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

After today, it would seem that investors have gotten over the most recent strains that were evident in markets recently as the Dow closed well over 200 points on Tuesday. Much of today's gain is a result from settling nerves regarding the European crisis, which seems to have softened a bit at the moment. Volatility still remains on high alert, so I would not be too confident in taking bull positions at the moment, at least I am not quite yet in my portfolio.

The public was just recently informed that the new estimates for oil leaking into the Gulf is much worse than originally expected. As such, I would expect BP's stock to not react well during tomorrow's trading. Already, it was bad enough as it is and with increasing spill levels, that problem only gets bigger for BP. In fact, I wanted to share with you a premium update charting video on Oil, which is being offered free for CMS readers, definitely worth watching.

S&P trends are passing strong thresholds right now. The big question is whether they can hold. A lot of attention will be put on new support levels. Just as with the oil video above, here is also a good S&P trends video update as well. You can see the new support levels are crucial. Happy Trading.

For now, we are smooth sailing back above 10,000, which makes many of the bulls happy after the nerve racking jolt markets have received the past few weeks. However, low volume mixed with large intra-day swings continues to make markets a very unstable to buy into at the moment. Today was a perfect example of that. At its highest point, the Dow was enjoying 100+ gains for the day, as investors were once again finding security in higher risk securities. Bonds and treasuries were getting hit in the morning as confidence was climbing. However, into afternoon trading, Greece received yet another downgrade from S&P and investors reacted to the negative news by taking cover. The Dow closed down 20 points.

Volatility is becoming more and more normal on a daily basis at this point. In fact, it is very reminiscent of market trading in the last quarter of '08 (minus the consistent huge crashes in the market). The volatility, coupled with the low volume is making it real hard for investors to feel comfortable buying more risky securities. Until the Euro becomes stabilized, I believe that volatility should continue to be expected.

With Europe's problem, we are continuing to deal with the oil spill in the Gulf. BP's shares have taken an enormous beating and are at an all time low as the oil giant continues to commit to paying for the clean up. I am sure they would have much rather dealt with Bush in this situation than Obama, as The President is making sure the pay for every last drop and then some. BP will come out of this and grudges will be dropped, but I don't see an entry for them anytime soon (definitely down the road though).

Real estate remains to be another huge question mark. It seems as just as something begins to gain traction in the industry, something else brings it down again. Transactions are increasing as sideline money is becoming itchy. However, banks are cooperating less and showing less leniency for loan modification. On top of that, many real estate professionals are aggressively fighting the proposed "Carried Interest" bill that is floating around the Senate as we speak, that could essentially increase taxes for partnerships of up to 120%. You can believe that will show up in the bottom line. A double dip seems extremely likely and I would be surprised if we didn't see that begin before the end of the year. Fall and winter months seem to put real estate on ice.

As for now, longing the dollar, gold, and short term treasuries seem to make sense. This uncertain volatility creates a dangerous environment for trading, both on the long and short side. The NASDAQ still remains to be the princess of the prom, and I expect that to continue as we go further throughout the year. Also, be prepared for yet another run from Apple when those new iPhone revenues (and continual iPad sales) start to hit their earnings reports. Happy Trading.

Markets are continuing to move with a strong selling pressure. Despite certain daily rebounds, the overall trend continues to remain on the downside, which is not ending well for bull investors. I wanted to share a great technical read from Money and Markets that goes into this critical trading trend that has been forming the past month. Despite positive news, the momentum remains down. Enjoy:

A Market of Stocks

There are technical indicators based on this reality. These are found by using market breadth data — the number of rising and falling stocks and the respective volume figures.

The Arms Index is one of those breadth-based indicators. It’s calculated with the following formula:

_(advancing stocks/declining stocks)_ (volume of advancing stocks/ volume of declining stocks)

This helps me look beneath the market’s surface: A ratio of 1 means the market is in balance. Higher than 1 tells me that more volume is moving into declining stocks. And lower than 1 means more volume is moving into advancing stocks.

During bull markets, the Arms Index rises above 3 every now and then. That usually indicates the end of a correction and thus a buying opportunity.

In bear markets, defined as markets with falling 200-day moving averages, an Arms Index above 3 still signals oversold market conditions. But the buying opportunity is often just a short-term one and much less reliable than in bull markets.

The History of Double-Digit Arms Index Readings …

The chart below shows you the history of the Arms Index since 1980.

During this 30-year span (it’s also true going back 50 years) the Arms Index rose into double-digit territory only four times:

• October 19, 1987, Black Monday, the day the Dow plunged over 22 percent in one of the most infamous stock market crashes in history.

• October 27, 1997, which turned out to be the stock market’s low during the Asian financial crisis.

• February 27, 2007, this marked the low of a short, but hefty correction.

• June 4, 2010, last Friday.

The first three instances turned out to be either outstanding or — in the case of 2007 — good buying opportunities. So does Friday’s reading of 13.22 signal another buying opportunity?

A Major Difference in the Big Picture

Friday’s high Arms Index reading indicates the next move is bound to be bearish.

