My Stock Winners

Ok, humor me, are we getting another dividend before the end of the year?

Why the stock has fallen because of a one month strike at one mine seems rather excessive to me, I’d say the shorties have convinced the small thinkers this is a major problem….yah sure to a pinstripe hedgehog its a problem….not for me. Look at the reserves…look at the new discovery at Doyon….thats what will make you rich in the long run. Gold is a scarce commodity and demand is rising because fiat currency printing has run a muck. A truely great investor wants an asset that is becoming scarce and they want it long before a run up in demand. How much was a 1969 corvette in 1969 …8000 bucks …..now the same car in 2007 is probably 70,000 bucks…..why because they don’t make great cars like this anymore. Why do you think the mona Lisa is priceless…..because its a rare commodity which cannot be replaced. Gold demand is rising…not falling….the price is rising not falling….the supply is falling not rising.

Iamgold’s production is rising not falling…its reserves are rising not falling. The short term stuff is oppurtunity not calamity. A hedgehog needs to churn profit in the short term…but can he time it perfectly to ride the rise and the fall in the commodity price…..some can some can’t. I know three very large hedehogs that lost the farm on wrong way trades in commodities. They chase the churn and now they are…. no more.
Buy the dips in the gold bull run….thats where are the money is made

Telecommunications (TTH)
Bullish

Sector trading above its…
20-day Moving Average: YES
50-day Moving Average: YES
100-day Moving Average: YES

Sentiment:Pessimism currently blankets the telecommunications sector despite its strong uptrend. Wall Street has awarded the components of the Telecom HOLDRS Trust (TTH ?37.87) very few “buy” ratings. In fact. Of the 158 analysts ratings on the sector, only 33 percent come in at a “buy,” while an impressive 10 percent come in at a “sell.” This bearish configuration leaves ample room for potential upgrades. What’s more, the ETF’s short-interest ratio comes in at five times the equity’s average daily trading volume, indicating that investors have yet to shed their bearish bets toward the sector.

Outlook:Technically speaking, the ETF has resumed its uptrend after bouncing off support at its ascending 100-day moving average, so that it tagged a new multi-year high last week at 38.19. Additional support in the form of its rising 20-day moving average is climbing to the region and should help to boost the shares significantly higher as pessimism toward the sector begins to unwind.

Utilities (UTH)
Bullish
Sector trading above its…
20-day Moving Average: YES
50-day Moving Average: YES
100-day Moving Average: YES

Sentiment:Skepticism is extremely heavy in the sentiment backdrop of the utilities sector. Wall Street has placed some heavy bets against the group as less than 28 percent of the 176 analyst ranking on the components of the utilities sector come in at a “buy.” This bearish configuration leaves ample room for potential upgrades. Despite the fact that the number of Utilities HOLDRS Trust (UTH ?143.81) shares sold short dropped by 16 percent in March, the ETF still has a short-interest ratio of more than six, pointing to high levels of pessimism still among short sellers.

Outlook:After pulling back on March 30, the shares of the ETF bounced sharply back last week to tag a new all-time high at 144.27. The security now appears to be digesting its recent gains as it moves along support at the 143 level, waiting for its 10-day and 20-day moving averages to catch up. UTH could use this trendlines as a springboard to help launch it on the next leg of its uptrend. The security also has strong support in the form of its rising 10-week and 20-week moving averages, which can help to buoy the shares. Additional support in the form of the ETF’s rising 10-month trendline is also climbing into the region and should help to buoy the shares.

Stocks fell sharply following the release of minutes from the FOMC’s last meeting, which showed that inflation remains the central bank’s predominant concern. “The market certainly didn’t like it but I think what came out was not all that unexpected,”said Robert Pavlik, chief investment officer at Oaktree Asset Management.

You know what I am thinking? BUY on weakness!

The above is no news and only those who understands the market will catch this buying opportunities. In fact, in the last 3 times, the market alwasy bounced right back in a day or two.

I am buying IAG and SNDK as I type.

Business: Iamgold Corp, (IAG) Acquires, explores, develops and exploits precious metals resource properties in Africa and South America. The company has interests in two commercial producing mines, the Sadiola and Yatela gold mines in Mali.

Business Sector: IAG has been assigned to the Mining Business Sector.
Industry Group: IAG has been assigned to the Mining (Gold\Silver) Industry Group.

Value: Value is a measure of a stock’s current worth. IAG has a current Value of $13.05 per share. Therefore, it is undervalued compared to its Price of $8.11 per share.

