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

Ending the week with the fourth consecutive day in the green is something we have not seen in the market since December 2008. We all remember the times of December. It was not a good time to be positioned short. Not to say that March will be the exact same, but this buying is definitely more than just a couple day fluke. It is behaving much like your standard bear market rally and may have a bit more left in it. The dangerous part is trying to guess when it ends. I keep reinforcing my choice to stay lucrative at the moment, besides my small trading I've been doing here and there. This is because I do feel there will be point where the shorts are at a price that is just too low and I want to have the capital ready and available to make my move. I think we are very close, but I do feel that there still may be some rallying the next week or two, so I am remaining fairly cautious.

I did almost pick up some SRS for two consecutive days now. However, on Thursday and Friday my $59 buy order was unable to hit. SRS enjoyed being up almost 10% on Friday, but as buying persisted, it found itself back at the $60-$62 range where it ended up closing at. SRS is definitely holding up the best during this bear market rally as it is clear that commercial real estate is just scraping the surfaces of the problems coming their way. If we indeed see SRS dip back into the $50's next week, I'll will buy my first round.

Monday is the big anticipated FASB meeting to discuss mark to market accounting principals and the possibility of altering it or completely doing away with it. I don't see how they would just do away with it all together without severe reporting problems, so I assume if they do make a move it will be an alteration that maybe allows multiple options for banks, kind of how businesses have the opportunity to choose either FIFO or LIFO for reporting their Cost of Goods sold. So all eyes will be waiting on Monday to see what is the outcome from the meeting. We do have to attribute some of this financial rally to the anticipation of an outcome, so staying in financials for all day Monday, could be a gamble. If banks get one more push Monday morning, I most likely will get out of my remaining BAC in case of a post meeting sell off. At any rate, the outcome will not eliminate banks problems and there will still be a pile of distressed debt waiting for banks to deal with, so either way I don't see much to cheer about for banks.

In just a few days, we have seen the destruction of FAZ, which is the big reason I held off in buying some at this point. At $40, it's hard to pass up on it and if it indeed gets any lower, I have to start considering getting in. Even if we see FAZ drop lower, I don't see it getting lower than $30. So, as you can tell, I am becoming very antsy to get in, it's just that past experience has taught me that a bit of patience can pay off big time. So, the time is close, and I assume by this week I will begin taking positions on the short side.


One problem we face in our current economy, is the nature of our cyclical capitalistic economy and how the current government is working to try and stimulate it. Although much credit is given to FDR's plan to pulling us out of the Great Depression, I don't feel it had much to do with it. Sure, there were some benefits that helped "preserve" some jobs and keep things stable, but it was time and World War II that, in my mind, were the big driving forces pulling us out of the depression. Today, we have much of the same style of government which has the theory of big government spending, increasing taxes, and having the government try and to stimulate the economy by controlling where money will be spent and than taking care of the people. At some points, it sounds nice, but I feel it can also be a crutch to us in our recovery.

In his interview this past week, Warren Buffett said that he thought he could see an increase in taxes for the wealthy in the future, but that this was not the time to do it. Other areas need to be more focused on. From the chart below, take a look at the change of the marginal tax rate following the depression. From 1931 to 1932, it more than doubled. So you can probably expect taxes to get significantly higher in the near future. Considering over 70% of our GDP is measured by consumer spending, it is so important to make sure that consumers continue to spend! By taking half of their income in taxes, this will not create that spending. I believe we need to be focused on getting more money into consumer's pockets and really focus on job creation and preservation. Those two driving forces can have the greatest influence in increasing GDP. So, I believe if we continue to go down the road of taking money away from small businesses and consumers, it may take much longer to see us come out of this crisis.


It is for this reason I chose to run a MyCorporation banner discussing starting up LLC's or S-Corps. These entities can provide a big tax shield for those making significant incomes, especially through stocks or other investments that have large short term capital gains. An accountant or MyCorporation can consult with you on how these vehicles can help save thousands of dollars in taxes. I, myself, am a independent contractor, so these types of entities are very appealing and provide a huge service. In the future, the terms of these entities could be changed by the government, so it's good to look into them now while they're still up and running.

