End of Day Selling Continues - Banks Bounce Up Than Down

The past two days are exactly the reason why I have chosen to sit in mostly cash for the time being. One can easily be sucked into (including myself sometimes) thinking momentum is moving in a certain direction and get slapped in the face with a change of the wind. Like I have said before, the market in this current limbo state is a very dangerous playing field and can change colors in a matter of minutes.

Stocks opened up strong and at one point was enjoying three digit gains. Things were looking good for the bulls and it seemed as they finally were going to pull something out. Well, lately, either the bears have been waking up late or bulls calling it a day early, but the recent trend has been to do nothing but sell the last hour of the market. Within the last hour, we saw the market sink very quickly to where it closed, down 88 points. I was lucky to have sold a lot of my FAZ put options during early trading when they were near their peak at $18.40 per contract. So even with remaining in the rest of the options and my BAC, I can afford to lose a bit from them if they do go down tomorrow, considering the very strong gains I made from my options today. Going into Friday, I don't want to even try to speculate what the market will do, but there are some things to keep an eye out for.

Obama announced the possibility of spending an additional $250 billion on banks from the budget, which is what contributed to the huge rally with financials early on in the day. These joys are continuing to be short lived and are all but gone by the afternoon as most of the banks handed back almost all their profits by close.


Morningstar
New home sales came in lower than expected at 309k for the month. I actually was out today looking at some bank owned homes here in Southern California and there are plenty to choose from. I think this next wave of pain is really going to start digging into the upper class's pockets. It is tough to hide from this storm no matter what class you fall under. Keep your eye out for GDP tomorrow, which should be pretty bad. PMI is pretty critical too, especially as being an indicator for the future. We find ourselves in a big day for news tomorrow, which lately, has not been good days for the market. Remember though, it is a Friday and we definitely have seen the ability of the market to rally, so I still don't find it a market with much definition for the time being.

S&P continues to stay above November 20 lows, which continues to show strength for a rally. Now if we see the S&P go below, and sustain, we could be in for one scary ride. I'm not going to rush it though, because if it's the crash I think is coming, there is still plenty of money to be made on the downside. So I will see what market does tomorrow.

So I did actually make a move today believe it or not. Towards the end of trading, oil began to go down. So I went in and bought some April expiring DUG put options, which is essentially buying DIG (Proshares Ultra Oil ETF), as I think oil definitely is waiting to jump a bit. OPEC is keeping a tight hold on supply right now, and rising gasoline prices is showing a slight increase in demand. So I think I got in at a good enough price. So I will keep you posted on how that goes.

FAZ/FAS have almost become text book for day traders the past few days. It seems like the thing to do is pick up FAS right before close, ride it up about 10% until mid day trading the following day, sell and buy FAZ for another 10% pop. Sure, it has only been a two day trend, but it has worked like clockwork. So, I'm sure a lot of you heavy day traders are having your fun with those. FAZ has a Market Club report trend score of +55, so it's been down trending (get your own symbol analyzed for free, all you need is a name and email, Click Here).

I'm on the road a lot tomorrow, so I will try to be on chat when I can. I'm gonna hop on later tonight and discuss Asia on chat, which is currently getting killed due to horrible recession numbers. Days for FXP could be coming back. It will be interesting to see if the negative news over seas bleeds into our trading tomorrow. Happy Trading and we'll see you tomorrow.

8 comments:

  1. Newbie Says:

    FF, I'm curious how would one go about finding a listing of bank owned homes in their neighborhood or foreclosed homes for sale for that matter?

    Thanks for posting regularly. Enjoy the posts and chat.

  2. Finance Fanatic Says:

    Newbie...
    Whenever a bank forecloses on a property it becomes public record. Check with a local agent to get on a list of current foreclosures.

  3. Anonymous Says:

    Why not use UCO/SCO to long/short oil vs DIG/DUG? I have seen days where oil is up, but the market is down. So, UCO is in the green, but DIG is red.

  4. Anonymous Says:

    Hi Finance Fanatic,

    I have a question. If you believe that we are very close to a market crash, where I assume everything crumbles, why wouldn't you wait to invest in Oil, or anything for that matter at that time? I mean, Oil will go down during a market crash, right? At least during that period. So, isn't it much better to wait for that? Thanks a lot for your opinion. Tim.

  5. Finance Fanatic Says:

    I think there may be some value in the short term with oil before we see a crash. This wasn't a big move for me, I just didn't have anything in energy at the moment, so considering demand has been ticking up for gas, I see some value. I personally believe we are still a couple months away from a crash.

  6. newbie Says:

    FF, thanks for the reply. I was hoping there was a website I could go through. Everything I've found charges some sort of fee. I'm sure if it's a matter of public record there should be a website I could go to just to browse. I'm looking to use the proceeds of my SRS shares once they reach 200 (i can wish) again to pick up a house or something. Ahhh, thanks again.

  7. QUALITY STOCKS UNDER 5 DOLLARS Says:

    Only time will tell where the market is headed.

  8. Dushan Marc Says:

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