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"Stocks in the Spotlight"
MARKET TALK
November 24, 2009
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Tax Selling Season Is Upon Us!! Dow Jones Industrial Average
April of 1999 was the first time the DOW 30 broke over the 10,000 level and it traded between 10,000 and 11,000 until June of 2002, 3 years, before falling under 10,000 and traveling all the way down to under 8,000 before finding the bottom for the last time in March of 2003. In December of 2003 the DOW 30 broke the 10,000 level again and it took until May of 2006 to get over the 11,000 mark again (2 years + 5 months).
The short story is: The markets could stay in this range for a couple of years
What a market! Up on good news and up on bad news.
Really, a little bit of good news is released and the markets soar for a few days. A little bit of bad news and
the markets fall for a day then turn around and move right back up. The DOW 30 keeps setting new 52 week highs
almost daily and lately the other indices jumped on the band wagon with it.
The problem is with the RUT, VL &
SPREAD. All three set new 52 week highs in mid October,
ahead of the rest, but none have set another one since. They are all broad indices and cover many industries. They
cover thousands of companies and allow us a peek at the entire economy. The failure of these "broad" indices to keep up with the rest of the pack is
cause for concern.
We
may be seeing the beginning of a correction because all three indices staying in the shadows. If they don't start
to catch up soon, I feel the others will fall back to join the old leaders. When I say "old leaders"
I mean of the stocks to reach a new high first, but all three have been strong leaders from the start of the move
from the lows on March 9, 2009. The SPREAD & Value Line are up more than 100% with the RUT up 72%. All three
lean toward the big OTC stocks and are normally leading indices.
I
want to believe in the economic recovery, but we have seen one of the strongest rallies ever in just 9 months and
without a correction I have to wonder how long I can believe in the rally. I can't seem to stop wondering what
will happen to corporate earnings when corporations can't find any more places to reduce cost.
If
unemployment keeps climbing, then consumer buying habits will keep tightening and the domino will start falling
into the next one. There won't be any one to buy the products, even if inventories are running down.
A jobless recovery is not a real recovery and will have little staying power.
TAX SELLING
Every year we have an opportunity to get rid of our losers and take advantage of a tax break. It
is a good plan if in need of a tax loss, but not if we sell the wrong company, or the right company at the wrong
time. The idea is to get out of a loser, but not if it will be a winner in a few months, so be very careful and
do all that is possible to make your decision a well thought out one.
The "wash sale" rule is one strategy. This involves selling the stock and waiting 31
days before buying the same stock back. The 31 day waiting period allows us to deduct the loss nest April but still
own the . Watch out. If the stock moves back up too far in less than 31 days it may not make sense to buy it back.
The like industry rule is the one where we like the industry but because of the tough economy ours
stock is losing money. An example would be if we owned GM and felt the U.S auto industry is the place to be. We can sell GM and by Ford. This way we are still in an industry
we like and get a tax write off to boot.
The "sell early" rule is the one that tells us to sell in November. The idea is that most
investors will drag their feet and sell in December, making stock prices lower at the end of the year, which is
also the end of the tax selling season. In an ideal world we sell at a higher price in November and buy back at
a lower price in December. Sort of a double dip deal.
One
of the hardest thing an investor might have to do is to accept the fact that the investment is not turning out
the way you had hoped and it is time to part company. We will never get used to it and it only hurts for a little
while. May the Force be with you!
Moving the "BUY" up to under $5 from
under $4
Buy Under $5
Advanced Micro Devices (AMD) (52 week range 1.62 - 6.47), now at $7.09. AMD moved from
the low of $1.62 on November 25, 2008, almost a full year ago, to a new 52 week high of $7.33 this past week, a
350% move in less than a year. AMD was climbing with the markets, but news 2 weeks ago of a $1.25 billion settlement
to AMD gave the stock price a shot in the arm. The link below will take you to the news about the settlement.
SAN FRANCISCO, Nov. 12 (Reuters) - Intel Corp. - (INTC.O) will
pay rival chipmaker Advanced Micro Devices Inc. (AMD.N)
$1.25 billion to settle all outstanding legal disputes, in a move that could weaken antitrust regulatory action
against Intel.
AMD
is not as big as Intel and will not need as much business to climb out of the recession. Also, with heavy debt
the extra money will come in handy. We could be looking at an easy 9 dollar bill in the next few months.
Buy on dips of 25% or anything under $5.50!
A "Featured" "Spotlight Stock"
*****
A "Buy Now" STOCK
Mineral Hill Industries Ltd. (MHI.V) (52 week range 0.03 - 0.20), now at $0.15. Mineral Hill
Industries Ltd. Is our newest "Featured
Spotlight"
stock and is aggressively pursuing Lithium mining
interest. Lithium is one of the fastest growing of the rare minerals and MHI is in a position to become one of
the fastest "growing in price" stocks of the year.
Several
acquisitions have already been completed and expected news on testing results is overdue.This latest acquisition
puts the company in both types of lithium mining, the "hard rock" mining and the brine, putting the company
in a much stronger position by being able to handle both markets.
Recently
the stock price was been easing back, but the bottom looks to be found and the daily volume has increased a bunch.
Both are indicators of a stock moving up. Our greatest concern should be if we will be getting in trouble with
the law if I buy the stock under a dime. Some places might consider this stealing.
All
joking aside, MHI has only had good news and there is very little reason for the stock to fall back to the current
"under a dime" level. It has not been here long and I would expect it will not stay here long.
Lithium
is one of the hottest buzz words of the times. A needed product that is rare but growing in demand, a recipe for
growth in any field. Lithium is considered the best metal for use in batteries. It is lighter but strong and holds
a lot of energy. It will only grow and Mineral Hill offers an investor a way to be part of this growth at an affordable
price.
The
last thing we want to do is to wait for more good news. It could very well be a costly wait.
Buy here!
The Current Market has been posted
be sure to visit our Current Market for additional stocks
The Current
Market
I am J.R. Budke and this is my opinion!
J.R. Budke
Stocks in the Spotlight
209.383.4647
spotlite@thespotlite.net
www.thespotlite.net
The Stocks in the Spotlight is not an Investor
Relations or Public Relations firm, but a stock market related web site with opinions and recommendations. It also
has to do with equity strategy, with a desire to assist in the various methods of increasing the value in a public
company. If you need assistance in equity strategy, or consulting, please contact us at the above telephone or
e-mail address.
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J.R. Budke had been a stock broker since 1981, an options principle since 1982 and a branch office manager since 1987. He is currently inactive as a stockbroker as of 12/31/99. J.R. writes the articles and opinions for the Stocks in the Spotlight, and the opinions and selections covered in this section are his opinions only, and no others, unless otherwise stated. You should not purchase any stocks solely on Mr. Budke's opinion. Mr. Budke's opinion should not be considered advice as it is only an opinion. Always consult with your broker or investment advisor before purchasing any stock. |