JUST STOCKS

Economics – What’s happening — We have moved away from the edge of the economic cliff and now folks are realizing that the world’s economy is in trouble. Its possible that Brazil, China and India will lead us out of the mess created mostly by the USA. Time magazine’s Justin Fox has an interesting article on what has been the mantra of Investors411  here

The Baltic Dry Sea Index is a critical gauge of the world’s economy (trade) and is has broken support levels. This is NOT good news. (see below) Can’t over emphasize this chart enough!

I’ve mentioned before, the problems with Larry Summers and Obama’s economic plan .  One major problem is that the stimulus plan is back end loaded and we need the help now. We’ve only spent 10% of the stimulus so far. A lot of states would have gone under and employment would have rocketed if there was no stimulus, but the new jobs were NOT shovel ready.

Until we rebuild our financial system its hard to see any long term recovery.  So far all we’ve done is talk about it.

However, the major problem is in underestimating just how huge  the economic mess really is. See Overview & Strategy Section of blog and lots of past daily updates.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Investors411 record – 4 1/2 years of beating benchmark S&P 500 (see results click  6/25 & scroll down)

Technicals and Fundamentals

Another major meltdown in below average volume. The S&P has now fallen back down through two major support levels – its 50 & 200 day moving average. As stated before the line in the sand is 875 support level (see past updates and look at chart on side of blog) SPX at 881.

As predicted at the beginning of the week we are already challenging the major support level.

Earning season starts as Alcoa (AA) reports at the close of US markets today.

The lack of volume still troubling factor. – One things for sure-money on the sidelines is staying here. Its hard to make a long term forecast with volume as a confirming factor .

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown.

These are important forecasting tolls, but secondary to volume .

BDI - The Baltic Dry Index measures the flow of goods (world trade) . BDI fell sharply again on Monday & Tuesday. Trade has broken through its support level and that decline was confirmed by another drop Tuesday. WARNING -  The breakdown in trade is very significant to any worldwide recovery. BEARS RULE

$USD - The Dollar rose +0.34 % yesterday The strong inverse correlation between the dollar and stocks has existed for many moons. Dollar up = markets down. Dollar closed at $80.72 and has been trading for  a month between @$81+yesterday= and $79+. So the dollar nearing the top of its consolidation range. Long term Bearish pattern for Dollar ( bullish for stocks ) that is consolidating pattern now ( neutral but turning bearish )

WTIC – Oil dropped another -1.75% yesterday. and 11% over last week. (see chart) The 5 day fall has been significant and has NOT been accompanied by a significant rise in the dollar. (dollar works inversely to oil prices) What oil markets seem to be saying is demand is weak out there and the world’s economic picture is less bright than traders thought. = More Bearish news for stocks

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Back to CAUTIOUSLY BEARISH outlook. This is in anticipation of a further breakdown of the BDI and S&P 500 .   Both of these have happened.

Our Positions (For more see Positions section of Investors 411-scroll down)

Monday/Tuesday’s  Recommendation -  take some $ (1/3) off the table in China (FXI ).

The Hedge – So far the QLD has lost -10.39% and the SDS has gained +10.88% Check out Positions section on top of blog = total gain +0.49%

I plan to buy back all recommended foreign ETF’s – just hopefully at a lower level. Perhaps when  S&P dips to support level @875. Perhaps lower

Bottom Line – The BDI has rolled over. This is important.  Investors 411 has closed a lot of long positions over the last month or two. The last being 1/3 of China investment. The short term may not look good, but it should also son be another buy the dip opportunity.  We will use the BDI turning back higher as a reentry point.

More tomorrow

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Liming Nuclear Arms

This is significant good news for the world. US and Russia agree to cut nuclear arsenals by @1/3. Today Obama was giving a commencement address at University in Moscow. Detente which was a critical part of winning the cold war is back.  Australian  press on the story here

Violent Protests in China

No, this is NOT Iran . Violent riots in the western Xinjiang Uyger Autonomous  region of China continue. China press puts death toll at 156. Video link here (caution more violent video)

Contrast the coverage in American media (even this blog) with China vs Ira n .

