Stocks for the Rest of Us
Archive for December, 2008
Strong Close Keeps The Bulls In The Game
Dec 3rd
This market is really getting ridiculous with the 100+ point intraday swings. We swung wildly from positive to negative territory throughout the day as the bad news rolled in. As I’ve said in previous posts I believe that for us little guys there are only two options. Either you simply stand aside and wait for better trading or if you MUST play the game then keep the positions small.
We were hit this morning with a bunch of bad news and opened down several hundred points but were able to shrug that off and rally into positive territory until we were hit mid day with some more selling around the release of the Fed’s Beige Book. We sold it all the way back down to support where the market rallied again. I posted earlier today that the 820 area in the S&P seems to be holding intraday and if you’re thinking about going long then that would have been a good reference point. We closed strong at the end of the day which bodes well for tomorrow barring any surprise bad news.
While the volatility certainly is frustrating it is refreshing to see the lows holding. Furthermore, the market’s ability to shrug off bad news and rally is usually seen as a sign of strength so the possibility of a year end rally is still on the table.
A Note To CNBC: Please Stop With The Underperforming Fund Managers
Dec 3rd
Why would anyone want to listen to an underperforming fund manager? It really bothers that these guys can come on TV and give there “expert” opinions about how the market is bottoming. Just now, CNBC had a fund manager on TV talking about his wonderful stock picks. It’s too bad his fund is down 46% YTD (only slightly worse then the S&P 500). I’d rather just own the SPY and not have to the pay management fees.
UMPQ Trade Update; Take Profits
Dec 3rd
Pigs get slaughtered. If you took the long side trade in UMPQ that I mentioned a few days ago I would consider taking profits here. 10% in a few days is nothing to sneeze at and in this environment you should take what you can get. It may go higher but being greedy will only lose you money in the long run. Take Profits!!!
How To Buy Gold; GLD
Dec 2nd
Gold is a controversial commodity because it’s not really a real commodity. I mean, who consumes gold? Either way, gold does serve a purpose and that is to protect your portfolio against inflation. With all this money being pumped into the economy I have to believe that eventually we’re going to get some inflation and in that case you’ll want to buy some gold. The easiest way to put some gold in your portfolio is with the GLD exchange traded fund. You can purchase it just like you would any other stock.
Having said that, I’m not sure that now is the time to be buying it. After the run we had last year gold has been in a downtrend and until that trend breaks I would just sit back and watch. Keep an eye on More >
S&P 500 Support: 820
Dec 2nd
If you’re thinking about getting long take a lookat the bounce today around 820 on the S&P 500. That’s probably the best bet for a point of reference. Consider placing a stop around 810 to protect yourself if the market starts to break down.
Update 12/3: Support has held 820 again today. If we can’t rally here then I suspect we’re going to go through it.
General Motors Bailout Could Be A “Sell The News” Event
Dec 2nd
Just a word of caution here for anyone expecting a rally if the Big Three are bailed out. The GM bailout might turn out to be a “sell the news” type of event in which we get an initial spike up and then a big sell-off. I think today’s rally was driven in large part by Nancy Pelosi saying that bankruptcy was not an option and the fact that we sold off so hard yesterday almost gaurantees a little bit of a dead cat bounce today. It’s looking more and more likely that the automakers will get the money and I’m starting to think that it might already be priced into the market. Just be careful chasing any strength you see as it can quickly turn into weakness.
Short The Euro; It’s Going Lower; FXE
Dec 1st
This thing is going lower, if it breaks 125 short it. The more times something bounces of support the less likely it is to hold.
FXE Short
Natural Gas Trade; UNG
Dec 1st
As I mentioned in a previous post I don’t really like the natural gas equities but I am starting to like Natural Gas itself for a trade. Things appear to be setting up technically and fundamentally. According to this AP article the DOE has stated that natural gas reserves slid more then expected last week while crude and gasoline supplies jumped. This is providing some support for natural gas and could lead to higher prices as winter sets in. Take a look at this UNG chart on a weekly basis. The downward momentum looks like it’s starting to wane and natural gas itself has held fairly More >