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

I said there would be fireworks today and indeed there was. I have to admit, even though I was considering it as an option, I was quite surprised to see the Fed do what they did today. As most found it time to cheer and buy, I was looking deeper into the decision and wondered why they would do such a move? This decision exposes a lot of the concerns the Fed has about the economy, and although it seems as though it will bring relief to the credit crisis, the side effects of such a move could have some serious repercussions on the market.

So the day reacted in my "B" scenario of what I expected to happen in the market place. Honestly, I was leaning more towards my plan "A" scenario, which was to have the market open up, due to expectation of the meeting, with a disappointing sell off after the announcement. However, the Fed decided to surprise the world with their plan. Luckily, I set up myself prepared for either direction, however, I would have done better with an ending sell off. Indeed my FAZ options purchased yesterday took a strong hit, but a lot of those losses were eaten up by my SSO gains. The options expire in July as well, so I have plenty of time for the banks to go sour once more. I'm not too worried.

So lets break down today's announcement. The Fed announced their plan to spend $300 billion over the next 6 months in buying up long term US government bonds. In addition to that, they announced that they would spend an additional $750 billion on buying mortgage-backed securities guaranteed by Fannie Mae, which now brings the total to a whopping $1.25 trillion. Also, yes also, they will be increasing their purchase of Fannie and Freddie debt to $200 billion. Those are a lot of bullets to fire in one meeting. In fact, I was very surprised to see the market only close up 90 points after such an artillery of news. So, how do I feel about all this?


Honestly, I think it shows the desperation of the Fed. Notice a big key missing ingredient of today's announcement. After Bernanke so proudly declared his expectation of the recession to maybe be over by 2009 in the CBS interview, there was absolutely no mention of a 2009 ending recession in the FOMC notes. At least they're not fudging the numbers too badly.

As with buying the government bonds, I believe it was something that needed to happen. There has recently been a scare of China pulling out a lot of their money that are in US Treasuries, which they own A LOT. Such an action from China would derail interest rates, only freezing the markets more. Instead, the move today sent Treasury rates sailing down, which in turn should hypothetically lead to lower lending rates. This is something the Fed hasn't done since the 1960's. So, if indeed China does pull out, this won't make that much of a net difference, just keep the Treasuries from plummeting.

The amount of money being put toward mortgage backed securities may put a door-ding in the debt that is hanging over these banks. Although it seems as $1.25 trillion is huge, it is nothing compared to the debt that is coming due and will be considered delinquent for CMBS loans. This makes a total of $4 trillion that the Fed has now spent (which will come out of your pocket), without asking the American people. Sorry folks.


This indeed is just more supporting my theory of massive inflation that will come later on, following the deflationary spiral hitting the markets. We have now had 3 consecutive months of declining PPI, which is very discouraging for the markets and which is why the Fed is acting in such a panic. Expect a beating from the dollar in the near future as well as more spikes from gold.

Already, many are on the wagon of the "we have reached bottom" club and are beginning to position themselves on the long side. Although I do believe we could rally a couple more weeks, especially with this recent news, I still very much believe that there are much tougher roads ahead. In fact, such news released today, only supports the models in setting up for capitulation. At least, that's my opinion. So I will remain patient, but the time is getting closer to getting back in the shorts.

So, it will be interesting to see how tomorrow reacts. I think, as with other plans that were a surprise to the market, people will begin to see the side effects of such a move, and its halo will begin to fade. For those looking for a good brokerage company, TradeKing is offering some really good rates for trades. Happy Trading everyone, see you tomorrow.

* Economic Summit: Major Problems, Modest Hopes
* More Americans Struggle With Loans, Credit Cards
* Kohl's, Nordstrom Cut Year Views As Holidays Loom
* Why Should You Worry About Weak Holiday Sales
*Obama Bounce Is Crushed By Worries About Economy

These are the headlines you will see on the front page of cnbc.com. Yet, we see the Dow close over 550 today. Amazingly classic. Well, lets discuss the facts. Since last Friday's unemployment announcement, there has been nothing but bad news looming on the economy, and the past few days we have seen the market react to that, but not by much. GM is border line bankrupt. Almost every retailer posted bad earnings. Then today, we started to see another down trending day, until about 10 AM, PST (see the regression difference at the turn around point below). At that point there was a huge dump of buying into the market. I couldn't believe my eyes looking at all of the sectors turn green. Then we see us close above 8800 with the volume far greater than the average. What does this mean to me? Market manipulation.

It is days like today why I went in and bought my Apple, DIG and GDX options yesterday and this morning. Even though it didn't kill the pain for me, it numbed it a bit. Plus, if I can get a quick return by playing long, I'm happy. Even though I have zero confidence in wall street right now, we still experience these aggressive bear market rallies with the help of some market movers once in a while. Do you think it is any coincidence that the big deadline for people to redeem their hedge funds is this Saturday? For some hedge funds, this is the last day until the following November. Think how many people are taking their money out this weekend. Are you? Are your friends? Next week, I believe the amount of money needed from the hedge funds to liquidate will be very large. In turn, they will then have to liquidate several of their positions, as we have seen some do already.

So, Yes, I took a bath today with my FXP. But, I'm honestly not worried (some of you may think I'm crazy). Like I said when I first bought it, FXP is very volatile. It can give you a heart attack, but I've been playing it enough and know enough about both our markets to feel very comfortable holding it for a while. This go around, I was planning on a 2 month ride. So if we hit January or February and we are still lingering around these prices, I can start sweating. China won the lottery this week, with their $600 billion bailout and this nice, strong, hedge fund driven rally we had today. We saw a similar trend with SKF back in September, when it was hovering under $100 and continually being beaten down below $100, only to shoot up close to $200 within a month. Remember, I said in previous posts that there was a good chance of seeing a rally before this weekend. I just thought if it hadn't started by Wednesday, it probably wasn't going to happen.

The good news. We may see SRS and SKF get back into buying position again. Either of these below $110 gives me confidence in buying them. Both have reached "rock star" status in my book. The bad news, we are probably going to see another strong rally tomorrow. Expect Asia and other foreign markets to go off tonight. Look for FXP to probably take another beating. If it gets near the low $50's, I'm loading up more. Hedge funds want the market as high as it can be in case of forced liquidations. If that is the case, tomorrow, I will probably begin selling off most, if not all of my long options I bought yesterday. I already saw big gains from them today (Apple Option up 34%, DIG up 20%, and GDX option up 50%), and I never like to push my luck going long. From there, I will put a lot of my gains into SRS, SKF and FXP. I attended a conference today where Bank of America doesn't see the lending markets BOTTOMING OUT for 2-3 years! Real Estate REITS loss half their value in the month of October! This is why I don't get nervous going short. Call me a pessimist, I like the term realist.

I've been expecting a day like today all week, but I was starting to think that maybe the hedge funds didn't have the muscle to pull it off, but it looks like they did. After 10, volume shot up and kept darting up into after hours trading. The higher they hike, the harder they fall. For the bearers of the inverse ETF's, cheer up and lick your wounds, because there should be a lot more up days like this for us then down. Just maybe not turn on your computer tomorrow. Have a good night and Happy Trading.

Every day that goes by we are seeing America slowly realizing just how bad it may get the next year. Today, only 1 stock was positive in the Dow and it was GM, solely based on the expectation of a government bailout. And I still believe the worse is yet to come.

Today, Secretary Paulson had a press conference to tell the country they are "revamping" the way they're going to spend the $700 billion bailout funds. Instead of focusing on troubled mortgage assets, they're going to focus on consumer credit debt. So now it sounds like they want to bailout people's credit card debt so that credit card companies can start lending to the same people again. What a great plan. This will somehow "unfreeze" the lending markets again. It sounds like full circle to me.

Well, the market didn't respond to well to Paulson's address. Following his remarks, we saw the Dow plunge another 100 points (300 more by the end of the day). The point is, even with hedge funds liquidating, most traders are realizing that we probably have some bad days ahead. These current market trends and volatility we are seeing are frightening close to the trends we saw in the market leading up to Black Tuesday. It's days like these, I'm glad I'm short.

FXP fought a hard fought battle today. It opened up in the red as a response to China's relatively strong performance last night. However, today's raging storm of bad news eventually brought it back up, closing a bit above $82. This is very encouraging for me, considering China had a strong day yesterday. China showed slow retail sales growth for the last month, which should shake things up. Most likely, Asia will take a bath this evening in response to our own bath. I'm looking for FXP to take a strong pop tomorrow.

On a different note, I actually bought long today. That's right, long. GDX has been so beaten up, I picked up some January expiring options at $22. So this gives me plenty of time for Gold to get a bit of a bounce from its recent slaughtering. I felt the need to hold something long as a hedge. If we go red again tomorrow, I am looking to buy back into the .QAADB Apple option (being below $10). Apple in the $90 range is a pretty good short term buy for me. I am enjoying the gains from SRS, SDS, and QID as well. Those should continue to run strong as we test a new bottom in the coming weeks/months.

