StockChartGrabber http://www.stockchartgrabber.com Share stock market trading tips, stock market tools and Investment Advice with fellow traders Tue, 22 Sep 2009 19:19:06 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 Airlines Index – XAL – Technical Analysis Daily http://www.stockchartgrabber.com/2009/09/20/airlines-index-xal-technical-analysis-daily/ http://www.stockchartgrabber.com/2009/09/20/airlines-index-xal-technical-analysis-daily/#comments Mon, 21 Sep 2009 01:53:36 +0000 Brian http://www.stockchartgrabber.com/?p=223 XAL Technical Analysis Daily

In looking over the U.S. Industries Indices today, I identified the AMEX:XAL Airlines Index as a great performer with some near term strength.

Even though the RSI is now overbought, we’re primarily concerned with the current price strength. The averages and MACD concur. Diving into the XAL components I’ve identified three stocks which I’ll be watching for the next few days for a good entry point.

Airlines Index Chart AMEX:XAL for September 20th, 2009 09/20/2009

Airlines Index Chart AMEX:XAL for September 20th, 2009 09/20/2009

 

Continental Airlines (CAL), Skywest Inc. (SKYW) & Southwest Airlines (LUV)

I’m looking for any pullback as an opportunity to get into Continental (quote analysis) over the next 3 to 4 trading days. As long as CAL is on the up-swing I’ll buy in as close to $15.50 as possible. I’m also looking for an RSI anywhere below 70. I plan on hanging on as long as the MACD continues to trend into positive territory and I’ll switch over to the Fast Stochastic to tell me when to exit on trading day.

Continental Airlines CAL September 20th 2009 - 09/20/2009

Continental Airlines NYSE:CAL September 20th 2009 - 09/20/2009

 

Second on the list is SkyWest, Inc. (quote analysis). I’m looking to buy on any pullback that is on the up-swing and the price range is between $16.50 and $18.00

SkyWest, Inc. SKYW September 20th, 2009, 09/20/2009

SkyWest, Inc. SKYW September 20th, 2009, 09/20/2009

 
Last I’m looking at Southwest Airlines (quote analysis)as a potential play heading into the end of this week or early next week. I’m looking for an easy buy-in at anywhere between $8.50 & $9.75. I’m mentioning it here a bit early because I want to keep it on the watch list. It’s showing a decent trend, although it’s just a bit too hot at the moment, I expect that will change over the course of the week.
Southwest Airlines LUV Analysis September 20th 2009

Southwest Airlines LUV Analysis September 20th 2009

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Is Buy and Hold Dead? – Technical Analysis Daily http://www.stockchartgrabber.com/2009/09/18/is-buy-and-hold-dead-technical-analysis-daily/ http://www.stockchartgrabber.com/2009/09/18/is-buy-and-hold-dead-technical-analysis-daily/#comments Sat, 19 Sep 2009 00:06:58 +0000 Brian http://www.stockchartgrabber.com/?p=188 What is Buy and Hold Investing?

Skip the backgrounder and find out here - Is Buy and Hold Dead?

I just got off the phone with my sister who is brand new to trading. I couldn’t be more thrilled about the chance to share my passion & knowledge about trading with someone close to me. Naturally she’s full of questions and you can tell she’s doing her homework. It’s nice for me in the way that being able to succinctly explain a concept also tests and reinforces my own understanding.

Listening to her questions, I can tell she’s building a framework in her own mind about finance & markets. I hope over the long term I can foster the kinds of insight and further curiosity that will have her calling herself a trader some day soon. So she asked me to help her understand buy and hold as a practical strategy and any purported benefits. As she posed her question, I attempted to grasp a perspective just how many people must have lost untold fortunes over the last year from buy and hold, the strategy among strategies when your goal is moderate growth and relative safety. It is so easy for me to argue against it despite it’s obvious merits, given that the year earlier has been so terrible for many investors relying solely on this strategy.

The rules of buy and hold are simple, just like it sounds. Investors using buy and hold basically set up a budget for buying a pre-determined stock or basket of stocks at some frequency. When the time comes whether monthly, quarterly or some other schedule - the investor buys as many shares at the market price as their budget will allow.  There are well understood benefits to the buy and hold strategy.

One such beneficial aspect of buy and hold is what is known as dollar cost averaging. Because the investor buys on some regular basis, they are less likely to buy during highs or lows as often and so they normally end up buying near the average price. The net effect is that they end up with a higher value asset purchased at the average cost.

