It’s hard to believe that last Monday the Dow surged by 289 points on news of the feds’ rescue of Fannie and Freddie. Today traders are in full panic mode. They have sent Dow futures down by 342 points, leaving the index at 11,109.

Rick Pendergraft advises investors to do one of two things: “If you are a long-term investor, ignore most of the news unless it affects one of your stocks in particular. If you are a short-term trader, take profits quickly and take losses even quicker.”

Buying an inverse ETF that profits as the market drops is also a sound way to insure against losses…

– If the stars of yesterday’s going were toxic mortgage twins Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE), Lehman Brothers (NYSE:LEH) put in a damned good supporting role. Traders pummeled the bank’s stock after a proposed investment deal with a Korean bank fell through. Lehman’s shares dropped 45%. Lehman wasn’t the only Wall Street bank to fare badly. Financial stocks overall tumbled more than 6%.

– This morning, the bad news continued for Lehman. It told Wall Street it will post a second straight quarterly loss but promised to slim down in the future, putting an end to a brief pre-market rally in its shares.

The recent ban on naked short selling (between July 15 and August 11) propped up the financial sector, the airlines sector, and the dollar. At the same time they killed oil, says Rick Pengergraft.

Several data releases last week – including new home sales, durable goods orders and GDP growth – signaled an improvement in the U.S. economy. But Rick Pendergraft in Investor’s Daily Edge says it is important to distinguish between stabilization and reversing course. A huge backlog of unsold houses and ongoing job losses will keep the economy on shaky ground for the time being…

Investor’s Daily Edge editors Rick Pendergraft and Andrew Gordon, speaking with Today’s Financial News editor J. Christoph Amberger, recommend four investments to make now to leverage volatility in the crude oil and currency markets.

Despite falling commodity prices, producer and consumer inflation are rising. Add to this low consumer confidence and you get bad news for the retail sector, says Rick Pendergraft in Investor’s Daily Edge. Rick recommends steering well clear of retailers right now…

Crude oil prices plunged on Friday – the sharpest one-day fall in percentage terms since December 2004.

This morning,  however, crude was up almost $1, touching $115.57 a barrel on the Nymex.

Rick Pendergraft in Investor’s Daily Edge says strong trendline support for the crude oil should prevent a further fall in prices in the coming months. But falling demand and a breakout for the US dollar mean $147 will be the high water mark for oil for several years.

According to a recent article in Barron’s, now is a good time to sell airline stocks.

So far this year, 25 airlines have collapsed. Those that have survived have taken on hefty losses. The seven biggest US carriers had combined 2Q losses of almost $6 billion.

Nevertheless, over the last month the AMEX Airline Index (XAL) rallied as the price of crude oil fell. This trend will be short lived says Rick Pendergraft in Investor’s Daily Edge. A reversal of fortunes for the dollar and for oil will send airline stocks back down again soon…

As recently as last November, Google was priced at over $700 per share. But the one-time Internet darling seems to have lost some of its allure. Google took Wall Street by storm in August ‘04 when the stock debuted at an even $100 a share.

Much has been written about the new drive by the Securities and Exchange Commission (SEC) to eliminate naked short selling of stocks. (Read the Mogambo Guru scathing criticism here.)

Rick Pendergraft in Investor’s Daily Edge has no problem in principle with the clamp down on naked shorting. But it may create more problems than it solves.

If hedge funds and brokerages suddenly have to settle all unsettled short sells, they will have to sell assets to cover their naked shorts. Blue chips with high institutional ownership are most vulnerable…