December 31, 2008

2008: A Year to Study for Stock Investors

For the year 2008, the Dow fell 33.8 percent; the S&P skidded 38.5 percent; and the Nasdaq posted its worst year ever, with a 40.5 percent drop.
Below is the table for the top 10 best performers for the year in the S&P 500 index,
in terms of percentage gains from Reuters. Are they really recession-proof?

Company Pct change
Family Dollar Stores Inc (FDO.N) 35.6
UST Inc (UST.N) 26.6
Amgen (AMGN.O) 24.4
H&R Block Inc (HRB.N) 22.4
Celgene Corp (CELG.O) 19.6
Wal-Mart Stores Inc (WMT.N) 18.0
Rohm & Hass Co (ROH.N) 16.4
Autozone Inc (AZO.N) 16.3
Hasbro Inc (HAS.N) 14.0
Gilead Sciences Inc (GILD.O) 11.2
The short term outlook still does not look too bright even though the stock market ended with a high note at the very last session today. According to the latest Commitments of Traders report., the commercial traders (usually correct) has short position of -$15 million, and the non-commercial traders (always wrong) has long position of $5 million which tells us that we still have at least one dip to come in January, 2009.

S&P 500 STOCK INDEX - CHICAGO MERCANTILE EXCHANGE                    Code-138741
--------------------------------------------------------------| NONREPORTABLE
Long | Short |Spreads | Long | Short | Long | Short | Long | Short
(S&P 500 INDEX X $250.00) OPEN INTEREST: 588,254
44,307 22,556 28,070 398,499 461,142 470,875 511,768 117,379 76,486

-18,378 -23,414 -41,360 -289,921 -311,698 -349,659 -376,473 -48,246 -21,433

7.5 3.8 4.8 67.7 78.4 80.0 87.0 20.0 13.0

37 18 33 86 70 136 108

December 23, 2008

Season's Greetings

Wishing everyone a Merry Christmas, Happy Hanukkah and Happy Holidays.

December 16, 2008

Stocks rally & Oil falls on Fed's rate cut

The S&P 500 Index was up 44.6 points, or 5.1% today with the Fed's rate cut. It closed above its own 50-day moving average which shows really bullish signal while 10-dma and 20-dma are on the rise to cross the 50-dma. It's also off the over-bought territory to show further upside technically.

Crude oil, on the other hand, tumbled today as the U.S. Federal Reserve interest rate cut revived investors' concern about slumping demand during the economic recession.

Some analysts are calling for the next bull market, but the others still remain bearish. Personally, I am more bearish on the current market condition.

December 14, 2008

U.S. Economy Week Ahead

Goldman and Morgan Stanley are expected to post another big quarterly write-downs on Tuesday and Wednesday respectively after their recent conversion into bank-holding companies. The Wall Street Journal expects "More Pain at Goldman and Morgan Stanly".

The Fed is expected to lower their target for the overnight federal funds rate by at least a half-point to a record low of 0.5% at the end of a two-day meeting, on Tuesday. If everything goes as expected, the Fed needs to find out some other ways to boost the sluggish economy.

The Organization of Petroleum Exporting Countries (OPEC) is likely to cut oil production to stem recent price declines. OPEC May Cut Production By 1.5 Million Barrels A Day. The meeting is on Wednesday in Algeria. Let's watch closely at the movement of the oil price for the week ahead.

More data on inflation and the housing market will be released next week, with the November Consumer Price Index on Tuesday, the National Association of Home Builders' December Housing Market Index on Monday and a government report on November housing starts Tuesday.

December 10, 2008

8 Steps to Purchase a Home

Step #1 – Meet with a financial institution for 3 reasons
  1. Learn about the lending institution and negotiate an interest rate. A difference of even half a percentage point can mean a huge saving over the life of a loan. For example, the difference in the monthly payment on a $100,000 mortgage at 8 percent vs. 7.5 percent is about $35 per month. Over 30 years, that's $12,600.
  2. Ask about all their fees (application fees, processing fees, etc.)
  3. Get a Pre-Approved Mortgage Commitment (in writing). Even before the house hunting begins, homebuyers need to determine how much they can afford. Mortgage companies or other lending institutions provide pre-qualified loan commitments. Sellers often don't take an offer seriously unless the prospective first-time buyer has some assurance of creditworthiness from a mortgage company.
Step #2 - Do Your "Home-work"
Be sure to check for listings, neighborhood information, and current mortgage information and home ownership services. The right amount of research will help you to better understand the marketplace and homes available in your price range when you're ready to work with a real estate professional.

Step #3 - Make a List of your Needs, Wants, and Dreams
To help make the home buying process a little easier, homebuyers should create a Home Search Checklist of the important features they want in a home. Location and the number of bedrooms and bathrooms are usually important. Other important questions to answer: Are there shopping centers, parks, and schools located near the home? Please refer and print off our Home Viewing Checklist that has been provided for your convenience.

Step #4 – Decide on How to search for a property
There are two basic ways to search for a home, either you search privately or hire a ‘buyer’s agent’. A buyer's broker or agent represents the buyer's interests and helps identify homes that are for sale and in the right price range. The broker also can help with such tasks as writing contracts, negotiating the asking price, and closing the purchase. There is normally no cost to the buyer for this service. Both Buyer Brokers and Sellers Brokers are paid from the seller’s proceeds. Make sure you know who is paying the Buyers Broker, you or the seller.
Step #5 - Make an Offer
Once you find the right house, make an offer. Make sure that your offer is conditional on at least two items:
  1. You're able to obtain adequate financing (if you haven't done so already), and
  2. You can cancel (at no cost) if the property doesn't pass the home inspection and the owner can't come to terms about how to fix the problem. Make a good faith deposit (to be held in trust), which is a check that you'll give your realtor or lawyer to indicate that you're serious about buying the house. The check will apply toward the sales price if the deal goes through; if not, you get it back. The focus of an offer mostly centers around price although there are other important factors to consider, sometimes more important that the price. These are things you should either decide on your own or consult with your lawyer or realtor. Here are some things to consider:
  • Irrevocable date: This is the time period you allow the seller to consider your offer.
  • Items included and excluded from the sale. Be specific and don’t assume.
  • Closing date (this is usually also the move in date)
  • Who pays for the survey if there isn’t one available. If there is a survey, take it to the bank and confirm with them that they will accept it)
  • Who pays the closing costs: Buyer or Seller (it is all negotiable)
  • The final walk through date: Usually the morning of closing.
Step #6 - Hire A Home Inspector
Making an offer contingent on an inspection by a registered home inspector can save thousands of dollars by avoiding unseen problems. Inspectors will check the house for any structural damage. In the contract with the seller, it should state any necessary repairs that must be made before closing on the house. Prior to closing, walk through the house and check that such repairs have been completed.

Step #7 - Buy Homeowners Insurance
Lenders require homeowners insurance to protect the new homebuyer's interests as well as their own. Shop around for the best rates.

Step #8 – The Final Walk-Through, Closing, and Move
Prior to going to closing, you and your agent may visit your future house. The ‘walkthrough’ provides a valuable opportunity to ensure that the property has been left in the condition that you agreed to and that the items have been left and that they are in good working condition. It is too late to deal with any problems after closing so make sure all parties have lived up to their obligation. Instruct your lawyer or title company to close once you are satisfied with the final walk through. The closing is where the seller and buyer sign settlement-closing papers to transfer the ownership of the home and all transactions are finalized. Your lawyer and/or realtor should discuss the closing documents with you so you completely understand the statements and the exact amount of money you need at closing.

As the real estate market is deep trouble right now, if buying a home is necessary, then you can take huge advantage of this buyer's market at present.

    December 07, 2008

    Job Report & Stock Market

    In US, the unemployment rate reached its highest point since 1993, and overall employment fell by more than a half million jobs. Quite simply, there was nothing good in this report. As the stock market is typically leading the general economy for 6 months ahead, the worst is yet to come.

    However, we need to remember that the fundamentals will still be horrible and appearing to get worse when the market starts up. Just as at the high in October 2007 the fundamentals looked good ahead according to Bernanke at least. So, the number will remain negative at the bottom, but the trend will tick upward.

    In Canada, 70600 jobs lost last month, the worst single-month drop since 1982, and unemployment rate hits 6.3%. Ontario shed 66000 workers, and two-thirds of them are in factory jobs.

    December 03, 2008

    Technical Analysis on S&P 500 Index

    Stocks rallied for the seventh time in eight trading days today, with the S&P higher by 2.6% to 871. Of course, there was one huge down day on Monday, but despite Monday's huge hit, the short-term outlook is still pretty strong.

    The following is a 6-month daily chart of S&P 500. We have got a Positive Divergence from MACD for the period from the end of October to end of November. As a side note for the term extracted from "A Positive Divergence occurs When MACD begins to advance and the security is still in a downtrend and makes a lower reaction low. MACD can either form as a series of higher Lows or a second Low that is higher than the previous Low. Positive Divergences are probably the least common of the three signals, but are usually the most reliable, and lead to the biggest moves."

    In addition, in the last two days, it forms a nice Bullish Harami pattern. With today's close, it formed a nicer Bullish Three Inside Up pattern which is the confirmation signle of Bullish Harami formation.

    However, we are still not totally out of woods yet, as today's close is still lower than Monday's high. Let's see how it develops in the next few days.

    December 01, 2008

    Gas Saving Tips in Winter

    With the cold weather upon us once again and there are ways to save gas and money even when the weather turns cold.

    • During cold weather watch for icicles frozen to car frame. Up to 100 lbs. can be quickly accumulated! Unremoved snow and ice cause tremendous wind resistance. Warm water thrown on (or hosed on) will eliminate it fast.
    • Same idea as above, empty the trunk and remove the excess weight from the vehicle. By doing so, you will gain more kilometers per liter. More kilometers per liter means more gas saving.
    • Cold weather will cause the air pressure in tires to drop, so check your tires regularly. Having tires that under inflated or not alligned will force your engine to work hard which consumes more gas.
    • Warming up your engine for longer than 1 minute is wasting gas/money. 45 to 60 seconds is plenty of time.
    • When planning trips, try to stay away from areas with excess traffic, such as busy shopping centres during holiday season, to avoid stop-and-go driving.
    Taking care of your vehicle, especially in the winter time, is one of the best things you can do for you, and your family. Togetherness is great, but not when your stranded and freezing. :)

    Your feedback is always appreciated.

    November 30, 2008

    5 Steps to Prepare Your Holiday Spending

    Whether it's planning for Christmas, Hanukkah, a big New Year's Eve Bash, or a pricey winter vacation, the time is now to get your finances in order to avoid debt and regrets that can lead to the holiday blues. The season of gift-giving and fellowship too often creates the spirit of giving far beyond what you can realistically afford. However, if you start now you can be holiday guilt- and debt-free with the new year. Here are five ways to stay on track.

    1. Make a list and check it twice. Record everyone on your gift-giving list and be sure to check it twice. Set recommended amounts and then keep track of spending along the way. Recognize that over-spending in one area means that you MUST reduce costs in another...a notion that is easier said than done when you're in the throes of the holiday spirit. Check your list for necessities and consider changing the amount of a gift if your budget is looking tight. Remember, it really is the thought that counts!

    2. Create Expectations and stick to your budget. OK. You've got your magic budget number. But, unless everyone is willing to stick to it, then the target is for naught. The key is to communicate with family members and begin planning now to avoid last-minute weaknesses and over-buying.

    3. Use cash. Nothing will keep your spending in check better than using cash. Overspending becomes obvious because your cash will only go so far.People often spend 3 to 4 times more when using credit!Again, take your lists with you when you shop, stay within the dollar range you set for everything you have on your list, and pay cash for all holiday purchases.hen your cash is gone, stop shopping!

    4. Don't wait until the last minute. Start thinking about gifts and menus and activities, and everything holiday related early (well... NOW!). Give yourself time to comparison shop, catch holiday sales, and find the best deals. If you have something in mind, and the price is right, get it now. Don't wait and run the risk of it being out of stock, and then you'll have to scurry around to find a substitute and could wind up spending more. The closer it gets to the holiday, the more hectic its likely to get. Avoid the stress and pressure that comes with waiting until the last minute and causes you to overspend.

    5. Write down what you spend. Write down the amount you spend on each and every thing, regardless of the money source: checkbook, credit card, debit card, cash, or gift cards. No matter where the money comes from, it all counts toward how much you're spending overall. When you write down everything you're spending in black and white, and keep a running tally, it's a lot easier to recognize when you're getting out of control and need a spending reality check.

    I hope you find these holiday spending tips helpful. If you use some of them, or all of them, be sure to let me know how they worked out for you!

    Also, don't forget to share these tips with your friends, family members, and associates so they can stay out of holiday spending trouble too!

    November 29, 2008


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    November 01, 2008

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