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

Thank you for your patience as I continue to try to find time to give updates on the site. Thanks to everyone who has reached out to make sure I am still alive, haha! All is well, and hopefully I get the opportunity to converse with many of you.

As for an update, I am pursing my MBA and am enjoying the opportunity to dig even deeper into financial markets and strategies. I have been lucky to work closely with faculty and staff who have extensive experience in portfolio trading and a long resume in market studies. It has been very interesting digging into market efficiency and really looking at the data and concluding if abnormal gains in investing can be accomplished and repeated and how... The results are very interesting. I will be sharing a variety of strategies and portfolio theory that we find and study with all of you as well as implementing these strategies in my account and sharing them with you.

Markets have continued to act unique this past year as it has since 2008. However, we are still finding many existing and new strategies are finding a lot of success in current trading environments. There are a variety of new portfolio strategies in today's market that allow for diversifying against non-systematic risk in portfolios. We are also seeing momentum trumping several past fundamental valuation methods.

The past two years, we have seen just exactly why fallen Angels small cap stocks are the optimal choice for portfolios rather than value growth stocks. Rebounds in companies such as Las Vegas Sands, Citi, and Wynn show just how profitable being 0n the right side of these rebounds can be.

I am excited to reignite some passion with the readers of this site... I look forward to some great gains and strategies for this year and hopefully we can share in the success that the markets are sure to bring this year. Happy Trading!

What? You thought the government was just going to keep giving handouts for free? Never. The IRS has announced that those who took advantage of the first time home buyer tax credit that was issued in 2008, will now need to start paying that back on 2010's tax return.

How this will work is that all those who took advantage of the $7,500 maximum tax credit in 2008 will be asked to add $500 to their taxable income for the next 15 years. If the house is sold before the 15 years is up, then the full amount will be due upon the sale.

What will really ruffle some feathers is that only people who took the credit in 2008 will be required to pay.

Not like this is going to affect the overall economy much. When you consider that about 70% of Americans are estimated to not be paying their home mortgage right now, you better believe their not paying their taxes either. At any rate, Uncle Sam is starting to look for payback, and its only going to get worse.

Another interesting side note is that Warren Buffett has reduced his portfolio holdings of Berkshire Hathaway to 25 positions, the lowest we've seen form Buffett in several years. Obviously, Warren himself, is having to think that indeed this run has to be coming to an end soon. This was surprising to many, considering that Buffett has been rather optimistic through much of the recovery.

In addition to reducing his holdings, Buffett also sold off all the remaining of his Bank of America stock, and up'd his positions in Wells Fargo. It seems as though Warren had seen enough of bad underwriting and news from the bank giant and has not gotten out. Wells seems to be a safe play at this point for financials as they remain as the high standard of underwriting and continue to make a killing off of interest spreads. Happy Trading.

Nice solid movement coming from the Gold Spot (Forex XAUUSDO). Good regression line and also a pretty solid crossover on the MACD. Definitely a beginning of a good uptrend. Markets rallying pretty good today, which should continue the last hour. I would not be surprised to see half of the profits returned tomorrow as many got a nice little pop today.

Once again, I apologize for my limited updates to the site, as times continue to be busy. As we can see, there has definitely been upward movements in stock prices. In fact, with my last post, the Dow was lingering around the 10000 mark at which I said that I expected a "rubber bottom" at around that point and expected to see a rather steep jump from there. As of now, we can clearly see that has been the case. Now the question is how much is left as we begin to head near the always interesting "end of year" times.

One luxury that the housing market has enjoyed throughout most of the summer months was the lack of foreclosing from banks. Hundreds of thousands of potential foreclosed homes have been delayed due to a variety of reasons. Now, we are starting to see the banks move forward more aggressively. In fact, Bank of America announced today that it plans to resume paperwork for over 100,000 cases of foreclosures in 23 different states. Not only will the housing market now have to endure the off season, they will also have to do it while competing with a fresh load of foreclosed homes. Let the auctions begin!

The housing market will not be the only sector to get affected by the change. For several months now, hundreds of thousands (if not millions) have enjoyed the extra disposable income that has been generated from not having to pay their mortgage. This can be quite significant. As banks begin to foreclose more aggressively, this means that more and more people will be forced to pay occupancy costs again (duh!), which in turn will affect several other sectors. We have seen in recent studies that much of the recent economic activity is a result from government stimulus. If these go away, market growth goes away with it. So now the decision is, when do we make the decision to pay the bill of this party we have been enjoying for the last year and a half.

