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2-10-10 : Bad News Travels Fast : Morning Market Update

|Includes: GLD, IMPAC MTG HLDGS INC (IMPM)

10:15am  (originally posted on Kudrna's Stock Market Blog)  

Nothing travels faster than light,
with the possible exception of bad news,
which follows its own rules
-Douglas Adams

Concerns are out there today that Bernanke is going to start increasing rates soon due to his prepared release to Congress that said rates would increase “before long.”  I’m not taking this bad news as literal and meaning an increase in rates anytime soon.  My research this morning indicates many other analysts are in agreement with me.  However, it may still be an overhang in the market today as many investors buy/sell on impulse.

This news is making the dollar rally which is again putting pressure on oil, gold, etc…  I’ve sold out of SPDR Gold Trust (GLD) for a very small gain as I think the price could dip further again.  Last year the dollar stayed weak so the market rallied.  Many have predicted this year is the year of consolidation and I agree.  The dollar could grow stronger and foreign currencies stay weak therefore putting pressure on the market.  We could rotate money in and out of sectors until we find some leadership.

My strategy is to build up long’s in a diversified list of blue chip stocks while playing some smaller cap stocks that hopefully continue to stay under the radar of the general market.  I’ve been busy adding to GoIP Global (GOIG.PK) this morning as prices are under some pressure.  It seems some shady websites which pump up/manipulate smaller cap stocks have been putting out news. GOIG is under some pressure as some people are reluctant to buy and others are selling out of fear they will lose their gains.  I’m increasing my stake in the weakness.  GOIG recently submitted their financials and they were as expected.  This is a make or break service for the company and I’m a believer it will be a big enough hit to allow them to be cash flow positive by 2nd quarter (meaning great news in the 3rd quarter when they release 2nd quarter’s earnings)…which would be just the start of the positive flow of news.  Do your research and see if you agree.  The services websites for Go800 launches on Monday and the service itself should launch in March therefore making 1st Quarter financials potentially ugly.

I’m also trying to load up on Impac Mortgage (IMPM) but the volume is low as not a whole lot of people want to sell at this price.  I’m going to add to my position when I can in anticipation of another bullish trend which can be seen on the chart over the past 6 months.  If any bad news comes out though, I will pull the trigger and sell soon as I have a very hefty gain in IMPM already.

Outside of that, I’m just trying to stay patient in this market until we find a bottom.  This Bernanke rate hike news is ridiculous to me so if the market takes a turn for the worse on it, I may run some trades that the news is overblown.  Be careful and don’t get too caught up in the emotional news stories you read and hear.  Good luck out there.

Mike




Disclosure: Long GOIG.PK and IMPM but positions can change at any time