Investors 411 Blog

by Barr Jozwicki
June 30, 2009

Market Updates – Fireworks

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

Iraq Fireworks

Iraq

US troops are leaving Iraq cities today. Last night there was a different kind of fireworks in the skies in Iraq. (Huffington Post photo)

Here’s one big problem – The fascist government in Iran is a major backer of their fellow Shia in Iraq. This includes Sadr who fought US occupation and immediately recognized Ahmadinejad as President. Reasonable to predict the "Supreme Leader" in Iran will try to have the same fascist and militant influence in Iraq as they do over terrorist groups Hamas and Hezbollah .

Iran (week 3 )

Nico Pitney’s blog at the Huffington Post has broke and provided more info than any other US news outlet . here

Elections were certified by Supreme Leader’s government. More, but smaller (in thousands not 10′s of thousands+) demonstrations and increasing arrests. Iranian protesters are shouting Allah Acbar on their rooftops every night in defiance.

Climate Change/Environmental Legislation

Willing to bet that 75% of America’s population has no idea that this legislation is working its way through Congress. Yesterday Investors411 went over one reason why this legislation is important – to combat global warming . Let’s go over one more.

#2 Pollution

Close the garage door, turn on the car engine, open the car windows, go to sleep and you don’t wake up. Pollution kills

We are a carbon based economy and this has had a huge positive economic impact. But the cumulative effect of growing population and increasing pollutants has turned many Chinese cities days into nights where cars have to drive around with headlights on and use windshield wipers to view the road (massive pollution mostly from coal). Simply put, pollution kills by everything from cancer to emphysema.  Trillions in health care costs could be saved and life expectancy would grow with less pollution.

Realism is needed here . Carbon based energy is very efficient and transitioning to alternatives is going to take many decades.

Chevron has "human energy" ads that proclaims we are going to need to work on ways of creating new sources of energy – wind, solar, geothermal, natural gas and oil. They’re right. You simply can’t just shut down oil exploration without devastating the world’s economic structure. But we can take some concrete steps to more environmentally friendly solutions.

(to be continued)

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow +1.08% down
NASDQ +0.32 % down
S&P500 +0.91% down
Russell2000 -0.51% -

-

Your Market Questions (part 1)

Thanks for all the public and private comments on how well Investors411 did in the first 1/2 of the year .

See Positions section & last Thursday’s update . (click on calendar) The major question is will we do as well in the first 1/2 of the year in the 2nd 1/2. Also, a general worry over the long term viability of stocks and the economy .

These questions are  outlined and addressed  in the Strategy and Overview sections of blog. Most of those sections were first introduced at the beginning of the year, then added to a few months ago. Little has changed.

The long term economic problem is the huge hole that was dug by removing the regulations on capitalism and letting greed run wild.  When it takes decades (especially the last one) to dig an economic hole, you don’t climb out of it overnight.

What’s happened is most savvy investors realizes that we almost had a complete world wide financial collapse last September and it now looks like we will survive. The major problems is getting banks to make loans, keeping loans affordable, and fixing growing unemployment.  Fixing these now could have long term negative impact.

China, India, Brazil simply have better balance sheets than the USA and in the case of Brazil more natural resources. They also did not did deep holes.

If we don’t develop alternative energy we will be stuck in a downward energy spiral forever. Cheap oil (the kind that bubbles out of the ground) is a finite commodity. Any recovery is going to be accompanied by rising oil prices.

Will the second half be as good as the first? I doubt it. Our core holdings should outperform, and if stocks do go higher in the USA our ETF’s should do even better . Investors411 biggest mistake is not being disciplined enough in buying dips.

(More later)

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown. Added the VIX back as a prediction tool .

BDI The Baltic Dry Index measures the flow of goods (world trade) . If trade is diminishing through out the world then a worldwide recovery is in big trouble. BDI started back up yesterday Long term Bullish although consolidating right now.

$USD - The Dollar fell-0.72% Friday and -0 0.04% yesterday. Any move over 0.50 is significant. The strong inverse correlation between the dollar and stocks has existed for many moons. Neutral – we are in a consolidating pattern.

Long term momentum for dollar is bearish. Short term  mo is neutral, but we are closer to a bottom side breakdown than an upside breakout. Any breakout or breakdown would be significant.

VIX Measures Volatility in S&P 500. Notice this chart is in almost a straight line down.  The less volatility means the better investors are feeling. Yesterday the VIX fell to the same level it was when Lehman Brothers collapsed and markets exploded to the downside.  Stocks still have not reached the level they were when Lehman collapsed. Long term Bullish for stocks

NB – The above are secondary indicators. Our mantra has always been Volume is the #1 forecasting tool – Right now volume is not giving any clear long term signal.

Reading the Tea Leaves .

This weeks fearless forecast A rally, but one that does not get to new highs. Yesterday we had a mild to moderate rally in 3 of the 4 major indexes. Small caps(Russell2000) lost ground, but this is probably due to the annual rebalancing where some stocks are added and others kicked out of the index.

Short term – Volume dropped and markets rallied – you like stocks to go up, but when volume drops in a rally a reversal is usually around the corner.

