|Stocks & Mutual Fund Information|
Will the Stock Market be Lower in October?
The stock market often closes a week in the middle of a "perceived primary-trend range." SPX closed at about 1,234 Fri, which is between a multi-year Fibonacci level at 1,253 (i.e. 38.2% retracement level from the peak in 2000 to the trough in 2002) and the 20 day MA at 1,212 (which was general support over a recent rally).
It's possible, SPX can rally to 1,253 short-term. However, longer-term (perhaps in Aug and Sep), SPX seems destined to fall sharply. A Goldilocks economy (of neither too hot nor too cold) is priced-into the stock market, and if any future economic data show either output growth has slowed more than expected or inflation has risen more than expected, then massive selling may take place.
There are several intermediate-term technical indicators that make me cautious. VIX (S&P 500 Volatility Index) shows an extreme level of complacency. VIX fell below 10 last week, to a 12-year low. Consequently, the SPX to VIX ratio hit an all-time high last week. Moreover, both the Transport and Utility Indices to VIX ratios have rocketed at parabolic rates recently, to over 50% beyond previous year's highs. Also, a ratio of large cap to small cap stocks (e.g. S&P 100 to Russell 2,000) is near a multi-decade low, which indicates big institutions, who tend to buy large cap stocks, are not convinced of the rally. Moreover, the SPX to U.S. Dollar ratio is near a historically high level. There's typically an inverse relationship between the U.S. stock market and the U.S. dollar, because a weaker dollar spurs export growth, which is normally bullish for the stock market. The high ratio indicates it's more likely the stock market will fall, since the dollar depreciation has stabilized for over six months, at far lower levels than a few years ago, and then risen somewhat recently.
SPX has open gaps at 1,221, 1,174, 1,143, and 1,138. Nasdaq also has several open gaps, including one at 1,905, which is currently 275 points lower. The stock market has been a market of deep rises and deep falls. For example, just over the past 13 months, Nasdaq fell 305 points (in two months), then rose 440 points (in four months), then fell 300 points (in four months), and then rose 300 points (in three months). Moreover, VXN (a Nasdaq volatility index) rose only six to nine points over the two deep falls, and declined from 28 to 12 (an all-time low), over the past 13 months, which made it a particularly unforgiving short-term trading market.
Economic reports next week are: Mon: Existing Home Sales, Tue: Consumer Confidence, Wed: Durable Goods Orders, New Home Sales, and Fed's Beige Book, Thu: Unemployment Claims, Fri: GDP and GDP Price Deflator, Employment Cost Index, Michigan Consumer Sentiment, and Chicago PMI.
Notable earnings next week include:
Mon: AXP TXN XRX PBI CEGE CD
Tue: AMZN DD SEBL WWY BIIB IMCL X N VLO LMT BDK GLW SUNW SE SWY MDG RFMD MCHP SSTI NANX
Wed: BA AHC COP CSX CL SBUX K KMG MSO NEM CHIR OSIP CRA FON HMC HCA
Thu: BMY GSK ELN GP XOM APA KLAC SYMC XMSR WMI BR RTN AET PD AU ABX KGC PAAS ZEUS GR WEN JNS DCX
Fri: CHV BHI AEP ADM BWNG
Large caps may outperform small caps over the next few months, i.e. small caps may fall greater than large caps. So, IWM (Russell 2000) and SPX (S&P 500) puts may be better than QQQQ (Nasdaq 100) and OEX (S&P 100) puts. With volatility levels at all-time or multi-decade lows, the steep decline in volatility, since the cyclical bull market began in Oct 2002, may shift into an uptrend. So, market conditions may improve for short-term traders, including daytraders.
Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.
Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time. This methodology has resulted in excellent returns with low risk over the past three years.
Discover the Biggest Trading & Investing Online Mistake
Any online investor / trader seeks an excellent off or online future trading career opportunity. Despite this goal, did you know 95 percent of all traders go broke within the first two months? Why do investors lose vast amounts of wealth in one or more of the following markets ? option trading, forex trading or currency trading, stock trading, future or commodity trading etc? in such a short amount of time?
Selection Vs Direction
As I have said many times before in this column it really doesn't make any difference what you buy ? stocks, funds or indexes - it takes smarts to know when to sell. Direction of the general market is more important than selection of any equity.
