Today - Cyclacel Pharmaceuticals (CYCC) - Had it's Highest Volume Day, and Highest Close in a Month:

I haven't talked about my favorite microcap biotech company in a while, because there hasn't been a lot to talk about...There have been some interesting developments in the past month or so, that haven't increased the share price of the stock, even though I think one of them should have...

The first piece of interesting news has to do with a patent infringement case between Celgene (Nasdaq - CELG) and Cyclacel:

BERKELEY HEIGHTS, N.J., June 18, 2010 (GLOBE NEWSWIRE) -- Cyclacel Pharmaceuticals, Inc. (Nasdaq:CYCC - News) (Nasdaq:CYCCP - News), a biopharmaceutical company developing oral therapies that target the various phases of cell cycle control for the treatment of cancer and other serious disorders, today announced that it filed its Answer and Counterclaims to the declaratory judgment complaint filed by Celgene Corporation. Cyclacel has filed counterclaims charging Celgene with infringement of each of four Cyclacel-owned patents and seeks damages for Celgene's infringement as well as injunctive relief. The four patents directly involve the use and administration of Celgene's ISTODAX(R) (romidepsin for injection) product.

The declaratory judgment complaint seeks to have the four Cyclacel patents, which claim the use of romidepsin for injection in T-cell lymphomas, declared invalid and not infringed by Celgene's products.

The four Cyclacel patents which are the subject of this action do not involve Cyclacel's clinical development candidates or its commercial products.

(The bottom line here is Celgene is infringing on Cyclacel's patents!...not the other way around...If CELG loses this patent infringement case, they will owe CYCC a nice chunk of change...IMO)

http://finance.yahoo.com/news/Cyclacel-Answers-Celgenes-pz-2925157020.html?x=0&.v=1

On June 28, 2010 it was PR'd that:

CYCC had been added to the Russell Microcap Index:

(This means that a lot of Hedge Funds must buy shares of CYCC if they don't already own them...)

http://finance.yahoo.com/news/Cyclacel-Pharmaceuticals-pz-3695109373.html?x=0&.v=1

The most interesting development was the announcement on July 1st that:

Cyclacel Pharmaceuticals Announces FDA Orphan Drug Designation for their lead drug Sapacitabine in Both AML and MDS:

"Orphan drug designation for both AML and MDS significantly strengthens the value proposition represented by sapacitabine and enhances our opportunity to advance this promising product candidate to late stage clinical development and commercialization," said Spiro Rombotis, President and Chief Executive Officer of Cyclacel.

Orphan drug designation entitles Cyclacel Pharmaceuticals to seven years of marketing exclusivity for sapacitabine upon regulatory approval, as well as the opportunity to apply for grant funding from the U.S. government to defray costs of clinical trial expenses, tax credits for clinical research expenses and a potential waiver of the FDA's application user fee. Orphan status is granted by the FDA to promote the development of new drug therapies for the treatment of diseases that affect fewer than 200,000 individuals in the United States.

(There was a huge Volume spike that day, but not much upward movement of the share price that day or in the days that followed...Personally, I think this is HUGE news and the share price should've move north because of it, but the overall market was in dump mode during this period and the biotech sector as a whole was pretty badly beaten up...)

http://finance.yahoo.com/news/Cyclacel-Pharmaceuticals-pz-2152455345.html?x=0&.v=1

Yesterday, the company announced the date they'll release Q2 Earnings and host a Conference Call:

Cyclacel Pharmaceuticals to Announce Release of Second Quarter 2010 Financial Results:

CYCC will announce second quarter 2010 financial results on Thursday, August 5, 2010. The Company will host a conference call and live webcast at 4:30 pm Eastern time on the same day.

Conference call information:

U.S./Canada call: (877) 493-9121/ international call: (973) 582-2750

U.S./Canada archive: (800) 642-1687 / international archive: (706) 645-9291

Code for live and archived conference call is 91437070

For the live and archived webcast, please visit the Corporate Presentations page on the Cyclacel website at www.cyclacel.com The webcast will be archived for 90 days and the audio replay for 7 days.

(EarningsWhispers.com says their projected earnings for last quarter are ($0.17), which would beat the previous quarter's actual earnings of ($0.18) by a penny...Also notice in the Analysts Recommendation section CYCC is listed as a "Strong Buy":)

http://www.earningswhispers.com/stocks.asp?symbol=CYCC

And now for the charts:

As you can see, the candlestick hit the upper Bollinger Band (BB) on the daily chart for the first time in three months...Unfortunately, I never buy AT the upper BB even if the candlestick formed today is very tall, white, bullish, and closed only two cents below the high of the day...I'm not saying it can't go up any further, but this is where I usually take profits if I was actually trading in and out of this stock...Which I'm not...I own a nice block of shares bought at $1.45 on July 20th when the hourly (and daily) chart said it was time to get back IN:

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=52462152

Now that I'm up nearly three grand, did I take profits today?....NO!...Why?...Because news about the SPA is nearly a month overdue from when the CEO said to expect it during last quarter's conference call...Why the delay?...Because SPA's are a back and forth dialog between the FDA and the company that creates a Phase III trial that uses the FDA's design protocols...While SPA's are not guarantees that the Phase III trial will be successful and lead up to FDA approval of the drug, it greatly increases the chances for success...I think the delay in announcing the SPA has been due to a continuing dialog between the FDA and the company that is in the process of altering and improving the Phase III trial design...So there has been another delay...So what?...If the trial is now on track to be safer and more effective, I don't mind another small delay...I truly believe that if the SPA had been denied, we would have heard about that by now...

