Month: March 2005

RSA Security


RSA Security, Inc. (Nasdaq: RSAS) provides various internet security solutions, including those little tokens that E-Trade and AOL are rolling out to certain customers.  These tokens have a screen that displays a security code that changes every 60 seconds.  So when you log on to your network, brokerage account, bank account, email account, or whatever, not only do you need your user name and password, which are both easily hacked, but you also need to enter the number displayed on the token, which is not easily hacked.  This simple third step creates an whole new level of security, which is going to get more and more press and importance as identity thefts and security breaches create increase the privacy concerns and fear, which of course is the most powerful motivator there is.  I’ll write more about this stock later, as I have to hop right now.  Just not on the chart above that we are around a support level from which RSA has launched rallies previously, after crossing above its 50-day moving average.  Cheers!

Easter Update…


The Cubes (Nasdaq: QQQQ) broke below some recent support zones this week, but the picture is clouded by the holiday-shortened week’s light trading volume.  Barring any bad news over the weekend, I would expect a rally attempt Monday morning.  If it’s strong into the close then we’ll mark day number one of a rally attempt.  If it fails, then some new lows for the downtrend are in order.  Cheers!

Interesting Excerpts From Stephen Roach’s Recent Article:

Yale historian Paul Kennedy has long argued that great powers typically fail when military reach outstrips a nation’s economic strength.  In that vein, there’s little doubt that America is extending its reach in this post-9/11 world.  Wars in Afghanistan and Iraq were the opening salvos.  The Bush Administration’s recent nomination of two leading neocons to key global positions — John Bolton as America’s ambassador to the UN and Paul Wolfowitz to head the World Bank (also announced on March 16) — are more recent examples of a White House that is upping the ante on its "transformational" projection of global power.  In Paul Kennedy’s historical framework, America is extending its reach at precisely the moment when its economic power base is weakening – a classic warning sign of the fall of a Great Power.


A Look at the Weekly Chart


As shown above, the Cubes (Nasdaq: QQQQ) continued their 3 1/2 month downtrend last week, closing the week below their 200-day moving average for the second time since the year began (see circled areas on price chart).  Both breaks came on heavy volume, with the first resulting in a 3-week rally.  Still too early to tell what this week’s action will bring.  As highlighted by the circled volume bars in the middle section of the chart, there have only been four up weeks since the Cubes began correcting, all of them coming on weak volume.  Until this negative pattern changes, more of the same downward chop can be expected.  It should be noted, however, that with oil up around $57 a barrel we could get a relief rally at anytime when oil cools off.  Of course, we still have the dollar, interest rates, the deficits (current account/trade and budget), and soon housing, that are capable of jumping out to say "boo" again.  Cheers!

Shakeout or Breakdown?


Today’s gap below support at $37 and the 200-day moving average on the highest volume since May 12, 2004, when the Cubes (Nasdaq: QQQQ) traded 198 million shares and bounced off the 200-day moving average around $34.35, pretty much means only two things, either things break further, perhaps with drama, or we get a brief volatile shakeout and then a fast rally.  Looking at other charts of indexes, stocks, and ETFs we see similar patterns.


On Perseverance

One doesn’t discover new lands without consenting to lose sight of the shore for a very long time.

-Andre Gide

Tale of Two Markets

In the following charts we can clearly see that the Cubes (Nasdaq: QQQQ) are lagging the MDY (mid-cap ETF).


While they haven’t broken down, the Cubes have been languishing below the 50-day moving average since first days of 2005.  Also a gap down to below $38 has setup new resistance.  The circled areas show the reversal-type candles each time they try to cross $38 and/or the 50-day moving average.


Meanwhile the MDYs broke out of a 7-8 week base on above average volume, and are now hitting all-time highs, but on declining volume, which is sometimes called "wedging up" and is a warning sign of possible lack of support.

Well, that’s it for today.  Sorry for being so inactive in my postings lately.  I’ve been real busy with work and a couple of fun projects.  Cheers!

On Change

Everyone thinks of changing humanity and nobody thinks of changing himself.

-Leo Tolstoy