Traders-Blog.com

As January ends, investors received positive news from a number of companies which helped the market improve over the past few days. Investors are looking forward to the close of a disappointing month and are hoping that February will be a brighter month. The Dow ended at 10,489.94 after rising 62.74 points today. Additionally, the Nasdaq rose 26.58 points and closing at 2,062.41; the S&P closed at 1,181.27 after rising 9.91 points.

Lee Enterprises announced today that it will be acquiring Pulitzer Inc., who runs over 100 weekly newspapers, for $1.46 billion, making the resulting company the fourth largest newspaper company in the United States. Additionally, SBC made a formal announcement that they will be purchasing their former parent company AT&T in a $16 billion deal. With their other recent acquisitions, SBC Communications is quickly becoming one of the largest telecommunications companies in the United States.

In yet another deal for the day, MetLife announced that they would be buying Travelers Life & Annuity Co. from Citigroup for a minimum of $11.5 billion. In their statement, the companies said that this deal would make MetLife “the largest individual life insurer in North America, based on sales.” Time Warner and Comcast will be entering into a joint bid for Adelphia. The cable operation company declared bankruptcy last year. The companies were granted permission to make the bid for $17.5 billion for the company and its 5.3 million subscribers. The deadline for bids is Monday, and the companies hope to close the deal by the end of the first quarter.

Exxon Mobil Corporation reported the highest fourth quarter earnings in the company’s history with a net income of $8.42 billion. The revenue for the company reached $83.4 billion as opposed to $65.95 billion a year ago. Additionally, Walt Disney Co. reported that first quarter profit rose 5.1% due to a rise in ESPN advertising and increased tourism at the company’s theme parks. The company’s net income was a whopping $723 million up from $688 million. Revenue for the company rose from $8.55 billion to $8.67 billion.

Once again oil prices were up today. OPEC ministers decided Sunday to keep output quotas unchanged; additionally, the news of higher than expected voter turnout in Iraq made investors feel a bit better over the weekend. The morning oil prices dropped almost 3%; however, this afternoon, crude oil prices rose 11% higher as the month came to a close. A number of countries may have difficulty producing the amount of oil needed for the coming year, and consumers are becoming concerned.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

More exclusive trading recommendations from world record-holder Dan Zanger and The Zanger Report - free 3-week trial. (No credit card needed.)

click to view chart full size

DAN’S 10 GOLDEN STOCK RULES

1 – Make sure the stock has a well formed base or pattern such as one described on this web site and can be found on the tab “Understanding Chart Patterns” on the home page, before considering purchase. Dan highlights stocks with these patterns in his newsletter.

2 – Buy the stock as it moves over the trend line of that base or pattern and make sure that volume is above recent trend shortly after this “breakout” occurs. Never pay up by more than 5% above the trend line. You should also get to know your stocks thirty day moving average volume, which you can find on most stock quote pages such as eSignal’s quote page.

3 – Be very quick to sell your stock should it return back under the trend line or breakout point. Usually stops should be set about $1 below the breakout point. The more expensive the stock, the more leeway you can give it, but never have more than a $2 stop loss. Some people employ a 5% stop loss rule. This may mean selling a stock that just tried to breakout and fails in 20 minutes or 3 hours from the time it just broke out above your purchase price.

4 – Sell 20 to 30% of your position as the stock moves up 15 to 20% from its breakout point.

5 – Hold your strongest stocks the longest and sell stocks that stop moving up or are acting sluggish quickly. Remember stocks are only good when they are moving up.

6 – Identify and follow strong groups of stocks and try to keep your selections in the these groups

7 – After the market has moved for a substantial period of time, your stocks will become vulnerable to a sell off, which can happen so fast and hard you won’t believe it. Learn to set new higher trend lines and learn reversal patterns to help your exit of stocks. Some of you may benefit from reading a book on Candlesticks or reading Encyclopedia of Chart Patterns, by Bulkowski.

8 – Remember it takes volume to move stocks, so start getting to know your stock’s volume behavior and the how it reacts to spikes in volume. You can see these spikes on any chart. Volume is the key to your stock’s movement and success or failure.

