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Stock Market News – Friday Morning Edition

The day is starting with an explosion, Ford Motor Co. released their earnings report and to no surprise, it was horrible. They stated that they’re going through cash quicker than they could burn it. Not really , but the report states that they lost $129 million in the third quarter. Ford lost $1.34 per share which beat the street’s estimate (I mean “beat” in a bad way) of losing only $0.94 per share.
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Ford also said that it would be cutting roughly 2,260 of white collar employees.
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It’s no surprise to see Ford post such great loses since earlier in the week we heard about GM releasing a statement that they will only be able to survive another hundred days and need financial support from the federal government. Yesterday the big three automakers went in front of the Washington to inform the politicians of the severity of the situation.
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In pre-market trading the markets are poised to open higher than yesterday’s closed. It’s no surprise that it would move higher after the last two days. As I’m writing this, the markets opened and the DOW opened 100 points higher, the NASDAQ is opened 20 points, S&P500 up 8.

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What A Wild Ride In The Stock Market Today

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photo by Hagerman

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No matter what good news may be out there to trade on, someone else will sell on that same message. The Markets again for the second day trades lower. The Dow closes down almost 6% with most of that lose happening in the morning hours, but at one point it was down nearly 700 points.
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In after market trading Amazon fails to beat the street with their earnings report, while Amgen beats what was expected from them today. Amgen has actually raised guidance for next year. What are you to do with this news? Nothing. For one by the time you’re able to get into Amgen the news will be priced into the stock. As of right now in after market trading Amgen is up $3 per share and the news just came out Secondly in this volatile market that we’ve been seeing, in the next couple off days we could see another major down day and see the stock drop below it $49.73 close price of today.
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Freeport McMoran Inc (NYSE:FCX) Has taken a beating in the last few weeks or so that has the price down to a new five year low. If you have five years to wait before you need you money, this might be the stock for you. In regards to the basic material sector, these stocks have been dealt a blow that will take some time before they really come back to the level that they were at this time last year. If you’re a veteran trader I’m sure that the UltraShort Basic Materials ProShares (AMEX:SMN) is something that you’ve been following if not trading . The stock was at $66 just two days ago and hit an intra-day high of $92.97 in the last 20 minutes of open trading today.
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If you’re going to trade in this volatile market, you need to know how to play both sides of the trading floor. You need to diversify your portfolio and understand what shorting can do for you. It something that I recommend for average traders to do until you fully look into how it’s done.
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In the last two days the Dow has lost nearly 700 point (almost 8%), but because of how I trade and hedge myself, I’ve increased my portfolio over 15% during the same period. Do your homework, double check your research and follow through with your due diligence.

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Unclear What Will Happen On Wall Street

The Markets are beaten up for another day this week. It’s unclear what will happen on Wall Street with all this doom-and-gloom being spoken about today. It’s definitely to build up cash reserves and sell out of stocks that are sensitive to economic turmoil. Consumer staples are the only thing that the analyst are recommending at this time, which I not too sure about any stock at this time.
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The other day I spoke about buying Mosaic at $65 and it’s a good thing that I’m being a trader at this time because if I wasn’t, I wouldn’t have sold yesterday morning at $70. What would have happened if I was an investor is that I would be out over $1000 on the purchase. Mosaic missed their earnings last quarter and lowered guidance for the rest of the year. The stock today is trading at $46 range.
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The markets are not just unsure about the “Invest In America” bill, they’re also having concerns about the future of the economy. The DOW open this morning in the red and has continued to go downward from there. Next week is the start of earnings season and Wall Street is concern that many, if not most will have similar reports like Mosaic.
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The Initial claims report was released today and the actual numbers were worse than what was expected from the Analyst. As a matter of fact, it’s the highest ever since 2001. Factory orders were also announce and again it was lower than what Wall Street wanted to see.
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We are in for a rough ride, so buckle up. Hopefully it won’t be a long one.

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Is Goldman Sachs (NYSE: GS) And Morgan Stanley (NY...

