That’s because Microsoft (Nasdaq: MSFT) still makes operating systems that are easy to use. And most people in this world have had or been on a Windows-based PC in the past.

That makes Microsoft a very strong company.

MSFT’s share price has taken a beating lately. But right now this stock looks set to pop.

I’m not calling an end to Microsoft’s rout. I’m saying there’s a high probability that its share price moves higher over the next week or two.

That’s because the RSI and Slow Stochastic both show a very clear pattern. Every time the RSI and Slow Stochastic show this stock at oversold levels (happened only three times in the past year)shares go on to rally.

And as you can see, the RSI and Slow Stochastic are oversold right now.

If this follows the previous pattern, buyers should begin to flood the market in the next day or two and take share prices higher.

How high could the go?

Considering MSFT has a hard time passing its 50-day moving average, you can expect that average to act as resistance.

That would give you a decent 16% gain in no time at all.

Last week, I pointed out Dollar Tree (DLTR) as one of those companies doing well. Another is one you probably know quite well, McDonalds (NYSE:MCD).

McDonalds has done extremely well over the past few years (no thanks to their stupid “I’m lovin it” series of commercials). It appears that their dollar and breakfast menus have been outperforming everyone’s expectations.

(On a side not, I love McDonald’s coffee. A little watered down, yes, but delicious none the less.)

From the middle of 2006 to today, MCD climbed over 100%. And you would’ve made a healthy 10% + over the past twelve months alone (not including the 3.4% dividend).

MCD also consistently used its 50-week moving average pretty as a form of support.

Sure, MCD showed a decline in revenues for the fourth quarter of last year. But at the same time, MCD increased same-store sales by 7.2% in the December quarter – extremely impressive (Wal-Mart (WMT) is lucky to increase same-store sales by 3%).

All of this translates into continued strength for McDonalds over the next 12 months.

Typically manufacturers pass along price increases to keep the spread between what they pay and what they sell (known as the margin) wide enough to make substantial profits.

When a recession comes along, manufacturers typically lower prices and see their margins shrink. But at some point, margins will be so thin, that the only choices manufacturers have left are to cut jobs, scale back production, or cut back on spending.

The Chief Economist of JP Morgan believes that this will lead to average payroll losses of 150,000 over the next six months – double the number we’ve been seeing thus far.

What this shows you is that this recession is just getting underway. This means it’s now more important than ever to invest in companies that are rich in cash and have wide operating margins. They are the only ones who will make it through this recession relatively unscathed.

Source: Manufacturing is Suffering… Badly

An expectation wasn’t met and a huge emotional reaction followed as investors let fear overtake logic. They thought that we might end up in a crisis as bad as “The Great Depression”. The market sold off in a huge way as a result.

But here’s the thing: emotional decisions can inevitably lead to big swings in any given stock or market. That means there are big opportunities for you to make money.

The lesson here is clear. While it’s important to know the fundamentals of a market or a given company, it’s equally as important to figure out what the markets expect. So the next time you’re looking at a company, try to see what the market expects from them. Then determine what would happen if the company failed to meet those expectations.

If you have a good answer to both of these scenarios, then you should be well positioned to profit regardless of what happens.

Source: The Bailout Blues: A Lesson on Expectations

When a company has a lot of cash, they avoid most of the financing problems that debt-heavy corporations are facing. Plus, with cash on hand a company is able to support their shares by issuing big buybacks, increasing the size of their dividend, or both.

Also, if the economy goes slow, cash-rich corporations are better able to weather the storm, since they have money left in reserves.

Over the next year, you should start seeing cash-rich corporations lead the stock market, while debt-heavy companies are left in the dust.

The easiest way to see how much cash a company has is to go to Yahoo Finance. Enter the ticker symbol of the company you are looking at, hit enter, and then look to your left hand side for “Key Statistics” Once there, just scroll down and you’ll see how much cash and debt a given company has.

What you want is a company with more cash than debt.

Source: It’s All About Cash

That’s one thing that isn’t so clear yet, but the answer is leaning towards “yes”.

Since the year 2000, gold has shown a pattern of bottoming during the summer and moving much higher by January. Since summer is just about over, it’s quite likely that gold is following this seasonal pattern.

But the technicals aren’t nearly as clear.

As you can see from the chart above, Gold hasn’t broken through its $200-day moving average. This is a very important point. And if passed, would mark a resumption of a bullish move in gold.

Source: Did Gold see a Bottom?

In August, producer prices fell 0.9 percent thanks to the big drop in energy prices. Now, if the prices producers are paying each other are dropping, then we should see a small drop in consumer prices.

Lo and behold, consumer prices for August fell 0.1 percent. Gasoline prices fell 4.2 percent, and fuel oil prices fell a massive 9.6 percent (the most in five years).

