Are the "Higher Ups" Trying to Tell us Something About Oracle (ORCL)?

Are the "Higher Ups" Trying to Tell us Something About Oracle? (ORCL)


(Photo taken by a friend of mine. Rights Reserved)

Was that a Double Bottom on the S&P 500 or is this an Opportunity to Short?

Today, the US Stock Market had one of the best rallies in years. The Dow went up over 416 points for a 3.55% gain. The S&P 500 bounced off the previous lows of around 1272 to make a 3.71% gain to 1320.65.

Is this the double bottom we have been waiting for? This blog expected a re-test of the lows of 1270 on the S&P 500. We recently tested the bottom and successfully bounced. But does this mean that we have a solid bottom?

Not necessarily.

The intermediate trend is still down. This may be just an oversold rally with massive short covering.

If our stock market breakdown scenario holds, we could be forming some sort of handle, in preparation for the next leg down.



In the chart above, we still see the S&P 500 in a downtrend. The S&P 500 is still underneath both the 200 and 50 day moving average.

Two resistance areas are the 50 day moving average, and the 50% retracement (from the 1396 to 1270 drop) line of around 1330. This 50% retracement also happens to hit other previous levels of support and resistance.

If we draw a triangle estimating the 50 day moving average trend and the 50% retracement line, we can see a future potential area to start a new short position.

But we can afford to wait and see how this market reacts before finding a good place to short.

Today's Chart

Not Choosing Individual Stocks in This Market?

For some time now, I noticed that I haven't been blogging about individual stocks. The market has been bad, and I didn't think the time was right to start going for stock home runs.

Then yesterday, on the CNBC show Mad Money, Jim Cramer says something very similar, that he is not recommending many stocks in this market because the market is very bad.

Thank you Jim Cramer for echoing my thoughts exactly.

There is a common market saying that a rising tide lifts all boats. The same thing can be said about the opposite of that saying.

Some reminders:

1. Your 401k money is long term money (assuming you have many years or decades before you have to take money out.) If you have a diversified set of broad based ETFs or mutual funds, you can ride out this market. Continue to put money in your 401k and continue to accumulate.
   
2. In your discretionary fund, are you taking too much risk?
   
3. Do you have high interest rate consumer or credit card debt? Consider paying it off.
   
4. Do you have a 3-6 month emergency cash fund in conservative investments?
   
5. If you think there is a housing bottom within five years, and you intend to buy a house with money from your discretionary portfolio, then maybe you can take some money out and put the money in more conservative investments (high yielding online savings account, for example.)
   
6. Don't forget about controlling your losses.
   

I intend to create a new blog entry commenting on today's monster rally in the US Stock Market.

Possible Stock Market Breakdown Scenario on S&P 500

In the chart of the S&P 500, we notice that the patterns from November 2007 to December 2007 compared with the pattern from January 2008 to March 2008 are very similar. If the pattern holds, we can expect a further breakdown below 1270 on the S&P 500.

While not a guarantee, the S&P 500 could be forming a bearish formation, the inverted cup and handle pattern. The Drop to 1270 on January 2008 is the first part of the cup. The recent decline to 1282 could be part of the other side of the cup. If the pattern forms, we may see some sort of a handle, then eventually, a breakdown below 1270.

Again, this is only a potential scenario and not a guarantee that we will get a breakdown on the S&P 500.

Today's Chart with Info Above

Gold Chart Initial Price Target $1160

Inflation and Gold have been making the news. Recently, on CNBC's show Fast Money, Chartist Louise Yamada showed a chart of gold and made some analysis. Inspired by her work, we charted GLD, the Gold ETF. GLD appears to have a price 1/10 of the true price of gold. (If GLD is $98, then the price of gold is around $980 per ounce.)



In the chart above, we see a trading zone (triangle) from around $55 to $72. In the first leg, we see an increase from around $42 to $72, a gain of 71%. If we use this gain, and add it to the the trading zone base (near the end of the triangle), we get $116, or 71% above $68. This estimate matches what Louise Yamada mentioned on the air.

After this price target of $116, perhaps GLD will start consolidating, preparing itself for the next move (higher?)

Today's Chart of GLD

No More Analog Over the Air Broadcasts 2009. Get Ready for Digital TV.

According to the www.dtv2009.gov website:

"At midnight on February 17, 2009, all full-power television stations in the United States will stop broadcasting in analog and switch to 100% digital broadcasting. Digital broadcasting promises to provide a clearer picture and more programming options and will free up airwaves for use by emergency responders."

In order to help consumers, the goverment is providing a TV Convert Box Coupon Program:

"Congress created the TV Converter Box Coupon Program for households wishing to keep using their analog TV sets after February 17, 2009. The Program allows U.S. households to obtain up to two coupons, each worth $40, that can be applied toward the cost of eligible converter boxes.

A TV connected to cable, satellite or other pay TV service does not require a TV converter box from this program.

Consumers have a variety of options. Options to explore include:
1. Keep your existing analog TV and purchase a TV converter box. A converter box plugs into your TV and will keep it working after Feb. 17, 2009, or
2. Connect to cable, satellite or other pay service, or
3. Purchase a television with a digital tuner. "

More information can be found in the DTV 2009 Website.

Can We Profit from This?

I'm still looking at more ways to profit from this trend, but we do know there is a solid trend from Analog to Digital TV.

In a previous blog, we mention a few initial stock options:

1. Corning (GLW) -- Used by Optical Networking and Flat Screen and High Definition HDTVs
   
2. Cisco (CSCO) -- Networking and Set-Top Box exposure.
   
3. NDS Group (NNDS) -- End to end digital technology and services to digital pay-television operators and content providers worldwide.
   
4. Harris Group (HRS) -- Has a Digital TV division and provides emergency communication equipment, broadcast communications and wireless networking.
   

We may revisit this topic some more at a later time.

Do you have any ideas you'd like to share?

Article on: "No Profit Bonanza Likely from TV Cutoff"

Finally an Exchange Traded Fund (ETF) focusing on India

WisdomTree now has an Exchanged Traded Fund (ETF) that focuses on Indian Investments. The ticker is "EPI"

Expense Ratio is 0.88%

Top Ten Holdings include (as of March 3, 2008)

1. Reliance Industries (13.18%)
   
2. Oil and Natural Gas Corporation (6.39%)
   
3. Infosys Technologies (5.43%)
   
4. Bharti Airtel Limited (3.75%)
   
5. Housing Development Finance (3.18%)
   
6. ICICI Bank Ltd (3.14%)
   
7. SAIL (2.40%)
   
8. Sterlite Industries (2.31%)
   
9. Tata Steel Limited (2.25%)
   
10. Indian Oil Corporation (1.99%)
    

There are a total of 146 Components in the Index.

Top Sectors:

1. Energy (25.05%)
   
2. Materials (15.86%)
   
3. Software and Services (11.78%)
   
4. Banks (10.67%)
   
5. Capital Goods (7.43%)
   
6. Utilities (5.79%)
   
7. Telecom Services (5.69%)
   
8. Automobiles and Components (4.00%)
   
9. Pharma, Biotech and Life Sciences (3.74%)
   
10. Food, Beverage, and Tobacco (2.40%)
    

WisdomTree does not use market cap weighted ETFs. Instead, WisdomTree weights the index based on dividends or earnings.

If you want to invest directly in some Indian Companies in the United States, you can check these resources.