Tuesday, November 25, 2008

Bollinger Bands

Bollinger Bands are an important technical analysis tool. This tip explainsthe term and its relevance to you as an investor.

What is it?

Generally, trading bands are lines drawn at fixed distance around a moving average. The Bollinger Band concept is that a stock usually trades within a predictable range on either side of the moving average. Bollinger Bands vary in distance from the moving average based on volatility. The upper band is the standard deviation above the moving average, and the lower band is the standard deviation below the moving average.

Bollinger Bands are insightful tools helpful for spotting trends. These are valuable indicators of when the markets are overbought or oversold. While technical analysis is not fool proof, it assists the investor to make informed market choices. Sharp moves tend to occur after the bands tighten to the average. A move outside the bands calls for a continuation of the trend. Tops and bottoms formed outside the bands, followed by tops and bottoms formed inside the bands, indicate a trend reversal. A move originating at one band tends to go to the other band.

What is sector rotation and why is it important?

Sector rotation is simply the overweighting of some sectors while underweighting others to take advantage of money flows moving in and out of the market.

This is important because, over time, sectors go in and out of favor. Sectors that are the best performers today won't necessarily be the best performers tomorrow, next week, next month or next year. Rotating in and out of sectors as they gain and subsequently lose momentum is a strategy intended to outperform the market over the long term.

After all, the strategy of overweighting some sectors and underweighting others is precisely what many big institutions do. And it's the billions of dollars in money flows they control that move these sectors up and down.

Tuesday, November 18, 2008


John F Kennedy said that a rising tide lifted all boats. That may no longer be the case. Most Americans are worse off now than they were in 2001 at the start of the last stage of economic expansion. And the median, as opposed to average, household income is only marginally higher than it was a generation ago. Is the American Dream fading?

Barbara Ehrenreich, author of the mini-classic Nickel and Dimed (2001), has brought out a collection of her most biting journalism and certainly thinks so. In language only she could deploy, Ehrenreich explains why the debate about whether the US is heading into recession is irrelevant to the large swathes of America that for years have endured flat or declining incomes.

For people living in the "real economy" as opposed to those who measure success by macroeconomic numbers, recession has never been far away. "With all this talk of how to stimulate it, you'd think that the economy is a giant sex organ," she writes. "If we have learnt anything in the last few years it is that the economy is no longer an effective measure of human well-being . . . If there is a real economy, then what in hell is the economy?" To pose the question differently, who nowadays best symbolizes the American economy?

Monday, November 10, 2008

Revealing Look Inside an Expert’s Real Estate Marketing System

Now you can get an inside view of the Platinum Level
back office without even being a member!

Just Tap Here and be prepared!

Tuesday, November 4, 2008

Next Wave of Bankruptcies

Banks have lost over $680 billion because of the huge wave of foreclosures that has hit the market over the past two years. And losses are beginning to ratchet up somewhere else, too: consumer credit card charge-offs.

Charge-offs are debts that a company deems "uncollectible." According to Moody's Investor Services, credit card charge-offs increased by 48 percent in August alone. And Moody's expects them to continue increasing into late next year.

6.82 percent of all credit card debt has now been written off. With unemployment rising and the economy falling into even more dire straits, the credit card charge-off rate is sure to skyrocket.

Which means that banks that have relied heavily on income from credit cards - like Capital One (COF) and American Express (AXP) - are sure to see bigger losses.

Sunday, November 2, 2008

Spock would say it's not logical!

Like all bear-market rallies, last week's was utterly illogical, irrational, certifiably insane.

Look. All the fundamentals that caused this bear market are stronger than ever:

The financial disasters that have gutted world stock markets this year are accelerating; NOT slowing.

Debt defaults are soaring; NOT going away.

Global economies are cratering; NOT growing.

Consumer confidence is crashing. Corporate earnings are vanishing. And, it's all coming unglued FASTER with every passing week.