Watching the Dow tick away nearly 240 points today shows how much weakness still exists in today’s market. Without huge positive news, the market is slowly falling into a sell-off powered by recent profit taking. After the Dow rallied for a week, investors were already pulling the trigger and cashing in, it seems like no one wants to hold onto US equities for longer than they have to. A modest week long rally comes to a close with a slide of 240 points. Read more…
Forex, Investing
DJIA
Inflation is a tough subject to handle and everyone has a differing opinion on how it works. The Keynesian theory, used by the government and the Federal Reserve points out that short term inflation can be a way to spur economic growth. On the flipside, it hurts in the long term by rising prices. Read more…
Stocks
inflation
Derivatives are defined as an investment that derives its value from another asset, many times it’s mortgage debt or the value of commodities, but it can be something as ridiculous as a simple bet. Every major corporation and bank is vested in the daily ongoings in the derivative market, where they hedge their own investments with high leverage bets against other corporations and bankers. Consider derivatives to be the casino of billionaires and institutions, it’s a zero sum game of high stakes gambling. Read more…
Stocks
The credit crunch climate has cooled off as commodities are bringing up consumer confidence as they fall. This drop in prices is favorable to the average joe who is feeling a bit of a slowing economy. Luckily a drop in commodities across the board should free up some discretionary spending money and boost numbers this quarter. Looking out, the R word (recession) is nearing yet again. Read more…
Round Up
Trading the markets is mentally demanding, especially when working with the intraday trading ranges that bounce often though irregularly. Traders who focus on short time frames often become exposed to the effects of tunnel vision, looking at a chart and a position in only one way. Tunnel vision can lead to large losses, especially when long term trends and chart patterns make their mark on short chart frames. Read more…
Round Up
The past two weeks have been very forgiving to the financial sector. Even as banks are writing off billions of dollars of bad loans and pumping up reserves to get through this downturn, it seems like investors are starting to find a bottom. After watching XLF, a SPDR for the finance industry, tumble from $36 in May of 2007 to $17 this July it seems like some are finding a place to buy.
Though the catalyst behind the finance industry’s fall is far from gone, the share prices of most banks have been deemed to be oversold. We’re trading prices here, not the subprime housing market. Read more…
Investing
SPDR, XLF
Yahoo and Carl Icahn are now on good standing after Yahoo gave Icahn three new seats on a board now 11 members strong. This will give Icahn and two others from his slate the ability to sit in on the discussions of the Yahoo board and even try to push policy. Yahoo is hoping that his three board seats will simply allow him to chime in on board events and withhold enough power that his votes will be easily overturned by the majority. Read more…
Investing
YHOO
Apple stock was never on my radar until the PEG ratios caught up with the price of the stock. Now that Apple stock is seeing good fundamentals line up with the technical there is plenty of reason for an investment. With a PEG ratio of 1.34 it’s playable, that’s not a bad ratio for a stock in a premium industry like tech. Read more…
Investing
AAPL
Freddie and Fannie Mae are huge. Together they hold $5 Trillion of US mortgages which equals roughly 50% of the US mortgage market. If these bankers prove to be insolvent, the United States will have a crisis on its hands in the form of 1970-80s style stagflation. To bail out these two banks, the national debt would have to adjust from $10 Trillion to $15 Trillion. Read more…
Real Estate
FNM, FRE
This stock has long been one of my favorites but now that it’s back to a moderate price there is plenty of reason to love it. Rowan Companies (RDC) leases offshore drilling platforms to oil companies who use them to bring up from the depths of the sea. With oil prices at a new high, the company has been able to lease some drilling equipment for record amounts of money, some for over $300,000 per day. Read more…
Stocks
RDC
I went long Sony options at $42.50 and was pleasantly surprised with the results after a move to $52 per share. Now that Sony stock has cooled off, a buying opportunity is showing itself yet again. Sony is still moderately priced at $42 per share and there is plenty of reason to love this stock for the next six months. Read more…
Stocks
SNE
In this scary credit scenario it’s important to know whether your investments are FDIC insured or you will feel the full brunt of a banking collapse. Stocks, bonds and mutual funds are left uncovered by the FDIC as are annuities and insurance but there is one more investment that may surprise you. The difference between a money market account and a money market fund will leave one insured while the other is uninsured. Read more…
Investing
FDIC
The SEC is finally giving some input on the practice of naked short selling but only in the realm of some desperate financial companies. The rest of the market is still available to short to the death as often happens with small cap stocks.
Naked shorting is selling shares before it is known that any shares can be bought back. Often this is done well past the companies float and to such an extent that share prices simple have to drop. The downward pressure that billion dollar firms can put on shares with naked shorts is tremendous, the SEC should jump in and stop this practice now. Read more…
Round Up
SEC
The bailout news is growing out of what anyone could have expected. IndyMac was no small bank, its assets number $32 Billion. This isn’t a regional savings and loans blowup, IndyMac was very large and established as a major mortgage banking institution in the United States. Most of the depositors were under the $100,000 FDIC insurance threshold and will be able to make payments, draw checks and withdraw money via the ATM until this mess is sorted. Read more…
Investing
IMB
Since the beginning of June I’ve believed that oil prices would soon correct to the $110 area. The prior two weeks have told me that no high is high enough and that the price of oil will rage on through the fundamentals in Iran to the falling dollar. But as it was reported last month, the amount of short sellers is finally outnumbering the buyers. This should stand to say that oil companies may be actually shorting the price of oil to hedge themselves against falling prices. Through futures options and other strategies, oil companies are able to hedge their production amounts against current prices via options and still earn the same amount per barrel whether oil is $150 or $50. Read more…
Futures and Commodities
oil
Commodities prices tumbled today which is generally received as a very good economic indicator especially when the word recession gets thrown around. Corn prices touched $8 a bushel briefly but are back down to modestly to $7.46 after falling the daily limit. Fears of a rainy summer and minimal crop have disappeared, now it looks like this years crop might be near normal levels. Read more…
Investing
oil
The markets as a whole have lost plenty of value as of late but it appears as though at least one index is set for a rally. The S&P 500 is off by 13% since the beginning of the year but some technical analysis looks make it seem like we’re ready for a rally. Read more…
Forex, Investing
S&P