Market Wrap-Up for Aug.9 (UNP, BAC, CBS, MA, EPD, CVC, more)

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What an unusual trading day it turned out to be today. We had the expected bounce this morning and it looked like clear sailing until the Federal Reserve commentary was released at 2:15pm Est. It was then revealed the fed is intending to keep interest rates low through mid-2013! The markets saw a quick drop, then a rally back up, only to see the Dow drop 200 points, but then rally back up to close at the highs (up 400 points). You following this? This is not the sort of market stability that can inspire too much investor confidence in the short-term, but we'll take the gains as it will allow some investors to re-position out of weak stocks they may own in their portfolio.

Looking at today's action, we saw a plethora of upgrades in the transports space, with railroad plays getting a thumbs up from several Wall Street analysts. Leading the way higher were shares of Union Pacific ( UNP ), CSX Corp ( CSX ), and Norfolk Southern ( NSC ). Other upgrades that popped up on our radar were for shares of CBS Corp ( CBS ) (has been a strong name in 2011), Humana ( HUM ) (likely cuts in medicare are not worrying analysts at this point), and Wells Fargo ( WFC ) (financials are constantly getting defended on the street, but I'm skeptical that business is anywhere near firing on all cylinders).

Outside of Mastercard ( MA ) and Visa ( V ), it's hard to find much performance in the U.S. financial sector. If only those stocks gave us better dividend yields, we'd put them on the income bandwagon. Earnings results pushed shares of Enterprise Products Partners L.P. ( EPD ) higher. As we mentioned yesterday, the MLP space could be in for some turbulence as lower oil prices begin to take hold. That said, we are carefully evaluating the sector. Lastly, Cablevision Systems ( CVC ) finished lower following the company's earnings results. Weaker-than-expected subscriber additions are hurting those shares today.

It was no surprise to see analysts come out in droves this morning with numerous upgrades. That's what Wall Street does. They rarely tell you to take much caution. As a matter of fact, StreetInsider.com reported 243 upgrades compared to 93 downgrades since Friday of last week. For every downgrade, the Street's analysts are doing almost 3 upgrades. Look at the bottom-fishing calls we have seen with Bank of America ( BAC ), which slipped below $7 during the market meltdown yesterday. Unfortunately because the stock is now trading in single digits, the retail investor's eyes become like sewer caps, as the stock begins to look "cheap." The stock traded 681 million shares yesterday! That's some incredible volume. We are in a dangerous market, and trying to catch bottoms for stocks like BAC is only suitable for the most nimble and experienced day-traders.

Much of the financial media is focused on rallies only sustaining if Gold prices ( GLD ) fall. However, we have seen gold prices move up in lock-step with the market rallies off the March 2009 lows. Conventional wisdom about the inverse relationship between the stock market and gold prices should be thrown out the window here - maybe for good.

Clearly, this is a time for investors to zero in on yield and be very selective. Unlike the usual commentary where things are painted as extremely opportunistic when stock prices fall, I put my guard up and try to narrow my areas of focus so that we are optimizing the "Best Dividend Stocks" List in the event stock prices remain in any prolonged downtrend. Now if the market is making you lose sleep, then you may need to hit the pause button on putting new money into stocks for the time being. Remember, though, your long-term focus should be on buying income-producing assets, so you need to consistently find the best targets no matter what the market environment is. Anyone who has set up a watchlist on our site has probably noticed a bunch of email alerts coming to your inbox the last couple of trading sessions. We continue to make the appropriate ratings changes we see fit in this fast-moving market.

When it comes to cleaning up your portfolio (pulling out any stock "weeds"), pay close attention to those you own that drop 25% or more from their 52-week highs. Speaking of cleaning up your portfolio, please be sure to check out the dividend stock we removed from our recommended list today if you did not read the e-mail alert we sent out earlier today. If you are adamant about never selling your shares, just take a look at what happened to former giants like General Motors ( GM ) or Eastman Kodak ( EK ). Selling is a virtue when there are better opportunities out there!

At worst, I advise holding off adding to any positions that are seeing heavy losses. Drawing a line in the sand in the kind of market we're seeing right now can be very dangerous. Sadly, there have likely been tens of thousands of traders that have been knocked out of the game in the last couple of weeks. For some, it could be simply a lack of experience in trading markets that don't bounce on every dip, and for others, simply gambling heavy margin positions. For all those who get excited about the idea of trading, take the lessons from the last few weeks and understand why in the end, trading for a living is as hard a profession as you can tackle. It makes us feel really good at Dividend.com to know that we are helping investors understand the path to growing wealth is by buying income-producing assets. We have plenty of stocks that will throw off solid cash flow for years to come.

Dividend investing allows an investor the opportunity to put compound interest to work for them, and it's never too early or too late to become a dividend investor. The key is once you start, you need to stay consistent and make money available to put to work for you. That's it. Don't count on the government or your employer to set you up for a remarkable retirement. Take control, do your own research, and create one for yourself. It's great to hear from subscribers that have said they are seeing superb results, and for the first time feel like they have an actual game plan for building and maintaining their wealth. The best thing we can do as individual investors is look for opportunities where we receive great income (dividends) from the companies who can best weather the economic storms ahead. You can count on Dividend.com to be your guide in that arena. As always, you can find all of our current recommendations on our industry-leading "Best Dividend Stocks" List .

Let me leave you with this quote from 19th century author Mark Twain that should sum up what investors are likely feeling:

"Courage is resistance to fear, mastery of fear - not absence of fear."

As I mentioned above, drawing lines in the sand with the wrong stocks can be the worst thing you ever do in your investing lifetime. Always respect what the stock tape is trying to tell us.

Thanks for reading, and I'll see you tomorrow! P.S. Please pass this e-mail on to someone you think can use some financial motivation as well as being kept in the financial news loop that could affect them.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Stocks

Referenced Stocks: BAC , CBS , CSX , CVC , EPD

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