Prediction for US dollar

I made the prediction for the dollar bounce about two weeks back. See post here.The prediction has been right on with dollar holding the down trendline and showing a nice bounce.

Now with the FED meeting tomorrow and the chart setup in a very nice way, I am expecting the Dollar to hit the upper dotted line before it starts pulling back.
So, you can expect GOLD and other commodities to start running again as the Dollar retreats.

New IPO- Intrepid Potash (IPI)

NEW YORK (AP) -- Shares of fertilizer maker Intrepid Potash Inc. spiked more than 50 percent on Tuesday in the first successful initial public offering since Visa Inc.'s blockbuster deal last month.

Intrepid's IPO of 30 million shares priced at $32 per share, well above the expected range of $27 to $29 per share.

IPI closed at $50.40 on the first day of IPO.

According to its prospectus with the Securities and Exchange Commission, Intrepid is the country's largest producer of muriate of potash, or potassium chloride, a fertilizer that helps regulate plants' physiological functions and improves plant durability.

Demand for potash has been driven by rising food consumption worldwide and rising demand for ethanol, which is made from corn. Some in the industry think potash prices may hit $1,000 per metric ton by the end of this year, according to a recent report from RBC Capital Markets.

Companies with bad earnings reports

'Adding NFLX'

As we go through the earnings season, I will be compiling a list of some of the companies that reported the worst earnings reports. This list is biased from my perspective. I am looking at how the Market REACTED to the earnings versus the actual report. These are stocks that you don't want to hold long.
The list:

* General Electric - GE
* Novatel Wireless - NVTL
* Crocs Inc - CROX
* Intuitive Surgical - ISRG
* Netflix- NFLX

I will add to this as the earnings bandwagon continues.

First Solar ETF- KWT

First Solar ETF launched; a bit late but this will be followed by a series of new Solar ETFs.

New York-based asset manager Van Eck Global marked Earth Day today by launching Market Vectors – Solar Energy ETF (KWT) on the American Stock Exchange^®. This new exchange-traded fund (ETF) is among the first solar ETFs listed in the U.S., and is unique in the degree of pure-play exposure it provides to the global solar industry. KWT seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Ardour Solar Energy Index^SM (SOLRX), the pure-play leader in tracking the solar industry. KWT’s total net expense ratio is 0.65%.

On an index-weighted basis, the companies in SOLRX derive well over 90% of their revenues from solar energy. Currently, the four top holdings are First Solar, Q-Cells, Renewable Energy and Solarworld, with weightings of 10%.

Updated Chart of S&P

We are still progressing towards the upper trendline. Everything is on the chart. No ifs and buts.
1400 also poses as the psychological barrier. I have been long for some weeks now and will continue playing on the long side. There is no need to play on the short side yet.

All earnings reaction very good

Citigroup, Honeywell today and GOOG, AMD last night.
ISRG the only damper even though earnings was good.

Couple that with Oil and Gold a bit down.
S&P 500 at 1386....now time to slice through it as I mentioned before.
Once we get through 1386, next resistance will be near 1396, where I expect a minor pullback.

Just look for day-trading opportunities, there will be tons of it as today is also op-ex day
Keep the bias on the long side that will be the easiest trade.

Good Luck !!!

Nucor Reports Record Results for First Quarter of 2008

CHARLOTTE, N.C., April 17 /PRNewswire-FirstCall/ -- Nucor Corporation (NYSE: NUE - News) announced today record first quarter net earnings for the fifth consecutive year. Consolidated net earnings for the first quarter of 2008 were $409.8 million, an increase of 8% compared to the first quarter of 2007 net earnings of $381.0 million and an increase of 12% from the fourth quarter of 2007 net earnings of $364.8 million. Diluted earnings per share increased 12% to $1.41 from $1.26 in the first quarter of 2007 and in the fourth quarter of 2007. The increase in earnings per share from the first quarter of 2007 is partially due to the reduced number of shares outstanding as a result of stock repurchases made in 2007.

Starting with the May 9, 2008 dividend payment, Nucor is increasing the base quarterly cash dividend rate from $0.30 to $0.32 per share. In addition to the $0.32 per share base dividend amount, the board of directors approved the payment of a supplemental dividend of $0.20 per share, for a total dividend of $0.52 per share. Nucor has increased its regular base cash dividend every year since Nucor began paying dividends 35 years ago.

My take: Not that great earnings. Glad to see that all other steel stocks viz. US Steel and AK Steel are down premarket. This is a good buying opportunity to buy these STRONGER stocks once the earnings effect of NUE subsides.

