The iPhone continues to lose ground to the gaggle of Google powered smartphones running the Android OS. And if Apple doesn???t do something fast, it risks losing its perch amongst smart phone manufacturers.

A Sept 23 survey conducted by ChangeWave research shows that Google (NASDAQ: GOOG) and its Android smartphone operating system is now neck-and-neck with Apple (NASDAQ: AAPL) and its iPhone OS amongst future buyers. Specifically, 38% of some 4,000 consumers inside the survey said they would prefer to buy a phone running the Apple iOS within the next 90 days and 37% of respondents had been eyeing an Android-powered phone. That???s a big shift from three months ago, when 50% of future buyers had been favoring the just-released iPhone and 30% had been anticipating an Android smartphone.

The slowdown in enthusiasm amongst consumers seems to be tied to two things ?

The first day of the fourth quarter ended with modest gains regardless of some excellent economic numbers.?

Personal income for August increased 0.5%, 0.2% better than expected, for the biggest monthly income of the year. Spending also beat forecasts, up 0.4% versus an expected 0.3%, and core personal consumption increased 0.1%, which matched expectations.

The University of Michigan consumer sentiment report increased to 68.two versus an expected 67. And finally, construction spending increased 0.4% versus an expected decrease of 0.5%.

Only the ISM September manufacturing index failed to meet expectations. It fell to 54.4 versus economists’ estimates of 54.8.

Stocks fell on the ISM report, but late buying managed to salvage what could have been a loss for the day. The late rally included economic stocks, which ended up 1.1%. The energy sector rose 1.3% due to powerful buying of crude futures.

The U.S. dollar hit a six-month low against the euro on Friday. The euro rose to $1.3784 from $1.3633 on Thursday. U.S. Treasurys rose with the benchmark 10-year note yielding two.519%.

At the close, the Dow Jones Industrial Average rose 42 points to 10,830, the S&P 500 was up 5 points to 1,146, and the Nasdaq gained two points at two,371.?

The NYSE traded just under 1.1 billion shares with advancers ahead of decliners by two.2-to-1. The Nasdaq crossed 533 million shares with advancers ahead by 1.4-to-1.

For the week, the Dow fell 0.3%, the S&P 500 was off 0.2%, and the Nasdaq fell 0.4%.

On Friday, crude oil for delivery in November rose $1.61 to $81.58 a barrel. The Energy Select Sector SPDR (NYSE: XLE) rose 75 cents to close at $56.81.?

Gold jumped to another record high, closing at $1,316.10 an ounce, up $8.30. The PHLX Gold/Silver Sector Index (NASDAQ: XAU) rose to 200.26, up three.three points.

What the Markets Are Saying

Many leading technicians and marketplace specialists see a breakout and rally for stocks more than the next three to six months as they again rose on Friday. The next target for the Dow is the psychologically important 11,000 line. For the S&P 500, the next line is at 1,157 to 1,171, which represents the bounce-back high in May following the flash crash.?

The Dow Jones Transportation Average did manage to score a new high on Thursday, which negates a possible non-confirmation since now both the Dow Industrials and the Transports have made new highs on the current run from the September lows.

The problem is that the intraday high made by the Transports resulted in a lower close. And since the index made a new intraday high but closed lower, it also produced a reversal day. Volume was greater, as well, and since that is part of the equation for our Collins-Bollinger Reversal (CBR) proprietary indicator, it flashed a sell signal. And volume again was somewhat greater on the two down days than the recent up days, and that too is technically a negative.?

But the last two weeks have accomplished something for the bulls. They have managed to hold above the support at S&P 500 1,130, and also have generally been able to consistently register breadth numbers in excess of 2-to-1 buyers more than sellers even on low-volume days.

In April, I discussed the sell in May and go away strategy that, along with our other indicators, led me to a turn from a cautious bull to a bear. The sell in May strategy, which is actually an indicator, has worked surprisingly well more than the years. Stock holders who sell in May, put the proceeds in cash, and come back to the marketplace six months later do well.?

In fact, since 1950, the Dow has produced an average acquire of 7.4% from November through April, but just 0.4% from May through October. And the S&P 500 November through April has beaten the May to October period 71% of the time. The indicator is also sometimes called the Halloween indicator since most adherents put money back to function just following the end of October.

With just three-plus weeks to go and an election coming up, we should be attuned to the possibility of a change in trend. But, for now, it is greatest to leave the goblins of Halloween as an afterthought and concentrate on what is and not what may be.?

See the Trade of the Day for a top gold stock to buy.

Today’s Trading Landscape

There are no significant earnings to be reported today.

