Bounce

The BPCOMPQ comes through again in calling the bounce. The trading day started out with a downside bias again as investors reacted to a string of disappointing same-store sales reports from the retail sector – and for a while, it looked as though stocks were going to suffer through yet another day of selling pressure. However, positive news helped the market back into positive territory by the afternoon: Federal Chairman Bernanke hinted at further interest-rate cuts, and Bank of America (BAC) announced it's in late-stage talks to buy out Countrywide Financial (CFC).

The Dow Jones Industrial Average (DJIA – 12,853.09) settled on a gain of 117 points, or nearly 1%, by the time the closing bell sounded. All but 6 of the Dow's 30 components closed higher. The DOW's intraday gains found a ceiling near the 12,920 level, though it has reestablished a foothold north of its 20-month moving average.

The S&P 500 Index (SPX – 1,420.33) added 11 points, to settle atop the 1,420 level for the first time since January 3. The Nasdaq Composite (COMP – 2,488.5) rose by an even 14 points, extending its winning streak to 2 sessions. The NAS is now just a slightly below support from its 20-month trendline.


Crude-oil futures declined today, as concerns over a possible slowdown in the global economy led investors to believe that demand could lessen. Yesterday, Goldman Sachs warned that a U.S. recession could be on the horizon; today, the investment bank followed up by saying there's a 50% chance that a similar economic pullback could hit Japan in 2008. According to MarketWatch, the U.S. and Japan account for one-third of global oil consumption. However, crude pared its losses in late-afternoon trading as investors reacted to Bernanke's implication that the Fed could cut rates again this month.

The promise of another Federal Reserve rate cut was also bullish for gold; February-dated gold soared to a new record high of $897.30 an ounce, blowing past its recently attained previous high of $894.40. The Gold rose as the U.S. dollar traded lower against the euro and the yen in the wake of Bernanke's comments. By the close, the front-month gold contract tacked on $11.90 to close at $893.60 an ounce.

Levels to Watch in Trading:


Dow Jones Industrial Average (DJIA – 12,853.1) - support at 12,500; resistance at 14,000


S&P 500 Index (SPX – 1,420.33) - support at 1,365; resistance at 1,510


Nasdaq Composite (COMP – 2,488.50) - support at 2,350; resistance at 2,750

Think Agriculture

Case for Ag in 08, Mosaic reported a 45% profit surge and guided higher for 08 and beyond. “Our second-quarter results demonstrate that Mosaic is leveraging the robust agricultural economy and delivering record results," CEO Jim Prokopanko said in a statement. He added that his company is on track "to deliver strong results in fiscal 2008 and beyond."
Mosiac said industry fundamentals should remain robust this year. "Phosphate and potash prices increased to even higher record levels at the end of 2007 and this momentum is anticipated to continue into 2008," the company said in a press release. "Further increases in grain and oilseed prices during the last several weeks have bolstered farm economics worldwide and solidify strong nutrient demand prospects for 2008." Third-quarter sales volumes for Mosaic's phosphates and offshore segments will probably be below the second quarter, but that's in line with expected seasonal patterns.
Phospates volume was 2.28 million tons for the just completed quarter, down 1% on the year.
For the fiscal year, volumes in the phosphates business should be 8.6 million to 9.1 million metric tons. Potash volume will probably total 8.5 million to 9 million metric tons. Both forecasts are unchanged from Mosaic's prior targets. This coupled with Monsanto’s guidance should bode well for TRA, TNH, POT, AG, DE and AGU to name a few.

Oversold Battered Bruised

Look I now I am not saying anything that people already don't know, we are deeply oversold and at a level where we usually bounce, take a look at one of my favorite indicators to call that bounce the $BPCOMQ (see previous posts). We are right at the level of the two last bounces I called, and we are below the August 16th low. But whats disturbing is that we are making lower highs when we do bounce. That is why I think its not a bottom but just a bounce. For this thinking to change we have to take out 40 on the $BPCOMPQ. For this to happen, I think the FED has to do something spectacular, something the market does not expect to get us above 40. Unfortunately, I think they won't.

Line In The Sand

After four days of feeding the Bears almost took a nap. Overall on a psychological note it was a bad day. The market gave up most of its gains but we could have gone down harder after a big reversal. Under the surface, energy (Services), materials and agriculture were very strong and a lot of those stocks hit 52-week highs. A look at the internals, not a rosy picture. Excet for the NYSE Decliners outpaced advancerd and the down vol was greater than up vol. Number of new lows to new highs was at a 5:1 ratio(NYSE)and 7:1 on the Nas.


Critical Levels :


Dow Jones Industrial Average (DJIA – 13,056.72) - support at 12,500; resistance at 14,000


S&P 500 Index (SPX – 1,447.16) - support at 1,400; resistance at 1,510


Nasdaq Composite (COMP – 2,602.7) - support at 2,500; resistance at 2,800



Today its all about the Job report. Futures are up six, if the market doest blast up from here we are in real trouble for the broader markets but if you are in the sectors that work the pain will be less till investors think stocks are a bargain again. Hold on tight it's about to get nerve racking!

Monsanto

Monsanto Shrs Hit Record High; 1Q Net Boosted By South Amer
Last update: 1/3/2008 11:11:19 AM
By Christopher Hinton

Monsanto Co. (MON) shares hit a record high Thursday, rallying as the agricultural company raised its earnings outlook for fiscal 2008 and reported having nearly tripled its fiscal first-quarter profit.

The strong results are thanks in part to robust demand in South America for its Roundup herbicide and seed trait products, the St. Louis company's results showed.
"The quarter was spectacular," said Charlie Rentschler, an analyst with the investment firm Wall Street Access.

