RSI is Saying Sell! Sell! Sell!
Posted On Wednesday, December 15, 2010 at at 3:21 PM by Finance FanaticA big fundamental index I enjoy watching for overall buying/selling trends in the stock market is the Relative Strength Index (RSI). This index essentially compares the recent gains with recent losses, while factoring in the trading time line and magnitude of momentum. In Wall Street, many look to this index as a an indicator of whether the market is currently overbought or oversold.
Sure, the movement in stock market is purely dependent on the mass trending of traders and has no fundamental dependence whatsoever (as we have seen quite clearly the past year and a half), however, the RSI has remained to be a pretty reliable index for indicating upcoming trends.
An index level passing lower than the 30 mark is usually a strong sign that the market is well oversold, which tends to bring a nice rally in the short future. On the flip side, a movement above the 70 level, is known to fundamental investors that the market is probably overbought for the time being.
For the first time in over 30 days, we just surpassed that key 70 mark, which history shows that indeed a pull back should be in our near future. Sure, we've seen the index go into the 90's before seeing an actual pull back, however, those levels are very rare.
This number combined with the very low volume that accompanies the last couple weeks in December could open the doors for a bit of selling going into 2011. Consumer confidence is what continues to fight the battle upward, but I have to think that even the extra bullish investors are starting to feel the time to pull some chips off the table for the time being. Keep your eyes out. Happy Trading.
Small Company Making Big Noise
Posted On Thursday, December 9, 2010 at at 3:47 PM by Finance Fanatic
As we grow closer to the end of the year, I try to start thinking about next year and new strategies and positions I will be considering. The past two years have been wild ones, and I'm not sure that 2011 will be that far off. We continue to see some companies become obsolete and thus fail, while others thrive on new innovation and technology that you and I cannot live without. Apple has done an amazing job the past 5 years in positioning themselves as the media giant and had no problems penetrating the cell phone market.
No one has a crystal ball, but trends can tell a lot. Lately, we have seen big trends towards hand held devices and social networking. Utilize both of these successfully and you will most likely be golfing most of the year.
There is a company that has been on my radar for quite some time and I think 2011 could be a break out year for them. Their name is Augme Technologies (AUGT). Sure their under $2 stock price doesn't make you jump out of your seat at first glance, but a bit of research and due diligence makes me like the company.
Augme is developing the technology to help large businesses communicate with consumers through their hand held devices. Already, the company has a client list that includes HBO, Ralph Lauren and Johnson & Johnson. They are ahead of the game in helping consumers be able to interact with these businesses, all from their handheld.
Right now, the company has a near $20 million of committed sales in their pipeline, which is a large leap compared to their current $4 million per year revenue stream. The cell phone marketing industry as a whole is projected to have a $5 billion value by 2012.
From a technical value, their stock has a strong trend going up. Their 20-day moving average is strong and their regression line has a strong uptrend for 2010. Don't be surprised if 2011 is their year to shine. Happy Trading.
Holiday Buying and An ETF on the Rise
Posted On Friday, December 3, 2010 at at 4:46 PM by Finance Fanatic
Markets were able to put on a big rally to end the week in the close having the Dow close up almost 20 points, after being in red for the entire day. Bulls are looking to finish out the year strong (as they usually do) as shopping malls look crowded, the noise of cash registers opening are filling stores, and consumers seem to be much more positive this year, looking forward, then they were last year. Whether they have good reason to be, is still yet to be seen, but at any rate, Wall Street should benefit from it here in the short term.
I am always looking for good plays in our current economy, because it still remains a unique one and could change its face at any time. One ETF I have been eyeing has a strong upward trend and has been performing, and should continue to perform quite well. This is the PowerShares DB Agriculture Fund (DBA), which is mostly comprised of the most liquid and most traded agriculture commodities (corn, wheat, cattle, etc).
As you can see from the chart above, it has put on some good momentum in the last couple days. I think we may see it pull back a bit near the $30.05 range, but if the stock can stay at that first support level and bounce back, I believe we will see some great gains from it. Either way, like gold, it is a good one for me to stock away, as commodities are a good hedge against inflation.
We should see things begin to heat up in the market next week, as that year end date grows near and hedge funds become a bit more antsy. Happy Trading.
High Yields Hiding in Wall Street
Posted On Wednesday, December 1, 2010 at at 2:19 PM by Finance Fanatic It has definitely been a roller coaster the past two years in the stock market. On both the Bull and the Bear side, there has been a lot of money made. As of now, it has become much more difficult to find "high yielding" investment instruments than it was a couple of years ago. Banks are lucky to give you .5%, and even more riskier investments (or illiquid) may offer you in the 3-4% range. But it seems as if the days of 9-10% dividends are gone...or are they?