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Two Ways To Play: Will Stocks Recover in '09?


Strengthen your portfolio in good times and bad.

Editors Note: Terry Woo is out today. Buzz & Banter editor Matt Theal is filling his considerable shoes.

There's no doubt that 2008 was a horrid year for the stock market. The Dow Jones Industrial Average fell 38.5% for its worst loss since 1931. According to the Wall Street Journal, stock performance now trails every asset class over a 10 year period. This has left professional and amateur investors angry and confused.

Some investors believe that stocks bottomed in November and that 2009 should be a recovery year. They believe that the worst has already been priced into corporate earnings and inflation is also not a worry as the Federal Reserve will keep the target rate near zero. Others are quick to point out that in 1931 the DJIA lost 53% and during the next year the index dropped another 23%. This would brighten the prospects for 2010 because the following year, 1933, saw a 67% rise in the DJIA.

In order for 2009 to be an up year for the market, many investors agree that policy makers will need to stabilize the economy and credit markets and spark lending between banks.

Bull Pen: Solid companies such as Proctor & Gamble (PG) could outperform the averages in 2009. Bulls could buy the stock here and set a stop loss at $60.

Bear Cave: Portfolio protection will be a key in 2009. Bears could buy Ultra Short S&P 500 ETF (SDS) here with a stop loss at $70.

Quick Check Around the World

Asian trading closed with the Hang Seng 4.55%, and Sensex 0.55%.

Glancing towards Europe, we see the CAC 2.04%, DAX 1.87%, and FTSE 1.26%.

As of 8:00 a.m. EST, S&P futures are trading +4.50 to 904.50, and Nasdaq futures are +3.75 to 1216.25.

A Look At Commodities

Crude oil is trading -2.95 to 41.65. Gold is -13.30 to 871.00. Silver is -0.17 to 11.125, and copper is 1.15 to 142.15.

On the Radar


10:00 ISM Manufacturing 35.1
10:00 ISM Prices Paid 19.0


Before: FINL

Click here for the full trading radar.

Good luck and have a great day!
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No positions in stocks mentioned.

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