My Worst and Best picks of stocks

My best and worst recommendations over the past year are worth reflection on my part. So let me start with the worst pick.

Worst pick:
It was the ETF Ultra Short of the Russell 2000, symbol TZA in about January of 2009. My initial purchase price was around $36/share and the stock went to $51/share but I held on and didn't take the profit as I should. It played out that the shares have fallen down to $5.91 at the close for a whopping 83.6% drop. I still own this ETF. How's that for a bad play.

Best picks:
So in dollar terms my recommended purchase of Apple's stock, symbol was spectacular at $79/share. Yesterday that stock hit a high of $260/share. That's a remarkable 229% gain.

But that isn't my best pick, interestingly, as it turns out during the Auto bailout, when GM was headed for bankruptcy in December of 2008, I had recommended and purchased Ford Motor stock, symbol F. The price was an amazing $1.49/share. That stock has increased to a whopping $14.54/share for an 876% gain! Unfortunately I sold those shares and bought them back twice over the period so my gains are much, much less. But those that have held the stock did quite well indeed. Wish all my pics were that good, but it is truly a rigged game and we all know it. The real question is this. Knowing it is rigged, can you still make money? Because my friends so isn't Vegas and we still go there too, now don;t we! :)

Where are we headed in the stock market now? Unfortunately back to the lows!

Today will be Black Friday in the stock market. The failure of the Congress, specifically the Republicans in the Senate, to pass the rescue bridge loan for the Auto Industry, along with a few Democrats, will scare everyone in coming days. Portfolios will take a haircut and ensure this Christmas is bleak for retailers as well. You are watching the slow unwinding of our economy and unless their is strong leadership to stop this decline we are headed for the Great Depression of 2009.

The Dow is down over 260 before the pre-market opens in 45 minutes. I expect it to be much worse today. The Democrats in Congress are looking to President Bush to save the day and to agree to use TARP funds to come up with the loan. I can hear the argument the Democrats are using to convince the President. It goes something like this.

Mr. President you came to Congress fearing a calamity in the Banking and Insurance Industry and asked us to trust you and Hank Paulson with approval of $700 Billion in TARP money. In fact Mr. President, you submitted only a 1 page document asking us to just trust you, with no strings attached to the money. We added about 400 pages of requirements to the package but nevertheless we passed the legislation to basically give you cart blanche for the funds. Now for only $14 Billion of that $700 Billion, we are asking you to return the favor and save the auto industry at least till March. It costs only 1 month for what we have allowed you to spend in Iraq. So Mr. President, you can once again feel omnipotent as one of your last final acts, and approve this money and walk away a hero to the very Middle Class you nearly destroyed in your 8 years as President.

Getting to the market, if you have bought and held the ETF Ultra Short of the S&P500, symbol SDS, you are sitting pretty this morning. If you also added to your position you are going to see very good gains today and possibly Monday as I see Monday as a possible culmination of the drive to the lows of the market and retesting next week around 7300 to 7500 on the Dow. When we get there we may have Capitulation in the markets worldwide. Ford is down in pre-market to a low of $2.12/share. It may be a good buy back down below $2.00 as something will come along when Barack Obama becomes President on Jan. 20th and pass the funds needed with the new Congress. GM will most likely close factories to save cash until then.

Hold on for a tough ride just before Christmas. And if you are an Auto worker, I am sorry for your situation and the pain you will be going through, at least short term. You didn't create this mess, it was the leadership.

UPDATE 1:20pm P.S.T.
Comments by Paulson regarding the prospect of using TARP funds to provide a bridge loan for the Auto Industry, had the effect of neutralizing the negative outlook of the markets, at least for today. It does not put off the inevitable market pullback, only delays it. That's fine right now. We need a break as the stress can be too much for some. I will write more this weekend on the market so stay tuned.

