Telephone: STRATEGY: UESDAY CTOBER · 2012. 10. 17. · RCM — THE RHODES REPORT 1 TUESDAY –...
16
1 TUESD UESD UESD UESD UESDAY – O – O – O – O – OCT CT CT CT CTOBER OBER OBER OBER OBER 16, 16, 16, 16, 16, 2012 2012 2012 2012 2012 RCM — CM — CM — CM — CM — THE HE HE HE HE R R R R RHODES HODES HODES HODES HODES R R R R REPOR EPOR EPOR EPOR EPORT TUESDAY – OCTOBER 16, 2012 “FORECAST” STOCKS: The European debt contagion has been “kicked down the road” as Spanish and Italian short-and-long term bond yields have moderated recently given the ECB “plan” to buy bonds of up to 3-years in maturity...but only if asked; and only if conditionality is imposed upon those asking. The Fed has also changed its game from “inflation-fighting” to “unem- ployment fighting”; and with any war — they will go further and farther than anyone believes in printing money to achieve their ends. This will support all asset prices ultimately. STRATEGY: The S&P 500 remains above the 160-wma long-term sup- port level at 1236. The much followed 200-dma support level stands at 1370, and remains the bulls “Maginot Line.” We’ve noted this is perhaps one of the “weirdest rallies” we’ve ever been witness to, and it causes us a great deal of consternation. But the new Fed policydirectly targets stocks; expect a near S&P all-time high test at 1515-to-1530. CAPITAL MARKET COMMENTARY fact, those gains are holding, and then it was announced that Citigroup’s Vikram Pandit was stepping down as CEO and as a board mem- ber. If recent step downs across the financial landscape have any predictive value, we’ll hear of Mr. Pandit moving once again to open a hedge fund. ! ! ! ! ! TRADING STRATEGY: Quite simply, we are long and we have been long in varying al- locations for the past month. For the moment, we continue to believe this is the place to be, with yesterday’s US gains holding up to scru- tiny for the first time in quite some time, and we with this morning’s gains it would appear the correction of the past month of more may be coming to an end. Call it a hunch; call it a OVERNIGHT PRICES Quotes at: 7:36am EST INDEX LAST DAILY CHG CHG % YTD YTD % Morning Futures S&P 500 up 1,442.25 6.75 Nasdaq 100 up 2,745.50 14.50 10-year Note Yield up 1.70% 3.0 bps Crude Oil up 92.10 $ 0.24 $ Euro € up 1.3051 0.0102 Yen ¥ down 1.2683 -0.0032 Gold up 1,745.00 $ 7.20 $ Foreign Indices FTSE 100 Index up 5,843 37.4 0.64% 271 4.86% German DAX up 7,315 54.2 0.75% 1,417 24.02% French CAC up 3,455 34.5 1.01% 319 10.16% Japan Nikkei 225 up 8,701 123.4 1.44% 246 2.91% SSE China Composite up 2,099 0.1 0.01% -101 -4.57% Spain Madrid General up 784 9.8 1.26% -74 -8.58% Italy FTSE MIB up 15,751 160.3 1.03% 661 4.38% US Indices Dow Industrials up 13,424 95.0 0.71% 1,206 9.87% Nasdaq 100 up 3,064 20.1 0.66% 596 24.16% S&P 500 Large-Cap up 1,440 11.5 0.81% 183 14.51% S&P 400 Mid-Cap up 984 8.2 0.84% 105 11.91% S&P 600 Small-Cap up 461 2.9 0.63% 46 11.10% THE RHODES REPORT Telephone: 484-278-4073 Email: [email protected] Web Address: http://www.rhodes-capital.com ! ! ! ! ! WORLD MARKETS ARE HIGHER IN EXTENDING YESTERDAY’S GAINS as there is a plethora of news out that is the very same news we’ve all come to love over the past couple of months. First, an “unnamed” Spanish Fi- nance Ministry official said Spain was looking for financial help from its Eurozone partners, but that the government was uncertain of unanimous backing given “worries that nervous investors” could then turn their sights on Italy. This says to us that Spain would rather go hat in hand with Italy to the Eurozone as there is “safety in numbers” and the stigma was be lessen politically – especially in front of PM Ranjoy’s home regional election in Galicia on October 21 st . Second, in the world of US banking – Goldman Sachs (GS) has provided the market with better-than-expected earn- ings, which was good for several S&P futures points. In S&P Materials Sector (Daily) “Bull ‘Head & Shoulders’ Breakout” D 2010 A MJ J A S OND 2011 M A M J J A S ON D 2012 M A MJ J A SO N D 170 175 180 185 190 195 200 205 210 215 220 225 170 175 180 185 190 195 200 205 210 215 220 235 240 245 250 255 260 265 200-DMA 400-DMA SECTOR: Materials -5 0 5 -5 0 5 14-day BLI (-3.47225) Forecast Note the “head & shoulders” breakout, and subsequent correc- tion back to the major breakout point at the major 200-dma/400- dma cross. This is bullish, with the rally about to resume.
