No Santa For Stocks - Season's Beatings
Posted On Monday, December 22, 2008 at at 10:20 AM by Finance FanaticI hope everyone had a good weekend and was able to knock off some holiday shopping. I don't know about you, but I couldn't help but notice the extremely low traffic at my malls, given it being just a few days before Christmas. Sure, there were a lot of people there, but nothing like years past. I guess it is just another sign of people not spending. There is a lot more of that to come in 2009.
My last post generated a lot of interest in Lending Club, a social networking lending club. There were a lot of questions, so I got the following brief summary from their company saying more about them and their strengths. They seem to have their act together pretty well. Here's what they said, "Because of the current financial crisis credit worthy borrowers are not able to get the financing they need to be entrepreneurs, expand current businesses and payoff debt. Lending Club connects these high quality borrowers with lenders. Lending Club offers SEC registered notes to these investors with returns stated from 6.69-19.37%.
Lending Club notes are 3-year fixed term, but can be resold on our secondary trading platform. This brings liquidity to social lending. Lending Club is currently the only peer lending site right now accepting new lenders and borrowers." So there you have it, if you're interested in testing those returns, go to Lending Club for more information.
Today, resulted in an interesting low volume day. No doubt, the holiday vacationers led to the low volume in today's trading. However, the sellers were definitely still by their computers, wherever they were. The market started out with a doozy of very disappointing earnings from both Walgreens, the largest US drug chain, and Toyota. If autos needed even more pessimism. Even the best made, most attractive and definitely most dominate auto company is having severe sales problems. I don't see a very bright future for our US autos no matter what kind of loan they get. Not for at least 2 years.
Another element, which made people a little ornery today, was the study that came out showing where banks have used the issued "tarp money." The results found that many of the banks were still paying out very large salaries to their executives as they did not have an outlined executive payout like the autos do. And as you can tell, not a lot of new "tarp" lending has hit the consumer market. So these funds are getting soaked up one way or another.
Something very interesting caught my eye today during today's trading. Notice below, the huge upswing just before close. Something came into the market during last 10 minutes to help give it a big boost (my guess starts with an F and rhymes with Red). With the low volume of trading and the large amount of bad earnings, I can't see a natural upswing like the one we saw today happening on its own. Can you say manipulation?
All the shorts finished strong, especially FXP and EEV. As we have discussed in other posts, foreign turmoil is building up and the more unstable the US becomes the more it reflects on these emerging markets. I am feeling good about being in them. SRS was up strong and came down towards the end with the market moving. One big reason for the fall as well, is that commercial developers are requesting to be a part of the bailout list, asking for more than 200 billion dollars. That's awesome, we're not even to Obama yet, and they are already asking. Of course, no companies were singled out personally, as their stock would most likely tank, but you can probably guess (Simon, Kimco, GGP, Centro), but their stock did receive some love today, as it seems some people believe they may get help. I cannot see them getting bailed out at all and them even asking shows just how much pain there expecting. You open Pandora's box if you give developers taxpayer's dollars. I am loving SRS next year.
Expect the volume to continue low this week with it being Christmas week. I still think selling will remain most the week as sentiment is getting worse everyday. The market has seemed very bearish the past two trading days, and once the volume comes back, it could get ugly. There should be some great profits made here in the near future. I hope everyone has a good evening, Happy Trading and see you tomorrow.