Investors 411 Blog

FEAR

Photo from great article “Fear is the Mind Killer” Link

Your Comments

This week many of you have offered very valuable comments and concepts on the health care debate. Check out the comments section on the side of blog.

The latest fear mongering is somehow “death panels” are going to be created if you pass a health care plan. LINK

The irony here is that insurance companies now have an army of agents who look for cracks in legislation (many consciously developed by corporate interests) to deny health care to those who need expensive often life saving procedures.

Why the far right Lies, Shouts down and tries to promote Chaos – It works! When you don’t have truth and facts on your side – you use fear to win.

Likely Course of Health Care Debate

Most Likely the House will have some sort of Heath Care Plan with a public option and the Senate will pass another watered down plan without a public option. Then there will be discussions.  Bottom line comes down to this – Are the Democrats willing to make the vote a simple majority rules vote rules? They have the power to do this or allow for  a Republican filibuster in Senate which will probably get less than a handful of Democrats to join in and therefore kill the public/private plan

The issue at stake is will we have a Public system like all the other industrialized Democracies who have for decades voted to keep them or will we have some watered down untested health care system.  Neither result will be universal health care. One plan may be a slight improvement, and a public option a significant improvement.

Cancer Breakthrough

Scientists at MIT have developed a ” a drug that can selectively target and kill the stem cells that drive the growth of tumors has been identified for the first time by scientists who searched more than 16,000 compounds to find it.” Story link here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Fed meeting this week went pretty much as expected – they’re pledged to keeping interest rates low and that’s good news for stocks.

France and Germany announced positive GDP growth in last quarter (+0.3% ) meaning they are no longer in recession. Good news for world’s economy. Their banks were far less involved in financial weapons of mass destruction (CDS’s) than ours. So in addition to more managed economies like China and India add France and Germany instead of the more “free market” USA economy as leading us out of recession. The far right should cringe because this looks like the socialists leading us out of recession.

One of the keys to keeping this recovery on track is mortgage rates . Rates below 5.5% = decent and the lower the better. Here’s a decent chart and story LINK

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern .  After a ten day drop the BDI has turned back higher  – up +78 points yesterday. The mid term trend since early July is clearly bearish, with a series of lower lows and lower highs. Bulls need a good long run here to break out of the bearish trading pattern.

In a nut shell the BDI is

• short term - Bulls are back (for now)
  
• mid term -  Bearish pattern
• long term - Bullish pattern

$USD - Check out the 6 month chart (to the left) or a multi year chart of the US dollar of the US dollar.  What has become quite clear is that the dollars 50 day moving average has become and ultra strong resistance level . This is signified by the blue line on chart . Every time prices close to this descending line since the end of June they have failed to break out higher.

Once again we tested that 50 day moving average this week and failed to break out. The dollar has fallen the last three days in a row since the test. Down -0.61% yesterday. Long term the dollar is in a bearish trend and the short term bearish trend has returned. Mantra – Dollar down usually = US stocks up

A gradual reduction in the price of the dollar is part of the solution to global worldwide recession n

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

The Positions section will be revised this weekend to show new positions in SPX 10+% EWZ another 5+ % FXI another 4% and more.

Personally I have been day trading US financials (FAS &FAZ) – I do not list day trades in Positions

Sometimes it’s surprising at just how long a trend last. But buying dips of trending sectors still works. -We are coming up on historically the worst two months of the year for stocks Sept. and October.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

We’re moving -  Downstairs in a two family home – So Investors411 may not go out a few times this week

Guest Editorial by

Sugar Free Bob/Bob Sadinski

Bob is a former artist and who now farms in North Carolina. He is a frequent contributor to the comments section of the blog .

Is it possible that despite our excitement at seeing this historical fight played out before our eyes that this is NOTHING NEW!

