Crash Market Stocks - Financial Tips On Making Money In The Stock Market

Well, today's continued selling is a strong move for bears, especially after the rather strong day the market endured yesterday. Along with the market movement, there is also some more negative economic data that is looming in headlines today, also bringing down consumer confidence. Most all the shorts are performing quite well today, but it will be how they close out, which will determine the momentum.

PPI data came in this morning significantly worse than expected. In fact, Core PPI came in negative again, which was worse than I was anticipating and shows that, clearly, deflation is still something to be worried about. Even in the midst of trillions being spent by the government to stimulate production, there is still a negative trend on the PPI. In a few weeks, with some other data, we will better know if how near the down spiral is, at which markets could respond very negatively.

Best Buy announced their earnings today, which was very disappointing to investors. As such, most retailers are down today. In fact, for you premium podcast subscribers, BBY was a specific short I mentioned on last week's podcast, as well as shorting the XRT. Both positions have performed quite well. I think this is only the beginning for retailer's struggles, as shrinking consumer income will eventually pay a big toll on most stores.

Watching us close this session out today will be very influential on how I view the market momentum, currently. A strong sell off to close would be a very good indicator for bears and definitely cause for more concern for bullish investors. Happy Trading.

After two days straight of down trading (three for the S&P), markets ended in the green today, having the Dow close up 46 points. The small rally comes with no surprise as some short covering was sure to be happening after two rather strong days of selling. Yesterday, I had a strong debate with myself whether or not to take some profits off the table in case of some short covering. Looking back, I probably should have, but hopefully I'll catch the next bus. I don't expect any huge buying volume anytime soon, and I still am enjoying 20-30% profits from my entry point. So, I would like to see the week end in the red, but in this market, you never know.

It is still looking like GM will be forced to enter into bankruptcy, and is looking to do so in the same manner that Chrysler did so. The company has a June 1st deadline to be able to get their debts in order, which would take a miracle if they were able to do so. Even though many are now expecting the bankruptcy, I don't think the consequences have fully been factored into the market. We saw what kind of influence the Chrysler bankruptcy had on the initial jobless claims report today, which came in worse than expected at 637,000. GM is a much larger company and as a result, should impact the overall economy much more significantly. Remember, it doesn't just effect employment. Think of all the dealerships that will be closed that they will be able to get out of their lease through bankruptcy. This should kill thousands of landlords around the world. Yet another bullet heading straight for commercial real estate. In today's premium podcast (subscribe here), I really outline some serious problems heading towards commercial real estate and why I am bullish in SRS and other funds.

PPI came in right in line with expectations. Like I said yesterday, such data does not necessarily suggest that deflation is no longer an issue. There are several indicators which measure deflation, one of which is CPI which is announced tomorrow. Look for CPI to set the mood for investing tomorrow. I would expect to not see much of a variance from last month's number, but we may be surprised.

More and more problems are creeping to the surface. One big problem about this economic crisis is that it is a global economic crisis. We are in uncharted territory in experiencing a massive, global recession in which almost all major economies are suffering severely. As a result, all governments are engaging in their own stimulus plans and is closing doors to a lot of imports, as they hope to keep manufacturing businesses within their country's borders. This is a plague for countries like China, Mexico, and Brazil, whose economies rely so strongly on major markets. Instead of looking to other nations to help stimulate our own economy, we and many other nations are forced to keep printing money and go more and more into debt.

Despite the rebound in financials, there still remains much concern for the future of banks. There has been so much focus on many of the "big banks", that many have thrown aside the thousands of regional banks that exist across the nation. These are the bread and butter of the financial systems. Even though their debt may seem insignificant compared to that of big banks, as a whole, they act as much of the equity providers for local real estate markets. Many of these banks will not find a TARP fund or bailout plan for them and will most likely have to go under. It is important to consider this when investing in financials.

I went in and bought some SRS call options for June today, as I wanted to take advantage of the down day. REITs received a lot of love today, who knows why, which I was kind of happy to see, considering that I had not positioned myself in SRS for quite some time now. I am hoping for a strong week from SRS this next week, as clearly commercial real estate is more and more coming into the spotlight.

Tomorrow I will be looking for the CPI numbers as well as the earnings data to set the tone. If we see yet another up day in stocks, I will most likely go in and buy up some more short as I feel that we are at the crest of the rally. I still see some great opportunity on the short side in the near term and look forward to some strong profits in my Zecco.com account. Happy Trading.

