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

Investors cautiously traded with mixed results, due to the high anticipation of upcoming employment data. However, the Dow was able to close up a few points and is getting ever so close to breaking that 11000 mark. Volume was critically low, possibly due to the holiday week as well as Spring Break, which tends to be a popular vacation time for many people. Tomorrow's ADP employment number, holds a bit more weight than most, due to its relationship with Friday's unemployment number.

Analysts are expecting a 200,000 increase in jobs for the month of March, however, it has also been estimated that over 100,000 of those jobs can be accounted for by government hiring for census workers. Considering that over 50% of Friday's number could be temporary government employees, investors are more likely to pay more attention to tomorrows ADP number than they usually do. Sure, Friday's number will definitely carry weight, as it always does, but expect a very inflated number.

Much of the recent rally has been in anticipation of a better month than we have seen recently. Retailers are expected to be performing better, home prices seem to be more stable, and the unemployment rate seems to have peaked. Really? All though some of these things may be true, it is always important to evaluate what is causing the performance and if it is sustainable. One thing is for sure, the housing market is looking at a rude awakening if the government stays with its plan to take away the tax incentive for home buyers, and here's why.

Despite recent data showing a smaller decrease in home values for January and February, more recent data is showing that we may start to see a double dip. The main fueling factors for home buying at this point in time is the tax incentive offered and the ability to secure a good loan. Without these two very critical factors, the demand for homes would most likely decrease over 50% (half the amount of buyers would be gone). If that were the case and then coupled with the amount of default and foreclosures that still exist in our market, we would sure to see another strong strike to home prices. Once again, this is predicated on whether the government does allow for nature to take its course, with no intervention. Whatever the case may be, people hoping that we had reached bottom for home prices, that is not the case.

Another aggressive dip in home prices is sure to bring down investor confidence. This is the one big factor frustrating me to go long more on equities. Sure, the government has pumped plenty of money to make things look sunny for now, but what happens when that runs out. This is why I continue to remain rather conservative and look for more solid investment opportunities in currencies, commodities, and energy. Definitely look for an aggressive move both tomorrow and Friday, as we see whether we beat or fall short of employment expectations. Happy Trading.

Markets opened up on fire Friday morning, after a much better than expected job report that came in for November. However, as a result, the dollar saw big gains, which as we have seen lately, caused for an adverse effect on overall trading, especially energy and commodities prices. Both gold and oil are traded down today as a result and most of the big gains which we saw when the market opened were given back by close.

The unemployment number came in almost too good to be true for economists. Just 11,000 jobs were estimated to be lost for November. Quite frankly, I am not that surprised. For the time being, we've seen a bit of stability back in the economy, and most businesses are not anxious to cut jobs in the middle of the holiday season. I expect December's number to be favorable as well. It will be very interesting to see what January and February brings, as I believe many companies will begin a new round of layoffs.

Gold really got hammered today (and even harder after hours). Lately, gold has been on a high. We may continue to see a push upward, but as soon as we see weakness in gold, it could come crashing hard. Foreign markets have been buying up gold quicker than they can get their hands on it, but that would stop as soon as the dollar found some strength. Oil would also most likely come down in price, in turn causing even more concern for deflation.

Manipulation still seems to be present. Even, with the 200+ point swings today, somehow, markets were able to close in the green. Like I've said before, during these low volume trading days, it can be a volatile storm.

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Options are becoming very cheap due to VIX levels dropping. I am finding prices for options very tempting. If indeed we see a next down leg, the VIX will be sure to spike, thus inflating option prices. Even 2011 options are reasonable at this point, which should not be a bad option. We could see this market take a turn for the worse even before year end. We are at very high support levels, and I believe this market can't handle it. The next few weeks should bring some fireworks. Happy Trading.

Well, as we have been anticipating, jobless numbers came in on Thursday and they were not pretty. Economists were expecting a loss of 360k, hoping that we would remain near last month's strengthening number. However, the actual number came in at 467k, crushing expectations. Like I have said all along, one or two months of strengthening data is not significant in proving a total correction, it all depends on sustainability.

As a result, the unemployment rate is now announced to be at 9.5%, which was actually less than expected, which really doesn't make sense, given the extremely large non farm payroll number. I expect that number to be revised. Also, something worth noting is the continuing drop in average work week, which if continues, usually means there is more layoffs to come. It is no wonder we saw a -220 point day for the Dow. Here's a 3-day trial on a pretty good upper income job finder FREE 3-Day Trial Offer. Happy Trading.

After another rather broad range of trading, Friday we saw the Dow close in red, ending the week as a whole down a few percent. The S&P closed pretty much flat, and the NASDAQ had a much better day than the others. Considering the range of trading today, and despite a what is usually a heavy buying option expiration Friday, the Dow was still able to close in the red. At this point it's hard for me to argue the point that indeed a pull back is here and I believe we're going to see that manifested even more so the next couple of weeks.

Hopes for a bettering job market were frustrated Friday by a new job report. All 50 states were studied, and as a result, 39 of the states had continuing job loss numbers. Out of those states, many of the larger states (California, Florida) reported record high unemployment numbers for the month of May. Michigan came in the highest with an unemployment rate estimated to be at 14.1%. Oregon was close behind, as was California, whom is struggling with a 11.5% rate as well as had the largest amount of total jobs lost for May (68,900). By the way if you have lost a job ResumeRabbit.com can be a great resource for finding a job, you can post your resume there.


I have always said that a recovering job market is the road back to stability. Unfortunately, as we continue to see more diminishing jobs at the large rate we've been experiencing, there is no way we can expect an increase in discretionary income or consumer spending. As such, I don't see much hope for a quick turn around in GDP numbers.

Earnings season is going to play a crucial role on how powerful this pullback becomes. Strong earnings showing hope could quickly turn around the pull back and possibly push us up into new highs, but I see that result being pretty unlikely. However, disappointing numbers would most likely send the market down faster. That mixed with the good possibility of deflation could be a recipe of disaster. As a result, I expect to see this pull back continue into next week and I will be looking to take some larger positions. Happy Trading.

Markets are cheering for a better than expected jobless report that was released this morning. There was a 345,000 net change in jobless for the US in the month of May. Market analysts were expecting a loss near 520,000. The results have caused for many investors to cheer as the market is trading moderately up today. Even though the numbers seem convincingly positive, as always there are things to consider behind the scenes.

First off, the jobless report came in "better than expected", however the overall unemployment rate change was significantly worse than expected, coming in at 9.4%, compared to the expected 9.2%. Confusing right? In addition to that, the average workweek fell to 33.1 hours per week, which is the lowest we've seen since this measure began in 1964. Weekly work hours are commonly used as a forward looking indicator, with the theory being that companies cut hours before they cut jobs. If that is the case, there seems to be not much to cheer about.

Also, remember that this report does not factor the many "self-employed" citizens who are out there and feeling the pressures of this economy. We should be feeling GM's job cuts hit the index the following two to three months. So, yes we like the reduction in jobless numbers, but other data seems very discouraging. For those that have lost their jobs, RiseSmart.com is a great place to look for jobs, especially 100k salaries and above.

I received a mixed response about the new format, but more seemed to lean toward the smaller, more frequent posts. For those who do like the one daily post, reading all the smaller ones together should not differ much and all will be emailed at once in the evening to those who are subscribed. So, we'll see how it goes. Happy Trading.

Due to several emails I have received, I am considering slightly changing the format of the daily posts and wanted to get the reader's opinion on it. I have been asked if I would be willing to make multiple smaller daily posts, throughout trading hours. I would continue to cover much of the macro data still, while at the same time giving some real-time updates of portfolio trades and intraday news. If you could leave a comment on your thoughts of the plan, that would be great. Thanks.

Today we saw yet another green day of trading today, with not much "good news" to support it. The market continues to be a day-trader's market, as bears are scared of continuing manipulation, and even most bulls think we've got to be having a pullback soon. As a result, we are continuing to see very low volume in the market.

Commodities and energy bounced back today as continuing dollar concerns remain. During times of uncertainty, many find commodities and precious metals as a safe haven to park a lot of their cash. It is no surprise to see strong gains in these sectors and it's something I talked about as an opportunity in March. My concern is for the still strong possibility of deflation, at which point commodities would most likely take a hit. We know inflation is coming, but probably not until well into 2010 and 2011. There is a pretty big lag time for inflation to react to funds being flushed into the economy.

Despite much of the optimism we have seen in certain sectors of the market, retail sales are still showing no signs recovery. We saw many of the retailers this past week report worse than expected numbers, which surprised many, especially after considering the rather large jump we received in consumer confidence numbers. Like I've said before, certain economic indicators experience much more variance than others, which makes it hard to use as a benchmark. Retail sales, unemployment, and average home sales are great benchmark indicators, as they usually point directly to discretionary income.

One thing worth noting, is the movements of The Conference Board's Index of Leading Indicators (LEI) chart (see below). The chart is a macroeconomic analysis tool that has been very successful at predicting recessions, as well as predicting ends of recessions. Since 1960 it has predicted every recession, so it does possess some value to it. What I want you to see is how frequently we see a minor up tick in the graph, only to be followed by a stronger fall. However, on the way up, it usually possesses a direct path, with almost no backtrack. You will notice the slight curl that we are experiencing currently. If we are coming out of the recession, we would expect massive positive growth that would push this chart to new levels. Such results are very unlikely, especially when you consider the most recent data we have received. So once again, I say be careful when going long at this point.


We will see how the market reacts to our new unemployment numbers released tomorrow. Once again, analysts have low balled the expected number, so even an "in line with expectations" number announced would be devastating news for our economy. At the current pace of jobless numbers we are seeing, if continued, will have continuing negative repercussions on the economy. I am still sure markets are shifting and momentum will soon change (for good analysis, try IBD: Subscribe to Investor's Business Daily, the complete investing system, for only $1.17 per issue.) At this point, I am seeing a lot of great opportunities to buy on the short side, as many are at record lows. Happy Trading.

One of the several optimistic headlines that were featured on CNBC's front page today, one in particular stood out to me. The article entitled After Two-Year Slide, REITs Showing Signs of Recovery perked my interest, considering that I work mostly within the Real Estate market, and know the industry from first hand experience. This is just one of several articles that I believe are written by inexperienced online writers, who maybe put two data points together to come to a certain conclusion, only to then post the article on the front page of one of the most read and influential financial sites on the web. Being a professional in the industry, I thought I would give my argument to this writer's optimistic write up.

The commercial real estate market is heading into, probably, one of the worst downturns we have ever seen. Many of my associates are those that have been very active in the real estate market since the 60's, and all of those all-timers agree that this is, by far, the worst condition they have seen the real estate market since they've been in the business. Why it may not necessarily seem that way, at this time, to people who are not in the business, the current problems that landlords are faced with, are looking to last for years down the road and is also looking to take down thousands of properties to bankruptcy.

The above article made the argument that many of the REITs have become oversold, since many of the REIT's stock price have been falling since the end of 2006. However, what many of these non-real estate professionals are missing, is that the REIT's stock price, just as was the case for actual real estate market, were much too inflated to begin with. Properties were doubling in months, due to the massive compression of interest rates, which in turned brought down CAP rates to record lows. All you need was a million dollars and you could turn it into two in a matter of months. Many had little, if any, experience and the appreciation of the market as a whole was an illusion based on the little money down needed, and the extremely low cost of borrowing for large loans. So as investors thought it was actual demand that was increasing in the industry, it was a mirage constructed by the banks, which is what we are seeing crash as we speak. This huge balloon in the real estate market was directly factored in to the huge gains in many commerical REITs stock price.

Considering that the lending markets pretty much came to a halt in 2008, this caused for the demand for properties to almost completely go away. Not only that, but due to the deepening recessions, tenants began seeing their profits get cut in half, which forced many mom and pop (and even several national tenants) to go under. Unfortunately, many of these highly leveraged, low interest rate loans were only offered for a 5-10 year term, which causes for many of these loans to be coming due in the next 2-5 years. There, currently exists a very large gap in loans coming due compared to what is available by the banks that should cause a whole new set of problems for many of these lending institutions. It is this reason, we have seen the value for many commercial properties get cut in half in only a year (especially in secondary and tertiary markets). The reason why this is real scary, is because we are just in the beginning phase of it.

