Thursday, September 20, 2012

The Day After a Stall

Did you notice yesterday was a stall day?

Stall days occur periodically in both up and down markets.

You have a rush for several days, weeks or even months where things  maintain an up or down trend. Then suddenly prices of stocks which had traded freely for a while judder to a stop. A stock moving dollars moves for pennies. It just happens.

You are in a Stall condition.

When this happens look for the markets to reverse for a while. Pundits and media advisors will give you reasons for the Stall. "Bad employment numbers", "Good  employment numbers." "A broker changing from buy to hold" any excuse will do.

What is happening is the market makers are running out of steam. They have pushed the market to where they wanted it to be. Now they momentarily hesitate, prices hover before the reverse.

Don't move to buy in the immediate aftermath of a stall. They can overstoot on the reverse, going too low in the down. Rising too quickly for you to catch the bus on an upturn, then leaving you stranded as they over correct again.

Yesterday saw a stall. I would hold tight for the next month or so. Pundits will blame economic factors and election uncertainty, but we will see a bouncy period in the markets until Thanksgiving, I feel.

After Thanksgiving however look for a surging rally towards Christmas. This is the period of Annual Bonuses so look for a major upturn in the markets as the end of the year approaches.

The old proverb, A Broker loves a Christmas Bonus should be writ large on every investors calendar.

Then plan to rebalance to cash for a New Year buying spree at the Wall Street January Sales.

Monday, September 17, 2012

Summer's Gone. Starbucks Anyone?

If, back in May you had taken the traditional advice espoused by many stock market pundits, "Sell in May and go away!" you would have missed this summers rally in the market and now becoming back.

Over the summer I did not do much. It has never seemed to be good practice to sell in May to me. This year proved it to be very unwise.

Last weeks extra little jump in the markets however caused me to pause and look at my portfolio's and rebalance them.

One stock I had bought with some hope a while back was Qualcomm (QCOM) this chip company never really performed well for me, so with the Apple (AAPL) move up last week Qualcomm made a rise which took it into reasonable profit territory for me, so I sold out in order to look for another more profitable opportunity

. With Bernanke's move on Wednesday last, I am thinking that some US consumables might be interesting. I am still a hold on Apple (AAPL) buying on that pullback in early summer has left me with some nice earnings. I plan on holding to about $700 and then clipping off a few shares that will return most of the initial purchase for all the shares I bought, back at $550. Any pullback then will mean the stock would have to fall along way for me to lose all of my money.

Another stock that looks interesting at under $60 is Starbucks (SBUX). I plan to use a good portion of the Qualcom sale proceeds to buy in here.

Why Starbucks?

Well a couple of reasons.

They have paid a reasonable dividend, 17cents per share.

With the forecast of lower coffee prices over the next few months and an acquisition of a food supplier for bakery services things look good to expand breakfast and snack services

. If Bernanke's policy works, We could see the American people move back to spending more money on small treats and rewards. Starbucks has always been seen as an indulgance and a reward. A daily life luxury and I see a return, if only a brief one, as people will see themselves as a little more prosperous following the stimulus and possibly post election euphoria may help, depending on the winner.