As of now, I believe we are nearing a rather aggressive pullback. November is known for the massive hedge fund redemptions that take place before year end as well as other year end pressures begin to pile up. Shorts should perform well during the end of October/beginning of November. Happy Trading.

Well, as I expected, we are continuing to see a rather strong "bouncing bottom" at around the 10000 level of the Dow. This last bounce has taken us above and beyond the 10700's, which seems to be a trend at this point. However, signs of a decreasing dollar is starting to raise concerns for investors.

Nothing could be more dangerous to our economy at this point than a sustained, low value dollar. There already exists massive threats of hyperinflation as the government continues to run ramped with government spending and bailouts. Recent jumps in gold are confirming investor's worries about inflation as gold prices are the best measure for investor's sentiment towards the dollar.

Many worry that declining dollar will not continue to "prop up" the market. A declining dollar would also equate to a decline in US consumer's spending power, which in turn will be a direct effect on GDP and economic growth. It is because of this, eyes are closely watching and hoping that we see strides of progress in regards to the dollar's strength.

There are others who feel that the dollar is primed to launch at this point. Some optimists feel that they expect to see some big gains in the dollar in the short term. I cannot agree with them at this point, when considering other lagging indicators that are still existing at this point, but we will see.

One big problem with a declining dollar is that we have not seen much inflation in the marketplace, which would be a normal sign of inflation. So although we are seeing the value of the dollar go down, consumers do not have an inflated amount of dollars in order to compensate for the drop in value. Thus the drop in spending power. Although it may seem to some not a big deal, the value of the dollar is critical at this point. Happy Trading.

For the most part, I usually choose to not actively participate in day trading, most due to the time commitment required as well as the stress levels it can cause. However, every now and then something comes along that is worth a look.

PCBC is a Bank that has been on the decline since the turn in the market and has been flirting with FDIC takeover for the past 6 months. Just a few months ago, the bank found a saving investor to hopefully salvage sinking ship. Gerald Ford, founder of Ford Financial Fund, opted to invest $500 million in capital into the bank, in return for a majority of stock. Although, temporarily, it seems as though the transaction will be enough to keep the bank going, it has also heavily diluted shareholders of the stock, which has sent the stock sailing down.

The interesting part is that now the bank will be offering a unique opportunity for shareholders of the stock. According to their filing (which has also bee confirmed by their investor relations department), any shareholder of the stock as of close of August 30th (which is the day before the Gerald Ford transaction is set to close) will be given rights to purchase up to 15.335 times the shares they currently own at an offering price of $.20 per share. You do not need to be a preferred stock holder, this is open to the public.

Due to this, we have seen enormous amounts of volatility in this stock (up 20% yesterday, down 45% today). As we approach this August 30th deadline I expect to continue to see extremely large amounts of volatility followed by what should be a rather steep decline in the stock, as the $.20 offering deadline passes. Obviously, the main risk in this investment is whether or not the bank stays afloat. As for me, I am familiar with the bank, and am comfortable with their operations and I am also comfortable with Mr. Ford's ability to see a good deal. If you want to see some fireworks the next few days, tune into PCBC.

First of all, please excuse my lack of updates for the past while. Those that are active readers of this site know that this is merely a hobby of mine to update many of you of the changing in markets as well as my own two cents on the always changing economy... and hopefully to profit from it. The past several weeks have been extremely busy for me in other affairs and I have been pursuing a variety of different investment projects that has, unfortunately, eaten up a lot of time. It actually has a bit of irony in all of it, because the overall economy is behaving in a similar manner. In fact, I have not been the only one to be loaded with new projects and possible scenarios that was not available the past two years. The big question is, is it feasible and will it last.

No doubt, investment activity has picked up this year. There is money out there and it is getting itchy. Although many small businesses and middle America investors continue to see no light in this tunnel, know that there are several big businesses and banks who are seeing some of the best profits and deals they have ever seen. Unfortunately at this point, it is all about who you know and do you have the cash (isn't it always about that?). At any rate, phones are ringing more, people are at least trying to make things move, but there still remains a big elephant in the room. What is the economy's next move?!

Many "conservative" economists (myself included) strongly believe that we are directly headed for a "double dip" recession. It is very evident that the job market is not recovering nearly at the rate that was hoped by the Fed. Overall market growth continues to be sluggish, despite monumental bailouts and credits that have been given by government. Keep in mind that during all of this, interest rates remain at essentially 0%. So the big question, can Obama afford to continue to ruthlessly spend to continue this "mirage" of prosperity or will he finally come to the realization that a bit of pain needs to come before a true recovery can begin? It is his call and unfortunately either way calls for tough times ahead.

