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Direct Access Trading for Stocks & Options
added: Tue, 19th December 2006 | 374 views | 0x in favourites
feed url: http://www.nobletrading.com/blogs/rss.xml
This feed by NobleTrading.com provides information about stocks and options. Find newsletters about latest stock market trends and ideas to stay on top in all stock dealings.
Latest feed entries:
Wolfe Waves Trading Pattern
Wolfe waves are trading patterns which occur naturally in all financial markets. Wolfe waves are considered as one of the most reliable trading pattern for finding the trends, supporting and resistance levels, possible equilibrium price range and the breakouts. Wolfe waves are created as a result of both short-term and long-term trading, as thus can be useful to any type of traders trading any product.
A five point wolfe wave is the complete wave consisting of 5 waves with equal time intervals and symmetry. A bearish trend consists of 3 bearish and 2 bullish trends and a bullish trend consists of 3 bullish and 2 bearish trends. The waves must fulfill certain regulations
- The range of wave 3-4 must equal to that of wave 1-2.
- There should be regular intervals between all waves.
- Waves 3 and 5 should show Fibonacci relationship (127% or 162%) with previous channel points.
- Wave 5 should extend beyond the trend line formed by wave 1 and 3.
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Strategies to Profiting from Weak US Dollar
Fall in dollar price compared to other foreign currencies can sufficiently affect a normal portfolio. Weak dollar triggers a chain reaction in the county’s economy, which includes increase of trade deficit and national deficit, increase of imported product price, interest rate hike, etc. However investors can also hedge against their portfolio value decrease by following many strategies.
- Investing in exporting companies. Weak dollar favors exporting companies as they get more dollars in exchange of foreign currencies that they get as a result of trading.
- Investing in multi national companies (MNCs). And also companies which get considerable part of their income from foreign countries.
- Investing in companies which are indirectly benefited from weak dollar. Such as companies that support exporters by providing them materials and services, companies which have production units in other countries, and outsourcing companies.
- Investing in foreign companies, funds and markets.
- Strategies that can benefit you in interest rate increase.
- Investing in gold and other precious metals.
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Weekly Stock Market Letter, May 12, 2008
The Week Ahead: The price of oil reached new highs daily for five straight days, and the lower trade deficit in March reflect a slowdown in the economy with consumers cutting back. Reports to watch are Tuesday's retail sales, import prices, and business inventories. Wednesday brings the Consumer Price Index while Thursday the industrial production and jobless claims numbers are released. The University of Michigan's Consumer Confidence numbers as well as housing starts are announced Friday.
Stocks to Watch: Shares of Bristol-Meyers (BMY) fell sharply after news of European competition for the generic version of its drug Plavix, but support in the low 20's could be at hand. Medicis Pharmaceutical (MRX) had earnings that more than doubled and received a strong upgrade by S & P as the stock moved up from a price base. A turnaround in the 4th quarter earnings for Activision (ATVI) saw revenue rise by 93% thanks to its Guitar video game sales as the stock lifted to new highs.
Special Note: Financial stocks were the biggest drag on the markets in the past week with some technology stocks disappointing as well. Support for most major indexes appears to be surrounding their respective 50 day moving averages since the lows recorded in both January and March. In contrast, resistance would be just north of the 200 day moving averages. Both moving averages are merging which could be indicating a sharp price move developing in either direction weeks from now.
Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.
To view all of NobleTrading's historical newsletters, click here.
Click here to open an account.
NobleTrading Direct Access Trading
email: info@nobletrading.com
phone: 877.872.3311
web: http://www.nobletrading.com
What is Systematic Risk?
Systematic risk also known as systemic risk, market risk and un-diversifiable risk is risk which applies to whole market or market segment. It is opposite to idiosyncratic risk which applies to specific stocks or other financial products. Often systematic risk results in declining of total portfolio investment value as all/most portfolio investments declines in value.
Systematic risks often originate from political or economical problems, wars, interest rate changes, and calamities. They are usually hard to avoid; and avoidance steps should come from higher authorities like governments. Usually systematic risks cannot be minimized by diversification of investment in a particular market segment; but may be by investing in different market segments, because the factors causing the risk affect different market segments differently. The major ways to reduce these risks are avoiding investments, reducing investments and hedging investments.