Transcript of Telephone: STRATEGY: UESDAY CTOBER · 2012. 10. 17. · RCM — THE RHODES REPORT 1 TUESDAY –...
11111 TTTTTUESDUESDUESDUESDUESDAAAAAYYYYY – O – O – O – O – OCTCTCTCTCTOBEROBEROBEROBEROBER 16, 16, 16, 16, 16, 2012 2012 2012 2012 2012RRRRRCM — CM — CM — CM — CM — TTTTTHEHEHEHEHE R R R R RHODESHODESHODESHODESHODES R R R R REPOREPOREPOREPOREPORTTTTT
TUESDAY – OCTOBER 16, 2012
“FORECAST”STOCKS: The European debt contagion has been “kicked down the road”as Spanish and Italian short-and-long term bond yields have moderatedrecently given the ECB “plan” to buy bonds of up to 3-years in maturity...butonly if asked; and only if conditionality is imposed upon those asking.The Fed has also changed its game from “inflation-fighting” to “unem-ployment fighting”; and with any war — they will go further and fartherthan anyone believes in printing money to achieve their ends. This willsupport all asset prices ultimately.
STRATEGY: The S&P 500 remains above the 160-wma long-term sup-port level at 1236. The much followed 200-dma support level stands at1370, and remains the bulls “Maginot Line.” We’ve noted this is perhapsone of the “weirdest rallies” we’ve ever been witness to, and it causes usa great deal of consternation. But the new Fed policydirectly targets stocks;expect a near S&P all-time high test at 1515-to-1530.
CAPITAL MARKET COMMENTARY
fact, those gains are holding, and then it wasannounced that Citigroup’s Vikram Pandit wasstepping down as CEO and as a board mem-ber. If recent step downs across the financiallandscape have any predictive value, we’ll hearof Mr. Pandit moving once again to open ahedge fund.
! ! ! ! ! TRADING STRATEGY: Quite simply, weare long and we have been long in varying al-locations for the past month. For the moment,we continue to believe this is the place to be,with yesterday’s US gains holding up to scru-tiny for the first time in quite some time, andwe with this morning’s gains it would appearthe correction of the past month of more maybe coming to an end. Call it a hunch; call it a
OVERNIGHT PRICES Quotes at: 7:36am EST
INDEX LAST DAILYCHG CHG % YTD YTD %
Morning FuturesS&P 500 up 1,442.25 6.75Nasdaq 100 up 2,745.50 14.5010-year Note Yield up 1.70% 3.0 bpsCrude Oil up 92.10$ 0.24$ Euro € up 1.3051 0.0102Yen ¥ down 1.2683 -0.0032Gold up 1,745.00$ 7.20$
Foreign IndicesFTSE 100 Index up 5,843 37.4 0.64% 271 4.86%German DAX up 7,315 54.2 0.75% 1,417 24.02%French CAC up 3,455 34.5 1.01% 319 10.16%Japan Nikkei 225 up 8,701 123.4 1.44% 246 2.91%SSE China Composite up 2,099 0.1 0.01% -101 -4.57%Spain Madrid General up 784 9.8 1.26% -74 -8.58%Italy FTSE MIB up 15,751 160.3 1.03% 661 4.38%
US IndicesDow Industrials up 13,424 95.0 0.71% 1,206 9.87%Nasdaq 100 up 3,064 20.1 0.66% 596 24.16%S&P 500 Large-Cap up 1,440 11.5 0.81% 183 14.51%S&P 400 Mid-Cap up 984 8.2 0.84% 105 11.91%S&P 600 Small-Cap up 461 2.9 0.63% 46 11.10%
THE RHODES REPORTTelephone: 484-278-4073
Email: [email protected] Address: http://www.rhodes-capital.com
! ! ! ! ! WORLD MARKETS ARE HIGHER IN EXTENDINGYESTERDAY’S GAINS as there is a plethora of news outthat is the very same news we’ve all come to love over thepast couple of months. First, an “unnamed” Spanish Fi-nance Ministry official said Spain was looking for financialhelp from its Eurozone partners, but that the governmentwas uncertain of unanimous backing given “worries thatnervous investors” could then turn their sights on Italy. Thissays to us that Spain would rather go hat in hand with Italyto the Eurozone as there is “safety in numbers” and thestigma was be lessen politically – especially in front of PMRanjoy’s home regional election in Galicia on October 21st.
