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Archive for July, 2010

All notes in Lending Club current

As I feared on Friday last week that one of my notes may default, the borrower paid today. So all my notes are current. It however doesn’t mean anything, since the borrower may default next time, but at least the risk is lower now.
Today I also purchased a new loan note completely funded by repaid principals and interest. That means that every month I deposit 100 dollars to my Lending Club account, purchase 4 notes and add one new note from reinvested proceedings. So now I am buying 5 notes monthly instead of four notes as at the beginning.

I am very satisfied with this snowball so far. However I still am aware of the investing risk I am undertaking and try not to be too greedy (as I was at the beginning by purchasing large loans with high interest) and keep investments on the very minimum amount. I would rather buy thousands of loans than a few.

Posted by MartZee July 22, 2010

Better than expected earnings reports moved indexes up

Some companies which are major components of S&P 500 reported better than expected earnings. That moved the stock market to a rally attempt. Will this be a sufficient catalyst for the market to sustain the growth? We will see.

Caterpillar Inc., 3M Co., UPS Inc. and AT&T Inc. all topped earnings forecasts and raised their outlooks for future profit. Only Travelers reported a dip in earnings, but that came as bad weather led to more claims payments.

The Dow Jones industrial average rose 119.88, or 1.2 percent, to 10,241.85. The Standard & Poor’s 500 index rose 15.00, or 1.4 percent, to 1,084.59, while the Nasdaq composite index rose 35.56, or 1.6 percent, to 2,222.89.

I would still proceed with caution and postpone purchasing individual stocks or ETFs. I would be buying NTF (No Transaction Fee) mutual funds in smaller portions rather than one big purchase and take advantage of possible further decline in price if the market slips back into correction.

Market back in correction

Trading ended with a huge loss today:

NEW YORK (Reuters) – Downbeat consumer sentiment data and weak revenues from GE and two big banks slammed stocks on Friday, driving major indexes down more than 2.5 percent.

The Dow Jones industrial average (DJI:^DJI) slid 261.41 points, or 2.52 percent, to end unofficially at 10,097.90. The Standard & Poor’s 500 Index (^SPX) dropped 31.60 points, or 2.88 percent, to finish unofficially at 1,064.88. The Nasdaq Composite Index (Nasdaq:^IXIC) fell 70.03 points, or 3.11 percent, to close unofficially at 2,179.05.

The three major U.S. stock indexes erased their weekly gains; each index closed down roughly 1 percent for the week.

(Reporting by Rodrigo Campos; Editing by Jan Paschal)

That it so big one day loss that it changes the market status into “Correction”. No new buys of stocks this time (if buying I will be buying mutual funds in small portions as the price will be dropping). Next week we may see more action as more reports will come up. As for my portfolio here is a calendar of upcoming reports:

Jul 28, 2010    Q3 2010  Visa Inc Earnings Release,  consensus estimate:  $0.928, Conference Call @ 5:00pm ET

Jul 20, 2010    Q2 2010  Johnson & Johnson Earnings Release,  consensus estimate:  $1.21

Posted by MartZee July 16, 2010

Market under pressure

The market opened lower today and is under pressure slipping back into correction. As I expected, the earnings wasn’t very good so far: bank revenues lag, Google disappoints, and Consumer Sentiment falls from previous 76 to 66 points and that drags the market down. As of this morning the Dow was 10,199.39  -159.92  -1.54% Nasdaq 2,208.07  -41.01  -1.82% and S&P 500 1,077.47  -19.01  -1.73%. If the market closes with these losses today, I will change the status back to correction.

Market in Rally Attempt

Market in Rally Attempt

When I wrote my post on July 7th about stocks rallying on earnings expectations I warned about this rally as it is not confirmed and it may fail. Even though the market made an impressive move and achieved great gains since then, it is still in an overall downtrend. Last couple of days I was quite busy, so today I could go back to check the chart more in detail and determine whether I can consider this rally attempt to be changed into a confirmed rally, since the market was gaining the whole last week.

If you had a chance to study books about how to recognize the trend of the market, you may already know what the characteristics are. When you take a look at the chart of S&P 500 you won’t see the market in confirmed rally yet:

S&P500

To confirm the trend we want to see it creating new higher highs and new higher lows. We want to see it trending above 200 MA and above 50 MA. None of it is happening yet. Although the market created nice reversal in oversold zone (see the arrow) on a strong volume and moved more than 3% that day, this new trend still may fail. When you take a look at the weekly chart, the picture is even clearer:

S&P500

When taking look at the weekly chart, we can see that the market did a reversal in March 2010 which ended the previous impressive recovery rally and then on strong momentum declined and reversed in June 2010. However as we experienced that June’s trend failed. So this new rally attempt still doesn’t tell us anything about the trend. Will it survive or will it fail? If it fails, the momentum is getting stronger and we may expect further drop dragging the stocks down with it, or if it survive, the stronger momentum can move the market higher and we can start recovering from this correction (which still looks quite healthy to me, so no worries about second dip…yet).

Until this happens, it would be very risky buying stocks right now. If the trend confirms itself you may feel sorry that you haven’t jumped in, but buying now may bring losses if this is a false trend. The choice is yours.

Stocks rallied on earnings expectation

Today, the stock market rallied on earnings expectation, which on the other hand makes me feel like wishful thinking. If the earnings show to be disappointing, the stocks will fall back down. Today’s gains were very impressive as the Dow Jones Industrial Average (DJIA 10,018, +274.66, +2.82%) closed above 10,000 points for the first time since June 28, boosted by financials, technology and energy stocks. The S&P 500 (SPX 1,060, +32.21, +3.13%) rose 3.1% to close at 1,060, and the Nasdaq (COMP 2,159, +65.59, +3.13%) advanced 3.1% to close at 2,159.

These gains would normally change the market status into a confirmed rally, but in such a volatile environment we are recently experiencing I would stay with a Rally Attempt status and wait for confirmation to see whether this rally sustains or it is just another bull’s trap.