SPX rallied over 100 points from mid-October to late-November. Many, if not most, expected the beginning of a cyclical bear market last month. Consequently, heavy short-positions were taken, in October and November. However, it turned out, SPX rallied to 4 1/2 year highs, while a "short-squeeze" took place over the past week, extending the cyclical bull market. The rally may continue into the end of the year, although the market may consolidate short-term. Typically, steep rallies (without consolidations) lead to volatile consolidations or steep pullbacks. So, I expect a volatile week next week, and over the first week or two of December.

The first chart is an SPX daily chart that shows both RSI and ULT (an oscillator) are both over 70, which is rare for an index. Consequently, a pullback may take place within the next week. The two previous pullbacks (see circle) were both to the 10 day MAs. Currently, the 10 day MA is just over 1,243 and rising about five points a day. Other major support levels are 1,253 (multi-year Fibonacci level), 1,246 (previous four-year high), 1,235 (congestion area), and 1,227 (20-day MA, which is also rising sharply).

The second chart is an SPX monthly chart. SPX has generally traded between the middle and upper monthly Bollinger Bands over the recent bull market. On Wednesday, SPX rose above 1,270, which was slightly above the upper Bollinger Band at 1,268, and then pulled-back. So, 1,270 may be short-term resistance. The monthly Bollinger Band may rise above 1,280 next month. Consequently, it’s possible, SPX will rise to about 1,300 in late December or early January.

There are several factors driving the market. Negative sentiment tends to be a contrarian indicator and created the recent short-squeeze. Investment funds want a strong quarter to finish the year with the highest possible returns. Consequently, the best performing stocks this year may continue to rise into the end of the year for "window dressing." Oil prices have stabilized between $56 and $59 a barrel after rising above $70, and a warmer than average winter may lower oil prices further. Expectation of a strong holiday shopping season, viewing economic data as "half full" rather than "half empty," and a belief the Fed tightening cycle will be over early next year will contribute to keep the market high.

Charts available at PeakTrader.com Forum Index Market Overview section.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.

Mutual Fund Investments are safe always. You may know that all the profits shared to the investors by the mutual funds are coming out of the profits from the investments in the stock market.

Normally mutual fund schemes are entrusted to the designated person who is called fund manager.

It is his look out where to invest and when to invest and when to come out. They are professionally qualified to carry out these activities sincerely.

Normally every mutual fund will have a risk management team also. This risk management team’s responsibility is to safeguard the interest of the investors when the stock market is behaving differently beyond the expectation.

It is the general comment of any mutual fund companies that while the investors are sleeping they proudly say that their fund managers are working briskly to safeguard the investments of their investors.

While investing through mutual funds, investors need not worry about the market fluctuations or volatility. Their fund managers are very intelligent and they very well know about the market’s behavior at all times.

They won’t be trapped by any rumors about the market condition. They won’t chase after the artificial boost of a particular company’s share.

If that is the situation they will immediately analyze whether the boost is real or artificial. If the boost of a particular company’s share is real then only they will take positive decision.

Moreover every mutual fund will want more investments from their existing or new investors only if they manage the fund effectively and give good returns to their investors sincerely.

So they naturally work sincerely for high returns to the investors.

Ideal period for every investor to remain in the mutual funds is from 1 to three years. Then only they can get good returns for their investments.

Investors need not worry about the volatility in the stock market if the period of investment is from one to three years.

Mutual fund investments are diversified in various good performing companies.

In other words every investor in the Mutual fund is having his investment portfolio spread over to many good performing companies, whether the amount invested by him/her is minimum or maximum.

Mutual fund investments are like a lifeboat in the ship.

C.Krishnan, is an experienced financial advisor to mutual Funds investments.

He is also running an emagazine "You can succeed" at http://www.tncity.biz/article.html.

Articles are published daily ranging from diabetes, weight loss, arthritis, beauty, fashion, diet,food etc.,

In Continuation of an article Don’t Just Pick Any Dividend, let me follow up with a few signs of company who may initiate dividend cut. Once dividend payment is initiated, management will be less inclined to cut them. Certain circumstances might force them to cut the dividend. Yes, it is embarrassing. But, it may be needed to survive. Business may be slow. Debt payments may be coming due. Whatever it is, dividend cut generally is not a good thing.