Economic reports due: factory orders (the consensus expects -0.3%) and pending home sales.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

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With the Q3 earnings set to begin this week and a crucial jobs report due, investors’ fear of failure on both fronts led them to sell stocks and run to the traditional safe havens of the U.S. dollar and Treasurys yesterday. Alcoa Inc. (NYSE: AA), which is traditionally the first of the Dow 30 stocks to report earnings, fell two.5%. AA will report earnings on Thursday.

Financial stocks had been hard hit as a result of a Justice Department lawsuit against American Express Firm (NYSE: AXP), with the sector falling 6.5%. The government accused AXP of imposing rules on merchants that are anti-competitive. Both Visa Inc. (NYSE: V) and MasterCard Incorporated (NYSE: MA) closed fractionally lower since they had agreed to settle the government’s claims.

Tech stocks had been amongst the worst performers. Microsoft Corporation (NASDAQ: MSFT) led the charge lower, off 1.9%, following a rating cut in by Goldman Sachs Group, Inc. (NYSE: GS) from buy to neutral, and Intel Corporation (NASDAQ: INTC) fell two.3%. As a result of the two tech giants taking big hits, the technology-laden Nasdaq fell 1.1%.

Mergers and acquisitions had been inside the news on Monday. Sanofi-Aventis SA (NYSE: SNY) offered to acquire Genzyme Corporation (NASDAQ: GENZ) for $69, Microsemi Corporation (NASDAQ: MSCC) offered Actel Corporation (NASDAQ: ACTL) $20.88 per share, and Sara Lee Corp. (NYSE: SLE) rejected an offer from KKR Monetary Holdings LLC (NYSE: KKR).

Factory orders for August fell 0.5% versus an expected decline of 0.4%. And pending home sales increased by 4.3% versus an estimate of 1%.

The 10-year Treasury note’s yield fell to two.481%, and the two-year fell to a record low of 0.407%. The greenback rose against both the euro and the yen, and was up 0.5% versus a basket of six currencies. The euro fell to $1.3689 versus $1.3784 on Friday.

At the close, the Dow Jones Industrial Average was off 78 points to 10,751, the S&P 500 fell 9 points to 1,137, and the Nasdaq dropped 26 points to two,345.?

The NYSE traded 943 million shares, and the Nasdaq exchanged 521 million shares. On both exchanges decliners had been ahead by advancers by two.75-to-1.

Crude oil for November delivery fell 11 cents to $81.47 a barrel, and the Energy Select Sector SPDR (NYSE: XLE) fell 71 cents to $56.10.?

December gold fell $1 to settle at $1,316.80 an ounce. The PHLX Gold/Silver Sector Index (NASDAQ: XAU) fell three.49 points, closing at 196.77.

What the Markets Are Saying

During the last two weeks, the S&P 500 has established a tight trading range with support at 1,131 and resistance at 1,150. On Thursday, the index penetrated 1,150, but then speedily sold off on a daily reversal. This was the second reversal within this tight range and puts pressure on the bulls since a break within the support line (1,130) could turn into a very quick fall to the 200-day moving average, now at 1,117.

The Dow’s trading range is similar with support at 10,700 and resistance at 10,890. But the Nasdaq’s range is a bit more ragged with support at around two,335 and resistance at two,385.

Since the Nasdaq has led the marketplace up since the August bottom, it could likely lead the marketplace down. So we should focus on the Nasdaq for clues as to which direction the general trend might take. Yesterday, while the Dow was off 0.72% and the S&P 500 fell 0.8%, the Nasdaq was hit for a 1.11% loss not a good sign for the bulls.

On Friday, I opined that the sell in May and go away indicator expires on or about Halloween, thus it is sometimes called the Halloween indicator. As a result, some of our readers interpreted this to mean that I am turning more bullish.

As I have often said, I am neither bullish nor bearish, just pragmatic. By watching our indicators, I try to read the marketplace for what it is telling us, so I don’t predict, but rather respond to the market’s signals. Sometimes I’m led astray but, most often, if I wait long enough, the marketplace finally comes through with a clear signal.

Patience is a key to investment success, and part of that process is to be aware of what happened yesterday, but also what might occur within the future. The expiration of the Halloween indicator is a what might occur inside the future bullish indicator. And there is another event the election that could have a major impact on stock prices, and that too could be bullish.

With both events in mind, we should continue to monitor our internal and sentiment indicators, and if by the end of October, they have fallen to an oversold status, we might consider a more aggressive program on the buy side.

In investments, as well as in life, is it finest to exercise patience, avoid predictions and always be aware of your changing surroundings.?

With that in mind, consider the powerful performance of Ford Motor Firm (NYSE: F) on a pretty lousy day for the marketplace. And it just so happens that Ford is our Trade of the Day.

Today’s Trading Landscape

Earnings to be reported before the opening include: Wolverine.

