We are still in a bear market; but, we are experiencing a bear market rally at this
point.  Most of the time, these rallies will last 6-8 weeks and run about 20-25% off the
bottom.  Until we have improving economic conditions…or at least sideways, we will
still be in a bear market.

It took me a long time (probably a couple years) until I could “plug my nose” and go long
at times like these.  Emotionally, you don’t have any desire to play the long side and
the thought of buying a stock…especially a financial stock makes you sick.  At times
like these, just make sure you are buying stocks that were strong in the market crash. 
This way, you know you are most likely buying a higher quality stock.  And after that,
make sure you have protection (stops, options, etc.)

One strategy you may want to look at is a bull call spread.  It is a low risk trade that
you may feel comfortable making.  Matt goes throught them in the Advanced Options class.

Thanks,
Robb

When a company sells stocks, it is important to know if this was stock they already owned (called Treasury stock) or if they are issuing (creating) new shares. If they are simply selling treasury stock, there should be little to no effect on the stock. If they are issuing new shares, this typically has a negative impact on a stock since this creates dilution of the current shareholders. Imagine you own 10,000 shares of a company that has 100,000 shares total outstanding. You own 10% of the company. However, lets say the company issues 100,000 more shares to raise capital, the value of your investment would go down since you only own 5% now.

The only time investors don’t mind a new stock issue is when they are issuing stock to buy a new company. In our prior example, if the company used the money to buy another business the same size, you would now own 5% of a company that is twice as big. As you can see, your investment didn’t really change in value.

But, one last thing about trading news events. I said this many times in the Trading Room, “understanding the news isn’t important. The reaction to the news is what we need to understand.”

Hopefully this helps,
Robb