Cautious approach in stock investing

Stocks on Wall Street rose on Thursday. The party was mostly led by industrial and pharmaceutical stocks, as investors were more cautious and defensive in advance of jobs data that may perhaps demonstrate how much housing and tight credit markets may have damaged the economy.

Overall on Thursday, most of the stocks were trading in narrow range and lackluster trading session as investors took more cautions approach as the center of attention continued on Friday's nonfarm payrolls report. Also the reports on the job market, service sector, and August retail sales bring up some cheers to investor’s mood by making a positive ending in Thursday’s trading session.

The Dow Jones index ended inch up at 57.88 points (0.44%), at 13,363.35. The Nasdaq Composite Index was up 8.37 points (0.32%) at 2,614.32.

My feeling for today’s (Friday) stock trading session remains a strong volatile day keeping investors in no comfort zone, but as a trader I might take a very short long position if there is any significant dip of about 150+ points in Dow and also I might go for stock investing in highly research stock in small quantity, eying mostly defensive sectors like pharma or telecom.

US Market seems stretched out

September 05, 2007

US market still seems to be stretching more of its bounce back rally from big fall happened two weeks back. The investor’s confidence seems quite good even after a slight negative clue from economic data which was bit slower than expected and slight slowdown in manufacturing growth. Bargain hunting was clearly seen in technology and telecom sectors as these stocks were in limelight even after credit concerns, but demand for computers, cell phones and other such products appears strong.

The Dow Jones industrial average rose 91.12 points (0.68%) to end at 13,448.86. The Standard & Poor's 500 Index was up 15.43 points (1.05%) at 1,489.42. The Nasdaq Composite Index was up 33.88 points (1.30%) at 2,630.24.

Global markets were trading in mix pattern ahead of definitive clue from US economic data and upcoming Fed meeting in mid September. Profit booking was clearly seen in majority of financial stocks in European market on renewed concern about the extent of the credit crisis, and coming event of Thursday's interest rate decisions by the European Central Bank and the Bank of England.

Looking at the present situation, it clearly seems like US market is too stretched after the good bounce back rally and profit booking is clearly evident at this point. From stock investor’s point of view, it is still not a good time to make any stock investing rather than I would prefer to book my profit.

Global market stable

September 03, 2007

Global stock market traded in mix ahead of US Labor Day holiday. The statement made by President Bush and Federal Reserve Chairman Ben Bernanke made the US market stable along with bringing stability in most of the worldwide stock markets. As it is known that US economy plays an important role not only for NYSE and Dow Jones, but it also plays and important role for worldwide stock markets. Any charming news from US market brings joy and cheer in other stocks market. With the discovery of globalization and interdependent economy, stocks market from all over the world tends to react if there is any slight fluctuation in economy of developed countries.

With the positive news coming in from last two weeks have improved the sentiment and confidence of most of the market and hope it will remain till the upcoming Fed’s meeting.

At this point, I will keep my wits away from any stock investing, and would trade stock in selective stock pick till clear picture comes from economic data front and Fed’s next move regarding any interest rate cut.

Mid term stock investing

As compared to long term and short term, mid term stock investing strategy is quite different, in-fact it is purely done by doing technical as well as fundamental analysis. The long term strategy purely depends upon fundamental story of your favorite stock pick, and short term stock pick is purely depends upon technical analysis.

One can differentiate the stock holding categories as
Very short term: Stock holding for very short term basis can be treated as stock trading or just to trade stock, which can be day-trading, or buy today sell tomorrow stock trading, or maximum couple of weeks, but not beyond that.
Short term: Couple of weeks to less than a year.
Mid term: 1 year to 4 years perspective.
Long term: 4 years till the investor wants to hold his stock pick.

Mid term stock investing is basically done to reduce extra burden of tax and to make adequate profit gain from the cash which you have achieved in your bank savings. It is neither a good understanding nor a bad understanding to hold a stock on a medium term basis.

Many a times it do happen even though your stock pick choice is perfect right and you have done stock investing in right stock, at right time, and at right price, but due to some unusual circumstance happening in the stock market, you immediately comes in danger zone, and your stock pick is also hammered significantly keeping you on loosing side, and this can last until the stock market completely recovers from it unusual circumstances. Many good stocks unnecessary gets hammered with any negative influences in stock market, but if your stock pick is just right, you definitely have a chance to make good profit in medium term also.

It is having said that stock investors like returns from their investment, if your stock pick is just perfect, even though after you stock pick gets hammered, it has more chance to bounce back at the same phase, because their valuation becomes more attractive and investors rush in to pick those stocks, giving you the stock rise. So for doing mid stock investing, technically as well as fundamentally the stocks should be good.

Stock market prediction is very complicated process, and looking from the mid term perspective it is still more complication, at such condition stock research is most important aspect which is done with the help of technical analysis and fundamental analysis.

Investor’s Sentiment held by Bush and Bernanke

August 31, 2007

With the end of this month, U.S. stock markets finished with one of the most volatile months in years. No doubt that according to me, as a stock trader, volatility is a paradise, which gives huge swing in the stock from top to down and down to top which helps traders to make good day trading with sufficient gain. For stock investing point of view, volatility is worrisome because it does not give a definitive clue of market direction.

Yesterday’s stock market upward move was mostly driven by statement made by Bush and Bernanke which was as per market expectation. Investors were reassured of making every effort to protect the economy from market turmoil.

The major indexes fluctuated but regained after President Bush spoke about details of a plan to help borrowers facing trouble paying their mortgages.

The Dow rose 119.01 (0.90%) ending at 13,357.74. The Nasdaq composite index rose 31.06 (1.21%) ending at 2,596.36.

Next week view
According to me, next week will be a volatile week. I will (as a trader) use any 50 to 100 points rise in market as an opportunity to book my profit in my selected stock pick and would buy if there is strong dip of 200 to 300 points. As a stock investor I will keep my holding going on, no matter in which way the stock market will swing.