The most recent European Central Bank loans to faltering European banks met mixed reviews. The first reaction seems to have been one of relief. It seemed that the EU had finally gotten its act together. At a recent Paris summit European leaders agreed to amend their treaty to bring about closer fiscal integration among the members using the Euro as their currency. They also agreed to give the European Central Bank a stronger hand in bailing out ailing banks and faltering governments. The first European Central Bank loans amounted to $639 Billion (in Euros). It was to prop up ailing European banks. The mixed market reaction was typical of the up and down sentiment that has plagued the Euro and European stocks for the last couple of years. The market seems to overreact to both good and bad news, creating a very chaotic market. This has been a difficult market for stock investors but often a profitable market for stock traders. A common stock trading strategy in recent months has been options trading because of the ability of traders to limit risk and leverage their investment capital.

The ability to generate European Central Bank loans without excessive need to consult the cumbersome EU bureaucracy is seen as a positive by many. Markets are not looking for all of the EU debt issues to be resolved but traders and investors are waiting to see a clear direction. Lacking a clear direction, traders have been limited to using very short term technical analysis in order to eek profits from market reaction to various pronouncements by EU officials. A perceived resolution to the EU sovereign debt dilemma would likely touch off a market rally, both in the EU and in markets throughout the world. Chinese factory production is off while new housing starts are up in the USA. These are mixed signals and the market is waiting for a clear direction. Although traders can make profits from short term market reactions they could find much more profit from successfully anticipating a substantial stock surge.

Trading Euro Zone stocks might be especially profitable if the EU is seen as getting its act together. Trading the Euro could be profitable as well if a resolution to the debt crisis drives the European Union currency upwards. In trading the EURO traders need to follow economic data and economic policy of the EU and of the nation against whose currency they trade the Euro. In trading Euro Zone stocks traders need to look at whether the company primarily does business in Europe or does business worldwide. A thoroughly European business would likely prosper in an EU recovery. A multinational located in Europe could suffer from a higher Euro as their exports would be priced higher abroad. As always traders are strongly advised to use both fundamental and technical analysis in trading stocks or currencies. Often times successful traders scout out stocks with trading potential but only trade them when market conditions are conducive to a sufficient likelihood of profits.

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For profitable trading potential in an otherwise unreliable world consider trading beer stocks. Beer stocks today have upside potential as they are attractive to investors. Stocks like Heineken, Anheuser-Busch InBev, Ambev, and SABMiller all pay healthy dividends. Ambev, the Brazilian brewer has seen its stock go up nearly a forth in the last year. Trading beer stocks may be profitable if the European debt dilemma does not finally get fixed. These are consumer stocks that hold their value even when markets crash. Beer is up there with laundry soap and bathroom tissue as something that people still buy during a recession. If the dreaded double dip recession does occur these stocks could become refuges during the storm for many investors and go up accordingly. In trading beer stocks on is not trying to outguess the market. Rather the basic strategy is contrarian, to expect an economic downturn and to trade stocks that will likely survive even when others fall.

The recent European financial summit yielded promising results for the long term. The EU needs closer financial integration and will likely get it. The extra power given to the European Central Bank may well help in streamlining efforts to bailout members of the so called PIIGS group of nations. However, the story is likely not over yet and there is probably a bumpy road ahead. What we are openly wondering about is a so called flight to quality or flight to reliable dividend paying stocks in the event of chaotic market events in the first half of 2012. This is not a certain thing. Thus the better play than simply buying any of these stocks in hopes of an uptick may well be to trade options on them. Buying reasonably priced calls will give the trader the option to purchase the stock in question if it does, indeed, go up in price. However, the cost of an options contract on each 100 shares is cheaper than buying the stock. Thus the trader gains leverage in the bargain. He also gains insurance as nothing is certain and the forecast of a downturn could well be in error. The trader will look for periods of volatile stock trading in order to increase his chance of profits. That scenario could be profitable but may or may not happen.

The other aspect of trading beer stocks is that each stock is unique and this may favor one stock versus the other. For example, the Brazilian brewer, Ambev, has jumped up in price nearly a forth in the last year and grown two and a half fold in the last five years while the other big brewers have seen growth or loss in the 1, 2, or 3% range. Watching a stock like Ambev with technical analysis pattern analysis could be profitable as the stock may continue to climb or may correct in the coming year. As always we are not suggesting that traders buy, sell, or trade options on any specific stock but that they use the thoughts above to help formulate a successful trading strategy.

