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

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.