There is still debate whether or not GM will be bailed out. My guess is they will. I don't think the government wants to send this market down the 6000 range (although I'm not sure if I agree with the bailout). Oil is another one to watch. It continues to get slaughtered as demand keeps going down. However, OPEC is considering another "emergency meeting" to cut supply again. This usually does well to give a nice 10-15% bump in DIG. I would wait to see how this week plays out before buying it. But if DIG goes below $25, it's a buy in my book.

Tomorrow, should be another good day for me, unless we wake up with a surprise from the government. There is still a chance of some manipulation from hedge funds, Friday being the deadline. Keep in mind, we still have the doozy of an announcement Friday, when they announce US retail sales. Once again, keep your eye on China tonight, that usually gives a good preview of where to expect FXP for tomorrow. Happy Trading everyone, and we'll see you tomorrow. Feel free to drop some comments, I'd like to hear other's thoughts.

They fought, and they fought hard. For any of you that have level two and three trading capabilities probably know what I'm talking about. Several times throughout the day we saw strong influxes of buying (my guess from Hedge Funds) trying to get the market in the green...And they almost succeeded. The fact that we are continuing to remain in the red during redemptions week should show the lack of consumer optimism for today's market.

We saw a good bounce in FXP today, closing over 10%. That should at least give some breath of life back to those like me that bought some shares in the low 90's. Just remember, this is a volatile, risky ETF. PLAY AT YOUR OWN RISK! I personally, having played and tracked this ETF for a while now, have a lot of confidence in it. One thing to keep in mind is there are talks of the Chinese government to begin to take stakes in certain Chinese companies. Announcements like these would most likely attract another emotional push in the Chinese markets, but as I have said before, they usually don't last long. This is all just talk, but it is something to keep in mind for those contemplating trading this ETF. I have accepted that we will most likely be up and down for the next couple of months, and then we should see FXP hopefully kick it into gear in December or January. All you have to do is turn on the news to hear the next bad thing happening.

I am straying away from energy stocks at the moment. Two of Tontine's larger hedge funds will be liquidated, which consist mostly of energy and coal. This should provide a saturation of the energy markets for the next while. These are just a taste of the many hedge funds we will probably see liquidated in the near future.

TJ Max was the lucky recipient of lower than expected earnings today, however, they didn't move much today. Congress meets next week to discuss the GM dilemma. I believe there is no way the government will let GM go bankrupt. If they were to allow them go under, this could be something that would cause the market to capitulate. Many analysts believe GM bonds are a good buy for this reason. If they end up getting help, we could see strength back to their stock. I don't plan on playing GM, because I would rather play stocks that rally as a result of a lack of government intervention.

For Tomorrow, it's kind of a toss up. I could see us having a green day as a result of some major hedge fund buying. If Asia reacts negatively to today's market than we could see another day in the red, so keep your eye on that. If we are indeed down again, I am going to look at buying some GDX options around $22 or $23, expiring in April. UYG has also taken a beating and I may go in and buy some $10 or $11 options expiring in April. I have been looking for enough red days to buy up some long options just as a short term hedge for this weird November. My goal is to completely be out of long by mid December. I would like to see FXP reach $100-$110 here shortly to pocket some profits, but I am also ok with being in it for a longer term. I'm sure all the FXPers had a good day today. I don't see a lot of green in the near future, but with government always looking to make a new bailout announcement, you never know. Happy Trading and we'll see you tomorrow.

Despite continual economic woes, we still see the marketing battling hard to stay above water. This is exactly why I said we're heading into "Rave Week". On the bright side, even in the up day, we still saw FXP take a little hop from yesterday's closing. That should show you the resilience of this ETF. Today, the market broke a critical barrier of 9300, which some believe was a threshold the market needed to beat to see a healthy run. Many believe that the market may rally close to 10000 this next week because this threshold was reached. As for me, it's Rave Week, so I won't bet on it.

I am very happy to only be in FXP currently. In fact I would not mind a healthy rally on Monday to send the shorts down further to lower my basis. Currently, SRS is becoming very tempting at $115, but I am going to continue to wait until it is under $100.

