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

This was my exact concern that I discussed in my post last month about the government having no more bullets left in the barrel to take down this enormous bear who has been eating at the Dow for over a week now. We saw this same trend in October and November. Whenever the market begins to consistently show strong bearish tendencies, it transforms the whole sentiment of the trading world. Almost every article you read is talking about worse times ahead or what the government needs to do to get banks nationalized. In the past, to stop such pessimism, the government usually came in with a very significant announcement to reverse the trend, such as lowering interest rates, discussing new stimulus plans, or the even the event of getting a new president filled with hope. Where we have found ourselves now, is in a point where there is not much more that the government to do or say to make things better that doesn't involve nationalizing companies and wiping out shareholder's equity. Sure they can send out Bernanke, Geithner, or even Obama himself, but the market has recently shown that they are done with the small talk.

It's hard to pin the blame on just one person or even one part of the government. I don't know who expected to see this market turn around anytime soon. Back when the stimulus was approved, we all knew that this was a "preservation" stimulus, to help slow the pain getting injected to the economy. This is why everyone was careful to say that the stimulus would create or "maintain" up to 3 million jobs for Americans. The market is becoming very impatient.

So, now we are left with a broken down market, with what looks like to have no reason to get better anytime soon, especially when you have auto sales, non farm payroll, and unemployment right around the corner. Unfortunately, this environment makes it very difficult for nature to take its course and we find ourselves in one big ping-pong match from red to green. Sure, some daytraders are probably having the time of their life (if they're playing the right bumps!), but as for me, I am hoping for a bit more normality and conistancy to return to the market. It is not seeing the market continually go down that makes me nervous, but it is the way that the market is doing it which gives me great concern. Almost all technicals have been thrown out the window and anything that can be perceived as good news is quickly trumped with a hard rush of selling.

I am amazed at how well the trend of mid day rallying followed by rapid sell off to end the day is holding up. Many investors are increasing their turnover and changing their hold periods from 3 days to 1 or even half a day. Instead of covering their shorts after 3 days, they're doing after half a day. As a result, you pretty much have 2 options in the current conditions; the first is to roll the dice with day trading, which if you roll well, could be very profitable, however very risky at the same time. The second, which is my strategy, hold tight a bit longer until we see some definition come through the market as it always eventually does. It is very obvious that markets are wanting to rally, as we see plenty of green throughout the day. Buyers are just missing that extra wind that they usually would get with government help. A continuing to delay a rally, however, makes the market very dangerous and could set it spinning down hard. So we'll see.

I'm keeping an eye on RIMM. Their strength today, despite tough conditions makes me suspicious of upcoming positive news. Under $40, I definitely think they're a steal anyway (in a normal market), so I may jump into some options for RIMM. Anymore down ticking and I'm going to have to eventually consider some shorts again. Maybe FXP due to more and more problems in the Asian markets or even more SKF. If we do indeed rally, SSO is one I would like to take a ride during a bear market rally. So all of these are on my radar. Rimm has a Market Club report score of -70, but has been steadily increasing (get your own symbol analyzed for free, all you need is a name and email, Click Here).

So, yes, the patience continues and I am confident that eventually it will payoff. It is times like these where you can loose your shirt if you play the wrong move and playing catch up is never fun. So these next two days are very critical to see if these lows continue to hold and if the S&P stays under 700. I am making money everyday, but the gains are much more moderate than I would have hoped for at this point. My Lending Club investment is performing very well, and still maintains that 10.5% target return on my investment. They are getting more love from the media as well, which has been great and can also be a very good resource for those needing to consolidate there expensive debt. I'll be on chat early in the morning, so with that, have a good night everyone, be careful, Happy Trading and we'll see you tomorrow.

Last night, Hollywood seemed at ease as they put on their 81st annual Academy Awards. Little did they know of the storm brewing for the stock market the day after. In fact, besides the "red carpet", the only other red out there is from all the selling in Wall Street. This morning, we actually experienced our first few moments in the green, but proceeded to spend the rest of the day heading downward. Buyers and government intervention (PPT) didn't stand a chance in turning this train around right from the get go. Any sort of attempt of a turn around, was quickly denied, sending the market down further. Finally, in my attempts to try and figure out what the heck is going on, I resorted to the "they must know something I don't know."

Indeed I am a very strong bear right in this market, but by now, I almost feel overfed from the recent down trading days and keep waiting for the days where I start throwing everything up. But that day still never comes. I caught something very interesting that made me quite curious. Indeed, as I said in previous posts, we are long overdue for a "technical rally". However, there has been no such rally and looks that it may not come for a bit. Whenever technicals are over ruled, I try to figure out why. On Thursday and Friday, many of the sellers were hedge funds liquidating positions in preparations for redemptions. This mass selling was a strong contributor to keeping the markets down, even in the face of strong buying surges.


So who was selling today? Believe it or not, but a lot of today's sellers were institutions. Many long term holders found themselves selling today in the midst of the downward treading market. For those of you that don't have upper level trading, you should have seen the bulks being sold. I had not seen anything like it, not even in November. With selling like this, clearly "they must know something I don't know." These guys don't like selling unless they absolutely have to. Towards the end of the day, I think we saw what it was. AIG needing up to $60 billion of new capital to stay a float. They announced that they will be announcing the largest loss in corporate history on Monday. Just what this market needs. Being that the US already has its maximum allowed stake in the company, they are seeking for alternative capital to keep them afloat. Good luck! This news indeed could have been the devastating news spurring the recent sell-a-thon that has taken place the last 5-6 days. I do not see how this news does not continue to linger with us all the way to Monday's announcement.

As of now, we have pretty much passed every major downward indicator for most every major indices. With S&P closing under 750 today and the Dow getting dangerously close to 7000, we are in very dangerous grounds for what could eventually lead into a downward crash. The big question is, can we hold? I have expressed my doubt about this being "the crash" of this market, as the deflationary indicators just aren't hitting. However, that does not mean that it can't happen. Even though we seem low at these current numbers, I honestly feel that when the big storm comes, we will see 500 S&P numbers and it will come fast. By that time I hope to be fully positioned in my portfolio. For now, I will continue with my current shorts I have (SRS, FXP, and SKF), along with my DGP, GDX, TBT, and UUP. I still have some FAZ put options, which I will keep just in case of a strong rebound rally, but for the most part, I remain in cash. I still enjoy green on days like today in my Zecco.com account, as most of my positions remain short.

Tomorrows reaction to today is so, so critical. A failure to hold these numbers may spur a bit of a rally, which I don't see lasting long, but definitely possible. However, another strong day of selling, depending on how aggressive the markets are, may result in beginning days of capitulation. I cannot stress the importance of the day tomorrow, as all analyst's eyes will be on trading. Keep your eye out for some fireworks. FAZ continues to soars with a Market Club report score of +70! (get your own symbol analyzed for free, all you need is a name and email, Click Here).

I hope to see you all up early and on chat (located on the right side of the site, towards the top). It should be an exciting one. Please keep in mind, President Obama is set to speak tomorrow at 6:00 PM eastern tomorrow. So something could be up. Maybe it is the "something I don't know." At any rate, I think it's clear that we have "Broke the Back" of this market and that if anyone still believes in the "buy and hold" theory for stocks, I am sorry, for you have probably lost value in your stocks since 1997, ouch! Also, HBSC is offering some good rates right now, so if you're looking, go to Earn 2.25% APY* at www.hsbcdirect.com for more info. Happy Trading and we'll see you all tomorrow.

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