Munchin’ On The Numbers

2-19-10

CURRENT BUY – 100% of stock allocation $$$
KEYLINE 7-25-09 BUY 50% allocation only (S&P @ 970)
SIGNAL 10-9-09 BUY balance of 50% (S&P @ 1071)

1-25-10 SPECIAL INSTRUCTIONS ALL SUBSCRIBERS:

Establish stops on volatile stocks 12% below highest high last six months.
Use 25% stop for “Steady Eddie” stocks. Check each day to see if any close
below stop. If so, execute that exit the next day, at the open. These
instructions hold until we close above S&P 1160 (if we do).

COPPER AND CRUDE OIL

I know you will at once notice that I have had to change the resistance and support lines on this chart. We broke through the resistance like it wasn’t there during the week and now the major resistance, too. If the higher resistance doesn’t hold this will be telling us that inflation fears are really re-ignited. Note also the MOMENTUM SECTION green line (fast sto). It has moved up to the 50 level as we broke through the resistance. But, only getting to the 50 level tells me that (1) either there is a lot of room to go much higher, or (2) if it stalls here for several days the likelihood of another drop in price is about to hit. We won’t really know until the next 3-4 days –- that is, unless the resistance is cross up. Then, of course, we will know. So, for now the watch is on to see what the major mood of investors is in this key commodity.

And as for Crude Oil, well, you can see that we are again trying to challenge the key resistance of $83.75. This will be try number 3 to break through the top resistance and if it fails I would guess that the next try to break out the bottom of this trading range will succeed. It would be try number six and that is an unusually high number of tries without a break. Also, note that the Keyline is just above the resistance level, so a break up through resistance will still have to contend with the Keyline to continue higher. Fascinating!

THE BOTTOM LINE

And as far as the S&P and bonds are concerned, we did see a Friday night close over S&P 1100 today. That is quite significant. Granted, it is only day one of the break up to the higher level. As you know, we need to hold this area for 3-4 days to really be home with this move. The next major resistance is at S&P 1140, quite a ways from here. But, if we were to cross that level, as I said yesterday, I am quite confident that the target of S&P 1220-34- would be reached. So, along with the Copper and Crude Oil, the S&P presents a very interesting formation, too. A lot riding on it outcome!

As for the bonds, when the Fed raised the Discount rate, that set off a whole bevy of bells and whistles for world currency and bond investors. They bought the dollar (and heavy to the yen, also) in handfuls and the Big Bond Guys, caught unawares, began to do some covering of their short positions and bond prices rose in response. We did NOT cross down the Keyline, however! So, this Fed move may well see us stay above the Keyline for some time. Next week will be very important to understanding the longer outlook for bonds, a development the Fed will be watching like hawks, too.

The only other major index we follow is Gold and it dropped about $5 today, as the dollar action clearly weighted on it. So, not much to say on this one until next week’s action, either.

One final time for the week — the mantra for this month (1) keep the powder dry, (2) the eyes peeled on the stops, and (3) keep a supply of possible Buys fresh in the hopper. And do hope your trading day was a profitable one. Will see you Monday, Lord willin’ and the creek don’t rise.

NEED SOMETHING TO TALK ABOUT TONIGHT?

SIX STORIES IMPACTING THE MARKET TODAY

1. Biggest news of the day: Fed raises Discount Rate one-quarter percent. Markets seem to like it.
2. An unprecedented event: Some Fed governors express serious concern for the nation’s debt!!!
3. Unexpectedly, core CPI fell to -0.1%. First decline in 25 years they say! Was Fed expecting this news?
4. Mortgage market easing?? Last 3 months of 2009 fewer borrowers fell behind in payments. Hummm.
5. French Parliament member Beres: If Greece falls apart, everything falls apart. Startling comment!
6. Dollar continues a sharp rally after Fed hikes Discount rate. How high is high for the dollar??

MY TAKE: #1 Without a doubt, the hike in the Discount Rate takes front and center today. The Fed thinks it is time to begin the mopping up operation. Will it work and keep inflation bottled up? Big order. #5 is a stark look at what the EU members all think, just don’t say. Keep an eye on Greece! #3 No one expected the core decline. The PPI (not core) came in lower than expected, but no one saw the core number coming. Fed will watch this one closely! #2 I do not ever recall the Fed governors commenting on the nation’s debt. Maybe it is the extreme stat of that debt that finally brings warnings. #4 Sure hope the rest of the economy holds water for the next 12 months so some of the mortgage problems can be put to rest. Fingers crossed!

Note: All closes at 4pm using continuous cash contract results

Disclaimer

** The top five sector stocks shown are stocks that are above their Super Chart Keyline and between $5 and $35 in price have been randomly selected from the stocks in the each sector. Their inclusion in the Report is not to be interpreted as a buy recommendation nor is the exclusion of others above their Super Chart Keyline to be interpreted as a sell recommendation. This data is given for informational and research purposes only, as we do not make buy or sell recommendations at any time under any circumstances.
?***Max Whitmore, “The Keyline Report”, and “MUNCHIN’ On the Number”report does not endorse or suggest any of the securities which are mentioned in any way in its Reports. They are provided purely for informational and research purposes only. Max Whitmore, “The Keyline Report,” and “MUNCHIN’ On the Number” do not recommend particular securities to anyone, ever, under any circumstances. The statements made herein include information obtained from sources we believe to be reliable, but no independent verification has been made and we do not guarantee its accuracy or completeness in any manner whatsoever. You should not make any investment decisions of any sort based solely on what you read in the Keyline or MUNCHIN’ Reports. The statements made herein contain general information and do not constitute an offer to buy or sell any security of any description. Subscription to any of the Reports mentioned above is consent by the subscriber of full release of Max Whitmore and the Reports mentioned herein from any claims or actions of any description, legal or otherwise, against Max Whitmore or the Reports. All material herein is Copyright 2010 by Max Whitmore. All rights reserved.

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