I added more shares of Lockheed Martin (LMT) at $75.50 today. While the market has rallied Lockheed has declined. I also bought the UltraShort Dow Jones ETF (DXD) at $41.80 today. The Dow is looking overbought at 9000.
This market has been pretty erratic over the past week. I have heard various commentators speculate as to why the market is up or down on a given day. At best these are simply guesses. It appears that the market is searching for direction. Stocks are nowhere near their highs of a year ago and are well off their lows from March of this year. While there are some examples of stocks that are trading too high and some are too low; Could it be that most stocks are not overvalued or undervalued but are at their appropriate valuations? This is truly a stock pickers market because there just aren’t that too many screaming buys out there. It is difficult to find many stocks that appear to be undervalued on their current earnings basis.
Bought shares of ProShares UltraShort Dow 30 (DXD) for my short term trading account. I now have 4 different ETF’s in my trading account that are for a short term pullback in stock prices. I bought these shares just below $51.
As stated before I am also taking some profits in General Electric. I probably should sell some Wells but that is one of my core long term holdings. If it drops as I expect most financial to continue to do I will use that opportunity to accumulate more shares. One of the main reasons that I believe that we are due for a major pullback is because people are not investing based on fundamentals but on momentum. When people see the market decrease they become afraid and that selling begets more selling.
The Dow Jones Industrial Average was up for the second straight day. The Dow was only up 3 points today after being up over 300 the day before. In a normal market this wouldn’t even be news but in this market two straight up days is monumental. Hopefully we have seen the bottom of this market or are somewhere near the bottom. The market was up yesterday amid news from Citigroup that the banking giant made a profit the first 2 months of this year. Citi’s stock has rebounded from $1 to $1.50. I am glad that the market has turned upward after the brutal sell off but I am not sure what has changed exactly. It is good news that Citigroup is turning a profit but considering that we don’t know the extent of the losses at Citi; I am not sure why the stock is trading up. It is good to see optimism back in the marketplace even if it just based on hope.
This should be an interesting week. The Dow Jones is at 7300 which is its lowest level since the mid 90’s. Financial stocks as a group are beaten down and the question is, Can they continue to go lower? The government is reportedly thinking of taking a larger stake in Citigroup. The government is expected to announce a plan that will stabilize the banking sector this week.
I will also be keeping an eye on automobile company stocks. General Motor’s market cap is down to 1 billion and the stock is selling for $1.77 a share. Ford may be selling for only $1.58 a share but the company seems to be in better shape than GM. Ford has not yet asked for any government funding and is gaining marker share from GM and Chrysler. Since Ford has not gotten any loans from the government, the company will have greater access to loans than its competitors.
How much lower can these stocks go? Dell is trading for $8 a share and the company announces earnings this week. Dow Chemical is down to $8 a share. At the rate that the stock is dropping the company may be insolvent before it can complete the Rohm & Haas deal. General Electric at $9 is at its lowest levels in 14 years. Can GE drop to $5?
