Showing posts with label chrysler bankruptcy. Show all posts
Showing posts with label chrysler bankruptcy. Show all posts

Green Friday Up For A Test

chrysler bankruptI can definitely say I am excited to see this trading week come to an end. This transition trading mode that we have been in the past couple of weeks has not made much technical sense and seems to only be benefiting day traders. As I said last week, I expected the next week or two to be a good environment for the FAZ/FAS double trading. It does require knowing approximately when in the day you should sell and where the bumps are, but with the last week, investors have been able to make significant profits on both FAZ and FAS on the same day multiple times. Now, most likely, this trend will not last, as I expect a more directional moving in the market to return shortly, but it has worked out quite nicely for many of you day traders.

Chrysler made bankruptcy official today as it will look to experience a "quick" bankruptcy reorganization. Accompanying their bankruptcy was a generous speech from President Obama trying to explain this process to investors. I'm sure there were many that believed his words that bankruptcy is not a negative result and this is good news for the company. However, anyone who has been in Corporate America knows that bankruptcy can set you back quite a bit and pretty much means you failed. Sure, it is the only viable option left for Chrysler, and in my opinion, most all the American Autos, but it is definitely not something we should be broadcasting as "good news." Obama will also be offering Chrysler $8 billion more of taxpayer's money to assist them in their bankruptcy process. I hope everyone is happy about more of your hard earned money going towards bankrupt, toxic entities. But hey, we've been doing this all along, by pumping our money into the bankrupt banks as well. I don't expect much of a lasting reaction from Wall Street as a result of the bankruptcy, as this fate was inevitable.

Once again it looks like the government will be delaying their release of the results from the bank stress tests. After a couple of other previous delayed announcements, it was decided that May 4th would finally be the date of the release. However, for whatever reason, the government is now saying that most reports will probably be released at the end of next week. This should be a strong signal that indeed there is a lot of manipulation that is going on from the government's end. My theory is that the government is expecting a push back in the markets, as most are at this point. Just as we finally see some sort of downward momentum, I believe it is the intent of the government to use their silver bullet (test results) to try and over rule the sell off. The theory is that such a turn around in what should be a strong sell off would open the doors for a brand new rally with brand new technical rules. Many are worried for this "May sell-off", which looks to be coming, as they should be.

This is my slight suspicion, as I cannot think of any other logical reason why the government would hold onto this information any longer. We all know these tests will shine a positive light on financials as it is just like announcing earnings for banks all over again. My personal feeling is that the sell off is inevitable and I don't think investors will be as easily fooled as many people think. I actually think the delay shows the un-organization of this new system and shows that it should be aborted and we should move on with life.

Real estate REITS got a big bounce from Kimco's release of earnings. Their FFO only dropped 28% (that's not a lot), which was supposedly a good sign for for the real estate REITs. They also cut their dividend from 42 cents a share to 6 cents per share. For me, this provides for a great shorting opportunity. If commercial REITS get 7% up days in this real estate environment, that's nothing but fluff. Give me some puts. As a result, SRS remained fairly weak for most of the day, but I would expect for Kimco to give those profits back soon.

Volume is slowly creeping back into the market as it seems that there should be a more stronger directional move being made. To end the markets in the red today after a rather strong green opening is rather significant and shows the bear's strength. I believe as the volume keeps ticking up, minimizing manipulation attempts, we will see stronger downward trading in the market. The time is getting closer and closer and as Japan confirmed today with their economy, deflation is here. In the next couple of weeks, the results in some of the models should be very significant. I will most likely be looking to take some strong positions with my Zecco.com account within the next couple of weeks. Have a good night and Happy Trading.

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