Admittedly, this isn’t exactly shocking stuff. Wal-Mart has been praised for being one of the only retailers to continue posting earnings that surpass estimates. But praise hasn’t given them higher share prices since the crash in October.

As you can see, Wal-Mart’s been dropping since last October. But interestingly enough, WMT has managed to hold above its October lows.

This combined with the fact that both the RSI and Slow Stochastic are showing WMT as oversold means that buyers should rush in and push WMT share prices higher.

For the traders out there – go long and place a stop @ $47 per share. If all goes as planned, WMT should rise over 10% in the next 30 days.

Think of it this way – if the foundation of your house was faulty… or if the wood beams holding your home up were weakened… it’s only a matter of time before your house finally crumbles.

The economy and the stock market are the same way.

Right now, the only thing that has changed is evidence that the economy isn’t shrinking as fast. I reckon that means the economy is still shrinking.

Now let me admit that before I jumped to that conclusion, I had to double check my logic.

So I consulted with my five year old niece, Amanda. I asked her “Amanda, if something is shrinking fast and then starts shrinking slower, does that mean it’s still shrinking?”

And she said “yeah you big dummy!”

So if the economy hasn’t even bottomed yet, odds are the stock market will continue moving down. Luckily, right now you’re presented with a golden opportunity.

This is a weekly chart of the Dow Jones Industrial Average. What I want to draw your attention to are those three blue boxes.

What they show is that when the Slow Stochastic and OBV are both above 80, we see stock prices move down over the next 7-12 weeks.

The first time this happened was from October 2007 to November 2007. The Dow dropped 8.5% in 7 weeks. The second time was in April of 2008 to July of 2008. The Dow dropped 15.7% in 11 weeks.

Right now, both the Slow Stochastic and OBV are above 80. The probability of stocks dropping between 8.5% – 15.7% is pretty high.

My prediction is that we’ll see the Dow Jones drop to 6,500 and retest the March lows. That’s a 17% drop.

If the Dow ends the week in the positive, all bets are off.

A number of technically bullish things have happened over the past 30 days that has turned me into a fully fledged oil bull.

First of all, oil has been making higher highs and higher lows since bottoming in late December.

Second, oil has rallied above its 50 day moving average and since then that average has acted as support.

Third, just a few weeks ago the 20 day moving average crossed above the 50 day moving average. This is known as a bullish cross.

Lastly, the fact that both the RSI and Slow Stochastic have turned up after hitting 50 suggests the underlying trend is strengthening.

Listen if you’re buying for the long-term, this is a sweet spot to buy it at. If you’re a short-term technical trader, this is still a sweet spot to enter into.

If oil keeps rallying then I don’t expect any headwinds untill the $70 mark. By that time, the 200 day moving average should also be around there (marking a huge resistance point)

As you can see from the chart above, the US Dollar Index ($USD) has formed a nice upwards trend line that stretches back to mid-September.

Today, the dollar is hitting that support line. Also, its RSI and Slow Stochastic are both indicating that the stock is oversold and ready for a bounce higher.

Fundamentally, China won’t start dumping dollars unless they want to slam the value of its over $750 billion in treasuries it holds. China also realizes that if it begins dumping dollars, it could trigger a trade war with the US.

Both of those things are bad for China. Yet, that’s not the only reason to suspect that the dollar will remain a reserve currency for some time.

In the G20 meeting coming up on April 1, China plans to make a big deal out of creating a new reserve currency. But, if the US doesn’t want that to happen, it won’t. That’s because for the G20 to adopt a new reserve currency, it would need approval from the US (since it has veto power).

Last time I checked, the US wants to keep its reserve status. And so more than likely, the G20 meeting will be a nonevent (As far as the dollar is concerned).

The play to make is to go long the dollar and ride it back up to its previous highs. But keep a stop-loss around 82.

By taking a look at Altria’s chart, you’ll notice a recent support line that was formed around $14 per share. This support line held up perfectly despite the sell-off.

Also, the Slow Stochastic (bottom of the chart) and RSI (top of the chart) both hit oversold levels and are showing a bounce towards overbought levels. As these indicators move to overbought, we should see Altria’s share price move even higher.

Your target should be its January highs ($17.50 a share) – a nearly 10% gain.

That’s because Microsoft (Nasdaq: MSFT) still makes operating systems that are easy to use. And most people in this world have had or been on a Windows-based PC in the past.

That makes Microsoft a very strong company.

MSFT’s share price has taken a beating lately. But right now this stock looks set to pop.

I’m not calling an end to Microsoft’s rout. I’m saying there’s a high probability that its share price moves higher over the next week or two.

That’s because the RSI and Slow Stochastic both show a very clear pattern. Every time the RSI and Slow Stochastic show this stock at oversold levels (happened only three times in the past year)shares go on to rally.

And as you can see, the RSI and Slow Stochastic are oversold right now.

If this follows the previous pattern, buyers should begin to flood the market in the next day or two and take share prices higher.

How high could the go?

Considering MSFT has a hard time passing its 50-day moving average, you can expect that average to act as resistance.

That would give you a decent 16% gain in no time at all.

The big topic of discussion was Kindle 2, Amazon’s new wireless reading device.

Frankly, the news bores me to death.

I read real books and magazines. And when I don’t, I read off of my laptop. But Oprah loves Kindle 2. So there’s got to be something to it.

Kindle 2 isn’t going to make or break Amazon. But it’s certainly given them an online publicity boost. And it’s focused attention on the company’s stock price.

As you can see, after bottoming in November Amazon has seen a nice little boost in share prices.

Part of this boost is due to the solid sales figures Amazon released in January.

It seems that even though consumers are cutting back on spending they’re still looking for deals online. And they’re spending in places like Amazon.

That puts AMZN in a good position to weather this recession. And this should give AMZN the fuel it needs to break above its 200-day moving average and move higher this year.

Look at the Slow Stochastic (at the bottom of the chart). You’ll see that even though it has been moving down, Amazon’s stock price hasn’t followed.

This bullish diversion (explained here) is another signal that AMZN shares should move higher in the coming months.

Not likely.

As you can see, Light Crude Oil ($WTIC) has formed a nice little downwards channel trend that stretches back all the way back from its November highs.

Combined with a Slow Stochastic (bottom of the chart) and the Relative Strength Indicator (RSI) (top of the chart) that show oil as approaching overbought, the indication is that oil prices will move down.

This morning, oil prices reacted negatively against that trend channel and lost value.

This confirms that the bearish trend line should continue and that we should see lower oil prices in the weeks ahead.

A great way to play this situation is to short-sell the United States Oil Fund LP ETF (NYSE:USO).

Jerry Yang After Saying "No" to Microsoft's Offer

This is a guy who sucked so many eggs, that he decided to say “no” to Microsoft’s buyout offer, even though they were offering a MASSIVE premium to Yahoo’s stock price.

Just so you know, that offer was to buy Yahoo for over $40 a share. At the time of the offer, it was trading under $30 a share. Today, Yahoo trades at $12.

It’s not that shocking that Jerry Yang was compelled to give up his position at Yahoo. After all, he lost shareholders one of the most lucrative paydays ever (right as the economy was plummeting).

But believe me when I say that Jerry Yang leaving is good news. Just take a look at the chart below to see why I think that…

What’s interesting about this chart is that Yahoo prices bottomed right as Jerry Yang was leaving Yahoo (he resigned on November 18th).

After that announcement, shareholders took Yahoo stock up over 40%. And since then, Yahoo has continued to make higher lows in an attempt to rally past $14 a share.

Adding strength is the fact that the Slow Stochastic (at the bottom of the chart) is oversold right now.
Oversold means just what you think it does – something has been sold too much. And if something has been sold too much, then eventually buyers will swoop in and snatch up shares at the more attractive, lower prices.

If you notice, the previous two times Yahoo was oversold, it went on to rally at least 15%.

While it is oversold, we also see Yahoo hitting the bottom of its newly formed support channel. And lastly, we see Yahoo starting to use its 50-day moving average as a support, not resistance.

This means Yahoo shares are primed for a climb over the next two weeks. Buying shares is a great move, but buying call options is a better one.

Now if you remember, I’ve talked about the dollar before. And I guess you can call me a “dollar bull,” if categorizing me makes you feel better about the “potentially blasphemous” words I’m about to speak.

On that day, the U.S. Dollar Index was trading at 85.71. Today, it’s trading at 88.

Had you followed my previous advice and dive into the forex markets, I bet you would have made out.

So heed my advice if you dare and take a look at this chart below…

This is a weekly chart of the U.S Dollar Index ($USD), which tracks the dollar’s strength versus six major currencies (including the euro and yen).

The first thing to notice is that the Slow Stochastic (at the bottom) and the RSI (at the top) can stay overbought for months at a time. This signals just how strong the dollars uptrend is.

Typically, stocks and currencies fluctuate from overbought back to oversold fairly quickly.

The next thing to note is that the dollar has run up to its November highs of 88.

If the dollar can break above these highs we could see it trading at 92 – 94 by next month.

So let me repeat the same recommendation I made 8 days ago:

“For you forex bugs out there, taking a long-term bullish position in the dollar should pay you greatly by the end of the year.”