As the economy continues to slow, we will continue to see drops in inflation readings. As inflation wanes, the attractiveness of gold and silver will wane with it. And this should give the Fed some more room to continue dropping rates.

While I’m not calling an end to inflationary times (or the bull-run in precious metals), we should see a slowdown over the next 12 months.

Source: The Slow Unwinding of Inflation

This loan was passed in part to help spur the development of fuel-efficient engines, designs, and technologies.

To put this into context, the government bailout of Chrysler of 1979 – 1980 was a $1.5 billion package. Even worse, the big three are lobbying the government to double this bailout to $50 billion.

While a bailout is never good news, it does give the big three more than enough capital to keep operating past 2010. With the lowered default risk, GM (GM) and Ford (F) bonds are a great (and safe) proposition.

You could get into GM or Ford bonds maturing in 2010 at a great discount to par (and interest payments in excess of seven percent). To find them, simply go to the Yahoo screener here and enter your criteria.

Source: The Big Three Bailout is Old News

Since March, The U.S. Dollar Index (NYBOT: DX) has been consolidating between the 70 and 74 cent range. Since mid-July the dollar has mounted a strong rise to the top of this range. But with the continued risk of more foreclosures, multi-billion dollar losses in the financial sector, ballooning deficits and a sluggish economy, the dollar will have a hard time finding traction for a long-term move.

Strong rallies in the dollar should be seen as an opportunity to take a bearish position. Of course you can do that through ownership of gold and silver, precious metals ETFs and mining stocks.

You can also play the falling dollar in the FOREX markets, if you have the experience and risk tolerance to do so. But a safer and quicker way is to buy the Rydex Weakening Dollar 2x Strategy (RYWDX). This fund increases in value by 2 percent for every 1 percent decrease in the dollar index.

Source: More Dollar Doom?

There, I said it. If the markets were unregulated, AMD would have never had a chance.

That’s because Intel is big and powerful. If markets had been unregulated, Intel would be a monopoly (according to AMD, Intel has monopolistic tendencies). That means AMD would have never had a chance to compete.

The only real way to prevent a monopoly is through government intervention. After all, it took government intervention to break up U.S. Steel, Standard Oil, and even AT&T.

So you see, the right kind of government intervention in the markets isn’t that bad of a thing. Really, it’s good. Yet so many people don’t see the need for regulation. Maybe that’s because they’ve never been in an unregulated market.

Of course, there are government interventions that are totally backwards. Like the Plunge Protection Team (PPT), which is a government ‘working group’ that helps ‘stabilize’ markets during crashes. In other words, they buy up the futures market to give the appearance that a big buyer is snatching up shares during a market crash.

Pretty dirty if you ask me. Plus, it destroys the mechanics of a free market. That’s not to say that all intervention is bad.

It was intervention that forced public companies to standardize their reporting practices. It was intervention that saw the need for making insider trading illegal. And it was intervention that told banks that they had to alert you anytime your interest rate changed on your credit card.

You can’t deny that these things are all good. They all try to level the playing field between powerful corporations and the consumer. Yet many economists and market players believe that all government intervention is akin to being punched in the face.

Case in point – my interview with Peter Schiff. The guy is smart. In his opinion, any government intervention in the markets is a bad thing. He goes on to say that government intervention helped cause the mortgage mess we are in (through fixed interest rates and expanding money supply).

Now, I won’t argue the interest rate or money supply points. Both are good points. But the truth is we got into this mortgage mess because the financial industry has been slowly deregulated for the past 30 years.

The Gramm-Leach-Biley Act (which your Monday editor, Rick Pendergraft talked about) was the final nail in the coffin. It freed banks to consolidate with insurance and securities companies. And it gave Citigroup and other banks the perfect incentive to begin packaging mortgages into CDO’s and then sell them through their financial services arm.

Alan Greenspan – much like Peter Schiff – didn’t believe in regulation either. So he turned a blind eye when banks – who were supposed to be conservative – started issuing risky no-documentation, zero-down payment, subprime, and even interest-only loans.

That brings up a little bit of irony on Mr. Greenspan’s part. Alan essentially screwed the consumer by refusing to intervene and tell banks to stop being idiots and to stop loaning money to people who might not even have a job. After all, he was anti-interventionist!

Yet, it was his very intervention – of putting interest rates UNDER the level of inflation – that helped balloon the housing market into a huge bubble.

What was Alan doing while the bubble was inflating? He was wondering about the ‘conundrum’ of low long-term interest rates during an expanding global economy. In other words, he wasn’t paying attention.

We all know where that led the industry. Hundreds of billions in losses, thousands of job cuts, and a flagging economy. Had Alan gotten off his ass and taken his nose out of his ideological beliefs, maybe he would have been able to regulate better what was going on in the mortgage industry. Maybe then, he would have thought to himself how crazy the financial industry was being and how it would lead to HUGE trouble later on.