When Interest Rates Fall, These Go Up +25%

TODAY'S DOW JONES TRADER PORTFOLIO FACT$:

1. Coca-Cola Company (KO) Hit a 52-week high: $57.68

2. Procter & Gamble (PG) Hit a 52-week high: $70.73
3. Our DJT Portfolio hit a new year high at +25.4%

Last Tuesday, we got the biggest buy signal since November 6, 2002. When we received that buy signal, the Dow closed at 8,771. That market trough coincided with the last time the Fed cut interest rates by 0.5%. Since then, the markets have done extremely well and that buy signal kicked off a five year bull market.

... But, while the Dow (overall) has returned a mere +57% since that time, there have been a lot of much better performing stock investments. Two of the best performers since that time were Energy and Health Care. Since the bull market began on October 9, 2002, the FACT is that only 18 of the 500 stocks in the S & P 500 Index have seen their share prices decline during this bull market run.

Can this time be different? Of course it can, but we're betting that long term stocks will rise handsomely and short term we intend to maximize our returns by riding overall market momentum and individual stock trends.

FUN $ FACTS:

The best performing current S&P 500 stock since the bear market began on March 24, 2000 is: XTO Energy (XTO) ... Which leads the top 25 list with a whopping return of over +2,188% ! The worst? ... JDS Uniphase Corp. (JDSU) ... it has fallen over -98.9%.
(We say, "Let bad dogs lie ...")

Fed Cut Rates and We're Up +24.6% ...

While Wall Street hails central bank's decision to cut the fed funds rate by a half-percentage point, we hail to Sam Adams and the ongoing performance of our Dow Jones Trader Portfolio.

That about sums it up! ...

The past several weeks of infinite media speculation and lingering financial analysts reciting crystal balled forecasts in unison all came to an abrupt end at 2:20 PM (EST) ... and like a sling shot, the Dow shot up +335.97 (+2.51%) as the market welcomed the news of the surprise rate cut. On a percentage basis, the Dow added 2.5 percent, its best one-day gain since April 2, 2003, when it gained 2.67 percent.

Last Thursday we did state our indicators pointed to a trend reversal for the first time in awhile, and coincidentally at 2:20 PM today our Dow Jones Trader Portfolio did profit from the Fed's half point decrease with the 4 new positions we purchased.

Additionally, today we also increased our holdings by adding the following two new positions;

American Express Company (AXP) and once again, General Electric Company (GE), which the stock broke-out and just hit a new 52-week high along with PG. Worth noting here, we have now gone from 6 stock holdings to 12 in less than one week.

Below is a complete portfolio list of all our holdings:

YTD % Change:

DJTP ........... +24.6%

S & P 500 ..... + 7.16%

NASDAQ ........+ 9.79%

FUN $ FACT: ... And for shits and grins, when we say ALL "media speculation and lingering financial analysts reciting crystal balled forecasts in unison all came to an abrupt end at 2:20 PM", we really meant that! The charts below illustrate a Wall Street phenomena which is rarely seen ... I guess you can call it "the power of the Fed!"... This Dow 30 snapshot was literally taken less than 30 seconds into the decision announcement to cut the fed funds rate by a half-percentage point...

Sodas, Burgers and Dirty Diapers ... and 4 New Buys

As of Thursday these two blue chip stocks, Coca Cola (KO) and McDonald's (MCD), were the best one month performers on Wall Street, and meanwhile Procter & Gamble (PG) just hit its 52-week high at $67.72 soon after the ringing of the opening bell.

When we sold off more than half of our portfolio holdings back in early August to protect our profits (from 15 to only 6 stocks!), we kept 2 of the 3 above mentioned companies in our Dow Jones Trader Portfolio, and today we are benefiting from their new record highs with a gain of +22%.

While almost all the financial talking heads and experts have been too busy for sometime debating whether the "Fed" will lower its benchmark rate or not come Tuesday September 18, the "trend" simply kept us invested in what many refer to as the boring defensive stocks ... In other words, the current sub-prime crisis presumes a doomsday scenario where if people continue to lose their homes and land in the streets, chances are they will still consume a $1.00 Big Mac, supersize on a diet Coke, slap-on some shiny white Pampers diaper on their bottomless kid ... and then spark up a Marlboro while fueling up their SUV at the pumping station.

(In case you're wondering, the ticker sequence to this award winning apocalyptic film would be; MCD, KO, PG, MO & XOM)

On a more serious note now … interestingly today, for the first time since early summer 2007 the stock market confirmed a trend reversal for several of the DOW component stocks - shifting from a negative trend to a positive.

Whether this trend reversal is real or setting up to be a fake-out, it remains to be seen. This type of action is personally more interesting than whether come next Tuesday Mr. “Fed” Bernanke will show up in a Disney or Wal-Mart tie. The timing can also prove to be lucrative.

Having said that we now finally commit some of our 50% cash to work in buying some positions.

For now we are establishing positions in:

C - Citigroup, Inc (NYSE)
JNJ - Johnson & Johnson (NYSE)
MCD - McDonald's Corporation (NYSE)
MSFT - Microsoft Corporation (NASDAQ GS)