Caution is the Key!

Its been quite a rally for last few weeks. Hope this is the end week for all the rallies. We might face big down turn testing our prior lows in the forthcoming days. The real reason being the stocks have had real nice run without pulling back. There should be some stop somewhere to have it controlled and steady. The problems are not solved. They were actually being delayed. Housing Market shows some sign of relief after pumping in Billions and Trillions of Dollars. The actual recovery should come within which is not happening at this point.

This is the time to be very cautious. The analysts have forecasted very low on profits which in the sense made most of the companies to beat their targets. Now its gonna change.. People will expect pretty more from the companies wherein government cannot support too long. There might be thoughts of Nationalization few months back. Now, situations were changing and people started thinking Banks are gonna run on their own. But we may not be so sure on that until the problem is resolved. Hiding the issue doesnt mean the issue is resolved. Mark to Market rules have facilitated the people from hiding the losses from the markets. But if things are not working as expected there we will see a big slide again later this year.

Employment issues were growing day by day. General Motors is still hanging and trying to survive under Government Aids. But it cannot continue for long as we expect. Things are not so good at this moment. Time to be Cautious.

Sign of Relief --?

After a very bad february, we had a nice little run during march. Dow has bounced more than 25% during this month alone. Not to mention that most of the financial stocks have regained their lost kingdoms. After the fears of nationalization during February and unclear statements by Treasury secretary, investors went wild and keep selling throughout the month. Thanks to Bernanke and Obama to comeout with 800 billion stimulus bill and made it through congress. Also, the most awaited Mark to Market rule which helps to keep the hope of financial recovery by 2010.

But still the challenging part is raising unemployment and increasing layoffs. Recent results from Alcoa is not so good and its kind of difficult to predict whats in store for April. Till now market is hanging around 8k benchmark and try to find some direction going forward. April used to be the deciding month for most of the stocks. As the earnings keep coming out we might see some reactions in the market.

Thanks to RIMM to bring back the energy and confidence in tech sector. Recent talks of IBM with Sun has created a possitive note in tech side but unfortunately the deal hasnt been struck which is not good for both the companies. Also, still the fears of deepening recession is not out of question. Addng to that SEC is also trying to bring back the Uptick rule which went out during 2006 and other regulations for the hedge funds.

Will all this help the market... we need to wait and see.

Comedy or Serious?

The recent debates / clashes / fights between John Stewart / Jim Crammer and CNBC was getting hot and finaly Jim came out to John's show and accepted the fact that he has no forecasting of what he really said. All the news said was what he heard from the CEOs and COOs. But there are too many good videos which supports John to bring up the nice point in a bad way. But is it comedy... No I don't think so.. It makes perfect sense that these news channels are supposed to do investigations on what they really telecasting. The group of people sitting and analyzing and advising come back and apologize that "sorry we made a bad call" is not gonna get the poor investors money.. Its already gone and never coming back. So, either stop promoting those words of CEO s and stop advising or start doing an introspection before giving any advice to others.

Check the Full Daily Show Episodes:

John Stewart on CNBC

John Stewart Head to Head with Crammer


Find some interesting videos on You tube about these issues.

The Bear Market Raily!!

As I mentioned few days back, the rally is here.. This may not last for long .. Most of the bear markets there would be short rallies which brings in the new investors and squeeze them out and make them run away from the markets. This is very common in every bear market. Just like how we get few down days in Bull Market. Here its gonna be bouncing for few days.. Thanks to Citibank to end the hammering of their stocks by saying they are profitable last few months.. Still there are questions on how they interpreted their profits. We need to really wait for some more time to see whether its the real truth or just for convincing the stock holders and moving the markets. Unfortunately many of the CEOs of those banks which have already vanished like Bear Sterns, LehMan Brothers, Wamu, Wachovia, Merril lynch were also saying we are good and well capitalized till the time they are bankrupt. There is no criminal actions or law suits against those people who manipulates their stocks by giving false message to markets.

There should be some severe penalty and punishments for those who gave info to the markets without solid background informations. Lets see ..

Last few days there is a huge rally without any really great change in the economic and housing conditions. The housing data is still bad and unemployment is still raising and nothing really changed. The simple reason for this run is nothing but the quarter ending. All these institutions want to book profits by manipulating the stocks and creating a short term up trend. Its one way good so the market will continue to make some money without loosing big on a day. Also, it brings in the money that were lying on the side due to fear. This rallies bring in those fresh investments in to the market and digest them.

