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Buy Berkshire Hathaway Before it Breaks Out

2010-01-27T23:16:12Z

Buy Berkshire Hathaway Before it Breaks Out

After closing the largest deal in its history by acquiring railroad company Burlington Northern Santa Fe Corp. (BNI), Warren Buffett's Berkshire Hathaway completed a 50-to-1 stock split of its Class B shares on Jan. 21 to accommodate the deal.

And Tuesday came the announcement that Berkshire Hathaway (BRK.B) would replace BNI on S&P 500 Index (SPX), which will be one of the biggest additions to the benchmark index in years.

Due to its more than $3,400 per share price tag prior to the split, BRK.B had been excluded from the index because it didn't have enough trading volume to meet the index's standards. But the stock split resulted in shares priced in the $70 range, and more than 14 million shares change hands on the day of the split.

So, shares of Warren Buffett Inc. are now affordable for the average investor, but does that mean you want to go out and buy BRK.B now?

Well, if the charts are any indication (and they are), then the answer is an unequivocal yes!

Berkshire Hathaway (BRK.B) About to Take Off

The stock split was the catalyst for an upside breakout in BRK.B from a rectangle pattern.

An upside breakout is a bullish signal that occurs when the price of a financial instrument breaks out through the top of a trading range. This technical event indicates that prices will rise explosively over a period of days or weeks as an almost vertical uptrend appears.

But a lot depends on the duration of the trading range from which the breakout occurred, because this can provide an indication of the strength of the breakout. The longer the duration of the trading range, the more significant the breakout.

For BRK.B it took nearly six months to form, and six months is considered a long enough time for an explosive breakout. And after the stock broke out, it immediately filled the gap and did a back test of the pattern.

Shine Up Your Portfolio With 3 Top Metal Stocks

2010-01-13T19:53:41Z

Shine Up Your Portfolio With 3 Top Metal Stocks

As we enter 2010, metal commodities like platinum and palladium are hitting new 52-week highs and breaking out of new chart patterns. Oddly enough, gold is one metal that hasn't reached new 52-week highs in the new year, but if you're familiar with me, you know I think gold is the No. 1 sector to invest in for 2010. And many of the best gold stocks are making new highs even though the actual metal currently is not.

In short, this is going to be a huge year for metal commodities and metal stocks. Now I can't cover all the metal sectors in this update, but I want to highlight a few of the main ones for you, namely platinum, palladium and copper. What's more, after I review these sectors, I'm going to give you three of my top metal stocks. These are the names I think the big money is going to go after first -- and you want to get in before they do!

You Can Now Follow Me On Twitter!

2010-01-11T21:26:27Z

I do everything in my power to give you the best and most-useful information available on hot stocks and market trends......you can now follow me on Twitter!

Link

A Second Chance to Trade One of 2009's Best IPOs

2010-01-11T19:56:30Z

A Second Chance to Trade One of 2009's Best IPOs

SolarWinds Inc. (SWI) may sound like an alternative energy company, but it actually makes application software. The company went public in May 2009, at $12.50, and has returned 84% since then, making in one of 2009's hottest IPO stocks.

Trading IPOs can be an exciting way to make huge profits. SWI is a great example of that. But it's also a great way to lose money. IPOs often trade erratically, and since the stock has no trading history, it is impossible to predict where it will trade next.

Sure, you could get lucky, like SWI investors did, but you could also be left holding the bag when the party is over if the stock heads south.

So, when trading IPOs, I like to wait until I can accurately predict their next move using technical analysis. This way I can time my entry and exit points to maximize my gains and get out before the party is over.

What is SWI's chart telling us right now? It's saying we are being offered a second chance to trade one of 2009's hottest IPOs.

SolarWinds Inc. (SWI) Trade

The stock has formed a cup-and-handle, a pattern similar in appearance to a coffee cup with a right-side handle, which indicates the potential for an uptrend.

This pattern is an elongated U-shape followed by a short period of consolidation of one to two weeks in duration, which tends to be downtrending. When the stock's price ascends outside of the trendlines, a breakout is likely to occur. If the price ascends beyond the upper right side of the cup, then the pattern is confirmed, particularly if it is accompanied with a sharp increase in volume.

5 Gold Stocks Set to Double in 2010

2010-01-05T03:15:47Z

This Is Your Second Chance in the Gold Sector

Where will some of the biggest profits of the year come from?