Here are several indications that management will cut future dividend:

Huge Loss. When a company is not profitable, dividend cut may be initiated. If the loss occurred for years and no sign of improvement for the foreseeable future, the chance is, dividend will likely be cut.

Negative Net Cash. This means that the company has more long term debt than it has cash. If the firm’s negative net cash is increasing and getting worse, the dividend cut will follow suit.

Negative Cash Flow From Operations. When the company is draining cash operating its business, there is no reason it should keep the dividend payment. The cash can be used for other purposes such as capital expenditure or investing in long term asset to expand its business.

Long Term Debt coming due. If a big portion of the company’s long term debt is coming due, it needs to conserve cash. Even if the firm cannot repay it on time, lenders want to see an effort by the company to conserve cash. To please lenders, the company needs to reduce dividend payment and request an extension for the loan.

If a company has one of these signs, they may not cut their dividend anytime soon. But if a company has all these signs, there is a big chance that dividend cut is the next logical stop. What company currently fit this description? General Motors Corporation is one. It has a huge loss of $ 3.81 Billion loss for the first nine months of 2005. Furthermore, its balance sheet is not stellar. It has a huge negative net cash ($ 31 Billion) and cash flow from operation is negative as well. I am not sure when GM’s long term debt is coming due. If a huge portion of it comes due, dividend cut will be initiated if its business does not turn around.

Get your free investing idea by regularly visiting our commentary section at http://www.noviceinvesting.com

1. You can tell if a Stock is cheap or expensive by the Price to Earnings Ratio.

False: PE ratios are easy to calculate, that is why they are listed in newspapers etc. But you cannot compare PE’s on companies from different industries, as the variables those companies and industries have are different. Even comparing within an industry, PE’s don’t tell you about many financial fundamentals and nothing about a stock’s value.

2. To make Money in the Stock Market, you must assume High Risks.

False: Tips to Lower your Risk:
· Do not put more than 10% of your money into any one stock
· Do not own more than 2-3 stocks in any industry
· Buy your stocks over time, not all at once
· Buy stocks with consistent and predictable earnings growth
· Buy stocks with growth rates greater than the total of inflation and interest rates
· Use stop-loss orders to limit your risk

3. Buy Stocks on the Way Down and Sell on the Way Up.

False: People believe that a falling stock is cheap and a rising stock is too expensive. But on the way down, you have no idea how much further it may fall. If a stock is rising, especially if it has broken previous highs, there are no unhappy owners who want to dump it. If the stock is fairly valued, it should continue to rise.

4. You can Hedge Inflation with Stocks.

False: When interest rates rise, people start to pull money out of the market and into bonds, so that pushes prices down. Plus the cost of business goes up, so corporate earnings go down, along with the stock prices.

5. Young People can afford to take High Risk.

False: The only thing true about this is that young people have time on their side if they lose all their money. But young people have little disposable income to risk losing. If they follow the tips above, they can make money over many years. Young people have the time to be patient.

Cory operates an educational website to help people discover their options to becoming financially free. To learn more checkout: http://www.choose-to-be-rich.com

One say’s "I bought "XYZ Company" at Rs.2200 and immediately after I bought the stock price dropped to Rs.2000." I feel sad. Another comes with a different version "I sold "XYZ Company" at Rs.2000 and it went up to Rs.2400 same evening" I made an imaginary loss of Rs.400 per share.

Solution:

You can buy more shares @ Rs.2000 and reduce your overall buying cost. This has to be done only if believe in the fundamentals,management and the future prospects of the company.

To do this you need to keep money ready.whatever money you have and want to invest,split it into two parts. Then keep 50% cash aside, only invest with other 50%.So if need to buy more of any stock when the price falls you have ready cash.

Also now if you have 200 shares of XYZ Company 100@Rs.2200 and 100@Rs.2000.Then the price goes up to Rs.2400. Sell only 100 of the shares.Then if the price further shot up, you have some shares to sell And participate in the rally to make money.

Next You sold the share and the price went up. The solution to this is never sell all the shares at one time. Sell only 50% of your shares.So if he price goes up later you still have the other 50% to sell and make profit.

The golden Rule is to first do your own analysis of the stock before investing and buy on tips. Also invest only in companies which declare dividends every year. To be sure that you are not investing in loss making companies.

Every Market expert advise to do your stock analysis before investing in the stock market. But nobody tells you how.

Well in my next article I will write about how to do stock analysis using various tools such as financial ratios and by checking the track records of the companies you plan to invest in.

P.S: If you are not Indian then replace the Rs. into your own local currency to understand the article

Jigar Vikamsey is a freelance writer and writes articles on stock markets and investments (http://www.sensex.in)

What if the average American could not invest in the stock market or buy mutual funds? What if only the wealthy could do this? Well, as more and more regulations are put on the financial investment industry and more and more minority shareholder lawsuits abound, we may see a time when the little guy gets shut out.

In fact many financial planners will not take to anyone who has less than 500,000 dollars to invest. Why? Well they feel it is not worth their time and with all the regulations in the financial planner industry, well, it I really isn’t and it is not worth the risk that they might lose their license as the SEC is quick to launch an investigation over any little complaint whether legitimate or not?

What can the little guy do? Well you can go down to Merrill Lynch and open up a brokerage account where some young stockbroker will read the latest stock picks on a 3 X 5 index card and tell you where your money should go, while they churn the ever-living-crap out of your account?

Why is this happening? Well, the SEC has it in for the little guy, as every 6-8 days they make another rule, causing more paper work and costs to little financial planners and Broker/Dealers forcing them to adjust their business model or quit business.

This means they cannot make money taking on small accounts under 500,000 and therefore, the little guys gets to go to the wire houses to get bent over; so my question to you is how do you like your SEC now? Think on it.

"Lance Winslow" - Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance in the Online Think Tank and solve the problems of the World; www.WorldThinkTank.net/

The first chart is a NYSE Oscillator weekly chart that shows severely overbought indicators. An oscillator for the oscillator, ULT, is above 70, which is rare. The other three indicators, above and below the price chart, are also severely overbought. The four-week MA is at 39.85, which is in the region where the market is about to consolidate or start a downtrend (also shown in older charts).

The second chart is an SPX daily chart that also shows severely overbought conditions. Major resistance continues to be around 1,270 (upper monthly Bollinger Band). The first major support level is the 10-day MA, currently at 1,247 and rising. If SPX begins a consolidation next week, it may fall to the 10-day MA, which will rise to around 1,255 by the middle of next week. Also, 1,253 is a multi-year Fibonacci level.

There are many economic reports next week, following the Thanksgiving holiday week: Monday–Existing Home Sales, Tuesday–Durable Goods Orders, New Home Sales, Consumer Confidence, Wednesday–GDP, GDP Chain Price Deflator, Chicago PMI, Oil Inventories, Fed’s Beige Book, Thursday–Personal Income, Personal Spending, Construction Spending, Unemployment Claims, Auto Sales, ISM Index, Friday–Nonfarm Payrolls, Hourly Earnings, Unemployment Rate.

The market may fall into a volatile trading range next week. A lot of positive news was priced-in recently. However, inflation remains an uncertainty, although the market has been pricing-in the end of the monetary tightening cycle. Moreover, gasoline prices are still high, although down from their peaks, which may slow consumption growth.

Charts available at Forum Index Market Overview section.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.

We’ve all heard about the investor how bragged about his 100% or 1000% return on a stock or about the guy who made it rich by investing in small caps, undiscovered stocks that made it big. In theory, it seems to be too easy. Invest in a couple of penny stocks, then sell them when they move up. Unfortunately, it is too easy. Too easy to lose money unless you know what to look for.

First, lets have a look at what types of companies trade on the OTC BB or Pink Sheets.

Stocks that no longer trade over $1 on the Nasdaq

These include companies that fell from grace (Enron). While it is possible that they may see better days in the future, the odds are stacked against them. Its usually best to avoid trading these stocks. If you feel that the temptation is too much, wait until the stock begins to rebound. If you try catching a falling knife, you will get hurt.

New Start Ups

Every year there are hundreds if not thousands of companies who decided to go public. Whether they need the money to expand their business, or are looking to cash out their equity, its a natural progression for a company with a compelling story, and a great track record to go public. While many of these companies will file for an IPO, many others will start off trading on the OTC BB as a penny stock

Second, lets look at some tips to help the penny stock trader avoid making costly mistakes.

Due Diligence

Stocks listed on the Pink Sheets don’t have to file annual or quarterly statements. This makes starting your due diligence difficult. Often, the information is sketchy at best, and typically, its biased. You should expect a shareholder to say good things about the company. If the company didn’t have potential, they wouldn’t be holding it. Or, they might be hoping to unload their shares and hope to talk you into buying.

