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

Green, green and more green. Will it ever end? Bulls came out swinging to start the week off, with the help of some more “perceived” recovering economic data that some have said is signaling a bottom in the markets. If you had watched CNBC this morning, it would have been impossible to tell that we are in a recession, as they must have officially decided not to report both sides of the economic argument anymore. Smart on their part by either GE or the government, who gave them the initiative to push positive sentiment onto beaten down investors across the world, as they are by far the single largest influencing factor in the market today. You don’t think the government has made a trip or two to talk to the executives at GE to discuss the sentiment shown on the network? Well, maybe it’s just me, but I’ve been around in the corporate world long enough to know that there exists plenty of fraud and manipulation. I just hope that investors do their own research when these numbers are released as well as earnings numbers, so that they are not so easily convinced from the rubbish that Larry Kudlow and Gang recommend on their morning shows. If Kudlow had been on the Titanic when it sank, he would have still been sound asleep while the ship was half under water.

No doubt the housing report was the big spark behind today’s rally, which shot the Dow up 215 points to inch so very close to that 8500 number. A 3% increase in existing home sales along with a slight .3% increase in US construction spending caused for most of this cheer on Wall Street. Of course such numbers have to mean that indeed the worst has come and we are on the road back up again. I mean, the duration of the recession has been about 17 months, which is about normal, so this all makes sense right? Well, that’s what many are saying, however, I still remain not that easily convinced.

I must give credit to those traders who have remained bullish this far into the rally, despite much of the downward pushing factors, as there are not many that saw this coming. I, myself, made some great profits riding this rally only until the first week in April, at which point I cashed out in fear of a near retracing. Afterward, I did not position myself strong on the short side, just took some smaller short positions, mostly of the continual fear I had of the possibility of more government intervention and manipulation. Indeed we have seen that come to pass and continue to come to pass. Even though it seems, for some, that nothing can put a stop to this upswing and that the days for bear’s profits are gone, I still remain ready for when this market decides to make a turn. Let me explain why.

First, the housing data. As I have said over and over again, there lies almost 0 significance when evaluating housing data on a month to month basis. Housing reports have some of the most seasonally influenced results out of all the economic data that is reported. Even though this is the second straight month of a positive month to month change in existing home sales, the year over year data continues to remain horrible. Only will several consecutive months of significantly changing housing data begin to effect my opinion of the current market. Let us not forget that Spring and Summer are the most popular times to buy homes and that combined with the recent large drops in housing prices, has caused for some traction in the housing sector, not to mention the many incentives the government is making for home buyers with all time low interest rates as well as tax credits to home buyers. The big question is, is it sustainable? I give more details of my opinion on today's premium podcast (subscribe here). You can see from the below chart, existing homes data is always changing and has sporadic ups and downs. It is the continual regression trend which is what you want to watch. Remember, the real estate recession in the early 90's lasted over 4 years with multiple bottoms.


Take any company that many of you may be working for at this point of time. I am sure, many of them are struggling with the current economic conditions and may have been forced to perform job and salary cuts, ask for a rent reduction from landlords, and have also maybe had to make some operational changes to survive in current conditions. If someone were to knock on your company’s door and offer them tens of millions of dollars in cash (or more or less depending on the scale of the company), and ask for nothing in return but to play by their rules, do you think your company would do it? I am sure most would at this point. As a result, it would totally change the look of your company’s balance sheet. Old bad debts could be written off, current expenses and payroll are able to made with flying colors, and next quarter’s outlook would begin to look much more brighter. But how long would that money last? If outside conditions became worse and worse, would it be sustainable?

I use this example as I believe it relates to what is going on in the banking system. Out of nowhere, banks have been blessed with mountains of cash. These new influxes do not need to be factored in on their balance sheet as a normal note would be. This is because the capital is coming from the mother ship itself(The Fed), who are allowed to expand and contract their balance sheet at will. The point is, after multiple trillions which have already been spent or announced to be spent this year alone, it is no surprise to me that we have seen some sort of traction in the market. Compare it to a drug induced high. People are able to escape the many pains of reality for a period of time, because of the injection of a hallucinogen. For a period of time, there is not a worry on the earth and everything feels right as rain. However, there comes a time where this high wears off, which is always followed by a crash or hangover. I compare our current times to one big high injected by the government. Either, our government keeps injecting us all with such doces of bailouts and TARP funds that we've seen recently, or we risk coming out of the high with one awful hangover.

