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

Last night, Hollywood seemed at ease as they put on their 81st annual Academy Awards. Little did they know of the storm brewing for the stock market the day after. In fact, besides the "red carpet", the only other red out there is from all the selling in Wall Street. This morning, we actually experienced our first few moments in the green, but proceeded to spend the rest of the day heading downward. Buyers and government intervention (PPT) didn't stand a chance in turning this train around right from the get go. Any sort of attempt of a turn around, was quickly denied, sending the market down further. Finally, in my attempts to try and figure out what the heck is going on, I resorted to the "they must know something I don't know."

Indeed I am a very strong bear right in this market, but by now, I almost feel overfed from the recent down trading days and keep waiting for the days where I start throwing everything up. But that day still never comes. I caught something very interesting that made me quite curious. Indeed, as I said in previous posts, we are long overdue for a "technical rally". However, there has been no such rally and looks that it may not come for a bit. Whenever technicals are over ruled, I try to figure out why. On Thursday and Friday, many of the sellers were hedge funds liquidating positions in preparations for redemptions. This mass selling was a strong contributor to keeping the markets down, even in the face of strong buying surges.


So who was selling today? Believe it or not, but a lot of today's sellers were institutions. Many long term holders found themselves selling today in the midst of the downward treading market. For those of you that don't have upper level trading, you should have seen the bulks being sold. I had not seen anything like it, not even in November. With selling like this, clearly "they must know something I don't know." These guys don't like selling unless they absolutely have to. Towards the end of the day, I think we saw what it was. AIG needing up to $60 billion of new capital to stay a float. They announced that they will be announcing the largest loss in corporate history on Monday. Just what this market needs. Being that the US already has its maximum allowed stake in the company, they are seeking for alternative capital to keep them afloat. Good luck! This news indeed could have been the devastating news spurring the recent sell-a-thon that has taken place the last 5-6 days. I do not see how this news does not continue to linger with us all the way to Monday's announcement.

As of now, we have pretty much passed every major downward indicator for most every major indices. With S&P closing under 750 today and the Dow getting dangerously close to 7000, we are in very dangerous grounds for what could eventually lead into a downward crash. The big question is, can we hold? I have expressed my doubt about this being "the crash" of this market, as the deflationary indicators just aren't hitting. However, that does not mean that it can't happen. Even though we seem low at these current numbers, I honestly feel that when the big storm comes, we will see 500 S&P numbers and it will come fast. By that time I hope to be fully positioned in my portfolio. For now, I will continue with my current shorts I have (SRS, FXP, and SKF), along with my DGP, GDX, TBT, and UUP. I still have some FAZ put options, which I will keep just in case of a strong rebound rally, but for the most part, I remain in cash. I still enjoy green on days like today in my Zecco.com account, as most of my positions remain short.

Tomorrows reaction to today is so, so critical. A failure to hold these numbers may spur a bit of a rally, which I don't see lasting long, but definitely possible. However, another strong day of selling, depending on how aggressive the markets are, may result in beginning days of capitulation. I cannot stress the importance of the day tomorrow, as all analyst's eyes will be on trading. Keep your eye out for some fireworks. FAZ continues to soars with a Market Club report score of +70! (get your own symbol analyzed for free, all you need is a name and email, Click Here).

I hope to see you all up early and on chat (located on the right side of the site, towards the top). It should be an exciting one. Please keep in mind, President Obama is set to speak tomorrow at 6:00 PM eastern tomorrow. So something could be up. Maybe it is the "something I don't know." At any rate, I think it's clear that we have "Broke the Back" of this market and that if anyone still believes in the "buy and hold" theory for stocks, I am sorry, for you have probably lost value in your stocks since 1997, ouch! Also, HBSC is offering some good rates right now, so if you're looking, go to Earn 2.25% APY* at www.hsbcdirect.com for more info. Happy Trading and we'll see you all tomorrow.

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For those that called it a day for trading a 3PM (eastern), most likely came back to their computers wondering what on earth happened the last 45 minutes of trading to make what was another 3% down day to just under .1% at close. So what on earth happened to make investors think that it was time to start buying? I find it no coincidence that the movement was made near the 820 S&P, as a closing under 820 would have been a pretty strong technical move. Here's some information that hit the press just in time.

With an hour left before close, the media announced Obama's plan to subsidize mortgages to prevent foreclosures. Once again before any sort of detailed information or laid out plan for the process of doing so, investors immediately jumped on the "rumor" train to gobble up any stocks in sight. It was early in this announcement that caused me to shave off some of my SRS profits from earlier (hit $70 today, I sold some at $68) and went in and bought some FAS. Just in the time before close my FAS went up 3%. This was a complete 180 degrees to what I felt I was going to be doing at the end of the day, but this is exactly why I choose the end of the day to make a lot of my moves. So, yes I indeed joined the buy craze in case this "rumor" train goes into tomorrow. Plus, I got some solid gains from SRS anyway today.



