Market outlook for week of March 30th, 2009

This past week both the Dow and S&P 500 climbed over and stayed above the 50 day Moving average. It was the first time in over a year when we had positive gains for 2 consecutive weeks. It sure felt good after weathering the drops of the past year. The chart above shows the Put to Call ratio since January of 2008 to close of the market yesterday. You can readily see we are moving to a lower range on this index. (If you click on the chart it will get larger.) We have not been over 1.00 on this ratio recently, March 5th to be exact. Yesterday's close was 0.92, replicating Thursday's close. The VIX Index closed at $41.04 and while I don't have a chart on this for your viewing, this Index has also come off its highs as well. This Index was as high as the $70's and $80's back last fall and we are now near the lows since early January of $38-$39.

So what's ahead for the week of March 30th? I am overall still optimistic on the market. Many see this as a Bear Market rally and can't see the Dow and S&P 500 going much higher. While I agree that this is still a Bear Market rally, I do believe we can go as high as 9,000 on the Dow before we pull way back again. This means a Buy and Hold strategy is not your best strategy. Trading is the only way to take advantage of the big market swings, which are inevitable. Hopefully when we look back after next week's close we will be above 8,000 and less than 8,500. The quarter ends on March 31st and we will shortly be reviewing earnings reports for a clue on how business is really doing. Stay tuned!

Let's take a look at several trades recently to summarize most of my trades. Starting with the loss, I sold TZA the ETF Ultra Short for a 17% loss. This was painful but remember I had TNA to offset some of this loss, but a loss is a loss. I sold Ford for a 45% profit. I sold Apple for a 16% gain. Apple gained far more since I sold it at $97/share and is now at $106.85/share. I sold some TNA shares for a 17% profit. I am still holding on to many more shares of TNA, some of which are under water. I still have my shares of Citigroup, which I purchased at $1.70/share and additionally at $2.41/share. Current price of Citi is $2.62/share.

I am hopeful this coming week of staying above the 50 day Moving average, but as I have cautioned before, if you are trading, pay attention as this market can go in either direction very quickly. One indicator next week will be the Unemployment rate and we already know it won't be good. But it is a look backwards and any moderation which shows the rate slowing may spur the market up. If the trend looks like it is accelerating, watch for a selloff. Good luck!

Market Outlook for March 17th: Up!

It may be a Happy St. Patrick's Day today, indeed, as it looks like we are headed back up today, after having a slightly down day yesterday. Futures are pointing up because the Housing Starts data showed a good positive surprise this morning. The actual number of Housing Starts was 583,000 which is up 22.2% from last month, which was down 14.7% from December's data. We held the gains from the previous week even though there was a pullback yesterday. We are still over 740 closing yesterday at 754 on the S&P 500. The Dow closed at 7,217 but did go over 7,300 during the session yesterday and then pulled back steadily to the close.

Yesterday I sold some Apple shares to raise some cash and take my profit on the stock. My average price for the stock was $83.50 and the shares I sold for $96.35 for a 15.4% gain. I had also sold some of my TNA shares yesterday that I had purchased at $11.20/share for $15.65/share. That was a 39.7% profit. I still own 90% of my TNA shares. But now I have some cash to buy anything on a market pullback.

This week is Options Expiration on Friday and expect some volatility on Thursday as well. It is difficult to say which direction the market will go by Friday but I still believe the news has been favorable and to me the odds point to going higher. As long as the news infers that we may have bottomed in some major indicators, unemployment claims will still be negative for a while. It might be the most lagging of indicators to watch. I would look at the price of Gold. If Gold can get back below 900 watch the market move up more strongly. Gold is at 916 in pre-market. The low closing last week was 905. We were as low as 820 in January and I can see Gold pulling back significantly to these levels if news continues good.

