Bulls Battle Bears

As I write this, BREAKING news has just come out over night that the US Government is converting their preferred shares in Citigoup into a 40% common stock. What is this going to do for the markets? its hard to say. Any logical investor would utilize indicators to predict a formation but lately, all stocks have been working on their own tracks and now (C) is about tread into new uncharted waters again. This sector is entertaining and will get very interesting.

In terms of Monday, (BAC) was breaking out at the open and like I have said always, do not buy at the open, look how gradually the stock bottomed out before slowly climbing up again. Hopefully nobody was caught in this common trap.

Currently on the overnight, the Asian markets are significantly low from their previous close and holding steady on this flat pattern, the US futures are not looking good right now but things as we all know, can change with another media manipulated speculation.

Here is the wrap up for Monday, this lady is a little annoying when she talks, but hey, its still resourceful information at the end of the day!

Now going back to the only thing the market really cares about right now and will solely react to is the move by the US government to get into Citigroup.

This, not matter how you cut it, is nationalization of a bank. I don’t know what technicality people want to use, but getting in on a 40% stake of a company is a huge chunk with a large voting power. Here are some reads anyone playing the market needs to catch up on to know how the market could react. Remember when (FRE) or Bear Sterns fell? there were deep falls on the markets and then rallies, its really unpredictable.

1. The Road to Nationalization – Wall Street Journal.
2. New York Times article on the Citigroup situation
3. UK perspective on the road to nationalization

Some are saying that the stocks have the ability to rise now that the government is willing to take a common share stake in (C) but I still have my doubts on this fix for the market. With the government a stake holder in one sense, its understandable that they want to see profits and a rise in price just like any other investor who gets in low and looks to sell high. Finance 101 right? I hope that this speculation works because right now I’m believing the opposite and don’t want to be right. Like all investors, I want to see a fix and some solid improvements in the market to reinstate confidence for myself and all others who have lost or risked so much in faith.

Before I go, here is a video on some top stocks that were popular on the news:

Also, I pressed the value in oil stocks lately and been waiting for a chance to get into then again. Here is an article talking about Chevron and its value. Link. This is a good article that talks about a lot of details that can make you make a sound decision.

Well that is the workup for the Tuesday outlook on the markets. Hope you all invest and prosper!

Happy Investing!

Aman, MBA