the Trade-Radar + TradingStockAlerts blog

I woke up this morning thinking that the financials have had their run. The ProShares Ultra Financial ETF (UYG) has moved up about 20% from its recent bottom over the course of just a couple of weeks. With the Fed decision looming, I thought it best to take profits. If the Fed only cut by 25 bps or didn't cut at all, I thought financials, and probably the rest of the market, would plunge. On the other hand, with a 50 bp cut widely expected, I felt there wouldn't be that much upside. Especially as it may signal that the economy is in worse condition than many thought. In any case, after the Fed announcement, investors will be getting back to focusing on the economy and the financial state of those stocks making up the sector. And that may not be a good thing. In terms of the economy, there are so many mixed signals that one can't be blamed for taking a cautious stance. In terms of the financial companies themselves, most of the major names have reported earnings already. The...

Graham Corporation (GHM) is a company located almost in my backyard, so to speak, so it was with interest that I reviewed their third quarter earnings announcement this morning. Graham is a small-cap company in the industrial sector. They are an equipment manufacturer for the oil refinery, petrochemical, power generation, fertilizer and pharmaceutical industries, etc. Its products include steam jet ejector vacuum systems; surface condensers for steam turbines; vacuum pumps and compressors and various types of heat exchangers. The numbers -- Sales were up $6 million over the previous year's quarter but down $3 million sequentially. Net income for the third quarter was $3.8 million, or $0.74 earnings per diluted share, compared with $666 thousand, or $0.14 earnings per diluted share, in the prior year's third quarter. On a sequential basis, earnings were down $600 thousand compared to the previous quarter. Domestic sales were 52% of total sales for the third quarter of fiscal 200...

I have been neglecting this blog lately and barely paying attention to the markets. Rest assured, though, I haven't been slacking. I have been working on a new approach for using the TradeRadar software. I have developed a method of scanning practically the whole stock market and applying an automated version of the TradeRadar signal software. The tests involved have been beefed up and made more rigorous. Given that the process is automated, there is less left to interpretation. How it works I scan the AMEX, the NYSE and the NASDAQ. That amounts to over 8500 securities including stocks, ETFs and closed end funds. The most up-to-date list of symbols for each exchange is read in. Then the software sequences through each symbol in each exchange, pulling in a year's worth of daily data and looking for recent trend reversals. In addition to the basic TradeRadar signal, trend lines are calculated and analyzed for direction (up or down) and steepness of the angle. To help confirm the ...

It was a gut feeling as much as anything, but it seemed to me that financial stocks were ready for a bit of a resurgence. Watching the UltraShort Financial ETF (SKF) jump and then proceed to plunge on Tuesday was the first tipoff. Seeing that behavior begin to repeat Wednesday morning convinced me that perhaps financials were ready to make a real move up. Since I had no idea whether this would be a sustained move or not, I elected to open just a small position in the ProShares Ultra Financial ETF (UYG) in mid-morning. It was then a pleasant surprise to see the hard-charging financials lead the market upward in the late afternoon on news that New York State's insurance regulator was encouraging banks to support bond insurers. Combined with Tuesday's surprise rate cut and another rate cut expected when the Fed meets next week, it does seem like a few factors are now falling in line to support the financials after their long decent from their peak last summer. Having gotten in at ...

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 ...

Most of the posts I and other financial bloggers write are typically focused on individual stocks or ETFs and managing active portfolios. For those folks who are more conservative investors, those whose main investment vehicle is a 401K, for example, the techniques for portfolio management might be a little different. The news of stock markets falling and pundits predicting recession is disconcerting to professional investors as well as to those of us who are watching our balances in an IRA or 401K sag. What approach should the average 401K investor take? Let's assume that the investor is contributing on a regular basis to one of these retirement accounts. There are two questions that the investor needs to ask: 1. Should I stop putting the regular contribution into stocks? My feeling is that investors making regular contributions are being handed a present by the markets. Every week the market goes down, these investors are lowering their average cost. When markets reco...

The other day IBM pre-announced their fourth quarter earnings. The NASDAQ and the entire tech sector jumped on the good news that was presented. Today after the close, they provided positive forward guidance, saying 2008 profit would rise in the neighborhood of 15% to 16%. This exceeded analyst expectations and gave the stock a nice bump up in after hours trading. The positive outlook on 2008 may provide an excuse for a market-wide rally or at least a tech sector rally. But really, can it be said that IBM is a fair representation of the market or the entire tech sector? I'll try to answer this question by reviewing IBM's business segments, organization, workforce and customer base. Business Segments -- Looking at IBM's business segments, it can be seen that they offer far more coverage of the technology space that those of the typical tech company: Global Services - this is the segment responsible for installing technology-based solutions at client companies. Within Global...