Many landlords are hanging on by reserves, as others are getting one or two year loan extensions by certain banks. However, a bottom is not expected in the commercial real estate market until, earliest, end of 2010, so it will be survival of the fittest. Currently, the market is at a full stand still, with a huge gap between the buyer's and seller's price. I don't see this gap fully closing until the entrance of the banks in selling off "bad bank" assets (essentially the RTC) to set the new comparable standards for sellers. We are still quite distant from that time as banks are still trying to resolve residential problems.

We saw what the fate was for GGP (bankruptcy), a REIT mostly focused on retail shopping centers. I do not rule out any REITs, at this point, that are not vulnerable to bankruptcy. In past real estate recessions, we saw SEVERAL false bottoms, which caused even more pains for landlords and two or three rounds of foreclosures. If such things were seen in recessions of past, we can only expect them to exist currently, but only worse. We have, in past times, seen inflated interest rates, sharp declines in property values, difficult credit markets, slow retail sales, and dilution of the dollar. However, never have we seen this storm combine at once, with a global recession, to the degree that it has at this point.

So, I strongly disagree with the above article and continue to believe that we are far from seeing the bottom of this crisis. Yes, the market did end up a bit today, but trading remained relatively flat throughout the day and financials and REITs struggled. Volume remains considerably low, as I feel many bears have been spooked of recent manipulation, and there just aren't many people buying (outside of the government). Auto sales were horrible and even though pending home sales were up, there was a 17% drop in home values, which I continue to stress is the important number to look at. I remain bearish and I still see a sharp downturn in the near future, which should yield some strong profits in my Zecco.com account. I believe unemployment should be an eye opener for many optimists believing that the worst is behind us. Time will tell. Happy Trading.

PS - In today's premium podcast (subscribe here), I discuss some of the moving trends I am following (which have an almost flawless track record) that are showing some interesting movements and indicators. These have been very reliable in times past.

Concerns are building in the bear community about the fact that today we saw another strong rally (220+ points), despite the continuing negative economic data being announced, as well as the big GM bankruptcy filing being done today. With this type of move from Wall Street in the midst of such a large bankruptcy filing (even though it was anticipated), there has been even a larger movement of people now believing the worst is over. Although it seems as though the market has been moving up for the past year, in reality it has only been a couple months. From a percentage basis, the recent move up is dwarfed compared to the downfall we've received. One big element of bear markets that never ceases, is the existence of very violent bear market rallies. I discussed the real possible of such rallies back in March, which is why I went long through most of March. Yes, I do admit that the duration of the rally has lasted longer than I anticipated, but there are also outside influences helping to boost the market. The economy as a whole continues to operate exactly how I expected. So as of now, we are just humming a different tune to the same old song.

Much of the most recent rally we have seen has been due to the increase of energy and commodity prices. Oil continues to soar, which is bringing up the cost per gallon of gas. I have explained my worries with increasing oil prices in previous posts, but be assured, such increases will take its toll on the economy. Also, due to the large scrutiny the dollar has been receiving, commodities and precious metals have received a rather large boost, which is something we discussed was a probable outcome last month.

One constant indicator that still remains, which stands out to me as a big argument to this not being the big "bull rebound market," is the continuing low volume amounts. For the last three green trading days, the volume has continued to be significantly low, which is very abnormal for a rebounding bull market. It also gives indication of possible manipulation that I've talked about before. Especially when you analyze the buying blocks throughout the day, there seems to most definitely be a "helping hand" in the market.

The biggest problem to the inflating stock prices is that the economic data and crisis continues to remain very dismal, and looks to only be getting worse. Sure, there were some SMALL indications of a possible bottoming, but newer data is starting to point to more problems. The rude awakening, in my opinion, will be at the end of this week when we receive our unemployment numbers. Remember, this will most likely not factor the newest GM layoffs, however, we should see a lot the Chrysler layoffs and other companies participating in the massive job cuts. If the number is as bad as I think it may be, it may offer up that "reality check" that I believe many investors need. Also, as unemployment continues to rise, so will home delinquencies. This in turn eats into discretionary income, which will ultimately effect GDP as well as more forced liquidations and redemptions in the stock market. As a result, I would expect large trading volume to return to the market and to the downside.


Even after today's strong upward move, the technicals are still pointing to a rather strong leg down. It is important to note that the indicator is a "longer term" indicator, so it's performance will be much better evaluated on a weekly basis, more so than daily. If by chance, these buyers (or the government) see it fit to blow up this market higher and higher, I will re-evaluate the technicals and may ultimately get out for now. However, I remain in my positions, still expecting the next leg down.

GM did indeed file for bankruptcy today, which didn't even the phase the buying. If anything, I see this being a rather negative reaction for the market. It is almost like delaying the mourning for the death of a loved one. In 1970, GM experienced a two month strike, which accounted for a 4.2% drop in the fourth quarter for the US GDP. Albeit, GM accounted for over half of the auto sales at the time, which they now only account for 20%. However, the filing is bound to effect this economy in several different ways. I mean, over 20,000 jobs are already looking to be terminated just with the first round. I've discussed many of the details just how in the podcasts, but needless to say, we need to mourn this loss and I believe eventually the market will.

So, I held off on making moves today, which I may regret tomorrow, as profit taking may be in order. I am waiting for a bit more downward momentum or more indicators from the charts. Financials are not moving quite as strong with the rallies, which if we see downward trading, I expect to see some strong red in the financial sectors. As concerns are increasing in the private sector, especially for financing, that puts just more pressure on the banks. This is why I've talked about pursuing companies like Lending Club, to consolidate debt at this time, as they usually can offer better rates than many credit unions. Tomorrow I will be on chat, and should have some results from technical readings that I will discuss. Happy Trading.