Al Jazeera has a well reasoned round table about internet reporting & bias coverage in Iran here (warning its 24 minutes)

We look at news through huge filters or blinders and unless you understand how the rest of the world see it you have almost no hope of making progress.

The Great American Bubble Machine

Mike Taibbi in The Rolling Stone has another provocative and illuminating editorial on how Goldman Sachs has been up to its eyeballs in profiting from building American economic bubbles – here

Unfortunately,  this crowd is the one that has Obama’s ear on economic policy. Bob Sandisky has, as usual, a passionate response to the Taibbi article in the comments section of blog. – One quote

The Bush administration set in motion a new paradigm that basically changes the essence of America, from "We the people being endowed with inalienable right to pursuit happiness" to substituting People with Corporation. – We the Corporation.

HELP in Health Care

Nobel prize winner Paul Krugman has an excellent article on health care here

The first numbers on the cost and # of people covered in the heath care proposal came out poorly, but last week the budget office offered a much better and under reported  assessment.

The reason that this news is not getting out is the other side is spending $1.4 million dollars a day in PR against public healthcare. All of that money spent fighting this will be added to your health care bills.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Investors411 record – 4 1/2 years of beating benchmark S&P 500 (see results click  6/25 & scroll down)

Technicals and Fundamentals

Markets were basically flat yesterday. Volume up but below average

The lack of volume still troubling factor. – One things for sure-money on the sidelines is staying here. Its hard to make a long term forecast with volume as a confirming factor .

The major upcoming fundamental factor is earnings season which goes into full swing next week.

The S&P resistance level of 875 is the line in the sand. If the index closes below this level, we most likely will be in for another leg(s) down. SPX at 899 .

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown.

These are important forecasting tolls, but secondary to volume .

BDI - The Baltic Dry Index measures the flow of goods (world trade) . BDI fell sharply again on Monday.  What’s worse, is that the index broke down through its major support level at 3452 and closed at 3375 .  WARNING – This chart is more a long term indicator, but the breakdown in trade is very significant to any worldwide recovery. BEARS RULE

$USD - The Dollar rose +0,23 % yesterday This is a relatively minor amount . The strong inverse correlation between the dollar and stocks has existed for many moons. Dollar up = markets down. . Dollar closed at $80.45 and has been trading for  a month between @$81+yesterday= and $79+. So its almost in the middle of its consolidation range. Long term Bearish pattern for Dollar (bullish for stocks ) that is consolidating pattern now (neutral )

WTIC – There was a huge 4.02% drop in oil prices yesterday. 9% over last week. (see chart) Things may stabilize temporarily, because it is sitting on a major support level.  However the 5 day fall has been significant and has NOT been accompanied by a significant rise in the dollar.  What oil markets seem to be saying is demand is weak out there and the world’s economic picture is less bright than traders thought. = Bearish for stocks

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Back to CAUTIOUSLY BEARISH outlook. This is in anticipation of a further breakdown of the BDI and S&P 500 .

NB – Volume has confirmed nothing. So confidence in above predictions is a bit shaky . However, the BDI has broken support and oil prices are plummeting.

Our Positions (For more see Positions section of Investors 411-scroll down)

The Hedge – Buying equal $ amounts of the SDS (a short) & the QLD (long). So far this trade has netted less than +0.50%. – largely because of a real bad day yesterday. The principle behind this is that the top 100 NASDQ stocks are going to outperform the S&P 500.

It does not matter which way the market moves, only that one index outperforms the other. Plan to hold this position until we have a 5 to 10% gain or loss and then sell it.

If you would like to enter this trade  "buy the dip." Wait for a day (or better two) when the S&P 500 outperforms the NASDQ (like yesterday) and then invest.

Again for more information see Postions section of blog.

Yesterday’s Recommendation – Traders  – take some $ (1/3) off the table in China (FXI ).

