What To Look For..

Resource: MarketGauge organizes the day's winners and losers. Unusual price and volume has pointed me in the direction of great companies being oversold/companies going on big upward moves that usually go bigger. Worth bookmarking for sure.

Discount broker consolidation could become a theme

Financials are now up 5% in last five trading days. I still would not touch them with a ten foot pole except for the pure asset management players like BLK or LM.

Although I never advocate buying companies with negative earnings. I think TTWO has major upside and may be an exception. They publish Rockstar Games makers of Grand Theft Auto. Stock could be a buy due to a new critically successful franchise on their hands in Bioshock.

Ahead of the Curve: After I managed to find over $700 worth of test prep materials through torrents for a certain financial analyst exam, I wondered what's holding college students back? They love free shit! Textbooks are awfully expensive and most students are tech-savvy enough to figure out how to use BitComet. What's stopping someone from helping them? This would negatively effect the McGraw-Hill's of the world obviously.

Remember why you need to invest in the stock market. It is important for young people to understand that there is no better way to save, grow, and get rich than the stock market.

Back To Basics - Stock Operator vs. Warren

The world's richest investor and his famous line: "Be fearful when others are greedy, and be greedy when others are fearful." – Warren Buffett

The market right now is the epitome of what Buffett describes in this quote. For anyone who follows Buffett or the literature that is written about his philosophy could reason that "Mr. Market" is acting irrationally and offering many companies at cheaper with no regard for the underlying fundamentals. It is time to load up and buy the greatest companies now that they are selling far below fair value! So start buying! Right?

Confusing times in financial markets lately with the themes of corporate credit, the leveraging of risky mortgages, liquidity injections, and open-market fed operations. There are very few people who can really grasp these concepts and understand the broad implications of them. I am not one of those people and you probably are fooling yourself if you think you are. What I can understand is price. In my last post I advocated a short/neutral position until the trend reversed. Nothing has changed except for the loss of 2.1% of the value in the overall market. There is only money to be lost until the tape begins to turn green.

This is as fundamental to the analysis of the markets as Buffett's quote except Warren never tells investors how a market turns from fundamentally supported greed to a bear market. When does "fear" really set in? How do you sense fear in the markets? My next post will look into periods and reference technical indicators that show investors fear.

What To Look For..

The end of the day action this week was interesting with large moves in the last two hours of trading. Monday trended up with increased buying later in the day. Tuesday actually gapped slightly up showing signs of life but sold off hard close to the bell. Wednesday the market was a roller-coaster with a buzzer-beater pop that was caused by a trading error. Thursday was fairly stable but trended up at the end of the day.

The week ended with a free fall in the last two hours of trading. Each index shaved off over 1% causing the week to be in the red for all three. Next week look for more of the same and keep an eye on the charts. The trend is downward. It would be foolish to think that weak buy signals are a sign of a reversal. If the support that is currently being tested holds and the market rallies then the trend would reverse. Watch the RSI and MACD to confirm the upwards price movement. Until it does, and I don't think it will next week, there is only one side of the market I would want to be on. Look for the open to be higher Monday withstanding any market-moving news.

The volatility does provide traders with greater potential for gains, but also losses. In a market environment like this it is important to stay focused. When making a trade always determine a stop but possibly take into account the increased volatility. It is important to follow your support/resistance levels and as always stick to some risk management. Just because the market went against you and you lost money doesn't mean it owes it back to you. Be ready for the next move - don't be blinded by your emotion and desire for revenge.

"Learn to lose your opinions - not your money."