Second, in the world of US banking – Goldman Sachs (GS)has provided the market with better-than-expected earn-ings, which was good for several S&P futures points. In
S&P Materials Sector (Daily)“Bull ‘Head & Shoulders’ Breakout”
D 2010 A M J J A S O N D 2011 M A M J J A S O N D 2012 M A M J J A S O N D
170175
180185190195200205210215220225230235240245250255260265
170175
180185190195200205210215220225230235240245250255260265
200-DMA
400-DMA
SECTOR: Materials
-5
0
5
-5
0
5
14-day BLI (-3.47225)
Forecast
Note the “head & shoulders”breakout, and subsequent correc-tion back to the major breakoutpoint at the major 200-dma/400-dma cross. This is bullish, with therally about to resume.
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CAPITAL MARKET COMMENTARY
gut feeling – but the selling is starting to feel as if it “soldout.” Now, we could be very wrong, and for the moment wehave no real propensity to add to our positions, but if wedo…then it shall be in the Energy/Materials sectors.
Looking at the daily chart of the Materials Sector on page 1this morning; one cannot help but see the bullish “head &shoulders” breakout. This obviously projects higher highs;and it opens up a larger possibility in terms of adding fur-ther Materials to our portfolio. At present, we are long FCX,and we will explore whether to add steel stocks – they havebeen terrible laggards; or whether we add goldshares…which we were long until several weeks ago intothe “surge.” Or, do we take the “high road” and simply gowith the S&P Materials ETF (XLB). More than likely, we’llgo with a combination as is our want; but we only have a20% weighting allocation available for it, hence it is likelyto be “stepped into” rather than done all in one silver bullet.
S&P Materials ETF (XLB—Daily)“Head & Shoulders Target”
Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013
30
35
40
45
30
35
40
45
270-DMA
140-DEMA
S&P Materials
-5
0
5
-5
0
5
14-day BLI (-3.40108)
-5
0
5
-5
0
5
40-day BLI
Forecast
Given the “head & shoulders” breakout, thetarget rests upwards of the trendline from theJan-2010 amd Apr-2011 highs...near $50.
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PORTFOLIO: RHODES AGGRESSIVE DISCRETIONARY
1. None. 1. None.
DISCLAIMER: "The performance data shown represent past performance, which is not a guarantee of future results. Investment returnsand principal value will fluctuate, so that investors' securities, when sold, may be worth more or less than their original cost. Current perfor-mance may be lower or higher than the performance data cited. The performance of an index is not an exact representation of any particularinvestment, as you cannot invest directly in an index. The illustrations and charts in this report are educational only and do not take intoconsideration your personal circumstances or other factors that may be important in making investment decisions. This report is not arecommendation to buy or sell a particular security.”
TRADE PRICE NOTE: All entry and exit prices for stocks are the “average” of the high and low prices for the trading day as provided for byYahoo!’s websiteat http://www.finance.yahoo.com.
