Tag: general electric

A Classic Impulse Wave in General Electric

Posted on by The INO.com Team

Explore the rules, guidelines and Fibonacci multiples of impulse waves

By Elliott Wave International

Impulse waves are an integral part of the Wave Principle. Understanding their rules, guidelines and Fibonacci multiples will improve your application and your ability to identify high-confidence trade setups.

There are three rules that govern impulse waves:

  1. wave two may never retrace more than 100% of wave one;
  2. wave three may never be the shortest impulse wave of waves one, three and five. It does not have to be the longest, but it may never be the shortest; and
  3. wave four may never end in the price territory of wave one. Continue reading "A Classic Impulse Wave in General Electric" →

Looking back it all makes sense ... your comments are welcome

Posted on by The INO.com Team

First posted on  October 2, 2008

Just because a stock looks cheap doesn't mean it can't go lower.

With General Electric (NYSE_GE) trading around 22 1/4 today it looks cheap, but can it go even lower? The answer is yes. The last time General Electric traded at current levels was back in October of 2002. Now add in inflation and General Electric is even lower today than it was 6 years ago!

Despite the fact that Warren Buffet invested 3 billion dollars in GE preferred stock giving him a 10% yield, I see no reason to buy GE. The deal Mr. Buffet received was a deal that every investor would love to have in their portfolio. The bottom line is the trend for General Electric which is on the downside and it shows no signs of turning around at this point in time. I would rather buy General Electric at let's say 30, knowing that it's going higher than trying to pick a "value bottom."

Watching CNBC this morning, Mark Haines who has been around for a long time in the financial world made a statement that the buy and hold strategy is no longer a successful strategy in the stock market. I have long held the belief that the world has changed and you can no longer just buy a stock and hold it forever hoping that in long-run it will go higher. We only have to look back at a recent blog commentary on General Motors (NYSE_GM) to see that this is a flawed strategy. Looking at General Electric today proves once again that we are in a trading world and not an investment world.

I understand many of you will disagree with that statement but the truth is the markets have changed, not just domestically here in the US, but globally. Now, the US has to contend in a competitive way with China, India and Russia. The US is in a much more competitive world, where fortunes will be made and fortunes will be lost.

At MarketClub, our mission is to help you make money in this ever-changing market. We are still waiting to see what the outcome will be from the rescue package, bailout package, save America package, any name you want on it package.

No one is going to be able to predict what will happen to the market, except the market itself. We've talked about this in the past. The market is the ultimate mechanism for price discovery.

I do not believe that the current global economic slowdown is going to turn around any time soon. I don't expect to see a "V bottom" in the stock market and that "demand destruction" will force a retracement in many markets that were very much in demand just a few months ago.
So here's my advice... the one thing we do know about the markets is that they a reflection of human nature. Having said that we would want to pay attention to our "Trade Triangle" technology. Those of you who are MarketClub members, follow the "Trade Triangles" because they will keep your emotion out of the market and show you which way the market is headed. For those of you who are not MarketClub members, you should be looking at some sort of technical analysis to help you avoid stock meltdowns.

It doesn't matter what markets you trade because there are always opportunities to make money in the trading game. Our mission is to present those opportunities to you in a very easy way to understand.

Every success in what can only be described as an interesting, turbulent and opportunistic time.

Adam Hewison
President, INO.com
Co-creator, MarketClub

How to tell or refer a friend (short video)

Is now the time for a bear market rally?

Posted on by The INO.com Team

I've been in contact and reading the blog Psychologyofthecall.com for a few months now and from what I've read they seem to be on top of a number of issues. I asked them to answer one question for me...Is now the time for a bear market rally? Here's their answer:

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The ongoing global financial crisis has made perma bears look like geniuses, yet the Psychology of the Call team (POTC) senses the imminent appearance of a bear market rally for four good reasons.

1) President elect Obama's first speech and chief of staff pick, Mr. Rom Emanuel, were very bearish for the market; we are confident both of those negativities will change soon. POTC believes Mr. Obama's goal in the coming days and weeks will be to do everything popular to be re-elected to a second term in just four short years. He understands that half of U.S. citizens are in some way affected by the mayhem of the recent sell off; Americans expect transparent leadership and policies now.

It's that second pivotal term where Presidents are more inclined to show their true colors, especially in terms of openly hell bent left or right policy. We remain confident and are prepared for a lag effect Thanksgiving Obama rally to begin this week, as his centrist appointments and policies begin leaking through hedge fund insiders. We are not waiting for New Year to enter long positions, as that seems to be the easiest and most ‘herdish’ trade today: we remain forward thinking contrarians and are going long the S&P emini contracts into Thursday's death spike.

We believe President elect Obama will appoint some Wall Street friendly names to his first administration, doing so to satisfy his political appetite to win that critical no holds barred second term in 2012.

Yet, if he chooses to select only hard line left wingers, the market will not rally. After witnessing the extremely well planned and hard fought victory, we would be shocked to see a concentrated (leftist) cabinet:. We are confident that will not occur.

2) The pressure from Warren Buffett on President elect Obama to call for a change in mark to market accounting from the SEC, or announce a huge infrastructure stimulus plan plays a factor in our short term bullish call as well.

Berkshire Hathaway just reported a horrible quarter, and even if Buffett is okay with paying higher taxes, we know he does not want to see his almost perfect legacy wither, wilt, and die in his waning years.
Other recent Buffett investments in Goldman Sachs (GS) and General Electric (GE) have underperformed as well, and both of those companies will survive this wickedly panicked market.

3) The financial sector could begin to stabilize as it shrinks. The S&P is heavily weighted with oversold financials.  Approximately 20% of the S&P value lies in financials, so be cautious. Regional banks could begin bouncing with 50%+ buy-out premiums. Rumors abound that Citigroup (C) is very close to bidding for a regional bank with government TARP money.
Story here

This would ignite a type of forest fire under financials, forcing many perma bears to cover their seemingly bullet proof short positions.

We will take advantage of what we view as monopoly money about to be used to boost stocks like Regions Financial (RF) and/or Suntrust Bank (STI).

4) Intel's (INTC) (see MarketClub's latest prediction here, ed note) report of lowering numbers after hours creates the perfect set-up for hedge funds to close or enter new positions before they step foot on Capital Hill, Thursday. Please remember these managers are either long, short, or in cash at this point, so we expect the INTC news to shake out the wounded, weak, and desperate long herd, and flush out the dynamic kings of cash, specifically Steven Cohen and Paul Jones: Story here

These managers are patiently waiting to take over your shares when your fear factor boils over Thursday, turning their greed gauge on auto pilot in search of inexpensive generals. Will you allow them that satisfaction?

Four examples of best-in-breed generals at these levels are: Apple (AAPL), America Movil (AMX), Chicago Mercantile Exchange (CME), and Google (GOOG).

POTC feels the S&P index could settle above 1,000 by Thanksgiving, and as the bear rally gains momentum from one or two other positive developments mentioned above, then 1,100 on the S&P could well be reached before we wish you a Happy New Year.

Psychologyofthecall.com

It hasn't sunk in yet, and maybe it never will.

Posted on by The INO.com Team

It hasn't sunk in yet, and maybe it never will.

For most people who've lost 30% or 40% of their IRAs or 401(k) plans, it just looks that way on paper. In other words, it hasn't sunk in yet. The reality is that when this sinks in, and it will, the realization will have a significant negative impact on the psyche of the US consumer and the US economy.

This is the first real bear market we have seen in a generation and maybe the start of the greatest bear market we have seen since the Great Depression. All of these distressed securities have to be worked out and priced accordingly in the marketplace and that is going to take time. Right now, there is no reason to jump in and buy stocks because they look cheap.

The technical and fundamental trends are clearly down in all the equity markets as the de-leveraging of the hedge funds continues. You may remember I made a post some time ago about hedge funds. I said that in the end "they will devour their young." That's exactly what's happening right now.

This is without a doubt an extremely challenging time for both the US and world economy. There are no easy answers. China's economy was built on manufacturing and selling products primarily to the United States, but also the rest of the world. The global slowdown will dramatically impact their economy.

The fact that crude oil has crashed and lost almost half its value in a very short time has helped the consumers shake the real fear that rests in their subconscious psyche. Will lower gas prices jump-start the economy if consumers see more disposable income in their pockets? Even if lower gas prices come to fruition, will consumers commit to spending the extra money?

The greatest fear right now has to be fear itself. I discussed this in one of my previous posts and I believe it hasn't yet sunk in to the general public just how bad the economy is.

If we see the recent lows in the equity markets taken out, we could see another huge capitulation to new lows. If that occurs, both professional and amateur investors alike will be scrambling for the exits at the same time.

So what's an investor to do? I have blogged in previous posts that these are not markets you can buy and hold forever. Unfortunately those days are long gone. The classic fall-back line for all stockbrokers is, "if it doesn't go your way, it will work itself out in the long-term." Did General Motors (NYSE_GM) work itself out over the long-term? NO. Has GE (NYSE_GE) worked itself out over the long term? NO. This can be said for thousands of other stocks that have not gone up "in the long-term." So remember when your broker tells you to, "hold it for the long-term...it'll come back," you might want to cut your losses early.

The key thing to trading and investing is knowing what the markets are doing at all times. Right now the market remains negative. Why would anyone go into defensive stocks just to be in the market? If the trend is down in a so-called defensive stock, why would you want to hold on to that stock? It just doesn't make much sense in my book.

I believe we are going into a prolonged, protracted time when stocks don't do much of anything. People are fearful right now. Over the years we've lived the good life here in the United States. Credit was easy, people thought the money carousel would go on forever. Well, guess what? The world has been playing musical chairs and when the music stopped (read that as the credit) there are no chairs to sit on. We are left standing, not sure what to do next.

I am normally an very optimistic person, but at the moment, I feel an economic chill settling over the world for quite some time.

Having said all of this, the perception of the marketplace can change at anytime. When that does, you need to change with it. You can no longer be passive in these types of markets. The individuals who do remain passive and hold for the "long-term" are now way behind the eight ball. Unfortunately, many may never recover.

Mark my words, there will be some fantastic opportunities in the weeks, months and years ahead. But, those opportunities will only go to the well-prepared, disciplined individuals traders who believe in what they're doing in the market. That's the only way successful investors will succeed in my humble opinion.

Best,

Adam Hewison
President, INO.com
Co-creator, MarketClub