Stock Market Newsletter -pt1
Daily Stock Report for Monday Morning, April 19
, 2010 pt1
Just when everything looks calm and steady upward, the market turns down on the news that SEC is charging Goldman Sachs for a civil fraud charges (not criminal) regarding subprime mortgages.
The US stock market indexes went down immediately today after news that SEC is filing civil fraud charges against Goldman Sachs. The market was already slightly lower on the Google, GOOG earnings news that didnt beat the whisper number after the market Thursday and ended down 1.1% to 1.63% for the day Friday.
It is important to know that these are civil charges, not a criminal complaint and this is much less serious than a criminal charge, meaning a conviction in criminal charges can lead to a jail sentence but a civil charge leads to fines.
Mitch King Rant: Notice how Mary Schapiro (SEC) wanted to make a big splash and announce this during market hours so this could have a maximum effect? Isnt it more than coincidental that Obama wants to overhaul the financial system and this is his way to get the mass population on his side? What happened to the great leaders who try to bring people into unity and not intentionally divide the classes? Wasnt one of the primary mandates of establishing the SEC in 1934 to help stabilize the markets? This act on Friday is against that very philosophy and the Obama politics have sunk to a lower low.
It is a racket how the regulators work and something that former NY Attorney General Spitzer worked the system masterfully. Someone like SEC makes these charges public against a publically traded company that has their stock listed on the exchange. Companys stock goes down sharply and gets bad publicity. Regulators cite various violations and wrongdoing, both go to negotiating table on the fines, company pays many millions but admits to no wrongdoing.
The company wants to stop the bad press and figures that settling would be better for the shareholders and stock resumes back toward previous price levels. Companies also want to keep the right image in the eyes of their customers (usually the public) and settling gets their name out of the press. And the regulators continue to build their treasure chest. Spitzer did this to the tune of billions of dollars in fines the state of NY received because he knew companies want to settle, whether or not the charges were valid. IMPORTANT CONCLUSION:
Conclusion: Goldman Sachs, (GS), along with many financial stocks should resume upwards sharply starting this week and give us excellent long possibilities BUT see if they drop more before jumping in long. Look at other stocks like JPM, BAC, and other financials.
Scalp of the Day: (all eastern times)
CPWM, Cost Plus had an excellent short at 257pm and gave a potential profit of 22% on the short side followed by an excellent long side of 15.5% potential profit. This happened in a very short time span, 12 minutes down, and another 12 minutes to bounce up. When you see big swings like that you often see one or two more tradable scalps after a big move UNLESS a company is being charged for accounting fraud (cooking the books).
These are the kind of trade ideas we will be giving in the Trading Room, which we are in beta testing right now. Put your email address and name on website page to be notified of actual launch date and info.
Mitch King is the founder of TradeStocksAmerica.com. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Mitch King. Investment recommendations may change without notice and readers are urged to check with their investment counselors before making any investment decisions. Opinions expressed in these reports may change without prior notice. Mitch King and/or the staff at TradeStocksAmerica.com may or may not have investments in any stocks cited above before or after this newsletter is prepared. Use the stock table above as a model portfolio of ideas that look attractive at the time of the writing. Comments can be hypothetical in nature. Opinions expressed in these reports may change without prior notice. Disclaimer - Stock investing or stock trading has large potential rewards, but also large potential risk. There is risk of loss as well as the opportunity for gain when buying or selling stocks, bonds, option contracts or engaging in any strategy listed in the Daily Stock Report, The Wizard Training Course, The Trading Room and our seminar or workshops. You must be aware of the risks and be willing to accept the risks when investing or trading in any financial markets. Don't trade with money you can't afford to lose. This website is neither a solicitation nor an offer to Buy/Sell stocks. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
by: Mitch King
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