Stocks continue to chop around on this options expiration Friday. While stocks …
The major market indices are off their worst levels of the session, posting los…
Feb 14 , 2009
It has been a week of anticipation and major disappointments. Last week we got news that Timothy Geithner was going to announce the new rescue package for the financial institutions on Tuesday at 11:00am. We were finally going to get details on what the Treasury was going to do. The markets rallied, Tuesdays announcement was about as clear as a puddle of mud! The markets wanted details, and were expecting a plan that included the purchase of toxic assets from the banks, a revised cash for equity program and a government guarantee on other bad assets. What we got was Geithner saying that the Treasury was looking at doing some sort of public/private partnership that they were still trying to work out the details on. That was a major disappointment. Needless to say the markets fell about 300 points.
Wednesday and Thursday focus was on the economic stimulus package, although it was not generating much enthusiasm. Thursday afternoon a story hit the wires about Geithner meeting with Obama’s economic team to discuss what to do to stem foreclosures and the markets reversed a 200 point decline to close down just 6 points. Day traders this is the news you listen for and trade on. By Friday morning the markets realized that what ever the government decides to do about foreclosures it’s going to take time and the Dow closed down 82 points.
We did get a couple of positive economic reports, but the markets were so focused on financial rescue package and the economic stimulus package you did not hear much about them. First we got initial jobless claims, they came in close to what was expected at 623 thousand down from the prior report of 631 thousand. It’s not great but at least it was not worse than expected. Next was the retail sales report, the market was expecting a decrease of .08% but we got a increase of 1.0%, this is good. Last week the ISM reported that the non-manufacturing index and that the manufacturing sector contracted at a slower pace which is also good. These are the first positive reports that we have had in many months.
Next weeks economic reports to watch for:
Wednesday- Housing Starts and Building permits also Industrial Production
Thursday – PPI and Initial jobless claims
Friday – CPI
Remember news is what moves the markets, weather you are long or short may all of your trades be profitable!!
Feb 7. 2009
This past week the markets have been trading sideways near the November lows. We found that consumers are spending less and trying to save more, which makes sense if people are worried about losing their jobs or having their hours cut. This is not good for the economy.
The ISM (Institute for Supply Management) showed that the non-manufacturing index rose to 42.9% from 40.1% in December(anything below 50 means the economy is contracting) and from 37.4% in November. What this means is that the contraction in U.S. nonmanufacturing sectors is slowing. Earlier in the week ,ISM released another report that showed the manufacturing sector also contracted at a slower pace. This is very good news, but two months is too short a period of time to signal that perhaps the worst of the economic drops are about over.
We had good news on home sales, pending home sales contracts rose 6.3% in December as buyers were attracted by lower mortgage rates and falling home prices. Keep in mind these numbers are for pre-owned homes. New home sales were down by 15% in December and 45% in the past year. This is the area we need to see improvement. The home builders are rallying on the news along with the expectation that there is going to be a tax credit of up to %15,000 for home buyers who purchase a home within one year in the stimulus bill. This in return is expected to help increase home sales take inventory off the market and stabilize home prices.
The unemployment report released this morning showed that nonfarm payroll employment fell in January, there was a loss of 598,000 jobs and the unemployment rate rose to 7.6% from 7.2%. We have lost 3.6 million jobs since the recession started in December 2007. Job losses in January were across nearly all major industry sectors.
You would expect the markets to have reacted badly to the news this morning, but no the markets are rallying. As I am writing the Dow is up 187 points, I believe the rally is because the markets had sold off to near the November lows and because of the expectations for the stimulus package we are to be getting details on early next week.
Sectors that are advancing are the home builders, they are on fire.
Bio-techs are really moving up, the infrastructure stocks are moving.
Also the bank stocks are moving with the expectation that we might get some sort of bad bank and details on how the rest of the TARP will be used. As always you should do your own research and investigation before jumping into stock or sector that I have mentioned.
Until next week, whether you are long or short may all of your trades be profitable!!
To everyone out there that’s contemplating trading or investing for yourselves, instead of trusting your money to a money manager, I understand where your are coming from.
After all of the scams that have been discovered in the last few weeks, from Bernie Madoff’s $50 Billion Dollar ponzi scheme, the biggest ponzi scheme in history to some of the smaller yet very notable scams such as Authur Nadel who has been charged with fraud by the SEC. He ran a hedge fund out of Sarasota Florida, approximately $350 million missing there and just Monday afternoon another man, Nicholas Cosmo the founding president of Agape World Investments is now accused of running a multi-million dollar ponzi scheme to the tune of $380 million dollars! Keep in mind that there are many good and honorable money managers out there. Do some investigating and research, do not just hand over your hard earned money. Do not just take someone’s word that a firm is good, and if it sounds too good to be true, Beware!!
If you are interested in trading for yourself and are new at it, I can not stress enough that you start by paper trading. Practice to see how well you would do, especially in this market. Nothing is more depressing than thinking that you have a pretty good grasp of how the markets work, deciding to daytrade and losing money.
You can paper trade stocks yourself, but you can also play online contests (which I find much more exciting) where you can win cash or prizes. CNBC just finished a 10 week contest that gave away weekly trips and prizes. The person that had the highest weekly portfolio return besides wining the weekly prize gets to compete in the playoffs with the top 10 players for $500,000 1st place, $250,000 2nd place and $100,000 3rd. It’s free to play and you can see how well you rank against the other players. I play because there is always that chance I could win. I ended up in the top .3%, which was in the top 900 portfolios out of 100,000 players and 500,000 portfolios (each player was allowed 5 portfolios). I did not end up where I would have liked to (weekly winner or top 10), but I did not do to bad.
There are other sites, Wallstreetsurvivor.com they always have a contest going on and I would keep my eyes open for a contest from thestreet.com sometime this year. They are all free to enter and who knows maybe the market expertise you think that you have, will make you the next big winner and show you that you’ve got what it takes to make money trading!
January 18, 2009
This week was another down week until we hit the 8000 area on the DOW Thursday afternoon and bounced. We are just stuck in a trading range. I thought we would trend up until Obama took office, I was wrong. I’m thinking that the markets will go up this week because he is taking office. Then again it depends on the news. I be watching to see if we take out the November lows if we do I think we will be going much lower.
The Senate gave the OK for President elect Obama to access the second half of the TARP fund with some strings attached for the banks that access the money. There would be tougher requirements that the banks lend money, restrictions on executive compensation and the Biggie was curtailing dividend payments for some firms. This is not something that is good for the retail stock holder and many bank stocks were sold off because of it.
The TARP announcement along with Bank of America saying that they need billions more in aid to close their Merrill Lynch acquisition and banks reporting dismal earnings and noting that loan losses are rising caused the banking stocks to hit new lows this week. If you short stocks this is a sector to be watching.
Oil keeps going down in price with crude inventories building. The stocks I’ve been trading because of this are the airlines. The airline industry is expected to generate solid profits in 2009 despite the recession.
Oil is expected to remain relatively low compared to 2008. It’s trading about $36.00 a barrel. Economist expect the price to rise to around $60 a barrel but that is a definite improvement compared to its peak cost of $147 a barrel this past July. Every $1 per barrel is equal to roughly $400 million in fuel savings for the airlines.
Economic news to watch for this week Tuesday January 22nd we get building permits and housing starts for December at 8:30am. I’m not expecting any good news there. This is an area that you should keep an eye on if you are waiting for a new bull market. Right now we are in a Bear market that is in a trading range.Until house prices stabilize and building permits and starts begin to grow and banks start lending money again we will not have a recovery in the markets.
We also get initial jobless claims at 8:30am again no good news expected there.
As always do your own research on any of the sectors or stocks that I mentioned above and whether you are long or shot may all of your trades be profitable!!
January 3, 2009
Written By Becky Smith
Well I am looking forward to next week, it will be interesting to see what direction the markets take. This week was mostly up, bad news did not matter.
The ISM report came out Friday. It showed that U.S. manufacturing activity declined for the fifth month in a row. The reading was the weakest since June of 1980, with declines in every component.
Still we ended the week breaking and closing above the November 5th highs, which is usually a bullish signal, but it was on very light trading volume.
The real start of trading for the year will not begin until Monday, when traders and investors are back from their holiday. This is when we will get a real sense of market direction. The Dow closed above 9,000 and the S&P closed above 900 on Friday. They broke through major resistance levels if we can hold above that, I think we will have a rally to about 10,000 on the Dow and 1000 on the S&P. Not that I think the rally will last or that the worst is over. I am a trader, I follow the trend. I think for a couple of weeks the trend is up, we’ll see.
The markets have expectations for a large stimulus (1 Trillion $$$) once Mr. Obama takes over the presidency in three weeks or so. This is helping stocks rise. Remember Obama has promised money for infrastructure, stem cell research and alternative energy. Keep your eyes on these sectors as I believe they will be going up at least until we get the details of his stimulus package.
Until next time, whether you are long or short may all of your trades be profitable !!
Saturday Dec 20, 2008
Written by Becky Smith
Well the markets ended the week about where they started it. I am starting to feel like a broken record, we had quite a bit of bad news and the markets did not react too badly. The consumer price index (CPI) had its largest monthly drop on record, which is a signal of how bad the U.S. recession is becoming. Housing starts continued their unprecedented fall along with industrial production.
On Tuesday the Federal Reserve Board announced it would lower the target rate from 1% to a range of 0 to 25%. They also outlined some steps that might be taken to help the economy, which include purchasing mortgage backed and Treasury securities. They sited the weak labor markets, declining consumer and business spending and slower industrial production as reasons for the move. The announcement led to a major stock market rally Tuesday, only to have the markets sell off the rest of the week.
Mortgage rates once again fell and are at their lowest levels since 1971, 5.19% down from 5.47% last week. Some mortgage brokers were quoting rates close to 4.5% for people with strong credit and a
good down payment. This is one piece of good news for the financial and housing sectors, also check out the REITS ( real estate investment trusts) they have been moving up the last week or so.
Next week is a shortened holiday week with light trading which can sometimes exaggerate the markets movements. Tuesday we will get 3rd quarter GDP (GDP is the widest measure of the state of the economy and the most important indicator), November existing home sales and new home sales. Wednesday we will get initial jobless claims, personal income and spending and durable goods orders.
Keep in mind these reports move various market sectors. GDP will move the markets. Existing and new home sales move the builders and financial stocks, for personal income and spending watch the retailers and anything that has to do with discretionary spending.
I hope everyone has a very Merry Christmas, and as always whether you are long or short may all of your trades be profitable !!
Saturday Dec 6, 2008
Written By Becky Smith
Well I’m impressed, after the horrendous news this week the market managed to end the week just about even. Monday we had news that the retailers had the worst holiday start in 35 years. Also on Monday we got news from the National Bureau of Economic Research that we are officially in a recession. Surprise surprise!! When did it start? last December.
That’s right after all the discussion on the financial news networks, analysts and economists saying that no they don’t think that we’re in a recession for the past 6 months plus, they were all wrong. Anyone in the last year that talked to friends , neighbors, small business owners, anyone making less than 150,000 a year would have called it. We also heard from the Commerce Department that construction spending fell by a larger than expected percentage in October, while the Institute for Supply Management said its gauge of manufacturing activity dropped to a 26-year low in November.
Foreclosures and defaults have risen to an all time high and it is not just sub-prime loans any longer people with prime loans are falling behind. Friday, after jobs numbers that exceeded even the most pessimistic projections, jobs lost in November 533,000, the unemployment rate hit 6.7% the Dow managed to end the day 259 points higher . It gives me hope that we have put in a bottom, at least for a while and we will be moving up closer to the 9800 range before moving back down. I think the markets will be in a trading range of 8400 to 9800 until Obama takes office. When the market can move up on negative news that is a good sign, it tells you that most of the bad news is priced into the market.
Wednesday a story was leaked that the Treasury was considering plans to intervene directly in the mortgage market to dramatically force down interest rates to approximately 4.5% on a 30 year mortgage to stimulate
the housing market, but none of these plans have been finalized. Keep in mind that news moves the markets. When this news hit the wires the home builders stocks took off, check the charts of DHI, CTX, LEN, PHM they are all up 25% or more since the news Wednesday. Then think about what else should move if more people were buying houses, look at Home Depot and Lowes charts.
People like to do improvements and decorate when they buy a house, make it their own, so don’t forget about Bed Bath and Beyond. I’m not saying to jump in and buy these, they have had big moves in three days time, on the contrary I would take my profits and get out and wait for confirmation from the Treasury. If you are wanting to start day trading this is the kind of news you need to listen for and learn to think about what other sectors or stocks should move because of this news. Also remember don’t be greedy, if you get a 25% profit in three days take it. There is always next week.
If you want to day trade and do not want to risk your money, you should sign up to play CNBCs Million Dollar portfolio Challenge it’s free and you can win cash and prizes!! Or try WallStreet Survivor they give away weekly and monthly prizes. It’s a good way to test your strategy, I’m playing CNBCs game, maybe I’ll see you in the playoffs!!
As always whether you are long or short, may all of your trades be profitable!!
Friday Nov 28 , 2008
Written by Becky Smith
Well, it looks as though this past Monday, the markets may have put in a temporary bottom and the financial sector stabilized.That happened when the Federal Reserve announced that it would inject 20 billion into Citigroup and back up to $306 billion worth of the banks assets to help stabilize it along with the rest of the financial system.
Then Tuesday the Federal Reserve announced two new programs. The programs are aimed at easing consumer credit and lowering mortgage costs.The potential bill for the U.S. financial rescue efforts, approximately $8.317 trillion dollars!!
Since Monday the markets have rallied more than 18%, and many of the financials are up 10%or more. December is usually one of the best performing months for the Dow. The multi day rally this past week have given the markets a boost of confidence. Many people expect a rally of 20 to 30 percent, but keep in mind we are up 18 percent in four days, in a shortened holiday week with light volume.It could all change next week depending on the news we get.
News events to keep in mind and watch for next week are:
Monday we should have an early look at holiday sales.
Fed Chairman Ben Bernanke speaking on the economy Monday, Thursday he speaks on the housing and housing finance.
Tuesday markets will also focus on auto sales for November.
Thursday and Friday Auto industry executives head back to Capitol Hill for two days of hearings on their request for a bailout package.
Last but not least is the December jobs report to be released Friday,
it is expected to show continuing deterioration in employment. All of these events will effect the way the markets move.
If holiday sales numbers are better than expected the retail stocks will move up. Bernankes’ speech if perceived as very negative could knock the markets back down. I expect autos and manufacturers of auto parts and supplies to continue rallying into the Thursday and Fridays meetings on Capitol Hill. I’m not sure that I believe that rescuing the auto makers is the right thing to do. But I can not see the Government turning their back on them and putting another 100,000 plus people out of work when our economy is in a downward spiral and getting worse as the weeks go by. Also keep your eyes on the steel stocks they have really been beaten down and many of them manufacture products for the automotive industry, check out the charts.
I hope everyone had a nice Thanksgiving and as always whether you are long or short may all of your trades be profitable!!
Saturday Nov 22, 2008
Written By Becky Smith
For anyone that is contemplating day trading, yesterday is a perfect example of why you should not put in a trade if you are not watching what is happening on a financial news network such as CNBC.
I thought that we were going to close down after breaking support levels in all of the indexes. We had been trading all day in about a 300 point range (up 180 and down 100) on the Dow. From about 1:00 at the peak we had trended down to just below break even by 3:00, then word reached Wall Street that Obama was likely to nominate New York Fed president Timothy Geithner, 47, for treasury secretary, and the markets turned on a dime. The Dow moved up to close 494 points higher, a rally of more than 6 1/2 percent in that last hour. Do I think the rally will last? no. The market was oversold and looking for any good news and that was it’s glimmer of hope. Obama is to announce the rest of his cabinet on Monday. We could possibly continue the rally, if we don’t get bad news about Citigroup. But then I think the downward trend will continue.
If you had not been watching you missed a good opportunity to jump in long and make a trade and if you were short and not watching, you lost money.
Yesterday on that turn, one of the best sectors to have jumped into was basic materials, oil and gas. For example check out the charts of Exxon Mobil and Chevron to see how they performed. That was your fast money!!
As always whether you are long or short may all of your trades be profitable!!
Friday Nov. 21, 2008
Well, this is nothing but a traders market, considering the wild swings intra-day. Last week when I wrote, I said to keep an eye on the lows of October 10th, If we closed below them we could be headed much lower. Tuesday the Nasdaq and S&P broke and closed below their lows, yesterday the Dow broke its low and the last hour we had a huge sell off. I would venture to say that this afternoons close will be ugly as well.
Fibonacci retracement is a tool that technical traders use. It gives them points of resistance and support on stock charts.
If you use fibonacci on the chart of the Dow, support was 7907, if we can not get back there today and close above it, the next support level is 6472. What is that about another 15% or so decline!!
Fibonacci retracement is created by taking two extreme points (usually a major peak and trough) on a stock chart and dividing the vertical distance by the key Fibonacci ratios of 23.6%, 38.2%, 50%, 61.8% and 100%. We broke through that 50% retracement yesterday.
