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

After spending most of the day in the green, the Dow was able to make its way down into the red by the closing bell, closing down just over 9 points. Worries in the health care business due to increase in premiums led to a sell off the sector. Personally, I was surprised to see the selling close. Lately, a strong buying turn around has been the closing trend. At any rate, the closing was rather flat and was not too significant.

Tomorrow acts as a hearty day for economic data. The much anticipated retail sales number for February will be announced following the opening bell tomorrow as will initial jobless claims. If this isn't enough, we close the week on Friday with the fun unemployment numbers. Depending on the data, these next two days have been set up to either fuel a short rally or set up an aggressive sell off. Considering how stagnant we have been of late, surprising data (either for better or for worse) should be enough to wake investors up. Investors cannot afford to be as patient in 2010 as they were in 2009. A lot of money was made from 2004-2007. Considering that, many could afford to be patient with their portfolio. However, carrying cash for two straight years starts to weigh heavy for many investors.

The outlook for retail is already set pretty low for tomorrow, considering the bad weather that hit the US. So if we indeed see a very devastating number come in below the already low set expectation, watch out for a pretty strong sell off. If numbers surprise and actually beat expectations, I expect the exact opposite. For the buy side, I expect so see some better than expected numbers in online retailers. One person's problem becomes another person's success. Just as the weather may have kept many people away from the malls, you can be sure that many of those people were still buying, just online. Amazon, Ebay, and Overstock are just a few that I feel could produce some surprising earnings this quarter and get a small run for the time being.

The Fed will most likely look to keep rates low for the time being, considering the continual rises we are seeing in unemployment. One way to quickly kill momentum to a recovery is to hike up rates. As of now, many do not notice the impact that the 0% Fed rate does for the economy. Considering its arrival in 2008, it has almost become a standard part of the economy. However, even a slight raise in rates would shake the economy enough to cause for concern of yet another credit crisis. Considering inflation still remains a distant concern, I don't see the Fed making a move quite yet. Happy Trading.

Although markets were still able to end today in the green, having the Dow close up 36 points, there was some discouraging data that hit Wall Street. After an encouraging, positive 0.8% increase in retail sales for June, July posted a drop of .1%. Analysts were expecting the number to at least match last month's number if not be better. This number proves to be even more disappointing, when you take into consideration the "cash for clunkers" stimulus program. Excluding autos in the number, retail sales actually fell -.6%.

These numbers are a wake up call for investors that even though there has been much success in the markets, consumers are still suffering. We cannot expect to get this economy back on track without the consumer. The news was slightly dulled by a strong earnings report from Wal-Mart. This is no surprise, as Wal-Mart tags themselves with the slogan, "the low price leader."

Other discouraging data that reached Wall Street today was the significantly greater initial claims number that came in. It would be no surprise to me if we were to see a severe drop in GDP towards the end of this year and early next year. Taxes are increasing, gas prices are more expensive, and more jobs are being loss. Even Tiny Tim warned of the plans to begin new regulations with the banks.

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We saw extremely low volumes of trading today. The fundamental signs continue to point to a very problematic, decaying economy, one of which that is walking on ice. Sure, sentiment seems to be better, mostly due to the performance of the stock market, but take that away and there is not much to brag about. I worry if this market goes any higher, the weak foundation will cause it to crash even quicker. In tomorrow's premium podcast (subscribe here), I will discuss some other fundamental changes that are causing a quick decay to the economy. Happy Trading.

Fear of the possibility of yet another depressing unemployment number, which will be released tomorrow, kept markets trading in the red throughout the day as the Dow closed down about 25 points. Another end of day close on the gap dulled the pain as the losses were more than double earlier in the day. All eyes are on tomorrow's unemployment number as analysts have once again thrown out a very nasty expectations number. If we get even close to their expected number, I would consider it as a very bad indicator.

I found a rather funny headline today at the very popular CNBC website. I enjoyed it so much, I am showing a copy of it at the top of this post. I think it very well sums up exactly what I've been saying the past 3 months (even though I think they were referring to it in a different light). You will notice the headline reads, "Retail Stocks are Rebounding - Even Without The Consumer." The statement is almost an oxymoron, considering that the success of retailers is based on the purchasing power of consumers. However, the headline does not lie. Despite a gash in consumer spending and personal income, retail stocks continue to rise. I don't see this as a positive phenomenon, more so as I see it showing how the stock market behave in unnatural form.