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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June 29, 2009

Market Updates The World is Flat Society

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

Iran Week Three

97683

Two points of view

More Optimistic – Andrew Sullivan here (above photo from his blog)

More Pessimistic – Jaun Cole here

Unfortunately, think Cole has better insight.

barr-july-1951 Photo to left – Your editor in the fabulous Summer of 1951

Why the USA Is in Such Trouble

-

One of my left wing friends lamented that the Mark Sanford debacle didn’t get enough media attention this week. Sanford is a Republican family values governor who hypocritically had a torrid long term affair with an Argentina "firecracker," then likened himself to the biblical King David.

Farrah Fawcett (an actress who fought a courageous battle against cancer) and Michael Jackson (music icon with some strange behaviors) died and they sucked up all the news coverage. He wanted the Republican toasting to be the story of the week. All these events were secondary.

There was one big headline last week and these three events will have far less impact on your life and especially those of your children. - The US House of Representatives for the first time passed a major climate and environmental bill. As a society we just don’t get what’s important. That’s why this country is in such trouble.

There are 4 reasons why climate/environment legislation is so important, but today let’s deal with reason #1

Global Warming and The World Is Flat Society

In every society there are the flat worlders who for some reason (mostly self interest or emotionalism) want the opposite to be true. Example: Smoking doesn’t cause cancer or the CIA orchestrated the 911 attacks. Usually you will find a mix of these two groups in Flat Worlders – one that makes a profit and the other, close minded followers.

If you search through any relatively unbiased media source like Wikipedia you’ll find that "the Scientific community has reached consenus that global warming is man made" and "Since 2007 no scientific body of national or international standing has maintained a dissenting opinion." Link

Unfortunately, American culture is locked in the here and now of the Stanford of Jackson stories. Just like  smoking causing  cancer,  global warming will not kill me now and Stanford and Jackson sell.

Nobel prize winner Paul Krugman puts it bluntly -  those who think global warming is a hoax are committing "Treason against the planet" Unfortunately there are Republican members of the Flat World Society who voted against this legislation because hey believe global warming is a "hoax."

Research, the latest from MIT , (an evil scientific institution that the World is Flat Society hates and ignores) are seeing an even more rapid deterioration than expected. There are imperfections in the climate change legislation, but to vote against it because you think science is a "hoax" puts you in The World is Flat Society.


Reasons 2,3 & 4 tomorrow & apologies to Tom Friedman who has a totally different meaning in his book The World is Flat.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -0.40% up
NASDQ +0.47 % up
S&P500 -0.15% up
Russell2000 +0.79 % -

-

Technicals & Fundamentals

Big spike higher in NASDQ volume. Other major indexes up, but below average. NASDQ spiked probably due to rebalancing of the Russell 2000. So, no real help from volume in making a prediction.

Big events of the week

  • Madoff Monday – The financier gets sentenced
  • Consumer Confidence Numbers on Tuesday.
  • Gov’t employment numbers come out Friday (Market closed on Friday)

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown. Added the VIX back as a prediction tool.

BDI The Baltic Dry Index measures the flow of goods (world trade). You have to get out of the box and stop thinking just of the USA. This is a worldwide integrated economic planet and this Index is perhaps the best forecasting tool. If trade is diminishing through out the world then a worldwide recovery is in big trouble.

Look at the chart. (Click on the blue BDI above) You can adjust it from 5 years to one day.  You’ll see what looks like a recovery. Friday the BDI was flat and its started to trade in a range. This is better than the bearish fall over the previous four days. Right now the long term momentum is bullish and short term neutral

$USD - The Dollar fell-0.72% yesterday. Any move over 0.50 is significant. The strong inverse correlation between the dollar and stocks has existed for many moons.

Long term momentum for dollar is bearish. Short term  mo is neutral, but we are closer to a bottom side breakdown than an upside breakout. Any breakout or breakdown would be significant.

VIX – Measures Volatility in S&P 500. Notice this chart is in almost a straight line down.  The less volatility means the better investors are feeling.  This is clearly a long term bullish indicator .

Reading the Tea Leaves

Last weeks  fearless forecast – Another down to flat week. All indexes except the NASDQ were slightly down. NASDQ rose 0.6% .

This weeks fearless forecast A rally, but one that does not get to new highs. Volume, the #1 forecasting tool, is not cooperating.   Its hard to have confidence in the prediction because volume is not confirming the price move. Secondary indicators are more positive than negative.

Our Positions

Let’s take the 5% loss on SDS and sell it. SDS was bought as protection against a big downside move. For Mid Year Results see last Thursday’s Post.

Our Hedge (SDS & QLD ) is starting to work.

Our other new position IFN (India) is also off to a good start.


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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June 26, 2009

Market Update – Heartbreak

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

Iran Day 14

6-25-martyrs

Collage of dead protesters – Photo Andrew Sullivan Blog

Sorry, I’m just too emotionally exhausted and heartbroken to continue sifting through the blogs and tweets on Iran. You look at too many videos, audios blogs, tweets, and analysis and it’s overwhelmingly sad.

Best 4 sources still

Nico Pitney at the Huffington Post here

Andrew Sullivan at the Atlantic here

Robert Mackey at the NYT here

BBC- world’s largest news outlet that strives to be unbias here

The Obama Debate

Barack Obama

We’ve had an excellent debate over Obama’s policies and effectiveness in the comments section of the blog .  You all have make some great points. Investors411 has both praised Obama and condemned him (mostly over the choice of Larry Summers as chief economic advisor)

Right now Obama is a very popular president (something like 60% positive and 32% negative) So what.

To jumble the title of his book – We have The Hope , but not enough Audacity .  This summer is the time for him to forget about consensus building and take charge. The single issue he alone can make the most difference in  this summer is health care.

"[Obama's]command of the issues — and ability to explain those issues in plain English — is a joy to behold. His administration has spent months talking and working with everyone on health care. Fine. Now its time for Audacity.  Take one plan and lead. See Nobel Prize winner Paul Krugman editorial here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow +2.08% up
NASDQ +2.08 % up
S&P500 +2.14% flat
Russell2000 +2.88 % -

-

Volume was below average again  and up just a smidge for the NASDQ and Dow. Perhaps some expert analyst can glean something from the volume, but the bottom line is no big moves are being made by the big institutions and there are a lot of people sitting on the sideline. Some of these folks are very unlikely to get back into investing in stocks. Volume is NOT confirming any price move.

Yesterday’s big move higher was probably a whole bunch of traders (as opposed to long term  investors) getting caught having to cover their short positions.

-

Top 3 Recommendations/concepts

Very happy with the mid term results posted yesterday! Obviously Investors 411 toasted the benchmark S&P 500.  Going forward 3 recommendations/concepts

  • China (FXI )will continue to outperform USA (See Positions & Overview at top of blog for more on this and other recommendations)
  • Brazil, (EWZ ) India (INF ) and alternative energy (GEX/PBW ) are still decent buy the dips plays.  But you have to be careful on all of the above including China. Even though they will outperform USA. They will fall faster in a meltdown.
  • The economic problems  created over the past decade are massive. Over leveraged or phony wealth accounted for huge part of economic growth and where is that growth going to come from now?  Our (the USA) debt, dependence on foreign oil, and our inability to change entrenched special interest groups are three large anchors holding our economy back.

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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June 25, 2009

Market Update – Investors411 beats S&P 500 Again

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

Mid Year Review of Stock Positions

Scroll down to bottom of STOCK section

Iran Day 13

6-24-night-street

Iran Photo from Andrew Sullivan Blog

Violence continues. See previously recommended sources – Lede from NYT, Huffington Post, Andrew Sullivan & BBC for more. At 9:13 EST Nico Pitne y at Huffington Post has a video of the Supreme Leaders military firing on demonstrators here

What can you do to help the protesting Iranians? Tom Friedman has an interesting long term approach. Iran’s Green Revolution = America’s Green Revolution. you can read about it here

Obama Debate Rages on

The are you happy with Obama ? debate continues to rage in the comments section. More fireworks See posts by  "A Friend" and D.

Health Care

Going to spend a lot more time on this . Two important points for now .

  • From D’s comments post - "if a private option is so bad why have none of the dozens of counties that have public heath care voted to change back to private health care?"
  • Time magazine’s Michael Grunwald has an excellent article on Health Care costs here Why some major hospitals and areas charge less than others for comparable services. Example Mayo Clinic & Cleveland Clinic @40% less than UCLA Med Center and John Hopkins.


STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -0.28% down
NASDQ +1.55 % flat
S&P500 +0.65% down
Russell2000 +1.06 % -

-

Technicals & Fundamentals

The volume was again below average. It hard to be sure about making a forecast when our #1 forecasting tool - volume – gives no indication of which way prices will flow .

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

Right now, there are two indexes that are significantly influencing stocks in the USA & world. The US dollar in the short term and the BDI in the longer term

$USD – The Dollar rose +o.73% yesterday. Any move over 0.50 is significant. The strong inverse correlation between the dollar and stocks has existed for many moons. In the short term we are seeing some breakdown in the strong inverse correlation between the dollar and stocks. The best explanation for this is that the dollar is trading within a range and when it breaks out of that range (78+ to 81+ see yearly chart here ) this inverse correlation will again become  more apparent.

BDI The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row,  a 6 day rally and now a 4 day fall. Technically we failed to make a higher high and if/when we make a lower low it will be technically a very bearish sign .  Momentum is building to the downside.

If trade is diminishing through out the world then a worldwide recovery is in big trouble.

Reading the Tea Leaves

This market has moved too high to fast and is a technical rebound. As stated two weeks ago we may see a 5 to 10% technical fall or consolidation. This week fearless forecast – Another down to flat week. Look for the areas around 875 and 850 on the benchmark S&P 500 as support levels.  So far because of the lack of heavy volume this looks like an over bought correction and not a total meltdown that tests the old lows.

Investors411 has recommended buying some downside protection on any minor rally. A 5%+ position in -SDS – An ETF that is ultra short’s the S&P 500 -  Bought yesterday at @$57. This is probably not going to be a position that will be held for a long time.

Caution – The last time I was worried about a drop (Swine flu) I bought FXP (ultra short China) and got burned

Mid Year Review of Our Positions

Part #1-Part 2 tomorrow

I’ve rounded off some of the numbers and the first number is the % of the entire portfolio invested. You can learn more by going to "Positions" section on top of blog. Some position in the same ETF were added at different times, so they have different results.

All numbers are approximate All position are year to date or from when they were bought this year (This does not include some short term day or swing trades – If your interested in this send me a separate email)

Our benchmark S&P 500 is flat for the year

FXI -(China)

  • 8% of portfolio, up 24% position open
  • 8% of portfolio, up 37% position open
  • 8% of portfolio, up 20% position open

FXP – (Ultra Short China)

  • 5% of portfolio down 13% position closed

EWZ (Brazil)

  • 6% of portfolio, up 26% position closed

GLD (Gold)

  • 3% of portfolio up 13% position closed.
  • 3% of portfolio down 4% position open
  • 3% of portfolio up 9% position open

QLD (Ultra long NASDQ 100)

  • 6% of portfolio up 16% position closed

XLF (Financials Stocks)

  • 5% of portfolio up 23% position closed

IFN (India)

  • 3% of portfolio up 1% position open

GEX (alternative energy)

  • 3% of portfolio up 10% position closed
  • 3% of portfolio up 3% position open

The Hedge (Equal amounts of QLD – ultra long NASDQ 100 & SDS ultra short S&P 500)

  • 15% of portfolio up 1% position open

SDS

  • 5% of portfolio up 1% position open

Analysis tomorrow – But obviously Investors411, as in past years, toasted of our benchmark S&P 500

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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June 24, 2009

Market Updates – Jesus Was a Liberal

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

Jesus was A Liberal

The Dalai Lama & Scotty

Christianity in America is often portrayed as conservative  -  flamboyant right wing evangelists, the conservative aura of the Catholic church, and, the often loud and sometimes violent abortion issue. Well, there are 10′s of millions of Americans who spiritually believe in something far less dogmatic. One such leader of these Americans is the Rev . Scotty McLennan

Back in the 60′s during the civil rights movement and later Vietnam we were all influenced by a great Christian leader from Yale - Rev. Sloane Coffin . (for those of you too young to  remember you can read about him here ) Scotty, was one of those who not only took this activist preacher’s message  to heart, he followed in his footsteps.  Scotty became University Chaplain at Tuffs and is now Dean of Religious Life at Stanford.

His latest book entitled Jesus Was a Liberal : Reclaiming Chistianity for All has just been published. - here You can follow Scotty at his own blog here

For my kids who know Scotty & Ellen well – your copy of  Jesus was a Liberal is in the mail. For those of you who think Scotty’s picture vaguely familiar – The Character of Reverend Scot in the comic strip "Doonsbury" is fashioned after him.

Iran Day 12

iranian divide2.jpg 

  • Same recommended sources in past updates continue to provide excellent information. Demonstrations are diminishing and military presence growing. Protestors have switched to strikes and Thursday as a National day of mourning. Foreign media continue to be arrested. Neda has become the symbol of the movement – from major issue in Obama’s press conference (opening remarks here ) to Iranian government saying video was fabricated.
  • Popeye in the comment section brings up the behind the scenes story of the power struggle in Iran over whose going to replace the "Supreme Leader." Steve Clemons blog has another yet similar point of view on the power struggle behind the scenes here and his daily blog offers more analysis here

Obama Debate Rages on

The are you happy with Obama ? debate continues to rage in the comments section. See posts by Abby and Popeye

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -0.19% down
NASDQ -0.07 % down
S&P500 +0.23% down
Russell2000 -0.62 % -

-

Technicals & Fundamentals

The volume was again below average. It hard to be sure about making a forecast when our #1 forecasting tool - volume – gives no indication of which way prices will flow. But there has been some ominous changes in the secondary forecasting indictors See below.

The World Bank’s downward revision of expected GDP for the planet is having an effect. (see yesterday’s update)  I can’t remember stocks falling so much directly in front of a Fed meeting. Usually everybody waits till the Fed announcement after 2:15 EST today to make their move.  Sure looks like bears are gathering to mount a charge

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

Right now, there are two indexes that are significantly influencing stocks in the USA & world. The US dollar in the short term and the BDI in the longer term

$USD – The Dollar fell-1.16% yesterday. Any move over 0.50 is significant. The strong inverse correlation between the dollar and stocks has existed for many moons. The dollar falling a very significant-1.16% and stocks ending up only flat (the Dow should have rose at least 100 points) is a very bearish sign.

BDI The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row,  a 6 day rally and now the BDI fell Friday and the rate of decline increased Monday and significantly increased Tuesday. Another very bearish sign

If trade is diminishing through out the world then a worldwide recovery is in big trouble.

