WEEKLY Market Preview Aug 30, 2009

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Weekly Market Preview:

Sat Aug 29

With recession recovery hopes on the rise,  Wall Street faces its historical worst month of the year. Coming exactly one year from last September’s financial market debacle, the market has already risen 50 percent from last March’s lows but evidence piles up indicating both traders and investors are turning cautious.

On the mend the economy may well be, but pros on the NYSE floor reckon a period of consolidation draws nigh and is even overdue. Others feel the market will need to consolidate to avoid getting overextended (versus only “extended”, one presumes). Still others point out that further gains will only bring the market back to its levels a year ago before the financial panic deepened on the heels of Lehman ‘s collapse and AIG’s controversial rescue. September effect angst combines with seasonal volume and volatility rebounds to foment a level of consternation even at the market’s apparent disinterest in “consolidating” on its own…

Next month is the market’s worst month historically, with an average loss of around one percent. Last year’s financial market meltdown, Lehman’s failure and the coincident credit freeze dragged the S&P down by 9.2 percent for the month. “The curse of the month of September, the weakest month of the year, is likely to bring in some selling before we even enter the month,” said Al Goldman, veteran strategist at Wells Fargo Advisors. “ Also, there is no clear evidence that the market has totally worked off its five-month, 50 percent rally. Fortunately, these are only very short-term problems. Much more important are the improving fundamentals and a reasonable (valuation) ratio.”

That said, a recent study undertaken by BarclayHedge, Interconti, Ltd. & Attain Capital indicates that along with rising volatility comes enhanced opportunity at least for traders approaching the markets via financial futures contracts traded using hi-frequency computerized systems or managed by trend-following CTAs.

Eco-data releases expected this week include:

TUESDAY, Sept. 1

NEW YORK — The Institute for Supply Management releases its manufacturing index for August.

DETROIT — Major automakers report U.S. auto sales for August.

WASHINGTON — Federal Reserve releases minutes of Federal Open Market Committee meeting of Aug. 11-12, National Association of Realtors releases pending home sales index for July, Commerce Department releases construction spending for July.

WEDNESDAY, Sept. 2

WASHINGTON — Labor Department releases second-quarter productivity; Commerce Department releases factory orders for July, Securities and Exchange Commission and the Commodity Futures Trading Commission hold joint meetings on current financial rules and recommend changes, (Through Sept. 3).

THURSDAY, Sept. 3

NEW YORK — Retailers report sales results; the Institute for Supply Management releases its services sector index for August.

WASHINGTON — Labor Department releases weekly jobless claims, Freddie Mac releases weekly mortgage rates.

FRIDAY, Sept. 4

WASHINGTON — Labor Department releases employment data for August.

Getting to grasp share sticker

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Current stock prices of publicly traded companies can be found out easily. A lot of financial sites give factsto investors that aid them in buying stocks of different companies. If you are not accessible to a computer where you can access your online brokerage, sites like Google and Yahoo give adequate real time stock prices and historical stock prices of corporations. In addition to visiting free financial services internet site, you can also open a brokerage account which will provide owners with much more in-depth facts about the stock prices of various businesses.

If you would like to know the stock price of a company in any financial website, try to discover a quotes bar and enter either the symbol of the firm or if the site permits the name of the company. You can see the name of the corporation below as you start type the first few letters. As you type along a box appears below which displays a probable list of businesses that you are looking for. If the company you are looking for is being displayed click on it. Knowing the symbol of a company can cut time, and you can just enter it in the get quotes bar. Once on the page of that company, you will be provided with the stock price of that firm. Most of the time, the stock prices are about 20 minutes delayed, so be careful when make trading choices.

You should know how good the reports of the stock price that is recorded on the internet site. A lot websites also list pre-market and after market stock prices, these are different than the actual stock price when stocks are trading when the market is open so be sure that when you are trading you are trading with right pricing facts. When you are securing and selling stocks make sure that the prices that you trade are the ones that are reflected in your brokerage website and not ones from free financial sites. Online trading companies provide you with the most latest data on stock prices and also give you with the purchase and sell order reports of other traders.

Overnite EurAsian Trade lower….

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Overnite EurAsian Trade lower….

