I’ve talked quite a bit about the head and shoulders top formations in the Dow and S&P500 in recent weeks and it looks like we might get confirmation of those topping formations soon, based on early trading action today.  What that means is that there is going to be an abundance of ways to play this market on the short side and I have one to keep an eye on today.  The company is Green Mountain Coffee Roasters (GMCR).

The maker of single cup coffee brewers has been on a tear in the last couple years with the stock vaulting from 8 to 60 in a little less than three years.  Earnings increased 60% in 2007, 48% last year and is expected to increase 81% this year.  Yes, the company isn’t showing any signs that the growth is slowing with 4 straight quarters of accelerating sales growth.  While this is a company that should continue to do well as more people save money by brewing coffee at home, it’s well overdue for a correction and the pieces are in place for a healthy downward move.

For one, you have deteriorating health in the overall market.  Since 70% of stocks move with the overall market, the wind may be at the back of GMCR to move lower .. and soon.  You also have a recent 3/2 split in the stock which creates a need for additional demand to keep the stock afloat.  Finally, you have a head and shoulders top formation forming on the daily chart, following a climax run.  Let’s take a look at the chart.

The climax run in May/June was highlighted with the huge gap up at the end of April and typically leads to the end of a long term move.  From there, you want to see some kind of topping formation and we have that with the head and shoulders formation.  The left shoulder was formed throughout May, the head formed in the first couple weeks in June and now we have the formation of the right shoulder.  A confirmation of this top would be confirmed with a break below the neck line around 51.  If that move takes place, I’m anticipating a drop to the first level of support, which would be a filling of the gap around 37.

::: >>> Click Here For Additional GMCR Analysis

Full disclosure: I currently hold a small short position in GMCR and looking to add more.

I’m short on time this week, so will move right into the charts.  Basically not much change in my analysis from last week as the indices continue to diverge with Nasdaq strength and S&P weakness.  The Nasdaq actually broke out of its two week consolidation on Thursday, closing the week above the 20 day moving average yet again.  Amazing.  I don’t think too many would have predicted the Nasdaq would close above the 20 by the end of the week after plunging Monday and Tuesday to test the 50 day moving average.  Support at 1800 is back in play, with 1750 now shaping up as strong support as well. 

Contrast the strength of the Naz with the deterioration in the S&P and potential head and shoulders top.  We’re right back to where we closed the previous week around the 920 level with significant resistance in the 925 - 930 range.  Another test of that level may just carve out the right shoulder of the topping formation for the S&P, so we need to watch this level closely.  The 900 level remains critical on the support side.  A weekly close below that level would be significantly bearish. 

While we have some important economic data coming out this week along with the unemployment figures on Thursday, I doubt this market will make a meaningful move ahead of the July 4th weekend.

:::::::::::::::::::::::::::::::::::::::::::

Isn’t Time You Took Control of Your Financial Future?

Get Your Self Investors Gold Membership Today!

The Self Investors Model Portfolio wrapped up 2006 with a gain of 27.6%, 2007 with a gain of 30.2%, finished nearly 35% ahead of the S&P in a very difficult 2008 and is off to a good start here in 2009, outperforming the S&P by 5%.  This is a REAL portfolio with position sizing and not based on extrapolated hypothetical gains for each trade.  On average, it beats the S&P by 20% per year. The result?

* Putting $100K into an S&P tracking index at the beginning of 2004 and you’re down more than $20K. 
* The Self Investors Model in the same time period would have more than doubled your money.  That’s the power of not buying and holding! 

When comparing the Self Investor Model Portfolio to the 535 Model Portfolios tracked by Hulbert Digest for annualized returns over the past 5 years, just four model portfolios produced better results and none of those used diversified approaches.

1. Cabot China & Emerging Markets: 22.2%
2. No Load Portfolios (Gold/Cash: 19.%
2. No Load Portfolios (Gold/Shorting): 19.9%
4. Outstanding Investments: 18.2%
    (focuses on oil & precious metals - did extremely well until it was crushed in the market crash)
::: >> 5. Self Investors Model Portfolio: 17.5%
(The SI portfolio isn’t currently tracked by Hulbert (and I’ve never looked into it) but every trade alert is sent via IM and email as well as tracked in a database which includes trade notes, position size and entry price)

** Astonishing fact #1: About a 1/3 of all model portfolios tracked by Hulbert Digest have not made a dime over the past 5 years!
** Astonishing fact #2: Just 6% of the model portfolios tracked have annualized returns over 5 years of 10% or more!

Would you like to receive buy and sell alerts in the Model Portfolio within minutes (NEW! now get them via instant messaging in near real time) of each transaction?  You can receive these along with ALL of the tracking tools and video reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more market beating months here at SelfInvestors.com.

Get Your Self Investors Gold Membership Today!

::: Best/Worst Performers :::

- Top 10 Performing Industries For the Week -

1. Medical Practitioners: 13.50%
2. Home Furnishing Stores: 8.75%
3. Computer Based Systems: 5.90%
4. Office Supplies: 5.75%
5. Dairy Products:  5.50%
6. Property Management: 5.45%
7. Silver: 5.35%
8. Consumer Services: 5.15%
9. Drug Related Products: 3.90%
10. Building Materials Wholesale: 3.85%

- Top 10 Worst Performing Industries For the Week -

1. Aerospace/Defense: -9.40%
2. Toy & Hobby Stores: -5.75%
3. Sporting Goods Stores: -5.30%
4. Metal Fabrication: -4.65%
5. Long Term Care Facilities: -4.05%
6. Banks - Pacifiic: -4.00%
7. Textile Manufacturing: -4.00%
8. General Entertainment: -3.90%
9. Diagnostic Substances: -3.30%
10. Movie Production - Theaters: -3.30%

