DOWn Comes The Wall

It had to finally happen, the DOW blew through 8125 and was up over 200 points at one point today on positive news out of the FED that things are maybe bottoming and news/rumours they may have a deal to save Chrysler. It closed up 168 when all things washed out at 8185.

The market seems to be running on this "worst is over" mantra and all sectors seem to be reaping the benefits from banking stocks to uranium. Now the question is will 8125 act as a support and carry the market into new bear market rally mode.

My biggest caveat is that it is almost the "Sell in May and go away" time and "almost" every year it has held true. The one time I thought for sure it would hold true was the summer after the tech crash in 2002 and it turned out to be the biggest mistake I made as the tech market came off a nasty bottom and stocks like RIM were on sale for $17-20 and the promptly went up 5 times plus in the next year so I will not be taking my eye off the ball this summer. History has a habit of repeating itself and this could be one of those times.

The DOW Wall

It's been another wild week of earnings suprises and disapointments,auto bankruptcy rumours then backroom deals to try and save them. All and all the DOW cannot break through 8125 and that is what my reference to The Wall is , besides being the best album and concert of all time that I was lucky enough to experience.

The traders always seem to be transfixed on certain numbers for certain entities. For gold it's $1000, for oil it's $50 and for now the DOW has had several kicks at the 8125 can and can't tear down that wall. With all the swine flu news dominating things I am amazed it has held up as well as it has. This next week shall really tell the tale but we also have housing numbers out suggesting the rate of decline has slowed and maybe the worst is over but I don't have the sudden urge to go buy an overpriced piece of BC real estate anytime soon.

Note on Thursday, Emergeo Solutions is having a conference call for any interested. See their PR last week for the number.

Mixed Signals

Talk about mixed signals. All those sell signals have basically stalled and are flat lining while the market decides wether Apple's and American Express positive earnings outweigh Microsoft and Amazon's disapointing sales forecasts.

We have gold inching up as per our TA guy's call which showed some clear bottoming signals but still there is no outright buy signals on the XAU which usually lead the price of gold which is up about $50 off the low last week. Gold did give some buy signals today so I am thinking we may have some safe haven buying with the Pakistan situation making some nervous. We shall see if the equities follow as Barrick gave an early warning buy signal today but needs some follow through tomorrow.

Oil has switched over to the June contract which was slightly higher than the May closing at $46 and is currently in the $49 range. What is interesting is the December oil contract as of yesterday was at $60 showing the markets conviction that higher prices will come regardless of the higher stockpiles being reported.

As well the VIX is acting bipolar not sure where to go so Friday should be another coin toss on which good news counters the bad.

Sell Signals

Looks like the call of a pullback was on the money, and if IBM's earnings are any indicator I expect further sell signals on the Dow Industrial and new sell signals on the Dow Transports which to me indicate the true market direction. The "Trannies", as they are called, did not produce sell signals so as much as I am bearish for tomorrow I was suprised to see them escape while the DJI did not.

I would think we will get some follow through on upside of the XAU gold shares and the price of gold. Our TA gold guy has been calling for gold and the shares to rise since last Wednesday and it may be looking like he is bang on if we see another step up tomorrow to confirm those buy signals of the golden metal.

The big smackdown today was from the market reading into the leading indicator numbers that show the contraction in the US economy will last through the summer and up to 6 months. This is not a postive but is almost expected versus what we have seen in the daily news the last two months as more people struggle to find a job,keep their job and rein in their spending.

Oil took a major beatdown over $4 to the $46 range as predicted but much faster than I wanted to see. I am thinking it will take some serious good news to slow a sell off most of this week so expect to see some more downside movement as the froth is blown off.

Oil and the DOW

The coming week plans to bring more volatility as more earnings reports roll in. The charts seem to be telling us along with the media that we are overbought and are ripe for a pull back so be on your toes. I don't expect it to be too long a pullback as alot of shorts seemed to be getting squeezed and most will use any opportunity to get out rather than play a long correction.

The one thing I find interesting the most the last 6 months is the corelation with oil prices with the DOW as well as gold with the US dollar. It used to be if the markets went up, oil went down and vice versa but now oil seems to trade up with the DOW rises and vice versa as the market looks for optimism we will be using more oil with a rebound from this recession. My gut tells me OPEC and some others have a very strong interest to keep the price above $50. Funny how new trading trends come out of the blue like that but that's what makes the markets such a wild place to be.

Should be interesting to see how this week plays out with Chrysler and Fiat as any bad news on a big scale could knock us back quickly. Don't see oil going much lower than $45 as the long term prices on the CBOE are showing a long term bias to the upper 50's.