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Many successful long term investors wait for a low point in the market to buy stocks for the long term. The Shanghai stock market is at its lowest point in the last three years. So, is it time to buy Chinese stocks? To decide if it is time to sell Chinese stocks or buy Chinese stocks a bit of fundamental and technical analysis are in order. General market fundamentals are that the Shanghai stock market was last at this level in 2008. A subsequent ¥4 Trillion (over $600 Billion at current exchange rates) economic stimulus of construction projects (airports, bridges, and roads) resulted in a nearly doubling the market composite in just a little over half a year. However, like all stimulus packages, the injection of ¥4 Trillion has worn off and the market is back where it was after the market crash of 2008. The European debt crisis and a possible double dip recession in Europe will hurt Chinese exports and manufacturing numbers are already down. If technical indicators show a market sentiment ready for a rebound it might be profitable in the short term to buy Chinese stocks. However, the Euro debt crisis is not resolved yet and the USA is still having trouble dealing with its monumental national debt. Because Europe and North America are China’s biggest customers this could spell trouble for Chinese stocks in the medium term.

Chinese traders indicate that a new economic stimulus package might be in the works. If that is the case then we may see short term gains in the order of a year or so. It might, indeed, be time to buy Chinese stocks in search of short term profits. If you are going to buy Chinese stocks where to you look for short term profits? Certainly the export sector will suffer if Europe and North America buy less. If the Chinese government aims its stimulus at infrastructure, that would seem to be the place to look for profits and share price growth. Any wishing to profit from trading Chinese stocks needs to do their research and refrain from trying to outguess the market . Here is a short list of Chinese companies engaged in construction or known as makers of construction supplies. Some of private and some are public companies. Anyone interested trading these stocks will need to research them individually.

• BBMG Corporation
• Broad Group
• China Communications Construction
• China Construction Design International
• China Harbour Engineering Co Ltd
• China National Building Material Company
• China National Materials Group Corporation
• China Railway Construction Corporation
• China Railway Engineering Corporation
• China State Construction Engineering Corp
• China State Construction International Holdings
• Chongqing Road Engineering Group
• CSG Holding
• Jiangsu Expressway Company
• Road and Bridge Construction
• Shaanxi Construction Engineering Group Corporation
• Shandong Gaosu Group
• Zhejiang Expressway Company

To buy Chinese stocks such as those construction-related companies listed above it may be necessary to open an account with a broker that offers stocks on the Shanghai exchange. The exchange has English language information on its web site, at www sse.com cn sseportal en_us. Anyone without sufficient hard information about any stocks listed on the Shanghai exchange should proceed cautiously. However, it may indeed be time to buy Chinese stocks, at least in the short run. If a stimulus package is involved one might look at this opportunity as recovery trading in Mainland China.

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What does the Fitch airport bond downgrade mean for those trading airport municipal bonds? News reports state that Fitch has downgraded bonds issued by O’Hare, Miami, and Dallas - Fort Worth, all from stable to negative. This happened after American Airlines filed for bankruptcy under Chapter Eleven. Municipal bonds such as may be issued by airports are generally considered a long term investment. They often attract high income investors because their interest is often not subject to Federal, state, or local taxes. However, municipal bonds do appreciate and depreciate in value as interest rates change. They can also subject to other factors making them a potentially profitable item to trade for short term profits. Such could be the result of the current airport bond downgrade by Fitch. As is common with all trading both fundamental and technical analysis are important.

The issue for investing in or trading airport bonds from the three airports mentioned above is that they are hubs for American Airlines. According to a Dallas – Fort Worth press release, “DFW International Airport is the world’s fourth busiest, offering nearly 1,750 flights per day and serving 57 million passengers a year. DFW provides non-stop service to 145 domestic and 47 international destinations worldwide.” Unfortunately for DFW a large percentage of its passenger traffic is dependent upon American Airlines continuing to use the airport in high volume during and after its reorganization. DFW, Miami, and O’Hare all have the same problem in that they could each lose substantial passenger traffic from American if the company chooses to reroute planes or stop serving certain destinations. However, passengers will still fly and other airlines can take over unused gate facilities as traffic warrants. Those interested in successfully trading bonds related to the airport bond downgrade need to remember that it is not a matter of trying to outguess the market but of calmly and carefully examining the profit and risk potential in each individual case.

There is a track record to follow in the case of this airport bond downgrade. American Airlines, it turns out, is the 189 th airline bankruptcy since the government deregulated airlines in 1978! Airport bonds tend to be insured. Checking that out for each of the airport bond downgrade victims would seem to be first on the list of things to do. A good benchmark to keep in mind is that an airport should have revenues of around 150% of what it needs to service its bonds. If American pulls out of DFW, Miami, or O’Hare where will that leave them in the short term? Look to see what sort of gate agreements each airport has with American. If they can quickly and efficiently reassign gates it could be good indication of flexibility and profitability. In addition, if an airport is in the middle of a development plan it is expecting to see its expansion result in higher traffic volume and more income. The bonds for the DFW two billion dollar expansion plan could be a problem here on top of the two billion in bonds already in place. Although trading in this scenario is not so much trading a disaster like the Japanese tsunami or the market fall after the world trade center attack it has some of the same characteristics. Uncomfortable investors may bail out of these investments driving prices very low. If the trader believes that bond prices will stabilize after a period of market inefficiency, buying these bonds after the airport bond downgrade could be profitable. As always this discussion is an exercise in profitable trading and not a suggestion to go out and buy or sell airport municipal bonds.

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Trading Euro Zone stocks received a boost as the EU moves toward a more integrated fiscal and budgetary system. The EU sovereign debt dilemma has not only threatened the Euro but the integrity of the European Union itself. European stocks have suffered as the economic recovery in Germany, especially, has slowed. Recent pronouncements by German and French leaders sparked a brief rally in markets across Europe with profits for many of those trading Euro Zone stocks, at least those who expected a rebound from the recent slide. As always in trading a down market, there is a possibility of a rebound and those who anticipate the same via fundamental and technical analysis are rewarded. The state of European debt is sufficiently bad that it threatens not only the European economies but also those of the exporting nations of Asia. China is expected to see reduced economic growth in the next year and the post tsunami recovery in Japan could be affected as well.

Nevertheless those trading Euro Zone stocks saw substantial action in response to what was perceived as good news coming out of Berlin and Paris. However, volume quickly dropped off in trading European stocks as traders and investors adopted a subsequent wait and see attitude. For the individual stock trader looking to profit from trading Euro Zone stocks there a couple of possibilities. First of all a trader can trade directly in European markets through exchanges such as Deutsche Börse AG or NYSE Euronext, or by trading Euro Zone stocks listed as American Depository Receipts on the NYSE North American traders can deal with an exchange that uses its own language. Traders can use the same trading techniques and strategies as in trading North American stocks. Options trading is a useful approach to limiting risk chaotic markets, which certainly fits for stocks trading in Europe today. Technical trading works as well. The recent reverse head and shoulders charting pattern seen recently in both the Euro and European stocks is just as predictive of a bullish reversal of a downward trending market in trading Euro Zone stocks as in other markets. Banks and insurance companies are especially volatile these days in Europe because of their exposure to the debt of the so called PIIGS group of nations (Portugal, Italy, Ireland, Greece, and Spain).

Following the news is essential in trading Euro Zone stocks, at least over the short run. Every positive pronouncement is met by a rise in the Euro and stocks and every cautionary pronouncement is met by a slide in the same. Over the longer term the picture is different. One does not need to limit oneself to trading banks and insurance companies. Companies like Diageo, Siemens, and Roche do business worldwide. These companies are not likely to be hurt greatly by the slow currency devaluation brought on by falling currency values. In fact a cheaper Euro might well help a company like Siemens in selling their products in the four corners of the earth. What such a company loses in sales due to a European recession could well be made up for in international sales. For those with a longer term view timing stock trades is less important. As always we are not suggesting that anyone trade Euro Zone stocks or avoid them. We offer this discussion as an example of the thinking that might go into choosing stocks to trade and learning how to trade them.

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