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My Chart Dr. Tells us "What's up w/ SPX 1163"

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"Get well soon, Collins! Both nature and Macke abhor a vacuum"

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Minyanville Mailbag with Capable Kenny Goodreau:

O.k. so what's up with 1160-1165? Its smack dab in the middle of everything that's what.

  • It's the 200-day moving average,
  • It's resistance in the form of old lows we saw in January and March,
  • It's support on a bigger picture in the form of 2004 highs.
  • If that's not confusing enough the % of stocks on the NYSE trading above their respective 200-day moving average is right around 51%, yes right in the middle.

Just for future reference breadth to me is more important than indices, because I am a stock picker. More confusion? Look at the NYSE composite, sitting right on the 200-day and April lows. The Value line arithmetic index is also doing the same.

So the bottom line in my opinion is we are very close to a major move. The question is what direction?

I think the burden of proof is clearly on the bulls, in other words they need to show me something more in order to deserve my money and my clients' money.

Here's why. All the major moving averages are below a falling 50-day. On up days I find the majority of big movers are beaten down names recovering from oversold levels, not fresh leadership advancing. The weekly MACD is clearly negative and signals that momentum is still weak despite triple digit days. Also of note, May is notorious for being the beginning of a tough time.

In terms of how I go about my particular Voo-Doo, my single favorite indicator is also flashing caution. For those of you who don't know, my best indicator is my eyes. I look at over 250-500 charts every night religiously and lately I have had a lot of trouble getting excited. Stocks that are moving are doing so on light volume and it looks more like they are up because the sellers took a break, not because there's a flood of fresh new cash. I think there are going to be some fierce rotations and at the end of the day if you are not nimble you are not going to make any dough. Also if you are too diversified you will spin your wheels as well. I don't think there is a ton of room on the downside, but see very little evidence to support higher prices. As they are behaving now, stocks need a reason to go up, but gravity is good enough to go down.

What would make me bullish?

  • S&P 500 over 1180.
  • Seeing the % of stocks above their respective 200-day start heading toward 60% would be a start (we need more troops marching)!
  • A flattening, to rising 50-day at a minimum. A weekly MACD turning positive would really get me in lather.
  • And lastly and most importantly some good looking charts showing some leadership would be nice, but that might be too much to ask. In closing I am a very active trader and reserve the right to change my opinion in the blink of an eye. So in short (pardon the pun) still favoring the dark side, but I remain nimble.

Thanks, Kenny!

Thumping Around the Horn

OpenTV's (OPTV) stock has been doing a whole lotta nothing good since I last wrote about the company. The MSO's are still sorting through and mulling the level of "not made in our house" deployments in their systems. I still think the MSO's will come around and the OPTV CEO seems to agree, he was buying shares on the open market this week.

The land of sub $5 stocks can be a very dark, disturbing place. Just sharing the developments, not advising nuttin'.

Warner Music Group (WMG): Not very Firm, certainly Radioactive.

The rat should have been easily smelled when WMG chose Jimmy Page to open the bell at the NYSE. Whatever you think of his work, Page hasn't released anything fresh since his short-lived group, The Firm, and their one quasi-hit, Radioactive, broke up in the mid-80's. Hardly a powerful demonstration of future WMG earnings power.

Almost before traders could say "hey... didn't the free version of Napster pretty much suck the life out of catalog album sales?" Warner Music actually managed to miss earnings. Less than a freaking week after going public.

The stock, originally "ranged" at $20-22 before getting marked-down and going public at $17, is currently trading at a well-and-truly broken $15 and change. The IPO was brought to us by the esteemed folks at Goldman Sachs (GS) and Morgan Stanley (MWD), who presumably issued new white gloves to the bankers who "handled" the deal.

Mother Morgan's excuse is obvious; the only question is how Goldman Sachs will go about attributing the Rocco-esque jamming to Phil Purcell.

Natalie Portman: Bidding to Replace an Ailing Collins?

I'm a bit less a Jeff Macke fan than Todd-O (it seems) but I too saw a personal connection in Natalie Portman's new doo. I'm thinking it's not an homage but rather that she's sensing an employment opportunity as my new Protégé, given Collins' malingering today.

It's an impressive bit of hustle and I must confess to being flattered. I mean, do the kids trying out for The Apprentice show up with bone-dry orange-ish combover things to impress The Donald? I think not.

Nice try, sister, but you've got three strikes working against you. 1.) I'm feeling (slightly) responsible for Collins being sick, making him work over the weekend as I did. 2.) Collins has/d a little buffer of security in his role as Macke's Grasshopper/ WMH Herndon after he spent that weekend worktime answering my question "There's a 'bio'-tech now, too?!" prior to Squawk Box. 3.) How could I ever bring Natalie back to meet the family? The woman went to Harvard.

No positions in stocks mentioned.

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