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

It seems as though Wall Street approves of the latest changes in politics that took place on Tuesday. The Dow enjoyed a 200+ point move today as investors seem to have a bit of optimism. In reality, there is little that the changes will be able to do. Sure, efficient incentives and policies can mitigate damages done to the economy and ease the pain, but the careless management and banking that has taken place the past 10 years cannot be erased by the signing of a pen or printing new money. It will take a lot of time and, unfortunately, pain.

Last year I discussed a penny stock with you that I had invested in and seen a great deal of success. The company is Imaging3 (IMGG). We were able to buy into this stock a $0.05, where the stock remained at for a few years. Well, last year, rumors of a near FDA deal caused for the stock to leap the the near $2.00 range, which we then opted to sell all of our shares. I have dealt with FDA pending stocks before, and history has shown me that it is much better to get out on the hype then to roll the dice on whether it really happens. Well, in this case, it was a wise decision.

This past week, IMGG had a shareholder conference call in which they announced that their application for FDA was rejected which greatly surprised IMGG management. Much of their notes, related to administrative deficiencies more so than actual performance of their product. You could sense the frustration of the CEO in not knowing exactly why it happened. As a result, the stock has now plummeted back down to the near $0.10.

Sure, the news is frustrating for investors, but this does not mean they will not get approval. In fact, the stock price is starting to become very appealing for re-entry at this point, as it is clear they will continue to fight for FDA approval. If it becomes clear that once again they are near that approval, I expect the stock to react much like it did the first time around. So, IMGG is definitely on the hot watch list for me and anymore decay in its price will force me to have to make a move.

First Friday of the month coming this week, which you know what that means...Unemployment data. Once again, unemployment will act as the main driver of sentiment in the marketplace and until we can consistently start to reduce that number, massive problems will still be in our midst. Anyway, look for this political rally to quickly be squashed of the numbers come in disappointing. Happy Trading.

In the morning of today's trading, it was looking like markets were going to rebound a bit, after the selling start to the week. However, markets violently sold into close closing the Dow down 69 points, putting the index under 10,000 for the first time since February. Many analysts were expecting a good climb back at this point and today's selling close shows that investors are still very skeptical about economic pressures.

Well, after yesterday's 300+ point loss on the Dow, markets rebounded and were able to close out the week on a positive note with the Dow closing up 125 points. In fact, I believe next week, we will see quite a bit more green. I was surprised to see yesterday's big sell off, not that I don't feel that we are overbought in the markets (I very well do!), I just feel that to closely track that "topping" curve we are seeing in the S&P, a bit of a rally back is needed to gain much larger momentum on the downturn. Two weeks ago, we saw a bit of what this trading environment is capable of. Who said we are not vulnerable to market crashes in this day and age?

One industry I have been tracking lately is solar. The past month, solar had been demolished due to its strong tie to European markets. In fact, Germany acts as one of the largest solar nations out there. Due to recent debt turmoil in Europe, solar has taken a beating. STP, a solar company I track closely has pretty much been cut in half in the last couple of months. I still believe there is a lot of upside in green energy stocks. Not so much because they are a financial viable business model, but more so that our current president has an agenda that he has proven he will stick to, and green energy is one on the top of the list. Already, bills have been proposed to exempt capital gains from green energy company investments as well as tax credits. If these perks get passed, watch for a big move into some of these companies.

As I have said before, Monday has been very reliable in turning into a green day. In fact, last Monday I was sure we were going to see our first selling Monday, as the market was down 180 points at one point. However, the market (or whatever powers it was) pushed back and was able to get all the major indexes back into the green before close. It was really phenomenal to watch. If yet again we see another green Monday, I will be impressed, as there is a lot of uncertainty going into the weekend with the financial reform bill. So time will tell.

Commodities should still perform well, as well as gold. After a bit of a rally back, I expect a pretty large jolt to hit markets, which usually tends to bring commodities to a premium. Also, Treasuries should get another bump as well. So for me, I expect a green week next week and hope to make some good profits to take advantage of it. I will also be attending the largest retail real estate conference in Las Vegas this weekend, which is always an eye opener. I will keep you posted on what the sentiment is like there, which is a wealth of knowledge. Happy Trading.

Well, we are now returning back to business as usual...higher movements in indexes accompanied by low amounts of volume. I was beginning to think that maybe people were going to be dusting off their keyboards to start making some trades, but it lasted about 4 days. At least for now, it seems that investors have squelched the recent "fluke crash" and are pressing forward to try and get the Dow above 11,000 again. As for me, I was lucky to be able to exit some of my major positions before Monday, which resulted in a great week for me last week.

For now, I am returning back to bunker mode, which is maintaining very small positions of rather low risk positions. One opportunity that is flourishing right now is gold. Lately, it doesn't matter whether the the market is going up or down, gold goes up. Charts are showing very strong strength for gold and we could definitely see a nice pop here in the short term. I do still see deflation risk for gold in the future, but not short term.

Apple should see some strong moves back towards the $180 mark. Tech is maintaining their status as the rock among a lot of shaky industries. This has definitely not been near as bad of a recession for many tech industries. Japan's tech is currently performing very well, which could have a positive influence on the NASDAQ tomorrow.

After last Thursday's crash, there have been an increased concern about the ETFs. During Thursday's spiral, the NASDAQ cancelled sell orders for selected companies in order to try and minimize the damage. There are analysts who feel that during an longer, sustained crash, such imposed government regulations would be more strictly enforced, which in turn would cause problems for the ETFs. Considering that many of these ETFs are based on derivatives and essentially mirror an index, worries that when these bids are shut down, the mirrored index will too be shut down. There continues to be a lack of regulation for many of the ETFs, however they can still be instruments for quick, large gains (and vice versa).

For me, I'm no so convinced. I do believe the ETFs (especially highly leveraged) should be traded with caution, I find it hard to believe that one would be completely unable to exit a position during a market crash. Temporary holds may be put on place, however, I would have to think an exit opportunity would have to be available. Those are my thoughts.

I expect the market to continue to bounce back and forth. Until, I see some more definition in the charts, I am going to remain rather light for the time being. Don't get me wrong, strong movements could show up again as early as this week, however, from today's trading, I'm guessing that won't be the case. Happy Trading.

After Tuesday's big triple digit loss, bullish investors were hoping for a rebound on Wednesday. However, markets closed on the downside yet once again, having the Dow close down 60 points. For now, the double day downer is rather significant when you consider that, recently, most big down days were immediately followed by big rebound days. That chain was broken today. Now, be on the lookout for a potential rally either tomorrow or Friday, because I do not see this market completely sinking all at once into a stock market crash at this point and here are some reasons why.

Much of today's negativity rooted from more turmoil in Europe. Protests have broken out regarding Greece's monetary dilemma and concerns for Portugal's credit rating are rising. Although there were some positives for the day (S&P earnings upgrades and ADP employment increases) they were muted by the negatives. I do feel that we indeed now have some downward momentum, however, I feel that a slight rebound is due Thursday or Friday. With the optimistic report from today's ADP number, Friday's unemployment report could be rather favorable. If numbers were to come out as a positive surprise to investors, markets would be primed for a strong rally. So I am on the lookout.

As I discussed in yesterday's post, one thing I am tracking closely at this point is the VIX levels. VIX was up nearly 5% today as investor's uncertainty grows. As the VIX does usually contradict the overall market direction and may have some weakness today or tomorrow, here is a nice exchange traded note (ETN) pushing out some rewards for the rising VIX. VXX, the VIX short-term futures ETN, has enjoyed some nice strong gains the past couple gains. For those that feel market uncertainty has a good chance of increasing here in the short term (me), VXX is a great option to consider. Beware, it can move with some volatility, but that can be rewarding on the right side.

Charts for SPY show some good technical trends for a potential pullback. I added some put options as well as bought into some SDS yesterday. Even with a rebound, I feel that these positions should reward me in the next coming weeks. After evaluating what we do during tomorrow's trading day, I may try and pick up some longs to take advantage of a potential rally on Friday. So, we will see how it goes. Happy Trading.

Nobody should be surprised nowadays when the market opens the week in the green. We have now consecutively closed a Monday's trading day in the positive for 3 consecutive months. Call it whatever you may, but the fact is, taking long positions just before close on Fridays is starting to sound like a guarantee return. Today was no different after responding to Friday's big down day by having the Dow close up 143 points. Not too shabby for a Monday.

Just as I figured on Thursday and wrote about, we saw a lot of people close out positions during Friday's trading. For those who took advantage of the selling, saw some good returns by close. Hopefully, you got out before close, as most of those gains were taken away today. This week, all eyes are on unemployment. It is clear that consumers have been much more active the past couple months. You can see that by your neighbors new car or house add-on, no parking spaces at the mall anymore, or the long wait at your favorite restaurant. It is pretty evident that people are out spending. Now the big question is, is this real consumer created income being spent or is it just government money? Is this extra cash that consumers are enjoying because they no longer pay their mortgage? I know a few of those. Friday will help diagnose whether the consumer spending is being backed up by an increase in jobs or if we are all somehow increasing our discretionary income somehow. Expect to see some volatility the closer we come to the announcement, especially starting Wednesday.

I said in post a couple months ago that retail should go for a nice little run in the short term. Indeed we have seen that come to pass. Retail stocks have rebounded substantially, with the help of positive earning reports and the overall market getting a boost. However, I did also give a disclaimer that I felt the boost would be short term and soon become overbought. Well, I believe we are getting closer and closer to that overbought stage. The above video, which was posted by MPTrader.com, discusses the recent movements of retail and gives some graphical evidence of why we should be seeing a correction shortly. It is clear retail is overbought at this point, but that fact alone has not stopped other markets (financials and energy) to continue to go up. However, coupled with some graphical momentum, I would say a soon turn in retail stocks is a pretty good bet.

May has officially begun and we will soon find out whether or not we are in for the usual May decline. Bulls would love to see yet another strong correction opportunity be overcome by even more buying. I do see mid May being a difficult time to keep support levels, even with a positive employment report.

BP continues to have its problems while dealing with clean up with its recent oil spill in the Gulf. Expect their stock to be a dog for the time being, as this kind of press is rarely good for consumer confidence. These situations tend to cause for an overselling of stock at a certain point, so a pick up of some BP in coming weeks could be a good play for a nice quick 5-10% correction as it gets oversold. At any rate, markets may be boring tomorrow but I expect to start seeing some more movement as we get closer to Friday. You may also want to consider just packing carry-ons from this time forward, as airlines have made an estimated $7.8 billion last years just on fees. Maybe you should just rent the skis. Ya, that policy won't be going anywhere for a while. Happy Trading.

Following Wednesday close, Hewlett-Packard announced that they will be acquiring the smartphone for $1.2 billion. This is roughly a 28% premium to their current stock price. As a result, Palm has leaped in after hours, currently being up over 23%. These are definitely things to keep an eye out for in 2010. I expect to see a lot of consolidation and buyouts this coming year, which can lead to some very profitable returns. Right now, certain big businesses are finding strong revenues at this point in the economy. However, other smaller companies are still fighting just to stay alive. This large gap between the two is a perfect environment for some both non hostile and hostile take overs. The goal is to find the companies that are prime for picking.

Palm is a perfect fit of the "ideal buyout candidate." They are a smaller company that has dominated market share in the past and has been dwindling since. They have great brand recognition and still a pretty solid retention rate. However, they're growth has been struggling for years as has their stock price and newly entered smart phone players like Apple, Microsoft, and Google are quickly gobbling up market share. This is a perfect scenario for takeover. So keep a look out for stocks (probably under $15), who currently hold a lot of liabilities, and holds a well known name brand that seems to have disappeared the past few years. The NASDAQ will be full of them so keep your eye out.

Financials rebounded rather strongly today, which help my "straddle" position bode well for today. Much of the cause behind the strength was more Fed reassurance that interest rates are not going anywhere anytime soon. Of course many people initially applaud these announcements, hence the jump in financials today. However, when you consider the cause for the 0% rates extension, it does not reflect well on the economic recovery. The Fed will only keep interest rates this low if they feel that by not doing so, the economy would respond very poorly. So in Layman's terms, No interest rates : No economic sustainability.

This week is the markets big chance to make a run before heading back into unemployment week, which is always a nervous week for investors. With the partial rebound in today's trading, much of Tuesday's downside momentum has been neutralized for the time being, unless bears can weasel their way in tomorrow and set up for a selling Friday. I cashed out of my positions today and will most likely hold tight until mid morning to see what the charts are saying. Happy Trading.

Selling transpired in Wall Street on Wednesday, as a drop in Treasurys, due to 10-year swap spreads going negative for the first time, caused for the retreat in equities. Interest rates for Treasurys to help fill the need for the new debt issued. My ETFs that I purchased as an interest rate hedge (post from last week) performed very well today and I believe there are more gains to come. It comes back to the simple economic principle of supply and demand. We know the amount of US debt that has been issued and continues to be issued and it is only a matter of time until "the demand" weakens. We saw that today.

As a result of the drop in Treasurys, we also saw a rise in the dollar. The dollar has been performing very this last month and was helped more today, due to the downgrade of Portugal's credit rating. UUP is one of those good rocks for me that keeps chugging away and brings in moderate returns. However, continual abuse of currency printing will eventually bring the dollar to worthless values (see chart below).


Inflation isn't a worry for many at this point in the game. They feel that all measures should be taken to keep the economy afloat. I do agree that the government should do all that they can, but they are beginning to go much more and beyond than what is required. As a result, many are worried for what consequences may lie ahead. Sure, inflation is not an immediate threat, but we are almost guaranteed to see it in coming years. Thomas Hoenig, the President of the Federal Reserve bank of Kansas City said the following:

“When I was named president of the Federal Reserve Bank of Kansas City in 1991, my 85-year old neighbor gave me a 500,000 mark German note. He had been in Germany during its hyperinflation, and told me that in 1921, the note would have bought a house. In 1923, it would not even buy a loaf of bread. He said, ‘I want you to have this note as a reminder. Your duty is to protect the value of the currency.’ That note is framed and hanging in my office.

“Someone recently wrote that I evoked ‘hyperinflation’ for effect. Many say it could never happen here in the U.S. To them I ask, ‘Would anyone have believed three years ago that the Federal Reserve would have $1.25 trillion in mortgage-backed securities on its books today?’ Not likely. So I ask your indulgence in reminding all that the unthinkable becomes possible when the economy is under severe stress.

“If German hyperinflation seems an unrealistic example from the distant past, then let’s come forward in time. Many have noted that in the 1960s, the Federal Reserve’s willingness to accommodate fiscal demands and help finance spending on the Great Society and the Vietnam War contributed to a period of accelerating price increases.

“Although the Federal Reserve was a reluctant participant, it accepted the view that monetary policy should work in the same direction as the Congress and the administration’s goals and help finance at least part of their spending programs. Monetary policy accommodation during this period contributed to an increase in inflation from roughly 1½ percent in 1965 to almost 6 percent in 1970. It also helped set the stage for the Great Inflation of the 1970s as inflation expectations gradually became unanchored …

“Walter Bagehot’s famous dictum about banks holds equally true for governments — once their soundness is questioned, it’s too late. At that moment, governments and their citizens are forced to make sizeable, painful fiscal adjustments.”

Well, at least some of the leaders are aware of whats going on. Happy Trading.

After another back and forth day of trading, the Dow was able to close up 44 points after a pretty strong end of day rally. We are now treading in a very critical trading zone, as today's closed matched January's highs. The question is will the stock market be able to break through these support level or are we in for another pull back? A lot of these answers will be found with tomorrow's economic numbers.

I purchased a fair share of Citi this morning, as I discussed in yesterday's post, which worked out quite well, as Citi closed over 5% today. Like I said yesterday, I plan for my positions in this and other upcoming longs to be very brief, as I do believe there is a very quick window to make some profits. For now, investors are buying into the notion that Citi is indeed undervalued, especially after being backed by the government. I will look to exit out of it as soon as I make some healthy returns.

Tomorrow's performance will most likely be dictated by two major economic announcements. First, we will be receiving retail sales for February. Analysts are expecting a slight drop in retail sales from the month prior. As of now, even a retail report coming in line with expectations will most likely cause for a bit of cheer for investors. Second, we will be looking at the new consumer confidence report that is released. This is very crucial, as many analysts believe the consumer is beginning to come out of hibernation. They are expecting a slight increase from January's number, which if that were to happen, we would probably get a bump. Sure, they may be a bit more spending going on than was last year at this time, but the consumer is still very beaten up from the bast 18 months. So if all goes as planned by the economists, we could end this week in a rally, but when do things go as planned these days?

One company catching my eye at this point is Petroleum Development Company (PETD). This is a company that focuses on natural gas. When looking at their chart, they are looking quite nice for a little run. Plus, oil and energy should remain pretty resilient at this point for a bit longer. Some shares will most likely be purchased tomorrow.

So for tomorrow, all eyes on retail sales and consumer confidence. If these number get beaten well, we may be in for a strong end of week rally. However, if these numbers disappoint again, I would expect to see a 100 point loss day. Happy Trading.

After spending most of the day in the green, the Dow was able to make its way down into the red by the closing bell, closing down just over 9 points. Worries in the health care business due to increase in premiums led to a sell off the sector. Personally, I was surprised to see the selling close. Lately, a strong buying turn around has been the closing trend. At any rate, the closing was rather flat and was not too significant.

Tomorrow acts as a hearty day for economic data. The much anticipated retail sales number for February will be announced following the opening bell tomorrow as will initial jobless claims. If this isn't enough, we close the week on Friday with the fun unemployment numbers. Depending on the data, these next two days have been set up to either fuel a short rally or set up an aggressive sell off. Considering how stagnant we have been of late, surprising data (either for better or for worse) should be enough to wake investors up. Investors cannot afford to be as patient in 2010 as they were in 2009. A lot of money was made from 2004-2007. Considering that, many could afford to be patient with their portfolio. However, carrying cash for two straight years starts to weigh heavy for many investors.

The outlook for retail is already set pretty low for tomorrow, considering the bad weather that hit the US. So if we indeed see a very devastating number come in below the already low set expectation, watch out for a pretty strong sell off. If numbers surprise and actually beat expectations, I expect the exact opposite. For the buy side, I expect so see some better than expected numbers in online retailers. One person's problem becomes another person's success. Just as the weather may have kept many people away from the malls, you can be sure that many of those people were still buying, just online. Amazon, Ebay, and Overstock are just a few that I feel could produce some surprising earnings this quarter and get a small run for the time being.

The Fed will most likely look to keep rates low for the time being, considering the continual rises we are seeing in unemployment. One way to quickly kill momentum to a recovery is to hike up rates. As of now, many do not notice the impact that the 0% Fed rate does for the economy. Considering its arrival in 2008, it has almost become a standard part of the economy. However, even a slight raise in rates would shake the economy enough to cause for concern of yet another credit crisis. Considering inflation still remains a distant concern, I don't see the Fed making a move quite yet. Happy Trading.

Despite continuing discouraging data hitting headlines, somehow markets are finding ways to keep going up. Volume still remains critically low, especially from a historical average comparison. It is clear that investors on both sides do not know what's driving this beast and where it is headed. In the long run, I always like to stick with fundamentals, as I do believe they eventually are forced to be revealed in stock market performance.

As of now, fundamentals are still remaining quite sluggish. Intel did produce higher than expected earnings today, however, the bar for favorable earnings has been set extremely low. The real question is whether or not these earnings levels are sustainable, because circumstances do not seem to be getting better anytime soon. My occupation gives me the opportunity to have a lot of interaction with a variety of small businesses. As such, from what I've gathered, many of the small businesses around the nearby cities (restaurants, clothing retail, service business, construction) are performing at record low levels. Many have a lot of frustration, due to much of what is on the news (that the recovery has begun and stock market rallies). Many feel that they are doing something wrong, which is why their numbers are still suffering. I try to tell them that indeed most businesses are still in their same position and that it is not an isolated incident.