Meredith Whitney expects another $11 B writedown at Citigroup

One of Wall Street's most influential analysts has predicted a further $11 billion (£5.6 billion) of writedowns at Citigroup when the banking giant reports its first-quarter figures on Friday.

Meredith Whitney, the first analyst to forecast correctly that Citigroup would need to cut its dividend to prop up its finances, said that she expected a writedown, which would be on top of $18 billion of writedowns in the third and fourth quarters. It would mean that Citigroup would record an overall group loss of nearly $7 billion in the first quarter.

Full Article at Times Online

When will US Dollar bounce?

The above chart is for the US dollar. The dollar has faced significant downward pressure since early February. But it has been stabilizing just above the blue line for the past few days.

As the global economy slows down due to higher inflation and higher borrowing costs, the growth rate of the emerging countries would slow down. Many say the emerging countries have decoupled from the US but in my opinion this would take a long time, probably 7-10 years. Over the next few months, the weakening of global economy should help the dollar as flight to safety should begin. In other words, people would move money out of emerging unstable markets to the developed stable markets like US and Europe. Add to it the 'Short dollar and long Euro' camp has been overcrowded. The Eurozone has not yet started cutting interest rates. Once they begin cutting rates like UK, the money should start flowing out of Euro.

So, in totality, I am expecting the dollar to start bouncing back in the next few weeks/ months. A significant change in direction won't happen unless the dollar breaks out of the top blue trendline. The same applies for the downward break. Till then we will be bouncing back and forth in this channel.

Is your state in a recession?

Nice pictorial at USA Today. Tells if your state is in an expansion, recovery, at risk or recession. You can roll the cursor over each state to check status of a specific county.

US Steel- X and AK Steel -AKS

Two of the hottest stocks of 2008- US Steel (X) and AK Steel (AKS).
Steel is one of the strongest sectors of 2008 and X and AKS lead the way.

Both of them sport a PE of 19. But AKS has better profitability and cash flow.
TA-wise both stocks are at yearly highs. You want to be long this sector and specifically these stocks.

Positive comments from Charles Nenner

Charles Nenner was on CNBC a couple of days back with positive comments on the market.

Highlights:
-----------
* He was out of the market in Dec 2007 and went short.
* Right now he is long the market.
* Thinks Dow has seen lows of the year
* Expects 2nd half of April to be good
* Month of May to be not so good. Expecting a couple of more big volatile moves
* Expects second half of the year to good with Dow closing around 14,000+. As if nothing happened to the market this year- Flat market, not a down market for the year.
*Areas to put money to work are Energy and Emerging markets because they have good fundamentals and when liquidity situation becomes better, money would flow there.
*Picked up DD, XLE, NOV, EEM, FXI
* Expects energy run to continue till mid-2009

CNBC Video here

Subprime crisis

Some of the largest banks across the world have encountered huge losses by having exposure to the subprime crisis. The crisis doesn't seem to have any end in sight as more and more banks uncover their exposures. Bear Sterns was on the verge of collapse, if it was not for the FED-JPM rescue.
Last Tuesday, UBS unveiled another $19 billion in losses amounting to a total of $37 billion loss in subprime.
UBS tops the list of subprime losses with $37 billion followed by Merill Lynch with $25.1 billion. Citigroup comes third with $23.9 followed by HSBC with $12.4 billion.

Article on New York Times. Click on chart on left hand side that lists current losses per bank.

Even though financial stocks are rallying for the past few weeks, remember to unwind your positions as S&P 500 nears 1400 level. We will going back and breaking the lows set in Jan & March 2008.

MON and other AGA stocks broke out

MON staged a breakout of this downtrend channel. All AGA stocks posted a nice breakout following this news:
April 3 (Bloomberg) -- Rice climbed to a record on speculation the 3 percent annual increase in global demand for cereals will outstrip supply as governments curb exports to prevent shortages.

MON earnings

MON reported earnings of $1.79. The expectation was for $1.72. Previous year-ago EPS was at $0.99.
Basically beat earnings.

Reaction to the numbers was not very good. This usually happens when expectations are high.
Bottom line:- On the Chart, you see it is in a downtrend channel. The channel should be broken out of to have any momentum. Till then, this stock will travel to the bottom of channel.
Good Luck !

Chart of S&P 500 with Elliott wave counts

This chart has served me well over the past few months with very few modifications. Counted the Elliott waves for S&P 500.
Note we have completed the A wave and now are in a counter-trend B wave. You don't want to be in a short mode during the B wave. We need to complete a small down wave in the B wave before completing the final upleg in the B wave. After that we should be having a trending C-wave which will follow the same direction as the A wave. Where the C-wave begins is a big question. But looking at the chart, it seems we should start it somehwere in 1400-1420 level.