Thursday, August 04, 2011

Put Up Your DUK 's

While we are getting hammered in the markets, there is no evidence of a let up. Times like these are when traders start to look for signs of stock market capitulation as a signal marking the unpredictable bottom. Capitulation is associated with routs as investors “give up” on stocks entirely and move into less risky investments. What we would see is panic selling on big volumes while the crowd runs for the exits. Although it is usually brief and somewhat terrifying, true capitulation often means that the sell off has finally run its course, and prices begin to feel for the bottom.

To stick our necks out and go long in this environment requires great intestinal fortitude. With that mindset, I feel that a safer route at this time is to load up on Duke Energy Corp. (DUK).

Over the past twenty months, we contemplated DUK as a good alternative to the miserable returns that banks were offering through their CD's and savings accounts. DUK was mentioned in this blog's watch list on 12/1/09 when it was trading at 16.68; then on 6/30/10 we got serious and saw a buying opportunity at 16.10.

The yield that we receive from DUK at the present time is 5.40%, ex-dividend coming up in less than one week (8/10/11), the stock is trading at 18.25 and holding steady (down .20) in an uncertain climate.

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