The invention of the Internet has brought about many changes in the way that we conduct our lives and our personal business. We can pay our bills online, shop online, bank online, and even date online!

We can even buy and sell stocks online. Traders love having the ability to look at their accounts whenever they want to, and brokers like having the ability to take orders over the Internet, as opposed to the telephone.

Most brokers and brokerage houses now offer online trading to their clients. Another great thing about trading online is that fees and commissions are often lower. While online trading is great, there are some drawbacks.

If you are new to investing, having the ability to actually speak with a broker can be quite beneficial. If you aren’t stock market savvy, online trading may be a dangerous thing for you. If this is the case, make sure that you learn as much as you can about trading stocks before you start trading online.

You should also be aware that you don’t have a computer with Internet access attached to you. You won’t always have the ability to get online to make a trade. You need to be sure that you can call and speak with a broker if this is the case, using the online broker. This is true whether you are an advanced trader or a beginner.

It is also a good idea to go with an online brokerage company that has been around for a while. You won’t find one that has been in business for fifty years of course, but you can find a company that has been in business that long and now offers online trading.

Again, online trading is a beautiful thing – but it isn’t for everyone. Think carefully before you decide to do your trading online, and make sure that you really know what you are doing!

FUNDAMENTAL ANALYSIS
The stock market took all of us by surprise yesterday. It felt like our travel bus has just been car-jacked just a stop from our travel destination. Just when the market is picking up on all the fantastic earnings coming in these 2 days and the great economic data, existing home sales reported a “larger than expected” decline. This, again sparked new worries on whether the housing sector is indeed coming to a soft landing as billions of dollars are at stake there along with billions in mortgage and whether the Feds would cut interest rates soon. The US treasury’s benchmark 10 years note also rose to 5 months high, breaking the 4.8% barrier. This further encouraged exit from the equity market in favor of the bonds market. Yesterday saw the hardest one day fall of 2007 so far and it all happened so fast that it caught all of us by surprise. So, if this is happening despite as the great releases so far, then there is little fundamentals we can fall back on to look into the future… let’s go technical…

TECHNICAL ANALYSIS
Talking about a hard hard fall. My mentor used to tell me that the bulls take the stairs and the bears jump off the windows… that was what we witnessed yesterday. The Bears took out in one day what the bulls built in 2 days. Both the Dow and the Nasdaq composite are back down to their respective 30 days MA and 50days MA support level. The candlesticks are showing a bearish engulf formation which indicates a strong and sudden shift of investor sentiment from bullish to bearish. All momentum indicators also showed a sharp reversal of momentum to downside. So, are we still safe? Yes, but we are certainly at the edge of the cliff once again. The Dow is still riding above its strong 30 days MA support level and many times, it has bounced off this level after strong sell-offs like we saw yesterday. One example would be the 1.29% sell-off on 27 Nov 2006. In the same way, it took the Dow back down to its 30 days MA and then bounced off nicely to new highs. We have yet to see a breach in the 30 days MA and a testing of the 50 days MA yet, but if it happens, it might be a prelude to something less pleasant. For the Nasdaq Composite, we are back where we started last week… if the 50 days MA fails, we should see a testing of the 2400 level, failing which, the Nasdaq Composite would go into a bear trend like the one we saw in May 2006 when it failed its 2300 support level. Yesterday’s action took both indices back down from an uptrend classification to a neutral trend classification. Traders need to be wary. It seems like January has always been a rather turbulent month over the past few years and yesterday’s market action took me totally by surprise. Again, the adage goes “The market has a mind of its own”… it does not necessarily follow the expectations of mere mortals.

Never has the market been more turbulent and all students are lucky to be going through this with me now and learn.
Jason Ng
Founder, Masters ‘O’ Equity
mastersoequity.com
“Your Personal Stock Option Mentor”