Archive for February, 2011
Smart Investing Daily – A Unique Formation in Crude Oil Prices — Should You Buy Here?
Friday, 25 February 2011
This has been a turbulent week on the geopolitical front, triggering waves in the stock market and sending the price of crude oil through the roof. While the stock market corrects itself (as we anticipated), the price of crude oil seems to be creeping ever higher, putting upward pressure on the price of fuel and energy. Worse still is the serious effect this could have on the economic recovery that everyone has been banking on.
A couple of weeks ago I showed you a way you could partially hedge some of your fuel costs with the rise in crude oil prices. But higher gasoline prices at the pump are only part of the problem for most of us. A continued rise in crude oil will wreak havoc on the prices of many things that we need to live and work.
There are three questions I want to address today:
- Are prices moving higher?
- What the heck is the difference between Brent Crude and West Texas Crude?
- How can you profit from a potential move in either?
Where Does Crude Oil Go From Here?
From a technical perspective, you have to be careful here if you are going long. The prices of West Texas Crude (and Brent crude) have almost gone parabolic. A “parabolic” move comes from 
the mathematical term “parabola,” which Read more
Litmus Test for New ETFs — Should You Jump Into this Smart Phone Fund?
I was out to dinner at a swanky restaurant here in Dallas where you would think etiquette would prevent the use of electronic devices at the table. I was blown away when I looked around the room and saw that about 40% of the patrons were using their smart phones to exchange pictures, surf the web, check out the reviews of some of the wines on the menu, etc. These aren’t kids without manners; the smart phone is transcending generations as the bulk of the diners using the devices were over 50!
Smart phones at dinner
For years now, I have been preaching about the huge upside growth potential in the smart phone sector and have outlined several stocks such as Google (GOOG:NASDAQ), Apple (AAPL:NASDAQ), Research in Motion (RIMM:NASDAQ) and others to invest in. I still believe that the smart phone will become the proverbial “wallet” you carry around with you, keeping you in touch wherever you are and perhaps one day even replacing your identification and credit cards.
But is investing in a company like Apple, Google, Research Read more
Smart Investing Daily – Could Disaster Be Brewing Inside These Popular ETFs?
I feel it’s our duty here at Smart Investing Daily not only to help you discover new and unique investment opportunities and tactics, but also to warn you of impending potential disasters.
Looking at the financial markets on the surface, many experts are saying that it seems a little “overbought.” There is no doubt I am in that camp, but now I am gaining more conviction. Experts use things like price/earnings multiples and technical formations to make these determinations. They also look at the past to make future forecasts.
When determining an “overbought” or “oversold” financial market, I examine several indicators, like the ones mentioned above and several others, to confirm my thinking. But there are a couple of signals that are not being talked about and one that I think can not only give us insight into the real strength of the financial market, but also explain its odd behavior and seemingly unstoppable bullish run. These signals are coming from three index Exchange Traded Funds (ETFs) that are some of the most heavily traded and most popular in the world.
A Growing Problem?
These three ETFs – Dow Jones Diamonds (DIA:NYSE), S&P 500 (SPY:NYSE) and Nasdaq 100 Index (QQQQ:NASDAQ) – represent the bulk of the most heavily traded, largest companies here in the U.S. and abroad. Combined, they represent over 600 stocks and the majority of the trading volume here in the U.S. What no one seems to be talking about are the large changes we are seeing in something called “short interest” and the “short interest ratio.”
Short interest is the measurement of how many shares are in short positions. When you want to short a stock, you must “borrow” Read more
Smart Investing Daily – Use This Professional Trader’s Technique to Find Value
Tuesday, 15 February 2011
For the past 17+ years, I have followed the financial markets and studied their behavior. One of the main reasons I fell in love with the marketplace was the fact that not only can you control your own destiny so to speak, but every day is new and exciting. Each new trading day brings with it new surprises and challenges to learn and potentially profit from. The financial market is an ever-evolving creature that many try to tame and often fail.
Even with all the change happening day in and day out, there are still some fundamental “rules and guidelines” that govern the actions of the “beast.” To prevent disaster, you need to spot major deviations in these guidelines and have an action plan.
Don’t get me wrong; there are no black-or-white guidelines when it comes to buying or selling a stock. Anyone who tells you X price is the exact buy level and Y price is the exact sell level probably has a bridge they can sell you as well.
I’m talking about rational, collective value reasoning. Masses of professional traders tend to have similar beliefs and if you know what they are you can use them to your advantage.
Let me explain what that means.
Finding “Value”
Both Sara and I have talked about these concepts in the past. Generally, both of us use some sort of common (or sometimes unique) gauge to measure both the Read more
Smart Investing Daily – Nasdaq Hackers Put Vital Information at Risk
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You’re not going to find Friday’s security breach at the Nasdaq exchange as headline news in most publications. Given the seemingly more important things like the Packers winning the Super Bowl in Dallas or the inevitable spending cuts that are coming down the pike, why would we care about a person, group of people or foreign government gaining access to confidential data that could influence future stock prices or perhaps allow them access to the orders and prices themselves?
Smart Investing Daily – Can You Profit From the ‘Death’ of the Newspaper?
Friday, 04 February 2011
More importantly, should companies like News Corporation (NWS:NASDAQ), Gannett Co., Inc. (GCI:NYSE), CBS Corporation (CBS:NYSE), Viacom, Inc. (VIA.B:NYSE), and Journal Communications (JRN:NYSE) be on your “short sell” list?
You would think a resounding “yes” would be the response to the question when asked to most people under the age of 35. I think they are right, at least partially… Let me explain.
Much of the younger generation (myself included) grew up with the Internet at their fingertips, and the traditional “paper” news was used mainly as a means of packing moving boxes. I mean, why would they (or the rest of us) need to buy and read something that not only adds to deforestation, but is “old news” before it even hits the newsstand?
We all know that paper kills trees and, even though biodegradable, creates waste and clutter. A study conducted by grad student Tom Suder noted it would take a rough average of 24 trees (softwoods and hardwoods 40 feet tall and 6-8 inches in diameter) to produce a ton of printing and writing paper, using the Kraft chemical pulping process. The green movement is making many newsprint mediums things of the past in many parts of the world.
And it’s not just a “greener” outlook that has newsprints disappearing from newsstands across the country. It’s about another kind of green…
The Print Media Outlook Is Bleak
In 2007, there were 1,456 daily newspapers in the U.S., selling 55 million copies a day, which may seem high, but is a fraction of Read more
Smart Investing Daily – Lock In Your Gasoline Prices With Crude Oil on the Rise
Tuesday, 01 February 2011
Yes, it’s true. I know what you are thinking… that I’m probably going to show you some fancy stock or futures contract strategy to offset higher crude oil prices — but it might be simpler than that. The question is whether it’s worth it or not… Let’s take a look.
West Texas Crude Oil Above $90
Sometimes it takes a geopolitical crisis or catastrophe to act as a “reality check” and create a catalyst for movement in the prices of stocks or commodities. Natural and man-made catastrophes can not only change the fundamental picture of a commodity like oil, but also rouse speculators to drive prices wildly higher (or lower). Sometimes an impending catastrophe can be right under our noses, as Sara discussed in yesterday’s Smart Investing Daily article. Whether you’re an investor or simply an informed citizen, you cannot afford to ignore what is going on around the world.
The events unfolding in Egypt and in other areas across the world (Australia) remind us of not only the fragility of some political and social systems, but also the unpredictability of our Mother Earth. The protests to oust President Mubarak alone have catapulted crude oil prices from $85 to over $92 a barrel in just two days. Egypt is not even a major oil exporter by comparison, but the Suez Canal is a major thoroughfare for tankers.
Even at two-year highs, crude oil prices are still drawing support, not just because of tensions in Egypt and the Middle East, but by the weakening dollar and a 20-year high reading of the Chicago Purchasing Managers Index, which perhaps indicates continued growth regionally and also nationally.
Let’s not forget our friends at OPEC who “manipulate” supply to keep crude oil prices steady. I am sure that the 12 members — Iran, Iraq, Kuwait Read more
