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


Strengthen your portfolio in good times and bad.


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.

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