Getting Over the Hurdle

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	Monday, April 21, 2008 Whitelist Us           Size Matters, uh um, I am Talking About Hurdling By Rick Pendergraft Remember Edwin Moses, the great hurdler from Dayton, Ohio?  The man set one of the greatest streaks in sports.  He won 107 straight final heats over a 10-year period.  The man was incredible to watch.  He made the 400- meter hurdles look easy.  The way he would glide over the hurdle without any effort at all, or at least it seemed that way.  What most people don’t know is that Edwin Moses was a scientist, majoring in physics and engineering at Morehouse College in Atlanta.  He applied his interest in science to his interest in track, and the results were incredible. Well, we don’t need a scientist to see what is happening with financial stocks right now.  The hurdles have been set so low that my 3-year old son could clear them as effortlessly as Edwin Moses cleared the intermediate hurdles. I watched this past week as the banks and investment houses each stepped up to the podium to tell everyone how much their earnings declined.  Here is a summary of the week: Monday- Although they weren’t scheduled to report until Friday, Wachovia Bank (WB) announces that they have received an infusion of capital, and oh by the way, we lost $0.14 per share this quarter, compared to earnings of $1.20 in the same period one year ago. Tuesday- Washington Mutual (WM) reports a loss of $1.40 per share for the quarter after earning $0.86 last year. Wednesday- J.P. Morgan Chase (JPM) announces earnings of $0.68 for the quarter after earnings of $1.23 one year ago.  So what if they are half of what last year’s earnings were?  At least they were still in the black.  Also on Wednesday, Wells Fargo (WFC) announced earnings of $0.60 per share after earnings of $0.66 last year.  Their motto, “Hey, look at us.  We only dropped six cents off our earnings.  Look at everyone else in the sector.” Thursday- Merrill Lynch (MER) reports a loss of $2.20 per share after earning $2.26 per share one year ago.  Add another $6.5 billion of fresh writedowns to the pile and make cautious statements about the next few quarters and you have a recipe for a rally, right?  Not normally, but guess what?  MER rallied after opening lower on Thursday. Friday- Citigroup reported a loss of $1.02 per share after earnings of $1.18 one year ago.  And the company missed estimates by seven cents, but rallied anyway. INTERNAL ENDORSEMENT Stock Market Shocker: How a Bunch of 5th Graders Made Fools of the Trading Elite…! Wall Street wants you to believe that you have to entrust your money with the professionals and all their skills, resources and systems, if you want to make money in the markets. It’s what these guys do for a living! How could you possibly beat them?! Nothing could be further from the truth. In fact, I have used an embarrassingly simple secret to make $15,048 in just 30 days... and boost my overall account balance 152% in less than a year. Keep reading to learn how you could join me each month... Despite all of these earnings reports and the seemingly endless downward spiral for financial earnings, the S&P Select Financial Spyder (XLF) moved up the last four sessions.  I don’t know about you, but these reports didn’t make me feel all warm and fuzzy about financial stocks? But that is not the point.  If you recall, this article started with a discussion about hurdling and Edwin Moses.  Well, the point is that when the hurdles are so low that a snail could clear them, it isn’t hard to make it over.  That is what has happened with financial stocks over the last week.  However, before you start looking into financial stocks thinking the downturn is over, you might want to look at the XLF chart below. There is still a lot of overhead resistance the XLF must overcome before I would declare the downturn dead.  Once investors get over the euphoria of these companies not being as bad off as Bear Stearns, the reality will likely hit again and the stocks will resume their downtrend. Good luck and good trading, Rick P.S.  To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com. [Ed. Note: Subscribers to Rick’s KISS Investing service recently closed out gains of approximately 150% on Continental Airlines and 175% on the Diamonds Trust. Click here to learn more about KISS Investing] Market Watch Big-Ticket Items Take Center Stage on the Calendar By Rick Pendergraft While the economic calendar may be light this week with only four major reports, three of the reports could carry some significant hints about the turnaround of the economy. With the housing market still in the doldrums, I don’t expect much good news from either the existing homes sales or the new homes sales reports. The existing home sales report will be released on Wednesday at 10:00 am followed on Thursday by the new homes sales numbers. Last month’s existing home sales were higher than expected, and this month’s expectations are lower than last month’s actual numbers.  It might be hard for them to disappoint, along with the new homes sales numbers.  Like the subject of the main articles says, when the hurdle is so low… The durable goods report is released Thursday, and after last month’s 1.7 percent decline, the expected 0.8 percent gain may be asking for a miracle.  No one is buying big-ticket items right now when their wallet is coping with gas approaching $4/gallon.  