Stocks listed on the OTC BB file annual and quarterly statements. This provides some measure of financial success. You’ll find most penny stocks lose money, whether through managerial incompetence, or research and development. The key is to identify the companies whose management has a record of consistently making money, or at the very least, delivering on their business plan, and decreasing expenses.

Penny Stock Newsletters

Being a writer for The Leading Source (http://www.1source4stocks.com) puts me in a biased position when speaking to penny stock newsletters. Here’s what I can tell you: be careful! Check the disclaimer for the amount the newsletter is being paid to carry the profile. Are they being paid in cash or in shares? You’ll likely find a corelation between the number of shares they are being paid, and the rating on the hype meter. Does that mean that you should avoid any stock where the company is paying IR professionals in shares? No. Just keep in mind that they are selling a story, and if they sell the story to other shareholders, they will gain. This is not a problem if you get in early, but could be a problem if you aren’t able to jump in right away.

Take a look at the track record of the newsletter. Have they profiled winners? Do they state the facts, or state the hype? Do they also offer unpaid stock profiles? If they do, you’ll likely find that they do their own research in all companies, and are looking to ensure that they aren’t passing a weak stock your way just to pay the bills.

If a company is paying an IR professional money to profile a stock to its subscribers, should you avoid it? Of course not. Think of the payment as advertising. They are promoting the company, and trying to get exposure. Like any company, the only way to get exposure is through some method of advertising. So dont dismiss a paid profile as hype. Keep it in the back of your mind while you are reading the profile, but pay attention to the profile. You may find a diamond in the rough that no one has discovered.

Volume

If you want to make money, you have to be able to buy and sell enough shares to lock in your profit, or protect your capital. If ABC company’s daily volume is only 500 shares a day, it may take you several days to accumulate a position worth taking. If there is bad news, who is going to buy your shares? If the volume is low, stay away. Its not worth it. If you feel that strongly about owning the company, consider contacting the company directly and working out a deal.

Buy Results, Not the Story

If you buy the hype, odds are, you will end up being the last one to own the shares, while everyone else has sold off their position. Look at a company, take a look at what their business plan was, and confirm if they have followed through on that plan. Were they successful? Did they bring a product to market on time? Did the company follow through on its acquisition strategy in the manner they set out? The hype might get you a quick pop, however, unless you are watching your trading screen every second of the trading day, you will miss out.

Size matters

There are thousands upon thousands of penny stocks. The size of your position should not be anymore than $2000 - $3000. While this may not seem like much, keep in mind that its not unusual for a $0.10 company to drop to $0.05. That’s a 50% loss. If your position is $10 000, a 50% haircut leaves you with only $5000. Keep your losses to a minimum. If the company has done well, and you are up, either take your profits off the table, or add to your position, and be sure to reset your stop loss so as to protect your previous profits. Capital preservation is the key to successful trading.

Have a plan before you buy. What are your reasons for buying. What is your exit strategy? Where is your stop loss? At what point will you take your profit? Write down these answers before you place that buy order.

Penny stock investing can be profitable. Remember, you are taking larger risks than you would if you were purchasing shares in a bank stock. That risk can be rewarded with returns that you cant get with a bank stock, or, it will be met with a large loss and a bad taste in your mouth for investing in penny stocks.

Do your homework, don’t believe the hype, and protect your capital.

Note: The Leading Source provides its subscribers with both paid and unpaid profiles. Follow those tips and you will watch your pennies grow into dollars.

investment strategies for trading penny stocks.
1source4stocks.com provides traders with online trading and investment startegies and tips. Free stock picks for subscribers to the Leading Source.

What are Put Options?

A Put is a contract on a particular stock, index or other security that allows the investor to sell the underlying stock at a set price (strike price).

The holder of his option has paid a premium (cost of the contract) to buy it. Put options are profitable when the market is in decline. If the investor has a put on a stock that has now fallen enough to cover the cost of the premium, the person would be profitable.

Ways to Profit with Put Options

Trading them:

If the Put is profitable, the investor can sell or trade the contract back to the market. The profit on the contract is shown by the premium increase on the option. As the market declines, the premium increases. This premium increase allows the investor to sell the contract. He is not "exercising the option". He is trading it out. This is how most options are done vs. exercising.