Reading the Tea Leaves

This market has moved too high to fast and is a technical rebound. As stated two weeks ago we may see a 5 to 10% technical fall or consolidation. This week fearless forecast – Another down to flat week. Look for the areas around 875 and 850 on the benchmark S&P 500 as support levels.  So far because of the lack of heavy volume this looks like an over bought correction and not a total meltdown that tests the old lows.

Our key secondary ($USD & BDI) indicators seem to indicate momentum will pickup on the downside.

This is about as close as I can get to bringing out the old Lost in Space robot who screamed Danger Will Robinson,Danger Danger.

The only missing piece is  H igh Volume confirming a downside move. Therefore, NO warning, but keep an eye on markets.

Yesterday Investors411 recommended buying some downside protection on any minor rally. A 5%+ position in -SDS – An ETF that is ultra short’s the S&P 500

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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June 23, 2009

Market Update – Barack “Hoover” Obama?

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

Iran Day 11

Mourners-sitting-6-22

Iranian protestors – Photo from Andrw Sullivan blog

Neda Agha-Soltan has become the hero of the Iranian revolution from American media (LA Times here ) to Arab media here In fact al Jazeera has a whole section devoted to "Iran in Crisis" here Al Jazeera is an outlet for mostly Arab Sunni’s and Iran is Persian Shia’s. No love lost between these two groups. You heard and saw Neda’s story at Investors 411 3 days ago.

More of the same in Iran. Less on street demonstrators and more violence. Previously listed best  sources are still telling the story to the world. Some predictions from BBC – What’s next for Iran here

One issue that many on the far left are not going to like to hear. Israe l has certainly made mistakes in its two recent wars with Iran and her proxies (Hamas & Hezbollah). But seeing how the Iran’s "Supreme Leader" treats his own people you can see how hard it is to make some peace with him or his clients. Of course, the first the recognize and lavishly praise Ahmadinejad’s & "Supreme Leader’s" victory was Hamas (here) and Hezbollah (here )

Barack "Hoover" Obama?

Herbert Hoover

Yesterday Abby posted an article by Kevin Baker on Obama from Harper’s magazine. Unfortunately you have to be a subscriber to reference the article. You can view some excerpts here The focus is that Obama has not and may not be able to change the strong intrenched interest that created the economic mess we are now in. President Hoover (his picture above) did nothing and the Great Depression grew.

Context We tore down the regulations on "free" markets and developed a massive credit debt over the last decade that has exploded. Yes, Paulson, Bernanke (more the previous Fed chair Greenspan) and Bush were leaders in creating this mess, but late last year when we stood on the edge of economic catastrophe they (PB & B) instituted a plan and prevented world economies from falling off a cliff. Bernanke, Geithner & Obama have followed through and added to that plan

Remember Lehman Brothers cause over $400+ billion dollars of debt to spread throughout the world when it went bankrupt. People were lined up in panic at insurance companies and banks. What if AIG, CitiBank, Merrill Lynch Fannie, Freddie. AIG and so many others had followed Lehman. The end result would have rippled through out the system and economic catastrophe would have been the result.

How Obama handles the economy is priority #1. Because it is the world’s economy and he is easily the most important/influencial figure. Unlike Hoover whose inaction significantly added to the Great Depression Obama has acted. But its those entrench interests that have dug in. Time will tell.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -2.35% down
NASDQ -3.35 % down
S&P500 -3.06% down
Russell2000 -3.88 % -

-

Technicals & Fundamentals

US markets took a major hit on a bad economic forecast from the World Bank.

The volume was again below average. It hard to be sure about making a forecast when our #1 forecasting tool – volume – gives no indication of which way prices will flow.

Major event – Fed Meets today and issues statement on Wednesday

Yesterday’s major event was The World’s Bank lowered its outlook for the world’s economy this year from -1.7% to -2.9% This is some truly bad new s for long term investors.

Since volume is out as a forecasting tool right now, today’s price move will act as a confirmation of yesterday’s move. Do we fall further (bearish) or rebound (bullish)?

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

Right now, there are two indexes that are significantly influencing stocks in the USA & world. The US dollar in the short term and the BDI in the longer term

$USD The dollar is the index to watch. Dollar went up +0.57% yesterday. Any move over 0.50 is significant.  It looks like the dollar may be establishing a short term bullish pattern (see chart)  of higher highs and higher lows. Still to early to tell.

All together now -  our mantra – when the dollar goes up stocks go down . This strong inverse correlation has existed for many moons.

BDI The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row,  a 6 day rally and the BDI fell minimally on Friday and significantly yesterday. This is a very important chart that has just rolled over. It usually moves in one direction for an extended period of time.  If it moves past and creates a lower low than it had eight days ago it would be a serious sign of trouble Right now, the momentum is with the bears.

If trade is diminishing through out the world then a worldwide recovery is in big trouble.

You can play with the chart and create different settings to get a better idea of what’s happening, (the same with all other links to different charts)

Reading the Tea Leaves

Still think this market has moved too high to fast and is a technical rebound. As stated two weeks ago we may see a 5 to 10% technical fall or consolidation. This week fearless forecast – Another down to flat week. The benchmark S%P 500 has already broken through support and fallen 6 to 7% from its high to  893. Next significant support level is 875 to 880. As stated above volume is NOT confirming (or has yet to confirm) the downside move. So far this still is a technical correction of a market that went too high too fast.

