These gains don't cause pain. A capital gain is the amount of money you pocket by selling one of your investments for more than you paid for it. Technically, capital gains only count for what's called a capital asset, but that's really just anything you own for investment purposes. Stocks and bonds obviously qualify, but your house and household furnishings can also count.

For tax purposes, capital gains are classified as either long-term (held for more than one year) or short-term (held for less than one year) and there are different tax implications for how long you hold onto a capital asset. For most long-term capital gains, you're taxed no more than 15% of the value of the asset. Short-term gains get taxed as regular income, so you pay the rate for the tax bracket you're in.

Capital gains can also be realized or unrealized. When you physically sell an asset like a stock, you've realized the capital gain. When you're holding the stock, and it has a value over its purchase price, but you're not selling it, you've got an unrealized gain, and you won't realize it until you sell.

In a perfect world, we'd all have capital gains. But no one¿s that smart or lucky. When the value of an asset at sale is below what you've paid for it, it's called a capital loss. The good news is that the government lets you count that loss against any gains you've had, lowering the taxes you pay. In fact, many people who sell a stock that has risen far over their purchase price tend to sell some stinkers, too, at the same time for the tax benefit. This is known as a capital-loss offset.

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Thursday, July 03, 2008

Comtex SmarTrend(R) Morning Call -- July 3, 2008

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Jul 03, 2008 (SmarTrend� via COMTEX) ----There are some early signs that the DJIA is successfully halting its decline and a weak and short near-term rally will launch shortly, but don't look for much this shortened trading day. If oil prices continue up and spike to $150 per barrel, the anticipated near-term uptrend start may be delayed past next week.

The struggle by the DJIA to halt its decline above 11,000 was helped yesterday by the daily SmarTrend(R) uptrends to downtrends, which, while still negative, improved to 23:77. This improvement was just enough to slow down the backsliding by the Trend Ratio at 27 and the IBDI's descent further into its oversold zone. Although trading hours today and thus trading volume will be diminished, look for further improvement in these two indicators. If this happens the intermediate-term trend could find a base from which to rally early next week. The first step in a confirmatory process is for the DJIA to rally above 11,450 and keep rising; further confirmation would be achieved if the DJIA can then rise above 11,600. This alone would not be enough to turn around the continuing long-term downtrend, as that is expected to take until after Labor Day, but a turn up by the intermediate-term trend would reduce some of the downward drag on the near-term trend as it prepares to rotate up.

Thus, there is a lot riding on the strength of the next near-term uptrend. So far the near-term trend indicators have done little more than bounce along the floors of their oversold cellars. Yesterday only the NBDX was able to rise from being oversold. The other three indicators, NBDI, NBDV and the SmarTrend(R) Ratio, all showed no sign of climbing up from their deeply oversold positions. At least three of the four will need to rise across their oversold thresholds before a near-term uptrend rotation can start. It appears that the soonest this could happen would be early next week.

Yesterday's trade-term trend movement supported the premises stated above. The trade-term trend indicators rotated from oversold to overbought intraday but it found higher intraday highs and lows as the day wore on. The lowest low of the DJIA this week was 11,183 registered on Tuesday. A good sign today would have the DJIA registering new intraday weekly highs and lows. This take-off pattern may turn out to be wistful thinking if oil prices, currently at $145 per barrel, spike above $150 next week, a prior estimate made by highly respected oil analysts. However, it is reasonable to project that a near-term uptrend is in the making and should emerge next week, providing favorable market circumstances for a while for long trading of some stocks. Such possibilities may be found at http://www.mysmartrend.com.

A list of negatives, including a disappointing ADP report, General Motors (NYSE:GM) viability questions, dropping oil prices, and more write downs expected from Merrill (NYSE:MER), brought equities to five-month lows, with both the DJIA and Nasdaq finishing the session in bear market territories. The DJIA, off over 166 points, or 1.5%, is now down 20.8% from its record close of last October. Declines by General Motors (NYSE:GM), Alcoa (NYSE:AA) and Caterpillar (NYSE:CAT) added 63 points, or more than one third, to the DJIA drop. The tech-heavy Nasdaq, off 2.3%, closed down 21.3% from October's multi-year peak. The S&P 500, also closing at session lows, managed to avoid the bear-market-defining 20% decline mark, closing off 19.4% from its record October close. All ten S&P sectors reported drops, with basic material, industrial and energy shares leading the declines on demand concerns resulting from the escalating prices of commodities. Declining shares outpaced advancing issues by almost three-to-one, as volume on the NYSE topped 1.5 billion shares. The dollar fell against the yen and the euro on the negative employment data as well as fears of a one-two punch from this morning's US Nonfarm Payrolls report and ECB President Trichet's guidance concerning the direction of future policy. The posting, however, came as no major surprise: the ECB hiked rates, as expected, to 4.25%, and the NFP printed at a 62K drop, less than most lately feared, with unemployment steady at 5.5%.

On the jobs front, yesterday's data revealed private sector job losses of 79K in June, its steepest drop since November 2002, leading to upward revisions of this morning's NFP job loss estimates. With the numbers expected to indicate its sixth monthly decline, there was a wide gap between the optimists and pessimists, bridging an expected drop of 20K to a drop of 130K. Surging layoffs, ADP numbers, 16-year low consumer confidence levels, continuing claims at their highest since February 2004, and declining ISM Manufacturing employment data suggested the number likely to print on the low side of estimates. And while the 0.6% gain in US-made factory goods in May came in at the high side of estimates, the weak demand for autos, heavy machinery and steel brought the numbers to their lowest since February.

Across the pond, the ECB, as expected, hiked interest rates 25 bp to 4.25%, for the first time in over a year, with President Trichet's comments at 8:30 ET coinciding with the release of the NFP numbers. This morning the US dollar has fallen to a 2-month low against the euro, with oil following to another record high above $146 as European shares descended to three-year lows. Despite calls for attention to weak Euro zone economic growth from Germany's Finance Minister, the President of France and Spain's PM, Trichet yesterday warned of the risk that inflation would "explode" should the ECB not take resolute action. Although suggestions have been made that a series of increases are not expected, the wording of Trichet's statement will prove pivotal to dollar/oil direction.

General Motors (NYSE:GM) shares slumped 15.1% yesterday to more than a 54-year low, sinking under $10 per share on a Merrill (NYSE:MER) downgrade to "sell" with a price target of $7, upon concerns that "bankruptcy was not impossible" upon further market deterioration, and that further capital-raising appeared likely. News from financials was mixed. Lehman (NYSE:LEH) shares gained 6.7% upon reports the company plans a mid-year stock bonus to employees to encourage talent loyalty. Both Deutsche Bank (NYSE:DB) and UBS (NYSE:UBS) announced they do not need to raise additional capital, with Deutsche Bank (NYSE:DB) saying it will post a second quarter profit. Robert W. Baird upgraded Fifth Third Bancorp (NASDAQ:FITB) based upon price considerations. And JP Morgan (NYSE:JPM) opined the worst over for European banks' mortgage-related write downs. However, Oppenheimer's analyst warned Merrill's (NYSE:MER) write downs for the second quarter could reach $5.8 billion, sending its shares 3.4% lower.

In the corporate corner, Blockbuster (NYSE:BBI) may resume a bid for Circuit City (NYSE:CC) at a later time, according to the New York Post... UnitedHealth (NYSE:UNH) will pay over $900 million to settle an options-backdating case... Chesapeake Energy (NYSE:CHK) and Plains Exploration (NYSE:PXP) announced a $3.3 billion joint venture... Nvidia (NASDAQ:NVDA) cautioned its second quarter revenues and gross margins likely to miss prior guidance, with sales expected to post at $875-$950 million... Abbott Labs (NYSE:ABT) received FDA approved of its Xience V drug-coated heart stent, expected to be a top seller in the $2 billion US stent market...

