Market Matters

Buy DXD and SDS,
These 2 ETF's will save your portfolio. Let me start explaining why by giving my opinion on the stock market. (see picture)

I have to say that I agree with what most of the talking heads are saying about the market. Let me drop a few links before I continue.

http://www.investors.com/

http://www.financialsense.com/

http://articles.moneycentral.msn.com/

http://www.thekirkreport.com/

well, that's the tip of the iceberg and I'm sorry to say that I can't post the best articles, since they are paid subscription services. If you do have a subscription to Barrons, TheWallStreetJournal, or Investors Business Daily then you can connect the dots yourself.

Onward to charts: Weekly Chart of DJIA

• This is a 3 year chart showing a divergence on the peaks, while the bottoms are a bit more neutral
• The MACD at the tail end of this chart shows a good possibility that it will soon cross the 0 line.

Daily Chart of DJIA

• A resistance line is right above the current price
• The Slow Stochastic shows a clear trend. As you can see each time it crosses that 80% threshold, the index dives.
  

This promising daily trend is what I believe will end up pushing the weekly MACD to cross the 0 line. So aside from charts, what else do we have that could throw a wrench into the cogs of our slowing economy?

Rising Oil prices
Avian Flu Pandemic
Iraq War
Israel-Hezbollah War
ANOTHER Rate Hike (probably not likely)
End of Housing ATM
Hurricanes

So what do you do when you believe the market is going to turn sour? Well some genius came up with the idea of an ETF that short sells the Dow Jones 30 and another that shorts the S&P500 index. Not only that, but the two ETF's double the volatility. What does that mean for you? Double the profits. (or double the losses)
ie: If the DJIA goes down 1% on the day, the DXD would go up 2% that same day.

This is an excellent tool to hedge your portfolio against the risk of a fall.

Worst case scenario: The DJIA gets positive again and surges to 11600, forming a double top that no investor would touch considering that the % return consensus on the DJIA this year is in the single digits. If that did happen, it would likely come right back down very quickly.

These "double inverse ETF's" are brand spankin' new, and have been out for 14 days. Use with care, however, because they are more volatile. Buy the UltraShort Dow 30 ProShares and/or Buy the UltraShort S&P500 ProShares.

Confidence Rating: 4/5 Stars
(Full disclosure: I will buy shares of DXD tomorrow)

Taking Risk Siriusly

Buy SIRI,
either today or on Monday. The company reports earnings on August 1st, and this is one of the only times a chartist will say buy before an earnings report. Sound risky? Not as much as you might think and here's why,

2 year Weekly Chart for SIRI:

• First, we have a negative MACD correlation, the stock should actually be trading around 4.5, which is above the daily 50DMA

• Second, there is a very strong 200DMA support which is doubled up by a support line from October of 04' when the stock saw resistance at 4.0

Aside from charts, the important thing here is that XM Satellite Radio, Sirius's competitor just released earnings two days ago. How did they do? Horrible. They missed estimates by 17 cents and guided downward. How did the stock react? Up 20% in two days.

Both stocks are down about 50% this year, and my bet is that all the smart big money investors had already priced the bad news into the stock. They knew XM would miss, and they know that SIRI will miss also. All of the sellers for these stocks are gone. I don't think that the same investors who rewarded XMSR for bad earnings will change their minds for SIRI. Also the trading programs these guys use will have buys in at the 200DMA, not allowing the stock to cross it.

XM & SIRI have a history of downward pressure until late summer only to increase in price and peak early in December.

Don't miss out on this easy trade.

Confidence Rating: 4/5 Stars
(Full disclosure: I bought shares of SIRI on 07/08/06)

Medical Money

Ok, let’s break this baby in. RMD a mid cap medical equipment maker. This could be an excellent stock to short, and here'’s why: The WEEKLY CHART

• Stocks should trade with their MACD. The long blue line shows a big discrepancy. The MACD has been flat, the stock has doubled
  

• The long purple line is the trend line, which the stock recently broke
  

• The shorter blue line shows a more recent negative MACD correlation

(excuse the pixelated chart, I'm still working on how to fix it)

To save space and time I will refrain from showing the Daily chart, but it agrees with the weekly. Also, remember that the weekly chart is more important for a divergence this big.

I will give a few short opinions from analysts.

#1
3 Star Rating
High Risk
3 Star Value

#2
Opinion: AVOID - Date 07/17/06

#3
Value: RMD has a Value of $38.90 per share. It is overvalued compared to its Price of $45.47 per share.

#4
Financial Alerts:
6/26/06 RMD's P/E ratio well above industry average.

#5
Insider Trading: The COO sold almost all of his stock
http://moneycentral.msn.com/investor/invsub/insider/trans.asp?Symbol=RMD

The company reports earnings on Aug 17 so I would try to avoid holding the stock through earnings, since it did beat estimates by 5 cents last quarter. All in all, this should be an excellent Short Sell. If you want to be sure, give it some time to let it fully break the trend line.

Confidence Rating: 3/5 Stars

First Post

Hey everyone

Here's my blog for opinions on stocks, market research, and technical trading. I will give my thoughts on what is affecting the stock market, how we can make money on it, and what the rest of wallstreet thinks.

Why should you believe anything I write about? You shouldn't. As Jim Cramer says "you should always do your own homework first." But for credibility sake, I made a 30% rate of return last year, and I'm on track to do it again this year. I do constant research, reading many hours of investment articles each day; and I constantly study chart patterns.

So with all of that said, Big Money, No Whammies
Let's make some money!