Shares of Monsanto recently changed hands at $118.45, up $6.98, or 6.3%, on volume of 5 million shares, already topping the stock's average daily volume of 4.6 million shares. Earlier Thursday, the shares traded as high as $119.80 a share, beating its previous record best of $116.25 set Dec. 27.
In the last year, Monsanto shares have more than doubled on demand for the company's hybrid corn, soybean and cotton seed traits that help to protect crops from pests while providing greater yields.

For the fiscal first quarter ended Nov. 30, Monsanto said it earned $256 million, or 46 cents a share, more than double the $90 million, or 16 cents a share, earned in the year-ago first quarter.
Analysts polled by Thomson Financial had expected, on average, earnings of 35 cents a share.
Monsanto also raised its earnings outlook for fiscal 2008 to $2.50 to $2.60 a share, up from its prior view of about $2.40 a share.

"Our results in the first quarter represent a solid start to the fiscal year and highlight the strong performance of our Latin American business," said Chief Executive Hugh Grant in a statement. "With the most significant part of our annual business cycle still to come, we believe these results position us for another strong fiscal year."

The improvement in first-quarter cash flow - to $996 million from $600 million last year - indicated plenty of prepayments from U.S. corn farmers.

"The spring should be very, very strong," Rentschler of Wall Street Access said.
Monsanto's second and third quarters are typically its strongest.
Total sales for the latest quarter rose to $2.1 billion from $1.5 billion, on the back of robust Roundup sales in Brazil and Argentina as well as greater adoption of its seed traits. Herbicide sales to Europe also helped, Monsanto said.
Analysts had been looking for first-quarter sales of $1.9 billion, on average.
Shares of Monsanto rival Syngenta AG (SYT) were also climbing Thursday, recently up $3.46, or 6.8%, to $54.09.

Bullish On Brazil

Monsanto noted that higher corn commodity prices are driving growth in plantings in Brazil to about 35 million acres. Currently, about 28 million acres use hybrid seeds, the company said.
Recent estimates also suggest that soybean production in the country could be slightly higher than last season as well, when 50 million acres were planted, the company said.
Monsanto also noted in a separate news release that its research and development pipeline volume was currently one of the company's largest, including SmartStax corn, disease-resistant soybean, second-generation high-oil soybeans, high-stearate soybeans and high-oil corn.
The agricultural industry has been benefiting from new demand in biofuels, which has increased crop commodity prices and encouraged the planting of additional acreage.
In November, sector bellwether Deere & Co. (DE) reported 52% growth in fourth-quarter earnings due to strong overseas sales. For 2008, the farm equipment maker expects to see double-digit sales of its products in the U.S. and to South America.
Deere's shares were recently trading up $2.42, or 2.7%, recently, changing hands at $92.62.
-By Christopher Hinton; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
January 03, 2008 11:11 ET (16:11 GMT)

Positions Update

For the Purpose of the BLOG:

Gainers (since date mentioned)

VIP +37%
MTL +29%
MDR +20%
NOV +16%
BVN +15%
MTW +12%
OIH +9%
RIMM +9%
FCX +8%
ITB + 1%
TEX -6%
JCI - 11% (Closed position)

DRY BULK SHIPPING

On October 18Th 2007, Jim Cramer on Mad Money made a call in favor of Dry Bulk shippers. His best pick at that time was Dianna Shipping which is down 11% as of today. The main players in the group are down an average of 35% since that call. I am going to stick my neck out and say that the group has hit a bottom. I'm going to buy DRYS, the fastest growing and cheap on a relative valuation basis and has a chart pattern I like. Its down from 130, tested its lows twice around 71 and it's headed to PAR (first major resistance) in my humble opinion.

Now, I hear all this talk about shipping rates coming down and there is a lot of negative news out there regarding slowing world growth but if you read my past posts I don't think that's true.

I have been to India (IFN, nice yeild as well), Middle East (TRAMX)(Dubai and Abu Dhabi) and Pakistan. All those countries are growing very quickly and the thirst for raw materials will not end any time soon. What we take for granted here are all luxuries in other parts of the undeveloped world (obviously I am not referring to Dubai or Abu Dhabi).

I am talking about food (MON, MOS, TRA), hot water in the winter, electricity 24/7, gasoline for cars and trucks as needed. Roads that aren't cracked up, cell phones, broadband Internet,Cable TV just to name a few. What are reffered to nowadays as emerging markets were all agriculturally based countries for hundreds of years (except Russia, political problems and war set it back 50 years) and Industrialization only began a couple or three decades ago. The rural workers moved to the cities to work in factories. They now can no longer grow their own food, they have to buy it. They need phones, but they have no credit. They buy pre-paid cell phones. They need transportation to get to work, beds to sleep in, electricity, you get the picture. If there is a slow down it will be small and temporary because its going to take forever to develop places like Africa, Russia, China and Eastern Europe (CEE). It'll take 20 years in India just to fix New Deli and Mumbai's infrastructure, 30 plus years in Pakistan but they are both moving in the right direction (aside from terrorism). As for places that are on fire. South Africa (EZA), South Korea (EWY), Brazil (EWZ) and certain parts of Latin America growing and have tremendous resources(they need infrastructure). Some resource stocks I like FCX, RIO, BHP and BVN). I am not naming any machinery stocks like TEX and CAT cause the price of US slowdown is not in the stocks but others like FWLT and MDR are making new highs even in this environment that speaks volumes for my thesis. Also look at all the Ag. stocks they are ripping while the averages are below their 200 day moving averages.

Please note my thesis on world growth is based solely on what I have seen, and experienced with my own eyes. The growth train around the world is rambling and strong its going to keep rolling. The only thing that can stop it is war in the respective regions I mentioned, so pray for peace.

With that said I will continue to believe in the world growth story until my charts tell me different.