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

Posts Tagged ‘stock market tips’

The “Secret” to Successful Investing

By for Profit Confidential

 austerity measuresThe bulls have been good to us so far in 2012. The stock market continues to show optimism; the key stock indices are displaying a “golden cross, with the 50-day moving average (MA) above the 200-day MA. All of this buying bias is encouraging, but the light trading volume tells us to be careful, as there continues to be numerous threats that could drive fresh selling.

Bullish investor sentiment in the stock market continues to drive buying interest despite the technically overbought condition. The key focus remains Greece, which has agreed to the tougher austerity measures. You would, too, if you were asking for another $171 billion!

Growth in the eurozone contracted 0.3% in the fourth quarter and speculation is that a mild recession may surface. Earlier this week, Moody’s downgraded six eurozone countries, so there will likely be more issues down the road as Europe struggles with debt.

Some of you may be too focused on the improving economic renewal domestically, albeit the Industrial Production and Capacity Utilization readings for January were below estimates and short of the December readings. And, on the home front, the NAHB Housing Market Index improved; however, it remains well below the level considered healthy.

In the stock market, the S&P 500 is facing resistance at 1,350-1,360 and will need a strong catalyst to break higher towards 1,400. The bullish investor sentiment in the stock market continues to drive the positive bias in stocks, but I’m seeing some stalling on the charts. The bias is for higher gains, but the lack of strong trading volume is somewhat of a red flag.

You need to … Read More

Slow Growth Concerns Drive Selling

By for Profit Confidential

The decline in stocks should not be a surprise given that the stock indices were unable to break or hold above some topping resistance on the charts. The failure to break higher was a red flag.

There are numerous technical breaks to the downside on Wednesday, with all four of our key stock indices turning negative this year. The NASDAQ and Russell 2000 are trading below their respective 50- day moving average (MA) and 200-day MA. The DOW is below the 200-day MA, but holding just above the 50-day MA. The S&P 500 is holding precariously around its 50-day MA. I feel that the recent failures to break above the chart tops for the various indices were bearish.

Watch for downside supports as follows: DOW at 10,000; SP 500 at 1,040; NASDAQ at 2,100; and Russell 2000 at 600.

Driving the selling was renewed concern towards slower growth in the United States by the Federal Reserve, along with news of slower growth in China and England. Weakness in China could easily spread globally to Europe and the U.S. due to economic interconnectivity. News of lower imports in China is driving concerns of slower growth in the country, which would also impact other global economies.

Overseas in England, the central bank lowered its GDP estimate, blaming the potential slowing in the U.S. and the eurozone. Germany also announced slower growth.

The Fed will expand its measures to increase lending; even so, this may not be enough to avoid weakness imported from overseas economies. Again, the fear of a potential double-dip recession is surfacing.

In addition to the economic growth concerns, the … Read More

Lombardi’s Mid-year Forecasts Update

By for Profit Confidential

With the first half of 2010 behind us, here’s an update on where I see things headed for the remainder of 2010, and where I believe my readers can make some money:

Stocks:

The surprise in stocks for the immediate term is on the upside. People are still very worried about the economy. National debt is out of control. Employment is high. Retail investors are staying away from the stock market. But corporate earnings are beating analyst expectations.

If you were to ask me about the short term, which would include 2011, I would tell you I am very bearish. I’m bearish because our dollar cannot sustain its value on the great amount of debt we have accumulated. National debt of $20.0 trillion by the end of this decade (we’re at over $12.0 trillion today) will place immense pressure on the U.S. dollar, which will eventually result in higher interest rates.

Higher interest rates may also be required as a deterrent to rapid inflation, which has historically been a problem for America after a prolonged period of easy money. But, for the months ahead, the Fed cannot raise rates because the economy is fragile. A low-interest-rate environment combined with rising corporate earnings is what the stock market loves. So I’m bullish for the immediate term, bearish going into 2011.

Like I’ve said all along, the bear market rally will suck more investors in before its next leg downward. And the best way to suck investors in is to move the market higher so investors feel that all is well again.

Gold:

I bought more gold last week, because I believe … Read More

How You Can Buy Before a Stock Retrenches

By for Profit Confidential

Markets have rallied above key moving averages, driving up the price of stocks across the board. Yet, instead of chasing the price advance, you could wait for a price dip to enter.

