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How Long Will The Market Stay Strong?

Our current economic condition is on shaky ground, but the stock market is still holding on to it’s position. Yes the stock market has been jumping up and down by 500+ points, but it’s still above the 10,000 level.

I keep getting question asked to me about how to read the stock market and I seem to be able to answer that less and less these days. The present Administration is spending money like there’s no tomorrow and if they keep it up there won’t be (for our economy that is). The private sector is not hiring enough people to give the economy the boost it needs. Unemployment is still above the 10% level and if you count the people who stopped looking for work and have finished their unemployment benefits, it’s more like 15%.

I watch the stock market each day and listen to the report that come up and they’re pretty negative. Consumer confidence, unemployment, durable goods and so many other reports show that the country is in bad shape. As it is, we can’t believe the media or the government to give us the “real” numbers or the truth, so I guess that’s how the stock market is still at the current levels.

Now a days it’s not easy reading the stock market so if you’re still looking to make money on Wall Street, you’ll need to do what I’ve been doing for some time now. That is to go ahead and just focus on the stocks out there that are still doing what is necessary to make it in this economy. Technology stocks like Apple and their suppliers are making profits and it doesn’t look like it going to end any time soon. Technology is what is need in this country and when the bottom drops out of the markets, it will be these stocks that will continue to grow. I noticed that people who are still out of work still have a cell phone, laptops and other gadgets. It seems that we can no longer live without these items.

Don’t bother trying to read the markets, it’s not so easy has it use to be when the economy was booming and the American people had money for discretionary spending. I can’t seem to figure out why the stock market is up to the level that it is, but it could also be because of the money that the Treasury is printing on a regular basis. As long as they keep printing money, the value of the dollar will continue to go down. Last week, the dollar was at a 15 year low against the Yen.

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The DOW Closes Above 12,000

With the DOW climbing 148 points today and closing at 12,040, many are wondering if it can sustain this level. The DOW hasn’t closed above the 12,00 level since June 2008. It’s been a long two and a half years to get back to this level, but are we out of the woods yet?

I’m no expert, but I will say that any average Joe can see that the economy has not recovered no matter what the “reports” say. I travel a lot and where ever I go, I see many establishments that closed in 2008 and to this day most of them are still vacant. I know in the county I live in, the unemployment rate is nearly 14% and the state’s level is “projected” at 10.1%. I say “projected” because who are they trying to fool with that report? How many people are no longer collecting benefits and are still unemployed? They’re no longer being counted which according to realistic estimates, puts the national rate some around 18%-19.5%.

What about the housing market? The average home prices are starting to stabilize, but no one is ready to get out there and start buying property again. A report was released this week showing that over 11% of the homes in America unoccupied and more people are looking to rent than to own.

One thing we can see from over the last two and a half years is which companies were strong enough to weather-out the storm. I’ve been able to see some small cap companies grow in value at a steady pace with expected pull-back from the profit takers, only to continue the climb up. There are others that I’ve recently discovered that look to be contenders in a couple of years.

For the last few months I’ve been sitting on the sidelines watching the market. I’m not confident with the markets, the economy or the government at this time. Yes I have missed some good gains in stocks that I was invested in, but I sleep better just sitting it out right now. I love the stock markets and will always be involved with it, so for now I’ve been looking at some short/long term (2-4years) small caps that I will be investing in soon enough. I’m just waiting for a healthy pull-back (6%-9%) at then I’ll make my trades.

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Dividend Stocks

The stock market has been a very bumpy ride for most investors, so much so that many of them are sitting on the sidelines. it’s a shame that they are doing it since there are other ways to making money than buying low and selling high. Dividend stocks are just another way to make money even when the stock market isn’t doing anything.

There are hundreds of companies that are traded on Wall Street that offer high dividend paying stocks for investors to take advantage of. What are dividends? Dividends are a way for a company to share the profit of the company with it’s shareholders. Many times a company has grown so much that they don’t need to put so much into research and development, so they will pass a portion of it to it’s shareholders on a quarterly basis (four times a year).

in doing so, an investor can make money even if the company’s stock price doesn’t change. Let’s say you buy shares in company XYZ for $100 per share and the company offers a 10% dividend. Which means that the company will give it shareholders $10 a year for each share you own. So four times a year you will receive $2.50 every three months for each share. After one year of owning the shares, your actual price per share is $90. If the price hasn’t moved over the same period, you are still up 10% on your investment. How could you go wrong with that? So where can you find stocks that pay dividends? When you do your research on a particular company, you will find the information in their chart overview.

There are also many different ETF’s that are built around this concept, but why pay a fee for something you can do yourself. Typically you can also do better than the ETF’s since you are able to get in and out easier than the big boys.

Be aware though that Washington and the present Administration is looking to raise capitol gains taxes which will include dividend payouts. Of course if it’s your IRA retirement account, it won’t affect you. Look into it for yourself to see if dividend stocks are right for you. it’s just another way to increase your profits. Espaecially when the stability of the markets are highly in question.

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Stock Market Roller-Coaster Ride

Here we go again. It looks like we’re in for another ride this week on Wall Street. The stock market lost over 500 points last week and on Monday, it gained 103 points. So what going on so far for this morning? Well the DOW opened flat, but was dropping fast as the opening minutes clicked by. Within twenty five minutes the DOW was down 180 points and since then has climbed it’s way back to only being down 36 points during it’s first forty five minutes into the trading day.

Either way you look at it, it’s going to be a wild ride for the rest of the year. I’m not confident on the condition of the stock markets and because of that, I’m sitting a lot of my money off to the side until the second dip happens sometime this year. We are not out of the woods yet and we are still in a lot of economic dangers in the near future.

Last night while watching Jim Cramer on Mad Money, I noticed that he is confident in the markets and sees some great things coming in the near future. The only thing I agree with him on is his opinion on investing in gold. Of course he didn’t say if you should own stocks in gold producing companies or in actually gold itself. My thoughts on that is that you should own gold coins and other gold items. Like I said, I don’t trust the condition of Wall Street and owning stocks in gold is not the same thing. Whatever you do, do your research into anything you’re going to invest in.

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Nuclear Energy Stocks

There are many different stocks out there that fall under the term “speculative”, of course that not really the case when it comes to the electric utility stocks. I just want to write about a sector that seems to be building up steam (literally and figuratively) later that needs to be addressed.


A little over a month ago I started looking for a new speculative stock to trade (oppose to invest in) and I happen to stumble over a company that is in the electric utility sector, but because it is mainly a nuclear play, I thought it would be a decent opportunity. I looked around at other companies that are also trying to expand their nuclear plant output, but this one stuck in my mind.


I invested a small amount (like I always do on speculative stocks) in the company after reading their earnings reports and reading the transcripts from their conference calls. Since then the stock price has moved up over 30% in just 5 weeks.


What really made me think that I had to write a post on it, was the fact that the company was profiled on a CNBC special this week titled Nuclear Option. In the show there was a lot of positive talk about the use of nuclear power being used in this country. There hasn’t been a nuclear power plant built in the United States in over thirty years, but now there are two being built as I type this post. One in Texas and the other in Maryland.


The company that I’m referring to is NRG Energy Inc. (NYSE:NRG). The company looks good to me and I will be buying more of it on the dips. I do expect it to lose some value because of profit takers as well as the overall market taking it down some as the DOW and the economy take a roller-coaster ride throughout the remaining part of the year. The chart looks healthy and with the price of oil expected to go back up, it will continue to rise.


As with any stock you look to invest in or trade, you need to do your own research to see if it’s right for you.

Nuclear energy stock market


Happy Trading



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Pork Barrel Spending Stimulus Package

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.

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Stock Prices Are On The Rise

After the year we had I the stock market, it’s nice to see stock prices on the rise. Today the DOW closed at 9015.10, up 62 points for the day. I know that 62 points isn’t really much, but I’ll take whatever I can get on the positive side.
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Stock prices have been rising steadily since the end of November. The Dow is up 19% since it’s November lows as well as the S&P 500 is up over 24% within the same time frame. I hope to see this continue. Especially after the news of Alcoa’s plans to cut 13,000 employees, roughly 13% of the work force, I look forward to see what will come in the next month.
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it seems that everyone globally has plans to pass out a stimulus plan of some sort. China is now reporting that they will have a stimulus plan of over $600 billion. Germany has released information that they too will have a stimulus plan. Everyone is getting happy with someone else’s money to stimulate their own economy. I don’t know about you, but doesn’t it sound odd?
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With all the news coming out that the U.S. can possibly see the light at the end of the tunnel sooner than expected, many traders are moving their capitol out of the consumer staple and health care sectors, which is what happens once the economy starts to show signs of improvement. To me I think it’s just been a good 5-6 weeks and I’m not expecting miracles of the stock market going up from this point without any temporary set backs and corrections.
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On top of all this news (particularly positive), it seems that another billionaire committed suicide. German billionaire Adolf Merckle stepped in front of an oncoming train in Berlin after leaving a note to the reason of his actions. It’s a shame that these wealthy people end their lives after they lose all their wealth. It just goes to show you that money can only make you so happy. This is the fourth person since September to end their lives because of their financial woes.