Market Outlook for the week of March 16th, 2009 (UPDATE)

Well I got the action right this past week for a change. Shear luck. But the real difficulty is predicting this next week. Let's take a look at a number of data points to glean some prognosticative abilities. The Dow ended the week over 7,200 to close at 7,224 on 4 consecutive days of very strong volume. The S&P500 ended the week over the critical 740 resistance level, closing at 756. Both Indexes closed over their 20 day Moving averages, but just barely.

The VIX Index closed at 42.36 after hitting an intraday low of 40.03 and it hasn't been at this level since the end of January. It remains below the 20, 40 and 60 day Moving average. The Put to Call ratio ended the week at 0.71. Click on the Chart above to see the trend from January 2008 to close on Friday. You will notice most recently the trend is down. When the Put to call ratio is low it is a sell signal and when it is at the highs it is a Buy signal but what is high and what is low is all relative. As I mentioned on an earlier post, back in the year 2000 I would use the Put to Call to time trades. But back then the lows on the Put to Cal ratio were as low as 0.3-0,4 and often signaled to me to sell. They were just a bit outside 2 standard deviations limits from the rest of the data. And on the opposite side I would recommend Buying at the 1.25-1.35 level. You can play with data yourselves by clicking on this CBOE link and selecting "CBOE Total Exchange Volume and Put/Call Ratios". The data goes back to 2003 to now on a daily basis.

The Candlestick pattern of the Dow on Friday was a Doji which shows a struggle between the Bulls and Bears for direction. It also implies a possible change in direction. And one last point about the chart pattern and where we are. We had reached a new bottom in the market a little over a week ago when the Dow hit a new low of 6,440 and the S&P hit a new low of 666. We have not retested those levels and therefore most likely will need a retest to insure we made a bottom.

So if I were a betting man, and of course you know I am, considering all this data, if we get any bad news this coming week we most likely will reverse this movement up. If on the other hand there is some surprise good news this week, the market will continue to rise. Eventually we will drop back and retest the lows. So this is at best a trade, not a Buy and Hold. The only decision you must make is when to sell to look in a gain and how long to ride this up. Technically we could go to 8,000 or above before we come back down to ground and retest. So take a measure of your fortitude and your level of risk taking, as you will be tested this next week to make a decision.

Ford closed at $2.19 on strong volume, but also closed Friday with a Doji candlestick pattern. It is up $0.30/share from my purchase or 15.8%. Apple closed at $95.93 also with a Doji pattern and is up over $12/share from my purchase or 14.5%.

The ETF's SSO and TNA recovered some of their devastating losses this past week. TNA closed at $15.07 also with a Doji Candlestick pattern. I had purchased TNA at $23.36 although I have added to my position with shares at $11.35/share to bring the average price down. SSO closed at $18.08 also with a Doji Candlestick pattern. I had purchased these shares at $21.57/share so I am underwater on both of these investments. But I still am holding them. My strategy will be that when I think the market is about to turn, I will purchase TZA to hedge the gains I have made back on TNA and SSO. My signal will be triggered by looking at the Volume as it will indicate the timing.

I don't know if this is too much detail for you on how I think about decisions regarding the stock market. Let me know by making a comment. I can post less and just tell you my conclusion or I can share the details of my decision making. The default position is this, if I don't receive comments, I will just post less details. Thanks for stopping by.

UPDATE: Monday Pre-Market

The Futures show the Indexes going up today, continuing the gains of last week. The Nikkei was up in overnight trading and the CAC, DAX and FTSE indexes in Europe. Last night on 60 Minutes, Fed Chairman Ben Bernanke gave the first ever interview on the program to explain the financial crisis and how the Fed stood ready to do whatever is necessary to maintain the Banking system. It was a very good interview and showed the man was from a small town and understood what it was like being from the Middle Class. He should be commended for taking this unprecedented step to help average Americans gain confidence in the government and the Financial system. This should be good news to the markets.