With that being said, it makes it hard to try and anticipate short term changes in markets. Although I have been busy recently pursuing new investment vehicles, I am making sure that everything I am pursuing is sustainable in an even stronger declining market. I have been offered many investment opportunities that forecasts massive jumps in activity the next five years and projects very rewarding returns, however, I continue to believe those forecasts to be far too optimistic.

One bright spot that seems to be benefiting from the collapse of large economies are the emerging markets. Sure, they will struggle with the rest of us and are somewhat tied to larger market performance, however, they have strongly outperformed most indexes this past year. ETFs like EZA, EWM, EWZ, and RSX have seen some extremely large returns and have rewarded investors who took the risk. The have traced back recently here, but as the Dow lingers near 10000, I would expect a short term "trampoline bottom," thus rewarding these ETFs even more. Time will tell, but I am in them.

Big banks are also strongly benefiting from recent government concessions. The foreclosure market has picked up tremendously, which is a direct correlations with the strength of their balance sheets. Earlier on, banks could not afford to take the hit on foreclosed assets, thus forcing them to modify loans or just not respond to delinquent borrowers. Now, they have replenished the vaults (at the Fed's and taxpayer's expense) and are much more aggressively taking back assets. As these assets hit the market, expect more declining prices in both residential and commercial real estate. It is definitely starting to get interesting. Happy Trading.

Fed Chairman Ben Bernanke graced us with his presence on Wednesday as Big Ben gave a formal economic update to the senate. Wall Street was not very pleased.

After opening the day in the green, just shortly after Bernanke's opening remarks, the Dow sold off quickly into the red over 140 points. It remained down under 100 for the remainder of the day.

So what caused the negative response. Well, quite a few things. First of all, investors are getting more and more impatient with the recovery. Here we are, well over a year into the so called "recovery" and we have seen just minor blips in the economy. Keep in mind, this is after enormous amounts of government spending as well as record setting Fed policies that are in place to help the consumer. With all of this, we have only seen a slight improvement and from how Bernanke sounded today, he does not see it getting much better anytime soon.

Bernanke said that the current economy is in a very "fragile state" and that plans are in motion by The Fed to take action if conditions worsened. He says that although we've seen in slight rebound in unemployment, now at 9.5%, he expects that rate to slow and remain above 9% for the rest of the year. Consumers did not like that.

In addition to that, he said that the housing market continues to be in a weakened state due to mass amounts of distressed and foreclosed inventory that is weighing on home values. Thus consumers will continue to be forced to tighten consumer spending, which will effect the overall economy. This is the devastating domino effect I discussed way back last year.

Bernanke said that inflation was not a current concern at the moment, which is pretty obvious, but he failed to address the issue of deflation, which would seem to be the more imminent beast at the moment. Despite many economists dismissing the idea of deflation, many Fed officials are quite worried about it. Also, when you look at fundamental data, deflation becomes a huge concern. It may have been a wise choice for Ben to dodge that subject.

At either rate, I expect this news to weight pretty heavily with investors. I expect overall momentum to remain down for the next week, which should provide a good short trading environment for the time being. I will be making some trades early tomorrow. Happy Trading.

I said last week that soon we would see an opportunity to re-enter BP as the stock has taken a huge beating throughout the oil spill clean up fiasco in the Gulf. Well, today, we saw it jump nearly 9%, as they announced that they are a week ahead of schedule in their clean up efforts. In my opinion, for the most part, BP has endured and absorbed most of the bad media from the spill. I see nothing but upside for them at this point of time, and that was reflected in their stock price today. At the end of the day, they are still a massive oil company. Let alone they are at risk of a buyout at this point as well. BP may bounce around as the clean up continues to go on, but I see a lot of upside from this time forward.

Nerves are beginning to rise as the largely anticipated employment prepares to hit headlines tomorrow. Many economists are expecting a increase in the unemployment rate, which would be a tough blow after the strong numbers that came in May. For many analysts, a bad enough number tomorrow will be enough to convince them that indeed a "double dip" recession is at hand. Manufacturing and home sales already support the notion. The only thing missing is employment.

If the number does pan out to be negative, expect a violent reaction from investors, especially going into the weekend. Regardless, even if we do open up strong in the green from a positive report, I still expect the market to trail down by close, especially the last 20 minutes, so be on the lookout.

One element that has me divided about the number tomorrow is what we saw today. Many are privy to early viewing of this employment number, which is why we see negative results many time factored in the day before. Today's just slight down day is slightly leading me to believe that the number may not be as bad as many are fearing. So tomorrow will definitely be exciting regardless.