Is it possible, ney, is it probable that because Winners Write History, that we have swallowed American Mythology  as History and that this dirty fight we are witnessing is not something really special but,…Just more of the same. Teddy Roosevelt first called for it. Can we imagine the War the corporations waged then was any less vigorous or disingenuous then as now? Or the titanic struggle against Unionism or against the New Deal? We have seen this struggle before,..many times. It’s about time that we viewed it not as partisan politics having a debate over public policy. It is class  against class, funded and led by corporate interests that will stop at nothing to get their way.

Under our legal system,a defendant is innocent until proven guilty. The Defense has to create a window of doubt  about the guilt of the client to avoid a guilty verdict. They don’t have to prove innocence. They only have to create doubt in some of the jurors minds to avoid losing.

Same with the health care fight. The corporate interests are free to lie and distort. They can intimidate discussion of the issues and the corporate interests that own the MSP are free to promote the impression that they are right to be angry. They are promoting doubt about the Obama plan and doubt leads to clinging onto the known rather then take a chance on the unknown. They are being sleazy and on ethical but,they have taken over the media focus and message and appear to be winning.

The question is: Are the corporate interests so Large and in Charge that we can’t beat them?!
Is this new or something we sadly had not learned from our history?!

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Volume fell dramatically as US stock’s posted very modest losses.  Volume is the #1 confirmation of a price move and when bulls see stocks fall they want volume to fall with it.

Fed meeting Tuesday & Wednesday this week.

AIG -Up another +5.75% in declining, but still huge volume.   Scroll down to weekly chart here.

Why AIG is so important -  it was the last in the long line domino shadow banks that insured/bet on credit default swaps. They received 10′s of billions from the US government or the taxpayers to keep the company afloat starting almost a year ago.  If AIG had fallen both the insurance and credit industries would have gone over the edge of a cliff in cascading debt obligations. This would have started a economic collapse.

It’s starting to look like we may get all our money back, plus interest. On the surface this would make these bailout programs a financial success for US taxpayers .  AIG stock is now at $28.70

The entire financial sector is up almost 200% since the lows. See chart of XLF here (scroll down to weekly chart) Both the Fed and the Obama administration have continued to insure that the shadow banks remain solvent through TARP bailouts, discounted Fed loans, simply printing money and doing nothing about the factors that caused the problems in the first place.

Simple reality is banks need to loan to make the economy grow. But if we leave shadow banks to regulate themselves inevitably the same lack of oversight will create the same problem. We all seem to have forgotten what happened last September and are moving forward using even less regulations – not even using mark to market accounting rules.

Bottom Line – History repeats itself.

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 2689 - down last eighth days in a row. 

In a nut shell the BDI is

• short term – Bears rule
  
• mid term -  Bearish pattern
• long term - Bullish pattern

The BDI has formed a series of  lower highs &  lower lows – a bearish chart pattern since early June. BDI fell 135 points Friday and 8 3 on Monday. So, the rate of decline/change is diminishing. Since the BDI chart flows more smoothly than stock prices we could be seeing a turn around because the rate of decline is diminishing. However, clearly still = Bears Rule

Simply put – if the cost to trade is breaking down between countries, so is the amount of goods that flow between countries.  One of the greatest dangers to a worldwide economic recovery is the breakdown of buying and selling goods between countries.

$USD - The dollar rose +0.32% Here’s a multi year chart of the US dollar Dollar up usually = stocks down. That correlation returned yesterday. However, we have established a series of lower lows and lower highs  on the chart pattern and that is bearish . If the dollar could rally above its resistance level (see chart 50 day moving average and an old recent high – both less than +0.50% higher then the rally could have some legs.  This would be in the short term bearish for stocks.

Positions

The whole Positions Section has been revised (Click on "Positions" at top of blog). Check it out

Adding to EWZ (Brazil)

Bought SPX yesterday (@5% of portfolio) (see yesterday’s post)

Would treat any dip in prices as a buying opportunity.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Sob stories of the Rich

Photo from Hasbro.com

The me first – Screw Everyone Else Crowd

The following comes from an editorial by David Sirota and you can find it here

What They Will Scream: We can’t raise business taxes, because American businesses already pay excessively high taxes!

