We ended up in the green alright last evening as investors realized rate cuts are coming and the economy will be saved if its in danger. A catalyst to drive the market higher was the BANK of AMERICA takeover of COUNTRYWIDE FINANCIAL. That was a boost for the sentiment - that ailing financial companies will be bought out. Makes sense. I bought some WM at 13.5 on hearing the Countrywide bailout. It was the immediate next in line if at all. Its trading at 15 today- as this morning brought talks of JP Morgan showing interest in WM.
All in all the DOW is down 180 points and NASDAQ down 30 points... etc. CANNOT emphasize it enough. Such days are a traders paradise.
When a sigh of relief is to be breathed and the market just plunges, we got to buy. Sooner or later bulls and investors will put in their money in US stocks- who dont want to miss the boat for the year.
We hold CITI and FRE both going higher. Am adding technology stocks- BRCM at 24, SNDK at 28.3 and CTSH at 27.5- this ones like a falling knife today.
BRCM is hovering around the 52 week low- just capitulating -is it called or consolidating. Whatever that may be, it looks good for a trade and for long term at 23.75. SNDK also fell out of bed last week- flirting with its 52 week low. I am in at 28.25 today. Sandisk has been beaten profusely- thats what I like- beaten down stocks that still have a life- at the Consumer Electronic show- the plethora of new products bodes well for the likes of SNDK- its flash memory is used across the board- in the stuff that works today- mobile, digital cameras, gaming consoles etc. The stock is down from 60.
CTSH is an - Indian offshore provider based in NJ. Its in IT consulting and CRM solutions- a hot sector. The stock has run down from 48 to 30. Today down 2 bucks- as an analyst started coverage with NEUTRAL. I say BUY. This and the likes of INFY will have positive momentum as rupee appreciation may be contained in 2008 (~5%) and U.S economic slowdown pushes more offshoring to India and China.
Well, we are in and wait for green at the end of the day- or next week brings us toward rally mode again.
Mind you a lot of the bad news about US slowdown is in the market prices. These volatile days give us a chance to make money. In and out is the only way in this market. BUY and HOLD can be painful to say the least. Trading is the way to go. You could trade in and out of stocks like TGT or COH- on the retail side or C or LEH on the financial side, good fundamentally yet very volatile... ! The way we are doing it is observing the trading range - buy on the lower end and sell at the higher end.
It gets easier if you are on the right side. We avoid the high-fliers- like GOOG and AAPL as any plunge in the market sentiment can take them down too fast. The ones that are beaten down tend to settle down at the bottom- where we pick em up for trades at monas mad market. I hope you are reading and benefitting.
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