The Stock Market Is Getting Ready For Another Run ...

Here we are again going through another correction in the markets. The three indicies have dropped over the past week off their seven month high and I’m not surprised. Over the last three months the markets have been on a tear coming off their lows. I mentioned before about how the markets wouldn’t be able to continue these gains without some sort of correction and profit taking.
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Even though I’ve been waiting for this pull back for some time, I did expect it. I will say that the markets aren’t as weak as I thought. I no longer expect to see the DOW reach 7000 again. As a matter of fact I don’t think it will get below 7800.
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The word on the street is that there is a large amount of money sitting on the sidelines waiting to jump back in, which means that once investors and traders feel that the waters a safe enough to come back in, it will help the markets rebound even more. Yesterday I heard that many of the hedge fund managers are already invested in and that they don’t have much capital not isn’t in the markets. The report stated that they are concerned that they may miss the next surge in the markets and they don’t want to be caught sitting it out.
If that’s the case, it can also be said that if they get skittish and pull their money out to avoid another big loss, we will see the 7800 level on the DOW.
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I don’t think so on the latter issue because the housing market is showing signs of stabilization, as well as the financial sector. Jim Cramer last night even had a segment in regards to the housing bottom. Since last August he has been saying that the housing bottom would be around June 30th of this year. Well, he ripped the board down and said that after yesterday’s housing number were the third straight month that they have improved. Other indicators are looking good too.
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With that in mind, I will start building positions in the stocks that I’ve been watching for sometime. Over the next two weeks, I will be looking at Apple, JP Morgan, Research In Motion and Agnico Eagle Mines. Of course there are others that I do like, but I would want more of a pull back before jumping on board with them.
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If you’re looking to take advantage of some free advice from Jim Cramer (besides his TV show), Check out his Action Alerts program that he’s always mentioning on his show. I’ve been a member for over a year and find some sound information from him, along with some great picks. Follow the link for a two week free trial of his Action Alerts subscription.
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Tags: Economy, Financials, Getting Started In The Stock Market, Hedge Funds, How to make fast money, Investments, NASDAQ, Stock market news, Stock trading

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Finance, Energy And Politics, Oh My

It seems that the stock market doesn’t react the way it should when important economic news is released. Over the last two months there has been negative news reports released that would normally cause the indicies to drop, but instead they have responded in the opposite manner.

The same goes for the good news that is also released. Look at how the news came out yesterday about the billions of dollars that will be paid back by ten of the major banks. You would think that the news would make investors and traders want to invest in these companies, making the price rise, well it’s wasn’t the case. As a sidebar comment, It amazes me that the money isn’t being returned to the Fed’s, instead it will be held by the Treasury Department just in case it will be needed again. My opinion is that the money will be used in the department’s slush fund and never returned to the tax payer.

The talk is out again about drilling in the Gulf of Mexico. The talks should have never halted. How are we to ever take control of our economy if we are depending on foreign countries to supply us with our energy needs? Oil is abundant in the gulf and we are not taking advantage of it, but I guess it’s OK since Russia is working with Cuba to drill in the gulf. That’s real good that they are doing so, this way they can also sell oil to us and we won’t be dependent on the Middle East. If you’re not sure, that last comment was a sarcastic one. Keep an eye on the alternative energy sector for some good gains. When oil gets above $70-$80 per barrel, solar and wind energy becomes more feasible and profitable as an investment.

The politicians are not doing the job that they were sent to Washington to do. The spending in this country is way out of control and needs to be pulled back. The private sector has to take charge of their future. We can not expect the government to come to their rescue. If the company can’t make a profit, then it needs to close no matter how many people it will affect. In the long run, having the Federal government get involved will only hurt more than it would have originally.

Keep your eyes on the stock market and be ready to raise capital (cash). I expect a pull back soon enough.

Tags: Alternative energy, Economy, Federal Reserve, Financials, Government spending, Investments, Stock market news, Stock trading, Treasury Dept.