Systematic risks often trigger a chain reaction in an economy. They necessitate change of plans and strategies by governments, companies, banks, financial markets and individual portfolios. Systematic risks are also a major cause for failure of banks. The beta value of a stock gives information about the systematic risk it faces.
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Different Ways to Invest in Gold
Gold is considered as the major hedging investment against inflation and economic crisis. The price of gold is some what steady compared to other investment options. There are many different options available for investing in gold.
- Gold bullion: involves investing in certified gold bars and gold coins. This is somewhat costly option which includes the direct ownership of the commodity; and thus includes storage and insurance costs. The price volatility of gold and dollar can cause positive or negative impacts.
- Gold jewelry: this is a more costly option from an investment point of view as you are buying product which is far more priced than the underlying gold value. But is a good option if gold price is expected to rise considerably in future.
- Gold based ETF and Mutual funds: cheaper option compared to first two and one does not need too much investing knowledge or research. No direct ownership required. But the fund allocation of mutual funds and ETFs may differ and thus investors should choose the one right for them.
- Futures on Gold and Options: For those having trading experience, gold futures are the most cost effective method to invest in gold. Because of low commission and margin requirements investors can control large sized contracts for small amounts. Options on gold futures are also a good option as they limit risks.
- Stocks of gold mining companies: this is one another indirect way of profiting from gold. But there are risks of holding equities and one should do proper research and analysis before owning a companies stock.
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What is Capital Growth Strategy?
Capital growth strategy is an aggressive asset management strategy, which aims at maximizing value of the capital or asset. It is a long-term strategy in which the portfolio is mainly constituted of equities. Capital growth strategy is usually a high-risk high-profit strategy which requires extreme money management and discipline.
Usually, a more than 65% of a portfolio based on capital growth strategy is of equities; the exact percentage can vary according to individual goals, portfolio capital and risk tolerance. 20 to 25% capital is allocated for fixed-income securities to limit the overall portfolio risk. More portfolio diversification is achieved through money market securities and keeping money as cash. Most individuals following capital growth strategy prefer growth stocks for investment. Most give preference to mid-cap and small-cap stocks because many of these sector companies show higher growth rate than market average.
The upside of capital growth portfolio management is faster capital appreciation – i.e. increase in asset value with rise in market value. The downside is high risk, high portfolio volatility and unpredictable return. One should properly analyze his financial stability and risk tolerance before adopting this type of portfolio management strategy.
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Ratios for Good Stock Picking
Determining the strength of the company and growth possibilities of its stocks are important steps in stock picking with a long-term profit goal. Traders and investors use many technical indicators and ratios for this purpose. Below are some of the important ratios to be considered when picking good stocks.
- Reserves and ploughback : Reserves are the accumulative profit of the company and plaughback is the profit available for adding to reserve after expenses and dividend payoffs. Growth companies usually have high reserve and high ploughback.
- Book value : shows the worthiness of company shares. Book value per share is the ratio between total asset minus total liabilities of the company and total equity shares.
- EPS (Earnings Per Share) ratio : one of the most important investment ratio. Is calculated as profit after tax divided by number of issued equity shares.
- P/E (Price to Earning) ratio : shows the relationship of market price of stock with earnings per share (EPS).
- Dividends : Many investors own stocks for yielding dividends. Although most growth companies offer very small dividends at their growing phase; they offer good returns over long periods of time.
- PEG (Price/Earnings to Growth) ratio : shows whether a stock is fully or over or under priced. It is a comparison of P/E ratio of the company with the expected future growth of the company.
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NobleTrading Stock Market Letter, May 6, 2008
The Week Ahead: Employment fell for the 4th straight month in April, but the decline was smaller than expected. Wage growth continues to stagnate as well as consumers cut back on spending. Further evidence could be in the Non-Manufacturing Index for the service sector on Monday. Also, watch the consumer credit numbers and pending home sales on Wednesday. The chain store sales figures and wholesale trade inventories will be out on Thursday. The March trade balance will be released on Friday.
Stocks to Watch: The aircraft components business of Triumph Group (TGI) was solid in the 4th Q beating estimates and recording a strong backlog of orders. Shares of Netsuite (N ) showed a smaller 1st Q loss versus a year ago and sees a potential breakeven 2nd Q, but the shares still made a new low after going public in December of 08'. The aerospace and industrial components maker, Barnes Group (B ), beat earnings from a year ago and boosted there forecast for 2008, but the stock could see resistance at its 200 day moving average.
Special Note: The three major indexes are either at or approaching 200 day moving average resistance. This may limit upside potential near term, but the back-in filling nature of the recent rally may also limit downside risk as well. With the volatility Index (VIX) now at its lowest level since last November look for markets to trade in a relatively narrow range with upside potential increasing the longer the markets stay sideways. One potential positive catalyst for markets going forward is a peak in oil prices followed by a lower gas price trend.
Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.
To view all of NobleTrading's historical newsletters, click here.
Click here to open an account.
NobleTrading Direct Access Trading
email: info@nobletrading.com
phone: 877.872.3311
web: http://www.nobletrading.com
Commodity Channel Index or CCI Indicator
Commodity Channel Index (CCI) is one of the most popular momentum indicators used by traders to identify trend formation and ending, and/or overbought and oversold conditions. CII was originally developed by Donald Lambert in 1980 for commodity traders, but is now widely used by all traders trading all financial instruments. Commodity channel index is considered a better trading tool when used in conjunction with other indicators.
The basic idea behind Commodity Channel Index is that the market moves in a cyclic fashion with periodical ups and downs. The actual formula for calculating CCI is some what complex, the simplified one is,
CCI = (Current Price – Simple Moving Average) /0.015 x D.
Where D is the normal deviation OR Typical Price, which is calculated as
Typical Price = (High + Low + Close) /3
Commodity channel index is used as an oscillator having positive and negative values (the value 0.015 is used for this purpose).
With Commodity channel index overbought conditions are identified when CCI is above +100 and oversold conditions are identified when CCI is below -100. Beginning of an uptrend is identified when CCI crosses +100 line and beginning of a downtrend is identified with CCI crosses -100 line; the trend ends when CCI crosses back over the line. Buy signals are generated when CCI crosses +100 and the position is closed before or on reaching back +100. Similarly sell signals are generated when CCI crosses -100 and the position is closed before or on reaching back -100.
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Tactical Asset Allocation Strategy
Tactical asset allocation strategy is a moderately active portfolio management strategy, which includes adjustments of investments with respect to short-term goals. Although the basic idea is to diversify investments and limit risks, investment preferences are given to different asset classes with respect to short-term yield predictions.
A tactical asset allocation strategy starts just like a strategic asset allocation strategy with diversification of portfolio with respect to long term goals in mind. The investor/portfolio manager then readjusts the investments with different asset classes. If equities are predicted to perform well in the near future, he/she allocates more capital for it; and if bonds are predicted to perform well, then more investments in bonds, and so on. Once the preferred result is obtained, the investor returns to the original allocation ratio desired for long-term goals.
Success with tactical asset allocation requires good money management, and ability to interpret and predict short-term trends. Investors consider P/E and P/B ratio of equities, fundamental indicators, various momentum and sentiment signals, and economic predictions in making decisions. The investor/portfolio manager must be keen enough to go back to original ratio, once the short-term profit opportunity is diminished. Tactical asset allocation strategy, in theory, can offer better results than strategic asset allocation strategy; but it also has more risks associated with it.
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Risks Associated with Forex Trading
Although Forex trading is becoming the number one choice for many novice traders to make profit, it is not at all free of risk. There are many other risks associated with Forex trading other than the common ‘trading risk’ that occurs as a result of price difference.
- Credit risk or default risk – Credit risk in Forex trading occurs when the counter party fails to payoff the currency position as agreed. This happens when the counter party has planned to payoff you from future cash flow, which does not occur as planned.
- Replacement risk or Replacement cost risk – Occurs when one needs to replace a contract, because the counter party fails to meet the terms of contract. The markets/prices may be changed from original, so the replacement contact now has to deal with new changes.
- Settlement risk – This occurs as a result of difference in prices at different time zones of the world. The creation of CLS (Continuously Linked Settlement) has eliminated the time differences.
- Exchange rate risk or currency risk – occurs as a result of changes in exchanger rate.
- Interest rate risk – occurs as a result of changes in interest rate by central banks. Affects Forex futures contracts more than spot contracts.
- Dictatorship risk – occurs when Governments impose restrictions or interferes with currency trading activities.
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Weekly Stock Trader Newsletter, April 28
The Week Ahead: Despite consumer confidence at its worst level since the early 1980's, S&P 500 non-financial companies first quarter earnings are still benefiting from a stronger global economy and weaker dollar. The FOMC meeting which begins Tuesday will end Wednesday with a decision on interest rates as a 1/4 point cut is now widely anticipated. Also watch first quarter advanced GDP numbers released on Wednesday, the personal income and spending data on Thursday, and an important April employment report on Friday.
Stocks to Watch: A big 84% surprise revenue increase in Southwestern Energy (SWN) and a doubling in earnings lifted this stock strongly to new highs. Goodyear Tire & Rubber (GT) surged through its 200 day moving average after announcing a big turnaround in first quarter earnings from a loss to a gain on 10% sales growth. The container shipment company, Horizon Lines (HRZ) cut its 2008 earnings target, but the stock could be nearing an important low. MEMC Electronic Materials (WFR) gave a cautious 2nd quarter outlook for its semi-conductor applications.
Special Note: Although another interest rate cut is expected by Wednesday, the bond market is forecasting that the Federal Reserve will stop cutting rates after the April 30 meeting possibly for the rest of the year. The S&P 500 and Dow Industrials could be looking at there best month since April of 2003 halting 5 straight monthly declines. Signs that oil may be peaking are in data suggesting there are no shortages and demand is slowing. Speculation seems to be the driving force for oil price increases.
Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.
To view all of NobleTrading's historical newsletters, click here.
Click here to open an account.
NobleTrading Direct Access Trading
email: info@nobletrading.com
phone: 877.872.3311
web: http://www.nobletrading.com
Margin of Safety Investing Strategy
Margin of Safety is one of the most trusted investing strategies, made popular by highly successful investors like Warren Buffet. The term – margin of safety – was coined by the father of value investing, Benjamin Graham, in 1934. The basic idea of this strategy is to buy low and sell high.
Every stock has an intrinsic value or true work. Any up or down price deviation from this intrinsic value is just deviations, and the stock price ultimately reaches its intrinsic value. Investors can assign a margin of safety with respect to the predicted intrinsic value of the stocks, usually the margin of safety 30 or 40% of the intrinsic value –more the percentage more the chance of profit and low the risk. Investors can buy stocks when they fall below margin of safety and sell them when they move above their intrinsic value.
Margin of safety investing strategy minimizes the downside risk as it offers a margin rather than a fixed price. But the prediction of intrinsic value is the most difficult task; investors have to develop their own strategies for this. Investors can use various value analysis tools for this purpose like P/E ration, book value, asset to liability ratio, investments in other companies, etc for this purpose.
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Benefits and Pitfalls of Simulated Trading
Simulated or Paper trading is so far the best strategy one has to experiment with trading strategies and tools without putting actual money in the market. Simulated trading really favors novice traders to get experienced to the trading systems, technical analysis tools, market behavior, etc. But paper trading has both benefits and pitfalls, and what you get will mostly depend on how you paper trade.
Simulated trading provides novice traders a chance to experience the actual trading process - placing orders, analyzing real-time data, effect of margin on trading, placing stop-losses and position sizing. They let you to experiment with trading strategies without the fear of losing money. The main use of simulated trading is to get used to a trading system, so it allows you to know all/most tools and performance of your future trading system.
But simulated trading is usually no way near the actual trading. In actual trading, traders’ fear-of-loss, emotions, risk tolerance and trading psychology are strong factors which determine the success. Often most brokers offer a fixed size account, like $1million or half a million, but the trader’s initial capital investment may be far less or high. Many times, paper trading accounts allow you to place orders for quantities which are not available in actual market, and execute orders for unavailable prices. Also many demo traders try to profit very much with their accounts, not respecting many actual market conditions and forces.
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Strategic Asset Allocation Strategy
Strategic asset allocation strategy is a portfolio management strategy, which includes periodical adjustments of investments with respect to the long-term goal. The basic idea is to diversify the investments and limit the portfolio volatility. But strategic asset allocation strategy does not include over-investing in either high-profit or low-risk securities.
In general, strategic asset allocation strategies do not consider the short-term performances of allocated assets. They only look for long-term performances, which is often positive to almost all investments. For example if stocks grow at 10% and bonds at 5% annually, then with a 50-50 asset allocation 7.5% yield is predicted, and the portfolio manager adjusts asset allocation to meet this yield.
Strategic asset allocation strategy requires long-term anticipation and forecasting. Portfolio managers consider various economic indicators and industry performances when readjusting the investments. If higher inflation rate is expected then more investments are done in stocks and commodities and less in fixed-income securities. Even the asset allocation for stocks can vary considerably; if low inflation is predicted then growth stocks and/or small-cap stocks are preferred and if high inflation is predicted then value stocks and/or large-cap stocks are preferred.
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NobleTrading Weekly Stock Market Letter, April 22
The Week Ahead: A number of mixed earnings reports didn't stop the DOW from rising over 500 points despite oil prices reaching there highest levels ever. If the market has further to go it will have to digest many more earnings reports plus the existing home sales and oil and gas inventory reports on Wednesday, and the new home sales and durable goods numbers on Thursday. The consumer sentiment reading for April is due on Friday.
Stocks to Watch: Recent strong earnings in Caterpillar and Honeywell have bolstered expectations in Cummins Inc. (CMI) which reports on April 30. Revenue growth targets for Intuitive Surgical (ISRG) are still shy of expectations even though earnings were higher as the stock dropped 60 points. Carpet maker, Mohawk Industries (MHK) beat earnings estimates by a nickel as its stock pushes up towards its 200 day moving average.
Special Note: The recent market strength has been led by the energy sector climbing 7.68% followed by technology up 6.32%, and financials up 5.20%. The average yield on S&P 500 stocks has now reached 6.78% compared to the 10 year bond yield of 3.82% making stocks appear more attractive even though earnings may be in question for many companies. The Dow Industrials having held the January lows is now officially in a 3 month up trend exceeding the February high.
Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.
To view all of NobleTrading's historical newsletters, click here.
Click here to open an account.
NobleTrading Direct Access Trading
email: info@nobletrading.com
phone: 877.872.3311
web: http://www.nobletrading.com
Balanced Portfolio Management Strategy
Balanced investing strategies are portfolio management strategies, which are most widely followed by investors. Balanced portfolio management strategy combines the merits of both aggressive and defensive strategies; so that both return and risks are balanced. This strategy suits almost all types of investors who are good in money management and have reasonable risk tolerance.
The key of a balanced portfolio management strategy is the diversification of portfolio. Balanced investing portfolio consists of both low-risk low-return fixed income securities like treasury notes and bonds, and high-risk high-return equity and mutual fund investments. Portfolio may also include investments in precious metals, real-estate, money market investments, cash etc. Balanced portfolio management strategy allows investors to actively control one portion of their portfolio by adopting different investment strategies; and allow the other portion to grow naturally.
Balanced portfolio management strategy is good for medium-term financial goals, usually for 3-5 years. With respect to the portion of portfolio allocated it can be slightly aggressive or defensive. But for enough diversification, the portfolio size must be fairly larger. The success of the strategy greatly depends on the investor’s ability to choose the right products for investment.
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Treasury Inflation Protected Securities (TIPS)
Treasury inflation protected securities or TIPS are treasury notes which offer fixed-income protected from inflations. They offer guaranteed payments which are automatically adjusted with the rise and fall in inflation rate estimated by Consumer Price Index or CPI. TIPS are also known as Treasury inflation index securities and Real Return Bond or RRB (in Canada).
TIPS are referred as safest of the safest. With TIPS, the face value of securities is recalculated in every six months and the interest amount is adjusted with the rise or fall in face value. Thus the security holder will get inflation-protection both in interest rate and capital. TIPS can be used as a measure of diversifying portfolio, reducing risks and minimizing portfolio volatility with time. They can be purchased directly as individual bonds or through mutual funds.
Treasury inflation protected securities are better for long-term income goals. They come handy when inflation rate is expected to increase. But they offer less interest in comparison to other fixed-income securities and bonds; also they offer poor returns when inflation is on downside or in deflation. Unlike equities, TIPS investing are not that much actively controlled.
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Consumer Price Index, CPI – Things to Know
Consumer Price Index or CPI is one of the most widely watched economic indicators which give a clear idea about economic situation through 3 different indices. CPI is released by Bureau of Labor Statistics (BLS). The 3 indices include CPI for urban wage earners (CPI-W), CPI for urban customers (CPI-U) and chained CPI for urban customers (C-CPI-U).
Consumer price index releases affect companies and investors in many ways. CPI is one of the factors which affect Federal Reserve interest-rate policy, financial management of big corporations and banks, tax rates, and employee wages. A rise in CPI indicates inflation; fall indicates deflation and staying steady indicates stagflation. Usually growing economies shows modest growing inflation. Rapid rise or fall in CPI is not a good sign for economy; both high inflation and deflation ultimately results in cutting down of profit of companies, thus making them less competitive.
High inflation badly affects fixed-income bonds, pensions and other fixed annuities. Investors can hedge against inflation by diversifying their portfolio, and using futures contracts against inflation or Treasury Inflation Protected Securities (Tips).
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CANSLIM Stock Screening Strategy
CANSLIM is a stock screening strategy developed by William O’Neil. CANSLIM is a highly successful strategy for trading/investing stocks as it gives proper guidelines, integrates major investment tactics and keeps minimum subjectivity. CANSLIM is an acronym of various factors a trader/investor should look when screening the stock.
- C : Current Earnings – CANSLIM traders look for stocks which have large increase in current earnings per share (more than 18%)
- A : Annual Earnings – Annual earnings per share should show reasonable growth (at least 25% above than last 3-5 years)
- N : New - CANSLIM traders target stocks of companies with new product(s), new management, new changes, new market entry, or new price heights.
- S : Shares Outstanding or Supply/Demand - CANSLIM traders look for companies with less shares outstanding (below 25million; below 5million is better). So they often avoid larger and older companies with large capitalization. The idea is that if good news comes up stocks of companies with lesser number of shares outstanding will go up faster.
- L : Leader or Loser – Every industry should have a leader and followers. It is always good to invest in leaders.
- I : Institutional Sponsor – The number of institutional sponsors should be 3 to 10. Better to look for companies with institutional sponsors with above average performance.
- M : Market Trends – Traders should use various trend prediction and confirmation tools to find market trends. Buy when stocks are going up and major markets are bullish.
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Weekly Stock Market Trading Newsletter, April 14
The Week Ahead: Earnings season starts off poorly with General Electric missing its guidance numbers, a sign that even well diversified companies are being impacted by the credit crises. With consumer sentiment continuing to drop as well, watch the retail sales and business inventory numbers on Monday. The PPI is released on Tuesday while the CPI, housing starts, and the Fed's beige book of economic activity are released on Wednesday. Finally, the leading economic indicators and jobless claims are due Thursday.
Stocks to Watch: Continental Resources (CLR) continued its upward move after a report that its Bakken field has 3 to 4 billion barrels of recoverable oil in the North Dakota/ Montana area. Higher commodity prices may be hurting Hershey Co. (HSY) as a major brokerage downgraded it. Another downgrade occurred at Johnson Controls (JCI) because of slowing North American construction orders. Ixia (XXIA) which makes internet test systems lowered it 1st Q earnings estimates from a previous forecast as the stock gapped lower.
Special Note: If the major market averages can withstand the onslaught of earnings reports over the next two weeks without making new lows, then in all likelihood a new up cycle will have started. Further evidence will be another interest rate cut by the Federal Reserve by months end which will add fuel to a positive technical backdrop. Also the anticipated economic spurt caused by the tax rebate checks that will go out in May might not be fully discounted by the markets yet.
Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.
To view all of NobleTrading's historical newsletters, click here.
Click here to open an account.
NobleTrading Direct Access Trading
email: info@nobletrading.com
phone: 877.872.3311
web: http://www.nobletrading.com
Aggressive Portfolio Management Strategy
Aggressive investment management and capital growth strategies are portfolio management strategies which aim at maximizing the return over investment. An aggressive portfolio management strategy often includes high-return high-risk investments such as equities. Aggressive portfolio management requires highest grade of money management and is not at all suitable for those with low-risk tolerance and those with less experience.
In an aggressive portfolio management strategy, usually more than 60% of investments are done in equities. Aggressive investors allocate lesser percentage of their money in low-risk low-return or fixed- income products like bonds, treasury notes, money market funds, etc. They often choose to invest in aggressive stocks from high growth companies, small and mid caps, etc. Although these strategies may include methods for limiting down-side risks, they will not be as strict as defensive investment strategies.
The advantages of aggressive investment strategy include long-term capital growth and higher return over investment. The disadvantages include higher risk, high volatility in asset value, difficulty in estimating the return and the need of active money management. Aggressive investment strategy is suitable for long-term returns and not at all for monthly earnings or living costs. With aggressive strategies, it is better to diversify investments and to include some low-risk investments.
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Automated Vs Manual Forex Trading
Trading currencies for profit is always a tough practice and traders must be certain about many things. Traders can trade currencies manually or using automated trading systems which follow specific rules or can take a mixed way. Each of the above trading methods holds their own merits and demerits depending upon trading style, brokerage, leverage, currency pair trading, etc.
Automated forex trading is done using robots which are created by high-level developers. These trading systems automatically generate signals, executes trades and place stop-loss orders. No human emotions like greed, fear, lack of confidence and hesitation interfere with the decisions; and all calculations are done using sophisticated mathematical functions. Other advantages include fast trading, around-the-clock trading, no need of trader’s physical attention, can execute multiple trades simultaneously, etc. Automated forex trading really favors day trading and swing trading as profiting from these trading styles require fast trading. But these systems must be programmed well to reap the success. Any malfunction of the program can seriously harm the trader.
Manual forex trading is good for traders who are really experienced and can calculate things very quickly. Manual trading favors long-term traders who don’t want to interfere much with the short-term currency volatilities. Combination of both manual and automated trading is always a good option, as traders can program systems to finding trading opportunities and to generate signals and he can then manually decide, whether he wants to got for it or not.
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Stock Market Newsletter, April 7, 2008
The Week Ahead: The 80,000 jobs lost in March makes the third straight declining jobs report fueling speculation that another interest rate cut is coming. The FOMC Minutes released on Tuesday could shed more light on this topic. The wholesale inventories numbers come out Wednesday while chain store sales figures are released Thursday. March import prices are due Friday, the same day the World Bank and G7 spring meeting takes place.
Stocks to Watch: Shares of ITT Educational Services (ESI) are up on pending legislation that allows the Department of Education to buy student loans from lenders in need of new capital. This news lifted the whole group. Riverbed Technology (RVBD) cut 1st quarter guidance after failing to close on several deals as the stock continues a long slide from its top last October. The stock of Allegheny Technology (ATI) blasted higher on takeover speculation that US Steel (X ) is interested in buying them.
Special Note: News that Lehman Brothers and UBS Securities plan to raise $19 billion in capital eased concerns about Wall Street liquidity, but Friday was the lowest overall trading volume day of the year for markets. This could mean that the recent rally in stocks may need a pause as a lateral trading range has developed since January and could retest the lows. Combine this with the kick-off of earnings season this week and another period of high volatility may rock markets.
Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.
To view all of NobleTrading's historical newsletters, click here.
Click here to open an account.
NobleTrading Direct Access Trading
email: info@nobletrading.com
phone: 877.872.3311
web: http://www.nobletrading.com
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