GENERAL MARKET OVERVIEW

The market seems to be in a holding pattern now with quite a battle going on between the bulls and bears.  This kind of impasse makes technical analysis and stock picking challenging indeed.  But we have some good positions here now and soon we’ll break out of this narrow trading range.  The market is awaiting confirmation that we will NOT have the biggest tax increase in history starting on January 1st.  In order to do that President Obama must get his Democratic congress on board with the deal he has cut with the Republicans.  This will more than likely get done but nothing like coming down to the wire.

Another thing to keep in mind about trading in December:  More often than not we do experience a “Santa” rally phenomenon.  Although it sounds corny, there is truth to it and good reason behind it.  First of all, in the weeks leading up to Christmas typically trading is light.  When volume is light market specialists can easily run the market up by slowly increasing the bid prices on their stocks penny by penny.  Pretty soon, the short sellers get scared out of their positions and must buy their shares back to cover.  This creates a short squeeze.  Secondly, many fund managers have end-of-the year bonuses riding on these last few weeks of 2010 stock market action,  so they are often in buying mode and the specialists are instructed to squeeze shorts as explained earlier.

I wouldn’t be surprised at all to see the S&P 500 at 1250-1275 before January 1st.

With that in mind, let’s review recent picks from your online investment guide, Companyinvest.com:

RECENT COMPANY INVEST PICKS:

LOW:  What a wonderful run this stock has made.  Did we nail the bottom here or what? We’ve been on board since $21.67.  As of today, the stock is still above $25, and went as high as $25.75.   What to do:  Take profits!  Sell half your shares and put your profits in your pocket!   Why be greedy?  At the peak of this trade, we saw nearly an 18% gain, and that’s in only 3 weeks time!  If you don’t want to sell any shares, put a 5% trailing stop in to protect your profits.

TAN: We got a nice move up on this solar sector ETF and since then it’s been consolidating.  What to do:  Put a stop in at $6.81 and don’t add any shares until the stock closes over $7.65.

EXM:  Excel Maritime:  This is a volatile stock, so you have to set a loose stop and ride out the roller coaster.  Set your stop below the last low at $5.40 or so.  After a nice 4-day rally, EXM has pulled back the last 3 sessions and now sits right on its 200 day moving average (support).  Chances are it will bounce from here, but your stop will protect you.  I still see this stock getting above $7 in the not too distant future so hang on!

ZSL (Double short Silver ETF):  We are playing a pullback in silver here after a ridiculous 71% gain over 4 months!  This trade is still looking good.  Hold your position with a stop around $10.15.  Don’t add shares until ZSL breaks $12.15, but when it does, load up!

Good luck!