Earnings to be reported soon after the close include: Diamond Foods, Team and YUM! Brands.

Economic reports due: ICSC-Goldman Sachs store sales, Redbook and ISM non-manufacturing index (the consensus expects 52).

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

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Both the Dow Jones Industrial Average and the S&P 500 set a new five-month high yesterday, as the U.S. dollar fell sharply on hopes of further quantitative easing. The optimism was encouraged by the Japanese central bank’s cut of its key interest rate to zero and its plans to purchase bonds and other asset-backed securities in order to further stimulate its economy.

All 10 S&P sectors had gains yesterday, led by the materials, industrials and economic sectors. And the technology-laden Nasdaq rose two.4% to its highest level since May 12.

The trigger for yesterday’s run-up was a positive September ISM number. The index came in at 53.two versus an expected 51.8. The report is comprised of service-sector companies, but it also includes construction and public administration, so it is considered representative of a broad base of the economy.?

The other major push for stocks was Australia’s decision to leave interest rates at current levels rather than raising them as most economists had expected.

Several favorable corporate reports, led by Walgreen Firm (NYSE: WAG), may have also contributed to buyers’ optimism. The big retail chain said that sales in September had been up 0.4% versus an expected decline, and the shares gained two.6%.

Treasurys remained in demand with the 10-year note’s yield falling to two.48%. The dollar fell against the euro, which closed at $1.383, up from $1.3689.

At the close, the Dow Jones Industrial Average rose 193 points to 10,945, the S&P 500 gained 24 points at 1,161, and the Nasdaq gained 55 points to two,400.?

The NYSE traded 1.two billion shares, and the Nasdaq traded 624 million shares, both with advancers more than decliners by 4.35-to-1.

November delivery crude oil rose $1.56 to $84.84 a barrel, which is the highest level for crude oil since May three, and was spurred on by weakness inside the U.S. dollar. The Energy Select Sector SPDR (NYSE: XLE) rose $1.32 to close at $57.42.?

October gold rose $12.50 to $1,338.90 for the eighth acquire in 10 sessions. The PHLX Gold/Silver Sector Index (NASDAQ: XAU) rose 6.1 points to close at 202.88.

What the Markets Are Saying

The bull has spoken. Yesterday, the major indices settled the issue of the near and intermediate direction with a resounding break more than resistance that has held back buyers for more than five months. And even though volume, at 1.two billion shares on the NYSE, is not yet at classically high levels, it is good enough to confirm the breakout since breadth came in at more than 4-to-1.

This puts the marketplace back on the offensive with the next resistance coming at the post-flash-crash rebound of May 13. For the S&P that number is 1,174, for the Dow it is 10,953, and for the Nasdaq the number is two,434.?

The break yesterday also confirms that the S&P 500′s inverse head-and-shoulders formation, last discussed here on Sept. 27, has met the criteria needed to confirm a genuine break. The neckline of the formation at 1,129 was penetrated on Sept. 20, but required a 3% break to confirm it. That number, 1,163, was met yesterday, and gives a target of around 1,230. This, of course, would be a new high and, if it makes it, would confirm that the bull marketplace has resumed. The number 1,230 is curiously coincidental in that the Fibonacci number of 61.8% retracement of the bear marketplace is also at 1,230, according to S&P’s Mark Arbeter.

Finally, the stochastic and momentum indicators also flashed a buy signal yesterday. And the 50-day moving average of the Dow Industrials crossed up and through its 200-day for a gold cross buy.

Now, before our young traders jump into this marketplace with both feet, I must caution that all internal indicators are still overbought, so it would not be unusual for stocks to surge for a day or so and then have a sharp round of profit-taking. If you trade, use common sense and stop-loss orders. And don’t overextend yourself. Buy only on support levels and take profits on resistance zones.

If the bull marketplace has resumed, then there will be plenty of time to make money just don’t lose it now in a rush of bullish over-enthusiasm.

For one sound way to make money, see the Trade of the Day.

Today’s Trading Landscape

Earnings to be reported before the opening include: Acuity Brands, Constellation Brands, Costco, Helen of Troy, Monsanto, Robbins & Myers and RPM.

Earnings to be reported right after the close include: Immucor, Marriott and Ruby Tuesday.

Economic reports due: Bank Reserve Settlement, MBA purchase applications, Challenger Job-Cut Report, ADP National Employment Report, EIA petroleum status report and Treasury STRIPS.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

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Stocks traded within a narrow band yesterday, as investors digested the broad gains of Tuesday. But blue-chip buyers drove the Dow Industrials to another five-month high as 20 of the Dow’s 30 stocks gained ground.