Some Company Earnings Were Hot, Some Were Not

By for Profit Confidential

Earnings season started with a bang following strong reports from Intel Corporation (NASDAQ/INTC), CSX Corporation (NYSE/CSX), JPMorgan Chase & Co (NYSE/JPM), and Advanced Micro Devices, Inc. (NYSE/AMD).

But, wait, maybe all is not as rosy as we thought earlier last week. In the first miscue of the earnings season, search engine giant Google Inc. (NASDAQ/GOOG) came up short on the earnings side despite a positive 24% year-over-year rise in revenues. Revenues were slightly ahead of estimates. The decline is not that bad given that it could be much worse. The shortfall may be Google-specific and impacted by stagnant advertising.

Not in China Yet? It Might Be Time to Look

By for Profit Confidential

China remains the top growth market in the world. That is why the top technology and industrial companies are expanding aggressively in China. Many technology companies are beginning to move more of their research and development to China. Why? Just take a look at the highly educated work force and the abundance of smart and inexpensive labor.

Realistically, Large-caps Are Tops

By for Profit Confidential

There’s still a lot of financial reporting going on with smaller, U.S.- listed Chinese stocks. A number of these companies are beating consensus estimates for the fourth quarter and year-end 2009, but visibility for 2010 isn’t as robust as investors would like.

Singing a Tune for Stocks

By for Profit Confidential

There are probably quite a few investors this morning saying, “Oh lord, won’t you give me 93 points on the Dow Jones. I need to make back all the money I lost in the stock market, I must make amends.”

How to Build a Portfolio When the Market’s Down

By for Profit Confidential

It is difficult to be a buyer of stocks when the broader market is going down. Timing the market is extremely difficult, and yet timing is the single most important aspect contributing to outperformance.

My Near-term Technical View

By for Profit Confidential

Talk about a party spoiler. If you believe David Rosenberg, chief economist at Gluskin Sheff, the worst is yet to come, as he suggested in a morning note. He suggests that there will be no returns for up to a decade. Kind of scary but there is a lot of clout here, as Rosenberg is highly regarded for his vie.

Weighing Your Investment Options: My Grandma’s Advice

By for Profit Confidential

Investors want growth and they aren’t finding much of it around these days. They want revenue and earnings growth from corporations; employment and income growth from workers; and spending growth from consumer. Without growth, buy-and-hold equity investors have limited options.

The Most Important Tenet in Trading

By for Profit Confidential

At this point of the market correction, I hope you are not one of those investors or traders who were caught by surprise as a result of the recent market backlash. The reason why I want to briefly talk about risk management is my sense that there are some of you who probably fail to incorporate some sort of risk-management strategy. If you do incorporate one, that’s fantastic and you are probably sleeping well at night. If you have been delinquent in this area, you are probably stung at this moment and thinking about how you are going to get your trading capital back.

Scanning the Landscape for the Best Opportunities

By for Profit Confidential

A lot of really good U.S.-listed Chinese stocks have been hit hard over the last few months, and equity prices are becoming very attractive in a number of issues. Investors are giving China the cold shoulder these days for a lot of reasons, but if you like to buy low and sell high, I’d start making some watch lists.

How to Deal with Emotional Investing

By for Profit Confidential

Remaining calm in the kind of markets we have had to endure the last few days presented a challenge even for the most disciplined among investors. Perhaps the reason for that is that even the most
disciplined investors often succumb to irrational/emotional thinking…predictably so.

Gone Fishing — Stocks Are Priced Where They Should Be

By for Profit Confidential

It won’t be long until we have another earnings season to go on. If Europe or China doesn’t disintegrate over the next month or so, then investors will have a lot more good news to go on. In the short term, the fundamentals do exist for solid earnings growth in the second quarter. In the absence of corporate results, investors will continue to focus on all the bad news. The marketplace is already expecting robust earnings, but the current trading action in stocks reflects lackluster sentiment that’s caught in a loop of declining expectations. Debt woes and commodity price weakness are feeding the view that future economic growth will be very modest this year and next. Without any hard data to suggest otherwise, stocks seem to be priced where they should be.

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