The reason I won't sell my block of shares today is because news about the SPA could come anytime between now and the CC, and if you're not IN when this news is PR'd, you will miss out on a nice spike up, and you'll be chasing the price higher after the PR is released...Especially if the SPA is followed immediately by news of a partnership with a big pharma company to help fund and execute the Phase III trial...If that happens, I'm pretty sure we will see a very large spike up in a very short period of time...And when I see that spike, I'll probably lock in my profits as close to the top as I can, because there will be a long quiet period for news after these two things are announced...

More Technical Analysis:

Today's close gave us the highest Volume day, and the highest closing price since June 29th when they announced Orphan Status for their lead drug...Today's candle looks very Bullish, even if it is AT the upper BB...The 5MA has crossed up thru the 15MA very sharply, which hasn't happened for a long time...The CCI is getting a bit toppy by rising above the +100 line, but Stochastics isn't very Overbought yet with a reading of only 69 for the fast line, which is above the slow line and upticking very sharply...The MACD is looking Bullish with the Histogram upticking sharply today (blue bars), and the fast line did too and is above the slow line which is also upticking...



The chart below has a few more technical indicators on it: Starting with the dark green Chaikin Money Flow at the top, it's at a two month high...On Balance Volume (red line) and Accumulation/Distribution (black line) are upticking sharply, and also close to two month highs...We already covered the CCI, STO, and the MACD on the previous chart...The ADX shows the green DI+ is above the red DI- and they are diverging further apart...The green line at the bottom is the RSI - Relative Strength Index, and it's AT two month highs...

Add everything together, and these charts are screaming BULLishness!...

The only negative I can see is today's candle AT the upper BB, because it is almost always a level of Resistance...Only increasing Volume early next week will be able to start to bend the upper BB up, and allow the price to keep bumping up against it as it moves up...



The weekly chart clearly shows that CYCC is in the bottoming process...It's bouncing up off of the lower BB, this week's candlestick is a Bullish Hammer (and so was last week's, and the week before was an Inverted Hammer showing a Reversal)...It convincingly closed above the 5MA for the first time since early June...The weekly Volume doesn't look so great because each day this week preceding today had record setting low Volume, so the weekly averages out to roughly the same as the weeks before this one...The CCI has just given a Buy Signal by crossing up thru the -100 line...Stochastics is fighting it's way up out of totally Oversold territory, and the fast line has finally convincingly crossed up above the slow line, which is Bullish...The MACD Histogram (blue bars) had a nice uptick this week, and the MACD's fast line (black) looks to be finally leveling off...IF this stock continues to go up next week, the Resistance Levels ahead of it are the 15MA at $1.91 and the middle BB at $2.04 and if it can start closing above the middle BB there was some Resistance for four weeks at $2.20 from mid-May to early June...There is some more Resistance in the $2.50 -2.55 area in the beginning of May, and then it has NO more Resistance after that all the way up to the upper BB Resistance at $2.71 But if it is headed up to the upper BB on the weekly chart, by the time it takes it to get up there, the upper BB will have dropped some from what it reads now...

This weekly chart is beginning to show MUCH more Bull than Bear!...



I think we are overdue some GREAT news, and it could come as early as the pre-market session on Monday, which is a favorite time this company releases PR's...If not, we are SURE to hear something interesting later in the week, when they announce Q2 earnings numbers and hold a conference call to discuss important things going on with the company and the FDA and hopefully some real clarification about what's going on with the SPA...

Good Luck to All CYCC Investors!...

zigzagman

My Thoughts for The Summer:

I won't be making a video again this week...

Of the $SPX daily and weekly charts...

We're in the busiest weeks for earnings reports, and that can cause a lot of volatility to the indexes...As far as the recent move to the upside early last week, it was waaayyyyyy overdone and was nothing more than a suckers rally IMO...It was more like a Pump Before The DUMP...

Earnings can be (and are) manipulated, as you will see this coming week when many of the biggest banks/brokerage houses report...News for the overall economy continues to be very weak, and I'm still thinking we'll see 950 before we see 1250-1300 like some of the Elliot Wavers here on IHUB are calling for (chichi2)...Even Pretcher put out an article this past week calling for Dow 1000 (not a typo) over the next few years...

http://www.nytimes.com/2010/07/04/your-money/04stra.html

In my last two or three videos, I called for the Head & Shoulders chart pattern that's formed on the weekly chart to yield down to 950 or so, and if/when that happens, I'll get back to posting videos again...This chart pattern is still in effect IMO, and the fall to 950 (if it happens) will most likely not be straight down, but will have a few oversold rallies like we saw two weeks ago...The 50MA on the weekly chart is and will continue to be a major area of resistance IMO...

So for a while to come, I'll be enjoying the summertime and spending less time paying attention to the market...I am 100% cash except for a small position in one microcap biotech stock (CYCC), and I continue to accumulate physical gold and hide it in various places, in and out of the country...

Happy Trading!...
zigzagman

Beware the Technical Trap:

Commentary: Investors shouldn't be fooled by another breakout...

By Tomi Kilgore - July 15, 2010, 12:01 a.m. EDT

NEW YORK (MarketWatch) -- Being fooled twice is enough to shame any investor, but how about three, or even four times?

The current rally marks the fourth time since early May that the Dow Jones Industrial Average (DJIA 10,287, -80.22, -0.77%) has bounced more than 5%. Previous bounces have taken the Dow above key resistance levels, and yet subsequent declines have resulted in even lower lows. Essentially, the recent pattern surrounding key technical breakdowns and breakouts suggests the Dow is nearing yet another turning point.

It is easy for bulls to fall into another technical trap, since the Dow has climbed above the 50-day simple moving average, which has acted as resistance since the Dow first fell below it in early May, and is now peeking above a downward sloping line that started at the April 26 high and connects the June 21 high. But rather than embolden bulls, the apparent breakout should actually make them skeptical, especially following a six-session rally.

There have been several false breakdowns and breakouts since the correction started in late April.

