Tuesday Feb 2 Premarket Analysis
Today in the Stock Market
Dear Fellow Traders
Strong earnings from Exxon Mobile (XOM) and positive economic data added some optimism in the market Monday. The Dow Jones Industrial Average managed to rally 118 points during the day. The 10,000 area appears to be a strong buy signal for a lot of investors. The Dow managed to close at 10,185, just a few points away from its intra-day high. According to some of the comments I have heard, a positive report from the manufacturing sector helped push the market higher. For most of the week I am expecting to see the market trade in a fairly big range with support at 10,000 and resistance at 10,200. We might be slowly establishing the short term bottom, we need to see higher volume with a new higher high on the index.
The general market optimism also helped to prop up the tech sector. However QQQQ, the ETF of the NASDAQ composite didn’t see as much benefit as the DJIA. The ETF appeared to have found some support at Friday’s low of $42.63. On Monday the stock gapped higher and finished the day at $43.26, which was just two cents away from the intra-day high. With major data expected to be released at the end of the week, I think we can expect QQQQ, to remain in a fairly tight range. The same idea of the reversal as on the Dow apply on the QQQQ.
The big news of the day was gold prices, which had a huge benefit from the weaker U.S. dollar. The U.S. dollar could be reacting to the 2010 U.S. budget which was released over the weekend. The government is estimating that they will have a deficit of $1.56 trillion dollars, which is about 10% higher than 2009 and way above the economist expectations. The extra spending could cause some investors to find a safer haven and right now the only real alternative is gold. GLD, the biggest gold ETF jump over $2 on the day and broke through resistance at $108. The move helped erase the loses made last week as the ETF closed at $108.35.
I have been waiting for gold prices because it will impact our gold pick AGCZ and it has. As I have previously said, I think this stock will outperform gold prices. The stock opened up at $0.30 and managed to hold on to its gains closing at $0.28, which is around its 20-day moving average. I see a lot of potential for this stock in the near term. In intra-day moves the stock hit a low of $0.20 but that created a strong buy signal, and buyers were able to push it up eight cents. I would like to see more volume on the stock but as gold makes headlines again investors will take more interest in AGCZ.
Our latest pick, BGOI made some interesting moves on Monday. The stock had a strong run up in the last four sessions and today after gapping higher managed to fall back two cents. This move is not surprising considering the price action we saw Monday morning. The stock gapped almost a cent at Monday’s open investors who were in this stock at $0.025 probably were quick to take some of their profits, which caused the selling pressure. A good lesson to learn is that gaps can be unpredictable it is better to see an orderly rise in the price and momentum that way you know the higher prices can be sustained. With the U.S. dollar dropping and oil prices moving higher, we think this stock can do well in the short term. What we really like about the stock is the fact that it has very high volume and a tight bid/ask spread.
RVBF continues to be an interesting stock to watch. This is another example of a stock that gaps higher at the open but is unable to maintain that pressure and creates a cascading sell-off. Hopefully now we can start to see this stock build its price momentum. RVBF opened today near Friday’s close and rallied consistently throughout the day to close at $0.10. I think we could see some consolidation around this level for a few days.
It was a relatively volatile day for BPAC the stock traded in a three cent range but ended up closing where it opened at. The stock performed very well last week so it is good to see some consolidation. BPAC hit high of $0.575 in the morning, retraced those gains to hit a low of $0.54 and then closed the day at $0.55.
As commodities benefit from a weaker U.S. dollar so will some of our other picks. FLX, a Canadian rare earth company appears to be consolidating around its 20-day moving average. On Monday the stock hit a low of $0.22 but managed to recover that ground and closed at its opening price of $0.23. We think this is a longer-term trade so and any major dip in price could signal a good buying opportunity.
Have a Great Trading Day
2 Responses to “Tuesday Feb 2 Premarket Analysis”
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I am a beginner and greatly appreciate your explanations!
What do you think of MZEI ?