Market update March 12, 2009

The Market has been relatively cam and quiet the past few days and today seems a repeat. Lots of data out today. Here's some of it:

Jobless Claims came in at 654,000, an increase over the last report but only by 9,000. Expectations were 644,000 jobs lost so definitely a close prediction. And it is good news the rate isn't increasing significantly, but rather may be leveling off as well. Retail Sales were down 0.1%. Business Inventories were down 1.1% in January compared to being down 1.6%. So maybe this is starting to level off and sales are closer aligned to inventories. This is also a good sign.

The Dow currently is up about 30 points after opening lower. The Dow seems to be having some difficulty getting and staying over 7,000. If we are going to go higher we must close and stay over 7,000. Right now it proving to be resistant. But maybe we will have 3 days of positive market action. Gold is up over $900 and did so yesterday and continues today. Oil is at $44/barrel.

The VIX Index continues to drop and is currently at 43.21. The Put to Call ratio closed yesterday at 0.75 and still high by yearly comparisons but relatively low given the past 3-4 months of exceptionally high numbers around 1.47. If the market returns to some sense of normalcy the number should be below 0.40 for market sell signals I use to use in 2001 to tell folks to sell.

And one last item on my holdings. I still own all of my purchases in TNA, SSO, AAPL, F, etc. and have no plans to sell.

The Stock Market: Should we abandon ship?

This must be on many minds this weekend as we broke through support levels which defined 25 year uptrend lines on the Dow. While we broke below support so gently the past week, nevertheless, we did break through the support levels and that is not a good sign. I took another look at the next level of support and while I can do this on a 25 year chart, I can't do it with the precision you deserve. So check with your professional stock advisor or other certified professional expert. It is my best guess we might go down to 6,300-6,500 on The Dow and 700 on the S&P. That means possibly another 10% drop of the total value of your portfolio of stocks. Ugh.

But there is also the possibility we can still have a strong Bear Market rally and go back up to 9,000 or over. That would be a 28% gain from where we are now. I personally am willing to take the risk of a 10% loss for a nearly 30% gain at this point. I can't speak for you here so you need to watch yourself and your assets. I believe this though, there is pent up demand and an oversold feeling with this market and the move up could happen very quickly. If any indicators aren't as bad as was expected in the coming week and show any possibility of no worse than last month, that could be enough for many to jump into the market.

I ventured in yesterday to buy Citi, symbol C, and so did many others as over 1.7 Billion shares were traded on Citi giving the Dow index a spike in volume for the day.

My recent purchases are underwater for my ETF's as well as the stocks I had purchased. TNA, the 3x Ultra Pro ETF of the Small Caps, closed yesterday at $15.53, after hitting a 52 week low of $15.02/share. I had recommended and purchased this at $23.36/share. SSO, the Ultra Pro shares of the ETF for the S&P 500 closed yesterday at $17.31/share after it hitting a 52 week low of $17.24/share. I had recommended and purchased it at $21.57/share. Ford Motor has pulled back after getting back up to as high as $2.20/share but now closed at $2.00/share. I had recommended and purchased this at $1.90/share. Apple, symbol AAPL closed yesterday down at $89.31/share. I had recommended and purchased the stock at $86.50 and $78/share. So there is the summary of my purchases.

Putting everything into context in a summary here, I think it's a crap shoot for this coming week as to whether we actually test new lows at the 6,300-6,500 level. If the SEC instituted back the Uptick Rule, we might not go lower but there is no certainty they will. It has been only discussed by Bernanke and others in the Administration. And further complicating matters is that Wall Street does not like what President Obama has been proposing on a host of topics like Healthcare reform, Medicaid reform, tax rate changes, stemming foreclosures and the bailout of banks. They speak with their money in the markets and that hurts us all. But change isn't coming, change is here and they had better get used to it. The good old boys network and the good old days, are gone forever or at least during this Administration. So I am not selling here and will hold and possibly add more shares of these investments as long as the cash holds out. So to answer the question asked in the title of this Blog, "Should we abandon ship?", the answer is No!

