As the world ever so slowly works its way out of the recession it is time to look at all of those companies that move merchandise across the globe. Trading freight movement is not just about Maersk putting more container ships back into operation or the Burlington Northern shipping more freight. It may have to do with obscure companies in little Panama where the Panama Canal expansion will allow huge ships to pass. It may have to do with the unknown companies that source shipments and offer logistics services to increase shipping efficiency. In trading the rallies and retreats of the stock market it may be time to look at trucks, planes, and express delivery companies.

In looking for where in the world the action will be don’t overlook the giants of the shipping industry and don’t forget the little guys. Huge global and transnational shippers have the advantage of being high cost of entry businesses in the recession. Companies that own huge tankers and container ships, companies that have the right of way to thousands of miles of railroad tracks, and companies with fleets of thousands of trucks all have a distinct advantage in a world of shrunken credit. Trading freight movement will start with knowing who has a head start as the recession gives way to economic growth.

In trading the movement of freight a little technical analysis will come in handy. It may not be necessary when trading and the stock starts to move but it will help find the right companies to trade. In a post recession world competition for fewer dollars will reward efficiency. Those who can keep their costs down and those who used the recession to tune up their business and cut the fat will likely do better in the coming months and years. Looking at price to earnings ratios, asset to debt ratios, and age of the company’s trucks, trains, or boats will come in handy. Anyone who has to deal with equipment breakdowns won’t be as profitable as someone who has had the cash to upgrade.

Before thinking about how straddles in the recovery market apply to transnational shippers or how a head and shoulders charting pattern may apply to express shipping companies look at the basics of their businesses and look at who they do business with. Many companies outsource technical aspects of their businesses. This is not outsourcing to Asia to get cheap labor. It is outsourcing to very bright people who facilitate the sourcing of freight shipments, oversea tracking systems, and maintain the software that makes sure that efficiency leads to profits. These companies may be harder to find but in trading freight movement they may well be more profitable than trading the big guys.

While you are thinking of trading Toyota and it recall problems think about trading freight movement. Find out who ships their parts to the USA from Japan. A downturn in Toyota sales could cause a dip in someone’s business on cross Pacific routes. Likewise when thinking about trading the GM IPO think who ships their cars.

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Popularity: 2% [?]

Trading the GM IPO could be one of the better opportunities of the year. General Motors has gone from being the world’s biggest auto maker to bankruptcy and back in just a year or so. This version of trading catchups could be quite profitable. As GM emerged from bankruptcy it lost money in last year’s third quarter and last year’s forth quarter results are expected to be profitable. The huge amount of restructuring and removal of bureaucratic bloat is expected to make the new GM a competitive company. A new, effective GM could be well positioned to take advantage of increased sales as the recession wanes. In the case of GM, where in the world the action will be may well be right here at home.

Trading Toyota is still possible as the company that is now the world’s biggest auto maker deals with recall issues regarding computer assisted brakes. General Motors, which slowly but surely lost its dominance due to a number of issues, is now a startup! The company has huge assets and the ability to make competitive products. So, how do we go about trading the GM IPO? The initial public offering of the new General Motors stocks will be fixed. The price for the IPO will be based on a fundamental analysis of the worth of the stock as well as the public’s willingness to pay. After the IPO is offered there will be stock trading subject to technical analysis. One common pattern is to see a stock rise substantially after the issuance of a popular new stock. Then profit taking is common. Thus a common chart pattern is an ascent to a peak and a drop to below the initial public offering price. What typically then ensues is a slow recovery to what will be the usual trading range. In this sort of post IPO pattern traders can find opportunities on both the rising and falling phases.

We are neither promoting GM nor suggesting that you avoid trading the upcoming IPO. We are also not making predictions about how the stock will perform after the IPO. Our suggestion is to keep an eye on the situation. Be aware of the fundamental and technical factors involved in the revitalized auto maker. Whether the resulting chart formations are variations of a head and shoulders pattern with the stock’s ascent and reversal or another common pattern, knowing your trading patterns and being ready could well lead to profits. Trading the GM IPO may involve scalping versus momentum trading as the first stock movement after issuance of an IPO typically takes place over days and weeks as opposed to months. If GM turns out to be a very successful and profitable company in its reincarnation it could become momentum stock as stock price climbs.

