Online Stock Trading | Stocks Higher on Hope, but Are We Out of the Woods?

Stocks Higher on Hope, but Are We Out of the Woods?


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The Nationalization of FNM and FRE gave stocks a lift on Monday.  From the start, stocks flew out of the gate netting the Dow Jones Industrial Average a gain of 350 points.  However, as the morning wore on stocks were hit with selling.  Stocks looked bleak, but a late day surge netted significant gains across the board.  Price action wasn’t ideal as we couldn’t push through the open prices on the indexes.  We will certainly need to see some follow through on Monday’s gains before I get too excited about this market.

Nationalization of anything is never a good thing.  The government is notoriously inefficient when it comes to running just about everything.  It would come to no surprise if FNM and FRE will be completely gutted but don’t expect them to return to any sense of glory with Uncle Sam at the reigns.  Once again, the US taxpayer will be footing the bill for a failed Goverment Sponsored Entity (GSE) who bought loans that were wrongfully underwritten to greedy homebuyers buying far too big of a home.  No question, lenders and borrowers should be footing this bill, not me or any other US Taxpayer:  SHAME ON YOU!  This nationalization of FNM and FRE has pushed our debt load over 9.5 Trillion Dollars.  It will take time and reform to rid ourselves of this awful piece of dung from our government.

Even on a positive day, New Lows outpaced New High 2 to 1.  This is not a good sign for stock market bulls who believe the bailout is going to save this market.  News Flash:  This is not a good sign whatsoever, even worse the Global Economy is about to crack hard.  I have been on the China story for months and with the Eurozone moving towards NEGATIVE GDP growth it will certainly affect China and the rest of the emerging markets.  Look for the Global Economy to negatively impact our stock market and capital markets moreso than our housing crisis on hand.

Cash is king, best to be patient on the sidelines waiting for stocks that will setup for 1,000 % or more in gains.

Enjoy!

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One Response to “Stocks Higher on Hope, but Are We Out of the Woods?”

  1. Stocks Higher on Hope, but Are We Out of the Woods? : Monster Stock Trader on September 9th, 2008 8:05 am

    [...] Stocks Higher on Hope, but Are We Out of the Woods? Share and Enjoy: [...]

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