So yes, I still remain a firm believer in the eventual collapse of these markets. It just may take some more time for nature to take its course. Investors can be fooled, but I only believe for a period of time. Volume is still remaining quite low, even on high moving days like today. It is very clear that big money has not entered these markets at this point and are still waiting for something. I think even many of the bulls are becoming skeptical about how much longer this rally can go on for. I said that I wanted to wait out the time until the bank stress test results were announced, which unfortunately keeps getting pushed back. I believe, that once we can sift through all of that mess, we will begin to see some opportunities on the short side. At that point, I will be ready with my capital, which I have preserved, in which I believe those that have remained patient will see a lot of opportunity on the short side. The real fundamental signs continue to be in bear’s favor, however, many of those are failed to be mentioned on many bull networks.

Many emailed me this weekend asking about my Lending Club experience, in which I have said before. I have had no delinquent payments on my loans I invested in and have still maintained my 10.5% return I sought out to receive in the beginning. So, no complaints here. I continue to remain patient and am only seeing more and more opportunities surface for me when the time is ready for the short side. Have a good evening, I’ll be on chat tomorrow, Happy Trading.

I can definitely say I am excited to see this trading week come to an end. This transition trading mode that we have been in the past couple of weeks has not made much technical sense and seems to only be benefiting day traders. As I said last week, I expected the next week or two to be a good environment for the FAZ/FAS double trading. It does require knowing approximately when in the day you should sell and where the bumps are, but with the last week, investors have been able to make significant profits on both FAZ and FAS on the same day multiple times. Now, most likely, this trend will not last, as I expect a more directional moving in the market to return shortly, but it has worked out quite nicely for many of you day traders.

Chrysler made bankruptcy official today as it will look to experience a "quick" bankruptcy reorganization. Accompanying their bankruptcy was a generous speech from President Obama trying to explain this process to investors. I'm sure there were many that believed his words that bankruptcy is not a negative result and this is good news for the company. However, anyone who has been in Corporate America knows that bankruptcy can set you back quite a bit and pretty much means you failed. Sure, it is the only viable option left for Chrysler, and in my opinion, most all the American Autos, but it is definitely not something we should be broadcasting as "good news." Obama will also be offering Chrysler $8 billion more of taxpayer's money to assist them in their bankruptcy process. I hope everyone is happy about more of your hard earned money going towards bankrupt, toxic entities. But hey, we've been doing this all along, by pumping our money into the bankrupt banks as well. I don't expect much of a lasting reaction from Wall Street as a result of the bankruptcy, as this fate was inevitable.

Once again it looks like the government will be delaying their release of the results from the bank stress tests. After a couple of other previous delayed announcements, it was decided that May 4th would finally be the date of the release. However, for whatever reason, the government is now saying that most reports will probably be released at the end of next week. This should be a strong signal that indeed there is a lot of manipulation that is going on from the government's end. My theory is that the government is expecting a push back in the markets, as most are at this point. Just as we finally see some sort of downward momentum, I believe it is the intent of the government to use their silver bullet (test results) to try and over rule the sell off. The theory is that such a turn around in what should be a strong sell off would open the doors for a brand new rally with brand new technical rules. Many are worried for this "May sell-off", which looks to be coming, as they should be.

This is my slight suspicion, as I cannot think of any other logical reason why the government would hold onto this information any longer. We all know these tests will shine a positive light on financials as it is just like announcing earnings for banks all over again. My personal feeling is that the sell off is inevitable and I don't think investors will be as easily fooled as many people think. I actually think the delay shows the un-organization of this new system and shows that it should be aborted and we should move on with life.