Real economic results from real consumers will need to return in order to fully bring us out of this recession. If not, we will see many of the small businesses around the country, which we all love, not survive. Hopefully, we can see a change in the consumer this coming year, or unfortunately, more problems are ahead.

Markets replenished about half of yesterday's losses today as wholesale inventory levels gave investors some confidence. 3M also saw some movement as Citigroup upgraded it to a buy. The market was able to fight its way out of the red with about an hour left of trading left, which as I have said before, can be very easy with such low holiday volume.

Citi is hoping to soon payback TARP funds and follow suit of other banks in hopes to relieve themselves of the strict employee payment limits the government has on banks who choose to accept their help. It amazes me how just months ago, almost all banks were under fire as the country wondered if there were any that could survive. Now, magically, after just a few months later, a few accounting changes later, and about 5000 points on the DOW later, everything is fine and dandy. I find it very hard to believe that banks are actually out of the woods. Sure, they have enjoyed a recovering stock price, but they continue to have billions worth of loans that will be on the chopping block in 2010 for both residential and commercial real estate.

So how will Citi come up with $20 billion so quickly to payback the government. You've got it, from you and I! Citi would like to payback the debt with a $20 billion stock offering that would open up to investors. Such a plan would have been useless back when the stock was under a $1. However, back at $3.86, this can easily be done. Some investors worry that the bank will have enough cash reserves after they pay the $20 billion back. If not, they just will continue not to issue loans as they currently are doing.

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McDonald's saw sales drop this quarter as they reported this week, which to me, is a bit scary. When we reach a point in this recession where McDonald's begins to see sales drop, watch out. McDonald's has been that light in the Dow, however, they too are now beginning to feel the heat of the recession. I mean, who can't afford a $1 McDouble?

Oil is continuing to struggle as inventory levels remain high. With this being the winter season and still oil is falling, I don't see it being much of a good 2010 for oil, especially when summer rolls along. There are many pitfalls that could easily hit the economy next year, and all it takes is that "black swan", to send us spiraling again. Happy Trading.

Optimism remained in the markets on Friday, due to several "perceived" strong earnings that were reported from a variety of companies. As I have said before, these reported numbers can be very deceiving, as much of the expected market earnings never get factored into trading throughout the quarter. Thus, when earnings are reported, the actual real reported numbers are thrown aside and the major topic discussed is whether it is below or above market expectations. Analysts have been writing expectations so low, that, for some companies, if the expected numbers were reached, they would be out of business. Either way, a 30-60% year over year reduction in revenues, which most of these companies are performing, is nothing I find reason to cheer about, especially when I feel that it is going to just get worse. Also, recent optimistic news about the upcoming bank stress tests caused for more cheering for financials. I have discussed my frustrations with these results in prior posts.

One thing to understand and which has been frustrating for fundamental traders, is that there has been a large degree of manipulation in the markets. Not just technically with PPT and other equity purchasing, but, I believe, also corporate and media manipulation. We saw last week the accusations from the CEO of Bank of America accusing Bernanke and Secretary Paulson of forbidding the bank to make public or discuss the purchase of Merrill Lynch, until further instructed. The Fed denied such allegations, but this goes to show that indeed the government is not just giving money to these institutions. They are giving it with strings attached and they expect the companies to play by their rules. It can be a lot easier to manage expectations when there is a monopoly of all the major institutions much like what we see in China. So although manipulation can only work for so long, it is something to be aware of and consider when making trades. I think we will begin to see more and more of these experiences exposed, which could cause some problems of the The Fed and the government.

Even in the midst of the recent strong optimistic trading, I have still continued to maintain my belief of harder times ahead. This belief is not established by me being a stubborn bear trader, as I prefer to make money on the upside. Instead, it is seeing the data, recognizing the consequences of such data, and forming conclusions by seeing what the result of such data has done to us in previous times. As much as I would love to see our economy experience a quick rebound, as I am an active professional in the corporate world and would benefit greatly from such a result, I am also a realist and see the consequences that we must bear as a result of greed and bad leadership for the past 15 years. Unfortunately, we as taxpayers, will ultimately need to pay for many of the mistakes our banks, corporations and government made as a greedy attempt to grow this economy and become rich much quicker than nature would allow. Eventually, everything returns full circle.

As a result, many have asked what data causes me to have such firm beliefs. I thought I would share a few, with graphs to help prove my point that, indeed, we should have much more tough times ahead. I understand this rally has been strong and very rewarding for many, including myself at points, that have traded on the long side. It is also very dangerous, because you are also betting against the house, as much of the data is "bearish data." Just as a word of caution for long traders (and for shorters for the time being). Be very careful, for just as quick those profits were given, they can be sucked out in a matter of days. So lets talk bear.

As I have said many times before, I believe deflation will be the big kicker that sends our economy and market down to new levels. Many are not talking about such worries, mostly because it hasn't been felt by the consumer as much as it will. However, we can look at recent data and see why there is reason to be concerned.

First, take a look at the graph below. This graph shows the adjusted monetary base, which pretty much is the sum of all money in the market. As you can see, we have recently experienced a huge spike in the graph, due to the recent large blocks of spending from the Fed. Their hopes are to flood the economy with cash in hopes to thaw the markets and once again get people spending again. The scary part about this, is that The Fed really has no form of formal regulation and can expand this spending as much as they feel the need to. Just recently, they expanded their balance sheet by more than a trillion dollars. In this type of environment, this amount of spending could only make things worse if it is wasteful spending, because eventually that money must be accounted for. This is why we have seen China, recently, worried about their large stake in government bonds and they should be.


The big question is, with the all of this huge spending by The Fed, is it getting into the consumer's pocket? I mean ultimately, isn't that the goal, considering that 70% of the makeup of GDP is from consumer spending? As we can see from the graph below, this isn't the case. In fact it's getting worse. In the graph below we see a comparison of household borrowing with the personal savings rate. Notice the enormous drop in household borrowing the past year. Not only is that a problem, but look at the increasing rate of savings. Sure, savings is a good principle for us to use and appreciate, however, to get out of this crisis will require consumer spending. I've heard before that the difference between a recession and a depression is a state of mind. If people find themselves in a environment where they feel it dangerous to spend money and hold on to every penny earned, a recession quickly finds itself in a declining depression. So this graph is very scary and if the trend continues, we should not expect stronger signs coming out of GDP.


In addition to these spoken above, is the continuing weakening PPI and CPI numbers. Our most recent PPI numbers recorded are the worst we've seen since 1950. This is the wholesale cost of goods. If that isn't a deflationary indicator, I don't know what is. Remember, this is a wholesale indicator, which I believe will lead right into CPI, which is consumer goods. It just takes time.

These are just a few of the signs I've been tracking that lead me to my firm belief of worse times ahead. I will continue to talk about more of them here as well as with a lot more detail on the premium podcast (subscribe here). You can find a lot of this data on Morningstar for free: More than investment news... In-depth Investing Analysis & Trusted Opinion. GET YOUR FREE TRIAL NOW! .

Indeed we find ourselves in the midst of a lot of optimism in the markets. As I hope for the best for our markets and our economy, I do not believe the recent steps taken by our government have been the best in turning this economy around. I believe a lot of what we have seen recently has been due to speculation by many that the government will hold our hands out of this. However, if we look at the real, raw data, we see scary indicators for the future. So, I will be very cautious going into the next few weeks, as I do believe a great shorting opportunity will be here very shortly. Happy Trading.

Well, as expected, we experienced a pretty aggressive selling day as yesterday's gains, and then some, were wiped out today with the Dow closing at 8149. I was glad to have sold out of almost all of my bank positions yesterday, as most of the profits were wiped out from today's selling. Tomorrow is a pretty critical day in deciding the future movement of this market. Another devastating day of selling could be enough to put the Dow below 8000, which would be a critical point of closing, especially with the market mostly trading up the first part of the week. As I've said in the comments, I'm a bit torn at which way it will go since so much depends on the GDP announcement and how it is spun with the media.

I didn't make many moves with my Zecco.com account today, as I still feel I want to be mostly short for the time being. I did, however, pick up some more TBT for myself. It has performed so well for me since I first wrote about buying it last month and I see it going nowhere but up this year. US treasuries have been so over bought, it's ridiculous. The yield with Treasuries hit 0%! It is very clear that Obama's plan is to spend our way out of this crisis and by doing so will even more saturate the market with more, already oversold Treasuries. Plus, as our government continues to print money, other nations will continue pulling their money out of Treasuries and putting them into corporate bonds, because their dividends are much more stronger. So I expect TBT to continue to do just fine for me.

I would expect big numbers from my FXP tomorrow, as Asia is currently looking like a market crash. Surprisingly, FXP is holding up pretty strong fundamentally, as they have a market trend score of +55 (see below. Get your own symbol analyzed for free, all you need is a name and email, Click Here). I did shave off some of FAZ earnings today as there was some huge gains today from it (almost 20%). It's not that I don't think there is more to grow with FAZ, it's just like I said yesterday, I can't be greedy.


My DGP performed well for me today, already being up close to 5%. This is one I plan on hanging on for a while. I sold some of my GDX for a pretty strong profit (first bought in at $18). I am seeing more upside for DGP in the long run than GDX. I think gold is bound to spike sometime throughout the year with this overspending.

So we all wait and see what the GDP Gods shall bring us. The number is going to be bad, no doubt about it. The next GDP announcement should be even worse. I cannot believe the devastation we have already experienced in January. Consumer sentiment is another one to keep your eye on, although I do feel it will be overshadowed by GDP. If indeed sellers take over this market tomorrow, which has usually been buyer's territory, I would expect that momentum to push harder into next week.

My Lending Club account is doing great so far. Payments are being made and my returns are looking to be strong. It's good to be diversified and helps me sleep a bit better at night. Below is an example of notes that are available to invest for 10%+ gains. I chose to pick higher valued loans, and not shoot for the 20% returns. Remember, my $100 promotion for Lending Club ends in a couple days. It's free to sign up, click here for instructions.


I will be on the comments tomorrow so check back and share your thoughts. I will probably be making some moves mid-day tomorrow so we'll see what happens. Have a good night and Happy Trading.

Free Trading Analysis Video click here

I don't know if it was all the media time Obama's new projected stimulus plan got this weekend or the perceived "good news" from the existing-home sales, but whatever the case, the market was some how able to stay up in the midst of some seriously bad employment news and other negative economic data. The Dow did spend some time in the red, but quickly recovered and closed the day up 38 points. Many perceived the 6.5% increase in home sales as good news and an indicator that we may be starting to see the bottom of the residential crisis. However, once again, people have failed to read between the lines.

There are two huge elements which helped increase this number. First, the median of housing prices are down 15% just from last year. Many of the houses that were sold were bank owned and were sold for a loss. Sure, if McDonald's lowered the price of Big Macs to 50 cents, they would probably sell more, but their profits would be down.

Second, THE DISCOUNT RATE IS AT 0%. For those that enjoy good credit, with the help of the FED, people buying houses are seeing rates in the low to high 4% range. At this rate, you could buy a mansion, rent it to a dog, and still probably be able to cover your monthly debt service. The point is, only a 6% rise in home sales with a 15% in price and 4-5% borrowing, is not encouraging at all.

Also, today we were slammed with a whole new round of job cuts. Our unemployment rate is quickly moving towards 9% and up into the teens. They are projecting another 500,000 job loss month for January, however at this rate, we're looking to be closer to the 800,000-900,000 range. I thought I would make a list of all the recent job cuts that have been announced the last week as it may become tough to keep track. I hope none of your companies are on this list:

* Caterpillar to Cut 20,000 Jobs
* Sprint Nextel to Cut Up to 8,000 Jobs
* Home Depot to Cut 7,000 Jobs
* Microsoft to Cut Up to 5,000 Jobs
* Intel to Cut Up to 6,000 Jobs
* UAL Layoffs Planned
* BofA Could Cut 4,000 Jobs
* Cerberus May Lay off 10% of Staff
* Clear Channel Cutting 1.500 Jobs
* GE Capital to Slash Up to 11,000
* Conoco to Lay Off 4%
* Pfizer to Cut Up to 2,400 Jobs
* AMD to Lay Off 1,000
* WellPoint to Lay Off 1,500
* Hertz to Cut More than 4,000 Jobs
* Motorola to Slash 4,000 More Jobs
* Google to Cut 100 Recruiter Positions
* Seagate Cutting 6% of Workforce
* Barnes & Noble Slashes 100 Jobs
* Oracle Cuts Several Hundred Jobs
* Boeing to Cut 4,500 Jobs
* Cigna to Slash About 1,100 Jobs

* U.S. chemical maker Huntsman said it plans to cut about 1,175 jobs, or about 9 percent of its workforce, by year-end to reduce costs and tackle the huge slump in chemical demand.
* Microsoft announced it would cut up to 5,000 jobs and said it could no longer offer profit forecasts for the rest of the fiscal year.
* Intel said it would close sites in Asia and scale back operations in the United States as part of a restructuring that could affect as many as 6,000 jobs.
* UAL announced it will further reduce the number of salaried and management employees by approximately 1,000 positions by the end of 2009. This is in addition to the 1,500 positions the company announced in the second quarter.
* Diversified U.S. manufacturer Eaton said it planned to cut 5,200 jobs, or about 6 percent of its work force, in an effort to further slash costs in the face of a struggling economy.
* Time Warner's Warner Bros. Entertainment said it would cut about 800 jobs, or 10 percent of its worldwide staff in coming weeks.
* Lee Enterprises, which publishes 49 daily newspapers including the St. Louis Post-Dispatch, said its quarterly profit on a preliminary basis fell 69 percent and cut its staffing by more than 10 percent.
* Rohm and Haas said it plans to cut 900 jobs, or 5.5 percent of its workforce, in a bid to tackle the slump in demand and widespread market weakness.
* Bank of America may slash as much as 4,000 jobs in its capital markets units starting this week. The cuts are expected to be in New York and reflect the consolidation of the bank’s sales and trading businesses after it bought Merrill Lynch three weeks ago.

Last month, I discussed the extreme over buying of treasuries, which pushed the yield to almost 0% numbers and pressed me to buy into TBT, the 20-year Lehman treasury UltraShort. As you can see from the graph, it has done quite well for me since I got into it. I expect this short to continue to remain strong as Obama tries to spend our way out of this mess and foreign nations begin to pull their money out of our treasuries.

Here also is the momentum graph for TBT. As you can see it is currently holding a +70 score, which is pretty strong momentum. I would expect it to keep going up for a bit more. Get your own symbol analyzed for free, all you need is a name and email, Click Here.

Banks came down later in the day due to more concerns of their ability to survive. Hello, why did these concerns ever go away? It didn't help that Fannie Mae is wanting $16 billion more from the Fed to keep a float and trust me, these secondary askings for money is just the beginning. In the next month or two all of them will be back at the table with their hands open. The debt coming due is monumental.

American Express and Texas Instruments reported horrible earnings and with the anticipation of a rocky GDP number this week, I would expect some days of down trading. However, the new Mr. Smart secretary who doesn't pay his taxes was sworn in today, and knowing this market, it could somehow cause some praiseworthy trading tomorrow. I'm sticking with my shorts and gold for the time being. I think the ticking time bomb is close enough to zero for me.

Well, tomorrow should be an interesting day. After hours are up, but that doesn't mean anything anymore. Take advantage of the free trial of INO video, because I believe it won't be offered much longer, click here. I hope to wake up in the morning to see some green in my Zecco.com account. We'll see. Happy trading and we'll see you tomorrow.

I thought this picture would be appropriate, as this is what I think investors are doing who feel like it is time to buy. Wow, today smelled a lot like manipulation again. Maybe the Fed felt like they had seen enough red lately. Whatever the case, the market had no business being up over 2% today. By the way, since we have been discussing Lending Club lately, the P2P lending site that can generate 10%+ returns, I saw that they were featured on CBS news, see here. I plan on lending just a little at first to see how it works. I will keep you all updated. As CNBC headlines said today, stocks are probably not the place to look to make money for 2009, unless your short (in my opinion), so I encourage any other options that can bring me good returns.

Well, Uncle Sam extended their arm again today to the dying American autos, which seems to be the cause of the buying spark today. I don't know how people take this as good news. Late last night, the Bush administration allocated 6 billion dollars to GMAC, GM's equity in auto to help in assisting to better their bottom lines. Now, GM claims to be able to give loans to lower credit customers and issue car loans anywhere from 75-80% LTV, compared to their recent 40%. Ha, we will see about that and just how long that lasts.

Tech had strong gains, as they seemed to have been killed the past week. I still think tech is one of the most vulnerable to this worsening market, as most technologies are a luxury. People will probably not by that extra computer, or the suped up processor chip this year. It's back to basics for me and my IRA for 2009. McDonald's, Wal Mart, and Johnson & Johnson are some of the only companies I dare hold long for the beginning half of 2009.

Of course, people choose to ignore other news, that in my opinion, affect our economy far greater than people's ability to getter better loans on a new Suburban. Consumer confidence fell to a record low in December, having the index fall to 38 from 44.7 from November's numbers. This is largely due to the huge job loss we have seen the past month. As layoffs are sure to continue, I expect the confidence to get even worse. Yes, even with Mr. Obama at the helm. Employers chopped 533,000 jobs in November alone, the most in 34 years. Yet, there are some out there that feel it is time to buy. Go on ahead. I can't even begin to think why that is the case. We have some serious tough times ahead of us.

Not only did that hurt, but the prices of US single-family homes in October fell 18% from last year! So this surely squelches some people's hopes that maybe the housing market was reaching close to bottom. I think not. I have said it before and I will say it again, the housing market led us into this catastrophe and I believe it will lead us out. I don't see any light at the end of the tunnel as long as housing prices remain at record lows.

So we move on. I think today was just a short term fluke, as people cheered Uncle Sam's intervention and hope for more. These days can be crippling to the market in the long term, as I feel some people are duped into buying, even though there are serious negative data released that needs to eventually be factored in. Oh well, you never know. Investors may entirely ignore these continual, harsh economic conditions, but I very much doubt it.

I expect to start seeing some serious drops in the Dow the next couple of weeks, before we start to work through Obama's honeymoon. As we grow nearer, I will probably look to pick up some longs to ride that short bubble and pick up some quick gains, but we'll dive more into that as we get closer. Have a good night everyone, Happy Trading and have a good evening.

What a day. I felt like I was riding a never ending roller coaster. Investors had no idea how to "day-trade" in today's market as digestion of all the new economic and auto bailout news was a bit difficult. Then to top off the day, we have the Madoff hedge fund scam that should cause some noise next week.

As expected, pre-market trading was very negative, in response to the rejection of the auto bailout last night with The Senate as well as the Madoff scheme. The Dow dipped as low as 220 points today, but quickly gained strength as President Bush announced the possibility of utilizing a portion of the "Tarp Money" to assist in preserving the autos. As I discussed yesterday, I did not see a very likely chance that they would completely abandon the auto makers.

We then received the retail report, which once again brought down the market. Retail sales came in down 1.8%, which actually was lower than market expectations, but it also has been the longest stretch of negative sales (beginning in July) since the Commerce Department began tracking the number in 1992. Many people believe the reason for this semi-optimistic number, is that more people did ALL of their holiday shopping during the Black Friday weekend, instead of spreading it out over December, as it has been in prior years. I don't know about you, but lately, the traffic in the shopping malls near me have been pretty modest.

Another positive that bumped the market a bit, was University of Michigan's consumer sentiment report came back more positive than the previous month, rising to 59.1 from 55.3. Much of this was contributed to the incredible drop in gas prices, as most people are getting anywhere from $50-200 extra a month now. However, studies show that people are not spending this money (either being saved, or paying bills). So in turn, that doesn't do much for our monetary supply chain. At any rate, they don't call the end of the year "The Bull Season" for nothing. People are a bit more positive during this season.

In the end, we did see the "end of the week rally" prevail as I believe that makes it 8 weeks in a row we have seen a rally on a Friday. I am still hearing from analysts on the news that, because of the ability to stay positive in the midst of persisting negative news, that means we're at the bottom. Hilarious. We are ankle deep in this current economic crisis, that has a very long winter ahead of it. And what happened today with the Ponzi scheme is a preview of what we can expect in coming months.

Today, Bernard Madoff, the well respected Wall Street guru who managed a billion dollar fund, and who was the Chairman of the Nasdaq Stock Market in the 90's, was arrested due to frauding investors of what could be more than $50 billion in what authorities are calling a "ponzi scheme." Madoff was able to fool investors into thinking their fund was producing great returns, when in fact their money was being sent to what Madoff called, "money heaven." This gives more weight to the phrase, "if it seems to good to be true, it probably is." Even though, the market seemed to plow right through this, this is a big divot in our recovery. This directly affects investor sentiment. After this story being in the headlines all weekend, many investors will question their hedge fund's integrity. If it wasn't difficult enough for hedge funds to gain confidence from investors to keep their money with them, now they have one more big obstacle they need to clear. Having been looked right over today in the "Friday Rally", I believe we will see this scheme factored in next week, as people will realize how big of a deal this really is.

We've got a lot of action in next week's trading. Not only do we have the Fed's meeting to discuss another rate cut, we also have Morgan Stanley's and Goldman Sach's earning announcement which should cause some momentum (either bad or good) for financials. I plan on selling my UYG options before than, as I do not expect good numbers, due to the disappointing announcement from JPMorgan yesterday. SKF and Faz could receive strong bumps, if those earnings are indeed disappointing. Also, there is still a consideration that the tarp money could not get allocated to the automobiles. Although, I still feel it is unlikely, it is possible. There is a lot of opposition to the bailout and it is still a crucial element to moving this market.

Going into the holiday season, volume should continue to get lower and lower, which makes it more vulnerable to volatility. It should be another crazy up and down week as we end the year. I still think we should continue to get gains from the shorts as more and more of this bad news gets factored into the consumer.

I am still loving SRS, FXP, EEV, GDX, and DIG for the next year, as I think they should receive some good gains. Note the recent volatility of SRS lately. Just in the past two days we have seen it be up 30% one day and down 20% another. Even though, I love this fund as a long buy, it could be a great play for you day traders. If you can buy into SRS in the $70's price and sell at around $100, you may be able to turn some quick profits in a very short amount of time. Keep that in mind. Have a great weekend and Happy Trading.

Well, it seems as if winter may be ending early as there was some movement from the hibernating bears today. Finally, we saw some strong movements from most of the inverse etfs today. As I said yesterday, the “Holiday High” may not sustain into the new year. Negative outlook persisted as Jamie Dimon, the CEO of JPMorgan, went on record to say that they had a “horrible” November and are having a “horrible” December. I can’t imagine the kind of numbers they are performing if the CEO has to prepare the market the way they did today. Like I have been saying all along, financials are definitely not out of the woods yet. The $700 billion was chump change just to help cover their bad debt. It has not stimulated any new lending, and in my opinion, much more “tarp money” will be needed if they expect the banks to start lending anytime soon. Wait until the consumer starts pulling out their money next year, because of the massive job loss. The banks are getting desperate. You can actually find pretty decent rates if you’re willing to work with the banks. This is a pretty cool site where you can have different FDIC insured banks bid for your business. It usually results in better rates. Visit MoneyAisle.com for more info.


KB Toys and EZ Lube were new members of the Bankrupt club this week, which is slowly becoming standing room only. Office Depot said they plan to close 112 under performing stores in North America, as well as six distribution centers. They are also going to cut spending by $200 million. These are the beginning signs of business failure. If only businesses new that you should cut spending in the high times and begin to contract their operations and use the recession times as building, they would be far better off. Many American businesses will now suffer from their past five years of greed. This should add another log to the Unemployment fire as we are looking to have one heck of a Q1 2009.

The auto bailout is still pending as it is finding some adversity in the Senate. Sure, they may have to go back in tweak some things, but I still don’t see how they won’t pass this bridge loan. Media likes to keep people on edge, but I believe it is a lot farther coming along than media plays it out to be. The auto bailout is the one lurking variable I still feel has the power to keep the bull running for a bit longer. I just wish it would be done and over with, so that we all could move on with more normal market movement.

One thing to look out for is next week when The Fed meets to discuss the rate cut. Sure, we most likely will see yet another cut to our already very low discount rate. However, don’t be surprised to see The Fed disappoint the market. The market expects a 50 basis point cut. In doing so, The Fed would be flirting awfully close with inflation and also needs room for emergency rate cuts, as I believe they know we have harsher times ahead. If we indeed see a lower than expected rate cut, that could cause for some negative trading and set a bad mood for next week. At any case, I believe the bears are ramping up soon to take control back of this market.

SRS showed today why I deem it the “Rock Star” out of all of the ETFs. We saw it just about touch $100 today (close to 30%), which I would say is pretty strong. In my opinion, SRS is just getting started. Wait until the commercial loans come do. 200+ stock in my book. SKF and FAZ also had high gains due to the negative outlook given by Mr. Dimon. FXP gained pretty well as Asian markets are continuing to show doubt to investors of their ability to grow in these tough times. Hey, maybe people are beginning to do their research.

I would like to say the selling will continue into tomorrow, but there are a couple of elements that could stir that up. First, we still have the auto bailout lingering out there. If a deal is cracked tomorrow, expect a pretty strong cheer rally. For you gamblers, picking up some GM or F stock may not be a bad idea. Just get out fast again. The second element is that it is Friday. Recently we have seen big runs on Fridays, despite whatever bad news the economy can throw at the market. For some reason, investors have found Friday a good day to buy, although I do believe the bulls are not as ramped as prior weeks. I still like YHOO as a pick up, as I believe it is only a matter of time until a deal is struck. At any case, I am glad to be short right now, and expect pretty strong gains from them the next few weeks. Happy Trading and see you tomorrow.

Well, as expected we saw our day of profit taking. Like I said yesterday, a 600 point rally in a bear market is more than you can ask for if you’re going long. Continual negative forecasts and outlooks brought Wall Street back down to reality for today, as people started digesting all this economic data we have been receiving. Personally, I don’t know who is doing the buying right now, because it is sure not the institutions. In fact, I believe the institutions are selling. The Treasury sold $32 billion in 0% yielding 4-week bills. $32 Billion! That shows just how many people feel that our market is in for a bad run. These people are happy having a 0% yielding return, which sounds great if you think a big downfall is on the horizon. Our foreign investor friends and institutions are looking like they are not wanting to roll the dice with the NYSE. Is it really all that surprising? ICSC (International Council of Shopping Centers) announced their negative outlook on retail for the next year. Fed Ex and Texas Instruments also joined the party of cutting their forecasts for the next quarter.

Even though we had this sell off day, we could see the market still continue to be bullish for the next week or two, especially if there is an agreement on the auto bailout this week. However, I feel that the bull is running out of steam. This Friday we have retail sales which , in my opinion, should be pretty lousy. We also have the PPI (Producer Price Index) on Friday, which expectations are pretty low as well. In any case, during this holiday season, there is not much to be cheerful about in regards to the stock market. However, the market has continued to push up and I have absolutely no idea who is buying right now. I think the government may just be printing money and putting it into the market, ha. At any rate, I still think we could see a crash any day. As soon as momentum starts pushing down again, it’s going to be hard to turn that train around.

SRS, my favorite ETF, was best of the shorts today, ending the day up over 12%. SKF also did well, as financial’s green streak came to an end. FXP and EEV were alright, however, I would like to see a stronger performance from them in the near future. DIG and GDX both held up strong despite the sell off. As I said yesterday, energy and commodities are the only buys I like long right now.

Right now, many people are using the “end of the year” term as a scapegoat. Broadcom cut their forecasts today saying that “many of their customers are postponing their purchases until 2009.” Yeah, like things are going to get better next year . It is the same with China and Europe, as they are hiding behind “year end uncertainties” to explain their market instability. The fact is they will use any excuse to hide behind to try and instill investor confidence. If foreign investors pulled out of those emerging markets, they would be killed. As soon as 2009 hits, I believe that is when reality will hit most. Coupled with the exhaust from holiday spending, year end earnings reports, continued unemployment, and slowly increasing energy costs. Right now, we are very lucky that oil has hit such lows. Just don’t expect it to be at $42 a barrel for much longer. As colder, winter months settle in, the demand for oil should increase.

We could see another day of sell off tomorrow, depending on the auto situation. If so, I will probably sell out of some of my long options and finally cash in on my profits. I have good positions in short right now, so no need to bulk up on more of those. If we go green again, I will, however, be picking up some more SRS in the low 80’s or high 70’s. I do expect a red day tomorrow, as I would expect foreign markets to react negatively to our down day today. But, who knows in this market, with these crazy buyers. I hope everyone has a good evening and thanks again for the donations, much appreciated. Happy Trading and we’ll see you tomorrow.

I think it's pretty clear that bulls are not going to back down for the time being as we saw another day ending in the green, despite some really bad numbers announced in the morning. I strongly feel there is some sort of manipulation happening right now, either with government bailout funds being allocated to market stimulation or PPT movement. In either case, with the data we received today, there should be no cause for celebration and especially buying (in my opinion) for that matter.

Whatever the case, it is pretty clear that someone wants a "Santa Bull", despite still large sell off tendencies throughout the day. The more strange part about it is that we started the day in the red and didn't kick into the green until after all the bad news came out. I guess the PPT likes to sleep in. Even though the rest of the world may be ignoring these numbers that came out today, I am not. These were big numbers that are not good for us in the coming months. ISM's (Institute for Supply Management) sector index got slashed 7.1 points to 31.3, a record low for this 11 year old index. This is a very bad number. On top of that, it is a number that points to the future. We won't see the effects of this decline for a few months, which makes me wonder how this would influence someone to buy.

On top of that, our ADP employment(private employment) fell 250,000 instead of an expected 205,000. Another wrenching number. Then to top if all off, Paulson continued to stress that the outlook for 2009 is not good and that he already wants access to the remaining $350 billion that is left of the bailout fund to use at his discretion. We are running out of bailout funds. My prediction is that he'll be back in his seat in front of congress asking for a trillion dollars within 3 months. The debt that is surfacing is too much to count. And just wait until all of the 5 year, very highly leveraged, commercial real estate conduit loans that were purchased between 2003 and 2007 start coming due. It is going to be another heyday for banks, just like the housing market.

As I said yesterday, its hard to say what is going to happen here in the short term. As long as there is this bull manipulation going on, it doesn't matter what is announced, we could still go up. However, I still believe that it won't last, and when these new numbers finally do get factored into the market, it should hit us pretty hard. I really think we should be in the low 7000, with our current state of our economy. I still plan to stick with fundamentals and put my money where reality is. I have accepted it may be a few months until my shorts are in selling position, but I am in no hurry.

Today, I actually reloaded up on SRS again at $119. SRS is probably my favorite inverse etf and I believe will be the big performer for 2009. I believe there are going to be a lot of retailers and REITS going BK next year. If I can sell at around $150-$160, I'll be a happy camper. I almost want to buy some FAZ right now, because of the grim outlook for Morgan Stanley and Goldman Sachs for the next year. I still believe financials have been over bought recently and have plenty of trials ahead of them. Plus, I believe our government cant continue to bailout every bank nearing bankruptcy.

I have officially put FXP on the back burner and am just going to let it set. I guess I will have to wait until there are mass public riots, so that people will begin to see the real trouble going on in China. Chinese stocks received more love today, when their government flushed capital into some of their major banks. All of these quick moves that the Chinese government continues to make just reiterates how bad off they are.

I am still continuing to make strong gains on my UYG, DIG, and Apple options. If we continue to rally through this week, I will probably begin selling those off by Friday. Friday is a key day to watch. Recently, we have seen Fridays ending in strong rallies. However, this Friday we may receive the worst news thus far, with the new unemployment numbers. This number should be very, very bad. Even though expectations are low, when reality settles in, it should jolt the market quite a bit. This is something that effects the consumer more directly and can hurt sentiment. However, in this market, you never know what's going to happen.

Stay on your toes. Volatility is still increasing, which always makes me nervous. There is a reason they call it a market crash. Not a downwards trend, or a hill. A crash hits when people least expect it, or when they think the worst is over. And on any given day, I feel that we could have a crash. I don't think it is very likely at this time, but it makes me comfortable to have some short positions. Have a good evening and Happy Trading.