I plan to buy back all recommended foreign ETF’s – just hopefully at a lower level. Perhaps when  S&P dips to support level @875

More tomorrow

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

140+ Dead in Demonstrations in China

You’ll here a lot more about Iran, but the Muslim minority has demonstrated or rioted (depends on which side your on as to which term is correct) in a far western Chinese Provence. The BBC headline story here

China owns a huge part of our debt and we need her cheaper goods. Will condemnation here be as great as Iran or hypocritically silent?

Biden – We “Misread”  Problems

Photos – Huffington post

Since last fall Investors411 has continuously repeated “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.” See positions section of blog.

Investors411 continually cited a significant group of economic thinkers who clearly demonstrated just how bad the economic problem was. Investors411 also criticized Larry Summers and the economic crew of the Obama administration.

The only good news is they finally woke up and smelled the coffee . Tax cuts good, Stimulus plan good but way too back ended (only 10% spent so far) The same problems that led to the financial meltdown are still out there. Yes, we’ve moved back from the edge of the cliff and everyone starting with Paulson, Bernanke and Geithner do deserve some credit by throwing the car they were driving into reverse as we approached the cliff.

However Greenspan, expanding deficits, wars, housing and unregulated capitalism have created a massive economic black hole. Short term stimulus usually worked as a solution in the past. The problem here, besides the holes massive depth, is the accumulated debt was already humongous. Biden’s admonition of misreading economic crisis here

For in depth previous prediction and solutions see Overview section of blog.

Iran (Week 4)

Huffington Post’s Nico Pitney’s daily blogging on events here

There has been one group of cleric’s come out in support of demonstrators and he wonders what’s happened to the head religious leader in Iraq – Sistani. He supported democracy for Iraq, but has remained silent on Iran

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Investors411 record – 4 1/2 years of beating benchmark S&P 500 (see results at 6/25-scrolldown)

Technicals and Fundamentals

A huge price decline, but again in weak declining volume Friday. How markets react to news is just behind Volume as a prediction tool. In this case it was the Unemployment figures that sparked the fall are lagging indicators.  Therefore, the huge downside reaction is way more than expected = Bearish.

The lack of volume still troubling factor. – One things for sure-money on the sidelines is staying here. Its hard to make a long term forecast with volume as a confirming factor. Weakly forecast below.

Earnings season begins next week. Historically, this week companies that are not going to do well warn – this is bearish

Oil futures are way down this AM trading at $63.88 at 7:15 EST. = Bearish

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown.

These are important forecasting tolls, but secondary to volume .

BDI - The Baltic Dry Index measures the flow of goods (world trade) . BDI fell sharply Friday.  This index is winding up like a spring, within a consolidation pattern and is close to a downside breakout (3452 is breakdown point and index closed at 3529)  See chart  Watch out! Long term Bullish rise from bottom, but coiling right now for next move . Potential bearish breakdown possible this week

$USD - The Dollar rose 0.74 % . The strong inverse correlation between the dollar and stocks has existed for many moons. Market. Dollar up = markets down. That’s just what happened Friday Long term Bearish pattern for Dollar that is consolidating pattern now (neutral) = Bullish for stocks

Fearless Weekly Forecast – Last week Broke Investors411 winning streak of forecasts for the week  as US markets fell on some bad consumers confidence and unemployment data. Momentum is with the Bears as we enter earning season. Check out all the red bearish signs above.

The S&P resistance level (@875 & SPX now at 896 )  should at least get challenged, especially in the beginning of the week. Watch BDI. Forecast – Bears Rule

Back to CAUTIOUSLY BEARISH outlook. This is in anticipation of a further breakdown of the BDI and S&P 500.

NB – Volume has confirmed nothing. So confidence in above predictions is a bit shaky.

Our Positions . -  China, Brazil, & India (FXI, IFN & EWZ )(Partial list)

Unlike the USA that has seen two economic bubbles burst housing and financials these growing countries have been relatively less impacted. The decline in trade with US is going to impact all 3.  China and India have positive GDP’s predicted for the year and resource rich Brazil’s GDP is predicted to be close to zero. The World Bank predictes a -2.9% loss of GDP for the rest of the world..predicts a-2.9% loss of GDP for the rest of the world.. For more see Positions section of Investors 411.