Trade Orders: Trade Executions:
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No. TradeDate
Long/Short
Share No. Name Ticker Beta Port % Invest Entry
PriceCurrent
PriceUnrealized
P/LPercent
P/L Stop Loss Point TARGET Earnings Release
1 9/10/2012 L 643 China ETF FXI 0.09 10.9% 21,344$ 33.20$ 36.65$ 2,221$ 10.4% 34.50$ TRADE < 41.00$ N/A
2 9/12/2012 L 1,056 Natural Gas ETF UNG 0.05 10.9% 21,389$ 20.25$ 22.41$ 2,282$ 10.7% 21.65$ TRADE < 35.00$ N/A
3 9/19/2012 L 331 20+yr Bond 2x Short TBT 0.07 9.5% 21,777$ 65.74$ 62.39$ (1,110)$ -5.1% -$ HOLD 23.00$ N/A
4 9/21/2012 L 529 Freeport McMoran FCX 0.22 9.8% 22,108$ 41.80$ 40.29$ (799)$ -3.6% 38.50$ TRADE 50.00$ N/A
5 10/2/2012 L 395 Brazil ETF EWZ 0.13 9.9% 21,568$ 54.60$ 54.60$ -$ 0.0% 52.66$ TRADE 62.00$ N/A
6 10/3/2012 L 641 Microsoft MSFT 0.10 8.7% 19,220$ 29.97$ 29.51$ (295)$ -1.5% -$ HOLD 40.00$ N/A
7 10/9/2012 L 1,793 Weatherford Int'l WFT 0.21 10.1% 21,618$ 12.06$ 12.20$ 251$ 1.2% 11.80$ TRADE -$ N/A
8 N/A 0.0% -$ -$ -$ -$ 0.0% -$ -$ N/A
9 N/A 0.0% -$ -$ -$ -$ 0.0% -$ -$ N/A
10 N/A 0.0% -$ -$ -$ -$ 0.0% -$ -$ N/A
11 N/A 0.0% -$ -$ -$ -$ 0.0% -$ -$ N/A
12 N/A 0.0% -$ -$ -$ -$ 0.0% -$ -$ N/A
TOTAL 0.86 69.8% 149,025$ 2,551$
Model Portfolio Inception ($100k): January 1, 2005 2012 RECAP Starting Balance 244,451$
2005 Performance: +20.34% Closed Posit ions (30,286)$
2006 Performance: +47.57% Open Positions 2,551$
2007 Performance: +20.84% Dividends 450$
2008 Performance: -3.75% PORTFOLIO YTD (Gain/Loss) 217,166$ (27,285)$ -11.16%
2009 Performance: +7.45% S&P 500 YTD 14.51%
2010 Performance: +10.22% Over/(Under) Performance -25.68%2011 Performance: -0.08%
"<" Denotes Change
!!!!!
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S&P 500 INDEX/ BROAD MKT INDICATORS
S&P 500 TECHNICAL COMMENTS
# RESISTANCE AT 1425 WAS BROKEN ABOVE;AND MUST NOW HOLD ALL CORRECTIONS: Quite sim-ply, in the days leading up to the QE-3 annoucement —major resistance was broken above. This is bullish, althoughsince this breakout — prices have had difficulty extendingtheir move higher, and have now consolidated in a side-ways movement, and in the process has broken trendlinesupport and the 28-dma. While the “bullish consolidation”stands as long as the 1415-to-1425 zone holds up to cor-rective scrutiny — we are now “officially” worried that alarger correction could take place. However, to mitigage aportion of our concern: the S&P futures forged a bullishkey reversal higher yesterday...a bullish precusor we be-lieve. Our view remains a “weirdness march” towards 1515-to-1530 or perhaps just a bit higher.
TECHNICAL INDICATOR REVIEW:
$ The 20-day is showing a negative diver-gence; and has turned into negative territory.
$ The % of stocks above their 10-dma areapproaching oversold levels once again.
$ The % of stocks above their 200-dmastands at 60%...up +3% from the prior day’s close.The 50-dma/150-dma cross is major support, andmust be regained rather quickly.
$ The Intermediate-term Model has rolledover from less than overbought levels — AND, hasnow broken below the 10-dma. This indicates wan-ing upside momentum; and is concerning.
Forecast
Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
50 5010-DMA
50 50150-DMA
50-DMA
50 50
-5
0
5
-5
0
5
-5
0
5
-5
0
5
1200
1250
1300
1350
1400
1450
1500
1200
1250
1300
1350
1400
1450
1500
380-DEMA
65-DEMA
200-DMA
28-DMA
S&P 500 INDEX
Negative Divergence
Sideways topping
Nearly Oversold
50-dma/150-dma crossis major support; itmust be regained
Slowly risingIntermediate-Term Model
% Above 200-DMA
% Above 10-DMA
40-day Model
14-day Model
Major support crosses at 1415-1425;and thus far it looks to have held. Afurther extension higher is required.
