On Vision

The mind is the limit. As long as the mind can envision something, you can do it.
-Lots of people understand this key to life. In this instance, it was Arnold Schwarzenegger

Signs of Life

Just have a minute tonight, but I wanted to post the chart for a few reasons: the test a couple of weeks ago, the retest the past two days, and the first decent white candle and volume pickup since falling into this low volume pullback, going into the Fed meeting and the Iraqi gov’t handover.

4-Wheeln’ Micro-cap

When I say micro-cap, I mean it with Cycle Country Accessories Corp. (Amex: ATC). With a 2.7 million share float and a $21 million market capitalization, you can’t find too many smaller, profitable, growing companies trading in the public markets. But ATC is an industry leader in the in accessories for all terrain vehicles (ATVs) in the U.S., Canada, Mexico, South America, Europe and the Pacific. Might sound like a boring business, but according to today’s press release, revenues increased 43.5% and net income 450% during the first eight months of fiscal 2004 vs. the same period last year. They must be doing something right. Maybe all those newly hired workers we keep hearing about are spending their money on ATC’s snowplow blades, lawnmowers, spreaders, sprayers, winch mounts, utility boxes, baskets and all the other must-have ATV accessories. Regardless, an unknown stock that came public in the past few years and is showing accelerating revenue and earnings growth is worth a look in my book!

Yellow Brick Road (short-term trade)

Entered a small long trade in Gold Fields, which may be ready for a bounce. Probably should have waited for a reversal candle and/or a stochastics crossover (see circled area on chart), so the timing on the entry could have been better. Separately, here are some stocks I am looking at, INTX and SIRF, two recent IPOs. More research required. Both companies have serious competitive threats from larger players.

2nd Day of Light Distribution

Negative: Second day of distribution on Tuesday (see circled areas on chart).
Possible Positive: Distribution was on below average volume. Also, we’re re-testing the 50-day moving average (see boxed areas on chart). Last time the test resulted in a rally.
Of Note: With this week being an options expiration week, we could see some excess volatility. And with the June 30th Iraqi gov’t “handover” just around the corner, there could be some increased [terrorist] risk premium in the market now and/or more could get built in over the next couple of weeks. If the fears do not develop into reality, then the risk premium may lift (i.e., market may rally). The question is, from where does it start, higher or lower!

Missing Man Video Clip

I shot this from the convergence of Constitution and Pennsylvania Avenues, which was where the twenty-one F-15 jets flew over. It was timed to when Reagan’s casket passed from Constitution Avenue onto Pennsylvania Avenue, for the final leg to the Capitol. Turn up the volume on your speakers to full to get an idea of how loud it was. And imagine the deafening roar of the missing man’s jet slowly fading into nothingness as his plane vanishes into space… Very impressive and moving. Download missing_man.avi

Fed Policy – Damage Done

This Sunday’s NYT had an short letter from a reader about the Fed’s interest rate policy and what it might mean for the future. I think it’s worthy of reprinting here:

Reagan on Big Gov’t (joke)

If it moves, tax it; if it keeps moving, regulate it; and if it stops moving, subsidize it.
-Ronald Reagan, 40th President of the United States

Reagan on Big Gov’t

Government is not the solution, it’s the problem.
-Ronald Reagan, 40th President of the United States, at his inaugural address, Jan. 20, 1981

Cups and Handles

And there you have it, a completed cup-with-handle base formation. The Cubes gap up at the open and rally all day, closing up $0.86 and near the high of a long white candle. Same story played out with numerous other stocks today, including big-cap bellwether GE (see 6/4/04 post). About the only weak spot was the volume, which increased from Friday’s levels, but sill was lighter than you’d want to see.

The Big, Big Picture

This is an interesting little chart, showing a 3-year history the Nasdaq. What stands out is the 25-month base and 5-month handle. Since the handle started forming on January 26, volume’s been contracting and the index has made two trips up and down, with the May low undercutting the March low then rallying off the abandoned baby formation (see mid-May posts) to this week’s highs. It’s interesting to see the different pictures painted when you zoom in and out on the various time periods. We’ve clearly got a series of lower highs and lower lows since January, but when viewed through the wide-angle lens, we see a normal-type consolidation after a 15-month rally.

The Mother Ship – GE

Not my cup of tea as a stock to trade, but worth watching to see how this pattern gets resolved.

Market Barometers – Some Stocks to Watch

Here is a mix of stocks to watch as sentiment barometers. Half of these are still in their bases and half have broken out to the upside. We have all market capitalizations represented, from mega to micro. Some are fast growers, some of not. At least one — YAKC — may be damaged goods, but I put it on the list so at least one micro-cap was represented. The ones trading at the highest multiples can be the best indicators, as they are the most sensitive to changes in market sentiment. What we’ll want to see is if the breakouts hold or fail and which way the bases are resolved. It’s interesting to note that, at least in this non-statistically significant sample, it’s the smaller caps and higher valuation stocks that are above their bases. My personal preference…

Employment Report, Please Hold

Not much action worthy of mention since last week’s “follow through” day. Here’s where we’re at now: First red candle painted since follow through day, lack of volume on the rally, stochastic crossover from overbought area. On the plus side, markets held as oil hit new highs, some stocks appear to be finishing bases and forming handle-type areas. We’ll see what tomorrow’s employment report brings. Stay tuned. NOTE: This post was written Thursday morning, so the chart only goes through Wednesday, not Thursday. I.e., one more trading day will occur before employment report Friday.