Market action re Auto Industry

I decided to sell my stock in Ford given the Republican use of a filibuster of the Bill to provide a bridge loan to the Auto Industry. I sold my remaining shares at $3.26. I recommend others do the same. as you can and will be able to buy them back cheaper. Many think this only has implications for the Auto Industry. They are incorrect in that assumption. It will also affect the Technology sector as many autos today are equipped with GPS, TV's, phones, computers and other technology based features. It also affects the equipment manufactures that make equipment to test your car and do diagnostics when there are problems with it. This filibuster is ill conceived and can plunge us back to the bottom range in the Dow, S&P500 and the Nasdaq. Listen to CNBC commentators arguing over this bailout.

Buy Ultra Short ETF funds like SDS, currently at $83.65/share

Pre-market Monday, Dec. 8th, 2008: Is the rally real?

Many of my friends don't believe the rally is for real. But many counter with the fact that the stock market is a leading indicator and usually 6 months ahead of the news. This weekend Congress, President-Elect Obama, along with the Bush Administration, have worked out some differences on a bailout for the Auto industry. Markets in Europe and Asia all had big rally's overnight and in the early hours. So it seems as though we are off to the races at the open, and you can expect a significant rally up about 300 points early in the day.

But again, is this enough to dispel the market overall fear? The answer to me is No! Most of us believe that more jobs are going to be lost going forward, more home foreclosures, tight credit and not much good news. So this rally is a relief rally based upon the worst news any could imagine from the bad jobs report last Friday, where 533,000 jobs were lost, behind us and no other news expected for a while.

So what to do. Well, first don't sell your Ford stock. Enjoy the ride today, as it will go up to $3.50 today for a nice gain. And because of the bailout, it will continue to $4 and above per share. If you believe as I do, that there will be a pullback eventually here and retest the lows, you are going to be given another opportunity to by the ETF Ultra Short fund, symbol SDS for around $83/share. If you buy this here you will most likely make a good return. So folks who believe we are in a Dow range between 7,300 and 9,500 will be looking to add to our Short positions using ETF Ultra Short funds. Yes, we may rally for a few days this week, but ask yourself this question, Are we going to have the worst of this financial crisis behind us 6 months out?

UPDATE 1:15pm PST.
I took my own advice today and purchased more shares of SDS, this time at $80.50/share with a limit order in for that price before I left for a client. The shares of SDS actually hit a low of $80.06 today. Ford closed up as well at $3.38/share after hitting $3.54 today, which was another lucky guess.

Market outlook for Friday Dec. 5th, 2008: Unemployment jitters rule the day! UPDATED

Going into this Friday Unemployment numbers, there is a lot of anticipation of a negative number with many saying they won't even believe a positive number. Yesterday's market action resulted in all three Indexes down. The Dow lost 215 and is now at 8,376. All three Indexes continue to stay below its 20 day Moving Averages. The big 3 Auto makers had their day with the Senate trying to convince them that their plans for recovery are real and that they should just be given a bailout. This seems highly unlikely as Sen. Chris Dodd and Sen. Harry Reid don't seem inclined to even take the vote. Not sure if that is because they don't have enough Republican support or if they don't also have enough Democratic support. Seems like most are coming around to the original proposal that they must go into bankruptcy, as a precondition for any funds.

So what will happen today? It seems unlikely of a positive move up today or even going into next week. I noticed that the volume yesterday was not high compared to previous days of the week. Thursday is usually the highest volume day of the week with Monday the lowest volume day of the week. Usually Friday's are about the same volume as Tuesday's. But this week has set up that today may be the greatest volume day of the week.

I just am hard pressed to believe there are going to be any buyers yet. So with some still selling and no buyers the forces of energy point down for all 3 market indexes. SDS continues to look attractive to me going into the next week. This cloud is also affecting the Christmas Retail sales and that shoe will drop in early January. I believe it is going to take until we have a new President, before there is any hope our economy has a chance for recovery. So we are in the most negative time right now. If we can get through this period we have a chance to reverse the psychology of the average investor. We should all be grateful we have at least some hope with the inauguration of President-Elect Obama on January 20th. He has inspired the Country and is doing his best even before taking office that he knows what he is doing and is a different kind of politician. Thank God.

I will update this after the Unemployment numbers are out and the market reacts. Going into the numbers at 5:00asm PST, the Dow Futures point to being down about 40 points.

UPDATE 5:35am PST

Well the Unemployment rate numbers came in worse than expected. The number of jobs lost were 533,000, which will scare many of those still employed. The Unemployment rate rose to 6.7% and would have been much worse except the fact that many unemployed have given up looking for work. To put this in perspective, President-Elect Obama wants to create 2.5 Million jobs over 2 years which is about 100,000 jobs created every month. In today's numbers that loss of 533,000 jobs represents about 5 months to gain back in a best case scenario. markets will react negatively. Only Short positions like SDS will help save or minimize the effect of the drop in market value. In my view this accelerates the possibility of help to the Auto industry. Today's numbers strengthens the case for a bailout quickly even if modest enough to review it again after Obama takes office. This makes Ford more attractive today to me.

UPDATE 1:30pm PST
The Dow finished up 259 points to close at 8,635 surprising even me after a terrible Unemployment report this morning. The market shrugged off the news and appeared to finish strongly and on higher volume than the previous 4 days. All 3 indexes, the Dow, S&P 500 and Nasdaq Composite, closed above their 20 day Moving Average. And while Volume was the best of the week today it was not convincingly higher to give more credence to the move up. I am still a doubter and the safe side of this market is Short, not Long. If the Bulls can get some strong volume going, it might be convincing but many just have been burned before and are reluctant to take a plunge back in. I will write again in the premarket on Monday, so check back if you are following this Blog for a market outlook. I may write over the weekend on other topics like the Auto bailout, prevention of home foreclosures and other topics of interest.

Market action during Tuesday, Dec. 2nd: Sold 1/2 Ford shares today

I sold 1/2 of my Ford shares this morning for an 80% profit. The remaining shares I own have an average share price of less than $0.10/share and I plan to keep them. The reason I sold half the shares was to return the cash I had invested for other uses such as playing the channel of the market. Having more cash in my tax deferred account allows me to move more quickly in buying ETF Ultra Pro shares, like SSO, and Ultra Short shares like SDS and TWM, to take advantage of the big swings in the market. The more frequent trades I can make with AT LEAST A 20% RETURN THE QUICKER MY ACCOUNT BALANCES WILL GROW AND THAT IS MY GAME PLAN.

This trade today settles on Friday so I will have more liquidity to respond to opportunities rather than waiting for them.

Markets are up so far today having reached a peak so far when President-Elect Obama was speaking to the National Association of Governors, in Pennsylvania, about stimulating the economy through the States, on infrastructure and investments on Renewable Energy programs.

Tuesday, Dec 2nd market outlook

All 3 Indexes, Dow, SP500 and Nasdaq are now below their 20 day Moving average. It was a big drop for the Dow having lost 679 points yesterday. The facts confirmed a pullback was in order and as sure as the sun rises, the market pullback was no real surprise Monday. What was a surprise was the amount of the pullback all in one day. The patterns of the candlestick for the day are the Hammer pattern suggesting the reversal of the previous trend, which was up for 5 straight days before this drop on Monday.

So what's ahead? We may have a rally Tuesday, since the drop was so severe, but I do not expect it to return to the close of the markets on Friday, until it goes down more in the days ahead and possibly retests the lows achieved a week ago last Thursday. I repeat, I do not expect the market to go back up, until we go lower. I have put orders in for the purchase of SSO at $18.20 and have also put in Sell orders for SDS at $120-$125/share. These orders are limit orders and Good till cancelled. If we stay in a tight range neither order may execute. But I am willing to accept as a strong possibility. I may need to wait for a breakout either to the upside or downside before either order gets filled.

I have kept my Ford shares and will watch the price to either add more shares on more of a pullback or to sell on a rise again within my $3.00 to $4.00/share.

Hope this is helpful to you, as many more visitors are reading these market entries this past month or two. Thanks for visiting and for some of your private emails to me.

Market outlook for week of Dec. 1st, 2008

Last week we saw a rising market as I said there would be and many were thrilled to see the Dow, S&P500 and the Nasdaq Composite Index. I have been asked through email and calls whether that rise was to be believed. Well of course it was to be believed any who bought ETF's or stock like Ford Motor, will tell you they made good money last week, especially if they sold to take the profit. But I think the real question which was behind their curiosity was whether the market rise was going to continue this week too?

No one can say with authority and certainty, what the week will do. But here are some facts about last week which should not be forgotten going into the week. First, even though there was a great rise in the 3 indexes mentioned above, 2 of the 3 did not go over the 20 day Moving Average. Only the Dow managed to close just above its 20 day Moving average. Secondly, if you look at a chart of the indexes along with a volume chart, you will notice the volume dropped off daily. When the price of a stock (or Index) goes up successively each day and volume drops off, it is usually an indicator of a change in direction, and in this case, down. If it rises for the week then the following week has an even higher probability of a pullback.

So, will the market rise this week? Well maybe early in the week yes but later in the week it may drop back. Remember the range of this channel from the bottom goes from about 7,300 to 9,500 on the Dow and we closed at 8,829 which is more than the mid point of the range. So the probability favors a pullback. My guess is that over time the range will tighten as many more play the spread like me. So we may have a new range of between 8,000 and 9,000 for a while before there is a breakout either to the upside or the downside again. That still is an 11% range and most can buy near the bottom of that range and sell near the top and repeat this many times. Those more skilled can not only buy at the bottom of the range individual stocks or Indexes but can also use ETF ULTRA Pro shares and ULTRA SHORT shares when the indexes are near the either end of the range.

In addition, this week we will know the Unemployment numbers for November and they will not be good. We will also get better info on Retail Sales. Early reporting suggests that Retail Sales are 3% above last year. I don't believe it and you shouldn't either. Many I have spoken to have cut back significantly on their purchases and I even saw reported that the wealthy have also cut back in expensive items. So, believe a 3% gain in Retail Sales at your own peril.

For example, as the market was rising I kept riding my ETF Ultra Pro shares of SSO until on Friday I sold them. At the same time Friday, the value of the ETF Ultra Short shares of SDS had dropped in price to below $90/share so I bought them. If the market goes up additionally in the first few days of this week, I will buy more shares of this at $88 and $86/share if the opportunity arises. I still own my shares of Ford and I see the stock continuing to rise right through the week. I see this stock going to $3-$4 in relatively short timeframe like 2 months. Did you know that 77% of Ford Motor shares are owned by Institutional Investors? So there is money to be made in the markets, but you must do it wisely, never committing cash you don't have to risk. All market "investing" is truly gambling. Any rational human being knows that and, like the Casino's, the game is rigged against the individual in favor of the house. The house here are the big boys who sleep every night because they have significant wealth and influence.

Good luck this coming week.

UPDATE Monday morning 6:45am.

Well the answer is in. Market is down over 300 points in the first 15 minutes of trading. Unrest and comments from China have fueled this early drop, as have comments that shoppers on Black Friday say they are done shopping and have completed their purchases by a whopping 36%. So the season may not be bailed out for Retail sales after all. I said if you believe that we are ahead of last year you do so at your own peril. SDS has risen sharply, up 8 plus points now to $96.35 which I bought for an average price of $89 last week and the SSDO I sold is down to $24.15. Ford continues to rise even with the Dow down 353 now as Ford is currently at $2.84.

Best 4 days in a row in the stock market in a long time.

I was very, very pleased to see the markets rise again today for a 4th straight day. I find myself wrestling with my Ego here wanting to say it was inevitable, given my earlier premise that Wall St. wants the consumer to forget about their stock portfolio's and go shopping. But on the other hand just happy I was able to point the way for some to make money this week. It was the best week in a long time.

Here's what I did today. I wanted to report that I sold my Ultra Pro ETF shares, symbol, SSO, for average price of $25.10/share. These are the shares bought at $19.35, so I have a lot to be thankful for a 24% profit in less than a week. Also I purchased 20,000 more shares of Ford Motor Co. at the open for $1.70. And lastly, I was able to buy the ETF Ultra Short of the S&P 500, symbol SDS, for $90.50/share. The idea here is that if the market drops next week due to very poor Retail Sales, I will make money on these shares. These are the same shares I bought at $88/share and sold at $118 last Thursday. The idea here being to make another round trip if the market goes down.

With the additional major news item of the day being a terrorist attack in India, the markets have a lot of pressure to go down next week. On Friday, you might consider buying this same ETF, symbol SDS. The Dow closed at 8,726 today. If you believe we are in a trading range and most likely will stay in that band, then playing it to your advantage is important. I believe the top of that band on the Dow is about 9,500 and the bottom is at 7,000, the half way point is 8,250 and we are above that point. That would mean there is better than a 50% chance we will pull back some. However, we are not that much above the mid point so it can just as easily continue up for a few days but we are still just below the 20 day Moving Average on the Dow and S&P 500. What I do in that case is to start buying 1/3 of the total shares I want to purchase of SDS at $90/share and buy 1/3 more at $88 and another 1/3 at $86/share.

Happy Thanksgiving.

Should you start buying stock now?

That seems to be on everyone's mind. Durable Goods orders were bad this morning but this indicator tells you what happened last month as does the unemployment numbers. But to determine if this is the time to get back into the market one has to ask 2 questions. First, can you afford to buy stock given your individual financial condition? I can't answer that for anyone but myself. The second question is this. What has the U.S. Government been doing with their money? Well from what I see they are throwing as much money as they can print into solving this problem. And they are "investing" significant amounts of money into the financial sector and most likely will bail out the auto industry as well. So if the government thinks banks and auto companies are a good investment at this time, why don't you?

I think it is a very good time to be buying back into the market selectively. I have been suggesting to my readers to buy Ultra ETF funds, as a way of getting in. I was asked by a reader if I sold my SSO yesterday and the answer is No. Even though pre-market looks like a down day, I am semi confident we will finish the day positively. I will either sell it near the close, hold it till Friday or Monday and see what transpires. I could take the profit and most others should have, but I tend to be patient and wait till I know more clearly the market's direction. Besides SSO is down from the closing price yesterday, BUT it is up from pre-market price, even though the market is down at the open.

I ventured into Ford Motor company at $1.49 on Friday and Monday and may buy more going forward. I like the way the chart looks these past 4 days. It hit $1.80 in pre market so we will see where it ends today. Good luck and Happy Thanksgiving.

Market does what is expected. Lucky guess again.

Ok, I think I got it right as we have had 3 days in a row of a positive uptick in the market. This is the first time since August. Unless tomorrow's Dow drops 1,000 points, we most likely will close the week up, which is what I predicted back on Friday and yesterday. Here's a check of my theory. How are you feeling now that the past 3 days have been positive in the market? Nervous it will drop? Happy it has gained ground? Hoping it will continue? You see most Americans are rooting for the market to rise, as there are few that want it to drop. If your mood is better, how will you be on the day after Thanksgiving, the most important day of the Christmas season for Retail Sales? I am hoping positive and that you consider spending a little money in thanks for what you have. Remember, it helps save jobs and can give you some joy if it is a present for someone you care about.

Those who purchased the Ultra Pro ETF of the S&P 500, symbol SSO, when I suggested and I did around $19.35, enjoyed the shares rising to a $24.37 at the close with a high for the day at $25.13. The gain so far is 25.8% For those who sold today, congrats on a nice gain.

I have an order in for the Ultra Short of the S&P 500, symbol SDS, at several prices: $90.50, $89.50, and $86.75 as a hedge for a market pullback.

Wanted to also wish everyone reading this Blog a very Happy Thanksgiving day and weekend.

Oh, I almost forgot that I wanted to tell you one other action I took and why I took it. I bought Ford Motor Co., symbol F, at $1.49 on Friday and Monday. Why you might ask. Because I believe that there will be a rescue plan for the auto industry and Ford is the stronger of the 3. Besides that stock is so cheap right now and 3 years from now when you look back you will be asking yourself why you didn't buy it here. That's my story and I'm sticking to it!