Real estate REITS got a big bounce from Kimco's release of earnings. Their FFO only dropped 28% (that's not a lot), which was supposedly a good sign for for the real estate REITs. They also cut their dividend from 42 cents a share to 6 cents per share. For me, this provides for a great shorting opportunity. If commercial REITS get 7% up days in this real estate environment, that's nothing but fluff. Give me some puts. As a result, SRS remained fairly weak for most of the day, but I would expect for Kimco to give those profits back soon.

Volume is slowly creeping back into the market as it seems that there should be a more stronger directional move being made. To end the markets in the red today after a rather strong green opening is rather significant and shows the bear's strength. I believe as the volume keeps ticking up, minimizing manipulation attempts, we will see stronger downward trading in the market. The time is getting closer and closer and as Japan confirmed today with their economy, deflation is here. In the next couple of weeks, the results in some of the models should be very significant. I will most likely be looking to take some strong positions with my Zecco.com account within the next couple of weeks. Have a good night and Happy Trading.

Just as I had anticipated, indeed another devastating economic indicator which was given to the market was once again somehow manipulated into portraying a positive sign for the economy. The ignorance that is being shown from traders is amazing to me and, in my opinion, will come back to haunt many investors as more and more continue to believe in this new “bull market.” The economic data continues to try and warn us of real, fundamental problems that still exist in this economy and are probably only getting worse. However, many are choosing to turn their heads and just hit the buy button.

GDP came in worse than expected at -6.1%. Last quarter’s number was -6.3%, showing that indeed we are not making any quick turnaround. In fact, being that the first quarter is usually a stronger quarter, having a contracting report still remain so close to that devastating fourth quarter of 2008 is discouraging news to me. However, I obviously was the minority feeling this way as stocks came out of the gates running right from the get go. Volume still shows that indeed this is not the "everybody get back into the market" bull rally that many on CNBC are claiming this to be. I believe it was a short covering, end of the month, mixed with some PPT day of rallying.

News that was perceived as a positive indicator was the 2.2% increase in consumer spending. As I have said time and time again, consumer spending makes up 70% of GDP and that if we plan on turning this ship around, we need to get money into consumer’s pockets to get them spending again. So, this 2.2% increase is a positive sign, right? Once again, you are required to look at the full data.

Is it just me, or has anybody else found themselves eating at Subway a lot more recently? If you have, most likely it is because you want to take advantage of their $5 foot long deal. I never thought to go to Subway before that, as I never felt the price of their sandwiches justified it. However, this new price (which they are no longer offering on my sandwich) caused me to make several repeat visits recently. This seems great for Subway, but remember they use to sell a foot long sandwich for $8. This is a 37.5% decrease in revenues per sandwich. Imagine how many more sandwiches Subway needs to sell in order to make that profit up. Usually, offers like these are unsustainable and are given as a promotion, but during the past few months everything is being promoted.

This scenario, multiplied by hundreds of thousands of businesses around the country explains the reason for the slight uptick in consumer spending. How do I know this? Because of the inventories number. There was a 3.4% decrease in inventories showing that businesses are increasing their Cost of Goods sold and selling more of their inventory. Thus, people are taking advantage of massive discounts and spending a little. Big deal. I wish we could see of what percent of the spending was done on credit cards, but that's a whole different story. I heard many analyze this decrease in inventories as a positive indicator giving praise and saying this could be a sign to start re-amping production. For me, as long as housing prices stay down and unemployment goes up, people will continue to spend less and less.

Another discouraging sign in the GDP report is the huge contraction in exports. Exports being down 30% is the lowest we’ve seen since 1968. This just confirms that indeed this is a global crisis and that nobody is buying our goods just as we are not buying other’s goods. Having this be a global recession/depression can make things much more complicated than they were during the great depression. If indeed data shows that we have continued in a recession into May, it will mark an 18 consecutive month recession. This hasn’t been seen since the Great Depression. I discuss more GDP influences and consequences on today's premium podcast (subscribe here).

What can I say? The real data remains discouraging. You can nick pick and manipulate them to be anything you want, and many will believe it. However, there still remains too much evidence that indeed we very much remain in a bear market. We saw bear market rallies of this magnitude during the Great Depression. Another support to us being at the tail end of this rally, is the retreat we saw from recent highs during mid-day trading. Obviously, there is still technical pressure signaling that we are due for some selling.

Banks received love today, as they tend to do on strong buying days. I don’t see the reasoning, especially as you see the Bank of America CEO fired by shareholders. I find this move very convenient and coincidental that it happened only a week after allegations from the CEO surfaced about the Fed forbidding them to discuss their acquisition of Merrill Lynch to the public. I am sure that is the last time a CEO will publicly discuss their concerns with The Fed or government. Anytime companies have their CEO fired, it is usually not good news.

The signs and models are still on track for capitulation. Like I have always said, I am still waiting with the small positions I have until the signs are stronger and there is less risk. At any rate, I do believe May will be a red month. This rally has had its fun and I don’t see much of a future for it. The good news is that I continue to make my 10.5% return on my investment with Lending Club. Whether you are looking to invest or get a loan to pay off some credit card debt, it's worth looking in to. No late payments thus far and it is proving to be a great investment for me. Have a great evening and Happy Trading.

Well, we saw another volatile day of trading, seeing the market back in forth from red to green. Trading in these conditions can be very frustrating for those that are hoping for a single direction in the market, as there have been several violent trading swings at different parts of the day recently. Just when I thought the market was going to rally, it was shot down and just as I thought a sell off was imminent, the bulls jumped back in. Beware of day-trading in this market, as it could cause a heart attack. Volume still continues to remain low, which is one big reason I have not chosen to take a bigger position in the market at this point. I assume this is the case as a result to the uncertainty that remains with the bank stress test results. There are also some other things to be aware of when considering trading at this point.

Tomorrow Q1 GDP is reported which is sure to cause some discussion for tomorrow. However, even with a bad number, as we saw with unemployment data, bull's defense will be that much of this data is "backward looking" data and that we would expect these numbers to be bad. However, more problems still exist in the retail sector as well as an increasing unemployment problem. That coupled with the lack of consumer spending which I discussed in Sunday's post, should continue to show disappointing numbers in GDP for the future. At any rate, I would think that tomorrow's number should be a reinforcement for people that we continue to remain in a recession/depression and that it will take more than a few bank accounting changes and trillions of dollars of government spending to turn this ship around.

Optimism hit the markets today when we received a very large gain in the consumer sentiment report. As encouraging as this can be it is important to remember that this information is merely based on a survey of a small amount of US consumers. It is no surprise to me that in a midst of a very strong bull rally, there is a boost in sentiment. In this fragile state, people's emotions are on eggshells. This is why such an environment is conducive for a crash. Just as emotion is able to change with the flip of a switch, so are investor's trading habits. It doesn't take very much selling to cause for worries to return to the markets. In fact, I am surprised to see the change we've seen for just the two days of slight selling we've seen from yesterday and today. Although subtle, we still find ourselves in the midst of negative fundamental data that can easily support the notion of another leg down. So, I do not see it hard to believe at all that another sell off is in our near future. Just remember, we reached this same number for consumer sentiment back in November. We saw what that resulted in.

I also do understand the risk of jumping in too early on the short side. We have learned from the past couple of months that outside intervention can cause for big reactions from the markets. I am very hesitant to jump in stronger on the short side until these bank stress test results are announced. I believe the government is doing a very good job of managing everyone's expectations that these are rigorous tests that should show bank's ability to stay solvent in worsening times. However, as I have discussed before, many of the assumptions they are using are already numbers that we either are already experiencing or will be very shortly. So how can this be a "test" if we are already there? I think many of the banks will pass with flying colors, which should once again cause for this false reason to cheer for banks that indeed their worst times have come and gone. Don't expect me to jump on that train and don't forget the commercial real estate!

It can be easy to buy into this optimism of the beginning of the bull market. Even if by some miraculous event we did see the bottom of this market back in March, history has shown us that even in the beginning of a bull market, it is common for the market to return and retest previous lows. We saw this in our most recent bear market in 2002. This is not to say I believe that this is the beginning of the bull. I am saying that I am having a hard time finding any good reason to go long at this point. I believe this is becoming more accepted in the markets, as we continue to see selling. Even in the midst of a "good news day" like we saw today, bears prevailed with another selling day. I think that's a big one to tack up for the bears.

