Investors 411 Blog

by Barr Jozwicki
May 28, 2009

Market Updates – North Korea

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , ,

What’s Up? North Korea, data, editorials, and raising the alert levels. How we act here impacts Iran – New daily Positions section for recommended stocks – Reading the Tea Leaves, a broader longer term market outlook.

North Korea Info Page from BBC
Map and links from BBC

 

The British Broadcasting Company is a more independent source for information than most American media.

North Korea’s nuclear test is obviously a very significant problem. US and South Korea have just raised their alert level.

Solutions here are going to have to involve China/world taking a more aggressive role against North Korea.  NYT editorial here. Iran is watching what happens here. Giving into North Korean demands obviously encourages every nation/dictator to become a nuclear power.

 

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -2.05% down
NASDQ -1.11% up
S&P500 -1.90% flat
Russell2000 -2.09% -

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Technicals & Fundamentals 

The NASDQ held onto most of Tuesday’s gains, but the Dow and S&P lost most of those gains. Small cap stocks (Russell 2000) were somewhere in the middle. Volume was again below average. We are stuck in a trading range.

From yesterday – “One interesting pattern is developing – The first trading day of each week recently shown a  a significant move higher and the rest of the week has given up those gains…. Very suspicious over lack of volume.”

XLF - The ETF that tracks financials (mostly shadow banks ) fell -2.99%. Financials has been the leading sector and as financials go so go the markets.

WTIC - Oil prices again closed over their $60 support level +1.60% at $63.45. Energy related stocks kept the rest of the US markets from loosing more ground. As stated before – “Higher oil prices are an indication of economic recovery, but also hurt that recovery because it means energy prices will rise.”

Fundamentally – Almost every analyst out there says we have a glut of oil and prices should be falling. 

BDIThe Baltic Dry Index measures the flow of goods (world trade).  The momentum here is bullish (see chart). This is extremely important because one of the greatest obstacles to a worldwide recovery is the lack of trade between countries (protectionism)

Reading The Tea Leaves - Longer term pattern is clearly consolidation (last month prices have been stabile) and this is good. The bullish trend that started on March 9th is firmly in place.  

If we break out of this consolidation pattern to the upside the Long Term Outlook will change to Cautiously Bullish. Right now, this senerio looks more likely than a downside breakout.  

  • The BDI rising 
  • Technical consolidation in prices 
  • consumer confidence rising  
  • rising commodity prices 

All this shows an improving economic situation worldwide. One downside to all this stimulus is inflation, but for now the mojo is still with the bulls  Questions - 

  • Could it be that we are unwinding the economic debt of shadow banks in the right way?
  • Are we in the last innings of the housing meltdown?  
  • What happens when we impose rules on the shadow banks?  

 As stated before we have dug a huge economic hole. We can go from  -6% GDP growth to zero and this will be positive for stocks. But what happens after that?

Positions - (See positions section of blog for more)

  •  EWZ - From yesterday “sure looks like it was a mistake to take our substantial profits (+26) in Brazil (EWZ) Brazil reached a new closing high yesterday… looking for a dip (-5 to 10%) to get back in.”
  • Inflation - GLD (gold) is one of the hedges against inflation. Down -0.33% yesterday
  • There are ETF’s that also will move higher if/when inflation occurs. Considering TBT  (explanation later this week), but is has way too high a price right now. This ETF has gone elliptical and will wait for a pull back.
  • FXI - our major position here only rose +0.68% yesterday.
  • GEX – alternative energy – +1.91 yesterday 

Long Term Outlook = NEUTRAL

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

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May 27, 2009

Market Updates – Californification

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , , , , ,

 

What’s Up? – David Patraeus on torture and Gitmo – The Supremes sing in Spanish – Californification, Is the Golden State falling into the sea? Will the US join them – Women’s historic win in the Islamic state of Kuwait – Fearless market forecast.


Petraeus

Petraeus – Huffington Post photo

Torture

  • Obama says – torture bad – closing Gitmo good – Right wing says NO
  • McCain says the same thing – Right wing says NO
  • Powell says same thing – Right wing says NO
  • Admiral Mullin (chair joint of staff & a Bush appointment) says the same - Right wing says NO
  • Sec. of Defense Gates says the same (another Bush appointee) says the same - Right wing says NO
  • Now the hero of the right wing General Petraeus says Obama is right – what will Cheney, Limbaugh and the rest of the right wing now say  about torture and closing Guantanamo Bay?

Californification

California is up to its neck in quicksand. Its one of the leading states in foreclosures and unemployment. Will the US follow California? Previous posts over the years have brought up California’s two major problems

 

  • Proposition 13 - This state taxes property at what you payed for it. So for example if you payed $50,000 for a property 30 years ago and it is now worth $1,000,000, you pay only a tax on$50,000. Someone who buys property now pays today pays a whole lot more – This has lead to a serious short fall in revenues.
  • You need a 2/3 vote in the legislature to make any serious changes in tax structure.

 

In the USA we too have self interested people who want to pay almost no taxes & have to overcome a 60% filibuster in the Senate to make any serious tax changes.  Not as bad as California, but still a problem.

Want to learn more – See Nobel Prize winner Paul Krugman’s editorial California - A State of Paralysis. 

Sonia

Sotomayor – AP Photo

Supremes

Front page of every newspaper – An “inspired” (obviously others might disagree) choice for the Supreme Court – Sonia Sotomayor. – - Impressive legal background, compelling life story, first Hispanic ever nominated to Supreme court. For more see NYT editorial

Aseel al-Awadhi smiles during a campaign rally in Kuwait City in this May 12, 2009 picture. Women have won four seats in Kuwait's parliament, the first to do so in the Gulf Arab state's history, in a blow to Islamists who have long dominated the assembly. Aseel al-Awadhi was among the winners. Picture taken May 12, 2009.

