Stock market surge

August 30, 2007

After getting positive global clues and growing cheerfulness among investor for further chances of interest rate cut by Fed and some strong support at level 13000, NASDAQ and Dow rose higher after previous day turmoil. Stock from many sectors took part to make the index rise higher by 247.44 points ending at 13,289.29. The broader S&P 500 index was up 31.04 points (2.19%) to 1,463.76. The technology heavy NASDAQ composite index rose 62.52 points to 2,563.16.

Previous day stock market CBoE volatility index, also considered as stock market fear gauge, drop significantly to 9.5% versus previous day of 16%.

According to me investors might take a breather at this point and will wait for any definitive clue to play with various factor affecting the stock market further, until then the stock market will move in a narrow range with any 50 to 100 point drop or 50 to 100 point rise from 13,2089 level. My today’s strategy will be as an “investor” I would wait and watch and would avoid buying but will keep my holding continue going on, and as a “trader” I will short the market at every 50 to 100 point higher level and will go long at lower level with any 50 to 100 points drop.

Stock Pick- Dycom Ind.

Dycom Inc. recently announced its 4Q result for the quarter ended June 28, 2007 shows significant jump in the profit margin from $10.1 million to $14.3 million (35%) per share, in the prior-year quarter, which according to report is above street estimation.

Contract revenue rose 25 percent to $317.3 million from $253.2 million in the fourth quarter of 2006.

For the full year, the net income doubled to $41.9 million, or $1.03 per share, from $18.2 million, or 43% per share.

Company’s revenue climbed 14 percent to $1.14 billion from $995 million.

Overview
Dycom Industries, Inc. is a leading provider of specialty contracting services. These services are provided throughout the United States and include engineering, construction, maintenance and installation services to telecommunications providers, and other construction and maintenance services to electric utilities and others. Founded in 1969, Dycom has grown to become one of North America’s largest specialty contracting services companies and recently has started to provide services on a limited basis in Canada. Its 30 operating subsidiaries serve customers in 48 states and the District of Columbia. Headquartered in Palm Beach Gardens, Florida, Dycom employs a workforce of approximately 10,000 employees in more than 400 locations.

Stock pick opinion
Looking at the company’s fundamental and overall performance and future growth prospectus, this stock pick clearly seems to have good potential to rise further from its current level, but looking at the present scenario and volatility in the stock market, investors should take more cautions approach before making any investment in this stock. According to me any significant fall in this stock would be an opportunity to buy, or who have bought this stock would keep this stock on hold.

Going through company’s fundamental, profit margin and growth prospectus this company is certainly headed toward to become a mid caps company from small caps, but still I would be little optimistic to hold this stock pick on a very long term basis.

Stock Pick Concern
With the growing apprehension among investor about slowdown in US economy can impact this company’s growth prospectus which might impact the company’s profit.

Any stock advice listed on this website is only for the reference purpose. Before investing your money in stock, please do full stock research or take advice of your stock broker or stock expert.

Volatility return to stock market

August 29, 2007

After the yesterday’s sharp correction on NASDAQ and Dow Jones stock market due to growing concerns of credit markets deficiency, which will mostly hurt the financial sectors along with lack of consumer confidence and falling home prices to some extent suggest growing concerns of slowdown in US economy.

Looking at the sharp fall on Tuesday, it clearly seems the volatility has return to Wall Street again along with all the major stock markets of world. Taking clue from yesterday’s fall from Dow Jones and Nasdaq, Asian market opened in red and recovered in late afternoon with news of rising weakness in yen versus dollar/euro giving a strong hand to stabilize the stock market, which significantly help the European market to open in green. No doubt this will help the US stock market to stabilizer around 13000 points and again some 100 to 300 bounce back rally clearly seems to be evident in coming days.

At this situation I would like to take caution approach and would like to do stock investing in selected stocks pick on a very short term basis until the next trigger, possibly the Fed’s next move, hits the market giving a confirm clue to stock market direction.

Stock Investing

Stock investing is an investment done in small, medium or big companies on short term, mid-term and long term basis for the companies which are listed on Stock Exchanges of each country. The main stock exchanges of the world are where large numbers of companies are listed and where big amount of buying and selling of stocks happens and they are DOW, S&P500, FTSE, DAX, Nikkei, MSCI, etc.

One has to be aware that investing in the stock market can be sometime or many a time loss making if not done in proper way but to discount loss making and to make a consistent profit from your online stock investing, one has to acquire good fundamental and technical knowledge of stock market. It is having said that investing in stock is an art of tactic by which one can make a consistent amount of profit and can make their good livings on it. One has to understand that investing in stock market is a part of nervousness and one has to pass through many ups and down to make oneself perfect in stock market.

Investing in stock is a pure business which one has to take a rational risk to gather steady rewards. With enough fundamental and technical knowledge and an adequate amount of discipline, you are all but definite to make a consistent profit in the stock market. Patience and willingness to intersperse your hard money savings across a portfolio of stocks, personalized to suit your age and risk profile will force your revenues at the same time cautions you against any major losses. Investing in a stock market is a method of buying assets in order to make money in the form of reasonably predictable income (dividends, interest, or rentals) and appreciation over the long term.

Why one should do stock investing?
Couple of decades back investing in the stock market for ordinary peoples was not so easy and safe and so utmost of peoples used to prefer to make their savings safe in bank and were satisfied with just very small interest that they used to get on their savings, but with the discovery of internet and advancement of technology the mentality of peoples has changed and instead of keeping their money safe in bank they are now willing to take little and some more risk to shoot up their earnings and to protect them against rising inflation and also with the intention to create wealth for better standard of living, vacations, retirement, etc. Also, it's exhilarating to appraise your stock investing returns and to see how they are accumulating at a faster rate than your salary.

When one should start stock investing?
If looking from stock market perspective you will never be able to catch any specific best time for making trade or stock investing as every day is a new day for stock market with tremendous changes in stock market mood. When entering in the stock market one has to keep a better view in his mind about the time horizon that he is looking for returns from his stock investment. Long term investor can enter the market anytime no matter market is going down or going up, medium and short term investors whom we can also calls as traders enters in the market with full study and risk that they are willing to adopt.

Rewards From Stock Investing

Stock investing basics

Stock investing tips

Learn Free Stock Investing and Stock Trading

Quarterly result - Important thing to know while doing any investment in stock

Mid Term Stock Investing

Fundamental Analysis for stock investing

Long Term Stock Investing

Cautious approach

August 28:

Monday’s fall at NY and Nasdaq stock market was said due to the ongoing slowdown in US housing market, which clearly gives a message out to stock investor about the consumer’s credit deficiency. This concern was clearly seen in stocks like banks, mortgage lenders and other financial stocks which losses their ground after the last week pullback.

Also the additional concern came from increasing rising inflation which added more worries among stock investors, which might impact the economy. At this point, it looks like the investor are more cautious on taking any fresh position except for some selected stock pick and will wait until for next trigger, such as upcoming economic data and what Fed’s will do next.

At this situation I definitely would like to take a short position at every 50 to 100 point rise in Dow Jones and would avoid any stock investing.

The Dow Jones industrial was down 56.74 points (0.42 %) at 13,322.13. The Nasdaq Composite Index was down 15.44 points (0.60%) at 2,561.25.

Stock pick

Stock pick is an important aspect when one goes for stock trading or stock investment. The stock pick consists of features which will take you towards the stock market wealth if you discover right stock at right time and at right price. But going through stock market history you will examine that it is very tough task to catch the rising price of right stock at right time and at right price.

So then how you will discover the right stock at right time and at right price? It is a $100 million question that all retail investor has!

Over here I would like to put some impression on it and it is solely my view and what I think how it can be! It might defer from investor to investor.

Broadly speaking stock market is one kind of bet; you cannot predict what is in mind of other investors and what they think about the stock you want to pick.

• Before you go for a stock pick examine how the overall stock market is doing. Find out the negative influence if there are any which might impact the stock market as a whole.
• Go through sector to sector and find out which business sector is performing well and which sector is undervalued.
• The sector preference fully depend upon the time horizon that you have kept in your mind to hold any selected stock on a short term basis or a mid term basis or for long term basis.
• If you are looking to hold your best stock from purely on a short term or the most mid term basis you definitely should go for good sector performing stocks, which shows consistent interest among investors as well as traders, but if you are looking to hold your selected stock pick on a long term basis you can go for undervalued sector also.
• Undervalued sector does not mean that the stocks containing in these sectors are not performing well or these are not quality stocks but due to some unsuitable reason big fund investor ignores these sectors as a whole and due to this behavior of investor the overall sector tends to fail to appreciate better as compared to other sectors belonging in the stock market, but instead when these sectors start to perform well it gives more high return than other sectors in stock market but only bet is that you should select your best stock pick which has a history of long term good performance.
• For here I would like to give example of banking sector. If there is any hike in interest rate, the immediate reaction appears in this sector and the stocks from this sector tends to get ignored by the investor and this sector becomes undervalued sector, because due to rise in interest rate the investor thinks that the profit margin of this sector might impact, but if you admire, this sector is still a very good long term bet because at some point this sector will again start to perform well and will increase their profit margin and that point investor mood will again change and stocks of this sector will outperform the rest of sectors in stock market.

