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

Ending the week with the fourth consecutive day in the green is something we have not seen in the market since December 2008. We all remember the times of December. It was not a good time to be positioned short. Not to say that March will be the exact same, but this buying is definitely more than just a couple day fluke. It is behaving much like your standard bear market rally and may have a bit more left in it. The dangerous part is trying to guess when it ends. I keep reinforcing my choice to stay lucrative at the moment, besides my small trading I've been doing here and there. This is because I do feel there will be point where the shorts are at a price that is just too low and I want to have the capital ready and available to make my move. I think we are very close, but I do feel that there still may be some rallying the next week or two, so I am remaining fairly cautious.

I did almost pick up some SRS for two consecutive days now. However, on Thursday and Friday my $59 buy order was unable to hit. SRS enjoyed being up almost 10% on Friday, but as buying persisted, it found itself back at the $60-$62 range where it ended up closing at. SRS is definitely holding up the best during this bear market rally as it is clear that commercial real estate is just scraping the surfaces of the problems coming their way. If we indeed see SRS dip back into the $50's next week, I'll will buy my first round.

Monday is the big anticipated FASB meeting to discuss mark to market accounting principals and the possibility of altering it or completely doing away with it. I don't see how they would just do away with it all together without severe reporting problems, so I assume if they do make a move it will be an alteration that maybe allows multiple options for banks, kind of how businesses have the opportunity to choose either FIFO or LIFO for reporting their Cost of Goods sold. So all eyes will be waiting on Monday to see what is the outcome from the meeting. We do have to attribute some of this financial rally to the anticipation of an outcome, so staying in financials for all day Monday, could be a gamble. If banks get one more push Monday morning, I most likely will get out of my remaining BAC in case of a post meeting sell off. At any rate, the outcome will not eliminate banks problems and there will still be a pile of distressed debt waiting for banks to deal with, so either way I don't see much to cheer about for banks.

In just a few days, we have seen the destruction of FAZ, which is the big reason I held off in buying some at this point. At $40, it's hard to pass up on it and if it indeed gets any lower, I have to start considering getting in. Even if we see FAZ drop lower, I don't see it getting lower than $30. So, as you can tell, I am becoming very antsy to get in, it's just that past experience has taught me that a bit of patience can pay off big time. So, the time is close, and I assume by this week I will begin taking positions on the short side.


One problem we face in our current economy, is the nature of our cyclical capitalistic economy and how the current government is working to try and stimulate it. Although much credit is given to FDR's plan to pulling us out of the Great Depression, I don't feel it had much to do with it. Sure, there were some benefits that helped "preserve" some jobs and keep things stable, but it was time and World War II that, in my mind, were the big driving forces pulling us out of the depression. Today, we have much of the same style of government which has the theory of big government spending, increasing taxes, and having the government try and to stimulate the economy by controlling where money will be spent and than taking care of the people. At some points, it sounds nice, but I feel it can also be a crutch to us in our recovery.

In his interview this past week, Warren Buffett said that he thought he could see an increase in taxes for the wealthy in the future, but that this was not the time to do it. Other areas need to be more focused on. From the chart below, take a look at the change of the marginal tax rate following the depression. From 1931 to 1932, it more than doubled. So you can probably expect taxes to get significantly higher in the near future. Considering over 70% of our GDP is measured by consumer spending, it is so important to make sure that consumers continue to spend! By taking half of their income in taxes, this will not create that spending. I believe we need to be focused on getting more money into consumer's pockets and really focus on job creation and preservation. Those two driving forces can have the greatest influence in increasing GDP. So, I believe if we continue to go down the road of taking money away from small businesses and consumers, it may take much longer to see us come out of this crisis.


It is for this reason I chose to run a MyCorporation banner discussing starting up LLC's or S-Corps. These entities can provide a big tax shield for those making significant incomes, especially through stocks or other investments that have large short term capital gains. An accountant or MyCorporation can consult with you on how these vehicles can help save thousands of dollars in taxes. I, myself, am a independent contractor, so these types of entities are very appealing and provide a huge service. In the future, the terms of these entities could be changed by the government, so it's good to look into them now while they're still up and running.

My first podcast will go out today. I plan to do two to three a week (or more depending if significant news needs to be talked about). I will expound on subjects that don't make it to the post and also discuss my portfolio changes more thoroughly. The service I use is a paid service to maintain the podcast, so there is a small monthly fee to subscribe. My hopes is to provide additional information that can be useful in breaking down this market and the significant movements that will be coming in the future. As soon as it's up I will post it in this post as well as in the sidebar.

So Monday should be another day of fireworks with hearing the results of the FASB meeting. Hopefully, I can start making some moves into the shorts and can begin on the road to profits. Have a great weekend everybody, Happy Trading and see you soon.

****Update- The podcast service is up and the first podcast is available. I am making the podcasts free for a week so you can see if it's for you. Enjoy! CLICK HERE TO SUBSCRIBE TO CRASH MARKET STOCKS PODCAST

Another critical barrier has been surpassed today on the path downward, as we closed under the critical 7500 number, which has been known to be the rubber bottom in previous months. A move to keep us under 7500 would be a big victory for bears going into the weekend, especially after enduring the several new mortgage announcements we have received this week. So we'll see if the bears have it in them to fight one more day.

I do regret having sold some of my SRS at $80 as there is definitely wind behind seller's sails. At this rate, I believe we could see SRS getting into the $100's very shortly. I have not completely abandoned my fears of a rebound rally, but I can definitely see a strong seller's market right now. Tomorrow will act as a critical day, seeing whether or not we can maintain under 7500. By doing so, I will probably find myself buying some options of SKF, SRS, and FAZ.

Oil has been on my radar the last couple months. As we saw today from DXO (up almost 15%) and other oil funds, there is definitely upside there. I recently was introduced to a distant in-law, who has quite extensive experience in the oil sector. Robert Dupree has a Masters Degree in Economics and, for most his career (30+ years), was engaged in developing and managing systems in support of exploration for oil and gas for Amoco. Along the way he was able to learn certain truths about the industry that I felt very applicable to the site and worth sharing. The following are excerpts from what he said from our conversation:


"I don't think that fundamentals had much to do with the spike in oil prices last year. I think that oil will play a significant role for decades to come. Our reliance on oil will persist for decades under our existing infrastructure and I don't see significant changes ahead for it. I would be inclined to invest as much in oil services as much as in actual energy companies. Companies in the service segment such as Weatherford or Schlumberger are worth investigating. They're being hit right now but their type of service will be vital for quite some time.

Regarding oil prices, they are run mainly by a cartel which must balance supply with the need for revenue. They cannot afford to be as political with oil as they were in the 1970s and they know it. The biggest factors that might affect oil prices are of the "Black Swan" nature which cannot be predicted. They would likely come from political events that could disrupt supply.

The romantic thrill of drilling and making a major discovery is still in the public's psyche. It's akin to the lust for gold. Politicians play upon it and the oil industry uses those offshore rigs as much for image as for real production. The oil industry is not lukewarm about more offshore drilling in the U.S. There is probably less than a year's supply of oil for the U.S. yet to be tapped in ANWAR and off of our coasts. Also, the lead time to manufacture the offshore rigs and put the infrastructure in place is at least a decade. What you have to watch for is new guys who might bid to acquire those leases. When Bush opened drilling in Utah, for example, the operators that came in were not very nice guys. "

As you can see, there is a lot going on behind the scenes that most people never become aware of, in dealing with oil. I'm getting very close to pulling the trigger on some oil stocks and ETFs. Not just necessarily for a short term gain, but for some long term potential. It is clear that it is still our biggest natural resource demand and is one the hardest, so far, to duplicate. I want to say thanks to Robert for taking the time out to share his thoughts with me and all of you and look forward to continuing our communication. I will be looking for an entry point for DXO shortly, which has a Market Club report score of -90 (get your own symbol analyzed for free, all you need is a name and email, Click Here), but I feel more and more oil has settled near its bottom. Also, OIH or even shorting DUG (Ultra Short Oil ETF) could be in my near future.

Tech is by far holding up better than the rest at this point. I have no faith in any financial institution at this point and don't even trust playing them as a short term bump anymore. I am all out of my FAS now and don't see myself getting back into them anytime soon. If I need to play the long side, I will look to companies in tech or even insurance companies. A breath of nationalization could send banks soaring down on any given day. I will, however, sit on some FAZ or SKF to try and take advantage of the speculative worries.

Keep your eye on the CPI number tomorrow. Expectations are a 0.3% change, which I would be very surprised to see us reach. A bad enough number here, coupled with more aggressive selling, could end the week on a strong selling note. As you can see from below, a force definitely wanted the market to rally right before close, but seller's would not back down. We are in a very different environment than we were in November.


Another critical day tomorrow. I plan to be up early and ready. It's always tough deciding whether to make moves on Friday, but tomorrow may be a day I do. I'll look for you guys on chat tomorrow and keep you posted. Also, yesterday I was asked to write a guest post for INO's Trading blog. So being my "bear" self, I decided to go with a bear topic. You can read it here. Remember to Sign up for the $200 promotion for Lending Club, click here for more info. Happy Trading.

It didn't take long to get speculative hopes back in the market. Today, the market got off to a bit of a slow start and even went red for a bit, but after the remarks of Geithner (the new secretary), investors felt a lot more comfortable with the future of the banks. Almost everything that was taken away yesterday was given right back. I was very happy to have sold out of most of my SKF before the aftermath, however, SRS had a much less than stellar day and I chose to hold on to those, my mistake. I did get the gains I was finally looking for out of Citi, but not much after the crash yesterday. It did help the banks that many of the CEO's bought back lots of shares to help instill confidence. I still ended up quite positive in my Zecco.com account after the two days and look to reboot my strategies as we are kind of at ground zero again. However, I think I am going to transfer some more money over from my ING Direct savings account to trade with, as the next few weeks could be prime for good money making.

It is funny, because during the interview, Geithner did not want to speculate on timelines and likely avenues the government would be taking, saying that by doing so in the past had caused premature speculations and radically effected the market. Well, even by avoiding the questions, he was still able to help radically move the market. How ironic. People are looking for the slightest bit of hope to help spur optimism.

So even though the Obama rally showed up a day late, it's here. Now, how long will it last is the magic question. Anytime momentum like that is stopped in its tracks and reversed to the degree we saw today causes some serious jolts in technicals. Although this rally should and could very well lead on into tomorrow, there are some deafening news that could reverse this day of high hopes. One day of Obama in office did not make the bank crisis's everyone feared yesterday go away. The debt outstanding is still substantially more than they can handle, and commercial vacancies haven't even hit half the number they're expected too. We're not out of the woods yet.

Google announces earnings tomorrow. This outcome could provide a big influence on where the market moves. With massive budget cuts, be assured that "online advertising" is one of the first things crossed off the list. Being that advertising revenue is a bulk of Google's earnings, they may struggle a bit. We lucked out this week with not much economic data being reported, but tomorrow we do have housing starts, which I cannot see being a strong number. That could effect some trading, but I don't expect it to be that influential. People should be clinging to headlines tomorrow to try and pull out any sort of negative or positive perception they can find. Whatever the case may be, I think the outcome will be very volatile, bouncing from red to green and higher volume. Did you see today? 408M trading volume, wow. This is the most we have seen in a while. With volume back and volatility increasing, we're heading back into market crash danger zone. Stay on your toes.

Apple knocked earnings out of the park after close today, sending after hours trading up almost 10%. This is not surprising to me, as I have liked apple all year (one of my top picks for long). All this news of Job's health and their ability to stay competitive is nonsense. Too much cash on hand and too much innovation. Apple should leap quite a bit and could definitely set the standard for up trading tomorrow. Lets see if Google can follow.

Due to the extreme uncertainty and volatility right now I am playing my bets with energy and commodities. Obama's only ammo to throw at this beast is more government spending (and even that can only slow the pain in my mind). He is going to have to spend trillions just to make a dent. Doing so is going to give gold, silver, and other commodities a pretty face of value. I'm bulling up on a lot of gold, DIG, and other commodities tomorrow to keep during this time of uncertainty. I've lowered my short position (still plenty left) until some definition is back and have a little bit of long financials as a hedge. Either way, tomorrow should pave the way of some new momentum.

Like I said yesterday, don't expect Obama to roll over and die his first few months in office. He should be working around the clock to ways to pump this market up. I still think we're heading to new lows shortly, we just need the Obama fluff to wear off a bit. Below is the market trend score (analyze a symbol here free) and movement for FAZ, which momentum score is still relatively strong at +60.

I hope everyone has a good evening. With this volatility, we are able to make some serious cash in quick moves. It's all about timing the bumps right. Happy Trading and see you tomorrow. Check out the new videos at INO TV, great stuff and it's free.

Well, as expected we saw our day of profit taking. Like I said yesterday, a 600 point rally in a bear market is more than you can ask for if you’re going long. Continual negative forecasts and outlooks brought Wall Street back down to reality for today, as people started digesting all this economic data we have been receiving. Personally, I don’t know who is doing the buying right now, because it is sure not the institutions. In fact, I believe the institutions are selling. The Treasury sold $32 billion in 0% yielding 4-week bills. $32 Billion! That shows just how many people feel that our market is in for a bad run. These people are happy having a 0% yielding return, which sounds great if you think a big downfall is on the horizon. Our foreign investor friends and institutions are looking like they are not wanting to roll the dice with the NYSE. Is it really all that surprising? ICSC (International Council of Shopping Centers) announced their negative outlook on retail for the next year. Fed Ex and Texas Instruments also joined the party of cutting their forecasts for the next quarter.

Even though we had this sell off day, we could see the market still continue to be bullish for the next week or two, especially if there is an agreement on the auto bailout this week. However, I feel that the bull is running out of steam. This Friday we have retail sales which , in my opinion, should be pretty lousy. We also have the PPI (Producer Price Index) on Friday, which expectations are pretty low as well. In any case, during this holiday season, there is not much to be cheerful about in regards to the stock market. However, the market has continued to push up and I have absolutely no idea who is buying right now. I think the government may just be printing money and putting it into the market, ha. At any rate, I still think we could see a crash any day. As soon as momentum starts pushing down again, it’s going to be hard to turn that train around.

SRS, my favorite ETF, was best of the shorts today, ending the day up over 12%. SKF also did well, as financial’s green streak came to an end. FXP and EEV were alright, however, I would like to see a stronger performance from them in the near future. DIG and GDX both held up strong despite the sell off. As I said yesterday, energy and commodities are the only buys I like long right now.

Right now, many people are using the “end of the year” term as a scapegoat. Broadcom cut their forecasts today saying that “many of their customers are postponing their purchases until 2009.” Yeah, like things are going to get better next year . It is the same with China and Europe, as they are hiding behind “year end uncertainties” to explain their market instability. The fact is they will use any excuse to hide behind to try and instill investor confidence. If foreign investors pulled out of those emerging markets, they would be killed. As soon as 2009 hits, I believe that is when reality will hit most. Coupled with the exhaust from holiday spending, year end earnings reports, continued unemployment, and slowly increasing energy costs. Right now, we are very lucky that oil has hit such lows. Just don’t expect it to be at $42 a barrel for much longer. As colder, winter months settle in, the demand for oil should increase.

We could see another day of sell off tomorrow, depending on the auto situation. If so, I will probably sell out of some of my long options and finally cash in on my profits. I have good positions in short right now, so no need to bulk up on more of those. If we go green again, I will, however, be picking up some more SRS in the low 80’s or high 70’s. I do expect a red day tomorrow, as I would expect foreign markets to react negatively to our down day today. But, who knows in this market, with these crazy buyers. I hope everyone has a good evening and thanks again for the donations, much appreciated. Happy Trading and we’ll see you tomorrow.