Market Wrap-Up for Oct.10 (BAC, MS, JPM, GS, FCX, GLD, more)

Share |

As of today's close, the markets have staged a 1,000 point swing to the upside from last Tuesday's intraday lows on the Dow. The massive rally has been helped by numerous rumors of European TARP-like bank bailouts. Is this a true basis to become bullish on the markets? Investors overseas are hoping history will repeat as we saw U.S. markets begin to rebound sharply in the spring of 2009 following the U.S. TARP program. The one not-so-shining takeaway from today's 300 point rise on the Dow and nearly 90 point jump on the Nasdaq, was the abysmally low volume. As I've said all too often before, we'll take the gains as it helps many a poorly-positioned trader get back some of what has been lost. However for dividend investors we need to see better confirmation in our data before getting giddy about more names to our "Best Dividend Stocks" list.

Looking at the action more closely, financial names gained back some of Friday's losses, with Morgan Stanley ( MS ), J.P. Morgan ( JPM ), and Goldman Sachs ( GS ) all pushing higher. Bank of America ( BAC ) was up just a bit today, even as news the company will be issuing multi-million dollar severance packages to several departing executives (despite the bank's current financial struggles). Whether you support the "Occupy Wall Street" protestors or not, news of multi-million-dollar severance packages from embattled banks certainly gives a bit more headline news leverage to their cause.

Elsewhere, we saw more of the beaten-up names begin to recoup some of the damage from last quarter, including Dow Chemical ( DOW ), Freeport McMoran ( FCX ), and Deere & Co. ( DE ).

On one last note, gold prices ( GLD ) were also sharply higher today. I noted this could be the case with a Euro-TARP initiative being rumored. If gold does put together a strong rally but fails to reach a new high, the long-term trend for the yellow metal could become very tenuous.

Momentum Stocks/Trading - Leave It to the Pros (actually only 10% of them)

Nothing changes when it comes to my rants on business media today. Regardless of the headlines, the coverage is always about the stocks "investors" should be owning going into the earnings reporting seasons (translation: what stocks should be rented to ride any upside surprises in). Unfortunately there is no scorecard kept for the numerous well-known momentum stocks that have absolutely crushed portfolios for some. Look at these three for example:

The recent three-month high for Netflix ( NFLX ) - $300, now trading around $125.

The recent three-month high for Illumina ( ILMN ) - $76, now trading around $27.

The recent three month high for ( SOHU ) - $90, now trading around $57.

It's not just the non-dividend stocks that have been in focus when it comes to losses. Look at these high-beta low-dividend-yielding plays we have been warning readers about.

Freeport McMoran ( FCX ) - recent three-month high of $56, now trading around $35-$36 range.

Carbo Ceramics ( CRR ) - recent three-month high of $180, now trading in the $116-$118 range.

It is said (but not completely documented as far as we can find) that only 10% of traders can make a living sitting in front of a computer day-in, day-out, trying to beat the markets. Those are horrible odds for anyone looking to trade full-time.

Now when you see rallies like we have this morning, it's tempting to buy stocks hoping for double-digit dollar amounts like some are seeing so far. However, most days aren't anything like today. Most of the time, traders are trying to grind out wins in a market that moves sideways. Granted, the volatility has been extreme since machine trading has played a bigger and bigger role. However, the sudden moves tend to ruin many strategies, especially for technical-style traders who watch certain moving averages for signs of stocks being over-bought or over-sold.

Dividend stocks may seem boring and have certainly been portrayed as such by the business media, but slow and steady has been the winning mantra for decades. Much historical data continues to back what we advocate is the best way to outperform the markets: owning high-quality dividend stocks. I know there will still be investors that want to roll the occasional dice, but please use as much discipline as possible and never leave yourself vulnerable to taking big losses. Use sell-stops at all times if you decide to test your carnival-style luck at winning the daily trading prizes.

Trading tends to be all about emotion of catching the next big move, up or down. Think about how many things people do well when it comes to money when there is a lot of emotion involved. The easy answer: not many!

Commitment to Excellence

Speaking of emotions, it was a tough weekend for sports fans on the east coast as the Phillies and Yankees were both eliminated from the MLB Playoffs. Fans of those teams naturally point to complacency and the lack of fire for failing to take their talents to a World Series championship. It's often very difficult in sports to get our arms around the real reasons some teams win and some don't (as well some players that perform well in a big spot and some don't). Either way, the conversation tends to be filled with emotion.

We also heard about the passing of legendary Oakland Raiders owner Al Davis this weekend. Davis was a well-known figure who tended to run his franchise with an iron fist. He was also known to coin the phrase "Commitment to Excellence," and the Raiders won three Super Bowls during Mr. Davis' tenure.

When I look at my kids' daily lives, I am always hoping they perform to the best of their abilities, regardless of the situation. As much as we like to see success in their sports' achievements, it is the academics I love to praise more whenever possible. It can be tough to bring the same emotion when it comes to motivating the academic muscles, but whether you have children, employees, a spouse, or just yourself, you can not afford to lose sight of the most important factors affecting your life.

In the words of Al Davis, a commitment to excellence should be a daily routine we can not take for granted. At, we don't lose sight of this fact. It is impossible to nail every call or analysis you make, but if you hit a majority of them, good things will happen. This only comes with preparation, discipline, and the drive to succeed.

Did You Miss Our Weekend Updates?

I hope everyone had a chance to check out our Premium members-only weekend articles, including new features that highlight some of the biggest winners and losers from the week that was, such as analyst upgrades/downgrades and earnings/story stocks. These articles are a great way to catch up on the week that was in the markets. We also have a rundown of how various Dividend ETFs performed on the week.

Thanks for reading everybody. I'll see you tomorrow!

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.

Created by

This article appears in: Investing , Stocks

Referenced Stocks: BAC , DE , DOW , FCX , GLD

More from

Related Videos



Most Active by Volume

  • $16.44 ▲ 2.37%
  • $10.19 ▲ 28.66%
  • $112.92 ▲ 2.94%
  • $25.01 ▲ 4.16%
  • $105.64 ▲ 2.53%
  • $2.28 ▲ 49.02%
  • $27.99 ▼ 2.34%
  • $43.90 ▲ 2.79%
As of 8/27/2015, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by