By Chip Brian, Editor-in-Chief -- editor@mysmartrend.com

The following equities mentioned above include:

 Comtex SmarTrend
   Alert ---------------------------------------------- Ticker Last Close Trend Direction Trend Price Trend Date ----------------------------------------------------------------------
   AA 32.11 Downtrend 38.35 6/20/2008 ABT 54.24 Uptrend 54.00 5/2/2008 BBI 2.64 Downtrend 2.82 6/13/2008 CAT 70.42 Downtrend
   79.32 6/11/2008 CC 2.32 Downtrend 3.96 3/6/2008 CHK 69.40 Uptrend 59.30 6/6/2008 DB 85.64 Downtrend 106.81 5/30/2008 FITB
   10.65 Downtrend 19.99 5/20/2008 GM 9.98 Downtrend 19.71 5/21/2008 JPM 34.60 Downtrend 44.81 5/20/2008 LEH 22.36 Downtrend
   22.53 6/27/2008 MER 31.15 Downtrend 47.93 5/8/2008 NVDA 18.03 Downtrend 21.75 6/12/2008 PXP 69.35 Uptrend 66.89 5/8/2008 UBS
   19.79 Downtrend 31.17 5/8/2008 UNH 25.12 Downtrend 55.69 1/10/2008

INX -- S&P 500: 1,262 Lo: 1,262 Hi: 1,292
   Change: -23.39

http://www.mysmartrend.com/images/INX20080703.jpg

INDU -- DOW JONES: 11,216 Lo: 11,214 Hi:
   11,434 Change: -166.75

http://www.mysmartrend.com/images/INDU20080703.jpg

QQQQ -- NASDAQ: 2,251 Lo: 2,251
   Hi: 2,317 Change: -53.51

http://www.mysmartrend.com/images/QQQQ20080703.jpg

This report is divided into three sections. The first deals with our 5 proprietary market indicators, the second section examines important economic and business happenings which are expected to affect U.S. Stock market movements and the third section describes specific company announcement and earnings releases. Experience demonstrates that when these 5 indicators reach extremes they can shortly be expected to change direction and move in the opposite direction. When such happens in all or most of the 5 indicators, on or about the same time, followed by a move from below an extreme (oversold) to above that extreme (or vice versa for overbought), a change in market direction is very probable. The near term market moves are measured to identify the best possible returns for traders/investors. Daily price/volume examinations provide the best data upon which to base such forecasts. In this report though, intraday indicators are examined to improve the point of entry timing for the expected move.

Comtex News Network, Inc. is not a registered investment advisor and does not provide investment advice. Investors bear complete responsibility for their own investment research and decisions and should seek the advice of a qualified investment professional prior to making investment decisions. SmarTrend is a registered trademark of Comtex News Network, Inc. Copyright, Comtex News Network, Inc. 2008

Comtex News Network, Inc. ("Comtex") obtains information from sources deemed to be reliable; however, Comtex does not guarantee the accuracy of any of the information or commentary provided. Comtex makes no warranties, expressed or implied, as to the fitness of the information for any purpose, or to results obtained by individuals using the information. In no event shall Comtex be liable for direct, indirect, or incidental damages resulting from the use of the information. Comtex shall be indemnified and held harmless from any actions, claims, proceedings, or liabilities with respect to the information and its use. Comtex does not make specific trading recommendations or provide individualized market advice. The information contained in the Morning Call product is provided as an information service only.

To subscribe to this newsletter, please visit http://www.mysmartrend.com/newsletter . To learn more about SmarTrend, go to http://www.mysmartrend.com or call Comtex sales at (212) 688-6240.

Copyright,
   Comtex News Network, Inc. 2008 ********************************************************************** As of Sunday, 06-29-2008
   23:59, the latest Comtex SmarTrend� Alert, an automated pattern recognition system, indicated a DOWNTREND on 06-20-2008 for
   AA @ $38.35. As of Sunday, 06-29-2008 23:59, the latest Comtex SmarTrend Alert, an automated pattern recognition system, indicated
   an UPTREND on 05-02-2008 for ABT @ $54.00. As of Sunday, 06-29-2008 23:59, the latest Comtex SmarTrend Alert, an automated
   pattern recognition system, indicated a DOWNTREND on 06-13-2008 for BBI @ $2.82. For more information on SmarTrend, contact
   your market data provider or go to www.mysmartrend.com SmarTrend is a registered trademark of Comtex News Network, Inc. Copyright
   � 2004-2008 Comtex News Network, Inc. All rights reserved.