Markets Still Sending Conflicting Signals

by Olivier on August 1, 2010

Regular updates will be back on starting with the second week of September at the latest. Rest assured, I am doing lots of research in the background. Still, for now my plan is to sit on my hands for another 2-4 weeks. Here’s a few observations:

  • Still lots of conflicting signals out there. Two head and shoulders patterns are emerging. We’ll see which one will prevail. Wrote about the two conflicting head and shoulder patterns in my last post.
  • Some resource stocks have started to print very decent moves to the upside. One could argue a positive divergence is starting to develop. They don’t follow the recent down move in gold anymore. They might be anticipating gold possibly making a seasonal low in August. A few that come to mind are CAN.V – Canaco Resources, a gold miner in Tanzania, SBB.TO – Sabina Gold and Silver, AND.TO – Andean Resources and TMM.V – Timmins Gold to name but a few.
  • Overall, tech stocks are doing very well but this week quite a few printed ugly gap downs. After long run ups these gaps are called ‘Hole in the Wall‘, a term coined by Alan Farley. Gap downs like the ones we saw with APKT – Acme Packet and NFLX – Netflix can be the starting point of long moves to the downside. It doesn’t necessarily mean a stock won’t recover but it is a signal to step aside and monitor the stock very closely before committing funds. Put another way it usually is not a bargain but the start of a short to intermediate term downtrend. STEC – Stec Inc. is a great example illustrating the negative implications of the ‘Hole in the Wall’ pattern. The stock got cut in half and although almost 12 months have passed the stock hasn’t recovered yet.
  • Uranium mining stocks recently got some serious media exposure. Lots of them have popped and it looks like we might get closer to the Uranium price turnaround I wrote about a while back. I think the most interesting candidates are DML.TO – Denison Mines and KIV.V – Kivalliq Energy.
    1. Uranium Sector Overview Chart I.
    2. Uranium Sector Overview Chart II.

  • GERN – Geron Corp. got an FDA approval. Risk appetite is still there and with the recent GERN move one could say it is increasing significantly as GERN is arguably one of the more speculative stocks out there. Biotech stocks and especially stem cell stocks are definitely not for the faint of heart. Still, I like to monitor the sector as it helps gauge traders’ risk appetite.
    1. Stem Cell Sector Overview Chart

It will soon be time to replenish my public list with new, strong and interesting stock ideas. Some will be removed. Stay tuned.

Handeln ist leicht, Denken schwer, nach dem Gedanken handeln unbequem.
Thinking is easy, acting is difficult, and to put one’s thoughts into action is the most difficult thing in the world. – Johann Wolfgang von Goethe

My public list with all my charts can be viewed here:

Buenas noches!

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