Bulls Battle Bears

Now all news tonight is talking about how today was a big rally, a big really for financial stocks which went up today in the range of 17-28% depending on the stock that you got into. Hopefully when I say you got into, it was BEFORE today. Look at any bank stock today, all were up from the moment they opened and gradually fell. This was just how I said it would be yesterday, people would buy without a true logic of reasoning and get into a hyped, get rich quick scheme where others would benefit off these price drive.

Tonight, its been announced that Obama’s stimulus package passed and the financial stocks are down? Is the party over? Well reading all the news out there, its not really certain how or what this bailout will mean for common shareholders, and more importantly, why the republicans were 100% opposed to the package. Yes, some might say they want to drag their feet but if this bailout was truly bi-partisan, then I’m sure a larger rally would take place. There is already talk that the Senate is going to look for changes in the bill. Read here.

So for a summary of today, here is a quick video to look at:

Tomorrow my pick last week (MO) is going to announce earnings at 9am. The stock is lower than my buy price, but the expected earnings are supposed to be inline so I hope for a rise in the stock.

So I bought (AAPL) last week at $79.87 before its anticipated earnings and planned to sell once earnings came out. My exit price was an even $92/share which was touched during after hours that night (or close to it) but just could not be bothered selling that night. From that day the price never touched until today. Finally, on Wednesday, basically after holding the stock for 6 days I sold my 125 shares for $93.50. Not bad. The stock did spike to $95, but I’m still happy with my exit price.

Total profit on (AAPL) = $1703.75 profit. – I am sure this stock has steam to go up more once the expected bailout goes through. But I made a healthy sum regardless worthy of walking away before greed takes over.

My other holdings from previous buys, HPQ, MCD, and CPB all need to be sold this week or next to free up some tied up assets. Since all are higher than my buy prices, I will just try to unload one of these stocks each day to take the profits.

Besides this, there was not much to play today. I would have loved to get into a bank stock, but the words “sucker” are not printed on my head. All the stocks are up on hype, all the stocks were up 20% before the market opened and all shot up before slowly coming down. Unless you were able to pick an order on a dip and sell on a rise, this was too much action for a very volatile stock. If anyone wants to look at a more stable entry into the financial sector, look at (XLF) its a fund that goes up with the financial sector.

Here is a great video on (SBUX), they called earnings today and look, just like I have said in the past, stocks go up for no reason before earnings on hype and when reality strikes, the traders who are diligent dump their shares leaving the common investor holding the bag. Tonight after hours, the stock is already down 3% and its going to fall further on really drastic cutting in the company. Again, if a stock you like is up without any true reason, don’t jump in on the hype. Let the market settle. So the stock might go up the next day and you might not get in at the low price you were initially going to get in, but guess what? if its a good stock then it will continue to rise. Just take a breath and evaluate a stock before jumping in.

For Thursday, watch the financial stocks, especially they continue a decent. This could introduce a good opportunity to buy before another rally. Again, with caution as this sector is seeing some huge swings.

Another stock (X), US Steel is way off its 52 week high and it seems to be moving with the bulls. If the stock can go above the 52day moving average, then this stock is something I will get into. Right now it seems to touch the 52day avg before coming down. Its on my watch list.

Hope you all made some money today!

Happy Investing!

Aman, MBA