Market Outlook for Feb. 26, 2009

The market has been in a very tight range of late. The VIX currently is at 44.67 and has retreated from the over 50 readings of 2 and 3 days ago. Volume the past 3 days has been higher than normal and the Put to Call ratio has abated down to 0.84 from highs in the 1.20 and higher intraday peaks of the past few days. The fact that we are still holding is encouraging. Also Fed Chairman Bernanke has also stated in testimony before Congress that they might reinstitute the Uptick rule for Shorting stocks which previous SEC Chairman had ended the rule taking the wrath of many investors like myself who called for his head.

I continue to believe we are not heading lower in the Dow and S&P 500 Indexes but my belief has been tested as well. I continue to hold TNA and SSO, AAPL, F and other favorites. It was good to see Ford climb back up over $2.00 the past few days. It had been as low as $1.67 the past few days so it is a nice recovery.

If I had available cash to invest I would wait to see if we can hold these levels before committing more cash to stocks. I still am hopeful we will finish the week neutral to positive.

Markets pull back from the Edge today

We stared into the abyss and pulled back from the most certain painful decline that we almost had today. We are not out of the woods yet but if we can string another day or two together we may be on our way to a Bear Market rally. Much anticipation as to what Treasury Secretary Tim Geithner's plan is for the Banks so that shoe is still yet to drop. But President Obama was confident and bold tonight in what he wants to be measured on regarding the success of his plans to restore the economy. You can't say he is shy about taking on responsibility. He has set a new standard just on that metric compared to all previous Presidents.

Futures are down a little this evening but it is too early to tell what will happen tomorrow. On a positive note, Ford Motor, symbol F, went up today to $2.20/share and is now profitable based upon my earlier purchase and strong belief in the stock back on January 24th with an average price of $1.90/share. My Apple stock is also back into profitability as well, from my purchase back on January 7th for $86.50/share and again on January 14th for $78.00/share. Still own all my shares of TNA and SSO.

Market Outlook for Feb. 19th, 2009 to week's end: Holding above Nov. lows!

Well we did not do badly Wednesday in the market, all things considered from Tuesday's abysmal showing. Today the Dow hit a low of 7451, which is ever closer to the previous November low of 7,392. The S&P closed Wednesday at 788 but did have a low for the day of 780. Looking at the charts on both indexes it looks very much like we are in the process of retesting the low of 7,392 on the Dow this week. It may only be a brief moment but my sense is that we will bounce back up off the bottom if we do touch it. The S&P 500 is a different story as we are still about 40 points above the November lows of 741, and we would have to have a more drastic drop in the S&P to get there than the Dow, which seems unlikely. So the Index to watch will be the Dow for the retest.

Friday is what they refer to as Double Witching fro Options expiration. Usually that means increased volatility. Volatility as measured by the VIX index today actually went down slightly from yesterday closing at 48.46. However on Tuesday it leaped up touching 50 before backing off to close at 48.66. While it is over the 20 and 40 Day Moving Average, it most likely does not look like it will go to the highs back in November when the market hit its lows. back then the VX hit between 70 and 80. Based upon this fact alone I do not see us in for a meltdown this week. I do see instead an opportunity to take some risk and buy some stocks as the market will have a rally most likely next week.

Supporting evidence to me are several stocks. Apple, symbol AAPL is still above its 20, 40 and 60 day Moving averages and no where near the lows. Another indicator is the Nasdaq closed at 1468 which is well above the November lows of 1295. In conclusion, this week is a buying opportunity and as I said earlier in another post 3 weeks from now many are going to kick themselves for not getting back into the market. Some I own and like are TNA, SSO, AAPL. I think you will see Gold and other precious metals like Silver drop, as World markets reflect our move up.

UPDATE: 6:00am PST

Weekly Jobless claims were up only 8,000 keeping Weekly Claims at 627,000 jobs lost. Continuing Claims reached 4.99 Million jobs lost. The CPI was up 0.8% and the Core inflation rate was up a surprising 0.4%.

Market stats coming week of Feb. 17th

This week has a host of data being released and the news is slanted to be terrible by most accounts. On Tuesday, the National Association of Home Builders will release its monthly sentiment survey, which has fallen to record low levels, with fewer than one in 10 builders confident about the business.

Industrial production is expected to have plunged again in January after falling 7% in the past six months. Economists surveyed were looking for a decline of 1.7%, following a 2% drop in December. The figures will be released Wednesday. Total hours worked in the manufacturing sector is seen falling 2.1% in January, with the number of jobs down in almost every industrial sector.

Continuing jobless claims have been at record high levels -- at nearly 5 million -- while initial claims have settled above 600,000 per week. No one knows what this week's data will show but many are expecting some very bad numbers.

The CPI is expected to rise 0.3%, and the PPI 0.4%, according to economists.

The Federal Reserve has warned it sees a risk of near-term deflation, but there's not much more they can do about that risk since rates are near zero.

With all this bad news pretty much expected, watch how the markets react. It is my opinion that the markets will hold and possibly rally on any news that seems to suggest we are near or at bottom or that maybe it is slowing the acceleration rate of these indicators. I particularly would watch how Apple stock reacts this week, as it is a good tech indicator of market direction. And what I plan to do is to again look for opportunities to buy the ETF, TNA, an Ultra short x 3 of the Small Caps. Watch volume for this week as well as it has been weak of late. Any high volume with a price rise will be most welcome and may cause the Shorts to cover.

UPDATE: Tuesday 5:45am PST

It looks pretty bad this morning in pre-market as markets around the World are negative. We must hold the lows of 7,300 on the Dow and 742 on the S&P 500 or we are in for some real pain. Dow futures down about 250 in pre-market. S&P 500 is down to 793 in pre-market. Today is shaping out to have a big drop at the open. The question will be whether we can recover today or are we headed to retest the very lows made earlier in November. Wall Street does not like with the Administration is doing with respect to the economic mess that Wall Street and the Bankers created in the first place. They don't like the restrictions on compensation put on them by the Congress and the Obama Administration. Fear levels are rising.

Market Outlook: Retest of the lows but don't panic as we will rebound strongly

That's correct, we will be retesting the lows on the Dow and S&P 500. We can go as low as 7,300 and retest the previous low but we will hold. This is the final shakeout before we surge strongly back up. Do not panic or get too scared by throwing in the towel as that is what the manipulators want because we are about ready to approve and sign into law the Stimulus package. It will stimulate and work over the next 6 months to a year. The best we can all do is try to return our lives to normalcy.

I still own all my TNA shares and on this last leg down I will be adding more shares. I also still like AAPL especially in light of the lower expectations by Research in Motion, symbol RIMM. It is possible that Apple's iPhone is gaining more market share here. I have visited my local Apple Store and it is still mobbed most of the time. People are buying product and services.

So keep the faith and look at this as a good opportunity to rebuild your future as I am.

UPDATE 8:00pm PST.

Well the market went very low today but recovered above the critical 822 on the S&P 500. But a news story tonight validated my earlier hypothesis about Apple and Research in Motion. Here's what I read this evening:

iPhone now represents 51% of U.S. smartphone traffic — report


This comes from one Web metric among many, so take it with a grain of salt.

But according to AdMob, one of the largest mobile Web ad networks, Apple’s (AAPL) handsets now dominate mobile Web traffic in almost every category.

According to AdMob’s analysis of the billions of ad requests it saw in January:

The iPhone OS now represents 51% of U.S. smartphone traffic, leaving RIM’s (RIMM) BlackBerry (19%) and Microsoft’s (MSFT) Windows Mobile (14%) in the dust.
In the global handset market, the iPhone and iPod touch now represent 18.3% of worldwide ad traffic — second only to Nokia (NOK) with 30.1%
Worldwide requests from Apple devices grew 28% month over month to 1.2 billion in January.
The iPod touch is rapidly catching up to the iPhone; it now represents 40% of Apple requests, up from 20% in September.
AdMob stores and analyzes every ad request, impression and click from more than 6,000 publishers’ sites in over 160 countries every day, according to its website.

The Stock Market: Week ending 2/6/09

So the summary for the week is as follows: The Dow closed the week at 8,281, which was up 280 points or 3.5% from the previous week's close. The Nasdaq closed at 1,592, which was up 116 points or 7.9% from the previous week's close.

Here's a summary of the stocks I have bought and where they stand at week's end:

TNA was purchased on January 21st at a price of $23.36 and today it closed at $27.89 for a paper gain of 19.4%. SSO was also purchased on January 21st at a price of $21.57 and today it closed at $24.25 for a paper gain of 12.4%. I also sold TZA on January 21st as well as SDS. TZA has dropped 26.7% since my selling of the stock and SDS has dropped 15.9% since the selling of the stock. It seems the strategy of buying the ETF Ultra Longs near the bottom of the range of the Dow, S&P500 and Nasdaq Indexes, is paying off.

Additionally, my purchase of Apple stock, symbol AAPL, on January 7th for $86.50 and additional shares at $78/share on January 14th, has had a nice paper gain closing today at $99.72/share. That's a paper gain of 15.3% and 27.8%, depending on which dates the stock is purchased. My average purchase price is $83.50/share.

Disappointing has been my purchase of Ford Motor Co., symbol F, with an average price of $1.90/share back on January 24th and January 28th ($1.80/share and $2.03/share).

Much depends on what happens to the vote on the Stimulus package which looks like it will occur on Sunday. If there is a semblance of bipartisanship, it would be a good thing for the country. The The Unemployment report today was an eye opener. It showed unemployment at 7.6%, with 598,000 losing jobs this past month. This may have put the necessary fire under elected officials.

Watch my post on Sunday night and Monday morning pre-market to get a sense of the upcoming week.

Hope we can believe in.

As the day begins, there is more hope for reaching a bipartisan agreement on the stimulus package before the Senate today. I would estimate that a few days ago there was only a 35-40% confidence by the public, the media and the Congress that there would be a compromise within the Senate deliberations of the stimulus package. The needle has moved now to about a 55-60% confidence that there will be compromise and a good bill that most can live with.

The Unemployment rate (just announced) is 7.6%, as we had 598,000 jobs lost this past month. These two forces will result in some higher volatility in the market today (as measured by the VIX). Based upon the realities on the ground on the negotiations, I believe the Bulls have the edge over the Bears in this market. Being on the Short side right now is very dangerous as this market can snap up in a heartbeat. I do not have any Short positions nor do I currently have any ETF Ultra Short Funds like TZA, DXD or SDS and if I did have them I would sell them at the first opportunity today.

I did add to all of the shares I have mentioned here. Added yesterday to TNA, SSO, F, and AAPL and feeling very confident these will rise in the next 30 days. When the Stimulus package gets passed by the Senate today and a compromise worked out with the House of Representatives during the next week, hopefully President Obama will be signing the bill by Friday the 13th or more preferably by Feb. 12th, President Lincoln's birthday. And the President will be credited with bringing a different kind of politic to Washington, thereby increasing his popularity with the American people.

Market outlook for Feb 5th and 6th: Update 2

Took a good look at the charts for the past 3 weeks for the Dow and the S&P 500. Looks to me we formed that "W" pattern but the second leg of the "W" pattern is lower than the first leg. It suggests to me the markets most likely will go down now the next several days. How low we go depends on the results of the Jobs report tomorrow. If they are bad showing at least as bad as last month, we will drop and possibly retest the previous lows on the Dow of 7,392 and 750 on the S&P 500. If the results are better than expected we will have a short rally up. However the news that will determine where we are going is the Stimulus Bill and how it gets through the Senate. It is how the process is perceived and how the President manages the news about this and how he uses the Bully pulpit. Time will tell, but we should know by a week from now.

My choices are going to be these. First, if the market drops down to retest the lows, I will purchase additional shares of the ETF's TNA and SSO. I will add shares of Ford, symbol F, and also Apple, symbol AAPL, continuing to add shares. I will not try to gain a little on the drop by buying TZA nor SDS as we are at the low of the range for these Indexes and I can't time the next leg up.

UPDATE: 5:30am PST

Jobs data out shows an increase of 41,000 jobs lost last week bringing weekly claims to 626,000 jobs lost. Productivity is up 3.2% and Continuing Claims have now reached 4.78 Million jobs.

UPDATE #2 8:08am PST

I purchased additional shares of Ford at $1.90/share, more shares of TNA for $24.90/share and more shares of Apple at $93.99/share

Market Update: ETF Ultra Pro shares SSO and TNA

I wanted to update my readers on my two recommended ETF Ultra Pro shares, SSO and TNA. Both are now up and profitable at this moment. SSO in pre-market is up to $23.93 and that would be 11% gain since I purchased the shares on January 21st. TNA in pre-market is up to $26.67 for a 14% gain since my purchase. I do not plan to sell at this times as it appears the markets are preparing for a rise.

At the end of last week I thought we were heading lower and said so in my post. It appears, even with the really bad news of layoffs on Monday, that the market was able to hold here. When I look at the charts for the Dow, S&P500 and the Nasdaq, these indexes held a very tight range and weathered the bad news better than certainly I had expected. This has set up a possible significant rally which many, including Art Cashin of UBS, have said on CNBC is possible from here. By holding both TNA and SSO you should benefit a more significant gain that what already has materialized.

A quick, cheap investment right now could be Ford Motor company, symbol F. The current price of Ford is $2.03/share. This stock could easily gain 10-15% and more on any significant market move. There has been 12 consecutive days of Distribution of Ford shares and we are due for a change.

Also, Apple, Inc., symbol AAPL, is up to $92.70 in pre-market and as you know I recommended these shares back on January 7th at $86.50/share and again after the Steve Jobs health scare at $78/share. If you bought the shares when I first did at $86.50, you have made a paper gain of 7% and if you purchased shares at $78/share you are almost 19% on paper. I will stay with this stock and will not sell these shares.

UPDATE: 7:30am PST

It looks as though there is a reason for the market's optimism. It is because there are stories out that the Obama Administration is considering taking the troubled assets off the books of the Banks and have "Good banks" and "Bad banks". This rumor has spurred the market rise and indicates Wall Streets approval of the idea. Additionally today it is expected that President Obama's much heralded Stimulus package will win House approval today. This all making for 4 days in a row of an up market.

What to add to your portfolio on a market pullback?

I bought Apple Computer a few weeks ago, symbol AAPL, at $86.50 and the stock rose in anticipation of Mac World, to about $93 but has pulled back to $90/share on Friday. If the market drops again, as I anticipate it will, I would recommend either buying the stock or adding to your current position. I am looking to buy more shares anywhere around $86 or lower, if possible.

Hold on to the ETF Ultra Short of the S&P500, symbol SDS and TZA, the ETF Ultra Short of Small Caps. These shares should start to rise with a market pullback. SDS closed Friday at $71.95 and TZA closed at $51.25 and is up in pre-market futures this evening.

UPDATE: Jan. 12 5:00am PST

3 Month Libor rates are now at a new recent low of 1.16%. Hard to believe with numbers as low as this that there is still tight credit, but the fact still remains, either credit is tight or people aren't wanting to borrow and no amount of available funds is going to change that, until investors psychology turns from fear to greed.

European markets are also down in pre-market.