EurAsian trade lower overnite on election angst in Japan and tightening angst in China. Not reflected in US screen trade which reads marginally higher a/o about 6:30 CDT.

Ecodata reports due out Tuesday include:
2 retail sales reports (different sources)
Case Shiller home prices
Consumer confidence

One of the retail sales reports is already out showing surprising strength, the Shiller homes price data is coming on the heels of unexpectedly encouraging real-estate reports last week, and consumer confidence is probably in the dumpster though not quite despondent.

Expect a slightly higher but very tentatively so opening…European shares fell back in early trade on Tuesday from the 10-month closing highs they hit in the previous session as investors took profits and after declines in Asia.

The European benchmark index is still up 50 percent from its lifetime low of March 9as investors have become more confident on the prospects for worldwide economic recovery.

Late Monday, reports emerged that the U.S. President, Barack Obama, plans to announce the reappointment of Federal Reserve Chairman Ben Bernanke, with the Wall Street Journal reporting that Obama will credit Bernanke for “pulling the economy back from the brink of depression.” “It’s good news in the sense that it’s what the market knows. Clearly, easy monetary policy will be maintained at the Fed. There will be no change in tack there,” said Edmund Shing, strategist at BNP Paribas.

TOKYO, Aug 25 (Reuters) – Japan’s Nikkei average drifted lower on Tuesday, hit by profit-taking after surging 3.4 percent the day before, with investors finding few reasons to buy actively before Japan’s Aug. 30 election and U.S. economic data. Exporters lost ground after leading Monday’s rally, while Mitsubishi UFJ Financial Group (8306.T) fell in the wake of losses in U.S. peers after a veteran banking analyst said 150 to 200 more U.S. banks would fail during the banking crisis.

HONG KONG/SHANGHAI, Aug 25 (Reuters) – Hong Kong stocks trimmed their losses to end 0.49 percent lower on Tuesday after earlier tracking Shanghai’s retreat on profit-taking following recent rallies.

Banks, Commods Lift Euro Stocks to 10-Mo Hi

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EurAsian markets hit highs on lite volume as recovery hopes abound. Post-peak however, some profit-taking ensued but I’d caution against reading anything too important into any of this because of the end of vacation season and resultant thin trade….. Overnite US screentrade higher but not fully reflective of overseas jubillance with DOW futures indicating about +30 points a/o 04:40 CDT..

This week also includes Treasury auctions of over 100byn in 2, 5 & 7 year notes of Tuesday, Wednesday and thursday – expect some crowding as a result – net effect will be clearer when we see the tail on Tuesday’s event..

Excerpted overnite market coverage below:
Published: Monday, 24 Aug 2009 4:45 AM ET By: Reuters

European shares rose in early trade on Monday, hitting their highest level in more than 10 months, with banks and commodity stocks gaining as investors become more confident about the prospects of a global recovery.

The pan-European FTSEurofirst 300 index of top shares was up 0.9 percent at 975.49 points, having hit a 10-month high of 977.93 points earlier. The index is up around 50 percent since reaching a lifetime low in early March and is up about 17 percent for the year.

“There are no specific stories out there, there is no good news and no bad news. Asian markets were ok overnight and the outlook for the U.S. looks reasonable so there is not reason for Europe to take the top off,” said Howard Wheeldon, strategist at BGC Partners.

TOKYO, Aug 24 (Reuters) – Japan’s Nikkei average jumped 3.4 percent in thin trade on Monday, boosted by hopes for a global economic recovery that sent U.S. shares climbing, with Canon Inc (7751.T) and other exporters leading the benchmark higher.

HONG KONG, Aug 24 (Reuters) – Hong Kong stocks surged 1.67 percent on Monday, tracking strength on mainland and overseas stocks markets, with refiners and Chinese finance stocks rallying after Sinopec (0386.HK) and China Construction Bank (0939.HK) reported strong earnings.

Investment Strategy for Mutual Funds

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This investment strategy I have to share is considered the most easily understood because it is based on common sense. Give me five minutes of your time to read this to see my point. The way to look at the stock market is by viewing its chart. To know if the stock market is performing bad is to see when the 1 year low was.

The 1 year low means the stock market price is below the same price it was 1 year ago. It also means no money was made in your retirement account. As long as the stock market is above its 1 year low in the past 12 months it means you are no longer losing money in your retirement account.
 