Aseel al-Awadhi photo – Boston Globe

Women in Kuwait

4 of the recently elected 50 members of parliament in Kuwait are now women. This begins to breaks the mold of how women are treated in Muslim countries and a first for the Gulf States. This is truly a historic move

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow +2.37% up
NASDQ +3.45% up
S&P500 +2.63% up
Russell2000 +4.75% -

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Technicals & Fundamentals 

Forecasting what markets will do is all about how potential investors feel about the  fundamental aspects of stocks and the economy. Technicals (looking at chart patterns) gives us some idea of where the traffic signals are. It all about predicting attitude.

Yesterday the US stock markets exploded higher as volume rose. However volume was below average and below the down days of both Wed. & Thur. of  last week. While the price move is encouraging and explosive, what natural for a sustained rally is increasing above average volume. This show buyers or potential investors are not moving back into stocks.

Yesterday is certainly not a bad day and it may be the start of another leg higher. However for right now it is a move from near the bottom of the consolidation pattern we’ve been in for the last three + weeks to near the top. Therefore, no big green light till volume confirms a breakout.

One interesting pattern is developing – The first trading day of each week recently shown a  a significant move higher and the rest of the week has given up those gains.

Good consumer confidence numbers were said to be the fundamental behind the market move. Never seen consumer confidence boost the markets this much. Very suspicious over lack of volume.

News this AM – GM bondholders say no and it looks like GM will go into bankruptcy.

XLF - The ETF that tracks financials (mostly shadow banks ) rose +3.26% This index closed at 12.04. As stated in past updates for the last 3 weeks financials have been trading between @ 13+ and @11+ (more specifically support at 11.33 and resistance at 13.08) Any close above or below these support of resistance levels would turn confirm a longer term trend for bull or bears.

WTIC - Oil prices again closed over their $60 support level +1.26% at $62.45. Energy related stocks kept the rest of the US markets from loosing more ground. As stated before – Higher oil prices are an indication of economic recovery, but also hurt that recovery because it means energy prices will rise.

Reading The Tea Leaves - Yesterday we moved up within the consolidation range. (see above or chart of SPX) There has yet to be any breakout in any US or world indexes.(except Brazil) The formerly leading Financials (shadow banks) are now a bit behind the major US indexes. The NASDQ (techs) seems in the lead.

Positions - (See positions section of blog for more)

  •  EWZ - sure looks like it was a mistake to take our substantial profits (+26) in Brazil (EWZ) Brazil reached a new closing high yesterday. As stated Thursday looking for a dip (-5 to 10%) to get back in.
  • Inflation – GLD (gold) is one of the hedges against inflation. As recommended last week I was able to add to this position as about $93. We sold some gold at $95 earlier this year. 
  • There are ETF’s that also will move higher if/when inflation occurs. Considering TBT  (explanation later this week), but is has way too high a price right now.
  • FXI – our major position here only rose +1.24% yesterday due to the proximity of China to the nuclear test in North Korea. 

Long Term Outlook = NEUTRAL

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

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May 21, 2009

Market Updates – Unsung Heroes

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , ,

WHAT’S UP? – Two unsung Heroes -Health Care Rescourses – Bears with stock market football – Our stock positions (some recommendations) – Oil prices breakout – Shadow Banks – Profiles in courage.

 

Two Unsung Heros

This year two outstanding women won the Profile’s in Courage Award given out by the JFK Presidential Library. 

Shelia Bair – (google photo)

Bair is the head of the FDIC and a Republican.  She opposed many aspects of the Paulson/Geithner shadow bank bailout. She was “the lone voice in the wilderness for her early warnings about the sub prime lending crisis.” She like Elizabeth Warren stands out as a voice of economic dissent in the Obama administration. For more see Bob Kuttner’s editorial

Brooksley Born – (Google Photo)
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Born stands out because as head of the Commodity Futures Trading Commission she warned that “unchecked trading in the credit markets could lead to disaster.”  You can read more about Born and her famous fights with Alan Greenspan from the Sanford magazine
-

HealthCare

The fight for a better heath care system is obviously heating up. Two ways you can make a difference 
  • MoveOn.org has teamed up with Dr. Howard Dean to raising $ to fight for heath care. You can hear Dean’s address here
  • Barack Obama has also asked for folks to sign up, tell their stories and/or donate. You can do so at this link.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -0.62% up
NASDQ -0.39% up
S&P500 -0.51% up
Russell2000 -0.79% -

-

Technicals & Fundamentals 

The losses might seem small, but the major US indexes were up almost 2% in the early afternoon. That’s a big drop into the close. Much bigger than yesterdays last hour plunge.  What’s worse is that Volume increased and was above average. Therefore volume confirmed the move lower.

XLF - The ETF that tracks financials (mostly shadow banks ) fell -2.66% . This index closed at 11.72. As stated in past updates for the last 3 weeks financials have been trading between @ 13+ and @11+ (more specifically support at 11.33 and resistance at 13.08) Any close above or below these support of resistance levels would turn confirm a longer term trend for bull or bears.

WTICOil prices confirmed their breakout above $60 and ended the day +3.23% at $62.04. Energy related stocks kept the rest of the US markets from loosing more ground. As stated before – Higher oil prices are an indication of economic recovery, but also hurt that recovery because it means energy prices will rise.