Once you have finished examining the sector you should now go for the thing that you are looking for i.e. “stock pick”.

There are many factors that you need to look for best stock in your selected sector and also it depends upon the time horizon that you are looking to hold the selected stock pick.

Stock pick for short term: Short term basis can be said as stock trading for only couple of days or mostly couple of weeks, beyond that the trader sells their stock holding and take out the profit on their desk that they have gained, no matter the gain is just minimum 3% or quite big or at some point the traders sell their stock pick holding in a loss. Stock pick on short term basis is purely done only on technical basis and very little bit with fundamental story of that stock pick. Liquidity, volume average, momentum, stock news, trigger, technical charts are some of the features which clearly defines the correct stock choose.

Stock pick for long term: Investor finds out that any specific stock of certain sector is suddenly trying to move out of their 200 days moving average in upward direction and there is sudden rise in stock volume as compared to average volume for the last few days or few weeks or for few months, along with sudden rise in liquidity which clearly gives an indication of that stock pick interest by some of the big financial funds, which is just a right indication that specific stock is now in rising mode and it can be bought.

Stock pick

Stock pick is an important aspect when one goes for stock trading or stock investment. The stock pick consists of features which will take you towards the stock market wealth if you discover right stock at right time and at right price. But going through stock market history you will examine that it is very tough task to catch the rising price of right stock at right time and at right price.

So then how you will discover the right stock at right time and at right price? It is a $100 million question that all retail investor has!

Over here I would like to put some impression on it and it is solely my view and what I think how it can be! It might defer from investor to investor.

200 days Moving Average

Why Every Trader Needs To Watch The 200-day Moving Average

Moving averages (MA's) are among the most popular tools available to portfolio managers, analysts, investors and traders but are they being used in the most effective way? We have stressed the importance of MA's many times and this article will teach you how, and why, we use them.

The simple moving average (SMA) is the most common type of MA used. This method uses a fixed number of data points as the data series moves forward. For example, a 200-day SMA will average the most recent 200-days worth of data (usually closing prices). With each new day, a new data point is added and the oldest data point is removed. In other words, the 200-day SMA displays the arithmetic mean of the most recent 200-days of closing prices.

It is important to determine the right length MA for your intended purpose. We use the 200-day SMA as a trend filter for stocks and indices. A stock or index trading above the 200-day SMA is considered to be in an uptrend, while a stock or index trading below the 200-day SMA is considered to be in a downtrend. Our research shows that using the 200-day SMA in this manner improves the test results.

We have also published research that uses the 5-day SMA or 10-day SMA to take profits/exit trades. We use these shorter MA's because our research shows them to be among the better exit strategies available.

Why the 200-day MA is so important
Here's a look at how the S&P 500 and the NASDAQ 100 has performed in relation to the 200-day MA. The test period covers from 1/1/89 to 6/30/06. The tables below shows the average percentage gain/loss for SPX and NDX during our test period over a 1-day, 2-day, and 1-week (5-days) period.

S&P 500 (SPX)


• Historically, the SPX outperforms when it is trading above the 200-day MA, 2-days and 1-week later.
• Historically, the SPX underperforms when it is trading below the 200-day MA, 1-day, 2-days and 1-week later.


NASDAQ 100 (NDX)


• Historically, the NDX outperforms when it is trading above the 200-day MA, 1-day, 2-days and 1-week later.
• Historically, the NDX underperforms when it is trading below the 200-day MA, 1-day, 2-days and 1-week later.


This research can be extended to cover stocks too. We looked at over seven million trades from 1/1/95 to 6/30/06*. The table below shows the average percentage gain/loss for all stocks during our test period over a 1-day, 2-day, and 1-week (5-days) period.

