yesterday’s large drop, it appears we should see a quick recovery and a new high around $16 a share over the next 4-6 days. Will this be the high that we take profits on?
You’ll have to stay tuned…
That’s it for today, I’ll talk to you tomorrow.
P.S. I really love GHM as both a short term and long term opportunity. Short term for the reasons I mentioned above: long term because GHM is keyed into the oil refinery business and goes up every time oil does. Jason and I are both calling for oil to run up massively later this year. In fact, it’s already up about 60% from it’s lows a few months ago. We’ve found three more oil sector small cap stocks that will be big winners as oil climbs back. It’s in my new report called Oil Shock 2009. Click this link to find out more and to get your own copy.