In the not too distant past, if you wanted to trade stocks you had to pay huge fees to use a full service broker. It was so expensive the average investor could barely afford it and many couldn’t at all. However, today there are many great discount online brokers to choose from and most offer free accounts that take just minutes to sign up for. And trading fees are low, way low. As low as $3-$5 a trade.

Choosing the “best” online stock broker is important since the broker will be carrying out your investment trades and maintaining your accounts. However, finding a good online stock broker can be unnerving due to sheer amount of investment firms and banks vying for your business. Everyone claims to offer the “best trades” and the “lowest prices.” So how do you decide which online stock broker best meets your needs?

EVALUATING ONLINE BROKERS

While choosing an online stock broker, the first thing to take into consideration is whether you need a full service or a discount broker. While full service brokers offer a comprehensive range of services, discount brokers generally only execute trades on behalf of the clients. As a result, discount brokers generally charge lower commissions. Some other parameters to compare online stock brokers on are:

Trading platform: Online trading can become quite confusing and cumbersome, if the software provided by the online broker lacks ease-of-use. If the broker’s website takes too long to load or is too confusing, your trade result can be grossly affected.

Products offered: When choosing an online broker, people generally only think of stocks. However, some online brokers deal in other investment vehicles as well, such as futures, options and gold contracts. If you seek diversity in your investment portfolio, find online brokers who manage multiple investments. 

Minimum deposit: Most online brokers charge a minimum deposit to execute, which may be as high as $10,000. Evaluate your financial capacity and choose a broker accordingly. Note that some online stock brokers do not charge any minimum deposit, although this might mean compromising on some additional services.

Customer service: Since online trading may become boggling at times, it is important that the online broker maintains appropriate real-time over-the-phone and online customer service. Lack of proper customer service may leave you confused and frustrated. Also, ensure that the online broker’s customer service provides regularly account statements, for you to track your progress.

Finally, note that the right online stock broker can make or break your progress on the stock market. Good brokers undertake research activities to keep their clients abreast of the best strategies to optimize returns from stock trading.

I’ve used Fidelity, Sharebuilder, Scottrade and a number of other online brokers.  But I found a broker with a mix of all the right qualities: great customer service, an easy to use website, no minimum deposit, great security, fast trade execution and, most importantly, LOW, LOW trading fees. Tradeking takes the prize in my book. They offer . Sign up today. You’ll be glad you did.  It’s free to sign up and it literally only takes minutes.

MARKET STUTTERS DESPITE QE

Despite the implementation of Quantitative Easing (QE2) this week by Ben Bernanke and the Federal Reserve, there was a swift selloff in the market today.
Very few stocks closed in the green with the exception of Home Depot (HD) and some others in the retail sector.

Gold, oil, and most other commodities sold off hard as the dollar rallied fiercely despite the daily buying of US Treasuries by the Fed through Permanent Open Market Operations (POMO). Speaking of Quantitative Easing, for those of you who don’t know exactly what it is, check out the entertaining video below today’s trade update; it’s priceless!

COMPANY INVEST TRADE UPDATES

ERY: ERY is a triple levereged (3X) Bearish Energy Sector ETF. We suggested getting in last week and got stopped out. We then Re-entered the trade on Monday at $29.25. Since then, ERY has gained a nice 8.25%, closing at $31.67 today. What to do now? This trade is doing fantastic! We believe it has much upside to go. Hold your shares and look to add to your position on any slight pullback (possibly tomorrow). We put a 6% trailing stop in today. That way, worst case we’re still ahead on the trade.

QID: QID is the Technology sector Ultrashort ETF. We recommended QID in last weekend’s post for purchase on Monday morning. We got it at $12.60 on Monday and since then it has gone up nearly 5%, closing at $13.20 today — Not bad for two days! What to do now? Hold and buy more on a pullback (when the market bounces in the next trading day or two).

QE VIDEO

Despite Ben Bernanke and the Federal Reserve’s $600 billion effort to prop the stock market and economy, it looks as if a correction is in order now.  Now would be a good time to pause, take profits and sell a portion of your long positions, or, if you are aggressive, why not make money when the market goes down?   You can do that by shorting stocks, buying put options, or, our preferred method, buying inverse ETFs.

We know that the market goes down much faster than it goes up because fear is a powerful thing, especially when coupled with money.  Right now the early signals indicate a 5 to 10 percent correction looming in the S&P 500.  And when the S&P 500 goes down, 3/4 of all stocks go down with it so take heed.  If you want to stay in your long positions, that’s fine.  Use a 5 to 8% trailing stop (whatever you are comfortable with).  A trailing stop is a wonderful tool offered by most online brokers.  It is a variable selling point and is great when you’ve already made money and want to lock in your profits.  If you put a 5% trail in, your selling point is always 5% lower than the current bid for the stock or ETF you are in.  That way, if the price keeps going up, so does your stop, however, once it corrects 5%, your shares are automatically sold, and your profits are locked in.

Today’s pick is QID.  QID is a reverse ETF which moves in the opposite direction of the QQQ’s (technology ETF).  That is when the technology sector is going down, QID is going up.

Looking at the chart there are several encouraging signals:

“A” is the slow stochastic momentum indicator.  It has been oscillating in oversold territory since early September!  We think this time the stochastic line has a great shot of going all the way up to 80 (overbought).  If that happens, QID will rally bigtime!  There is a powerful divergence between the stochastic and the price channel.  Look at the severely downsloped price trendline (red), compared to the stochastic lows (green line).  The stochastic line is flat to slightly sloping upward, indicating a change in trend.

“B“is the price chart for QID.  We had a powerful white candle on Friday (typically a selling day) and QID had a positive week overall.  More importantly, are the 3 and 10 day Exponential Moving Averages (EMAs).  The green and red arrows in the chart indicate buy/sell signals generated when the 3 day EMA (blue line) crosses up or down through the 10 day EMA (red line).  As you can see this technique gives wonderful stock trading signals.  The last signal (SELL) occured at the beginning of September.  Since then QID has gotten a 36% haircut! As of Friday’s close the 3 day EMA is EXACTLY the same as the 10 day and is just about to cross to the upside.  Monday could be an EXCELLENT entry point.

“C” is the MACD histogram.  Look at the massive bullish divergence between the histogram and the price channel.  This is a powerful buy signal.

“D” is the ADX indicator.  You get a buy signal when the green line crosses up through the red line (heading that direction but hasn’t happend yet).  However, the ADX line (black line) gives early signals.  The ADX line measures trend, and the trend has been up since early September, however that line is now rolling over and sloping down.

Bottom Line: Look for an entry point Monday and buy 50-100 shares of QID with a stop $1 below your entry point.

UPDATE: We had two wonderful stocks here in X (US Steel) and DGP (Double Gold ETF).  Hopefully you took profits and sold all of your shares now.

ERY:  We recommended it last week, but our stop of $29.20 was triggered.  However, ERY rallied hard on Friday and we really like it again as a trade.  Look to re-enter on Monday.

At Company Invest,  we strive to provide analysis to give readers the most accurate forecast for the best stocks to buy based on recent chart signals.  We use technical analysis as our primary trading strategy.  For those who don’t know, technical analysis is the study of stock price charts.  We get signals from a variety of indicators including chart patterns, support and resistance levels, Japanese candlestick signals, moving averages, volume, and a variety of momentum indicators.

Before we get to the charts, on a macro level there are some interesting news events to consider.  With last week’s Federal Reserve decision to enact Quantitative Easing (QE2), many assumed, and rightly so, that the dollar would get trashed while commodities, especially precious metals would soar.  And that pretty much came true last week with gold hitting a new all-time high above $1,400 an ounce.  However, it seems to me this week (in a 180 degree reversal to that theory) that the Fed would like to strengthen the dollar.  There seems to be a sector rotation going on here that started yesterday and continued today.  The sector rotation appears to be a move out of gold, commodities, and treasuries and into stocks.

That brings us to today’s Company Invest pick, ERY.  ERY is a bearish Exchange Traded Fund (ETF) for the energy sector.  With what seems to be a coordinated effort to strengthen the dollar and with the dollar’s chart (UUP) looking quite bullish, the energy sector is setting up for a big correction.  And, by buying ERY, you can capitalize by making money when energy stocks go down.

