As of 1:00 ET, there were 140 new PnF chart pattern breakouts (double top, triple top, bullish triangle, etc), and only 10 stocks showing new chart pattern breakdowns.

Here’s an example of a breakout in a healthcare name:

…and one example of a breakdown in a healthcare name:

Disclosure: I bought shares of ELN @ $7.67.

Breakout:

ELN:

Breakdown:

LH:

NOTE:

As of 1:00 pm ET, out of a total of over 7,000 stocks and ETFs I track, there were 140 new pattern breakouts (double top, triple top, bullish triangle, etc.)  and only 10 stocks showing new breakdown patterns.

Still bullish.

Disclosure: I bought shares of ELN @ $7.67.  

I know it’s still frackin’ football season, but baseball been berry berry good to me. It happens to be my favorite sport. So, I’ll use my poetic license and hit you with a baseball metaphor.

This morning I took a swing at 10 low priced small cap names, mainly because I need something to do, and I’m getting antsy. I enjoy “jumping the gun”, then banking large rolls of coin and bragging about the wins, humbly mind you.

If I’m wrong, you won’t hear a peep from me, of course. SOP. But, I’m placing a bet (albeit small) on a continuing rally.

That said, I bought:

BLC @ $1.93

LSE @ $2.34

CPF @ $8.74

FOE @ $7.53

FBN @ $2.75

GKK @ $1.24

LZB @ $2.65

MNI @ $1.77

SYNA @ $17.71

VRS @ $1.34

Yeah these are sucky, but sometimes you just gotta step outside the coveted bunker with 3 ft thick walls, and expose yourself to hostile fire—for s&g’s.

Carry on….

In a continuing development, there are now over 5 1/2 times more bullish breakout patterns than bearish breakdown patterns on my PnF database of over 3,200 stocks. Pay scant attention to the Dow. It will distract you from what appears to be happening—-a broad-based rally in stocks, especially small and mid caps. Are we in overbought territory? You betcha. Can the market still go higher? Affirmative.

In last night’s comments, I indicated that, “of the stocks traded on the NYSE, almost 72% of them are now trading above their 50 DMA. In addition, 64% of the stocks in the S&P 500 are on PnF buy signals. That number is 76% for the Nasdaq 100″. After today’s down action in the Dow, those numbers are 75%, 67% and 78%, respectively. It’s gotten even more bullish. See what I mean?

The market has more strength going for it than I expected. How odd, yet profitably pleasing, in a most anticipatory kind of way.

I am bordering mild elation and ideas are bountiful. Let me throw out a diversified list of what are on my screens: CMN, CUB, CVTX, EGO, ESI, FAF, FSP, KGC, MCD, NNI, PCG, RATE, RMBS, STSI, and TOL. Not what I’d expected. All of these have favorable reward to risk ratios of over 3 to 1, and are exhibiting above average potential.

Sorry, I’m not in the mood to give you all the colorful charts like my other compadres might be inclined to do. Use your imagination. I’m sleepy tired (*yawn*).

Groovy…;

I spent all of today reviewing my holdings and tightening up my stops. I got stopped out of several stocks like VZ, TLT, and IEF, with profits intact.

Just know that you are a certifiable gunslinging rally monkey if you bought in today. There is no need to jump the gun. The market is at an inflection point and teeter-tottering toward stardom or asshattery. Your choice, but choose carefully, and get ready to be “cleavered” if you’re wrong.

My point being that you should be waiting for confirmation from whatever indicators you’re using (assuming they’re good) and not trying to guess what the market, or even your indicators will print.

As for me, I rarely follow the admonishments I dish out to internet types, preferring to “cowboy up”, flying by the seat of my pants, ready to change the rules in case I get bored.

That is all.

We will know by the end of this week whether this rally will continue. By some measures, the markets are getting into overbought territory. Of the stocks traded on the NYSE, almost 72% of them are now trading above their 50 DMA. In addition, 64% of the stocks in the S&P 500 are on PnF buy signals. That number is 76% for the Nasdaq 100. So, if you’re adding to long positions, or thinking about getting long now, be advised.

As far as sectors, insurance, steel and machinery look like they’re getting into overbought territory.

There are nine, count ‘em nine, economic reports scheduled to come out this week, the most important of which is the employment report, which is actually made up of five economic measures: initial jobless claims, average workweek, hourly earnings, nonfarm payrolls and the unemployment rate. These are scheduled to be reported starting on Thursday with initial claims, then the rest on Friday.

Given the wealth of data contained in the employment report, it is important to take all of these indicators into account when passing judgment on the report. Looking at payrolls alone, is often misleading, as the workweek, earnings, and household employment measures may be telling a different story. Taken together, however, and taken with the caveats concerning monthly volatility and revisions, the employment report offers the best monthly glimpse of the economy.

Look people, the bad news is out. Any, and I mean any, indication of improvement in the employment situation will most likely drive this market much higher. Traders and investors are looking for any excuse to keep this rally going. I can’t say that I blame them. However, one must be careful about putting too much weight on one week’s report. There is still much to be concerned about on a global scale, including the developments in the Middle East.

On a technical “big picture” note, my PnF charts are showing an interesting development. As of Friday, almost five times more stocks are showing bullish breakout patterns, versus bearish breakdown patterns. The week before last, there were twice as many stocks still in breakdown patterns versus breakout patterns. That was out of over 3,200 stocks. Five times more bullish patterns than bearish patterns in this environment might be a contrarian indicator to short this market. We shall see.

Holdin’ out for a sign this week.

http://www.youtube.com/watch?v=xbQKiW0xLwM

(Sorry for the link, but the embedding function went all queer on us)

Good on you all. I won’t recap 2008. What’s the point? The year has been sliced, diced and analyzed ad nauseum. If the asshats in the media use the word “unprecedented” one more time, I’m going to cancel my free subscription.

The market looks like it’s setting up for a potentially nice rally that could take us back close to 10k DJIA. However, I’m waiting for better confirmation of that possibly today and into next week before loading up (albeit nervously).

That said, there is a cornucopia of things that can sink the market again this year. While some people have been talking of a recovery in 2009, I staunchly believe that is premature. Sorry, no “V-bottom” is in the cards. Just more pain….and suffering. However, that doesn’t mean that the market won’t rally. Hey, traders have to make a living. Someone has to push the market back and forth.

As I alluded to, lots of things can go wrong—and probably will. Joe Biden even said so.

Here’s one: the Israel / Gaza thing is escalating and could incite Iran and other Israeli-haters into action. Just know that Israel is very close to attacking Iranian nukular [sic] facilities, possibly within the next 30 days. With Iran getting close to nuclear warhead capabilities, not only is there a threat to Israel, there is a very real threat to the U.S. which has been discussed and analyzed now for several years. I’m talking about an “E-bomb”. Were one to be deployed successfully against us, or any other country for that matter,  by Iranian-backed terrorists, the economic meltdown would make 2008 look like the good ol’ days, not to mention the death, disruption and social chaos.

Oh yeah, Happy New Year.

“Preferred stock”. The phrase usually illicits repetitive yawning and eye-rolling. Throw ”Bank of America” in front of that phrase, and most people start laughing uncontrollably. “You mean, a bank preferred stock is worthy of my time? I spit on preferreds.”

Don’t be so quick to judge,…… you gunslinging rally monkeys.

Take the Bank of America Preferred Series E shares (BAC.E). This is one of the few floating rate preferreds out there that has caught my interest. And since BAC is officially a “TARP” bank, aka, a proxy for the U.S. Treasury, this is one that demands a little attention for those who like collecting dividends of 8% or more. Not only is this NOT the common stock, it’s not your common preferred stock (I know, that sounds confusing). Allow me a moment to explain….

The interest rate floats based on 3 month LIBOR + 35 basis points, with a minimum rate of 4%. (Quit yawning). Even if LIBOR goes to zero, the rate is still 4% at a minimum.

Stay with me. Currently, the shares are trading around $11.50. However, the 4% minimum interest rate is based on the par value of $25 per share. So, the lowest dividend payout is going to be $1 per share, or 4% of $25, even if LIBOR is below 3.65%. It’s currently at 2.16% last time I checked. 

Buying this at the current price, the yield is about 8.7%, which is the lowest yield an investor is going to get over his / her holding period. The rate can only increase from here. And, the dividends, which reset at the end of each quarter based on the 3 month LIBOR, qualify for the 15% tax rate.

I’m hearing more about institutional interest in this preferred stock, and with 74 million shares outstanding, lack of liquidity is not an issue.

If you think interest rates will eventually be going up in the future, this preferred is certainly worth a look. As LIBOR goes above 3.65%, the yield starts to increase. Let’s imagine LIBOR getting back to 5%. The annualized dividend would be 5.35% of $25, or $1.33. At the current price, that’s an 11.56% yield.

This baby is an interest rate hedge, and you get paid handsomely, my friends. Very unsual, no?

By the way, the issue is also callable starting 11/15/2011, at $25 par. That would be a 117% return on principal at the current price.

So, stop yawning…..

 

Disclosure: I own shares of this.

Technically, this is a stock that you can still get into for a ride, and the risk/reward characteristics are excellent.

Check out the bullish flag that has already formed and the potential bullish catapult forming:

Here is a stock that has some outstanding potential even after breaking out of a huge basing pattern. The stock broke a triple top at $9.50 this past month, ran up to $14.50, then pulled back to $13, and has started up again. It also has blown by the bearish resistance line (red) very convincingly.

A bullish catapult is the combination of a triple top breakout, followed by a double top breakout. This is a very powerful bullish pattern that has the potential to “catapult” the stock higher. In the case of CMN, the double top breakout is completed on an intraday print of $15, which also initiates the bullish catapult.

But it gets even better. This stock also has an outstanding reward to risk profile. Here’s why:

1. The price objective is $29, based on the vertical count.

2. With an entry price of around $14, you would want to place your stop around $12.50, which is where the sell signal is for a double bottom breakdown. That’s risking $1.50 for the potential of $15 ($29 - $14).

3. I’ll take a reward to risk of 10 to 1 all day long.

You’re welcome.

Disclaimer: If you buy this stock without doing the necessary research, a gay elf in a pink Santa suit might show up on your doorstep singing “The Twelve Days of Christmas”, and you might experience a “de-banking”.

Much to my surprise, this market is getting ready to lift off, thanks in part to the huge interest rate cut by the Fed (which just about everyone pooh-poohed). See, contrary to what bearshitters have postulated, interest rate cuts are good for the market. It just takes a little time and patience for things to kick in.

The size of the rate cut was actually historic, despite being downplayed by the bears.

Two weeks ago, I mentioned that I thought the market was setting up for a “shakeout”. Well, guess what? It sort of happened. Problem was, the market held the double bottom the past week, then broke out today. So no shakeout pattern, which is even better news for the bulls. The weak bulls weren’t shaken out. That tells me the bulls are more emboldened than I originally thought.

I’m really starting to see that we’re going higher, but want to see that delightful vision confirmed by market action and volume tomorrow and through Monday. Size matters.

If I do get confirmation, I may load the boat on the long side, including a large dosage of everybody’s favorite rally monkey-esque double ultra ETFs.

People, when all the chief asshat analysts start crunching valuation numbers, there’s nothing like ZERO interest rates to start making things look exceedingly cheap.

On top of that financial trickery, stocks are simply oversold. Sorry. We’re just due for a mark up here.

Cover those shorts. The future ain’t what it used to be.

When it comes to interest rate manipulations, in the end, size does matter.