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

Markets soared on Monday as investor's confidence got a boost from the weekend G20 meeting, which portrayed a strengthening of the global economy. A 200 point rally on 200M of trading leads me to believe that a small group of people are doing a lot of the buying.

With reading the headlines and sites nowadays, I almost feel like I am getting pitched on a multi-level marketing scam, when referring to the stock market. Analysts are proudly declaring the success of the market with firm recommendations saying "you can still get in, we've got a ways to go." Whether or not that is case, is still yet to be determined, but what makes me very cautious to partake of any such rally, is the fact that almost all of our recent successes are due to massive government stimulus and spending.

Last week, we saw our unemployment reached double digits (which in reality is much worse than 10.2%, when considering all consumers). Mom and pop businesses (which is usually considered the "salt of the earth", in regards to businesses) continue to rack up massive losses. In fact, it is very easy to see just how good businesses are doing by going into your local diner or cafe. Consumer spending remains considerably down. However, at this point, the government has manipulated the natural regression of GDP (which is historically 70% influenced by the consumer) by moving up numbers with massive amounts of government spending, stimulus, and rebates. The problem is that as markets continue to rise, investors will more and more begin to believe that a "natural recovery" is what is bringing back markets, which is absolutely not the case.

Last week, the FDIC approved banks not having to mark down depreciated assets to its current market value, as long as the loan "remains current." Now current will be defined in a variety of methods I am sure, but such a move is another huge cover up for banks. This goes to show investors that indeed opening up bank's books to the public to show the "true value" of their current assets would cause for most banks to be bankrupt. In my opinion, this is the cause of a continued 0% Fed interest rate, as well as government purchasing of mortgage debt. The government clearly knows that banks cannot absorb the true values of these losses. Inflating the stock market is also helping this process, however, at the expense of those investors buying into it.

Because we are still rather new into this downturn, effects of government intervention are quite delayed. As months continue to go on, our economy will more and more see effects of a mindless spending government. In my opinion, I compare this recent market bolstering to the construction of a building with a weak foundation. We are so concerned about the upward performance of the stock market, we have failed to evaluate the foundation of our economy and if we can sustain growth for the long term. Just as a building with a weak foundation would, I believe the stock market is waiting to come crashing down once more. However, with 200+ rally days like today, I continue to be watchful for the right time. On a good note, my 10.5% return with Lending Club remains in tact.

I found it comical to see Cramer this morning almost mimicking my April Fools joke from yesterday by publicly calling today that "The Depression is Over!" Today on national television Cramer said that thanks to the genius works of Geithner and Bernanke, he is officially calling it that the "depression" is over. He indeed feels that we are still in a recessionary state, but obviously is saying that the worst is over. Cramer...Come on! Are you serious? I think during the recent distress of GE, the government came in and took control of the GE's assets (including CNBC), which is now why every analyst on CNBC is now saying that President Obama and Geithner have been flawless in their government intervention. Either way, Cramer has made a lot of "national calls", many of which have never come to pass. Good luck on this one Cramer, no going back and editing your show like you usually do!

Come on guys, we discussed these "speed bumps" in my post last week, so there should not be much of a surprise. Indeed I was a bit surprised at the degree of praise the markets received, but a lot of the extra praise came from more "fluff" from the G20 meeting. At any rate, a day like today is nothing new that we haven't seen. Whether it is a new trillion dollar economic stimulus, loan modification options, or a company bailout, we have always seen these temporary, violent responses from the market. The keyword being here is "temporary." This is another one of those days where I believe the market reacted before they analyzed what it meant, much like we saw when the Fed announced their trillion dollar toxic asset plan. You will remember a vicious sell off that followed that day.

What caused much of the praise today was the mixture of the statement from the G20 meeting in which they said as a group, the committee will do all that is necessary to bring health back to the global economy and the vote from FASB to "relax" mark to market accounting. The G20 announcement should not be earth shattering to anyone who has kept up with the committee in prior meetings. They have always taken this stance and I believe if it were not for the mark to market meeting, most investors would have looked right over the meeting.

As for the FASB meeting, the results were much as I anticipated. The vote was to "relax" the mark to market standards, giving banks more options when considering to write down debt. As I have said before, this should make a difference on paper as far as reporting and keeping their balance sheets balanced, but it will not solve the problem of frozen lending. In fact, from here on out, I would suspect investors to be even more "skeptical" of bank's earnings reports, as the numbers will no longer reflect current values. So although this may help with their reserve requirements from the Fed, more will be required to get banks lending to the consumer again, which ultimately needs to happen if we expect to turn this economy around. So, I am calling it as well, "Cramer you will eat your words!"

Bulls and dependent analysts are already trying to downplay the significance of the non farm unemployment number which is being released tomorrow. They are indeed yielding to the fact that the number will most likely be the worst we've seen thus far, however they are saying that the unemployment is a delayed indicator and that there are many future indicators that are becoming more positive. Nonsense! Unemployment is one of the biggest influences of GDP performance. Sure, it may not be as "forward looking" as some indicators, but to say that the worst number we have received is good news for our economy is, in my mind, ignorance.

I personally don't feel that investors will be so easily duped tomorrow. Indeed there is a lot of positive momentum in the market right now, but a bad unemployment number will eventually take its toll, whether it be tomorrow or next week. I strongly believe, just as we have seen with other new announcements, the news driven rally will be short lived, and we will then look for something new to keep the rally going. We did see the Dow trace back toward the end of trading, closing under the 8000 mark, which mentally, for investors, is pretty significant.

As we would expect, the shorts continue to get crushed by these rallies, which is a big reason why I am choosing to play it safe at the moment. If tomorrow takes the market above 8000 levels, I would believe that is a pretty good indicator that we have some more of this rally to endure, especially with more fluff to be announced. There will still be small opportunities in between, but as for the big set up, we've probably still got some bleeding to do on these shorts.

My apple options (QAADB) were up over 100% at one point, which actually turned today into a profit, over powering my losses from my SRS and FAZ call options. I had written off these apple options months ago. It's amazing what time and patience can do. RIMM soared after hours with a positive earnings report, which should keep Apple and RIMM in the green tomorrow.

My biggest goal remains capital preservation in my Zecco.com trading account. Bears are getting killed in this rally if they are not careful. Although my current patient strategy may be frustrating to some, it has saved me from serious losses that I could have suffered if not for my patience, in which I go into more detail on today's podcast (subscribe here). I do feel there will be a great opportunity to make money on the short side, but that time is not quite yet in my opinion. Happy Trading and we'll see you tomorrow.

Just when everyone thought the market was finding its footing and becoming more stable, once again we see aggressive volatility back in the market. The lead up is much similar to the one we saw leading up to our lowest point back in mid October. This causes me to speculate a little and discuss some interesting concepts.

As we know, there is a lot of technical analysis that goes into analyzing market trends and movements and determining bottoms and capitulation. The vertical rebound we experienced Thursday, and the volatility of Friday has set up the perfect scenario for what many believe are the gates to capitulation. So I thought I would share what I have learned.

The "G20", consisting of major global emerging markets leaders, are meeting this weekend to discuss the global crisis and maybe some possible resolutions to slow the bleeding. Some expect a small band aide announcement will be made, causing a strong emotional rally on Monday. From there, many technical analysts feel that this is where we will see the bottom fall out. Some expect it to drop like a tank. By analyzing graphical trends, some believe we could reach anywhere from 6500-7500 by the end of next week and experience our first capitulation of this recession/depression. Bear in mind these are technical analytics that may not apply to this crazy market we're currently in, but it's good food for thought.

So what did I do with this news? Obviously, I am keeping my shorts. Thankfully, we saw FXP gain back a lot of ground it loss from Thursday. As expected, we saw a massive sell off the last 5 minutes before the market closed (probably from the mass hedge fund liquidations). All the other usual suspects for inverse ETFs did great as well. One new one I am adding to my list that I have been eyeing (probably picking some up on Monday) is EEV. EEV is an inverse ETF shorting the emerging markets sector. Now, with the "G20", involving many of these emerging market leaders, we should be seeing some good gains out of this as we continue to see these quick fixes fail. We see similar trends with this ETF as we do with FXP, but it seems to be holding up slightly stronger.

Considering that I feel we could be in for a short term rally on Monday, I picked up some DIG options on Friday, expiring in December as well as some more of my .QAADB April expiring Apple options. With this volatility coming back, I'm looking to play both sides a little bit more. I am not 100% sold of this technical prediction, but I feel good about picking up these options at these prices anyway. If we do indeed get this rally on Monday, I will look to liquidate all of my long positions, with the exception of maybe my GDX options and throw my profits into EEV and some SKF or SRS. I believe next week will be a pretty monumental week. I think we will see A LOT of activity go on. So stay on your toes and try and catch the openings and closings of the market. That is usually when the deals are. Thanks to those that commented, I enjoy your insights. I hope everyone has a good weekend and Happy Trading. We will see you Monday.