Bull Market

When do you know it is safe to buy stocks? Bull markets primarily occur when interest is low, when housing sales are increasing, and when unemployment is dropping. We only have one of these necessary factors for a bull market in August of 2011, low interest rates.

If we did not have the low interest rates, it would be an all-out bear market instead of just a marginal bear. This is a situation where you should sell the rallies to make a small amount of money, to break even, or to take a small loss. Eventually, you will make money on leveraged ETFs like ERX if you have bought low enough.

Another bad thing about the current market is that you cannot go all-in on shorting the market either. With the Dow sitting below 11,000 we are probably at the bottom because the bad news is not really the end-of-the-world hype. So, it is a waiting game. Another question is how high can the bull rallies go in this kind of market?

The bottom line is that you cannot buy and hold growth stocks right now because they will not go anywhere of significance. Bonds and REITs seem to be the only investments that are relatively safe currently. I recommend AGNC, ARR, JNK, and RCS if you want to collect some interest money.

Best Stock To Buy

This is August 14, 2011. The Dow just went through one of the most volatile weeks of all time. It dropped more than 600 points on Monday, but it had recovered the losses by Friday.

In the meantime, ERX, Direxion's 3X Energy Bull, dropped below $40 per share at one point during the week. It had recovered to $47.89 by Friday. It is the best stock to buy right now because oil is still in great demand, and this situation will continue to exist since China and India need gas for all the cars their people are buying for the first time.

I own 148 shares of ERX in one of my stock trading accounts. That amounts to $7,088 currently invested in the stock. If ERX goes back to $85 per share, my 148 shares will be worth $12, 580. I expect the stock to reach $85 again in two months or less since the oil demand has not diminished. So, I will earn more than $5,500 in a short amount of time. Then, when the Dow falls again along with ERX, I will be a buyer again at these low levels. This is the way to win on Wall Street!

Stock Trader Diary

The stock market drop of this past week presented fantastic opportunities to buy stocks at unbelievable lows. ERX, the Direxion 3X energy bull, dropped briefly below $40 per share. I loaded up with more shares as fast as I could while ERX was selling in the $40 to $50 range.

Since ERX is tied to the price of oil, and oil demand is not going away anytime soon, this was the bargain of the year. This stock can easily rise to more than $80 per share because it has been there before. That is a 100% gain from the low price of the stock. It has already gained 20% from the low with the current price of $47 and change.