As I have said before, historically, the stock market takes a little bounce after an election and with the short squeeze on going with the Hedge Funds, we are set up for a nice little rally. Even though I am predicting a rally next week, I am going to wait on the sidelines and only stock up on my short position if prices fall. Look to continue to pick up shares of FXP if they fall $85 and below as well as SRS if it falls below $100. An investment to be considering in the near future is Gold. Next week I will discuss why it is a buy and how we can make some quick cash on it. We ended the week with a little bit of unexcitement, but we are set up to do quite well this next month. Have a Good Halloween and lets make some money next week. We'll see you Monday.

Well, as we expected, The Fed went through with their cut of 50 basis points. We saw the market rally in anticipation of the cut as well as stay fairly strong after, until the last 10 minutes where we saw a lot of profits being taken. I sold out of most of my call options, because DIG, RIMM, and UYG were all up strong and yielded strong gains. I gained a 90% return on my Nov. expiring RIMM option, 70% on my DIG option, 60% on my UYG option, and I kept my .QAADB, April expiring call option which I bought for $9 (It closed today at $15), because I believe Apple will continue to go up. They are cash liquid, have no debt, and continue to rise above with their innovation.

Now what goes on tomorrow? Usually, I would expect a pretty strong sell off, considering we had two pretty strong days of green. In this market, that's more we can ask for. However, Japan looks to make their own Fed Cut, which if they make a strong one, would most likely send our market skying tomorrow, especially Asia stocks. In fact, as we speak, Hong Kong's SSE is up quite a bit off of anticipation.

So for me, Tomorrow is a measuring day. Another day in the green, expect our short positions to be in prime position to buy back into. Personally, I feel it will be a green day, so I will be looking to get back into FXP or SKF if it gets in the low $90's or below. Also, I will maybe to look to get out of my Apple (AAPL) option if we see it go up another 50%. If for some chance, the sell off is stronger and pushes the market down, tomorrow will end up being an "observance day" for me. Remember though, to not give up on the market. You cannot count on how the market is going to finish until watching it five minutes before it's going to close. We saw a 300 point swing today in 7 minutes. The market is very volatile and a Red Morning can be a huge Green Afternoon, so keep tabs.

So keep your eye out and if we see another strong green day, look to building up your short FXP position, because as we saw from last week, that's a great wave to ride in this market. If it's red, don't worry about it, because election week is next week and I think we'll see some more green next week. Happy trading and we'll see you tomorrow.

Like I said patience is a virtue. You should have not been too surprised, because we here at Crash Market Stock said it was coming. In any regard, I hope that you are finding ways to make money in this market, because the opportunities are ALL AROUND YOU!

So here we are, a huge rally, up over 10% for the Dow today. All of the options we discussed are up anywhere from 30-90% depending on which ones you bought. And after completely liquidating my FXP, there was not any downside today. So what now...

Tomorrow will be a very interesting day and I'm going to be very cautious to what I advise. There are many elements constantly pounding on the market everyday telling us Bad News. I mean, even today we got the worst consumer sediment report in 30 years. You would think that would devastate a market. However, this time, I believe there was more positive pounding, temporarily, to give us this huge run. But there is a lot less positive to work with than negative, which is why we need to be careful when playing the long. In fact, GDP reports come out Thursday, which I am sure will now show a recession.

As for tomorrow, we have the big announcement. Now, no doubt most of the reaction of the cut was factored today, but not all. This puts us in a sticky situation. Most are expecting around a 50 basis point cut in the rate. Anything less than that, will probably send this market down tanking (coupled with the people taking profits from today). If they cut to expectations or more, I believe we'll see another healthy rally tomorrow. Remember, there are billions of dollars out there sitting on the sidelines waiting for the "bottom", and as soon as they see signs of life, they dump it in.

As For me, I plan on keeping my option contracts and hopefully selling them tomorrow for a healthy gain. Then, depending on how the market moves, I would love to get back into a short position. Notice below the chart for FXP. See the trends?
As you can see, there is a pretty correlating trend with spikes in this ETF. Good fluctuation from $80-90 up to $190. For me, as soon as it gets below $100, its a buy, and look what we found last week. The great news is after today, it took such a beating, its back down to $113. Another day of that and I am back in. For your options, look to hold on tomorrow and think about liquidating at the peak of the day tomorrow. Remember, it may be better to sell it before the Fed's announcement, because as we saw from the Bailout vote, action can cause the market to move down. If we see FXP hit $92 or below, I would get back in. There is too much bad news to come to keep that stock below $150. Good luck, Happy Trading, and we will see you tomorrow.

