Bailouts Beat Out Bad News

The Friday rally returns. And in the midst of so much adversity too. I was surprised today to see my Zecco.com account in the red today when I first checked this morning. This definitely has to be the Obama anticipation rally, because I can't think of anything else that would end today green other than that. The belief in Obama's ability to continue to print money is ringing much louder in everybody's ears than the fact that there is much to be worried about in the near future.

Circuit City announced today that it's official. They have been unable to reorganize their business and will move to the next step, liquidation. For those who have been reading my site for a while, we knew this back in November. There goes another tens of thousands worth of jobs as well as an American business that has been around for more than 20 years. GE capital, Conoco, AMD and Pfizer are also in the plans for some massive layoffs. January-April's unemployment numbers are going to atrocious. Every single sector of business is somehow struggling in this market. There is no immunity.

As I said I was going to do yesterday, I picked up some Citi shares today. Due to their unfavorable earnings and their splitting, at $3.50, it is low enough for me to make the gamble. I predict some serious bank rallies next week as Obama gets put into office and begins to unfold his huge bailout plan. Although I feel this won't fix anything in the long term, it should make some serious movements in the bank stocks. Hopefully I can make a 30-40% return and get out of it before it comes down again. Sure it's a risk, but I'll take it.

I also picked up some more GDX options today. With the huge bailout plans, will come some serious money printing. Gold is sure to get a good bounce as Obama looks to unload a good chunk of cash. Just today, gold was up $35. This should be even more next week.

Bank of America and Chrysler got another check from the Fed today. Now people are wondering whether Circuit City should get a piece too. Why not? Everyone else has. They failed to draw the line with the autos, so they have opened this door and now have to deal with it. It really does scare me of what our deficit will be when all of this is done. I do recognize the principle of backing the banks, no matter what, but it should end there.

For all you Californians, enjoy your IOU from Arnold concerning your tax refunds. Due to the $41.6 billion California deficit, Arnold is looking to either issue IOU's or postpone the payment. Either way, holding tax returns will not stimulate the economy and should cause for even more problems. State government IOU's, are you serious? California is desperate.

It was another volatile day going from 100 up to 100 down and back up again. We are nearing market conditions from past October and it is beginning to become thin ice with trading again. After the Obama change, what is left to cheer? More bailouts? Either way, I think we're in for a tough run until May.

With the Vix getting back into the 50's, it's prime for buying the 2x inverse etfs again soon. Since they are momentum movers, the higher the VIX, the better, as long as you're going the right way. I hope you all have a good weekend. Next week is the big one, lets hope for some serious dollar signs. Happy Trading.

PS - I am running a promotional contest to win a quick $100 on behalf of Lending Club to try and instill some curiosity in the company. We've talked a bit about it on the site and I do feel they are worth checking into. So if you are interested, than go here for details. It requires no money to enter the contest, just filling out a form and poking around the site. I'm just trying to stimulate some curiosities.

13 comments:

  1. Dave Says:

    I agree that the VIX and return of volume, coupled with the inauguration and a slew of earnings reports will make next week - uhmm, interesting.

    Important to point out that volatility means dramatic price change over a short period of time in either direction. So don't forget about the ultra (2x) etf's. For instance if I were going to place a bet on large gains in bank stocks early next week, I'd go with UYG instead of an individual stock.

  2. Anonymous Says:

    Is US market open on Monday?

  3. Finance Fanatic Says:

    Markets are closed Monday.

  4. John Says:

    sorry dave and the others so called Bulls. Guy and Girls got no clue uyg FAS C BAC is going to o.oo here the facts and charts to prove your wrong! its going to $0.00 that right ))) 0 (((( sorry I hate saying this but its true.

    C target look and see you bulls
    http://stockcharts.com/def/servlet/SC.pnf?chart=c,PLTADANRBO[PA][D][F1!3!!!2!20]&pref=G

    bac target
    http://stockcharts.com/def/servlet/SC.pnf?chart=bac,PLTADANRBO[PA][D][F1!3!!!2!20]&pref=G

    uyg target
    http://stockcharts.com/def/servlet/SC.pnf?chart=uyg,PLTADANRBO[PA][D][F1!3!!!2!20]&pref=G

    fas target
    http://stockcharts.com/def/servlet/SC.pnf?chart=fas,PLTADANRBO[PA][D][F1!3!!!2!20]&pref=G

    and where hell is DOW30 on $indu is going too watch and see 6,900 or wave 5 target of 6,000- 5,800 before we get a FOOLs rally in the markets

    http://stockcharts.com/def/servlet/SC.pnf?chart=$indu,PLTADANRBO[PA][D][F1!3!!!2!20]&pref=G

    you my be asking yourself why do I and this blog care by posting helpful info why. we dont want you People to lose all your money in wallst friend....

    yes dont be shy tell what think of my post comment.Talk with kindness or facts know this is not a yahoo or google broad dont use Bar or Street talk here. Would sound foolish me and other members, guests of this blog.