Also the rumour on mark to market and Uptick rule fuelled up the rally. For those edge funds to make money they want stocks which are fat so that they could make money by shorting them down. Now they all covered and waiting for the poor investors money to come in to market and buy those stocks. Later these big players again short them down.

Not the first time we are witnessing this. We have seen the same happend to citi when it broke 5$ barrier. So, the history repeats itself. This recession is not over and this rally is not gonna last long :(. If you are smart enough make money or cover your shorts in this run..

Whats Wrong with WellsFargo?

"Wells Fargo" is being one of the very conservative banks which doesnt take any serious risks in order to make big profits. Their one and only move in the recent financial crisis is to buy Wachovia for a bigger price than that of what Citi offered. Everyone said this move make Wells Fargo a better bank and made it among the top 3 financial institutions in America.

Fortunately or Unfortunately they have also borrowed money from Treasury on TARP funds. This made them to answer the congress for every moves they make from now on which is good for the investors to know what they are upto... The real questions are not answered yet. How much is the loss Wellsforgo is currently holding due to the merger with Wachovia. How much cost cutting measures they are going to take in the coming days. How they are gonna mitigate risks and how they protect their dividends.

Recently JP Morgon made a smart move for cutting their dividends 80% in order to have more cash to protect and safeguard themselves and promising investors on long term stability. But Wells havent announced any cut in their dividend payouts. Everyone is surprised to see wells 10% yield and still stocks are going lower. Sounds like the losses due to merger of Wachovia are taking toll on WFC's stocks.

We might need to stay close and watch whats going on in the near future. Will it join C and BAC?

Finally Bounce Back Time!!

Its not even 2 weeks, when we wrote about DOW at 7800 is very dangerous.. As suspected, it went well below 7000 and started to bounce back today after a massive downward run. I think this is the short term bottom. We could see a nice run up for around 10% from here which might get DOW back to 7600 range by next two weeks. Its kind of setting up for the Quarter ending. Also the institutions want to hold up the market for few more weeks prior to the next worst earnings coming up in April. Its second quarter after the official recession. Everyone knows very well the numbers are gonna be bad. They dont want to push the stocks too bad. So, we will be seeing a run up for 10-15% from here and then decision will be made after April first two weeks and then market can go to retest their Feb lows again. Just like what happened in October. This is a very typical recession market. Its clear that things are not going to recover soon as expected.

Everyone started realizing that the Change may not happen quick enough. It takes its own time. We could say its been too much of expectation from the historical president at this time. He is trying to do what he could ( may be he could have done it better). Still we need to wait and see how this stimulus is gonna work out and effect of budget which everyone is unhappy with.

Whatever may be the conditions and whatever may be the reality.. we are gonna bounce back for next few weeks. Happy Short Bull run in the bear market.

Fears are growing that SPY might retest 500 levels if things are not going to recover by June.. Next quarter is gonna look pretty ugly. June is gonna be bad. Lets be ready for that... :(

Dow 7800 - > Cat on the Wall?

As we were discussing about the worst might happen if the bailout II which is the one final hope for the financial crisis and economic turnaround. Treasury Secretary announced the bailout early today on which the markets reacted very badly as expected. The reason being there is no clear statement of what they were going to do for resolving the problem. In the speech, every word the stress is on we were working on a plan which bring private and public sector together which will help to bring the bad assets out of the banks etc etc.. There is no new plan as such has been announced except its kind of marketing a plan which doesn't exist. The next worrying issue is the amount of constraints that were put forth for those banks requesting the money. Its more likely the funds will remain with government itself as the constraints are more severe that most of the banks may not want to participate and go through a stress test. For the equity holders of financial institutions its a big risk that they might get wiped out.

As the bailout money lenders are going to washington to face congress questions tommorow, the markets are at very critical levels below the previous bottom and the lowest for 2009. If things are not working well or not turn around we might witness another wide sell off till it finds the next Dow bottom around 7000+ levels which is not so good. Things might look very ugly and it takes even more time if it touches below 7k anytime. We might need to add another bad year if that happens to the market.

Already few investors jumped in after the last low levels in october last year.. We may not expect the same thing to happen this time as people were very cautious in proceeding forward. Considering the global economic down turn and stimulus delay and mounting unemployment number which keeps increasing everyday globally, its gonna be very bad in the near future and it might take more than what everyone were thinking to recover.

Its all with how and what the new administration is going to do with bailout fund and Stimulus fund. How they are going to make it work instead of adding to the already high deficits. Lets wait and see...