Add in the NASDAQ and Morgan Stanley shaking up investor confidence with the botched Facebook, Inc. (FB) IPO, along with a Dell Inc. (DELL) earnings disaster and you have the recipe for Wall Street to wipe of the week’s meager attempt at a comeback – sorry L.L.

Top Equity News believes it adds up to an eventual trip for the NASDAQ, Dow, and S&P to their 200-day moving averages, 2745, 12,210, and 1279 respectively.

Investors have a couple of ways they can handle turmoil and actually profit if troubles persist as TEN believes will be the case for the foreseeable future. During the downfall, the NASDAQ has fallen faster and harder than its peer indexes, it also rallied more strongly in the blip of a rebound.

We don’t expect that to change. If you are worried about downside and don’t want to short stocks, then inverse ETFs like ProShares Short QQQ (PSQ) or ProShares UltraShort QQQ (QID) will turn red to green.

PSQ seek to return the opposites of the index, meaning that if the NASDAQ 100 drops 2%, then PSQ will gain roughly 2%. QID, on the other hand, add in leverage and its objective is to double up the NASDAQ 100. Should the index drop 2%, QID would put approximately 4% on your bottom line.

Remember, however, that it goes both ways. If the NASDAQ 100 heads higher, you’ll lose the opposite or twice the index’s gains, depending on which ETF you choose.

Shorting stocks is more difficult and requires that you have a margin account, pay interest, and the short candidate must be margin-able and approved for shorting. We’ll have some short ideas in the days ahead of stocks continue to slide.

Stock Market Trends: Profit from a Trip Down to the 200-Day Moving Average is an article from:

However, before Wall Street gets to the crest up yonder, the relief rally could take the NASDAQ to 2900, the S&P to 1340, and the Dow to 12,700. Those are the support levels that failed, leading to the markets waterfall declines last week.

Support on the way down is usually resistance on the way up.

There could be a limited trading opportunity for investors on the upside. TEN’s research shows that the indexes rarely break their 200-day averages on their first attempt. They typically hit the mark and bounce, then hit the mark and bounce, and then on the third attempt and beyond is when it becomes very dangerous to buy.

That’s why Top Equity studies the sectors and how they might perform going forward. You’ll want to own stocks from industries that have the look of over-performance and avoid the slackers.

Despite a horrible week, the list of Buys and Sell are shallow this week. TEN expected to find many more in the sell columns than we did.

EMERGING BUY: industries with positive technical analysis traits that are in the early stages, indicating possible above average returns in the near-term:

Medical Equipment
Industrial Transportation
Internet
Recreational

MATURE BUY: industries that have outperformed and their charts suggest the above average returns could continue:

Biotech
Specialty Construction
Pipelines
Footwear

MATURE SELL: industries that have underperformed and, based on their current chart patterns, could continue to lag:

Asset Manager
Business Training
Investment
Financial Services Companies
Home Improvement (Thanks Lowes)

EMERGING SELL: industries that have fresh negative technical analysis set ups and could have subpar performance in the weeks ahead:

Banks
Personal Goods

Sector Selector: Thin Pickings Despite Big Selloff is an article from:

Additionally, US stocks are cheap on a couple of accounts. Too many companies are trading below their 10-day moving averages, and the indexes are well below normal relative strength ratings. A rebound is due regardless of the G8’s plans to expand debt.

Just how far can stocks go? Typically, inner-contra moves within the current trend have three common targets. As a rule of thumb, market watchers look for a reversal move of a third, half or two-thirds of recent gain/losses.

In this case, the NASDAQ opened up the landing gear for descent at 3050 and closed at a low of 2778 on Friday. That’s a drop of 272 points. The three possible goals for the NASDAQ are to add on 90 points, 136 points, or 180 points respectively.

However, Top Equity News believes the max move for now is back to 2900. That’s the level where support was found many times on the way down before the index fell apart in the last few weeks. Now, 2900 will act like a lid on the way up.

Overall, TEN believes the Dow, NASDAQ, and S&P have come too close to their 200-day moving averages not to touch them eventually. Pivots don’t usually occur in midflight. They tend to happen at support levels or on key trend lines, like the benchmark 10, 26, 50 and 200-day moving averages.

While stocks could run enough to erase much of the pain of current losses, the new trend is absolutely down. That’s means when the short-covering spree has ended, sellers will return to the forefront and probably take the index down another notch.

When the market is sour, investors are wise to flip the buy the dips maxim around and take profits on rallies. Keep it here at Top Equity News as we will continue to update our readers as market conditions unfold.

Stock Market Trends: Stocks to Bounce, How High? is an article from:

This week we will try to find a company that is likely to beat, but also subject to big moves so we can try to play both sides with an options straddle.

Collective Brands, Inc. (PSS) is expected to announce first quarter earnings Tuesday, May 22, 2012, after the market closes, with a pre-recorded message from management will be available via phone and at the company’s website at 4:30 pm EST the same day. It can’t be too good if Memorex and management doesn’t want to take questions. What is that? TEN has never heard of anything like that before.

PSS is expected to earn $0.44 for its 1st quarter.  Top Equity News expects the Payless ShoeSource stores operator to report earnings that will beat Wall Street’s expectations. TEN’s estimate is 47 cents –  a 3 cent upside surprise.

Collective Brands tends to beat earnings big, but the stock tends to move all around. Eight of their last 16 earnings announcements have seen the stock move at least 11.8% in the days surrounding the profit news. On three occasions, shares have soared of dipped 28% or more.

The stock can be volatile, and that’s what we look for this time around.

In the last 30 days, 28 apparel retail companies have released their quarterly results, 20 of them had their share price trimmed afterwards. So the odds favor PSS dropping.

Let’s take a look at the options.

Collective Brands closed trading on Thursday at $21.09. For the purposes of our straddle, Top Equity will work with the June 21 call and put options. The calls last traded at 50 cents, and the puts at 28 cents.

For the trade to breakeven, the stock will have to about $1 to the upside or $1.10ish to the downside. Either move is roughly 5%, which is well below the average move of 13.91% in either direction.

Trading Earnings: Know Your Collective Brands, Inc. (PSS) Options is an article from:

The world is uneasy about the state of Greek politics and the ever increasing odds of Greece leaving or getting booted from the Euro.

The situation has taken its toll on US stocks as traders have been greeted to one up day in the last two weeks. While the indexes are reaching oversold levels, the action has put the NASDAQ, Dow, and S&P in a terrible technical analysis place.

Each member of the trio is now under key support levels; maybe they’ve even broken a head-and-shoulders neckline, which would mean more, perhaps a lot more downside to come. Top Equity News believes the index 200-day averages is the next chart destination Wall Street doesn’t straighten out its act.

The current environment leaves investors in a difficult spot. There have been some pluses, especially in the first quarter earnings results. With more than 90% of the results tabulated, nearly 67% of S&P member have exceeded their consensus earnings estimates. Meanwhile, profits and sales have grown by nearly 7% and margins remain high at 9% versus the historical norm of 7%.

If Q2 is a solid as Q1, then stocks are on sale.

On the other hand, the recent run of mostly disappointing economic news from a lower than expected GDP to horrible jobs numbers has economists and brokers revising their outlook for the economy lower.

If the forecasters are correct and the economy grinds to a halt, then Q2 earnings are likely to fall and so are stocks. The combination of good earnings news versus the volatile EU debt crisis and underwhelming US news on the economic front muddles the waters. Toss in a technical picture that shows the indexes drowning and it becomes downright confusing.

So what’s an investor to do in uncertain times like these? Three ideas come to mind.

The first and most obvious is to move some money to cash. Never, ever make the mistake of thinking it can’t go any lower than this. It can and probably will as new lows are typically followed by new, lower lows. Eventually the bleeding stops, but this mind frame turns small losses into big ones and adds dead weight to your portfolio.  Everybody knows of theses anchor stocks, when I just get back to breakeven, then I’ll sell it. Only it takes years, and in the meantime, better stocks zip right on by your dead holdings.

The second idea that could help stem the tide is to write covered calls against some of the stocks you already own. It is the practice of selling another investor the right to buy your stock at a set or specific strike price. Say you own ABC stock, and it’s trading at $43, and the option to buy ABC at $45 within the 90 days is trading at $3. You can sell the option and receive $300 for every 100 shares of ABC you own. As long as ABC stays below $45, you keep the money and the stock. If ABC trades at or more than $45 when the option expires, you sell the stock at $45 and keep the money.

The third option is to short stocks. Most people don’t like to get involved with margin as it can lead to bad habits and shorting stocks can be intimidation. The unknown is always scary. TEN’s preferred choice is to buy an inverse ETF that acts like a short. Something like ProShares Short S&P500 (SH) makes it easy to bet against the market. The funds objective is to seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the index. In other words, if the S&P falls 1%, then SH gains 1%.

These are three easy ideas you can implement right now. When the bulls come charging out of the gates once again, you could be better positioned to take advantage of the next run.

3 Easy Things You can do to Protect Your Portfolio When the Stock Market Sucks is an article from: