« Lets Solve the Mortgage Loan Portion of Todays’ Financial Crisis by Reinventing the HOLC | Home | Is The Stock Market Forming a Double Bottom? - Or Is It A Bear Trap For Unwary Investors? »
Headline - US Stocks Soar - Well Maybe, Time Will Tell…
By Geoff Green | March 11, 2008
Is this a stock market “dead-cat-bounce” or a real sign of a bottom? Lots of technical indicators are predicting that stock prices are near a bottom, however, you should wait for confirmation before risking your money in this market. The longer term trend is still bearish.
For example, here were the headlines from CNN at the start of todays’ trading:
NEW YORK (CNNMoney.com) — U.S. stocks soared at the start of trading Tuesday after the Federal Reserve acted to boost liquidity for financial markets and the European Union approved the Google-DoubleClick merger.
The Dow Jones industrial average gained 270 points, or 2.3%. The Nasdaq composite index surged 2.6%. The Standard & Poor’s 500 index was 2.1% higher.
In the news Tuesday:
Fed-liquidity: The Federal Reserve announced it is ramping up efforts to provide more relief in the spreading credit crisis, saying it will make up to $200 billion in cash available to cash-strapped financial institutions.
Google-DoubleClick: European Union regulators cleared Google Inc.’s $3.1 billion bid for online ad tracker DoubleClick, saying the deal will not hurt competition for online ads. Stock (GOOG, Fortune 500)
Oil: Prices soared to a record $109.72 a barrel in electronic trading as the U.S. dollar weakened further.
Gas: The price of gasoline matched its record high of $3.227 a gallon Tuesday, according to the widely followed survey conducted for the motorist group AAA.
Trade gap: The U.S. trade deficit widened in January, although the gap was narrower than expected, according to a government report Tuesday
Thornburg Mortgage: The jumbo mortgage lender and real estate investment trust restated its 2007 losses, increasing them by 69% because of a reduction in the value of mortgage assets. Stock (TMA)
Aetna: The insurer said Tuesday it still anticipates 2008 profit will come in below Wall Street’s expectations.
In reality, how many “good news” headlines are in that news story? I don’t really count any.
But most investors are hanging their hopes on more liquidity for the banks.
Make certain you understand one thing - the FED cannot force banks to make loans - no matter how low the FED interest rates are. Banks are using this easily available money to shore up their damaged balance sheets and protect their dwindling stock prices. After all the overpaid CEO’s have to protect their stock option prices for THEIR retirement, not yours!
Right now there is a psychological problem against taking on ANY type of lending risk.
Just take a look at the mortgage loan market. Most banks got burned badly by the defaulting mortgage loans and they aren’t going to jump back in quickly.
The mortgage loans and the lending guidelines tighten every day.
For example, Private Mortgage Insurance is no longer available for anyone with a credit score less than 620. This means that a 620 credit score is now the subprime dividing line. It also means anyone with a 620 score or lower will need 20% + closing costs + 2 months reserves in cash in order to buy a home.
That is NOT good news for our suffering housing market!
For more information on mortgage loans and the lending market in general please visit the best mortgage loan website.
As the author and owner of this article, you have my permission to publish these postings & articles electronically or on your own Web site, free of charge as long as the following by-line and functional Internet link is included in its entirety.
Written by Geoff Green, at http://www.profitable-investing.com Copyright 2008.
.
Topics: Federal Reserve, bearish, indicators, interest rates, trading psychology |
One Response to “Headline - US Stocks Soar - Well Maybe, Time Will Tell…”
Comments
You must be logged in to post a comment.
April 2nd, 2008 at 9:15 am
[…] Wow, what a move up in the stock market indexes yesterday. I’ve posted several articles on a potential intermediate bottoms and potential trend changes in the stock market recently. You can view them here Evidence of a Stock Market Bottom, and here, Stock Market Indexes Soar. […]