Labor day weekend is just ahead. Volume is getting light. Instead of a full blown update, we just want to discuss briefly RIMM (Research in Motion), a stock that has had a huge come back since hitting a 5-year low this month.

We can attribute some of the 50% rally to short covering. Problem is fundamentally, RIMM’s valuation has not really changed i.e. not significant enough for analysts to revise up their price and earnings target estimates in a meaningful way. The recent rally was achieved under light volume. Both RSI and MACD are making a comeback from their previous severely oversold state. There might be more room for this rally but it’s just not convincing at this point.

SPX is not really making any significant movement neither. RSI bounced perfectly off the low of 30 and the index has been rallying under light volume. We do not feel any bullish sentiment at the moment.

Looks like we are going to have two more contributors coming on board this week. I will introduce them soon. Stocks are falling a little bit while treasuries gain. The economy is just not picking up no matter how one spins it.

Tze: 9:00 AM

The stock model is updated to reflect Monday’s market move. You can download the entire model Excel output file here: StockModelFile_20110830 Remember we do welcome individual stock and ETF commentary requests. All you have to do is submit your request or questions in the comments section of this post and we will promptly reply.

For 08/30/2011 trading session,  we are going to focus short position in Morgan Stanley (MS) and a long position in Genworth Financial (GNW).

Charts are provided by contributor Roller Coaster.

Morgan Stanley is weak fundamentally with a model ranking of quntile 5 (worst). Its EPS related factors are below its peers in the financial sector and its earnings growth relative to its PE is very low. MS has retraced back to the consolidation area which may serve as resistance.  The 20 EMA and 50 EMA are sloping downwards.

GNW (Genworth Financial) on the other hand is fundamentally strong (model ranking of quintile 1 (best)). We can see that from its much lower than average P/E, Prices/Sales and Price/Book related metrics within the financial sector. GNW looks like it is in a bottoming process.  RSI and MACD lines are pointing up.

ETF Model Update:

You can download the entire ETF model Excel output file here: LeveredETFModelOutFile_20110830

The bullish sentiment of the bull ETFs are mainly concentrated on the commodity related ones. We are not certain if this kind of bullishness is good for the general market as run in commodity very often signal possible downturns in the general stock market. Today, we are highlighting DIG (Proshares Ultra Oil/Gas) and AGQ (Proshares Ultra Silver).

AGQ recently is making higher highs, and higher lows.  It’s now pulled back to the 20 EMA and 50 EMA, that are rising slightly. AGQ’s ranking has been improving in the ETF model, moving from the worst ranking of 5 to 1 recently.

DIG has found temporary support at $37.50.  It may now close the gap, or retrace to the 50 EMA. DIG’s generated a new buy signal with a ranking of quintile 2 for trading session 08/30/2011.

The above chart is the ES daily.  The ES has rallied sharply recently, but I am expecting this is due to short covering rather than strong buying because the volume has been decreasing during the rise inside the channel.  I’m watching the levels at the March and June lows for a possible short position. 

Above is the Soybean daily chart.  Soybeans recently broke out of the long trading range.  I think there can be a buying opportunity in ZS on a pullback.

The stock model is updated to reflect Friday’s market move. You can download the entire model Excel output file here: StockModelFile_20110826 Remember we do welcome individual stock and ETF commentary requests. All you have to do is submit your request or questions in the comments section of this post and we will promptly reply.

For 08/29/2011 trading session,  we are going to focus long positions in F (Ford) and XOM (Exxon Mobil) in Charts are provided by contributor Roller Coaster.

Ford has a quintile ranking of 1 (best) in the auto sector. Ford looks like it is trying to hold around the $10 level.  There can be a quick move up to try to fill the gap at about $11.  The MACD is also ticking up. This stock’s contrarian indicator is very high relative to its peers indicating a rally is anticipated. In addition, the stock’s earning growth relative to its PE is significantly  higher than most of its peers in the auto sector.

XOM has a quintile ranking of 1 (best) in the oil/gas sector. XOM has held the $70 level; and may now look to tag the 50 EMA, which is also near the level of the June 27th low. XOM is even more attractive based on its contrarian indicator and the stock is at a bargain price given its valuation related metrics.

ETF Model Update:

Given’s the market’s bullish move on Friday, the model has tilted even more towards the bull ETFs. However, it also provided better entry opportunities for the bear ETFs. For 8/29/2011 trading session, we actually favor one of these bear leveraged ETF – EDZ (Direxion Emerging Market Bear 3X). EDZ’s ranking has moved up from a neutral quintile ranking of 3 to a 2. We believe going long Ford (F) and Exxon (XOM) and hedge the two long positions with EDZ is a great combination.

EDZ is consolidating after it’s big move up, and break of the 50 EMA.  The 50 EMA is now rising.  EDZ may break the consolidation to the upside.

The stock model is updated to reflect today’s market move. You can download the entire model Excel output file here: StockModelFile_20110824 Remember we do welcome individual stock and ETF commentary requests. All you have to do is submit your request or questions in the comments section of this post and we will promptly reply.

This morning we focus a long position in BAC (Bank of America) and a short position in MU (Micron Technology, Inc.) Charts are provided by contributor Roller Coaster.

According to our ranking model, BAC’s valuation is extremely cheap at the moment. We can tell from our book, PE and PEG related composite value factors. However, it can get cheaper! It made a new low on high volume, but it didn’t fall too much.  Potentially, we can see a relief rally here.

Micron Technology ranks poorly within the FocalEquity Stock Ranking model because its valuation related metrics are particularly unattractive relative to its industry peers. This stock has been declining without any significant retracements.  It’s possible this stock will continue to fall until it finds support.

ETF Model Update:

You can download the entire ETF model Excel output file here: LeveredETFModelOutFile_20110824

Today we like to highlight DRN (Direxion Real Estate Bull 3X). With the huge rally yesterday, many of the bear ETFs generated sell signals in the model. You should carefully look at each trading signal and ask us questions on our blog if you are uncertain.

DRN had a strong close on high volume August 9, 2011.  It’s pulled back recently on light volume.  There can be another push higher from here.

ETF Model Image Capture (for trading day 2011-08-24)

All the ingredients appear to be in place for the fall. 30%+ rise off bottom, P/E overvalued, banks have completed pump ‘n dump, dollar bottomed, 10yr treas moving up, Dan and K’s counts appear to be there (or near), and on and on, but mainly the emotional aspect appears to be in place. We’ve been faked out many times on this move up, so I will cautiously approach this move. I really want to see the VIX daily RSI take out its trendline and the weekly SPX RSI fall below its trendline.

 Here are my two indicator charts for your viewing pleasure. These are always in my chartbook and remain updated at all times. If you like to visit and use them you must leave a vote for me on the stockcharts front page. Thanks in advance.

Charts are massive and don’t view well here, so follow the links below.

Daily Chart Link-

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3186525&cmd=show[s165700978]&disp=P

Weekly Chart Link -

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3186525&cmd=show[s165701390]&disp=P

 GK trading,

Shanky

Le Blog – http://shankystechblog.blogspot.com/

For the third day in a row S&P traded above its upper BB and closed a tad below it today. TA gurus consider this as very bearish. Last time it happened was in August.

After the close:

• Alcoa announced it will cut 13,500 (13%) jobs, take upto 900 mil charge. Stock down slightly.
• Bank of America warns of 2008 results, stops bonuses to the execs. Stock doesn’t react.