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

Today The House quickly approved a bill to generate $2 billion more of funding for the very popular government program, "cash-for-clunkers", which is a recently passed program that can get consumers up to $4500 worth of credit towards a new car when turning in an old "clunker." Today, many government officials boasted at the plan's huge success and that indeed the quick depletion of the originally allocated funds shows just how good of a plan it was. I have a serious bone to pick with this plan and here's why:

More Market Fabrication. This is just yet another fabricated, government induced program to skew numbers and transactions during this economic downturn and, once again, by having you and I pay for it. Of course, as a result, car sales will surely see a jump in sales in the coming months as who wouldn't want to trade in that old broken down car for free money? In the end, it is not helping to stimulate the actual economy and help increase the money flow and supply to the consumer. Once again, it is just another way for the government to write a check to companies to bail them out, oh, and give you and I the bill. So, for those that are using this program and are thinking they're getting a "deal", we will see how much money you're saving when your tax rate gets raised an extra 15%, that is if you pay taxes.

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Encourages More Debt and Wasteful Spending. In tough economic times, it wise to use your funds wisely. Anyone who has purchased a car knows that the second you drive off with it, you've lost money in it. In most cases, cars are income eating assets. Sure, participants in this program will save a few thousand on a car, but will still have to cough up a few more to buy a new one. I am sure most of this gap is being put on credit cards, which in the end, will keep pushing those credit defaults up and up. At this time during this economic crisis, we should be promoting more worthwhile spending habits than upgrading your automobile.

As much as I don't agree with the program, it will go forward. As a result, I expect to see some inflated numbers in car sales reports, so going long on the autos may not be a bad choice at this point, at least for the short term. Unfortunately, as is the case for most of these programs, it is unsustainable and, in my opinion, will not get our economy back to a self sufficient state. In fact, it is only making matters worse, and deepening the debt.

The Nasdaq hit 2,000 today, which was the first time since October of 2008. It is clear at this point that investors are finding a "safe haven" within the tech sector. However, many analysts believe that such a strong response in the market is a bit pre-mature in this environment, especially when considering the recent demand for tech products.

The big question is will the fire igniting the Nasdaq recently come back to burn them here shortly? My opinion is that even with the strengths with many of the tech companies, such quick, strong gains in any sector at this point in our economic turmoil is far too unjustified. I expect this quick bounce to return a quick fall. Sure, Nasdaq should remain the sweetheart sector during the plunge, but back to 2000 already? Please.

Coming into trading today, there was a lot of worry and speculation about the markets as, yesterday, China had its biggest drop in their markets since mid-November, mostly due to worries of the government tightening up credit. During trading today, the market was down nearly 90 points at one point, but once again we saw our "coincidental" end of day massive rally that we tend to get on critical trading days, which ended up closing the Dow just down 26 points. However, as the trend has been lately, today's news tells a much scarier story than today's market performance.

Oil prices got crushed today based on new numbers showing weakening demand and a surplus of supply. Oil prices closed under $64 per barrel, which is the lowest we've seen in a while. In addition to that, we also saw big weakness in metals and other commodities. Such moves is right in line with my deflationary expectations, which if we do start to see a down spiral here shortly, would most likely spark serious selling pressure on the markets.

Another scary indicator we saw today was the extremely large drop in durable orders. After a market expected 0.7% loss in orders, we saw the actual number come in at a loss of 2.5%, more than double the expectations! Considering the recent extreme favoring of analyst's expected numbers, such a surprise is really upsetting for investors. Demand for commodities is definitely in jeopardy.

If that wasn't bad enough, we also had to deal with The Treasury selling $39 billion in debt today, which was the largest sale ever. Due to the large amount, interest rates took a bit of a jump today to enable selling of the debt. As this continues, the future value of the dollar gets put into serious questioning.

We are seeing the data coming in right in line with my expectations, however, there is a bit of lag with the reaction of the market. Eventually, as it finally did in March, both will coincide. I greatly worry for the future of this market and that we could see some serious selling pressure if deflationary signals continue. In a few weeks, we will know if such problems are here, but until then I remain very cautious. At that point, I expect some big gains in my Zecco.com account. Happy Trading.

PS - Tonight's premium podcast (subscribe here) will be posted later.

I apologize for the late post tonight, as I have been very busy (and will continue to be busy throughout the week) from other aspects of my business and life. Even with the delay, not too much action was missed. Aside from another extremely low volume, flat trading day that was bolstered up the last seconds of trading and another uneventful Bachelorette finale, there was not much action today.

New homes sales data helped spark a bit of a run for financials, which in turn crushed SRS and FAZ today. Both are continuing to play the role of dogs as of late, which continues to amaze me as there continues to remain nothing but devastation in the commercial real estate market. I don't understand why people are finding it hard to realize that an increase in residential activity is mostly based on seasonal buying, as most families find it very convenient to relocate their family during the summer.

In addition to today's festivities, The SEC made their recent short term ban on naked shorting a permanent thing. Although, just as we saw before, this does not really effect the inverse etfs other than people selling them in fear that indeed it does effect them. They all have existed just fine the past four months while the ban has existed. In addition to that, The SEC will no longer require hedge funds or institutional groups to disclose their short positions. Good thing, because I'm sure many of them are about to load up.

This week will be yet another record setting week for US Treasuries. The Treasury plans to sell a whopping $235 billion in bills, notes and bonds. As a result, we saw prices for Treasuries fall in early trading. Unfortunately, our government is forced to continue to sell debt, as we cannot maintain our current pace of spending. On this track, inflation could kick in much quicker than originally anticipated. This would not weather well for our perceived "recovering" residential market.

Once again, we are seeing the market in flat, low volume trading with everyone being to scared to step foot in it. I am guessing once again it will require a rather strong significant event to push the market much higher or lower from this point. Be assured there are plenty of dollars waiting on the sidelines. As I wait, I will enjoy my 10.5% return from Lending Club. Happy Trading.

Well, bulls were able to finish out their rally with a green Friday, as the markets bounced up and down today but ended up closing slightly in the green. Once again, trading remained very low as it is hard for investors to know where to go from here. Today's closing gives media analysts and bulls even more reasons to cheer on the big rebound recovery that many believe our economy is experiencing. I have expressed my personal opinions to that in previous posts, but I wanted to discuss a major element that has been overlook in these analyst's reports. That is the consumer.

When you examine the make up of the much important GDP, you will find that the consumer (consumer spending) essentially makes up 70% of the number. That means that 70% of the influence in turning this recession around has to do with the fate of you and I. Of course, from the looks of what we see on TV and from politicians, it would seem that financial institutions and corporations have bounced back and are moving forward. Although I disagree with that, there is one key element that people fail to mention in this great debate. The consumer. To think that we are recovering solely based on corporate profits and profiting banks is asinine. The consumer needs to be leading us out. As of now, that leadership is nowhere near being present.

Currently, there is about 15,000,000 unemployed Americans amongst us and that is only continuing to rise. 7,000,000 just since the beginning of the recession. Do we really comprehend the size of that number? Do we honestly feel that such a large increase in unemployment can be quickly recovered by a few trillion spent by the government? Not only that, but our personal savings rate has spiked from nearly 2% to almost 8%, just in a year. So not only have we seen massive cuts in consumer income, but we've seen a huge jump in personal savings. This is not a good mixture when trying to jump start an economy.

Coupled with this has also been the recent increase in gas and energy prices. Paying $2.50-$3.00 per gallon adds up and cuts into that much needed income for many families. Also, we have seen home values drop anywhere from 20-60%. To have the largest asset for most families be reduced by 50% in just a year has major effects not only on spending but overall consumer sentiment. This is probably why we continue to see low consumer sentiment numbers out of Michigan.

Media and politics can preach a recovery as much as they want to, but in the end it will be the consumer that drives us out. As of now, the consumer is hiding, protecting and preserving the assets they have left. What corporate gain we have seen has been largely induced by government spending and stimulus packages. Be assured that if unemployment numbers continue to come in at what we've seen and home median prices continue to fall, consumers will find it no reason to come out of hiding. In turn, we should continue to see that 70% of GDP remain very dismal. Look to the consumer, which lately, we have not. Happy Trading.

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