Reading The Tea Leaves - For more than a week volume has not given us a signal as to the direction of the markets. It did yesterday. Two or three high volume meltdowns can turn the direction of stocks.  The football is now with the Bears. Watch the XFL. If it breaks down through its support level and closes significantly below 11.33 in big volume, then you will probably see more damage to markets. Also 891 in the S&P 500 is another critical support level.

Positions - (See positions section of blog for more)

Long Term Investors 

  • Looking to increase positions in gold (GLD
  • Waiting to get back into Brazil (EWZ) on dips.  Right now Brazil’s 2 main exports coffee and oil are at multi month highs. 
  • GEX (alternative energy) is running higher with the move in oil.  It too broke out to a new 6 month high. Best read of tea leaves is the move in oil above $60 is unsustainable and both (GEX & WTIC) will fall. You can take some profits here especially if you bought the dip around $15 to 18. GEX closed at $25.67 and hopefully buy back in on a dip. 

Shorter term traders - 

 

  • Personally, if I had the time, I would probably trade any drop of the FNX to its support level. 

Long Term Outlook = NEUTRAL

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

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May 20, 2009

Market Updates – Foreign Policy

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , , ,

What’s Up - Pakistan  - Are we making the same mistakes? ; Israel/Palastine - an ineviable war and a path not taken; Polls and Avaaza; Markets continue low volume & low volatility. Stocks held onto Monday’s gains; Volume and volatility continue to fall. Bulls with the football

Refugees.jpg

Refugees (Photo LA Times)

Pakistan

Are we going to learn from the mistakes of the past? Right now the Pakistan government is fighting the Taliban in certain areas of Pakistan. This has created a refugee problem of  almost a million people. 

One report shows the same old counter productive results. Each day the Pakistan military announces the # of Taliban killed. Each day in the massive refugee camps full of people fleeing the violence, Taliban allies offer food and help to those whose lives have been shattered. Add to this often unmanned Ameirican planes blast the Taliban and there is significant civilian collateral damage.

There are some signs that things will be different. For now the Pakistani clerics are supporting the government denouncing the Taliban tactics. Also, Hillary Clinton has asked for $110 in humanitarian aid. Perhaps this time the focus will be more on winning over the hearts and minds of the people instead of focusing on body counts. Only time will tell.

Netanyahu: ready to fight his political opponents, not the real enemy

Netanyahu  (Photo Google images)

Israel/Palestine

This is a minefield whenever its brought up.  So let’s take Obama’s Notre Dame advice and look for some common ground. A recently conducted poll of Palestinians and Israeli contained the following results.

 

  • 70% of the Palestinians and 65% if the Israeli’s wanted Obama involved in the peace process.
  • 59% of the Israeli’s think Obama is trustworthy  vs. 31% think Bibi Netanyahu (Israel’s PM) is trustworthy 

 

The Bottom Line here is the USA/Obama should get more involved in the peace process. If this situation is allowed to fester another war is inevitable, perhaps within a year.

 Avaaza (Voice) is a multi national group of 3 million members that is trying to get Obama more involved in the peace process. Check  out Avaaza.org. and their add.  Another way, if Avaaza is not your cup of tea, is obviously to directly contact Obama and let him know how you feel.


STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -0.34% down
NASDQ +0.13% up
S&P500 -0.17% down
Russell2000 -0.31% -

-

Technicals & Fundamentals

Markets basically went nowhere and Volume remained light.

In one sense this is bullish – we held onto Monday’s big gains. However, volume has been weak and well below average for the last 4 trading sessions.  Since volume is the chief confirmation factor of a price move, we simply have no confirmation of the price move.

XLF - The ETF that tracks financials (mostly shadow banks ) moved lower yesterday -2.03 in light, but increased volume. The chart (see side of blog) shows light volume for the last 7 days. The XLF has entered a rangebound pattern between 11+ and 13+. Yesterday’s close was 12.04. The downside volume has been greater than the upside volume. This gives a little of the mojo to the bears.  A breakout from this range (@11+ to @13+) will determine the overall markets next move.

Market’s Major Mantra - Again – If Shadow Banks go up – so will stocks. If Shadow banks go down so will stocks” 

WTIC - Oil prices closed at $60.10. Up +0.86%. Prices had established a range between $54 and $60. We are sitting directly at a major resistance level for oil.  

HIgher oil prices have two sides. Higher prices for oil usually means investors think the economic picture is getting better. Higher oil prices means everyone pays more for gasoline.

BDI - The Baltic Dry Index that measures world trade  broke through resistance last week and is at a new 6 month high. The BDI broke through a major resistance early last week and rose another +1.5% yesterday. Repeat - World trade is critical, because if protectionism/nationalism between countries grows over trade the recovery is doomed. Very Bullish indicator for world economics and stocks

Reading this weeks tea leaves - Our primary forecasting tool – Volume – is not clear, so let’s use our secondary indicators -  

Markets moved higher on good news (India) and the BDI give us a short term bullish bias.  Resistance level of 13.08 on XFL is the breakout area to watch. Any move above this is very positive for bulls. Another important breakout level is 930 on the benchmark S&P 500. Right now the bulls have the football.


Long Term Outlook = NEUTRAL

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

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May 19, 2009

Market Updates- Capitalism’s Future

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , , ,

 

WHAT’S UP? – Three influential  personalities are shaping future trends - Jesse “the body” Ventura; Jim “mad money” Cramer ; Arianna “she’s everywhere” Huffington.  Their views on the future of capitalism and American morality will impact your money and your lives; Investors411 just took +23%, +16% and +26% profits in 3 different areas – Was it a mistake?

 

Jesse Ventura

Jesse Ventura

Jesse’s been a Navy Seal, a World Wrestling Federation Champ and the Governor of Minnisota. Last week he came up with the following quote on why we should prosecute Dick Cheney for torture-

“You give me a waterboard, Dick Cheney and one hour, and I’ll have him confess to the Sharon Tate murders.”

Jim Cramer

photo – Time mag.

Jim Cramer

Our government and others are flooding the world with printed money. We all know deficits are bad and can lead to crippling inflation. Cramer’s answer (see yesterday’s blog for more)

That’s exactly what they were worried about in 1929 to 1931. Hoover was very worried about tremendous inflation, so he did his best to avoid that, and we had the greatest depression in history. So perhaps we learn from history and worry about inflation after we worry about taking a Great Depression off the table. 

Arianna Huffington

Web entrepreneur, Arianna Huffington has not only turned the Huffington Post into the #1 news source for hundreds of thousands of people, she catapulted this into a media presence on everything from the financial news channel to late night TV. Some of her insightfull comments on the future of capitalism. (Time pg. 54)

“…there has to be a moral component…What happened is that capitalism was reduced to Ayn Rand-ian selfishness

…the agreement among serious economist that we’re doing the wrong thing by trying to protect the Wall Street Oligarchy. What’s amazing is that we’re not having enough of a populist outrage about that.”

 

 

 

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow +2.85% down
NASDQ +3.11% down
S&P500 +3.58% down
Russell2000 +3.98% -

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Technicals & Fundamentals

From yesterday – Let’s stick with the same prediction, for this week as last. More consolidation with a downside bias. After 9 up weeks in a row a consolidation is good for bulls. Going too far too fast creates bubbles. 

Major US and world markets couldn’t wait for a consolidation and instead on the India news (See yesterday’s Investors411) IFN India  ETF was up +21.5%exploded higher. A relatively positive earnings forecast from Lowe’s (home building/remodeling supplies) helped. Competitor Home Depot had basically the same report this AM.

There is one ingredient missing - VOLUME - The #1 confirmation factor of any rally did not show up yesterday. Below average declining volume indicates that the huge amount of money on the sidelines stayed there. 

XLF - The ETF that tracks financials (mostly shadow banks ) exploded higher yesterday  +6.59% in below average declining volume. Volume is NOT confirming the price move. Of course, they again outperformed.

Market’s Major Mantra - Again – “If Shadow Banks go up – so will stocks. If Shadow banks go down so will stocks” 

WTIC - Oil prices fell from the $60+ high last week and have established a range between $54 and $60. Up Monday +4.54% to $59.59. This is directly below the the major $60 resistance level.  Hard to tell if stocks are pulling oil prices or visa versa. Both seems to be signaling a rebound in the economy. 

BDI - The Baltic Dry Index that measures world trade  broke through resistance last week and is at a new 6 month high. The BDI broke through a major resistance early last week and rose another +2.4% yesterday.  World trade is critical, because if protectionism/nationalism between countries grows over trade the recovery is doomed. Very Bullish indicator for world economics and stocks

Reading this weeks tea leaves From yesterdayLets hope and predict a consolidation with a downside bias this week in weak volume. BDI and India are both long term  positives. If 877 support holds on (Mon, Tues. & Wed.) the S&P 500, we could see  the nine week stampede of bulls continue later this week. 877 is the number to watch.

Looks like I was wrong – or I let hope of a consolidation cloud my judgement. The stampeding bulls did NOT wait till the end of the week to get the stampede started.  When bulls stampede they just blindly move. Today they’ll look around and wonder why their fellow bulls did not show up.

We’ve had 3 days in a row of declining volume as markets went south. Then a major reversal in still less volume.

Certainly looks like only short term traders are putting their money down. Benchmark S&P 500 closed at @ 910 and last week its high was @930. We could reach or even surpass that 930 resistance level. But without volume after another short term push higher expect a fall.

Reasons to rally-

  • Markets are moving higher on good news
  • BDI has broken out and moving higher
  • Rising Oil prices reflect an economic rebound
  • Financial analysts keep mentioning “green shoots” sprouting up all over.
  • Obama is one good salesman.
  • Shadow banks have government support

Why are the giant institutions and massive amounts of cash staying on the sidelines? Not having VOLUME confirm the rally is maddening and therefore definitive longer term calls are suspect. However, the mojo is back with the bulls.

Was it a mistake to get out of certain positions too early? +23%, +16% & +26% (See Positions section of blog) Perhaps, and will buy back into EWZ (Brazil) on dip.  Would buy back into XLF (financials) as longer term investment on dip -A smaller position than before. Also looking for a dip to buy some more GLD

However still short term trading FAS and UYG (ultra financials)on dips.

NO major long term  moves now – Be patient - But a tradable market.

Long Term Outlook = NEUTRAL

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

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May 18, 2009

Market Updates – World’s Biggest Democracy

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , ,

WHAT’S UP? - A Standing O at Notre Dame; India/Democracy’s big win; Jim Cramer on who brought our nation to its knees. Soaring stock market – after9 weeks in a row takes a breather; Of course more on Shadow banks; Reading the Tea Leaves.

President Barack Obama is hooded as he receives an...

Photo – Charles Rex Arbogast/AP

Obama’s Sanding Ovation at Notre Dame

The contrast between Obama and the previous administration is like night and day.  Where Cheney Bush projected fear and confrontation, Obama, who inherited two wars and and the greatest economic meltdown since the great depression, worked on ways finding common ground. You can listen to his compelling 30 minute address at this link

Those who tuned in to see Barack the pro choice “baby killer” were soarley  disappointed.

PM Manmohan Singh

photo BBC

Big Victory in the World’s Largest Democracy

The Congress Party in India surprised the pundents and came close to winning a majority in parliament. The party that saw the biggest drop was (Hindu Nationalist Party) who, as the name implies, fosters nationalism and fear of those who are different.  Also shrinking in size were the many independent parties including the Communist. (Congress will be less dependent on the Communists who were their allies in last government)

Its hard to say how big or small a role Obama’s election in the USA played in the victory of the more moderate Congress party. But the bottom line – a more moderate, less confrontational, and pro business victory in India benefits the world. Congress did reach out and gained more votes from the lower classes in India. Stocks in India have surge 17% – BBC

Jim Cramer

photo – Time mag.

Cramer’s Interview 

Money quote from CNBC’s most popular stock analyst Jim Cramer, in Time magazine  on the financial innovations of last several decades -

They almost brought our country down. The only guy who really called this right was Carl Marx. Marx understood what would happen if you let the markets run amok. Of course, it was done by right-wing Republicans. They brought our nation to its knees, and we’re not going to end up being a great power because of what happened.

Cramer did take it on the chin in a Jon Stewart interview. Stewart’s  attack was directed rightly at the financial channels concept of cheerleading unregulated markets. Cramer obviously took the attack personally.(See past Investors411 for more)

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -0.75% down
NASDQ -0.54% down
S&P500 -1.14% down
Russell2000 -1.01% -

-

Technicals & Fundamentals

Let’s stick with the same prediction, for this week as last. More consolidation with a downside bias. After 9 up weeks in a row a consolidation is good for bulls. Going to far too fast creates bubbles. 

From Friday -Volume has dried up to a trickle. Looks like an ocean with no breeze. No breeze means no direction. Declining volume as the market retreats is also  bullish sign. If you’re long equities what you want right now is consolidation or a pull back in light volume.

@ 877 on the benchmark S&P 500 is still an important support level. We closed just above it at 883. When support levels break is often means many  investors start looking at the next support level (@ 832 – see chart at side of blog – both old high and the 50 day moving ave.) as the next area to buy or halt the fall.

XLF - The ETF that tracks financials (mostly shadow banks ) ended the week much lower. Friday they closed down -2.04% in below average declining volume. Volume is NOT confirming the price move.

Market’s Major Mantra - Again - If Shadow Banks go up – so will stocks. If Shadow banks go down so will stocks 

WTIC - Oil prices fell from the $60+ high last week and have established a range between $54 and $60. Down Friday -4.07% to $57.00. Oil prices are often an indicator of which way stocks are moving. This is a bearish number for stocks.

BDIThe Baltic Dry Index that measures world trade  broke through resistance last week and is at a new 6 month high. While 2544 is a long way from the 11,793 high a year ago its a move in the right direction.  World trade is critical, because if protectionism/nationalism between countries grows over trade the recovery is doomed.

Reading this weeks tea leaves - Lets hope and predict a consolidation with a downside bias this week in weak volume. BDI and India are both long term  positives. If 877 support holds on (Mon, Tues. & Wed.) the S&P 500, we could see  the nine week stampede of bulls continue later this week. 877 is the number to watch.

Long Term Outlook = NEUTRAL

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

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May 15, 2009

Market Updates – The “Sith” Lord

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , ,

What’s Up? – Cheney – Truth Serum – Exposing the “Sith” Lord – Darth Cheney; 4 overlooked facts; Col Wilkerson on the “Sith” Lord; Torture; Friday Funnies: Summer doldrums come early to US stock markets; Reading the Tea Leaves

Cheney

Darth Cheney -Truth Serum 

  • More Americans were killed by terrorists under his administration than any other.
  • “American Don’t Torture” was at least as big a lie as Clinton’s “I didn’t have sex with that women.”
  • Cheney /Bush authorized a massive torture system that include torture to find fictitious WMD’s in Iraq.
  • The Cheney/Bush torture program was the (or a) major reason Islamic terrorism has grown. (unjust invasion if Iraq other major cause)

The Abu Ghraib torture photos (early 2004) basally put an end to the massive torture and rendition program. Participants became too fearful of retribution. Therefore, since the beginning of 2004 mainland America has remained safe without a huge torture program. See Steve Clemons/Larry Wilkerson editorial on Cheney for more. 

Col. Wilkerson , Secretary Powell’s chief of staff, is horrified at the damage Limbaugh and the “Sith” Lord(from Star Wars) Cheney is doing to his Republican party. 

Friday Funnies 

In keeping with a new tradition – keeping Friday funny – here’s Darth Cheney, err, Darth Vader video of him conduction the star troopers orchestra

Clone War Vet funny picture

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow +0.56% down
NASDQ +1.04% down
S&P500 +1.04% down
Russell2000 +1.88% -

-

“Capitalism Could Fail” is the headline story on CNBC this AM by noted bear Marc Faber

6 Insurance Companies got themselves over leveraged and will receive $22 billion in TARP $. WSJ story Insurance companies are a big part of the Shadow Banking system.

Technicals & Fundamentals

Prediction at beginning of weekRight now this looks like natural profit taking after a big run higher. I could develop into a reversal if volume increases. – Unless we have a major move higher we will end the week down.

Volume has dried up to a trickle. Looks like an ocean with no breeze. No breeze means no direction.

XLF - The ETF that tracks financials (mostly shadow banks ) after three down days rose (as predicted – see last two days) +3.34% in below average declining volume. Volume is NOT confirming the price move.

Taking your ownadvise – I did not buy FAS – as I urged short term day and swing traders – boy what a mistake. Would have made @10% and got out. 

With volume NOT confirming the price move – its hard to use XFL today as a short term forecast tool. But longer term bullish trend is still in place.

Market’s Major Mantra – Again If Shadow Banks go up – so will stocks. If Shadow banks go down so will stocks 

WTIC charts “Light Crude Oil”.(see chart) Notice after Oil hit a low @$37 a barrel in Feb. it rose to a range between $48 and $54 for over a month and over a month ago it broke out and two days ago reached a high of almost $60. 

Yesterday oil prices rose +0.76% to $59.42. The major resistance level is @$60 and a move above this would be bullish for stocks and bad for consumers. Summer driving season is around the corner and historically prices rise at this time.

BDI, The Baltic Dry Sea Index, that measures worldwide trade has reached a new high this year. The fact that prices to ship goods worldwide is moving higher is bullish for stocks.

Reading the Tea Leaves – Summer doldrums seem to have started early. The BDI & higher oil prices (secondary forecast tools) are both bullish. The overriding fundamental factor is Shadow Banks – So far they have pretty much got what they want from the Obama administration – Banks privatized gains and Taxpayers socializing losses. 

So after some more consolidation we’ll probably see a move higher. Of course unexpected news can change all this.

Long Term Outlook = NEUTRAL

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

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May 14, 2009

Market Updates – The American Worker

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , ,

What’s Up? – Not the stock market; Financials fall –  financials flooding markets with  more shares to raise capital; First in,hopefully, a series of guest editorialist: This one by Scott Herwehe “ Is this a financial crisis or is this a crisis of an unsustainable economic model?” The American Worker.

American Worker by Jeff Kubina.American Worker, by Michael Florin Dente, 1990. Photo flickr.com

Is This a Financial Crisis or Is This a

Crisis of an Unsustainable Economic Model?

By Scott Herwehe

(highlighting mine)

 From approximately 1820 to 1970  worker productivity increased in America and wages increased for most American workers as well. These increased wages were won through a vibrant labor movement that battled and fought for higher wages and better work conditions.

From 1945 to 1970 the average American enjoyed greater wealth than any other time in American history meaning the distribution of wealth was more equitable than any other time period. In fact, the bottom half of American workers made more significant gains than the top half.

Realizing the gains of the labor movement of the 1930′s the owners of production began looking at ways to increase profit and productivity. Two major ways that this was accomplished was outsourcing ( this was accomplished through polices that were undemocratic such as trade polices and the breakdown of Bretton Woods and also see Operation Bootstrap) and increased reliance on the secondary labor force which is workers such as immigrants who have fewer rights than an American citizen.

A massive propaganda campaign was made against unions and we have seen a steady decline in union membership as well as policies beginning with Reagan that have decreased union power and workers rights.( Remember we are the only country in the industrial world where striking workers can be permanently replaced).  

So  around 1970 avg. American workers wages began to level off and productivity continued to increase. Americans were working more hours and more people from a family were joining the workforce. More mothers and children of the family were joining the workforce. So Americans were working harder but real wages were stagnating.  The continued rise of productivity and stagnant wages created huge profits for the owners of capital. With more wealth led to a financialization of our economy where we started producing and making less stuff and instead designed ways to make money off of money.

The only problem was that the gains of the financialization of the economy only went to a small minority of people. Accroding to the World Bank it went to the top 5 %.  A massive redistribution of wealth began to emerge where more and more wealth became concentrated toward the top few.  This created a problem for the owners of production though.  Obviously if wages stagnate or decrease than the workers consumption slows. There needed to be new ways to maintain low wages and continue our consumer based economy.

The answer was credit. We became a nation of borrowers and new and ingenious ways to make money were designed.  This obviously is an oversimplified explanation. There are other policies and factors at play but what is stated is important to know. Can we continue this economic model of working more and more for less and less? Can we continue to borrow more than we can afford?  Can we continue using up massive amounts of resources to keep consuming and buying things that we don’t want or need? We use almost 30% of the worlds resources and have 5 % of the worlds population.

Our economic model is unsustainable. We do need change. Real change. Obama seems content on maintaining the institutions and players that got us into this mess. To be fare to Obama he really didn’t promise us a lot. During his campaign if you ignored the rehtoric and looked at his actual stances on policies than you know he is a centerest democrat which thirty or fourty years ago might even mean Republican. ( Nixon even pushed for nationalize health care.) He is a stark contrast to Bush and a rush back to the center feels very good after an administration that was so far to the far right.

Change and progress in American history has only come when people come together, organize, and fight for it. Power is never freely given to others. We can’t hope for change. We can’t be Obama’s army waiting for orders. We must give the orders after all he works for us.  We have to hold him and our elected officials to the fire. Throughout our nations history American workers have overcome far greater challenges in much worse circumstances. As a country we need to look back on the lessons of the past and create an economic model that works for all Americans and not just a few.

Scott is “addicted” to Investors411 blog and often post’s comments. He searching for anew teaching job in California. 

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -2.18 down
NASDQ -3.01 down
S&P500 -2.69 flat
Russell2000 -4.72 -


Technicals & Fundamentals

Major market had a major meltdown yesterday. Volume again did not rise and therefore did NOT confirm the move lower. Third down day in a row. Often cumulative lower volume can become a factor over time.

 877 on the  benchmark S&P 500  is the support level to watch. The SPX closed at @ 884.

XLF - The ETF that tracks financials (mostly shadow banks ) fell big time -5.08 in average volume. Obviously, the shadow’s are still leading the markets.

If Shadow Banks go up – so will stocks. If Shadows go down so will stocks – The mantra of the markets for the past two months continues.

Reading The Tea Leaves – Why Markets Are Falling

Obviously, technically, bulls have come too far too fast. There another significant reason that involves our broken economic model (see Scott’s editorial above) and our over reliance on credit.

Many Shadow Banks need to raise cash because they are insolvent. So while the markets are high they are selling “secondaries” or issuing more stock to make $ and pay down debt. The other institutions need to raise the cash because the shadow banks are NOT lending. So they too are selling new shares.

All of this new stocks sucks up the limited amount of investors willing to buy. It’s a supply and demand problem. Now that markets have gone up 30 to 35% there’s a stampede of companies creating new shares. This is going to force stocks lower.

So far volume is NOT confirming the move lower and no major technical support levels have been broken. So too early to call a reversal in even the short term trend. This could all end today.

WTIC charts “Light Crude Oil”.(see chart). Oil prices again crested over $60. Prices fell -1.24% yesterday and are further deteriorating in pre US market trading.

Most likely senerio for week -  Consolidation or profit taking. Let Shadow banks be your guide.

From Yesterday – There is at least a short term dip coming. Investors411 has already (Friday) dumped positions in financials and techs.   Yesterday we temporarily sold EWZ (Brazil)

NB change to CAUTIOUSLY BEARISH if S&P 500 closes below 877

Long Term Outlook = NEUTRAL

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

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May 13, 2009

Market Updates – Auto’s death spiral

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , ,

WHAT’S UP? – GM crumbles – the impact; Major trend establishes itself – Reverse Colonialism; Your broker’s bias; Stocks -Buy and hold is dead – why; Changes to Positions section; Your stock questions

Image: Allison Kimble, Scott Kimble

Auto Parts Workers – Josh Anderson/AP photo 

GM/US Auto’s Crumble

GM sock fell over -20% yesterday to below 1933 prices. It ended the day at $1.15.

What happened is that big companies that hold GE bonds also have Credit Default Swaps (remember how CDS’s crumbled housing) protecting their bonds.  Therefore, they have no financial incentive keep the company in business. Looks like bankruptcy is almost inevitable. Story link to pain of car sector dissolving. This looks like a death spiral.  Consequences of bankruptcy -  

  • The worse case senerio the Stress Test had for unemployment (now -8.9%) was -10.3% - We could easily surpass this.
  • More unemployment = more foreclosures = Home prices fall = less consumers buying = more stress on banks= greater chance of economic meltdown. 
  • The USA is addicted to oil and cars. Transportation is vital to the economy. We are already dependent on foreigners for oil and now we will be dependent on them for cars/manufacturing. 

The Trend – Reverse Colonialism

One significant trend that is almost ignored is just how significant a role other countries are playing in buying our debt.

Most talking heads put foreign ownership of the US at @$5 trillion now. The whole way our financial structure has been moving over the last 40 years has depended on expanding and over leveraged credit. Foreigners have bought up lots of this credit.

Inevitably, foreigners are going to demand better and better assets as they become bigger and bigger shareholders in the USA. Already in  countries like Saudi Arabia – the  #2 form of income is foreign ownership.

It’s doubtful that foreign entities will stop buying US debt because it will hurt their own economies. But what is more likely is that they will demand more significant and better American assets to finance America’s future debt. In essence - Reverse colonialism

Bottom Line – Teach your kids Chinese.

Buy and Hold is Dead

Thanks for all the  personal emails on specific stocks (see comments section) I will answer them. But, I do NOT recommend individual stocks because I’ve long since realized that everyone else knows more and has access to better information than I do. 

Your broker is biased.

  • Brokers are paid by how much $ they have in the market 
  • Each AM they are given a list of companies to push that their bosses have made deals with. This info is given to most wealthy clients first.  
  • Individual stocks are too easy to manipulate like GM (see above) Your broker might not be, but brokerage companies play this game.

Buy and hold 

  • Buy and hold used to work in multi decade bull markets.  Since 2000 (Dow at 11,000 & now at 8,400) we’ve been in a Bear Market.
  • Markets now move much faster because hedge funds and private mega institutions dominate trading. The buy and hold mutual funds are not as significant a factor as the past. Even mutual funds trade far more often than they use to.
  • Short term traders with computers and far more esoteric trading tools dominate the markets.

This is why Investor’s 411 looks for mega trends and follows them with low cost stable market baskets of stocks (ETF’s)

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow +0.60% up
NASDQ -0.88% flat
S&P500 -0.10% up
Russell2000 -1.35% - 


Technicals & Fundamentals

Major markets closed mixed. Mostly to the downside. Volume was up but below average for the S&P 500 and Dow. Above average and flat for the NASDQ. Volume so far this week is not showing any sign of confirming the price move. Therefore …

Still looks like natural profit taking after a big run higher. I could develop into a reversal if volume increases.

XLF - The ETF that tracks financials (mostly shadow banks ) fell -2.12% in flat below average volume.  Repeat - Since the current rally began two months ago only 4 times have we had two down days in a row for financials.  So if today is another down day in, especially in light volume, short term traders might (day and swing traders) might see it as an opportunity to buy.

Short term Traders only – would buy the dip today (see above) and use stops to limit losses

If Shadow Banks go up – so will stocks. If Shadow banks go down so will stocks – The mantra of the markets for the past two months continues.

WTIC charts “Light Crude Oil”.(see chart). Oil prices momentarily crested over $60. Prices were up 0.30% to $59.71.  In one sense high oil prices are bullish. Higher oil prices indicates that investors think demand will be strong in the future. The downside is higher energy prices is it further diminishes the buying power of the middle class consumer in America,

Repeat from yesterday-What happens to Shadow Banks is still the dominant factor controlling what other stocks do. Investors411 has given the good,the bad and the ugly of the privatizing the gains and socializing the risk in Shadow Banks – The good is the gains on Wall Street.

 The Upcoming war We have rapidly created an incredibly massive subsidy system for America’s Shadow Institutions – How do we disconnect from these wealthy welfare recipients?

Most likely senerio for week -  Consolidation or profit taking. Let Shadow banks be your guide.

Email Question from MamaJama

Should we take profits on China and Brazil now? (see Comments and Positions section of blog) 

Reading the Tea leaves - There is at least a short term dip coming. Investors411 has already dumped positions in financials and techs.  Do plan as a trader to buy the dip in financials.

 Yes you can take some money off the table/take profits in China & Brazil. No one evr went broke taking profits. You can also buy some protection.

Remember, the last time I recommended this (the “swine flu scare”) I was wrong. Right now, personally I’m selling some Brazil (EWZ) with the intention of buying the dip.

As stated many times in the past month – what happens to shadow banks is what moves stocks.  China and Brazil right now (in the short term) will follow this trend. As long as Shadow Banks rule – and right now they seem to have the Obama administration in their pocket – stocks should not fall too far too fast.

Long Term Outlook = NEUTRAL

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

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May 12, 2009

Market Updates – Media’s Huge Bias

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , ,

WHAT’S UP? - Prisoner Journalists Roxana Saberi & Sami al Hajj; Media’s huge bias; Understanding why people really act as they do may be completely different from what you have been conditioned to believe; A sucker’s Wall St. Rally? Oil Prices gushing, & Shadow Banks.

AP photo of  Roxana Saberi

The Enormous Bias in the Media

Roxana Sabreri is the American/Iranian jounalist who was recently convicted of spying  in a secret trial trial in Iran. She was released yesterday and American media is understandably happy. It’s a major story and demonstrates many of the many of the injustices within Iran. The months she spent in jail in Iran were clearly unjustified.  This is something almost all of us in “civilized” countries are happy about.

——— 

But have you even heard of Prisoner # 345. – Sami al Hajj –

The rest of the world has


Al Jazeera photo of Sami al Hajj

Sami al Hajj - Is an Al Jazerra (#1 media outlet in Muslim world) cameraman who without a secret trial spent 2139 days or 6+  years imprisoned in Guantanamo Bay.  He called his treatment by American’s –  “worse than rats would be treated.” The entire Muslim world kept a vigil on Sami’s “cruel and barbaric” treatment by the US. He has been released and drew many pictures describing his captivity.
You wonder why so many Muslim’s hate us?
Why do so many Muslim’s become terrorists?
Take a look below at one of his sketches.

 We see ourselves painted by the light of American media bias. The Muslim world see a differently painted bias.

To create a solution and build a better future you have to at least understand why the other side takes the actions it does.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -1.82% down
NASDQ -0.45% down
S&P500 -2.15% down
Russell2000 -1.93% -

-

Long Term Outlook

Quotes from Positions section of blog-  Fundamentals - The problem in the financial sector is far far far far far bigger than fist imagined. Impact of this mess is going to take years to resolve. Quote from Strategy section of blog - This is NOT your fathers buy and hold market

It is very feasible to see stocks rally as GDP rises from @-6% in the USA to perhaps 0%. However, the long term viability, after that concept is built into stock prices, is the major concern. The Upcoming War with Shadow Banks will be the first big test for the future. 

Is this a sucker’s rallyFrom the WSJ 


Technicals & Fundamentals

Major down day for most major markets except NASDQ.  Volume decreased and was below average. Therefore, volume did NOT confirm the price move. The NASDQ had a major loss with increased volume 3 trading days ago.  So far volume has not confirmed the losses on any major index including financials (see below & charts onside of blog)

Right now this looks like natural profit taking after a big run higher. I could develop into a reversal if volume increases.

XLF - The ETF that tracks financials (mostly shadow banks ) fell -5.84%in decreased below average volume.  Since the current rally began two months ago only 4 times have we had two down days in a row for financials.  So if today is another down day in, especially in light volume, short term traders might (day and swing traders) might see it as an opportunity to buy.

If Shadow Banks go up – so will stocks. If Shadow banks go down so will stocks – The mantra of the markets for the past two months continues.

WTIC charts “Light Crude Oil”.(see chart) Notice after Oil hit a low @$37 a barrel in Feb. it rose to a range between $48 and $54 for over a month and over a month ago it broke out and two days ago reached a high of almost $60. 

This breakout move above $54 has two sides two opposite sides (Bullish & Bearish) to it. 

  • Oil above $54 indicates that investors see a recovery in the future that can sustain higher oil prices
  • Higher oil prices hurt American consumers whose purchasing power are critical to the recovery.

What happens to Shadow Banks is still the dominant factor controlling what other stocks do. Investors411 has given the good,the bad and the ugly of the privatizing the gains and socializing the risk in Shadow Banks – The clear positive is the gainsonWall Street.

The upcoming war  - We have rapidly created an incredibly massive subsidy system for America’s Shadow Institutions – How do we disconnect from these wealthy welfare recipients?

Most likely senerio for week -  Consolidation or profit taking. Let Shadow banks be your guide.


Long Term Outlook = NEUTRAL

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING !

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