However, the gains had been not easily achieved, as traders had been quick to take profits. Volume continued to be light with most investors staying away from the markets in advance of Q3 earnings. In addition, a report yesterday showed that private-sector jobs inside the United States unexpectedly fell last month by 39,000. The ADP Employment Change report had been expected to show an increase of 10,000 payrolls.

Some of the energy giants had big gains with Exxon Mobil Corporation (NYSE: XOM) up 1.07%, Chevron Corporation (NYSE: CVX) gaining 0.6%, and Massey Energy Business (NYSE: MEE) rising 6.09%.

Energy stocks rose on a weaker U.S. dollar, but another blue chip, General Electric Firm (NYSE: GE), gained two.4% right after it said that it may not increase its $1.two billion bid for Wellstream Holdings right after that organization turned down an offer from the big conglomerate.

American Superconductor Corporation (NASDAQ: AMSC) jumped 5.8% following it said it received the world’s largest order for its high-temperature superconductor wire, to be used in creating power cables for utilities. And Verizon Communications Inc. (NYSE: VZ) was reported to be offering the new Apple Inc. (NASDAQ: AAPL) iPhone early next year. VZ rose 0.84% and AAPL was up 0.09%.

The dollar continued lower versus a number of other currencies. And U.S. Treasurys had been so powerful that virtually every maturity set new record lows.

At the close, the Dow Jones Industrial Average was up 23 points to 10,968, the S&P 500 fell a point to 1,160, and the Nasdaq lost 19 points at two,380.

The NYSE traded 979 million shares with decliners slightly ahead of advancers. The Nasdaq crossed 574 million shares, but decliners led by 1.4-to-1.

Crude oil for November delivery rose 41 cents to $83.23 a barrel, which is another five-month high following a report that showed a drop in U.S. fuel supplies. The Energy Select Sector SPDR (NYSE: XLE) gained 51 cents, closing at $57.93.

December gold rose $7.40 to $1,347.70 an ounce on concerns more than destabilizing currencies resulting from a rush by the world’s central banks for more monetary easing. The PHLX Gold/Silver Sector Index (NASDAQ: XAU) rose three.91? points to 206.79.

What the Markets Are Saying

The Dow managed to register a acquire yesterday with two-thirds of its stocks moving ahead regardless of a lack of follow-through inside the broad marketplace. Why? Well, it’s hard to fight the Fed expansion policy, so when the big dealers see a spread advantage between quality common stocks and bonds, you can bet that they will move in that direction. Thus, they jumped into the blue-chip, dividend-weighted stocks of the Dow 30 while the other indices had a minus day.

And so, what is, is, and the most effective course for investors is to jump aboard what the big guys are buying and enjoy the ride. There is another reason to hop onto the chippies and that is their price stability versus the greater volatility, lower quality, high price/earnings ratio stocks.

And since we’re talking about volatility I’ll caution once again that jumping aboard a train that’s almost reached its interim destination while paying full fare is not a very bright idea. Even though the marketplace has broken from the summer trading range, that doesn’t mean that it will make an immediate and huge move greater. If we are entering the second phase of a three-phase bull marketplace, this could be a tedious run with many stops and reversals in between.

Investors should study not only the charts of the major indices, and highlight the support and resistance zones, but they should do the same for each stock on their buy list. This is especially true of traders who are looking for a quick acquire. Buying on support lines is buying low and selling on resistance lines is selling high. Many who are new to the game get caught up inside the emotion of the moment and in spite of my warnings do exactly the opposite. They buy high, forget to place stop-loss orders, and find themselves with a steep loss while others are cashing in their profits and driving their new holding lower.

Here is a summary of the closest support and resistance lines for the major indices:

Dow: 10,700 to 10,953S&P 500: 1,130 to 1,174Nasdaq: two,300 to two,425

Studying them, as well as the next zones of resistance and support, will prepare you for a stop-and-go marketplace. There will be many stops and a few reversals before this local train reaches a station where we can get aboard the express that represents the third and final phase of the bull marketplace.

Get the name of one stock you should buy right now.

Today’s Trading Landscape

Earnings to be reported before the opening include: International Speedway and PepsiCo.

Earnings to be reported right after the close include: Alcoa, AngioDynamics, Micron and Nu Horizons Electronic.

Economic reports due: chain store sales, Monster Employment Index, jobless claims (the consensus expects 450,000), EIA natural gas report, consumer credit (the consensus expects -$4 billion), Fed balance sheet and money supply.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

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Investors are nervous following the break to five-month highs that could lead to profit-taking, and they are concerned that Q3 earnings will fall short of the Street’s optimistic forecasts.

But stocks started greater yesterday, following a decision by the Bank of England to leave interest rates at current levels. And a pre-opening report that initial jobless claims for the week of Oct. two had been slightly less than expected was greeted warmly, in spite of a continuing claims numbers that was slightly more than expected.