Forecast
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MODEL PORTFOLIO POSITIONS I
Forecast
Last: 36.65$ TGT: 41.00$ Entry: 33.20$ STP: 34.50$
FXIChina ETF Natural Gas ETFLast: 22.41$ TGT: 35.00$ Entry: 20.25$ STP: 21.65$
UNG
Last: 62.39$ TGT: -$ Entry: 65.74$ STP: -$
20+yr Bond 2x Sho TBTLast: 40.29$ TGT: 50.00$ Entry: 41.80$ STP: 38.50$
FCXFreeport McMoran
ep Oct Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013
29
30
31
32
33
34
35
36
37
38
39
40
414243
29
30
31
32
33
34
35
36
37
38
39
40
414243
280-DMA
50-DMA
FTSE China 25
-5
0
5
-5
0
5
14-day BLI (5.21457)
-5
0
5
-5
0
540-day BLI
The bullish falling wedge and280-dma breakouts are veryconstructive for higher prices..
Forecast
ep Oct Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013
15
20
25
30
35
40
15
20
25
30
35
40
35-DMA
150-DMA
US Natural Gas Fund
-5
0
5
-5
0
514-day BLI (6.99189)
-5
0
5
-5
0
5
40-day BLI
The 150-dma breakout isleading to an extensionhigher. Expect further gainsin the weeks/months ahead.
Forecast
p Oct Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
55
60
65
70
75
80
85
90
55
60
65
70
75
80
85
90
300-DMA
170-DMA
30-DMA
Lehman 20+yr Bond 2x Inverse
-5
0
5
-5
0
520-day BLI (-3.75873)
-5
0
5
-5
0
540-day BLI (0.08494)
The 170-dma remains strongoverhead resistance, but trendlinesupport must now hold the declineand turn prices higher.
Forecast
Sep Oct Nov Dec 2012 Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013
30
40
50
30
40
50
80-DMA
300-DMA
Freeport-McMoran Cp & Gld
-5
0
5
-5
0
520-day BLI (0.50609)
-5
0
5
-5
0
540-day BLI (4.06381)
Trendline and 300-dma resistancewere violated, with prices consoli-dating in bullish fashion. Expect aresolution higher.
Forecast
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MODEL PORTFOLIO POSITIONS II
Forecast
Last: 54.60$ TGT: 62.00$ Entry: 54.60$ STP: 52.66$
Brazil ETF EWZLast: 29.51$ TGT: 40.00$ Entry: 29.97$ STP: -$
MSFTMicrosoft
Last: 12.20$ TGT: -$ Entry: 12.06$ STP: 11.80$
Weatherford Int'l WFTLast: -$ TGT: -$ Entry: -$ STP: -$
N/A 0
Sep Oct Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013
50
55
60
65
70
50
55
60
65
70
380-DMA
110-DMA
ETF - Brazil
-5
0
5
-5
0
5
14-day BLI (-4.29533)
-5
0
5
-5
0
5
40-day BLI
We are long given thebreakout aboe the 110-dma. As long as it holds,then we won’t put muchemphasis on the potentialbearish flag pattern.
Forecast
Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
24.0
24.5
25.0
25.526.0
26.527.027.528.028.529.029.530.030.531.031.532.032.533.033.5
24.0
24.5
25.0
25.526.0
26.527.027.528.028.529.029.530.030.531.031.532.032.533.033.5
100-DMA
200-DMA
Microsoft Corp.
-5
0
5
-5
0
5
14-day BLI (-6.86547)
-5
0
5
-5
0
5
40-day BLI (-1.10377)
The developing bullishtriangle remains in placeand still suggests higherprices; but we’ve seenmore weakness thananticipated. Note theoversold 14-day model.
Forecast
Sep Oct Nov Dec 2012 Mar Apr May Jun Jul Aug Sep Oct Nov Dec
11
12
13
14
15
16
17
18
19
20
11
12
13
14
15
16
17
18
19
20300-DMA
85-DMA
Weatherford International Ltd.
-5
0
5
-5
0
5
20-day BLI (-5.06610)
-5
0
5
-5
0
540-day BLI (-0.81310)
Forecast
The lows have held onmultiple occassion, and we’lllook for prices to wrok theirway higher to the 300-dma.
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STOCKWATCH – POTENTIAL LONGS IFedEx FDXLast: 90.65$ 0.25$
CSXLast: 21.45$ 0.14$
CSX Corp
ABFSLast: 8.27$ 0.09$
Arkansas BestLandStar System LSTRLast: 48.36$ 0.23$
Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
404142434445464748495051525354555657585960
404142434445464748495051525354555657585960
200-DMA
60-DMA
Landstar System Inc.