Gold stocks. That's right, gold is the No. 1 sector to invest in for 2010.

Gold has risen for nine years straight -- not a single year of negative returns! Do you know of any other asset class that can make that claim? And this year will be no different.

So, while I'm sure there are plenty of you out there kicking yourself for missing the gold run in 2009, you can stop beating yourself up over it now. Because the profits to be had in this sector will blow last year away, especially if you invest in the following five gold stocks that I think will double (or better!) in 2010.

The No. 1 Sector to Invest in for 2010

2009-12-28T16:24:04Z

My last update on gold, which I wrote toward the end of November, was titled "Why You Do NOT Want to Invest in Gold Now." At the time, I was bullish on gold long-term, but issued this warning because all of my charts, indicators and oscillators showed gold and gold stocks at extremely overbought levels.

Gold did sell off in December, managing to work off all those frothy levels, but we have now entered the second leg of the mega rally in gold that will last for all of 2010 and into 2011.

Keep in mind that this is my longer-term view on the sector, as opposed to my typical short- to medium-term updates, which you have seen throughout 2009.

Your Second Chance in the Gold Sector
If you missed the gold run in 2009, then do yourself a favor and join the party in 2010. Don't miss this next run up, because the profits to be had in this sector next year will blow 2009 away.

As I've stated before, gold has risen for nine straight years without a single year of negative returns. (Do you know of another asset class that can make that claim?) And next year will be no different. And gold is not, I repeat NOT, a U.S. dollar story. Gold isn't rising in the dollar alone. It's hitting new highs in every currency around the globe. And not all the world's currencies experienced a complete freefall like the greenback.

The daily chart of gold below shows a symmetrical triangle breakout and parabolic run up that I brought to your attention in August.

A Stock That's Good as Gold ... Better, Actually

2009-12-07T16:13:31Z

A few weeks ago, as gold was making new all-time highs, I warned investors that it was not the opportune time to invest in gold stocks. I foresaw a correction, and I was right.

Gold sold off last week, in part due to better-than-expected unemployment data and the Fed saying it believed inflation will remain "subdued." And gold stocks followed the metal down.

Now, don't get me wrong. I am BULLISH on gold in the long term (and I think it's almost time to go long gold stocks again). But I didn't think you'd want to weather the pullback I saw coming.

That said, there was one gold stock that actually closed up on the week: Northern Dynasty Minerals Ltd. (NAK).

There's something to be said for a stock that hangs tough in a market as volatile as the gold sector and even outperforms the actual metal!

So while gold might see some more consolidation in the short term, NAK should hold up just fine.

In fact, it should do a lot more than just hold up, as it's about to break out of a bullish ascending triangle pattern.

An IPO You'll Be Thankful For This Holiday Season

2009-11-25T12:49:06Z

An IPO You'll Be Thankful For This Holiday Season

Lately, I've been talking a lot about the hot IPO market, and today I want to tell you about the next great IPO trade.

Talecris Biotherapeutics (TLCR), a biopharmaceutical company that specializes in plasma-derived protein therapies, went public on Sept. 30, raising a whopping $950 million.

In early November, the IPO received a slew of upgrades:

*Barclays Capital initiated "equal weight"
*Citigroup initiated a "buy"
*Wells Fargo initiated "outperform"
*JPMorgan initiated "overweight"
*Since it began trading, the stock's chart has formed a bullish cup-and-handle pattern.

The pattern includes an elongated U-shape followed by a short period of consolidation of one to two weeks in duration, which tends to be downtrending.

The pattern is similar in appearance to a coffee cup with a right-side handle, and indicates the potential for an uptrend.

If the price ascends outside of the trendlines, then it has the potential for breakout. If the price ascends beyond the upper right side of the cup, then the pattern is confirmed, particularly if it is accompanied by a sharp increase in volume.

Your Next IPO Winner Here

2009-11-09T16:20:18Z

Satellite imagery provider DigitalGlobe (DGI), which went public in mid-May, was the fifth U.S. IPO in 2009, and is part of a larger and very exciting trend in the IPO market.

With Morgan Stanley (MS) and JPMorgan (JPM) as lead managers on the deal, the company raised $279 million by offering 14.7 million shares at $19, which was above the proposed $16 to $18 range.

DigitalGlobe is a leading global provider of high-resolution satellite imagery for defense and commercial applications, such as Google Maps. According to the company, "With advanced collection sources and a comprehensive ImageLibrary containing more than 730 million square kilometers of imagery and imagery products, DigitalGlobe offers a range of online and offline products and services designed to enable clients to access and integrate imagery seamlessly into business operations and applications."

