| July 11, 2014 | | | | | |
 | | | 3 Terrible Trading Mistakes | | | - Time for "Bad Idea Friday"
- Ragged retail stocks you need to avoid
- Plus: The end of another stock scam?
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| | | Greg Guenthner coming to you from Baltimore, MD...  | | Greg Guenthner | Usually, I fill what little space I have here in this morning note with the latest trends and trades that can help you navigate our unforgiving markets.
Not today.
I'm breaking from our usual agenda to bring you "Bad Idea Friday". Yes, it's exactly what it sounds like: I'm going to give you three boneheaded trading ideas. You might think of these stocks as potential comeback plays. But do yourself a favor -steer clear of these market casualties.
All three of the stocks I'm going to show you are down significantly this year. And each is dealing with problems that could send shares even lower.
Let's get to it...
First up is an electronics megastore I'm sure you set foot in before: Best Buy (NYSE:BBY).
I don't like Best Buy for a couple of important reasons. First, big-box retailers are struggling. But Best Buy in particular is in trouble because Amazon is eating its lunch. Customers use Best Buy as a showroom for gadgets they want, and then they just buy them online for a cheaper price. Best Buy tried to stop the bleeding with price match guarantees. But that appears to be only a temporary solution.
Best Buy shares are up 25% since the end of April. But I see little reason to trust this rally. The stock remains down significantly year-to-date. It still has plenty of resistance to clear from its January swoon--and earnings season is fast approaching. Stay away from this one...
Next up is Aeropostale (NYSE:ARO). Aeropostale is a mall-based retailer that caters to younger customers. And it just can't seem to do anything right lately. In fact, some analysts are predicting the company might just shut its doors as early as next year. As Yahoo! Finance reports, "Aeropostale's teen line of branded clothes is fighting a losing battle with the likes of low cost brands such as H&M and Forever 21." Specialty retail is a fickle business. And it sometimes makes for a bad investment. Take a look:
The stock is down more than 60% on the year. ARO is pushing toward new lows this week. Don't even think of buying this one...
Finally, we have Lumber Liquidators (NYSE:LL), which sells specialty flooring at its locations across the U.S. Lumber Liquidators made headlines yesterday when the company announced soft demand and fewer customers visiting its stores. The stock dropped more than 20% on the day...
Lumber Liquidators has almost been chopped in half since the beginning of the year. Things could get even uglier when the company reports earnings later this month.
Stay away from these stocks this summer. It looks as if their plights could get worse before they improve... | | | | | | | | | An Income Stream to Last a Lifetime
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| | | | 63% | of all stocks trading on U.S. exchanges are above their respective 50-day moving averages. That's a sharp drop from just before the long weekend... | | $4.13 | is the price of natural gas this morning. Natty continues to dive this month, breaking to lows not seen since early January... | | $102 | buys a barrel of crude this morning. Oil is also slipping this summer. Light crude has retreated from its highs above $106 set in mid-June... | | $1,337 | marks the spot for gold futures. Gold is down about a buck in early trading after dropping from yesterday morning's highs... | | 1,957 | is where you'll find S&P futures. Stocks are looking at a flat open to begin the trading day... | | | |  | | | | Rude Trends | When to Buy... When to Sell
| | | When several groups of stocks are moving higher while the rest of the market just kind of wanders, some people (including myself) like to call it a "stock picker's market".
But in reality, there are almost always individual stocks doing their own thing while the market hums along. If you look hard enough, you can find amazing--and awful--trades and investments no matter what the rest of the market is doing.
That brings us to a little company called Cynk Technology.
I don't know what this company does. Neither does anyone else. But that didn't' stop it from rocketing higher this week...
"As of Wednesday's close, the stock had rallied almost 25,000% over the past few weeks, pushing its nosebleed valuation toward $5 billion and sending traders (and markets reporters) on an Internet goose chase to figure out what it's all about," MarketWatch explains. "They discovered, well, almost nothing. Literally. No revenue, no assets, no discernible product and just one employee."
Of course, there's something fishy going on here. The stock was halted earlier this morning...
When you're on the hunt for new trades, beware potential scams like Cynk. If it looks too good to be true, it probably is.
If you want to try to pull gains from small, unknown companies, talk to our small-cap expert Jonas Elmerraji first. He'll steer you in the right direction... [Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner] | | |  | | | | Ignore At Your Own Peril | Today's Must Read Links | | | | | | | | | BE SURE TO ADD dr@dailyreckoning.com to your address book. | | | | | | | Additional Articles & Commentary:
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