What You Should Say: The Government Accountability Office reports that most U.S. corporations pay zero federal income tax. Additionally, as even the Bush Treasury Department admitted, America’s effective corporate tax rate is the third-lowest in the industrialized world.

What They Will Scream: But the rich still “pay close to 60 percent of this nation’s taxes!”

What You Should Say: Such statistics refer only to the federal income tax. When considering all of “this nation’s taxes” including payroll, state and local levies, the top 5 percent pay just 38.5 percent of the taxes.

What They Will Scream : But 38.5 percent is disproportionately high! See? You’ve proved that the rich “contribute more than their share” of taxes!

What You Should Say: Actually, they are paying almost exactly “their share.” According to the data, the wealthiest 5 percent of America pays 38.5 percent of the total taxes precisely because they make just about that share—a whopping 36.5 percent!—of total national income. Asking these [rich] folks to pay slightly more in taxes—and still less than they did during the go-go 1990s—is hardly extreme.

Obama Caves into Drug Companies

Four major financial factors contribute to our heath care mess and Obama has caved in on one.

• The uninsured get free hospital care and you end up paying the bill.
• Insurance companies make huge profits
• Waste  and inefficiencies
• Drug companies make huge profits.

Obama has made a deal with the drug companies that promises if public health care becomes reality he will not use their buying power to lower the costs of drugs for everyone. Story here

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Surprise the fall in unemployment numbers from 9.5% to 9.4% was not a bigger headline on Saturday.  In Jan & Feb. we were loosing a little under 700,000 jobs a month and now a little under 250,000 a month. This is a clear positive fundamental trend. It looks like the coordinated Fed (Bernanke) and administration (Obama stimulus) plan is working.

Stocks fell into the close on Friday, but still had significant gains on the employment numbers.  There seems to be a ready pool of investors, who have been on the sidelines or not fully invested ready to buy any dip. – The S&P 500 ( a lot of this gains is financials) is beginning to lead.

AIG – We bailed this company out to the tune of 10′s of billions of dollars. In early July it rose @ 100% and last week it took another massive 100% gain in huge volume before and after its earnings report.  Scroll down to weekly chart here.

It’s starting to look like we may get all our money back, plus interest. On the surface this would make these bailout programs a financial success for US taxpayers.  AIG was , by far the worst of the lot of bailout shadow banks/companies. Problems at AIG and other shadow banks are still disguised because we no longer use mark to market accounting, but as far as the investment community is concerned AIG is a risky but increasingly positive bet.

Obviously the issues that created these problems have not been addressed in any significant way.

Other shadow banks should follow this path.

The Obama administration has a lot to crow about, but they should keep their lips sealed since stocks are overbought and due for a correction.

• Shadow banks/companies are returning to stock market stability. (see AIG above)
  
• S&P now up +5% this year
• Unemployment number have been reduced from Jan.’s almost 700,000 to July’s 250,000.
• Only part of the stimulus package has been spent and the rest should help over the next year or two.
  

Friday’s NYT article now confirmed by jobs data – Experts See Some Lift From Stimulus ” Story link here

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 2772 down last seven days in a row. 

In a nut shell the BDI is

• short term – Bears rule
  
• mid term -  Bearish pattern
• long term - Bullish pattern

Warning - The BDI falling through its support level at 2975 is very bearish. It ha s That breakdown was confirmed Friday with another significant drop. BDI fell 109 points 3 days ago, 144 points 2 days ago and 135 points Friday. We broke through a major support level and Friday confirmed that breakdown.   The impact of these numbers are more long term than short term. However clearly this = Bears Rule

Simply put - if the cost to trade is breaking down between countries, so is the amount of goods that flow between countries.  One of the greatest dangers to a worldwide economic recovery is the breakdown of buying and selling goods between countries.

$USD - The dollar rose a health +1.25% Yesterday. It also moved back above its broken support level.  Here’s a multi year chart of the US dollar Dollar up usually = stocks down. That inverse correlation got crushed yesterday as both the dollar and stocks moved higher. The dollar moving higher shows both worldwide confidence in both the USA and stocks= Extremely bullish move

Fearless Forecast

Last week forecast - “It looks like another rally week” came true.

Markets are way overbought and technically we are due for a pullback.  This would be healthy for the market.  Hope and predict a flat market or slightly down market.- +0.5% to – 2.0%

The dollar and stocks rose Friday. An unusually combination.  The BDI is in what looks like free fall.  Our major indicators are moving in opposite directions. Something has to give.

Bottom line – At least in the short term things look might good for US relative to rest of world right now since both dollar and stocks are rising.

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

Going to build a large position in the S&P 500. (SPX) This will be kind of a default position instead of cash.  Starting with @5% of portfolio and adding 5% chunks on dips till we reach 25+% of portfolio.

Added to EWZ (Brazil) on Friday (more later)

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

The “Socialist” Joker

Obama – SF Bay photo

The attempts to break up civil discourse at the Town Meetings Democrats are having to discuss health care is turning into anarchy. Encouraged by the FOX news cable channel, the right wing, and host Glenn Beck who considers Obama “a racist,” mobs are trying to break up normal debates and discussions of the issues.  Latest “Violence” at Tampa Bay town hall meeting. Link here Photo below

There are also pictures of Obama with white powder and red lipstick on his face, depicting him as The “Socialist” Joker. For those too young to remember in the first half of the last century white men used to put black powder on their faces and lips to mimic black men as a vaudeville act. Needless to say this was derogatory and racist. Link to story here Photo above.

Tampa Bay mob banging on windows of meeting – Huffington Post.

Propaganda/Falsehoods – HealthCare

The estimated cost of House version of health care plan is $90 Billion a year NOT a trillion dollars a year. The proposed payment is a tax on those earning over $1,000,000 a year. The trillion dollar figure is estimated cost over 10 years. Two sources Debunking the spin

• WaPo’s Steve Pearlstein – Link here
• NYT Paul Krugman - Link here

Impact of Stimulus

The NYT feature story is the impact of the stimulus package. So far @ $100 billion of the $7 80 billion has been spent. Headline – “With Jobs Data Due, Experts See Some Lift From Stimulus ” Story link here

Bottom Line – If you sit back and do nothing the mob wins. The in your face yelling works unless you act.  Send some emails, write an editorial, go to a Town Meeting (see yesterday’s blog) – Do something, anything – Make a Difference - Its your country

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Volume is beginning to pick up and so is the downside moves in front of the unemployment data. Volume is the #1 conformation of a price move. This is a sign that we have reached a top (a bullish higher high of prices) and are due for some sort of correction. Actually long overdue for a correction,

Even though jobs are a lagging indicator in an economic recovery, these figures are very important. Waiting for results…

US employment data for July -247,000 jobs – Better than expected loss . Best monthly number since Aug. 2008.  Rate down to to 9.4% from 9.5% – Markets rally on news.

This paragraph was written last – Rally in stocks

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 3051 down last six days in a row. As long as we hang in above 2975 stocks should do well.  This chart (click on BDI at beginning of paragraph) moves rather smoothly.

In a nut shell the BDI is

• short term – Bears rule
  
• mid term -  Bearish pattern
• long term - Bullish pattern

Warning - The BDI falling through its support level at 2975 would be very bearish. IT DID yesterday . What’s worse the rate of downward momentum is accelerating BDI fell 109 points two days ago and 144 points yesterday. We broke through a major support level and the rate of change downward is accelerating = Bears Rule

Simply put - if the cost to trade is breaking down between countries, so is the amount of goods that flow between countries.  One of the greatest dangers to a worldwide economic recovery is the breakdown of buying and selling goods between countries.