  5. Anonymous Says:

    Hey John,

    Market moves only on what people think about the long term outlook and not by just the real data. Uncertainty is the key and it is up to the big rich guys where to run the market. It is "all" manipulation. Chart analysis is nothing but bullshit. And me personally don't know what is in the head of the big rich guys. Recently, some bears woke up trying to take this market down, but the bulls are also awake when the market his its previous bottom. The only thing that changed recently was that with bad news market went down which was normal as opposed to before. And now the history of 3 months ago is repeating which is bailout news. We had a few "BIG" rallies and then all the way to the south. So expect another volatile market in the next three months (May hit or exceed the previous bottom of 7500), but after that things should go normal again and "I" think we will go up from there. For now volatility is the key. These are my understanding from the past 3-4 months history. However, I don't know what the plan of the big guys are. I don't know if the institutions lie or not, but they say they are not buying right now. If so, then they must be short selling.

  6. John Says:

    Hello my Bear friends. Have you no fear this market is bigest bear market in history in the making just start be Born 2009 rejoy profits are coming to the bears.
    well the bulls HOPE obama hopey help them CHANGE YES WE CAN CAN CAN.
    I feel sorry for them all but obama cant help and mater fact no one can. all that needs to done is for the bear play to its trend to the downside.

  7. John Says:

    First Two Bank Failures of 2009
    Another Financial Portal - 1 hour ago
    National Commerce Bank of Berkeley, IL and Bank of Clark County, Vancouver, WA became the first two banks to fail in the US on Friday according to the Federal Deposit Insurance Company (FDIC).
    Regulators Close Two Banks TheStreet.com
    Regulators close Bank of Clark County Bizjournals.com
    Chicago Tribune - Bloomberg - Wall Street Journal - CNNMoney.com
    all 400 news articles » BOCH

    http://news.google.com/nwshp?tab=en&ned=us&topic=b

  8. John Says:

    wow investors and USA are geting ripoff wow and its only the start.
    Yes obama change is HERE

    US Subsidiaries in Offshore Tax Havens
    New York Times - 20 hours ago
    By LYNNLEY BROWNING Many of the largest United States corporations, including big banks now receiving federal bailout money, operate scores of subsidiaries in offshore tax havens that may let them evade or defer their tax bills, according to a ...


    Florida Fund Manager Missing; Clients Say Money Gone
    Bloomberg - 3 hours ago
    By Saijel Kishan and Susan Decker Jan. 17 (Bloomberg) -- Arthur Nadel, a hedge-fund manager in Sarasota, Florida, has disappeared and clients are concerned they may have lost hundreds of millions of dollars, according to law enforcement officials.
    Man in 'mini Madoff' missing Straits Times
    Nadel's stepson: 'We hope that he is safe' Sarasota Herald-Tribune
    The Associated Press - ABC Action News - Tampa Tribune - New York Daily News

  9. Anonymous Says:

    i hear you, c and bac "look" like great deals, but there is so much toxic crap on their books, i wouldn't be suprised if those banks get nationalized.

    i'm not shorting them, but i did get burned badly.

  10. Dave Says:

    John - you so completely missed my point. I was merely pointing out that:

    1) Volatility does not mean automatic downward movement, so don't get tunnel vision on the inverse etf's

    2) I personally feel that UYG would be a better idea than C to play a hunch on short term upward movement in banks.

    Nowhere in my post did I say that I have made or will make such a bet.

    I certainly didn't mean to cause you to spend so much time researching the obvious...

  11. Finance Fanatic Says:

    By no means do I feel like Citi's problems are gone, in fact I wouldn't stay in the stock longer than a week, but I do feel there is going to be a lot of "feel good" during the beginning of next week. So I hope to gain from that.

    After such clouded praises are gone, I expect some serious gains to come from the inverse etfs. UYG can be an option too, I just feel with the recent huge losses of Citi, they have a better chance of popping a bit more for Monday and Tuesday during the Obama love. However, Please note, I am still very much bearish on any type of financials. This is purely an emotional move in my opinion.

  12. John Says:

    Dave thanks iam not burning my time if iam helping you understand most of time $vix picks up to the upside markets start moving downward friend.

    go see it yourself stockcharts.com

    input in the indicators below $vix
    use the 6month or 1year chart only
    in the main input xlf , indu , spx

    see mid to late SEP $vix made upward moves the indexs and xlf start its downward move

  13. QUALITY STOCKS UNDER 5 DOLLARS Says:

    Excellent picture