Skip to main content

Weekly Market Update - still waiting for an up week

The financials killed us again this week with Washington Mutual, Citigroup and Merrill Lynch announcing massive losses. This was accompanied by more gyrations among the bond insurers. Based on write-offs by Merrill and others, analysts figure most of ACA's guarantees for CDOs are close to worthless. Ambac and MBIA are flailing about in tatters with ratings agencies seemingly lowering their credit ratings every week.

It was a standoff in tech with bellwether Intel coming in light on fourth quarter earnings and providing cautious forward guidance offset by IBM beating analyst expectations in both Q4 and 2008 projections. AMD surpised by meeting their projections for 4Q07 but still reported a large loss. They are by no means out of the woods yet.

Despite generally positive results from GE, manufacturing took it on the chin when the Philadelphia Fed's reading on regional manufacturing activity came in stunningly below expections.

After all this, I expected a rally on Friday based on the over-sold nature of the market and IBM's results but down we went again to leave the Dow and NASDAQ down 4% on the week and the S&P 500 down a whopping 5.4%.

What's next? Most of the big financials have reported already so the worst may be behind us in terms of 4Q07 earnings news. Energy stocks may disappoint as oil prices, which have been erratic lately, seem stuck in trading range. Still, investors continue to worry about the next shoe to fall in the financial sector and what ripple effects it will have on the economy as a whole.

With investors looking with trepidation at the remainder of 2008, last quarter's earnings may not carry much weight. Markets will be watching the guidance provided by reporting companies and stocks are likely to rally or falter based on how optimistic management teams are.

Comments on the TradeRadar portfolio

I have been watching the iShares FTSE/Xinhua China 25 ETF (FXI) and on Thursday it finally broke down out of its wedge-shaped chart pattern. This brings it right down to its 200-day moving average. On Friday, FXI bounced off the 200-day MA but was unable to penetrate the resistance level that was previously the lower boundary of the wedge. There was a report this weekend that a central bank official in China was quoted as saying that if US consumption comes down significantly it will have a serious impact on Chinese exports. This throws more doubt on the "decoupling" concept. I assume FXI is primed for more weakness unless there is a significant and sustained rally in US markets. Accordingly, I maintain my position in FXP, the ProShares UltraShort FTSE/Xinhua China 25 ETF. And, yes, we are again showing a profit in this position.

With the S&P 500 down 5.4% this past week, we saw a nice gain in the ProShares UltraShort S&P ETF (SDS). The chart for the S&P 500 looks horrible, it has been dropping practically straight down, so I think it will need to establish a bottom before it can begin to move up. Accordingly, it seems safe to continue to hold SDS.

I track the SPDR Technology ETF (XLK). This week it got a boost from IBM's pre-announcement but quickly resumed its recent downtrend. Our position in the ProShares UltraShort Technology ETF (REW) continues to grow. Tech seems more mixed than ever with results varying all over the board. With the negative sentiment in the markets and the unpredictability of techs we will continue to hold REW and keep a close watch on it.

We still keep a small position in Generex Biotechnology (GNBT). As it drooped down to this week's closing price of $1.42, it is approaching our stop at $1.34. If markets keep up their dismal behavior we may finally end up closing this long-held position.

As for the PowerShares DB Oil ETF (DBO), it seems trapped in a horizontal channel; however, it is sitting at the bottom of the channel at $32.83 as of the close Friday. Another serious drop in the price of crude and we could see DBO hitting our stop at $32. That would signal a potential drop into the $28 to $30 range.

As can be seen, the portfolio is mostly bearish. Sad to say, this negative period in the markets has turned out to be reasonably profitable for the TradeRadar portfolio.


blogger said…
Be Alerted to the Hottest Stock Picks!!
Join Emerging Growth Alert Newsletter !

By joining the team at Emerging Growth Alert you will be in position to receive stock alerts profiling stocks about to move or already in motion. Our alerts are sent in time for you to research, investigate and make a decision about whether this opportunity is right for you. You will not be bombarded with junk mail. There is ABSOLUTELY NO OBLIGATION, and the service is entirely FREE.

You may think this is spam but this is only an invitation for those interested to receive Stocks alert – ONLY stock alerts... Thanks to those who subscribed :)
Anonymous said…
Dear Visitors,

This blog is really nice and informative. We do think our posting will be highly beneficial for you too. As we know now a days
stock market trading has just became a joke, every third person who don’t even know about the name of exchanges is willing to
do trading due to which in recent past we have seen few shares which are fundamentally very week but had flied high in rally.
But now everyone is trapped in those sort of companies.

Now best strategy is to wait and watch let Nifty close above 5350-5400 for 1-2 days only then strength will come back in market.

We are expecting short covering above these levels.

Till then our approach should be wait and watch trade in less quantity.

Sharetipsinfo Team

Popular posts from this blog

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position. This first post in the series starts at the beginning: getting good investment ideas. Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets. As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street profess

Interactive Ads - Google one-ups Yahoo again

Google's ( GOOG ) press release describing the expansion of a beta program for what are being called Gadget Ads has again shown that Google is unparalleled at melding technology and advertising to benefit its bottom line. Gadget Ads are mini-web pages or "widgets" that can be embedded within publisher pages. I have written in the past on Yahoo's ( YHOO ) Smart Ads and how, by more precisely targeting site users and adjusting ad content accordingly, they provide a much desired evolution of the banner or display ad format. Though Smart Ads and Gadget Ads are not really the same, I think it is fair to say that Google has seen the challenge of Smart Ads and has chosen to leapfrog Yahoo by rolling out its own update to the display ad format. The evolution of the Gadget Ad -- One of the trends on the Internet over the last year or so involves software developers creating "widgets" which can be hosted within web pages and blogs. Widgets can be pretty much any

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. ( Click here to read the original post ) With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas. Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing wh