I wouldn’t be surprised to see another decline. Date Time (ET) Statistic For Market Expects Prior 23-Apr 10:00 AM Existing Home Sales Mar 4.95M 5.03M 24-Apr 8:30 AM Durable Orders Mar 0.10% -1.70% 24-Apr 10:00 AM New Home Sales Mar 585K 590K 25-Apr 10:00 AM Mich Sentiment-Rev. Apr 64.2 NA INTERNAL ENDORSEMENT Imagine if There Were Only 6 Numbers to Choose from When Buying a Lottery Ticket! Wouldn’t that be great?! Of course, the less the number of choices, the more likely your chance of success, right? How many choices are there when buying and selling shares? Errmm… a LOT! Hundreds…One of the reasons I enjoy such consistent success from trading, is because I only have 6 options to choose from! Except this is even better in a way, because the lottery is pure luck… I only have 6 choices AND have a VERY good idea about which choice to make because of the insider signal If you enjoy IDE's daily investing advice, you'll definitely be interested in checking out our sister publication, Early to Rise. Each morning, you'll get powerful wealth-building advice covering real estate, entrepreneurship, personal finance, marketing, and much more. Sign-Up for Early To Rise today! To unsubscribe, Click here To change your email address, Click here To cancel or for any other subscription issues, write us at: Investor's Daily Edge 245 NE 4th Ave, Suite 201 Delray Beach, Fl 33483 Phone: (800) 681-4759	The Market Minute Expired… Friday was options expiration for the April options series and there had to be some folks taking some big hits.  After Google and Citigroup posted better than expected earnings, the market soared higher from the word go.  Anyone that had been writing calls as the market declined had to take a big hit, as there wasn’t time to get out given the gap higher on the open.     In The Markets   Last Change YTD Dow 12,849.36 228.87 -3.13% Nasdaq 2,402.97 61.14 -9.40% S&P 500 1,390.33 24.77 -5.31% Gold 917.70 21.60 10.13% Silver 17.82 0.42 20.65% Oil 116.78 1.92 21.67% Nat Gas 10.59 0.31 41.58%   Newsworthy Male Sex Hormone May Affect Stock Trades By RANDOLPH E. SCHMID, AP Science Writer 3 minutes ago The hormone that drives male aggression and sexual interest also seems able to boost short term success at finance. But what seems to start out well can turn bad, with elevated testosterone levels over several days possibly leading to irrational risk-taking, according to researchers at the University of Cambridge in England. "If people want to get practical, it would be good for both banks and the financial system as a whole if we had more women and older men in the markets," said John M. Coates, lead author of a study appearing in this week's issue of Proceedings of the National Academy of Sciences. Such a change would produce a much more stable financial system, said Coates, a research fellow in the university's department of physiology, development and neuroscience. Coates and Joe Herbert studied male financial traders in London, taking saliva samples in the morning and evening. They found that levels of two hormones, testosterone and cortisol, affected traders. Those with higher levels of testosterone in the morning were more likely to make an unusually big profit that day, the researchers found. Testosterone, best known as the male sex hormone, affects aggression, confidence and risk-taking. Cortisol is tied to uncertainty, novelty and unpredictability, "which pretty much describes a trader's life," Coates said in a telephone interview. Coates and Herbert's study comes less than two weeks after U.S. researchers reported that young men shown erotic pictures were more likely to make a larger financial gamble than if they were shown a picture of something scary, such as a snake, or something neutral, such as a stapler. Money and women trigger the same brain area in men, those researchers said. One member of that team, Camelia Kuhnen, an assistant professor at the Kellogg School of Finance at Northwestern University, said Coates and Herbert's findings "are very interesting and they help support the claim that emotion influences financial decisions." But she cautioned that the findings don't prove a causal link between testosterone and profitability. Kuhnen, who was not part of Coates and Herbert's team, termed the idea that long-term high testosterone levels can lead to irrational risk-taking "an interesting hypothesis." Coates said he worked as a Wall Street trader during the dot.com bubble in the 1990s when millions of dollars were invested in new Internet companies, many of which later collapsed. He said trader behavior he observed didn't make sense in terms of economic or game theory, "everyone seemed to be on a drug." Even in airport bars the crowd would be ignoring baseball to watch and cheer financial reports on television, Coates said. That prompted him to begin a study of the behavior, which didn't seem to affect women. In hormone research there is the "winner model," based on both human and animal activity, in which competitors have rising testosterone levels. When one wins, his hormone levels increase even more, while they fall in the loser. That can give the winner an advantage in aggression and risk-taking in the next competition, a positive feedback, he explained. But after a while the effect overreaches and the male begins making stupid decisions. "I wondered if that was what was going on in the financial markets," he said. The London study indicated that hormone levels in the traders were both responding to financial events and influencing them. Their conclusion: "Cortisol is likely, therefore, to rise in a market crash and, by increasing risk aversion, to exaggerate the market's downward movement. Testosterone, on the other hand, is likely to rise in a bubble and, by increasing risk taking, to exaggerate the market's upward movement." And that, Coates and Herbert wrote, "may help explain why people caught in bubbles and crashes often find it difficult to make rational choices." ___ On the Net:     Meet the Team MaryEllen Tribby - Publisher Jedd Canty - Business Director Rick Pendergraft - Managing Editor Jon Herring - Editor Nicole Reynolds - Marketing Analysts / Editorial Contributors Michael Masterson Charles Delvalle Andrew M. Gordon Dr. Russell Mcdougal D.D.S.

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