Nobody wants to step into the market before the weekend, especially with all the worry about Citigroup. Fear is growing that Citi, which is one of the worlds largest banks, is in critical condition. It’s taking all the financials down with it. It could very well be the next shoe to drop. If the government has to step in on this one I do not believe it’s going to instill confidence in anyone, and it could signal that we are farther away from the bottom in the financials than most analyst think.
If you missed it Wednesday, housing starts reached an annual rate of 791,000 in October, the lowest level since the Commerce Department started tracking it in 1959. Building permits fell 12% to an annual rate of 708,000 breaking their previous low set in March 1975. We really need to see an uptick in permits issued to signal a turn in housing. Once we get a turn in housing hopefully the financials will follow, then the rest of the market. I think that this will be a long time in coming, as house prices have not stopped falling.
Keeping all of this in mind, if you are planning on putting some money in the markets. Do it a little at a time, dollar cost average over the next year or so.
As always whether you are long or short may all of your trades be profitable !!
Thursday Nov 13, 2008
Written By Becky Smith
Well, this week started out pretty ugly if you are long. Today started out with Walmart reducing expectations and Intel giving a weak outlook. The jobless claims were released this morning, they were up 32,000 to 516,000 with 3.9 million continuing claims, not good!! By midday the indexes were at or below their October lows. Traders look at that level as a low risk entry point and started buying, and by the close of the market all of the indexes were up about 6 to 7 percent, so we had a successful retest. In October the rally off the lows was about 18 percent before it started selling off again. Traders are looking for more upside to this rally.
This could all end tomorrow, because tomorrow is the hedge fund redemption deadline. Don’t know what that is? There is a redemption notice period of 45 to 65 days for most hedge funds. This means that investors must notify the fund that they want their money 45 days before the quarter ends, thats tomorrow. Many experts believe that there will be a flood of redemption requests. This means these funds have to start selling their holdings to raise the money needed for their clients.
I’ll be watching the market to see how it reacts and keep my eye on the October 10th lows, S&P low close was 848.92, DJIA low close was 8,175.77, NASDAQ low close was 1,451.90. We do not want to see the indexes break and close below those lows. If that happens we could be going a lot farther down.
Some things that could move the markets next week, PPI which will be released Tuesday at 8:30 am the Producer Price Index measures the price of goods at the wholesale level. Housing starts and building permits will be released on Wednesday This is an area we need to see improvement in before our economy begins to turn around. I’m not expecting any good news.
So keep your eyes on the indexes your finger on the trigger and whether you are long or short, may all of your trades be profitable!!
Friday Nov 7, 2008
Written By Becky Smith
Well, what a week, so much for the Obama bounce. The markets gained approximately 18% the two weeks before the election. On Wednesday and Thursday we lost 9% of that move. It must have been a buy on the possibility and sell the reality.
Because we are down approximately 48% in all the indexes, if you are thnking of buying stocks in anticipation of the markets turning and because Obama was elected, you might want ot keep some sectors in mind. Look at alternative energy, biotechs having to do with stem cell research and health care.
Obama plans to raise the amount of federal money spent on science and technology research, to spur innovation and job creation. He will be seeking approval to spend 150 billion dollars over te next 10 years on clean energy technologies, and 10 billion a year over the next five years on healthcare information systems. He has pledged to double federal funding for basic research in science and technology, this includes embryonic stem cell research.
If you think that we are in store for more bad news coming from the banks, keep your eyes on the financial sector, I’m right there with you. I watched an interview with Merideth Whittney, who correctly called this blow up, and she does not believe that we are close to the end. She believes earnings estimates are still too high and need to be adjusted, thus share prices are still too high.
The jobs numbers that came out today were horrible, non-farm payroll fell by 240,000 jobs in October. Unemployment jumped from 6.1% up to 6.5%. Employment has fallen by 1.2 million in the first 10 months of 2008. Over half of that in the past 3 months.
If you are feeling depressed about he economy you are not alone. Consumer confidence came out about a week ago. It fell to an all time low of 38. The impact of the financial crisis has taken a toll on consumers. The decline in the index was -23.4 points, it is the third largest drop in history and is the lowest reading on record.
Why am I telling you this? Because it all has to do with the direction and movements in the market. It is always darkest before the dawn. When everyone is a naysayer and a doomsdayer, that is about the time you might want to start looking for bargains. I am not saying builders or financial are the place to look, but if you want to start putting some money in the market, check out stocks in the sectors that I have mentioned above.
Until next time whether you are long or short, may all of your trades be profitable!!