Pre Market - August 9th 2007

** Breaking News **

Did you hear that big thump overnight? That was another shoe dropping.

The markets are in big trouble this morning due to news out of France that they now have a liquidity problem with funds that are tied to the US sub prime market.

This news is bad in that it shows that the problem is not contained to the US only. I had said a while back that the sub prime problems was likely to spread and today's news from 'BNP Paribas' of France has confirmed this. The traders this morning are seeing this news as increasing bad for the financial sectors this morning and it is reflected in the futures. Futures are down very big this morning.

And if the news out of France was not bad enough there was news from Home Depot this morning that they now have to restructure their pending sale of the Home Depot supply business. And that the restructuring would reduce the price by up to $10.3 Billion. This action is a result of the credit situation.

One more note this morning is Bernstein has cut their 2007 and 2008 estimates for the US securities firms Bear Stearns, Goldman Sachs, Lehman, and Morgan Stanley. The cuts are rather significant and they lay the reasons on (do I need to even say) the credit situation.

I have been saying we need to keep our guard up and this is exactly why I have been instructing my RebelTrader subscribers to use caution. Swing trading in this environment is tough. We can do our best but we have to keep our guard up and our trades on a short leash.

The action in the markets over the past 6 weeks now shows why the old "buy and hold" style of investing does not work anymore in this increasing global economy. So many stocks have lost gains going back many years now. Buy and hold style does not work. You need to know when to take profits and set them aside. For if you don't you can lose many years of gains and you end up right where you started. I will be doing a feature article on buy & hold vs swing trading in the near future to show how keeping money in dead stocks reduces your financial growth even more than if you sold it, took the gains, and moved it into a new stock. The concern over short term capital gains becomes a mute issue when your long term gains are wiped out by not knowing when to "sell and take you gains".

Today will be rough.. Hang on