Navigating Earnings in Dow stocks

The December issue of Active Trader measured how the 30 component stocks of the Dow Jones Industrial Average (DJIA) fared in the days and weeks immediately following quarterly earnings season, which begins in January, April, July, and October.

The analysis found Dow stocks tend to climb overnight after earnings are released (most public companies announce earnings when the stock market is closed). The study also showed Dow stocks tend to sink the next day before heading higher within a week or so.

But we largely ignored the question of how earnings measured up to analysts’ expectations. The following three figures show how Dow stocks behaved overnight, the next day, and the subsequent two weeks when their companies beat, matched, and missed analyst estimates of quarterly earnings per share (EPS) From October 2001 to September 2009.

Figure 1 shows that after positive earnings surprises, Dow stocks rose 0.77 percent overnight, fell 0.26 percent the following day, and gained 1.06 percent two weeks later. In other words, the market rewarded stronger-than-expected earnings, which isn’t a big surprise.

According to Figure 2, Dow stocks were less active after they merely matched expectations as they went nowhere overnight, dropped in-line the next day, and gained just 0.3 percent two weeks later

Finally, the market punished Dow stocks with earnings that disappointed the Street. They opened 2.06 percent lower, slid another 0.76 percent that day, and fell 0.6 percent further within two weeks.

by David Bukey, www.activetradermag.com

Zecco Trading Features

The Zecco Trading brokerage launched with relatively simple online brokerage functionality and a limited service offering in 2006, but has since added many features. Currently Zecco Trading offers customers:

* Stock trading including limit orders and trailing stops
* Options trading including complex strategies such as spreads, straddles, condors, butterflies, etc.
* Online mutual fund trading and mutual fund screener
* Bond trading through a broker
* Real-time positions and balances
* Quotes and research (stock quotes, charts, analyst ratings, company financials, etc)
* Research reports provided by S&P
* Options analytics tools
* Stock alerts
* Streaming data platform (fees apply)
* Performance tracking and tax reporting tools (fees apply)

ZeccoShare Comunity

The online financial community on Zecco.com is called ZeccoShare. It shares much of the common core community functionality found on sites like Facebook and MySpace like forums, blogs, groups, a customizable profile page, 1:1 emails, shout boxes and an activity feed.[

However, ZeccoShare is customized to investing and has many novel features as a result. For example, users can elect to share their verified trades, holdings, trade notes and performance taken directly from the brokerage. Users can subscribe to (and follow) star performers’ trades, and discuss trade ideas with them. Zecco argues that this provides a level of transparency not found in previous financial communities which were rife with pump and dump schemes.

Commisions

# Online stock trades: 10 free trades per month with a minimum of $25,000 in assets or 25 trades per month. $4.50 otherwise.
# Options trades: $4.50 per trade plus $0.50 per options contract.
# Mutual fund trades: $10 per transaction.
# Bond trades: $4.50 per bond with a $22.50 minimum per transaction.
# Treasuries: $24.50 per transaction.
# Forex: bid/ask spreads as low as 0.7 pips depending on currency pair, size of account, and market conditions.

Regulation

Both Zecco Trading and Zecco Forex are subsidiaries of Zecco Holdings, Inc., but the two are subject to separate regulatory bodies.

Zecco Trading is a registered broker-dealer, member FINRA. FINRA (Financial Industry Regulatory Authority) is the primary regulatory body of the securities industry.

Zecco Forex is a separate but affiliated company from Zecco Trading. Zecco Forex is subject to regulation by NFA (National Futures Association).

Learn more Zecco pricing and products page at zecco.com

by zecco.com

The Rules of Real Stock Investing

The stock market is the anticipator of the economy. That is right, but it is not how to succeed with stock investing. If the balance sheet of a company is sound its stock will rise either sooner or later. Doesn't this sound plausible? Well, even if the whole stock market contained good and rock-solid companies, this wouldn't mean that their stocks will rise.

Well, one of the oddities of stock investing is that stocks do not necessarily behave according to the company's condition. Everybody remembers the years 1998-2000. The internet stocks appeared in the markets and there were plenty of these stocks. And they rose like brokers never dreamed of before. But their fundamentals were unbeaten when it came to making huge losses!

The rule to that booming time is still valid today. Buy stocks when they make strong upward movements accompanied with a huge trading volume. So the upward movement should come together with a lot of buys and sells. That is one of thestock investing principles. Buy when the stock market begins to roll and sell when the stock market makes a big break. One strategy is to buy stocks which have newly surpassed their all-time-high. This is done because it is often seen that those stocks begin to soar even more after having significantly broken the all-time-high-resistance line. This way ofstock investing or trading is called the Darvas strategy.

Naturally, the mere buying of rising stocks doesn't mean stock investing work is finished. The real hard work begins just after purchase. Now the phase of managing stocks has begun. What must the investor do, if they begin to fall and what when they soar? This is the most crucial point ofstock investing . Generally, whenever stocks are bought, the maximum pain level must be set up. This is also called the stop loss. This must be done in order to cut losses to a level, which doesn't bother the investor too much.

But even if stocks go vertically upwards after purchase it is very important to adjust the stop loss level that means this level has to be increased in order to lock in some profits.

Doing it that way, increases the probability of stock investing to be profitable. But the main problem is to do all this with discipline and this exactly is the point where the most investors or traders fail.

by Jophan Celebi

Understanding Your 401k

Understanding Your 401K

A 401K is a retirement plan sponsored by your employer. It is a defined contribution plan where you contribute a certain portion of your income into the account. 401K accounts are popular because of two main reasons.


As a retirement investment, the 401K has both advantages and disadvantages:
Pros:
Tax deferred until withdrawal.
Possibility of additional contributions from employers

Cons:
Withdrawal penalties of 10% with certain exceptions.
Lack of liquidity if the contributor needs the money for another purpose.



Benefits of a 401K

First they are a tax deferred plan, as an example let's say you put $4,000 dollars into the account over a year and earned $54,000 that year, only $50,000 would have to be claimed as income. On the other hand, the benefits upon withdrawal once you've retired are taxed as income. Second, employers may offer a matching contribution giving you a strong incentive to deposit into the 401K account because of the increase in assets gained if employers match the deposit.

The tax deferment option can be advantageous because retirees generally require fewer expenses than during their career so can live off of a smaller yearly income. This drives them to a lower tax bracket so they have to pay less on the withdrawals from their 401K than they would have paid during their working years.

Although a 401K is an employer provided benefit, if you were to change employers and your new employer has a 401K plan, you can transfer your old 401K plan to the new employer. If your new employer does not offer a 401K plan, it can be transferred to an IRA at another institution or the old employer may charge a fee to keep the 401K managed through them.

The money deposited in a 401K is distributed among a variety of assets that could include stocks, bonds, mutual funds, money market funds and others. The options available are based on the specific plan your employer allows and the proportion of funds in each can be regulated by the contributor manually.
Deposit Limits

401K contributions are limited to a maximum of $16,500 a year in 2009. People age 50 or older are allowed an exception to this limit in the form of "catch-up" contributions. These catch up contributions are limited to $5,500 in 2009. These limits are also imposed if more than one 401K (such as a traditional and Roth) are owned by the same person, there can be no more than $16,500 contributed to both accounts combined. These limits are set by the IRS and can differ from the limits set by your employer's plan which may limit it based on a % of yearly income.
Withdrawing Funds from a 401K

The current age requirement to begin withdrawing funds from a 401K is set at 59 ½. At this point withdrawals can freely be made with no penalty, but an income tax must still be paid. If withdrawals are made before this point, there is a 10% tax added on to the income tax for the withdrawal.

There are a few exceptions to this rule. Some plans may allow the employee to take a loan out from their 401K plan. Loan conditions can vary greatly based on individual plans offered by employers but won't exceed 5 years and will be a reasonable income rate. The income is then paid back and added to the 401K account but does not get the tax deferred treatment that regular deposits get.

In addition to the available loan, 401K plans will not suffer the 10% withdrawal fee if the contributor dies, is disabled or cannot work any longer. If upon leaving the employer which holds the plan, the employee cannot find another plan to transfer the funds to such as an IRA or a new 401K, the funds can be distributed without penalty.
Types of 401K plans

All of the above information was in reference to a traditional 401K plan, the following is a list of non-traditional 401K plans available and how they differ from the traditional plan.

Roth 401K

A Roth 401K differs from a traditional 401K primarily in that it is does not have a tax-deferred contribution. This means that an income tax is paid on all income before the contribution is made but at the time of withdrawal, no income tax is paid. There are additional restrictions associated with a Roth 401K. The $16,500 limit is imposed on a combination of traditional and Roth 401K that an employee may have so they cannot invest $16,500 in two separate accounts.

SIMPLE 401K

This is a type of 401K plan available to companies with 100 or fewer employees. The employees eligible must have received at least $5,000 in pay from the company in the last year. Traditional 401K plans have a requirement for the employer to test whether the higher compensated employees in the company are being treated as equally as lower paid employees. The SIMPLE 401K eliminates those testing requirements so allows small businesses to provide retirement benefits to their employees without high costs. One difference is that the SIMPLE 401K has a lower limit of $11,500 contribution per year in contrast to the $16,400 limit in a traditional 401K.


401K plans are popular among employees and are the major source of retirement income for 44% of all workers. It is important when planning for retirement to understand the different options available and fitting them to your personal preferences. You can read more about how a 401K fits into saving for retirement and retirement investing.

by Finantage