Saturday, January 17, 2009

Want A Quick Trade?

The first half of this year is not going to be positive for the stock market. The rising unemployment in America, mixed with the worsening bank situation is only making the fundamentals of the economy worse. Knowing that, if you are looking for a quick trade, wait until after next week when 1/3 of the S&P 500 releases their 4th quarter earnings. The poor earnings have NOT been priced into stocks yet, as seen with the huge downturn we have had the last week. The markets will go down next week when the big players release poor earnings. After earnings are out, we should see a small bounce in the market. It’s clear that investors want the market to go up, as seen in the beginning of the year. There was no news out to change the economic landscape, yet we saw a substantial rally in the markets. After earnings come out, there will be excitement for a stimulus plan that President-Elect Obama will be hard at work with Congress to get something passed. Look to invest in some stocks that were beat down during earnings season, but that should fare well from the Stimulus hype. Look for stocks like Caterpillar, AT&T, and Honeywell, stocks that will benefit from infrastructure spending. But please, beware, do not hold these stocks for long, they will go up only because of excitement. Sell them before unemployment data comes out for the month of January. This data will bring investors back down to Earth and remind them of the worsening economic scene. The infrastructure spending will not really impact companies for months, so it is not time to invest in them for the long run yet.

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