Income is vital for investors right now, says Eric Roseman. He says investors should begin to accumulate long-term positions in “busted” credit markets. Investment-grade corporate debt currently offers great yields and, in some cases, is government-guaranteed. These bonds may not have bottomed out yet, but now is the perfect time for value investors to test the waters.

This from Sovereign Society:

“This aging stock bull market is looking increasingly like a scarred prizefighter after winning too many championships. Indeed, the market is looking increasingly fragile, bruised and battered since the bear market low in October 2002.”

In January 2008 I made the above observation about stocks as the market was coming undone. Of course, almost a year later the stock market has collapsed with stocks likely to post their worst calendar year of performance since 1931. Over $10 trillion dollars of global stock market values have been wiped-out in 2008.

So

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Current crisis proves that Volatility Index VIX as a investing indicator is not as sufficient as expected. a href="http://stockweb.blogspot.com/2008/09/volatility-index-vix-above-40.html" target="_blank"strongHistory showed level of 40/strong /aas an indication of market bottom. But it has not been case of current market. VIX crossed easily above 40 and jumped to 89. Similar situation happened during October 87 when VIX peaked at 150. p/ppimg id="BLOGGER_PHOTO_ID_5272961483636998178" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 237px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_28p7XDn4Qb0/SS1SiDKAACI/AAAAAAAABTw/sSVey4DehMo/s400/commercial+papers.jpg" border="0" //pbr /pMore accurate indicator for coming turmoils have been spreads. Either a href="http://stockweb.blogspot.com/2008/10/falling-ted-followed-by-easing.html" target="_blank"strongTED spread/strong/a or a href="http://www.federalreserve.gov/releases/cp/" target="_blank"strongdiscount rate spread for commercial papers/strong/a. It concerns short term (up to 9 months) paper. As you can from the chart, for lower rated A2/P2 the spread reached high already in the beginning of 2008. Market had been more cautious than after 9/11/2001. This has been the first signal for lack of liquidity. /pbr ...

Tuesday’s mega-rally will have many investors itching to get back into the stock market. But Eric Roseman says chasing a short-term bounce could be a big mistake. Similar up-crashes during the Great Depression were followed by prolonged downturns. But Eric says this could be a good time to “nibble” at some quality blue chips or non-Treasury bonds.

This from the Sovereign Society:

Yesterday’s [Tuesday] spectacular 889 point rally for the Dow ranked as the sixth largest daily percentage gain in history for the world’s most widely followed benchmark. The Dow surged 10.9% on Tuesday and other international markets also followed suit with huge double-digit gains.

But again, don’t get too cocky thinking we’re at the cusp of a new bull market. It won’t happen. The economic backdrop does not portend profit recovery any time soon. Domestic consumption is still declining in the United States as Americans start saving again. A higher

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First picture on the left, courtesy of Bloomberg, shows falling TED Spread. Difference between 3 month T-bill interest rates and 3 month LIBOR. Especially today we see dramatic decline below 3.Someone could call TED Spread as a new volatility indicator in current market. Unfreezing credit market is lifting equity markets and easing volatility. It really goes in line with CBOE Volatility index VIX.Second picture, courtesy of Yahoo, is 5 days trend with VIX and as you can see today is crossing below level of 60.I am giving you two links where you can check TED Spread and Volatility index VIX.http://stockweb.blogspot.com/atom.xml

Last week we saw huge global rally on Monday. But next two days the gain was almost wiped out. And on Thursday again buying interest sent stock significantly higher. Nevertheless the last low is higher than the previous low I don't see this as a strong signal to say we have bottomed. We are talking just about three days when the formation has been created. I need to see higher low in coming weeks.Volatility index VIX (^VIX) reached new highs when crossed above 80 and closed on Friday at 70. This level of volatility has not been seen in two decades. Last time VIX passed this level on October 1987. You can check out trend of CBOE Volatility Index.I am becoming more bullish in short term horizon. All these fears about recession and financial crisis are already priced in the shares. No surprise if US ...

Stocks skyrocketed yesterday. Today, the Dow has fallen below Monday's close after soaring by as much as 400 points.

What are investors to make of this wild volatility?

Keith Fitz-Gerald in Money Morning says it's too early to tell if the recent rally was the "real deal" or simply another "head fake” in a long string of downdrafts.

Keith says there are three key indicators you need to watch closely and three key ways to protect your portfolio in this bear market.

[Although the Dow Jones Industrial Average soared 936 points yesterday (Monday) to post its biggest one-day gain ever, Money Morning’s Keith Fitz-Gerald cautions against abandoning defensive positions.] With the huge rally we saw yesterday (Monday), the question most investors are going to ask themselves is this: Is this the real deal, or is this yet another “head fake” in a long string of downdrafts? It’s too early to tell which way stock prices are headed from here. Indeed, traders could take this market in either direction in the weeks to come. So, before you abandon your defensive portfolio positions, here are several key points to consider: The London Interbank Offered Rate (LIBOR): Despite the fact that it came down over the weekend, LIBOR is still near all-time highs, which continues to suggest that banks prefer not to lend to one ...

Several stock exchanges posted the biggest daily and weekly declines in history. Most of the markets dropped 20% or more in one week. Long term LIBOR interest rates are still on rise nevertheless over night rate are already falling.Volatility index VIX jumped above 75. All this big fear is reflected in stock price. This global sell off is broad.There is no distinction between sectors related to economic cycle or recession prove sectors. Even defensive plays like health-care are posting sharp declines. Nobody cares about debt ratio or focusing on untouched sectors.I don't expect "V" recovery from that point. In fact I do expect that markets can go lower. What we could saw on last Friday in US before markets closed trading. Dow Jones jumped 800 points in less than half an hour of trading. There is cash waiting to get in. Record VIX level or Put / Call ...

Several stock exchanges posted the biggest daily and weekly declines in history. Most of the markets dropped 20% or more in one week. Long term LIBOR interest rates are still on rise nevertheless over night rate are already falling.Volatility index VIX jumped above 75. All this big fear is reflected in stock price. This global sell off is broad.There is no distinction between sectors related to economic cycle or recession prove sectors. Even defensive plays like health-care are posting sharp declines. Nobody cares about debt ratio or focusing on untouched sectors.I don't expect "V" recovery from that point. In fact I do expect that markets can go lower. What we could saw on last Friday in US before markets closed trading. Dow Jones jumped 800 points in less than half an hour of trading. There is cash waiting to get in. Record VIX level or Put / Call ...

Global stock markets are still in the selling pressure and volatility index VIX is already second week above 40 points. In fact this week index is oscillating around level of 50. This is right time for value investor for bargain searching. Many worthy stocks are below P/E 10 with still perspective growth and book value equaling to stock price.Uncertainty about future attracts more attention to defensive sectors like health-care or consumer staples. I run fundamental stock screen for large cap health-care stocks with P/E below 15 and Price-Book Value below 4. Here is the list of potential value plays. Ticker Company Name PEG P/E P/BV ...