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

One thing is for sure, history shows us that stocks and bonds tend to run as an "inverse relationship." However, as of lately, we have seen the phenomenon of both stocks and bonds running in the green. The idea is very perplexing when breaking down the fundamentals of each of the investment strategies. Bonds are looked upon as a more conservative play and get more attention during "distressed" times where speculation grows in the stock market. Stocks tend to flourish when economic outlook is strong and people are looking towards riskier investments for larger potential returns. These conditions tend to rarely coexist, so to see success with both instruments brings many questions.

My first belief is manipulation. Readers of this site know of my strong belief in market manipulation. I believe there has been billions, if not trillions, of government funds thrown into the market throughout the past several months. On top of that, we know that The Fed continues to be, by far, the #1 buyer of US Treasuries and has been very active in buying them lately, despite the record amount of debt the US Treasury has been issuing. On top of that, stocks continue to rise, despite record amounts of insider trading, which is usually coupled with a downward trend in the market. With this government intervention, we are seeing both markets get love.

With manipulation, another factor that is contributing to this phenomenon is the weakening dollar. Considering the dollar is very appealing to foreign investors, we are seeing a lot of shorting of the dollar, due to increased concern of its weakness. As The Fed is expected to keep interest rates at basically 0% during the upcoming meeting, some feel the strength of the dollar remains at risk. Usually, such a result would also bring down gold and other commodities, but that relationship has also been terminated.

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It is evident that the market is moving at very abnormal levels. I do not expect this to continue for long. By the way, the last time we saw such a phenomenon in the stock market was during the early 90's, which was during one of the worst real estate recessions since the Great Depression. We also so that time period followed by a spike in interest rates. Indeed I see those same problems heading right for us. Happy Trading.

After a pretty solid week of green trading, this week opened up on the red side, having the Dow close down 41 points today. We have seen blips in this rally before and, at times, looks pointing to a turn around, only to result in a continuing rally in the markets. Can today be the beginning of this long, overdue turn around? It might be, as there are plenty of burdens weighing heavily on the economy. However, I am still on guard against further ruthless buying.

Another 100 point rally ended with the Dow today as surely many are buying into Bernanke's belief of an recession that is now over. Indeed, no one can deny how impressive it has been to see the market rally for so long and I congratulate those who have made some significant money off riding it up. I, unfortunately, have not been able to pull the trigger and will not be able until I see a stabilization of certain very critical areas of the economy. Don't get me wrong, my ultimate hope is for as quick a recover as possible, but despite such recent strong performance from Wall Street, I still strongly believe we are not finished with scary times.

As I have said before, a critical influencer in the economy is the movement and prices of homes. This summer, for many markets, housing sales have gone up a bit as have new home sales. Some have taken this as the sign that the residential crash is over. For me, there are things to consider when evaluating the housing market. First, the season. Everyone knows that Spring and Summer are hot home buying months. It's convenience for families to move in between school years and the weather is hot and warm. So to see a month to month change in home purchases is not all that surprising. However, year over year, we remain significantly lower.

Another big influence, especially on new home sales is the $8,000 tax credit. It is estimated that over 1/3 of all the new home buyers are using the $8000 credit. In fact, since its creation in January, there has been a consistent gain in new home sales. Home builders now worry that due to the program's November expiration, new home sales will considerably drop. They may be right.

In addition to the tax credit, is the mass amount of Freddie and Fannie debt that the US Treasury is purchasing. Conforming home loans are some of the only loans available in the market for most banks. This is because the US Treasury has been purchasing all Freddie and Fannie conforming loans. As a result, we have seen record mortgage interest rates, which have reached below 4.5%. It is estimated that a total of $2.3 billion has been saved from mortgage rate savings. Per household, that comes out to about an average of $110 per month. The problem is the government cannot buy these loans forever and plans to stop at the beginning of next year.

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As I have said before, the big question is: can this economy stand on its own two feet? A recovering stock market is a great story and wonderful to see, but unfortunately, it has no fundamental tie to the actual progression of the economy. Sustainability is always the key. Happy Trading.

Moderate gains in stocks have kicked off yet another week in Wall Street. We are not seeing a flood of buyers in the market, pushing up the indexes. Instead, what we are seeing, is a complete lack of sellers at this point, mostly due to fear of more gains in the near future. Forcing the actual initial turn is always the hardest, whether you are going up or down. You can remember back in March, when everyone was determined that the market was heading to 5000, there were many "fake" rebounds until finally the market was able to rally as a whole.

Today, markets are performing well, mostly due to Fed Chairman Bernanke saying that he believes the recession has ended, but to expect a very slow, sluggish recovery. This seems to be the major consensus, especially in the government, as he was preceded by the same belief from President Obama, Geithner, and other government officials. I guess it sounds better to the public that "the worst" is behind us, but it won't get much better anytime soon. I unfortunately, continue to believe that there are still too many obstacles that lie in front of us to firmly declare an end to this recession.

Going into next month, Wall Street enters a critical point in this recession. That is to see if our economy can walk on its two feet. President Obama and Secretary Geithner have both announced that the government is looking to get out of the business of "bailouts" shortly. Also, The Fed has announced that it will significantly reduce the amount of US Treasuries they will be purchasing, beginning in October, which up until this point has been the backbone to not tanking the Treasuries market.

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Up until this point, it has been from massive government spending, which has caused much of the "little" improvements we have been seeing in some economic indicators. Literally, trillions of dollar were injected in just a few months time, which is sure to cause "blips" in charts. If the Government stays true to its word and indeed begins to wean themselves from this economy, it will be very interesting to see where the money comes from. It will have to come from the consumer and small businesses, which at this point, have been beaten to a pole and has not been involved in this recovery. With no signs of a nearing bottom for residential or commercial real estate and a huge void still existing in job creation, I don't see how the consumer comes to bat at this point in the game. We will know a lot more about the consumer in the coming month. Happy Trading.

After today's green trading, indexes have reached new highs for 2009. Both the S&P and Dow were able to reach new tops since last October. If you were to tell someone back in March of this year that we would be at these current levels by October they would have most likely laughed at you. Wall Street has been running on a mind of its own the past few months, but unfortunately, businesses and the economy can't quite keep up, even with it being a "forward looking" indicator.

Home foreclosures for August came in at record numbers at over 18%. Over 300,000 homes filed for foreclosure just in the month of August. Such news causes frustration for those hoping for a beginning of a recovery in the housing market. As bank owned houses continue to dominate home sales, owners will find it harder and harder to sell their house at levels allowing them to get equity out.

Today, we saw yet another step down from a corporate CEO. John Mack, CEO of Morgan Stanley, plans to step down and give the reigns to Co-President James Gorman. At this point, many of the banks are looking for new beginnings going ahead and looking for places to put the blame on mistakes of the past. Thus, the easiest thing to do is to start fresh from the top. Banks will have their hands full well into 2012, especially as commercial real estate really becomes a problem for them. Leasing activity has picked up a bit, but new office leases are being dominated by credit repair services businesses and debt collection. Bad credit is at record numbers and millions are looking to improve credit. As a result, these businesses are thriving.

As for moves, Oil and the US dollar have been catching my eye. In my opinion, oil is nearing the end of its run and has seen its highs for quite sometime now. I am looking to pull some puts on DIG at this point to take advantage. Also, as of late, the dollar has been hammered. I see a lot of opportunity to long the dollar as I do feel there is a severe risk of deflation at the gates. UUP is one I plan to pull the trigger on very shortly as I believe the dollar should soon begin to gain some ground. Happy Trading.

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