Earnings season is right around the corner and stock are deeply oversold. So, is now the time to buy or should you wait until after earnings are reported? Is now the time to buy and wait for a quick pop from earnings or should you wait until earnings disappoint and buy the sell-off?

Many stocks are trading at single digit P/E ratios and valuations that make the market look cheap. Although I am not too much into fundamental investing, I have to consider fundamentals when trading. Value investors are working overtime right now trying to distinguish whether these valuations are of actual value or whether they are pointing to a weaker earnings outlook.

What Am I Doing?

Sitting it out for now. If I am not in the market, I can’t lose money. I see companies hoarding cash, retailers reporting mixed numbers, employment not improving, and terrible housing data. The technicals of the markets say there is more room to the downside but with any earnings season around the corner, volatility is the only certain thing in the markets. Some stocks will win and others will lose, I will sit on the sidelines and wait.

Many individual investors and mutual fund managers choose not to invest or trade stocks selling less than $5/share. Many of these stocks, often referred to as penny stocks, will go to zero but what about the ones that don’t? Many mutual funds place limits on stocks they buy; penny stocks are often forbidden by mutual funds. Once these stocks reach the $5/share mark, mutual fund may jump in and push them higher.

Citigroup (C)

Citigroup is in a turn-around phase and once it pays back the government, this stock has the potential to move much higher. This stock is a longer-term trade or more like an investment, which could see a double in price action over the next few years.

SciClone Pharmaceuticals (SCLN)

SciClone is a Chinese pharmaceutical company that operates mostly in Asia but sells its primary drug ZADAXIN in 30 different countries. SciClone Pharmaceuticals recently had a big upgrade, which has driven up the price. SciClone Pharmaceuticals has many products in testing phase which once completed could drive the stock higher, easily reaching the $5/share mark.

Conexant Systems (CNXT)

Conexant Systems is a semiconductor company that recently reported a less than expected earnings loss. The stock currently has a PEG ratio of 0.33. Conexant closed today at $3.64. Although the trend is down, the stock may find support at around $3.00 as the 200 DMA will support the price. This stock is a trade and not an investment: place stop losses and be prepared to take profits quick.

Xinyuan Real Estate Co (XIN)

Xinyuan Real Estate is a Chinese property management company that also engages in residential real estate development. This stock trades at less 3.86 times forward P/E and at a PEG ratio of 0.14. If you believe in the Chinese real estate bubble, stay away from this stock or take it for a quick trade. The stock is currently selling at a discount to book value and presents a promising trade for a couple points.

Global Ship Lease (GSL)

Global Ship Lease leases container ships to various container-shipping companies with long-term contracts at fixed rates. The company is selling at less than book value with the current price/book ratio of 0.66 and a P/E ratio of 3.22. Global Ship Lease has 17 ships currently on the water with two more coming at the end of 2010.

Trading penny stocks significantly increases your risk. Most of the companies listed are microcap companies that can also increase risk. Please research these stocks before making any purchases. Consider penny stocks speculation and allocate the appropriate funds to them.

DISCLAIMER: I do own shares of SciClone Pharmaceutical.

Looking for a broker geared toward the active trader? Lightspeed may be the answer. Lightspeed is a direct access broker that offers everything you need to analyze a variety of investment products in their trading platform. With ultra-low commissions and a great trading platform, Lightspeed might be your next broker.

The Trading Platform

Lightspeed’s trading platform is an all in one package. Lightspeed is one of the few brokers to offering a great charting package within their platform. Their platform is not for beginners, strictly for the experienced active trader. You can see a basic layout of their platform below.

If you do not understand or have problems with the desktop trading platform, they also have a web trader platform that will seem familiar to anyone who has ever used any online broker. Their web trader platform also provides a good amount of fundamental analysis.

Pricing and Commissions

Stocks – $0.00395 per share plus market center fees.
OTC BB and Pink sheets – $10 per order.
Options – $0.50 per contract, no minimum order.
Futures – $0.50 per order plus exchange fees.
Minimum Account Opening Funds – $2,000

For a full list of fees listed here.

Overall, Lightspeed is a solid broker with cheap commission and a great platform to trade from. If you are looking for a new broker, I would advise you to get Lightspeed a try.

Tired of paying high brokerage fees? Looking to lower your brokerage commissions? Charles Schwab recently began offering free ETF trades when you open a brokerage account with them. Are the benefits worth it?

ETFs Available To Trade Free Now

Schwab US Broad Market ETF (SCHB)
Schwab US Large-Cap ETF (SCHX)
Schwab US Small-Cap ETF (SCHA)
Schwab International Equity ETF (SCHF)

Available In December

Schwab US Large-Cap Growth ETF (SCHG)
Schwab US Large-Cap Value ETF (SCHV)
Schwab International Small Cap ETF (SCHC)
Schwab Emerging Markets Equity ETF (SCHE)

Are Charles Schwab’s ETFs Right For You?

If you are a investor looking for longer-term investments or trades and like using indexes; then these ETFs are worth looking at. For traders and shorter-term investors, the volume is too low for me to recommend them. When trading stocks and ETFs (other than the Schwab ETFs listed above), commissions rates are $8.95 – $19.95, depending on the amount of trades placed.

Understand that commission free trading is nice, but with Charles Schwab, you are limited to a few ETFs that you can trade. If the volume rises in these ETFs, it might be worth looking into. For now, the products are too limited and commissions on other ETFs and stocks are higher than most online brokers.

Get more information on opening an account and Charles Schwab ETFs @ www.schwab.com.

I recall watching CNBC when the DOW crossed 10,000 a little over a week ago. What was it that made the traders and investors on the floor cheer? Why is the 10,000 milestone so important? What makes this time different from the first time the DOW passed the 10,000 mark 10 years ago?

The Decade That Flat-lined

To me, the DOW crossing 10,000 means nothing fundamentally and technically it is another whole number to trade off. The DOW crossing 10,000 did not create any new jobs, nor did it help the declining dollar. As I mentioned earlier, the DOW crossed the 10,000 milestone 10 years ago. If you had put your money into an index fund 10 years ago, it has done nothing…not counting dividends. Dividends that, if reinvested, have lost value and taxes you paid on them probably wipes out anything you might have gained.

Dow 10,000 – The Second Time Around

With a decade of no performance, where do we really stand? Well, 10,000 today is not the same 10,000 as it were 10 years ago. Thanks to inflation, your investment in an index fund that tracks the DOW might have returned you the same dollar amount as you invested but it gave you a dollar with a significantly weaker buying power. Want to know more about the loss in your buying power? Head over to ZeroHedge.com and read an article called “DOW 10,000!!!! OhWait, Make That 7,537.”

Investing In Index Funds

If you are investing in index funds think about this post. Ten years of no gains and loss of buying power will make anyone poorer than they were 10 years ago. Do not get me wrong, I am not saying that index funds are a terrible investment. I am saying that the buy and hold theory should be history. A decade of losing 25% of your buying power and no investment gains is an obstacle you do not want in a retirement account.