Despite having mortgage rates at record lows, home sales are struggling. With this being the case, we have to remember that we are in the peak season as well for home sales. I can't help but think that when the fall and winter months come, we shall see one big tidal waves of foreclosures come, which will directly effect prices. As of now, the bear in me is definitely making much more noise than the bull. Happy Trading.

Markets sold off on Tuesday when new questions arose regarding the much unknown Financial Reform Bill which has been floating around, not being able to get approved as of now. However, it was announced today that certain bank taxes would be eliminated to help entice some of the moderate republicans to vote it on through to approval. As such, financials sold off as many do not quite know all of the consequences that will follow with the passing of this bill. At any rate, I expect to see continual weakness throughout this week (despite the good possibility of a rebound tomorrow). I thought I would post a good article going into more detail about the changes that was posted on Reuters:

Democrats on Tuesday planned to strip out a controversial tax from their landmark financial reform bill in order to win the swing votes needed to pass it through Congress.

With crucial Republican moderates threatening to withdraw their support, Democrats were weighing alternative ways to fund the most sweeping rewrite of the Wall Street rulebook since the 1930s.

Though a supposedly final version of the bill had been hammered out last week, Democrats in charge of the process called a fresh negotiating session, which got under way shortly after 5 p.m. EDT Tuesday.

Democratic lawmakers and aides said they planned to remove a $17.9 billion tax on large financial institutions. Instead, they would cover most of the bill's costs by shutting down a $700 billion bank-bailout program.

"I haven't talked to everybody, but I gather from a number of people they like this option,'' said Democratic Senator Christopher Dodd, one of the lawmakers in charge of the bill.

The bill had been expected to pass both chambers of Congress this week in time for President Obama to sign it into law by July 4. But supporters have been forced to scramble for votes in the Senate, putting that goal in jeopardy.

Analysts said while that timetable may slip, the bill was still likely to become law.

"We believe that this legislation will pass, timing and the bank tax remain the final question marks,'' wrote FBR Capital Markets analyst Edward Mills in a research note.

Democratic aides said it was still possible to pass the bill out of Congress by the end of the week.

Democrats are now two votes short of the 60 needed to clear a Republican procedural hurdle in the Senate. Democratic Senator Robert Byrd died on Monday, depriving his party of a needed vote, and Republican Senator Scott Brown said on Tuesday he would withdraw his support unless Democrats strip out a $17.9 billion tax that would apply to large financial institutions.

The tax was added to cover the costs of the bill during a final all-night negotiating session last week.

"It is especially troubling that this provision was inserted in the conference report in the dead of night without hearings or economic analysis,'' Brown wrote in a letter to the Democrats who are handling the bill.

Other moderate Republican senators who previously supported the bill have also expressed reservations over the new tax.

One of those Republicans, Senator Susan Collins of Maine, told reporters she was working with Dodd to get away from the tax and they were "making progress.''

"The bill is not perfect. But I believe if you take out the new bank tax that, on balance, it would improve our financial system and I would support it,'' she told reporters.

Thursday marked yet another day of strong selling as the Dow sold off almost 150 points by close. What really becomes surprising is that much of this was done in the midst of positive news. We've had a few strong earnings reports and yet investors are not feeling confident. I do feel tomorrow will be aggressively green as there should be some week end profit taking, so I picked up some longs before today's close.

With that being said, I think there are still a lot of downward pressures on the market. I wanted to share an article by Claus Vogt, an economic writer, in which he discusses some key things happening at this time which point to a longer recession. I've always been a believe in a probably double dip, and here are some good technical reaons why it will probably be the case:

There are two well-known and important leading economic indexes for the U.S. economy:

• The Conference Board’s Leading Economic Index (LEI), and

• The Weekly U.S. Leading Economic Index published by the Economic Cycle Research Institute.

I use them both in my analytical work to better understand the economy’s actual position in the business cycle. And in 2007, they gave me clear, recession warning signs.

So what are they saying now?

Leading Economic Index (LEI) Peaked in March

The LEI is published monthly. Historically its year-over-year percentage change has been one of the best recession forecasting tools available. Whenever it fell below the zero line for three months in a row, a recession followed. And it has never missed calling a recession since the 1960s.

The chart below shows you the history of this indicator. It looks like the LEI saw the high for the current business cycle in March 2010 when the year-over-year change shot up to 11.6 percent. In April it declined to 10.4 percent. And then last Thursday the May figure was released — a drop to 9.2 percent.

Source: Bloomberg

These are still high readings and far from the recession warning level. But what’s important is that the trend of this index has changed direction and is now heading down.

Also noteworthy is that the major positive contributors were the financial components. If you strip them out, the indicator’s recent readings were much worse …

Instead of plus 0.4 percent month-over-month in May, the reading comes in at minus 0.4 percent.

I think it makes a lot of sense to strip the financial components out since history shows that monetary policy looses much of its effects in a post-bubble economy. Hence it’s probable that the LEI is actually overestimating the outlook for the economy!

This apprehension is underlined by the behavior of the second leading economic index for the U.S. economy …

The ECRI Weekly U.S. Leading Economic Index Is Nearing Recession Levels

Last week the Economic Cycle Research Institute’s Leading Economic Index had its second negative reading when it fell to minus 5.7 percent from minus 3.5 percent. As you can see on the following chart, this indicator has been in a steep downtrend for many months and is now at its lowest reading in a year.

Source: Bloomberg

Historically, readings as low the current one have ushered in a recession 80 percent of the time. And readings below minus 8 percent have had a hit rate of 100 percent. So even though it’s not there yet, it’s getting dangerously close.

Lakshman Achuthan from ECRI said that it was premature to call a recession. The negative readings have “not persisted long enough.” I agree. And we’ll have to wait a little longer to know for sure.

Yet one thing is undeniably clear: The risk of a double-dip recession has grown considerably.

Best wishes,

Claus

When you look at days like today in terms of trading trends, it may be a bit frustrating when trying to decide what positions to take. Short term trends have been very strong, however, looming economic pressures are still very much present, making it a risky move to move into a bullish position. On the flip side, bears have been severely punished for the last year and a half, so holding a bear portfolio may seem out of the question.

Sure, eventually the more macro trends will begin to take place, but that has yet to be seen the past couple of months. The market has been ping ponging back and forth. As a result, unless you want to partake in the guessing game, there are certain positions which are definitely more appealing in this type of trading environment.

For me, I am finding a bit of a safe haven (with less risk) in investing in stocks that are yielding higher dividends. There are a couple of reasons why it make sense at this point.

First, historically, high dividend yielding stocks outperform during a downward market. In 2002, when the S&P fell 23%, companies who did not issue a dividend fell an average of 30%. Companies that did only fell 11%. In 2008, we saw this also be the case, as dividend paying stocks outperformed non-dividend paying stocks over 6%.

So why is this the case? First of all, the thought is that if stocks are going down anyway, you might as well receive a good dividend in the process. Also, good dividend paying stocks are very popular for retirement accounts (401K and IRA) which helps keep the volatility much lower. Not only can you enjoy a greater hedge against a potential market crash, but you also get nice monthly dividends as well.

Another reason these securities tend to do well is because stocks issuing strong dividends is because if companies have the retained earnings to issue them, they are usually performing with strong revenues. Thus, companies with these trends historically hold up better in worse times. Here are a few companies with extremely large dividends. KSP, AGNC, CMO, CIM, VZ and RSO. Happy Trading.

Markets are continuing to move with a strong selling pressure. Despite certain daily rebounds, the overall trend continues to remain on the downside, which is not ending well for bull investors. I wanted to share a great technical read from Money and Markets that goes into this critical trading trend that has been forming the past month. Despite positive news, the momentum remains down. Enjoy:

A Market of Stocks

There are technical indicators based on this reality. These are found by using market breadth data — the number of rising and falling stocks and the respective volume figures.

The Arms Index is one of those breadth-based indicators. It’s calculated with the following formula:

_(advancing stocks/declining stocks)_ (volume of advancing stocks/ volume of declining stocks)

This helps me look beneath the market’s surface: A ratio of 1 means the market is in balance. Higher than 1 tells me that more volume is moving into declining stocks. And lower than 1 means more volume is moving into advancing stocks.

During bull markets, the Arms Index rises above 3 every now and then. That usually indicates the end of a correction and thus a buying opportunity.

In bear markets, defined as markets with falling 200-day moving averages, an Arms Index above 3 still signals oversold market conditions. But the buying opportunity is often just a short-term one and much less reliable than in bull markets.

The History of Double-Digit Arms Index Readings …

The chart below shows you the history of the Arms Index since 1980.

During this 30-year span (it’s also true going back 50 years) the Arms Index rose into double-digit territory only four times:

• October 19, 1987, Black Monday, the day the Dow plunged over 22 percent in one of the most infamous stock market crashes in history.

• October 27, 1997, which turned out to be the stock market’s low during the Asian financial crisis.

• February 27, 2007, this marked the low of a short, but hefty correction.

• June 4, 2010, last Friday.