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The ADP Report Better Than Expected

The April ADP report was released today and it was better than expected. That doesn’t mean that it was all roses though. Many people are still losing their jobs, but not to the extent to where we could be. The report states that there was a decline of 491,000 compared to the 700,000 that the analysts were expecting. In the release, the March numbers were adjusted to 700,000 from the original number of 663,000.
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This brings the unemployment rate to 8.9% from 8.5% last month. This makes it the highest unemployment rate since 1983.
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All the signs of the stock market and the economy show that the bottom is coming (if not here already). The unemployment rate is the last thing to change course. We can expect to see the unemployment rate get as high as 10%, but as that happens the economy will improve.
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In the meantime the stock market has made some great strides this week again. Seeing the DOW at 8500 is nice, but can it stay that way or will it drop down to the 7000 level once more before we really get get back on track. The S&P 500 closed over 900 points and to think of it dropping down below eight hundred is not something that most analysts are predicting.
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Either way I’m keeping a watchful eye on the markets as I continue to be a trader and not an investor. Yesterday was a great example. when the market opened, the trend was pointing downward. I sold out of my positions in the morning and jumped back into the same ones right before the close of the day. In some cases I bought the same shares back at 15% less than the price I sold them at earlier in the day.
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Two of the stocks were
Sirius (NASDAQ: SIRI) sold at 0.52 per share, bought back at 0.42
Caterpillar (NYSE:CAT) sold at $40.75 per share, bought back at $38
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*DISCLAIMER* Billy has holdings in Sirius and Caterpillar at the time of this being posted.

Tags: Economy, How to make fast money, NASDAQ, NYSE, Stock market news

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Stress Test Results

It was announced today that the results of the bank stress test will be released on May 7th. Which might be a good thing for investors and traders who are looking at some more gains this week. The stock markets have been relatively flat today on light volume.
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I’ve been holding on to some of the positions waiting for some sort of sign of a pull back to come. With the news of the stress test coming out on Monday, I was planning to sell out of the remaining positions today, but with the news being pushed back three days, I just might wait till Tuesday.
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One company I’m looking to jump out of is Kinder Morgan Energy Partners (NYSE:KMP). The stock has jumped over 15% the beginning of March. Why I’m waiting to exit the stock is because of the 10% yield I will receive on the dividend. The ex-date is today at the close of the trading day. I feel that it’s been stuck at a resistance level and has stalled. I’m up nicely and will get back in when the markets pull back, taking KMP’s price down along with it.
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I feel that the stress test are going to be negative for the nineteen banks, why else would they delay the results. Of course we should have known they would be for the simple fact of the guidelines put in place by the government. The banks won’t be allowed to count the preferred assets to the bottom line. Without those assets counted, the government will claim that the banks are not well capitalized. If they are considered not well capitalized, the government will not allow them to give back the bailout money, letting the government have some say in what they banks policies and procedures are.
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Keep in mind that the markets have moved up well over 20% in the last two months. We are not out of the woods yet when it comes to the economy. So be prepared for a healthy pull back in the indicies.
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Have a great weekend and happy trading.

Tags: Economy, Getting Started In The Stock Market, Stock market for beginners, Stock market news, Stock trading

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Will The Stock Market Retest The Lows?

This past month has been great and the way the “experts” are talking, you would think that the bottoms have been found in the stock markets. If we are to learn anything from history, it’s that it tends to repeat itself. During the Great Depression, the markets experienced bull rallies a few times only to reach a new “bottom. The process was dragged out from 1929 to 1932.
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We only started seeing the signs of a downward spin in November 2007. So what makes them think that we’ve seen a bottom? When the S&P 500 hit 741 and started to climb back up, We heard that this could be the bottom. Only to pull back and fall even further to 666. That level was reached on March 9, 2009, a year and five months after it all started. Throughout that time we also were told that the credit crisis and the housing was so screwed up by “improper practices”. How could this all be figured out and solved in such a short time.
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Now we’re hearing reports about how some banks that received government money, are looking to give it back. On top of that Goldman Sachs just reported that they nearly double what The Street had expected. Something doesn’t make sense and because of that, I’m expecting us to see the markets drop back down to the lows of March 2009.
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Another thing to take into consideration is that Barack Obama stated today in a press conference that we will still see an increase in unemployment as well as foreclosures for some time.
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Do I think that the S&P will fall below 666 soon? That I can’t answer, but I can say that it will be down to that level again before the end of the third quarter of 2009.
In the meantime, I’m going to continue to be a trader and not an investor. I suggest you do the same. If you don’t have time to do your homework on stocks you’re going to invest or trade in, don’t jump in right now. You will see that there will be another opportunity to get back in at lower levels.
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Happy Trading

Tags: Economy, Foreclosure, Getting Started In The Stock Market, Stock market for beginners, Stock market news

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In The Stock Market, What Goes Up…

…must come down. That’s how the “old” saying goes, but is that going to be the case with the stock market? The question is when is it going to start moving downward again? The last month has been great for some hefty gains and it’s actually been able to stay at these levels for over a week now.
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Two weeks ago I said that it was time to start scaling out of some of my positions to lock in the gains that I’ve made. During a three week run in the stock market, I gained over 22% in my portfolio and was quite happy. During the last two weeks, I did just that. Unfortunately, I didn’t read the trend that was going on and missed out on what could have been another 12%+ in my portfolio.
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Days like these will happen and as an investor, I’ve learned not to get myself “bent out of shape”. Instead I look at the positive side, which is the fact that I made a good chunk of change. I still own some position in the stocks, just not as many as I did two weeks ago.
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The truth of the matter is that the market will back off. But to what level. Can the DOW pull back down below 7000? Is all this growth in the past month in the stock market temporary? Is the worst to come, already past us? It seems that no matter what form of media you get your news from, they talk about how the stock market recovers six months before the economy does with unemployment shortly behind it.
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If that’s the case then, it’s time to wait for any sort of a pull back and start accumulating shares. I’m still thinking that the worst is not over. The DOW at 7000? Yes, I do expect to see that again real soon (I just expected it sooner). At where the DOW sits now, it means that there should be a 12.5% correction in the market. Like I said, I do see it it coming, but it may take as long as three months to get back there.
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Or will it?

Tags: Economy, Getting Started In The Stock Market, The Week Ahead

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Bear Market Rally

What a week this has been for some great gains. Just more to add to the already increasing portfolio since the DOW hit the 6500 range. On March 9th the DOW was at 6547.05. In less than three weeks the market now sits at 7924.56 going into Friday morning trading. I don’t know about you, but if you haven’t taken your profits and locking in those gains, you are just being greedy.
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Everything points to this movement to be nothing but a bear market rally. In the last three weeks the Dow increased 18% while the S&P 500 and the NASDAQ jumped 20% during the same period.
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We are not out of the woods yet. The economy is still in disarray and current Administration doesn’t have all the answers. Whatever the reason for the stock market performance, it’s not going to last or even to be able to sustain these levels. Just because Jim Cramer has stop screaming “the sky is falling”, because he says the “Great Depression II” is off the table. Remember that after the initial crash in 1929 to the actual “bottom” in the stock market, there were quite a few bear market rallies.
Yes, the prices of stocks fell over the long three years, but in between those years there were times when the market experienced a nice 10% to 20% gains in relatively short periods of time, only to drop back down to it’s bottom or even lower levels.
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I’m quite happy with the 22% gains I’ve made this month. I started scaling back my position and taking profits on Monday. The prices of the stocks have continued to climb after I sold many of the shares. I’m not going to get greedy and think about if I didn’t sell any of the shares I would have had more profits than just 22%.
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No one can ever predict a “bottom in the market or in any one stock, the same goes for trying to do the same at the “top”. The whole idea to never buying all your shares at once is to lower your dollar cost average. The idea of scaling out of a position is to secure your profits.
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Be ready for the pull back in the stock market as it’s exactly what I’m expecting to happen in the next three weeks. I’ll pick up the same shares I sold, but at a lower prices.

Tags: Economy, Getting Started In The Stock Market, Government spending, Stock Market, Stock market for beginners

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Momentum In The Stock Market

This past week has been great for profits in the stock market, but only if you get out before the momentum stops and the prices come back down from the profit takers. After the DOW fell below 7000 in the last month, there hasn’t been much of a bright side to making money in the markets unless you’ve been shorting stocks. Of course of you don’t have a margin account, you’re not able to short stocks.
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In the past week there has been great gains a many of the stocks that were beaten up during the fall of the DOW. The only way for you to hold on to those gains is to sell. If you don’t take your profits, then you didn’t gain anything if the prices fall again.
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With what’s going on in Washington, it stands to reason that the upward movement that we’ve just experienced in this week, is just a temporary one. Capitalism is under fire with all the spending that is going on in the government. Many companies are laying off people and it will continue throughout the rest of this year. Even though Caterpillar has announced today that they will be hiring back many of the 2,400 employees that were recently laid off, there are other companies that are not in the same position as them. Caterpillar will be involved in many of the infrastructure contracts that will be created by the stimulus bill.
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If didn’t get into Caterpillar when it fell below $22, then you missed out on some of the great gains that the stock has made. It’s not too late to buy into Caterpillar even at the $26 range. I expect good things for the stock over the next year.
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As for other stocks that have made some good moves over the last week, Sirius XM Radio has moved from their recent low of $0.05 in the latter part of February to where it sits now at $0.3362 per share. I’ve talked about Sirius in the past and still favor the company to come back from their near extinction. With it great move of 43% just today, I will be taking some profits and look to get back in on a pull-back.
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Remember to be aware that the turmoil is far from over and there will be pull-backs on most of these stocks that have had momentum gains. Trade carefully and don’t be greedy.
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Happy Trading.