RV (Relative Value): RV is an indicator of long-term price appreciation potential. IAG has an RV of 1.50, which is excellent on a scale of 0.00 to 2.00. This indicator is far superior to a simple comparison of Price and Value because it is computed from an analysis of projected price appreciation three years out, AAA Corporate Bond Rates, and risk. RV solves the riddle of whether it is preferable to buy High growth, High P/E stocks, or Low growth, Low P/E stocks.

RS (Relative Safety): RS is an indicator of risk. IAG has an RS rating of 0.89, which is fair on a scale of 0.00 to 2.00. RS is computed from an analysis of the consistency and predictability of a company’s financial performance, debt to equity ratio, sales volume, business longevity, price volatility and other factors.

GRT (Earnings Growth Rate): GRT reflects a company’s one to three year forecasted earnings growth rate in percent per year. IAG has a forecasted Earnings Growth Rate of 30.00%, which I consider it to be excellent. GRT is computed from historical, current and forecasted earnings data. GRT often foretells a stock’s future price trend. If a stock’s GRT trend is upward, the stock’s price will likely rise. If GRT is trending downward, the stock’s Price will probably fall. VectorVest favors the purchase of stocks whose GRT is rising and is greater than the sum of current inflation and interest rates, (8.07%).

Sales: IAG has annual sales of $303,000,000

Sales Growth: Sales Growth is the Sales Growth Rate in percent over the last 12 months. IAG has a Sales Growth of 207.00% per year. This is excellent. Sales Growth is updated each week for every stock. It is often useful to compare Sales Growth to Earnings Growth to gain an insight into a company’s operations.

Recommendation (REC): IAG has a BUY recommendation. These parameters are designed to help investors buy safe, undervalued stocks rising in price. They also help investors avoid or sell risky, overvalued stocks falling in price.

Friday’s March employment report showed better than expected job growth (180,000 jobs added) and the unemployment number contracted to 4.4% showing a U.S. economy that just refuses to quit despite Alan Greenspan’s warning several weeks ago. All that fell on stocks like a deaf ear, as equity markets were closed Friday. Contrary to our concern last weekend, stocks zoomed ahead in the holiday shortened week.

The NASDAQ Composite was the weekly leader gaining 49 points (+2.0%) with the Dow a close second adding 206 points (+1.7%). The S+P 500 picked up 22 points (+1.6%) and the Russell 2000 wasn’t far behind adding 12 points (+(1.5%). That stocks did so well in just a four day trading week was way ahead of our own modest expectations, but we’ll take it.

While stock trading was closed for the Friday holiday, bonds did trade in an abbreviated session. The seesaw economic numbers released over the past week or two have finally created enough impetus to push the yield on the 10 year Treasury note to 4.75% by Friday’s close. For the first time in a while, the yield curve has finally flattened and it will remain to be seen how this affects the stock market.

Combine a flattened yield curve with the fact that analysts have been anxiously reducing U.S. economic growth estimates for the remainder of the year and the risks increase that stocks could reverse even though they bolted higher last week. Equities were further boosted by the fact that crude oil prices finally gave back 2.4% of their recent gains and the Street is awash in liquidity. Big time merger and acquisition activity (Chrysler and First Data) remains exceedingly strong, even after last year’s record pace.

In the week ahead, Monday Nokia’s royalty deal with Qualcomm expires with the San Diego-based company expected to seek arbitration to settle things up. Tuesday, Alcoa reports earnings and the Bank of New York holds a shareholder meeting. Wednesday, minutes from the last FOMC Committee meeting should offer clues about eliminating references to further rate hikes, while Fed Chief Ben Bernanke talks about market discipline and regulation in the afternoon. Chicago Fed President Michael Moskow addresses economic outlook in Illinois Wednesday night.

Thursday brings the initial jobless claims report with most analysts expecting an up tick to 320,000-330,000 claims. Economists will also be looking closely at the non-fuel portion of the March import prices report which fell 0.2% in February. (Let’s hope there’s not an up tick in prices to further spook the Fed.) Friday the March producer price index is expected to show a 0.7% rise in the headline index and a 0.2% increase in the core number, and GE’s first quarter report will reveal how bad a hit the Dow leader’s lending unit has taken from the sub-prime mortgage fiasco.

It ought to be an interesting week, so stay tuned!

