Monday Feb. 8 Premarket Analysis
Today in the Stock Market
Dear Fellow Traders
Fear had a firm grip on the markets last week and the Dow Jones was barely able to hold on to its recent support level at 10,000. Increasing sovereign debt for many European countries have some investors wondering if the worst of the world wide credit crisis is over. This doubt caused a significant drop in the DJIA. In intra-day trading the index fell to a low of 9,835. However, the drop must have signaled a major buy signal because the bulls stepped in and managed to close the stock at 10,012. As I have said before the 10,000 mark has been an interesting psychological area. It is a relatively light week for U.S. data so the DJIA could consolidate around this level. The trade balance on Tuesday might cause some concerns as investors focus on debt problems around the world. Retail sales, on Thursday, will also cause some volatility in the market as this will give a glimpse at how the consumer is holding up.
It was also a wild day for the tech sector. The NASDAQ Composite hit its lowest level in two months on Friday but again the Bulls stepped in to drive up the index. QQQQ, the ETF of the NASDAQ Composite hit a intra-day low of $42.12 but managed to bounce back and close at $42.98, which was near the high of the day at 43.02. The ETF appears to be finding some support around $42.50 in the near term. However I think it will be hard for the ETF to make substantial gains as market participants focus on the debt problems around the world.
Gold is showing some interesting moves and the U.S. dollar continues to dominate the commodity market. On Friday, GLD, the biggest gold ETF, hit a low of $102.28 in intra-day trading. However the relatively cheap price was seen as a bargain and people started buying again. The ETF closed at its high of $104.68. I don’t think we have seen the last of the gold sell-off. According to some of my contacts, I think there is a strategic move to bring gold futures as close to $1,000 as possible. This could be seen as a great buying opportunity and could cause the next major push towards $2,000 and higher. I want to point out that in March 2008 when GLD hit $100 it fell over the next eight months. The ETF hit a low of $68.81. From there the price went all the way up to $119.54 by the next year. I think we are going to see a similar move just over a shorter period of time.
With a lot of investors once again focused on the gold market it is no surprise our gold pick is starting to generate some attention. On Friday AGCZ opened up at $0.16, which was its lowest point since Jan. 29 but the price did not stay there long. Buyers managed to drive the price higher and closed the gap from Thursday’s close at $0.20 cent. With the stock finding support at $0.16, I think we could see another push higher in this stock.
There was a similar move in BPAC on Friday. The stock opened up at is support level at $0.50 and spend the rest of the day in positive territory. BPAC ended the day at $0.56 after touching a high of $0.57. The $0.57 area is providing some short-term resistance but I don’t think it will prove to be very strong. Friday’s strong rally could draw some new buying interest in the stock.
It was an interesting day for BGOI. The negative market sentiment, coupled with weaker oil prices caused this stock to drop to a low of $0.017. But that area has proven to be a strong support level and touching it trigged a buy signal. Investors were able to drive the stock higher to close at $0.026.
A lot of our readers have been asking about KNDR and we have been watching it very closely and this could be when we see this stock take off. For the past two months KNDR has traded in an extremely tight range with very little volume. In short it has been a boring trade. In late January the stock started breaking through the support levels. On Feb. 4 the stock closed at its lowest level in six months. On Friday the stock opened at $0.035 and managed to close at its high of $0.055. The move was also made on strong volume, which is a signal of growing momentum. A break of 0.08 would probably trigger another major buy signal.
Finally, Friday was kind of an exciting day for RVBF. The stock opened up at $0.08 and managed to rally to a high of $0.10. The stock closed modestly higher from the open at $0.082. This consolidation period is not surprising. We saw a similar move after it hit a high of $0.16 on Jan. 7.
To start off the week we wanted to provide our readers with a watch list of stocks. We don’t have a position in these stocks yet but we are waiting for them to hit our entry point.
MMUH
BNXR
GETA
KATX
UCBH
ADXS
CHRI
Have a Great Trading Day!
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