$USD - The dollar rose a health +o.57% yesterday. Dollar closed at $78.00 (weighed against a market basket of other currencies)  We did establish a lower low for the dollar earlier this week.  This chart is important as a forecasting tool because there is a strong inverse correlation between the dollar and both (most) stocks and oil prices

Here’s a multi year chart of the US dollar that show the line in the sand support level or its all time low below $71.00 in April to June of 2008

Dollar up usually = stocks down.

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

See Thursday’s comments and those made earlier this week. The BDI breakdown through support and accelerating decline is a longer term BEARISH SIGN .

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

This is the Moment

Huffington Post photo

You can make a difference. I joined to make a difference in the health care reform not for me (I’ll soon be on Medicare) but for my/your kids, grandchildren and the future of America. Hope you will too. LINK HERE

Just in case here are some more facts on health care in America.

• The illusion that we have the “best health care system in the world” – link here
• Among the developed countries we have the 10th highest death rate of cancer patients. link here
• Staggering health cost prevent 38% from getting access to heath care access vs. 11% for Canada and 6% for the UK link here
• I know he’s theatrical, but his facts check out. Here’s Michael Moore’s SICKO blog link here

The public health care component proposed does not go far enough to really make me happy. But, its a start.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Big news is JOBLESS FIGURES for July that come out on Friday. Anything over -400,000 will be bad for stocks. The “cash for clunkers ” program will improve auto sales for the next month or two. Senate just approved more funding. Unfortunately after the Ford Focus the next 4 top selling cars in the program are foreign. Link here

Tech giant  Cisco CSCO (see chart) marks the end of major earnings reports for the quarter. There were some positive comments about the economy from the CEO here

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 3051 down last five days in a row. As long as we hang in above 2975 stocks should do well.  This chart (click on BDI at beginning of paragraph) moves rather smoothly,

In a nut shell the BDI is

• short term – Bearish trend starting
  
• mid term -  Bearish pattern
• long term - Bullish pattern

Warning – The BDI falling through its support level at 2975 would be very bearish. BDI fell 109 points yesterday. The rate of decline is growing. At this rate we will reach critical support today.

.

$USD - We broke that major support on Friday and dollar took another big hit Monday Tuesday the dollar inched forward +0.19% Yesterday the dollar gave back those gains -0.23% Here’s a multi year chart of the US dollar that show the line in the sand support level or its all time low below $71.00 in April to June of 2008

What this means for stocks – The dollar has a long way to fall before it hits major support. Y esterday’s close - $77.56 Therefore, stocks (and oil prices that are tied to the dollar) have a long way to rise before this support level is reached .

Falling dollar is Bullish for most US stocks

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

The problem here is investors are buying the smallest of dips. We’ll keep adding until the dollar and the BDI fall to their major support levels. The Dollar dropping is key to this rally and it has a long way to go before reaching major support levels. The BDI is close to breaking support and this will impact all exporting economies.

• Sold all EWS (Singapore ETF) at 10.25 . This was bought at 9.4 (see positions section of the blog) The net gain on this trade that was @6% of portfolio was @+8%
• Sold all of EWY (South Korea) at 41.75. This was bought at 39.9. The net gain on this trade which was @5% of portfolio was @ +5%
  

If job numbers are bad, but not a disaster, ill buy QLD Friday when stocks fall. Also considering add more EWZ (Brazil) on dips ASAP. This again depends on the jobless numbers.

Perhaps I’m wrong, but the downside risk (markets are also way over bought) outweighs the upside gain right now. Also the BDI sure looks like its going to break support levels and make a lower low. That’s bad for world trade especially Singapore and S. Korea that depend on it.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors 411 Record - Beating the S&P 500 for 4 1/2 years

Your Comments

Yogi Berra – Old Yankee catcher

Both Mama Jama and Bob Sadinsky have come up with some valuable info on health care in the comments section of the blog.  Check out following Physician’s website – here

Yogi Berra said it best – Deja Vu All over again

Just like in the Iraq war when anyone questioned the war was shouted down with in your face screams that you were “unpatriotic,” “un American,” and” hated the troops.”

Now in the  health care debate. Bob points out that the same thing is happening. Town hall meetings to explain heath care reforms are being  shouting down and  disrupted.   This coordinated organized angry protesters are funded by the drug, insurance and right wing fringe groups. Some examples

• In Massachusetts  one anti public health care advocate “likening Rep. McGovern to Nazi war criminal Josef Mengele, notorious for performing macabre experiments on concentration camp inmates.” link
• In Connecticut “an angry mob” heckled Senator Dodd who has prostate cancer  to “treat” his cancer with a “handful of pain killers” & “whiskey” link

The Democrats are fighting back with the following add about the same old Mob . You can see it at the same above link (you may have to scroll down) Unfortunately this political in your face yelling works because it takes the attention off the debate/facts and onto yelling demonstrators.

Who pays for the almost 50 million uninsured people when they use the hospital? – First the hospital, then you pickup the eventual huge increased cost? If we institute a public system the cost would most likely be picked up by a 5% tax on those earning over 1 million dollars a year.

You pay or those who get big Wall Street bonuses, sport figures, Rock stars, CEO’s, old money mansioned  millionaires pay.

Yes, some smaller business owners will loose $50 k out of $1,000,000+ they make each year.  Some might cut a job instead of buying a new boat. But with health care covered the uninsured and those who loose everything because the insurance company finds a way to deny them coverage in a medical disaster will be protected. These folks will now be better able to spend money once they know they are covered.  Small business will benefit in the long run by their spending.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Big news is jobless figures for July come out on Friday. Don’t expect major moves in US equities till that number is announced.

US markets shot up in the last 20 minutes of trading – A short term Bullish sign.

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 3159 – down last four days in a row. As long as we hang in above 2975 stocks should do well.  This chart (click on BDI at beginning of paragraph) moves rather smoothly,

In a nut shell the BDI is

• short term – Bearish trend starting
  
• mid term -  Bearish pattern
• long term - Bullish pattern

Warning – The BDI falling through its support level at 2975 would be very bearish. BDI fell -9 2 points yesterday. At this rate we will reach critical support by the weekend.

.

$USD - We broke that major support on Friday and dollar took another big hit Monday Tuesday the dollar inched forward +0.19% Here’s a multi year chart of the US dollar that show the line in the sand support level or its all time low below $71.00 in April to June of 2008 .

What this means for stocks – The dollar has a long way to fall before it hits major support. Therefore, stocks (and oil prices that are tied to the dollar) have a long way to rise before this support level is reached .

Support levels have been broken and that break conformed by Monday’s further meltdown. Dollar closed at $77.74. Lots of downside momentum established over sharp fall of last 3 trading days.  So yesterday looks like just a technical pause. Bullish for stocks

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

The problem here is investors are buying the smallest of dips. We’ll keep adding until the dollar and the BDI fall to their major support levels. The Dollar dropping is key to this rally and it has a long way to go before reaching major support levels. The BDI is close to breaking support and this will impact all exporting economies.

Therefore, by weeks end it may be time to take some profits on foreign investments like the Singapore and South Korea ETF’s. Both the falling dollar and BDI cold hurt these stocks if trend continues. China can hold its own even though overbought right now. Brazil is strongly influenced by oil prices and it should hold up even  better. – Nobody ever went broke taking profits.

Buying EWZ (Brazil) & QLD (2X NASDQ 100) on dips.

