Dallas, TX
May 13, 2010, 08:00 EST		 Dr. Joe Duarte's Market I.Q.


The Internet's Intelligence Digest
Intelligence, Market Timing, And Trading Strategy For Traders and Investors

Day 4: Make Or Break Day Possible
What's Hot Today:

U.S. stock index futures were flat in early Thursday trading. The Euro remained below 1.27 but was not falling precipitously. Asian and European markets were stable. Gold held up overnight.

News For Thought

Science fiction nightmare comes to life. According to The Wall Street Journal: "For the first time, microscopic robots made from DNA molecules can walk, follow instructions and work together to assemble simple products in an atomic-scale assembly line, mimicking the machinery of living cells." Anyone who's ever watched the Stargate series on the SciFi channel (guilty) knows how this may turn out.

Poll: 76% still believe U.S. in recession. According to CNBC.com: A new Wall Street Journal/NBC News poll shows that "76 percent of Americans believe that the US economy remains in recession; an even larger 81 percent describe themselves as dissatisfied with the economy. That's a major reason why 56 percent of Americans say the country is still on the wrong track, notwithstanding recent positive economic news. Obama's own job approval rating rose slightly, to 50 percent, since the March survey."

Turkey hops on the nuclear bandwagon. Accordging to The New York Times: "Turkey and Russia signed 17 agreements on Wednesday to enhance cooperation in energy and other fields, including pacts to build Turkey's first nuclear power plant."

Day 4: Make Or Break Day Possible
A Continuation Of The Rally Could Break The Short Sellers Today
Day 4 in the Post 1000 Point Dow Jones debacle from May 6th may be the day in which the short sellers have to cover any down side bets that they have left. If that happens, we could see stocks move higher from here.



Chart Courtesy of StockCharts.com


Already the small stocks in the Russell 2000 Index (RUT) have outperformed the big stocks in the S & P 500. Much of that may be due to the strength in the dollar, which is, more than anything, due to weakness in the Euro and now the Pound Sterling.



Chart Courtesy of StockCharts.com


Small stocks tend to rally when the dollar is strong, given that they receive a smaller percentage of their revenues from overseas sales in many cases.



Chart Courtesy of StockCharts.com


One of the most reliable indicators in this rally has been the NYSE advance decline line (NYAD). The AD Line made a triple top in late April, early May, a move that proved to be very prescient in its ability to predict the market's vulnerability. This indicator has recovered, but is still not at a place where you could make big bets on its current appearance. What's safe to day is that a couple of more good days are likely to return it to where it will have turned positive again.

However, if it fails to rise above its recent triple top, it could be a signal that more trouble is coming for the stock market.

The rebound's major problem is the lack of volume, which suggests that the big money is still not ready to make its move. If we get a continuation of the rally and volume rises, it will go a long way toward reassuring us that the trend has likely returned to the up side.

Conclusion

It's all about volume, or the lack of it right now. The rebound is still trying to find its legs. To be sure, lots of stocks look tempting, while others don't.

In this environment, it's best to be sure, which means we'd like to see more volume.

Know when to sell and how to make money when the market falls. Get a detailed trading plan in your pocket. Read Dr. Duarte's All NEW Books "Market Timing For Dummies." and "Trading Futures For Dummies." The Trading Manuals for All Seasons. Also Available As Kindle Books.

 

Market Moves - Stock Of The Day
Watching 1.25 On The Currency Shares Eurotrust ETF (NYSE: FXE)
The Currency Shares Eurotrust ETF (NYSE: FXE) is hovering jus above the 1.25 area to the dollar.



Chart Courtesy of StockCharts.com


Most stocks investors rarely pay attention to the currency markets. We think that's a mistake, given the amount of money that is traded in the currency market on a daily basis, and the influence those trades can have on all markets.

The Greece crisis is a perfect example. When it was time to sell, investors sold the Euro. And it was the pressure on the currency that led to selling in other markets.

Think of currencies as the face that a country, or in the case of the Euro, a federation puts on every morning. If the market doesn't like that face, it sells. Selling in currencies influences, above all things, commerce. Without commerce, there is no economy. And without an economy, there is no market.

That's why the Euro prancing above 1.25 is worth watching. A break below that key area could lead to accelerated selling in the currency, and a rebalancing of expectations in all global markets.

Right now, we'd place the odds at a bit higher than 50-50 that it will break 1.25. But, we don't expect it to be easy, as the European Central Bank and other central banks are likely to intervene, leading to more volatility.

What's our point? Right now the stock market is trying to bounce back. But a problem for the Euro may change all of that.

Follow Dr. Duarte on Twitter
 

 


Other Subscriber Reports are located on the website (log in required). These
reports are updated on a weekly basis (or as conditions require) and are not emailed:

S&P Timing  /  Bond Timing /  Dollar Timing /  Energy Timing
Gold Timing /  Tech Timing /  Biotech Timing

© Copyright 1996-2010, Market Timing Strategies, Inc., All Rights Reserved.
  • Market IQ reports may not be redistributed without permission.
  • Joe-Duarte.com is independently operated and solely funded by subscriber fees. This web site and the content provided is meant for educational purposes only and is not a solicitation to buy or sell any securities or investments. All sources of information are believed to be accurate, or as otherwise stated. Dr. Duarte and the publishers, partners, and staff of Joe-Duarte.com have no financial interest in any of the sources used. For independent investment advice consult your financial advisor. The analysis and conclusions reached on Joe-Duarte.com are the sole property of Dr. Joe Duarte. Dr. Duarte is a private investor and a financial journalist. He trades for his own account. He discloses any positions that he has open in any stock or exchange traded mutual fund that he writes about. Dr. Duarte offers commentary and analysis about the financial markets. Dr. Duarte is not providing investment advice.