Bears Rule – There are basically 3 Positions in the Bottom Line Section of Market Updates Cautiously Bullish, Neutral and Cautiously Bearish. Only on the rarest occasion is the outright Bear or Bull position used. Today is one of those times where Bears Rule. Check out US markets below.

Misogyny In America – American Corporate Media whose board rooms are dominated by rich white right wing males rarely mentions misogyny, but it is often promoted for rating results. Sexism is one of the most dangerous and destructive forces that permeates almost every aspect of American life. Bob Herbert is a black columnist for the NYT whose Politics and Misogyny editorial is the basis for the outline below.

1) Multi billion dollar internet porn industry has transformed pornography from the raincoat crowd to a password crowd
2) Paparazzi risk death to get revealing shots of Paris and Brittany without their underwear.
3) Violence toward women abounds – a gunman a year ago separated Amish girls from boys then proceeded to kill the girls.
4) Cable and Network news run story after story of young blonds who are in trouble and meet a violent end.
5) The latest obsessive coverage of the pretty young pregnant marine who said she was raped and later killed is the latest example.
6) Television is obsessed with shows of dead young women or the young blond in trouble.
7) AP reports 80 military recruiters had to be disciplined for sexual misconduct toward young women
8) Recent NYT report – 121 returning vets accused of murder – killing mostly women.
9) Fashionable adds all over the print and electronic media play to this violence, death, female submissiveness and child pornography
10) We become so desensitized to the degrading, disrespectful and violent treatment of women that it hardly gets noticed.

Romney Wins Big – Michigan primary results Romney 39.4% McCain 30.0% Huckabee 16.4% (100% precincts reporting)

It was “the economy stupid” (this was the famous quote by political pundent James Carvel that help win Bill Clinton the presidency) that by far influenced most Michigan Republican voters. Romney’s business skills (Bain Capital) made a difference. If you are from Massachusetts, where Romney was governor you have a totally different opinion of his business skills as well as his positions on a number of issues. However, as our economic situation deteriorates

See demographic break up (exit poll data) of Michigan vote .

 

STOCKS

Index % Change Volume

Dow -2.17% up
NASDQ -2.45% up
S&P500 -2.48% up
Russell2000 -2.11% –

US Markets – Volume confirmed a massive downside move. The Dow has broken its line in the sand support level on both daily and weekly charts http://stockcharts.com/charts/gallery.html?$INDU The other 3 major indexes are all close to breaking down through the same support levels established in 2006.

Bad earnings news from the mother of all banks Citigroup and the announcement of the worst holiday retail season since 2002 (right after 9/11) were the fundamentals blamed for the fall. http://articles.moneycentral.msn.com/Investing/Dispatch/080115markets.aspx

It Gets Worse – Intel, the mother of all chip stocks, missed badly in its earnings report and plunged over 14% in after hours trading. This means the technical support levels on the other major indexes will probably get wiped out and panic may take hold. Three likely outcomes.

1) We could have a climax sell off. This would be a day or two of huge losses and volume, – (Would buy into this)
2) We could continue on the path of 1+% to losses in big but not huge volume today leading to a slow meltdown.
3) We could fall and bounce back to reclaim the broken support level in a day or two.

Tea leaves feel that scenario #2 is most likely.

Riding to the Rescue? – What’s out there that could mitigate what looks like upcoming doom?

1) Since Bernanke has already indicated a 0.50% rate cut on January 31st only a 0.75% rate cut today might temporarily stop the fall. This amount of a rate cut is almost unprecedented.
2) Some kind of good earnings news. Unfortunately it’s hard to trump the Intel and Citibank earnings debacle.
3) Arab dictators might announce a massive buying of American banks and financial institutions

Bottom Line – There is going to be a lot of pain over the next few days. The bottom Line section has to be adjusted because of broken long term support levels. We are down 12% on the S&P 500 and 20% down is the actual book definition of a bear market The crucial question is how long will the bear market last? The analysts on the financial channels almost unanimously agreed that all the write downs because of the credit crisis were not accounted for by Citigroup. The felt they should not have laid off 4000, but instead 20,000. This means there’s more pain to come.

Unfortunately, most of the recommended long positions (except gold) are going to get hurt. So some more changes are in order.

Note – TRAMX , a mutual fund, is being added to recommended list and as previously discussed EEM is being dropped. The emerging markets that are focused on all have one thing in common – big energy supplies (oil, natural gas, or ethanol) There are no ETF’s that invest in this area. EEM has been a recommendation for years, but its time to be more specific as to where the growth will be.

GLD has reached a shorter term overbought top and short term traders should be aware of the potential pull back. Take profits

Bottom Line

Long Term Outlook BEARS RULE (caution – this “Outlook” is based on US equities and while US markets greatly influence other markets it is not necessarily the outlook for recommended sectors)
As long as we stay below the 2007 lows BEARS RULE will stay in effect.
Signs of credit problems spreading to auto loans and credit cards are appearing. Some early signs of good nes in mortgage based credit (LIBOR & 3MYB) Global growth is the energizer bunny for markets throughout the world and the single most important factor holding up US and foreign equities

Asset Allocation/ Recommended Sectors (long term)

*20 % Energy rich EWZ, (Brazil) RSX (Russia) two recommended countries. TRAMX (mutual fund invests in Mideast and Africa)
*35% Energy – PBW – 20+% (alternative energy) XLE 15- % (energy companies) Other considerations in alternative energy GEX and PZD.
*20 % GLD (gold).
*25 % cash (All investors can short rallies if they are comfortable with this- strongly recommended as a short term defensive play ) SJH Ultra Shorts the Russell 2000. ProShares offer a lot of short funds (ETF’)
These are long term positions. Best Strategy – BUY THE DIPS – Be patient. (There is a hold on this right now because of bearish trend except for gold )
Changes to Bottom Line Section Bolded .
As Always, Do Your Own Research Before Investing

  • Share/Save/Bookmark