Apologies to those of you who are long term buy and hold traders. You could hold onto EWY (S.Korea) and EWS (Singapore). Investors411 has only held these positions for one and three weeks. Plan to reinvest in them again later. Right now they are over extended and vulnerable to falling BDI. So I’s using a tight stop/loss order after opening (I know I’ve lost some of you with this technical explanation)

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record - Beating the S&P 500 for 4 1/2 years

Legislators For Sale

The reason Health Care is moving so slowly in congress is because of the massive amount of lobbying the insurance, drug and health care industries spend to distort the truth and buy legislators votes.

Keith Olbermann is not afraid to go after the Republicans and Democrats who receive massive amounts of cash from these industries for their vote. This is beyond the $1.4 million these industries are spending each day (NPR statistic) to defeat what almost every other industrialized Democracy has voted for, a public health care option.

Why have none of these countries voted to change back from their public or public/private heath care systems if they are so bad? -  Yes these other systems have problems, but they on the whole deliver statistically better care at far less cost.  The answer is Americans are bought by the big corporations. They dominate and pay for the media own the politician’s votes.

Here MSNBC’s Olbermann last night giving an example of just how owned our Senators and Congress people are – Legislators for Sale

I strongly urge you to pass this video on to your friends, email your congressman or better yet one of the wavering Politicians Olbermann mentions on health care and promise that you will send a contribution to his/her opponent if she or he fails to support a public option.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

Big Rally – low volume. This rally is all based on the dollar breaking support levels and falling sharply for the second day in a row. (see dollar chart below) The products of globalized US companies who sell abroad  become less expensive when the dollar drops. Therefore, profits go up. Of course these same companies who have just fired American workers will now start to rehire foreign workers to keep up with growing demand.

Big news is jobless figures for July come out on Friday.

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 3267 – down last three days in a row. As long as we hang in above 2975 stocks should do well.  This chart (click on BDI at beginning of paragraph) moves rather smoothly,

In a nut shell the BDI is

• short term – Neutral (perhaps bearish trend starting)
  
• mid term -  Bearish pattern
• long term - Bullish pattern

.

$USD - We broke that major support on Friday and dollar took another big hit Monday down -0.88% to $77.59 against a market basket of other currencies. Here’s a multi year chart of the US dollar that show the line in the sand support level or its all time low below $71.00 in April to June of 2008 .

What this means for stocks – The dollar has a long way to fall before it hits major support. Therefore, stocks (and oil prices that are tied to the dollar) have a long way to rise before this support level is reached. Bullish for stocks and could mean the rally will get extended till we near support levels.

Fearless Forecast

The dollar slipping (closing) below major support on Friday is bullish for stocks. Even though markets are overbought and oil prices rising to yearly highs (in large part because of dropping dollar) it looks like another rally week.

Buy the dips of trending sectors. See recommended Positions section at top of blog.

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

Buy the dips of recommended ETF’s (see Positions)

Adding to QLD , FXI and EWY (Korea) on dips . Also EWZ (Brazil) and EWS (Singapore)

The problem here is investors are buying the smallest of dips. We’ll keep adding until the dollar and the BDI fall to their major support levels. The Dollar dropping is key to this rally

Caution – Watching out for prices going elliptical – up too far too fast.

The Hedge – This is a major more conservative position of Investors411 (15+% of portfolio) – The long part QLD is at +19.74 and the short part SDS is at - 15.40 = Net gain of +4.34% As stated earlier at a 5+% gain we would cash (take profits) out of this investment.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 Has Returned from Summer Hiatus

Economic Outlook /Stocks

Late last week the US GDP figures came in better than expected, a -1.0 %. The expected number was -1.5% . This number while not positive should be compared to the previous quarters -6.4 % and the loss in the quarter before that of about -5.7% .

Clearly back  in September it looked like the US and the world’s economy was headed over a cliff. That no longer is the case. “In short, the recovery act turned this quarter’s economic performance from disastrous to merely bad.” See data/story here

The economic stimulus that the Fed and the Obama administration delivered has turned the tide. The economics have improved dramatically. Since our government’s stimulus plan is back end loaded and only @ 25% has been allocated, the economic picture should stabilize or improve in the coming quarters.

