OT

More woes at Kodak...This stock is going to get hammered more today....

ROCHESTER, N.Y. (AP)--Eastman Kodak Co. (EK), undergoing a difficult
transition to digital photography, posted a wider loss of $282 million in the
second quarter Tuesday - its seventh quarterly loss in a row.

Largely because of $214 million in restructuring costs, Kodak lost the
equivalent of 98 cents a share in the April-June quarter, compared with a loss
of $155 million, or 54 cents a share, a year ago.

Sales fell 9% to $3.36 billion from $3.69 billion in last year's second
quarter.

Excluding one-time items, Kodak lost $54 million, or 19 cents a share.

The average First Call earnings and revenue views were 22 cents a share and
$3.45 billion, respectively.

A photographic film icon during much of the 20th century, Kodak has struggled
to turn profits even while becoming a major player in recent years in the
digital arena.

While stung again by the rapid slide in film sales, Kodak found solace in its
steady drive into the digital era. Its overall digital sales in the quarter
rose 6 percent to $1.83 billion, while revenues from film, paper and other
traditional, chemical-based businesses slumped 22 percent to $1.52 billion.

A year ago, the 127-year-old company disclosed plans to lay off 10,000
employees on top of 12,000 to 15,000 job cuts targeted in January 2004.

Well let's see if this initial move from overbought conditions sticks today. After yesterday's "Preserve the Gains for Month End Statements Day", today was the day things were going to move as pointed out by mtzion.

Hmmm .... So much for the bull run. That inflation news has them stampeding in the other direction this morning.

transports are really highlighting the problem. if we were about to get a series of rate cuts a la 1998 or even if the fed could shift to significant pause mode, you would think the DJTR could muster up more than a few hours worth of rally.

instead, the index begins the day by sprinting through last week's lows. what is that saying to us?

it's early and as markm points out, it's the initial move from overbought. in my book, the initial move is often a head fake.

If I had to hazard a guess, this one looks real. There was an attempt just now to turn this back and it was SWAMPED by sells. We'll see.

Gee, I can't BELIEVE the data continues to show we have inflation and slowing growth. ;)

on the DJIA and the SPX, they are defending the city walls at last friday's lows. this makes sense. the longs do not want to see a long dark engulfing candle. if the selling cannot be contained here, there is a chance the wheels will come unglued for a few hours.

however, sometimes gap down openings can be kind of bullish so we remember our fallibility and we remember our stops and we protect our capital as we go. history is strewn with the bodies of traders who forgot to be flexible yet committed at the same time.

Friday's lows for DIA; 200dma for the SPX, but yes, great observation.

don't mean to verbose today but this is a pretty interesting market.

i'm watching GOOG closely here. i like to keep it on my screen. is it safe to say that in the world of nasdaq right now, it has been one of the cadillacs? they are up and comers and they seem to be pushing their business ahead.

trading wise, GOOG is holding only slightly above trendline support that goes back nearly a couple of years. given the pattern of higher lows, the daily chart is showing a large triangle formation. bullish or bearish? i don't know but it has been my experience that really hard corrections in the market aren't over until they take even the best stocks out back and shoot them. support looks to be 330-340 with a big old gap down around 310.

the other thing about a stock like GOOG is that if it is a truly great growth stock like microsoft once was, it will shake everybody out as it goes. great stocks stop going up once everybody owns them.

That is not a chart I would buy.

Gold currently fighting to rally through the 50% retracement at approx. $636.

Economic data plus geopolitics could pull gold through the 50% retracement to it's 61.8% retrace of $658. If that occurs within the next few weeks, the price of gold will be at it's downtrend line and that is where the next battle will be fought, IMHO. Then, we'll see how the price oscillators look.

If gold fails to move higher, the next sequences are approximately:
$614
$586
with round number $600 and $580 also being significant.

Fundamentals continue to improve for reasons that are not fun to think about.

Good luck and good trading!

g034-

It'd be nice to have some VOLUME on this move. A break above 658 on strong volume would be VERY bullish and I'd be a buyer, but volume has been dropping over this last move and it has me wary.

The fundamentals are,as you say, "unfortunately", improving each week.

Dear Bill,

Thank you again for publishing the UBS silver miners report, it was truly a great read and it took me a while at that. ;)

BTW - I wanted to comment a bit on my rudimentary understanding of the metals markets after ~ 2 years of observation. In order to understand what is going on it seems like you have three major inputs to your equation in order of significance:

1) Market metals prices
2) Economic Indicators (re: PPI, CPI, PCE)
3) Treasury Bond Market Yields

Most of the time these three should confirm each other - i.e.:

#2=benign, #3 yields fall, #1 precious metals rise - this is the current paradigm although I have the gut feeling that this relationship will evolve over the coming months /years to eventually show this:

#2=inflationary, #3 yields rise, #1 precious metals also rise. New paradigm. This relationship is finally asserting itself today. I think it has to do more than anything with the understanding that the Fed truly cannot control inflation, because if there is no ability for the Fed to control inflation through future rate hikes which was previously the fear - then metals prices can ramp to show the fallacy of the Fed and the higher inflation it will herald.

Maybe too much convoluted thoughts here - but I wanted to give you some feedback.

Best regards,

BG

MarkM-

What volume are you looking at?

Spot, futures, etf's, miners?

Have you factored in the rollover volume changes in the futures, or the volume taken away from spot into the etf's?

For example, the rydex gold miner cash flows were at very low levels last week, which would normally be bullish for the mining stocks, but how much of that historic cash flow has been taken over by the etf's and does that indicator need a more oversold level to have the same significance before the etf's launched? I think so, but I have not done the research on this myself.

Just curious,

g034

Random musings-Does anyone follow Richard Russell? The action in the transports (along with the inverted yield curve and implosion in housing stocks) seems to be screaming recession not goldilocks slowdown. The transports were up over 150% from the Oct 2002 lows to the 2006 highs and are beginning to stairstep down in a manner that mirrors the action of the Nasdaq in 2000-big moves up, bigger moves down. This must be one of the biggest Dow Theory non-confirmations ever. The fundamentals in the metals, oils, and commodity sectors are about the only ones that seem to make sense IMHO. It will be interesting to see if the so called gurus (read pupputs of the gnomes) will enjoy the the next 6 months assuming they get want-the Fed to stop raising rates and begin to ease. I don't recall it being very bullish for equities as the Fed began easing in 2001. Be careful what you wish for.

leaving the lunch hour and we've seen no real attempt to rally this thing although anything can happen.

the OIH - which like transports is kind of dependent upon economic strength - is threatening to fail at its downtrend line while the XAU - an index that has caused me great happiness and terrible pain over the years - is threatening to take out its own downtrend.

i wonder if gold has become a currency again.

Re: Dow Theory and DJTA

In 1994 the DJTA went down right until the end of the year if I recall - with most of the other averages all going up. A major non confirmation signal - which if you followed - would of course been a huge opportunity loss.

Dow Theory proved useless in 1994.

I'm not saying - that we are in another '1994' scenario again.... but just thought readers would like to be aware of this...

I would have no problem going long NASDAQ at some point (if technicals merit) - even if the DJTA is declining the rest of this year.

I think this is a "Split Market" - where one index can be going up and another going down. A diversified portfolio returns little in this type of market.

IMHO... Tradesman

i think that's a good point tradesman. the market seems to defy rigid, mechanistic interpretations and whenever somebody starts insisting that because A has happened that B must happen is usually about when the pattern is reversing.

'94 is a good example because the broader indexes masked the pockets of weakness throughout individual sectors. a bad year to be bullish and a good year to accumulate into extreme weakness.

that said, looks like they are turning CAT away from the buffet table today. another stock dependent upon economic strength unable to get through its downtrend.

Tradesman-the real point of the comment was to question the advise one gets from the financial entertainment television network. The market action will give one a better forecast than economists and investment strategists, and the message is clear-slowdown ahead. The Fed cutting rates does NOT necessarily mean a bull market is going to magically appear. The transports are leading the way down just like the Nasdaq in 2000 and bounces should be for shorting-buying the dips will prove costly. They had a huge move higher over a nearly four year run and it will take longer than a few weeks to retrace some of the gains. As for the Nasdaq now, as Bill has alluded to, some large megacap stocks began their correction long before the popular averages (Intel, Microsoft, Dell, etc.)and thus will bottom before the broad market. Using Bill's concept of accumulation and distribution areas should allow us to buy weakness and sell strength in blue chip companies, preserving capital and increasing returns.

10 am

"If I had to hazard a guess, this one looks real. There was an attempt just now to turn this back and it was SWAMPED by sells. We'll see."

3:10pm

No headfake that. Naz is nearly off 2% and the trannies are getting trashed. The only question now is mtzion's engulfing red candles scenario+....

tradesman,

one thing is pretty certain here - the transports have been a great indicator and it's been on days like this that it is most apparent. just no lift at all.

i exorcised my cnbc demons years ago. now i either play music or throw in south park re-runs while i am working. it's much more rewarding.

anecdotally, on a couple of other blogs that i read, i notice a lot more small players are buying puts and asking each other advice on shorting. this seemed to start a few days ago....permabulls throwing in the towel and saying that they were going to learn how to short. it's a conversion that happens slowly but when that has run its course, then we will have bottomed for this cycle.

mark,

daily chart wise, we should have plenty of room to roll over for a couple of days although as you pointed out this a.m., the SPX has held over friday's lows. in the last few minutes, somebody with some clout has really been pushing the TICK to keep us away from wiping out those gains. they know how important these price levels are.

may you live in interesting times.

mtzion...

I see you may be a short term trader...

I'm often puzzled by the wild swings upward in the US Market in the last 30 minutes closing on a day when there were no obvious buyers.

There was no Market on Close imbalance...
so this does not explain it...

Do you have any insights (other than suggesting blanant intervention?)

thanks

tradesman

tradesman,

i know. i'd love to be flippant and say it's just blatant intervention, our fed's crash protection team just putting our tax dollars to work but that's usually just way too simplistic (although at certain big market turning points in history, that's how it was done and will be done). sometimes those late last hour surges or sell-offs prove to be meaningless. and other times, it's three days later and you're scratching your head and saying wow they really knew what they were doing. today's late day reversal, for example, definitely makes me nervous about hanging around short overnite. do these big funds know something i don't? have their black box systems that cost them a million bucks plus subscription rates run all the data and figured out that there's nowhere to go but up from here, that this has been just a little shakeout prior to blowing through SPX 1282? and the best time to squeeze a short is the last hour of trading? i don't know. i know that for myself, the last hour is important because i have to make some basic decisions about my own risk profile overnite. if i'm too extended, do i need to cut back? or am i not extended enough? once they shut it down, i'm stuck until the morning so even for a small time chump like myself, the last hour is pretty important. sorry i couldn't give you a better answer. my guess is that on this blog, people with more knowledge than myself will offer their perspectives because this is a really good question. p.s. - i'm usually not as short term oriented as i have been since the may top. years ago i learned painfully that once we top and start selling, the options i trade get more expensive, volatility jumps and if i don't shorten my time frames, my mistakes will kill me.