That's a nice little niche, but if you're familiar with me, you know that I like to trade best-of-breed IPOs with in-demand products or services, using technical analysis as my guide. (If you're not familiar with my IPO trading strategy, I suggest you take a look.)

Psychological Resistance And Technical Resistance

2009-10-23T21:46:15Z

Psychological resistance is a person's refusal to change their behavior directly or indirectly to a certain set of events triggered by a past circumstance in the market place that they refuse to discuss, remember, deal with or even think about. We call this resistance "pissed off supply". They sell simply because this is exactly where they bought weeks, months or years prior. For no other reason than that.

Technical resistance on the other hand is completely different because it's "rational behavior" done by far fewer market participants and in this update, I will explain why the 1,100 "psychological barrier" that I keep talking about will soon end as we get buyers around the 1070 level. In fact, that is the range of the market all week. Not a coincidence!

Video Update That Explains It All

The Right Way to Invest in IPOs

2009-10-22T23:56:04Z

The Right Way to Invest in IPOs

Trading IPOs is an exciting way to make spectacular gains. It's also a great way to lose money.

Buying an IPO at the offering price, and then selling the stock soon after it starts trading on the open market, is known as "flipping," and it is one of the riskiest ways to invest in IPOs. In fact, it is greatly discouraged by underwriters, especially if done by individual investors.

So I'm going to show you how you should be trading IPOs to maximize your profits and minimize your risk. And with the IPO comeback we're witnessing, now is the perfect time for you to hone this trading strategy.

What to Look for When Investing in IPOs

Before we get to my trading strategy, though, I want to cover a few basics.

IPO stands for initial public offering, and refers to a company issuing its shares to the public for the first time.

Investing in IPOs requires that you do some homework, such as identifying early on which patents, trademarks and key executives can help take a company to new heights.

Think of it this way: If you were transported into the future by pressing "CTRL, ALT, F" on your keyboard, would the products a particular company is selling still be around? The answer to this and similar questions will help you to distinguish between the fly-by-night companies and the ones that are not going away any time soon.

Also, when selecting IPOs to invest in, make sure you take sector performance and industry growth into account.

You Don't Have to be First to the Party ... and You Don't Want to be Last

Some of these newbie stocks skyrocket in the hours, days and weeks after they go public.

September's hot issue, Lihua International Inc. (LIWA), which went public on Sept. 4, doubled by the end of that month.

While these kind of quick gains are enticing, and, yes, a lucky few do make spectacular profits, this is a risky game for individual investors. Even if you do get in on a nice run immediately after a company goes public, how do you know when to bail out?

IPOs trade erratically, and because it has no trading history, there's no way to predict what the stock will do next.

LIWA hit its high of $10.69 in early October, and since then shares have given back about half their value. So, if you're not careful, you could end up being the one holding the bag when the party is over.

That's why I prefer to trade the secondary reaction versus the initial "out-of-the-gate" reaction. And that is where technical analysis comes in.

Waiting for the secondary move allows you the benefit of using the charts to guide you through the overall supply and demand picture. By trading the secondary reaction, you avoid whipsaw from buying high out of the gate, and then selling low out of fear.

Why You Want to Invest in IPOs NOW!

2009-10-20T01:46:58Z

I want to let you in on the next investing phenomenon: IPOs.

Sure, IPOs are nothing new, but I can tell you that we are looking at the hottest IPO market we have seen in years, and you'll be kicking yourself if you miss out on the chance for phenomenal profits in this arena.

One thing we have learned about bear markets, especially after the brutal one following the dot-com bubble crash of 2000, and the latest bear market brought on primarily by the subprime mortgage crisis, is that they have a silver lining in common. That is, when the dust settles, the companies that are able to go public are typically the cream of the crop.

After the virtual IPO drought associated with bear markets, it is the "best-of-breed" companies -- the ones with clean balance sheets, compelling growth stories, etc. -- that are able to come to market first. And this is exactly what we are witnessing right now, with a flood of quality mid-cap companies going public.

Soon we may see the smaller-cap companies go public, and that will tell us much more about the health and longevity of the current IPO market trend. You see, the smaller the company, the more nurturing it needs, because of the higher beta, which, in turn, means higher risk.

Wall Street, in my opinion, still has some challenges to overcome before it's full steam ahead with the higher-beta, more speculative companies. But the steady stream of mid-cap names going public is a good sign.

Make no mistake about it; now is the time you want to be investing in the best IPOs that come to market.

Just take a look at the chart below. The IPO Composite Index, a float-weighted index of IPO performance, has returned about 42% so far this year, compared with 18% for the S&P 500.

How to Double Your Money on 3 Top Biotech Stocks

2009-10-16T21:08:00Z

My Top 3 Biotech Stocks Report Next Week (I Actually Now Have A 4th Subscribers Already Positioned In That Play) And We Have No Position In AMGN!

But let's see how these suggested plays from 09/03/09 play out this week! Keep in mind all our options are 2010 expiration option plays. So just in case we have a market wiggle we gave ourself enough time to bounce back.

How to Double Your Money on 3 Top Biotech Stocks

Not too many sectors can claim that they made new all-time highs after the worst bear market that most of us can remember just a few short months after the broader market bottomed.

So, while many market pundits continue to call for a stock market correction as we enter what is historically the worst month of the year for the stock market, I offer three trades in the biotech sector.

The higher stocks in general go, the louder the predictions for disaster will be. But before we circle the months of September and October on our End of Days calendar, let's take a look at Celgene Corp. (CELG), Gilead Sciences (GILD) and Amgen (AMGN) as biotech plays that should continue the move the Amex Biotechnology Index (BTK).

First, let's review the BTK. As you can see from the chart below, it has broken out from an ascending triangle to new all-time highs.

An IPO You Can't Afford to Pass Up

2009-10-15T09:15:58Z

It's flu season, and the publicity surrounding the H1N1 (swine) flu has people more nervous than usual this time of year. And managers are worried about the impact this could have on employees and their businesses.

Sick workers can disrupt business operations and result in lost work days and, thus, lower productivity. This is especially troubling given the tough economic times and the already reduced workforce at most companies due to layoffs.

Enter LogMeIn Inc. (LOGM). This company provides on-demand, remote-connectivity solutions to businesses and consumers -- in fact, it connects more than 70 million devices worldwide.

Users rely on LogMeIn solutions for remote connectivity and support solutions. And the company also offers on-demand remote access software to your desktop from your iPhone. Pretty cool stuff!

I'm not the only one interested in this recent IPO. LOGM is getting a nice round of applause from the folks following the venture capital world, and the stock recently received five upgrades:

"Overweight" by JPMorgan
"Overweight" by Barclays Capital
"Overweight" by Thomas Weisel
"Overweight" by Piper Jaffray
"Buy" by Canaccord Adams

LOGM's IPO Story
LogMeIn Inc. went public on June 30, at $16 a share, and the stock immediately shot up to nearly $21. That's a pretty nice move, but when it comes to trading IPOs, the approach I like best is trading the secondary reaction versus the initial "out-of-the-gate" reaction. By trading the secondary reaction, you prevent whipsaw from buying high out of the gate, and then selling low out of fear.

Also, it is typically the secondary move that is the meatiest part of the move, and you also have the benefit of using the charts to guide you through the overall supply and demand picture. Monitoring the supply and demand via the charts will assure that you don't end up holding the bag when the party is over, because, as we all know, one day the punch bowl will run dry.

Triple Your Money in These Trades

2009-10-12T09:18:30Z

Shipping Stocks Ready to Break Out

As I mentioned last time, the Baltic Dry Index (BDI) tracks worldwide international shipping prices of various dry bulk cargoes, and is a gauge of global supply and demand for these commodities. The steady rise in the BDI we've witnessed lately is seen by many as a key indicator of an increasing world commodity trade.

More importantly to us, though, the BDI is considered to be a sort of industry thermometer, and a leading indicator as to the behavior of stocks in this sector.

After experiencing a decline, the BDI is now going approaching the highs of two months ago, and I believe we are about to witness a parabolic rally

The BDI has seen some milestone developments in the past two weeks. It is up almost 25% since the time I wrote the last article, and it has risen the past 11 trading days in a row. And the index is attempting to break out of a bullish continuation falling wedge pattern.

Like I said, the BDI is a great leading indicator for shipping stocks. With the index poised to break out, we could also see explosive moves in individual stocks.

The stocks in this sector now have the momentum to make the wild 10% intraday moves up like they did earlier in the year when the BDI showed the same chart pattern that it is displaying now.