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

Well, it seems as if we aren't as excited for 0% interest rates as we thought at close yesterday. It seems as though people have been digesting the thought of the huge rate cut with some serious questions. Why on earth did the Fed do such an aggressive cut? What can they do now to help stimulate the market? Even though there are still many vehicles they can do use to attempt to stimulate the market and cause for more speculative rally days, their strongest weapon is now out of bullets.

The fact that the Fed made the decision to slash the rate to the degree that they did yesterday, tells me that they think some serious problems are ahead. I mean, if the Central Bank feels they need to bottom the discount rate, like I said yesterday, this is their big finale that can hopefully carry us through the very frightening 2009. Really, the only big factor left, is the ability to continue to print money and flood markets with more capital. But Japan and Germany has shown us what can come from doing that. That is why I have loaded up on GDX and GLD. Which if you are looking for a trading account, you can get free monthly trades at Zecco.com
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Well, Chrysler announced today that their assembly plants have been put on hold. Sure, this could be a bluff to try and hurry a bailout decision. In any, case it doesn't look good, especially to foreign nations. Ford also is choosing to shut down most of their North American plants an extra week in January. I just wish we could move on with the bailout, because we are going to experience another reactive day, like yesterday, as soon as something is announced with that. Can we please move on?

None of the short etfs were dramatically better. EEV and FXP were some of the better performing ones as foreign markets continue to show frightening signs. SRS was significantly lower today due to some strong gains in the REIT sector (GGP and Kimco). I mean, remember, it was just yesterday that we just received a historical slash to the rate. For this reason, I held myself from pulling the trigger on more SRS today, although I may hate myself tomorrow. Of course real estate is going to receive a push with the rate at 0%. If it is down more tomorrow, I am just going to have to buy some more. I don't feel like this cut is going to stimulate the market. Those that can get new competitive loans, will most likely take equity out of their house just to put money in their savings account or pay off their credit card debt. It's not going to be money inserted back into the economy. I just feel that when we cool off from this fuzzy high we're on, we have some serious problems to face.

Another problem with yesterday's rate cut is that, like I said, we cannot lean on that anymore. The ability to cut the rate has single handedly been the biggest source for market recovery than anything else. Well, we have maxed that out. No longer can we factor in expectation into the markets when the Fed meets. These are just a few things I feel people came to realize after yesterday's closing.

Sure, we are still very vulnerable for some more rallying. This is a massive rate cut, and with the help of other nations doing the same (probably Japan) and the auto bailout, we may still rally some more. But are bailouts our drying up. I do plan on picking up some more of the longs I discussed yesterday to give me some more hedge, but I still am staying very strong with my short. January is approaching very quickly, and there are a lot of problems which have been pushed to "next year" that will come back to haunt us.

I don't see us going much past 9200. If so, maybe after the holidays, I expect some serious consecutive days of selling. There has been a lot of money made on the long side the past month, and I would like to believe many of these people would be cashing in their chips. Tomorrow will be an interesting day, as a pretty aggressive sell off spurred right before close today. This trend could push through tomorrow and create some more selling on the trading floor. Either way, I am expecting both red and green throughout the day, with a pretty aggressive punch in either direction the last 10 minutes. I have some making up to do on my shorts, but I still feel that we've got a ways to go before we start to get better in our economy. Have a good night and we'll see you tomorrow.

Bravo Fed...Bravo. I have to tip my hat off to the Fed for their slide of hand on cutting interest rates today. They were able to manage expectations to create an explosion of excitement today. Throughout all last week, all of the signs and the announcements the Fed was releasing to media had to do with their probability of not doing a large cut. By doing so they were able to control expectations to a minimum and surprise the world by their cut to pretty much 0%. It actually is a range of 0-.25%, as they feel it would be easier to manage having a range. Much like the finale of a firework show, it seems as if the Fed has saved the best for last. This is their big finale to hopefully pull us through the next year. Although they claim to have other factors to help stimulate the economy, there is nothing comparable to their "trump card" of cutting rate. By their move today, they have become very vulnerable to future expectations.

Things started out when both Best Buy and Goldman Sachs announced "better than expected" numbers, both, however, being losses for the quarter with some strict guidelines for the next quarter. Media is doing a great job of managing the day traders by using such terms as "market expectations." By doing so, it is helping to ignore the fact that these companies are still suffering losses and are hurting more and more in an unstable economy. In fact, I am not even listening to some of the analysts out there, as I feel they are trying to manipulate investors. I have been very satisfied with Morningstar. They have a GREAT annual subscription or you can sign up for a membership to use their free website tools. See more at Morningstar Investment Research: Free Online Trial. 4,000 In-Depth Reports, Ratings. Data on 20,000+ Stocks and Funds. Either way, the market has purely become one that reacts off of speculation and should be factored in when making investment decisions right now. Fundamentals are completely gone at this point and our future has become even more so darkened.

Of course a day like today will cause for extreme buying volume. However, despite the huge gains, volume was still not high. Just a bit above average. Many people are still holding back. The bears fled at sight. The belief is that buy having almost 0% interest rates, this should stimulate mortgage, credit card, and small business loans. However, in my opinion, this is not possible. The monumental debt which is due in 2009 is far greater than available funds that the bank has. The CMBS, conduit loans have destroyed our lending system for a very long time. Unfortunately, a majority of the American people don't know this. Either way, expect to see this market continue to rise in the short term as we still have an auto bailout to pull off as well as more upcoming stimulus plans.

To hedge my shorts, the only sector I feel comfortable going long is commodities. Buys like POT, GDX, DIG, SLVR, GLD are the few stocks that I feel aren't as vulnerable to having the bottom fall from underneath them. Financials scare me tremendously, especially after the extremely over zealous buying which has gone on this month in the financial sector. With the Fed looking like they will continue to print money as long as it takes to get banks lending again, I believe commodities are due to fly. The US dollar will be worth nothing. 1990's Japan, here we come.

Expect this rally to probably push into tomorrow. People are so love struck by the Fed, I don't even think disastrous Morgan Stanley numbers could even phase them. World markets should cheer the rate cut tremendously in their markets this evening. This market should pull back one day after this momentum slows, as it usually does after an announcement driven rally. Either way, I plan on buying more SRS and either FAZ or SKF tomorrow as they are sure to be down to all time lows. These may seem like a sinking ship to some of you, but I personally feel that once this emotional rally is finished, there is a lot of problems to sift through. If I can keep lowering my basis on some of these shorts, it will be that much better for me during, what I believe to be, the 2009 disaster. Most of these "day traders" have quit (or been laid off) from their jobs, so they don't even know whats going on in Capital America. There are many, many tough times ahead.

With my long UYG, DIG, and GDX options expiring Friday, I have been trying to decide whether to sell them or execute them. Most likely I will sell a lot of them during tomorrow, if the market remains up. I may flush those profits right into POT and SRS.

Well, its a rough day for the shorters today. Patience. Houdini just performed his final trick and seems to have nothing left up his sleeve. We are, as the poker players say, "all in." I hope for the best with our economy and hope that somehow we can lessen the pain that is to come in 2009, I just don't see that possible from happening. Have a good night, see you tomorrow.