Look for a Dollar Rebound and Stock Selloff This Month

First Happy Thanksgiving! Be thankful for everything you have now and everything you want for the future. Amen

Second, this Friday is the USA, Canada, and Germany Unemployment Reports, along with Australia and European Union Central Bank Interest Rate decisions are coming in. Thanksgiving week historically has been strong. Even with the important data reports coming in this week, but with the shortened trading week, it could be somewhat relatively calm with big players starting the holiday early. The dollar is still the big issue right now. Forex traders might be watching the stock market, and stock traders might be watching the forex market for direction clues. The tide could possibly be turning here for a reversal, and possibly a major one at that for the dollar and stocks for the time being. I’m looking for a dollar rebound and stock selloff this month or next. Let’s watch and be ready to move if it does.

Important Economic Data Reports This Thanksgiving Week

Monday: Canada GDP Report. Australia Manufacturing Index Report

Tuesday: Australia Central Bank Interest Rate Decision, and Commodity Index Report. Switzerland GDP Report. German Unemployment Report. USA ISM Manufacturing Report.

Thursday: European Central Bank Interest Rate Decision. Euro-Zone GDP Report

Friday: USA & Canada Unemployment Rate Reports

My Stock Pick This Week

Sell short on a USA Coal producer. Even with commodities strong right now, I believe we will be seeing lower demand and prices sometime soon. This company is capitalized at $1.3B with 68% owned by insiders, with an 8% dividend. The dividend is a plus, and possibly the insiders large holdings is a plus, but watch if the insiders start selling big. Between February, 2008, and September 2008, insiders were all sellers between 27 and 24 prices. They sold before the biggest down-leg of the market started in October 2008, so I would suggest to watch the insiders like a hawk. Long term this company products are a buy, but look for lower prices to buy in longer term. Right now, I see a low-risk high-reward sell-short trade setup on it. Stick to stop-loss in case the price keeps going up.

Sell Short Alliance Holdings – Ticker AHGP

Sell Entry: 23.64 to 23.00

Stop-Loss: 25.62

Take Profit Areas: 22.36 to 21.08, 18.68 to 18.11, 17.59 to 17.05

Alliance Holdings Company Profile

Alliance Holdings GP, L.P., through its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. It produces a range of steam coal with varying sulfur and heat contents. As of December 31, 2008, the company operated 8 coal mining complexes in Illinois, Indiana, Kentucky, Maryland, and West Virginia, as well as operated a coal loading terminal on the Ohio River at Mt. Vernon, Indiana. It also had approximately 686.3 million tons of coal reserves in Illinois, Indiana, Kentucky, Maryland, Pennsylvania, and West Virginia. In addition, the company leases land and operates a coal loading terminal, with a capacity of 8.0 million tons with ground storage of approximately 60,000 to 70,000 tons, on the Ohio River at Mt. Vernon, Indiana. Further, it engages in trading of coal, as well as offers services, including ash and scrubber sludge removal, coal yard maintenance, and arranging alternate transportation services. Alliance GP, LLC, serves as the general partner of Alliance Holdings GP, L.P. The company is based in Tulsa, Oklahoma.

Click here to review and trial the Trading Software we used in determining our sell short position on AHGP.

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Comments

[Dave Wrixon]

No the dollar is headed South. You can see that in the Gold price. Interest rates will rise but only in half hearted manner. But even relatively small hikes in interest rates will kill the equity market stone dead.

2009 Nov 23 02:38 PM

[bob adamson]

Good to read your perspective, Michael Michaud.

A short duration ‘dead cat bounce’ for the US dollar and a mild retreat in the stock market after months of run up would not come as a surprise sometime in the first quarter of 2010 but within 7 days (or even by year end) seems a bit too soon.

2009 Nov 23 11:00 PM

[slam stocks]

Not sure about about a dollar bounce and selloff, but the market remains highly volatile and believe if there is any changes it would be late Dec for tax loss selling.

2009 Nov 24 11:38 AM