To see if the stock market is stabilized is to look at its 1 year average. The 1 year average is the average price over the past 12 months. As long as the stock market is above its 1 year average this means the stock market is moving up and you are making money in your retirement account.

The stock market chart shows how all the stocks of companies are performing. These stocks are in the mutual funds that you have in your retirement account. The companies in mutual funds are the same in the S&P 500 Index. The S&P 500 Index is a list of the 500 biggest companies in the world such as Walmart, Verizon, Sony, Exxon, Pepsi and hundreds more.

By following the S&P 500 Index you can see what and how the overall stock market is doing. Other indexes are the Dow Jones Index but it only has 30 companies and the Nasdaq Index which has many small companies. These two Indexes follow the lead of S&P 500 Index because of its more established companies.
 
To understand how the stock market works is go to any website investment page and click on the ticker symbol for this index. Next is to set the time frame for months. When you look at the stock market over the past 12 months with the month to month price instead of the day to day price you will notice all the zig zags are gone. The zig zaging of price movements is what confuses people because all you see is the fluctuations in price.
 
This is caused from the buying and selling of stocks from millions of people. Setting the time frame of the stock market chart to be viewed by month to month instead of day to day with straighten out all these lines you see in a chart. By doing this you will see straight lines being formed over the long term. It is like watching the stock market in slow motion because you are able to see when the market was up and down.
 
There are a lot of articles written on mutual fund strategies and but none will tell you why or how the strategy works. The answer lies in the chart because this is physical evidence of what is currently happening now. These are real companies with their stock prices going up or down. When the majority of stock prices are going down, it is a clear indication that most investors are selling. The reason they are selling is because these companies are about to be earning less revenue than before.
 
Stock prices go up when companies increase theirs earnings and they down when their earnings are decreasing. You can witness this by looking at the S&P 500 Index chart. This all points to our economy. Our economy is base on the gross domestic product. This is the increasing and decreasing of business services and products that are produced in the U.S.A.

The Government have Economists study how the U.S. economy is performing every month. These reports show how the manufacturing of products, employment, business services and retail goods are performing currently and in the past. It is easy to see if the U.S. economy is in a recession by comparing it to the stock market.
 
The key to a successful retirement plan is to finish every year with a positive percentage rate. This means your mutual funds have to go up from January 1 to December 31.
 
Keys points are:
 
1. Mutual Funds are a collection of stocks from many companies.
2. The companies in mutual funds are the same in the S&P 500 Index.
3. The S&P 500 Index is considered the benchmark of the stock market because of all the big companies in it.
4. It has to be above its 1 year low because this means the stock market has stopped dropping.
5. It has to be above its 1 year average for the stock market to be moving up. The 1 year average is the average price over the past 12 months.
6. Look at the chart of this index using the month to month price instead of the day to day price. This will erase all the fluctuations and make straight lines.
  
You will find this is the best investment strategy for mutual funds because it is shows how to avoid a bear market.
 

Mutual Funds Strategy To Protect Your IRA And 401K

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The way to understand how the stock market works is by looking at the stock market chart. The stock market chart shows how all the stocks of companies are performing. These stocks are in the mutual funds that you have in your IRA and 401K. The same companies in mutual funds are in the S&P 500 Index which is the stock market.
 
The S&P 500 Index is a list of the 500 largest companies in the world such as Target, AT&T, Apple, BP, Coke and many more. By watching the S&P 500 Index you can see what and how the overall stock market is doing. Other indexes are the Dow Jones Index but it only has 30 companies and the Nasdaq Index which has many small companies. These two Indexes follow the direction of the S&P 500 Index because of its more well known companies.
 
To see how the stock market works is go to any website financial page and click on the name of this index. Next is to set the time frame for months. When you are viewing the stock market over the last 12 months with the month to month price rather than the day to day price you will find all the zig zags are eliminated.
 
The zig zaging of price movements is where investors become confused because all they see is the changing in price. This is caused from the buying and selling of stocks from thousands of investors. Setting the time frame of the stock market chart to be viewed from month to month instead of day to day makes all these lines you see in a chart become straight. When doing this you will see the straight lines over many months as well as years. The stock market becomes a picture on pause because you are able to see when the market was rising down and up.
 