Let’s first address the major difference between 1987 and 1997 on the one hand and 2007 and 2010 on the other …

The first two instances happened during a long-term bull market that began in 1982 and lasted until 2000. Both signaled longer-term buying opportunities.

The latter two took place during a long-term bear market that began in 2000 and will probably last a few more years. The one in 2007 signaled a short-term opportunity. And that’s exactly what I expect from the most recent occurrence. It’s marking only a short-term low.

In the bigger picture, last Friday’s stumble serves as another warning sign that the next major market move will be a severe bear market. A bear market as severe as or even worse than the 2007-2009 bear market, which was heralded by the record-breaking Arms Index reading in February 2007.

Keep in mind, though, that like all technical indicators, the Arms Index is not infallible. It has to be interpreted in the context of the bigger picture. And as you have just seen, this bigger picture is unequivocally bearish.

Best wishes,

Claus

Friday's employment surely hung over investor's head over the weekend as markets experienced yet another strong selling day on Monday, in which the Dow closed down 115 points. Despite a morning rally, selling prevailed in markets as more uncertainty set in. Job loss reports were well below expectations on Friday, which caused for the bulk of the selling to close out last week. Unfortunately, a lot of variables hang over our economy's head, which is not providing an environment conducive for stock buying. Here are some factors that keeps our economy in limbo.

Financial Reform Bill
Much of what we have heard has been hear-say in regards to the large bill that is causing people all over the world wondering what this bill is going to do. President Obama would like the bill to be signed by the end of the month, however, those are aggressive goals. The fact remains that not much is known about the bill as well as what consequences we should expect with it passing. As long as it remains in limbo, I expect financial stocks to do the same.

European Banks
We have seen extreme weakness in European banks (especially Spanish Banks) recently, which is dragging down the global sector. The crisis in Greece is not helping things and if it were not for China bailing them out, there could be some serious problems.

Cleaning Up The Oil
It may seem that there is little correlation between an oil spill and larger scale economies, but that is not the case. In fact, the recent BP oil spill is continuing to create a lot of noise in the marketplace. 20,000 barrels of oil are flowing through the Gulf of Mexico as we speak, which there is no telling what kind of effects we can expect from that. The spill damage far surpasses original expectations and is only making oil consumers more angry in buying their product. Clean up that mess!

China's Slowing Pace
Much of the fear to global analysts was the rate at which China's economy was growing in such a little amount of time. Many felt that the country's economy would fall just as hard as it grew. However, thus far, China has seemed to manage well with it's slower growth periods and minimize any lopsided whirlwind. Thus far, China has been a good bailout for many failing economies (including the US) and needs to stay that rock in the midst of many declining markets.

These coupled with the continuing employment woes that the US economy is faced with, makes it hard to gain real momentum behind a rally. Sure, we should see rebound days here and there, but I cannot think there can be a significant run in the markets until many of these unknowns are solved. For the most part, the shorts have been performing very strong the past couple weeks and I look for them to continue to perform strong the next few weeks. Happy Trading.

Tuesday's trading trends brought memories back from late 2008 days. In fact, trading trends for the past few weeks have been very reminiscent of the uncertainty days of 2008 in general. To me, it is clear that the fast pacing, bullish rally has temporarily come to a close as it has been very difficult to gain momentum on the buy side. Even on days where strong data is released, selling continues to prevail. Today, was another wild swing day, which resulted in the market having an aggressive sell off to close the day and ultimately close the Dow down 112 points.

So why the selling now? We saw from recent months that the market has barrelled through uncertain times with flying colors. There are a couple answers to the questions. First of all, we've seen a return of volume. For most of the first quarter, volume levels remained critically low. Many of the institutions and big players remained sidelined and played the market very "safely" as to not get blindsided. Lately, we have seen a very big gain in average volume, especially on days of strong selling. As the volume continues to increase, it will be harder for market movers to manipulate indexes to move in the direction they want.

Secondly, we are now reaching global pressures. The US was center of most problems that began in 2007. Thus, it us the most. Although global pressures also existed, the US seemed to be experiencing it the worst. As we saw seeds of a bottom, many jumped back on the US bandwagon, trying to take advantage of those early reversal gains (which many did!). However, now global pressures are taking over headlines and there is a lot of speculation that those pressures can and will directly affect the US. Whatever the reason may be, the charts are looking quite optimal for short positions.

Manufacturing and select tech companies seem to be the only reasonably "bright spots" in the market at this point. Oil is taking a beating thanks to the BP disaster in the Gulf and residential builders are hurting from more and more reports of consumers selecting not to pay their home mortgages anymore. Ultimately, we cannot anticipate just how great effect these pressures will have on the US economy, but we can estimate it will be great. For many, taking a pretty good profit from the past year's gains is good enough and cash and bonds are looking better than ever. Today's inability to hold in the green shows that even with a new month and a new week, new beginnings are getting harder to make. For me, I am out of almost all long positions, and have been enjoying gains from some shorts and the VXX ETN. I expect continuing rebound rallies to occur frequently, but I do see a strong downward trend at this point. Happy Trading.