Every day that goes by the market is becoming stranger and stranger. Today was no exception. We're beginning to see more of a separation of sectors in trading. For the last few months, it has seemed that most all stocks were trading in the same direction. If financials were down, so would tech, energy, and pharmaceuticals. However, lately, we are beginning to see these sectors begin to develop their own investment outlook as more variability is coming into the market. Much of this is due to the rather stagnant trading we've had the past few weeks, but it is something worth noting.

There was a lot of anticipation going into trading this morning as many were waiting for more hopeful words from our Fed Chairman Ben Bernanke. Lately, any government official or staff member at the podium has seemed to stimulate investors to want to go long. However, today was not the case with Big Ben. Due to much boredom and the large quantity of rambling which took place, I did not catch the whole hearing of Bernanke with Congress, however, I heard enough to make me even more nervous for our economic future here in the short term.

I especially enjoyed Ron Paul's tough questions for Bernanke, asking him about upcoming massive inflation worries and the possibility of making The Fed more transparent. As a response, Bernanke seemed not as worried about inflation (I don't know how) and felt that The Fed could become "more transparent" in some areas, but that other functions of the Fed would best to be left not public. Of course, why should the public be informed about all of the corporate and bank manipulation that is going on, as well as the foreign policy manipulation. Slowly The Fed is becoming more and more like The Men in Black. If the public knew of the beasts The Fed had to combat, we would most likely all go insane.

At any rate, if anything, Bernanke's words were a let down. I could definitely sense doubt in his voice as he attempted to remain as optimistic as possible and you can't blame him, that's his job. Unfortunately, when he makes comments like commercial real estate is fine, and you are professional in that industry, it is easy to see just how little information they are giving to the public.

MGM and LVS soared today due to another case of "better than expected earnings." Even though MGM suffered a 20% loss in revenues, this amount was small enough to send the stock up over 40% at one point during trading. Of course, no one failed to mention that the big Vegas company did sell one of their prized assets (Treasure Island) this past quarter for over $700 million, which I'm sure helped quite a bit. I said in the chat a month ago, that LVS was one of my favorite long gambles, as either it was going BK or it was going to soar, due to a confidence brought back to financials. For those that bought in, I applaud you.

However, with such big increases like we saw today, I can't help but think of the big shorting opportunity there is for me with LVS now. LVS, owner of the Venetian hotel in Las Vegas, is going through some serious debt problems. I understand they are considered similar to MGM, however, they are in much different boats. I actually wanted to maybe pick some puts up today, but missed my opportunity. I'm sure an opportunity will present itself either tomorrow or Thursday.

Friday we will be receiving unemployment data, which always sparks a reaction in trading. Just a warning for bears, there could definitely be some buying momentum building into the end of the week. Thursday we have the results for the bank stress tests, which I still believe will be nothing but praises to the banks, noting that all or most are well capitalized, at least when placed in front of the measly stress tests. If we see such a move, the bulls could find more support when a "better than expected" unemployment number is released. Market is expecting a horrible -643,000 jobless report, which for April, would be a very devastating number. I would expect the number to most likely not be this bad, which once again should cause for this sense of cheering from investors. If unemployment numbers end up being this bad, I would be running for the hills, however, I am sure bulls have a good rebuttal prepared in case of the bad news. I believe these are just a few reasons why much of the bear volume is sitting on the sidelines at this point.

So even though it is boring, I will still patiently wait through some of these uncertainties so that I can start to see more clarity in the market. I may look to double up on some options, by buying and selling calls and puts of the same stock at different strike prices in order to pocket the premium difference. As expiration nears, these plays become more appealing to me.

Tomorrow could be another green day due to some "better than expected" Disney earnings which were released after hours. However, GM's desire to have a 100 to 1 reverse stock split is not sitting very well with investors after hours, which it shouldn't. That is usually done as a last attempt to salvage value. So who knows. As I've said before, I believe these over-corrected market expectations which are manipulating investor's reaction will eventually come back to bite these company's stock price. The same goes with the economic data like Friday's unemployment rate. So we'll see how these companies can sustain, when enduring 30-60% drops in revenue. MorningStar is a good place to keep track of company's earnings, check out the free trial: Morningstar - Valuable insights and innovative portfolio tools. Get the Morningstar advantage with a FREE 14-day trial membership! Times are becoming more and more interesting and I believe some big opportunities are around the corner for me. Have a great night and Happy Trading.

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I have spoke to many bear traders the past few days who have been telling me their war stories of trading this past week. If positioned on the short side, this week is one that you would like to be forgotten. Even in the little positions I took on the short side, I noticed the frustrating week. If it were not for my Apple options that I purchased back in November and had written off two months ago, due to poor performance, this week would have stung a lot more. The fact of the matter is, playing leveraged ETFs can be very risky when they trade against you, which is why I have always traded them with caution.

It is not my intent of this site to beat every "bull" bone out of you, but to inform you of my personal thoughts of the market, and some future consequences we could definitely see as a result of decisions our country is making now. I am not a "lifetime bear" trader, meaning I am not always on the short side. I trade the sides I find opportunity on. With that being said, I see a lot more reasons and opportunities for this market to go down than to go up, which is why I currently mostly choose to trade on the short side.

Although I haven't been too active for March, I have accomplished my goal. This was to preserve my capital and protect it against what I felt was going to be a pretty strong bull rally. In fact, I've done better than I expected. I made some very strong profits longing financials earlier on and even made some on the short side. I am currently down on my latest small short position, but overall March has been profitable for me. I attribute this month's success to my caution of pulling the trigger. Trust me, FAZ at $30 and SRS at $60 was so so tempting to me, but as I responded to those on chat during these prices, I still wanted to wait longer until things settled. When that time is, I can't exactly say.

The first part of the March rally was just retracing an oversold market. Technically, it was expected to retrace back toward the 8000 level. Lately, we have seen the rally move to a government stimulated rally. These are harder to track. As for now, the government is wanting to show the world that they are active and will do whatever it takes to turn the economy around. The problem is, many are overlooking what some of those consequences are. I go into more of my feelings of the consequences of the latest government action in today's podcast (subscribe here). To sum things up, in the past we have seen what the combination of increasing a deficit mixed with more currency printing can do, and the result has been very destructive.

