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

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Strengthen your portfolio in good times and bad.

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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

Economics

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

Earnings

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.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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