Play safe and don't risk big bucks at this short term top,patience is a virtue for sure at this junction.

Emergeo News

Emergeo, V.EMG, came out with some more contract news. Not the biggies I am hoping for but these are very important contracts when you put it in the world perspective of national disasters you are seeing on your nightly news the last few weeks with the flooding in Manitoba and North Dakota.
When you start coming out with $400,000 contracts consistently, they add up nicely like building blocks leading to bigger deals down the road as the software system becomes more well known.
Bottom line is EMG saves lives and property.




Emergeo Solutions signs $400,000 deal in Manitoba

Emergeo Solutions Worldwide Inc (C:EMG) Shares Issued 16,710,647Last Close 4/14/2009 $0.60Thursday April 16 2009 - News Release

Mr. Michael Morrow reports

EMERGEO SUPPORTING RED RIVER FLOOD RESPONSE

Emergeo Solutions Worldwide Inc. has secured a $400,000 contract with the Province of Manitoba Emergency Measures Organization to implement EmerGeo's crisis management software solution.

EmerGeo was contacted just a few weeks before the Red River flooding began in Manitoba and within one week had deployed a technical response team onsite to implement the software and provide training and support services. The system is currently being used to help manage this disaster in the Province s Emergency Coordination Centre (ECC) in Winnipeg.

Disaster can strike with little or no notice and our technology and team can be deployed very quickly when needed. We stand with the Manitoba Emergency Measures Organization to provide tools and support that will enhance the Province s preparedness, response and recovery efforts now and in the future , states Mike Morrow, President and CEO of EmerGeo Solutions. More information on the Manitoba flood event and organization is available at http://www.manitoba.ca.
EmerGeo software is also installed in the North Dakota Department of Emergency Service s Emergency Operation Center to support their flood fighting efforts. In situations like the natural disaster affecting both North Dakota and Manitoba, EmerGeo s software and services are being used to save lives and protect property and the environment.

The Company also reports that it has granted 85,000 options to officers, employees or consultants at a price of $.50 cents per share, exercisable for a period of ten years from date of grant, in accordance with the terms of the company s stock option plan.

Oil & Gold TA Charts

I use several different charts from www.theUptrend.com, to www.stockscores.com . Lately I have used this guys free twice a week TA reports for Oil and Gold and he has been bang on so far. Worth a look and a free sign up for some basic TA with some commentary.

http://www.thegoldandoilguy.com/TheGoldSectorApril4.php


http://www.thegoldandoilguy.com/TheEnergySectorApril4.php

Which Way Now ?

DOW over 8000 ? Can't be ! but it is. We have rallied about 20 % in a very short time so what now ? This is where I go to the TA charts but even they are showing some misleading signals. On one hand there is alot of room on the chart to the upside but we will need some serious positive earnings coming out. Of course it is all in "how" the market interprets even the bad news. Is it bad news but the worse may be over ? is it not as bad as "was expected". Remember expectations have been lowered so if any of the bellweather stocks blows away any preconceived earnings then the rally may keep on going.

On the other hand there is much talk of this is not the "worst is over" scenario and the earnings may come out complete crap with more bad numbers to come. All I can say is keep your finger on the trigger cause things change so fast right now and everyday is a new adventure on what the market thinks. The floor traders don't believe this rally according to CNBC but they are just the middle men for the buyers so they do as they say and the ones laying out the cash is the bottom line and so far it is saying they think the worst may be over.

One comment on gold, with the IMF selling 400 tons this year it has really taken the bloom off and it has sold off back under $800 and we could see low $800's if the positive forces in the markets continue.

Oil on the other hand is a different beast and any enthusiasm in the world economy recovering is only going to make the price of oil go up. As per TA charts, $62.50 is the next resistance level with $50 as the support line.

Should be an interesting week ahead but a short one with the holiday Friday.

Tea Time at the G-20

Now that's what I call Obama power. In one day in merry ole England he's helped influence what is usually a tough crowd and under these economic conditions he has passed in flying colors. Uncle Gordie Brown helped things along as well and this has even got George Soros changing his tune that the worst may have been averted as he stated the G-20 has "pulled a few rabbitts out of the hat". Now coming from him while he pumps his new book on the coming doom and gloom makes you wonder if this is the beginning a major rally like non other ?

Time will tell as the correction I predicted was very short lived,tomorrow should be interesting to see where we close but breaking 8000 though brief was a biggie.

On the gold front, the sheen may be off in the next while as the IMF plans to dump 400 tons into the market. Gold held $900 so it should be interesting if the gold bears cream gold to the low 800's or it settles around here so the IMF gets a good price when they do sell over the coming months.