Another way the buy and hold investor can benefit is by compounding. As a stock increases in value it generates earnings for the investor who adds the new earnings right back into the investment. At this point the investor begins earning based on their inital investment plus the new earnings. Over time new earnings generated by compounding can generate earnings that easily outpace the earnings gained from increases in the value of the underlying investment. An added benefit of some stocks is that earn aquarterly or biannual per share dividend. The dividends are also reinvested in the form of either more shares or simply held as cash in the investment account where it will add to the interest earnings and compounding. This reinvesting of dividends is  referred to a DRIP or a Dividend Reinvestment Plan.

An example of compounding at work (reprinted from Investopedia www.investopedia.com)

 

Compound Interest from Buy and Hold Investment Strategy

 Investopedia explains Compounding
 

Suppose you invest $10,000 into Cory’s Tequila Company (ticker: CTC). The first year, the shares rises 20%. Your investment is now worth $12,000. Based on good performance, you hold the stock. In Year 2, the shares appreciate another 20%. Therefore, your $12,000 grows to $14,400. Rather than your shares appreciating an additional $2,000 (20%) like they did in the first year, they appreciate an additional $400, because the $2,000 you gained in the first year grew by 20% too. If you extrapolate the process out, the numbers can start to get very big as your previous earnings start to provide returns. In fact, $10,000 invested at 20% annually for 25 years would grow to nearly $1,000,000 (and that’s without adding any money to the investment)!

 
Now that we all know the basic strategy behind buy and hold there’s one thing left to consider. One last little curve ball… Buy and hold only works when markets are trending up. Many novice investors would have done well over the last 52 weeks had they known this integral bit of info. You see, when the value of the underlying stock is steadily declining, the buy and hold investor continually pays the highest price for the stock, the value of the investment never exceeds the initial investment and the interest earned is always less than before due to the continual erosion of value of the underlying security. It’s a losing battle and many people have lost fortunes blindly following buy and hold way longer than they should have. I get a sense that when it comes to their investments (401k’s, IRA’s and the like) a suprising number of people simply ignore their duty to stop the bleeding when the market sours. Why? I suppose it’s because many feel that managing their retirement is at best a mysterious art or perhaps buy and hold was over sold to them and they never had a full understanding of this simple form of investing.

Now what do I tell my sister? Maybe I could tell her to look at her 401k and decide if buy and hold is right for her. Chances are she won’t be happy. Ideally she’ll understand that it does have it’s place as a viable strategy. That it is to be employed under the right conditions, not just ANY conditions - as so many people seem to believe.

As long as she understands buy and hold has its share of shortcomings, I wouldn’t mind telling her that many analysts seem to think the market’s put in a bottom and that buy and hold can be a decent strategy as long as she intends to pay attention to the market.

I think she’ll know what to do. Finally, our original subject…

Is Buy and Hold Dead?

I know this has been a long read and I appreciate you sticking with me. Now heres a chance to stop reading and just relax. I found this timely video from my friend Adam Hewison (lead analyst over at INO.com).

Here’s Adam’s opinion of Buy and Hold and a perfect place for me to end this article. Adam describes our current market environment and shows us how he’s decided once and for all… Is Buy and Hold Dead? Launch the Video

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Stock Chart History of the 1929 Market Crash http://www.stockchartgrabber.com/2009/09/18/stock-chart-history-of-the-1929-market-crash/ http://www.stockchartgrabber.com/2009/09/18/stock-chart-history-of-the-1929-market-crash/#comments Fri, 18 Sep 2009 17:50:52 +0000 Brian http://www.stockchartgrabber.com/?p=180 Dow Jones Industrial Average Stock Chart from 1920 to 1940 including the 1929 Market Crash

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Huntsman Corp – Technical Analysis Daily http://www.stockchartgrabber.com/2009/09/16/huntsman-corp-technical-analysis-daily/ http://www.stockchartgrabber.com/2009/09/16/huntsman-corp-technical-analysis-daily/#comments Wed, 16 Sep 2009 08:55:05 +0000 Brian http://www.stockchartgrabber.com/?p=132 Huntsman Corp – Technical Analysis Daily

Since the recent consolidation in the Dow Jones US Chemicals Index (DJUSCH), I’m remaining bullish on a few of its components. One other component-stock I’d identified while researching my last pick (FMC Corp - NYSE:FMC) was Huntsman Corporation (NYSE:HUN quote analysis).

