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

Today's closing was better than the evening fireworks show displayed at the Disney theme parks. I had to double blink a few times just to make sure I was seeing the correct numbers stream across my screen. Definitely, something caused for an absolute V difference in trading, as we saw the Dow go from being down 100 points to closing up 90 in under 30 minutes. The biggest change was made, literally, the last 5 minutes of trading. As I have said before in prior posts, we should expect these violent swings more often and with more volatility. Today reminded much like the V turn around we experienced back in November. It was definitely something to see.

Now my first suspicion of the closing was PPT. The sudden jolts of buying at certain dow markers was very similar to trends that PPT would create. My other theory is that some inside information may have leaked out about the GDP number tomorrow. It kind of felt like there was a party and the whole neighborhood was invited, except for me. Either way, someone is trying to ignite the market in preparations for something, and as for me, it makes me a very cautious investor. Oh yea, and over half of today's volume came from the last two hours of trading...chew on that.

It is days like today that more solidify my beliefs in the coming of a strong downward spiral, as clearly there remains significant speculation in the markets. Even after another day of "perceived" strong numbers, the second half of trading (besides the last 20 minutes) was mostly selling. In my opinion, the rally is beginning to run out of steam. We're about 250 points off of my 8000 expectation that I wrote about a couple weeks ago and we could be there by tomorrow. If we break through the 8000 mark, the rally should push onward toward 8300, so keep an eye on that.

As we anticipated, new home sales were better than expected as were the purchase of durable goods. Once again we find ourselves comparing apples to oranges. The better comparison for such numbers is a year over year number instead of a month to month number. As it was reported that durable goods did rise 3.4% from January, from a year to year basis they are still down 28% from last year's March numbers. The same goes for the new housing sales in which we saw had a significant increase from last month's numbers. However, from a year over year standpoint, we are down over 41%! Also, they failed to highlight that the median price declined, once again, over 15%.

Obviously, there is a twisting of the definition of numbers going on to try and propel buying in the markets. There was also some problems with Government bonds and the failure for asking prices to get filled. I go into more detail of this problem in today's podcast (subscribe here), but I feel The Fed has some big motivation to keep the markets looking healthy at this point.

There is an article on CNBC today that almost directly defines the headlines we should expect to see more of in the near future, entitled, "Has Geithner Rescued America?". In the article the writer talks of all that Geithner has done and that we have him to thank for unfreezing the credit markets and turning around this economy. Talk about don't speak too soon. I am amazed that CNBC posts articles such as these on their front page. Sure, give me access to a currency printer and I will get anyone out of their current financial problems...for now. Such nonsense shows the naivety of some of these writers, all of which I take with a very, very small grain of salt.


At one point during the day, SRS and FAZ were both up over 10% which was looking quite well for me. Being only 45 minutes from close, I thought to wait until closer to the closing in order to take some profits (considering my SRS was up over 20% from when I bought it, and my FAZ option up 30%). However, little did I know the storm that was to arrive right before close and flip the market upside down. I ended up not making any trades, which could keep my little stake in short longer than I had originally wanted to hold it. I still remain up in SRS, but if this rally shoots into tomorrow, we could see it back in the mid 40's.

I anticipate the GDP number to follow suit and be "spun" as a good number. Tomorrow is a tough one to call, because honestly I could see us rallying 200 points or even sinking 200 points. Investors are becoming more and more sensitive to market conditions and the littlest breath of new developments can stir things up. We should have a good sense of where things are going in pre-market trading, but I would expect GDP to set the tone for tomorrows trading.

I believe we're getting close to the peak of this rally. I don't mind getting in late on the short side rather than getting in too early. I don't think we are done with seeing these violent green jolts, so I am still being cautious on the allocation of my funds.

So tomorrow acts as a very critical day for trading and I believe we will be able to better tell if this rally is coming to a halt or if it has some more steam left in it. April is getting closer and closer which not only could be new trends for the Dow, but also the dreaded tax season. In this type of economy, there are a lot of ways to save $$$ on tax dollars, so consult with someone. Washington Tax Service is very good, so if you Need Help with Tax Debt? Learn your options for reducing or settling tax debt. Have a Tax Attorney on your side. Get Started Today.


We'll see you all bright and early, Happy Trading.

There are many parading the streets today cheering that the recession is over and nothing but green pastures are waiting for us in the future. I could even see it at lunch. People were offering to buy for one another again, everyone seemed to smile a lot more, and I was often catching mumbled conversations involving "I bought more...today" and "I wish I would have bought such and such at..." Are we really surprised? I mean come on, I wrote in this post back on March 2 that I felt a strong bear market was coming. We were oversold and technicals had been pushing for a good, strong bear market rally for sometime.

It is very common during strong bear markets to see these very violent rallies. We saw the same movements in the 30's, 70's, 80's and 90's. However, never in the history of the Dow have we seen such volatile swings that we have experienced the past year. This is even more of a reason why we should expect these violent rallies to be even strong than past times. So the key, for me, is to be aware of them and to be careful around them until there is more clear direction given from technicals that the rally is easing. We are not at bottom. No actual economic data has given such evidence. You may be saying, well what about the uptick in housing sales released today? That is an increase from the previous month. There are many variables that can cause for that monthly uptick. When dealing with this data, it is better to compare apples to apples by taking year over year data instead of month over month. Year over year we are still down. Oh, and nobody is focusing on the 15% decrease in median housing prices announced today. That should help sell a bit more.

So, even though I am not positioned in short quite yet, I am still very much a believer that this is a short term, bear market rally that will hit a wall and a much more stronger sell off will occur, giving me a more clear path to make much more profits than the current position we are in.

I was asked many times today, what should I do? Are you buying FAZ? Should I go long? I do not have a crystal ball and too be honest, at this point in the rally you might as well flip a coin, because there is a big cloud in trading due to these government announcements mixed with a technical rebound. I don't need to make trades right this second. I have been very patient over the past three weeks and have preserved my capital, for the reason of taking advantage of good buy in points when the market is in a much more "clearer" position and trends are easier to read. That point is not right now. Tomorrow can go either way as far as I am concerned and it doesn't matter that much to me which direction it goes. This rally will take its course, then I will make my move more aggressively.

For those that have been keeping up with my site know that I said there would come a time when many would begin saying the worst is over. Well, I believe we are already there. Even many of you which read that post 3 weeks ago, have now changed your mind and believe the worst is over. That is fine and I hope the best for everyone's trading. I just feel that events are lining up just as I expected in which ends with a capitulating crash of serious lows for the market. I know it's hard to believe such things in the midst of such strong, optimistic trading, but two weeks ago, almost everybody thought it was coming. It is amazing what a little bit of time can do to perception.

I go into more detail on today's podcast about my thoughts and beliefs about continuing to have a very sluggish economy and why this new plan that the Treasury has unfolded doesn't necessarily do much for the bottom line of GDP (if you are not subscribed to the podcast and want to be, you can subscribe here). I believe once again the government has taken a loan from taxpayers to attempt to eliminate debt. Not stimulate spending of consumers.

Amidst all my doubts of a progressive economy, I am now a minority in my thinking. This rally could very well last throughout the week. I believe, eventually, investors will have to take profits and we should see some selling days, but I don't see a lot negative sentiment in a 500 point trading day. We have seen moves like this before in November, so people should not consider it "impossible" to drop off after such strong buying. As a side note, the volume was much lower than you would expect on such a big day. That is another thing to gnaw on.

With such fireworks, I did have to pull the trigger today. For those on the chat today at close, saw that I ended up buying a first "light" round of SRS today right before close for $49.80. Sure, we may see it go down a bit more the next couple days, I don't know, but at such a low price I felt like I could easily afford to buy some shares. That way, if we do steam off some of these profits tomorrow or Wednesday, I could pocket some quick gains. I mean come on, it was down 30% today!

My SSO was up almost 15%, so that helps swallow the loss from that small amount of FAZ options I picked up. I set a trailing stop loss on my SSO to protect my profits in case a burn off comes. I didn't expect to make such a killing so quickly with that ETF, but I'll take it.

So those are my thoughts for today. Remember the $25 Start Up Promotion for Lending Club. I'm only running it for a couple weeks, so if you are interested, sign up through the above link and you will start out with $25 in your investment account for free. Good deal. Happy Trading and see you tomorrow.

I said there would be fireworks today and indeed there was. I have to admit, even though I was considering it as an option, I was quite surprised to see the Fed do what they did today. As most found it time to cheer and buy, I was looking deeper into the decision and wondered why they would do such a move? This decision exposes a lot of the concerns the Fed has about the economy, and although it seems as though it will bring relief to the credit crisis, the side effects of such a move could have some serious repercussions on the market.

So the day reacted in my "B" scenario of what I expected to happen in the market place. Honestly, I was leaning more towards my plan "A" scenario, which was to have the market open up, due to expectation of the meeting, with a disappointing sell off after the announcement. However, the Fed decided to surprise the world with their plan. Luckily, I set up myself prepared for either direction, however, I would have done better with an ending sell off. Indeed my FAZ options purchased yesterday took a strong hit, but a lot of those losses were eaten up by my SSO gains. The options expire in July as well, so I have plenty of time for the banks to go sour once more. I'm not too worried.

So lets break down today's announcement. The Fed announced their plan to spend $300 billion over the next 6 months in buying up long term US government bonds. In addition to that, they announced that they would spend an additional $750 billion on buying mortgage-backed securities guaranteed by Fannie Mae, which now brings the total to a whopping $1.25 trillion. Also, yes also, they will be increasing their purchase of Fannie and Freddie debt to $200 billion. Those are a lot of bullets to fire in one meeting. In fact, I was very surprised to see the market only close up 90 points after such an artillery of news. So, how do I feel about all this?


Honestly, I think it shows the desperation of the Fed. Notice a big key missing ingredient of today's announcement. After Bernanke so proudly declared his expectation of the recession to maybe be over by 2009 in the CBS interview, there was absolutely no mention of a 2009 ending recession in the FOMC notes. At least they're not fudging the numbers too badly.

As with buying the government bonds, I believe it was something that needed to happen. There has recently been a scare of China pulling out a lot of their money that are in US Treasuries, which they own A LOT. Such an action from China would derail interest rates, only freezing the markets more. Instead, the move today sent Treasury rates sailing down, which in turn should hypothetically lead to lower lending rates. This is something the Fed hasn't done since the 1960's. So, if indeed China does pull out, this won't make that much of a net difference, just keep the Treasuries from plummeting.

The amount of money being put toward mortgage backed securities may put a door-ding in the debt that is hanging over these banks. Although it seems as $1.25 trillion is huge, it is nothing compared to the debt that is coming due and will be considered delinquent for CMBS loans. This makes a total of $4 trillion that the Fed has now spent (which will come out of your pocket), without asking the American people. Sorry folks.


This indeed is just more supporting my theory of massive inflation that will come later on, following the deflationary spiral hitting the markets. We have now had 3 consecutive months of declining PPI, which is very discouraging for the markets and which is why the Fed is acting in such a panic. Expect a beating from the dollar in the near future as well as more spikes from gold.

Already, many are on the wagon of the "we have reached bottom" club and are beginning to position themselves on the long side. Although I do believe we could rally a couple more weeks, especially with this recent news, I still very much believe that there are much tougher roads ahead. In fact, such news released today, only supports the models in setting up for capitulation. At least, that's my opinion. So I will remain patient, but the time is getting closer to getting back in the shorts.

So, it will be interesting to see how tomorrow reacts. I think, as with other plans that were a surprise to the market, people will begin to see the side effects of such a move, and its halo will begin to fade. For those looking for a good brokerage company, TradeKing is offering some really good rates for trades. Happy Trading everyone, see you tomorrow.

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.

Watching the end of trading today, I almost believed that once again we were going to see a close in the red. I am amazed at the power of the selling that is now going on right before close. Lucky for the bulls, the selling did not prevail this time as the market finally closed in the green today up 2.23% (6,875), however far below the intraday highs. The S&P also did rebound back from its recent below 700 level, which is a good technical sign that indeed a bear market rally could be brewing. However, many obstacles remain for the bulls in pushing this market up, so it is still looking like we are in a very unpredictable market. A big one is the scary unemployment number heading our way Friday.

First, let me point out the very large volume of trading today, 464M (compared to an average of 354M). My level two trading platform was going off the entire day. The increase in volume is definitely something to look out for, especially if markets begin to creep up again this next month. A mixture of the two could be a very critical factor influencing an upcoming crash for the market. So my eyes are watching.

It was liberating for me to see the market finally trade up. Not for any reason specifically dealing with my current holdings, but because it will most likely create some opportunities for me to make some good profits in the near future. I do have some long plays in case of anything severely violent, but nothing very significant. Although the green closing was positive and shows some signs of the possibility of a rebound here in the short term, the critical thing to watch is whether the buying can continue, even amidst negative news. We were very overdue for a technical rally, and are still, in my mind, a bit oversold in the market. So yes, a rally was a good sign for markets today, but it is so so critical to see if that buying continues into tomorrow. I worry if it doesn't it may not make it the rest of the week.


China helped jump start trading today, along with Obama presenting the new plans for loan modification, and the process by which the plan is to unfold. I am very curious to see how successful this plan is, as it seems too specific in some points and far too vague in other points. I would just let nature take its place in the market and have prices correct themselves. If we don't we risk facing more problems in the future. It was also very strange to see that China had a strong up tick in their PMI, but at the same time needed to pass a huge stimulus for the country. Ha, that doesn't smell like number forging. The combination of the two sent China stocks flying and FXP crashing. However, as for me, I am staying out of China!

Other stocks that came crashing today were MGM Mirage, as they have put a hold on their new Civic center on the strip due to a lack of funds available. They are looking for financial partners to help finish the deal. Picked a great time to try and do that. Ford and GM came crashing down during after hours as their plan to "reorganize" debt was announced, which sounded a lot like bankruptcy. Citi took another 7% off today as more concerns keep growing whether or not they're going to make it alive. My guess is no.

Oil finally got the love I've been waiting for today as oil was up nearly 10%. I was a couple days early on buying my options, but it was nice to finally see some reward with oil. This may spark a rally for oil depending on how the rest of the market trades. Gold is creeping down back to the 900 range, which makes it very tempting for me to pick up some more rounds of options. Gold performed very well for me last time, and although I still believe we're a while away from inflation risk, at 900 it's looking very appealing to me. GDX and DGP are back on the radar. UUP and TBT continue to make me glad that I bought them. UUP has a Market Club report of +90, which is also very good for technicals (get your own symbol analyzed for free, all you need is a name and email, Click Here).

If indeed we do see this rally gain some ground, I think we could be in for quite the rebound for the March. Historically, March is usually a strong rally month, as it usually acts as the rebound for the beginning of the year blues. If this rally does indeed get some steam behind it, we could see a 15-20% rally for March. I'm not claiming that we've hit bottom, no way. In fact, I believe such a rally is what will ultimately set up for the market crash, probably sometime around the dreaded earnings season. By then I will want to have once again loaded up on a lot of the shorts to ride, what I believe, will be the worst down spiral we've seen this round. So I am remaining very careful not to get caught on the wrong side of one of these violent rallies for the time being.

So, tomorrow is a very critical today. If we do indeed see bears come back just as hard tomorrow, the green we saw today was in vain. If we see two days consecutive of buying, that's a very strong sign for a short term rebound. Congratulations to Nate Meyer for winning the Lending Club promotional contest. Nate also put money in it, and thus far, says he has nothing but good things to say about the company and his investment. Enjoy the $200 Nate. Have a good evening, Happy Trading and see you tomorrow.

Well, our rally streak has ended, at least for the DOW, as we saw it close down just under 26 points today. The Nasdaq remained strong today with the help of some better than expected earnings the past few days from tech companies like RIMM. In fact, if any of you are looking for some quick ways to way money, I found an interesting site where you can borrow from other people or make money(up to 19% return) by lending to other people(all secured). It's pretty interesting and worth checking out, It's called Lending Club. Hey, even in a recession, there's ways to make money.


The S&P barely closed up, ending today at 887. As we discussed yesterday, 920 was the magic number for all the graph and trend analysts. Many of the formulas and trends they use to determine this number is much too left brain for me, but they can definitely help in showing direction of trends. Closing today below 920 is suppose to show that the Christmas rally is done with and we should start heading the other direction. As I have said before, take this information how you may, as they can be wrong, but I do give them credit, so we'll see how next week makes out.

Seeing that we opened up a little fickle, despite the auto loan approval made me more believing that indeed we may have reached the end of this holiday rally. I mean here we had our usual Friday rally day, great news with the 17 billion auto loan to be approved for Chrysler and GM, even good earnings news for tech, and lowering oil prices and we still ended down today. So I definitely think, at least for now, momentum has shifted.

So with me believing we have the bears returning, I decided to make some moves today. I put a decent amount of cash into SRS at $61.00. Being that retailers, despite being downgraded by banks, had a push today, I felt like it's just too low for me to pass up. In fact, I actually transferred some of my FXP investment into SRS, it being my favorite of all the etfs right now. I do still see a lot of upside for FXP, it's just with SRS at $61, I can't pass it up. So, we'll see how that goes. It may go down a bit more in the short term, due to our recent huge rate cut, but with the woes heading for commercial real estate next year, I can't help but to love this fund.

I still think Apple is a bit undervalued, considering that RIMM performed well on earnings recently, and the Iphone has been outperforming Blackberry in mobile phone sales. Sure, Apple's computer sales may be down, but their product mix is so solid, I can't see them hurt too much during these times, especially with their cash balance. We'll see though, I still own some April expiring options.

So, I am now mostly out of my longs, with a few remaining GDX and Apple options. I personally feel that during next week, we should start to trail off. Maybe not too much with Christmas in the mix, but I definitely feel we're close to retesting the lows we've reached already. Hopefully, I can regain some traction on my short position as my latest buys seem very low. I hope everyone has a good weekend and is gearing up for a holiday. Go shopping this weekend, retailers are having RIDICULOUS sales (especially Macy's) to try and stimulate money spending. I am sure it's been a pretty slow December thus far. Happy Trading and we'll see you next week.

There we have it, The Bull wins today. It was a hard battle up until the last hour. With the help of Obama's cabinet picks, especially the new Secretary of Treasury (Timothy Geithner, the New York Governor), the market made a dash for green and far beyond. Once again we see the sensitivity of the market in action. The speculation of the new Secretary of Treasury ignites a 500 point rally? Really? These are the times we're in. Wow.

I discussed the probably of a strong short term rally, based on a new band aide fix that temporarily numbed our current pain. Which is why I keep my long options as a hedge. Even the guy's hamburger shop that's about to go out of business got a bump today with this rally. However, unfortunately, I remain a realist. Our volatility increased more today, as well as our volume. In my opinion, this just keeps pushing us closer to capitulation. The more this market sets up emotional traders to play in the market, the more vulnerable it is for a downfall. In a recession, people are far more inclined to sell during a down day, then to buy during an up day. This is why you usually see the down days hurt more and last longer. That is exactly what caused Black Tuesday.

The bad news. I know, I should have sold out of FXP yesterday, right? Although I did expect a strong rally today, I did not expect FXP to take this much of a beating. Still, no worries for me as I have said before, I plan on holding this time around for a couple of months. We just have to start over again, ugh! China is experiencing some serious Government intervention, which is causing people to think that it could still be a profitable place to invest money. I don't buy it one bit. We're talking about the country that lied to the world to get a gymnast into the Olympics. In my opinion, pretty soon we will see very bad days in China as more and more businesses are shut down and the poverty level increases. I remain VERY BULLISH on FXP, even more so on the low price.

I did not buy more of FXP, as I am already heavily into it. I did, however, pick up some more EEV shares. Not much, but enough to earn back some of the losses that happened today. So yes, my shorts got killed today, but let's not forget how great they were this whole week. 4 days for 1? I'll take it.

The good news, were my long options shot out of the park. My GDX options were up 133%! Gold has been waiting to launch, it just needed some market support. I continue to be bullish with GDX. With a rate cut approaching, I think gold will be in high demand. My DIG option was up 40%, and my other options were up about 20% combined. So even on a day where I should have gotten killed, my losses were severally less, because of these options I hedged with. This is exactly why I choose to buy them, even in this crappy economy. These bear market rallies can be fierce!

I chose not to sell any of my options today, despite the very large gains. There is still one variable that hangs and could potentially spawn another big rally like the one we saw today. That is the GM bailout. Expectations have been lowered, dealing with the possible bailout of the autos. If next week or over the weekend they were to announce a bailout plan for them, we would most likely have another rocket of a day. In case of that, I want to be hedged with my shorts on a day like that, where we could see a big potential for green. So I will hang on to them for a bit.

Fundamentally, nothing changed today that wasn't there yesterday. What did happen is that there was no news announced (which is a good thing for the market these days). Also, there was the new Secretary announced. This does not change our daily increasing jobless numbers, broken down banking system, failures of small business, and a holiday spending season that should be a record low. When you mix emotions with trading, it may feel like the worst is over on a day like today. However, when you look at the facts, it's easy to see that the worst is yet to come.

For next week, I will look to see how the market is established on Monday. We have some key announcements next week. The one I am especially eyeballing is Consumer Confidence on November 25th. Confidence has been thrown out the door this past month and should be devastating. Existing home sales should also be a doozy on Monday, so we could see this rally put to a quick halt with some of our REAL economic data. Thanks for all the comments and to those that have donated! It is much appreciated. I enjoy the comments as well. Have a good weekend and we'll see you Monday. Happy Trading.

* Economic Summit: Major Problems, Modest Hopes
* More Americans Struggle With Loans, Credit Cards
* Kohl's, Nordstrom Cut Year Views As Holidays Loom
* Why Should You Worry About Weak Holiday Sales
*Obama Bounce Is Crushed By Worries About Economy

These are the headlines you will see on the front page of cnbc.com. Yet, we see the Dow close over 550 today. Amazingly classic. Well, lets discuss the facts. Since last Friday's unemployment announcement, there has been nothing but bad news looming on the economy, and the past few days we have seen the market react to that, but not by much. GM is border line bankrupt. Almost every retailer posted bad earnings. Then today, we started to see another down trending day, until about 10 AM, PST (see the regression difference at the turn around point below). At that point there was a huge dump of buying into the market. I couldn't believe my eyes looking at all of the sectors turn green. Then we see us close above 8800 with the volume far greater than the average. What does this mean to me? Market manipulation.

It is days like today why I went in and bought my Apple, DIG and GDX options yesterday and this morning. Even though it didn't kill the pain for me, it numbed it a bit. Plus, if I can get a quick return by playing long, I'm happy. Even though I have zero confidence in wall street right now, we still experience these aggressive bear market rallies with the help of some market movers once in a while. Do you think it is any coincidence that the big deadline for people to redeem their hedge funds is this Saturday? For some hedge funds, this is the last day until the following November. Think how many people are taking their money out this weekend. Are you? Are your friends? Next week, I believe the amount of money needed from the hedge funds to liquidate will be very large. In turn, they will then have to liquidate several of their positions, as we have seen some do already.

So, Yes, I took a bath today with my FXP. But, I'm honestly not worried (some of you may think I'm crazy). Like I said when I first bought it, FXP is very volatile. It can give you a heart attack, but I've been playing it enough and know enough about both our markets to feel very comfortable holding it for a while. This go around, I was planning on a 2 month ride. So if we hit January or February and we are still lingering around these prices, I can start sweating. China won the lottery this week, with their $600 billion bailout and this nice, strong, hedge fund driven rally we had today. We saw a similar trend with SKF back in September, when it was hovering under $100 and continually being beaten down below $100, only to shoot up close to $200 within a month. Remember, I said in previous posts that there was a good chance of seeing a rally before this weekend. I just thought if it hadn't started by Wednesday, it probably wasn't going to happen.

The good news. We may see SRS and SKF get back into buying position again. Either of these below $110 gives me confidence in buying them. Both have reached "rock star" status in my book. The bad news, we are probably going to see another strong rally tomorrow. Expect Asia and other foreign markets to go off tonight. Look for FXP to probably take another beating. If it gets near the low $50's, I'm loading up more. Hedge funds want the market as high as it can be in case of forced liquidations. If that is the case, tomorrow, I will probably begin selling off most, if not all of my long options I bought yesterday. I already saw big gains from them today (Apple Option up 34%, DIG up 20%, and GDX option up 50%), and I never like to push my luck going long. From there, I will put a lot of my gains into SRS, SKF and FXP. I attended a conference today where Bank of America doesn't see the lending markets BOTTOMING OUT for 2-3 years! Real Estate REITS loss half their value in the month of October! This is why I don't get nervous going short. Call me a pessimist, I like the term realist.

I've been expecting a day like today all week, but I was starting to think that maybe the hedge funds didn't have the muscle to pull it off, but it looks like they did. After 10, volume shot up and kept darting up into after hours trading. The higher they hike, the harder they fall. For the bearers of the inverse ETF's, cheer up and lick your wounds, because there should be a lot more up days like this for us then down. Just maybe not turn on your computer tomorrow. Have a good night and Happy Trading.