Exercising them:

When an investor exercises a Put Option, he or she is selling a stock they already own. The right of a put holder is the right to sell the stock at the strike price, regardless of the actual price in the market. If you owned a Put with a strike price of 50, and the market has declined to 40, you could purchase the actual the stock in the market at 40 and then exercise the put at 50. You would make 10 points on that stock, minus the premium paid.

The break-even for investors who own put options (disregarding commissions) is the strike price minus the premium paid. In the above example, if the investor paid $300 for the option - his break-even would be 47. Since the market in our example went down to 40, the actual profit for that person would be $700.

Writing a Put Option

When you sell or short a put option, you are "writing" the contract. The writer is someone who is bullish on the market. The seller collects the premium (as opposed to the buyer who pays the premium) and is hoping the option expires worthless. The premium is the writer’s maximum gain. So, obviously if the premium is all that he can make - having the option expire is the best case scenario.

Put option writing does carry risk. If the option is exercised (by the holder/buyer), the writer must purchase the stock from the holder at the strike price. In the example above, the writer would have had to buy the stock at $50 (the current price), while the market was at $40. He would be stuck with a stock 10 points above the market. His loss would be lessened by the premium received. The writer can buy back the put before it is exercised, but if the put has gained value, the purchase price would be higher than the premium he originally got - so, it would be a loss either way. The option is expiring is the best bet.

Covered Put Option Writing

Since the seller or writer of puts must purchase the underlying stock at the strike price, he must have the cash to do that. Selling stock short and using the proceeds to cover an exercised option can be done. Also, the premium received for selling the put option can assist a short position to get greater profit.

As with any option, time is the biggest factor. Put options expire monthly. All options carry large risks, but can present large profits. Educate yourself further and talk to your broker.

Learn More: Put Options

Nick Hunter is the President of American Investment Training (AIT) and the owner of http://www.brokerjobs.com - A financial career and education website.

The first chart below is a Nasdaq weekly chart that shows Nasdaq closed last week at the top of a multi-year rising wedge. Also, Nasdaq closed at 2,227 just below the upper weekly Bollinger Band at 2,228 1/2. Over the next few weeks, a consolidation below the top of the multi-year wedge is more likely than a break-out. A consolidation may take place in the upper half of the Bollinger Bands, while the wedge continues to narrow. If Nasdaq breaks-out, next major resistance is around 2,250 (upper monthly Bollinger Band and 80 month MA).

The second chart is an SPX daily chart. SPX is also near multi-year resistance, i.e. just below the 38.2% retracement from the 2000 peak to the 2002 trough, or the Fibonacci 61.8% level. Over the past month, SPX rallied from just above the Fibonacci 50% level, at 1,161, to just below the Fibonacci 61.8% level, at 1,253, and closed at a new four-year high at just over 1,248 on Friday. I also expect SPX to consolidate short-term. Support levels are at 1,230 to 1,235 and 1,220, which are congestion areas. Resistance levels are at 1,253 (Fibonacci level) and 1,264 (upper monthly Bollinger Band).

The stock market held-up well over the summer, had a quick "wash-out" in October, and has entered the seasonally strong period of October to May. Consequently, the market may rise higher after a consolidation period. The catalysts for a further rise are lower oil prices, anticipation of a pause in the Fed tightening cycle, and continued strong earnings growth. Oil closed at $57.21 a barrel Friday, and may continue to fall towards $50 over the next few months. The market may discount that after two more hikes in the Fed Funds Rate, in December and January, the Fed will pause or start an easing cycle. The economy continues to expand at above trend growth, which contributes to corporate earnings.

There are many high-quality stocks that failed to participate in the recent rally. Consequently, I’d expect price disparities to close somewhat in a consolidation phase. Many drug stocks e.g. PFE BMY LLY ABT AZN etc. remain out of favor, while other stocks e.g. LU FNM X INTC CSCO DELL etc. have become even more relatively undervalued. Nonetheless, oil stocks remained high and GOOG rose above $400. Oil prices and economic reports should continue to influence the market. The U.S. stock market will be closed Thursday for Thanksgiving. Economic reports next week are–Monday: Leading Indicators, Tue: FOMC Minutes, Wed: Unemployment Claims, Revised Michigan Consumer Sentiment, and Oil Inventories.

Charts available at PeakTrader.com Forum Index Market Overview section.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.