- Top 5 Best Performing ETFs For the Week -
(excluding leveraged ETFs)

1. Claymore China Real Estate (TAO) 8.80%
2. India Fund (IFN) 5.20%
3. iShares Taiwan (EWT) 4.35%
4. iShares Hong Kong (EWH) 4.00%
5. SPDR Emerging Middle East & Africa (GAF) 3.85%

- Worst 5 Performing ETF’s -

1. SPDR Oil & Gas Exploration (XOP) -4.75%
2. Templeton Russia & E Europe (TRF) -4.60%
3. Claymore Global Solar (TAN) -4.60%
4. iShares Global Energy (IXC) -3.95%
5. iShares France (EWQ) -3.85%

::: Upcoming Economic Reports (6/29/2009- 7/3/2009) :::

Monday:        None
Tuesday:       Consumer Confidence, Case-Shiller Home Price Index, Chicago PMI
Wednesday:  ADP Employment Change, Construction Spending, Pending Home Sales, ISM Index, Crude Inventories
Thursday:      Nonfarm Payrolls, Unemployment Rate, Initial Claims, Factory Orders
Friday:           None

::: Earnings I’m Watching This Week :::

Still slow for earnings.. the bulk of earnings will get going in a couple weeks

Monday: Apollo Group (APOL) 

The indices are down but not out.  That was the theme of last week as the indices broke down out of tight, short trading ranges and are in the process of testing some key resistance levels which could soon tell us whether the rally will continue or enter a prolonged retracement.  Last week, I discussed the developing head and shoulders formations, but it’s much too soon to tell whether those topping formations will confirm.  For now, the Nasdaq remains remarkably strong and continues to trade above its 20 day moving average and actually looks poised to continue moving higher.  Contrast that with the Dow and S&P which closed the week below their 20 day moving averages for the first  time since the rally began in March.. so certainly some divergences and contradictions taking place that makes the current market a bit difficult to read.  I am leaning to the cautious side.  Tech and commodities have been the backbone of the rally and with commodities showing signs of cracking last week, perhaps they lead the market to the downside.  Let’s take a look at some key support and resistance levels I’ll be watching on the major indices next week.

Remarkably, the Nasdaq isn’t showing any signs of breaking down yet as tech bellweathers (with the exception of RIMM) such as CSCO, MSFT, AAPL and GOOG all remain quite strong.  The Nasdaq closed the week above that 20 day moving average (in green) yet again and actually looks poised to continue moving higher.  Perhaps it’s a head fake and we’ll know that by the end of next week. 

The S&P is showing some signs of deterioration having closed the week below the 20 day moving average for the first time since the rally began.  There is going to be significant short term resistance in the 925 - 930 area and BIG support at the 900 level where the 50 and 200 day moving averages converge.  If the S&P closes below the 900 level at any point in the next few weeks, I will get fairly aggressive on the short side.  On the other hand, if it bounces big off that level with volume, that may be a spot to get aggressively long.  That 900 level is the BIG line in the sand for me to determine a bullish/bearish market.

The Dow remains the laggard of the indices and not only took out the 20 dma last week, but closed below the 200 day moving average as well.  Friday’s highs will provide a significant hurdle next week as will the 8750 level if it can clear Friday’s highs.  On the support side, look for a test of 8250 if the Dow takes out the 8500 level next week.  If the 8250 level is taken out, that confirms a head and shoulders top, and sets up a much larger drop. 

:::::::::::::::::::::::::::::::::::::::::::

Isn’t Time You Took Control of Your Financial Future?

Get Your Self Investors Gold Membership Today!

The Self Investors Model Portfolio wrapped up 2006 with a gain of 27.6%, 2007 with a gain of 30.2%, finished nearly 35% ahead of the S&P in a very difficult 2008 and is off to a good start here in 2009, outperforming the S&P by 7%.  This is a REAL portfolio with position sizing and not based on extrapolated hypothetical gains for each trade.  On average, it beats the S&P by 20% per year. The result?

* Putting $100K into an S&P tracking index at the beginning of 2004 and you’re down more than $20K. 
* The Self Investors Model in the same time period would have more than doubled your money.  That’s the power of not buying and holding! 

When comparing the Self Investor Model Portfolio to the 535 Model Portfolios tracked by Hulbert Digest for annualized returns over the past 5 years, just four model portfolios produced better results and none of those used diversified approaches.

1. Cabot China & Emerging Markets: 22.2%
2. No Load Portfolios (Gold/Cash: 19.%
2. No Load Portfolios (Gold/Shorting): 19.9%
4. Outstanding Investments: 18.2%
    (focuses on oil & precious metals - did extremely well until it was crushed in the market crash)
::: >> 5. Self Investors Model Portfolio: 17.5%
(The SI portfolio isn’t currently tracked by Hulbert (and I’ve never looked into it) but every trade alert is sent via IM and email as well as tracked in a database which includes trade notes, position size and entry price)

** Astonishing fact #1: About a 1/3 of all model portfolios tracked by Hulbert Digest have not made a dime over the past 5 years!
** Astonishing fact #2: Just 6% of the model portfolios tracked have annualized returns over 5 years of 10% or more!

Would you like to receive buy and sell alerts in the Model Portfolio within minutes (NEW! now get them via instant messaging in near real time) of each transaction?  You can receive these along with ALL of the tracking tools and video reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more market beating months here at SelfInvestors.com.

Get Your Self Investors Gold Membership Today!

::: Best/Worst Performers :::

- Top 10 Performing Industries For the Week -

1. Health Care Plans: 10.15%
2. Music & Video Stores: 5.60%
3. General Entertainment: 4.75%
4. Medical Laboratories & Research: 4.55%
5. Medical Equipment Wholesale:  4.35%
6. Home Health Care: 3.75%
7. Mortgage Investment: 3.65%
8. Healthcare Info Services: 3.40%
9. Education & Training Services: 3.30%
10. Research Services: 5.00%

- Top 10 Worst Performing Industries For the Week -

1. REIT - Hotel/Motel: -17.75%
2. Silver: -13.95%
3. Copper: -12.60%
4. Agricultural Chemicals: -11.30%
5. Tobacco Products: -10.35%
6. Oil & Gas Equipment & Services: -10.40%
7. Drugs Wholesale: -9.70%
8. Oil & Gas Independent -9.40%
9. Aluminum: -9.30%
10. Cement: -9.05%

- Top 5 Best Performing ETFs For the Week -
(excluding leveraged ETFs)

1. iShares Health Care Providers (IHF) 5.65%
2. US Natural Gas (UNG) 3.35%
3. Biotech (BBH) 2.60%
4. iShares Healthcare (IYH) 2.00%
5. iShares 20 Year Treasury (TLT) 1.90%

- Worst 5 Performing ETF’s -

1. Templeton Russia & E Europe (TRF) -25.40%
2. Market Vectors Coal (KOL) -12.20%
3. India Fund (IFN) -12.05%
4. Claymore Global Solar (TAN) -10.80%
5. Central Europe and Russia (CEE) -10.70%

::: Upcoming Economic Reports (6/22/2009- 6/26/2009) :::

Monday:        None
Tuesday:       Existing Home Sales
Wednesday:  Fed Rate Decision, Durable Orders, New Home Sales, Crude Inventories
Thursday:      Initial Claims, Initial Claims, GDP (final)
Friday:           Personal Income/Spending 

::: Earnings I’m Watching This Week :::

Tuesday: AeroVironment (AVAV), Americas Car Mart (CRMT), Oracle (ORCL)

Wednesday: Monsanto (MON), Nike (NKE), Red Hat (RHT),

Thursday: Accenture (ACN), Lennar Cor (LEN)

Friday: AZZ (AZZ), KB Home (KBH)

The growth in China over the past 10 years or so has been staggering and despite a global economic crisis, the economy is still growing around 6% (so they say).  With an attitude of growth at any cost and a mass migration to China cities, you have to assume that water pollution and scarcity could very well choke the economy in the coming years. 

Guo Youzhi, general secretary of the China Desalination Association, said that only 20 percent of industrial wastewater in the country is efficiently re-utilized and 80 percent is being simply discharged.

Duoyuan Global Water (DGW) which IPO’s next week aims to alleviate some of the concern.  The  company distributes its water treatment equipment which includes filtration, water softening, water sediment separation, disinfection and reverse osmosis throughout 28 Chinese provinces.  The company is growing quickly with revenues rising 40% and net income jumping 63% over 2007 levels.. The company cites population growth and industrialization as factors that are driving demand for water treatment in the country.

The IPO is expected to price on June 23rd and begin trading the next day on the NYSE under the ticker symbol “DGW”.  The company plans to sell 5 million ADRs between $13 - 15/share with the proceeds being used to improve and build new facilities including research facilities as well as create new products.

Get the prospectus and road show video for Duoyuan Global Water (DGW) here

>>> Click Here For Your Free Duoyuan Global Water Analysis

I’m short on time this weekend so will keep the commentary to a minimum and just focus on the chart of the Nasdaq and what it might be telling us about where we’re headed.  The market is definitely showing some signs of fatigue recently but continues to digest gains in a very health manner and could very well be coiling the spring for another push higher, quite possibly to the next level of major resistance which in the the case of the Nasdaq is in the 1900 - 1947 range.  Note that the 50 day moving average has now crossed above the 200 day moving average, forming “the golden cross” which is a decent indicator of a bullish market. I still think we’re probably setting up for one last push of a few percent which would market the top of this leg up before entering a significant retracement phase. 

We’ll have to keep an eye on the possibility for another head and shoulders top formation similar to what we saw at the end of 08 and into 09.  A confirmation of that pattern could set us up for a possible test of the March lows, but I think the odds of that happening are quite slim.  An area where I’ll be looking to get considerably aggressive on the long side would be a successful test of support in the 1665 area.  For next week, I’ll be keeping a close eye on the top and bottom of the tight trading range in all the indices for an indication of shorter term strength or weakness.  For now, the trend up is still strong until proven otherwise.  No change in my strategy either . . I continue to trade the small to mid cap momentum plays particularly in the China and commodity areas, while looking for longer term hedging plays in both ETFs and individual stocks. The closer the indices get to major resistance (Naz 1900ish, S&P 1000ish and Dow 9088ish), the more aggressive I’ll be on the short side.

:::::::::::::::::::::::::::::::::::::::::::

Isn’t Time You Took Control of Your Financial Future?

The Self Investors Model Portfolio wrapped up 2006 with a gain of 27.6%, 2007 with a gain of 30.2%, finished nearly 35% ahead of the S&P in a very difficult 2008 and is off to a good start here in 2009, outperforming the S&P by 7%.  This is a REAL portfolio with position sizing and not based on extrapolated hypothetical gains for each trade.  On average, it beats the S&P by 20% per year. The result?

* Putting $100K into an S&P tracking index at the beginning of 2004 and you’re down more than $20K. 
* The Self Investors Model in the same time period would have more than doubled your money.  That’s the power of not buying and holding! 

When comparing the Self Investor Model Portfolio to the 535 Model Portfolios tracked by Hulbert Digest for annualized returns over the past 5 years, just four model portfolios produced better results and none of those used diversified approaches.

1. Cabot China & Emerging Markets: 22.2%
2. No Load Portfolios (Gold/Cash: 19.%
2. No Load Portfolios (Gold/Shorting): 19.9%
4. Outstanding Investments: 18.2%
    (focuses on oil & precious metals - did extremely well until it was crushed in the market crash)
::: >> 5. Self Investors Model Portfolio: 17.5%
(The SI portfolio isn’t currently tracked by Hulbert (and I’ve never looked into it) but every trade alert is sent via IM and email as well as tracked in a database which includes trade notes, position size and entry price)

** Astonishing fact #1: About a 1/3 of all model portfolios tracked by Hulbert Digest have not made a dime over the past 5 years!
** Astonishing fact #2: Just 6% of the model portfolios tracked have annualized returns over 5 years of 10% or more!

Would you like to receive buy and sell alerts in the Model Portfolio within minutes (NEW! now get them via instant messaging in near real time) of each transaction?  You can receive these along with ALL of the tracking tools and video reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more market beating months here at SelfInvestors.com.

::: Best/Worst Performers :::

- Top 10 Performing Industries For the Week -

1. Toy & Hobby Stores: 9.45%
2. Aluminum: 8.60%
3. Dairy Products: 8.30%
4. Shipping: 8.00%
5. Banks - MidAtlantic:  6.90%
6. Property Management/Development: 6.45%
7. Recreational Goods - Other: 6.20%
8. Air Services - Other: 6.05%
9. Data Storage Devices: 5.05%
10. Confectioners: 5.00%

- Top 10 Worst Performing Industries For the Week -

1. Resorts & Casinos: -9.20%
2. Major Airlines: -7.90%
3. Health Care Plans: -7.20%
4. Sporting Goods Stores: -5.90%
5. Hospitals: -5.75%
6. Textile Manufacturing: -5.75%
7. Jewelry Stores: -5.35%
8. REIT - Hotel/Motel: -5.30%
9. Gaming Activities: -4.95%
10. Music & Video Stores: -4.95%

- Top 5 Best Performing ETFs For the Week -
(excluding leveraged ETFs)

1. iShares Sweden (EWD) 6.00%
2. PowerShares DB Base Metals (DBB) 5.60
3. US Oil Fund (USO) 5.45%
4. ING Global Equity Dividend (IGD) 5.10%
5. iShares Australia (EWA) 4.75%

- Worst 5 Performing ETF’s -

1. Holders Internet Infrastructure (IIH) -13.90%
2. Caribbean Basin (CUBA) -11.75%
3. Templeton Russia & E Europe (TRF) -6.10%
4. iShares Taiwan (EWT) -5.30%
5. PowerShares Dynamic Retail (PMR) 4.50%

::: Upcoming Economic Reports (6/15/2009- 6/19/2009) :::

Monday:        NY Empire Manufacturing
Tuesday:       Building Permits, Housing Starts, PPI, Capacity Utilization, Industrial Production
Wednesday:  CPI, Crude Inventories
Thursday:      Leading Indicators, Initial Claims, Business Inventories
Friday:           None

::: Earnings I’m Watching This Week :::

Monday: Capstone Turbine (CPST), Casella Waste (CWST)

Tuesday: Best Buy (BBY), Factet Research (FDS)

Wednesday: Fed Ex (FDX)

Thursday: Research In Motion (RIMM)

One key component to pin pointing market tops and bottoms is the market reaction to news.  It’s something I’ve discussed quite a few times here in the past few years and with this V shaped market rally continuing into the stratosphere, it’s worth keeping an eye on to help determine when this rally might roll over for more than a few percentage points.  Certainly, there have been a few technical indications that the rally is cracking in the foundation, but the house that the bulls built remains standing for now with Dow 9000 and S&P 1000 in the cross hairs.  I mentioned last week that the inability of the bears to take control for than a day or two with buyers stepping in each time at key levels increasing the likelihood of an upside breakout out of consolidation.  On Monday, we got the confirmation of Friday’s strange end of day breakout, so the next leg up is in process.

As the market battles more difficult levels of resistance, we’ll very likely we’ll see a shift from market rallies on any glimmer of hope (aka green shoots, or as one of my members Charlie likes to call green kudzu) to a market where “better than expected” won’t cut it and a focus on the negative returns.  We saw that Friday for the first time since the rally began as it appeared traders focused on the surge in the unemployment rate to 9.4% (note that this already surpasses the 8.9% the Fed was using in its stress tests of banks for more adverse conditions in 09) and the continuing spike in Treasury yields.  Can you imagine the magnitude of the rally had a big, unexpected drop in jobless claims occurred several weeks ago?  Following an open gap up Friday morning, traders quickly sold into the news and each attempt at a rally was thwarted.  This doesn’t derail the rally, but the reaction to news is something to keep a close eye on. 

Let’s turn to the charts..

The Nasdaq remains the strongest of the major indices with a tremendous amount of support in place all the way down to 1600.  The dramatic move over the past few months sets up a looming “golden cross” situation where the 50 day moving average (in blue) crosses above the 200 day moving average (in red) (Note: the Q’s have already confirmed the golden cross).  It’s a bull market indicator for many analysts just as a cross of the 50 day moving average below the 200 day moving average signals a bear market (this last happened in early 2008) and proved to be a darn good exit signal.  In my opinion it’s a bit too simplistic but generally it’s not a bad indication of the overall health of the market.  Coming out of the internet bubble, the 50 day moving average crossed the 200 day moving average for the first time in early 2003 which kicked off a nearly 5 year bull market.  I’ll have more on the comparison to today’s market collapse to the internet bubble collapse in an upcoming report.

I do think that this stage of the basing pattern is mighty extended with the potential for just a few more percent left before a major retracement takes place (again, more on this in an upcoming report).  I’m looking for the Nasdaq to test the 1900 level and possibly fill the gap around 1947 before the major retracement begins.  There is going to be tremendous support around the 1675 - 1700 level but given this sharp rise off the bottom we can’t rule out a 50% retracement which would put us in the 1600 range (another strong level of support).  At this point, I don’t think there’s any way the Nasdaq touches those March lows again, but I’d have to reevaluate that if the Nasdaq takes out the 1600 level.  I think the odds of that happening are quite slim.

The S&P is having some difficulty around resistance of the Jan highs but still closed the week above that 200 day moving average.  It looks to me like there is enough juice left to test the next level of resistance around 1000.  On the support side, the area where the 20 dma & 200 dma (labeled incorrectly on the chart) converge (around 925) will serve as strong support.

The Dow closed the week above its 200 day moving average as well and is looking poised to test the next level of resistance around the Jan highs.  The market is getting back into overbought levels, so may need to come back a little or trade sideways, but there remains considerable strength in this market.

My trading strategy remains as it has over the past several weeks.  I’m trading high momentum plays on the long side, primarily in small caps and specifically in the China and commodities areas while looking for spots to add longer term hedging. 

:::::::::::::::::::::::::::::::::::::::::::

Isn’t Time You Took Control of Your Financial Future?

The Self Investors Model Portfolio wrapped up 2006 with a gain of 27.6%, 2007 with a gain of 30.2%, finished nearly 35% ahead of the S&P in a very difficult 2008 and is off to a decent start here in 2009, outperforming the S&P yet again.  This is a REAL portfolio with position sizing and not based on extrapolated hypothetical gains for each trade.  On average, it beats the S&P by 20% per year. The result?

* Putting $100K into an S&P tracking index at the beginning of 2004 and you’re down more than $20K. 
* The Self Investors Model in the same time period would have more than doubled your money.  That’s the power of not buying and holding! 

When comparing the Self Investor Model Portfolio to the 535 Model Portfolios tracked by Hulbert Digest for annualized returns over the past 5 years, just four model portfolios produced better results and none of those used diversified approaches.

1. Cabot China & Emerging Markets: 22.2%
2. No Load Portfolios (Gold/Cash: 19.%
2. No Load Portfolios (Gold/Shorting): 19.9%
4. Outstanding Investments: 18.2%
    (focuses on oil & precious metals - did extremely well until it was crushed in the market crash)
::: >> 5. Self Investors Model Portfolio: 17.5%
(The SI portfolio isn’t currently tracked by Hulbert (and I’ve never looked into it) but every trade alert is sent via IM and email as well as tracked in a database which includes trade notes, position size and entry price)

** Astonishing fact #1: Roughly a 1/3 of all model portfolios tracked by Hulbert Digest have lost money over the last 5 years!
** Astonishing fact #2: Just 6% of the model portfolios tracked have annualized returns over 5 years of 10% or more!

Would you like to receive buy and sell alerts in the Model Portfolio within minutes (NEW! now get them via instant messaging in near real time) of each transaction?  You can receive these along with ALL of the tracking tools and video reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more market beating months here at SelfInvestors.com.

::: Best/Worst Performers :::

- Top 10 Performing Industries For the Week -

1. Aluminum: 13.60%
2. Auto Dealerships: 12.90%
3. Trucks & Other Vehicles: 11.55%
4. Textile Manufacturing: 11.40%
5. Aerospace/Defense:  11.35%
6. Major Airlines: 11.35%
7. Recreational Goods - Other: 10.85%
8. Department Stores: 10.40%
9. Industrial Equipment & Components: 10.20%
10. Research Services: 10.15%

- Top 10 Worst Performing Industries For the Week -

1. Gold: -6.15%
2. Drugs Wholesale: -5.50%
3. Silver: -5.25%
4. Oil & Gas Refining & Marketing: -3.40%
5. Internet Service Providers: -3.25%
6. Publishing - Periodicals: -3.25%
7. Banks - Midwest: -3.15%
8. Residential Construction: -2.65%
9. Semis - Integrated: -2.40%
10. Broadcasting - Radio: -2.35%

- Top 5 Best Performing ETFs For the Week -
(excluding leveraged ETFs)

1. Templeton Russia & E Europe (TRF) 19.10%
2. Herzfeld Caribbean Basin (CUBA) 18.60%
3. Claymore Global Solar Energy (TAN) 9.80%
4. PowerShares Clean Energy (PBW) 9.40%
5. Morgan Stanley Frontier Markets (FFD) 8.50%

- Worst 5 Performing ETF’s -

1. Market Vectors Gold Miners (GDX) -6.40%
2. iShares Taiwan (EWT) -4.90%
3. ING Global Dividend (IGD) -4.75%
4. Central Fund of Canada (CEF) -4.75%
5. iShares Sweden (EWD) 4.70%

::: Upcoming Economic Reports (6/8/2009- 6/12/2009) :::

Monday:        None
Tuesday:       Wholesale Inventories
Wednesday:  Fed Beige Book, Treasury Budget, Trade Balance, Crude Inventories
Thursday:      Retail, Initial Claims, Business Inventories
Friday:           Export/Import Prices, Mich Sentiment

::: Earnings I’m Watching This Week :::

Tuesday: 99 Cents Only (NDN), Sina.com (SINA), Titan Machinery (TITN) 

Thursday: ArcSight (ARST), Hoku Scientific (HOKU), Lululemon (LULU)

By Guest Author: Robert Williams, PhD, P.E.

There are many companies involved in all aspects of the oil/gas industries but very few gain a significant market dominance. Some achieve this by acquisitions of various significant companies. Referring back to the last oil/gas industry perspective re: automation companies, an example of such acquisition is Emerson Process Control acquiring Rosemount instrumentation which has extensive, and some cases, an exclusive market within the industry. Similarly, with the two companies listed in this industry perspective. Their corporate history is too diverse to elaborate on in this brief article and hyperlinks are provided to their individual websites at each company name.

We should point out that Self Investors market specialist Tate Dwinnell has featured these companies but they are not currently included in the Model Portfolio.

Since all companies are categorized into industry groups, e.g. DRC – Diversified Machinery, there is no explanation as to the significance of each company within that industry group. The intent of this industry perspective is to increase the reader’s awareness in this respect.

Major oil companies have installed so many of these companies’ products that they become standardized in that product. Consequently, due to standardized engineering, operation, maintenance and training any new project becomes a sole source for that product. A prime example would be centrifugal compressors on natural gas pipelines and jet pumps in refinery delayed coking process.

Dresser-Rand Group Inc.(DRC) is the global supplier of custom-engineered rotating equipment solutions for the applications in the oil, gas, petrochemical and process industries. The products and service applications include oil and gas production; high-pressure field injection, gas lift, and enhanced oil recovery; natural gas processing; gas liquefaction; gas transmission and storage; refining; petrochemical production; and general industrial markets, such as paper, steel, sugar, distributed power and United States Navy. The Company operates globally with manufacturing facilities in the United States, France, United Kingdom, Germany, Norway, China and India. It operates a range of products and clients to the global client base in over 140 countries from the global locations in 18 US states and 26 countries.

DRC is a global leader in the turbo-machinery market, providing compressor and gas power turbine technology for the following primary industries: gas lift/injection, gas gathering/storage/transmission, ethylene, fertilizer, refineries and chemical production. Dresser-Rand has delivered in excess of 2000 gas turbine driver packages for generators and compressors world-wide. DRC also provides gas turbines which are used for base load and standby power generation applications. More than 900 of gas turbine units have been supplied into over 62 countries.

The concern about carbon dioxide emitted by traditional coal-fired power plants can be alleviated by the fairly new technology known as carbon capture and storage which offers a viable method to capture most of that carbon dioxide gas and store it underground. DRC has the technology to help reduce carbon dioxide emissions by the carbon capture and storage process.

:::: >>> Get More Dresser-Rand Analysis Here

Flowserve Corporation (FLS) is a manufacturer and aftermarket service provider of comprehensive flow control systems. The Company is engaged in developing and manufacturing precision-engineered flow control equipment, such as pumps, valves and seals, for critical service applications. Through the manufacturing platform, the Company offers a range of aftermarket equipment services, such as installation, advanced diagnostics, repair and retrofitting. The Company operates in three business segments: flow serve pump division for engineered pumps, industrial pumps and related services; flow control division for engineered and industrial valves, control valves, actuators and controls and related services, and flow solutions division for precision mechanical seals and related products and services. In April 2009, the Company acquired CALDER AG.

In the oil and gas industry FLS has provided equipment for crude oil handling and treatment, heavy oil steam processing, sub-sea developments, water injection recovery and water handling and treatment. In the refining world they are involved with hydro-cracking, distillation, delayed coking, etc., for transportation - crude oil and petroleum products pipelines and gas processing involving LNG, NGL, GTL (gas to liquids) and natural gas processing/treatment. For these process applications FLS provides pumps, valves, seals, instrumentation, actuators and steam systems.

:::: >>> Get More Flowserve Analysis Here

Earnings Estimates

  DRC                                              FLS

Please peruse the following DRC and FLS stock charts and refer to your strategic stock trading plan as to when to invest, if at all.

Author Bio

Robert is a valued contributor to Self Investors and provides great insight into the oil industry.  He has 40 years of experience which includes oil/gas engineering in crude oil/petroleum products/natural gas, refining, processing and pipelines on all continents, except South America and Antarctica, from Alaska and Australia pipelines to S.E. Asia offshore, from UK North Sea to Los Angeles fuel truck racks and from Romanian pipelines to West Africa FPSO.

Sina.com (SINA) is China’s largest internet portal with over 200 million registered users across not only China but Taiwan, Hong Kong, North America.  The company continues to post outstanding growth each quarter despite a slumping global economy and beginning to tap into the trend of user generated content with the launch of SINA Blog and SINA Podcasting.  Considering that collectively, Chinese internet users spend more than 10x the amount of time online as US users do, that’s a whole lot of user generated content and potential ad revenue.

What stands out to me in terms of its financials is the fact the company has been posting accelerating quarter over quarter revenue growth over the past two years.  Ok, well not quite .. in the last quarter the company reported revenue growth of 44% vs the previous quarter growth of 64% so the streak has stopped, but still mighty  impressive growth.  Quarter over quarter earnings growth is equally as impressive over the past 8 quarters with growth of 19%, 29%, 28%, 31%, 74%, 59%, 38% and 44%.  The company will report its 1Q 2009 results within the next couple weeks.

:::: >>> Click Here For More Free Sina Analysis

Technically, the stock continues to work higher off a new base formation, somewhat catapulted by all the Microsoft buyout rumors, but the fundamentals are clearly driving  this stock higher.  The stock cleared a one year downtrend a few weeks ago and today cleared  the first consolidation above both major moving averages (the 50 and 200 dma) with good volume.  It offered an entry around 29 today, but is a bit extended.  I’m looking to get in on a pull back to 30 or lower.  My exit point is a drop below the 200 day moving average.

Once again the bears can’t take the bull (er, I mean ball) and score.  There have been several indications over the past few weeks that this rally is on the verge of falling apart and each time the market is one move away from a key breakdown, buyers step in and push this market higher.  Frankly, I’m baffled at the way the buying has taken place particularly over the past week and ESPECIALLY in the last 15 minutes on Friday.  Window dressing? Perhaps.  Goverment intervention/manipulation? Perhaps.  Whatever it was, it wasn’t natural which was the capper on a week of mighty strange trading action (the sustained rally after the consumer confidence number was also a head scratcher).  The thin, volatile market where choppiness and unnatural trading prevail, prompted me to move more to the cash side, until a firm break out (with volume) out of the consolidation appears.  With Friday’s move and the overall resiliency of the market, it appears the odds are increasing of an upside breakout move, but let’s put an asterisk next to that Friday move and await more confirmation.  It should be noted that technically, the Nasdaq broke out at the end of the day Friday but the S&P and Dow remain below the 200 day moving averages.  So, while the Nasdaq remains relatively in the free and clear up here, the S&P and Dow still face significant hurdles.  Suffice it to say, it’s going to set up one wild week of trading.  In my opinion, where the market finishes the end of next week will determine the direction for the next several weeks.  Be ready on either side at this point or better yet, go enjoy warmer days and longer nights while this bull/bear battle play out at key resistance.  Let’s take a look at the charts..

I should really redo this chart and add a few lines, but it’s Sunday and I’m lazy, so I’ll leave it be.  I should have added another resistance line at the May 20 high at 924.60 which will be the next level of resistance.  I’ve drawn out the next level of resistance around 930 from May 8th which happens to be just about on that 200 day moving average in red.  Even if the S&P can manage to clear tough resistance between 925 - 930, it still must face resistance of the Jan high at 943.85.  On the support side, notice the S&P bounced once again at the May lows, narrowly averting a double top confirmation.  Apparently, bears also have 9 lives.

The late day Friday move, not only took out the high of the 2nd top of the double top, but cleared the May of 1773, so yes technically a failed double top and Nasdaq breakout Friday, setting up a possible move to 1785 and beyond. BUT, let’s remember how that was done and be somewhat suspicious.  If however, the Nasdaq holds up at the levels in the first few days of next week, it lends validity to the move and we have to respect it. 

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Isn’t Time You Took Control of Your Financial Future?

The Self Investors Model Portfolio wrapped up 2006 with a gain of 27.6%, 2007 with a gain of 30.2%, finished nearly 35% ahead of the S&P in a very difficult 2008 and is off to a decent start here in 2009, ahead of the S&P YTD performance by 5%.  This is a REAL portfolio with position sizing and not based on extrapolated hypothetical gains for each trade.  On average it beats the S&P by 20% per year. The result?

* Putting $100K into an S&P tracking index at the beginning of 2004 and you’re down more than $20K. 
* The Self Investors Model in the same time period would have more than doubled your money.  That’s the power of not buying and holding! 

Would you like to receive buy and sell alerts in the Model Portfolio within minutes (NEW! now get them via instant messaging in near real time) of each transaction?  You can receive these along with ALL of the tracking tools and video reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more market beating months here at SelfInvestors.com.

::: Best/Worst Performers :::

- Top 10 Performing Industries For the Week -

1. Copper: 12.00%
2. Trucking: 10.50%
3. Office Supplies: 10.50%
4. Oil & Gas Drilling & Exploration: 9.95%
5. Oil & Gas Equipment & Services:  9.90%
6. Steel & Iron: 9.75%
7. Semis - Memory Chips: 9.60%
8. Nonmetallic Mineral & Mining: 9.40%
9. Air Services - Other: 9.40%
10. Silver: 9.35%

- Top 10 Worst Performing Industries For the Week -

1. Education & Training Services: -4.70%
2. Major Airlines: -4.05%
3. Mortgage Investment: -2.45%
4. Computer Based Systems: -1.95%
5. Home Health Care: -1.70%
6. Staffing & Outsourcing Service: -1.20%
7. Specialized Health Service: -.85%
8. Residential Construction: -.80%
9. Computer Peripherals: -.60%
10. Publishing - Books: -.60%

- Top 5 Best Performing ETFs For the Week -
(excluding leveraged ETFs)

1. Templeton Russia & E Europe (TRF) 22.45%
2. Claymore China Real Estate (TAO) 17.95%
3. India Fund (IFN) 17.55%
4. Indonesia Fund (IF) 12.65%
5. Morgan Stanley E Europe (RNE) 11.50%

- Worst 5 Performing ETF’s -

1. iShares Municipal Bond (MUB) -1.20%
2. iShares 7 - 10 YR Treasuries (IEF) -.75%
3. iShares Home Construction (ITB) -.60%
4. iShares 20 Yr Treasury (TLT) -.45%
5. iShares Sweden (EWD) 0%

::: Upcoming Economic Reports (6/1/2009- 6/5/2009) :::

Monday:        Personal Income/Spending, Construction Spending, ISM Index
Tuesday:       Pending Home Sales, Auto/Truck Sales
Wednesday:  ADP Employment, Factory Orders, ISM Services, Crude Inventories
Thursday:      Initial Claims, Productivity
Friday:           Nonfarm Payrolls, Unemployment Rate, Consumer Credit

::: Earnings I’m Watching This Week :::

Tuesday: Applied Signal Tech (APSG)

Wednesday: Joy Global (JOYG), Martek Biosciences (MATK), Shanda Interactive (SNDA), Toll Brothers (TOL)

Thursday: Guess (GES), Valence Technology (VLNC)

I’ll keep it brief and to the point in this shortened Memorial Day weekend edition of the weekly market review/preview.  The market appears ready to roll over with the indices possibly confirming a double top formation in the coming days.  Take a look at the Nasdaq and S&P, both of which nearly retested the May highs before selling off and taking out the 20 day moving averages (the first time the S&P has traded below the 20 dma two consecutive days since the rally began in March).  If in fact the indices take out the May lows (and it looks like they will), that would confirm a double top formation and a likely test of the 50 day moving averages (in blue).

On Wednesday night I made the following comments to my members:

“Today’s high may have marked the top…

After Monday’s big move and the way the gains were held Tuesday, I
commented to Gold members last night that a move to the 200 day
moving averages in the S&P (around 940) and Dow (around 8800) is
becoming more likely. We may not get that far.  While the market
staged a decent rally in the morning today, that rally completely
fell apart following the Fed minutes.  It may have had something to
do with the Fed waking up to reality and revising their estimates for
GDP and unemployment downward. 

Technically, there are a few major bearish implications of today’s
move.  For one, it was another high volume reversal and a close near
the lows of the day.  In addition, the indices confirmed a head and
shoulders top formation on the intraday charts and a possible double
top formation on the daily charts.  Tomorrow’s action will be very
telling.  During most of this rally, the market didn’t follow through
to the downside after days of significant weakness like this, so a
big plunge tomorrow would indicate a change of character and likely
mark a top to this rally.”

Taking a look at the chart of the Nasdaq reveals a break down back below the 20 and 200 day moving averages with a likely retest of 1665 coming soon.  A break below that level confirms a double top and sets up a test of the 50 day moving average at the  very least. 

The S&P has taken out the 20 day moving average as well as the up trend channel and looks poised for a test of the 850ish level at the 50 day moving average.  Volume has been light ahead of the holiday weekend, so we’ll have to see if the deterioration in this market picks up once normal trading volume resumes towards the latter half of next week.  Tough resistance around the 900 level, so a close with volume above that level would indicate bulls are back in control.  I think those odds are slim at this point.

:::::::::::::::::::::::::::::::::::::::::::

Isn’t Time You Took Control of Your Financial Future?

The Self Investors Model Portfolio wrapped up 2006 with a gain of 27.6%, 2007 with a gain of 30.2%, finished nearly 35% ahead of the S&P in a very difficult 2008 and is off to a decent start here in 2009, ahead of the S&P YTD performance by 5%.  This is a REAL portfolio with position sizing and not based on extrapolated hypothetical gains for each trade.  On average it beats the S&P by 20% per year. The result?

* Putting $100K into an S&P tracking index at the beginning of 2004 and you’re down more than $20K. 
* The Self Investors Model in the same time period would have more than doubled your money.  That’s the power of not buying and holding! 

Would you like to receive buy and sell alerts in the Model Portfolio within minutes (NEW! now get them via instant messaging in near real time) of each transaction?  You can receive these along with ALL of the tracking tools and video reports with the very popular Gold membership.  Don’t delay, get started today and join me for many more market beating months here at SelfInvestors.com.

::: Best/Worst Performers :::

- Top 10 Performing Industries For the Week -

1. Hospitals: 15.15%
2. Internet Service Providers: 13.50%
3. Gold: 11.95%
4. Silver: 10.65%
5. Copper:  9.35%
6. Recreational Goods: 9.05%
7. Steel & Iron: 8.65%
8. Nonmetallic Mineral & Mining: 8.60%
9. Foreign Regional Banks: 8.05%
10. Beverages - Brewers: 7.80%

- Top 10 Worst Performing Industries For the Week -

1. Banks - SE: -7.45%
2. Banks - Mid Atlantic: -6.95%
3. Banks - Pacific: -6.50%
4. Home Health Care: -5.95%
5. Health Care Plans: -4.40%
6. Medical Equipment Wholesale: -4.30%
7. Savings & Loans: -4.25%
8. Banks - Midwest: -4.20%
9. Home Furnishings & Fixtures: -3.65%
10. Industrial Equipment & Components: -3.50%

- Top 5 Best Performing ETFs For the Week -
(excluding leveraged ETFs)

1. WisdomTree India (EPI) 22.75%
2. iPath India (INP) 21.20%
3. Morgan Stanley India (IIF) 18.05%
4. India Fund (IFN) 17.20%
5. Market Vectors Gold Miners (GDX) 11.70%

- Worst 5 Performing ETF’s -

1. US Natural Gas (UNG) -14.45%
2. Morgan Stanley China (CAF) -11.45%
3. SPDR Banking (KRE) -6.25%
4. Herzfeld Caribbean Basin (CUBA) -5.45%
5. iShares 20 Yr Treasury (TLT) -4.60%

::: Upcoming Economic Reports (5/25/2009- 5/29/2009) :::

Monday:        None
Tuesday:       Case Shiller Home Price Index, Consumer Services
Wednesday:  Existing Home Sales, Crude Inventories
Thursday:      Durable Goods Orders, Initial Claims, New Home Sales, Crude Inventories
Friday:           GDP, Chicago PMI 

::: Earnings I’m Watching This Week :::

Monday: Giant Interactive (GA)

Tuesday: Canadian Solar (CSIQ), Cellcom Israel (CEL)

Wednesday: Autozone (AZO), China Finance Online (JRJC), China Nepstar (NPD), China Sunergy (CSUN), Netezza (NZ)

Thursday: Costco (COST), Freeseas (FREE), Trina Solar (TSL)