Friday’s gift from the Labor Department of evidence that the economy still had some life it in has, thus far, been met with grumbling by Wall Street. Despite a closed market, the Labor Department announced that March nonfarm payrolls grew by an unexpected 180,000, crushing the consensus estimate for an increase of 168,000. What’s more, the unemployment rate dropped from 4.5 percent to 4.4 percent, matching October’s level, which was also the lowest level in six years. To add to the surprising robustness of the job market, February’s payrolls were revised higher by 16,000 and January’s payrolls were revised higher by 16,000.

In response to the strong jobs report, the dollar has rallied against the various foreign currencies, as fears have been at least temporarily allayed that the U.S. economy is still alive and kicking. On the other hand, bonds had sharply retreated.

The one repeated comment across the financial media in response to the payroll figure has been the fact that the Fed is now even less likely to cut interest rates now that there is fresh proof that the economy continues to chug along. But how likely was the Fed to cut rates if jobs had come up short? During his most recent speech on Capitol Hill, Fed Chief Ben Bernanke reiterated that the Fed’s main concern was inflation. Currently, inflation readings remain above the two-percent mark and outside the Fed’s comfort zone of one to two percent.

But my ultimate beef with the bearish take on the lowered likelihood of a rate cut is the fact that the bearish case since the 2/27 market plunge has been predicated on an economy that is about to implode due to various “excesses” that are about to be corrected. If instead the bearish case for the economy is exaggerated, then there is no need for a rate cut. My point is that the gloom that has accompanied the relatively minor February-March market pullback is now becoming impervious to how the facts are playing out, and this bodes favorably for a bullish resolution for the market.

Following the release of payroll figures, futures on the S&P 500 futures popped higher, indicating that stocks are primed for a potentially positive start to trading when the market opens again today. The broad market put in a solid performance last week, with both the S&P 500 Index (SPX) and the Russell 2000 Index (RUT) gaining approximately 1.6 percent. However, the small-cap index continues to be the leader on a year-to-date basis, with its return of roughly 3.3 percent, versus the SPX’s return of 1.8 percent and the Nasdaq Composite’s (COMP) gain of 2.3 percent. (For more of my thoughts on the outperformance of the small-cap sector, please read “;Schaeffer on Charts: Why Small Caps Make Sense”.)

But this doom and gloom from analysts isn’t limited to getting the hoped-for interest-rate cut from the Fed. Attention has now been turned to first-quarter earnings that will soon begin to wash over the Street, and expectations are extremely low. The latest from Thomson reveals that Wall Street analysts are looking for 3.3-percent growth in the first quarter and 6.3 percent for the full year. This consensus estimate is down from 3.8 percent and 6.7 percent just a week ago. In addition, an article in a well-known financial publication stated over the weekend that derivatives strategists are recommending that investors buy defensive puts to protect themselves from a moderate correction in stocks, as investors react negatively to the expected deceleration in corporate-earnings growth.

Evidence of this growing interest in put positions can be seen in the broad-market exchange-traded funds (ETF). The Standard & Poor’s Depositary Receipt’s (SPY: sentiment, chart, options) Schaeffer’s put/call open interest ratio (SOIR) has steadily climbed from a near-term low of 1.92 on March 23 to its current perch of 2.11. During this time, investors have added more than 490,000 put contracts and only 147,000 call positions among SPY options with fewer than three months until expiration. During that same time frame, the iShares Russell 2000 Index Fund (IWM: sentiment, chart, options) has seen its SOIR rise from 2.19 to 2.26. Put open interest for the ETF among near-term options has swelled by 407,000 contracts, while call open interest has jumped by fewer than 135,000 contracts.

This growing pessimism among investors is underscored by the fact that they are jumping into their puts while they remain expensively priced on a relative basis. The volatility indices have pulled back from their recent highs but remain above single-digit territory, which has pointed to market downdrafts in the past.

In my opinion, the market is faced with what could be a huge opportunity for a big breakout. The cautious sentiment that blankets the Street leaves the door wide open for companies to positively surprise investors with their earnings reports. On the heels of a stronger-than-expected employment report that came with revisions higher in previous months, perhaps the consumer is not in as in bad as shape as feared by many on Wall Street. This sets the stage for positive surprises in consumer spending, which hints at negative earnings revisions potentially being too dramatic, since the consumer is the ultimate engine of economic growth.

Important Facts to Understand Re: Gold, Stocks and Bonds

Let’s get some facts straight before you make any decisions regarding your gold stock portfolio and your other assets. Most of these facts point toward higher gold and metal prices after the panic selling stops. Industrial stocks and bonds may have shown the first signs of a sustained decline or at least a major topping range.