PepsiCo, Inc. (NYSE: PEP) fell 3% following its report of a 12% rise in Q3 profits, but it cut the top end of its annual forecast.

Retailers had been powerful throughout the day following a better-than-expected retail sales report. American Eagle Outfitters (NYSE: AEO), Abercrombie & Fitch Co. (NYSE: ANF) and Limited Brands, Inc. (NYSE: LTD) made gains and had the most effective results. Of the 25 retailers covered by Briefing.com, 19 had better-than-expected results.

Rumors also moved stocks yesterday. Adobe Systems Incorporated (NASDAQ: ADBE) jumped almost three points soon after the New York Times reported that Microsoft Corporation (NASDAQ: MSFT) CEO Steve Ballmer was at Adobe’s headquarters for a secret meeting. No announcement was made following the meeting.

The U.S. dollar fell in early trading, but made back most of its gains inside the afternoon. The euro closed at $1.3912, down from $1.3936 on Wednesday. And the 10-year Treasury note rose 1/32, bringing its yield to two.396%.

At the close, the Dow Jones Industrial Average fell 19 points to 10,949, the S&P 500 was off two points at 1,158, and the Nasdaq gained three points at two,384.

The NYSE traded 915 million shares with decliners just slightly ahead of advancers. The Nasdaq crossed 511 million shares with decliners ahead by 1.25-to-1.

Crude oil for November delivery fell $1.56 to $81.67 a barrel, and the Energy Select Sector SPDR (NYSE: XLE) lost 29 cents, closing at $57.64.

December gold fell $12.70 to $1,335 an ounce. The PHLX Gold/Silver Sector Index (NASDAQ: XAU) closed at 201.30, off 5.49 points.

What the Markets Are Saying

Apparently some of our readers missed Monday’s Daily Marketplace Outlook and had been somewhat confused by what seemed to be a turn in opinion from bearish to bullish on Wednesday’s report. You may still go back and retrieve them, but to summarize I said that two positives had occurred last week:

1. The rise that broke the top of the summer trading range of S&P 1,040 to 1,130.

2. The success of the Dow Transports to finally make a new five-month high, which confirmed the high made by the Dow Industrials.

These moves gave the bullish cause a boost and set the next objectives for the major indices at Dow 10,700 to 10,953, S&P 1,130 to 1,174, and Nasdaq two,300 to two,425.

I also pointed out that the sell in May and go away strategy I discussed in April is sometimes called the Halloween indicator because it expires in October. And studies indicate that investors who buy the S&P 500 on Nov. 1 and hold through April produced an average acquire of 7.4% compared to just 0.4% for those who hold from May through October.

Furthermore, on Wednesday, I said, The break yesterday also confirms that the S&P 500??s inverse head-and-shoulders formation, last discussed here on Sept. 27, has met the criteria needed to confirm a genuine break. The neckline of the formation at 1,129 was penetrated on Sept. 20, but required a 3% break to confirm it. That number, 1,163, was met yesterday, and gives a target of around 1,230. This, of course, would be a new high and, if it makes it, would confirm that the bull marketplace has resumed. The number 1,230 is curiously coincidental in that the Fibonacci number of 61.8% retracement of the bear marketplace is also at 1,230, according to S&P’s Mark Arbeter.

If you did not read these Daily Marketplace Outlooks, I can understand your confusion when yesterday I noted that regardless of what we might think should happen it is only what is that counts. And the what is is a blue-chip buying spree by major institutions, and also the better-quality technology stocks.

This, then, brings us up-to-date. As for changes in outlook, this column will often state my opinion on the direction of the marketplace, which results from the analysis of charts, indicators, money flows and other data. Here is the current read: The near-term trend is up, the intermediate-term trend is up, and the long-term trend is still down. If this is confusing, please review the Dow Theory, which we discussed this summer.

Finally, bands of support and resistance, like those I discussed above, are important. I give them to you so that you many manage your trading scheme. If you are a trader, you should buy on support and sell on resistance. All effective traders know that they are in a game of probabilities and that the chances are that the zones will hold. But they also know that eventually all zones will be broken. Therefore, traders must protect against being on the wrong side of the marketplace when a zone breaks against them by using stop-loss orders.

If some of our readers are still confused, I would be pleased to address your individual questions as to strategy. I cannot, however, give individual investment advice and portfolio analysis.

There’s one more thing I’d like to add today, and it applies to just a few of the thousands who read the Daily Marketplace Outlook. We think it is important to provide a means for you to comment and have a discussion with other readers. But it has been brought to my attention that a few have been discouraging the many from an open and intellectual exchange. Let’s stop with the whining, carping and foul language. If you don’t have the emotional fortitude or economic means to trade and invest wisely, then don’t. As President Harry Truman said, If you can’t stand the heat, get out of the kitchen.

