"The financial problems we all face are now bigger than the US government alone can handle. For example, our financial challenges cannot be solved simply by the Federal Reserve raising or lowering interest rates, yet millions of people all over the United States and the world worship the wisdom of the Federal Reserve. Whenever former Federal Reserve Chairman Ben Bernanke speaks, the world listens. However, the problems have not been solved and now are becoming global problems, beyond the borders of our country and beyond the control of our political leaders…..some of the problems: A growing trade deficit, a growing US national debt, a falling dollar, baby boomers without money, an entitlement mentality, higher oil prices" – Robert Kiyosaki "Why We Want You To Be Rich"
Perhaps the S&P 500 gaining 0.51%, the Dow Jones Industrial Average gaining 0.48%, the NASDAQ gaining 0.66% and the Russell 2000 Small Cap Index gaining 0.12% today should make us feel comfortable about this market. If we experience a rally for a couple of weeks will we trust that the never-ending up days of the Fall of 2007 have returned? Not likely! Not everyday will we see the Dow oscillate 680 points, not every day will we see Asia panic and drop 4% overnight, not everyday will we see the Bank Index lower (it was down 1.11% today), but that doesn’t mean we will be lulled into complacency on the days when little happens. Sure, some of the fundamentals are attractive now but that doesn’t mean we have to stand in the way of grizzly bears until they’re fat and full and sleeping.
Interestingly, the back cover of the book, Why We Want You To Be Rich, quotes Steve Forbes emphasizing the need for "financial literacy". Financial knowledge is not just knowledge that you should have, it is knowledge you must have for you, your family, your kids and your grandkids. Education lasts forever. Most people invest money but not time and most people lose. Preparation comes first. That’s why Stock and Option Trades and Phil emphasize teaching and learning as much, if not more, than simply making money. Money can be lost if it’s not managed by wise investors. Knowledge of wise investing lasts a lifetime. If you haven’t got an account set up in a Virtual Trading Platform, we encourage you to open one. The practice is free but the experience is priceless.
As we scan the charts today, we can see some technology stocks rebounding. Apple has had a few bullish days and could still trend higher before encountering a number of overhead resistance levels.
Like Apple, Google has made a good start to a bullish run but the price-volume action is uninspiring on this latest bullish attempt. Interestingly, the PEG of Apple is significantly higher than that of Google’s despite Apple falling more on a percentage basis since its peak.
Of the three technology stocks featured, RIMM has demonstrated the strongest performance of late. It will be very interesting to see how RIMM trades on Tuesday following the outage of its Blackberry service across North America. The after-hours move has been inconsequential but the tendency is to be volatile so watch out below in the morning unless this is resolved quickly.
Boeing has reached a decision point. While it’s crossed above its 5-day EMA today, its downtrending resistance has proven strong since early December and in this market, we don’t feel particularly inclined to place money on speculating its future direction.
We would be happy playing Baidu long-term. The premiums are astonishing almost every month on Baidu. If you believe you can make just $5 each month on short calls and $5 each month on short puts for the next 20 months or so, you could make a very handsome return by initiating a trade with longer term long calls and long puts in January 2010. Of course, those of you that play Baidu regularly know you can make much more than $5 each month on such positions. Either way it should be fireworks when earnings are announced this week!
Have a fantastic week!
Stock and Option Trades