So we'll see how we go into the rest of the week. Bears are having a very hard time of keeping this market down and I assume, without any economic help, they will continue to have a hard time. Many are still waiting for that spark. Financials are still drawing concerns with investor's wonders if there will be a need for more capital for Citi and Bank of America. Of course they'll need more capital, but the government is being very careful about how they go about getting them that capital. Tomorrow should be a telling day. If you're looking to get into trading and you're looking for a trading platform, check out TradeKing, as they have good rates right now. Happy Trading.

Just as Friday has been finding it a norm to end green, selling has become comfortable on returning Mondays as bears barely won a hard fought battle that left the Dow 50 points in the red. Once again, we saw several different color changes as the Dow continues to have problems making up its mind (with the help of some manipulation), however bears were able to finish off with stronger selling and keep markets in the red. The lack of volume is showing that bears are not ready to come back from vacation as of yet. I assume many are waiting for the big spark, whether it be another large corporate bankruptcy, more destructive economic data, or worsening unemployment data (take your pick). The fact of the matter is, many are there waiting, and when the coast is clear, I would imagine some pretty strong volume to return, especially if these bulls eventually start taking their profits as well.

Trading trends have been very abnormal as of late, which continues to cause me to believe in some continuing manipulation in the markets. It seems, just as strength is building on the bear side throughout the day, it is only squelched by an large influx of buying volume. With this being a continual trend I’m seeing, I’m starting to think it’s no coincidence. The double trading of FAZ/FAS has remained to be a good option still at this point as once again both found themselves in the green at one point during trading. It is just being able to time when to sell each one.

SRS finally had a bit of a rebound in the market with a 10%+ gain today, as companies like Simon Property Group were slapped with some downgrades. Also, on Friday, Kimco announced their selling of mixed securities over a short period of time. They will be selling a mixture of common and preferred stock that they say they hope to use for acquisition of new centers that may arise. Well, of course they need to offer stock. They can’t get any bank financing. What about the trillions of dollars that was given to banks from the Fed? Shouldn't that help. Like I’ve said before, it is easy to say that the banks have recovered, however, when looking at real life application, not much has changed in the credit markets, especially on the commercial side.

A global scare of the new “Swine Flu Virus” caused for some concern in the morning of trading. This new virus has been founded in different parts throughout the world, but mainly rooting from Mexico. As a result, we saw airlines get killed today in worries that many people will be re-arranging their summer traveling schedules to keep safe from the virus. I myself have a trip planned for Mexico in June that is now in jeopardy depending on the fate of this virus. If this problem continues to become more severe, I would expect it to get even worse for airline and hotel stocks. This could be a great time to consider a short on MAR, DAL and UAL. Even though this could blow over into something that is nothing of much concern, it is just one more thing to tack onto the list of worries for people around the world.

Another thing to consider with the recent flu outbreak, is what effect this could have on emerging markets. Today we saw a pretty big jump in FXP and EEV, the short on China and emerging markets. I believe that emerging markets have been overbought for the past six months, especially China, and feel that concerns of health could bring even more problems to their already fragile economies. If indeed we begin to see this next leg down in the market, I think I will be able to find a lot of opportunity in FXP and EEV.

Today’s selling really doesn’t tell much of a story. With the low volume, it’s hard to make the argument that a downward push is beginning. Sure, bears fought a good fight today, but it will be their ability to maintain selling in this trading environment that will show strengthening signs of a sell off shortly ahead. We’ve started the past few weeks with red trading on Monday, only to end with green at the end of the week.

So it will be interesting to see if we can maintain the selling or if more news comes out to spark more aggressive selling or buying. Don't forget, the stress tests still are hanging there ready to cause some noise in trading. Until there is consistency, I will remain with my holdings as to not get caught by more surprises from Uncle Sam. My Zecco.com account has cash waiting to be put into the markets, which is crucial for me, as I smell opportunity in the very near future. Remember to join the CrashMarketStocks Forum to engage in more detailed stock analysis and questions with others in the CMS community. Happy Trading.

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