-5
0
5
-5
0
5
20-day BLI (0.96505)
-5
0
5
-5
0
5
40-day BLI (-1.64937)
ct Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
10
15
20
25
10
15
20
25
400-DMA
100-DMA
Arkansas Best-10
-5
0
5
-10
-5
0
5
20-day BLI (-1.56630)
-5
0
5
-5
0
540-day BLI (-7.74127)
t Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
75
80
85
90
95
75
80
85
90
95
250-DMA80-DMA
FedEx Corporation
-5
0
5
-5
0
5
20-day BLI (-0.83940)
-5
0
5
-5
0
540-day BLI (-3.33561)
Aug Sep Oct Nov Dec 2012 Mar Apr May Jun Jul Aug Sep Oct Nov Dec17.5
18.0
18.5
19.0
19.5
20.0
20.5
21.0
21.5
22.0
22.523.023.524.024.525.025.526.0
17.5
18.0
18.5
19.0
19.5
20.0
20.5
21.0
21.5
22.0
22.523.023.524.024.525.025.526.0
300-DMA120-DMA
CSX Corp.
-5
0
5
-5
0
520-day BLI (-5.56903)
-5
0
5
-5
0
540-day BLI (-4.42085)
The higher low is constructive, but amove above the 120-dma/300-dmacross. We think soon given the 20-day model turn higher.
This is a “long-shot” pick that is goodwithin a group of transport stocks; simplyoversold and unloved...with great shortcovering characteristics.
The decline appearscomplete given thetrendline breakoutand supportivemodels. We’ll look tobe a buyer soon.
The higher low is constructive, butyesterday’s move above the 80-dma/250-dma cross is bullish given the 20-day model. We are buyers soon.
Forecast
Forecast
Forecast
Forecast
88888 TTTTTUESDUESDUESDUESDUESDAAAAAYYYYY – O – O – O – O – OCTCTCTCTCTOBEROBEROBEROBEROBER 16, 16, 16, 16, 16, 2012 2012 2012 2012 2012RRRRRCM — CM — CM — CM — CM — TTTTTHEHEHEHEHE R R R R RHODESHODESHODESHODESHODES R R R R REPOREPOREPOREPOREPORTTTTT
STOCKWATCH – POTENTIAL LONGS IIDevon Energy DVNLast: 60.96$ (0.40)$
OXYLast: 81.70$ (0.23)$
Occidential Petro
BTULast: 25.56$ (0.15)$
Peabody Energy CRRLast: 64.08$ (0.41)$
Carbo-Ceramics
g Sep Oct Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
65
70
75
80
85
90
95
100
105
110
65
70
75
80
85
90
95
100
105
110
400-DMA
100-DMA
Occidental Petroleum
-5
0
5
-5
0
520-day BLI (-6.82262)
-5
0
5
-5
0
540-day BLI (-3.43986)
Forecast
The larger bullish triangle should led tohigher prices; a 400-dma breakoutwould be bullish. But for now, the 100-dma must be regained.
Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
55
60
65
70
75
55
60
65
70
75400-DMA
100-DMA
Devon Energy Corp.
-5
0
5
-5
0
5
20-day BLI (-0.38366)
-5
0
5
-5
0
540-day BLI (2.19853)
Forecast
The 100-dma breakout iasbullish; a futher rally will turnthe models higher, and bringus in as buyers towards the400-dma.
Oct Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
20
25
30
35
40
45
50
55
60
20
25
30
35
40
45
50
55
60
300-DMA75-DMA
PEABODY ENERGY
-5
0
5
-5
0
520-day BLI (0.79073)
-5
0
5
-5
0
5
40-day BLI (1.53887)
The “head & shoulders” bottom isclear, with yesterday’s nascent breakof neckline resistance catching ourattention. We may be buyers soon.
Forecast
Oct Nov Dec 2012 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
60
70
80
90
100
110
120
130140150160170
60
70
80
90
100
110
120
130140150160170
200-DMA
80-DMACarbo Ceramics
-5
0
5
-5
0
520-day BLI (-6.96247)
-5
0
5
-5
0
5
40-day BLI (-6.15272)
Yesterday’s strength of the lows createsan interesting trade op; furtherextension higher would be positive, witha stop at yesterday’s lows. Hmmm.