From within a company, any retailer would tell that you that the consumer is number one. To think that companies are better off with a wounded consumer would be crazy. Sure, companies can position themselves, cut costs, and take measures to help themselves endure such difficult times, but in the end, it will be the consumer that keeps them alive. I just thought the headline was worth sharing. Thanks CNBC.

Make sure to keep your eye out for the hours per workweek number that will also be announced tomorrow. Many times that number gets cast aside as everyone focuses on the unemployment rate. This can be a great indicator if firms will still be cutting jobs in the future. In times past, a down trending number can point to further future job losses, with the theory being that companies cut hours before they cut jobs. If you're looking for a job RiseSmart.com can be a great place to find high paying jobs. Happy Trading.

The market was surprised today with a negative move in retail sales for the month of April. Most analysts (even myself, slightly) were expecting at least the same as March’s numbers, probably even stronger. However, retail sales showed a loss of 0.4% for the month, 0.5% without autos. Such news supports my theory and thoughts on us facing more harsh times in the near future. The fact is that despite the massive discounts and liquidations that have been occurred the past few months and retail sales are continuing to weaken shows that consumers are still not spending and liquidity problems still remain. Remember, these numbers track the total receipts of retail stores, not actual net income. With the slash to margins, such news should tell us that many retailer’s bottom line is getting killed. Like I’ve said before, as we keep treading in this swamp of low liquidity, one by one more and more retailers and businesses will begin to go under, which will bring us to the next chapter in this crisis: The Bankruptcy Stage (which usually leads directly into the unemployment stage).

Today’s downward movement acts as a pretty big technical move for bears, as we have not seen strong, consecutive selling for quite some time. Our current position in the market is very vulnerable to technical reversals. Today, keeping the S&P under 890 was a very strong technical and should indicate a near retracement down to the 750 levels. Here is another Free S&P Technical Analysis video, which discusses this critical point in more detail. Sure, we are still vulnerable to upswing days and profit taking, but I am becoming more and more convinced that this selling should continue much further. We will learn a lot from the PPI and CPI report which comes out tomorrow and Friday.

Last month, we received a horrible -1.2% MONTHLY drop in PPI (Producer Price Index or wholesale goods). This data was very significant, as it shows our deflationary state worsening more and more (you can get solid economic data from Morningstar, which they have a free trial: Morningstar Premium Membership - 14-day free trial). Tomorrow, they are expecting the results to remain flat from the previous months. Such a result would not refute the possibility or existence of a deflationary down spiral, as like I’ve said before, we can expect slight month to month swings. However, if indeed we see a worse number reported, I would see this as a big red flag to the markets, and I will most definitely be gearing up and preparing, for what I believe, will be a rather aggressive down leg. CPI will also be factored in, especially on a year over year basis. So I will make sure to be keeping everyone updated on my moves, especially on the podcasts (subscribe here).

Ignorant bulls (not that all bulls are ignorant, but some are being pretty stubborn these days) are already throwing this small sell off aside saying that we all expected a pull back and there is no need to worry. As expecting the rally may be the case, there is still a big debate of how severe the pullback will be. I admit, there isn’t much to cheer about quite yet as a bear, but I would be very careful moving forward as a bull for the next couple of months, because the clouds are there for a perfect storm to form. It all depends on which way the wind blows. To say this is only “profit taking” and an opportunity for investors to buy into the bull market at lower levels is risky and down right foolish. Unfortunately, if we do push lower, many will be caught chasing lost profits. This is why I always preach patient and careful moves.

There was more green in my portfolio for me to enjoy as a result from today’s trading. FAZ closed up 13.8%, which weathered well for my FAS Put options as well as my actual FAZ share holdings. Also, SRS closed up 13.8% as more and more worries for commercial real estate are coming to light. My Put options on PRU are also performing very well, as they continue to struggle. I will have to look at taking some off the table at some point, but for now, I cannot complain. I hope some of you were able to short my last week’s Market Trend Feature which was LVS. Since then, the stock has taken over a 40% beating.

Macy’s came out with worse than expected numbers, which took a bite out of their stock. Last month I gave a list of retailers that should especially struggle in this economic environment and Macy’s was at the top of my list. I expect department stores to continue to take a back seat for the next several months as many people are going back to Wal-Mart and other cheaper retailers. Wal-Mart does release earnings tomorrow, which could definitely be better than expected as they are considered a “discount retailer”, and more people are shopping cheap. From a macro economic standpoint, you almost have to take that as bad news, as most likely, people are replacing their other retailers by just choosing to go to Wal-Mart. I don’t expect their results to be too influential, but worth noting.

