By Nicholas Santiago on June 11th, 2010 12:42pm Eastern Time
Today the major market indexes seem to be pausing after yesterday's huge point rally. As most traders know this market has been like a yo-yo, trading up sharply one day only to be down sharply the next. The daily swings in the Dow Jones Industrial Average have been extremely wide. It seems that almost every other day the DJIA is either up over 100.00 points or down over 100.00 points. While this is not healthy action, the market has still held above the February lows and that must be respected. Today the SPDR Dow Jones Industrial Average ETF (NYSE:DIA) is trading lower by 0.21 to $101.67 which is a mild pullback day. The same can be said for the SPDR S&P 500 ETF (NYSE:SPY) as it is trading lower by 0.28 to 108.87 having a pausing session. This type of activity is not uncommon after a major rally or a major decline.
Next week is options expiration week which is always a volatile trading period. Therefore, traders can expect more of this yo-yo type activity from day to day. During options expiration there are a lot of games that are played by the institutional money that has the cash on hand to move the markets in their preferred direction. Usually it is the small retail option investor that will pay the price. Therefore, it is prudent to be very selective next week.
Many investors and traders are now talking about the worst of the downside action being behind them. This is something that I say is completely wrong. The markets never go up or down in a straight line, therefore, this has been a traders market. After a year long rally that we experienced in 2009 sharp bounces and rallies along the way are to be expected. However, 2010 is a traders market and not like 2009 where the market floated higher.
Read more…
By Gareth Soloway on June 10th, 2010 1:38pm Eastern Time
Some smaller Chinese stocks are trading at price-to-earnings ratios that put them in line for a "best buy" in my opinion. The drop in the market has made retail investors run from thinly traded small cap companies. As liquidity vanishes, small caps take the biggest hit. The fear of a major Chinese meltdown which has not and most likely will not develop in the near future has hit small cap China stocks even harder. At this time, there are some stocks that look like they could be big time movers in excess of 25-50% over the next few months.
China Armco Metals, Inc. (AMEX: CNAM) is a profitable metal play in China that is growing revenue at a 50% plus clip year-over-year. The stock was recently as high as $11.10 on March 4th, 2010. It is currently trading at $3.64. At this current price point, this stock is in my best buy category. I currently own some.
China Security & Surveillance Tech. Inc. (NYSE:CSR) is another beaten down Chinese play. It is currently trading at a price to earnings ratio of 4. These profitable China plays are trading at depression levels and China is still growing around a 10% rate. The fear of a major bubble popping in China is somewhat factored in.
NIVS IntelliMedia Technology Group, Inc (AMEX:NIV) is another one that has lost 50% of its value in the last couple months. This stock has had amazing growth and looks to continue to expand and grow. Profitability is not even a question here. It is trading just over $2.00 per share after being as high as $4.38 a couple months ago. The company should easily make $.50 - $.75 for 2010 putting them on pace to have a price to earnings ratio of 3-4. The company expects growth of 20-30% for 2010.
This list could go on and on. As a value small cap swing trader, I am very interested in these and other Chinese stocks trading at reduced levels. Any stock that has great growth and is trading at a P/E of 3-5 must be looked at closely. I will most likely be buying more Chinese small caps over the next few weeks at these levels. To get these entries, guidance and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.comRead more…
By Nicholas Santiago on June 10th, 2010 12:42pm Eastern Time
Forget the news and forget the talking heads in the media. When the dollar falls the markets rally and inflate again. The opposite occurs as the dollar rallies and the markets deflate. Perhaps that relationship will change one day, however, until it does that is the bottom line. This is a traders market and it should remain that way throughout 2010. Learn to trade.
Read more…