1. There will be no recession or slow down in China which people feared would cut demand for gold and base metals as well as impact other economies. The facts behind this statement are: a) Money supply (M1) increases in China are 20.3% y/y (year over year) and have averaged an incredible 14% for the last five years. Recessions don’t start with that kind of new money in the system; in fact this data spells boom times for years and inflation as well for China. Also retail sales in China y/y, has averaged 18% for the last four years which shows an internal economy is developing. China is most likely at least 2-3 years away from even a slowdown to 5% growth.

2. The Chinese authorities did the right thing in clamping down on illegal stock sales on the Shanghai and Shenzhen stock markets. Their other measures to curb speculation (margin and bank lending for stocks) caused a panic in these two overbought markets sporting an average p.e. ratio of 45 (these markets are mostly retail accounts and basically limited to Chinese nationals only). The result was a huge 8.8% sell off in one day. But the Hong Kong market had only a small reaction and was down only 1.75%. So the smart Chinese money in Hong Kong wasn’t in any way panicking.

3. ZTE, China’s largest phone equipment maker was up 3% during the panic. This is more anecdotal evidence of no recession anytime soon for China.

4. Gold in Hong Kong was almost flat in spite of the stock sell off on the mainland. Therefore the more sophisticated Chinese investors weren’t buying into the TV talking head syndrome that the strong economy in China is now over and that gold and base metal demand would decrease.

5. In New York gold was only off $2.5 despite the Dow plunging at the close of the commodity trading session. In the NY after market which is illiquid and easily influenced by a panic, gold was hit hard and then the Gold ETF followed suit and sold off as well.

6. Bonds in the U.S. rallied as a safe haven. But will foreigners buy US bonds if the dollar continues to go down - which it did - which makes the gold rout in the aftermarket that much more suspect and temporary. My guess is that gold needed a breather since it has had a recent sustained rally.

7. The Fed is now faced with a housing slowdown and a possible further market crash from a nervous and obvious vulnerable stock market. They would be way out of character to raise rates any time soon especially with the latest report on mortgage defaults at four year highs.

8. The Fed not raising rates means more weakness in the U.S. dollar and that is bullish for gold.

9. India is the largest gold consuming nation. What’s happening there? 2006 M1 money supply is up 20% and has averaged 17% per year for the last 3 years! GDP is expected to grow 9.2% in 2007. These are powerful stats that should mean continued support for gold prices.

10. How long will it be before China lifts exchange controls and allows all those remimbi’s they have been creating to be sold for some other currency to facilitate investing overseas? This will allow the government policy of a weaker currency to be aided by the people themselves and allow their mercantilist economy to continue. A good Libertarian definition for Mercantilism is where a government is on the side of the factory owners and big business and pursues a policy that benefits the business class at the expense of the average person. A strong currency allows Joe six pack to buy cheaper goods from overseas whereas a weak currency makes everything more expensive for him but allows the business owners to export more. Mercantilism squeezes the little guy and helps government cronies. It’s a bad deal and 180 degrees from a free market.
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11. Margin calls are a real possibility in the next 24-48 hours. So one should just be patient with buying until the dust settles.

12. The sell off in the mining shares took place when almost every mining analyst, mining money manager, and gold fund manager who are anywhere on the global radar screen were all attending the BMO Gold Mining Conference in Tampa. These smart money players were all away from their screens and definitely out of the loop as their sector took it on the chin. Most likely by Thursday, when these heavyweights are back at their desks, they will have a shopping list of mining stocks they love but were waiting for a sell off to buy.

13. Nikko Cordial is the 3rd largest brokerage house in Japan. They are being nailed for cooking the books and their stock is plummeting. This should be another reason why some Japanese household money will find its way into gold.

14. My experience dealing with and knowing many hedge fund managers is that they have little knowledge or even know what Austrian school economics is all about and certainly have little knowledge of the hard money- paper money controversy. Ayn Rand, Nobel Laureate F.A. Hayek, Murray Rothbard and Harry Schultz could be Academy Award nominees for all they know. Hedge fund participation in the gold market and gold shares is growing not because of a deep seated reasoning on economic issues but only because it is a hot sector. The volatility in the gold shares will be above average in the coming years because of them. They will be the gold bugs worst nightmare and best friend - depending on the trend. This is why being on margin will be a bad idea.

15. Derivatives: With a global market panic starting in a low interest rate and, so far, low inflation environment, one has to be wonder about the real reason for this sell-off. Easy money almost everywhere leads to leverage and speculation. No where is this more prevalent than in the global derivative market. It is not out of the question that third party defaults and risk aversion designed instruments that collapse and go sour may someday overwhelm the financial markets. Latest figures from the Bank of International Settlements: $8.3 trillion of real money is controlling $313 trillion in derivatives. That’s 38 to 1 leverage. These figures are just for the over - the - counter derivatives and do not include the global exchange traded derivatives in currencies, stocks and commodities which are another $75 trillion. Any accidents here should make gold a very desired asset class.

16. Every once in awhile technical trading and computer trading take over almost completely when a human panic evolves in markets. This is what happened on Tuesday’s crash. Fundamentals were ignored. The Shanghai and Shenzhen markets were selling at 45 price earnings ratios. Many of the mining stocks that we own in our fund are selling at only2-3 times expected cash flow when they go into production. These developmental mining companies with documented reserves and real value in the ground sold off even though they are obviously not at speculative levels. I am sure there are similar stories for other mining portfolios. This across the board sell off is a sign that hot money is being chased out of the mining stocks and the shares will be going into stronger hands.

17. If the mainland Chinese are bidding stocks to 45 times earnings, it is an indication of how high they will eventually bid up gold mining companies in New York and Toronto when exchange controls are lifted. As Doug Casey likes to say; “it will be like Hoover Dam going through a garden hose.”

18. The U.S. money supply is up 5.5% for the last twelve months and 16.7% for the last three years. Raw goods and Intermediate goods are now climbing at above 7% and this will soon impact consumer prices. With inflation in the pipeline, will foreigners want to buy US bonds which will be heading down? This will also hurt any dollar support in the future from this source and therefore be supportive of gold.

Conclusion

Excessive speculation in China by retail customers and a market correction have little to do with the Chinese economy’s forward progress. The plans to build 120 airports a year for the next 10 years and tens of thousands of other projects will not be affected because some gamblers and speculators overdid it.

Gold and gold mining shares, despite a short term disappointment will surely recover as the investing world has been given a wake up call on the frailty of paper assets owned by global investors. Base metal stocks will also recover as the China and India growth story has many years to go.

A few weeks ago, Suining Yinfa DAR Industrial Co., Ltd. (DAR Industrial), a subsidiary of Voice Diary Inc. (OTC Bulletin Board: VCDY.OB), received earnest money of Import-Export Agent Executive Agreement and advance payment of 2007 orders, a total of USD$60,000 from DongUi Cosmetics Co. (DongUi), a corporation organized and existing under the laws of Republic of Korea (South Korea). Among the total, USD$15,000 is for earnest money, USD$45,000 is for advance payment.

Pursuant to the Import-Export Agent Executive Agreement signed on March 5, 2007 between DAR Industrial and DongUi, DAR Industrial shall deliver DAR orders in specific times after receiving advance payment. The execution of the agreement and DAR orders will bring in DAR Industrial a sales revenue of USD$1,125,000.

During the summer, their products will grow and in the autumn, they are ready to be sold and being added value to. VCDY.OB is going international. It went IPO in USA, and they are selling and signing deals all over the globe.

Do you see the potential of this China stock? I see the price up 400% by the year end from this level. Let me know what you think!

Financials (XLF)
Bullish
Sector trading above its…
20-day Moving Average: YES
50-day Moving Average: NO
100-day Moving Average: NO

Sentiment: Options traders continue to show an overwhelming preference for puts over calls toward the Select Sector SPDR Financials Fund (XLF –35.63). The Schaeffer’s put/call open interest ratio (SOIR) for the exchange-traded fund (ETF) comes in at 6.64, as put open interest is nearly seven times call open interest among options with fewer than three months until expiration. This ratio is also higher than 84 percent of those taken during the past 52 weeks. In fact, peak put open interest in the April series rests at the 35 strike with roughly 266,000 contracts. This accumulation of bearish bets not only indicates high levels of pessimism, but the buildup could also act as a layer of options-related support.

Outlook:Technically speaking, the ETF lost some ground last week, but it is currently holding onto support at its 20-day moving average and is struggling to regain the support of its 10-day trendline. In addition, XLF continues to benefit from the combined support of heavy put option interest at the 35 strike and its rising 50-week moving average. Since the end of October, the ETF has finished only one week below this intermediate-term trendline. This combination of pessimism and growing technical strength has bullish implications from a contrarian perspective.

Sector
Utilities (UTH)
Bullish Sector trading above its…
20-day Moving Average: YES
50-day Moving Average: YES
100-day Moving Average: YES

Sentiment:Skepticism is extremely heavy in the sentiment backdrop of the utilities sector. Wall Street has placed some heavy bets against the group as less than 28 percent of the 179 analyst ranking on the components of the utilities sector come in at a “buy.” This bearish configuration leaves ample room for potential upgrades. Despite the fact that the number of Utilities HOLDRS Trust (UTH – 140.82) shares sold short dropped by 16 percent in March, the ETF still has a short-interest ratio of more than six, pointing to high levels of pessimism still among short sellers.

Outlook:Last week saw the UTH consolidate some of its recent gains as it moved sideways into support at its 10-day and 20-day moving averages. What’s more, the ETF managed to tag a new all-time high of 142.26 in trading last week. The security also has strong support in the form of its rising 10-week and 20-week moving averages, which can help to buoy the shares. Additional support in the form of the ETF’s rising 10-month trendline is also climbing into the region and should help to buoy the shares.

Friday marked the last day of first quarter trading, and on the week, stocks ended lower across the board. The Dow Jones 30 (-1.0%) closed at 12,354, while the S+P 500 (1,421) Nasdaq Composite (2,422) and Russell 2000 (801) all surrendered 1.1%. For the quarter, the Russell (+1.66%) led, followed by the Nasdaq (+0.26%) and the S&P 500 (+0.18%). Only the Dow (-0.87%) finished the first quarter lower.

As market professionals bid prices up to close the quarter, there’s good reason to suspect they might off load a few in the days ahead, especially now that the quarter has ended. With seventeen straight interest rate hikes the Fed finally shifted into neutral and the pressure on the stock market eased. However, the big risk lately appears to be an economy that’s showing signs of slowing combined with persistent inflationary signals. The good news for investors, it appears, is that the Fed is now content enough to at least sit on the fence to see how the tight money thing plays out.

Higher rates have certainly not been beneficial to all those poor souls who bought real estate at the top of that market three years ago with all those exotic sub-prime loans that were marketed around. Consumer spending has been a big stock market driver these past several years, and it’s no surprise that the threat of a loss of “liability” liquidity could seriously exasperate problems in real estate, and spill cold water all over stocks. Wall Street pros still believe the Fed will come to the rescue this year with a “downshift” in interest rates, but the fear they won’t could be enough to cause stocks to retest recent lows at least one more time.

The Fed trots St. Louis President William Poole to New York on Monday to speak to the Big Apple’s Association for Business on the obvious topic: “Understanding Inflation,” while Nike splits their shares 2 for 1. Tuesday brings the domestic auto sales report for March. Lehman says these numbers should be little changed from the past three months and show an annual pace of 12.7 million vehicles (can you say “thank you” for 0% financing?) Rupert Murdoch (News Corp) and John Malone (Liberty Media) are expected to bury the hatchet Tuesday and complete a two year feud, culminated by an $11 billion asset swap between their two companies.

Wednesday, several big box retailers (Best Buy and Circuit City) announce earnings with results expected to be good (Best Buy) and bad (Circuit City). Thursday, Harrah’s Entertainment shareholders hold a special meeting to vote on a merger with venture capital behemoths Texas Pacific and Apollo Management. Friday brings the March employment report (140,000 new jobs projected to be created), but any impact from that number waits until the following Monday, as U. S. financial markets are closed for the Easter holiday.

So far we have just been focusing on the daily rallies, but it is important to never lose track of the big picture. We have discussed the importance of looking at the weekly charts and it is important to also keep an eye on the longer term Fibonacci analysis. In Fig. 3 we were focusing on the euro’s rally from .9571 to 1.1928, but at the same time we should be looking at the Fibonacci analysis using the previous low of .8549 and the high at 1.1928. The 23.6% support level of this rally was at 1.1130, which was broken the week of August 23, 2003 along with the weekly uptrend. The next level from the longer term chart was the 38.2% support at 1.0637. Therefore, you had the daily 50% support level at 1.0749 and the weekly 38.2% support level at 1.0637. The convergence of these Fibonacci levels (see circle labeled e) made this a critical level of support. The euro as discussed earlier made a low of 1.0759.

Market sells into news on SanDisk’s (SNDK) news of it 4GB products.
http://biz.yahoo.com/prnews/070328/nyw026.html?.v=91
Instead of complaining, this actually presents a good entry point for us

I ran the following technical indicator, the result is a, you guessed it…. BUY!

Short Term Indicators
7 Day Average Directional Indicator -Buy
10 - 8 Day Moving Average Hilo Channel- Buy
20 Day Moving Average vs Price -Buy
20 - 50 Day MACD Oscillator -Buy
20 Day Bollinger Bands -Hold

Medium Term Indicators
40 Day Commodity Channel Index -Buy
50 Day Moving Average vs Price -Buy
20 - 100 Day MACD Oscillator -Sell
50 Day Parabolic Time/Price -Buy

Long Term Indicators
60 Day Commodity Channel Index -Buy
100 Day Moving Average vs Price -Buy
50 - 100 Day MACD Oscillator -Hold

Overall Average: Buy

TARGET 1 Price: 46.08 Profit: 6.4% , for a typical rally.
- Stop Limit/Trailing Stop Limit: 41.93 Loss: 3.2%

TARGET 1 POTENTIAL Good, there are 1 resistance areas on the way to Target 1.
- Stocks may quickly rise to Targets when there are not many resistance areas blocking the way.

TARGET 1 RESISTANCE +2.3% at 44.32 ± 0.93, type triple+, strength 10
+6.4% at 46.08 is Target 1

TARGET 2 Price: 47.67 Profit: 10.1% ,
Profit/Loss Ratio: 3.2 : 1 - Good

The euro rallied sharply over the next four months, forming a short-term peak in early March, then, after a four-week correction, resumed its uptrend. The euro eventually reached the 1.1950 level (point d) and then moved sideways for two weeks before starting a deeper correction. At this point, the analyst would start to examine the entire rally from the low at .9571 (point c) to the high of 1.1928 (point d). Once again, we look at the difference between the high and low to determine the Fibonacci levels to watch: 1.1950 - .9571 = .2357. The 23.6% level at 1.1371 was broken on July 3rd and the 38.2% level at 1.1027 held until August 21st when it was also broken. This made the next key level of support at 1.0749 the 50% support level. After the 38.2% support was broken, one was able to identify the continuation pattern (blue lines) that eventually took the euro to a low of 1.0759, just holding above the 50% Fibonacci level. The break through resistance at point 2, completed the continuation pattern.

Financials (XLF)
Bullish

Sector trading above its…
20-day Moving Average: YES
50-day Moving Average: NO
100-day Moving Average: NO

Sentiment: Options traders continue to show an overwhelming preference for puts over calls toward the Select Sector SPDR Financials Fund (XLF ?6.20). The Schaeffer’s put/call open interest ratio (SOIR) for the exchange-traded fund (ETF) comes in at 6.73, as put open interest is nearly seven times call open interest among options with fewer than three months until expiration. This ratio is also higher than 86 percent of those taken during the past 52 weeks. In fact, peak put open interest in the April series rests at the 35 strike with roughly 264,000 contracts. This accumulation of bearish bets not only indicates high levels of pessimism, but the buildup could also act as a layer of options-related support.

Outlook:Technically speaking, the ETf gained ground last week with the rest of the broad market and climbed back above its 20-day moving average. In addition, XLF continues to benefit from the combined support of heavy put option interest at the 35 strike and its rising 50-week moving average. Since the end of October, the ETF has finished only one week below this intermediate-term trendline. This combination of pessimism and growing technical strength has bullish implications from a contrarian perspective.

Utilities (UTH)
Bullish Sector trading above its…
20-day Moving Average: YES
50-day Moving Average: YES
100-day Moving Average: YES

Sentiment:Skepticism is extremely heavy in the sentiment backdrop of the utilities sector. Wall Street has placed some heavy bets against the group as less than 27 percent of the 178 analyst ranking on the components of the utilities sector come in at a “buy.” This bearish configuration leaves ample room for potential upgrades. Despite the fact that the number of Utilities HOLDRS Trust (UTH ?140.86) shares sold short dropped by 16 percent in March, the ETF still has a short-interest ratio of more than six, pointing to high levels of pessimism still among short sellers.

Outlook:UTH shot higher last week, pushing through resistance at the 135 level. The ETF is now less than one percent away from the all-time high of 142.17 it reached on February 26. The security also has strong support in the form of its rising 10-week and 20-week moving averages, which can help to buoy the shares. Additional support in the form of the ETF’s rising 10-month trendline is also climbing into the region and should help to buoy the shares.

