BAC Cover Recommendation

By: ispeculatornew
Date posted: 03.17.2008 (8:40 pm) | Write a Comment  (5 Comments)

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BAC – Bank of America (NYSE) – (Closing Price – $35.96) 

Bank of America is down moderately since my initial short recommendation and I think now would be a good time to cover and take the gain off the table. I still think financial companies are going to see further weakness but they will most likely rally tomorrow when the Fed cuts interest rates. If the Fed cuts by a point, which I have a feeling is going to happen, financials could get a significant short term boost. Instead of holding through the volatility I think it would be wise just to cover.

If you shorted Bank of America when I gave my recommendation you are sitting on a 9.5% gain in just a couple of weeks. That is not an insignificant gain considering the short amount of time it took to obtain it. You could have made an even better gain shorting other financial companies when I gave my recommendation. If you shorted Bear Sterns (BSC) you would be sitting on a huge gain.

If you are a very short term trader and like to trade in and out of stocks it may be wise to consider buying financial stocks tomorrow, especially if the Fed cuts by a point. If financials rally tomorrow I would trade the news but get out quickly.

Disclaimer: I have no position in BAC, BSC, or any other financial company.

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5 Comments

  1. Comment by Eve — April 1, 2008 @ 9:26 am

    After reviewing your articles, I am puzzled.

    When you say short certain stock, you mean the stock will go down? How do I make money if I follow your advice? I am using scottrade online trading.

    sorry for the stupid question.

    thanks

  2. Comment by admin — April 1, 2008 @ 9:56 pm

    Eve,

    When you short a stock you make money when the stock price goes down. When you place an order you will see different options you can choose: buy, sell, sell short, and buy to cover. If you wanted to short a stock you would choose sell short and enter either a market or limit order. However, you really shouldn’t short stocks if you are new to investing because their is more risk involved in shorting stocks than buying stocks. I plan on writing a post in the near future that explains how shorting works. I will also give some tips on shorting.

  3. Comment by Eve — April 2, 2008 @ 11:33 am

    Hi Phillip,

    Are you specialized in shorting stocks?

    Would you recommed stocks to buy?

    thanks
    Eve

  4. Comment by admin — April 2, 2008 @ 9:44 pm

    Hello Eve,

    I have had pretty good success shorting stocks. The reason I have been focusing on shorting stocks this year is because the market has been selling off due to fears of a recession.

    However, I do have some buy recommendations under “free stock picks”. I would recommend SWIR, SILC, CAAS, and EGHT. I have a couple of other recommendations under free stock picks, MCZ and DTLK, but I am just recommending to hold them. I also plan on giving a couple of more recommendations in the next week or two.

    I currently own SILC myself.

  5. Comment by eve — April 3, 2008 @ 2:50 am

    Thank you for the insights.

    i will keep my eyes on them.

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