The Dow Jones dropped a historical 500+ points on Monday and 300+ points on Wednesday before a huge turn around began on rumors that the government would come in to save the day with a bail out plan. On Friday morning, the Feds validated those rumors with an announcement to come up with a bail out plan with Congress to secure bad debt in financial market. With government acknowledgement to the seriousness of the crisis and a radical planned action to correct it, consumers suddenly gained confidence and the market soared back up with a huge rally on Friday.
The upside to all the crashing news this week, is that there were plenty of opportunities to buy low and increase one's investment. When the Dow Jones Industrial Index dropped more than 500 points on Monday, most Wall Street analysts said it was probably too late to sell by that point and holding shares for an inevitable recovery in the market was the best strategy. On Tuesday the market recovered by gaining more than 200 points suggesting consumers were ambivalent about the fall the previous day and took advantage of low prices. Then on Wednesday the Dow Jones dropped more than 300 points, only to nearly recover fully by Friday. Although I don't think the Wall Street experts foresaw the recovery to come so quickly, they turned out to be right in their prediction. In fact three stocks mentioned in this blog in the past (Ford, Starbucks & Solarfun) actually gained over 6% during the week --out-performing the Dow Jones, NASDAQ and the S&P 500.
From opening price on Monday 9/15 to closing price on Friday 9/19, Ford (F) gained +13.1% and Solarfun Power Holding Inc. (SOLF) gained +16.8% this week. Holding these two stocks during the turmoil would have made big returns on your investment. Buying at their low would have increased your returns even more. Another two stocks in my portfolio that gained 6% or more this week from opening price on Monday to closing price on Friday were Harmonics Inc (HLIT) +6.73% and Starbucks (SBUX) +6.5%.
Each week I also keep an eye on the schedule of Quarterly Earnings Report announcements. Usually there is a rally to purchase stocks before the quarterly earnings report is given on companies expected to show greater than expected earnings. This week Oracle (ORCL) was scheduled to annouce its 1stQ 09 Quarterly Earnings Report on Thursday, September 18th. The stock had outperformed its earnings estimates 3 out of the 4 quarters in 2008 and The Street.com, Standard & Poors and Jaywalk all gave it a Buy rating. Despite the anxiety in the market, Oracle was a sound stock to buy. Although Oracle dropped below $18 dollars on Thursday the stock still rose 4.9% for the week from a Monday 9/15 open of $19.13 to a Friday 9/19 close of $20.08 making it yet another stock to deliver a big gain during a wildly volatile week.
And that's the Stock Upside for this week.
-- Jonah
