Posts Tagged ‘Stocks Trading Tips’
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.
One of the best ways to hone your equity trading skills is to take apart a stock that’s done well. Even if you didn’t own a position, a cursory review of a stock’s price action does help you to refine your stock-picking skills. It’s the exact same thing as playing the game of golf. You can’t get better at it unless you practice yourself and learn from a pro.
After a year of restructuring and bankruptcy protection, General Motors Corporation (NYSE/GM) rose from the dead on Thursday with so much anticipation and hype that it looked like a Hollywood debut, but it was far from that.
It’s always easier to be a bandwagon investor. Buying high and trying to sell higher makes for a decent investment strategy if you like “playing the markets.” I think back to my days as a stockbroker, and some clients just loved to trade stocks, even if they weren’t making any money at it. I don’t care what anybody says; the stock market is like a grand casino and some people just can’t stop playing.
The stock market’s been very strong since the end of August. Now it’s consolidating, which is healthy. But I have to repeat my steadfast view that investment risk for equities investors remains very high in the current environment. We can’t ignore the sovereign debt issue anymore.
I continue to be on the bullish side, but at the same time I am concerned with the mounting debt and deficit issues in the U.S. and debt issues overseas in Europe. In Ireland, investors are dumping Irish bonds on mounting speculation that the country will need to ask the European Union for bailout help similar to what Greece had to endure.
I’ve noticed that a lot more people I speak with lately are less inclined to talk about the stock market and their investments. It used to be that everyone wanted to talk about their equity portfolio. Things changed a lot after the stock market bubble burst in 2000. Then, the seven-year recovery was promptly killed by the subprime mortgage debacle.
It’s earnings season again and it could help to drive trading over the next several months. There are clearly some high hopes of seeing sales growth in addition to earnings acceleration as the economy recovers, but hopefully it will be an improvement over the second quarter.
The fact that gold and oil prices are so strong at this time is a reflection of a global economy that’s not too worried about slowing growth in the U.S. market. Growth in Asian economies is grabbing the attention of global investors and they are placing their bets by bidding on precious metal and oil futures.
There have been some spectacular stock market performances taking place since the beginning of the year. Certainly the major change in investor sentiment helped at the beginning of September, but there’s still been some fantastic wealth creation going on and it’s been in technology.
The major stock indices have closed higher in 10 of the past 14 sessions, but the trading volume has been relatively light during the rally, which is not what we want to see and raises a red flag.
On the chart, the key stock indices are holding above their respective 200-day moving average (MA). The S&P 500 is at a key chart top at around 1,125. The fact that the indices are above their 50-day and 200-day MA is bullish. The NASDAQ is facing chart resistance at 2,320.
Monday was an impressive day for stocks with the S&P 500 and NASDAQ on a technical level, as both indices rallied back above their respective 200-day moving averages (MA) and the highest level in a month. All four of our key stock indices are now back above their respective 50-day and 200-day MAs and are positive on the year. While the indices continue to be down from their 52-week highs, between 5.61% for the DOW and 11.28% for the Russell 2000, the ability to rally and hold is encouraging. However, you need to be careful, as the 50-day MA remains below the 200-day MA with all four indices. Also watch, as there is some topping on the market charts. A strong break above on rising volume is critical.
Finally there’s some good news on the corporate revenue front. A lot of big companies reported solid earnings growth in the second quarter, but revenues haven’t been inspirational. The Dow Chemical Company (NYSE/DOW) just reported very solid numbers and this is a good sign for the industrial economy.
One thing you can’t do in the stock market is control the amount of returns you can generate. Dividends from solid companies provide a level of security, but look at what happened to BP. Anything can happen to any big company at any time. If you are invested in stocks, you are taking a big risk.
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