What in the world went on yesterday? It doesn’t look like it’s getting any better in the finance sector. As a matter of fact, it looks like it’s going to get much worse. Goldman Sachs closed Wednesday at $107.89, which is a price I thought that I would never see again. They are the leader in the industry, but obviously they can’t escape the credit crisis even with the decent earnings report that came out this week. As for Morgan Stanley, what happened yesterday was just a continuation of the trouble that stock has seen throughout this year. Morgan Stanley closed Wednesday at $21.75, which is 50% down from where they were in May of this year.
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This is in part of the fact that the Feds stepped in to save AIG and many investors are dumping any stocks now that may seem vulnerable. Both companies rely on the confidence of other financial institutions staying open for business. No one is trusting that any financial company will be able to survive this turmoil.
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Of course others believe that there are other factors involved. It’s being reported that John Mack, the CEO of Morgan Stanley has sent an internal memo to the firm’s staff blaming short sellers for the drop in the stock price.
“You should know that the management committee and I are taking every step possible to stop this irresponsible action in the market,” Mack wrote. “We have talked to Secretary [Hank] Paulson and the Treasury. We have talked to Chairman [Christopher] Cox and the SEC. We also are communicating aggressively with our long-term shareholders, our counterparties and our clients. I would encourage all of you to communicate with your clients as well — and make sure they know about our strong performance and strong capital position.”
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What is Paulson and Cox going to do about this issue that they didn’t have the chance to do months ago. They had the chance to pull in the reigns on short selling and decided to look the other way. I believe that the letters will fall on deaf ears.

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Super-Size My Profits, McDonald’s (NYSE: MCD...

The economy may be slowing down, Consumer confidence is low and consumer spending is dropping, but no matter what people want to go to McDonald’s more and more it seems. McDonald’s same store comps rose last month (August) 4.5% in the U.S. and 8.5% worldwide. I’m not surprised in the news because when you are out and running around (like most Americans) you just want to get a quick bite to eat, Where do you run to first? McDonald’s has made it a point to buy key properties in all cities over the life of the company that it’s hard not to find one when you’re in a rush to grab something.

They are also building new restaurants everyday all over the world so how could they not beat their comps for the previous month. I do expect this to continue on the basis that more countries are eating more American-ized type food and McDonald’s are leading the way.

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As for any other fast food restaurant, they can’t compete with these numbers. Wendy’s stated in August that their same store sales were up, but only 0.01% and in Burger King’s 4th quarter, their worldwide comps were only up 5.3%.

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This is a company that I will look into because if these comps were better than expected, it could mean a good earnings report when they report next month on October 22nd. The stock is up over 10% since the beginning of the year and up30% since it’s low of $49.36 at the end of January. it has shown great returns over the long haul and with a dividend yield of 2.4% who can really complain? I do have some concern with the fact that the dollar has gained some strength and could possibly hurt international operations.

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As with any interest in buying stocks, you need to do your research and due diligence before claiming a stake in the company. Happy trading.

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This Bud’s For You

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photo by mindexpansi0n
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Anheuser-Busch(NYSE: BUD) had a going away party today(not really). Today’s earnings report beat the estimate that the street was expecting. Yes, it was only $0.02(1.8%) but they beat it just the same. The makers of Budweiser posted net income of $689 million, or 95 cents a share on Wednesday, on sales of $4.72 billion. Thomson Reuters estimates called for 93 cents on $4.71 billion.
BUD shares closed Wednesday at $67.36, up 11 cents.
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In recent weeks Anheuser-Busch agreed to a takeover by InBev(BR: INB) for $65 a share which comes to $52 billion(just in case you had a hangover and missed the news).
I’m not a Bud drinker(never was either), but this is an American icon to be held in honor. To see it go to foreign investor is a shame for a red-blooded patriot. What’s next, the New York Yankees purchased by Petroleo Brasileiro(NYSE: PBR).
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Growing up in the NY/NJ area both of these giants are landmarks in their communities that they are in, but from the looks of things, the landscapes are about to change.