Recommendations – Investors has a very big position FXI a very small position in IFN , and a closed position in EWZ .  Again see Positions section of blog. Short term traders might want to take some profits in FIX and both traders and investors  should look at possible “buy the dips” opportunities that should emerge this week or next in IFN & EWZ .

More tomorrow

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Palin’s New Job

Sarah Palin suddenly quit her Alaska Governor’s job yesterday  and some people are waiting for the other shoe to drop.  The "Quitter on Twitter" Palin news  is spreading quicker than the tweets from Iran and even rivals the Michel Jackson news. America has long since become a celebrity driven culture rather than one interested in substance and reality.

She didn’t quit the Governor’s job when she ran for VP.  Alaska was flush with $140 a barrel oil revenues then and she was the state’s most popular poll. Now the states problems are growing with oil at $70 a barrel and her judgement was being questioned. Palin’s popularity was fading both in Alaska and even with Republicans.  The latest fiasco was in Vanity Fair (here ) where fellow Republicans were playing whack a mole with her run for VP.

We are damn lucky this lady is not a heartbeat away from the presidency because the kitchen gets a whole lot hotter in the White House.  Palin is getting out of the Alaskan furnace because it’s a no win situation. The supposed "fighter" leaves the state in the middle of the biggest economic crisis since the great depression, declining personal popularity. and falling oil revenues that make up a huge chunk of the states budget.

FOX news’s anchor started out describing Palin’s resignation in the reality of Harry Truman’s famous statement "if you can’t stand the heat – get out of the kitchen." But FOX soon changed its tune to this could be a "brilliant" move.

The best read of the tea leaves is that there will soon be a multi-million dollar contract with Rupert Murdoch and FOX news (plus a book deal). How about her own show? FOX quickly realized  that you don’t want to play wake a mole with their future network mega star.  At very least, she will be all over the ultra right wing FOX channel in paid interviews

Politics is about money and power.   Yes she’s cut an run from Alaska as its economy crumbles, but as she stated "only dead fish go with the flow"(text of resignation here) Sarah Palin has charisma and now a shot at a lot more money, power and celebrity status.

Happy 4th!

Barr

Afghanistan Escalation

Photo – Huffington Post

US launches major escalation in opium rich province in Afghanistan. BBC story here

By getting side tracked with an "unjust" war in Iraq we have created or ignored a whole host of other problems – Our decline in credibility, loss of allies, Iran’s moving to fascism, Pakistan destabilizing, the rise of Hamas & Hezbollah, Lack of focus on N. Korea and deterioration in Afghanistan are just some of the problems that have emerged.

Health Care

• Wal Mart according to CNBC now backs Obama’s concept of a public health  insurance program here
• AMA (American Medical Association) now "open" to public health insurance program. This group can’t make up its mind. Story here
  
• While the two above indicate momentum toward a public heath plan program the major obstacle continues to be the huge amount of money the lobbyists against the bill give senators and congress. (see past Investors411)

Boycott EXXON

While other major energy companies are  running ads that encourage conservation and alternative fuels  Exxon is still funding groups that are putting out false and misleading info on climate change here

Many of you in the past have sent me boycott Exxon emails. Sometimes this was over high oil prices, sometimes they’re leading opposition to climate change. I still boycott EXXON

Employment Numbers for June

8:30AM EST – Job loss grows from 9.4% to 9.5% with greater than expected -467,000 jobs lost last month. .  Manufacturing was way down – probably duein large part to auto bankruptcies. Markets are going to take a  hit today because of this.

This report was @ -100,000 worse than May, but +100,000 better than the months before May. Jobs are a lagging indicator, but quite important if you have one. More here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals and Fundamentals

All eyes on Unemployment numbers this AM Results =

Prices rallies, but volume dropped significantly/moderately for all major indexes. This is a bearish sign

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown.

These are important forecasting tolls, but secondary to volume .

BDI - The Baltic Dry Index measures the flow of goods (world trade) . BDI fell yesterday.  This index is winding up like a spring, within a consolidation pattern. Watch out! Long term Bullish rise from bottom, but coiling right now for next move .

$USD - The Dollar fell -0.64 % . The strong inverse correlation between the dollar and stocks has existed for many moons. Market. Dollar down = markets up. We are in a month long consolidating pattern after a multi month fall Long term Bearish pattern for Dollar that is consolidating pattern now (neutral) = Bullish for stocks This strong correlation may break down in future. (see yesterday’s update.

VIX – Measures Volatility in S&P 500.   The less volatility means the better investors are feeling. Yesterday the VIX fell a meager - o.49% yesterday.  Longer term 4 month trend down and we are near Sept. 08 lows. Bullish long term trend for stocks

Our Positions . -  Over the holiday weekend I’ll try to give you an in depth outlook for our positions, especially the new positions.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

Climate/Energy, Cap and Trade, or Waxman-Markey Bill

photo from Treehugger /flickr

Tom Friedman here weighs in on the climate/energy bill that goes under the  many different names used in the above title

It’s easy to agree with Friedman who thinks that the Republican Party is becoming the party of “sex scandals and polluters.” Earlier this week Investors411 went over two significant reasons to back this bill – It fights global warming and reduces pollution.

Another fact on pollution smog increases the chance of premature births by 128% here

Here’s reasons 3 and 4

Changes Mindset and Produces Jobs .

Friedman-”if this bill passes. Henceforth, every investment decision made in America — about how homes are built, products manufactured or electricity generated — will look for the least-cost low-carbon option. And weaving carbon emissions into every business decision will drive innovation and deployment of clean technologies to a whole new level and make energy efficiency much more affordable.”

What all this innovation means is new industries and jobs, jobs, jobs.

Stops Groveling to Petroleum Dictators

This is one significant step toward alternative energy and away from dependency on oil. The USA has reached peak oil decades ago and our domestic oil production is more than 1/2 of what it used to be link here The era of cheap oil  is over. New technology will squeeze oil out of shale and dig miles beneath the ocean to make up some of the loss but this gets very very expensive.

Oil production is dominated by a cartel and dictators whose butts we have to kiss to get the supply.  Look how cautious the world is on condemning “Supreme Leader” & Iran because they have oil. We spend trillions on the military to fight oil wars and ensure oil supplies. Why not encourage alternative energy instead? It would save lives, save future trillions in military wars, promote democracy and lead us toward energy independence.

Bottom Line – Reality is this Bill is a small step and watered down. But we have to take the first step now

Iraq

Most recent polling data on Iraq withdrawal here

• 73% favor withdrawal 26% opposed
• 52% violence will increase, 32% violence stay the same, 15% decrease
• Almost 66% believe we should NOT go back if violence increases.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

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Technicals and Fundamentals

Volume was still well below average. Up slightly for NASDQ & Dow, but moderately for S&P 500. Volume is still giving no clear sign of market direction.

How markets react to news is another significant forecasting tool. Yesterday consumer confidence numbers for last month came in more negative than expected and that according to most sent stocks down. Reacting negatively to bad news is a bearish sign

Of course this could get balanced by the markets reacting positively to good news. This would = a neutral market.

All this makes Thursday’s (I stated Friday earlier this week-number of different sources making conflicting statements – ) monthly unemployment numbers the major fundamental catalyst for the week.

Technically the consolidation pattern continues.

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown.

BDI - The Baltic Dry Index measures the flow of goods (world trade) . BDI up for second day in a row. Long term Bullish although consolidating right now.

$USD - The Dollar rose +0.39% . The strong inverse correlation between the dollar and stocks has existed for many moons. Market. Dollar up= markets down. We are in a month long consolidating pattern after a multi month fall Long term Bullish pattern that is consolidating (neutral)

This correlation pattern could break down in the future, because oil is bought in dollars and oil also goes up as dollar goes down.  Higher oil prices are a danger to fragile economic recovery

VIX – Measures Volatility in S&P 500.   The less volatility means the better investors are feeling. Yesterday the VIX rose 3.94% yesterday. This is a moderate move higher.   Longer term 4 month trend down and we are near Sept. 08 lows. Bullish long term trend for stocks

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING