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Two Ways: Obama's Home-Loan Rescue Program Saves the Trading Day

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Strengthen your portfolio in good times and bad.

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The US financial markets had quite a reversal after word got out of an Obama home-loan subsidy rescue plan. According to Reuters, the president is considering a program that would subsidize mortgage payments for homeowners even before they fall behind - a major break from current aid programs which go into effect once the borrower becomes delinquent.

Details are still emerging, but what is known is that mortgage companies will utilize a uniform eligibility test to determine if the borrower qualifies for the program. The Obama administration is hopeful that the industry can develop a new set of standards to modify more home loans.

Fannie Mae (FNM) and Freddie Mac (FRE) will also play a role in the plan, but sources say they aren't likely to expand the securitizations of loans.

The S&P 500 reversed in the last hour of trading after being down over 20 points. It closed up 0.17% to 835. The Dow Industrials closed flat, down 6.7 points, or -0.09%, to 7932. The Nasdaq Composite added 11 points, or +0.73%, to finish the day at 1541.

For more, see Professor Andrew Jeffery's Keepin' It Real Estate: How Good is Zillow?

From the Bull Pen: Sure, there was a major reversal in stocks today, but that's no excuse to be reckless and go all in. Bulls can consider the Ultra Long S&P 500 (SSO) for a short-term trade with a tight 2% sell stop. But keep in mind that Professor Kevin Depew's 783 target on the S&P still remains in effect.

From the Bear Cave: Bears can still consider a play in Exxon Mobil (XOM). Professor Vitaliy Katsenelson mentioned this stock today. One can initiate a position here with a buy stop around $77-$78.

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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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