Stocks


• Historically, stocks slightly outperform the benchmark when trading above the 200-day MA, 2-days and 1-week later.
• Historically, stocks underperform the benchmark when trading below the 200-day MA, 1-week later.



This information, combined with our days of the month study, PowerRatings, and the other research we have recently published (view archives) shows how to build successful trading strategies.

How to use this information
When you go to the new TradingMarkets Stock Indicators page you'll see that all of the indicators (bullish and bearish) use the 200-day MA. The bullish stocks are all trading above the 200-day MA, while the bearish ones are all trading below the 200-day MA. The lists are filtered this way because our research shows an even greater edge can be obtained.

Ashton Dorkins is Editor-in-Chief of TradingMarkets.com.
editor@tradingmarkets.com
Larry Connors is CEO and Founder of TradingMarkets.com, and Connors Research.
* Our research looked at 7,050,517 trades from Jan 1, 1995 to June 30, 2006. We applied a price and liquidity filter that required all stocks be priced above $5 and have a 100-day moving average of volume greater than 250,000 shares.

Stock portfolio

Stock portfolio is a very strong professional stock trading tool if managed in proper and effective way gives you high and high returns in stock market by any other mean is not that quite possible. Stock portfolio provides you an additional security and decreases your risk appetite in significant way in stock market.

Stock portfolio is a mixture of any number of stocks mostly preferable for small stock market investor or stock market trader is 10 to 15 numbers. Stock market traders prefer to have 10 to 15 numbers of best stock collections in their favorite stock portfolio which helps them to execute stock trading almost on daily basis. It always does not happened that day traders are able to conduct their day trading in only one specific stock on daily basis because they know that only one stock cannot give them a perfect entry point on daily basis to conduct day trading so to overcome this issues they prefers to have 10 to 15 stocks or more which helps them to give chance to enter in any 2-3 stocks for day trading on daily basis.

Professional stock market investors also prefer to maintain 5 to 10 numbers or a bit more of best stocks in their stock portfolio. By investing money not only in one stock but diverting the money in mixture of stock gives them an additional security and reduces their risk appetite. The stock portfolio consists of mixture of stocks such as large cap, mid cap, highly volatile stock, highly defensive stock, highly liquid stock, very less affected by external factor stock, etc. The stock investor prefers to maintain portfolio as per their investment horizon and amount of money they want to invest in their best stocks.

Now you might be thinking about how the stock portfolio will give high return and will reduce risk?
As it is know the stock trading or stock investing is a risky factor to make money. No doubt that if your stock pick selection is perfect from all angle chances are evergreen that you will make handsome of money, but still it is having said that there is still risk associated in it, because the external factors which might impact your stock pick is not in your hand and nor you can imagine it, which might cause the stock dump.
The external factors might consist of
• interest rate.
• crude oil dependence
• government policies
• natural disaster, and many more
which might negatively influence the specific stock pick you are holding, so to overcome this issue you need to make stock trading or stock investing in more than 2 to 3 stocks of different categories as mentioned above which will help you to trim down your risk associated only in one stock.

The stock portfolio is only established after a strong stock research which you want to include in your portfolio. Stock research includes the fundamental as well as technical study which gives a correct view about the overall performance of your favorite stock pick. The some of the categories in stock portfolio but not limited to are:

Large Caps
• Large cap stocks are stock with market capitalization of more than $5 billion such as IBM, Microsoft, Wal-Mart, etc
• You need to keep these types of stock in your stock portfolio because these stocks are consistently out performer in their whole history and will remain out performer in future also
• This stock has a deep market penetration, endurance and solid business management background and has a capacity to cope with any unsuitable condition.
• These stocks make consistent good innovative changes in their product which gives you an assurance and faith that you money is always safe and will give you high returns.

Mid Caps
Mid cap stocks are stock with market capitalization between $1 billion to $5 billion.
• There is slight risk as compared to large caps in doing stock trading or stock investment in these stocks because mid caps stocks does not always give that much of consistent performance as compared to large caps.
• Also there is lot of competition in mid cap companies which might impact their profit margin in significant way along with inconsistent market base
• But still if your have done strong stock research and have pick out a good mid cap stock which might sustain at any unsuitable condition and has a capacity to become a large caps in coming years then you have a very good potential to make good money in coming days.
• The advantage of investing your money in mid cap is that the mid cap stocks has a big room to become a large caps which will increase it market capitalization giving you high stock price return along with other benefits.

Small Caps
Small cap stocks are highly risky stocks and are also called as penny stocks.
• There is sudden inflow and sudden outflow of funds from these stocks which makes these stocks more vulnerable.
• If at any point any uncertain situation arise in the stock market, these small caps penny stocks are the first which are hammered significantly, but also if there is any strong rally in stock market, these stocks have a big potential to go high giving you high returns.

So to increase your efficiency and to maintain consistent profit from stock market you need to be more specific in selecting your stock portfolio. Consuming mixture of stock pick of different categories and of different business aspect will end up giving you consistent money at low risk.

Impact of interest rate cut on stock market

The Fed Reserve’s decision of key interest rate cut on August 17, 2007 had given an indication to worldwide stock market investors about loosening of liquidity crunch and trying to prevent disturbance that started in the market for household mortgages from scattering through the economy. The Fed reserve decision on interest rate cut was taken as surprise that boosted the stock market sentiment and worldwide stock market rallied on.

From last couple of weeks the ways the worldwide stock market was behaving was quite annoying and was spreading a fear among investors regarding the liquidity crutch which was impacting in significant way in many of the stock market worldwide along with the Dow. The stock market from Europe, Japan, Korea and other developing countries like China, India, Taiwan, Brazil, etc was hammered quite significantly from their peak level. Due to this situation, the thing was going quite tough for the small investor to take a call on stock trading.

Now with this interest rate cut move made by Fed Reserve, and also big brokerages believing this interest rate cut move will continue in the next Fed meeting also, will bring down the liquidity crunch in market and will help to raise economy rate.

The Dow ended the day up 1.8 %, 233.30 points, at 13,079.08.

Long term stock investment

Stock trading done for long term basis can be purely said as long term stock investment. Investing in stock if done in more regular strategic investment way can give you high returns. Many stock market investors basically retail investors are quite interested for long term stock investing plan rather than going for short term margin gain which is quite risky. Long term stock market investment gives an additional leverage position to a stock market investor if the stock pick choice is right, and also it does not get affected by the short-term volatility in the stock market.

Long term stock investment is more profitable and with regular performance of chosen stock pick (company) the stock investor gets regular dividend as well as bonus which is quite encouraging and cheering to investor as well as it spreads a message among stock market investor about the company’s goodwill, which helps to keep on consistently rising the stock price and generating high return to stock investor.

Long term stock investment is basically done keeping in view for making an investment for minimum of five years to as long as the stock investor prefer to keep it as an investment. Investors who generally gets regular returns via that stock pick through a source like regular dividend and bonus does not sell that specific stock pick and keeps on holding that stock pick as long as their best stock market investment is performing good by maintaining the current market share and well as increasing its company brand to more customer base.

Before going for any long term stock investment approach, proper study of best stock is needed along with proper strategic investment plan. Long term stock investment is usually done in the stock which has a good reputation, which has gained stock market investors’ confidence and which is performing very well at every time interval. Stock prices are always volatile and do not remains stable at any point, with keeping this in mind, no full investment in stock is done at one point, but professional stock investor use strategic investment plan which help them to make regular investment in their same favorite stock at various prices of their stock pick. The strategic investment plan is done in two ways.

1. Stock market investor who are more confident on their chosen stock pick make regular investment in stock at every significant dip in their favorite stock pick, keeping in view the long-term returns. The stock market investor who makes investment in stock through this strategy uses every dip in their favorite stock pick as an opportunity to make their investment.
2. The second way the stock investors invest their money in their favorite stock pick is by regularly investing at every rise that happens in their stock pick. Stocks which are consisting performing well always have a chance to rise higher by gathering more attention of fellow stock investors.

With the help of these strategic investment plans, the stock investors invest their money in their stock pick at every specific time interval which reduces their risk appetite and protect their money at every ups and downs of stock market.

The some of the long term stock investing benefits

1. Your long term stock investment return is always high than of fixed deposit or small savings in bank.
2. Gives you an additional leveraged position against rising inflation.
3. Regular returns from stock investing in the form of dividend and bonus if the stock pick is consistently performing well.
4. You are always a share partner of successful corporate of whom you are holding stocks.
5. Historical out performer than any other asset classes.