Chris Rowe

Are Buyers Emerging from the Bearishness?

    Tweet This

Free Trading Guides

It seems like every week a new institutional stock scandal or some sort of manipulation is being uncovered. We are constantly reminded of how high gas prices are, how much the value of our homes is dropping, and how many jobs aren't being created in this economy.

Barron's recently published an article about Fannie Mae (FNM) and Freddie Mac (FRE) regarding the increasing likelihood of a U.S. Treasury bailout that would approach nationalization of the two. It pointed out that such a move could wipe out existing holders of common stock in the largest U.S. home funding companies.

Federal help for these companies seems to be inevitable, as the companies -- which account for upward of 42% of the nation's $12 trillion in outstanding mortgage debt -- have seen their stocks drop 90% this year.

Not only would current stockholders feel the pinch of government intervention, but the burden would likely be shared among U.S. taxpayers, with early estimates coming in at $25 billion … depending on how bad the situation turns out to be in the longer term.

Mortgage companies are feeling the pinch of margin calls from their own lenders as home prices continue to fall. I mean, all of this literally hits home and it is so in-your-face that it's hard not to be bearish.

Yet, with all of this fear, institutions are buying.

MARKETS DOWN, BUT BUYERS NOT COMPLETELY OUT

We are seeing more and more stocks moving through key resistance levels in the face of this bearish tone. Any stock market pullbacks have been met with new buyers. ...