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

Well, we saw another volatile day of trading, seeing the market back in forth from red to green. Trading in these conditions can be very frustrating for those that are hoping for a single direction in the market, as there have been several violent trading swings at different parts of the day recently. Just when I thought the market was going to rally, it was shot down and just as I thought a sell off was imminent, the bulls jumped back in. Beware of day-trading in this market, as it could cause a heart attack. Volume still continues to remain low, which is one big reason I have not chosen to take a bigger position in the market at this point. I assume this is the case as a result to the uncertainty that remains with the bank stress test results. There are also some other things to be aware of when considering trading at this point.

Tomorrow Q1 GDP is reported which is sure to cause some discussion for tomorrow. However, even with a bad number, as we saw with unemployment data, bull's defense will be that much of this data is "backward looking" data and that we would expect these numbers to be bad. However, more problems still exist in the retail sector as well as an increasing unemployment problem. That coupled with the lack of consumer spending which I discussed in Sunday's post, should continue to show disappointing numbers in GDP for the future. At any rate, I would think that tomorrow's number should be a reinforcement for people that we continue to remain in a recession/depression and that it will take more than a few bank accounting changes and trillions of dollars of government spending to turn this ship around.

Optimism hit the markets today when we received a very large gain in the consumer sentiment report. As encouraging as this can be it is important to remember that this information is merely based on a survey of a small amount of US consumers. It is no surprise to me that in a midst of a very strong bull rally, there is a boost in sentiment. In this fragile state, people's emotions are on eggshells. This is why such an environment is conducive for a crash. Just as emotion is able to change with the flip of a switch, so are investor's trading habits. It doesn't take very much selling to cause for worries to return to the markets. In fact, I am surprised to see the change we've seen for just the two days of slight selling we've seen from yesterday and today. Although subtle, we still find ourselves in the midst of negative fundamental data that can easily support the notion of another leg down. So, I do not see it hard to believe at all that another sell off is in our near future. Just remember, we reached this same number for consumer sentiment back in November. We saw what that resulted in.

I also do understand the risk of jumping in too early on the short side. We have learned from the past couple of months that outside intervention can cause for big reactions from the markets. I am very hesitant to jump in stronger on the short side until these bank stress test results are announced. I believe the government is doing a very good job of managing everyone's expectations that these are rigorous tests that should show bank's ability to stay solvent in worsening times. However, as I have discussed before, many of the assumptions they are using are already numbers that we either are already experiencing or will be very shortly. So how can this be a "test" if we are already there? I think many of the banks will pass with flying colors, which should once again cause for this false reason to cheer for banks that indeed their worst times have come and gone. Don't expect me to jump on that train and don't forget the commercial real estate!

It can be easy to buy into this optimism of the beginning of the bull market. Even if by some miraculous event we did see the bottom of this market back in March, history has shown us that even in the beginning of a bull market, it is common for the market to return and retest previous lows. We saw this in our most recent bear market in 2002. This is not to say I believe that this is the beginning of the bull. I am saying that I am having a hard time finding any good reason to go long at this point. I believe this is becoming more accepted in the markets, as we continue to see selling. Even in the midst of a "good news day" like we saw today, bears prevailed with another selling day. I think that's a big one to tack up for the bears.

So we'll see how we go into the rest of the week. Bears are having a very hard time of keeping this market down and I assume, without any economic help, they will continue to have a hard time. Many are still waiting for that spark. Financials are still drawing concerns with investor's wonders if there will be a need for more capital for Citi and Bank of America. Of course they'll need more capital, but the government is being very careful about how they go about getting them that capital. Tomorrow should be a telling day. If you're looking to get into trading and you're looking for a trading platform, check out TradeKing, as they have good rates right now. Happy Trading.

The market took a breather today after its huge hike up yesterday, as the Dow closed down 115 points after being up several different times throughout the day. I expected a rather mixed day of trading at some point either today or tomorrow, as there were many still buying to try to catch the soaring rally mixed with those selling to pocket those big profits from yesterday, which bulls hadn't seen for a while. Today, we saw even lower volume than yesterday, which really has me wondering who's trading in this market right now? It doesn't seem to be institutions or hedge funds. I believe it's a world full of day traders...at least at the moment.

Sometimes, in the midst of these violent, bear market rallies, it is easy to forget that indeed we still dwell in a bear market. It was surprising for many to see the Dow end almost 1.5% today, when just two weeks ago we were down over 1.5% almost on a daily basis. It is during these times I continue to remind myself of the actual, fundamental problems that exist in the economy and rely on those measures to make investment decisions instead of what is going on with CNBC and government press conferences.

Of course there needs to be an awareness and recognition for government intervention, as history has shown us, they can cause quite an uproar, for better or for worse. So, I make a lot of my decisions, currently, based on a collage of indicators and trends. So far it's been working pretty well. Since I'm on the topic, lets discuss the important data coming forward this week.

Tomorrow, we are getting new home sales reports, which are important, but I believe will take a back seat to all the other media noise going on right now(unless of course we see a really significant number). Then Thursday, we have the GDP report. This one could cause some rallying, as a lot of indicators are based on GDP levels. We saw a horrible number last time around, so it will be hard to top our previous number. However, I still think there will be more sever GDP decline in the future.

So make sure to factor those into your research, along with all the government news. President Obama spoke tonight, trying to convey his confidence in our ability to overcome this crisis. To me, the speech seemed like a campaign for his new "budget", more than a economic update. I don't see much of a response from investors based on the speech tonight, even though after hours are slightly up, but you never know what Bernie or Tiny Tim might have in their pockets.

I made yet another move today. I pulled the trigger on some more FAZ call options with my Zecco.com account (which have great option prices by the way), that I had previous bought last week. They got as low as $4 today in early trading (which is where I got in at) and I felt that this is a great price to lower my basis. Still, nothing significant, but enough to create some cheers for profits. The option closed above $5 by close, so already that's working for me. I am not worrying about this option, as the contract expires in July and as we have seen with FAZ and the past two weeks, it can cover some big ground in a little amount of time.

SRS did very well in the second half of trading, ending up over 10% today. I had a feeling there would be some rebound from its 31% loss yesterday. This is why I ended up buying some yesterday, even though I feel that there may be some rally left. If we see it up yet again tomorrow, I'll begin pocketing some profits. I can't get greedy right?

Today's halt of the rally was indeed significant, but not by much. Proving to keep the market down again tomorrow is a better sign for bears. However, even after the two day halt of buying we saw on Thursday and Friday, we saw how the market responded Monday. So tomorrow's performance could set the tone of how we're going to go into Thursday and Friday with the GDP announcement. There is still no reason for me to think this rally can't hit 8000 and above at this point, so I still remain cautious on my positions.

So that's about it for today. I just wanted to mention some things regarding the chat. I have received a few complaints about the recent content of the chat. I created the chat in order to find good a good network of people, without dealing with crap like you see on Yahoo and Google boards. Please refrain from using profanity or degrading language. I don't mind the use of avatars and would like to keep them, but please use discretion in choosing one. Refrain from using girls, offensive pictures, etc. Remember, there are many people on here during the day that are in a work place and would like a safe, chatting environment. If I do see the problems myself, I will have to resort in banning. Enough with that, just keep the conversations mature and educational and we all can continue to enjoy it as a resource. Happy Trading everyone and have a good night.

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.


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.

Quickly, go all in. We have reached the bottom. Not so fast. In our current market, emotions are playing as a higher factor than fundamentals. But like a heroin high, it's only going to last a bit and then cruel reality will once again set in.. Yesterday, I discussed the probability of a green day, especially in Asian stocks dealing with the possibility of a rate cut in Japan. That possibility is still lingering.

Today, we officially found out we had a contracting economy(one more quarter of those and we've officially got ourselves a recession) with the GDP report, but the "bad news" was better than expected.
With that, surprisingly, came a pretty well stimulated day. Good enough that I unloaded the rest of my Apple $110 strike price contracts for double what I bought into them for. And with those proceeds I'm back in heavy to FXP at $90. Ahhh, I feel so much better now. It's like coming in from a rain storm. Getting back on the short side is so much more comfortable in this market than playing the long. Let's take a look at where we're at: