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 with a rather aggressive rally and sustained for most of the day until an aggressive sell off occurred to close out the day. The Dow closed up just 5 points, however, the S&P ended up closing in the red. Good earnings reports from the tech and retail sector as well as a reduction in initial jobless claims helped spark the early buying.

As the low volume trading continues to occur in markets, these volatile end of day swings will most likely happen often. It doesn't take much at this point to move the market, which makes it very vulnerable to manipulation. Believe it or not, there are actually a few reasons I believe we may see this rally extend a bit further before a big pullback, and here is why.

First of all, there are a couple reasons to believe that we are in for a decent earnings season this next quarter. Just from my own business, I have been able to tell that consumers have been more active the past few months. With the help of trillions spent from the US government, some money finally became available to the consumer. As a result, some consumers were able to go out and spend this money thinking that the worst is behind us. It is almost like a sun spot in the middle of a storm. When you think about the lag time it takes for that money to actually reach the consumer, it makes sense that the economy is now starting to respond. As a result, I believe consumers got out a bit more this past quarter and was able to spend some of Uncle Sam's cash.

Another reason to expect good earnings is that there has been almost zero early bad earning warnings. If approaching a quarter where companies are looking to have much lower earnings than expected, they usually like to ease in the news by issuing a premature "warning" of lower earnings. However, when earnings are looking to beat expectations, well they always want this news to be reported as a surprise to help spark a run on the stock. The fact that we've seen almost none this quarter, leads me to believe that earnings should be relatively strong.

Considering the market is reacting very sensitively at this point to economic data, I think a strong earnings season could definitely bolster up markets for a bit. However, as I've said before, the numbers are skewed to a degree. Much of the money that has been spent is government money, which has to be paid back eventually. So although it may look like we heading up, I definitely expect to see some more rough times to come. However, retailers and real estate REITS should perform decently well the next couple months. We saw from Best Buy today, earnings are already looking good. Happy Trading.

Selling transpired in Wall Street on Wednesday, as a drop in Treasurys, due to 10-year swap spreads going negative for the first time, caused for the retreat in equities. Interest rates for Treasurys to help fill the need for the new debt issued. My ETFs that I purchased as an interest rate hedge (post from last week) performed very well today and I believe there are more gains to come. It comes back to the simple economic principle of supply and demand. We know the amount of US debt that has been issued and continues to be issued and it is only a matter of time until "the demand" weakens. We saw that today.

As a result of the drop in Treasurys, we also saw a rise in the dollar. The dollar has been performing very this last month and was helped more today, due to the downgrade of Portugal's credit rating. UUP is one of those good rocks for me that keeps chugging away and brings in moderate returns. However, continual abuse of currency printing will eventually bring the dollar to worthless values (see chart below).


Inflation isn't a worry for many at this point in the game. They feel that all measures should be taken to keep the economy afloat. I do agree that the government should do all that they can, but they are beginning to go much more and beyond than what is required. As a result, many are worried for what consequences may lie ahead. Sure, inflation is not an immediate threat, but we are almost guaranteed to see it in coming years. Thomas Hoenig, the President of the Federal Reserve bank of Kansas City said the following:

“When I was named president of the Federal Reserve Bank of Kansas City in 1991, my 85-year old neighbor gave me a 500,000 mark German note. He had been in Germany during its hyperinflation, and told me that in 1921, the note would have bought a house. In 1923, it would not even buy a loaf of bread. He said, ‘I want you to have this note as a reminder. Your duty is to protect the value of the currency.’ That note is framed and hanging in my office.

“Someone recently wrote that I evoked ‘hyperinflation’ for effect. Many say it could never happen here in the U.S. To them I ask, ‘Would anyone have believed three years ago that the Federal Reserve would have $1.25 trillion in mortgage-backed securities on its books today?’ Not likely. So I ask your indulgence in reminding all that the unthinkable becomes possible when the economy is under severe stress.

“If German hyperinflation seems an unrealistic example from the distant past, then let’s come forward in time. Many have noted that in the 1960s, the Federal Reserve’s willingness to accommodate fiscal demands and help finance spending on the Great Society and the Vietnam War contributed to a period of accelerating price increases.

“Although the Federal Reserve was a reluctant participant, it accepted the view that monetary policy should work in the same direction as the Congress and the administration’s goals and help finance at least part of their spending programs. Monetary policy accommodation during this period contributed to an increase in inflation from roughly 1½ percent in 1965 to almost 6 percent in 1970. It also helped set the stage for the Great Inflation of the 1970s as inflation expectations gradually became unanchored …

“Walter Bagehot’s famous dictum about banks holds equally true for governments — once their soundness is questioned, it’s too late. At that moment, governments and their citizens are forced to make sizeable, painful fiscal adjustments.”

Well, at least some of the leaders are aware of whats going on. Happy Trading.

Most of the recent news has been dominated either by Tiger Wood's second interview (which doesn't affect a lot of stocks) and the recent passing of President Obama's coveted health care bill by Congress. There are still changes to be made to the bill, but for the most part, the rough sketch is completed. You better believe that the enforcing of this bill will cause some noise in Wall Street.

First off, I believe those benefiting the most from the health care passing are the pharmaceuticals. Much of their current operations and restrictions shouldn't change much, however, we should expect to see a very significant jump in pharmaceutical sales as President Obama hopes to insure almost everyone in the country and you better believe a lot of those people will be on meds! So as a result, I expect to see continuing growth for pharmaceuticals. This same principle can be applied to health care manufacturers.

On the other end, there will be some who get dragged with this bill. The companies that stand out in my mind are insurance companies. This bill is an insurance company's nightmare, full of new restrictions and puppet strings that are sure to dig into profits. It's no secret that insurance companies have been getting away with highway robbery for years now (and they're stock holders have been rewarded for that!), but uncertainty tends to spur selling.

I exited out of my Citi stock today. It was up another 4%, and I had made enough profits to reward me for the short risk. I am real hesitant to enter into more stocks at this point until this bill becomes more firm and volume begins to increase in the market. We are in a very unorthodox trading environment and as a result, we could see some crazy swings in a short amount of time. So I'm sticking with the waiting game.

It seemed fitting for the market to miraculously close "green" once more today on this St. Patrick's Day (about the 7th day in a row) after what looked to be a very aggressive sell off heading into close. However, the sell off was stopped in its tracks with about a half hour to go, only to rebound back into positive to close. Once again accompanying this rebounding close, was another very low day of volume.

VIX levels are at 2008 lows, which does not give bears much confidence of a strong move downward. However, just as we saw from 2007, as the market gets going, that VIX can move fast. Considering that, historically, not much significant happens on the short side during low volume trading has discouraged bears from being more aggressive. Bulls, on the other hand, have a hard time believing that the market keeps going up. They are almost wanting a dip, just so that another potential rally could have some momentum.

Important data being reported tomorrow is CPI and new jobless claims at the opening. As usual, these should definitely set the mood for most of the days trading trends. So far, CPI has not played much of a role in influencing investors. Jobless claims could definitely put a wedge in trading if they look much worse than expected.

One thing bears need to be careful about tomorrows trading is the big options expiration date. There is a lot of open interest in options for the S&P at 1170 and 1175 levels. In most cases, with the big options, we tend to say the market move towards those levels on expiration day. If that is the case tomorrow, we are in for yet another green trading. I do expect a pull back here shortly, but tomorrow is set up for another green day of trading.

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My Freddie Mac and Fannie Mae positions performed very well today, as these government backed entities are finding more investors. If given another big bump tomorrow, I will most likely exit my positions on these, as I do not want to hold on to them much longer. Watch for volume being low once again tomorrow, which could be another reason why markets move higher. At any rate, it should be a more exciting day of trading. Happy Trading.