Let’s look at a long term chart of $USB and compare it to POT which is an agriculture stock that was clearly a bubble that needed to burst last year.

As of right now I don’t really see a bubble as I do see a strong momentum chart. Yes there has been a strong bull market in bonds for quite a long time, however for this to go on some type of climax run this will be well into the 200’s before that is even an option, possibly 300’s.

Ways to play this are TLT, IEF, and SHY.

POT is the true definition of a bubble going from low single digits to the mid 200’s in the span of 6 years with most of those gains being realized in about 18 months. It didn’t have a down month from mid 2006 until the end of 2007. Just be aware the next time you hear that bonds are in a bubble and remember that the charts don’t lie.

This was a guest post by Jeff Pierce (Track his trades on Covestor.com). Jeff is a full time trader based out of Vancouver Canada. Read his blog at zentrader.ca.

Here’s my take on where we stand.

1. The bubble has burst in oil and then some, which most healthy corrections have to go through. Just as targets on the upside overshoot, they’re equally as cruel on the return trip.

2. Long term support does seem to be in the $40 range based on previous tops.

3. There is a long term trendline that does appear to coincide with the $40 range as support.

4. I’ve heard from the media oil targets as low as $20-25, which does seem to be a bit outrageous, indicating oil sentiment is very low.

5. It’s plausible that an worldwide recession is what is really baked into the price of oil bringing it form $148 to $40.

While it’s not inconceivable to think oil could fall further, I think it could be a bullish sign for the markets if the oil sector rebounds. I could see them both rallying in tandem as it could to some type of economic rebound. Long term high oil is bad for the markets, but shorter term it could help investors come to grips with the worldwide economy not coming to an end.

Update: I almost forgot to add this chart of USO showing the highest daily volume close since this instrument peaked back in July. Could prove to be significant showing that capitulation might be setting in.

This was a guest post by Jeff Pierce (Track his trades on Covestor.com). Jeff is a full time trader based out of Vancouver Canada. Read his blog at zentrader.ca.

In our eyes the rally was technically confirmed last Wednesday and further supported with the strong close Friday after the crummy jobs report ironically enough sparked a rally. When the market does not react to terrible news it is a sign of support.

Even with this confirmed rally I am still personally 95% cash and will not be participating for a variety of reasons. If I were participating it would be playing stocks for very short term momentum and I would now be comfortable with holding positions overnight. Two month view of the S&P 500 below.

Major note here is that the rally technically ends if we see a distribution day close under 815 on the S&P 500 which is below the intraday low of distribution day one (the red #1). Also not shown on this chart is the downtrending 50 day moving average which lies at around 930. This is a strong resistance area. Four month view of the S&P 500 below.

The above analysis is a combination of CANSLIM and our own opinionated ramblings. We have been hot with our stock picks as of late so look for more positive price action and back off if that bearish close under 815 decides to manifest itself.

Longterm (6 months+) we are still bearish.

Dollar stores have been around forever, and in fact dollar stores have become a multi-billion dollar industry. When times get tough these deep discounted retailers have more business than they know what to do with.

Three dollar store chains are publicly traded and over the last few months have been under heavy accumulation by institutions. Every investor should take a close look at Dollar Tree (DLTR), Ninety Nine Cent Stores (NDN), and Family Dollar Stores (FDO).

Both Daily and Weekly Stock Charts are below:

1. Dollar Tree (DLTR) – Daily
2. Dollar Tree (DLTR) – Weekly
3. 99 Cent Stores (NDN) – Daily
4. 99 Cent Stores (NDN) – Weekly
5. Family Dollar Stores (FDO) – Daily
6. Family Dollar Stores (FDO) – Weekly

Numbered Charts Below, Click To View:

1. 2. 3.

4. 5. 6.

Dollar store stocks are not going to be the high fliers of the century, but they are a great alternative to currently volatile and otherwise riskier investments.

Earnings are on the rise for all three of these companies and as long as the economy continues to weaken all three will continue to be on institutional buy lists. Recession proof retail is officially in trend.

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What we use to track oil is the United States Oil Fund (USO) which is an ETF that tracks the spot price of crude. View the chart below to see today’s breakout. Take note the market has not yet closed today so chart will adjust at session close.

The reason this is important for short term investors is it gives credibility and momentum for oil related stocks. These stocks could now be in favor for the next few weeks.

We recommend new investors read Stock Charts, Understanding the Basics and browse the technical analysis archives before viewing the charts below.

Some stocks to watch or play off this momentum include the below. Note there are more than this we just are posting several of the more well known companies:

1. Helmerich & Payne (HP) – Drilling
2. Ensco International (ESV) – Drilling
3. Nabors Industries (NBR) – Drilling
4. Continental Resources (CLR) – Explor/Prod
5. St Mary Land (SM) – Explor/Prod
6. Chesapeake Energy (CHK) – Explor/Prod
7. Devon Energy (DVN) – Explor/Prod

Stock Charts Numbered (click to view full chart):

1. 2. 3.

4. 5. 6.

7.

Another way to play this is to simply buy USO or even DIG which is the Ultra ETF that tracks the performance of the Dow Jones US Oil and Gas index. Could be good for a move to $50, currently trading just above $37. Also watch OIH which is the ETF tracking the Oil services industry. Breaking above $100 consolidation today although on lower volume.

Last note is there is a noticeable movement towards alternative energy stocks. LDK, CSIQ, ENER, etc. FSLR has had a phenomenal few days since killing its earnings. These are arguably speculative plays though associated with politics so be conscious of added volatility if deciding to get involved.

The further the worldwide markets fall the more the US dollar strengthens. All common sense would point to this as a misunderstanding for how could anyone have confidence in the dollar during a time like this? The reality is that it wasn’t just the US that drank the kool-aid, so no longer can we be singled out.

Take a look at the chart below of the $US dollar index. Note the move that began in mid July which hasn’t slowed down much since.

Commodities as a whole have been the biggest losers as a result of this rally. Some of the hottest market trends of the last year are now just a memory due to the market as a whole and now the dollar making its comeback.

We here at stocktradingtogo.com like to think back to the “good-old-days” of late 07 and early 08. The commodities boom had every investor reaping huge returns with little effort. Watching leaders like POT, MTL, FSLR, ANR, and CNR soar into the sky was a never ending dream. A dream that abruptly ended with the market meltdown.

Stocks within these groups have in the last five months seen drops of 50% or more. Some investors walked away with massive profits as soon as these big name started rolling over. Others though cringe as they still look at their current holdings and whisper to themselves, “Don’t worry, it will come back…”

With the once hot trends all but over, we bid the following stocks a very dear goodbye. May they rest in peace until their trend is re-ignited some day in the future… some day…

Fertilizers

One of the best bull runs in the last two years, and from this group every investor should remember one name, Potash (POT). It’s glory run had it peaking at $241.62 on 06/19/08 and has since fallen some 70% now trading under $75. Its weekly chart lies below:

Click to View Full Chart

Other big names within this group include Mosaic (MOS) stock which is off nearly 80% since its $163.25 high, Intrepid Potash (IPI) stock which is off 76% since its $76.24 high, and CF Industries (CF) stock which is off 68% since its $172.99 peak.

Alternative Energy

This group has the best potential for making a strong comeback, with the leader of the group being First Solar (FSLR). First Solar had a mind blowing run in 2007 and peaked at $317 on 5/14/08. The stock has lost over 50% of its value since that day. Weekly chart below:

Click to View Full Chart

Other names include LDK Solar (LDK) stock which has fallen over 60% since its $52.40 high, A-power Energy (APWR) stock which has lost a mind boggling 83% since its $31.89 peak, and Canadian Solar (CSIQ) stock which has also lost nearly 80% of its value since its $51.80 high.

Oil Exploration, Drilling, Etc.

As oil ran to its peak above $140 a barrel numerous groups focused on the commodity simply soared. Perhaps one of the best runs came from Continental Resources (CLR) who’s stock ran nearly tripled before peaking at $83.81 on 07/11/08. Since though CLR has lost nearly 70% of its value. Weekly chart below:

Click to View Full Chart

Other stocks include Chesapeak Energy (CHK) which has tumbled over 70% since its peak of $74, St Mary Land & Exploration (SM) which has shed 65% since its peak price of $65.58, Nabors Industries (NBR) which has lost 70% since its peak of $50.58, and Helmerich & Payne (HP) who’s stock is down 66% from its $77.24 high.

Steel Producers

The leader and highlight story from this great trend was none other than Mechel Steel (MTL) which saw a move of over 700% from the beginning of 2007 before peaking at $58.66 on 5/19/08. MTL has given back all its gains since its peak and has seen its stock fall a staggering 86%. Weekly chart below:

Click to View Full Chart

Other stocks in the group include AK Steel (AKS) which has tumbled 83% since its peak of $73.07 and Steel Dynamics (STLD) which has lost 78% since its peak of $40.92.

Coal

The run these stocks pulled off still blows our minds to this day, and we have the charts saved for memory sake. The largest run came from James River Coal (JRCC) who’s stock ran from a 2007 low of $3.56 all the way to $62.83 which was the peak price on 6/19/08. A return of over 1700%; weekly chart below:

Click to View Full Chart

Other runs included Alpha Natural Resources (ANR) who’s stock has tumbled 68% since its peak of $119.30 and Massey Energy (MEE) which has fallen 76% since its peak price of $95.70.

While the effects have been wide spread one new bullish trend has re-emerged as the dollar’s ego has once again been hit hard. As investors retreat from the dollar they look to two key areas for safety, hard assets such as gold and silver and oil.

Gold is now trading back at nearly $900 and Oil today had a one day record price jump closing at $120.92.

How long this new trend sticks around for is any investor’s guess, but we will cover it for readers until the bitter end. Here are five great ETFs that have made a run since the beginning of last week:

1. Spider Gold Trust (NYSE:GLD). This exchange traded fund tracking the price of the Gold bullion has surged from $75.55 to a close today of $89.35 in just six trading days.

2. Ishares Silver Trust (AMEX:SLV). The exchange traded fund tracking silver has jumped over 30% since last Monday.

3. Market Vectors Gold Miners ETF (AMEX:GDX). A great play on gold mining stocks GDX has soared over 25% since the beginning of last week, closing today at $38.09.

4. United States Oil Fund (AMEX:USO). Tracking the spot price of west texas light sweet crude USO today had a 6% price jump closing at $87.60 after trading as low as $72.95 last week.

5. Powershares DB Commodities Index Tracking Fund (AMEX:DBC). A great play on commodities as a whole this ETF is up over 15% since bottoming last week at $31.70.

Looking for Trade Ideas? Read our review of Dan Zanger, the Investor who turned $10,000 into $42 million! Also check out this Gold technical analysis video.