Is Technology The Next Sector To Breakdown?

September 30, 2011

The technology heavy NASDAQ Composite has held up better than the other major stock indexes such as the Dow Jones Industrial Average, S&P 500 Index and the Russell 2000. As long as the NASDAQ Composite holds up and does not breakdown, this tells us that people are still willing to take on risk. Please remember, most stocks in the NASDAQ Composite do not issue dividends. The majority of stocks in the NASDAQ are considered growth stocks, therefore, if this sector breaks down it is a sign that investors believe that the chance of growth is over for the time being.

Recently, the Dow Jones Industrial Average (DJIA) has been beginning to hold up better than the other major stock indexes. This tells us that investors are trying to find yields and have given up on growth. Please understand that all of the 30 companies in the DJIA pay a dividend and are considered multi-national blue chip stocks. Therefore, if you buy a stock such as Procter & Gamble Co (NYSE:PG) you know you will receive a dividend and you hope that the stock will not decline as fast as other stocks. For example, PG stock is one of the few stocks that are trading above all of the major daily chart moving averages. At this time, there are very few stocks that have been able to recapture the daily chart 50 moving average. When stocks trade below the daily chart 50 Moving average most institutional traders will view the stock as being in a weak technical position. Obviously, PG stock is in a strong technical position at this time.

The bottom line, when the Dow Jones Industrial Average is stronger than the other major stock indexes it is a negative for growth stocks. If this remains the NASDAQ Composite could be under some severe selling pressure. It is safe to say that these markets will remain very volatile in the near term. Traders should be aware that the technology sector could be the next major indexes to breakdown.

Nicholas Santiago
InTheMoneyStocks.com


Buffett Bounce

September 30, 2011

When the stock markets get into serious trouble the Oracle of Omaha will come out of the woodwork to defend stocks. Once again, Warren Buffett just appeared on CNBC live from the New York Stock Exchange. Mr. Buffett said that he is buying stocks and is investing in the United States. The SPDR S&P 500 Index (NYSE:SPY) has climbed sharply off the lows. Traders should watch for intra-day resistance on the SPY around the $115.52 area.

Nicholas Santiago
InTheMoneyStocks.com


Financial Stocks Are Talking

September 30, 2011

On days like this, where the stock markets are down sharply at the start of the day there is only one place to look for guidance, it is the financial stocks. As long as the financial stocks remain weak traders must expect lower prices on the major stock indexes. If and when the financial stocks bounce that is when the major stock indexes will catch a small bid and trade higher.

J.P. Morgan Chase & Co (NYSE:JPM) is the most important stock in the United States and possibly the world. This stock has lead the stock markets higher and lower throughout 2011. Traders should always watch and monitor JPM stock at all times. This morning, JPM stock is trading lower by 0.58 cents to $30.81 a share. This financial giant will have some minor intra-day support around the $30.43 area. Should that near term support level breakdown the next intra-day support areas will be around the $30.00 and $29.50 levels.

Other leading financial stocks that traders should follow are Goldman Sachs Group Inc (NYSE:GS), Morgan Stanley (NYSE:MS), and Bank of America Corp (NYSE:BAC). All of these leading financial stocks look horrible on the daily chart at this time. This is how the financial stocks talk to us.

Nicholas Santiago
InTheMoneyStocks.com


Yo-Yo Markets, End Of Quarter Window Undressing

September 30, 2011

Once again, the major stock market indexes are coming under heavy selling pressure. The S&P 500 Index e-mini futures (ES Z1) are trading lower by 13.50 points to 1142.75 per contract. The declines in the market come as the economic data out of Europe was worse than expected. Inflation jumped in Europe and this is at a time when the ECB may need to do more bailouts. This could be the start of another perfect storm brewing in the Euro-zone. Who would want to hold stocks on a Friday ahead of a long weekend? Unless another band-aid solution comes out from the central banks intra-day this trading session is likely to be very volatile.

 


It Is Time To Bring Out Buffett

September 29, 2011

This afternoon, the major stock indexes have once again rolled over reversing a 200.0 point rally on the Dow Jones Industrial Average (DJIA). The talking heads in the financial media continue to talk about the recovery from the 2008 financial crisis, meanwhile, we are still in that very same crisis. Stocks such as J.P. Morgan Chase & Co (NYSE:JPM), Bank of America Corp (NYSE:BAC), and other financial giants continue to look terrible on the charts. Investors are still waiting to hear and see the central banks inflate the markets higher again in that typical Keynesian fashion. So far, we can see how much that money creation approach has gotten us. The stock markets have not yet gone into panic mode, however, stock prices continue to decline and fear is beginning to creep in.

Tomorrow, the world’s most famous investor, Warren Buffett, is going to appear on CNBC. You know things must be getting bad when everyone’s favorite Keynesian is going to make a television appearance. Sure, he will tell everyone to buy stocks when people are fearful, however, he knows that he will be bailed out  by the government if his trade goes bad. He was bailed out in 2008 when he invested in Goldman Sachs. That was just about as a trade as I have ever seen. Now Mr. Buffet has invested in Bank of America, many investors jumped right on his band wagon when he bought those preferred shares. That stock is underwater from that time and a lot of investors are underwater with him. This guy has benefited from bailouts more than anyone on the planet. You know things are getting bad when Warren Buffet has to come out from Omaha and make his save the market TV appearance.

Nicholas Santiago
InTheMoneyStocks.com


Stock Market Videos: Another Roll Over Screams Crash

September 29, 2011

The markets rolled over again today. This is the third day in a row and if the downside holds, could signal a major decline on the horizon. When the bulls cannot prop the market up, and each time they do, they lose, eventually they will throw in the towel. For InTheMoneyStocks members holding shorts, this is fantastic. Another major week of gains. While news filtered out from Europe about a German vote, more debt rating downgrades soured the tone. The markets are heading for the $110.00 level on the SPY and it is just a matter of time until they hit.

 


Buying Opportunity As DOJ Joins SEC On China Stocks

September 29, 2011

Today, word hit the markets that the U.S. Department of Justice is helping the Securities & Exchange Commission look into “accounting irregularities” among U.S. listed Chinese stocks. This sent companies like Baidu.com, Inc. (ADR) (NASDAQ:BIDU) and Sohu.com Inc. (NASDAQ:SOHU) down over 10%. Other Chinese stocks listed on the U.S. exchanges dropped as well.

While this news is causing some selling, it is probably the best possible outcome and should be cheered. It also may be setting up for the best investment opportunities over the next decade. In the last year, Chinese companies like RINO International Corporation and many others have been exposed as frauds. This has made investors run from all small and mid cap Chinese names. Whether legitimate or not, investors are not willing to take the risk of buying them.  The DOJ and SEC action will hopefully cleanse the system of bogus companies. Out from under the ashes will emerge companies trading at P/E’s of 1,2,3 and 4 that are legitimate. This will be the place to be in the next decade and these valuations will not last long.

Now is not the time to jump in to these small and mid cap names. However, once the DOJ and SEC do their jobs, the sun will rise and those that survive will be some of the best values in the stock market.

Gareth Soloway
InTheMoneyStocks.com