My first podcast will go out today. I plan to do two to three a week (or more depending if significant news needs to be talked about). I will expound on subjects that don't make it to the post and also discuss my portfolio changes more thoroughly. The service I use is a paid service to maintain the podcast, so there is a small monthly fee to subscribe. My hopes is to provide additional information that can be useful in breaking down this market and the significant movements that will be coming in the future. As soon as it's up I will post it in this post as well as in the sidebar.

So Monday should be another day of fireworks with hearing the results of the FASB meeting. Hopefully, I can start making some moves into the shorts and can begin on the road to profits. Have a great weekend everybody, Happy Trading and see you soon.

****Update- The podcast service is up and the first podcast is available. I am making the podcasts free for a week so you can see if it's for you. Enjoy! CLICK HERE TO SUBSCRIBE TO CRASH MARKET STOCKS PODCAST

It seems as though this bear market rally is here to stay for the time being as it made a pretty bold point to investors as the Dow closed up 240 points, getting back above 7000. We also saw the S&P close a hair above 750, which show two strong technical moves indicating that indeed we could be heading back towards that 8000 Dow level again. I would expect resistance to be built up around the 8000 level and at that point it will be very interesting to look at the deflationary models to see if we are indeed on target for capitulation.

Just as I expected in yesterday's post, we started out pretty flat in the morning. However, more and more "perceived" positive news slowly kept driving the market up until it hit fire around mid day. Financials really caught fire after several banks announced their "stable" state and that they believe they will no longer need aid from the government. The sun must be shining bright wherever they're at, because unless they're lying, that is almost impossible. However, the announcements from Citi and Bank of America helped investors feel comfortable as BAC finished up almost 19% and FAS finished up a whopping 25%. I was a little upset that I had sold a lot of my FAZ put options yesterday, but I was able to sell the rest today at a strong $18.30 a contract (It actually got over $20!). So, I'm glad that worked out, considering they expired next Friday. Talk about a close call. BAC's Market Club report score is a +60, a huge upgrade since last week (get your own symbol analyzed for free, all you need is a name and email, Click Here).


Three days of rallying. Something we haven't seen since January. As I anticipated, already we are seeing everybody convert back to bottom believers and are now playing the part as the bull. As for me, I am currently in a "partly bullish" state, but am still very much a bear. As you can see from CNBC's screenshot above, they are already running the headlines "Market Looks For Glimmer of Hope." This alter in psychology is right in line with the expectations of a crash. Having people in "bear mode" like we all have been the past month (even many of the bulls), makes it hard for the market to capitulate, since many people were hedged and in cash. With the hope that we've reaching bottom, we will most likely see the volume start pouring in, and that's when the fear selling can be spawned.

I had a buy order in for SRS at $59 and unfortunately it only got down to $59.70. I may be upset I was off by 70 cents tomorrow, but I am sure I am going to have the opportunity to get it lower than $59. Even though I feel it will probably go lower, I felt it was a good price to begin a light 1st round of buying in case we have an exhaust day tomorrow and decided to take back some profits. I think it is realistic to think that we could be picking up SRS in the $40's. If that's the case, I'm loving it.

As for financials, my only current play is holding onto my BAC. I have some trailing stop losses set in case of a rapid sell off, which I don't really expect, but you can never be to sure. With all this new confidence in BAC, we could see it get back up in the $8 range. However, financials scare me the most, because they are also the most vulnerable in this market and I know of a lot of the troubles that still lie ahead for them. Their loan activity has been almost zero, which means their profits are very low (despite what they say). With more and more debt coming due and becoming delinquent, that will most likely require a significant amount of government aid. So I'm not going anymore long in financials now, and definitely not buying FAZ yet, although it's very tempting at $40 isn't it?

I think the trend will continue upward for the month of March, but we will definitely have our big down days still, so there is still value in trying to play the bumps for the leverage etfs. It just hurts when you play it the wrong way like on days like today for FAZ players. Ending the week with another strong up day will definitely keep that rally spark going into next week. In my opinion, THIS IS NOT THE BOTTOM, not even close. So be careful if you're convinced to load up on all the industrials now for the long haul.

Due to a number of people wanting the podcast, I am in the process of getting it set up. I will give more details when I finalize it. So tomorrow may be another mixed trading day, considering we have now spent 3 days straight buying. I will be ready to pull the trigger on some shorts if they take another pounce tomorrow, but only a light 1st round buying. Have a great night everyone, happy trading and see you tomorrow.

Fog continues to dawn on the market as we yet again experienced another up and down day of trading, showing that investors have not quite made up their mind of what they want to do. It also shows that day traders are still very strongly running the show as it seems institutions are still sitting on the sidelines. I was surprised to see a lower volume today, compared to the last few recent trading days.

The market spent most of the morning trading in the green as there were numerous talks of several very large mergers, including the Genentech buyout. Also, banks received a lot of love with some help from Mr. Buffett expressing some kind words about Wells Fargo in his interview this morning with CNBC. He also said that banks were in pretty good shape and that they should be able to "earn" their way out of this, but that banks need to get back to banking. Buffett went on to say that indeed our economy has "fallen off a cliff", but that there is a lot of hope for us in the future. I love how the market reacts more from encouraging words from a corporate executive than our own President and Secretary of Treasury. Shows how much confidence we have in them. The market did rather well during the Buffett interview, only to fall when Obama showed his face to talk about the approval of stem cell research. Thanks Obama.

It was nice to see a good bounce from oil and financials, considering that 80% of my long positions are of the two. We also saw more love for the US dollar, which weathered well for my UUP shares. Gold took another hit, edging its way down near that $900 level, which makes me very tempted to pick up some shares. Another strong down day for gold, and I am most likely getting in.

Other than that, I can't find much to extract from today's trading. This market is wanting to rally, you can see it. It just lacks a spark to do so and until then, unfortunately we may see these flat trading days where short traders dominate the close. If indeed a spark does come (don't ask me what that will be, I think Buffett tried today), the rally could take off pretty aggressively. However, we are running out of time. Sooner or later, more bad news is going to hit the market. That is what happens when you are in a recession/depression. So each day that goes by without bulls pushing this market up, is one more day closer to a big sell off day. I would have think if bulls don't make their move this week, this market may be toast. This would not be good for me as I am not prepared full for the market to crash. Well, at least I wouldn't be losing my shirt either.

So again, I wait patiently for the market to make a direct move. Although some may argue that having us close another day in the red is showing more signs of the crash, there were enough positive movement to unable me to come to a clear conclusion. The rally for financials was big, considering that it has been financials that has been the downward driving force for the market in recent weeks. If financials can continue to gain ground and investor confidence, this could be what sparks the rally.

NASDAQ has been recently showing weakness in trading after its rather strong trading month in February. I think the NASDAQ could be the next to get hit hard. For many people's portfolio, some of the only stocks that still have value are their tech stocks. If they need to liquidate their stocks for cash, they will most likely to sell their GOOG rather than their BAC, considering GOOG is still in the high 200's. QID is one that I am most definitely considering to get in as well, when I find it a good time to load up heavily on shorts again. It had a nice 4.21% bounce today. So we'll see how that goes. QID's Market Club report score is a +70. Looking very strong and I only see it getting stronger (get your own symbol analyzed for free, all you need is a name and email, Click Here).

Tomorrow should be interesting to see what the market does. For those that emailed me about Carbon Sciences and Origin Oil, you should have received a response from me giving you more information. If you did not, please email me again and I will get you the information. Also, my Lending Club continues to yield very strong returns. It can also be a great source for those of you needing to consolidate your debt and not get caught with the very large credit card interest rates. You can get a loan as low as 7.5% to pay off that 15% and higher debt. Below is a recent news video that CBS featured on the company Lending Club and their successes.