The stock market looks like it is on a runaway bull run with more and more money being put to work by mutual fund managers.  It looks like we are mostly past the short covering and actual investors are starting to buy.  Many different sectors are moving up and stocks that were harshly punished are being bid up.  Even goofy stocks like specialty retailers have been moving up, which were stocks that were treated like leprosy a couple of weeks ago.  So we could see further uptrend in the indices and sectors that have been severely punished.  Anticipate that we have some pullback, particularly in the banks.

The focus is on the good news events like positive earnings, improved economic data, and investors are ignoring the bad news at the moment.  It is becoming that any bad news events are having less and less effect on stock prices.

 We could even start to get into a panic buy situation on the short term yet the banking sector is still mostly down today, even through the close.  There are quite a few sectors that we didn’t notice were moving up so much because we were focused so much on the short side of the banks and life insurance companies looking to profit on our 4^th cycle of trades with these sectors.  My apologies, it’ll never happen again.

online stock trading, stock market commentary, stock market education, stock picks

March 16, 2009  Monday Evening

The Dow30 had a nice run caused by the Bernanke comments on 60 minutes last night, until the last two hours of the session.  It was probably a staged talking head ordered by the Commander in Chief himself and the very statement of “the end in sight” is like guessing an end game of a chess game after the first few moves are made.  For decades, the Federal Reserve was insulated from influence by other politicians but we saw Greenspan be President Clinton’s puppet a few times in the late 90’s but Bush seemed to leave them alone for most of his 2 terms.

The trading strategy that we have been taking the last 4 weeks on the banking stocks may seem aggressive to many of you but this is how you rack up serious profits.  Anytime you follow the chart of a single stock or sector as we have in the banking stocks JPM, USB, BAC, WFC, KEY, STI, and even GE with three round-trip trades starting with long, short, long and now short again is extremely profitable. 

Remember we came from intraday trades (aka scalping) most of September, October, November and part of December to swing trades with a few failed attempts at intermediate trades (that last for more than a week).  So we are using the techniques that work for the current market conditions.  If you are only a long term buy and hold investor, you may be waiting a long, long time before market conditions are conducive to making that a profitable strategy.  We go with the strategies that work and even though this may be a fast pace for many of you, this is what is working now.

You could always sit out this current cycle of short positions if you are tired or exhausted mentally.  OR a good fix for that is to have a very small position than normal so it won’t stress your nerves but keeps you alert and your head in the game.  A rest is fine by having no positions at all but keep monitoring what happens so you don’t totally get stale and indifferent to what is happening in the market.  Even someone as good as Tiger Woods will take some weeks or months to get back into tournament play after a 9 month layoff from golf so it is wise to be somewhat updated as to what the market is doing even though you may not have any positions.

Stock Charts, Stock Trading, Uncategorized, online stock trading, stock market commentary, stock market education, stock picks

March 10, 2009  Tuesday Evening

We had the big news out of C, Citibank and its chairman on making money in January and February so stocks took off like crazy moving up 5.8% on the Dow30, 7.1% on the Nasdaq Composite and 6.37% on the S&P 500.  World markets are up now on Tuesday evening and this will likely carry over into tomorrow and probably into Thursday.

On top of that news, Barney Frank Democrat out of Massachussets, said they will likely reinstate the zero plus tick rule on short selling, which means the stock has to go up before selling short a stock  This will reduce volatility and not encourage short sellers to sell the market down for profit.

Seriously consider half of your stock positions or more tomorrow and remaining the next day or two (Thursday and Friday).  Don’t try to make all your last 2 or 3 years of losses up in a short period of time but we have made serious money with just the banking stocks alone by going long, then short, now long.  Ignore the idea of selling short on this top unless you are really proficient at trading and have a very small position at the most.

Uncategorized

Finding the Right Solution:  http://www.cnbc.com/id/15840232?play=1&video=1056768419

Comments on the Big 3 Automakers:  http://www.cnbc.com/id/15840232?play=1&video=1056749605

Banks Should Get Back to Banking:  http://www.cnbc.com/id/15840232?play=1&video=1056717135

Uncategorized Warren Buffet Comments

We are deeply oversold on a short term basis and although the market can get more oversold, the odds are favoring some sort of at least what we call a relief rally.

The most likely scenario is we see one of these countertrend rallies start this week, possibly as early as Monday or Tuesday.  What we should be looking for a rally that could last only a few days if it is a weak one (which is most likely) OR if some sort of news catalyst that the market reacts positively, it could last longer BUT be prepared that this may not last long and any long positions should be sold into that rally.

At this point, don’t let any of the slight losses you have in the long positions bother you.  The odds heavily favor us holding the long positions in anticipation that just a couple days’ rally would erase any of these losses

Uncategorized market commentary, online stock trading, stock picks

The best process to take when deciding to take profits on volatile stocks such as the bank stocks is to get most of the profit available with the lowest risk.  Your goal isn’t to take the most profit available in a position because to get the last 10-15% of the profit will require you to take on a lot more risk, an exponential amount of risk.  WFC and BAC were covered today near the lows of the day, in the first hour of trading.  When you see the violent declines like we just saw in the last two sessions in these banking stocks, they can rebound up like a stretched bungie cord returning to a “neutral position” with a person on the end.  That rebound can come quickly and erase much of your profit and turn your greed emotions into fear.

Start gearing your attention toward what a bottom looks like because it looks we are going to have one real soon.  The market is setting up to have a powerful and tradable rally that may last for days or possibly a couple of weeks (less likely).  That beautiful V bottom we love doesn’t mean a bear market is over and suddenly a bull market returns.  It is just the shape of charts that were extremely oversold and short covering and buying long occurs to establish the right side of the V.  And we are on the left side of the V toward the bottom now.  Some of the signs we want to see are increased volume, which we are getting now in the Dow30 and many stocks.

If the market continues down the next day (tomorrow) or two of the next three days in similar fashion as today, we could get a really nice rally that makes big profits similar to the bottom we saw in banks last week.  And again, you will be emotionally caught off guard as to the right time to buy because the human emotions are geared to react at just about the worst time possible when it comes to financial markets.  It is the right emotions for an animal like deer and elk to panic when a mountain lion is attacking the herd but not for you to panic when markets are dropping. 

Our human emotions keep most of us from making extraordinary returns but you can train yourself to be in that small percentage of people who can recognize what to do. Your body may be telling you to panic or sell when your mind is telling you to buy.  When you learn to recognize these signs, you will be giving yourself a serious raise in income and perhaps be able to change your lifestyle.  I’ve said for many years that the trading techniques are not hard to master, it is the high dosage of destructive emotions that is difficult to control.  Master your emotions in trading and you are going to be a wealthy person.  Do I make emotional decisions with stocks?  Absolutely, but just not as often as most.

The great investors, traders and speculators have learned to understand this concept and allow the intellect to be more powerful than the emotions.  Investors like Warren Buffet, who is getting his share of ridicule right now for making his own admitted mistakes.  Or speculators like George Soros or Jimmy Rogers or even the greatest of traders in his own time and ours, Jessie Livermore in the 1920’s who made hundreds of millions as a trader (he called himself a speculator).

Uncategorized