Federal Home Loan Mortgage Corp (NYSE: FRE) Defines High Risk Says Market Timer Frank Kollar

August 7, 2008 (FinancialWire) (By Frank Kollar)

Shares of Federal Home Loan Mortgage Corp (NYSE: FRE) are off some 90% over the past nine months since the credit crisis has taken its toll not only on the stock, but the economy as well.

After reaching panic lows, touching $3.89 back on July 11, FRE has rebounded closing Wednesday at $6.49. That is a gain of 67% from those lows. Can FRE go higher? Is there a bullish trade to be made in this stock?

A long time trader, former market maker and personal mentor in my early trading years once told me “never buy a stock that costs less than a pizza.” There is a reason why it costs so little and no trade is worth the risk.

That about sums it up and though FRE may have a bottom in place that could be its historical lows, it also may not be. When Nortel hit $70 a share, there were advisories stating it was a great buy. That was before it reached half a buck at its lows.

We would stay far away from FRE until the crisis is over and share prices return to normalcy, wherever that is. That day may, or may never, happen

Kollar is editor and chief analyst at FibTimer.com (http://www.fibtimer.com) which offers market timing strategies for S&P and Nasdaq index fund traders, as well as bond, gold, small cap, sector, ETF and stock trading strategies.

Kollar’s research has shown that the financial markets are in tradable trends approximately 80 percent of the time. FibTimer strategies define trends and trade them in both advancing and declining markets. Caring nothing about what newscasters say or what the latest economic indicator predicts, trends are where the profits are, and that is where FibTimer is.

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