Are you scared of the economy taking a nose dive once again?

Well, looking at economic data, may it be employment scenario, housing prices or consumer spending, your fears seem warranted. Unless, you are a compulsive stock investor, there are some safe investment bets that you can hold till the crisis scenario completely plays out. Gold has been on the rise since the stocks entered their downtrend, and many would argue if it’s another asset bubble in the making.

Demand for gold has always been there and even its supply has been on a consistent rise till date. But the recent spurt in demand for gold has led the prices rocketing higher, concerning value investors, at a time when there are a very few safe investment options available. So, the question is if there is another storm in the financial markets, does it makes sense to invest in gold at such high levels?

Gold Rush- Are glitters here to stay?

Well to answer that I’ll ask you another question. Where do you think the money will flow if economic growth flattens out and stocks take a wild hit? No doubt, the Fed is ready to go to any extent, but all it can do is print more money, which is not a durable fix to the situation. Gold along with other precious metals will surely continue the up move, whether the prices are justified or not, till the economy remains submerged.

Ideally considered as a perfect hedge against inflation, this time around it’s even bigger as gold is gaining popularity on concerns of hyperinflation. Such alarms are being pressed as Fed is desperately pumping cash into the system to avoid deflation. The economy has shown a slight rebound in the first and second quarter on the back of renewed consumer confidence, but concerns prevail due to systemic risks, which can lead to a much worse economic times than what we witnessed in this recession. So, we can expect gold to glitter, no matter if the prices may seem over stretched to investors chasing value.

Is there too much Hype?

Smitten by the gold rush, analysts believe that there is still more to come, as when compared to hyper inflationary pricing that gold enjoyed in 1980’s there is still room for another 30% upside. On the face of all this, deflation worries that are looming investors, if come out to be true, then fasten your seatbelts for an unknown territory, as then no price barrier will stop gold.

We can conclude by saying that gold with its resilience is a crises commodity and limited supply is another factor that keeps the price trending higher. But all this does not make gold a holy commodity as it may seem to many in current conditions. It can fall back on you, if there is unprecedented change in the economic conditions, so plan your investment effectively and don’t let the charm of gold take you blindfolded.  Making direct investments though commodity exchanges is not advisable given the nature of contracts, but you can opt for Gold ETFs and physical purchases in bar and coin form.

Helpful Articles-

http://www.comparebroker.com/gold_is_always_a_good_investment.php

http://www.brighthub.com/money/investing/articles/84954.aspx

Up To %75 Return In 1 Hour! Simple & New Options Trading Platform Start Making money Now!www.eztrader.com

Some call it recession, some recovery, and a few already shouting depression. But if you ask a chartist, he might point towards consolidating markets that are very volatile within a range. Well, the last one seems more realistic to go by as domestic stocks are swinging directions in a fury. Forecasting market moves has become virtually impossible as there is no solid basis to name the current scenario. So how can one predict the future when he has no clue of where his feet are at present?

Anyhow, there are voices that the markets will see a recovery early next year, but that primarily depends on how it pans out till year end. Till then, uncertainty prevails, and volatility will continue to present challenges for both trades and investors. There is much more that could put-off investors in the near term.

Disappointment Prevails

It seems as if disappointing numbers is all that could be expected by the street, whether it is housing, jobs or manufacturing, which have failed to give any direction to investors till now. Stepping along lines with US, Europe is continuing to contract as the financial crisis is deepening roots in their system. Together with data from Europe, third and fourth quarter domestic numbers can now be looked forward to give a clear direction to the markets.

Economic growth is the key indicator that all investors must be closely watching, as this taped pace of witnessed recovery is what makes it suspicious. Currently growing at around 3%, with latest statements from fed expecting it to slow down further, once again raises the most asked question- is the recession really over?

Eyes on Corporate growth

In another most likely scenario, corporate earnings data may be the next pivotal from where the bulls and bears might get a better view of the key performing sectors. This data will be more important to ascertain whether corporate growth will initiate a job spur or bad data will shake the bolts of this fragile recovery.

Should investors stay on the sidelines?

That’s the current scenario, the way it is, and nothing can be done to change what’s already done. Somehow, this is what can be understood, hearing to lame statements from the Fed, which seems to have no plan in place to quick heel the economy. So in such financial conditions what all options do investors have to protect their capital and make some returns if lucky?

Well, investors have no other option but to stay heavy on cash, as going overweight on stocks in current times may make then forced sellers if the second dip scenario arises. Taking short term calls on the market is out of question, as even the long term possibilities are questionable. Moreover, if the markets head into side-trending mode like it did between sixties and eighties, then stock returns may not even beat inflation.

Chase Value in Stocks

Overall sentiment may be negative and investing tougher than ever, but there are still ample opportunities for long term value investors, especially in the Healthcare sector. Value investors can latch on to heavily undervalued stocks such as Novartis and Johnson & Johnson, which are trading almost 20% below their fair value estimates. Apart from this sector, investors can find value in alternative energy space, but should restrict with mutual funds and ETFs.

————-

Up To %75 Return In 1 Hour! Simple & New Options Trading Platform Start Making money Now!www.eztrader.com

Is Recession Really Over?

If economic indicators can point to anything meaningful, then we can say that the road to recovery has not seen a dead end yet. Even the recent statements from the Fed suggest that the contraction has stopped and the economy is stabilizing. However, the National Bureau of Economics and Research seems to be hesitant in making any official statements, so there still might be some evidence that this recession is here to stay. On the contrary, many analysts from the Wall Street and few economists have made claims that the recession has ended almost a year back.

So, eyes and ears are on NBER, for official declaration that the recession has ended, and till then we should not get overly poised by the lame recovery in place. Obviously, there has been visible recovery from the worst that this recession has made us witness, but it may be too early to say that the economy is expanding again.

Recovery in Uncertainty

No doubt, investors are rejoicing the economic recovery, but at the same time consensus is building up for a deflated economy. Actually, these are the times of unusually high uncertainty, with equally convincing standpoints for a stable recovery and a long recessionary phase.

Scepticism may have come off from its highs after a long stable rally in the markets, but investor confidence is still lurking way behind, as the shock waves of the Great Recession still continue to haunt stock markets. Even the recent data is not sufficient for building up a compelling road-map of the markets journey ahead, so till uncertainty prevails, we will remain in an unsettling environment.

Consumer Spend Lurking on Jobless Claims

At best, investors should expect a ranged market, but they should be prepared for wild swings within a broad range. However, if the jobless rate continues to hold around 9% mark or inches up yet again then the situation may even get worse than before. As employment has a direct impact on consumer spending, it is not possible for the economy to expand or even stay where it is with such disappointing jobless rates. Consumers have restricted their spending as they are now focusing on savings, which is clearly visible from the June data that shows a 6.4% savings rate for American Households. At the same time, businesses are maintaining exceptionally high levels of cash. Impact of cash hoarding by households and businesses can be seen in GDP numbers, which have started falling again after a short pickup due to government stimulus.

Thin Line Maize

Altogether, we can say that economic recovery is dependent on consumer spending and employment scenario, and both of these will take time to snapback to old levels. Surely, the economy is healing, but a double-dip recession is a sheer possibility as the GDP is stalling at the brink of negative growth. Moreover, particularly this recession can be better understood as a continuous slump phase with small spurts of growth within its horizon.

Is the Bear up Again, How will Autumn Pan Out?

Reaping over the past will not straighten up things for future; rather, we should be examining the key culprits behind the market crash. As we know, amass Toxic Assets held by banks dried up lending activity when real estate prices took a sharp plunge and losses for banks kept piling up. So, our key concern should be on the health of financials and real estate, as they can yet again trigger a bear market.

Current state of Banking and Real Estate

Banks are currently enjoying the financial aid provided by the government, and they have well invested this money in different Treasuries. The only concern is that they are still not lending to businesses and mostly relying upon low yields from investments in Treasuries. On the other hand, revenues from securities trading have shrunken heavily as the stocks are still trading in the blues.  Whatsoever, these are the two main sources of income for banks at present, which are helping them recover from the losses made in toxic real estate market. Banking concerns on the real estate front are not getting any respite as foreclosures are continuing due to persistent unemployment and refinancing constraints for homeowners. So, in case of banks, we can expect them to be the key participant in next bear phase if there is no breather from falling housing prices.

Federal Reserve has taken proactive stance in stabilizing the real estate crises, which is clearly visible from their low interest rate regime. But the real estate situation is no better than worse as homeowners with bad credit are finding it hard to refinance due to stringent lending norms. Anyhow, the June data reflected some change in sentiment, which even the markets rejoiced with a rally. But, the incongruity between actual performance of real estate sector and the stock price action clearly states that market is accumulating froth. So, at this point, if the equities start correcting again real estate stocks will be ideal shorting plays for bears. From the fundamental standpoint, this sector might take a severe knock if the Fed is not able to keep the rates low for long.

Autumn sets in with the Bear Knocking at the Door

Based on past track records, we can say that market activity remains calm in August, as key participants are busy holidaying. But who knows, what’s cooking up for this autumn, as investors and traders are nervy on the possibilities of a renewed recession and economic downside fears due to soaring deflation risk. Better still, August can turn out to be a flat month, but real tests await markets in October, as volatility is generally up in the so called ‘Devil’s Month’.

Its time to position ourselves for a potential correction, however, the markets can always surprise as they usually shrug-off sentiments and predictions. Still, it’s better to anticipate a fall as then blue chip stocks will be available much cheaper than their current value. Those who are not comfortable sitting on cash all this time can certainly switch over to defensive, as such stocks yield consistent dividends, and on the brink of deflation these will be most preferred investments.

On Friday, the government released the job numbers and the unemployment is still hovering around 9.2% which is actually pretty bad if you consider the recovery. But somehow the market does not seem to be that bearish. Few bullish things to notice in the market:

1. Down Jones is hovering around 10,600 range, inching towards 11k which should mark a significant buy point for investors. If DOW hits 11,000 mark and stays there for few days, we will see significant volume increase. Currently market is behaving as if not a whole lot of institutions are participating in the trading. Volume in all the major stocks seems to be really kind of sluggish.

2. S&P is about to cross 1130 mark, which will definitely confirm the bullish market trend and should attract investors from all territories back in the market.

3. Major earnings improvement across industries: recent earnings announcement from several large market leaders ($aapl, $MSFT, $amzn, $v  all have posted major increase in their earnings statements. That just means companies are starting to see growth, jobs will just follow the suit. Jobs always trail behind because companies start their cost cutting during economic slumps.

Investment Strategy in slow motion market:

In a slow economy like this, any negative news gets exaggerated and stock gets smacked down suddenly. You can almost ALWAYS take great advantage of such a move. When $amzn dropped 10% pre-market after their EPS missed analyst’s estimates, it presented a perfect opportunity of quick bucks. It recovered almost entire slump within intra-day trading. Within next week, $amzn moved 5-6% up, so totally a return of 15% if you bought on the sudden drop. Bottom line is, look for overreaction of traders on negative news and you can almost always make quick money. Obviously there is no guarantee, do your own DD before putting your money in the line of fire

This week has been extra good for the market. Several big positives came into limelight:

1. $BP’s oil spill is finally seems to be getting close to fixed
2. $Apple recorded record earnings due to more than expected strong sales of iPad and early sales numbers for iPhone 4
3. $F, $MSFT all recorded awesome earnings

European bank’s stress test result come out today. Different investors have different views about these tests. Some think they are pointless and most of the banks will pass the test. Others tend to disagree and are actually contemplating the future of economy based on the stress test results.

Germany and UK both reported much better numbers than everyone had in mind. Check out this latest article which details out the earnings for major companies in the past week or so:

Stocks May extend rally this week

So in the wake of all this positive news, one has to wonder whether we are out of the cursed spell that brought all of us down since April. I sure hope so. Jobless claims continue to rise despite the awesome earnings reported by fortune 100 companies. However it is very important to understand that jobs are always created AFTER the market has turned around a good bit. Companies do not want to hire new people if there is too much uncertainity regarding where the economy is headed. So while it definitely helps to see green on my portfolio and it is also rewarding to know that people who are looking for jobs are able to find jobs to support their families and send their kids to school.

People are saying if somehow DOW can get back to 11,000 range, we can sit back and enjoy the ride all the way out to the promised land. Lets sit tight for trading session to see where we are headed

So Apple reported their earnings on Tuesday night on 7/20. Highest ever earnings reported by Apple. Apple rose almost 20$ within a matter of 1 day and then during the day entire market decided to take a U turn. Apple could not contain its gain during After hours trading. Apple however did move up from its last close on Tuesday right before earnings. So is that good sign or a bad sign? No one really knows. Technical traders will out claiming one thing, fundamentalists will tell you another thing, Apple lovers will describe a whole another story.

Best way to trade any stock is usually based on your guts. You have to gather info from various sources and then call the shots yourself.

Lets look at what major factors Apple has currently:

Positives about Apple during Q3

1. Record sales for iPad & iPhone
2. Upbeat market sentiment about $aapl after earnings
3. Superior products
4. Steve Jobs did an awesome job by retaining Apple lovers by admitting to slight problems with very limited number of iPhone 4.
5. Continued research into product improvement
6. New product line up – This is unannounced as of right now. This will unfold in near future on its own
7. Potential Introduction of iPhone with other careers like Verizon & T-Mobile
8. Launch of Apple products in other countries

and the list goes on and on and ……

Negatives about Apple during Q3

1. Consumer Reports claim about Antenna problem with iPhone 4: Well as Apple has reported, problem is limited to very few people. Less than 1 percent of total iPhone 4 owners. So this probably not a such a huge deal
2. Apple has become too big. Now its time for others to try to bring Apple down. There will be several companies conspiring. If Apple is truly Amazing, it will come out even stronger. If $aapl breaks 273-275 range, it appears it might soar to 330$ very soon. It will be fun ride thats for sure.
3. Overall economic conditions: Well no one can do anything about that. But can you really stop a company expanding 78% year over year from reaching new highs every day, every month?

Its very depressing to see your portfolio in red every day five times a week! Obvious question in everyone’s mind right now is what to do! People have the tendency. There are several ways to make money in a bear market, some of them are listed below:

Short stocks: Shorting can be very profitable in a bear market like this. However keep in mind to be vigilant. You need to always remember that MOST people lose money in trading, specially in their first year of trading. So if you decide to short a stock, be sure to keep an eye on the stock price on a regular basis. One good news is all it takes for the market to rally. If you see signs of bounce play, thats a sign for you to check out!

Invest in Reverse ETFs: These ETFs are inverse of the popular stock indexes. Shares of these ETFs are traded just like any other share. SDS is a very popular reverse index ETF to look at. Its actually double inverse of S&P 500. So it doubles the drop in the S&P for you. You can make really good money if you play it carefully. Again remember, market is for losers!

Buy at dips, sell on news: Thats the old tested techniques. Buy after a stock with good fundamentals has dropped in few sessions and see on the immediate bounce. Do NOT hold stocks for too long when market is volatile.

Cash is the king: Be sure to keep some cash in your account so that you can use it when the unexpected happens and you have a lifetime opportunity to go “all in”!

After almost a month of bear market, it seems like we are heading towards the green land again. No blood on the street does look awesome. However investors are still being very careful. Job loss claims seem to be rising once again; that could be an indication of economical growth slowing down again!

Europe seems to be coming together with Spain being able to pay their debt on time. BP’s fate has been decided after them depositing 20B USD in escrow account. There is a good chance that BP will get bought over by a large oil firm. Their stock has gone down almost 50% in past few weeks, which does not reflect nicely on their cash position either after cutting out the scheduled dividend.

There might be some more sell off planned for next few trading days but overall market sentiment seems to be good. That is purely based upon strong US economy indicators such as retail sales.

Lets keep cash in the account to take advantage of any unforeseen dips in the market! Be sure to chase the solid stocks with promising EPS. This is the time for strong companies to become even more stronger.

With Asian Markets shooting up in early trading, can we expect some quick respite from the free fall that we experienced in the past two trading sessions? At the time of writing this article, Nikkei 225 is trading 19.66 points up which is 0.21% up. BSE Sensex is 81.03 or 0.48% up. That is definitely a bullish sign.

However I would not start pumping money just yet. What happened in the US market in the past two sessions is alarmingly scary! On Friday markets fell on the news of weak hiring in May. Monday morning markets opened slightly up but then towards the end of the day, markets dipped into red zone. That has been a pattern of late. Many investors have recognized that pattern and they secure their profits in the early trading and sell off in the afternoon if the market shows bear signs. That in turn has been driving the markets even more.

European crisis are supposedly the biggest culprit in driving the markets down. I am sure US investors would let Europe sort out their own problems. However the media is not allowing people to focus on the right source of info. US has been showing signs of improved economy, however due to media instilling fear in people, markets are not able to find a solid support!

I am about 40% cash right now and depending on the market direction, I might get in sometime this week or next week. But I feel media is too doing too much damage to investors’ confidence by publicizing negative reports every day! So its better to stay off the front line and watch the fire drill.