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

Wednesday experienced yet another day of down trading as the Dow was down over 100 points at one point during mid-day, only to close down 66 points. With the downward trading has also come a rather significant bump in volume, which still supports the fact there are more sellers than buyers in the market right now. I was very surprised to not see a rebound today, considering 2-day consecutive down days are a rare thing nowadays. This makes tomorrow's potential to be a green day only that much stronger. I believe there needs a bit more of a rally back to really gain momentum on the down side to complete the leveling trend with the S&P.

May has definitely brought a sentiment change compared to what we saw in April. Just what I am finding in my daily business, there has been a global sentiment change that has taken place. In March and April, about 8 out of 10 of my clients would say they felt that the economy was on the way up and that better days were just around the corner. Now, only about 4 out of 10 really feel that the tough times are behind us. Whether it is the European debt crisis, continuing employment struggles, increased taxes, or sluggish home prices, it is definitely taking its toll on the economy. It seems that in most of my daily, casual conversations, people are bringing up their concerns for our state in the economy. In March, it felt like we were all enjoying a night out on the town after just completing boot camp.

The mortgage crisis will continue to takes it toll on the economy. Very damaging data hit headlines today regarding consumer mortgages that can't help the already dragging economy. More than 10% of home owners have missed a mortgage payment during the months of January - March. This is up from the record height of 2009's 4th quarter 9.5%. 10% may not seem like that big of a deal to the average person, but when you consider just how many people that equates to and then total the amount of outstanding debt, it is massive. On top of this, it is estimated that about 7% of Americans are in risk of losing their homes. Never, since the Great Depression, has the US seen such a large risk of home loss for consumers. If we really consider just how harsh the consequences are of a mass foreclosure process, the results are very depressing. That is 24.5 million people who are in risk of losing their home... Sure, that probably won't affect anything (I hope you sense my sarcasm).

What is even worse is that government intervention has had little effect. The $75 billion bill that Obama issued to assist in home loan modification has all but put a door ding on the problem. In fact, only about 25% of the 1.2 million consumers who applied for the modification program have continued to receive an extended modification program.

Sure, the government will continue to spend, especially with Obama in the White House, however, in my opinion it will take several years for this country to just begin to sort out this mess. Put future inflation aside, the mortgage crisis could be the dagger to bring the market down yet again. What really is becoming dangerous is that now many consumers do not care if they pay their mortgage and actually go and spend money on other things before paying it. So yes, we may see a bit of a rally back tomorrow, but I do not see how things are getting better in the long run. Happy Trading.

It seems as though investors took Meredith Whitney's words to heart as the Dow finished down 114 points to end the day. Financials especially struggled which yielded some strong returns for FAZ for the day (up 10%). No doubt, there is a much more resisting trend that is lurking in markets currently. When analyzing charts of recent months, you will see movement up with much more fluidity. However, now we are seeing a continual wall being hit, despite some more favorable news which has been announced recently.

Institutions are having a hay day with the market right now. Some of my hedge fund insiders have told of some their recent activity. Manipulation is running ramped in the markets currently, and not only from the government. Many institutions are taking advantage of this low volume trading and seeing strong gains on these volatile pushes. Also, they aren't choosing sides. I have heard from multiple sources that money is being made from these funds on both the long and short side. No wonder we are in this crazy market!

Today, the SEC proposed an initiative that, in a sense, will publicly allow the PPT to take action in markets. Under the initiative, it states that any stock found within the S&P 500 that experiences a 10% drop in stock price in one day, would be temporarily halted for 5 minutes or more. These so called "circuit breakers" would be applied during Eastern trading hours of 9:45 to 3:35 PM. In describing these circuit breakers, SEC Chairman, Mary Schapiro said:

"We continue to believe that the market disruption of May 6 was exacerbated by disparate trading rules and conventions across the exchanges. As such, I believe it is important that all the exchanges quickly reached consensus on a set of uniform circuit breakers that would be triggered when needed."

So, in other words, lets completely take away the idea of "free market trading." For years, there has been an extremely large amount of evidence supporting the notion of government sponsored organizations (PPT) who are commissioned with the task of preventing market free falls. There are some out there who felt the idea was rubbish and absurd. Well, there you have it, The SEC wants to make it public. They learned from our "mini crash", that they were very much out of their league to try and halt the crash, while also remaining discrete at the same time. This will allow them to publicly interfere with free market trading and create who knows what kind of trading trends. In my opinion, regulation is getting out of control and The SEC are overlooking some serious consequences that could arise from their plan.

If thinking that a temporary ban on certain free falling stocks will take away the negative sentiment of the sentiment, they are mistaken. These stocks that would be closed for trading would only bring more negative sentiment to investors. It is much like when companies were being bailed out by the government. Banks stock prices were crushed when aide was announced, because it revealed their financial weakness. So to will be the case for these "circuit breakers" in my opinion.

At any rate, I'm looking for a bit of a rebound either tomorrow or Thursday, before an even stronger push down. As I stated in a previous post, we are seeing an almost identical leveling off chart for the S&P. If that is the case, down we go. Happy Trading.

Here are a list of a variety of resources and answers to many questions regarding Stock Trading and the Stock Market.

A couple months back, I shared with all of you a video of Meredith Whitney in which she discussed her feelings that big banks were going to be seeing some hard times in the near future. This announcement was several months after she first announced that banks were very undervalued when they were near there lows back in March of 2009. As I have said before, I believe Whitney does a great job of taking an unbias approach at looking at valuation and expresses an honest, logical opinion. Well, today she went another round with the banks...and she came out swinging.

In an interview with CNBC, her main theme was "Avoid banks at all cost." Wow, that is a bold statement, especially from someone who said banks were a steal just over a year ago. Well, a lot has changed since then, and she has good reason to make such a statement. Here are a few reasons for her major concern.

First of all, she feels that the new Senate Financial Reform Bill will have serious adverse effects on the banking industry and greatly restrict credit, resulting in a gash in bank earnings. Referring to the senate she said:

"Politicians have proven far worse than our worst expectations,. It could be very bad for banks."

She referred to two major problems that stand out in the bill. The first is the rule for credit card companies to comply with individual state caps on credit card interest rates. The second, is regulation on how much credit card issuers could charge merchants for using their cards. By enforcing these two new rules, Whitney said the following:

"It's going to make accessing capital so difficult for pockets of the country," she said, particularly for small businesses that often depend on credit cards for funding.

In addition, the proposed rule on merchant charges—instead of benefiting consumers—will price community banks out of the market, Whitney said, restricting credit even more.

"Some of these regulatory proposals are going to make it so difficult for everyone involved that you'll see, I think, at least another $1.3 trillion (of credit) sucked out of the system."

She went on to explain more fully today's drop in credit card delinquencies. She said that the drop was a result of a new rule enforced earlier this year which prompted banks to not consider consumers of low credit scores as customers. She also said that she expects a "double dip" in the housing industry as well as more job losses in the employment sector. Overall, in regards to the economic recovery she said, "It's going to be rocky sledding." Conclusion...there may be some high sailing for FAZ, SKF, and SDS. Happy Trading.

Oh and PS...Pretty much disregard the earlier post regarding the break in Green Monday. PPT was able to bring it back before close...They never cease to amaze me!

I was very surprised to wake up this morning and see that my stop losses had hit for my couple longs I bought on Friday before close. For 12 weeks straight, I believe, we have seen a green Monday to open up the week. Many people felt that seeing green to start the week was a sign of a return of investor's confidence, as confidence would supposedly build over the weekend. Well, whatever was the reason, the streak was quite impressive and draws a lot of questions from me, considering the trend was broken today. Sure, nothing too significant can be drawn, however, it is another sign for me of weakening markets and a shrinking in consumer confidence. PS... I think EUO (see above chart) is definitely one to consider in the short term. The Euro is struggling.