chart With the momentum of optimism from earnings this season, the stock markets all rose to new levels before pulling back from their peaks. Gold pulled yet another record closing price which is affirming for some that shelter is still wise. However, when dollar falls, gold price go up but Bond prices should ALSO fall. This has not particularly been the case. A reason for the pullback from the broad morning gains came from the type of buying that had driven the Dow to a new closing high on Friday and into the green to start Monday. Instead of buying because of increased earnings or economic expectations, a large chunk of investors were jumping into stocks based on performance fears going into the year’s last few months.

For my trade today, I was looking at the earnings whispers for Pier 1 imports and spent too much time debating the size of buy and ended up with 400 shares at $4.37. The stock was higher with the broader market before pulling to a slight positive close relative to my buy price. As the earnings were released at the close, the after-hours markets are reacting to the hype and I just unloaded my shares after-hours at $4.81/share. The price did just peak higher, but I will walk with a profit.

Total profit on (PIR) = $176

So I’m sure you are reading this and wondering what I’m doing here? Nothing different from all the past earnings seasons. I normally make the brunt of my income from investing at these times. I watch the companies that are set to report for the day and then start narrowing down to the companies I want to look at further. From there, I will look at overall sector and how the particular company fares. Is there room to grow? Potential to diversify? Margins? Legal issues? etc. I go through all these and then buy a small stake which I can afford to risk as earnings can surprise even the most talented investors.

With the DOW now approaching this new psychological level of 10,000, there are two stark possibilities, the markets will either react with a new strong wave of buyers or, this will cause a strong sell-off. Depending on your position as a long or short, one of the two scenarios will be a great payday. Speaking of earnings, this week is going to be the focus on some of the big players. Bank of America (BAC), JPMorgan Chase (JPM), IBM (IBM), Intel (INTC), Johnson & Johnson (JNJ) and General Electric (GE), Google (GOOG), Nokia (NOK), Citigroup (C) and Goldman Sachs (GS) are some of the players to watch. I was foolish and will once again admit that fact for failing to jump into (GE) shares. However, my hopes are on the banking stocks at I have a long stake in Citigroup that I pulled in from $1.76/share a while back and am waiting to see the outlook.

Here is the market summary for Monday (longer video with some analyst insights):

For Tuesday I will watch the earnings and overall market sentiment. Things can change overnight but right now, it looks like another touch towards DOW 10,000 and the opportunity to make some quick in and out trades on fast moving stocks based on earnings. Remember, I don’t have a perfect record, I am still holding the back on Hewlett Packard, Evergreen Solar Inc. (ESLR) which have both been flat or slightly lower. Overall, I am up strongly on other plays so my strategy works for me. I don’t put all my money on one stock, I make the money off the panic hyped buying others are doing and get out before getting too greedy (most of the time…(VVTV) is one I’m sticking to like glue at the moment).

Happy Investing!

Aman, MBA

Related posts:

  1. Financials are winners Monday! + Tuesday Earnings
  2. Broad Based Rally on Monday
  3. Citigroup Is On The Move!