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Stock Market News For The Week

It’s amazing how this week has turned out for me and for some investors that I talk to. I’m not talking about the traders who buy and sell everyday or even the day-traders. I’m referring about investors who have more of a buy and hold mentality. I’ve spoke before in another post about how in these trouble times that the buy-and-hold system isn’t really working. There’s too much volatility in the markets to do that type of trading, but with the moves (or lack of) of the markets this week…who knows.
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In this week the markets have held up quite well and I’ve made some good gains because of the strength and stability in the markets.
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News came out late last week about the Ponzi scheme that Bernard Madoff was running for some time. Taking over $50 billion dollars from many people. I would have figured that more people would have pulled out more money on that news.
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I guess that the Federal Reserve basically removing the lending rate this week help. That really got the markets fired up on Tuesday afternoon. It seem to continue throughout the week as well as news came out about the condition of the financial industry. The dollar has weakened in the last few trading days, which makes me a little confused to how the markets have been moving, but I’m not going to complain at this point.
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It seems that the stability is coming back to the markets as the VIX levels drop to more of a normal and acceptable area. Yes, the markets were flat, but with all the bad news that came out, we should be happy on the performance of the markets.
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Quite a few of the positions that I’ve taken in the last week were down from my core, so I did buy more of those stocks and from Monday to Friday, they’ve all made moves to the upside. With weeks like this when things could have gone worse than they did, It makes me wonder if we’re basically at the bottom already. I guess next week will give us a better clue on the answer of that.

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Stock Trading Insight

So far today in the morning trading hours, the markets are on a tear. The DOW has been up big since it opened and if things continue in this manner, we will have a great day and the DOW should close above 9000 today.
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Talks of the stimulus plan has caused some positive trading throughout this morning’s trading.
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With the moves that have happened this past week in the markets, many think about moving their capital out of the equities out of some of the less favorable sectors and look for the tried-and-true sectors during a recession period.
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We heard last week that we are officially in a recession, but the real question hasn’t been answered. That question is “how long have we been in a recession?”
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With that in mind, you have to take into consideration that the smart money have been positioning themselves in those sectors for sometime to protect their assets.
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An article that I found today talks about the fact that the time to get into some defensive plays, like consumer staples has past and you may want to do something else.

The article is from CNN Money.com, I hope you you find it interesting.

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Are Dividend Yields Too High?

What a difference a year makes. Last year at this time the stock market was on a tear, it just came off it all time high of 14,136 and looked like it was taking a healthy pull back, waiting to go up again. Then all of a sudden all the walls started to fall from the house of cards that had been built over the last few years. Signs of trouble from the sub-prime mortgage were starting to show.
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Fast-forward back to November 2008. The stock markets have lost nearly 50% from where they were last year and everyone is running for some sort of safe place to hide their money until the storm has passed. Jim Cramer from TheStreet.com
has been suggesting hiding out in strong companies that have some great dividends.
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What are dividends? Dividends are what some companies give to their shareholders. Basically dividends are cash that the company distributes from their cash reserves because they don’t have anything else to do with the profits that they make every year.
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Dividend payouts are figured on a percentage basis of what the share is worth at the time. When stocks drop in value, the yield on those dividends rises. Let’s say that a company’s stock is valued at $100 and they give a $5 dividend payout for the year (typically broken up in four payments), the yield of those dividends are 5%. Now if the company is now trading at $40 per share, the yield would be calculated at 12.5%. That would be some great returns on your investment. You can’t get that in any other type of investments.
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The problem comes in where the yield is too high for the company to keep paying out that dividend. So the company will cut the dividend to help the company keep some cash flow. So what is considered the “sweet-spot” yield for dividends? It’s hard to really pinpoint it. Typically look for those strong companies that give any where in the 3%-7% yield, but anything that is over 10% is considered too high to really expect it to stay there.
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Don’t get me wrong there are some that continue to give double digit yields, but they’re few and far between. The only one that I can say that kept their dividend payout the same this past month was Atlas Pipeline Partners (NYSE:APL). The stock was trading at $18 per share and their quarterly payout was $0.96 per share. That was a 5% yield just for the quarter, if you calculate it for the year it comes out to a 20% yield. I don’t expect it to be the same when they pay out their next dividend in February 2009. The company is in trouble now that oil has come down so much, so my advice is to stay away from Atlas.

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