On September 18, 2008, it was leaked to the media that The Fed was in motion to put together a plan to come to the rescue of the some odd hundreds of billions of dollars out there in debt to be foreclosed on. The news resulted in the stock market making about an 800 point swing into the green, which it greatly needed after the beginning of what was going to be the worst week in Wall Street history. Today, the market remained optimistic by ending today well into the green. Is the beginning of the end of the crisis? My guess is, NO!

What is the greatest lesson we learn in our economics classes of why the banks failed during the Great Depression? It was because of the lack of confidence from consumers. The Fed has done a great job of slowing the pain by stepping in during critical times, as we saw with the Fannie and Freddie takeover, bailing out AIG, and now looking to rescue the rest. We began this week by what looked to be the beginning of the worst week we've seen in the stock market. If it were not for this news, we could have seen devastating losses, which were on the week of option expiration. We could have seen up to 3 more banks do what Lehman did last week.

This surely would have destroyed all confidence of consumers fueling this recession into even a worse state. The announcement saved us, for now. Looking at the numbers today, I do not see how The Fed will be able to embark on such a task it has laid out to do. Plus, I'm not so sure congress will be optimistic to move the risk of these failed loans from the banks to the taxpayers, who are you and I. Either way, this does not mean our economic woes are finished.

Strategist say that even if the Fed pull this off, they don't see the housing market reaching the bottom until late next year and 10-30% lower in prices. However, The Fed is determined to have something to send to congress by as early as next week in hopes to "juke" America away from all the financial hurricanes we have been faced with.

Take this news with what it seems to be. A temporary relief from a battle in the financial sector. Consider taking out a line of credit on your house to use as an emergency fund for then next 2 years. Access to equity will most likely get more difficult in the near future. Next week will tell a lot of how the market accepts this announcement long term.

By definition, recession means "a contraction phase of the business cycle." Although, in early stages, most economists dodged that word by saying we were a "slowing economy," I am pretty sure that all agree that the recession is here. The plan is to hopefully put it off until the economy is back on the upswing and we can look back and call the time a recession. No one likes to admit that we are currently in one. However, I believe if you can recognize it, prepare for it, you can come out of it more successful than you are today.

Signs of the Times
We first began to feel the heat on the economy when the sub prime market fell out in early 2007. This began a ripple effect which halted the purchasing of new homes, then lead to a surplus of houses on the market, then leading to a decline housing prices throughout the country. This resulted in new housing projects to be put on hold or cancelled.

Losing equity in your house is usually the biggest influence on a person's disposable income. Hey, you've always got your house, right? When you've lost 30-50% value in your house in 2 years, you tend to tighten the belt a bit. National retailers banked on new growth areas and a booming economy to sell their inventory which they pay for after they sell.

As a result, we have retailers like Linen's & Things, Starbucks, Circuit City, Mervyn's and many more, who then make the decision to either file for Chapter 7, or close several stores to prevent bankruptcy. In 2007, commercial real estate owners should have realized it was only a matter of time until the same problems that plagued the residential market would eventually come to the commercial side. What is that problem? No Lenders.


CMBS Market
From 2000 to 2005, CMBS financing became very popular by offering new financing terms that had never been seen. CMBS can be explained by taking a group of different loans and packaging them into a bond rating (ie AAA, BBB) depending on their strength of credit. These rated bonds would then be traded on wall street and sold to investors depending on their credit rating. This in turn allowing lenders to provide very competitive interest rates and terms.

However, the underwriting standards became sloppy and banks were being loose with their lending. This in turn led to the eventual collapse of the CMBS market all together. In short, the banks were lending out AAA money to CCC properties which artificially pushed property prices into the roof. Buying buildings for $400 per foot in secondary and tertiary markets was unheard of. It became a reality.

It was only a matter of time until this bubble popped. Now with the turmoil of the banks (Lehman Brothers, Freddie and Fannie, AIG), this has stepped up the crisis one more notch. Not too mention the oil crisis, weak dollar, inflation, commodity scarcity due to global economy, and the upcoming election. All of these elements combine to provide the vehicle into maybe one of the worst economical positions the US has seen since the Great Depression.

Goal Of This Site
Knowing the signs, you can prepare for the worst, but hope for the best. Living within your means is the key. In this site, I will provide the tools, warnings, strategies, and vehicles that have helped me to weather these storms. Living in a land that promotes "free economy," we must live with a Cyclical Economy. There is no way around it. The goal is to know when the cycles are coming and change our lives accordingly.