Daily Gains Letter

Stock Market

The stock market is one of the most exciting ways in which individuals can realize a significant return on their savings. It can also be a risky venture. Simply put, when you make a stock investment, your hard-earned capital is on the line—without any guidance and knowledge, your savings could disappear.

That said, there is no need to rush into the stock market just because you heard a hot stock tip or read something in the news. As an investor, it’s important to be comfortable and knowledgeable with both the equities you’re interested in and the potential rewards and risks.

Investing in stocks with high potential returns requires a lot of due diligence and background work. If you are not careful, a stock investment can leave a serious dent in your portfolio. That’s why it’s imperative investors research a stock as much as possible; so they know what to expect.

With an endless stream of economic data, earnings results, analyst reports, and technical trends to follow, it’s easy to see why so many investors are at a loss to figure out where the market is going at any given time…and where the best-performing stocks are going to surface.

Researching a stock helps reduce the risk factors and lets investors know what to expect in different economic conditions. When it comes to predicting the future direction of any stock or commodity, investors follow two schools of thoughts: fundamental analysis and technical analysis.

Fundamental analysis looks at a company’s financial statements in an effort to predict a trend. In contrast, investors who pursue a technical analysis believe that chart patterns and past price performance can help predict what the future prices will be.

And yet, researching stock can only take you so far. Investors must also be aware of outside factors like economic conditions. If the economy is in a bad state, the stock markets as a whole tend to go lower.

Once selling hits the market, even the best companies can see negative returns. The 2008 and 2009 market crash is a fantastic example of excellent companies being kicked to the curb for no good reason. This goes to show you can never account for how unpredictably investors will respond…to anything.

Not that any of this should discourage those looking to get involved in the stock market. Regardless of market sentiment, there are always opportunities to make money on sound stock investments.

Next Stock Market Crash Coming Soon?

Stock Market CrashA look at the charts makes me a bit nervous that the next stock market crash could be on the horizon. The fact is that the market has not witnessed a correction of any major proportions in excess of 10% since the stock market began to turn up in March 2009. Sure, we have had the occasional five-percent adjustments in stocks, but these periods of selling were short-lived, always followed by periods of buying support. I suspect we could be on the verge of another correction that could drive the major stock indices down to test their respective 200-day moving averages (MAs) after already breaching the key short-term 50-day MA. While we would all love to see stocks continue to creep to new record highs, this is not ... Read More

YUM! Brands: The Next Big Restaurant Stock Winner?

YUM BrandsYou can't blame newly installed McDonald's Corp. (NYSE/MCD) CEO Steve Easterbrook for not being enthusiastic about the fast food restaurant stock. I’m certainly not; you can see my negative view towards the seller of the “Big Mac” here. Even after Easterbrook's new strategy to turn things around, you can’t get angry at me for not getting too excited. (And then there’s YUM! Brands, Inc., which is looking pretty darn good in comparison—but more on that later.)

McDonald’s New Strategy Not Doing Much for Operations

What is McDonald’s doing to try to turn t ... Read More

Apple: Still a Stock Market All-Star?

Apple a Stock Market All StarI no longer own an “iPhone” and I don't have plans anytime soon to order the “Watch,” a smartwatch from Apple Inc. (NASDAQ/AAPL). Yet despite my personal needs, I do think Apple is the king of the mountain in the stock market’s technology space. Some are suggesting the iPhone will eventually meet its match, but I have yet to see this. Apple sold something like 74.5 million iPhones in its first quarter. This a huge number, and it could get even better if existing users of older iPhones decide to stay. I didn't; I switched to the “Samsung Galaxy,” which I feel is a comparable alternative to the iPhone. But this is not about my personal taste. The reality is that Apple ha ... Read More

Alibaba: A Threat to Google?

Alibaba A Threat to GoogleSome say Alibaba Group Holding Limited (NYSE/BABA) is the Google Inc. (NASDAQ/ GOOG) of China. And that is currently the case at this juncture...until Google can gain a foothold in the country’s Internet technology sector. But that will not be easy. Comparing Alibaba to Google in the technology sector at this time is difficult. If we could fast-forward a few years, the answer to which Internet starlet is a better choice would likely be clearer. Google is currently nearly twice as big as Alibaba based on market capitalization. This on its own doesn’t mean that Google is superior; however, I will explain why I think it may indeed be the better choice now in the Internet technology ... Read More

Restaurant Sector: Two Contrarian Players to Watch

Restaurant SectorWhy the Restaurant Sector

This may be a surprise to you, but one of the top-performing sectors over the past few years has been the restaurant sector. While there has clearly been some euphoric buying, the fact that we are seeing stronger job growth and rising home wealth in the U.S. has helped as well. If you look at the chart of the Dow Jones U.S. Restaurants & Bars Index, you can see the upward moves, highlighted by several breakouts along the way, including the recent breakout from the sideways channel. I doubt the gains ahead will be as dynamic for the restaurant sector, but there will continue to be opportunities to accumulate stocks on price weakness.

Read More

How to Limit Risk and Profit from Momentum Stocks Like Netflix

Momentum Stocks Like NetflixIn the past, I have often talked about the quick money that can be generated trading big-volume momentum stocks in the Internet and social media spaces. Take a look at the biggest companies by market-cap on the NASDAQ and S&P 500, and you'll find numerous highflying, valuation-defying stock market trades. Of course, I'm talking about the likes of Facebook, Inc. (NASDAQ/FB), The Priceline Group Inc. (NASDAQ/PCLN), Twitter, Inc. (NYSE/TWTR), LinkedIn Corporation (NYSE/LNKD), Tesla Motors, Inc. (NASDAQ/TSLA), and Netflix, Inc. (NASDAQ/NFLX). Apple Inc. (NASDAQ/AAPL) is not in this group because the stock’s gains tend to be steadier, rather tha ... Read More

Restaurant Stocks: McDonald’s No Longer King in Stock Market Sector

restaurant stocksAdmittedly, McDonalds Corporation (NYSE/MCD) was somewhat of a staple in my diet growing up as a teenager. I couldn't get enough of those golden fries and loved the taste of the “Big Mac.” But that was then; today, I’m no longer drawn in by the “golden arches.” And the stock market appears to be feeling the same way, as the fast food operator looks to turn things around. My approach to McDonald's, so far, has been one of patience, but until the company can figure out what to do with its sliding revenues, I see better opportunities in the restaurant sector.

McDonald’s Struggling to Stay on Trend and Its Numbers Show It

While the share price is only slightly off from its 52-week hi ... Read More

Near-Term Oil Prices a Trader’s Market: How to Play the Uncertainty

Oil PricesUncertainty appears to be influencing oil prices near-term, and the long-term outlook doesn’t look to be showing much strength. For the time being, oil prices are stuck in a trader’s market.

Current and Near-Term Action in Oil Prices

Oil prices are currently at a crossroads with the longs and shorts battling it out. On one hand, there appears to be some decent support at the $40.00 level for the West Texas Intermediate (WTI), as prices for the May futures contract has been bid up to the $52.00 level. Conversely, I expect to see some resistance selling, as oil prices edge higher due to the record oil storage and the fact that the global demand side continues to be a major overhang. China is importing less oil ... Read More