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By David Goodboy

It was September 2008, and the stock market was in chaos.

The Dow Jones Industrial Average ($INDU) experienced its largest point decline, plunging 777 points in just one session. The support of the 50- and 200-period moving averages were slashed like a hot knife through butter, while the Volatility Index ($VIX) rocketed through technical resistance as if it wasn't even there. The financial media was full of pundits declaring a complete technical breakdown in the stock market.
 
Many were left asking what it all meant. Part of what it meant was that the once esoteric quasi-science known as technical analysis had gone mainstream. 

Anyone who has been following the Market Volatility Index ($VIX) and VIX-related ETFs over the past year knows that these instruments have been decimated. Usually, investors who buy VIX or its related instruments do so as a hedge against risk, and they normally use only a small part of their portfolio to do so. But a decline like the one we have seen over the past year can make an investor who has only a small amount allocated to this hedge raise his eyebrows.

In every respect, this is understandable. The moves are aggressive, and some of the instruments related to VIX are leveraged two and three times as well. That multiplies the risk, of course, but it also multiplies the risk control if the market begins to experience problems.

 

Can you ride out the end of bond buying?

 

We just had a correction based on that concept and I think the answer for most stocks is no, not if it is going to go on for months and months, which is what I would fear.

 

That's why I think you have to accept the fact that raising cash on days like Monday in the groups that were hardest hit makes a ton of sense.

But what acted well in the downturn? What didn't give up the ghost? Two groups: tech and banks.

 

By David Sterman

Will interest rates continue their recent ascent?

If so, many investors will come to question the wisdom of holding dividend-paying stocks. After all, bonds and CDs are virtually riskless, and if they sport more attractive yields, why bother with riskier stocks?

The simple reason: Interest rates (such as on the 10-year Treasury note) are unlikely to move past 4%, as I noted recently on StreetAuthority.

 

By Matthew Kanterman

U.S. equity futures rose slightly in premarket trade Tuesday as investors eagerly awaited the Federal Reserve policy decision and statement Wednesday. Monday trading was a whip-saw marked by a steep sell-off over tapering fears.

In other news, the German ZEW Economic Sentiment Index rose to 38.5, beating expectations of a reading of 38.1 and better than the prior 36.4.

European Central Bank President spoke in Jerusalem overnight and hinted that the long-term refinancing operations could be extended as a means of providing additional bank liquidity. Speculation had grown that the ECB could do this however it is the first time Draghi has addressed it directly.

 

We have less than two days before the Federal Reserve and Chairman Ben Bernanke take up the "what's next" questions.

As in: Will the Fed trim its bond buying? Will the Fed move interest rates higher? What exactly is the Fed hoping to accomplish?

The answer on Monday -- and only for Monday -- was yes, the Fed may start to trim its $85-billion-a-month bond buying campaign. "When" wasn't clear.  No, it's not moving interest rates higher any time soon. And what the Fed wants is an economy that, for the foreseeable future, can take care of itself and start to expand solidly.

We know this because the stock market ended nicely higher -- after ending un-nicely lower on Friday. In fact, June is now a positive month for stocks. For how long that will last won't be clear until after Wednesday.  

I’m selling Johnson Controls (JCI) out of my to raise cash in the current market, because 1) I think I can do better than the 12.9% return to my target price, and

2) because I think the uncertainty in that target has gotten higher recently.

Getting to my $42.40 target price was contingent on fairly decent second half 2013 auto sales from European automakers -- and that looks less likely with the most optimistic projections now putting off economic growth in the eurozone into 2014 -- and a pick up in orders in the company’s building energy unit. That too seems less likely as interest rates start to tick up, creating a drag on commercial construction.

 

By Zacks Equity Research

 

Adobe Systems Inc. (ADBE) is set to report second quarter 2013 results on Tuesday. Last quarter, it posted a 10% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors This Past Quarter

Adobe’s first-quarter earnings of 22 cents were in line with the Zacks Consensus Estimate. Revenues were down both sequentially as well as from the year-ago quarter, but were above management’s guidance due to increased adoption of Adobe’s Creative Cloud. Margin expansion was limited due to the change in sales mix, which favored lower-margin products.

 

DreamWorks (DWA) Animation announced a multi-year programming deal with Netflix (NFLX).  The partnership will result in 300 hours of original programming, as DreamWorks Animation expands even further into the non-movie business. 

The new programs will be inspired by characters from the DreamWorks universe, including Shrek, the Croods and the upcoming Turbo.  But will the new deal pay off for investors?  In this installment of Stock Of The Day, Motley Fool analyst Andy Cross shares why he believes shares of DreamWorks Animation still have room to run. 

 

Updated: 5:24 p.m. ET

On May 31, crude oil in New York settled at $91.97 a barrel, and there were thoughts the price might break below $90.

On Monday, crude oil (-CL) briefly hit $98.74 a barrel before settling back to $97.77, down 8 cents from Friday. But the worry that crude oil might hit $100 a barrel is definitely at play, with the possibility of higher prices at the gas pump.

Brent crude, the benchmark North Sea oil that has a big influence on domestic gasoline prices, was at $105.57 a barrel after reaching as high as $106.67.

Light sweet crude is up 6.3% for the month and 6.5% on the year. Brent crude is flat for the month and down 5% in 2013.  

By Louis Bedigian 

Exchange-traded funds expert Doug Fabian sits down with Ray Collins from the MoneyShow.com and discusses three of his favorite new and innovative plays in the ETF market.

ETFs made easy. We're here now with Doug Fabian. Doug, there are some innovations in the world of exchange-traded funds.

Well, Ray, I love this area of ETFs. And in some sense it's getting really complicated, because there are 1,300 products, but there's really good stuff that's coming from American companies; there's innovation that I want investors to know about.

The first innovation that I want them to know about is an ETF that is actually a fund of funds ... an ETF of ETFs. Now, you might initially think that maybe somebody's going to get double-charged or something like that. That's not the case. If you have mutual funds inside a mutual fund, there is a compounding of fees, but not so in the world of exchange-traded funds when it's done by a single company.

 

By Dana Blankenhorn

 

Back in 2011, when I first started writing about financial topics, I remember pounding the table for Google (GOOG) over Apple (AAPL).

 

I was still pounding the table last September. At Seeking Alpha, I wrote a story called "A Strong Cloud Beats as Strong Device." Since then, investors have been buying that idea big-time.

 

Maybe too big. Since I wrote that piece, Google shares are up nearly 27%, a roughly $70 billion increase in its market cap. Apple, meanwhile, is down 34%, a loss of almost $200 billion to investors.

 

So my efforts have turned toward the other side of the trade. I have written lately on TheStreet that Apple is practically giving its stock away and that Google is in a bubble. 

 

By Tom Aspray, MoneyShow.com

Last week's lower close has left many of the key U.S. markets on the verge of stronger sell signals but the global markets are starting off the week on a very positive note. Japan revised its first-quarter growth to 4.1% as the Nikkei 225 gained almost 5%.

This could complete the correction in the Nikkei as it has reached the buy levels (MoneyShow) outlined last week. European stocks are strong as the Dax Index is up well over 1% in early trading with the S&P futures showing double-digit gains.

Of course, it will be the close Monday that is important as the daily charts reviewed in the Money Show's Week Ahead column need two consecutive strong closes with strong A/D ratios to indicate that the correction is really over.