Wednesday, June 30, 2010

S&P 500 Breaks Support Level

In the last hour of the trading day, the S&P 500 broke through the 1040 level. The market has bounced off this level repeatedly over the past month, selling off sharply after the market failed to bounce off. This is a very bearish sign for the market, and the market will more than likely continue to sell off as the technicians will definitely bid this market lower. Another bearish sign is the 10 year treasury, now yielding just 2.94%. To me, the 10 year is a key indicator of where the market is going. If the 10 year continues to fall, so will the market. Investors are worried about the world economies; this is why they are flocking to treasuries. This trend will continue until a)European financial markets are fixed and b)US housing and employment numbers begin to rise.

Tuesday, June 29, 2010

Down Market=Opportunities

With uncertainty still looming over this market, there is good reason to be cautious; but this is also a great opportunity to start building or continue adding to your positions in defensive and/or high dividend yielding stocks. I am going to name my favorite defensive/dividend plays, all of which have increased their dividend within the past year.

1. Altria (MO) $19.96/share, Div Yield: 7.01%
2. Dr Pepper Snapple (DPS) $37.79/share, Div Yield: 6.20%
3. Home Depot (HD) $28.63/share, Div Yield: 3.30%
4. Eli Lilly (LLY) $33.75/share, Div Yield: 5.81%
5. Magellan Midstream Part. (MMP) $46.19/share, Div Yield: 6.24%
6. Waste Management (WM) $31.46/share, Div Yield: 4.01%
7. Procter & Gamble (PG) $60.32/share, Div Yield: 3.19%
8. Johnson & Johnson (JNJ) $59.24/share, Div Yield: 3.65%
9. Verizon (VZ) $28.62/share, Div Yield: 6.64%

Monday, June 28, 2010

Sell Research in Motion (RIMM)

We have all heard about this trade, over and over, but it still holds true. Selling Research in Motion (RIMM), even after the huge decline it had after it reported earnings last week, is still a good play. Not only is RIMM losing customers to the iPhone hand over fist, come this July, the release of the new Droid X will surely hurt sales for RIMM. Also, with rumors circulating that Verizon (VZ) could be getting the iPhone by as early as this fall, RIMM could be in an even worse situation. Until RIMM announces a smart phone that can rival the iPhone or Droid X, there is no catalyst for this stock to go higher. The introduction of the Blackberry (RIMM's smart phone) was evolutionary to the cell phone community; but, RIMM has lacked new technology and innovation, allowing the iPhone and Droid to step in and steal Blackberry users.


Sunday, June 27, 2010

Buy Citigroup (C)

This year, had two issues that needed to be addressed before its stock price could make a significant move to the upside- financial reform and the Treasury selling its stake in the bank.  This week, the financial reform bill was passed by Congress, and for the past month, the Treasury has been selling millions of shares a day.  Once the Treasury completes selling their stake, there will be nothing to hold this stock back.  Now I'm not saying that I think it will ever get back to pre-'08 levels, but over the next 3-5 years, I don't  think its unrealistic to think that this stock will be at $12/share- a 204% increase from its $3.94/share close on Friday.  The CEO, Vikram Pandit, has done an excellent job turning this company around and bringing it back to profitability- and I expect this to continue in the future.  Anytime the price is below $4/share, its a great time to add to your position, as long as you plan on holding on to this name long term.