| Springtime Comes (WAY) Early! |
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| September 18, 2007 |
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The calendar, the weather and the foliage tells me that Fall is on its way but BOY does it seem like springtime — everything in the market is beginning to bloom!
We are still treating the QQQQs like our leader because it continues to maintain a vertical move up. I anticipate new highs on the QQQQs within the next 10 trading days — so sometime this month we should be at new 52-week highs!
You may very well be hearing nothing but doom and gloom in the news—but I am here to tell you to just tune all that out and remember that if there ever was a sweet spot in the market, it is here — or really darn close!
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This Just In: Fed Cuts Rates by 0.5%
Everyone’s been on pins and needles lately about what the Fed would do in its meeting today. And today, the prayers of many were answered when it cut the fed funds rate for the first time since 2003, from 5.25% to 4.75%. This could be their biggest news in a decade—but so what?
I knew that whatever the Fed did today, the market response would be positive — all the charts were looking bullish. Of course, now that the Fed has handed Wall Street everything they could have hoped for and then some, the markets are really going to go nuts.
I’m here to tell you that I’ve had us positioned throughout all the different stocks from PEG to MIR to FPL for a reason: A couple months from now all of this market uncertainty is going to be nothing but a blip. Today’s news is just the starting point of a rally that will hand us a fantastic finish to the year.
Over the next couple of days I will be in the Trending123 Trading Room ready to answer any questions you have on our stocks, the Fed’s rate cut, and where we’re going from here. Don’t miss this opportunity—join Trending123 now to chat with me and get the scoop on our trades in real-time.
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In sector after sector, we are seeing something quite rare: a snap-back of the correction we are in. (In other words, the market has rallied abruptly one way and then quickly snapped right back to rally just as strongly the other way.)
Experience should tell you that when something rare occurs in the market — it’s time to sit up straight and take careful notice!
This snap-back is something we are currently seeing in the Utility Index. And due to the $UTIL being one of the most interest rate sensitive there is, you can imagine that the current hubbub over interest rates is causing it go a bit haywire!
What you have to realize about the $UTIL is that it goes counter-trend interest rates. In other words it declines when there is a fear of higher interest rates and it rises when there is a sense that interest rates will not rise — guess which pattern we’re in?!
Right now, the Utility Index is in a bullish trend reversal on the daily chart and while also looking fantastic on the weekly chart. As for the $UTIL’s indicators and oscillators, we are seeing some crazy-good bullish divergence — especially in the MACD. The MACD, as you may know, is one of my favorites because of it’s ability to really give a palpable feel to what the market is doing and what it will do soon.
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There are three utility stocks that are rocking out — giving us the “buy me now” nod. If you are wondering which of these are my favorite, my answer is all three! I literally could not pick just one. They are all in fantastic charts and patterns — so if you are looking for solid stocks that move up at a nice-and-steady pace, look no further than the 3 below:
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Mirant Corp. (MIR) — Mirant Corporation produces and sells electricity in the United States and the Caribbean. It also trades and markets energy in the United States. It was founded in 1982 and is headquartered in Atlanta, Georgia.
- If you like value, this is your stock. It has a P/E of 4! My target is in the $60s, yet even that seems conservative.
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Public Service Enterprise Group (PEG) — Public Service Enterprise Group Incorporated, through its subsidiaries, engages in the transmission, distribution, and sale of electric energy and natural gas to commercial, residential, and industrial customers primarily in the Northeastern and Mid Atlantic United States. It was founded in 1985 and is headquartered in Newark, New Jersey.
- Currently in an ascending triangle pattern, PEG is bullish-looking on both the daily and weekly charts but especially so on the weekly. Right now my target for it is $105.
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FPL Group Inc. (FPL) — FPL Group, Inc., through its subsidiaries, engages in the generation, transmission, distribution, and sale of electric energy. It produces electricity utilizing natural gas, wind, nuclear, oil, hydro, and other resources. It was incorporated in 1984 and is based in Juno Beach, Florida.
- Another stock currently in an ascending triangle pattern, FPL topped in May and is currently on a rocking path back up. My target is $80.
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A while ago I was cautioning all Trending123-ers to reel themselves in a bit. That is true no longer! We are now free to roam the markets. Things are just positively bullish right now and we need to sink our teeth in and take advantage when and where we can.
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How do you measure the health of the market?
Some might point you in the direction of the $NAMO for the answer to that. The $NAMO has always been good at predicting market turning points when internals were awful.
So oddly enough, right now, we just went from the worst internals to new multi-year highs. In fact, we have taken out the highs of the $NAMO for several years — all the way back to 2004!
To me, this appears to be a precursor of things to come. When it can go from multi-year lows to multi-year highs — there are only three words to be said: GOOD THINGS HAPPENING!
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So be aware and stay on top of things — now is not the time to be lax about your trading plan — the snap-back occurrence that I mentioned earlier only stays around for a nanosecond. Now is the time to get out in front and take advantage of the (many) opportunities that are literally being laid out in front of you.
Sincerely,
John Lansing
Trending123
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