This week’s recap starts with Cramer’s less than stellar stock picking performance on Mad Money versus the major market indexes. I mixed in a couple links about the Fed decision on Friday from Bonddad and Bloomberg. Madstocks has a post about interesting stocks that perform better than average when hurricanes start to develop and cause havoc in the Gulf of Mexico. StockBee highlights characteristics of stocks that typically outperform the market after a correction or pullback. I touched on this subject earlier in the week with a short list of my own. I rounded out my weekly top 10 links with posts from solid perennial stock bloggers such as Brett Steenbarger, Roger Nusbaum and Bill Rempel. Enjoy and don’t forget to read them ALL!

• The Cramer Effect and Defect:
  By Bill Alpert via Barrons Online

  “But a comprehensive and careful review of his stock picks by Barron’s finds that his picks haven’t beaten the market. Over the past two years, viewers holding Cramer’s stocks would be up 12% while the Dow rose 22% and the S&P 500 16%, according to a record of 1,300 of the CNBC star’s Buy recommendations compiled by YourMoneyWatch.com, a Website run by a retired stock analyst and loyal Cramer-watcher.”

• Friday’s Markets: via The Bonddad Blog
  

  “Bernanke has continued the the “Greenspan put” tradition. When financial markets screw-up and make a ton of bad loans, the Federal Reserve will bail them out.”

• Fed Cuts Discount Rate to 5.75% to Ease Credit Crunch: via Bloomberg
  

  “Today’s move also shows how Bernanke, like his predecessor, is prepared to temporarily abandon Fed growth forecasts and inflation objectives to offset the risk of a credit crunch. Former Chairman Alan Greenspan was known for his tendency to give financial market conditions a primary role in policy, and he came to the rescue on several occasions when turmoil struck.”

• Mood, Emotion, and Trading: via Brett Steenbarger at TraderFeed
  

  “We have a lot of volatility at the moment, but we have more fear than we have seen in a very long time. As the markets have rallied during the course of the day, the VIX to SDS ratio has remained stubbornly higher, suggesting that the fear component of the VIX may now be the tail wagging the volatility dog.”

• Hurricane Plays: via Madstocks
  

  “I have traded hurricanes many times, this is a list of stocks that made huge moves when a hurricane was present in the Gulf of Mexico:”

• Creating and Managing a Trading Journal: via Toni Hansen
  

  “One of the most common, and least helpful, forms of a trading journal that people use is the spreadsheet. I despise spreadsheets… We are talking a level much higher than simply disliking them. If I ask a client to bring me their trading journal and they show up with a spreadsheet showing things like stock symbol, entry time and price, exit time and price, amount gained or lost and that is all, then I just want to take that spreadsheet and throttle them with it… ”

• Search For Stocks With Fattest Profit Growth: via Pradeep Bonde at Stockbee
  

  “Today Investor’s Business Daily has a piece on stock selection and importance of earnings and earnings acceleration in stock selection process. Market corrections like the one we are currently witnessing are good time to focus on such stocks. These stocks withstand such corrections. Even if they pullback, they do it reluctantly.”

• Financial Sector: via Roger Nusbaum at Random Roger’s Big Picture
  

  “One thing we all need to think about is that at some point the financial sector carnage will end. When it does it will make sense to go heavier into financials… The sector is in trouble, the trouble will end, and once it does makes sense that the more volatile names within will provide leadership. As a general idea increasing volatility at the start of a new cycle and then letting up on that volatility as the cycle matures has been a reliable pattern in the past.”

• From One Perception to Another: via David Kneupper at The dk Report
  

  “So far, this correction has a bizarre, unpredictable quality to it that’s about de-leveraging, illiquidity and other serious matters. However, there’s no evidence that the weakness is about an economy tipping into recession. As a result, it’s worth repeating that remarkable opportunities are being created through the mis-pricing of equities. High quality watchlists will come in handy soon enough.”

• Irony, Possible Bottoms, and Scaling In: via Bill Rempel, a.k.a. NO DooDahs!
  

  “No one is consistently on time, even though it’s a fact that someone always buys right at the bottom or right at the top, because, you know, there was a tick there… I still see nothing to change the thesis that this was a forced-selling panic, and I expect these buys to be profitable before long, probably before most of the demagogues even recognize a bottoming has occurred.”

It was an interesting week as we started with IBD calling for a new rally on Monday but then declared it dead on Friday after the DOW undercut its recent low. The Fed injected another $38 billion on Friday after pumping an above average amount of $24 billion on Thursday.

IBD’s big Picture states: “The events of the past few weeks have made it clear that we’re in a news-driven, whipsawing market.”

I say: “Listen to the NH-NL Ratio when confirming a rally or follow-through. Without confirmation, the spike among the indices rarely means a thing. They need support from leaders to sustain their move over a period of time.”

• Three Easy Ways to Expand Your Creativity:
  by Chris Garrett via Copyblogger
  “It is only by being creative that we can create anything remarkable. Like our writing muscles, our imaginations need regular attention and exercise if it is to serve us well. It’s so easy to get stuck on rails, always doing what we do, think the way we think, produce what we always produce.”
• Friday’s Markets:
  by The Bonddad Blog
  “Today, the main news was the Fed’s announcement that they would add liquidity to the market if needed. This gave the market a floor. We opened lower and rallied twice. The bottom line is the markets are still in bad shape. They are are still clinging to support at areas where the psychology could change from bullish to bearish very quickly.”
• Advice for Rich Uncles and Others…:
  by The BigPicture
  “Advice for Investors: Never buy anything you do not understand. This is a very simple rule, regularly ignored by all too many people. If you don’t understand what a company does, DO NOT BUY IT.”
• Fear vs. Volatility:
  by Vix and More
  “We have a lot of volatility at the moment, but we have more fear than we have seen in a very long time. As the markets have rallied during the course of the day, the VIX to SDS ratio has remained stubbornly higher, suggesting that the fear component of the VIX may now be the tail wagging the volatility dog.”
• The Importance Of Realistic Goals:
  by No Limits Ladies
  “Realistic goals can save you from quitting a project too early or selling a stock too quickly.”
• Short-Term Waterfall Declines in the Stock Market: What Happens Next?:
  by Brett Steenbarger
  “I went back to 1996 (N = 2891 trading days) and found only four occasions in which we had a prior overnight session down by 1% or more followed by a day session down by 1% or more and a current overnight session down by 1% or more.”
• I’m Ben Bernanke, I’m here to rescue you! :
  by Accrued Interest
  “The Fed adds liquidity almost every day, so the fact that they injected some money isn’t surprising. What happened yesterday was so many banks wanted to borrow that it pushed the trading level of Fed Funds well above the Fed’s target of 5.25%. This is unusual, and therefore the amount of reserves the Fed added was much larger than usual.”
• Video Stock Market Technical Analysis Review 8/10/07:
  by Alpha Trends
  “There is still a lot of uncertainty in the markets and I am wondering if the Fed actions did nothing more than delay further selling. The underlying problems for this market still exist and I suspect that we will continue to see more news driven mini panics over the coming weeks.”
• Search For Stocks With Fattest Profit Growth:
  by StockBee
  “Today Investor’s Business Daily has a piece on stock selection and importance of earnings and earnings acceleration in stock selection process. Market corrections like the one we are currently witnessing are good time to focus on such stocks. These stocks withstand such corrections. Even if they pullback, they do it reluctantly.”
• Closing Comments:
  by Broker A via Fly on WallStreet
  “We are not done going lower. If you are just tossing dollars into the market, prepare to lose a few hairs, over the next few weeks. I am hearing lots of rumors, from multiple sources, regarding hedge fund liquidations. I can tell you there is still significant headline risk, specifically with GS. Because of this belief, I am prepared to short the financials, especially into rallies.”

It was a wild and crazy week and several of these bloggers can give you an idea, a recap or a breakdown of what actually happened.
Enjoy and have a great Weekend!

• Deep Market Thoughts:
  “Because I think (opinion, not fact) the market is extremely rigged, I also have learned to take the longest possible view. I have the best chance of being correct and will keep my costs down. Not that complicated.”
• Market Metldown:
  What’s happening now? I cannot stress enough that the action did not cause severe technical damage on the charts. There is a clear support zone right below price action that could thwart the selling momentum in the short-term, but should this level fail, bears would gain authority and further deteriorate the rising market.
• Weak Home Sales, Tightening Credit Standards = Multiple Mortgage Apps:
  Based on our interviews with our Real Estate clients (commercial builders, RE brokers) and especially residential Mortgage Brokers, there appears to be a dramatic rise in multiple applications for both new purchases, refis, and home equity lines.
• Blood In The Streets! Bears Piss Themselves While Celebrating! It’s “Buy Time!”:
  There are only 118 of the S&P 500 stocks above their 50 dma, and only 267 of them above their 200 dma. The last three times that happened were near the bottoms of the corrections of Apr 2005, Oct 2005, and Jun 2006.
• Is T2108 Already Indicating a Bottom?:
  Aside from the glaring negative divergence in T2108 what really struck me about T2108’s chart is that it’s already below its *magical* 20. As I’ve posted many times before, 20 on T2108 is typically a sign a of a decent bottom and a buy signal.
• When Traders Lose Confidence – Part One: Gaining Perspective:
  “Were you wrong, or were you trading poorly?” It’s a key question. There will always be risk and uncertainty in markets.
• When Traders Lose Confidence – Part Two: Changing Your Self-Talk:
  Confidence is not something we have, like money or a car; it is something we do. Confidence is our appraisal of our capacities relative to the challenges we anticipate.
• The Return of the Absolute VIX:
  Fast forward to the present and here we are with a VIX in the 20s and suddenly the old numbers may have some meaning.
• Relief Rally:
  Today we got the much anticipated relief rally… to the downside. Relief from the never ending barrage of “Dow 14,000” blurbs and flashing alerts from CNBC.
• IBD100 Strikes Again:
  Stocks with the very best fundamentals function like an early warning system for the stock market. Until they sell off in heavy volume, a rally almost always keeps moving higher.