Forecast
99999 TTTTTUESDUESDUESDUESDUESDAAAAAYYYYY – O – O – O – O – OCTCTCTCTCTOBEROBEROBEROBEROBER 16, 16, 16, 16, 16, 2012 2012 2012 2012 2012RRRRRCM — CM — CM — CM — CM — TTTTTHEHEHEHEHE R R R R RHODESHODESHODESHODESHODES R R R R REPOREPOREPOREPOREPORTTTTT
The “Blue-Line Indicator” or “BLI” ExplainedThe BLI is our simple momentum oscillator used for timing and trend decisions; we rarely if ever use other momentumindicators for we prefer to focus and understand one indicator really well rather than a basket of indicators that can at timesbe contradictory. Furthermore, we prefer to use the BLI in conjunction with basic chart patterns; it is our experience that thiscombination works rather well for type of trading style.
Basically, the BLI it is a full stochastic indicator derivative of our own undertaking; our changes have been several, butprimarily relate to “smoothing” the indicator in order to provide for better signals once it does in fact change directions. Weuse varying time periods dependent upon whether we are working with weekly or daily charts. We have found that a 14-period BLI works well with the weekly charts, whereas both a 20-period and 40-period work well with daily charts. Obviously,the 40-period BLI catches longer and more tidal changes in direction. We normally don’t use these in our Daily Bulletin givenits shorter-term time frame, but behind the scenes it plays a big part.
When using the BLI with price charts; we look upon the following 3-factors as “set-ups” upon which the probability ishighest to trade:
1. BLI Extremes: Oversold (-6 to -8)/Overbought (+6 to +8)· When the BLI trades into either extreme, our “reversal ears” go up as a change in trend becomes a higher
probability. This puts the risk/reward dynamic in our favor generally, but we won’t take a position without welldefined stop losses and perhaps prices are trading into support or resistance as the case may be. However,we must note that extreme conditions can and will become more extreme in a powerfully trending market;hence this is the “caveat” to trading with the BLI in isolation.
2. BLI Divergences: Positive/Negative· A divergence is said to have occurred when the price and BLI do not make new lows/highs together. They in
effect “diverge”, with the BLI not confirming the prevailing trend. If the BLI turns higher/lower from below aprevious BLI low/high – then a divergence is said to have occurred, of which the probability is increased that thetrend is changing in favor of the BLI direction.
3. BLI Reversals from Positive/Negative Levels· Another very good BLI trading pattern which denotes a strongly stock is when the BLI turn higher from already
positive levels – this suggests a strong upwards acceleration is underway. Conversely, a turn lower from alreadynegative numbers suggests a strong downward acceleration is underway.
1010101010 TTTTTUESDUESDUESDUESDUESDAAAAAYYYYY – O – O – O – O – OCTCTCTCTCTOBEROBEROBEROBEROBER 16, 16, 16, 16, 16, 2012 2012 2012 2012 2012RRRRRCM — CM — CM — CM — CM — TTTTTHEHEHEHEHE R R R R RHODESHODESHODESHODESHODES R R R R REPOREPOREPOREPOREPORTTTTT
CAPITAL MARKET COMMENTARY
96 98 99 00 01 02 03 04 05 06 07 08 010 10 11 12 13 14
5000
0000
5000
20000
25000
30000
3500040000450005000055000
65000
7500085000
5000
10000
15000
20000
25000
30000
3500040000450005000055000
65000
7500085000
16-MMA
BRSP BOVESPA IND
Euro Currency (Monthly)“Head & Shoulders Topping Pattern”
1 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 01010 11 12 13 14
4000
5000
6000
7000
8000
9000
10000110001200013000140001500016000
18000
200002200024000260002800030000320003500038000
4000
5000
6000
7000
8000
9000
10000110001200013000140001500016000
18000
200002200024000260002800030000320003500038000
18-MMA
HANG SENG INDEX
Hang Seng Index (Monthly)“Below the 16-MMA”
The 18-MMA defines thetrend, and prices havefailed in their attempt tobreakout above this level.Hence, a bear market isupon Hong Kong.
Forecast
Forecast
The 16-MMA defines thetrend, and prices havefailed in their attempt tobreakout above this level.Hence, a bear market isupon Brazil.
1111111111 TTTTTUESDUESDUESDUESDUESDAAAAAYYYYY – O – O – O – O – OCTCTCTCTCTOBEROBEROBEROBEROBER 16, 16, 16, 16, 16, 2012 2012 2012 2012 2012RRRRRCM — CM — CM — CM — CM — TTTTTHEHEHEHEHE R R R R RHODESHODESHODESHODESHODES R R R R REPOREPOREPOREPOREPORTTTTT
MODEL PORTFOLIO POSITIONS III
Forecast
Last: -$ TGT: -$ Entry: -$ STP: -$
N/A 0Last: -$ TGT: -$ Entry: -$ STP: -$
N/A 0
Last: -$ TGT: -$ Entry: -$ STP: -$
N/A 0 N/ALast: -$ TGT: -$ Entry: -$ STP: -$
0
The decline began over 1-yr ago,and appears close to completingits capitulation as prices are -47% below its 200-dma.
1212121212 TTTTTUESDUESDUESDUESDUESDAAAAAYYYYY – O – O – O – O – OCTCTCTCTCTOBEROBEROBEROBEROBER 16, 16, 16, 16, 16, 2012 2012 2012 2012 2012RRRRRCM — CM — CM — CM — CM — TTTTTHEHEHEHEHE R R R R RHODESHODESHODESHODESHODES R R R R REPOREPOREPOREPOREPORTTTTT
STOCKWATCH – POTENTIAL SHORTS IIBM IBMLast: 196.46$ -$
EMC EMCLast: 24.22$ -$
Coach COHLast: 70.11$ -$
N/A 0Last: -$ -$
1313131313 TTTTTUESDUESDUESDUESDUESDAAAAAYYYYY – O – O – O – O – OCTCTCTCTCTOBEROBEROBEROBEROBER 16, 16, 16, 16, 16, 2012 2012 2012 2012 2012RRRRRCM — CM — CM — CM — CM — TTTTTHEHEHEHEHE R R R R RHODESHODESHODESHODESHODES R R R R REPOREPOREPOREPOREPORTTTTT
1414141414 TTTTTUESDUESDUESDUESDUESDAAAAAYYYYY – O – O – O – O – OCTCTCTCTCTOBEROBEROBEROBEROBER 16, 16, 16, 16, 16, 2012 2012 2012 2012 2012RRRRRCM — CM — CM — CM — CM — TTTTTHEHEHEHEHE R R R R RHODESHODESHODESHODESHODES R R R R REPOREPOREPOREPOREPORTTTTT
FRIDAY – AUGUST 10, 2012
THE RHODES REPORTTelephone: 484-278-4073
Email: [email protected] Address: http://www.rhodes-capital.com
We apologize about the brevity this morning; but we havetraveled overnight; and we didnt’ get into our hotel untilvery early in the morning. Therefore, we’ll simply update ourS&P chart and our current positions.
Lastly, given the recent outperformance in the energy sec-tor, we’re of the opinion that we need more exposure — butof course on a risk-adjusted basis. Hence, we’ll be buyers ofWeatherford Int’l (WFT) today in a 10% position...bringingour total Energy Sector exposure to 25%. We are buyingthat which is doing well for us currently; adding to our posi-tion as the Energy Sector provides us with profits.
Good luck and good trading,Richard
1515151515 TTTTTUESDUESDUESDUESDUESDAAAAAYYYYY – O – O – O – O – OCTCTCTCTCTOBEROBEROBEROBEROBER 16, 16, 16, 16, 16, 2012 2012 2012 2012 2012RRRRRCM — CM — CM — CM — CM — TTTTTHEHEHEHEHE R R R R RHODESHODESHODESHODESHODES R R R R REPOREPOREPOREPOREPORTTTTT
Rhodes CapitalSector / Industry CharSector / Industry CharSector / Industry CharSector / Industry CharSector / Industry Chart Bookt Bookt Bookt Bookt Book
January 2013
Published Monthly by Rhodes Capital Management Inc.
1616161616 TTTTTUESDUESDUESDUESDUESDAAAAAYYYYY – O – O – O – O – OCTCTCTCTCTOBEROBEROBEROBEROBER 16, 16, 16, 16, 16, 2012 2012 2012 2012 2012RRRRRCM — CM — CM — CM — CM — TTTTTHEHEHEHEHE R R R R RHODESHODESHODESHODESHODES R R R R REPOREPOREPOREPOREPORTTTTT
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Rhodes Capital Management, Inc111 Presidential Blvd.Suite 135Bala Cynwyd, PA 19004 USAWebsite: www.rhodes-capital.comTel: 484-278-4073Fax: 484-278-4079Email: [email protected]