9 – Many stocks are mentioned in the newsletter with buy points. However just because it’s mentioned with a buy point does not mean it’s an outright buy when a buy point is touched. One must first see the action in the stock and combine it with its volume for the day at the time that buy point is hit and take keen notice of the overall market environment before considering purchase. Are stocks moving briskly or are they acting sluggish or even worse, are we in a hefty sell off.

10 – Never go on margin until you have mastered the market, charts and your emotions. Margin can wipe you out.

Note: If you are new to trading or investing, I suggest reading these rules many times over until they become ingrained so you can act without emotions.

Stocks that breakout and move up with tremendous volume and close near the highs of the day seem to work out best. However many stocks that move up 15% or more on breakout day often fail. You’ll just have to watch your stocks action like a hawk and get to see and understand these things over a long period of time. If trading were easy everyone would be making millions. It’s not; it takes years and years of hard work and long hours.

Many traders employ a half hour rule, meaning that for the first half hour of the day many traders do not buy any stock that gaps up in price. If the price holds after the first half hour then often many traders will step in a buy the stock. I find this rule works good after the market has moved up for few strong weeks and is not very effective at the start of a new strong move.

If it’s earnings season then it’s an absolute must that you know the date that your company reports its earnings. Many traders prefer to be out 100% before a company reports its earnings in case the company misses its earnings or guides lower. Others I know reduce positions substantially before earnings are released to lower risk. The choice is up to you.

Investors were disappointed today as the stocks fell again, but they were thankful that they didn’t reach their lowest 2005 levels. The Dow was down 40.20 points today, closing at 10,427.20.In addition the Nasdaq closed at 2,035.83 after falling 11.32 points, while S&P 500 closed at 1,171.36 after falling 3.19 points.

U.S. fourth quarter stocks were lower than in the previous seven quarters. GD cooled at a low at 3.1% growth rate for the quarter. Wages and salaries suffered the smallest increase since 1999 as they rose only 0.4 percent in the quarter. With the war in Iraq and upcoming elections, investors are wary of U.S. stock purchases.

The U.S. Treasury note rose more today than in the past seven weeks due to a Federal report that economic growth was less than expected last quarter. Slower growth means that there is a smaller likelihood that the Federal Reserve will be increasing interest rates imminently.

Proctor & Gamble announced early this morning that they plan to buy out Gillette Co. in a purchase worth $57 billion. The ensuing company will create the largest consumer products company in the world, selling 21 brands, such as Pampers and Duracell, that each bring in more than a billion dollars in sales each. As the buy was announced, Gillette stocks skyrocketed rising 5.91 points to reach $51.60 by closing.

Merck & Co., one of the largest pharmaceutical companies in the U.S., suffered greatly today as the news continued getting worse. The formal investigation on Merck’s recall of Vioxx, its most popular anti-inflammatory drug, was announced today; the company says the U.S. Securities and Exchange Commission would begin soon. After this unsurprising but disappointing announcement, Merck also discovered that their patent on Fosamax, their popular osteoporosis drug, was ruled by a Federal Court to expire in 2008.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

For the second day in the row, the market was up due to positive earnings reports. The Dow was up by 37.03 points closing at 10,498.59 this afternoon. Additionally, the S&P rose 5.66 points closing at 1,174.07, while the Nasdaq gained 26.14 points to close at 2,046.09.

After a good day yesterday, the Dow was again today due to concern about earnings reports. After uncertain reports, the Dow fell 31.19 points to close at 10,467.40. The Nasdaq closed at 2,047.15 after rising 1.06 points, while the S&P rose 0.48 points to close at 1,174.55. Investors are hoping for positive news tomorrow before the weekend begins.

Microsoft, the world’s largest software maker, doubled their second quarter profits due to lower stock based compensation costs. With sales of Windows for corporations and the popularity of the Xbox video console helping the company beat their expected profits. Microsoft net income rose to $3.46 billion from $1.55 billion last year after sales rose 6.5% to top off at $10.8 billion.

Proctor & Gamble, the largest U.S. household goods maker, also reported good news today with their announcement that due to high sales in Asia, second quarter profit rose 12% to $2.04 billion. With increased prices for Folgers coffee and detergents made last year to counter commodity costs including a 60 percent jump in coffee bean prices, Proctor & Gamble was able to pull in a large profit. Chief Executive A.G. Lafley has begun expanding marketing for mid-priced products in developing market such as China. With this increased focus, P & G may be a winner for investors.

AT&T Corp., the largest U.S. long distance phone provider, stocks jumped today by 7.4% after rumors began circulating that they were in talks with SBC Communications Inc. once again concerning a possible merger. Although the merger was once called “unthinkable,” analysts say that now the merger is definitely a possibility. At the same time, SBC prices dropped as investors became concerned over the possibility of taking on a company with shrinking revenue while still adjusting to the purchase of Cingular Wireless LLC and AT&T Wireless Services Inc.

After rolling out their newest model, the updated 737, this week, Boeing also had great news today as they announced a $7.2 billion order for sixty 7E7s from China. This is biggest order for the company’s new model and the first order from this country. With concerns on the rise as to the potential success of the 7E7, Boeing rejoiced to have the large order from the expanding country.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

More exclusive trading recommendations from world record-holder Dan Zanger and The Zanger Report - free 3-week trial. (No credit card needed.)

click to view chart full size

For the second day in the row, the market was up due to positive earnings reports. The Dow was up by 37.03 points closing at 10,498.59 this afternoon. Additionally, the S&P rose 5.66 points closing at 1,174.07, while the Nasdaq gained 26.14 points to close at 2,046.09.

Stocks rose today as positive earnings reports were announced today. Texas Instruments Inc. announced unexpectedly high earnings for the fourth quarter due to the expansion of their company to sell their special chips to Samsung and other television manufacturers. Electronic Arts Inc., the largest video game maker in the U.S., announced a rise in quarterly profits of $1.23 per share exceeding the $1.18 expectations of Thompson. Lilly stocks rose today as the maker of the world’s top selling psychiatric drug, Zyprexa, reported a profit of 75 cents per share.

HealthSouth Corp.’s founder, Richard Scrushy, charge with conspiracy, money laundering, perjury, obstructing justice, false statements, securities fraud, mail fraud and wire fraud, suffered today as his former chief financial officer, Aaron Beam, reported that Scrushy asked him to “fix” their numbers in light of a possible revenue shortfall. With Beam’s testimony, the trial that began yesterday may end with Scrushy spending dozens of years in prison.

Once again the euro gained against the dollar Wednesday. Despite other market problems in the past weeks, the dollar had been holding its own to some extent, but today the Euro jumped against the dollar as a report from Germany, Europe’s largest economy, showed increased consumer confidence. Not only did the dollar lose in comparison with the euro, but also with the yen (ending at 103 yen), the Swiss franc, the British pound, and the Canadian dollar. Although the latter are not major concerns, increasing losses against the euro and yen may have major effects on investors.

In world news today, French president Jacques Chirac encouraged world leaders to come together to fight disease, famine and violence plaguing humanity around the globe. In his speech on the opening day of the World Economic Forum’s annual meeting, Chirac pushed rich countries to impose an international tax to help those less fortunate. British prime minister Tony Blair also joined the call to rich nations, suggesting that the U.S. and Europe put aside their differences to fight the greater battles that Chirac called these “silent tsunamis.” Blair said, “If America wants the rest of the world to be part of the agenda it has set, it must be part of their agenda, too. It can do so, secure in the knowledge that what people want is not for America to concede, but to engage.”

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

RJOFutures – Special Offer
Free 2005 Commodity Trading Guide

Order your commodity trading guide while supplies last.

* 15 Years of Daily Price Charts on Main Commodities

* Over 200 Charts

* Supply/Demand Tables

* 2005 Outlooks on all the Major Commodities

* Key Industry and Government Report Dates

* First Notice, Last Trading and Option Expiration Dates

* Contract Specifications

Absolutely free, without any obligations.

Request your copy here.

Disclaimer: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed as to the accuracy, and is not to be construed as representation by R.J.O’Brien. The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.

Is there a light at the end of the tunnel? After weeks of low stock prices, a report showed that U.S. consumer confidence was on the rise, and today’s market showed evidence of that truth as the Dow closed at its top day for 2005. The Dow ended at 10,461.56 up 92.95 points; additionally, the NASDAQ rose 11.25 points to close at 2,019.95 while the S & P closed at 1,168.41 after rising 4.66 points.

Johnson & Johnson and DuPont Co. both reported positive earnings reports today that proceeded to help boost the market. Last month Johnson & Johnson decided to purchase Guidant Corp. , and today they rose $2.23 after their earnings reports. The company that produces Tylenol and a variety of other products announced that fourth quarter profits were approximately 67 cents per share beating analysts expectations of 64 cents. DuPont , the second largest maker of chemicals in the U.S. , said that profit was around 37 cents per share, exceeding the 33 cent estimate by analysts. The company announced that it expects 2005 profit to reach $2.65 to $2.85 per share; analysts have forecast an average of $2.74.

Texas Instruments reported that fourth quarter earnings reached a nine year high with increased sales for their handsets around Christmas. The company surpassed its fourth quarter forecast of $3.02 billion to $3.14 billion in December. Chief Executive Officer Rich Templeton has convinced television manufacturers including Samsung Electronics Co. to use his digital light processing (DLP) chips in their products. Additionally, he won a bid with Samsung to add his chips to their mobile phone handsets; given the expanding market, Texas Instruments seems to be on the way up.

In more discouraging news today, the Bush administration announced their expectations that the federal budget deficit would expand to $427 billion this year. Part of the reason for the $100 billion increase in the anticipated spending since six months ago is due to increased military spending for troops in Afghanistan and Iraq ; the administration requested an $80 billion increase this year.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter

The globalization of financial markets has made asset diversification and managing portfolio risk more important than ever.

The recent growth of managed futures trading systems offers investors a viable and low-maintenance approach to achieving diversification in commodities.

Free Investor’s Guide to Systems Trading – Futures Trading Systems: A Practical Approach for the Prudent Investor

Just click here to receive your free PDF immediately

In this free investor’s guide, you will receive valuable insights on the following topics:

* Asset diversification in today’s financial markets

* Futures trading systems as an alternative investment

* Selecting the right trading system

* Tips to build a winning system trading portfolio

* Valuable resources for further research

The report will be immediately emailed to you in PDF format – just click here

U.S. stocks came near a three month low on all four major U.S. indexes. The Dow fell further again today, closing at 10,368.61 after falling 24.38 points; the Nasdaq ended close to its three month low when it closed at 2,008.70 after falling by 25.57 points; and the S&P closed at 1,163.75 down by 4.12 points. With rising energy costs and falling stocks, United States investors are becoming increasingly worried about the coming season.

With the Northeast trapped indoors by a major blizzard oil costs are rising as providers hope for similar weather throughout the rest of the winter; oil costs have risen to $49 per barrel, their highest level in almost two months. Although the oil companies are happy, U.S. stocks fell once again. Analysts are concerned that rising energy costs will have disturbing effects on upcoming earnings reports. Each time crude oil prices go up, the market seems to do badly, and analysts do not expect this time to be any different. However, if you are looking to buy some stocks at low prices, now may just be the time to do it; the market always seems to bounce back after the winter season ends.

On a difficult day, American Express Co., the fourth largest supplier of credit cards to the United States, had some good news to share. In the last quarter, their profits jumped 17%, the largest jump in the past two years. Their net income climbed to $896 million from $763 million a year earlier, consumers have been helping American Express Co. by charging more and more with each continuing year.

In other news, stock picker Anthony Elgindy was convicted of racketeering and fraud today. Elgindy was convicted for providing illegal tips from an FBI agent into trading profits by short-selling stocks of companies under government investigation. Jeffrey Royer, the FBI agent, was also convicted. Elgindy has been in jail since last April after he tried to take a flight to Phoenix, later connecting to San Diego, while carrying fake identification, $25,000 in cash and $40,000 worth of jewelry. For a while federal prosecutors suggested that Elgindy could have known about the 9/11 attacks in advance since he predicted a stock market collapse and began to sell stock from his children’s trust funds. With the trial over, Elgindy and Royer are facing possible maximum charges of 20 years in prison.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter