Oxen Pick (SHORT SELL): LUV
by David Ristau - July 17th, 2009 3:40 am
Courtesy of David at The Oxen Group
Oxen Pick (SHORT SELL): LUV
The Oxen Group is looking for a short sell on Southwest Airlines Co. (LUV) tomorrow. The market may move green or red, and it really comes down to Bank of America, Citigroup, and GE. Those three giants release earnings tomorrow. If all three are splendid, the market will really take off, even Southwest Airlines.
The issue for Southwest is that even if that does occur, this stock is going to come down. In after hours today, Moody’s Investor Ratings commented that they were putting LUV on a possible credit downgrade due to the weak demand and market for airfare. The airline industry has been struggling, but Southwest Airlines always seems to be a step in front of the competition. This news of a likely downgrade spells bad news for Southwest, especially because the stock has really no upside right now.
What will Southwest do? If the market is looking to trend down after the earnings reports, LUV will drop right away and continue to trend down on a red day. If, however, the market jumps out of the gate and looks bullish, LUV will most likely have some type of small gains into the day, but it will not be able to sustain those gains and move backwards. Further, one has to wonder even if the earnings are positive, how much more this market has to go with four straight days in the green and a lot of quickly overvalued stocks. Additionally, if CIT goes bankrupt it could add more fuel to a downward market. LUV technically is, outside of its upper bollinger band, way overbought. So, its technicals all point towards downward movement.
Entry: Recommend selling 15-30 minutes into session if earnings are good, right away if bad.
Exit: We recommend exiting after a 2-4% increase.
Stop Loss: We recommend a 3% stop loss on all entry in prices
Upper Resistance: 6.60 (lower)
Oxen Rating*: 5
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DiggChina: Economic Catastrophe Unfolding
by ilene - June 20th, 2009 9:29 pm
China: Economic Catastrophe Unfolding
By Terence Doherty, guest author
Here’s some recent news about the real estate markets in China. I think it is fascinating watching how these things unfold. This proves once again that the lesson of history is that we don’t learn the lessons of history.
I predicted over 2 years ago that the Chinese stock markets would implode dramatically, much to everybody’s disbelief and skepticism. It began a few months sooner than I thought, but, that is exactly what has happened. Now for the last year or so, I have predicted that things will get VERY bad in the Chinese real estate markets over the next several years. Again, most people I have talked to about this (especially Chinese) have almost universally dismissed this notion as absurd.
But this is not just a guess. When you read these articles, you will see just some of the evidence that leads me to this conclusion. There are a lot of data on this, and most of it comes from statistics issued by various Chinese government agencies. But it is not advertised by the mainland press or TV. So, many Chinese are not at all aware, and think that everything will soon be wonderful, because that is pretty much what they constantly hear from the official media.
That is one thing I noticed immediately about China: there is a constant barrage everywhere you turn—-TV, advertisements, magazines, newspapers, billboards, etc.—-that essentially suggests that everything is wonderful and getting more wonderful all the time, and everybody is just happy, happy, happy, and China is getting better and better and stronger and stronger. I was really struck by this. It was like living in a never-ending infomercial. Maybe some go to China and are not very aware of this, but to me it was like a constant din.
Actually, at least some of this data is readily available on the mainland. But it requires digging. The official news agencies like Xinhua and the People’s Daily just keep repeating the same mindless mantra in endlessly varying ways every day: “Everything is good, there are only a few small little problems, but the Motherland is unstoppable and will just get mightier and mightier.” If the Falun Gong would just chant that mantra, they would get to keep their organs and they would have no more problems in China.
The news here…
Pick: Ultra Proshares Oil and Gas ETF (DIG)
by David Ristau - June 18th, 2009 2:19 am
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Pick: Ultra Proshares Oil and Gas ETF (DIG)
Courtesy of David at the Oxen Group
The Oxen Group, for Thursday, is optimistic to hope for a good day from the market. Too many red days even in a bearish trend, means a correction every few days. Tomorrow, futures are already up as investors may be getting excited about jobless claims, which have been bullish for the past few weeks. Additionally, Research in Motion will be releasing earnings that are expected to be very positive for the tech sector and TARP paybacks were successful.
The market is due for a fundamental correction, as there are some bargains presenting themselves again. One of these is oil, oil service companies, and oil ETFs. After oil prices have slipped, with a late small gain today, oil may be ready for a move on Thursday. Gasoline wholesale prices have continued to slip, which is signalling a pullback in gas prices. Further, oil may get a boost from a very bullish Chinese inventory announcement that shows the Chinese economy is pumping again, helping to increase oil prices in the Asian market. We like Ultra Proshares Oil &Gas (DIG) to rally, with major holdings in Exxon and Chevron, which have both been hit with losses for the past four days. DIG has lost 13% in the past four days and moved down too quickly, presenting an opportunity for money to pour into the stock. If jobless claims are bullish and gas prices rescind, investors will push this stock up as inventories really did not get a chance to increase the oil market, which was a bullish indicator. Oil looks ready to rise, therefore, BUY DIG!
Entry: Recommend buying within first 10-25 minutes.
Exit: We recommend exiting after a 2-4% increase.
Upper Resistance: 30.50
David’s Oxen Trade Results:
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Wednesday – What Color Is Your Beige Book?
by Phil - June 10th, 2009 7:47 am
The Fed’s Beige Book comes out at 2pm today.
Our last Beige Books came out Jan 14th (down 250), March 4th (up 100 ahead of huge drop) and April 15th (up 100) so we are anxious to hear what the Fed has to say today in their anecdotal report of economic conditions through the end of May. On May 20th we had Fed minutes and the market didn’t like that one bit. so let’s hope they’ve cheered up since that last meeting.
Oil has cheered up, hitting $71.50 in pre-market trading. All of our indexes are flying as Asian trading rocketed higher on a RUMOR that China’s Friday Industrial Production Report rose 8.9% in May and Tomorrow’s Fixed Asset Investment Report will rise 37% for the month. This came from the Ming Pao Daily, who cited "unnamed market sources." This information is stunning, especially in light of the ACTUAL PPI falling 7.2% for May and the ACTUAL CPI, that showed a 1.4% decline but, since we have long ago entered the "no thinking zone" (in fact, on Mad Money yesterday, Cramer made fun of us for thinking!), so happy rumors trump ugly facts every time.
Perhaps it’s true, perhaps China did increase Industrial Production 9% while driving input costs down 7% during a month when commodities rose over 20%. If so, all the more reason the Republicans should shut up and let us go Communist ASAP because those guys REALLY know how to get things done! We’re already giving them Hummer and it’s very likely, by 2011, we’ll be importing 2M Electric Hummers a year from China. Boy that joke will be on us, right?
![[The hidden costs of China stimulus charts]](http://s.wsj.net/public/resources/images/AI-AV646_CDEBT_NS_20090609124030.gif)
China is leading the global stimulus bandwagon, of course with a massive increase in debt financing this year. "There is no such thing as a free stimulus package. There is a huge amount of unreported government debt, and we’re adding to it now clearly," said Stephen Green, an economist for Standard Chartered in Shanghai.
The stimulus package in China is working so well that there is now a 2-month wait to buy a car in China as direct subsidies and a cut in retail taxes has pushed millions of Chinese into auto dealerships. Gee, rather than give the auto companies $30Bn three months before they went bankrupt – do you think the US could have offered $5,0000 incentives on 6M cars…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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coordinator for PSW. She manages the Favorites backup site
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