To know when the stock market is declining and losing money is to look at the 1 year low. The 1 year low means the stock market price is below the same price it was 12 months ago. It also means no money was made in your retirement fund. When the stock market is above its 1 year low in the past 12 months you can rest assure that the stock market has stopped declining.
 
To see if the stock market is leveling out and not going down is to look at its 1 year average. The 1 year average is the average price over the last 12 months. As long as the stock market is above its 1 year average this means the stock market is rising and you are making money in your IRA and 401K.
 
A lot of articles will write about a mutual fund investment strategy and but none will tell you why or how the strategy works. The answer is right in the chart because this is physical evidence of what is presently going on every day. These are real companies with their stock prices going up and down. When most or all stock prices are starting to decline, it is the sign that investors are selling. The reason they are selling is because these companies are about to be earning less money than before. Stock prices go up when companies increase theirs earnings and they down when their earnings are decreasing. You can this yourself by looking at the S&P 500 Index chart.
 
This all points to our economy. Our economy is base on the gross domestic product. This is the increasing and decreasing of services and products that are produced by business services in the U.S.A. The Government have Economist study how the U.S. economy is performing every month. These reports show how the manufacturing of products, employment, business services and retail goods are performing currently and in the past. It easy to see if the U.S.A. economy is in a recession by comparing it to the stock market.

Investing points are:

A. The same companies in a IRA and 401k plan are in the S&P 500 Index which is the stock market.
B. It is viewed as of the most watched Index because of all the well established companies.
C. Mutual Funds are a portfolio of stocks from hundreds of companies.
D. View the chart of this index using the month to month price and not the day to day price.
E. It has to be above its 1 year low because this means the stock market is no longer dropping.
F. It has to be above its 1 year average for the stock market to be rising up. The 1 year average is the average price over the last 12 months.

To avoid a bear market is by understanding how the stock market works.

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Investment Strategy For Stock Market Declines

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Asset Allocation during the declines of a stock market is the only way to preserve wealth in a retirement account. To avoid a bear market and having an investment strategy is necessary for 2009.

This is  an update in the stock market for the short term and long term. From January 1 through today the market is up a positive 6% and the one year rate is down a negative 22%. The stock market is currently above its 1 year average which is the average price over the past 12 months.

The short term direction of the stock market trend is positive. The 1 year average of the stock market is the trend setter for how the market is doing at any present time. It gives investors of mutual funds the update by knowing if the market is going down or up. It is a cross between the short and long term direction of the market that shows when the market is turning positive or negative.

Investors should have switched from mutual funds to money market funds when the stock market reached its first 1 year low in early 2008. At that time the market was also under its 1 year average. The decline in 2008 could take years to make back the loss in value to retirement accounts. Asset allocation is when the investor transfers from declining mutual funds to safe mutual funds. This can only be done by understanding the stock market trend.

Economists agree that the recession has seen its worst but they also agree the economy is not as healthy compared to 2003. The stock market will continue to have its rise and fall in rallies but a long term bull market is still not insight.

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To pick the best mutual funds in your retirement account is to look at ones that are performing the best over the past 6 months. To say the market will finish 2009 in a positive percentage is not guaranteed. The Commerce Department has released the second-quarter gross domestic product report which says, “including the April-to-June period, the economy has now contracted for a record four straight quarters, for the first time on record dating to 1947″. The market may test in lows by the end of the year.To pick the best mutual funds in your retirement account is to look at ones that are performing the best over the past 6 months. To say the market will finish 2009 in a positive percentage is not guaranteed. Economists agree that the recession has seen its worst but they also agree the economy is not as healthy compared to 2003. The stock market will continue to have its rise and fall in rallies but a long term bull market is still not insight.

Beginner Bulk REO Investing

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With more foreclosures now than ever before, America’s weak real estate market seems to set new dismal records each month. However, opportunistic real estate investment professionals are turning the recession into great profits with a bit of creativity.

‘Bulk REO Investing’ is the name of the new strategy, and it’s captured the attention of many well-heeled investors.

Take a just a minute to consider the basics of this highly profitable business.

Understanding the notion of Bulk REO’s requires understanding of the foreclosure process.

As a home owner misses a payment or two, the lender sends the predictable barage of threatening letters and warnings. Following a period of time determined by the lender, formal foreclosure proceedings begin. Between the formal beginning of the foreclosure process and the public auction is the ‘preforeclosure’ period.

The defaulted property is ultimately auctioned, thus completing the foreclosure process. If there are no buyers for the property at auction, the property is returned to the lender. The designation of ‘REO’ (Real Estate Owned) is then attached to the foreclosed property.

Lenders usually try to unload their REO properties at close to retail price by listing their REO’s with a real estate broker. But as a consequence of the weak economy, lenders are frequently selling their REO properties far below their actual value. But the price of receiving such great pricing is the need to purchase multiple REO properties (a ‘package’) rather than individual properties.

These REO packages represent the potential to acquire huge amounts of equity for savvy real estate investors. One of the best ways to take advantage of Bulk REO Investing opportunities is to partner with a well-regarded source of funding. Some sources of funding for these transactions are: personal funds, hard money lenders, commercial lenders and non-conventional sources such as private investors and hedge funds. Additionally, one man is becoming very well known in the field of bulk REO investing, and his name is Sal Buscemi of Dandrew Capital Partners, a New-York based hedge fund.

How to find the right broker for you

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There is no doubt that when you are looking to choose a stock brokerage you should take your time as your decision could have a big affect on the returns you earn from your trading activities.

There are two main options, firstly there are discount stock brokers. These brokers basically just give you the barebones.

The other option is a full service broker. Full service brokers offer you all the services a discount broker offers. They also offer many additional services including retirement planning, trading help and advice, information on tax, risk management strategies and much much more.

For most investors, a online discount stock broker will be the best choice. Most investors, especially experienced investors do no need the additional services of a full service broker. Even if an investor would find the services of a full service broker useful, they are often not able justify the additional expense.

Typically discount brokers charge between $3-15 per trade. On the other hand a full service broker will often charge well in excess of $100 for a single trade. Look out for sites offering discount stock broker information.

Clearly this is a huge difference. Paying very big commissions means you would have to make a lot higher returns on your trading activites just to break even after paying all the fees.

There are also other important factors to consider when looking for a brokerage firm. What is their support like? Do they offer after-hours trading? Are there extra fees in the terms and conditions? Is their execution quick enough? Which payment methods do they take and how promptly do they send you your money when you request it? Who regulates them?

Let me show you a quick example of how much of a difference the commissions can make. If you make 20 trades per month and your account balance is $10,000 you will pay $100 per month in fees at $5 per trade and $2000 per month at $100. You can see how the fees can adversely affect your account balance in no time at all?

don’t bet the farm on penny stocks

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There are several definitions of penny stocks. The Securities & Exchange Commission (SEC) definition states that a penny stock is any stock with a value less than $5.

This is by no means a definition used by everyone. Other definitions include stocks valued at less than $1. Finally, any stock that is traded on pink sheets or over-the-counter bulletin board (OTCBB) is widely considered to be a penny stock.

Choosing a broker

Choosing a the right penny stock broker is very important. As penny stock investors often buy a large number of stocks (due to the low cost), it is important to choose a penny stock brokerage that has a commission structure that is favourable.

For example, some stock brokers charge a fee for each share purchased as well as a flat rate per trade. Clearly, this could be very costly if you were purchasing large amounts of penny stocks.

Ideally the best penny stock broker is one with no fees additional fees for purchasing large numbers of shares, a low price per trade and quick execution of trades.

Volatility

Penny stocks can often be highly volatile, offering the opportunity for high returns. Fluctuations of 100% can be seen in a matter of days with certain penny stocks.

Whilst this can clearly result in outstanding returns, it is important to consider the other possible outcome. High volatility can result in substantial losses very quickly.

It is very important to fully understand the risks when investing in penny stocks. Most traders lose money trading penny stocks. Good risk management is imperative.

Penny stocks are not for the faint hearted and are generally only appropriate for investors with a very high risk tolerance.

Cheap to buy

Due to the relatively low cost of penny stocks, they are more affordable to a far wider range of investors. This is plus if you only have a small amount of money to risk.