Huntsman Corp has been in a strong up trend for around 60 days now. Huntsman’s momentum – very steady, but note the RSI is signaling overbought today so expect a minor pull-back before entering a trade.  At that point I would scale-in since this trend is quite mature. 

Also check this out, Huntsman is currently paying a .10 cent dividend every six months. At $9.19 per share that’s over 1% return built in!

Huntsman Corp NYSE:HUN Technical Analysis Daily

Huntsman Corp NYSE:HUN Technical Analysis Daily

Finally, it’s about time for me to do another industry-by-industry analysis. I wouldn’t be at all surprised if the Retailers or Tech shows up on the radar as the next Index to watch. I’ll let you know as soon as I find out!

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FMC Corporation – Technical Analysis Daily http://www.stockchartgrabber.com/2009/09/15/fmc-corporation-technical-analysis-daily/ http://www.stockchartgrabber.com/2009/09/15/fmc-corporation-technical-analysis-daily/#comments Tue, 15 Sep 2009 05:22:29 +0000 Brian http://www.stockchartgrabber.com/?p=97 Last week I was preoccupied with the Dow Jones U.S. Chemicals Index.  The DJUSCHhas been in a trustworthy up trend over the last month and recently took a quick pause offering this index a chance for consolidation. With the brisk market action today the DJUSCH is in a great place (better than most) to continue it’s trend.

My current favorite DJUSCH component is FMC Corp (NYSE:FMC quote analysis)

Like it’s parent index, FMC has confirmed it’s well into a strong new up trend. On a down day, I’m looking for a pull back to about $52.00 before jumping on. In an up-market I’ll get in now and hold on til the MACD shows signs of weakness.  

FMC Corp Stock Chart

FMC Corp Stock Chart

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Dow Jones U.S. Chemicals – Technical Analysis Daily http://www.stockchartgrabber.com/2009/09/11/dow-jones-u-s-chemicals-dow-jones-u-s-chemicals-technical-analysis-daily/ http://www.stockchartgrabber.com/2009/09/11/dow-jones-u-s-chemicals-dow-jones-u-s-chemicals-technical-analysis-daily/#comments Fri, 11 Sep 2009 17:49:28 +0000 Brian http://www.stockchartgrabber.com/?p=82 Dow Jones U.S. Chemicals Index

I’m watching all Dow Jones U.S. Chemicals for a good entry point. I’m staying out of momentum plays until Monday as the current environment is fairly hot. (Dow Jones U.S. Chemicals components)

Currently Watching Dow Jones U.S. Chemicals Index

Currently Watching Dow Jones U.S. Chemicals Index

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Healthcare Stocks Made for the Obama Healthcare Bill http://www.stockchartgrabber.com/2009/09/10/healthcare-stocks-made-for-the-obama-healthcare-bill/ http://www.stockchartgrabber.com/2009/09/10/healthcare-stocks-made-for-the-obama-healthcare-bill/#comments Thu, 10 Sep 2009 16:32:12 +0000 Brian http://www.stockchartgrabber.com/?p=69
President Barack Obama Addresses a joint Congress to discuss healthcare reform

President Barack Obama Addresses a joint Congress to discuss healthcare reform

Since the Obama administration began, it was clear that it’s agenda of healthcare reform was not going to die with a whimper and last nights address to the joint congress only makes it more clear [if that's possible] that Americans are going to wind up with some form of sweeping healthcare law. Regardless of the details of the current healthcare bill, whether we like it or not, change is a comin’.

It’s impossible to know with certainty just what the healthcare law will look like by the time it’s enacted. There are some pretty straightforward “truths” already emerging and some big players are jockeying in the nationalized healthcare arena already.

One thing about a nationalized health-care system is for sure. It will need funding, management and audits. If you don’t know already, there is huge money in helping a government take care of itself. One prominent healthcare player and all-around government helper that I found is becoming more attractive the more I look. CGI Group (NYSE:GIB quote analysis) is an IT solutions provider, outsourced by the U.S. government for other operations and already manages billing, auditing and more for the Canadian national healthcare system. 

Some of CGI Groups more recent strategic moves along the nationalized healthcare front in the U.S. include expanding operations in D.C and Virginia and acquiring key people from government agencies.  CGI Group is already well positioned to win some major contracts within the managed healthcare space.

Another important part of the story is that CGI Group is a profitable company with an already great-looking financial picture around an 8% profit margin on average and little debt.

The truth is that managed health-care is about to become a reality in the U.S. CGI Group is ready to manage any part of what is surely a lucrative opportunity for just such a company.

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