The first bounce started after the Dow fell below the 200-day moving average, seen by many as a bull vs. bear market divider, for the first time in 10 months; that bounce ended the day after the Dow closed above the 50-day moving average; the next decline ended after the Dow fell below key support at the February low; another rally ended a few sessions after the Dow had broken above the 200-day moving average and traded above the 50-day in intraday trading.

The Dow started the latest rally right after hitting a new low for the year. The break below the June 8 low of 9,757 confirmed a head-and-shoulders pattern, which is a widely recognized longer-term bearish reversal pattern.

Basically, those reacting to technical breakdowns and breakouts have been fooled many times. And keep in mind that the Dow's last six-session winning streak ended on April 26, the day before the market correction began.

The current rally has extended in anticipation of a strong second-quarter earnings reporting season, or one that isn't as bad as the market seemed to be expecting earlier this month, rather than anything concrete. Economic data out of the U.S. and abroad, as well as the downgrade of Portugal's debt by Moody's Investors Service on Tuesday, indicate some of the conditions that started the market's correction--a slowing global economy and sovereign debt risk--still exist.

Even if strong second-quarter results become a reality, investors have already acted on it. The Dow faces tough resistance at the 10,400 to 10,450 level, which encompasses the 200-day moving average and the 50% retracement of the fall from the April 26 high of 11,258 to the July 5 low of 9,614. The June 21 high of 10,594 shouldn't give way without some good, concrete news on the economy. The Dow was up 175 points at 10,391 in afternoon trading.

For investors to feel safe betting on a breakout, the Dow needs to start the next bounce before it hits a new low. There should be some support at the 9,950 to 10,000 level, while drop below 9,757 would indicate another new low was coming. At least investors can then start expecting another false breakdown, and another 5%+ bounce.

Tomi Kilgore writes Taking Stock, a global column that gives insightful analysis about equity-related topics around the world. This column originally appeared on Dow Jones Newswires.

http://www.marketwatch.com/story/dont-be-fooled-by-another-breakout-2010-07-15?siteid=e2eyahoo

VIDEO - Fundamental & Technical Analysis of the S&P 500's Daily & Weekly Charts:

Technical Analysis of the S&P 500's daily and weekly charts, plus a look at the important Economic and Earnings Reports due out next week...

This video is viewed best in Full-Screen Mode...Click the four arrows in the bottom right corner...Press the Escape key on your keyboard to exit back to Normal Mode...

Happy Trading this week...
zigzagman

VIDEO - Fundamental & Technical Analysis of the S&P 500's Daily & Weekly Charts:

http://www.viddler.com/explore/zigzagman/videos/19/

Here is the end of the week Technical Analysis of the S&P 500's daily and weekly charts, plus a look at the important Economic and Earnings Reports due out next week...

Happy Trading this week...
zigzagman

VIDEO - Fundamental & Technical Analysis of the S&P 500's Daily & Weekly Charts:

Here is the end of the week Technical Analysis of the S&P 500's daily and weekly charts, plus a look at the important Economic and Earnings Reports due out next week...

Happy Trading...
zigzagman

$PWRM - The International Congress of Alzheimer's Disease Accepts Four Scientific Presentations by Power3:

Power3 Presents NuroPro® to ICAD for the 2nd Year in a Row:

http://finance.yahoo.com/news/The-International-Congress-of-bw-3938801446.html?x=0&.v=1

Press Release Source: Power3 Medical Products, Inc. On Wednesday April 28, 2010, 1:06 pm EDT



HOUSTON--(BUSINESS WIRE)--Power3 Medical Products, Inc. (OTCBB: PWRM – News) announced that four abstracts were accepted for presentation to the annual meeting of the International Congress of Alzheimer’s Disease on July 12, 2010 in Honolulu, Hawaii. The presentations will cover results from protein biomarker discovery, drug response, test development, and ongoing clinical validation trials of the NuroPro® AD biomarkers and blood test for Alzheimer’s disease. The four studies to be presented involve a total of 154 Alzheimer’s disease patients and 91 Parkinson’s disease patients, as well as 210 age-matched normal control individuals and 173 disease control individuals.

The NuroPro® AD biomarkers and blood test are intended to help clinicians distinguish patients with Alzheimer’s disease from “normal” individuals, i.e., patients with similar, non-Alzheimer’s neurological disorders. They are also intended to solve the critical challenge facing physicians, clinicians, patients and drug developers, who all need tests for early stage accurate and specific diagnosis of this debilitating disease, as well as more guidance for drug therapy, patient selection for drug clinical trials, and better tools to monitor drug treatment response.

The abstracts report the use of combined results from ongoing clinical validation trials of NuroPro® AD. The trials are being conducted by the Power3 scientific team, led by scientific advisory board member Lourdes R. Bosquez, MD and Chief Scientific Officer, Ira L. Goldknopf, Ph.D. in collaboration with Marwan Sabbagh, MD, director of the Banner Sun Health Research Institute. The team is also utilizing previous studies Power3 conducted with Stanley H. Appel, MD during his tenure as Chairman of Neurology at the Baylor College of Medicine and, currently, as Co-Director of the Methodist Neurological Research Institute. Dr. Appel continues to be chairman of the scientific advisory board of Power3.

“These 4 posters represent the culmination of 7 years of hard scientific effort which we have been blessed to pursue with our distinguished collaborators,” said Dr. Goldknopf. “There will be some surprises for our colleagues at ICAD that we are particularly excited about because they have the potential to guide us towards improvements in treatment for this awful illness.” Dr. Goldknopf will present two of the posters at ICAD, one on NuroPro® AD biomarkers for Alzheimer’s specific diagnosis and the other on NuroPro® AD diagnostic clinical validation trials. Dr. Sabbagh will present a third poster on prospective clinical validation of the use of protein biomarkers from newly drawn patient sera for diagnosis of Alzheimer’s disease, and Dr. Bosquez will present a fourth poster on NuroPro® AD protein biomarkers and drug response.

“We are proud that Dr. Goldknopf will be joined this year by two members of our scientific advisory board, Dr. Sabbagh and Dr. Bosquez, in presenting to ICAD 2010,” said Helen R. Park, MS, Chief Executive Officer of Power3. “For us to present four posters at the same time at such a prestigious forum speaks to the depth of our science and our commitment to improving the outcomes for patients with Alzheimer’s disease. This work, in conjunction with the recent filing of our joint patent application with StemTroniX, bodes well for the upcoming acquisition of StemTroniX by Power3.”

Power3 Medical Products:

Power3 Medical Products, Inc. is a leader in bio-medical research and the commercialization of biomarkers, tests, and mechanisms of disease. Power3's patent-pending technologies are being used to develop screening and diagnostic tests for the early detection and prognosis of disease, and to identify protein biomarkers and drug targets, to fulfill critical unmet needs in areas including neurodegenerative disease (NuroPro®) and breast cancer (BC-SeraPro™). Power3 operates a state-of-the-art CLIA certified laboratory in The Woodlands (Houston), Texas and continues to evolve and enhance its IP portfolio, employing sensitive and specific combinations of biomarkers blood-based tests for ALS, Alzheimer's, and Parkinson's diseases, breast cancer, and drug resistance.

For more information, please visit: http://www.power3medical.com

StemTroniX:

StemTroniX, Inc. is a stem cell biotechnology holding and acquisition company that is committed to improving the lives of individuals by using autologous adult stem cell technology to repair tissue damage in patients. Autologous adult stem cell therapy is the process of using an individual's own stem cells for the purpose of repairing and regenerating damaged tissue. StemTroniX also provides a patented system to augment this process in a non-invasive method for in-body monitoring of the stem cells at the site of injury as they are being introduced into the patients.

For more information, please visit: http://www.stemtronix.com

The $SPX Daily Chart had a Major breakdown today...

Today's selloff of the overall market was pretty severe...Today's bad news was about Portugal and Greece getting their credit ratings slashed by Standard and Poors...Plus a GS executive is being grilled by a Senate subcommittee...He's denying all wrong doing...

The $SPX closed below the middle BBand today and took out the previous level of support it had two Fridays ago when the news the SEC was accusing GS of fraud...I see the $SPX heading to the lower BBand at 1168 now...Closing below the intraday low set on the 19th is a breakdown of a double-top chart pattern...

Today it closed below the 15MA for the first time in since mid-February...That's very Bearish IMO...The CCI dropped below zero today, and STO is dropping hard and may blast down thru 50 if we see two more down days in a row...The MACD looks Bearish...Volume was very high on the selloff today...

Tomorrow should be another down day according to the shape of today's candlestick...The $SPX closed only two points above the intraday low...The canldestick is very tall and solid red...Expect a smaller red candle tomorrow, a smaller one the next day, maybe a hammer or a doji the following day...

If this was a stock, that's how it would usually go...Since it is an Index, it's a bit harder to predict what it will do over the next few days because of the massive amount of news it gets every week...There's lots of Earnings and Economic Reports to come out this week...

Overall, this chart just turned very Bearish in only one day...See what bad news can do?...

VIDEO - Fundamental & Technical Analysis of the S&P 500's Daily & Weekly Charts:

Here is the end of the week analysis of the S&P 500's daily and weekly charts, with comments on important reports due out next week.

Happy Trading this week,
zigzagman

VLNC - Valence Technology Brings Intelligent Batteries to "Smart Grid Community of the Future":

http://finance.yahoo.com/news/Valence-Technology-Brings-bw-2494091485.html?x=0&.v=1

$13.5 Million DOE Grant to Help Fund a $27.4 Million Regional Demonstration Project: “Technology Solutions for Wind Integration in the Electric Reliability Council of Texas”

Press Release Source: Valence Technology, Inc.
Thursday April 8, 2010, 9:03 am EDT

AUSTIN, Texas--(BUSINESS WIRE)--Valence Technology (NASDAQ: VLNC) today announced it has been selected as the preferred residential/community battery technology provider for the “Smart Grid Community of the Future,” the first smart grid solar powered residential development in Texas, the Houston-area master planned community of Discovery at Spring Trails. Utilizing its lithium phosphate battery design, including intelligent Command & Control logic, Valence Technology will supply dynamic energy systems for the individual smart grid residences containing electric vehicle charging stations and smart appliances. Valence Technology’s energy solutions will be used to support a smart-energy practice known as “peak shaving,” whereby smart appliances like dishwashers and washing machines are efficiently utilized during peak demand hours.

This smart grid project will demonstrate how community battery systems can enhance grid stability and decrease overall electricity costs by practicing “peak shaving.” Homeowners can avoid higher peak power costs during evening hours when multiple appliances are typically running after Valence Technology dynamic energy systems kick-in to power the smart appliances.

“Valence Technology is proud to be involved with a project as pioneering as the Discovery at Spring Trails smart grid community,” said Robert L. Kanode, president and CEO, Valence Technology. “By significantly reducing homeowners' energy costs through peak shaving, community storage applications will gain acceptance in the marketplace. Valence Technology is well-positioned to provide proven, field-tested dynamic energy systems that will enable greener, smarter and more efficient energy use.”

As part of the regional demonstration project entitled “Technology Solutions for Wind Integration in the Electric Reliability Council of Texas (ERCOT),” the “Smart Grid Community of the Future” will serve as a test model for the development of future distributed energy-generation communities utilizing clean technologies. The project includes improved technologies to monitor the ERCOT electric grid and expanded smart portal capability to support demand response in the new development, Discovery at Spring Trails. With $13.5 million in funding from the U.S. Department of Energy, the $27.4 million project is scheduled to break ground this year.

The team for this “Smart Grid” project includes CCET, Valence Technology, Southwest Research Institute, Electric Power Group, EcoEdge, CenterPoint Energy, Oncor, American Electric Power, Sharyland Utilities, Land Tejas Developers, Montgomery County Municipal Utility District 119, Xtreme Power/Energy Xtreme, General Electric, GridPoint, Direct Energy, Drummond Group and Frontier Associates.

Valence Technology stationary energy storage systems are designed for use in frequency regulation, community energy storage, telecommunications back-up power, auxiliary power units and uninterruptible power supply projects around the globe.

About Valence Technology, Inc.

Valence Technology is an international leader in the development of safe, long-life lithium iron magnesium phosphate energy storage solutions and provides the enabling technology behind some of the world’s most innovative and environmentally friendly applications. Founded in 1989, Valence today offers a proven technology and manufacturing infrastructure that delivers ISO-certified products and processes that are protected by an extensive global patent portfolio. Headquartered in Austin, Texas, Valence Technology is strategically aligned by five business segments: Motive, Marine, Stationary, Industrial and Military. In addition to the corporate headquarters in Texas, Valence Technology has its Research & Development Center in Nevada, its Europe/Asia Pacific Sales office in Northern Ireland and global fulfillment centers in North America and Europe. Valence Technology is traded on the NASDAQ Capital Market under the ticker symbol VLNC. For more information, visit www.valence.com.

About CCET

The Center for the Commercialization of Electric Technologies (CCET) recently received the $13.5 million grant from U.S. Department of Energy aimed at better integrating the vast Texas wind energy resources into the state’s electric transmission, distribution and metering system. The project represents a multi-faceted synergistic approach to managing fluctuations in wind power in the large Electric Reliability Council of Texas (ERCOT) transmission grid through better system monitoring capabilities, enhanced operator visualization and improved load management. CCET is leading a coalition of Texas electricity market participants, including Valence Technology, in carrying out the demonstration project. For more information, visit:

http://www.electrictechnologycenter.com

Red Flags and Scary Charts:

Posted on 04/03/10 at 2:40pm by John Nyaradi

This week we went to “Red Flag Flying” status, expecting lower prices ahead. Aside from our primary technical indicator shifting to a bearish posture, numerous technical indicators and fundamental elements are flashing red in spite of the euphoria in the general financial press.

On March 31st, we entered a couple of inverse ETF positions in our Standard Portfolio, one inverse ETF in our leveraged portfolio and bought an S&P put option in a new options trading system that I am sending to Standard and Pro members.

To better understand why we shifted to a “short” posture let’s look at some of the factors going into that decision.

Our primary indicator is a proprietary long/short momentum indicator that went to a “sell” signal this week.

To confirm that indicator, I also look at a number of other technical and fundamental indicators to give us the highest probability of success. Some of these are widely followed indicators and some are exclusive to Wall Street Sector Selector.



Chart courtesy of stockcharts.com

In the S&P chart, we see the RSI at highly overbought levels in the top display, with above 70 becoming overbought and subject to a correction. At some point, these conditions generally will correct themselves with a substantial price decline which you can see occurring recently in November, 2009, and again in January, 2010.

In the bottom display, one of the most reliable indicators I know of, MACD, has just shifted to a “sell” signal, indicating declining momentum and the possibility of a decline ahead, just as previously occurred in November and January.

Also, a glance at the Russell, Wilshire and NASDAQ indexes all present similar pictures and confirm substantial weakening and what very well could be a topping out of the current rally.

We also look at various market breadth indicators and investor sentiment indicators as well as the VIX and find extreme complacency and bullishness on all fronts which supports and adds validity to our primary thesis of lower prices ahead.

And then as a final step, I look at macro conditions and fundamental trends that could confirm or weaken our overall view of market conditions. These include but are not limited to interest rate movements, economic reports, news and corporate earnings as well as oncoming events that are just around the bend but could impact market prices over the next few weeks.

After all that analysis is complete, I look at and choose the particular Exchange Traded funds and now option positions that could offer us the highest likelihood of success and potential profitability.

Looking At My Screens

Regarding fundamentals, two charts are particularly scary. One is from Credit Suisse and is reprinted below.



This chart depicts the monthly mortgage rate resets and you can see how these peaked in 2007-2008 in the red box on the left and set off the sub prime debacle that eventually led to the worldwide financial crisis that still bedevils us.

What’s scary about this is that after a lull in 2009, we see another spike in mortgage resets coming in 2011 and 2012 framed by the red box on the right. This time the culprits are not sub prime loans but Option Adjustable and Alt A loans resetting that could easily trigger another round of foreclosures, bank failures or “too big to fail” actions by the U.S. government.

Judging from the carnage we saw the last time the graphs on this chart were this high, a return to these levels could easily be the catalyst for a double dip recession which would almost be certainly worse than the one we’ve just been through because unemployment is worse, more national debt, etc, etc. Finally, to make matters worse, the Fed terminated their $1.25 Trillion mortgage buying program on April 1st which will create a further drag on this market.

The second scary chart is what’s going on in the U.S. Treasury market as evidenced in the chart of the U.S. 30 Year Treasury Bond below.



Chart courtesy of stockcharts.com

This frankly is a truly terrifying chart because, as you know, Treasury prices move inversely to interest rates and so as interest rates rise, Treasuries drop in price. In late March you can see the huge gap down in Treasury bond prices as interest rates rose sharply and that trend continued this week and even on Friday in response to Friday’s unemployment report.

As you know, rising interest rates usually spell lower stock prices and this sharp reversal in the direction of interest rates is a serious development as this could easily affect the fragile recovery underway, not to mention the real estate market, both commercial and residential, both of which are still in critical condition.

Last week’s Treasury bond auctions were weakly received and started the jump in interest rates. Further problems lie in supply/demand metrics as we’re issuing record amounts of debt this year including more than $40 billion this coming week starting April 5th. With the Fed out of the mortgage market and China scaling back its holdings of U.S. debt for three months straight, interest rates could continue to rise as the “bond vigilantes” look like they’re about to take control of this critical game.

So, adding it all up, these are treacherous times in spite of all the happy talk we get from the general financial media.

The View from 35,000 Feet

This week the news was mixed again as the bulls and bears struggled for domination of the markets. On the upside, the Case/Shiller housing price index showed improvement along with an improving consumer confidence report and the much ballyhooed employment report on Friday indicated that north of 150,000 jobs had been created in March.

On the negative side of the ledger was the fact that nobody mentioned that we need 100,000 plus monthly new jobs just to hold even and so unemployment remained steady at 9.7%, that the jobs created fell far short of consensus estimates and that U6 unemployment, the “full” unemployment reading of unemployed plus underemployed rose to 16.9% or about one in six people not employed or not working as much as they want.

But probably most dismal of all was the fact that long term unemployed ranks swelled to 6.5 million, that is people who are jobless 27 weeks or beyond, and a gain of more than 400,000 for the month or 44% of all unemployed, an all time record.

No matter how you slice it, these are not pretty numbers.

Other negative news focused on the Chicago Purchasing Managers Index declining, factory orders dropping and construction spending declining.

Finally, let’s throw in some dribs and drabs like commercial real estate loan losses kicking in to the tune of a half trillion in 2011, the ongoing Greek tragedy and drama that will return to center stage in mid April when 15 billion worth of Euros will have to be refinanced and a new national health care plan that will be “fully funded.” (When was the last time the Federal government fully funded anything?)

Sadly the litany goes on with greater numbers of Americans filing for bankruptcy protection in March than at any time since October, 2005, when the bankruptcy codes were tightened, a total of more than 158,000 filings in March alone, or nearly 7,000 per day, and states and municipalities edge closer to the brink of default as tax revenues continue to shrivel.

Where is the Easter Bunny when we really need him?

What It All Means

What it all means is that, in my opinion, all the happy talk about “happy days are hear again” (the theme song from the Great Depression) is based on a foundation of skating on very thin ice and that we are traveling through very dangerous days with the very likely possibility of a double dip recession lurking like an iceberg in the path of the U.S. Titanic.

However, no matter what happens or what we read, we will stick with our indicators and go with the flow of the market in whatever direction it takes us. One can never underestimate the madness of crowds and the power of the Federal Reserve.

The Week Ahead

The week brings some important economic reports including:

Monday: March ISM Services, February Pending Home Sales

Tuesday: FOMC Meeting Minutes, February Consumer Credit

Thursday: Initial Unemployment Claims, Continuing Unemployment Claims

Friday: February Wholesale Inventories

Sector Spotlight:

Leaders: Gold Miners, China, Russia

Laggards: Biotech, EAFE (Europe, Asia, Far East)

I was in Germany this week where the soccer playoffs were filling the bars and restaurants with cheering fans and where patience is growing thin with the Euro and European Union and their troublesome friends in the Club Med countries.

Now I’m home for the holiday weekend and wish you peaceful days and happy times with your families and friends. Spring is here (although it snowed in Bend today) and I look forward to continuing our work together through these interesting times.

Wishing you a great weekend wherever you may be,

John

http://www.benzinga.com/205571/red-flags-and-scary-charts

VIDEO - Fundamental & Technical Analysis of the S&P 500's Daily & Weekly Charts:

Every Sunday evening, I post a video here and on a few other sites that shows the technical analysis of the $SPX daily and weekly charts. I also show the Dow Jones Industrial Average, the Nasdaq Composite, and the Russell 2000 charts, and talk about what kinds of news, earnings reports, and economic reports to pay attention to in the coming week.

Happy Trading next week,
zigzagman

SLXP - Salix Pharmaceuticals Ltd. Gets FDA Approval For XIFAXAN®

SLXP - Salix Pharmaceuticals Ltd. Gets FDA Approval For XIFAXAN®

RALEIGH, N.C.--(BUSINESS WIRE)--Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) today announced the U.S. Food and Drug Administration (FDA) has granted marketing approval for XIFAXAN® (rifaximin) 550 mg tablets for reduction in risk of overt hepatic encephalopathy (HE) recurrence in patients 18 years of age or older.

HE is a serious disorder caused by chronic liver failure, resulting in cognitive, psychiatric and motor impairments. This approval was supported by findings from the largest randomized trial of maintenance therapy in HE conducted to date, which assessed the efficacy and safety of XIFAXAN 550 mg tablets and demonstrated a statistically significant and clinically meaningful reduction in the risk of overt HE recurrence.ii The labeling for XIFAXAN 550 mg tablets includes data on both the risk reduction of overt HE recurrence as well as risk reduction of HE-related hospitalization.

http://finance.yahoo.com/news/FDA-Approves-XIFAXAN-550-MG-bw-3571437432.html?x=0&.v=1

This is a live intraday chart:



Here is a quote page that shows the Outstanding Shares, the Float, Average Daily Volume, all of which are very reasonable numbers for the sector this company is in:



Here is a chart showing last night's and this morning's Extended Hours Sessions:



Here is a daily chart that shows SLXP closed at $33.52 and it opened today's regular session at $36.15 with a high of the day at $38.00 even:

Radian Group Inc.- RDN is Up Over 17% Today...

Nice day for RDN (NYSE), up over 17%...

I've done my research on this one, and it's fast becoming one of my favorites.

Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides private mortgage insurance and related risk management products and services to mortgage lenders nationwide through its principal operating subsidiary, Radian Guaranty Inc. These services help promote and preserve homeownership opportunities for homebuyers, while protecting lenders from default-related losses on residential first mortgages and facilitating the sale of low-downpayment mortgages in the secondary market.

It's up over two dollars today, and I don't see any news behind this big move.



It's breaking up into Blue Sky territory on much higher than average Volume, and all of the technical indicators are looking very Bullish on this daily chart:

Happy Trading, and keep this one on your radar...
zigzagman

$SPX - End of the Week Chart & Fundamental Analysis

Here is the video I make every weekend that analyzes the daily and weekly charts of the S&P 500's ($SPX) daily and weekly charts. I also mention Fundamental Analysis items you need to be aware of in the coming week.

Happy Trading next week...
zigzagman

Stocks to Watch on Monday March 22nd, 2010: ANX - HDY - RNN - GSL - IDT - POL - FORD - GENT

Three AMEX Stocks: ANX - HDY - RNN:

ANX - There may be some news released next week, giving a date for the the face-to-face meeting with the FDA about the Refuse to File Letter on the NDA for their drug ANX-530.



HDY - It closed above the 15 Moving Average on above average Volume on Friday. All of the technical indicators are showing upticks, and look much more Bullish than they have in the past.



RNN - May be starting another run here. Look at what happened the last time the CCI crossed up through the +100 line. Volume picked up on Friday, and most of the technical indicators are showing improvement.



Three NYSE Stocks:

GSL - Has broken above a previous level of Resistance on above average Volume. Most of the technical indicators are showing signs of improvement.



IDT - It may be a bit too late to catch this Runaway Train, but Volume keeps increasing as it rallies, and all of the technical indicators look very Bullish.



POL - Had a HUGE pop up on Friday with over five times average daily Volume. Every one of the technical indicators are very Bullish.



Two NASDAQ Stocks:

FORD - Has broken above all levels of Resistance on above average Volume, and every technical indicator is upticking very sharply and are looking Bullish.



GENT - Also broke above all levels of Resistance on Friday on very high volume. All of the technical indicators are looking Bullish at this time, except the Accumulation/Distribution line (black). That was most likely due to massive profit taking on the huge pop up it did.



Happy Trading next week,
zigzagman

Is The United States Headed For A Commercial Real Estate Crash Of Unprecedented Magnitude?

Will commercial real estate be the next shoe to drop in the ongoing U.S. financial crisis? While most eyes are on the continuing residential real estate disaster, the reality is that the state of the commercial real estate market in America could soon be even worse. Very few financial pundits are talking about this looming disaster but they should be. The truth is that U.S. commercial property values are down approximately 40 percent since the peak in 2007 and currently approximately 18 percent of all office space in the United States is now sitting vacant. That qualifies as a complete and total mess, but the reality is that the commercial real estate crisis is just starting.

In fact, the commercial real estate market is likely to get a whole lot worse. It is being projected that the largest commercial real estate loan losses will be experienced in 2011 and the years following. Some analysts are estimating that losses from commercial real estate at U.S. banks alone could reach as high as 200 to 300 billion dollars. To get an idea of how rapidly the commercial real estate market is unraveling, just check out the chart below....



Does that look like things are getting better to you?

And unfortunately, all indications are that the commercial real estate market is going to get much worse.

According to Real Capital Analytics, the default rate for commercial property mortgages held by all U.S. banks more than doubled in the fourth quarter of 2009 and may reach a peak of 5.4 percent by the end of 2011.

But even that estimate may be way too conservative as we shall see in a moment.

According to a recent report by the Congressional Oversight Panel, approximately 3,000 U.S. banks are currently classified as having a risky concentration of commercial real estate loans. All of them are small to mid-size banks which have been already severely weakened by the recent financial crisis.

So could the crisis in the commercial real estate market lead to a massive wave of failures among small and mid-size banks?

Count on it.

In fact, the FDIC has acknowledged that the number of banks on its "problem" list climbed to 702 at the end of 2009. To get an idea of just how bad that is, keep in mind that only 552 banks that were on the problem list at the end of September 2009, and only 252 banks that were on the problem list at the end of 2008.

Are you starting to get the picture?

So how are banks responding to this commercial real estate quagmire?

They are rapidly raising loan standards and they are dramatically reducing the number of loans they are making.

Just a few years ago, the number of commercial real estate loans was exploding, but now the bubble has burst, and as the chart below reveals, commercial real estate lending has absolutely fallen off the map....



What is making things even worse is that owners of commercial real estate are starting to walk away from properties that are heavily "underwater" just as many residential homeowners have been doing. This has caused default rates to start shooting through the roof.

One of the latest and most high profile commercial property owners to do this is Vornado Realty Trust. Earlier this month Vornado indicated that it would walk away from two heavily underwater loans totaling $235 million.

In the past commercial property owners would be very hesitant to do such a thing, but the reality is that the stigma has faded for these kind of "strategic defaults". Just as with residential real estate, these kinds of defaults have almost become accepted practice now.

The number of defaults is likely to skyrocket even further with so many commercial real estate loans scheduled to rollover in the next few years.

You see, commercial real estate properties typically carry mortgages with lives of 5 to 10 years. A vast array of commercial real estate loans made between 2000 and 2005 are coming up for a rollover, but because credit standards have tightened, borrowers may find that they simply do not qualify for refinancing.

In fact, a report entitled "Commercial Real Estate at the Precipice" estimates that even under lenient lending standards, approximately 57 percent of existing commercial real estate mortgages will not qualify for refinancing.

That is a nightmare.

But if you apply more conservative lending standards, it is estimated that almost two-thirds of all commercial real estate borrowers will not qualify for a rollover.

So what is going to happen to the U.S. commercial real estate market when large numbers of borrowers start walking away from their "underwater" loans and about half of those who want to rollover their loans don't qualify for refinancing?

What do you think that is going to do to commercial real estate prices?

Somebody better do something, because both the commercial and the residential real estate markets in the U.S. face a crisis of unprecedented magnitude.

But most Americans still have no idea that the great economic machine that their forefathers built is falling to pieces all around them. They would rather numb the pain by watching the latest episode of American Idol or by catching up on the latest round of celebrity gossip.

But that is not going to stop what is about to happen.

http://theeconomiccollapseblog.com/archives/is-the-united-states-headed-for-a-commercial-real-estate-crash-of-unprecedented-magnitude

DRWI - DragonWave Inc. - Closed Up +6.27% Today!:

Last night at 9:22 pm ET, in the post just below this one, I posted that DRWI had put out some very good news about a share buyback it was planning to do.

I also stated that I thought it would be a good time to get IN this stock.

And they also announced this news on March 15th:

Cosmoline has selected DragonWave as its exclusive backhaul provider for a national 4G mobile WiMAX network across Greece. (there's a link to this story in the post below this one)



As you can see from this final Quote, DRWI closed up over 6% today, and it's daily chart is looking even more Bullish today than it did after yesterday's closing bell...



This was a very nice upward move for DTWI today on strong Volume. It closed just pennies below the high of the day, and every one of my Technical Indicators are upticking sharply. Closing above the 15MA on it's first attempt is very Bullish. If it can get through the middle Bollinger Band area at $11.50 or so, there's a real good chance it will run up to the upper BBand at around $13.50 or so.

That is my top price target for this stock before it meets any major Resistance. If the CCI gets turned back at the zero line, Stochastics will also be turning back down at the fifty line. If that happens, I'll lock in my profits and wait to see if it can rise above these two levels of Resistance before jumping back in...

A Stock to Watch: DRWI - DragonWave Inc. Moves to Support Its Stock Price:

DragonWave Inc. Moves to Support Its Stock Price:

It appears that DragonWave (DRWI) is fighting back against whatever forces were causing the free fall in its stock. The company announced a normal course issuer bid of "up to 10%" of the float this morning. It is always hard to know if companies will follow through on such promises, because we often see announcements like this of potential stock buybacks (i.e. X amount of authorized shares we "could" buy), but in reality they are just announcements and companies many times only buy a fraction of the shares authorized. But from a strategic point of view, it's an interesting move even if they don't follow through all the way since it shows the company has the willpower to support the stock price.

Either way it's a nice comfort to shareholders to see an engaged management. Most of the time you see executives more than happy to line their own pockets with extra cash rather than defend shareholders. Those darn socialist Canadians, thinking so different than Americans...

Via the company press release:

The Board of Directors of DragonWave Inc. announced today that it has authorized the purchase of common shares of the company equal to up to 10% of the public float by way of a normal course issuer bid on the Toronto Stock Exchange and/or the NASDAQ Global Market.

The normal course issuer bid is subject to acceptance by the TSX. If approved by the TSX, purchases pursuant to the normal course issuer bid will be made through the facilities of the TSX and/or the NASDAQ Global Market. The normal course issuer bid will be subject to the rules of the TSX and applicable securities laws, including the rules pertaining to the maximum number of shares that may be purchased in any one day.

DragonWave will pay the market price at the time of acquisition of common shares purchased through the facilities of the NASDAQ Global Market and/or the TSX. All common shares acquired by DragonWave under the normal course issuer bid will be canceled.

DragonWave is initiating the normal course issuer bid because it believes that, at certain times, the market price of its common shares may not reflect the underlying value of its business and its future prospects.

The objective of the normal course issuer bid is to provide capital appreciation and market stability for the benefit of DragonWave's shareholders. DragonWave has not previously engaged in a normal course issuer bid.

For reference, DRWI has 36.25M shares, almost all of which are floating (34.2M). 10% of the float would be roughly 3.4M shares - at today's prices this would be around $33M if they bought all 10%. A quick look at Yahoo Finance shows just over $100M in cash on the balance sheet.

http://seekingalpha.com/article/193707-dragonwave-moves-to-support-its-stock-price?source=yahoo

Here is an additional news release from March 15th that is very good news for this company:

Cosmoline has selected DragonWave as its exclusive backhaul provider for a national 4G mobile WiMAX network across Greece:

For more information, visit their website at www.cosmoline.com

http://www.dragonwaveinc.com/main.asp?id=news&page=releases&newsid=182

Here is a one month-daily chart for DRWI, and it looks to me like it's bottoming after a hard fall. That's when I usually like to enter a Swing Trade on the Long side. Here's my read of this chart, and why I think it's turning Bullish:

5MA - The share price closed above the 5 Moving Average, and closed at the high of the day.

CMF - Chaikin Money Flow (solid green), On Balance Volume (red) and Accumulation/Distribution (black), which are my three Money indicators are all upticking.

CCI - The Commodity Channel Index (dark blue) just gave my primary Buy Signal by crossing up through the -100 line.

STO - Stochastics (purple) was very Oversold below the 20 line, and is now upticking through it.

MACD - Moving Average Convergence Divergence - The MACD Histogram (light blue bars) is upticking, and so is the slow line of the MACD (red).

ADX - The DI's of the Average Directional Index (red and green) have started to pinch together again.

RSI - The Relative Strength Index (green at the bottom) is upticking sharply.

Volume will need to increase more if this stock is going to continue to move up.

I like what I see about this company's recent news and the way it's chart looks. I will be following this stock closely for a while to see how this plays out.

Happy Trading,
zigzagman

Stocks to Watch for March 15th: ATAI - CCO - CGIX - JOEZ - ZQK - ATV - BWEN - CNAM - CYTX - WILC:

Stocks to Watch on Monday March 15th, 2010:

LONG:

ATAI:



CCO:



CIGX:



JOEZ:



ZQK:



SHORT:

ATV:



BWEN:



CNAM:



CYTX:



WILC: