Can the Stock Market Rally Continue?
Profit is in the air! Earnings season is here once again as companies report 2nd quarter profits. So far, the results are surprising and pushing stocks higher:
- Goldman Sachs (GS) profit “soars on trading gains” , July 14th
- Intel (INTC) trounces estimates and shares soar, July 14th
- JP Morgan’s (JPM) profit jumps 38 percent, July 16th
- IBM (IBM) “Blows up expectations” and shares jump, July 16th
- Caterpillar Inc (CAT) beats the Street and lifts outlook, July 21st
This rally which is being led by technology and financial shares started Monday, July 13th and has lifted stocks about 12 percent.
Can the rally in stocks continue?
Dividend Investing
“Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.”
– John D. Rockefeller
Dividend investing and is one of the most stable, tried and true ways to make money month in and month out – regardless of market conditions.
In fact, your dividend checks start to make you more money when stocks actually go down in value.
This week, we were able to talk with an expert in the world of dividend investing: Eric LeRich, founder of Investor Rules which teaches ordinary people to become self-directed investors.
His service has helped thousands of individuals to consistently beat markets and helped them make the complex world of online investing understandable and managable. He is currently mentoring many lucky students.
Listen to our 15 minute interview with Eric LeRich
If you liked what you heard, sign up for Eric LeRich’s TWO-MONTH free trial on becoming a dividend investor.
Volkswagen: The Most Valuable Company in the World
Because of a freak event, shares of Volkswagen have spiked, giving it a market value of $370 billion, surpassing that of Exxon Mobil, at $343 billion.
On Sunday, Porsche unexpectedly disclosed that it had raised its stake in Volkswagen to 74.1 percent from 35 percent, through the use of derivatives.
At a time when much of the world is looking at the markets for signs of whether we can weather a financial crisis, an episode like this makes the volatility in stocks look like slapstick comedy. It is baffling how something so basic as a major shareholder doubling its stake could cause so much turmoil in a market. Yet somehow the acquisition came as a complete surprise. Where was the transparency here?
The price spike resulted from a squeeze. A number of hedge funds had shorted VW shares, betting that the company, like other automakers, would fall in the market as consumers cut back spending. In short sales, investors borrow shares and sell them, betting that the stock price will fall and that they can buy them back at a lower price and profit from the difference.
But the move by Porsche meant that there were very few shares of VW available. The German state of Lower Saxony, where Volkswagen is based, owns 20 percent. That means only about 5 percent of VW shares were on the market.
That scarcity drove up the stock price of Volkswagen. Its shares surged 150 percent on Monday and 93 percent today as hedge funds scrambled to buy shares and cover their positions.
“Each and any short-seller in the world is trying to close up their position, and there is no way they can do it except for trying to buy like mad,” Heino Ruland, an analyst with FrankfurtFinanz, told Reuters. “Someone is selling it at a rather interesting and rich price: It is about 10 times as much as it should trade.”
The VW squeeze play may well generate sympathy for short-sellers after months of vilification from politicians and executives who should know better. Shorts have been accused of manipulating stock prices through secretive means. Now they have been the victims of similar force.
“I have hedge fund managers literally in tears on the phone,” one London-based auto analyst told the Financial Times.
Soruce: Portfolio
Thomson price glitch this morning
This morning between 9:30 – 10:30AM, all the quote providers were giving bad stock prices for some symbols. For example, Orix Corp. (NYSE:IX) had a price of $9,999 (now at $64.64)!
Our support team will go back and look at all trades that were made in stocks with bad prices for this time period and adjust accordingly.
Best Stock Trade of the Day
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Due to corporate actions like name changes, splits and stock ticker changes, the accuracy of the Best Trade of the day has been spotty, at best. For example, yesterday’s Best trade (on 9/16) which displayed at the top of every page shows a $276,360 gain for REV which split 10-1 yesterday. This “Best” trade is not realistic or accurate.
While we work to fix this feature, we are going to take it down and replace it with the Weekly winner.
Trading Halted for United Airlines (UAUA) on September 8th
The stock of United Airlines (UAUA) had a bizarre drop yesterday — from $12.00 to one penny ($0.01) per share — due to a FALSE news story that the airline had filed for bankruptcy and was going out of business. See the chart for UAUA below:
The story was quickly picked up by search engine spiders and news wires. But before the story could be refuted, trading of the stock had been halted on the real stock markets for about 90 minutes. However, Survivors could still trade UAUA throughout the day, at prices not available in the real markets.
Several astute Survivors, most notably Aaron Leigh, took advantage of the situation, bought the stock when it was dirt cheap and proceeded to make a fortune ($4.48 million) in one day!
Unfortunately, this is not fair to other Survivors, nor is it realistic.
Therefore, we are canceling all trades of UAUA that were placed between 10:56AM and 12:27PM EST. This is the only way to fairly treat all Survivors in the game.
Further, we have used this experience to improve our trading engine and have implemented a new check before an order is placed to see if real market trading has been halted for the stock. This improvement will bring WSS even closer to the real markets by eliminating trading in halted securities and make the game more fun and valuable for everyone.
Are we in a Sucker’s Rally?
This interesting video suggests that the current mini-rally that started on Friday with a 300-point rise in the Dow is just a small rally inside of a much larger Bear market down trend. Can you say “Sucker’s Rally”?
What do you think?
Trading Ideas: Served Daily
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Trading Idea, June 27: Buy NFLX
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We’re hooked up with the very smart folks at TradingHistory.com who are providing Survivors with one very good stock trading tip every day.
They scan their enormous historical database of stock prices every day and compare it to patterns that they have observed in the past to make a prediction about one stock. Their accuracy often reaches the 90% level!
It’s really quite elegant and simple. Give it a whirl and then test out their trading ideas with a fantasy stock portfolio!
Maximum Shares to Buy
According to the Wall Street Survivor contest rules, players may not hold a single position that is worth more than $25,000. This creates often annoying error messages on the trade page when you attempt to buy more than the $25k limit rule.
So, some smart Survivors suggested that we build a handy-dandy little button called “Max. Shares” that in one click provides the maximum number of shares you can buy for that security. How about that for progress!
We hope to have this ready in June with a more streamlined trade page. See the mock-up below:
Starter Stock Portfolios
What do you do when you don’t know what stocks to buy?
That question inspired us to develop starter stock portfolios: a selection of stocks pre-selected for you so you don’t have to spend a lot of time researching or asking your buddies for Hot stock tips.
For the new contest starting May 1st, everyone will have the opportunity to select one of 3 starter portfolios after registering: Safe, Balanced and Aggressive. Of course, you can still choose to select your own stocks, if you prefer.
