In my Market Direction outlook on the weekend I commented that market weakness on Monday should be expected but that I expected to see the market direction push higher by the close. That still appears to be valid as the day progresses. A lot of analysts are looking for the market direction to remain flat for this week, especially with Goldman labelling stocks as fairly valued. The NASDAQ and S&P are both marginally higher while the Dow keeps flirting with positive and negative movements. After the market direction broke to new highs on Friday it is not surprising that the market direction is relatively flat. Whether it will stay this way for the week I am pretty doubtful but we will have to wait and see what the market direction technical timing tools predict at the close of each day. Personally I find market direction opportunities often abound when there is little news for investors to trade against.
Buffett Talks Up Stocks
Meanwhile Warren Buffett was talking up stocks on the weekend and talking down bonds. I think it is a safe bet for most investors to understand that bonds have reached a fairly flat yield now. There is not a lot of bond growth ahead until we see a moment or two when investors are no longer interested in bonds. That’s when I will become a lot more interested. That said, I am still holding a lot of corporate bonds which are up about 10% for the year. I have sold a few corporate bonds but some of them are paying close to 4.5% which for my bond portfolio is decent. So to augment that 4.5% I have sold a few here and there to jump the overall return to about 6.5% which for bonds I think is decent for now.
Berkshire Hathaway Stock BRK.B
Berkshire Hathaway Stock is certainly having a wonderful year. It is up 40% today from last June when it was trading at $78.45. There are a lot of investors who are short this stock. That has to be a nightmare trade. Buffett has done well and a lot of investors have been writing me wondering about my outlook for Put Selling BRK.B stock. I will have to take a look but the stock does not pay a dividend which is one of the criteria I look for primarily as it can assist rescue efforts when a trade turns the wrong way.
Being short stock I think is often a mistake. I would much rather own puts and have them expire worthless than be short a stock that is in a serious uptrend. At the same time I think the only time to be short is when the trend is definitely and unequivocally down. Second guessing and going by “hunches” is just not my style of investing and often shorting a stock is done on a guess and a belief but no real technical analysis. Needless to say I would not be short Berkshire Hathaway Stock.
Market Direction And Gold
Most commodities were lower in the early going today but I have to wonder about gold. So many analysts are now bearish and their outlook continues to worsen that I have to wonder if gold could stage a bit of a recovery here. Personally I see no value in owning this commodity but I do see lots of value in trading the miners who are terribly beaten up. My favorite is Barrick Gold Stock although for most investors it is “tough love” as CEO Munk is not the most shareholder friendly administrator in the world. A lot of my investor friends are in Yamana Stock which trades on the TSX under the symbol YRI and on New York as AUY.
You can see Yamana Stock below for the past 12 months from May 2012 to May 2013 in the daily chart below. At A recent conference I was at I found out that all of my investor friends who bought into Yamana between $12 to $14 a little over a year ago, never got out! They are all still in the stock. What happened was last year at a conference there was a lot of talk about how Yamana Stock would be bought by a bigger precious metals company like Newmont or Goldcorp or such and the stock would more than double. Well the stock was up to just a bit over $20 in November which would have made a return of 66% from $12. I think I would have sold there. Just goes to show you that even investors who have been at this a long time make mistakes.
You can see in the above chart that the buying is drying up in Yamana Stock. Not a good sign as normally with the stock this low it should be the other way around and accumulation should be rising as the stock is falling. Instead it is showing signs of entering a bear market as the stock is already down 40% from its November high.
All of this negative talk about gold though certainly makes me wonder if the selling is overdone.
Market Direction Intraday Chart
Market direction intraday shows exactly what the market direction technical indicators were predicting. A grinding move higher in the S&P 500. Indeed the chart is definitely indicative of this. The lows of the morning held and now the market is pushing higher into the afternoon.
Market Direction News
This morning I did a Put Selling trade on Johnson and Johnson stock. Aside from this the big news I think is in Linn Energy Stock which got a serious downgrade by Barron’s which called the stock not only overpriced but suggested that the partnership units are worth half of their current price. Linn Stock plunged 10% on the report in the morning. I have a few friends in Linn Stock and they are unconcerned but then perhaps they have not read the whole article.
Market Direction Intraday and IWM ETF Russell 2000
I have done one trade on IWM today using the Trading For Pennies Strategy and I will write it up for FullyInformed members.
Market Direction Intraday Summary for May 6 2013
Analysts think this week will be flat. There is no economic news to be released of any serious consequence this week. Often that does not lead to a flat market but instead to a climbing one as markets love quiet period. If that is the case I will be entering another Stock Market Trading strategy with the VIX Index. FullyInformed Members can read about that strategy through this link.
While analysts tend to not see opportunities on what they perceive as a “quiet week”, I often find the opposite is true as these quiet weeks are often leaderless with no news to trade against. This often provides excellent opportunities for a trade here and there as stocks wander wider than usual without any news to support them one way or the other.
I see nothing on the horizon that concerns me for any of my positions and I see nothing that would indicate concern for any kind of corrective action in the market direction for this week. Let’s see what the market direction indicators tell us this evening.
Internal Market Direction Links
Profiting From Understanding Market Direction (Articles Index)
Understanding Short-Term Signals
Market Direction Portfolio Trades for 2013