As expected, the unemployment number came in dismal on Friday, which was "in line with expectations", with a nonfarm payroll report of -663,000, boosting the national unemployment rate from 8.1% to 8.5%. This term "in line with expectations" can very dangerous, as many try to water down the true meaning of the economic data being reported. In fact, many are already trying to water down the upcoming earnings season, saying "we already know these should be pretty bad numbers, so there should be no surprise, hence there should not be much selling." Well, even though we may see that trend at first, eventually data catches up. So although we ended the day up Friday and it may seem to some that economic data no longer influences the market, I respond by saying time will tell.

Then there is the argument that unemployment is backward looking data and that we should pay attention to more "forward looking" data. Well, also reported Friday was hours for the Average Workweek. This data is considered more "forward looking", especially for unemployment as the theory is that most businesses cut hours before laying off employees. Well, this data showed a very small decrease from 33.3 to 33.2 for March. Even with the small amount, a decrease usually indicates that indeed unemployment has not bottomed and that we can expect continuing layoffs. This should be no surprise, even in the midst of the trillions of dollars being spent by the government, as most of those dollars are going to the purchasing of bad assets from banks and not to the actual consumer. In fact much of the bailouts is eating into consumer income, since it is tax payers that will eventually have to front the bill. Until we see money get put into consumer's pockets, most likely we will continue to see the contraction and deterioration of most small businesses.

With this, I still remain cautious in positioning myself more strongly on the short side, for obvious reasons. I'd like to see the market response from the first round of earnings as well as the upcoming uptick rule meeting and GS earnings. Like I've said before, I can afford to give up some initial gains on the short side by trying not to guess when this rally turns around and guess wrong. I do feel, technically, we are overbought, but I believe investor sentiment is on the more positive side due to recent announcements and positive media.

I believe the next woe to plague the economy will be the destruction of government bonds. There are so many indicators showing that there are many problems heading to government bonds. Despite the recent massive buying of government bonds from the Fed and rate cuts, the price of long-term bonds have already gone down 19 points in just 2 months. From its recent low to recent high, the yield level on the 10-year Treasury note has soared 47% and at the end of 2007, Default Insurance on the US Treasury was only $700 per $1 million in 10-year notes. In February of 2009, it was almost $10,000 or 14 times the 2007 price! This shows the public concern of the Treasury, especially after recent announcements of their spending trillions to buy up toxic debt. It would be one thing if after spending these trillions, the government had something to show for it. However, at this point, we are over $11 trillion in debt, and we have nothing to show for it. We risk slowly becoming a "toxic government."

The timing of this bond destruction is unknown to me as of now, but I am steering very clear of long term bond purchases. You can trade short term bonds (13-week T-bills) using a variety of different ways. These are the only bonds I would consider buying at this point as I believe yields will soar through the roof and the last thing I want to do is be stuck with long term bonds. When that time comes, watch gold. It should also soar.

So, there is still plenty of bad news out there, it just doesn't seem like it because of the monopoly of media with hedge fund managers. The only good news I've extracted from the latest government moves is that hopefully bank's balance sheets will look a lot less scary on paper and maybe break a bit of the ice off of the frozen lending. However, as of now, I am not too optimistic. So, I will continue cautiously waiting for the right opportunity. I will keep eyeballing option trading too, as prices should go down due to the decreasing VIX. Zecco.com has some of the best option trading prices around. On that note, we'll see you on chat tomorrow. Happy Trading.

PS- If you haven't already, check out khronostock.com, they have some great technical analysis charts and articles. Good stuff.

BREAKING NEWS*** The recession is over! Today, I liquidated all of my shorts and placed every last cent from my brokerage account as well as two mortgages on my house into 3 stocks- AIG, C, and GM. I plan to be a billionaire by July. Well, that's going to be my best attempt of an April's fools joke and I am sure I didn't have anyone believing it for that long, but hey, we've got to have some fun on here. Believe it or not, but there are many out there believing that the above portfolio would be a good play right now. As for me, we're right on track on where I expected to be at this time, and this is good news.

It seems as though investors are going to roll the dice with the FASB meeting all the way to the gates. With this much buying purely on the speculation of the meeting, it just means there is that much more to retrace if the announcement is on par or less impressive than what people are expecting. In my mind, there is too much anticipation for the meeting, as I personally don't feel their decision and changes they make to mark to market are going to change much of the economic turmoil. If anything, it will adjust how banks look on paper, but as we have learned from past experience, that debt must be accounted for sooner or later. You would think that the US would learn from our mistakes of the past.

Today's rally also overshadowed some more ACTUAL bad news that was overlooked due to all the excited buying in anticipation of tomorrow's FASB's meeting. Today's ADP unemployment projections for March blew expectations out of the water. Market expected the number to be a loss of 663,000 where the actual number was 742,000! If this isn't bad news, I don't know what is. I have been saying it over and over, that the two most crucial economic indicators for a turn around in this market is unemployment and housing prices. When I say housing prices, I do not mean purchase volume, but the average house price. I expect to see more and more houses sold, but it is the average price which I am interested in and which I feel is an early indicator of where our economy is heading.

With this in mind, this forecasted number of 742,000 shows the continual deterioration of the economy as more and more businesses are contracting due to lack of consumer spending. However, with the announcement there was not much of a reaction from investors. Sure, futures came down as did the value of the dollar, but I would consider this data much more defining compared to anticipation of a FASB meeting that no one even knows what the consequences will be of such an announcement that is made. There are a lot more forces pushing the market for a sell off tomorrow than a rally. In fact, I believe only a close to flawless plan announced from FASB tomorrow could end us in the green.

Another reason why today's unemployment forecast was critical is because it foreshadows the unemployment rate being announced on Friday. Obviously this number is going to be a very bad number. As long as our small businesses continue to have huge employment cuts, how can we expect to bring an increase to our GDP, when 70% of our GDP relates to consumer spending? Another critical result from today's number is that the government led the way with the job cuts. Here the government is spending trillions of dollars on trying to "preserve" jobs and they can't even retain their own employees. If they can't, how can we expect any other small business to? Especially with new up and coming tax margins.

