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

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.

What a day. I felt like I was riding a never ending roller coaster. Investors had no idea how to "day-trade" in today's market as digestion of all the new economic and auto bailout news was a bit difficult. Then to top off the day, we have the Madoff hedge fund scam that should cause some noise next week.

As expected, pre-market trading was very negative, in response to the rejection of the auto bailout last night with The Senate as well as the Madoff scheme. The Dow dipped as low as 220 points today, but quickly gained strength as President Bush announced the possibility of utilizing a portion of the "Tarp Money" to assist in preserving the autos. As I discussed yesterday, I did not see a very likely chance that they would completely abandon the auto makers.

We then received the retail report, which once again brought down the market. Retail sales came in down 1.8%, which actually was lower than market expectations, but it also has been the longest stretch of negative sales (beginning in July) since the Commerce Department began tracking the number in 1992. Many people believe the reason for this semi-optimistic number, is that more people did ALL of their holiday shopping during the Black Friday weekend, instead of spreading it out over December, as it has been in prior years. I don't know about you, but lately, the traffic in the shopping malls near me have been pretty modest.

Another positive that bumped the market a bit, was University of Michigan's consumer sentiment report came back more positive than the previous month, rising to 59.1 from 55.3. Much of this was contributed to the incredible drop in gas prices, as most people are getting anywhere from $50-200 extra a month now. However, studies show that people are not spending this money (either being saved, or paying bills). So in turn, that doesn't do much for our monetary supply chain. At any rate, they don't call the end of the year "The Bull Season" for nothing. People are a bit more positive during this season.

In the end, we did see the "end of the week rally" prevail as I believe that makes it 8 weeks in a row we have seen a rally on a Friday. I am still hearing from analysts on the news that, because of the ability to stay positive in the midst of persisting negative news, that means we're at the bottom. Hilarious. We are ankle deep in this current economic crisis, that has a very long winter ahead of it. And what happened today with the Ponzi scheme is a preview of what we can expect in coming months.

Today, Bernard Madoff, the well respected Wall Street guru who managed a billion dollar fund, and who was the Chairman of the Nasdaq Stock Market in the 90's, was arrested due to frauding investors of what could be more than $50 billion in what authorities are calling a "ponzi scheme." Madoff was able to fool investors into thinking their fund was producing great returns, when in fact their money was being sent to what Madoff called, "money heaven." This gives more weight to the phrase, "if it seems to good to be true, it probably is." Even though, the market seemed to plow right through this, this is a big divot in our recovery. This directly affects investor sentiment. After this story being in the headlines all weekend, many investors will question their hedge fund's integrity. If it wasn't difficult enough for hedge funds to gain confidence from investors to keep their money with them, now they have one more big obstacle they need to clear. Having been looked right over today in the "Friday Rally", I believe we will see this scheme factored in next week, as people will realize how big of a deal this really is.

We've got a lot of action in next week's trading. Not only do we have the Fed's meeting to discuss another rate cut, we also have Morgan Stanley's and Goldman Sach's earning announcement which should cause some momentum (either bad or good) for financials. I plan on selling my UYG options before than, as I do not expect good numbers, due to the disappointing announcement from JPMorgan yesterday. SKF and Faz could receive strong bumps, if those earnings are indeed disappointing. Also, there is still a consideration that the tarp money could not get allocated to the automobiles. Although, I still feel it is unlikely, it is possible. There is a lot of opposition to the bailout and it is still a crucial element to moving this market.

Going into the holiday season, volume should continue to get lower and lower, which makes it more vulnerable to volatility. It should be another crazy up and down week as we end the year. I still think we should continue to get gains from the shorts as more and more of this bad news gets factored into the consumer.

I am still loving SRS, FXP, EEV, GDX, and DIG for the next year, as I think they should receive some good gains. Note the recent volatility of SRS lately. Just in the past two days we have seen it be up 30% one day and down 20% another. Even though, I love this fund as a long buy, it could be a great play for you day traders. If you can buy into SRS in the $70's price and sell at around $100, you may be able to turn some quick profits in a very short amount of time. Keep that in mind. Have a great weekend and Happy Trading.