So we’ll see if we can finally see a hat trick in selling tomorrow. Volume is slowly getting higher and VIX levels are climbing, which both act as very good indicators for downward momentum. We are sure to see continual bank problems as well as more problems hitting the private sector. Be alert and careful, Happy Trading.

Another day of violent, volatile market movement. Day-traders are having a field day with this market, as the NYSE is looking more and more like the penny markets. In this waffling state of the market, I am being very careful of taking profits a bit more quickly when I have them, at least until some more consistency sets in either on the long or short side. Like I've said before, we are in a very critical point in this rally, where it looks like we are wanting to retrace a bit, however, with the low volume, bears are unable to make a firm move. Most stocks were down in early trading as more and more company stock offerings were announced. As I discussed yesterday, this should be a trend we continue to see from many companies, as there really is no other way to get capital at the moment, aside from The Fed. Wells Fargo, Morgan Stanley, KeyCorp and Capital Financial were just a few more of the companies that have decided to sell more stock.

After seeing most of the day trade in the red, especially with financials and real estate companies, once again we saw this continual "coincidental" end of day rally kick into gear, which at one point got the Dow up over 80 points, but closed just over 50 points. So, we witnessed yet another 100 point swing in a matter of minutes during the last hour of trading. I've harped on my suspicions of such activity in previous posts, so I will hold back, but what I will say is that I continue to be aware of the trend, especially as volume continues to be on the light side. Below, I have outlined this U trading trend that we have continued to see with the Dow recently, where we miraculously shoot up at the open, only to trade down for most of the day, then close with a violent jump. The fact is, whatever it is, we have to deal with it, and I have factored it in my trading strategies.


Tomorrow, the government will once again attempt to "control" the media tomorrow and set the mood for the day, as Secretary Geithner has scheduled a broadcast for 9:00 AM with the banks, conveniently to be following some retail sales numbers, as well as some earnings reports (Macy's and Dr. Pepper). It will be no surprise to me if we see retail numbers "better than expected", as we have been seeing a lot recently. It is no secret that March and April have had more encouraging data than January and February, in some departments. Sure, it has helped that the government dumped trillions of the dollars into the system, but even so such results are not unfamiliar in this type of environment.

In the graph below you will see the several strong, violent bear market rallies we experienced during The Great Depression from 1929 to 1932. In fact, you will notice the very aggressive 60% bear market rally directly following the initial 1929 crash. This rally lasted for 6 months! Here we are about two months into ours and look how many people are already planning for the good times to come back this year (Larry Kudlow). I can only imagine what some people were saying back then. The point is, it is normal for economic data to fluctuate in this type of environment. From the graph below, you can see the several different violent rallies, however, the frozen credit markets eventually took its toll, as the overall downward trend lasted for three years. This is why it is much too early to be making any sort of calls, especially considering that all of the data being released now until about October has a big asterisk next to it that says, "Including trillions of dollars from government spending factored in." So a slight increase in retail numbers will not take me by surprise, in fact I believe most are expecting it. However, in my opinion, fundamental data is still showing much more pain and problems heading our way, which I discuss more in today's premium podcast (subscribe here).


GM hit a 76 year low for their stock price as it flirted oh so close with that $1 mark. It is pretty evident that bankruptcy is in the near future for the auto giant, and I assume when it finally hits the headlines, we should see some adverse trading as a result. Not just factoring the jobless claims and pensions that will be hit as a result, but just the psychological fact that an All American company like GM is going bankrupt. It definitely refutes the old "buy and hold" strategy many live and die by. I think we will see many corporations follow GM to bankruptcy, especially in the end of 2009, early 2010 as these new bottoms and problems become established. I cannot stress enough the impact the trillions of dollars of government spending has had on the overall economy here in the short term. The problem is that it is unsustainable, and that the debt must be repaid.

So, tomorrow will be interesting. I expect to see markets shoot up right before opening, as the trend has been and possibly stay up a bit, slowly trading down throughout the day. However, the opening retail and earnings results should have a pretty big influence on morning trading, so if a worse than expected number takes us by surprise, watch out. I am sure Geithner will be singing his praises to banks, confirming that the worst is behind us. So it will be interesting to see if we can start bringing up the trading volume soon. The good news is, is that even in this volatile market, I am still enjoying my constant 10.5% return I am getting from my Lending Club investment, which acts as a good buffer, especially for some of my extra cash. I'll be on chat tomorrow and post some things on the message board tonight. Happy Trading.