Tags: Buying penny stocks, Economy, Getting Started In The Stock Market, How to make fast money, Stock market for beginners, Stock trading

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Pork Barrel Spending Stimulus Package

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The stimulus package was passed last week and Wall Street is letting Washington know that they are not happy. Since the package was passed, the DOW has dropped nearly 500 basis points, reaching a twelve year low of 7077.35 and closing at 7114 on Monday.
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The current stimulus package will cost American tax payers $778 billion. That’s after they’ve cut out all the unnecessary spending that was originally in the plan. Unfortunately, the Democrats that control the House are now in the process of passing another bill that will add up to about $410 billion in what they are calling “needed to fill the gaps that the first stimulus package left out”.
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This administration has only been in office for one month and they have already passed bills that will spend more money than the previous one did in it’s last year. Something that this administration campaigned on not doing.
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All this spending is going to have to be covered by some sort of tax increase and the one that will be hit first will be the capitol gains tax. It presently sits at 15%, but as President Obama stated on the campaign trail is that he feels that it needs to be raised to 25%-30%. If that is to happen, then expect the stock market to drop well below the 7000 mark.
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As this administration start to show their true agenda for this country, Wall Street will have no choice but to pull out their money to avoid unnecessary tax burdens.
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As for the economy, it won’t be any better. How can a company increase their profits, as well as their work force, if they become more tax burdened. If a business can not make a good profit, it will not attract stock holders. It all ties into one another.
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For the last couple of months, I’ve only been trading stocks that have taken a beaten because of the market as a whole has dropped. I don’t have the confidence in the stock market any longer and will do what I can to pull out the capitol that I have out of it. I stated before that I don’t typically short stocks and in times like this it too doesn’t sound like a great idea, but in bad economies, it’s much easier to make a profit shorting stocks than it is to go long.
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Whatever you decide to do with your trades, be aware that this economic turmoil is far from over.

Tags: Economy, Government spending, Stock investments, Stock Market, Stock trading, Treasury Dept.

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Stock Market Technicals

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I’ve been warning many of my readers that the stock market will take a dive very soon and from the looks of the last few days, that time has come. If you look at stock market technicals, you are aware that the DOW at a level of 7550.00 is a level that would cause many sell-offs to happen.
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Today’s lows of the DOW was 7551.01, which came very close, but not to the point where the sell off would have occurred.
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I said it before and I’ll say it again, you need to keep plenty of money on the sidelines for times like these when the prices for stocks in good companies are at a great “sale” price. These companies are not damaged, just the stock prices are. You need to be ready to take advantage of these buying opportunities to help grow your portfolio during a bad economic down-turn.
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For those of you that have had patience over the last month or so, this just might be the time for you to jump in and build a good solid position in the companies that you’ve been watching. I’ve been holding back in jumping in with both feet and with the stock market down at these levels, it’s hard not to just dive in head first. Of course I won’t involve my emotions in the markets.
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Who knows where the markets will be in a month or two from now. Especially with the fact that Obama’s stimulus plan hasn’t really been accepted by Wall Street and Main Street. On the news of the plan being approved, the Dow has dropped quite a bit. The markets can hit that crucial level of 7550 and all bets will be off, the sell off will begin and it won’t stop until it get to about 7300 basis points. Then again it may just take back off to the 9000 level just like it did not too long ago.
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No matter what, the rest of 2009 is going to be a total washout and the only way to get your portfolio to grow is to make trades when the time is right and then get out while the getting is good. Either way the market may go either way over the next couple of days, you should keep an old saying in mind, ” hope for the best, but prepare for the worst”. This way you’ll be ready without being disappointed.

Tags: Diversified, Economy, Getting Started In The Stock Market, How to make fast money, Stock market for beginners, Stock market news, Stock trading, The Week Ahead

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