Consensus outlook is for moderate growth next quarter/year that should turn positive.

China’s GDP has also rebounded. Their economic low was a +6.1% in the first 1/4 of 2009 and is now at a better than expected +7.9% in the latest quarter.  Remember their stimulus package was far greater than ours when measured against GDP ( from memory something like $585 billion on a GDP of 4 trillion vs. UA 780 billion on GDP of $13 trillion.) Businessweek story here

So the world’s two most important economies are rebounding.

Apologies to the European Union whose combined countries have a slightly larger GDP than the USA. On the whole they are on par with the US. There expected to have a loss in 2009 of -1.8 % and a relatively minor rebound in 2010 of +0.5% These figures/projections are obviously far more consistent with the USA than China.

Bottom Line – China is once again going to outperform the other major economies of the world. Those countries like South Korea, Singapore, India and Brazil (see Positions section of blog) will continue to outperform the USA. All these countries benefit from the mega trend of globalization . (Will fill in details in upcoming updates.)

Jobs/Jobs/Jobs

In the up coming year or two the employment picture should like the economy brighten because of the stimulus .We are now losing jobs at the rate of about @ 400,000 a month (compilation of May & June) vs. @ 700,000 (Jan & Feb.) The overall figure will grow. However, as more of the stimulus kicks in this figure should fall.  Most estimates have unemployment going up to 10% this year, however the rate of unemployment is dramatically declining. The figures for July come out  Aug. 7th.

Like the small recession in the beginning of the Bush administration it will take a long time for the jobs picture to improve . What happens is that companies lay off US workers and tighten their belts in a major recession.  When it comes time to hiring back workers they do it where they find the cheapest labor – abroad. This is one result of the mega trend globalization (See Overview section of blog)

The “Giant Sucking Sound” (Ross Perot’s term) is middle class and working jobs going abroad. However, for a year or two the stimulus will help. It’s NOT all roses and sunshine but –  American companies will do far better than American workers. Foreign countries will continue to outpreform the USA.

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING!

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

• Brown = repeat statements
• Green = usually bullish statements
• Red = Usually bearish statements

Technicals and Fundamentals

The S&P 500 joined the NASDQ in significant multi day volume confirmation of its price move last week

Off had, I do not remember US markets being this over bought. Just from a pure technical point of view it looks like rally has run out of steam. But there are an army of investors still waiting to buy the dip.

Big news is jobless figures for July come out on Friday.

Significant forecasting tools/Indexes for stock markets

BDI - The Baltic Dry Index measures the flow of goods (world trade) It looks like we could be forming another lower high and that would reinforce the mid term bearish pattern . 2975 is the major support level and the BDI closed at 3320 – down last two days. As long as we hang in above 2975 stocks should do well.

In a nut shell the BDI is

• short term – Neutral (perhaps bearish trend starting)
  
• mid term -  Bearish pattern
• long term - Bullish pattern

.

$USD - The Dollar went down and tested its major support level all last week . The last remaining support level is the June lows at @78.4. . Breaking this support would be very bearish for the dollar and bullish for stocks. We broke that support on Friday and dollar now at 78.29. Bullish for stocks

Fearless Forecast

The FF did not get its “stabilization week” as stocks moved moderately higher. Technically conditions are still way overbought .

The dollar slipping (closing) below major support on Friday is bullish for stocks. Even though markets are overbought and oil prices rising to yearly highs (in large part because of dropping dollar) it looks like another rally week.

Buy the dips of trending sectors.

Positions

The whole Positions Section has been revised (Click on “Positions” at top of blog). Check it out

Buy the dips of recommended ETF’s (see Positions)

Adding to QLD , FXI and EWY (Korea) on dips.

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING!