Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Archive for the ‘NASDAQ’ Category

A Positive January Means an up Year for Stocks

By for Profit Confidential

Stocks continue to maintain a positive bias in January, with technology and small-caps leading the charge. The NASDAQ is up over three percent in the first two weeks of January. The small-cap Russell 2000 is up 2.30%, while DOW and S&P 500 are up about 1.33% and 2.07%, respectively, in January.

My Near-term Technical Assessment

By for Profit Confidential

The bulls appear to be in full control at this juncture.

On the charts, the NASDAQ has joined the Russell 2000 to move above their respective previous chart highs. This is bullish, but we need to see if the indices can hold.

Keep a Close Eye on Your Long Stocks

By for Profit Confidential

There’s nothing wrong if you are long stocks at this time, as the market continues to want to trend higher and, as an investor or trader, you want to ride this upside wave. However, you should also be careful due to a technically overbought condition and the absence of any sort of correction. The reality is that markets cannot go up without a pause or correction. It will happen at one point.

Market Stalling? An Investment Strategy to Help You Get Through It

By for Profit Confidential

As an investor and trader, what you can do when you feel the market may be set to take a pause and stall is to write some covered calls on your long positions. This appears to be the case at this juncture.

Covered call writing (also called Buy-Write) means you hold an underlying position in the stock represented by the call option. It is much less risky compared to naked call writing, in which you do not have an underlying position in the stock. Be aware of this distinction, as it will save you lots of stress and potential unnecessary losses in the long run.

Let’s take a look at Cisco Systems, Inc. (NASDAQ/CSCO) and assume that you own 1,000 shares at a cost base of $15.00 per share. You are already up just over $5.50 a share based on the prevailing price of $20.50.

You continue to be bullish on Cisco, but at the same time feel that the stock may continue to pause given its failure to move higher and its retrenchment back to just above its 52-week low of $20.36. There are several strategies at your disposal. You can sit on the position and wait for the stock to rise. The problem is that this is an inefficient use of capital in my view.

So, why not make your capital work for you? It’s much easier than you think and represents a win-win situation. The process involves writing covered calls on your holding of 1,000 shares of Cisco. For every board lot (100 shares) of Cisco, for example, one call option may be written.

Covered call writing … Read More

A Burgeoning Industry We Never Think About

By for Profit Confidential

Back in March, I wrote in this column about growing investor interest in the agricultural sector. Like precious metals, most individual investors have no affinity or exposure to this huge industry, but I’m certain that this is one sector with excellent potential for above-average returns over the next 10 years.

A few others feel the same way. In what can only be described as a bold and opportunistic move, mining giant BHP Billiton Limited (NYSE/BHP) just announced an unsolicited takeover bid for the world’s largest fertilizer business by capacity, Potash Corporation of Saskatchewan Inc. (NYSE/POT).

The $39.0-billion hostile takeover bid is for $130.00 per Potash share and virtually all participants (except BHP) view the offer as too low. Potash operates a great business and there’s a lot of pent-up global demand for potash, phosphate and nitrogen. This is why Street analysts view the $130.00-per-share offer as too low and traders have already bid up Potash shares to just under $150.00 a share in anticipation of a bigger offer.

People usually don’t think about agriculture as a business or an investing opportunity. This is especially the case with fertilizer. While the fertilizer part of the industry is highly cyclical, it’s a product that farmers can’t do without.

I believe that we’re at the beginning of a new up cycle in the agricultural sector and there’s good money to be made from this trend. The commodity price cycle is not over and, in my view, is about to migrate into basic agriculture commodities. Already, the prices of sugar and coffee are strong. If we get a period of sustained price inflation from … Read More

Making Your Capital Work for You

By for Profit Confidential

The market is on a nice upward trend and we have yet to see any signs of topping. Yet, for stocks to move higher, there must be a fresh catalyst.

A Return to the Old Days — I’m Not Sure We Can Handle It

By for Profit Confidential

Big, brand-name companies always get the early headlines during earnings season, because they have the big accounting departments to get their books done early. Right now, if you want to know where the broader stock market is going, all you have to do is follow the Dow Transports and the NASDAQ. Railroads and large-cap technology are the two key barometers for this market.

A Way to Protect Yourself Against Downside Moves

By for Profit Confidential

Markets are showing an upward bias at this point, but there is concern that the rally will face increased selling pressure, as stocks edge higher. With the NASDAQ up over 70% from its March low, you would have to surmise that some profit-takers will emerge. The upcoming post-Thanksgiving shopping period will be critical for the economy, but without renewal in the jobs and housing market, it will not be easy and this exposes you to downside moves.

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