Happy Independence Day USA!
As an American are you wishing you were celebrating financial independence from the economic mess the USA is in currently? The first step to meaningful successful change is to not live in denial, accept the mistakes, and make the necessary corrections and adjustments to prosper sooner than later. It’s time for austerity for everyone around the world now, whether you are a person from main street to wall street to corporate America, and especially the US and Europe Federal governments. But because of old ideas like the “too big to fail” mentality and other old school old age habits, more financial pain and suffering may be on the way before the light of financial freedom shines bright again for the majority of the world again.
S&P500 Still Under Pressure?
I see the S&P500 heading down to the 960.38 to 943.52 area for major support to be formed possibly providing a good possible low-risk high-reward tradable upswing. It’s at 1022.58 as Friday July 2nd. With equities in their current downtrend, dollar strength would be normal in this environment. But then again, the financial markets are not normal anymore it seems, it’s the “new normal” as Mohamed El-Erian of Pimco has stated. I agree with him. It’s the new age, new generations, new changes and the new ideas that need to take root to reverse the downturn, and that will simply take some years to do. So the bottom line is for now, be ready for anything, sell-short, or get out of the market completely, and trade risk cash in the currency futures and forex markets if you want to get a return better than stuffing it in your safe at .home
Buy Gold Now?
With the big selloff in gold last week, the gold investors might be seeing now that inflation is no were to be seen just yet, and maybe they need to remove some long precious metals positions from their portfolio for awhile until the economy shows some real inflation that it’s time to buy the yellow metal again. Or maybe gold will get the bid again when it looks like the financial world is actually going to default and collapse and gold will be the reserve currency of the world. I suggest, if it comes to that, then food and water should be worth more than gold. In the meantime, gold looks down short term to me. I see major support for gold in the 1195.78 to 1153.80 area, and possibly as low as 1110.00. At these support areas, I currently see a good low-risk high-reward buy point to move to possibly gold to move to new highs from there.
How To Make Money In Declining Stock Markets?
Raise cash, go to cash, hold cash, invest and trade cash in the forex or currency futures market, and or sell-short equities on upticks. With the global economy sitting on the edge of full blown deflation now in my opinion, I suggest not buying stocks yet, and possibly even ones that pay big dividends and selling them or short-selling them for the time being. Cash looks to be one of the best investments and trades right now in my opinion, so I suggest raising as much cash as possible, investing and trading currencies short, intermediate, and long-term for the best lowest-risk highest-reward returns, and the most important factor, for the liquidity that any market can provide right now. With the leverage in the forex and currency futures markets, I suggest keep your lot size light, and use stop-loss as you’re most important tools to profit long-term. It’s managing your losses in the markets that will make you profitable long-term. This is the most important in economic times like now.
My Stock Pick This Week Is a Short-Sell on Noble Corp Offshore Oil Driller
With the gulf oil spill, and now BP looking for some global white knight investors to help bail them out of their oil, it looks like there might be more downside pressure on oil prices, the industry and the drillers at least short term I think, and possibly longer than expected. I know oil is in demand long term, but the world is slowing down here, and I think should continue to slow down for better economic health longer-term. I think the downtrend that going on in the industry currently would end up being a very good thing long-term. The downtrend will end someday, but I don’t think it’s over just yet with forward global growth rates forecasted to be very low for awhile.
A possible positive for Noble Corp, is that it has agreed to buy privately held Frontier drilling for about $2 billion, adding seven new drilling vessels to its fleet. I suggest this purchase sounds very good in the long-term for them but it may not have any effect in the short-term with current things as they are right now. The acquisition is expected to be supportive to Nobel’s cash flow immediately and possibly add approximately $2 billion to Noble’s existing backlog of $7.5 billion in drilling contracts, but I’m betting it doesn’t happen that fast and or the market ignores it and their stock price keeps sliding short term. In case I’m wrong, stick to stop-loss and your investment portfolio will still be ok. In case it does, you can play it both ways, short now, and possibly buy it long later at lower prices.
Sell Short Nobel Corp – Ticker NE
Sell Entry: 34.82 to 32.12
Stop-Loss: 36.00 or 8% from your entry price.
Take Profit Areas: 22.55 to 21.09, 15.99 to 14.95
Noble Corp Company Profile
Noble Corporation provides offshore contract drilling services for the oil and gas industry worldwide. As of December 31, 2009, it operated a fleet of 62 mobile offshore drilling units, including 13 semisubmersibles, 4 dynamically positioned drillships, 43 jackups, and 2 submersibles. The company also offers labor contract drilling services, and engineering and consulting services. Noble Corporation was founded in 1921 and is based in Baar, Switzerland.
Click the Noble Corp stock chart for a larger view.
Disclosure: Going short Noble Corp per trade plan above.