As the year progresses keep track of GM. This year will be a good time to gain perspective and anticipate the market, trading the GM IPO included. With Toyota back on its heels from the recall issues GM may have a chance to win back customers that it long ago lost to the current market leader. GM will need to do a lot of things right to make it back to number one but watching its progress will be interesting and could be profitable.

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Popularity: 3% [?]

The recovery is on its way and many banks, whether they were ones that got bailed out or not, are looking like profitable investments again, maybe. Trading banks might just be profitable as the banking industry continues to sort itself out on the long tail end of this recession. The damage done to banks by the recession and the damage they did themselves with bad loan portfolios is evident in a stock like Citigroup. Citi stock is stuck around $3 a share when it used to trade around $100. It is not totally clear if this company falls in the trading catchups column or should be filed under creating a game plan for trading market recovery. This company has the world’s largest financial services network throughout 140 countries. It also was bailed out by the US government which holds a 36% equity stake in the company. Options traders are happily selling calls on the stock with little concern that it will rise more than 30% in the next year.

More and more it would appear that in trading the rallies and retreats of the stock market that Citi has been left behind. Certainly that is the belief of those trading banks who are selling calls on this huge company. The concern for sellers of calls on this stock is that if the company gets its act together and the economy jumps a little Citi could show profits and jump up in price. Then those trading banks would be scalping profits on the way up. It would not have to go anywhere near anywhere near its previous highs to do serious damage to options traders who did not have a strategy for hedging their bets.

Citi could be a good place to consider the use of straddles in the recovery market. Currently puts and calls can be had for Citi of a penny a share, namely $1 for a contract. A traditional long straddle would be to buy both a call and a put at the current price, expecting to profit with substantial movement up as well as down, although at $3 a share there is not a long way to go on the downside.

Another option in trading the likes of Citi would be to buy calls and sell puts. This strategy in trading banks assumes that Citigroup really cannot fall any more in price. Thus the risk is, hopefully, minimal for a loss on the put and its premium will counter the price of a call option on the high side. The sad part about Citi at this point is that there are no standard options being offered above $7 a share but calls at $4, $5, $6, and $7 are all selling for a penny a share so the price is right. One of the things protecting Citigroup on the downside is the matter of high cost of entry businesses during the recession. Citigroup is a huge company with assets around the world. For someone to come in and take them on world wide would take a huge investment in resources, manpower, and expertise. This could well be why Citi stock still sells at just over $3 a share as traders realize that Citi, even though it is limping along, will probably not go away. Other US big banks to look at are Wells Fargo, JP Morgan Chase, and Bank of America. As usual we are trying to get you to trade Citigroup or to neglect it, simply to have you look at the possibilities of making a profit trading banks or other stocks and options as the market slowly recovers.

Popularity: 4% [?]

The market continues to slog painfully out of the recession. Traders are looking for head and shoulders patterns to spot market reversals as we see China further tightening credit, Hyundai gaining market share from Toyota, video games loosing luster, and congress taking aim at market makers in its attempts to find some cash to help pay the deficit. Whether trading catchups or day trading the politics of the recovery savvy traders are always on the lookout for market reversals. The head and shoulders pattern is said to approach 95% accuracy in spotting market reversals, according to some experts.

The head and shoulders pattern is a charting pattern that resembles a shoulder, a head, and a shoulder with three successive peaks of stock price. The first peak is moderate, the second is higher, and the third is lower again. The other key features are the “necklines” which are the valleys between peaks. Traders typically treat the neckline as a support level and the peaks as resistance levels. When the head and shoulders pattern emerges traders will commonly set stop loss orders at the right shoulder level, using the distance between neckline and shoulder as a profit target. A key to using the this pattern to spot market reversals is when the stock proceeds down below the previous neck level, breaking down out of the support level. This pattern is useful in trading the rallies and retreats of the stock market.

Use of the head and shoulders pattern or its mirror image may be useful in a number of current market situations as Hyundai picks up market share from brake problem plagued Toyota. Trading Toyota may be just as much about trading Hyundai, Honda, and Ford as counting the recalls of the world’s first place car maker. Another place to look for market reversals is in the mildly ailing video game industry. The likes of Carl Icahn are buying stock and seats on the board of video game companies with an apparent eye towards profits to be gained in buyouts and consolidations. The entire video game set of stocks as well as the auto makers may be good places to develop a strategy, do a little simulation trading, and see how the use of the head and shoulders pattern can generate trading profits.

The technical analysis of stocks using patterns that predict market reversal may also be useful looking at oil and other commodities as China tightens credit again, giving up short term growth to protect long term potential. Where in the world the action will be seems to fit with China on an ongoing basis as a major engine for global growth. When China raises credit requirements it may well be time to look for head and shoulders patterns in raw material suppliers to China’s industrial engine. Beginning traders unfamiliar with stock charting patterns are well advised to learn the basics of a pattern and practice in simulation trading using historical data stored in their trade station. When the trader has the ability to read the pattern and generate profits in the simulation world, and only then, should he or she venture into the world of video game company consolidation, the car wars, and commodity fluctuations caused by China’s credit concerns.

Popularity: 4% [?]

The market is already saying that there is not going to be a quick recovery of Toyota stock. The world’s number one car maker is feeling the heat of an unending product recall. This is the sort of thing that can scare away buyers for years, maybe back to American car makers. How does one go about trading Toyota? What will day trading the politics of Toyota look like?

Toyota, which has benefited from the perception of very well made cars for years finally beat out GM as the world’s number on car maker. This happened at the same time that the Detroit automaker went bankrupt during the current economic downturn. Now Toyota is dealing with gas pedal problems and software glitches take make the break system pause for almost a second before applying the breaks. In a car traveling at 60 miles an hour that is 89 feet before deceleration begins. Toyota stock has dropped just as the automaker was emerging from the effects of the recession. Meanwhile Ford, Nissan, and Honda’s stock prices continue to rise. In trading we often wonder where in the world the action will be in order to be trading where the volume and volatility lie. In this example we look to the automakers as Toyota deals with the brake issues.

Although crashes have been reported, only two injuries and no fatalities have been reported so far from Toyota’s brake problems. The trading Toyota issues are the immediate effects on Toyota stock and the long term effects from a possible defection of millions of loyal customers. Toyota expects to end the fiscal year in March with just under a billion dollar profit. However, the brake problem is expected to cost $2 billion and 100,000 customers in North America and Europe. That later figure may be more damaging. Toyota stock has dropped 12% this year and 5% in one day recently.

The politics of trading Toyota may be just as important as the technical facts. The US government still has a black eye from failures in regulation that led to the recent market crash. There will be heavy political pressure to not only act aggressively with Toyota but to be seen to be. The multi issue recall now includes the popular Prius and Lexus. The U.S. National Highway Traffic Safety Administration recently announced the start of a formal investigation.

The point of this article is not to promote or degrade Toyota. Trading Toyota is to give an example of the thinking that may be useful in taking advantage of current issues in choosing stocks for trading. It is always useful to gain perspective and anticipate the market when trading. No matter how technically skillful trader is it does not good to be watching a stable stock when a whole sector is wobbling back and forth with product recall news. NHTSA’s Office of Defects will be in the news a lot and stock prices may well jump up and down based upon press conference information or the lack of it.

We have spoken about straddles in the recovery market. This options trading strategy may apply to trading Toyota the stock may be quite volatile. Use of a long straddle strategy will allow the trader to profit from stock moves in either direction. Trading the rallies and retreats of the stock market may work here as it applies to Toyota’s competitors. There have to be really big smiles in the offices of Honda, Nissan, and Ford. Maybe there will be smiles on the faces of traders from trading Toyota.

Popularity: 5% [?]