The first three instances turned out to be either outstanding or — in the case of 2007 — good buying opportunities. So does Friday’s reading of 13.22 signal another buying opportunity?

A Major Difference in the Big Picture

Friday’s high Arms Index reading indicates the next move is bound to be bearish.

Let’s first address the major difference between 1987 and 1997 on the one hand and 2007 and 2010 on the other …

The first two instances happened during a long-term bull market that began in 1982 and lasted until 2000. Both signaled longer-term buying opportunities.

The latter two took place during a long-term bear market that began in 2000 and will probably last a few more years. The one in 2007 signaled a short-term opportunity. And that’s exactly what I expect from the most recent occurrence. It’s marking only a short-term low.

In the bigger picture, last Friday’s stumble serves as another warning sign that the next major market move will be a severe bear market. A bear market as severe as or even worse than the 2007-2009 bear market, which was heralded by the record-breaking Arms Index reading in February 2007.

Keep in mind, though, that like all technical indicators, the Arms Index is not infallible. It has to be interpreted in the context of the bigger picture. And as you have just seen, this bigger picture is unequivocally bearish.

Best wishes,

Claus

Friday's employment surely hung over investor's head over the weekend as markets experienced yet another strong selling day on Monday, in which the Dow closed down 115 points. Despite a morning rally, selling prevailed in markets as more uncertainty set in. Job loss reports were well below expectations on Friday, which caused for the bulk of the selling to close out last week. Unfortunately, a lot of variables hang over our economy's head, which is not providing an environment conducive for stock buying. Here are some factors that keeps our economy in limbo.

Financial Reform Bill
Much of what we have heard has been hear-say in regards to the large bill that is causing people all over the world wondering what this bill is going to do. President Obama would like the bill to be signed by the end of the month, however, those are aggressive goals. The fact remains that not much is known about the bill as well as what consequences we should expect with it passing. As long as it remains in limbo, I expect financial stocks to do the same.

European Banks
We have seen extreme weakness in European banks (especially Spanish Banks) recently, which is dragging down the global sector. The crisis in Greece is not helping things and if it were not for China bailing them out, there could be some serious problems.

Cleaning Up The Oil
It may seem that there is little correlation between an oil spill and larger scale economies, but that is not the case. In fact, the recent BP oil spill is continuing to create a lot of noise in the marketplace. 20,000 barrels of oil are flowing through the Gulf of Mexico as we speak, which there is no telling what kind of effects we can expect from that. The spill damage far surpasses original expectations and is only making oil consumers more angry in buying their product. Clean up that mess!

China's Slowing Pace
Much of the fear to global analysts was the rate at which China's economy was growing in such a little amount of time. Many felt that the country's economy would fall just as hard as it grew. However, thus far, China has seemed to manage well with it's slower growth periods and minimize any lopsided whirlwind. Thus far, China has been a good bailout for many failing economies (including the US) and needs to stay that rock in the midst of many declining markets.

These coupled with the continuing employment woes that the US economy is faced with, makes it hard to gain real momentum behind a rally. Sure, we should see rebound days here and there, but I cannot think there can be a significant run in the markets until many of these unknowns are solved. For the most part, the shorts have been performing very strong the past couple weeks and I look for them to continue to perform strong the next few weeks. Happy Trading.

Tuesday's trading trends brought memories back from late 2008 days. In fact, trading trends for the past few weeks have been very reminiscent of the uncertainty days of 2008 in general. To me, it is clear that the fast pacing, bullish rally has temporarily come to a close as it has been very difficult to gain momentum on the buy side. Even on days where strong data is released, selling continues to prevail. Today, was another wild swing day, which resulted in the market having an aggressive sell off to close the day and ultimately close the Dow down 112 points.

So why the selling now? We saw from recent months that the market has barrelled through uncertain times with flying colors. There are a couple answers to the questions. First of all, we've seen a return of volume. For most of the first quarter, volume levels remained critically low. Many of the institutions and big players remained sidelined and played the market very "safely" as to not get blindsided. Lately, we have seen a very big gain in average volume, especially on days of strong selling. As the volume continues to increase, it will be harder for market movers to manipulate indexes to move in the direction they want.

Secondly, we are now reaching global pressures. The US was center of most problems that began in 2007. Thus, it us the most. Although global pressures also existed, the US seemed to be experiencing it the worst. As we saw seeds of a bottom, many jumped back on the US bandwagon, trying to take advantage of those early reversal gains (which many did!). However, now global pressures are taking over headlines and there is a lot of speculation that those pressures can and will directly affect the US. Whatever the reason may be, the charts are looking quite optimal for short positions.

