Wednesday December 24, 2008
Navivest

Yesterday, we got home sales numbers that showed that on an annualized basis, sales of new homes had dropped to an 11 year low. Fortunately, even though the numbers were worse than expected, the stock market was able to look past it, or using Wall Street terminology, the news had already been discounted in stock prices. As a result, the Dow only dropped 100.28 points, to close at 8419.49 for a loss of just 1.18% on the day.

Among the economic news on tap today, we get Durable Goods orders, which tracks orders for manufactured goods with a long lifespan of at least three years and Initial Jobless Claims, which tracks newly unemployed persons.

Already released data shows that we lost 533,000 non-farm jobs in November of this year. This follows the 403,000 jobs lost in September and the 320,000 jobs lost in October, for a three-month loss of 1,256,000 jobs.

The stock market has shown a propensity of late to almost ignore bad news since they are now par for the course, but if we get an Initial Claims number that’s worse than the 545,000 that’s being forecasted, it might be a bad day for those that are long stocks.

Other than the crude inventories report which is due out at 10:30 AM, most of the economic news slated for today, will be released before the markets open, so traders will be able to make trading decisions without having to worry about upcoming news.

We are looking for some rebound after the holidays and after the economic news shakes out, towards the end of the trading day might be a good time to go long. The trading plan would be to see how the stock market takes the news today. If the market is ignoring the news and we have an upside bias, then start buying, if not, regardless of how bad stocks fall, towards the end of the day, around 3:45, start buying.

Remember the past few days, stocks have basically just waffled then ended the day to the downside. So if buying early today, then look for strong conviction. We want to see either at least a hundred points on the Dow right at the open and have that hold for at least thirty minutes, or if less than that, we want to see big moves of at least a dollar or more in some big name market leader Dow and Tech stocks with more stocks up than down by a decent margin.

Note, if we do get a rally after the holidays, take profits. Unless noted, the trading ideas that we post on the Navivest blog are all short-term trading ideas.

For a free two-week trial to our trading advisory services, The Options Capitalist and Navivest Equity Trader, click here.

 
Tags: Initial Claims  Durable Goods  Economic Calendar  Trading Idea

Tuesday December 16, 2008
Navivest

Today will be an interesting one for the stock market. We could possibly see a move to the downside in early trading, followed by a very nice move to the upside in later trading.

The monetary policy setting arm of the Federal Reserve, the Federal Open Market Committee, will be announcing its latest interest rate decision, after meeting yesterday and today. Most analysts and forecasters are expecting that they will cut interest rates further, with some looking for a cut of as much as half a point.

Before we get the decision on interest rates, which does not come out until 2:15, we have some economic news due out today that should dictate the early tone of the markets.

At 8:30 AM, we will be getting Building Permits numbers, CPI numbers and Housing Starts. There is a very good chance that the housing related numbers could come in worse than expected, so unless the stock market decides to trade higher on bad economic news, we may drift lower at the open.

In addition to the interest rate decision news, will be getting news from OPEC, which is expected to cut oil production perhaps by as much as two million barrels a day. That should help send oil and commodity stocks higher.

We are also awaiting word from the Whitehouse, with regards to help for General Motors (GM), Ford (F) and Chrysler. While we don’t know whether that news will come this week, next week or even later, we know news is on the way.

President Bush leaves office on January 20th, so we are looking for that announcement to come in the next two weeks. To the extent that the automakers are operating on fumes with just weeks’ worth of cash on hand, we could possibly get the news this week.

With all the news that’s due out, we are recommending traders take long positions today. Once the market opens, gauge to see if we have decisive trading or if the market is just treading water. If we are definitely heading down on the economic news, then wait until at least 10:30 AM or so, then start buying.

Trading psychology will come into play today. If stocks are moving to the downside early, don’t be scared to get in. If later on we do get the upside move, then buying on a dip enables traders to extract maximum gains.

If stocks are just drifting, you can start entering into positions around 10 AM. Some oil and commodity stocks that we like are Apache (APA), Anadarko (APC), Devon Energy (DVN), Mosaic (MOS), Agrium (AGU) and Bucyrus (BUCY). We also like the Proshares Ultra Dow 30 (DDM), which is a great play if the stock market is heading higher. While we prefer these names, if we do get a move to the upside, it would be a broad based rally.

If we are fortunate enough to have stocks move to the upside in the latter part of the trading day, then exit today and lock in profits.

Navivest, through our subscription based services, provides trading advisory services for traders. We currently offer two distinct products. These are The Options Capitalist service for options traders and Navivest Equity Trader for short to intermediate term stock traders. If you would like a free two-week trial to either service, click here.

Tags: Stock Recommendation  Trading Ideas  GM  Ford  Interest Rates  FOMC

Tuesday December 2, 2008
Navivest

Traders and investors will be watching the markets today to see if we continue with the massive slide we underwent yesterday. Stocks do have quite a few reasons to continue moving to the downside, as the economy remains in focus.

We got confirmation yesterday that the U.S is officially in a recession and we have more economic news in store that could highlight that fact, providing a negative tone for the markets.

Today we get auto and truck sales for the month of November and needless to say, those numbers will be dire.

The one ray of hope is that with the big moves we got to the downside yesterday, that almost creates an extreme situation, which should not extend too much more without a reversal. A major caveat however, we could test 7,500 on the Dow over the next couple weeks.

Tags: Trading Plan  Stock Market  Options  Trading Idea

Tuesday November 25, 2008
Navivest

Indications on where the stock market, as represented by the Dow Jones Industrial Averages, will open this morning have been moving in and out of positive territory all morning.

There are still hopes for some moves to the upside, as U.S. Treasury Secretary Henry Paulson will be announcing a plan to boost consumer lending today.

The plan, which is aimed at increasing the availability of auto loans, credit cards and student loans, will reportedly be operated by the Federal Reserve and will extend loans to investors who are willing to invest in securities that are backed by these assets.

Traders who did not get into the market Friday or early yesterday, could look at getting in before the Paulson speech. However, we do get preliminary GDP numbers for the third quarter at 8:30 AM. Then at 10:30, we get Consumer Confidence numbers for November. These could act as a deflator on the market, so it would probably be best to wait until after 10:30 to enter into long trades today.

If we do get any sort of a rally today, we recommend taking profits and unless there are opportunities for intra day trading tomorrow, staying out for the rest of the week.

Tags: Trading Plan  Trading Idea  Credit Crisis  Henry Paulson

Wednesday November 19, 2008
Navivest

With the rout we saw in the stock market today, that had the Dow, Nasdaq and S&P 500 shed 5.07, 6.53 and 6.12% respectively, we are hoping that the rebound that we have been looking for, will come tomorrow.

Today’s action should be a watershed that will hopefully give us a temporary bottom that we can bounce off of tomorrow.

From a technical and psychological standpoint, we do need to see some buying and a strong move to the upside tomorrow. We are already trading at levels we haven’t seen in five years and further violations of long-term support areas could result in further significant losses in shareholder wealth as those who for whatever reasons are still holding on to their stocks, decide to dump them.

If we have any buying in early trading, we would recommend getting in, so as not to miss a technical rally.

Tags: Technical Analysis  Stock Trading  Dow Nasdaq

Thursday November 13, 2008
Navivest

After three consecutive down sessions, stocks might be looking to rebound today. Assuming that the lowered Q4 guidance announcement from Intel yesterday or some other bad news does not overwhelm the market, we could get a rally that feeds itself.

If stocks start moving to the upside, then investors and traders who are sitting on the sidelines might get in, which could create a buying frenzy.

Word of caution, watch the markets carefully and make sure that we do have a positive day ahead of us. Obviously if we are in store for a bullish day, you do not want to wait until the markets have rallied before getting in, but we don’t want to get caught in a bearish trap.

Wait for the first 15 to 30 minutes of trading and if stocks are up, we have decent buying volume and we have a bullish advance decline line, then we can take long positions. On the other hand, if the Dow opens up about a hundred points, then get in early.

Some good trading candidates if stocks are moving up would be Dow components Caterpillar (CAT) and 3M (MMM) and market indices such as SPDR Trust (SPY) which allows you to trade the S&P 500 stocks.

Also, oil seems to be holding steady and could move higher today which would be good for battered oil-related and commodity stocks.

If oil continues to hold, traders should also look at stocks like Apache (APA) and Anadarko Petroleum (APC). That being said, we do get crude inventory numbers today at 11AM and if we get a bearish number, that could send oil prices lower.

The long and short of things are, we are willing to make long bets today if the stock market meets our above entry criteria. Worst-case scenario, if we enter and stocks fall, that creates further impetus for stocks to move up tomorrow or Monday.

However you trade, keep in mind its still a highly volatile market, so take those early profits.

Navivest provides subscription based trading advisory services for stocks and options traders. For a free two week trial to any of our services, click here and fill out the short form.

Trading Idea  Caterpillar  3M  Trading Plan

Monday November 10, 2008
Navivest

We are looking for the stock market to extend Friday’s gains today and if the market does not open too strongly, traders can look to enter short term trades with the aim of exiting as soon as profit opportunities present themselves.

Traders however, do need to watch for heavy volatility. November 15 is the deadline for investors in hedge funds that allow withdrawals with a 45-day notice, if those investors are looking to close out their accounts by the end of this year.

If hedge funds get those redemption notices, then they will have to sell shares to raise the needed cash, which will put downward pressure on the stock market.

The best course of action might be to wait for stocks to rally and then look to short stocks later in the week.

For those looking to trade today, we would suggest going long the market by buying the Ultra Dow 30 ProShares (DDM).

Remember, we expect volatility this week, so if you have a 2% plus gain in a trade on the day, exit.

Navivest provides subscription based trading advisory services. For a free two week trial to our products, click here and fill out the short form

Tags: Trading Plan  Trading Idea

Tuesday October 28, 2008
Navivest

The markets seem headed for a big open today although the pre-market indicators have been wrong over the past few days. If stocks do open strong and stay that way, then the approriate trade(s) for today would be to look to jump into long trades, with the aim of exiting today.

Tomorrow we get the Federal Reserve’s interest rate decision and while this could be taken as a positive for stocks with the expectation that we could see a rise, stocks might actually sell-off on the news since the rate cut, if we do get one, is being expected by the markets and won’t be a suprise.

Trading Idea:
Some names we like for today - if the stock market has a bullish day, are the Proshares Ultra QQQ (QLD), Apple (AAPL) and Mosaic (MOS). If these don’t open too much to the upside, then go long or buy at the money calls and again, look to exit today.

Tags: Trading Idea  Trading Plan  Stocks

Friday October 24, 008
Navivest

Unfortunately, if you weren’t already in short positions, you miss out on what will turn out to be a very profitable day as the stock market looks set for a mini crash at the open.

However, we will look for a bounce next week and we will be getting subscribers to Navivest’s The Options Capitalist out of our puts trades and go long the market if we find appropriate options trades, as we expect a bounce very soon.

If you would like to receive those trades as well as a free two-week trial to The Options Capitalist, click here and fill out the short form.

Tags: Trading Plan  Trading Ideas
 

Tuesday October 21, 2008
Navivest

We expect market volatility to continue through into today, as investors shift through the barrage of earnings report that we will be released this week.

Before the market opens today, some of the earnings releases we will be getting includes those from 3M Company (MMM), AK Steel Holding Corporation (AKS), Avery Dennison (AVY), Biogen Idec (BIIB), Caterpillar (CAT), Dupont (DD), Freeport-McMoRan Copper & Gold (FCX).

Most of these companies are economic barometers and depending on whether they beat or disappoint, they will set the tone for the market. There are no economic news due out today.

If the stock market is happy with the news from these companies and we open higher, then the trading plan for the day would be to go along for the ride and take profits as soon as you get them.

Look for the strongest sectors and buy the leaders on the day in those segments. Also, if it looks like a bullish market, buy calls on the Diamond Trust Series (DIA) which tracks the Dow 30 stocks and the S&P Depository Receipts (SPY), which tracks the S&P 500 index. Alternatively, buy puts on these instruments if the tone is bearish. Again, remember to take early profits.

Also watch out for volatility. The Dow closed up 413.21 points yesterday, but during the day, it fluctuated between double and triple digit gains. So you can look to maximize your profits buy buying low and selling high, then going short or buying puts and taking profits when socks pull back again.

Tags: Trading Idea