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Earnings Report Pt 2

There’s a reason why the average/amateur investor should stay away from trying to play earnings report. If you’ve been watching this season so far, you’re probably scratching your head wondering what the heck is going on.
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Today alone, there were several companies that reported. Quite a few of them beat the estimates that the street was expected, but a good portion of those stocks went backwards. Out of the ones that missed the estimates, some went up in value. Go figure.
I’ve played the report game in the past and half the time the reports didn’t stand up to the estimates. I have noticed that I’ve done better during a bull market than a bear(market). Last summer was very successful for me when the market was on a tear.
There are too many variables in an earnings report. The company can beat the estimate for that quarter, but their guidance may not be what was expected. Look what happened with Apple. Their profits jumped 31%, but the stock dropped 11% in after market trading. They did come back today to finish down 3% from yesterday’s close.
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My advice is to stay out of the game if you haven’t done your due diligence. When you do the research on a company and see that the fundamental are strong, you should be investing in that stock well before then. Yes, this site is titled “Beating The Stock Market”, but to do that you can’t take chances gambling.

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Apple, A Possible Buying Opportunity.

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Apple(NASDAQ: AAPL) beat Wall Street’s third-quarter expectations which was expected but the company’s guidance for the this quarter seems to be below what the street was hoping to see from the tech giant.
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The company said today that it earned $1.07 billion, or $1.19 a share, in the third quarter, compared with a profit of $818 million, or 92 cents a share, a year earlier.
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Revenue climbed to $7.46 billion from $5.41 billion a year ago.

The average expectation from analysts was $1.08 eps which beats the street by about 9%
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For the fourth quarter, Apple stated that they expect revenue of $7.8 billion and earnings of $1 a share. Analysts were expecting revenue of $8.32 billion and earnings of $1.24 a share.
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That’s enough of the technical mumbo-jumbo. What I see is a great buying opportunity. The shares are down in after market trading to $148.50(@6:00pm) which is an 11% drop from where it closed today and may continue to drop a little more. As you may know that this is the company that has just released it’s new iphone on July 11th and Apple has said that they sold over 1 million of them in the first three days. The ipods are still selling at the same rate for some time now and with the younger generation having more than one each, I can’t see this stock staying anywhere near this level when they report again. It also looks like the MAC is making a comeback.

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Earnings Report Season

Once again it”s that season again. Earnings reports will be coming out like a barrage of gun fire. As always it will start with Alcoa (AA) like it does every time.
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For those that are not fully aware of what earnings reports are, they are just that. Companies report four times a year to inform their shareholders of how successful (and in great detail) the last quarter(3 months) was.

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Outside of the financial & some of the consumer dependent stock, I think this season will fair quite well. Time will only tell though, we’ll have to wait and see.

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5 Tips For Staying Afloat In The Stock Market

There are some things that need to be considered when investing in the stock market. Before you go ahead and invest your money in investments, even good ones like GE stocks or some Monsanto stock, you need to know the basics. I’ve listed 5 of the things that I learned over the years, that I feel are quite important.

1. Emotions – Letting your emotions get involved while trading stocks will most likely have you make mistakes. Having your emotions take control will lead to certain financial death. Point blank.

2. Avoid listening to “great stock tips” – If anyone wants to give you a stock tip, you need to ask yourself why he/she would be giving you that advice. Trust you own homework, not someone else’s. If they had inside information about a particular stock they would be breaking the law in giving it to you or anyone else.

3.Due Diligence – Also known as DD’s. You must do your homework and research each company that you invest in. Typically you should put about an hour each week for each of your stocks.

4. Buy Incrementally When you first buy into the stock, you need to know how much of a percentage of your portfolio you will allocate to that stock. Only purchase 1/2 of your position at first. Wait for a pull-back to buy the rest, but only buy 1/4 position at one time. The reason for that is that if the stock pulls back any more you can buy the next piece at an even cheaper price.

5. Exit Strategy Just like in case of a fire, you need to have a plan. If you do your homework and keep an eye on the companies that you invest in, you’ll be aware of when the fundamentals change and the company is not as sound as it used to be. When you get into a stock, you need to make a decision of how long you’re willing to wait for your gains or how much you’re willing to lose before you cut you loses. That also includes you knowing when a stock has reached it top before a big pull-back.

By following these 5 simple rules, you will always come out ahead of the markets. Each one of them is as important as the other, so don’t think that you can skip one or two of them. It doesn’t work that way.

Happy Trading.

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