So where do I begin in expressing my thoughts of this new plan. This idea is even more out there than Geithner's plan. Subsidize mortgages? Are you kidding me? Is the government aware of just how much toxic debt is outstanding and is going to be outstanding in the next 3 years? Then what happens when commercial real estate hits the fan, which it will. He talks of securing the assets to try and incentivize banks to keep lending. Again, where is this money coming from? If Obama does indeed decide to pursue this outrageous task, it is inevitable that our dollar will be completely destroyed. So I am curious to see how quickly this plan is shot down by the public, but it all came out so quick today, that investors thought of nothing else to do but to buy. So I believe with the combination of the long weekend, it being Friday tomorrow, and our new "rumored" plan from Obama, it would be good to get me some long positions to try and earn some green tomorrow. But I was pretty surprised to see how quickly my Zecco.com account changed.

If not for the late announcement, I was actually almost ready to pull the trigger on some more shorts. Like I've said before, you never know what's going to happen during the day, especially with this new administration. I had a feeling they had something up their sleeve, as a big selling day for today would have been a bad sign for the markets.

Everyone was surprised to see the market down so much with the, what many thought were "positive, numbers" for retail. A .9% increase reported compared to the -.6% that was expected. However, there was some very bad employment data that came out to quickly kill the optimism. Plus, remember the retail sales is a measure of the total receipts of retail stores, this is not the bottom line. I am more interested in the bottom line of retailers, which can't look pretty. Think of all the liquidation sales that are going on this month and that were left over from the holidays. Everything is on sale. So, indeed, total sales may be up, but I bet you the bottom line or net income is looking pretty scary.

So indeed, I switched it up a bit today and it will be interesting to see what tomorrow brings. I definitely will try to get out of FAS as soon as I can as I see no backbone for financials at the current time. If there is indeed a rally tomorrow, I don't expect it to last long. Who knows, maybe the reality of nonsense of the plan will catch up to the market by tomorrow and there will be no rally, which is why I'm setting a 5% stop loss. I do, however, see nothing for green for gold as continual printing of US dollars should keep gold firing. Check out GDX's market trend chart, a +100, wow (get your own symbol analyzed for free, all you need is a name and email, Click Here).
See you on the chat, Happy Trading and we'll see you tomorrow.

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The lovely paradox we have been discussing the past few days of "buy the rumor, sell the news" has been getting thrown around the media, saying that this was the sole purpose for the big sell off we received yesterday. Come on...Sure there was indeed some of that factored in, since much of the buying on Friday and Monday were due to the "rumors" of the stimulus and new bank plan. However, Geithner also went up and disappointed Americans with his lack of answers for the direction the Treasury plans to head in these coming months. I believe Americans are slowly beginning to realize that there is a lot more talk with these politicians than walk.

It is a very interesting week we have on our hands. After these plans shake out, there is really not much left for the government to unfold. I believe it is after the failure of this next attempt (my personal thoughts, obviously), that we will most likely see a market crash and a new bottom set. Investors are getting more desperate and losing more money, and it is fear that usually leads to the mass selling of a crash. As for now, it seems that stimulus hopes was able to keep the market green for today, but once again, we will see how long that green can maintain. We saw the Dow stay below 8000 two days in a row, which has not happened in a while and we’re heading into retail sales announcements for tomorrow, which could be pretty bad.

Strangely enough, there has actually been a reduction in shorting the retailers going into the announcement tomorrow. It seems as if some people feel that they are low enough and don’t want to gamble with them anymore. Shares short in Wal-Mart (WMT) were down 21% to 40.3 million shares. The short interest in Target (TGT) lowered 15% to 39.1 million. Shares short in Home Depot (HD) were also off 8% to 59.8 million. In addition, the short interest in Johnson & Johnson (JNJ) fell 24% to 25.6 million and shares short in P&G (PG) dropped 17% to 30.3 million. Shares short in Coke (KO) lowered 20% to 20.5 million.

The short play on financials was a mixed one. Short shares for Wells Fargo (WFC), were off 11% to 111.7 million. However, the short interest in Citigroup (C) was up 11% to 181 million. GE’s (GE) short interest were higher 17% to 168 million, as it has had increasing concerns. Below is the market trend analysis on WFC (get your own symbol analyzed for free, all you need is a name and email, Click Here).


So indeed it does seem that there was some money moved out of the short side for the time being, but this does not affect my desire to remain mostly short right now. As I did not make many moves today and I still remain mostly in cash and in shorts, I am still waiting for the time that looks good to move in more. I think retail numbers have the potential to be disastrous. If by chance this number does go overlooked, thanks to more bailout fluff, I would expect it to catch up with us much like unemployment did. So, if we stay green tomorrow, shorts here I come.

The government reached an agreement on price for the stimulus at $789 billion. They expect this powerhouse package to create up to 3.5 million jobs over the next 2 years. When doing the numbers, that means that for every position, it averages to be $223,000 per job. Sure, this number is to be over a period of time, but I think there are a lot of Americans who are willing to work for less than $60,000, let alone $223,000.

Also, the government plans to have their plan of new “transparency” with the banks. Beginning next week, the top 20 financial institutions will be submitting a monthly TARP form, hoping to shine light of how much money they are receiving and where the money is going. I know they think of this as a transparency play, but this can also be a bad move by the government. I don’t know if the public is ready to handle some of numbers these banks are going to throw out. It could just make matters worse for banks and lower the consumer’s confidence. So we’ll see how that goes. Below is an example of the form they will be using.


So, there still seems to be more uncertainty out there. The markets are still very vulnerable to violent movements either way. The day panned out much the way I expected it to, however, I did think financials got a bit more love than was due to them, and I was bummed to see SRS end in the red after the strong start this morning. That is slowly becoming a trend for SRS… Buy before close, sell in the morning. So tomorrow will be interesting. I plan to get into more shorts, whether it is red or green, pending some new announcement.

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. Find me on chat tonight and tomorrow, Happy Trading.

PS – I’m loving my Gold right now, and inflation isn’t even here yet! (GDX, GLD and DGP)

It is days like today, which solidify my feeling of why I am so nervous to be long in these current market conditions. We saw in just one day, the last three days of green get annihilated, closing the Dow once again under 8000 at 7888. This is why having dangerous days like Friday, in which investors looked right past some pretty devastating unemployment numbers and kept buying on hopes of "The Saving Bailout Plan", sets us up for an even more devastating day of losses as eventually that news will get factored in. The market opened up in the red, but really began dashing down during Geithner's speech, where he attempted to unfold the Treasury's plan with confidence, but failed miserably. A bunch of numbers were thrown out there, as well as phrases like "private equity help" and "should help to unfreeze markets", however the linking equation to execute the promises was missing.

As soon as the speech was over, analysts had their way with Geithner and his new "plan." Many discussions about the Fed's inability to perform on their promises as well as their "lack of preparedness" in the plan gave the media a lot to talk about the rest of the day. This indeed seemed to cause a lot of doubt with investors as the selling continued up until the close.

So what do I think? I think it's a joke. I can't blame Geithner as I feel our current dilemma is a task too big for any individual or entity. We are currently reaping what we sowed for the past 5 years. Falsely labeled AAA-BBB assets were bought and sold with no actual currency exchange, but with new loan documents. This debt has built up to a ridiculous amount that will take much longer than a year or two, in my mind, to begin to see a turnaround. So I can't blame Geithner, although I blame him for falsely preaching hope to investors, causing buying at times when markets should be selling. In the end, this market needs to crash in order to pick itself up again. I believe we are close to these times.


They discussed helping private equity to help buy these toxic assets. What private equity? You mean the $13 trillion in wealth destruction? Sure there is still money out there in certain institutions, but who has the kind of money they need to buy these "toxic assets". I guess this is why many institutions are interested in the plan, but none have signed up. I loved the line, the private sector will "determine the prices for current troubled and previously illiquid assets." Sure that will be easy, just talk it out. These are just a few of problems with this plan.

So I'm very glad to have sold out of BAC yesterday. There was a lot of green in my Zecco.com account today, as after my FAS shares sold, there were nothing but profits all around. Indeed, in this market, we can expect these selling days to be much more violent than the buying ones. Before close, I took a lot of my SKF profits off the table as I don't think we're quite out of the "rally woods" yet and wanted to pocket some in case of a rebound rally. I don't necessarily feel that we will be green tomorrow, but I made enough gains from my shorts today, I can play it a bit more conservative for tomorrow. In fact, with retail sales coming this week, and the poor earnings from NVIDIA and Applied Materials after today's close, we may see another day of selling for tomorrow. I am keeping all of my SRS as I still continue to love that ETF and will average down if hurt tomorrow.

After the huge day of selling, we could see a day in the green, but I don't expect big green numbers, unless we get some additional news. Days like today take a good bite out of sentiment. Sure, there may be some profit taking, but I don't feel that there is much wind behind Bulls sails. If we do indeed end below 8000 for tomorrow and possibly end under 820 for the S&P, I would expect a continuing downward trend. We'll see what tomorrow brings though, 8000 has been very, very tough to stay under and Hogan's bottom seems to have a spring on it.

My DGP did quite well today, as gold continues to do well in these uncertain times. I'm continuing to like plays like these, and even oil right now as I think there will soon be some more separation between Dow movements and commodities. Plus, DGP has a market trend score of +55, not too bad (get your own symbol analyzed for free, all you need is a name and email, Click Here).


So tomorrow will be interesting. I plan on getting into a position in the morning as I believe we will see some definition of the day's trading pretty early on. So yet another day of early rising for me and we could see the markets hit some critical technical numbers tomorrow. I'll be on chat later and tomorrow, so I will see you then. Happy Trading.

It seems as if our market is developing a bit of a pattern, “Freaky Friday” and “The Monday Blues”. It’s as if people actually go out around town and see exactly what is going on in our economy over the weekend and come into Monday with low expectations. Then during the week, the market places a trance over them into thinking that everything is just fine. I mean come on, we just had one of the biggest frauds pulled off in US history on Friday, and the market didn’t even blink twice. Sooner or later, all of this bad news needs to be factored in.

There wasn’t much of a fight today, like we saw all last week. It pretty much stayed in the red all day. It didn’t help that Bush warned auto makers that a bailout was not a sure thing. Only that it is to be considered. Plus, President Bush has bigger things to worry about, like getting hit in the face by Iraqi shoes (watch the video if you haven’t seen it, it’s hilarious). Either way, a passed bailout may cause for a short term rally, but should have no lasting effect on our dying economy. There is a lot to look out for this week that could cause some serious momentum in either direction. We’re getting close to the end of the year, and we’re hearing of more problems day after day.

On the bright side, look at Gold! Like I’ve been saying, I love GDX. Even with the down day it has the wherewithal to be up close to 6%, hitting over the $30 mark. If you scroll back to the post when I was buying it, it was at $19. With the government continually printing new money to bail out every Tom, Dick, and Harry, we should continue to see gold’s value go up and up.

OPEC is meeting this week to discuss a possible supply cut. I think there is a good possibility of the dissolution of OPEC, with growing demand problems. Soon, it will be a blame game of who should be cutting supply more, Saudis? Russians? Iranians?. In turn, the countries may choose to go their separate ways during this financial turmoil. At any rate, they don’t like oil being under $50 a barrel, so I am guessing something will be done with them. Keep your eye on DIG.

Well, we’re slowly but surely hacking our way back up with the inverse etfs. SKF and FXP both performed strong as there were doubts with financials thanks to the Madoff scheme. China continues to struggle as doubts loom over investors. With worries of government instability as well as the possibility of riots, what recently was labeled the savior economy, China, is looking to be a sinking ship.

The Fed begins their meeting tomorrow to discuss the possibility of a rate cut. Like I said in last weeks post, don’t be surprised to see a disappointing number come out of that meeting. The market would like to see a 50 basis point cut to the rate. However, I feel that The Fed will show the US that they cannot expect aggressive rate cuts every meeting, even in our current financial fragility. Sure, it may cause some drama in Wall Street, but hopefully will show investors that every meeting does not mean another 50 basis point hack to the discount rate. The Fed has also given hints to maybe not expect a big cut this time. It’s kind of like taking morphine. Sure, it dulls the pain for a bit, but later we’ll wake up with a bigger headache and worse pain then when we started.

Some key earnings this week are Best Buy and Goldman Sachs tomorrow. I would expect Best Buy to have pretty bad numbers, since I don’t see them that far off from Circuit City. I would also expect Goldman to have less than par numbers after the JPMorgan announcement last week. GS is before market, and Best Buy should be during the day sometime. Watch financials go tomorrow. If the numbers are indeed bad, we could see a 20% run in SKF, providing a solid day for the shorts. This could set the mood for the rest of the week.

Morgan Stanley, reports the following day, and I would expect them to follow suit. I can’t see them being any stronger than GS. If for some reason positive news comes out of the big Investment Bankers, than watch the market run. We have seen the potential for some upswing during December, and positive IB news could give some fuel to the bull. I don’t expect it, however, never rule it out.

The bear is growing hungrier by the day and I believe soon we will have some serious red days in our near future. These inverse etfs are still at really low levels and I would be extremely happy to just be buying into them now. If you don’t have a trading account, you can open one and get free monthly trades at Zecco.com.

SRS (up 5.77%) is still my favorite as we saw the extreme loan problem in real estate during 60 Minutes last night (what I have been saying the past 6 months). Depending on GS news tomorrow, it could be a slaughter. Either way, expect a big push either up or down. Let’s make some money, Happy Trading and we’ll see you tomorrow.