The broad market bounced back in a major way last week, with all four of the major market indices gaining more than three percent. The S&P 500 Index (SPX) not only conquered the 1,400 level once again, but it is now less than two percent away from the peak of 1,461.57 it reached just before the sharp pullback that started on February 27. In addition, the SPX is now sitting on a 1.3-percent year-to-date gain.

While the market now appears to be on the mend again, analysts around the Street have begun to complain about the relative shallowness of the recent pullback and the brevity of the consolidation phase. From peak to trough, the SPX shed only 6.7 percent and has staged a rather quick bounce back.

This bounce has not been met with celebration and general jubilant comments, but rather with a strong does of skepticism from both Wall Street and investors alike. Last week, the latest short-interest figures were released by the New York Stock Exchange (NYSE), revealing a 9.5-percent jump in the shorted shares not yet closed out on the NYSE. The monthly period measured for short interest stretched from February 15 through March 15, encompassing the pullback in the market. Even so, this is an off-the-charts increase in short interest, as my experience has been that these monthly short-interest changes tend to be in the one- to two-percent range.

A second sign of the growing pessimism on Wall Street comes from mutual fund investors. Recently, the NAVdjusted assets for the Rydex Nova fund has plunged to a more than three-year low as investors have fled the mutual fund. The Nova fund is designed to have a target beta of 1.5. In other words, using shares of equities, stock index futures contracts, and options on those securities and futures, the fund has a target performance benchmark equal to 150 percent of the SPX. Traders who invest in this fund are considered very bullish on stocks.

A final sentiment indicator that is pointing toward extremely heavy levels of pessimism is the Schaeffer’s equity put/call open interest ratio, which measures put and call open interest across all equities using their front three months of options. This ratio has soared to its highest level in more than four years, as put positions have been added at a faster pace than call positions during the past couple of weeks. In fact, this ratio is near the highs achieved in 2002 when the market was searching for its ultimate bottom at the tail-end of a multi-year bear market. I find some very bullish contrarian implications in the fact that this major level of negativity was generated among equity option players by a pullback this brief and this shallow.

This mix of pessimistic murmurings from traders and Wall Street analysts suggests that there is ample money still waiting on the sidelines to help fuel a continued rally in the broad market.

Throughout this rebound in the broad market, the strongest performer has been the small-cap Russell 2000 Index (RUT). Last week, the index was the big winner as it gained almost four percent and is now up 2.8 percent on a year-to-date basis. The RUT easily plowed through resistance at the 795 level (a 50-percent correction level of the index’s recent pullback) and the 800 level, which hindered its rally attempts in December and January.

Looking at the iShares Russell 2000 Index (IWM), we find that peak April call open interest lies at the 82 strike, with roughly 81,000 contracts in open interest. Of course, this accumulation pales in comparison to the 258,000 puts at the April 76 strike or even the 123,000 puts at the April 78 strike. Meanwhile, the April open-interest configuration for IWM shows extremely light open interest above the 82 strike. Normally on a pullback like we had recently you will get an out-of-the-money call build. Not this time. This lack of interest in out-of-the-money calls on IWM indicates that traders are not expecting much more upside out of the small-cap sector despite its impressive technical performance.

Furthermore, anecdotal sentiment during the most recent “turmoil” in the market was that investors should play the safety of large caps, given the uncertainty surrounding the economy and interest rates. Yet, the market proved once again that rallies will be led by the small and mid-cap groups, again defying the consensus opinion that seems to favor the larger-cap, blue-chip names.

Finally, it is of interest to note that the SPX is currently sitting right at a level that corresponds to its peak on the morning of February 27, just ahead of that afternoon’s horrific plunge. The current rally stalled out at this level beginning on Thursday and we’ve moved sideways since then. This resistance (resulting from the fact that many players who did not sell ahead of the 2/27 plunge view it as a “break even” level from which to exit) may continue to weigh on the market over the short term.

As we close the final week of the quarter, the economic calendar will give investors a lot to digest before looking ahead to first-quarter earnings reports in the second week of April. Traders will be keying in on data such as new home sales, retail sales, and durable goods order for February in the first few days of the week. Later in the week, we’ll see final data for fourth-quarter Gross Domestic Product (GDP) and corporate profits, personal income and spending, the Chicago Purchasing Managers Index and construction spending.