COMPANY INVEST TECHNICAL ANALYSIS

Looking at today’s chart, “A” is the Relative Strength Index (RSI) set to the 7-day period.  At a reading of 10.44, the RSI is more oversold than it has been for at least 6 months (this entire chart).  This tells us a bounce is coming.

“B” is the ERY price chart.  Last Thurs, Nov 4 ERY gapped down pre-market and then continued to sell off throughout the day.  A “gap” occurs when prices move up or down outside of the trading session (in futures trading).  Technical analysis tells us that most of these gaps are eventually filled, meaning there is a very high probability that ERY goes back to the $34-$34.50 area in the near term.  That would mean over an 11% possible gain on a quick swing trade.  Also, yesterday’s candle was a hollow red candle, which indicates a reversal could be imminent.  The hollow red candle meant that ERY gapped down premarket yesterday, moved lower, then rallied the rest of the day to close higher than it opened, yet still lower (barely) than the previous day’s close.

“C” is the MACD histogram.  A shallower blue bar at the end of today’s session would indicate a reversal and a possible bullish divergence between the histogram and the price chart.  These bullish divergences happen when prices make a lower low, but the histogram makes a higher low (see sloping up green line on histogram and sloping down red line on price chart).

Finally, “D” the slow stochastic momentum indicator got a bullish cross (signal line “black” crossed up through the stochastic line “red”).

Company Invest Bottom Line:  This trade has a good risk reward.  You can buy it here and put a stop at $29.20, for a move to $34-$35.

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WHAT IS THE VIX?

 We strive to introduce new trading strategies at companyinvest.com.  Today we talk about a contrarian indicator, the VIX index.

 The VIX is the symbol for the Chicago Board Options Exchange’s volatility index. It measures implied volatility (not historical or statistical volatility) of a wide range of S&P 500 options. It is often called the “investor fear gauge” because it reflects investor’s best prediction of near-term market volatility, or risk. In general, VIX starts to rise during times of financial stress and lessens as investors become complacent. It is the market’s best prediction of near-term market volatility.  The good news is we can use the VIX to forecast the future direction of the market.

 HOW CAN YOU VIEW THE VIX?

 You can access the VIX index using your stock software or any major online trading platform software such as www.stockcharts.com or Yahoo Finance.  Enter the symbol “$VIX”. 

 USING THE VIX TO TRADE

 There is an old clichéd saying about the VIX index that goes:

 ”When the VIX is high, you buy… When it’s low, you GO!”

Looking at today’s chart of the VIX, “A” is the 3-day relative strength index (RSI).  Look at the past 3 times the levels were this oversold (green circles).  They all led to rallies in the VIX, while at the same time corrections in the S&P 500.  Here’s how they played out:

• June 21-Jun 30 VIX rally =     10.67% Correction in S&P 500
• July 12-July 18 VIX rally =     3.93% Correction in S&P 500
• October 19-20 VIX rally =       2.6% Correction in S& P 500
• November 5 to ? =                  3 to 10% S&P Correction on the HORIZON!

 ”B” is the price chart.  Right now the VIX is approaching a several month low, so if the saying rings true, you should sell some of your long positions or consider going short for the impending correction.  Also, today’s candlestick is a doji, indicating a probable change in trend.

 ”C” is the MACD histogram, a wonderful forecaster of trend change.  It looks like a bullish divergence is forming, meaning the VIX price made a LOWER low, while at the same time the MACD is forming a HIGHER low.

 Bottom Line: Position yourself for a 3 to 10% market correction.

 RECENT COMPANY INVEST PICKS

 We found some hot stocks recently!

 US Steel (X).  We said to buy shares at the $40 level on October 28, and since then the stock has rallied over 21%!  Many investors don’t get that kind of return in a whole year.  What to do:  Take 3/4 to all of your position off and put the profits in your pocket.

 Double Bull Gold (DGP).  We said to buy shares at the $39 level.  The trade is currently up 6.5% and still rising.  What to do:  HOLD or put a 5% trailing stop in.

Even though we’re still somewhat bearish on gold  right now at Company Invest, the chart signals are telling us the trade right now is to the upside.  We prefer to use DGP, which is a double gold ETF.

COMPANY INVEST TECHNICAL ANALYSIS

Looking at today’s chart, “A” is the Wilder’s ADX indicator.  Welles Wilder developed the Average Directional Index (ADX) to evaluate the strength of a current trend, be it up or down.  Low readings (below 20) indicate a weak trend and high readings (above 40) indicate a strong trend The ADX line (black line) measures this trend.  It has settled back to 24.39, after staying at an overhead level for a couple weeks. The other two lines on the indicator are the +DX (green) and –DX (red).  Buy and sell signals are generated in a trending market when a +DX/-DX crossover occurs . On 10/28 we had a bullish DI cross.  Confirmation of this buy signal occurs when the stock closes above the high point of the day of the crossover.  On 10/29 we got that confirmation with a close of $39.30. Buy signal firmly intact.

“B” is the daily pricing chart of DGP.  I prefer candlestick charts, because they have useful predictive qualities.  In this case, a red spinning top on Oct 27 (candle body has shadows extending both above and below it) indicated a temporary bottom.  Spinning tops occur on volatile trading days when the stock trades well above and below its opening and closing price throughout the day.  It marks investor indecision.  When this occurs following a multi-day trend, it suggests a pause or change in direction.

Secondly, I plotted this chart with 3 and 10 day Exponential Moving Averages (EMAs).  3 and 10 day EMA crossovers give wonderful buy signals.  Look at all the great signals on the chart when one line crossed the other. Today the blue line (3 day) crossed up through the red line (10 day).

Finally, as “C” shows, we had a confirmation of a bullish “PPP” pattern on the MACD histogram today. You can see this pattern on the chart. A higher low bar was put in yesterday, while today, 10/29 the stock closed higher than it did yesterday, confirming the signal. “PPPs” also give good, solid signals.

Company Invest Bottom Line:  Buy DGP Monday for a possible run into the $44-46 range.  Put a stop right below $37 (nearest support).  That way, you cap your potential loss

What a roller coaster of a week.  Monday, the market shot straight up;  Tuesday’s news of slowdown in China brought it back down.  Wednesday, rally on light volume; then today was a day of indecision: the market opened up, soared higher, sold way off on a dollar reversal, then rallied at the end of the session for a nearly flat finish.

What is interesting this week is what happened to the dollar.  The dollar can be tracked using the ETF “UUP”.  We’ve had a reversal in the dollar and, what looks like, an ensuing correction in precious metals and commodities. 

The following is a recap of recent picks from this site (which are all doing really well!!):

DZZ (Short Gold ETF):  On Oct 17 we said to watch for a rally in the dollar. The chart showed that the dollar was sitting right on support.  We recommended DZZ (short gold), DUG (short oil) or MWN (short mid cap stocks).  What Happened: DZZ has had a wonderful reversal rally week and looks poised to go higher.  The others are doing well too.  The DZZ chart also produced “buy” signals with a bullish 3/10 EMA cross.  It was trading around $8.35 when we recommended it, and has since rallied nearly 11%!!  What to do next:  Look to add to DZZ on the next pullback as it will likely go higher.

Home Depot (HD):  On Oct 19 With HD trading at $30.50, we said to grab it for a run to $33.  What Happened: A great trade is ensuing.  HD is currently trading at $31.81 and looks to go higher in the short term towards our price target.  What to do next:  Hold.

Sallie Mae Corporation (SLM).  We caught this stock at the bottom of a well defined price channel and said to grab it under $11.50 for a possible run to $13.  we said to put a stop loss order at $10.89 (meaning when the stock trades below $10.89, your internet broker will automatically sell all your shares).  What happened: The stock is hanging in there, consolidating, currently at $11.40.  A run to $13 could easily be in the cards.  What to do next:  Hold.

Three great trades this week!  We feel best about the DZZ trade though as the dollar will likely continue to rally in the short term, driving gold and silver down.

Good luck!