The market was surprised today with a negative move in retail sales for the month of April. Most analysts (even myself, slightly) were expecting at least the same as March’s numbers, probably even stronger. However, retail sales showed a loss of 0.4% for the month, 0.5% without autos. Such news supports my theory and thoughts on us facing more harsh times in the near future. The fact is that despite the massive discounts and liquidations that have been occurred the past few months and retail sales are continuing to weaken shows that consumers are still not spending and liquidity problems still remain. Remember, these numbers track the total receipts of retail stores, not actual net income. With the slash to margins, such news should tell us that many retailer’s bottom line is getting killed. Like I’ve said before, as we keep treading in this swamp of low liquidity, one by one more and more retailers and businesses will begin to go under, which will bring us to the next chapter in this crisis: The Bankruptcy Stage (which usually leads directly into the unemployment stage).

Today’s downward movement acts as a pretty big technical move for bears, as we have not seen strong, consecutive selling for quite some time. Our current position in the market is very vulnerable to technical reversals. Today, keeping the S&P under 890 was a very strong technical and should indicate a near retracement down to the 750 levels. Here is another Free S&P Technical Analysis video, which discusses this critical point in more detail. Sure, we are still vulnerable to upswing days and profit taking, but I am becoming more and more convinced that this selling should continue much further. We will learn a lot from the PPI and CPI report which comes out tomorrow and Friday.

Last month, we received a horrible -1.2% MONTHLY drop in PPI (Producer Price Index or wholesale goods). This data was very significant, as it shows our deflationary state worsening more and more (you can get solid economic data from Morningstar, which they have a free trial: Morningstar Premium Membership - 14-day free trial). Tomorrow, they are expecting the results to remain flat from the previous months. Such a result would not refute the possibility or existence of a deflationary down spiral, as like I’ve said before, we can expect slight month to month swings. However, if indeed we see a worse number reported, I would see this as a big red flag to the markets, and I will most definitely be gearing up and preparing, for what I believe, will be a rather aggressive down leg. CPI will also be factored in, especially on a year over year basis. So I will make sure to be keeping everyone updated on my moves, especially on the podcasts (subscribe here).

Ignorant bulls (not that all bulls are ignorant, but some are being pretty stubborn these days) are already throwing this small sell off aside saying that we all expected a pull back and there is no need to worry. As expecting the rally may be the case, there is still a big debate of how severe the pullback will be. I admit, there isn’t much to cheer about quite yet as a bear, but I would be very careful moving forward as a bull for the next couple of months, because the clouds are there for a perfect storm to form. It all depends on which way the wind blows. To say this is only “profit taking” and an opportunity for investors to buy into the bull market at lower levels is risky and down right foolish. Unfortunately, if we do push lower, many will be caught chasing lost profits. This is why I always preach patient and careful moves.

There was more green in my portfolio for me to enjoy as a result from today’s trading. FAZ closed up 13.8%, which weathered well for my FAS Put options as well as my actual FAZ share holdings. Also, SRS closed up 13.8% as more and more worries for commercial real estate are coming to light. My Put options on PRU are also performing very well, as they continue to struggle. I will have to look at taking some off the table at some point, but for now, I cannot complain. I hope some of you were able to short my last week’s Market Trend Feature which was LVS. Since then, the stock has taken over a 40% beating.

Macy’s came out with worse than expected numbers, which took a bite out of their stock. Last month I gave a list of retailers that should especially struggle in this economic environment and Macy’s was at the top of my list. I expect department stores to continue to take a back seat for the next several months as many people are going back to Wal-Mart and other cheaper retailers. Wal-Mart does release earnings tomorrow, which could definitely be better than expected as they are considered a “discount retailer”, and more people are shopping cheap. From a macro economic standpoint, you almost have to take that as bad news, as most likely, people are replacing their other retailers by just choosing to go to Wal-Mart. I don’t expect their results to be too influential, but worth noting.

So we’ll see if we can finally see a hat trick in selling tomorrow. Volume is slowly getting higher and VIX levels are climbing, which both act as very good indicators for downward momentum. We are sure to see continual bank problems as well as more problems hitting the private sector. Be alert and careful, Happy Trading.

I hope everyone had a good weekend and that those mothers out there all had a good Mother’s Day. This coming week definitely acts as a very critical week for trading and could be a huge influence of where we will see the markets go for the next month or two. There continues to be a big debate in regards to attempting to define this current rally we’re in. Is it a Bull Market now or just a Bear Market Rally? You all know where I stand on the subject (if you don’t just read the posts on this page) and I don’t plan on wavering from that belief anytime soon. I believe we are seeing and will see more indicators this week that will confirm my belief.

One huge red flag that instantly stands out to me, regarding market trading, is the mass move by many companies to issue stock for capital. Like I’ve said before, unlimited government spending is unsustainable and to continue with it would be irresponsible and result in monumental destructive economic consequences. If you take away the government as a source of capital, who’s left in this market? Banks are definitely not lending to the degree that would be beneficial to many businesses. Most private equity groups have their hands tied with their own problems with real estate and negative leveraged assets. So who? The answer is wall street.

Yes Wall Street. Instead of forcing ALL taxpayers to have to "invest" in dying companies through Federal bailouts, just let those wanting to gamble decide to do it themselves by issuing more share offerings.. The fact is, many of these companies needed capital long ago, however, due to the hammering we saw of the market during the first quarter, it prevented a lot of companies from selling shares for equity. I mean can you imagined if Bank of America would have tried to issue 10 billion worth of shares when they were below $4? Think how much more bang for buck they will be getting now, more than three times. I believe part of the plan and hopes for the government in boosting up this market, was to at least get stock share prices to a point, where if companies were to liquidate some, they could get some value out of it. At the February levels, this wasn’t possible for many companies.

However, now, many companies are finding it to be the right time to issue shares. This concept is a simple law of economics. First of all, most companies try to avoid share offerings, as it dilutes stock prices and usually causes some negative reactions from investors. When companies do wish to sell their own stock, they shoot for the highest value point they feel that they can get with the current market conditions. If by chance a big announcement is coming or something else which would cause an increase in value of their stock price, most companies will wait until after that event happens. In most cases, if companies find their stock “oversold”, many will take the initiative to buy back some stock shares, because if they’re oversold, it should be a good investment, right? This is the simple fundamental explanation of company offerings.

Well, today there were several companies who offered additional sales to the market and I believe many will follow. Us Bancorp, Capital One, BB&T, Microsoft, and Simon Property Group were just to name a few of some of the companies announcing offerings of billions worth of shares to the public. Sure, you can make the argument that companies are having to go to shareholders as a lender of last resort, considering there is nowhere left. That may be the case, but such action does not shed positive light on the market and makes me believe that many of these companies feel that their current stock price levels are the best they’re probably going to get for a while.

Other news that could have a negative effect on trading is the probability of GM’s bankruptcy. GM has already announced their plans to close thousands of their dealerships around the world and have also said that bankruptcy is looking to be a likely scenario. Unfortunately, this decision is once again after taxpayers had given tens of billions of dollars for nothing, in which now will probably never been seen again. This is why I showed a lot of frustration in the government’s decision to give such easy handouts. Oh well, hopefully the government will learn from some of these mistakes. As a result, I plan for some new sting in upcoming jobless numbers as a GM bankruptcy will be a big blow.

PPI and CPI are coming out this week, which is very significant when discussing deflationary indicators. Last month’s data showed us very close to some dangerous deflationary numbers and I suspect that this month’s number won’t deviate far from that. As I have stated many times before, I believe it will be deflation that kicks this crash into third gear. Such deflationary numbers are very close as we have been seeing year over year CPI and PPI numbers getting killed. So keep your eye out for them later in the week.

As I discussed as a strong possibility on the podcast over the weekend, today we saw a rather large pullback in PRU’s stock price. I was able to pull the trigger on both some PRU put options for October on Friday as well as picking up some FAZ shares, which worked out quite well for me today. Due to travel, I was unable to get a post out Friday, but I did give an update on the podcast (subscribe here). I think Prudential’s problems will only continue to get worse as the next stage of commercial real estate failure becomes evident. So I plan on holding onto the options for a little while, but overall there was a lot of green in my Zecco.com trading account.

Sure, today’s down trading will not be enough to convince bulls that there is still need to worry. Many are already re-structuring their IRA for the next 5 years. I, personally, believe we will begin to see this market take a turn and start to see some more consistent, downward trading. If markets do bounce back a bit tomorrow, it does not mean that the turn is not here, as consistency is always the key. Another day in the red tomorrow, will only confirm my suspicions even more so.

On Friday, I advised much of my family and friends to take their profits for the last two months, especially in financials, as I (and many others, including Meredith Whitney) have some serious doubts about bank's strength here in the short term. Below is a link for a great technical analysis video discussing the current rally, and what technical and fundamental indicators are showing us. If you like it, you can subscribe to them free and get new video updates. Happy Trading.

Market Trend Technical Video