One data piece that many felt "equalized" the above number, was the lower number of scheduled job losses. Scheduled job losses fell 19.3% in March to 150,411. I find this number to be much more insignificant than the ADP number, but most obviously don't. Also, many people were impressed that GM's sales were only down over 30%. What world do we live in now?

As I expected, oil took another hit today as energy and commodities are continuing to show weakness. As strong as the market was today, financials rose fairly moderately, leading me to believe that indeed we could be near the end of this aggressive financial rally we've seen this past month. However, there still remains too much up and coming government news which makes me still cautious in moving forward.

Right now I am pretty well balanced. If indeed we see a positive reaction from the FASB meeting and rally, I still have several Apple $110 call options that I bought back in November that should get a big boost, as NASDAQ has been benefiting most from these rallies recently. If we fall from more bad economic data, my FAZ call options and SRS should see very strong gains.

So, we have another critical trading day tomorrow and hurdle our first big "anticipated" announcement, in which we have a few more to come in the coming weeks. Tomorrow's reaction should give us a preview of what we should expect going into some of the others in coming weeks. The US dollar is becoming prime for shorting, especially in the midst of all the G20 meetings. I may be shorting it as early as tomorrow depending on how the market reacts.

I have thus fulfilled my March goal thus far, which was to preserve my capital for a much bigger and better profit opportunity. At this point, we are much more closer. The shorts are cheaper, the sentiment has changed, and the deflation indicators are stronger. My Zecco.com account is ready and waiting to beef up on short. The time is very close. Just a note, those who were unable to subscribe to the premium podcasts, the problem has been fixed. You can now subscribe and become a premium subscriber by Clicking Here. Happy Trading and we'll see you tomorrow.

Any hopes for new beginnings for the stock market this week was quickly put to rest as the markets opened down and didn't manage to get anywhere near green territory throughout the duration of trading hours. The Dow closed under 7,000 at 6,763 and the S&P closed just above the scary line of 700, being the lowest in 13 years.

Starting the week on such a bad note can not be good for traders looking for green in the markets. With unemployment news coming this Friday, starting the week on such a bad note sets a negative tone to a week with what looks to have a bad ending. No doubt, having AIG post the biggest losses ever caused for negative sentiment to last throughout the day. We knew it was coming last week, so I don't know why everyone was so surprised. However, amidst the tumultuous turmoil, my schizophrenic personality still remains. I have indeed been doing pretty well during these down trading days, just not as well as I would have a week ago, when I was still in a lot of my short positions. Even though it seems as though nothing but bad news is swimming around us, I do not feel this is the time for me to push the chips into the short side. Here are a couple reasons why:


Deflation
Although we have indeed experienced deflation, we have not to the degree I think we will. A deflationary down spiral was a key factor leading markets down during the crash of the Great Depression. During the crash between 1929-1932, although a big drop happened in 1929, the greatest damage by far was between 1930-1932 following the deflationary down spiral. So, even though it seems that we are in the worst of the storm, I still feel there may be worse times ahead.

Markets Oversold
There are strong technical indicators that point to the markets being oversold. Just today, 97% of volume was down volume. This is a ridiculous number and, historically, is usually followed by a strong rebound rally. Markets did put up a fight at their strong resistance points, however, faulty government plans and strong negative commentary has helped to push markets further down. Just as markets were being over bought towards the end of the year due to these factors, we are experiencing similar trends on the selling side.

This is not to say I don't believe we could keeping selling our way into a crash. Of course that could happen. I just feel that we are not quite there yet. I try not to listen to the banter of commentators and analysts, as they waffle back and forth on positions quicker than John Kerry did. It is amazing to see how quickly they will change their position of whether we've hit bottom or we've got a ways to go. I blame them for a lot of the clouding of judgement for people to make logical, sound investments. However, some of you may feel the same of my "banter", but hopefully you know these are truly my own feelings and thoughts and that of course the market moves at its own desires. I just try to tell it how it is.

People are saying that the S&P closing over 700 todayis a big hold for technicals and shows some strength. I don't know how much I buy into that, as whether it closed at 705 and 695, it was a horrible day for the market. I do think there is potential for a rally at some point this week, but I don't feel it will have much to do with the S&P closing above 700.

Then there is unemployment. Do you remember playing the game Monopoly and approaching that part of the board that was densely owned by your opponent, in which he/she had also put a variety of hotels and houses on the different properties and just praying that you rolled that number that sailed you right through that section or at least landed you on a chance? Well, that's kind of how I feel approaching unemployment. We know it's coming. I feel it is going to bad, as it has been lately and investors are just hoping that somehow we can "roll" right past it this month and hopefully move on until the next announcement. Well, I don't know if that will be the case, but I thought I would share that metaphor. At any rate, I expect there to be negativity with the number.

So I am continuing to wait patiently for a time I am comfortable to take a more aggressive position on the short side. We saw great gains from all the shorts today and are seeing more love roll around for FXP, which is always good to see. Problems seem to be magnifying in Asia, which could bode well for FXP. Believe me, I would like nothing more but to be in a strong short position, but if indeed we are due for a bear market rally, we have seen how fierce they can be and how quickly they can kill profits from the short side. I do not wish to be the "Dump and Dump", single minded bear activist and say nothing but bad things about the market. I try to make money where the momentum is, and right now I see it on the bear side, but with some short term risk of a rally.

So, on that note, have a good night, Happy Trading and we'll see you all tomorrow.

Get your stock symbol's trend analyzed for free, Click Here

It looks as if Obama is planning and arsenal and doesn't want to tell anybody about it. There are numerous rumors going around right now of different potential plans and strategies he may be using soon to try and combat this financial crisis. In my opinion, I think he's holding his trump card for a time when he really needs it...and that time may be tomorrow.

My first suspicion is wondering what caused the huge reversal this morning (see below). The Dow jumped over 150 points in less than 20 minutes, just when it was looking like another day of selling. I personally believe PPT has a nice camp set up on Hogan's bottom waiting to push it back up. If indeed selling would have continued, it would have marked our first two day closing under 8000 in a long time as well as a possible sub 820 close for the S&P. Both of these could have spurred one heck of a selling day on Friday coming into unemployment numbers. However, has history has shown us, nature most like won't take it's course and once again the inevitable will probably be delayed for a bit longer. If we could just capitulate and get over it, I believe we would be better off.


So yes, unemployment is tomorrow. Part of me wants to get a big loan from these guys, and just put it all into FAZ. If only I was that compulsive. The market expects a 7.5% unemployment rate with an expectation of -540,000 loss of non-farm payroll jobs. I am sorry, but if the number is below this or even close to it, I am going to suspect the government of fudging numbers. January has been horrific with headline after headline preaching new job cuts. I think the number should be at least in the high 600,000's if not 700,000's. We'll see what is said, but at this current state, tomorrow is a critical day for the market. I wouldn't be surprised to see Obama have something up his sleeve.

I was pleased to see SRS hold up as good as it did for an up day like today. I was hoping to see us go back into the red, because SRS could have had a 10%+ day if that would have been the case. It almost hit $70 in the morning.

If indeed unemployment numbers do prove to be worse off, that doesn't mean we're on for a selling day. Obama may choose to unveil his great and mighty stimulus which has been brewing a lot of curiosity from investors. Talks of doing away with market to market (which I will give my opinion on that tomorrow!) accounting and extra funds for mortgage backed securities could quickly heal the pains of a bad unemployment number in turn Friday into a rally of epic proportions. I indeed do not hope for the latter, but I took some minor precautions, just in case.

First off, I did end up purchasing some FAZ (see market trend analysis below, get your own symbol analyzed for free, all you need is a name and email, Click Here) earlier in the day at $49. I thought whether or not we rally tomorrow, this is a low enough price, especially if we see a big sell off tomorrow. Towards the end of close, I felt the need to hedge myself to some degree, so I went in and bought some FAS at $8.95. I put stop losses of 5% for each of them as I believe whichever is up tomorrow, will most likely be up big. So hopefully the gains of the winner will outdo the losses of the loser. We'll see.


As I said in the chat, if for some reason indeed there is a vote on the bailout and it fails, watch out. We saw what happened last time the proposed bailout failed in voting. It tanked the market almost 400 points. With so much riding on this stimulus and in the current fragile market we are in, the result could be even more devastating. I believe there is a small chance for that happening, but there are senators out there who believe the Democrats do not have all the votes to pass it. Food for thought.

I also wanted to share a bit of this article I found on Harvard Business Review website talking about Lending Club, he said: "So what? A profound secondary effect of the down market will be an increase in the availability of peer-to-peer finance and its convergence with traditional lending. My bet is that mainstream investors and banks will cherry-pick the best investors in Lending Club and other systems – reducing risk by tapping their superior credit-assessment capabilities – and fund them to grant more and bigger loans. Moreover, within five years every major bank will probably have its own peer-to-peer lending network.

If innovative legislation were drafted to allow peer-to-peer risk coverage, similar transactions might begin to flourish in the insurance market. Precise knowledge of local conditions would allow individuals to band together in order to underwrite the cost of insuring properties in safe neighborhoods or to make insurance more widely available in higher-risk neighborhoods.

The current economic constraints will only accelerate the growth of these new entities. I predict that they will be among the most important financial-services innovations in the coming decade." You can read the full article here. I agree that investment vehicles like these will become more popular in the future. If you haven't checked it out, go to Lending Club for more.

Early morning for everyone tomorrow, I'm sure. Either way, I believe we're going to see a big trading day for whichever side it decides to go. We may see a bit of both green and red, but I see us trading big in one direction by close. So set your alarms, Happy Trading, and we'll see you tomorrow. I'll try to be on the chat later.

Just as I anticipated, we encountered a pretty volatile day which made a sharp u-turn around mid-day, resulting in a pretty strong sell off of most everything, tech holding up the best. Once again we have dipped below the 8000 mark and may stay there to end the week, pending some big announcement that I am not foreseeing. Talk of the town today has been Obama's decision to regulate bank executive's salaries to a maximum of $500,000 annual. They do have stock option bonuses, but there are still lots of restrictions of when they can cash in on those. Sure, there is a need to regulate some of the antics that are going on around some of these companies and an accountability for spending, but I don't know if this is the right move.

I worry about Obama attempting to go to war with the upper class as he will most likely lose. There has to be a cohesive plan that can benefit all parties without dragging the upper class through the mud. We will see what response is given from the banks and the market dealing with this new development.

It has been a different week for the market and there are a few things on my mind which will most influence my upcoming trading. These 5 things are:

Effects of Restricted Bank Salaries
This may look like a good plan on paper, but there could be some pretty bad consequences if this plan backfires. No doubt there has been ridiculous spending by some executives that should result in some accountability. The problem I am worried about are banks losing their top executives to foreign competition. I mean how easy is it for foreign countries to match the $500k cap, not to say blow it out of the water. This filter will not only put a leash on the bad-performing executives, but also the good ones. If we risk losing some of our top executives, I can't see that being a good sign for banks and our overall economy.

S&P Closing Below 820
It has been a while since we have seen a sub 820 close for the S&P. Knowing the technicals are pretty strong at that point, I am very curious to see if we close under 820 sometime this week. If this is the case, I would expect there to be some extra downward momentum, possibly sending the S&P close to 800. Below is the recent market trend analysis for the S&P (get your own symbol analyzed for free, all you need is a name and email, Click Here).

Unemployment - Record Setting
I am very curious to see what unemployment numbers we see reported on Friday, as I personally feel they will be record setting. If you have been tracking the layoffs as I have, you have noticed the daily massive job cuts which have been going on. This is not to mention all of the mom and pop layoffs that are going on behind the scenes. This could be a big drag on the market.

Bad Bank - Nationalization?
I have not been able to wrap my fingers around this bad bank plan. I see them wanting to set up a similar system as the RTC program in the 80's and 90's, but I don't see how this plan works without instilling the nationalization of banks. And if that's the case, I would think that most of the shareholder's equity would be wiped out. Having Citi's or BAC's equity wiped out would most likely kill confidence in the financial markets and maybe cause a market crash.

