April 22, 2008

"A Raging Bull Set to Break Free"

The Dow Jones Utilities Average (DJU) is used as a surrogate for bond prices. It is often a leading indicator of broad market trends since stocks in this sector are typically the most interest-rate sensitive.

The reason for this sensitivity? Well, utility companies typically have large amounts of debt on which they pay interest and hold cash for capital improvements, so they are affected by interest rate changes sooner than other industries.

When we see bullishness in the DJU, it is a tip-off that something big is revving to explode. After all, the last time the Utilities and the Transportation indices went wild was 1998—right before the (raging) bull market!

Now that both indices are nearing all-time highs, the market is essentially setting the stage for a repeat of what we saw happen ten years ago. 

If you like to play ETFs, my suggestion would be to stick with the Utilities Holders (UTH). This investment allows you to diversify your holdings in the utilities industry by investing in a single, exchange-traded fund that contains shares of common stock issued by several specific utility companies.

We recommend that you invest in UTH only in a pullback. Yes, technically right now everything is in a pullback but the UTH has been up 7% this month, so be aware of that.

Two Hot Stocks

There are two value stocks that I handpicked for my Trending123 subscribers—and am now sharing with you. One has a P/E of 7 and the other a P/E of 6. Now, I'm not going to sit here and claim that the dividend yields for either are what I might call "cream of the crop," but that is typical. You see, the stocks with the worst P/E's have the best-looking charts and vice versa. And yes, you want the stocks with the best charts!

HOT STOCK #1: Companhia Paranaense de Energia (ELP), through its subsidiaries, engages in the generation, transmission, and distribution of electricity in the state of Parana, Brazil. Additionally, it has interests in the telecommunications and information technology, water and sewage, natural gas distribution, consulting services businesses. The company was founded in 1954 and is headquartered in Curitiba, Brazil. TARGET: almost double current prices!

HOT STOCK #2: National Grid PLC. (NGG) engages in the transmission and distribution of electricity and gas in the United Kingdom and the United States. In addition, the company provides infrastructure and related services, which include metering and meter reading services, grain LNG, inter-connector services, property holding and management services, engineering consultancy and software solutions, and network mapping services. National Grid PLC was founded in 1990 and is based in London, the United Kingdom. TARGET: 40%+ current prices!

But DO NOT PLAY THESE YET! I like to alert my Trending123 subscribers about the stocks they should keep a watchful eye on because we are about to play them. Then when the time is right, I send a quick alert advising them to jump in. The reason is I'd like all of my readers to be fully educated (and thus prepared) before they take any leaps with their money.

I know how important your money is—especially in this economy—and I want to help you safeguard what you have and BUILD on it! Let me help you do just that: find out about Trending123 and how I can help you towards the easiest profits you'll ever make trading stocks!

Sincerely,

John Lansing
Trending123

P.S. Watch out! Some stocks are like hot potatoes right now—you need to get your hands on them quickly if you expect to profit. At Trending123, we have a Portfolio Watchlist that's as long as our current portfolio! Find out how you can capitalize on the next round of money-making/profit-taking stocks now!

P.P.S. Seems like everyone has a blog these days! So if you can't beat ‘em, I say join ‘em! Especially when you are overflowing with trading goodness. Check out my Trending123 blog today!

All Bets Are Off

With the kind of market we continue to find ourselves in, the best advice I can give you is don't do anything rash.

I've been getting a lot of questions lately about whether it is beneficial to sell energy/oil/commodity stocks. My answer to anyone who asks that: forget about it. Forget about trying to short those sectors. The truth is that in this market, betting against ANY stock is virtual suicide!

We can't count out anything right now. But we can count on certain sectors outperforming others. Take a look at what a typical business cycle looks like below. You'll also see the points at which various economic sectors tend to outperform the broader market.

Certain sectors of business profit more in certain stages of an economic cycle. This simple arrangement of stages provides a useful road map to traders of most stripes.

Let's take the transportation sector as an example. Railroads and other surface carriers tend to react early to a pickup in the economy. Airlines are subject to cyclicaly fuel costs, usage versus capacity, and competitive pressures on airfares.

The financial sector is also a good indicator of the current stage of the economic cycle. Stocks in housing-related industries tend to respond well to falling interest rates and are often targeted by investors in the mid to late stages of an economic contraction. Non-mortgage-dependent banks are generally driven by commercial and consumer loan growth, and tend to be favored by investors during the middle of the cycle.

Want to learn more about the economic cycle and how different sectors perform within it? Click here and subscribe to Trending123 today.

Reasons AGAINST the Bear

Still convinced that we are headed on a one-way street toward a bear market? Hmm… you certainly are a stickler for this line of thought, aren't you?

I've tried to convince you before. Allow my to take another stab at it—after all it is your money (not to mention your sanity)!

There are several reasons why this market is headed for a bull and not a bear. In fact, I gave 34 of them to my subscribers!

Permit me a moment to wet your palate:

• The SP500 is following a 30-year uptrend line that has NEVER been broken and it's presently supporting the SP500 from descending into a Bear market.
• Historically, high short interest—an indicator of investor pessimism in the market—has always marked transitions from down markets to up markets. The highest short interest ever reported was on Feb. 29, 2008 with over 14.9 billion shares short.

To view my complete list of reasons AGAINST the Bear, get your full-access membership to Trending123 today!