Posts Tagged ‘Stock Market Analysis’
Stock Market Sees Worst Decline Since September 2011
By George Leong, B.Comm. for Profit Confidential
There were no proverbial May flowers this year when it came to the stock market, with the month showing the worst decline since September 2011. The NASDAQ fell 7.19% in May and 8.54% from the end of the first quarter. The DOW, S&P 500, and Russell 2000 lost over six percent in May. The DOW is up a mere 1.49% for the trailing 12 months, but will likely see a move to negative territory based on my stock market analysis. On Friday, the DOW broke below its key 200-day moving average (MA) of 12,250. This is a red flag.
My stock market analysis suggests that the technical picture is bearish and there could be more potential losses especially if a base is not found. As such, based on my stock market analysis, I would be hesitant to add long positions at this time. What will likely happen is that there could be an oversold bounce, but my stock market analysis view is that this is an opportunity to sell into it, as the upside sustainability will likely continue to be an issue. The key stock indices have been devoid of any momentum or signs of sustained buying interest.
The overall Relative Strength is weak, indicating that there may be more downside moves or that the upside gains may be limited, based on my stock market analysis.
The breach of the 50-day MAs was bearish, but a move below the 200-day MA would be a big red flag and renewed weakness on the charts, according to my stock market analysis.
The underlying strength, as indicated by the advance-decline line for … Read More
Is This the Time to Buy Stocks?
By Sasha Cekerevac, BA for Profit Confidential
Looking towards 2012, many investors are worried about their assets. Europe is in disarray, the U.S.debt is continuing to balloon, unemployment levels remain high, and no real concrete steps have been taken by political leaders to stem the negative sentiment. With all of this pessimism, in my opinion, this is a great buying opportunity for the long-term investor to acquire solid companies.
Generally speaking, you want to buy when people are selling, and sell when people are buying. The ICI, Investment Company Institute, tracks the flow of money into mutual funds. With December numbers in, the ICI reports that investors have been pulling money out of domestic mutual funds in every month since May; a total of $132 billion. That is a huge amount of money to be pulled out of the market, a sign of negative market sentiment. But, historically, when so many people have sold their stocks, it has provided a great buying opportunity.
Let’s take a look at recent history and see what has happened. We see a massive amount of money being pulled out of domestic mutual funds between September 2008 and March of 2009; again, poor market sentiment. The bottom of the market was March 2009. By looking at this one indicator of market sentiment, you can’t pick the exact top or bottom, of course. It is merely a tool to show you where the mass crowd of investors is moving their funds, but it gives you an idea that we’re closer to the bottom of the market. For someone with a long time horizon who averages into their trades, the aforementioned period … Read More
The Ironic and Soon to Be Short-lived
Rush to U.S. Treasuries
By Michael Lombardi, MBA for Profit Confidential
Here’s how the fable goes…
Jim is in the boardroom talking to his three young analysts about where the mutual fund they manage should place its billions of cash, as the firm recently exited some equity positions.
“Where are we going to park those couple of billion we have raised?” Jim asks of the young analysts.
Bobby says, “Let’s not buy bank issued CDs. Banks really haven’t come clean with all their bad loans yet.”
Sammy says, “And let’s keep it out of the eurozone government bonds…they are paying good returns, but if they default, we will never get our money back.”
Joey finally gets up and says, “I’ve been studying the 10-year U.S. Treasury market and can’t believe funds like ours are pouring billions into 10-year U.S. Treasuries paying a paltry 1.9%. Everyone knows the U.S. government has the biggest debt load in the world…that our debt will be close to 150% of U.S. GDP in eight years…that our debt crisis is really bigger than the eurozone debt crisis.”
All faces look to Jim for an answer, “Where do we put our billions in cash?” Jim answers the question quickly by directing that all the cash they have be put into the 10-year U.S. Treasury.
Joey stands up again and says, “Sir, in all due respect, I’m not sure that is such a good idea. I’ve read articles that say the 10-year U.S. Treasury market is a bubble of its own.”
“Sit down Joey,” Jim starts. “Do you know why we don’t buy Italian or French bonds? It’s because we don’t know if we will get our money back. … Read More
What You Can Learn From the Solar Energy Market Meltdown
By Mitchell Clark, B.Comm. for Profit Confidential
For the most part, good timing results in the majority of your investment returns, whether you’re investing in the broader stock market or in a specific market sector. The problem, of course, is that nobody can predict the future and trying to time the stock market is extremely difficult. (See The Best Stock Market Advice I Know: Get Ahead of the Business Cycle.)
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