Market Outlook: 02-13-08

Robert Hsu, February 13, 2008

I just got home from attending the World Money Show in Orlando, Florida, last week. I always enjoy Money Shows, and this one was no exception. I was pleased to meet many of you in person and hear what's on your mind. As market conditions grow more volatile, many investors are wondering what to do now.

That's an excellent question, and as a subscriber to Asia Edge, I'll tell you exactly how to protect your holdings and make profits. But first, I want to talk about where the market is headed. I still expect the S&P 500 to trade in a 10% range between 1,270 and 1,400 for the next few months. After a run-up to the top of my expected trading range of 1,396 two weeks ago, stocks sold off hard last week. This week the market has started to bounce a bit.

In this type of choppy market environment, it's important to buy stocks on dips and sell into rallies instead of chasing breakouts. In addition, traders should have some short positions in their portfolios to help hedge downside risk.

Let's take a closer look at what's happening in the U.S. economy. According to Bloomberg, overall fourth-quarter earnings from the S&P 500 have fallen almost 20% on average, with 367 companies having released results so far. Earnings are down mainly because financial giants like Merrill Lynch and Citigroup have posted record losses. As a result, the S&P 500 has been down for three consecutive months, its longest losing streak since 2003.

To get the latest updates on the market and which stocks Robert Hsu is recommending now, join Asia Edge.

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