Today’s Trading Landscape

There are no significant earnings to be reported today.

Economic reports due: employment situation (the consensus expects -8,000 for non-farm payrolls and 9.7% unemployment rate), and wholesale trade.

Economists and analysts continue to talk about the economy making the slowest recovery since World War II, yet stocks continue to rise. On Friday, gains had been made inside the face of a jobs report that showed a loss of 94,000 jobs in September versus expectations of no change.

The market’s reaction makes sense in a perverse way since every negative economic report is viewed as more pressure on the Fed to implement QE2, the second round of quantitative easing. And talk now is not only about the U.S. Federal Reserve, but also of the possibility of implementation of a similar plan by the Bank of England and Japan.

Alcoa Inc. (NYSE: AA) started the Q3 earnings season with a bang, announcing that revenues climbed by a greater-than-expected 14.6%, and the stock jumped 5.7%. Earnings per share had been 9 cents versus a consensus estimate of 5 cents, and management increased upside guidance.

Blue chips continued to perform well: Caterpillar Inc. (NYSE: CAT) rose two.1%, The Walt Disney Organization (NYSE: DIS) gained 1.8%, and The Procter & Gamble Business (NYSE: PG) gained 1.7%.

But small-cap stocks continue to outperform all others. On Friday, the Russell 2000 Index rose 1.4% to its highest close since May 17. And the S&P SmallCap 600 Index rose 1.3%, led by the energy and material sectors.

Treasurys had been powerful on the disappointing jobs report. The yields on the two- and five-year notes fell to record lows, and the 10-year note’s yield fell to two.332%, which is the lowest yield since January 2009.

The U.S. dollar fell to a 15-year low versus the yen, and the euro closed at $1.3929, up from $1.3912 on Thursday.

At the close, the Dow Jones Industrial Average was up 58 points to 11,006, the S&P 500 gained 7 points at 1,165, and the Nasdaq rose 18 points at two,402. The NYSE traded 945 million shares with advancers more than decliners by almost 3-to-1. The Nasdaq traded 522 million shares, and advancers there had been ahead by two.5-to-1. For the week, the Dow gained 1.6%, the S&P 500 rose 1.6%, and the Nasdaq gained 1.3%.

Crude Oil for delivery in November rose 99 cents to $82.66 a barrel, and the Energy Select Sector SPDR (NYSE: XLE) closed at $58.36, up 72 cents. December Gold rose $10.30 to settle at $1,335.40 an ounce. The PHLX Gold/Silver Sector Index (NASDAQ: XAU) rose three.52 points to 204.81.

What the Markets Are Saying

On Friday, the news couldn’t have been worse as jobs numbers again missed estimates, and yet the marketplace rallied. In reading comments from our readers, I was reminded of the marketplace axiom, Don’t fight the tape, which had been a favorite expression of the person who hired me into the investment world as a trainee in 1966. What it means is that in spite of your personal feelings about the value of stocks, you should follow the trend, and even if the marketplace is going against all other logical information it is the trend that is most important.

I’ve occasionally reminded our readers of a variation on that theme, saying that when bad news is treated well, we are facing a very powerful marketplace. And, of course, the opposite is true, i.e., when good news is treated badly you had better exit your stock positions. Other similar expressions are Don’t step in front of a moving train and Stocks that make new highs will continue to make new highs.

These expressions, like support and resistance lines, trendlines, moving averages and virtually every tool inside the technician’s toolbox are subject to exhaustion. Obviously stocks don’t move up against bad news forever, nor do bull and bear markets last forever. That is why the wise trader will not only review his positions frequently to determine if they are keeping pace with the marketplace, but will enter trailing stop-loss orders to protect against sudden reversals.

Nevertheless, losses as well as gains are a part of investing. I know that even though I may exhaustively research the technical trading aspects of every trade and recommendation, some will fail. That’s part of the business and it is no one’s fault there are simply just too many moving parts to keep track of everything, and unexpected news often smacks you before you are out of the gate. Blaming yourself or others achieves little. When losses occur, the wise investor casts no blame, seeks to know the reason for the loss, and if necessary, adjusts the strategy, puts it inside the past, and moves on.

For a dividend stock you should consider buying, see the Trade of the Day.

Today’s Trading Landscape

Earnings to be reported following the close: Global Payment.

There are no significant economic reports due today.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

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Stocks traded in a narrow band yesterday, with little news either corporate or economic to influence trading. The only feature during the entire day that caught investors’ attention was a late afternoon sell-off, and it was totally reversed by the close.

Technology stocks had been the leading group with Apple Inc. (NASDAQ: AAPL) and International Business Machines Corp. (NYSE: IBM) making intraday highs.

And energy stocks had been in demand, led by Chesapeake Energy Corporation (NYSE: CHK), which gained 1.1% as CNOOC Limited (NYSE: CEO) agreed to buy a stake in Chesapeake’s oil shale and gas reserves. This marks the first time that a Chinese state-run organization has invested in onshore energy within the United States, according to the Wall Street Journal.

Trading was light in all markets as a result of the Columbus Day holiday. The U.S. Treasury marketplace and bond desks had been closed.

At the close of stock trading, the Dow Jones Industrial Average was up 4 at 11,010, the S&P 500 was unchanged at 1,165, as the Nasdaq was unchanged at two,402. The NYSE traded 627 million shares with advancers more than decliners by 1.2-to-1. And the Nasdaq crossed 393 million shares with decliners slightly ahead of advancers.

November crude oil fell 45 cents to $82.21 a barrel, and the Energy Select Sector SPDR (NYSE: XLE) rose 16 cents to $58.25. December gold gained $9.10 to settle at $1,354.40 an ounce. The PHLX Gold/Silver Sector Index (NASDAQ: XAU) gained 0.12 points to 204.94.

What the Markets Are Saying

Even though the markets started the week with a flat day, a 50-point sell-off that started at about two:25 p.m. was completely erased by buyers within the final minutes of trading. The rally went almost unnoticed by the press but illustrates that there are buyers waiting within the wings ready to leap on any weakness.

I am constantly preaching the virtues of a disciplined approach to investing and trading (there is a difference), so the question of the management of stop losses is asked often.

A recent publication of quotes from famous investors addressed this issue with one from Bernard Baruch. In addition to being an adviser to several presidents, he started the Council on Foreign Relations along with the Rockefellers, Morgans, etc., and he was known as an ardent investor and speculator. Before World War I he was said to be worth more than a million dollars, and by the end of the war, it was said that he was worth more than $200 million.?

He said that he would research a stock, buy it, and then each time the stock rose 10% from his purchase price, he would buy an additional amount equal to his first purchase. If the stock began declining he would sell everything he had bought when the drop equaled 10% of its top price.

And Jesse Livermore, the legendary speculator, is primarily known not for the enormous wealth that he accumulated inside the 1920s, but for rapidly changing from bull to bear in late 1929 not only saving his fortune, but being flexible enough to go to the short side of the marketplace and add to that fortune. Livermore had three basic rules of investment:

1. Sensitivity to mob psychology.

2. Willingness to take a loss.

3. Liquidity, meaning that stock positions should not be taken that cannot be sold in 15 minutes at the marketplace.

Finally, there is Addison Cammack, a stockbroker from Kentucky who swore by the 2-point stop-loss rule. If you’re wrong, he said, you might as well be wrong by two points as 10. He followed this method successfully and was one of the few bears to make a fortune on Wall Street and keep it.

Thanks to Jeffrey D. Staut of Raymond James for the quotes: Jeffrey goes on to say, Interestingly, all of these disciplines have one thing in common. They all adhere to Benjamin Graham’s mantra, ‘The essence of portfolio management is the management of RISKS, not the management of RETURNS. Well-managed portfolios start with this precept.’

While most marketplace historians think of Graham as an advocate of holding stocks and never selling, he actually supported technical analysis and its ability to cut losses. And Staut points out correctly that many investors who hung in there during the bear marketplace of October 2007 to March 2009 took a loss of more than 50%. Had they ‘listened’ to the cautionary signals that the marketplace was flashing in November 2007, and at least hedged their positions, the loss would have been less than 10%.

And they could have saved more than 45% if they had been flexible enough to act on our March 7, 2008, Daily Marketplace Outlook when the Dow was at 12,040, which said, The overall chart picture is a breakdown from triple- to quad-bottoms with some charts breaking lower from a triangle. But the exact chart pattern is unimportant. What is important is that new closing lows had been established. And so, for the few remaining doubters, the bear marketplace is confirmed.

Almost without exception, the successful investor follows a disciplined approach that includes a strategy to keep losses small, which protects him against disaster. And the application of an inflexible stop-loss strategy is the most important tool available to keep losses small.??

And finally, this bit of advice from Will Rogers: Don’t gamble, take all your savings and buy some good stocks. If they go up, sell them; if they don’t go up, don’t buy them!

For one good stock to buy, see the Trade of the Day.

Today’s Trading Landscape

Earnings to be reported before the opening include: Fastenal.

Earnings to be reported soon after the close include: ADTRAN, CSX, EXFO, Intel and Linear Technology.