The greenback has been the key to nearly the entire 70% rally the market has seen since March, 2009.  Simply put, when the dollar goes down, stocks have went up, and visa versa.  This is especially true with commodities.  We at companyinvest.com expect a multi week pop in the dollar because the fed may want to increase its value right before it revs up the printing press to print more dollars to buy treasuries with (quantitative easing).  Further QE, should the fed do it, will crush the value of the dollar.

The following chart is the weekly chart of UUP (which is an Exchange Traded Fund (ETF)) representing the dollar’s movement.  Weekly charts are useful because they are longer term and could illustrate investments of weeks to months in duration.

On the chart you can see the RSI “A” is nearing “30″ which is extremely oversold.  Stocks and ETFs can stay oversold for prolonged periods of time, but this looks to be a decent entry point.

“B” is the weekly candlestick.  It’s a red candlestick, indicating the ETF lost value last week, however it is a “spinning Top,” which illustrates indecision.  It shows that during the week UUP traded both higher and lower than where it opened and closed.  This could mean UUP is ready to reverse.  A “Spinning top” sort of looks like a plus sign.  Compare that with the previous weeks red candles. Do you see a difference?

“C” is important.  “C” is a long term trendline of price support going back to early 2008.  Notice this week’s candle tagged that support line and bounced off of it.

“D” is the MACD.  Watch its final print next Friday, 10/22 and see if the histogram “blue bars” put in a shorter bar.  If so, that is a directional change and a buy signal.

“E” is the slow stochastic. Notice it went from below 20 to back above, and now it’s back dowm below 20 again.  That’s a bullish signal.  When the black line crosses up through the red line you could potentially have 1 to 3 months of buying before the black line gets all the way to “80″ again (overbought).

Bottom Line:  You can buy UUP here for a longer term trade, but instead I would look at buying either DZZ (short gold), DUG (Short Oil services), or MWN or QID (short midcap stocks, and short tech).

Today marked the release of the September, 2010 Non-farm payrolls report.  The report was awful; worse than expected.  Minus 95,000 jobs in September (the number was expected to be flat).  Selloff imminent right? Wrong.  As I write this, the Dow has eclipsed the 11,000 mark, all indices are solid green, and gold and other commodities are up as well.

Why? There is strong speculation that this widespread economic weakness will lead the Fed to enact “Quantitative Easing, Part II”, or QE2.  This means they will continue a zero interest rate policy and again crank up the money printing press, using those fresh greenbacks to pay off our debt through the purchase of treasuries.  This keeps interest rates low, especially mortgage rates, while trashing the value of the dollar.  Long term this policy will create many problems including widespread inflation.  However, that is a way’s off.  Until then, let’s party like it’s 1999.

Here’s a brief snippet of the past few Company Invest picks:

October 4 (John Deere: DE). What We Said: Get this stock at the $68 level for a quick run to $76.    What Happened: DE did indeed break out and rallied above $76 today for a great trade.  What to do now?:  Take profits and sell 1/2 your position.

Sept 30 (Apple: AAPL). What We Said: The stock is overheated and will more than likely pull back to 272 before resuming it’s upward trend.  What Happened: Pulled back from 285, to 278 (not quite the 272 we were expecting), and skyrocketed.  As I write this it’s trading at $294.  What to do Now? Take 1/4 to 1/2 off your position off and take profits.

Sept 29 (3M: MMM). What We Said:  Stock is in a trading range between $85 and $88.  Sell under $85 and buy above $88.  What Happened:  It broke through the top of the range and is now in a new range between $88.25 and $89.92.  What to do Now? HOLD your position and place a stop below $88.25.

Sept 28 (Alcoa: AA). What We Said:  At $12.22 take profits and let it pull back.  What Happened: Pulled back to $11.85 before taking off after a positive earnings report on 10/7. It is now trading over $13.  What to do Now? Nothing.  Don’t buy this stock until it pulls back.  Don’t chase a train out of the station.

These were some good calls.  Technical analysis is a wonderful thing and we hope you like this information and continue to visit the site.  As always, your comments are welcomed.  Stay tuned for a full week of picks next week as we fire up 3^rd quarter earnings season on Wall Street.