PowerRatings, the Geithner Plan and More
Announcing that the government must not make the mistake of “applying the brakes too early,” Treasury Secretary Tim Geithner vowed “comprehensive and forceful” action in restructuring a battered American financial system.
Geithner’s plan consisted of a number of key components including new transparency standards and “stress test” requirements for financial institutions. Said Geithner, “under this framework we are establishing three new programs to clean up and strengthen the nation’s banks, to bring in private capital to restart lending, and to go around the banking system directly to the markets businesses and consumers depend on.”
The new programs included a new public/private investment fund of approximately $500 billion developed with the Fed, the FDIC and the private sector devoted to what Secretary Geithner called “legacy assets”, and a plan to provide $1 trillion to support consumer and business lending, including an increase in federal loan guarantees for small business loans. Geithner also announced a comprehensive housing program designed to reduce mortgage payments and to bring down mortgage rates
A new website, financial stability.gov, has been created where additional details of the restructuring plan can be found.
At the beginning of Geithner’s remarks shortly after 11 am Eastern, stocks were pulling back by more than 2% in the Dow, S&P 500 and Nasdaq. Entering the day already significantly overbought, the early sell-off was something that many traders had anticipated.
Consider the chart of the SPDRS Trust
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Continued selling will likely create oversold conditions and key upgrades and downgrades to Short Term PowerRatings in a variety of stocks and ETFs. Be sure to visit TradingMarkets for our Daily PowerRatings Analysis every morning and evening after the close to find out what kind of opportunities those Short Term PowerRatings upgrades and downgrades create for short term stock and ETF traders.
Last but not least, here are a bonus extra 7 ETFs and Stocks You Need to Know over the next several days and weeks in the new financial landscape of aggressive public participation in the financial markets.
The ProShares Ultra Financials ETF
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PowerRating) is one of the most widely traded, leveraged exchange-traded funds. It is also one of the best ways to keep track of the fortunes of the financial stocks – fortunes that are very much linked to those of the S&P 500 and stocks in general. A non-leveraged option for ETF traders and investors is theFinancial Select Sector SPDRS ETF
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If you think that the financials have further to fall – or if you want to hedge trades or investments in financial stocks – the ProShares UltraShort Financials ETF
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Financial stocks were among the most volatile in the early hours of trading on Tuesday. Shares of Bank of America
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Will the financial restructuring plan be bullish or bearish for the dollar? One of the best ways to trade the dollar’s rise and fall is through an exchange-traded fund linked to the price of gold. Among the most liquid of these ETFs is the Gold Shares SPDRS ETF
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David Penn is Editor in Chief at TradingMarkets.com.