Economic reports due: NFIB Small Business Optimism Index, ICSC-Goldman Sachs store sales, Redbook and FOMC minutes.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

John Lansing’s Chart of the Day Watch as chart wizard John Lansing details chart patterns on specific stocks set to deliver quick profits. It’s sent right to your inbox each trading day FREE!

Stocks languished yesterday until the release of the minutes from the September FOMC meeting. Then came the announcement that Mr. Bernanke and his governors had discussed buying more Treasurys and new inflationary strategies if prices remained too low and unemployment too high. Following a pause for analysts to decipher the Fed-speak, stocks rebounded and closed with slight gains.

The Fed announcement held few surprises since the governors have been open about the need to have a QE2″ stimulus. But the Fed’s staff cut projections for economic growth in 2011, and said they expect the inflation rate to fall further. Expectations are that the Fed will decide on additional stimulus measures at its November meeting.

The U.S. dollar was up along with Treasurys just prior to the Fed’s announcement, and both fell immediately right after. But Treasury yields rose with the 10-year going to two.419%, and the dollar ended the day with a 0.1% loss right after being up 0.6% in overnight trading.

Financial stocks made the biggest gains, closing with a 1.3% acquire. JPMorgan Chase & Co. (NYSE: JPM) rose 1.69% ahead of earnings today.?

And technology stocks had been up 0.7%, with Intel Corporation (NASDAQ: INTC) gaining 1.07% ahead of its earnings soon after the close yesterday. Intel reported that Q3 profits climbed 59% to 52 cents a share versus analysts’ expectations of 50 cents. And revenue topped $11.1 billion versus an expected $11 billion.

Pfizer Inc. (NYSE: PFE) said that it will acquire King Pharmaceuticals, Inc. (NYSE: KG) for $14.25 a share.?

At the close, the Dow Jones Industrial Average rose 10 points to 11,020, the S&P 500 gained 4 points to 1,168, and the Nasdaq rose 16 points at two,418. The NYSE traded 922 million shares, and the Nasdaq exchanged 518 million shares. On both exchanges advancers exceeded decliners by about 1.3-to-1.

Crude oil for November delivery fell 54 cents to $81.67 a barrel, and the Energy Select Sector SPDR (NYSE: XLE) fell 9 cents, closing at $58.43. December gold fell $7.70 to settle at $1,346.70 an ounce. The PHLX Gold/Silver Sector Index (NASDQ: XAU) fell 0.76 points, closing at 204.18.

What the Markets Are Saying

Stop-loss orders for options seem to be on the minds of our readers with most of them interested in an effective stop-loss technique. Let’s start off by saying upfront that call and put options must be treated differently than stocks. When you purchase a stock, it is easy to determine almost the exact loss that you are willing to take, and that’s where the stop-loss order is placed. In that situation, the stop is like a marketplace order to sell once a certain price is hit.??

But with options, there are additional risks:

1. There is implied volatility, which even within the absence of a move within the underlying stock could trigger a stop inside the option.

2. Large spreads between bid and ask are not uncommon, so what triggers your stop the bid, the ask, or the last price? Ask your broker.?

3. There is the risk of time premiums declining as expiration approaches. This risk could even cause a decline in an option price while the stock appreciates, especially if you bought the option at a big premium.?

4. Finally, options are a leveraged means to participate in a stock’s movement more than a limited time. Thus a relatively small move inside the underlying stock results in a much larger move inside the option and often that move is inside the wrong direction.?

Despite the differences, placing stops on options positions is a prudent strategy. But I recommend keeping it simple. Apply a stop-loss point as it relates to the stock, not the option. If it is 5% of the stock’s value, then at a 5% decline inside the stock’s price enter a marketplace sell order for the call. But this requires discipline since you can’t enter a contingent order to sell a call versus a stock’s price ahead of time. You will have to monitor the stock’s price and use a mental stop if it hits that price.?

As for the stock marketplace, stocks gained again yesterday, though by a small margin. Volume has not kept pace with the acquire since early September, and our internal indicators are grossly overbought. Stocks are definitely due for a round of profit-taking, but the indices continue to aggressively cut through overhead resistance lines like they don’t exist. Stocks are moving in direct relation to a weak dollar and Fed’s policy of accommodation. The trend remains your friend, so be long or be wrong.

For a homebuilder to go long, see the Trade of the Day.

Today’s Trading Landscape

Earnings to be reported before the opening include: ASML Holding, Cantel Medical, Host Hotels, iGATE, JPMorgan Chase and Medtox Scientific.

Earnings to be reported following the close include: Apollo Group and Spartan Stores.

Economic reports due: MBA purchase applications, import and export prices, and Treasury budget (the consensus expects -$32 billion).

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

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