So the last time I talked about the stocks I was pushing the thought of a pull-back. Something necessary for healthy growth. Well, what I predicted did not essentially occur. But more and more people are starting to share the same sentiment as markets continue to push higher. Yes, this rally is great for my holdings in the short-term, but for long term gains, we are building towards disaster.

As the last week of August begins, many are preparing for the September pull backs. I have enacted my own strategy to prevent any losses but putting trailing stop losses. Some are factoring in swings of 15% drops while others are might tight. But if history is any wise guidance, the markets after Labor Day will be choppy and perhaps more negative than anyone would like.

The past earnings season was phenomenal. Historic some might add. These blockbuster, expectation beating earnings will be hard to replicate in the future and its going to be to the fundamentals when picking stocks. What is the company going to do in order to sustain profitability and growth?

Economic data on housing, jobs, sales, etc. will also have to be more widely watched to determine trends in the coming weeks. Watch them carefully!

Here is what to watch for the coming week:

A few stocks that have been trading heavy and perhaps been some you played would be Freddie Mac and Fannie Mae. Both have seen substantial gains and its good time to take profits off the table. Remember, these stocks could turn to zero on the long run. Short term traders are enjoying the run up after the companies reported a profitability for the first time, but don’t get greedy!

Another stock getting a lot of positive sentiment is Citigroup (C) which is above $5/share. Many are expecting the price of this stock to move above $8 and even $10/share in the coming months but with the run up on the financial markets, a pull back could be realized before the next upward trend.

Happy Investing!

Aman, MBA

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