Stimulus & Government Intervention
I still am waiting for Obama's bag of tricks. He has a good gift of linguistics and can do a great job of selling the country on hope. However, he has been very careful of not leading people's hopes astray. I think that's good. More false hope can cause even more problems in the long run. Still, I can't help but think that Obama has something brewing to attempt to counter this plunge and try to spark a big rally.

These things have been going in and out of my thoughts and continue to keep me guarded of what to buy. Indeed I am still heavily short, but have not gone as short as I would like because of some uncertainties. Hopefully, more clarity is brought the next couple of days and I can get back on track. Until then, I guess these thoughts keep creeping. Your Thoughts? Happy Trading.

PS - Seems as though the chat is working good. Good call on the recommendation. I will try to comment as much as I can during the day, however, I am often away for other business. By the way to clear some of your questions, Zecco.com is still offering free monthly trades, you just need to have more than 25 trades a month, which I'm sure most of you, like me, are doing. Just to answer those that thought the promotion was over.

Free Trading Analysis Video click here

It seems as if reality struck a day sooner than expected. After seeing global markets reacting the way they did last night, I was surprised to see us down this morning. I thought we would maybe get a little rally today, followed by this massacre tomorrow or Friday. This just goes to show how grim the forecast looks for the next year. I am not blaming today's mishap on Obama, however, I knew yesterday's gains were a bit overzealous for the current situation we are in.

GDX actually weathered pretty well today and I was able to liquidate all my shares of AIG this morning before it got too nasty. Although I was hoping for a near $3 sale, I was able to sell at $2.30, yielding a 43% return in 3 days. Not too bad. So now, I am completely out of my long positions and will stay that way for the next month or two. Not too say I don't think we will have anymore green days. I just think if we do, they will be in result to a manipulated short squeeze or a reaction to some new stimulous plan that gets everyone all riled up again. Either way, they will be very, very short term.

I said not to lose faith in FXP, today we saw it up over 15%. SKF and SRS also saw huge gains. My large position in FXP ended giving me a pretty good day today, overall. And I believe it's going to be tough to slow this downward train.

Tomorrow, we have retail news. If it's anything close to last months, it will be bad. Consumer sediment has almost been completely wiped out and with the recent earnings reports from several retailers, I'm guessing this to be a bad month. Look for SRS to take a pretty healthy jump tomorrow, as most of their shorts are with real estate REITS. This stock is still a strong buy! I believe by January, we will see it back at $200+. With this news, we should probably see another down day tomorrow and even Friday. Our short term rally could be wiped out as soon as Monday.

It is still possible that today was a lot of profit taking. Solar stocks were crushed today, which was surprising, because with the election of Obama, (who is a strong supporter of alternative energy) you would expect a bounce. However, yesterday there was such strong gains that almost was overzealous. But don't be overly shocked if we somehow make it into the green tomorrow. People still are on this buzz of change with Obama.

Stay with your short positions, they will be what makes you a lot of money the next two months. If you haven't bought FXP, it is still a good buy. It was a lot better at $75, but under $100, it is still a great buy.

If you feel uncomfortable only in a short position, look to buy April contracts of GDX ($26) or GLD ($82), or look to get into some solar. STP is a great undervalued solar company. A few months ago, Morningstar had a 5 star rating with a target price of $92. Today, it closed at $16.35. I believe this stocks should be at $30-$40 by February. With the help of Obama's alternative energy crush, we should see strength in the big solar players. This is if you HAVE to go long. I would prefer to just hold short for now. This credit crisis we are in will most likely not BEGIN to get better by early 2010. So enjoy these inverse ETF's, because there are not a lot of guarantees in life! Have a good night and Happy Trading. We'll see you tomorrow.

As anticipated, this week (at least the beginning of it) does not look to be a good week to anticipate market movement. Today, we saw the Dow Jones trade at low 179.25 M volume, the average being 335.66 M. Clearly, we see that Wall Street has taken the back seat to the upcoming election which takes place tomorrow. It was a pretty slow day all around for the market and not much movement was found in most sectors. Circuit City announced today that they will be closing 155 stores and cutting around 7,300 jobs, as we expected. This is just a tease until the big closure comes after the holidays.

On the bright side, China had a relatively strong opening of the week, bringing FXP down to $85 during points of the day. I was able to bulk up my position more at this discounted price. If I can continue to pick up shares at this discount, I am all about, because a storm is coming, and it's just a matter of time. It will be interesting to see how Asian markets respond this evening to the relatively weak opening of Wall Street today. I believe many countries predicted a nice rally this week.

Like I said last week, I am not planning on being too active this week. With the volume so low, it makes it a real volatile market vulnerable to several conditions. A couple positions that have been catching my eye are GOLD (GDX) and AIG. Everyone keeps saying we are in a "deflationary" market, hence the continual rate cut. Many predict us to eventually have The Fed rate at 0. At this point, inflation is inevitable. It doesn't matter how quick The Fed responds, we will experience inflation. At that point, gold becomes a commodity of high demand. I think GDX is a Strong Buy under $20. You can't go wrong.

Also, AIG is picked up strength the past few days. With the FDIC controlling it currently, I think its a pretty solid buy in the short term. Mind you, there will continue to be negative news with credit markets for the next year, so I look at it for the very short term.

As for now, I am mostly playing FXP. If SRS and SKF can get below $100, I feel very confident about getting back in those as well. This Friday, November 7, Employment Report comes out and you can count on this number being disappointing. I would not be surprised to see the Unemployment rate over 7% and the new jobs down huge from the previous quarter. This is bound to take a negative punch on the market. However, we still could be feeling the short squeeze up until Nov 14th, so be aware we may not see too much movement until Mid November. But be advised, this credit crisis is not going anywhere for a while. Get out and vote tomorrow and keep tabs on FXP. I'm guessing we should get a little bounce from it tomorrow. Happy Trading and we'll see you tomorrow.