Both the dollar and the BDI have started to trend in the wrong direction (If you’re a bull on stocks) Add the World’s Bank prediction and you have lots of reason to hear the bear’s growl.

Got burned with this the last time I did this, but buying a little protection on any minor rally. Adding small position in SDS (ETF that does 2X the opposite of the S&P 500)

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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June 22, 2009

Market Update – The Obama Debate

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

Iran Day 10

NEDALADavidMcNew:Getty

Photo  Flckr user Jamie Vatanhah

The BBC has an excellent post of brown shirted Iranian government forces riding on there motorcycles and shooting into a crowd here or a women from inside Iran describes what’s happening to BBC here

NYT lead story has Government publicly admitting that there were more ballots than votes cast in 50 Iranian cities here here The usual sources still provide the best description of what’s happening . Also add the live NYT blog the Lede

Read Scott’s worthy description of Iran’s/US past history in his post on the right side of blog.

The Obama Debate

Obama Pakistan Interview

Frank Rich editorializes its Obama’s Make or Break Summer here (See Sunday’s blog) Bob and D already staked out there positions. Here they are.

Bob I am feeling badly betrayed by Obama. His health care reform is nothing that will help and his reforms for Wall St look like they were written by Wall St. He has not kept his promise on Don’t Ask, don’t tell and his Justice Dept is defending DOMA. His energy head is pushing for Govt.subsidies for Nuclear Power,but not for renewables. He refuses to prosecute the High Crimes and War Crimes of the Bush administration. I am angry,ashamed and I feel betrayed! Maybe Nader was  right! Obama is not going to give us health care ,or green energy. He is giving us endless war,a fascist state and new nuclear power plants. At least Bush never pretended to represent us,but O did. Damn him to hell!

D Bob, I can understand people being frustrated with Obama, he hasn’t done everything I want too. But sometime you you get what you get and your cup is 1/2 full. I hope it fills up more over the course of the next 4 years. Some of the Positives that Obama has helped create -


1) As Barr said under Bush we got Ahmadinejad, Under Obama we got the Cairo speech, Lebanon election and the Green Revolution in Iran
2) We don’t have a right wing radical nominated to the Supreme court, we have Sonia Sotomayor
3) Laws expanding children’s health care funded by a cigarette tax
4) science means something again and we passed stem cell research
5) Abolishing torture, ordering Guantanamo closed and a fixed timetable for Iraq withdrawal.
6) A big stimulus bill/taxcut to get the economy moving again.
7) Moving toward better lower cost heath care for more Americans
8) Keeping the economy from crashing and a stock market rebound

9) Money in the stimulus for green jobs and education.
10) The new respect the US has gained from other countries around the world.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -0.19% up
NASDQ +1.09 % up
S&P500 +0.31% up
Russell2000 +0.64 % -

-

Both the NASDQ and the S&P moved higher in above average volume.  However Friday was what is called a "quadruple witching day"  This means either a whole bunch of stock traders were riding around on their broomsticks in audition for the new Harry Potter movie or a whole lot of options expired.

Bottom Line – Increased volume NOT a fact on Friday.

Major event – Fed Meets this week

Technicals & Fundamentals


Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

Right now, there are two indexes that are significantly influencing stocks in the USA & world. The dollar in the short term and the BDI in the long term

$USD The dollar is the index to watch. The bottom line right now is – When the dollar goes down-stocks and oil prices go up and visa versa. Dollar went down-0.34% .   It looks like the dollar may be establishing a short term bullish pattern (see chart)  of higher highs and higher lows. Still to early to tell

Fundamentally its hard to understand why the dollar is rising, because we are printing to much $ and have s large stimulus package. Still other countries and traders are buying dollars. Lots of different ways to spin this – one is there is still confidence in the US economic system.

BDI The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row,  a 6 day rally and the BDI fell minimally on Friday 4073 to 4070 . The BDI is more a long term indicator. The chart pattern shows that the BDI has reached a critical resistance level its high of the year.  This could either be a double top chart pattern (bearish) where price fails to move higher or we may break out to new highs. Time will tell.

If trade is diminishing through out the world then a worldwide recovery is in serious trouble.

Reading the Tea Leaves

Still think this market has moved too high to fast and is a technical rebound. As stated two weeks ago we may see a 5 to 10% technical fall or consolidation.  But one Economist who called the whole stock meltdown in the first place Nourille Roubini see a "significant market correction" LINK His reasoning is oil prices and interest rates are rising too rapidly.

If these do continue to occur, what started out as an over bought technical retreat could turn into a full scale test the low bottom.  So in future Investors will keep an eye on interest rates and continue to watch oil prices.

This week fearless forecast – Another down to flat week.

  • Holding onto long term positions FXI ,
  • PBW/GEX (sold 1/2 of GEX and waiting for dip to buy similar amount of PBW – then will sell other 1/2 of GEX and buy PBW.  PBW is just a better preforming alternative energy ETF
  • IFN Bought a small amount India ETF.

Personally, have not reinvested in the other positions that Investors411 held – QLD ( 2x NASDQ) EWZ (Brazil) & XLF/UYG (financials) Waiting for more of a dip.

"The Hedge"  SDS and QLD is basically flat since it was introduced.  For more see Position s section at top of blog

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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June 21, 2009

Neda – Martyr for Freedom

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

Neda, The Iranian Freedom Fighter

Bloodgirl

Photo of Neda by unknown Iranian

  • You can see the tragic end of Neda’ s life-on the Andrew Sullivan Blog here or the whole video  (you’ll have to scroll down to 2:27 PM yesterday of Nico Pitney’s live blog )at the Huffington Post here
  • NYT’s Roger Cohen has an excellent editorial from inside Iran here His first hand account on "Islam stands for Freedom" and what’s happening on the streets is riveting. Violence has escalate during the day and each night cries of God is Great (Allah Acbar) and death to the dictator ring out over  the rooftops of Iran.
  • The BBC is the world’s largest news organization and it strives to be neutral unlike American Corporate media (or me – I clearly have chosena side in this). They question the honesty of the Iran elections here The BBC lists many doubts. They also quote Professor Juan Cole who makes the same argument that Investors411 has made – How does a country 4 times the size of France collect 39 million folded paper ballots and count them in less than 4 hours?
  • Read Obama’s latest statement invoking Martin Luther King here

The question of the week is what do you think of Obama so far – Good, Bad, Ugly? Besides Iran, there are some huge issues facing the USA – Today Frank Rich editorializes its Obama’s Make or Break Summer here

Back with stocks on Monday

Barr

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June 19, 2009

Market Update -Iran Day 7

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

WHAT’S UP? – Iran Day 7 – Kissinger, Kerry, Kahameni, Moussavi, Ahmadinejad, Obama Effect – Some conclusions – The “Supreme Leader” Reading the Stock Tea Leaves – low volume – The dollar & the Baltic Dry Index – plus more

IRAN Day 7

Friday demonstration -Photo Getty

  • Perhaps biggest rally yet as “Day of Mourning” brings million+ to street yesterday. Story Link
  • “Supreme Leader” Ayatollah Kahameni today called the elections fair Story Link
  • The “Supreme Leader,” this is the name they use for their dictator, accused US, Britian, and Zionists of compicity incasting doub on the elections.
  • Henry Kissinger endorses Obama’s hands off strategy “Anything he [Obama] says would handicap Mousavi “(opposition leader) This echo’s Senator Kerry “Think Before You Speak” editorial

Some Conclusions the Far Left and Far Right are NOT going to like to Hear.

  • The focus has shifted. It’s no longer The American’s against he Muslim world (you’re either with us or against us) but between the conservatives and modernist in Islam.
  • Ahmadinejad was created under the hard line Cheney/Bush approach to the Muslim world. The “Green Revolution” under the “Obama Effect”
  • Lesson learned – All Muslim’s are not the same – Just like American there are there many different sides
  • If the Ahmadinejad/Kahameni militant temporarilly win – remember they are the main supporters who encourage and support other violent terrorist groups like Hamas and Hezbolah.
  • Look at what the Ahmadinejad/Kahameni militants do to their own people and think what they would do to you, Sunni Muslims, Israel, or any who do not follow their orthodoxy.
  • These militants in Iran are more dangerous than “Supreme Leader” Kim in North Korea because they are religious miitants.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow +0.69% down
NASDQ -0.02 % down
S&P500 +0.84% down
Russell2000 +0.48 % -

-

Technicals & Fundamentals

Mea CulpaLike many others I’ve been caught up in the events in Iran and not been doing due diligence on stocks and other issues. But still believe in basic conclusions listed this week. However,  the conclusions/forecasts have been pretty accurate starting Monday. See reading the tea leaves below.

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

$USD The dollar is the index to watch. The bottom line right now is – When the dollar goes down-stocks and oil prices go up and visa versa. Dollar went up +0.45%.   It looks like the dollar may be establishing a short term bullish pattern (see chart)  of higher highs and higher lows.  Too early to tell difinitively. However if you get another 1 to 2% rise inthe dollar the mantra of the last few months will probably reapear. Investors 411 mantra is Dollar rallies = Oil & Stock prices fall.

XLF - The ETF that tracks financials (mostly shadow banks ) have been stuck in consolidation for over 3 weeks. +2.41% in low volume. Financials are in danger of breaking down through a major support level. (see chart) They got a reprieve yesterday. Any breakdown would be bearish.

WTICOil prices closed up +0.29% yesterday.

BDI The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row, & now a 6 day rally. But again yesterday the move higher was minimal and we have NOT reached the highs of 6 days ago.

We could be putting in a double top or a slightly lower high. This would be a longer term bearish sign if it occured.

Reading the Tea Leaves

The conclusions/forecasts have been pretty accurate starting Monday.

  • Monday’s lead statement - Expect a tired low volume market to retreat this week .
  • Low volume means indicates no bias toward bulls or bears.
  • The low volume breakout has failed and we are back in the old consolidation area and, therefore back to NEUTRAL outlook.
  • Strong support at @ 900 on the S&P 500. This has held for a couple days.
  • The low volume indicates a technical correction of a market that went too high too fast.
  • The possibility of this 4% correction turning into a 10% correction exists – still with low volume

The key two words are low volume . This shows little commitment my major players one way or the other.

The BDI and especially the Dollar are the indexes to watch. This is a technical correction, but volume is the key. Some unexpected bad economic news could turn volume around and put the bears and fundamentals in control.

In the Long term its hard to see the dollar move higher because fundamentally we are printing so much money and injecting a lot of stimulus intothe markets.

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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June 18, 2009

Market Updates – Iran Day 6

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

WHAT’S UP? – Iran Day 6 – Health Care, Despite 76% of American’s wanting a public component, its in trouble, why – The regulatory rewrite – Reading the Stock Tea Leaves – India – Stock predictions and more

Iran Day 6

Supporters of defeated reformist candidate Mir Hossein Moussavi line the streets of Tehran Wednesday.

Best sources for what happening remain The Huffington Post , Andrew Sullivan’s blog, and the BBC . (See yesterday’s post)

  • Day of mourning for fallen proclaimed by opposition leader Moussavi
  • Demonstrations continue and Ahmadinejad government continues to censor press (foreign and Local) and beat/arrest demonstrators

Scott (see posts on the right) reminds us Ahmadinejad is not a dictator and more like a "Secretary of State." He’s right. The "Supreme Leader" Ayatollah Khamenei is the religious dictator . He is backed up by a group of other religious leaders whose head is a Moussavi supporter.  The question is will this oligarchy of conservative religious leaders win or will "Supreme Leader."

Remember there were over 300 candidates for President and only 4 approved candidates allowed to run.

Health Care

76% of Americans want a public heath care plan to go along with a private plan NBC/WSJ Poll Link Unfortunately this legislation is in trouble. Here’s why.

  • Opposition by HMO’s who fear competition
  • Opposition by Drug companies who fear decline in prices
  • Opposition from AMA. Doctors who fear loss in revenue.
  • Decline in Obama popularity because of the depth of the economic problems.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow -0.09% up
NASDQ +0.66 % up
S&P500 -0.14% up
Russell2000 +0.65 % -

-

Technicals & Fundamentals

So far Volume has simply not confirmed any price move. Yesterday volume, although higher was not yet even close to average.

The exceptions is the NASDQ – Yesterday’s modest rally was accompanied by above average volume.  This is not yet significant because the rally was so modest +0.66%

Jobless rate for week =

Long Awaited Government’s Regulatory Fix

The administration released its prescription for regulatory fixes for what went wrong in the financial meltdown (102 pages) The reaction from Wall Street – Stocks went nowhere .

You’d think at least financial companies (shadow banks and related institutions) who got us into this whole mess would be in panic over regulatory changes. The XLF (financials/shadow banks) did loose -2.93% yesterday and is down this week in anticipation of this report. But this drop is not nearly as big as many over the past few months.

Conclusion – Too early to draw a conclusion about how effective some of these changes may be. They have to get through congress. Simply judging from the reaction of the Shadow Banks prices.  Their concerned – prices have fallen – but not panicked.

Just judging from how investors are reacting to proposed regulations – The suggested regulations are not tough enough. If they were we would have seen a bigger meltdown.

This is, hopefully, going to be the biggest regulatory rewrite since the Great Depression .

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown

$USD The dollar is the index to watch. The bottom line right now is – When the dollar goes down-stocks and oil prices go up and visa versa. After two significant days where the dollar was up a total of over 2% it fell -0.58% Tuesday & -0.59% Wednesday. Investors 411 mantra is Dollar rallies = Oil & Stock prices fall.

XLF - The ETF that tracks financials (mostly shadow banks ) have been stuck in consolidation for over 3 weeks. -2.93% in noticeably higher volume .

WTICOil prices closed up -0.67% yesterday. 

BDI The Baltic Dry Index measures the flow of goods (world trade). 24 up days in a row, 6 down day in a row, & now a 5 day rally. But yesterday the move higher was minimal and we have not reached the highs of 6 days ago.

Reading the Tea Leaves

Monday’s lead statement - " Expect a tired low volume market to retreat this week ".

The rising dollar is technically the most important influence on stocks. The correlation between the dollar rising and stocks doing the opposite is perhaps greater than 80% over the last few months.

NBVolume is confirming Nothing. So it looks like the support levels will hold. This prediction yesterday looks premature . The XFL (could fall off a cliff if they think financial regulations are too stringent) and this would bring stocks down. Of course we need good regulatory laws and enforcement to prevent the same thing from happening again.

Positions

IFN (India) - Bought a small amount of IFN yesterday (India) yesterday at 27.6) This will probably fall more in sympathy when US markets fall.  So I may be premature in buying. Will buy more on larger dip.

The dollar is still key to market & oil prices.


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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