Manufacturing and select tech companies seem to be the only reasonably "bright spots" in the market at this point. Oil is taking a beating thanks to the BP disaster in the Gulf and residential builders are hurting from more and more reports of consumers selecting not to pay their home mortgages anymore. Ultimately, we cannot anticipate just how great effect these pressures will have on the US economy, but we can estimate it will be great. For many, taking a pretty good profit from the past year's gains is good enough and cash and bonds are looking better than ever. Today's inability to hold in the green shows that even with a new month and a new week, new beginnings are getting harder to make. For me, I am out of almost all long positions, and have been enjoying gains from some shorts and the VXX ETN. I expect continuing rebound rallies to occur frequently, but I do see a strong downward trend at this point. Happy Trading.

I was very surprised to wake up this morning and see that my stop losses had hit for my couple longs I bought on Friday before close. For 12 weeks straight, I believe, we have seen a green Monday to open up the week. Many people felt that seeing green to start the week was a sign of a return of investor's confidence, as confidence would supposedly build over the weekend. Well, whatever was the reason, the streak was quite impressive and draws a lot of questions from me, considering the trend was broken today. Sure, nothing too significant can be drawn, however, it is another sign for me of weakening markets and a shrinking in consumer confidence. PS... I think EUO (see above chart) is definitely one to consider in the short term. The Euro is struggling.

As anticipated, markets remained rather flat for most of the day, that is until a big swarm of selling hit markets with about an hour left of trading to close the Dow over 100 points in the negative. I was a bit surprised by the aggressive move, especially after such a flat day, but the "nervous" end of day selling continues to show the uneasiness of investors. Accompanied with the selling, was significantly more volume than we have seen on buying days.

There still remains a lot of talk about last Thursday's fluke crash. Many analysts are still trying to prove that indeed the drop was almost all related to technology flaws and that there was no "real" selling motivation. That statement is rubbish and, in fact, Thursday's big drop is matching perfectly with technical signs of "topping off" for the S&P.

As you can see from the graph above, the trend almost exactly mimics a topping curve. From the recent highs to Thursdays low, there was about a 12% drop in the S&P. That downward "whip" is the largest contributors to index leveling. Now when we evaluate other data, we see that they too match a level off formation.

If the market is indeed leveling, what we can expect in the short term is a bit of a rally back to recent highs and maybe even beyond a bit. However, following that, markets tend to respond with more frequent "whips" in the market, sending the S&P down even further. Of course, this is speculation based on charts, but the percentages state that indeed the S&P is leveling off. If this does become the case, Thursday's crash was just a warning to investors that the market is sucking wind.

Consumer confidence continues to struggle. In a large, national media poll conducted, it was reported that over 75% of consumers feel that we are still in a recession? Really? But everyone is saying we are done. The government, CNBC, Tom Hanks, and Cramer are all saying we are out of the recession. So how can this be? This is because, the consumer continues to suffer. Home prices are still declining, health care and energy prices continue to rise, taxes are increasing, and disposable income is still shrinking. In this type of environment, consumers will continue to be on their guard and not be so easily fooled by inflated earnings or a "ra ra" speech from Cramer.

Friday should be interesting. I'm sure market movers did not like that selling close today. Lately, Friday's have been trending on the sell side, however, often we see open with a bit of a buying spike, only to trail down by the end of the day. Once again, I plan on entering some short positions early morning if this is the case. I will be exiting these positions by close, only to pick up some longs just before close. Lately, it has almost become automatic that Mondays open green. Of course, I am a bit worried of weekend news in relation to the debt turmoil in Europe, however, I will maintain strict stop losses and roll the dice a bit. Happy Trading.

Well, it seems that investors are smarter than I thought. Despite a very good employment report (almost 300,000 new jobs created, excluding census workers), markets still sold off going into close on Friday to make it the worst week for the Dow since 2008. After opening up in the red, the Dow actually bounced back and even saw some green, however, sold off to end the day down 139 points. Due to markets opening up in the red and not in the green as I had anticipated, I waited until we rebounded back to almost green until I picked up some short positions (FAZ, VXX, and SDS). I then sold out of these positions before close as to not get caught with our usual green Mondays.

More speculation about whether it was indeed a "fat finger" error that triggered the mass selling yesterday caused for investors to remain unsettled on Friday. Now, many analysts are saying exactly what I said in my post yesterday as an explanation of what caused yesterday's market crash. Due to more modern, computer regulated trading practices, a domino effect can quickly come into effect, especially when markets are uneasy with an international debt crisis. Authorities are still looking into the "exact" reason of what may have caused it, but unless they get real creative, I don't think they're going to pinpoint a singular event.

Back in the old days, during similar types of crisis's, market traders would just not answer the phone to make buy/sell orders. In a sense, this is the same type of response. The selling triggered computer sell positions all over the world, which would most likely explain why many were having problems placing trades on their computer platforms yesterday. I, myself, am not fooled to think that yesterday was a fluke and that we can expect to return to business as usual on Monday. Today's negative trading, despite a very positive employment report, proves otherwise. So, active traders, be on your guard, because I have a feeling the next few weeks are going to be very interesting. If you are needing to open a trading account, I think Zecco.com is offering a monthly free trade promotion. Worth checking out.

VXX continues to move strong, being up another 12% today. Now yes, this ETN will get hammered on a big rebound day, which is why I am trading it with a lot of turnover and very tight stop losses. However, it has moved up close to 60% in just a few days. With the always concern of Monday being a green day, I had to exit out a lot of this position, with some stop losses on what remains.

It will be interesting to see what news comes out over the weekend to either help or hurt our current situation. Remember, just as how devastating to markets this Greece debt crisis is, an unseen solution, if it were to be announced, would most likely bring a lot of confidence back to Wall Street. We have seen in times past that the IMF and US government are willing to do just about whatever it takes. This why it is always dangerous trading around these influencing variable events.

I do, however, remain pretty confident in a re-tracement regardless of the outcome of Greece. We had been way overbought for a while now, even with the trillions of government stimulus that has now reached our economy, we are only seeing minor steps to growth, which is I'm sure, much less than the government was anticipating. We cannot rule out the possibility of a double dip for this recession, as it is very common to see happen in these types of economic environments. Now that the problems are extending globally, the US government and The Fed are starting to lose control and the man behind the curtain is being revealed. Let's see what next week brings. Happy Trading.

Nobody should be surprised nowadays when the market opens the week in the green. We have now consecutively closed a Monday's trading day in the positive for 3 consecutive months. Call it whatever you may, but the fact is, taking long positions just before close on Fridays is starting to sound like a guarantee return. Today was no different after responding to Friday's big down day by having the Dow close up 143 points. Not too shabby for a Monday.

Just as I figured on Thursday and wrote about, we saw a lot of people close out positions during Friday's trading. For those who took advantage of the selling, saw some good returns by close. Hopefully, you got out before close, as most of those gains were taken away today. This week, all eyes are on unemployment. It is clear that consumers have been much more active the past couple months. You can see that by your neighbors new car or house add-on, no parking spaces at the mall anymore, or the long wait at your favorite restaurant. It is pretty evident that people are out spending. Now the big question is, is this real consumer created income being spent or is it just government money? Is this extra cash that consumers are enjoying because they no longer pay their mortgage? I know a few of those. Friday will help diagnose whether the consumer spending is being backed up by an increase in jobs or if we are all somehow increasing our discretionary income somehow. Expect to see some volatility the closer we come to the announcement, especially starting Wednesday.

I said in post a couple months ago that retail should go for a nice little run in the short term. Indeed we have seen that come to pass. Retail stocks have rebounded substantially, with the help of positive earning reports and the overall market getting a boost. However, I did also give a disclaimer that I felt the boost would be short term and soon become overbought. Well, I believe we are getting closer and closer to that overbought stage. The above video, which was posted by MPTrader.com, discusses the recent movements of retail and gives some graphical evidence of why we should be seeing a correction shortly. It is clear retail is overbought at this point, but that fact alone has not stopped other markets (financials and energy) to continue to go up. However, coupled with some graphical momentum, I would say a soon turn in retail stocks is a pretty good bet.

May has officially begun and we will soon find out whether or not we are in for the usual May decline. Bulls would love to see yet another strong correction opportunity be overcome by even more buying. I do see mid May being a difficult time to keep support levels, even with a positive employment report.

BP continues to have its problems while dealing with clean up with its recent oil spill in the Gulf. Expect their stock to be a dog for the time being, as this kind of press is rarely good for consumer confidence. These situations tend to cause for an overselling of stock at a certain point, so a pick up of some BP in coming weeks could be a good play for a nice quick 5-10% correction as it gets oversold. At any rate, markets may be boring tomorrow but I expect to start seeing some more movement as we get closer to Friday. You may also want to consider just packing carry-ons from this time forward, as airlines have made an estimated $7.8 billion last years just on fees. Maybe you should just rent the skis. Ya, that policy won't be going anywhere for a while. Happy Trading.