Successful Trading ? Taking Profits - Part 1
So you're started trading, you bought some positions with your online broker, you've set some reasonable stop-losses to protect your account and all of a sudden one of your positions move strongly in your favor ? so what do you do now? This my friend, is probably the hardest situation to deal with in trading the market ? believe it or not.
Value Investing: Selecting From The Bargain Bin
Picking a beaten-down stock requires a different kind of selection process. Normally, most companies beaten down this far have no earnings to speak of. Of course, if the company continues to earn money, one can apply normal valuation techniques. By that measure, many of these stocks appear outrageously undervalued: an indication of great buys. But this may also be a red flag that things are "too good to be true".
When you become interested in a stock or mutual fund you can call your broker and he will send you reports on how the company is doing, what their management is like and what might be the projected earnings for the company and how the industry is doing. Great information.
Question: How does it get better when it gets worse?
3 Components Needed for Beating the Market
Time to look back
How to Pick Winning Stocks
There is nothing more exciting than finding an undervalued stock and seeing it explode out of nowhere rising in value 100% or more in a few weeks. Some stocks can move as much as 1000% in a year and?. Even after the stock market crashed in 2000, some stocks still have gone up 500% or more in a year.
The single most expensive stock market trades are those made with emotions, but, of course, you are not an emotional trader are you?
Stock Valuation using the SMP Model
Disclaimer: Please note that I do not necessarily purchase, own, or partake of any of the securities or other financial instruments mentioned in this article. I also do not take any responsibility for any actions resulting from any actions taken by anyone who reads this article. You are responsible for your own finances - no one else. Do your yown due diligence when researching financial matters.
What does it take to be a stock trader? It takes a total mental commitment to the task. It becomes a complete way of life. You cannot be a part timer. You cannot work at a regular job and trade stocks successfully. When you decide to make your living this way you must be willing to work 365 days a year, 7 days each week, 24 hours every day with no time off. I know.
Stock Market System ... ONLINE STOCK TRADING ... Beyond Day Trading Basics & Tips
Day trading is all about making buy and sell decisions. When you make a trade either your going to lose money or your going to make money, and some other times you will break even. When you win some body else will lose and so forth, but that's NOT what's important.
Prospering with Mutual Funds: How Anyone can ?Afford? an Investment Advisor
Recently I was invited to appear on a live CNNfn television show to discuss my article "How to evaluate Load vs. No Load Mutual Funds." (You can read that article on my website http://www.successful-investment.com/articles21.htm)
Stock Trading Success
The ABC's of Stock Trading Success
Using Sector Funds to Construct Diversified Mutual Fund Portfolios
'Sector funds are too risky.' 'I doubled my money with Fidelity Select Technology in 12 months!' 'Avoid sector funds.' If all of this sounds confusing, you are not alone. Sector funds are among the more misused and misunderstood investments. So, how should you use sector funds?
Trading Tips No 5: Stock Trading Curve Drawdown and Commitment
All stock trading and investing methods must deal with the inevitable drawdown from the most recent peak in one's stock trading curve to a bottom before reversing and making a new high. Seasoned systems traders are well familiar with the drawdown phenomenon and the importance of drawdown as a percentage of annual average returns in evaluating a trading system. On the other hand, many "investors" that follow a "buy, hold and hope" approach to the markets for the long term, don't think in terms of a drawdown when their portfolios drop in value by 10%, 20%?75%, as has happened in the past few years. But what they have experienced is an stock trading curve drawdown.
No Load Mutual Funds: Boost Your Portfolios Returns
Investors who exclusively use broadly diversified, no load mutual funds for their stock investments often lose out on opportunities to increase the reward potential of their portfolios. This article looks at two methods investors may use to enhance the performance of their portfolio of diversifed, no load mutual funds.
An Old Proverb for Investing
"If you don't know where you are going, any road will get you there."
The Big Bad Bear
The big bad bear is stirring again. So far he has stretched, yawned and peaked out of his cave. After his almost year-long nap he is hungry. A nice big steak would hit the spot.
Trading Baskets II: The Crapolio, A Roll of the Dice in the Stock Market
In a previously written article, we expanded the use of the term "Trading Baskets" to include stocks from different sectors or industries. Now I want to share with you an approach to day trading or swing trading that I had some success with back in the wild and woolly, pinnacle days of day trading that may still work today. Unfortunately, this basket of stocks was dubbed "The Crapolilo", a name it just could not shake. You'll see why.
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