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Thursday, October 15, 2009

Beware Muni Bond Funds - Alert HQ for Oct 15, 2009

This post is announcing that Thursday's Swing Signals, Trend Leaders, Trend Busters and Gap Signals are now available at Alert HQ. All are based on daily data.

Today we have the following:
  • 22 Swing Signals -- 15 BUY signals and 7 SELL Signals.
  • 726 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 277 stocks that are new additions to the list and 71 that fell off the previous list.
  • 129 Trend Busters of which 29 are BUY signals and 100 are SELL signals.
  • 168 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed.
The view from Alert HQ --

Markets were wobbly today but our signals have remained reasonably positive with one exception. We'll get to that exception is a minute but first the positive news.

Our Swing Signals list continues to be on the short side but BUY signals again outnumber SELL signals. We have more upside gaps than downside gaps on our Gap Signal list. The Trend Leaders list has been steadily growing and, as we approach 1000, we know the short-term top will be at hand. But we're not there yet.

But what happened on our list of Trend Busters?

We got SELL signals for 90 municipal bond funds. That's out of a total of 129 signals or about 70% of the total list. Today many of these funds were little changed but as stocks surged upward over the last two weeks, many muni funds dropped and broke below their trend lines, below their 50-day moving averages and below their lower Bollinger Bands. We've got funds from many of the major fund managers including Alliance, Blackrock, Eaton Vance, Federated, Morgan Stanley, Nuveen, Pimco and Van Lampen represented on the losers list.

Since the March lows, these funds have been trading like stocks; many were up 100% before the carnage of the last week or so. It appears that they just ran out of steam as there has been no particularly horrible news like a default or major changes in rates. The sudden downturn looks real and has occurred on increased volume.

To end on a more positive note, we do have plenty of attractive BUY signals. One example is also on the Trend Busters list. It is O'Reilly Automotive (ORLY). These guys run auto parts stores which isn't a very sexy business; however, as people have been keeping their cars longer these days, ORLY has reaped the benefit by selling more and more replacement ports.

Using our signals --

If you're a momentum trader, the Trend Leaders list is a good place to go shopping. If you practice technical analysis, check out the Trend Busters. And if you are a short-term trader or even a day trader, our Swing Signals or Gap Signals may provide some good trading ideas.

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